.

Exhibit 10.1

 

CONCHO RESOURCES INC.

2015 STOCK INCENTIVE PLAN

 

PERFORMANCE UNIT AWARD AGREEMENT

JANUARY 2, 2018

  

To:       E. Joseph Wright

 

            Concho Resources Inc., a Delaware corporation (the “Company”), is
pleased to grant you an award (the “Award”) consisting of an aggregate of 11,253
performance units (each, a “Performance  Unit”) that have a performance period
beginning on January 1, 2018 through December 31, 2020 (the “Performance 
Period”). The Award is subject to your acceptance of and agreement to all the
applicable terms, conditions and restrictions described in this Performance Unit
Award Agreement (this “Agreement”) and the Concho Resources Inc. 2015 Stock
Incentive Plan (as such plan may be amended or restated thereafter from time to
time, the “Plan”). A copy of the Plan is available upon request. To the extent
that any provision of this Agreement conflicts with the expressly applicable
terms of the Plan, you acknowledge and agree that those terms of the Plan shall
control and, if necessary, the applicable provisions of this Agreement shall be
deemed amended so as to carry out the purpose and intent of the Plan. The
Performance Units contemplated herein are granted as Performance Awards under
the Plan and are subject to the award limitations applicable to awards
denominated in shares of the Company’s common stock (the “Common  Stock”) that
are set forth in Paragraph V(a) of the Plan.

 

Terms that have their initial letters capitalized, but that are not otherwise
defined in this Agreement, shall have the meanings given to them in the Plan in
effect as of the date of this Agreement. In addition to the terms defined in the
body of this Agreement, the following capitalized words and terms shall have the
meanings indicated below:

 

(a)        “Employment Agreement” means that certain Employment Agreement
between you and the Company as in effect on the date of this Agreement,
including as amended by (i) that certain First Amendment to Employment Agreement
between you and the Company dated as of November 19, 2010, and (ii) that certain
Retirement Agreement between you and the Company entered into as of May 17,
2017.

 

(b)        “Retirement Date” shall have the meaning assigned to such term under
the Employment Agreement.

 

            This Agreement sets forth the terms of the agreement between you and
the Company with respect to the Performance Units. By accepting this Agreement,
you agree to be bound by all of the terms hereof.

 

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            1.         Overview of Performance Units. 

 

            (a)        Performance Units Generally. Each Performance Unit
represents a contractual right to receive one share of Common Stock, subject to
the terms and conditions of this Agreement; provided that, based on the
achievement of the performance objective outlined in Section 2 hereof (the
“Performance  Objective”), the number of shares of Common Stock that may be
deliverable hereunder in respect of the Performance Units may range from 0% to
300% of the number of Performance Units stated in the preamble to this Agreement
(such stated number of Performance Units hereafter called the “Initial 
Performance  Units”). Your right to receive Common Stock in respect of
Performance Units is generally contingent, in whole or in part, upon (i) the
achievement of the Performance Objective and (ii) except as provided in Section
4(a) or Section 5 hereof, your continued employment with the Company through the
end of the Performance Period.

 

            (b)        Dividend Equivalents. With respect to each outstanding
Performance Unit, the Company shall credit a book entry account with an amount
equal to the amount of any cash dividend paid during the Performance Period on
one share of Common Stock. The amount credited to such book entry account shall
be payable to you at the same time or times, and subject to the same terms and
conditions as are applicable to, your Performance Units; provided that, if more
than the Initial Performance Units shall become payable in accordance with this
Agreement, then the maximum amount payable in respect of such dividend
equivalents shall be the amount credited to your book entry account. Dividends
and distributions payable on Common Stock other than in cash shall have a value
equal to the amount of such dividends reported by the issuer to its shareholders
for purposes of Federal income taxation and will be addressed in accordance with
Section 9 hereof.

