EXHIBIT 10.2
FORM OF
RESTRICTED STOCK AWARD AGREEMENT
EXECUTIVE
This Restricted Stock Award Agreement ("Agreement"), effective as of
____________, 2002, between Encore Acquisition Company, a Delaware corporation
(the "Company") and _______________ (the "Executive").
WHEREAS, pursuant to the provisions of the Company's 2000 Incentive
Stock Plan (the "Plan"), the Compensation Committee (the "Committee") of the
Board of Directors of the Company (the "Board of Directors"), which administers
the Plan, has determined to grant a Restricted Stock Award to the Executive upon
the terms set forth below;
NOW, THEREFORE, the Company and the Executive agree as follows:
1. Grant of Restricted Stock. The Company hereby awards to the
Executive under the Plan, subject to the terms and conditions hereinafter set
forth, ______ shares of common stock, par value $0.01 per share (the "Common
Stock"), of the Company (the "Restricted Stock"). The Company will issue to the
Executive stock certificates evidencing the shares of Restricted Stock, which
certificates will be registered in the name of the Executive and will bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to the Restricted Stock, substantially in the following form:
The transferability of this certificate and the shares of Common Stock
represented hereby are subject to the terms, conditions and
restrictions (including forfeiture) contained in the Restricted Stock
Award Agreement, effective as of ________, 2002, between Encore
Acquisition Company and the registered owner hereof. Copies of such
Agreement are on file in the offices of Encore Acquisition Company, 777
Main Street, Suite 1400, Fort Worth, Texas 76102.
The certificates evidencing the shares of Restricted Stock shall be held in
custody by the Company or, if specified by the Committee or the Board of
Directors, by a third party custodian or trustee, until the restrictions on such
shares shall have lapsed, and, as a condition of this award of Restricted Stock,
the Executive shall deliver a stock power, duly endorsed in blank, relating to
the shares of Restricted Stock.
2. Transfer Restrictions. Except as expressly provided herein,
the shares of Restricted Stock are non-transferable, otherwise than by will or
the laws of descent and distribution, and may not otherwise be assigned,
pledged, hypothecated or otherwise disposed of and shall not be subject to
execution, attachment or similar process. Upon any attempt to effect any such
disposition, or upon the levy of any such process, the award provided for herein
shall immediately become null and void, and the shares of Restricted Stock shall
be immediately forfeited to the Company.
3. Restrictions. Subject to the forfeiture provision of Section 4
hereof, the restrictions on the shares of Restricted Stock shall lapse and such
shares shall vest in the Executive subject to the following conditions:
If and only if the Company shall achieve any one of the following performance
goals during either the 2003 fiscal year or the 2004 fiscal year:
(i) on a barrels of oil equivalent basis using prices of $23.50
per barrel of oil and $3.50 per thousand cubic feet of natural
gas, (A) the difference of the Company's proved oil and gas
reserves at December 31, 2003, minus the Company's proved oil
and gas reserves at December 31, 2002 (B) is greater than the
Company's production of oil and natural gas during the year
ended December 31, 2003; or
(ii) the Company's finding and development costs for the year ended
December 31, 2003 shall be less than the finding and
development costs of at least 50% of the companies
constituting the compensation peer group set forth in Exhibit
A hereto; with the finding and development costs determined as
(A) the sum of (a) the capital invested for development of oil
and gas properties during the year ended December 31, 2003,
plus (b) the capital invested for acquisition of oil and gas
properties during the year ended December 31, 2003, (B)
divided by the sum of (x) the increase in proved oil and gas
reserves from December 31, 2002 to December 31, 2003, plus (y)
oil and gas production during the year ended December 31,
2003; or
(iii) on a barrels of oil equivalent basis using prices of $23.50
per barrel of oil and $3.50 per thousand cubic feet of natural
gas, (A) the difference of the Company's proved oil and gas
reserves at December 31, 2004, minus the Company's proved oil
and gas reserves at December 31, 2003 (B) is greater than the
Company's production of oil and natural gas during the year
ended December 31, 2004; or
(iv) the Company's finding and development costs for the year ended
December 31, 2004 shall be less than the finding and
development costs of at least 50% of the companies
constituting the compensation peer group set forth in Exhibit
A hereto; with the finding and development costs determined as
(A) the sum of (a) the capital invested for development of oil
and gas properties during the year ended December 31, 2004,
plus (b) the capital invested for acquisition of oil and gas
properties during the year ended December 31, 2004, (B)
divided by the sum of (x) the increase in proved oil and gas
reserves from December 31, 2003 to December 31, 2004, plus (y)
oil and gas production during the year ended December 31,
2004;
then, the shares of Restricted Stock shall vest in the Executive in three
installments at the rate of thirty-three and one-third percent (33 1/3%) of the
shares of Restricted Stock awarded hereunder on each November 22 of the years
2005, 2006 and 2007; provided that restrictions shall not lapse with respect to
any fraction of a share. Shares as to which restrictions shall have lapsed shall
no longer be deemed Restricted Stock. If as of December 31, 2004, the Company
shall not have
2
achieved one of the performance goals set forth above, then all shares of
Restricted Stock shall be immediately forfeited to the Company.
