Form of 2006 TSR Restricted Stock Agreement

 

THIS 2006 TSR RESTRICTED STOCK AGREEMENT (this “Agreement”) is made as of February 14, 2006 and is by and between Newfield Exploration Company (the “Company”) and ___________________________ (“Employee”).

 

1.  GRANT.

 

(a)  Restricted Shares. Pursuant to the Newfield Exploration Company 2004 Omnibus Stock Plan (as amended from time to time, the “Plan”) (i) ________ shares (the “Base Restricted Shares”) of Common Stock (as defined in the Plan) and (ii) ________ shares (the “Bonus Restricted Shares” and, together with the Base Restricted Shares, the “Restricted Shares”) of Common Stock shall be issued in Employee’s name. All of the Restricted Shares shall be subject to the Forfeiture Restrictions (as defined below).

 

(b)  Plan Incorporated. Employee acknowledges receipt of a copy of the Plan and agrees that the issuance of the Restricted Shares pursuant to this Agreement shall be subject to all of the terms and conditions of the Plan, which terms and conditions are incorporated herein for all purposes. Capitalized terms used but not defined in this Agreement shall have the meanings ascribed to such terms in the Plan.

 

2.  DEFINITIONS.

 

(a) “Change of Control Bonus Shares” means the percentage of the Bonus Restricted Shares corresponding to the highest TSR Rank that would have been achieved pursuant to Section 3(d) of this Agreement if the Measurement Period had ended on the day immediately prior to the day on which the relevant Change of Control occurs, rounded down to the next whole share.

 

(b) “Disability” means permanent and total disability within the meaning of section 22(e)(3) of the Code.

 

(c) “Fiscal Quarter” means each of the three month periods ending (i) May 31, August 31 and November 30, 2006, 2007 and 2008, (ii) February 28, 2007 and 2009 and (iii) February 29, 2008.

 

(d) “Forfeiture Restrictions” means the prohibition on transfer of the Restricted Shares and the obligations to forfeit the Restricted Shares to the Company as set forth in Section 3 of this Agreement.

 

(e) “Initial Peer Group” means the following companies: Apache Corporation, Anadarko Petroleum Corporation, Cabot Oil & Gas Corporation, Chesapeake Energy Corporation, Cimarex Energy Co., Denbury Resources Inc., Devon Energy Corporation, Encana

 

 

 

Corporation, EOG Resources, Inc., Forest Oil Corporation, Kerr-McGee Corporation, Murphy Oil Corporation, Nexen Inc., Noble Energy, Inc., Pioneer Natural Resources, Pogo Producing Company, Questar Corporation, Range Resources Corporation, Southwestern Energy Company, St. Mary Land & Exploration Company, Stone Energy Corporation, Swift Energy Company, The Houston Exploration Company, Talisman Energy Inc., Ultra Petroleum Corp., Inc., Western Gas Resources, Inc. and XTO Energy Inc.

 

(f) “Measurement Period” means the period beginning on March 1, 2006 and ending on February 28, 2009.

 

(g) “Pro Rata Base Shares” means that number of Base Restricted Shares equal to the total number of Base Restricted Shares multiplied by a fraction, the numerator of which is the number of full or partial Fiscal Quarters completed on or before the day on which Employee’s employment with the Company and its subsidiaries is terminated as a result of Employee’s death or Disability and the denominator of which is 12, and then rounded down to the next whole share.

 

(h) “Qualified Peer Group” means (i) the Dow Jones Industrial Average Index, (ii) the S&P 500 Index and (iii) each company included in the Initial Peer Group that has had its primary common equity security listed or traded on a national securities exchange or the Nasdaq National Market (or any successor thereto) throughout the Measurement Period.

 

(i) “Qualified Retirement” means Employee retires on or after March 1, 2008 from employment with the Company and its subsidiaries in accordance with the policies of the Company and, at the time of such retirement, Employee is at least 60 years of age and has at least ten years of continuous service with the Company or any of its subsidiaries.

 

(j) “TSR Rank” means the Company’s rank from one to one plus the total number of companies and indices comprising the Qualified Peer Group, with the Company, each such other company and each such index together ranked from best to worst based on the Total Stockholder Return of the Company, each such other company and each such index.

 

(k) “Total Stockholder Return” means the rate of return (expressed as a percentage) achieved with respect to the Common Stock, the primary common equity security of each company in the Qualified Peer Group and each index included in the Qualified Peer Group if (i) $100 was invested in each such security or index on the first day of the Measurement Period based on the average closing price of each such security or index for the 20 trading days immediately preceding such day, (ii) if the record date for any dividend to be paid with respect to a particular security occurs during the Measurement Period, such dividend was reinvested in such security as of the record date for such dividend (using the closing price of such security on such record date) and (iii) the valuation of such security or index at the end of the Measurement Period is based on the average closing price of each such security or index for the 20 trading days immediately preceding March 1, 2009.