 

            2.         Performance Objective. The Performance Objective with
respect to the Initial Performance Units is based on both (a) the Total
Shareholder Return achieved by the Company relative to the Peer Companies (as
defined below) for the Performance Period (the “Relative Total Shareholder
Return”) and (b) the absolute annualized Total Shareholder Return achieved by
the Company for the Performance Period (the “Absolute Total Shareholder
Return”). “Total Shareholder Return” shall mean, as to the Company and each of
the Peer Companies, the percentage rate of return shareholders receive through
stock price changes and the receipt of cash dividends paid over the Performance
Period, determined in accordance with the following formula:  (Closing Value
minus  Initial Value plus  Cash Dividends) divided by Initial Value, where:

 

Closing Value means the average of the closing stock prices of the Company or
such Peer Company, as applicable, on each trading day during the period
beginning on the first day of the calendar month in which the last day of the
Performance Period occurs and ending on the last day of the Performance Period;
provided, however, that if a Peer Company ceases to have a class of common
equity securities listed to trade under Section 12(b) or Section 12(g) of the
Exchange Act during the Performance Period (determined after any applicable
adjustment by the Committee pursuant to Section 9 hereof), then the Total
Shareholder Return for such Peer Company shall be determined by the Committee as
provided in the preceding provisions of this sentence but, from and after the
date of

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such cessation, the price per share of such Peer Company’s common stock shall be
deemed to be equal to the price per share of such common stock immediately prior
to such cessation increased by the interest that would be earned on such amount
if it were invested in U.S. Treasury securities of approximate equal duration to
the portion of the Performance Period remaining after such cessation.
Notwithstanding the foregoing, if Total Shareholder Return for the Company is
required to be determined for purposes of Section 5(a) hereof, then the Closing
Value with respect to the Company shall mean the fair market value (as
determined in good faith by the Committee) of the consideration received by the
stockholders of the Company with respect to each share of Common Stock as of the
effective time of the Change of Control (as defined in Section 5(e) hereof);
provided, however, that if such Change of Control is effected in a manner that
does not result in the stockholders of the Company receiving consideration in
exchange for their Common Stock, then such Closing Value shall mean the Fair
Market Value on the Change of Control Date (as defined in Section 5 hereof).

Initial Value means the average of the closing stock prices of the Company or
such Peer Company, as applicable, on each trading day in the calendar month
immediately preceding the first day of the Performance Period. The Initial Value
of the Common Stock to be used to determine the Company’s Total Shareholder
Return over the Performance Period is $142.96 per share.

Cash Dividends means the aggregate amount of cash dividends per share paid over
the Performance Period by the Company or such Peer Company, as applicable.

Achievement with respect to the portion of the Performance Objective that is
based on Relative Total Shareholder Return shall be determined by the Committee
based on the Company’s relative ranking in respect of the Performance Period
with regard to Total Shareholder Return as compared to Total Shareholder Return
of the Peer Companies, and shall be a percentage determined in accordance with
the table set forth in Appendix A hereto. A company shall be a “Peer Company” if
it is one of the companies listed on Appendix A hereto. Achievement with respect
to the portion of the Performance Objective that is based on Absolute Total
Shareholder Return shall be determined by the Committee based on the Company’s
annualized Total Shareholder Return achieved over the Performance Period, and
shall be a percentage determined in accordance with the provisions set forth in
Appendix A hereto. As soon as administratively practicable following the end of
the Performance Period (but in no event later than the 15th day of the third
calendar month following the calendar month in which the Performance Period
ends), the Committee shall certify whether and to the extent that the
Performance Objective has been achieved and will determine the number of
Performance Units, if any, determined to be earned for the Performance Period
(which number of Performance Units shall equal the product of the Initial
Performance Units (subject to adjustment as set forth in Section 9 hereof)
multiplied by the percentage determined with respect to Relative Total
Shareholder Return pursuant to the table set forth in Appendix A hereto
multiplied by the percentage determined with respect to Absolute Total
Shareholder Return in accordance with the provisions set forth in Appendix A
hereto). The number of Performance Units, if any, determined by the Committee to
be earned pursuant to the preceding provisions of this Section 2 shall be
referred to as the “Earned Performance Units.” 

