Exhibit 10.4
NEWFIELD EXPLORATION COMPANY
2017 OMNIBUS INCENTIVE PLAN

NOTICE OF RESTRICTED STOCK UNIT AWARD
TOTAL STOCKHOLDER RETURN (TSR)

 
Awardee
Date of Award:
           , 2018
Target Number of Restricted Stock Units:
________________
Awardee Position Type on Date of Award:
Officer

Effective as of the Date of Award set forth above (the “Date of Award”), the
Compensation & Management Development Committee (the “Committee”) of the Board
of Directors (the “Board”) of Newfield Exploration Company, a Delaware
corporation (the “Company”), hereby awards to you, the above-named Awardee, the
target number of restricted stock units (the “TSR Restricted Stock Units”) set
forth above (the “Target RSUs”), on the terms and conditions of the Newfield
Exploration Company 2017 Omnibus Incentive Plan, as it may be amended or
restated from time to time (the “Plan”), the attached Terms and Conditions (the
“Terms and Conditions”), and this Notice of Restricted Stock Unit Award Total
Stockholder Return (TSR) (the “Notice”).
In signing below, and in accepting this award of TSR Restricted Stock Units, you
are expressly agreeing to the confidentiality provisions contained within
Section 3 of the Terms and Conditions and to the forfeiture conditions contained
within Sections 3 and 4 of the Terms and Conditions. You acknowledge and agree
that you are making such agreement knowingly and voluntarily after reviewing and
considering the Terms and Conditions, including Sections 3 and 4 thereof.
The TSR Restricted Stock Units shall be subject to the prohibitions and
restrictions set forth herein with respect to the sale or other disposition of
such TSR Restricted Stock Units and the obligation to forfeit and surrender such
TSR Restricted Stock Units to the Company (the “Forfeiture Restrictions”). The
Forfeiture Restrictions shall lapse at the time and in the manner described in
the attached Terms and Conditions, provided that your continuous employment or
engagement with the Company and, as applicable, its direct and indirect
subsidiaries (collectively, the “Company Group”) has not terminated prior to the
end of the Performance Period. The number of TSR Restricted Stock Units that may
become Earned RSUs in respect of this award upon lapse of the Forfeiture
Restrictions may range from 0% to 200% of the Target RSUs, as described in the
Terms and Conditions.
In addition, your rights with respect to the TSR Restricted Stock Units are
subject to forfeiture pursuant to Sections 3 and 4, as applicable, of the Terms
and Conditions. If a Change in Control of the Company occurs or if you (i) die
(ii) incur a Separation from Service due to becoming Disabled, or (iii) meet the
requirements for a Qualified Retirement, in each case, prior to the end of the
Performance Period, your rights to the TSR Restricted Stock Units under this
Notice will be determined as provided in the attached Terms and Conditions.

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Following the lapse of the Forfeiture Restrictions applicable to the TSR
Restricted Stock Units, the Company shall issue to you, at the time of payment
and subject to the other conditions provided in the attached Terms and
Conditions (including Sections 3 and 4), one share of the Company’s common
stock, $0.01 par value per share (the “Common Stock”), in exchange for each such
Earned RSU and thereafter you shall have no further rights with respect to any
of the TSR Restricted Stock Units subject to this Notice, and such shares of the
Common Stock shall, subject to the provisions of the attached Terms and
Conditions, be transferable by you (except to the extent that any proposed
transfer would, in the opinion of counsel satisfactory to the Company,
constitute a violation of applicable federal or state securities law).
Notwithstanding any provisions of the Plan to the contrary, shares of the Common
Stock shall be transferred at the time(s) specified in this Notice and the Terms
and Conditions.
Except as otherwise set forth in the Terms and Conditions, the TSR Restricted
Stock Units may not be sold, assigned, pledged, exchanged, hypothecated or
otherwise transferred, encumbered or disposed of by you (other than by will or
the applicable laws of descent and distribution). Any such attempted sale,
assignment, pledge, exchange, hypothecation, transfer, encumbrance or
disposition in violation of this Notice or the Terms and Conditions shall be
void and the Company shall not be bound thereby. Any shares of the Common Stock
issued to you in exchange for the Earned RSUs may not be sold or otherwise
disposed of in any manner that would constitute a violation of any applicable
federal or state securities laws. You also agree that (a) the Company may refuse
to cause the transfer of any such shares of the Common Stock to be registered on
the stock register of the Company if such proposed transfer would in the opinion
of counsel satisfactory to the Company constitute a violation of any applicable
federal or state securities law and (b) the Company may give related
instructions to the transfer agent, if any, to stop registration of the transfer
of such shares of the Common Stock.
Capitalized terms that are not defined herein shall have the meaning ascribed to
such terms in the Plan or the Terms and Conditions.
In accepting the award of the TSR Restricted Stock Units you accept and agree to
be bound by all the terms and conditions of the Plan, this Notice and the Terms
and Conditions. A copy of the Plan will be furnished to you upon request.

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IN WITNESS WHEREOF, the Committee has caused this Notice to be duly executed by
an authorized officer of the Company, and Awardee has executed this Notice, all
as of the date first above written.
NEWFIELD EXPLORATION COMPANY

By:________________________________________        
Name:
Title:

AWARDEE
                        
____________________________________________________        
[Awardee]

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NEWFIELD EXPLORATION COMPANY
2017 OMNIBUS INCENTIVE PLAN

TERMS AND CONDITIONS
FOR TOTAL STOCKHOLDER RETURN (TSR) AWARDS
1.
DEFINITIONS. For purposes of these Terms and Conditions (the “Terms and
Conditions”), the following terms shall have the indicated meanings:

1.1    “Affiliate” means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person and, if
such specified Person is a natural person, the immediate family members of such
specified Person. “Control” (including the terms “controlled by” and “under
common control with”), with respect to the relationship between or among two or
more Persons, means the possession, directly or indirectly, of the power to
direct or cause the direction of the affairs or management of a Person, whether
through the ownership of voting securities, as trustee or executor, as general
partner or manager, by contract or otherwise, including the ownership, directly
or indirectly, of securities having the power to elect a majority of the board
of directors or similar body governing the affairs of such Person.

