ex10_39.htm


    
      
        

      
Exhibit 10.39


       

      ROSETTA
RESOURCES INC.

      2005
LONG-TERM INCENTIVE PLAN

      


      PERFORMANCE
SHARE UNIT AWARD AGREEMENT

      


      THIS AGREEMENT, made and entered into
as of the ___ day of [MONTH], [YEAR], is entered into by and between ROSETTA
RESOURCES INC., a Delaware corporation (“Rosetta”), and [NAME], an employee,
outside director or other service provider of Rosetta or one of its Affiliates
(“Participant”).

      


      WHEREAS, the Compensation Committee of
Rosetta’s Board of Directors or such other committee designated by Rosetta’s
Board of Directors (the “Committee”), acting under Rosetta’s 2005 Long-Term
Incentive Plan, as amended from time to time (the “Plan”), has the authority to
award performance awards in the form of performance share units representing
hypothetical shares of Rosetta’s common stock (“PSUs”), with each PSU equal in
value to one share of the Company’s $0.001 par value per share (a “Share”), to
certain employees, directors or other individuals providing services to Rosetta
or an Affiliate; and

      


      WHEREAS, pursuant to the Plan, the
Committee has determined to make such an award to Participant on the terms and
conditions and subject to the restrictions set forth in the Plan and this
Agreement, and Participant desires to accept such award;

      


      NOW, THERFORE, in consideration of the
premises and mutual covenants and agreements contained herein, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

      


      1.         
  Performance Share Unit
Award.  On the terms and conditions and subject to the
restrictions, including forfeiture, hereinafter set forth, Rosetta hereby awards
to Participant, and Participant hereby accepts, a PSU award (the “Award”) of
[NUMBER] PSUs (the “Performance Units”).  The Award is made effective
as of the date of this Agreement (the “Effective Date”).

      


      2.          
  Vesting
and Forfeiture.

      


      (a)           Performance
Period.  The Performance Period in which the Performance
Objectives (as provided in paragraph (b)(i) of this Section 2) are measured
shall begin on [DATE] and end on [DATE].

      


      (b)           Restrictions

      


      (i)            Performance
Objectives.  The interest of the Participants in the
Performance Units shall vest as the Committee determines in its sole discretion,
to the extent that the “Performance Objectives” set forth in Appendix A are met
and after considering other circumstances, if any, that the Committee determines
should apply.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      (ii)           Transfer
Restrictions.  The Performance Units shall be subject to
forfeiture by Participant to Rosetta as provided in this Agreement, and
Participant may not sell, transfer, pledge, exchange, hypothecate or otherwise
dispose of any of the Performance Units, other than by will or pursuant to the
applicable laws of descent and distribution(the “Transfer
Restrictions”).  Following the settlement of the Performance Units for
Shares, as the Committee determines in its discretion, the Participant shall be
free to sell, transfer, pledge, exchange, hypothecate or otherwise dispose of
such Shares, subject to applicable securities laws and the policies of Rosetta
then in effect.  Furthermore, Rosetta shall not be required to treat
as an owner of Performance Units, and associated benefits hereunder, any
transferee to whom such Performance Units or benefits shall have been so
transferred.

      


      (iii)           Service
Requirement.  Except as otherwise provided in this paragraph
(b)(iii) of Section 2, upon termination of Participant’s employment or service
with Rosetta or any Affiliate prior to the time that the Committee certifies the
extent to which the performance goals and other material terms of this Award has
been achieved or satisfied for the Performance Period, Participant shall forfeit
all Performance Units granted under this Award and any rights with respect
thereto (the “Service Requirement”).

      


      (A)           Termination with Good Reason or for
Reasons Other Than Cause.  If during the Performance Period
Participant’s employment is terminated by Rosetta other than for Cause, or by
Participant for Good Reason (“Cause” and/or “Good Reason,” as defined in the
Participant’s employment agreement with the Company, if applicable, or if the
Participant has not entered into an employment agreement with the Company, in
the Rosetta Resources Inc. Executive Severance Plan), the Committee may exercise
its discretion to accelerate the vesting of the Performance Units granted to
such Participant; provided that the condition to such acceleration of vesting
shall be that the Participant executes and delivers to Rosetta, and does not
revoke, a waiver and release agreement in a form satisfactory to Rosetta within
two months of Participant’s date of termination (an “Effective
Release”).