 

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            3.         Conversion of Performance Units; Delivery of Common Stock
with respect to Performance Units. Unless an earlier date applies pursuant to
Section 5(c) hereof, payment in respect of Earned Performance Units shall be
made not later than the 15th day of the third calendar month following the
calendar month in which the Performance Period ends. All payments in respect of
Earned Performance Units shall be made in freely transferable shares of Common
Stock. Neither this Section 3 nor any action taken pursuant to or in accordance
with this Section 3 shall be construed to create a trust of any kind. Any shares
of Common Stock issued to you pursuant to this Agreement in settlement of Earned
Performance Units shall be in book entry form registered in your name. Any
fractional Earned Performance Units shall be rounded up to the nearest whole
share of Common Stock.

 

            4.         Termination of Employment. 

 

            (a)        Death, Disability or Retirement. In the event that your
employment with the Company terminates during the Performance Period due to your
death, due to your Disability (as defined below), or, subject to the provisions
of Section 4(d) hereof, on your Retirement Date by reason of your retirement as
provided in Section 3.1 of the Employment Agreement, then you shall be deemed to
have earned, as of the end of the Performance Period, that number of Performance
Units equal to the number of Earned Performance Units that you would have earned
in accordance with Section 2 hereof had you remained employed through the end of
the Performance Period. Any portion of your Performance Units that is eligible
to be earned pursuant to the preceding sentence, but is not earned as of the end
of the Performance Period, shall terminate and be canceled upon the expiration
of the Performance Period.  Distribution of shares of Common Stock in respect of
the Performance Units determined to be earned by reason of this Section 4(a)
shall be made at the time provided in Section 3 hereof.

 

            (b)        Other Termination of Employment. Unless otherwise
determined by the Committee at or after grant, in the event that your employment
with the Company terminates prior to the end of the Performance Period for any
reason other than those listed in Section 4(a) hereof, all of your Performance
Units shall terminate and automatically be canceled upon such termination of
employment.

 

            (c)        Definition of Disability. As used in this Agreement, the
term “Disability” shall mean that as a result of your incapacity due to physical
or mental illness, you shall have been absent from the full-time performance of
your duties for six consecutive months, and you shall not have returned to
full-time performance of your duties within 30 days after written notice of
termination is given to you by the Company (provided, however, that such notice
may not be given prior to 30 days before the expiration of such six-month
period).

            (d)       Release Requirement.  Notwithstanding the provisions of
Section 4(a) hereof, if (i) your employment with the Company terminates on the
Retirement Date by reason of your retirement as provided in Section 3.1 of the
Employment Agreement and (ii) either (1) you fail to timely execute the release
described in Section 5.10(c) of the Employment Agreement or (2) you revoke such
release in a timely manner in accordance with the provisions of such release,
then, pursuant to Section 5.10(c) of the Employment Agreement, all of your
Performance Units shall terminate and automatically be canceled effective as of
the Retirement Date.

 

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(e)        Termination of Employment. For all purposes of this Agreement, you
will be considered to have terminated from employment with the Company when you
incur a “separation from service” within the meaning of Section 409A(a)(2)(A)(i)
of the Code and applicable administrative guidance thereunder; provided,
however, that whether such a separation from service has occurred shall be
determined based upon a reasonably anticipated permanent reduction in the level
of bona fide services to be performed to no more than 49% of the average level
of bona fide services provided in the immediately preceding 36 months.

 

            5.         Change of Control. Notwithstanding the provisions of
Section 1 through Section 4 hereof or the terms of any employment agreement
between you and the Company or any Affiliate, if you have been continuously
employed from the grant date specified above until the date that a Change of
Control (as defined below) occurs (the “Change of Control Date”), then upon the
occurrence of a Change of Control your rights in respect of the Performance
Units shall be determined as provided in Section 5(a) hereof. If your employment
shall have terminated prior to the Change of Control Date, but your Performance
Units remain outstanding pursuant to Section 4(a) hereof, then your rights in
respect of your outstanding Performance Units shall be determined as provided in
Section 5(b) hereof.

 

            (a)        Continuous Employment.  If a Change of Control occurs and
your employment has not terminated prior to the Change of Control Date, then you
will be issued a number of shares of Common Stock equal to the number of
Performance Units that would have become Earned Performance Units in accordance
with the provisions of Section 2 hereof assuming that:

 

            (i)         the Performance Period ended on the Change of Control
Date; and

 

            (ii)        the determination of whether, and to what extent, the
Performance Objective is achieved is based on actual performance against the
stated performance criteria through the Change of Control Date.