1.2    “Company Business” means the acquisition or development of, or
exploration for, crude oil or natural gas or any rights in, or with respect to,
crude oil or natural gas within the Territory.

1.3    “Competitive Activity” means directly or indirectly carrying on or
engaging in the Company Business (other than on behalf of any member of the
Company Group), including by owning an interest in, managing, operating,
joining, participating in or otherwise becoming an officer, director, employee,
advisor or consultant of, any entity engaged in the Company Business, in a
capacity in which you have the same, similar or expanded responsibilities or
duties as you had on behalf of any member of the Company Group within the 12
months prior to the date that you are no longer employed or engaged by any
member of the Company Group; provided, however, that it shall not be
“Competitive Activity” for you to (i) own solely as an investment and when taken
together with the ownership, directly or indirectly, of all of your Affiliates,
up to 5% of any class of securities of any Person if such securities are listed
on any national securities exchange or traded on the Nasdaq Stock Market,
provided that neither you nor your Affiliates has the power, directly or
indirectly, to control or direct the management or affairs of any such entity or
is involved in the management of such entity, (ii) own securities issued by the
Company, (iii) provide services solely as a non-employee director of any entity
or organization (including, for the avoidance of doubt, an entity engaged in the
Company Business) as long as, in the course of providing such services, you do
not use or disclose Confidential Information, or (iv) provide services for any
entity or organization (including, for the avoidance of doubt, an entity engaged
in the Company Business) as approved in writing by the Committee.

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1.4    “Confidential Information” means all confidential, proprietary,
competitively valuable or non-public information, designs, ideas, concepts,
improvements, product developments, discoveries and inventions, whether
patentable or not, that are or have been conceived, made, developed or acquired
by or disclosed to you, individually or in conjunction with others, during the
period that you are or have been employed or engaged by any member of the
Company Group (whether during business hours or otherwise and whether on Company
premises or otherwise) that relate to any member of the Company Group’s
businesses or properties, products or services (including all such information
relating to drilling programs or wells drilled by the Company Group, reserves
data, technical data, including seismic, geological, geophysical and engineering
information, prospect or trend data and maps, potential, proposed or completed
acquisitions, mergers, or other purchases or sales of oil and gas properties or
seismic or other data or technology, financial information, including
historical, current, and projected financial results, unless publicly announced,
strategic plans or changes in the Company Group’s operations, liquidity,
borrowings, security offerings, security repurchases or redemptions, or changes
in previously disclosed financial information, computer programs or program code
developed by the Company Group, legal matters (including matters relating to
litigation), corporate opportunities, operations, future plans, methods of doing
business, business plans, strategies for developing business and market share,
research, financial and sales data, pricing terms, evaluations, opinions,
interpretations, acquisition prospects, the identity of customers or their
requirements, the identity of key contacts within customers’ organizations or
within the organization of acquisition prospects, non-public lists of employees,
employee applications, summaries of employee qualifications, employee
compensation, employee matters, customer or marketing and merchandising
decisions, techniques and strategies, prospective names and marks). For purposes
of these Terms and Conditions, Confidential Information shall not include any
information that (i) is or becomes generally available to the public other than
as a result of your public use, disclosure, or fault, (ii) was available to you
on a non-confidential basis before its disclosure to you by the Company Group;
or (iii) becomes available to you on a non-confidential basis from a source
other than a member of the Company Group, so long as such source is not bound by
a confidentiality agreement or otherwise prohibited from transmitting the
information by a contractual, legal or fiduciary obligation.

1.5    “Disability” means you (i) are unable to engage in the essential
functions of your job (after accounting for reasonable accommodation, if
applicable) by reason of any physical or mental impairment that can be expected
to result in death or can be expected to last for a continuous period of not
less than 12 months, or (ii) are, by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, receiving
the maximum short-term disability benefit payable under the short-term
disability policy of the Company Group in effect from time to time.

1.6    “Earned RSUs” means the number of TSR Restricted Stock Units earned for
the Performance Period (or shortened Performance Period, in the event of a
Change in Control), as determined and certified by the Committee based upon the
level of attainment of the TSR Vesting Objective as outlined

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in these Terms and Conditions, subject to your satisfaction of the Continuous
Employment Requirement, which shall be determined as follows:
 
TSR Rank
Percentage of Target RSUs that Become Earned RSUs
First Quartile
1-3
200%
4
180%
5
160%
Second Quartile
6
140%
7
130%
8
120%
9
110%
10
100%
Third Quartile
11
90%
12
80%
13
70%
14
60%
15
50%
Fourth Quartile
16-20
0%

Any TSR Restricted Stock Units that do not become Earned RSUs as of the end of
the Performance Period shall terminate and be cancelled upon the expiration of
the Performance Period.
1.7    “Peer Company” means (A) one of the following companies (or their
publicly held successors, whether it be through a transaction involving cash,
stock or any combination thereof, as of the closing date of such purchase,
merger or combination thereof, or if the successor is not a publicly held
successor (e.g., a private equity firm), the peer company shall be replaced by
the S&P Oil & Gas Exploration & Production Select Industry Index, currently
traded under the ticker symbol SPSIOP (the “Replacement Index”) as of the
closing date of the purchase, merger or combination thereof), that (B) has had
its primary common equity security listed or traded on a national securities
exchange throughout the Performance Period:

Bill Barrett Corp.
Energen Corp.
PDC Energy, Inc.
Carrizo Oil & Gas Inc.
EP Energy
Pioneer Natural Resources Co.
Chesapeake Energy Corp.
Jones Energy
QEP Resources, Inc.
Cimarex Energy Co.
Marathon Oil Corp.
SM Energy Co.
Concho Resources Inc.
Matador Resources Co.
Whiting Petroleum Corp.
Continental Resources Inc.
Noble Energy, Inc.
WPX Energy, Inc.
Devon Energy Corp.
 
 

1.8    “Performance Period” means the period commencing January 1, 2018 and
ending December 31, 2020.

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1.9    “Person” means any individual, partnership, corporation, limited
liability company, trust, incorporated or unincorporated organization or
association or other legal entity of any kind.

