Exhibit 10.4

 

LAREDO PETROLEUM, INC.

OMNIBUS EQUITY INCENTIVE PLAN

PERFORMANCE SHARE UNIT AWARD AGREEMENT

 

This Performance Share Unit Award Agreement (“Agreement”) is made as of
                , by and between Laredo Petroleum, Inc. (the “Company”) and
                 (the “Participant”).

 

W I T N E S S E T H :

 

WHEREAS, the Participant is currently an employee of the Company, and the
Company desires to have the Participant remain in such capacity and to afford
the Participant the opportunity to participate in the potential increase in
value of the Company over the Performance Period (as defined below).

 

NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto agree as follows:

 

1.                                      Grant of Performance Share Units. 
Subject to the restrictions, terms and conditions set forth herein and in the
Company’s Omnibus Equity Incentive Plan (the “Plan”), the Company hereby grants
to the Participant                  performance share units (the “Performance
Share Units”, or the “Award”). The provisions of the Plan are incorporated
herein by reference, and all capitalized terms not otherwise defined herein
shall have the same meaning as set forth in the Plan.  In the event of any
inconsistency between the provisions of the Plan and this Agreement, the
provisions of this Agreement shall govern and control.

 

The Performance Share Units will be payable, if at all, solely in common stock
of the Company (“Stock”) (other than the settlement in cash of any fractional
share values), based upon the achievement by the Company of the Performance
Goals as described on Exhibit A, over a three (3) year period commencing
January 1, 2016 and ending on December 31, 2018 (the “Performance Period”).  The
date on which the Performance Period ends either (i) on account of the end of
the Performance Period or, if earlier, (ii) due to the Participant’s termination
as set forth in Section 4(b) of this Agreement is referred to herein as the
“Maturity Date.” The Participant’s right in the Performance Share Units shall
vest on February 19, 2019 (the “Vest Date”); provided, however that if the
Maturity Date is on or prior to December 31, 2018, then such Maturity Date shall
be considered the Vest Date.

 

The specific Performance Goals described on Exhibit A were established by the
Compensation Committee of the Company.  Subject to the other terms and
conditions of this Agreement and the Plan, payment of the Performance Share
Units will only be made if the Administrator certifies, following the close of
the Performance Period, that the pre-established threshold Performance Goals
have been exceeded in whole or in part on the Maturity Date and that the
Participant is still employed by the Company on the Vest Date, and then only to
the extent of the level of performance so certified as having been achieved.

 

1

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

 

2.                                      Form of Payment.  Except with respect to
cash payments for fractional shares, the Award earned by reason of the
Administrator’s certification as described above will be payable in Stock to the
Participant (or the Participant’s beneficiary, or personal administrator in the
case of your death or Disability) in the calendar year following the Maturity
Date sometime following the Vest Date and on or before March 15 of such calendar
year.  The amount of Stock to be paid will be determined by multiplying the
number of Performance Share Units set forth in paragraph 1 by the Total
Shareholder Return Modifier (such resulting number, the “Award Amount”). The
Participant shall receive a number of shares of Stock equal to the Award Amount.
For purposes of this paragraph, the Total Shareholder Return Modifier means the
percentage, if any, achieved by attainment of the Relative TSR Performance Goals
for the Performance Period in accordance with the schedule set forth on
Exhibit A, as certified by the Administrator.

 

3.                                      Transferability.  This Award shall not
be transferable otherwise than by will or the laws of descent and distribution. 
Any attempt by the Participant (or in the case of the Participant’s death or
Disability, the Participant’s beneficiary or personal administrator) to assign
or transfer the Award, either voluntarily or involuntarily, contrary to the
provisions hereof, shall be null and void and without effect and shall render
the Award itself null and void.

 

4.                                      Forfeiture Provisions.  The following
forfeiture provisions shall apply to the Performance Share Units:

 

(a)                                 If the Participant’s employment with the
Company or any if its Subsidiaries is terminated by the Company or such
Subsidiary for any reason, with or without Cause, or the Participant resigns (in
either case, other than as set forth in Section 4(b) below) prior to the Vest
Date, then no amount shall be paid in respect of the Award.

 

(b)                                 If the Participant’s employment with the
Company or any Subsidiary is terminated (i) by reason of the Participant’s death
or (ii) because the Participant is determined by the Board or the Administrator
to be subject to a Disability, then the Participant shall be eligible to receive
a pro-rated Award, taking into account the time that the Participant was
employed during the Performance Period prior to the date of such termination.
Any amount payable pursuant to this paragraph 4 shall be paid in accordance with
Sections 1 and 2.

 

5.                                      Compliance with Section 162(m).  The
Administrator shall exercise its discretion with respect to this Award in all
cases so as to preserve the deductibility of payments under the Award against
disallowance by reason of Section 162(m) of the Code.