            (b)        Prior Termination of Employment.  If your employment
terminated prior to the Change of Control Date, but your Performance Units are
still outstanding on such date pursuant to Section 4(a) hereof, then you shall
receive a number of shares of Common Stock equal to the number of shares of
Common Stock that would have been issued to you determined as though Section
5(a) hereof was applicable to you.

 

            (c)        Time and Form of Payment.  Any shares of Common Stock
issuable pursuant to this Section 5 shall be issued immediately following (and
not later than five business days after) the Change of Control Date and shall be
fully earned and freely transferable as of the Change of Control Date.
Notwithstanding anything else contained in this Section 5 to the contrary (other
than Section 5(d)), if the Change of Control involves a merger, reclassification
or other reorganization or business combination pursuant to which the Common
Stock is exchanged for or converted to stock of the surviving or continuing
corporation in such transaction, the successor or continuing entity to the
Company or the direct or indirect parent of the Company (collectively, the
“Successor Corporation”), then you shall receive, instead of each share of
Common Stock otherwise deliverable hereunder, the same consideration (whether
stock, cash or other property) payable or distributable in such transaction in
respect of a share of Common Stock. Any property distributed pursuant to this
Section 5(c), whether in shares of the Successor

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Corporation or otherwise, shall in all cases be freely transferable without any
restriction (other than any such restriction that may be imposed by applicable
law), and any securities issued hereunder shall be registered to trade under the
Exchange Act, and shall have been registered under the Securities Act of 1933,
as amended (the “Securities Act”). 

 

            (d)       Alternative Form of Payment.  Notwithstanding anything
else contained in this Section 5 to the contrary, the Committee may elect, at
its sole discretion by resolution adopted prior to the Change of Control Date,
to have the Company satisfy your rights in respect of the Performance Units (as
determined pursuant to the foregoing provisions of this Section 5), in whole or
in part, by having the Company make a cash payment to you within five business
days of the Change of Control Date in respect of all such Performance Units or
such portion of such Performance Units as the Committee shall determine. Any
cash payment for any Performance Unit shall be equal to the Fair Market Value of
the number of shares of Common Stock into which it would convert, determined on
the Change of Control Date.

(e)        Definition of Change of Control.  As used in this Agreement, the term
“Change of Control” shall mean:

(i)         a merger of the Company with another entity, a consolidation
involving the Company, or the sale of all or substantially all of the assets of
the Company to another entity if, in any such case, (1) the holders of equity
securities of the Company immediately prior to such transaction or event do not
beneficially own immediately after such transaction or event equity securities
of the resulting entity entitled to 50% or more of the votes then eligible to be
cast in the election of directors generally (or comparable governing body) of
the resulting entity in substantially the same proportions that they owned the
equity securities of the Company immediately prior to such transaction or event
or (2) the persons who were members of the Board immediately prior to such
transaction or event shall not constitute at least a majority of the board of
directors of the resulting entity immediately after such transaction or event;

(ii)        the dissolution or liquidation of the Company;

(iii)       when any person or entity, including a “group” as contemplated by
Section 13(d)(3) of the Exchange Act, acquires or gains ownership or control
(including, without limitation, power to vote) of more than 50% of the combined
voting power of the outstanding securities of the Company; or

(iv)       individuals, who, as of the grant date specified above, constitute
members of the Board (the “Incumbent Board”) cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual
becoming a director subsequent to such grant date whose election, or nomination
for election by the Company’s stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered for purposes of this definition as though such individual was a
member of the Incumbent Board, but excluding, for these purposes, any such
individual whose initial assumption of office as a director occurs as a result
of an actual or threatened election contest with respect to the election or
removal of

 

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directors or other actual or threatened solicitation of proxies or consents by
or on behalf of any individual, entity or group other than the Board.