4. Termination of Employment; Forfeiture.
(a) Upon termination of the Executive's employment with the
Company or any subsidiary of the Company (or the successor of any such company)
as a result of the retirement of the Executive, the shares of Restricted Stock,
after such retirement, shall continue to be subject to the restrictions set
forth herein, which restrictions shall lapse and such shares shall vest in the
Executive in accordance with the provisions of Section 3 hereof. Retirement of
the Executive shall mean (i) the termination of employment with the Company on
or after the last day the month in which the Executive attains age 65 and has,
as of such date of termination, been continuously employed by the Company for at
least two years or (ii) otherwise as the Committee or the Board of Directors
shall determine, in its sole discretion.
(b) Upon termination of the Executive's employment with the
Company or any subsidiary of the Company (or the successor of any such company)
as a result of the death of the Executive, the restrictions on all shares of
Restricted Stock shall lapse and such shares shall vest in the Executive's legal
representative, beneficiary or heir only if, and immediately after, the Company
achieves one of the performance goals set forth in Section 3 hereof.
(c) Upon termination of the Executive's employment with the
Company or any subsidiary of the Company (or the successor of any such company)
as a result of the disability of the Executive, the shares of Restricted Stock,
after such disability, shall continue to be subject to the restrictions set
forth herein, which restrictions shall lapse and such shares shall vest in the
Executive in accordance with the provisions of Section 3 hereof, provided that
if the Executive shall be disabled for a continuous period of 18 months, then
the restrictions on all shares of Restricted Stock shall lapse and such shares
shall vest in the Executive if and only if prior to or during such disability
the Company shall achieve one of the performance goals set forth in Section 3
hereof, which lapse of restrictions and vesting shall occur on the later of (i)
the last day of such 18 months of continuous disability or (ii) the date the
Company shall achieve one of such performance goals if the Executive shall
remain so continuously disabled on such date. The disability of the Executive
shall mean the total disability of the Executive as determined in accordance
with the Company's long-term disability insurance benefit plan, or if no such
plan is then in existence, total and permanent disability as determined by the
Committee or the Board of Directors in its sole discretion.
(d) Upon termination of the Executive's employment with the
Company or any subsidiary of the Company (or the successor of any such company)
for any reason other than subsections (a), (b) and (c) above, all shares of
Restricted Stock as to which the restrictions thereon shall not have previously
lapsed shall be immediately forfeited to the Company.
5. Distribution Following Termination of Restrictions. Upon the
vesting and expiration of the restrictions as to any portion of the Restricted
Stock, the Company will cause a new certificate evidencing such number of shares
of Common Stock to be delivered to the Executive, or in the case of his death to
his legal representative, beneficiary or heir, free of the legend
3
regarding transferability; provided that the Company shall not be obligated to
issue any fractional shares of Common Stock.
6. Voting and Dividend Rights. During the period in which the
restrictions provided herein are applicable to the Restricted Stock, the
Executive shall have the right to vote the shares of Restricted Stock and to
receive any cash dividends paid with respect thereto unless and until forfeiture
thereof. Any dividend or distribution payable with respect to shares of
Restricted Stock that shall be paid or distributed in shares of Common Stock
shall be subject to the same restrictions provided for herein, and the shares so
paid or distributed shall be deemed Restricted Stock subject to all terms and
conditions herein. Any dividend or distribution (other than cash or Common
Stock) payable or distributable on shares of Restricted Stock, unless otherwise
determined by the Committee or the Board of Directors, shall be subject to the
terms and conditions of this Agreement to the same extent and in the same manner
as the Restricted Stock is subject; provided that the Committee or the Board of
Directors may make such modifications and additions to the terms and conditions
(including restrictions on transfer and the conditions to the timing and degree
of lapse of such restrictions) that shall become applicable to such dividend or
distribution as the Committee or the Board of Directors may provide in its
absolute discretion.