1.10    “Prohibited Customer Solicitation” means (other than on behalf of any
member of the Company Group) directly or indirectly, soliciting, causing to be
solicited, interfering with any member of the Company Group’s relationship with,
or endeavoring to entice away from any member of the Company Group, any Person
or Affiliate who was or is a material customer or material supplier of, or who
has maintained a material business relationship with, any member of the Company
Group and with whom or which you had personal contact, or about whom or which
you obtained Confidential Information, during your employment or affiliation
with the Company Group.

1.11    “Prohibited Employee Solicitation” means directly or indirectly,
individually or through or on behalf of another Person, soliciting, hiring,
recruiting, attempting to hire or recruit, contacting with a view to the
engagement or employment of, or encouraging or inducing the termination of
employment or engagement of, any person who is an officer, employee, consultant,
director or contractor of the Company or any other member of the Company Group
and with whom you had personal contact or who directly or indirectly reported to
you during your employment or engagement with the Company or any other member of
the Company Group.

1.12    “Qualified Retirement” means your voluntary termination of employment
from any member of the Company Group that results in no member of the Company
Group continuing to classify you as an employee, so long as such termination
occurs when you (i) are at least age 55, (ii) have at least 5 years of Qualified
Service and (iii) have provided the Requisite Notice.

1.13    “Qualified Service” means your continuous employment or engagement with
the Company or another member of the Company Group, plus any additional service
credit granted to you (or a group of employees of which you are a member) by the
Board.

1.14    “Requisite Notice” means at least 6 months prior written notice to the
Chief Executive Officer of the Company and then to the Chairman of the Board (if
you are an officer of the Company) or to the Chief Executive Officer of the
Company (if you are not an officer of the Company).

1.15    “Separation from Service” means a “separation from service” within the
meaning of the Nonqualified Deferred Compensation Rules.

1.16    “Specified Employee” means an individual who is, as of his or her date
of Separation from Service, a “specified employee” within the meaning of the
Nonqualified Deferred Compensation Rules, taking into account any elections made
and procedures established in resolutions adopted by the Committee.

1.17    “Term” means the period commencing on the date that you are no longer
employed by any member of the Company Group and ending on the date that is (i)
if, immediately prior to such date, you were providing services to the Company
Group in a position that would be classified as an

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“Officer” position type as set forth on Exhibit B, 24 months after such date,
and (ii) if, immediately prior to such date, you were providing services to the
Company Group in any “Non-Officer Employee” position type as set forth on
Exhibit B, 12 months after such date.

1.18    “Territory” means those geographic areas within any Canadian province or
United States county in which any member of the Company Group, as of the date
that you are no longer employed or engaged by any member of the Company Group,
(i) is engaged in the Company Business; or, (ii) is considering engaging in the
Company Business (as evidenced by submission of a specific, written proposal to
the Board or the Chief Executive Officer of the Company during the six-month
period ending on the date you are no longer employed or engaged by any member of
the Company Group); and (iii) any county contiguous to a county described in
clause (i) or (ii) of this Section 1.18.

1.19    “Tier 1 Retiree” means your combined age and years of Qualified Service
place you in Tier 1 reflected on Exhibit A attached hereto as of the date of
your Qualified Retirement.

1.20    “Tier 2 Retiree” means your combined age and years of Qualified Service
place you in Tier 2 reflected on Exhibit A attached hereto as of the date of
your Qualified Retirement.

1.21    “Tier 3 Retiree” means your combined age and years of Qualified Service
place you in Tier 3 reflected on Exhibit A attached hereto as of the date of
your Qualified Retirement.

1.22    “Total Stockholder Return” for the Performance Period means the rate of
return (expressed as a percentage) attained with respect to the Common Stock and
the primary common equity security of each Peer Company (including the
Replacement Index, if applicable): (A) if $100 was invested in each such
security or index on January 1, 2018 assuming a purchase price equal to the
average closing price of each such security or index for all the trading days
during the month of January 2018; (B) if the record date for any dividend to be
paid with respect to a particular security occurs during the Performance Period,
such dividend was reinvested in such security as of the ex-dividend date for
such dividend (using the closing price of such security on such ex-dividend
date); and (C) if the valuation of such security or such index at the end of the
Performance Period is assumed to be the average closing price of each such
security or index for all of the trading days during the month of December 2020
(the “Closing Value”). For clarification purposes, if a Peer Company merges or
is acquired by another publicly held company, or if a Peer Company is replaced
by the Replacement Index, the calculation of Total Stockholder Return for such
Peer Company shall be the Total Stockholder Return of such company through the
closing date of the corresponding acquisition or merger, and after taking into
account the applicable conversion into the successor publicly held company, the
Total Stockholder Return of such successor publicly held company or Replacement
Index on the trading date immediately following the closing date of the
corresponding acquisition or merger going forward. In addition, notwithstanding
anything herein to the contrary, if a Peer Company ceases to be publicly traded
at any time during the Performance Period due to or following its

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bankruptcy or de-listing or if the Replacement Index is discontinued, such
company or index shall remain a Peer Company with its Total Stockholder Return
automatically deemed to occupy the lowest available rank (e.g., if a Peer
Company has been de-listed or has filed bankruptcy, then any subsequent Peer
Company to be de-listed or to file bankruptcy will occupy the next to lowest
rank) among the Peer Companies (including the Replacement Index, if applicable,
and the Company) for the Performance Period.

1.23    “Trade Secrets” means: (i) all information and materials that satisfy
the definition of a “trade secret” pursuant to the definitions applied by the
Texas Uniform Trade Secrets Act or the federal Defend Trade Secrets Act; or (ii)
to the extent not addressed by the definitions referenced in clause (i), all
Confidential Information and all other non-public information and materials with
respect to the conduct or details of the business conducted by any member of the
Company Group, including a formula, pattern, compilation, program, device,
method, technique, process, data, financial or strategic information or plans,
or list of actual or potential customers or suppliers, that (a) derives
independent economic value, actual or potential, from not being generally known
to, and not being readily ascertainable by proper means by, other persons who
can obtain economic value from its disclosure or use and (b) is the subject of
efforts that are reasonable under the circumstances to maintain its secrecy.