For purposes of the preceding sentence, (1) “resulting entity” in the context of
a transaction or event that is a merger, consolidation or sale of all or
substantially all assets shall mean the surviving entity (or acquiring entity in
the case of an asset sale) unless the surviving entity (or acquiring entity in
the case of an asset sale) is a subsidiary of another entity and the holders of
common stock of the Company receive capital stock of such other entity in such
transaction or event, in which case the resulting entity shall be such other
entity, and (2) subsequent to the consummation of a merger or consolidation that
does not constitute a Change of Control, the term “Company” shall refer to the
resulting entity and the term “Board” shall refer to the board of directors (or
comparable governing body) of the resulting entity.

6.         Clawback and Forfeiture under Certain Circumstances.  
Notwithstanding any provisions in this Agreement to the contrary, any portion of
the payments and benefits provided under this Agreement or the sale of shares of
Common Stock shall be subject to a clawback to the extent necessary to comply
with applicable law including, without limitation, the requirements of the
Dodd-Frank Wall Street Reform and Consumer Protection Act or any Securities and
Exchange Commission rule. In addition, notwithstanding any provisions herein to
the contrary, the Committee may terminate your Award if it determines that you
have engaged in conduct that would permit the Company to terminate your
employment for cause. For purposes of the preceding sentence, the term “cause”
has the meaning assigned to such term in your employment agreement with the
Company or an Affiliate; provided, however, that in the absence of such an
employment agreement or if such employment agreement does not define the term
“cause,” then “cause” means a determination by the Company that you have (a)
engaged in conduct that is injurious (monetarily or otherwise) to the Company or
any Affiliate (including, without limitation, misuse of any of the Company’s
funds or other property), (b) been convicted of, or pleaded no contest to, or
received adjudicated probation or deferred adjudication in connection with any
felony or any other crime involving fraud, dishonesty or moral turpitude,
(c) breached any material provision of the Plan, this Agreement or any other
written agreement or corporate policy or code of conduct established by the
Company or its Affiliates, (d) engaged in gross negligence or willful misconduct
in the performance of your duties, or (e) refused without proper legal reason to
perform your duties.

            7.         Nontransferability of Awards. The Performance Units
granted hereunder may not be sold, assigned, pledged, exchanged, hypothecated or
otherwise transferred, encumbered or disposed of, other than by will or by the
laws of descent and distribution. Following your death, any shares distributable
(or cash payable) in respect of Performance Units will be delivered or paid, at
the time specified in Section 3 hereof or, if applicable, Section 5 hereof, to
your beneficiary in accordance with, and subject to, the terms and conditions
hereof and of the Plan.

 

            8.         Beneficiary Designation. You may from time to time name
any beneficiary or beneficiaries (who may be named contingently or successively)
to whom shall be delivered or paid under this Agreement following your death any
shares that are distributable or cash payable hereunder in respect of your
Performance Units at the time specified in Section 3 hereof or, if applicable,
Section 5 hereof. Each designation will revoke all prior designations, shall be
in a form prescribed by the Committee, and will be effective only when filed in
writing with the

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Committee during your lifetime. In the absence of any such effective
designation, shares issuable and cash payable in connection with your death
shall be paid to your surviving spouse, if any, or otherwise to your estate.

 

            9.         Adjustments in Respect of Performance Units. In the event
of any common stock dividend or common stock split, recapitalization (including,
but not limited to, the payment of an extraordinary dividend), merger,
consolidation, combination, spin-off, distribution of assets to stockholders,
exchange of shares, or other similar corporate change with regard to the Company
or any Peer Company (other than the payment of cash dividends), appropriate
adjustments shall be made by the Committee to the Initial Value of the
corresponding common stock, and, if any such event occurs with respect to the
Company, in the aggregate number of Performance Units subject to this Agreement.
The Committee’s determination with respect to any such adjustment shall be
conclusive.

 

            10.       Effect of Settlement. Upon conversion into shares of
Common Stock (or Successor Corporation common stock) pursuant to Section 3 or
Section 5 hereof, a cash settlement of your rights, at the election of the
Committee at its sole discretion pursuant to Section 5(d) hereof, or a
combination of the issuance of Common Stock and the payment of cash in
accordance with any applicable provisions of this Agreement, all of your
Performance Units subject to the Award shall be cancelled and terminated. If and
to the extent that you are still employed at the end of the Performance Period,
and none of your Performance Units shall have become earned in accordance with
the terms of this Agreement, all such Performance Units subject to the Award
shall be cancelled and terminated.