      


      (c)           Vesting

      


      (i)         
  Except for Performance Units that are earlier vested under paragraph
(b)(iii)(A) of this Section 2 or in the event of a Corporate Change (as defined
in the Plan), as provided in paragraph (d) of this Section 2, at the end of the
Performance Period, the Committee shall determine in its sole discretion whether
the Performance Objectives set forth in paragraph (b)(i) of this Section 2 have
been met and the number of Performance Units that will vest in accordance with
the level of achievement of such Performance Objectives.  Participant
may receive from zero percent (0%) to two hundred percent (200%) of the
Performance Units set forth in Section 1.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      (ii)           Upon
the vesting of the Performance Units, Participant shall be entitled to receive,
as soon as administratively practicable, but not later than thirty (30) days
after such vesting event, Shares, cash or a combination of Shares and cash, as
the Committee determines in its sole discretion, equal to the number of
Performance Units that have vested.  If the Performance Units are
settled in cash, in full or in part, prior to the end of the Performance Period,
the cash settlement shall be based upon the Fair Market Value (as defined in the
Plan) of a Share on the date of vesting. If the Performance Units are settled in
cash, in full or in part, after the end of the Performance Period, the cash
value shall be based on the Fair Market Value of a Share as of the last trading
day of the Performance Period.

      


      (d)           Corporate
Change.  After a Corporate Change, the Performance Objectives
shall be deemed to be met at target; provided that the Transfer Restrictions and
Service Requirements will continue until the end of the Performance Period;
provided further that the Service Requirements shall end at the end of the
Performance Period and not at the time when the Committee certifies that the
Performance Objectives have been met.  For the avoidance of doubt,
after a Corporate Change, this grant of Performance Units shall convert to a
time-vested grant of Performance Units, rather than based on the achievement of
Performance Objectives and restrictions on the Performance Units shall lapse as
to the number of Performance Units set forth in Section 1 at the end of the
Performance Period if Participant remains employed by the Company until the end
of the Performance Period, unless earlier vested under paragraph (d)(i) of this
Section 2.

      


      (i)      
     Termination with Good Reason or for
Reasons Other Than Cause after a Corporate Change.  If after a
Corporate Change and prior to the end of the Performance Period Participant’s
employment is terminated by Rosetta other than for Cause, or by Participant for
Good Reason, all Performance Units granted to such Participant in Section 1
hereunder shall immediately be 100% vested conditioned  upon the
Participant providing to Rosetta an Effective Release.

      


      3.           
 No Rights as
Stockholder.

      


      (a)           PSUs
represent hypothetical Shares, subject to attainment of specified performance
conditions.  The Participant shall not be entitled to any of the
rights or benefits generally accorded to stockholders.

      


      (b)           Upon
the lapse of restrictions, if Rosetta determines, in its sole discretion, to
issue a Share for each vested Performance Unit pursuant to paragraph (c)(ii) of
Section 2, such Shares shall be released into an unrestricted book entry account
with Rosetta’s transfer agent; provided, however, that a portion of such Shares
shall be surrendered in payment of required withholding taxes, if necessary and
in accordance with Section 4 below, unless Rosetta, in its sole discretion,
establishes alternative procedures for the payment of required withholding
taxes.

      


      4.         
   Withholding
Taxes.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      (a)           Participant
(or in the event of Participant’s death, the administrator or executor of
Participant’s estate) will pay to Rosetta or the appropriate Affiliate, or make
arrangements satisfactory to Rosetta or such Affiliate regarding payment of, any
federal, state or local taxes of any kind required by law to be withheld with
respect to the cash or Shares in settlement of the Performance
Units.

      


      (b)           Any
provision of this Agreement to the contrary notwithstanding, if Participant does
not satisfy his or her obligations under paragraph (a) of this Section 4,
Rosetta shall, to the extent permitted by law, have the right to deduct from any
payments made under the Plan, regardless of the form of such payment, or from
any other compensation payable to Participant, whether or not pursuant to this
Agreement or the Plan and regardless of the form of payment, any federal, state
or local taxes of any kind required by law to be withheld with respect to the
cash or Shares in settlement of the Performance Units.

      


      5.        
    Reclassification of
Performance Units.  In the event of any reorganization,
recapitalization, stock split, stock dividend, merger, consolidation,
combination of shares or other change affecting the Common Stock, the Committee
shall make such adjustments as it may deem appropriate with respect to the
Performance Units.  Any such adjustments made by the Committee shall
be conclusive.