 

6.                                      Withholding.  The Company shall be
obligated to withhold amounts sufficient to satisfy any tax withholding or
similar withholding obligations to which the Company or its Subsidiaries may be
subject by reason of payment under this Award.  The Participant expressly
acknowledges and agrees that the Participant’s rights hereunder are subject to
this obligation of the Company regarding any applicable taxes required to be
withheld in connection with the Award, in a form and manner satisfactory to the
Company.

 

2

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

 

7.                                      No Right to Continued Employment.  This
Agreement does not confer upon the Participant any right to continuance of
employment by the Company, nor shall it interfere in any way with the right of
the Company to terminate the Participant’s employment at any time.

 

8.                                      Terms of Issuance.  The Participant
acknowledges being subject to all terms, conditions and policies contained in
the Company’s Employee Manual, as the same may be amended or modified from
time-to-time at the sole discretion of the Company.

 

9.                                      Notice. Every notice or other
communication relating to this Agreement shall be in writing, and shall be
mailed to or delivered to the party for whom it is intended at such address as
may from time to time be designated in a notice mailed or delivered to the other
party as provided herein; provided that, unless and until some other address be
so designated, all notices or communications by the Participant to the Company
shall be mailed or delivered to the Company at its Tulsa, Oklahoma, office and
all notices or communications by the Company to the Participant may be given to
the Participant personally or mailed to the Participant’s home address as
reflected on the books of the Company.

 

10.                               Administration.  This Agreement and the
issuance of Stock contemplated hereunder shall be administered by Board or a
committee of one or more members of the Board appointed by the Board to
administer this Agreement and such issuance (the “Administrator”).  Subject to
applicable law, the Administrator shall have the sole and plenary authority to:
(i)  interpret, administer, reconcile any inconsistency in, correct any defect
in and/or supply any omission in this Agreement; (ii) establish, amend, suspend,
or waive any rules and regulations and appoint such agents as the Administrator
shall deem appropriate for the proper administration of this Agreement;
(iii) accelerate the lapse of restrictions on Stock; and (iv) make any other
determination and take any other action that the Administrator deems necessary
or desirable for the administration of this Agreement.  The Administrator may
delegate to one or more officers of the Company the authority to act on behalf
of the Administrator with respect to any matter, right, obligation, or election
that is the responsibility of or that is allocated to the Administrator herein,
and that may be so delegated as a matter of law. For the avoidance of doubt, in
the event of a Change of Control (as defined in the Plan) the provisions of the
Plan shall apply, including, without limitation, with regard to the vesting of
Performance Share Units, payment amount and payment timing.

 

11.                               Governing Law.  THIS AGREEMENT IS GOVERNED BY
AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE.  EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

 

3

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

 

12.                               Miscellaneous.

 

(a)                                 Amendment and Waiver.  The provisions of
this Agreement may be amended, modified or waived only with the prior written
consent of the Company and the Participant, and no course of conduct or failure
or delay in enforcing the provisions of this Agreement shall be construed as a
waiver of such provisions or affect the validity, binding effect or
enforceability of this Agreement or any provision hereof.

 

(b)                                 Severability.  Any provision in this
Agreement which is prohibited or unenforceable in any jurisdiction by reason of
applicable law shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating or affecting the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

(c)                                  Entire Agreement and Effectiveness.  This
Agreement embodies the complete agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.

 

(d)                                 Counterparts.  This Agreement may be
executed in one or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same Agreement.

 

(e)                                  Headings.  The paragraph headings have been
inserted for purposes of convenience and shall not be used for interpretive
purposes.

 

(f)                                   Gender and Plurals.  Whenever the context
may require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice versa.

 

(g)                                  Successors and Assigns.  This Agreement
shall bind and inure to the benefit of and be enforceable by and against the
Participant, the Company and their respective successors, allowable assigns,
heirs, representatives and estates, as the case may be.

 

(h)                                 Construction.  Where specific language is
used to clarify by example a general statement contained herein, such specific
language shall not be deemed to modify, limit or restrict in any manner the
construction of the general statement to which it relates.  The language used in
this Agreement shall be deemed to be the language chosen by the parties to
express their mutual intent, and no rule of strict construction shall be applied
against any party.

 

(i)                                     Survival of Representations, Warranties
and Agreements.  All representations, warranties and agreements contained herein
shall survive the consummation of the transactions contemplated hereby and the
termination of this Agreement.

 

(j)                                    WAIVER OF PUNITIVE AND EXEMPLARY DAMAGE
CLAIMS.  EACH PARTY, BY EXECUTING THIS AGREEMENT, WAIVES, TO THE FULLEST EXTENT

 

4

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

 

ALLOWED BY LAW, ANY CLAIMS TO RECOVER PUNITIVE, EXEMPLARY OR SIMILAR DAMAGES NOT
MEASURED BY THE PREVAILING PARTY’S ACTUAL DAMAGES IN ANY DISPUTE OR CONTROVERSY
ARISING UNDER, RELATING TO OR IN CONNECTION WITH THIS AGREEMENT.