1.24    “TSR Rank” means the Company’s rank from one to the number that is equal
to one plus the total number of Peer Companies (including the Replacement Index,
to the extent applicable) at the end of the Performance Period, with the Company
and each such Peer Company (including the Replacement Index, if applicable)
together ranked from best to worst performance based on the Total Stockholder
Return of the Company and each such Peer Company (including the Replacement
Index, if applicable) for the Performance Period.

2.
VESTING AND PAYMENT OF RSUS. Provided your continuous employment or engagement
with the Company Group has continued through the last day of the Performance
Period (the “Continuous Employment Requirement”), the Forfeiture Restrictions
applicable to the Award evidenced by the Notice of Restricted Stock Unit Award
Total Stockholder Return (TSR) (the “Notice”) to which these Terms and
Conditions are attached shall lapse and you shall be entitled to receive the
Common Stock in respect of Earned RSUs upon the Committee’s certification of its
determination of the Company’s TSR Rank in respect of the Performance Period
with regard to Total Stockholder Return as compared to the Total Stockholder
Return of the Peer Companies as outlined in these Terms and Conditions (the “TSR
Vesting Objective”). The Committee shall have the sole discretion for
determining the level of attainment with respect to the TSR Vesting Objective
and the resulting number of Earned RSUs, and any such determinations shall be
conclusive. The Committee shall determine and certify the level of attainment of
the TSR Vesting Objective as soon as administratively practicable following the
end of the Performance Period (or shortened Performance Period, in the event of
a Change in Control) and payment in respect of Earned RSUs shall be made to you
as soon as practicable but no later than 60 days following the last day of the
Performance Period (or shortened Performance Period, in the event of a Change in
Control). As provided in the

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Notice, payment in settlement of Earned RSUs (including any TSR Restricted Stock
Units that become Earned RSUs in accordance with the remaining provisions of
this Section 2) shall be made in the form of one share of the Common Stock in
exchange for each Earned RSU, subject to compliance with the requirements of
Sections 3 and 4 of these Terms and Conditions, as applicable, and satisfaction
of applicable withholding and other taxes as provided in Section 5. Any TSR
Restricted Stock Units that do not become Earned RSUs shall be forfeited to the
Company for no consideration as of the end of the Performance Period.
Notwithstanding anything to the contrary in the foregoing, the following
provisions will apply in the event your continuous employment or engagement with
the Company Group terminates, or a Change in Control of the Company occurs, in
each case, prior to the last day of the Performance Period:

2.1    Change in Control. If a Change in Control of the Company occurs before
the end of the Performance Period and your continuous employment or engagement
with the Company Group has not terminated before the date the Change in Control
of the Company is consummated, then, if the Change in Control of the Company
qualifies as a change in the ownership or effective control of the corporation,
or in the ownership of a substantial portion of the assets of the corporation,
within the meaning of the Nonqualified Deferred Compensation Rules, upon the
consummation of such Change in Control of the Company, you shall be deemed to
have earned a number of TSR Restricted Stock Units equal to the number of Earned
RSUs you would have earned in accordance with the first paragraph of Section 2
if (a) the Performance Period ended on the date such Change in Control of the
Company is consummated, (b) the determination of whether, and to what extent,
the TSR Vesting Objective is attained is based on actual performance through the
date such Change in Control of the Company is consummated, and (c) the Closing
Value for the Company and each Peer Company (including the Replacement Index, if
applicable) is equal to the average closing price of the Common Stock or the
primary common equity security of each Peer Company, as applicable, for all
trading days during the 30-day period ending on the date such Change in Control
of the Company is consummated; provided, however, that the number of Earned RSUs
you shall be deemed to have earned upon the consummation of such Change in
Control of the Company pursuant to this Section 2.1 shall in no event be less
than the number of Target RSUs awarded pursuant to the Notice. All remaining
Forfeiture Restrictions (including the Continuous Employment Requirement) then
applicable to the Earned RSUs, determined in accordance with this Section 2.1,
shall lapse as of, and payment in respect of Earned RSUs shall be made as soon
as practicable (but no later than 60 days) following, the date such Change in
Control of the Company is consummated.

2.2    Termination Generally. If your continuous employment or engagement with
the Company Group terminates before the end of the Performance Period for any
reason other than one of the reasons described in Sections 2.3 through 2.5
below, the Forfeiture Restrictions applicable to the TSR Restricted Stock Units
shall not lapse and you shall, for no consideration, forfeit to the Company on
the date of such termination all TSR Restricted Stock Units to the extent then
subject to the Forfeiture Restrictions.

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2.3    Disability. Notwithstanding any other provision of the Notice or these
Terms and Conditions to the contrary, if before the end of the Performance
Period you have a Separation from Service due to your having incurred a
Disability, then you shall be deemed to have satisfied the Continuous Employment
Requirement and to have earned the number of Earned RSUs that you would have
actually earned had you remained continuously employed through the end of the
Performance Period determined in accordance with the first paragraph of Section
2 as of the end of the Performance Period; provided, however, in the event a
Change in Control of the Company occurs following your Separation from Service
due to your having incurred a Disability but prior to the end of the Performance
Period, then the number of Earned RSUs you shall be deemed to have earned shall
be determined in accordance with Section 2.1. Payment in respect of such Earned
RSUs shall be made as soon as practicable (but no later than 60 days) following
the end of the Performance Period (or, in the case of a Change in Control as
described in this Section 2.3, at the time specified in Section 2.1).

2.4    Death. Notwithstanding any other provision of the Notice or these Terms
and Conditions to the contrary, if you die before the end of the Performance
Period and before you have otherwise terminated your continuous employment or
engagement with the Company Group, then you shall be deemed to have satisfied
the Continuous Employment Requirement and to have earned the number of Earned
RSUs that you would have actually earned had you remained continuously employed
through the end of the Performance Period determined in accordance with the
first paragraph of Section 2 as of the end of the Performance Period; provided,
however, in the event a Change in Control of the Company occurs following your
Separation from Service due to your death but prior to the end of the
Performance Period, then the number of Earned RSUs you shall be deemed to have
earned shall be determined in accordance with Section 2.1. Payment in respect of
such Earned RSUs shall be made as soon as practicable (but no later than 60
days) following the end of the Performance Period (or, in the case of a Change
in Control as described in this Section 2.4, at the time specified in Section
2.1).