 

 

 

3.  RESTRICTIONS. Employee hereby accepts the Restricted Shares when issued and agrees with respect thereto as follows:

 

(a)  No Transfer. Except as specifically set forth in this Section 3 or as otherwise provided in Paragraph IX of the Plan, the Restricted Shares may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred. The Forfeiture Restrictions shall be binding upon and enforceable against any permitted transferee of the Restricted Shares.

 

(b)  Forfeiture. Employee (or his or her estate, as applicable) shall, for no consideration, forfeit to the Company all Restricted Shares that, after taking into account paragraphs (c) and (d) of this Section 3, remain subject to the Forfeiture Restrictions (i) at the time of Employee’s termination of employment with the Company and its subsidiaries for any reason (including as described in the last sentence of Paragraph XI(b) of the Plan) other than as a result of Employee’s Qualified Retirement or (ii) on March 1, 2009.

 

(c)  Death or Disability. If not previously forfeited, the Forfeiture Restrictions with respect to the Pro Rata Base Shares shall lapse upon the death or Disability of Employee.

 

(d)  Total Stockholder Return. If not previously forfeited, on March 1, 2009, the Forfeiture Restrictions shall lapse with respect to that percentage of the Base Restricted Shares and that percentage of the Bonus Restricted Shares corresponding to the highest “TSR Rank” (with Top 6 being the highest, Top 7 being the second highest, etc.) achieved, as set forth in the table below, rounded down to the next whole share in each such case.

 

TSR Rank	Percentage of Base Restricted Shares as to which Forfeiture Restrictions Lapse	Percentage of Bonus Restricted Shares as to which Forfeiture Restrictions Lapse
Top 6 Top 7 Top 8 Top 9 Top 10 Top 11 Top 12 Top 13 Top 14 Top 15 Top 16 Top 17 Top 18 Top 19 Top 20 Below 20	100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 90% 80% 70% 60% 50% 0%	100% 87½% 75% 62½% 50% 40% 30% 20% 10% 0% 0% 0% 0% 0% 0% 0%

(e)  Change of Control. If a Change of Control occurs while any unforfeited Restricted Shares remain subject to the Forfeiture Restrictions (i) the Forfeiture Restrictions with respect to the Base Restricted Shares shall lapse immediately prior to such Change of Control  

 

 

 

 

 

and (ii) if such Change of Control occurs (A) prior to March 1, 2008, Employee shall, for no consideration, forfeit to the Company upon such Change of Control all of the Bonus Restricted Shares or (B) on or after March 1, 2008, the Forfeiture Restrictions with respect to the Change of Control Bonus Shares shall lapse immediately prior to such Change of Control and Employee shall, for no consideration, forfeit to the Company upon such Change of Control all of the Bonus Restricted Shares that remain subject to Forfeiture Restrictions at such time.

 

(f)  Certificates. A certificate evidencing the Restricted Shares shall be issued by the Company in Employee’s name, pursuant to which Employee shall have voting rights and receive dividends. The certificate may bear a legend reciting or incorporating the Forfeiture Restrictions and any other legends the Company believes are appropriate, and the Company may cause the certificate to be delivered upon issuance to the Secretary of the Company (or such other person as may be designated by the Committee) as a depositary for safekeeping until the Forfeiture Restrictions lapse or forfeiture occurs pursuant to the terms of the Plan and this Agreement. At the Company’s request, Employee shall execute and deliver a stock power, in blank, with respect to the Restricted Shares, and the Company may exercise such stock power in the event of forfeiture. Upon the lapse of the Forfeiture Restrictions without forfeiture, the Company shall cause a new certificate or certificates to be issued without legend in the name of Employee.

 

4.  COMMUNITY INTEREST OF SPOUSE. The community interest, if any, of any spouse of Employee in any of the Restricted Shares shall be subject to all of the terms, conditions and restrictions of this Agreement and the Plan, and shall be forfeited and surrendered to the Company upon the occurrence of any of the events requiring Employee’s interest in such Restricted Shares to be so forfeited and surrendered pursuant to this Agreement.

 

5.  TAX ELECTION. If Employee makes the election authorized by section 83(b) of the Code, Employee shall submit to the Company a copy of the statement filed by Employee to make such election.

 

6.  BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under Employee.

 

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an authorized officer and Employee has executed this Agreement, all as of the date first above written.

 

 

 

 

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