      


      6.          
  Effect on
Employment.  Nothing contained in this Agreement shall confer
upon Participant the right to continue in the employment or service of Rosetta
or any Affiliate, or affect any right which Rosetta or any Affiliate may have to
terminate the employment or service of Participant.  This Agreement
does not constitute evidence of any agreement or understanding, express or
implied, that Rosetta or any Affiliate will retain Participant as a Participant
for any period of time or at any particular rate of compensation.

      


      7.          
  Assignment.  Rosetta
may assign all or any portion of its rights and obligations under this
Agreement.  The Award, the Performance Units and the rights and
obligations of Participant under this Agreement are subject to the Transfer
Restrictions in paragraph (c)(ii) of Section 2.

      


      8.           
Binding
Effect.  This Agreement shall be binding upon and inure to the
benefit of (i) Rosetta and its successors and assigns, and (ii) Participant and
his or her heirs, devisees, executors, administrators and personal
representatives.

      


      9.        
   Notices.  All
notices between the parties hereto shall be in writing and given in the manner
provided in Section 15.7 of the Plan.  Notices to Participants shall
be given to Participant’s address as contained in Rosetta’s
records.  Notices to Rosetta shall be addressed to its General Counsel
at the principal executive offices of Rosetta as set forth in Section 15.7 of
the Plan.

      


      10.           Governing Law; Exclusive
Forum; Consent to Jurisdiction. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the
principles relating to conflicts of laws) of the State of Texas, except as
superseded by applicable federal law.  The exclusive forum for any
action concerning this Agreement or the transactions contemplated hereby shall
be in a court of competent jurisdiction in Harris County, Texas, with respect to
a state court, or the United States District Court for the Southern District of
Texas, Houston Division, with respect to a federal court.  PARTICIPANT
HEREBY CONSENTS TO THE EXERCISE OF JURISDICTION OF A COURT IN THE EXCLUSIVE
FORUM AND WAIVES ANY RIGHT HE OR SHE MAY HAVE TO CHALLENGE OR CONTEST THE
REMOVAL AT ANY TIME BY THE COMPANY OR ANY OF ITS AFFILIATES TO FEDERAL COURT OF
ANY SUCH ACTION HE OR SHE MAY BRING AGAINST IT IN STATE
COURT.


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      11.           The
Plan.

      


      (a)           Agreement.  The
Plan is incorporated herein by reference. The Plan and this Agreement constitute
the entire agreement of the parties with respect to the subject matter hereof
and supersede in their entirety all prior undertakings and agreements of Rosetta
and Participant with respect to the subject matter hereof, and may not be
modified adversely to Participant’s interest except by means of a writing signed
by Rosetta and Participant.

      


      (b)           Receipt of the
Plan.  Participant acknowledges receipt of a copy of the Plan
currently in effect and the Plan prospectus and agrees to receive stockholder
information, including copies of any annual report, proxy and Form 10-K from the
investor relations section of Rosetta’s website at www.rosettaresources.com.  Alternatively,
Participant may request to receive the information in this Section 11 upon
written or telephonic request to Rosetta’s Corporate Secretary.

      


      IN
WITNESS WHEREOF, Rosetta and Participant have executed this Agreement as of the
date first written above.

      


      


      
        
          
            
              
                
                  
                    
                      
                        
                          	 	ROSETTA
      RESOURCES INC.
	 	 	 
      
	 	 	 
      
	 	 	 
      
	 	By:	
                                   

                                
	 	Randy
      L. Limbacher
	 	President
      and Chief Executive Officer
	 	 	 
      
	 	 	 
      
	 	 	 
      
	 	PARTICIPANT
	 	 	 
      
	 	 	 
      
	 	 	 
      
	 	 	
                                  [NAME]

                                


                        

                      

                    

                  

                

              

            

          

        

      


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      APPENDIX
A

      


      Performance
Objectives

      


      
        
          
            	
                    Performance Metric

                  	 	
                    Performance Goal on
  12/31/11

                  
	 
      	 	 
      
	
                    Mcfe
      Reserves per Share

                  	 	
                    9.7

                  
	 
      	 	 
      
	
                    Inventory
      / Proved Reserves Multiple

                  	 	
                    2.0

                  
	 
      	 	 
      
	
                    Percentage
      Change in Cash Flow Multiple

                  	 	
                    Higher
      Percentage Change than the

                  
	
                    S&P
      400 Oil & Gas Exploration &

                  	 	 
      
	
                    Production
      Index