2.5    Qualified Retirement. Notwithstanding any other provision of the Notice
or these Terms and Conditions to the contrary, if before the end of the
Performance Period your employment terminates as a result of your Qualified
Retirement, then you shall be deemed to have satisfied the Continuous Employment
Requirement and to have earned the number of Earned RSUs that you would have
actually earned had you remained continuously employed through the end of the
Performance Period determined in accordance with the first paragraph of Section
2 as of the end of the Performance Period, but only to the extent of the
following:

(i)    if you are a Tier 3 Retiree, then the Forfeiture Restrictions shall be
deemed to have lapsed (other than any forfeiture restrictions set forth in
Sections 3 and 4 of these Terms and Conditions), and payment shall be made, with
respect to 50% of the number of Earned RSUs for which Forfeiture Restrictions
would have otherwise lapsed if your employment with the Company Group had not
terminated and you had remained continuously employed through the end of the
Performance Period;

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(ii)    if you are a Tier 2 Retiree, then the Forfeiture Restrictions shall be
deemed to have lapsed (other than any forfeiture restrictions set forth in
Sections 3 and 4 of these Terms and Conditions), and payment shall be made, with
respect to 75% of the number of Earned RSUs for which Forfeiture Restrictions
would have otherwise lapsed if your employment with the Company Group had not
terminated and you had remained continuously employed through the end of the
Performance Period; and

(iii)    if you are a Tier 1 Retiree, then the Forfeiture Restrictions shall be
deemed to have lapsed (other than any forfeiture restrictions set forth in
Sections 3 and 4 of these Terms and Conditions), and payment shall be made, with
respect to 100% of the number of Earned RSUs for which Forfeiture Restrictions
would have otherwise lapsed if your employment with the Company Group had not
terminated and you had remained continuously employed through the end of the
Performance Period.

In each case, the number of Earned RSUs described in clauses (i), (ii) and (iii)
of this Section 2.5, as applicable, shall be referred to herein as the
“Retirement Adjusted RSUs.” Payment in respect of Retirement Adjusted RSUs shall
be made as soon as practicable (but no later than 60 days) following the end of
the Performance Period. The excess of (A) the number of Earned RSUs with respect
to which the Forfeiture Restrictions would have otherwise lapsed had your
employment with the Company Group not terminated prior to the end of the
Performance Period over (B) the Retirement Adjusted RSUs, shall be immediately
forfeited as of the end of the Performance Period. Notwithstanding any other
provision of the Notice or these Terms and Conditions to the contrary (but
subject to the terms of Sections 3 and 4 below), if a Change in Control of the
Company that qualifies as a change in the ownership or effective control of the
corporation, or in the ownership of a substantial portion of the assets of the
corporation, within the meaning of the Nonqualified Deferred Compensation Rules,
occurs following your termination of employment as a result of your Qualified
Retirement and before the end of the Performance Period, then the number of
Retirement Adjusted RSUs you are entitled to receive shall be determined
applying clauses (i), (ii) and (iii) of this Section 2.5 but with the number of
Earned RSUs determined in accordance with, and payment made at the time
specified in, Section 2.1. For the avoidance of doubt, payment(s) in respect of
the Retirement Adjusted RSUs and your right to retain the shares of the Common
Stock received in settlement thereof (or any proceeds related to any sale
thereof) are subject to compliance with the requirements set forth in Sections 3
and 4 of these Terms and Conditions.
3.
PROTECTION OF CONFIDENTIAL INFORMATION.

3.1    Access to Information. In the course of your employment or engagement
with the Company Group and in the performance of your duties on behalf of the
Company Group, you will be provided with, and will have access to, Confidential
Information.

3.2    Nondisclosure. You agree to preserve and protect the confidentiality of
all Trade Secrets both prior to and after the date that you are no longer
employed or engaged by any member of the Company

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Group. Except as expressly permitted by this Section 3, you will not disclose,
divulge or furnish to any other Person or use for your own or any other Person’s
benefit any Trade Secrets, other than as necessary and authorized in the course
of your employment or engagement with any member of the Company Group and for
the Company Group’s business purposes.

3.3    Security. You shall follow all Company Group policies and protocols
regarding the physical security of all documents and other material constituting
or containing Trade Secrets (regardless of the medium on which any Trade Secret
is stored).

3.4    Return of Property. Upon the date that you are no longer employed or
engaged by any member of the Company Group, and at any other time upon request
of the Company, you shall promptly surrender, and deliver to the Company all
documents, files (including electronically stored information) and all copies
thereof and all other materials of any nature containing or pertaining to all
Trade Secrets in your possession, custody and control and you shall not retain
any such documents or other materials. Within 10 days of any such request, you
shall certify to the Company in writing that you have returned to the Company
all such documents and materials.

3.5    Consequences of Breach. Notwithstanding any other provision of these
Terms and Conditions or the Notice, if it is determined by the Committee in its
sole and absolute discretion that you have violated any of the terms of Section
3 of these Terms and Conditions, whether before or after the date that you are
no longer employed or engaged by any member of the Company Group, then your
right to receive the shares of the Common Stock or any other payment or benefit
provided to you under the Notice or these Terms and Conditions, to the extent
still outstanding at that time, shall be completely forfeited. Such remedy shall
be in addition to all other remedies available to each member of the Company
Group, at law and equity. For the avoidance of doubt, the Company and each other
member of the Company Group shall be entitled to obtain a temporary or permanent
injunction or other equitable relief to prevent or enjoin your breach or
threatened breach of this Section 3 and shall be entitled to specifically
enforce this Section 3, without proof of actual damages or the necessity of
posting a bond or other security as a prerequisite to obtaining equitable
relief. You agree not to dispute or resist any such application for relief on
the basis that the Company or any other member of the Company Group has an
adequate remedy at law or that damage arising from such non-performance or
breach is not irreparable.