 

(k)                                 Delivery of Laredo Petroleum, Inc.
Prospectus dated May 25, 2016. Participant acknowledges that Participant has
been provided a copy of the Company’s prospectus related to the Company’s
Omnibus Equity Incentive Plan through such prospectus’ availability on the
Company’s shared network drive, at S:\Omnibus Equity Incentive Plan Prospectus. 
A copy will also be provided to Participant, upon Participant’s written request
to the Company

 

13.                               Section 409A.  Notwithstanding any of the
foregoing, it is intended that this Agreement comply with, or be exempt from,
the provisions of Section 409A of the Code and that this Award not result in
unfavorable tax consequences to the Participant under Section 409A of the Code. 
This Agreement will be administered and interpreted in a manner consistent with
such intent.  Notwithstanding anything contained herein to the contrary, to the
extent required in order to avoid accelerated taxation and/or tax penalties
under Section 409A of the Code, the Participant shall not be considered to have
terminated employment with Company for purposes of this Agreement and no
payments shall be due to him or her under this Agreement which are payable upon
his or her termination of employment until he or she would be considered to have
incurred a “separation from service” from the Company within the meaning of
Section 409A of the Code.  To the extent required in order to avoid accelerated
taxation and/or tax penalties under Section 409A of the Code, amounts that would
otherwise be payable and benefits that would otherwise be provided to a
“specified employee” pursuant to this Agreement during the six-month period
immediately following the Participant’s termination of employment shall instead
be paid within 30 days following the first business day after the date that is
six months following his or her termination of employment (or upon his death, if
earlier).  In addition, for purposes of this Agreement, each amount to be paid
or benefit to be provided to the Participant pursuant to this Agreement shall be
construed as a separate identified payment for purposes of Section 409A of the
Code.  Notwithstanding any of the foregoing to the contrary, the Company and its
respective officers, directors, employees, or agents make no guarantee that the
terms of this Agreement as written comply with, or are exempt from, the
provisions of Section 409A of the Code, and none of the foregoing shall have any
liability for the failure of the terms of this Agreement as written to comply
with, or be exempt from, the provisions of Section 409A of the Code.

 

14.                               Clawback.  The Participant acknowledges and
agrees that payments made under this Agreement are subject to clawback if such
payments are made (i) on account of fraud or misconduct by the Participant,
(ii) following an accounting restatement under certain circumstances (as
referenced in the Company’s Omnibus Equity Incentive Plan) or (iii) as may be
required by any other policy of the Company which may now exist or hereafter be
adopted regarding repayment of incentive-based compensation, as may be in effect
from time to time.

 

5

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

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.

 

 

COMPANY:

 

 

 

LAREDO PETROLEUM, INC.

 

 

 

 

 

 

 

Randy A. Foutch

 

Chairman & CEO

 

 

 

PARTICIPANT:

 

 

 

 

 

 

 

Name:

 

6

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

 

Exhibit A

 

Performance Goals

 

Start of Performance Period — End of Performance Period

 

The Performance Goals established by the Compensation Committee of the Company
are based on the Company’s relative three year total shareholder return (“TSR”)
over the Performance Period measured against the Company’s Peer Group.  The
final number of shares associated with each Performance Share Unit granted at
the Maturity Date can range from 0% to 200% (rounded to the nearest tenth
decimal point) of the target amount in accordance with the following chart:

 

 

 

Relative TSR Performance Goal

 

TSR Modifier

 

 

 

 

 

 

 

Below Threshold

 

Below 40th percentile

 

0

%

Threshold

 

40th percentile

 

50

%

Target

 

60th percentile

 

100

%

Maximum

 

80th percentile

 

200

%

 

The Committee will interpolate all points between the Threshold and the Maximum
Performance Goal. In the event that the Start Average Stock Price is greater
than the End Average Stock Price plus Dividends then, unless otherwise
determined by the Board, Committee or the Administrator, the TSR modifier shall
be no greater than 150%.

 

TSR is calculated on the basis of the following formula:

 

End Average Stock Price plus Dividends*  — Start Average Stock Price

TSR                         
=                                                                                                                                                                                      
Start Average Stock Price

 

with the Start Average Stock Price being the average closing stock price for the
first 30 trading days of calendar year 2016 and the End Average Stock Price
being the average closing stock price for the 30 trading days immediately
preceding the Maturity Date, as reported on the stock exchange on which such
shares are listed.

 

The Peer Group consists of the following companies:**

 

QEP Resources, Inc.

 

Clayton Williams Energy, Inc.

Concho Resources, Inc.

 

Diamondback Energy, Inc.

SM Energy Co.

 

Parsley Energy, Inc.

Cimarex Energy Co.

 

RSP Permian, Inc.

EP Energy Corp.

 

Whiting Petroleum Corp.

Energen Corp.

 

 

 

7

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

 

·                  Dividends shall be assumed to be reinvested, as applicable

 

·                  ** the Board, Committee or Administrator may, in its good
faith, substitute or set a specific applicable price in the event of a
liquidation, bankruptcy, dissolution, merger, acquisition or similar event
affecting any peer company in accordance with then current policy.

 

8

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