 

            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 by or under any
applicable statute or regulation.

 

            12.       Remedies. The parties to this Agreement shall be entitled
to recover from each other reasonable attorneys’ fees incurred in connection
with the enforcement of the terms and provisions of this Agreement whether by an
action to enforce specific performance or for damages for its breach or
otherwise.

 

            13.       Information Confidential. As partial consideration for the
granting of the Award hereunder, you hereby agree with the Company that you will
keep confidential all information and knowledge, except that which has been
disclosed in any public filings required by law, that you have relating to the
terms and conditions of this Agreement; provided, however, that such information
may be disclosed as required by law and may be given in confidence to your
spouse, tax and financial advisors, or to a financial institution to the extent
that such information is necessary to secure a loan.

 

            14.       Payment of Taxes. The Company may from time to time
require you to pay to the Company (or an Affiliate if you are an employee of an
Affiliate) the amount that the Company deems necessary to satisfy the Company’s
or its Affiliate’s current or future obligation to withhold federal, state or
local income or other taxes that you incur as a result of the Award. With
respect to any required tax withholding, unless another arrangement is permitted
by the

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Company in its discretion, the Company shall withhold from the shares of Common
Stock to be issued to you the number of shares necessary to satisfy the
Company’s obligation to withhold taxes, that determination to be based on the
shares’ Fair Market Value at the time as of which such determination is made. In
the event the Company subsequently determines that the aggregate Fair Market
Value of any shares of 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.

 

            15.       Right of the Company and Affiliates to Terminate Your
Employment. Nothing contained in this Agreement shall confer upon you the right
to continue in the employ of the Company or any Affiliate, or interfere in any
way with the rights of the Company or any Affiliate to terminate your employment
at any time for any or no reason; provided, however, that any such termination
shall be subject to the terms and conditions of any employment agreement between
you and the Company or any Affiliate.

 

            16.       No Liability for Good Faith Determinations. Neither the
Company nor the members of the Board and the Committee shall be liable for any
act, omission or determination taken or made in good faith with respect to this
Agreement or the Performance Units granted hereunder.

 

            17.       No Guarantee of Interests. The Board, the Committee and
the Company do not guarantee the Common Stock of the Company from loss or
depreciation.

 

            18.       Company Records. Records of the Company or its Affiliates
regarding your period of employment, termination of employment and the reason
therefor, leaves of absence, re-employment, and other matters shall be
conclusive for all purposes hereunder, unless determined by the Company to be
incorrect.

 

            19.       Severability. If any provision of this Agreement is held
to be illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining provisions hereof, but such provision shall be fully
severable and this Agreement shall be construed and enforced as if the illegal
or invalid provision had never been included herein.

 

            20.       Notices. Whenever any notice is required or permitted
hereunder, such notice must be in writing and personally delivered or sent by
mail. Any such notice required or permitted to be delivered hereunder shall be
deemed to be delivered on the date on which it is personally delivered, or,
whether actually received or not, on the third business day after it is
deposited in the United States mail, certified or registered, postage prepaid,
addressed to the person who is to receive it at the address which such person
has theretofore specified by written notice delivered in accordance herewith.
The Company or you may change, at any time and from time to time, by written
notice to the other, the address which it or you had previously specified for
receiving notices.

 

            The Company and you agree that any notices shall be given to the
Company or to you at the following addresses:

 

 

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Company:

Concho Resources Inc.

Attn: Corporate Secretary

One Concho Center

600 W. Illinois Avenue

Midland, Texas 79701

 

Holder:            At your current address as shown in the Company’s records.

 

            21.       Waiver of Notice. Any person entitled to notice hereunder
may waive such notice in writing.

 

            22.       Successor. This Agreement shall be binding upon you, your
legal representatives, heirs, legatees and distributees, and upon the Company,
its successors and assigns.

 

            23.       Headings. The titles and headings of Sections and
paragraphs are included for convenience of reference only and are not to be
considered in construction of the provisions hereof.