3.6    Disclosures Pursuant to Law or Legal Process; Permitted Disclosures.
Notwithstanding the foregoing provisions of Section 3 of these Terms and
Conditions, you may make disclosures for the purpose of complying with any
applicable laws or regulatory requirements or that you are legally compelled to
make by subpoena, civil investigative demand, order of a court of competent
jurisdiction, or similar process, or otherwise by law. Nothing herein will
prevent you from: (i) making a good faith report of possible violations of
applicable law to any governmental agency or entity; or (ii) making disclosures
that are protected under the whistleblower provisions of applicable law. An
individual (including you) shall not be held criminally or civilly liable under
any federal or state trade secret law for the disclosure of a trade secret that:
(A) is made (1) in confidence to a federal, state or

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local government official, either directly or indirectly, or to an attorney; and
(2) solely for the purpose of reporting or investigating a suspected violation
of law; or (B) is made in a complaint or other document filed in a lawsuit or
other proceeding, if such filing is made under seal. In addition, an individual
who files a lawsuit for retaliation by an employer of reporting a suspected
violation of law may disclose the trade secret to the attorney of the individual
and use the trade secret information in the court proceeding, if the individual
(X) files any document containing the trade secret under seal; and (Y) does not
disclose the trade secret, except pursuant to court order.

3.7    Survival. For the avoidance of doubt, the terms of this Section 3 shall
survive the termination of your employment or engagement with the Company Group,
regardless of the reason for such termination.

4.
NON-COMPETITION AND NON-SOLICITATION FOLLOWING QUALIFIED RETIREMENT

4.1    Consequences for Engaging in Certain Activities Following a Qualified
Retirement. If your employment with the Company Group ends due to your Qualified
Retirement, then you agree that your rights to: (i) receive the shares of the
Common Stock or any other payment or benefit provided to you under the Notice or
these Terms and Conditions with respect to the Retirement Adjusted RSUs; and
(ii) retain the shares of the Common Stock or any other payment or benefit
received by you pursuant to the Notice or these Terms and Conditions with
respect to the Retirement Adjusted RSUs, are expressly conditioned upon your
promise that, during the Term, you shall not engage in: (x) any Competitive
Activity in the Territory, (y) any Prohibited Customer Solicitation in the
Territory, or (z) any Prohibited Employee Solicitation.

4.2    Disclosure of Business Activities Following a Qualified Retirement. If
your employment with the Company Group ends due to your Qualified Retirement,
then you agree that, during the Term, you will: (a) inform the Company in
writing of any business activity in which you engage or are materially planning
to engage that relates to the acquisition or development of, or exploration for,
crude oil or natural gas or any rights in, or with respect to, crude oil or
natural gas; and (b) if you are unsure of whether the pursuit of a particular
business opportunity would involve engaging in business within the Territory,
you will make a written request to the Company to clarify whether the applicable
geographic area related to the business opportunity is within the Territory. Any
notices or requests under this Section 4.2 should be directed to the Company’s
General Counsel.

4.3    Right to Cancellation and Recovery. You specifically acknowledge and
agree that the Company has granted you the TSR Restricted Stock Units described
in the Notice to reward you for your future efforts and loyalty to the Company
Group, and that the TSR Restricted Stock Units provided to you give you the
opportunity to participate in the potential future appreciation of the Company
and further align your interests with the long-term interests of the Company
Group. Accordingly, in the event that, during the Term, you engage in any of the
activities described in parts (x), (y), or (z) of Section 4.1, then the Company
may: (i) refuse to pay or deliver to you any shares

11

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of the Common Stock in settlement of any unpaid Retirement Adjusted RSUs that
would otherwise be paid or that are scheduled to be paid following the date you
engage in such prohibited activity, and such Retirement Adjusted RSUs shall
become automatically null and void; and (ii) if, as of the date you engage in
such prohibited activity, you continue to own any such shares of the Common
Stock previously received in settlement of any Retirement Adjusted RSUs, recover
from you, and you shall pay to the Company, either such shares of the Common
Stock or an amount equal to the aggregate Fair Market Value of such shares of
the Common Stock as of such date; and (iii) if, as of the date you engage in
such prohibited activity, you no longer own any such shares of the Common Stock
previously received in settlement of any Retirement Adjusted RSUs, recover from
you, and you shall pay to the Company, an amount equal to either (A) if such
shares were disposed of in an open market transaction, the proceeds received
from the disposition of such shares or (B) if such shares were disposed of other
than in an open market transaction, the aggregate Fair Market Value of such
shares of the Common Stock as of the date you engage in such prohibited
activity. If you do not pay any such shares or other amount over to the Company
within 20 days of demand, such shares or amount may thereafter bear interest at
the maximum rate permitted by law and you may be liable for all of the Company’s
costs of collection, including reasonable legal fees.

5.
TAX WITHHOLDING.

5.1    Share Withholding. The issuance of shares of Common Stock under Section 2
above is subject to the Company’s collection of all applicable federal, state,
local and foreign tax withholding obligations of the Company. Unless alternative
arrangements are elected by you and permitted by the Committee, in order to
satisfy obligations for the payment of withholding taxes and other tax
obligations related to the TSR Restricted Stock Units, the Company shall reduce
the number of shares of the Common Stock deliverable hereunder with respect to
any Earned RSUs by a number of shares of the Common Stock up to the number of
shares having an aggregate Fair Market Value on the date of withholding that
does not exceed the aggregate amount of such obligations determined based on the
maximum statutory withholding rates in your jurisdiction that may be utilized
without creating adverse accounting treatment with respect to the TSR Restricted
Stock Units. In the event the Company subsequently determines that the aggregate
Fair Market Value of any shares of the Common Stock withheld as payment of any
tax withholding obligation is insufficient to discharge that tax withholding
obligation, then you shall pay to the Company, immediately upon the Company’s
request, the amount of that deficiency.