7. Corporate Structure Change. Except as otherwise provided in
the Plan in the case of a Change in Control of the Company, in the event of any
merger, consolidation, reorganization, recapitalization, reclassification or
other capital or corporate structure change of the Company, the securities or
other consideration receivable for or in conversion of or exchange for shares of
Restricted Stock shall be subject to the terms and conditions of this Agreement
to the same extent and in the same manner as the Restricted Stock is subject;
provided that the Committee or the Board of Directors may make such
modifications and additions to the terms and conditions (including restrictions
on transfer and the conditions to the timing and degree of lapse of such
restrictions) that shall become applicable to the securities or other
consideration so receivable as the Committee or the Board of Directors may
provide in its absolute discretion.
8. Tax Withholding. The obligation of the Company to deliver any
certificate to the Executive pursuant to Section 5 hereof shall be subject to
the receipt by the Company from the Executive of any withholding taxes required
as a result of the award of the Restricted Stock or lapsing of restrictions
thereon. Unless the Committee or the Board of Directors shall determine
otherwise at any time after the date hereof, the Executive may satisfy all or
part of such withholding tax requirement by electing to sell to the Company a
designated number of unrestricted shares of Common Stock (not to exceed in value
such required tax withholding amount) held by the Executive at a price per share
equal to the closing price of the Common Stock, as reported for consolidated
transactions on the New York Stock Exchange (or other principal exchange on
which the Common Stock is listed or admitted to trading), on the date of lapse
of the restrictions or, if the Common Stock did not trade on such day, on the
next preceding day on which trading occurred, or if the Common Stock is not
listed or admitted to trading on a national securities exchange, the average of
the highest bid and lowest ask prices on such day as reported by the National
Association of Securities Dealers, Inc. or a comparable service.
9. Securities Laws Requirements. The Company shall not be
required to issue shares of Restricted Stock unless and until (i) such shares
have been duly listed upon each stock exchange
4
on which the Common Stock is then registered and (ii) the Company has complied
with applicable federal and state securities laws.
The Company may require the Executive to furnish to the Company, prior
to the issuance of any shares of Restricted Stock, an instrument, in such form
as the Committee or the Board of Directors may from time to time deem
appropriate, in which the Executive represents that the shares of Restricted
Stock acquired by him hereunder are being acquired for investment and not with a
view to the sale or distribution thereof.
10. Incorporation of Plan Provisions. This Agreement and the award
of Restricted Stock hereunder are made pursuant to the Plan and are subject to
all of the terms and provisions of the Plan as if the same were fully set forth
herein. In the event that any provision of this Agreement conflicts with the
Plan, the provisions of the Plan shall control. The Executive acknowledges
receipt of a copy of the Plan and agrees that all decisions under and
interpretations of the Plan by the Committee or the Board of Directors shall be
final, binding and conclusive upon the Executive. Capitalized terms not
otherwise defined herein shall have the same meanings set forth in the Plan for
such terms.
11. No Rights to Employment. Nothing contained in this Agreement
shall confer upon the Executive any right to continued employment by the Company
or any subsidiary of the Company, or limit in any way the right of the Company
or any subsidiary to terminate or modify the terms of the Executive's employment
at any time.
12. Miscellaneous.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO THE
PRINCIPLES OF CONFLICT OF LAWS.
(b) This Agreement shall be binding upon and inure to the benefit
of the Company and its successors and assigns.
(c) If any term or provision of this Agreement should be invalid
or unenforceable, such provision shall be severed from this Agreement, and all
other terms and provisions hereof shall remain in full force and effect.
(d) This Agreement, including the relevant provisions of the Plan,
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings, both
written and oral, with respect to the subject hereof. This Agreement may not be
amended, except by an instrument in writing signed by the Company and the
Executive.
(e) This Agreement may be executed in one or more counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same instrument.
5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ENCORE ACQUISITION COMPANY
By _________________________
Jon S. Brumley
Executive Vice President
EXECUTIVE:
____________________________
[Name]
6
EXHIBIT A
Compensation Peer Group
The following companies constitute the Company's peer group for
employee compensation purposes. The following group may be modified from time to
time by the Committee or the Board of Directors by adding or deleting one or
more companies as the Committee or the Board of Directors deems appropriate in
its sole discretion; provided that the peer group hereunder at any particular
time shall be the same group of companies as the peer group then used for
employee compensation purposes.
Cabot Oil & Gas Corporation
Chesapeake Energy Corporation
Comstock Resources Inc.
Denbury Resources Inc.
Energy Partners, Ltd.
Magnum Hunter Resources, Inc.
The Meridian Resource Corporation
Newfield Exploration Company
Nuevo Energy Company
Pioneer Natural Resources Company
Pogo Producing Company
Range Resources Corporation
Stone Energy Corporation
Swift Energy Company
Tom Brown Inc.
Vintage Petroleum, Inc.
Westport Resources Corporation
The Wiser Oil Company
7