 

            24.       Governing Law. All questions arising with respect to the
provisions of this Agreement shall be determined by application of the laws of
the State of Texas except to the extent Texas law is preempted by federal law.
The obligation of the Company to sell and deliver Common Stock hereunder is
subject to applicable laws and to the approval of any governmental or regulatory
authority (including any applicable stock exchange) required in connection with
the authorization, issuance, sale, or delivery of such Common Stock.

 

            25.       Execution of Receipts and Releases. Any payment of cash or
any issuance or transfer of shares of 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 and receipt therefor in such form as
it shall determine.

 

            26.       Amendment. This Agreement may be amended at any time
unilaterally by the Company provided that such amendment is consistent with all
applicable laws and does not reduce any rights or benefits you have accrued
pursuant to this Agreement. This Agreement may also be amended at any time
unilaterally by the Company to the extent the Company believes in good faith
that such amendment is necessary or advisable to bring this Agreement into
compliance with any applicable laws, including Section 409A of the Code.

 

            27.       The Plan. This Agreement is subject to all the terms,
conditions, limitations and restrictions contained in the Plan.

 

            28.       Agreement Respecting Securities Act. You represent and
agree that you will not sell the Common Stock that may be issued to you pursuant
to your Performance Units except

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pursuant to an effective registration statement under the Securities Act or
pursuant to an exemption from registration under the Securities Act (including
Rule 144).

 

            29.       No Stockholder Rights. The Performance Units granted
pursuant to this Agreement do not and shall not entitle you to any rights as a
stockholder of Common Stock until such time as you receive shares of Common
Stock pursuant to this Agreement. Your rights with respect to the Performance
Units shall remain forfeitable at all times prior to the date on which rights
become earned in accordance with this Agreement.

 

[Signatures on the following page.]

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If you accept this Performance Unit Award Agreement and agree to its terms and
conditions, please so confirm by signing and returning the duplicate of this
Agreement enclosed for that purpose.

 

Very Truly Yours,

 

                                                            CONCHO RESOURCES
INC.

                                                                         

                                                            By: /s/ Timothy A.
Leach     

                                                            Name:  Timothy A.
Leach

                                                            Title:    Chief
Executive Officer

 

 

ACKNOWLEDGED AND AGREED:

 

 

 

By: /s/ E. Joseph Wright     

      E. Joseph Wright

 

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Appendix A

Determination of Earned Performance Units

A.        Relative Total Shareholder Return

Peer Companies: 

OXY    Occidental Petroleum Corporation

EOG    EOG Resources, Inc.

APC     Anadarko Petroleum Corporation

DVN    Devon Energy Corporation                 

APA     Apache Corporation               

MRO    Marathon Oil Corporation

PXD     Pioneer Natural Resources

CLR     Continental Resources, Inc.

NBL     Noble Energy, Inc.

HES     Hess Corporation

COG    Cabot Oil & Gas Corporation

SWN    Southwestern Energy Company

XEC     Cimarex Energy Co.

RRC     Range Resources Corporation

NFX     Newfield Exploration Company

FANG  Diamondback Energy, Inc.

Determination of Percentage Attributable to Relative Total Shareholder Return: 

The percentage attributable to the achievement of Relative Total Shareholder
Return shall be determined in accordance with the following table based on the
Company’s relative ranking in respect of the Performance Period with regard to
Total Shareholder Return as compared to Total Shareholder Return of the Peer
Companies (straight line interpolation will be used between levels):

 

Company’s Relative Ranking

Applicable Percentage

90th Percentile or Above

200%

70th Percentile

150%

50th Percentile

100%

25th Percentile

50%

Below the 25th Percentile

0%

 

 

 

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B.         Absolute Total Shareholder Return

The percentage attributable to the achievement of Absolute Total Shareholder
Return shall be determined in accordance with the following table based on the
Company’s annualized Total Shareholder Return for the Performance Period:

 

Company’s annualized Total Shareholder Return for the Performance Period

Applicable Percentage

Less than 0%

50%

0% to 15%

100%

Greater than 15%

150%

 

 

 

 

 

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