5.2    Early Tax Payments. To the extent permitted by the Nonqualified Deferred
Compensation Rules, payments may be made to you with respect to TSR Restricted
Stock Units prior to the applicable scheduled payment dates provided in Section
2, on a pro-rata basis in respect of each scheduled payment date, if, as
determined by the Committee in its sole discretion, it would be necessary to pay
employment or other taxes imposed upon the TSR Restricted Stock Units prior to
the scheduled payment date, including (i) the Federal Insurance Contributions
Act (FICA) tax imposed under Sections 3121(a) and 3121(v)(2) of the Code (the
“FICA Amount”), and (ii) the income tax at source

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on wages imposed under Section 3401 of the Code or the corresponding withholding
provisions of applicable state, local or foreign tax laws as a result of the
payment of the FICA Amount and the additional income tax at source on wages
attributable to the pyramiding of Section 3401 of the Code wages and taxes
(together with the FICA Amount, the “Taxes”). For purposes of determining the
amount of such Taxes, you will be considered to pay federal income taxes at the
highest individual rate in effect in the year in which the Taxes will be paid.

6.
NON-TRANSFERABILITY. None of the TSR Restricted Stock Units, the Notice, or
these Terms and Conditions is transferable by you other than by will or by the
laws of descent and distribution.

7.
CAPITAL ADJUSTMENTS AND REORGANIZATIONS. The existence of the TSR Restricted
Stock Units shall not affect in any way the right or power of the Company or its
stockholders to make or authorize any adjustment, recapitalization,
reorganization or other change in its capital structure or its business, engage
in any merger or consolidation, issue any debt or equity securities, dissolve or
liquidate, or sell, lease, exchange or otherwise dispose of all or any part of
its assets or business, or engage in any other corporate act or proceeding.

8.
RSUs DO NOT AWARD ANY RIGHTS OF A STOCKHOLDER. You shall not have the voting
rights or any of the other rights, powers or privileges of a holder of the
Common Stock with respect to the TSR Restricted Stock Units that are awarded
hereby. Only after a share of the Common Stock is issued in exchange for an
Earned RSU will you have all of the rights of a stockholder with respect to such
share of the Common Stock issued in exchange for an Earned RSU.

9.
NO ADVICE REGARDING RSUs. You acknowledge and agree that (a) you are not relying
upon any written or oral statement or representation of or from any member of
the Company Group, or any member of the Company Group’s respective employees,
directors, officers, fiduciaries, trustees, attorneys or agents (collectively,
the “Company Parties”) regarding the tax effects associated with your receipt
and holding of, the lapse of the Forfeiture Restrictions with respect to and the
settlement of the TSR Restricted Stock Units, and (b) in deciding to accept the
TSR Restricted Stock Units, you are relying on your own judgment and the
judgment of the professionals of your choice with whom you have consulted. You
hereby release, acquit and forever discharge the Company Parties from all
actions, causes of action, suits, debts, obligations, liabilities, claims,
damages, losses, costs and expenses of any nature whatsoever, known or unknown,
on account of, arising out of, or in any way related to the tax effects
associated with your receipt and holding of, the lapse of the Forfeiture
Restrictions with respect to and the settlement of the TSR Restricted Stock
Units.

10.
EMPLOYMENT RELATIONSHIP. For purposes of the Notice and these Terms and
Conditions, you shall be considered to be in the continuous employment or
engagement of the Company Group as long as you have an uninterrupted employment
or independent contractor relationship with any member of the Company Group,
except to the extent provided otherwise with respect to the determination of
Qualified Retirement as defined in Section 1.12. The Committee shall determine

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any questions as to whether and when there has been a Separation from Service or
other termination of your employment or other service relationship and the cause
of such Separation from Service or termination under the Plan, and the
Committee’s determination shall be final and binding on all Persons. The
Committee may, in its sole discretion, determine that if you are on leave of
absence for any reason you will be considered to still be in the employ of, or
providing services for, the Company or the Company Group, provided that rights
to the TSR Restricted Stock Units during a leave of absence will be limited to
the extent to which those rights were earned or vested when the leave of absence
began. Records of the Company or other members of the Company Group regarding
your period of service, termination of employment, Separation from Service and
the reason(s) therefor, and other matters shall be conclusive for all purposes
hereunder, unless determined by the Company to be incorrect.

11.
FURNISH INFORMATION. You agree to furnish to the Company all information
requested by the Company to enable it to comply with any reporting or other
requirements imposed upon the Company or any other member of the Company Group
by or under any applicable statute or regulation.

12.
NOT AN EMPLOYMENT AGREEMENT. The Notice and these Terms and Conditions are not
an employment agreement, and no provision of the Notice or these Terms and
Conditions shall be construed or interpreted to create an employment or other
service relationship between you and any member of the Company Group or
guarantee the right to remain employed or engaged by any member of the Company
Group for any specified term.

13.
SECURITIES ACT LEGEND. If you are an officer or affiliate of the Company under
the Securities Act, you consent to the placing on any certificate for the shares
of the Common Stock issued under the Notice an appropriate legend restricting
resale or other transfer of such shares except in accordance with the Securities
Act and all applicable rules thereunder.

14.
LIMIT OF LIABILITY. Under no circumstances will any member of the Company Group
be liable for any indirect, incidental, consequential or special damages
(including lost profits) of any form incurred by any Person, whether or not
foreseeable and regardless of the form of the act in which such a claim may be
brought, with respect to the Plan. No member of the Company Group and no member
of the Board shall be liable for any act, omission or determination taken or
made in good faith with respect to the Notice, the Terms and Conditions or the
TSR Restricted Stock Units granted thereunder.

15.
EXECUTION OF RECEIPTS AND RELEASES. Any payment of cash or any issuance or
transfer of shares of the Common Stock or other property to you, or to your
legal representative, heir, legatee or distributee, in accordance with the
provisions hereof, shall, to the extent thereof, be in full satisfaction of all
claims of such Persons hereunder. The Company may require you or your legal
representative, heir, legatee or distributee, as a condition precedent to such
payment or issuance to execute a release of claims and receipt therefor in such
form as it shall determine.

14

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16.
FUNDING. You shall have no right, title, or interest whatsoever in or to any
assets of the Company or any investments that the Company may make to aid it in
meeting its obligations under the Notice and the Terms and Conditions. Your
right to receive payments under the Notice and the Terms and Conditions shall be
no greater than the rights of an unsecured general creditor of the Company.

17.
NO GUARANTEE OF INTERESTS. The Board and the Company do not guarantee the Common
Stock of the Company from loss or depreciation.

18.
SUCCESSORS. These Terms and Conditions and the Notice shall be binding upon you,
your legal representatives, heirs, legatees and distributees, and upon the
Company, its successors and assigns.

19.
SEVERABILITY. If any provision (or part thereof) of these Terms and Conditions
or the Notice is held to be illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining provisions (or parts thereof) hereof,
but such provision (or part thereof) shall be fully severable and these Terms
and Conditions and the Notice shall be construed and enforced as if the illegal
or invalid provision (or part thereof) had never been included. The parties
agree to cooperate in any revision of the Notice or these Terms and Conditions
that may be necessary to meet the requirements of the law. The parties further
agree that a court may revise any provision of the Notice or these Terms and
Conditions to render the Notice or these Terms and Conditions enforceable to the
maximum extent possible.

20.
GOVERNING LAW. All questions arising with respect to the provisions of these
Terms and Conditions and the Notice shall be determined by application of the
laws of Delaware, without giving any effect to any conflict of law provisions
thereof, except to the extent Delaware state law is preempted by federal law.
The Company is incorporated in Delaware and Delaware has a substantial
relationship to the Company and the issuance of the Award provided pursuant to
the Notice and these Terms and Conditions. There is a reasonable basis for this
choice of Delaware law, as Delaware law is well known to the Company and
well-developed with respect to the subject matters of the Notice and these Terms
and Conditions. Further, the designation of Delaware law and the interpretation
and application of these Terms and Conditions and the Notice consistent with
principles of Delaware law assures uniformity, certainty, and predictability in
the application of the Plan through which the TSR Restricted Stock Units are
granted. The obligation of the Company to sell and deliver the Common Stock is
subject to applicable laws and to the approval of any governmental authority
required in connection with the authorization, issuance, sale, or delivery of
such Common Stock.

21.
CONSENT TO JURISDICTION AND VENUE. You hereby consent and agree that the state
courts located in Montgomery County, Texas and the United States District Court
for the Southern District of Texas each shall have personal jurisdiction and
proper and exclusive venue with respect to any dispute between you and the
Company arising in connection with the TSR Restricted Stock Units, these Terms
and Conditions, or the Notice. In any dispute with the Company, you will not
raise, and you hereby expressly waive, any objection or defense to such
jurisdiction as an inconvenient forum.

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22.
AMENDMENT. Except as provided in Section 19, these Terms and Conditions and the
Notice may be amended or waived by the Committee in writing at any time
(including for the avoidance of doubt, any provisions of Section 3 or 4 or any
related definitions); provided, that no such amendment shall adversely affect
the TSR Restricted Stock Units in any material way, without your written
consent.

  
23.
ELECTRONIC DELIVERY AND ACCEPTANCE. The Company may, in its sole discretion,
decide to deliver any documents related to the Award or future awards that may
be granted under the Plan, if any, by electronic means or to request that you
consent to participate in the Plan by electronic means. You hereby consent to
receive such documents by electronic delivery and, if requested, to participate
in the Plan through an online or electronic system established and maintained by
the Company or another third party designated by the Company.

24.
SECTION 409A COMPLIANCE. Notwithstanding any provisions of the Notice or these
Terms and Conditions to the contrary, all provisions of the Notice and these
Terms and Conditions are intended to comply with the Nonqualified Deferred
Compensation Rules, or an exemption therefrom, and shall be interpreted,
construed and administered in accordance with such intent. Any payments under
the Notice or these Terms and Conditions that may be excluded from the
Nonqualified Deferred Compensation Rules (due to qualifying as a short-term
deferral or otherwise) shall be excluded from the Nonqualified Deferred
Compensation Rules to the maximum extent possible. Notwithstanding the
foregoing, the Company makes no representations that the payments and benefits
provided under the Notice and these Terms and Conditions are exempt from, or
compliant with, the Nonqualified Deferred Compensation Rules and in no event
shall the Company be liable for all or any portion of any taxes, penalties,
interest or other expenses that may be incurred by you on account of
non-compliance with the Nonqualified Deferred Compensation Rules.

25.
CLAWBACK. The Award shall be subject to the clawback provisions set forth in
Section 9(l) of the Plan.

26.
MISCELLANEOUS. The Notice is awarded pursuant to and is subject to all of the
terms and conditions of the Plan (including any amendments thereto) and these
Terms and Conditions. In the event of a conflict between these Terms and
Conditions, the Plan and the Notice, the Plan provisions will control. The term
“you” and “your” refer to the Awardee named in the Notice. Capitalized terms
that are not defined herein shall have the meanings ascribed to such terms in
the Plan or the Notice.

27.
INTERPRETATION. Titles and headings to Sections hereof are for the purpose of
reference only and shall in no way limit, define or otherwise affect the
provisions hereof. Unless the context requires otherwise, all references herein
to an agreement, instrument or other document shall be deemed to refer to such
agreement, instrument or other document as amended, supplemented, modified and
restated from time to time to the extent permitted by the provisions thereof.
The word “or” as used herein is not exclusive and is deemed to have the meaning
“and/or.” The words “herein”, “hereof”, “hereunder” and other compounds of the
word “here” shall refer to the entire Notice, Plan and Terms

16

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and Conditions and not to any particular provision hereof. The use herein of the
word “including” following any general statement, term or matter shall not be
construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not non-limiting language (such as “without limitation”,
“but not limited to”, or words of similar import) is used with reference
thereto, but rather shall be deemed to refer to all other items or matters that
could reasonably fall within the broadest possible scope of such general
statement, term or matter.

17

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EXHIBIT A
retirementeligibilitya02.jpg [retirementeligibilitya02.jpg]

A-1

--------------------------------------------------------------------------------

EXHIBIT B
POSITION TYPE FOR DURATION OF NON-COMPETITION &
NON-SOLICITATION REQUIREMENTS

Position Type
Officer
All officers
Non-Officer Employee
All non-officer employees

B-1