Exhibit 10.1


 


CIMAREX ENERGY CO.


 


2002 STOCK INCENTIVE PLAN


 


PERFORMANCE AWARD AGREEMENT


 


This Performance Award Agreement dated                           ,
20   , is between Cimarex Energy Co., a Delaware corporation (“Cimarex”)
and                                   
and is subject and pursuant to the terms of the Cimarex 2002 Stock Incentive
Plan (“Plan”).  If there is any
inconsistency or conflict, the Plan shall control except as otherwise indicated
herein.


 


1.             Grant of Restricted Stock.  Pursuant to the Plan and subject to the terms
and conditions of this Agreement, you are granted                 
shares of restricted stock (“Restricted Stock”), subject to certain vesting and
performance goals hereinafter described. 
Upon Cimarex’s achievement of pre-determined objectives for a specified
performance period, some or all of the shares of Restricted Stock will vest
(the “Vested Shares”).  Prior to the end
of the Performance Period (as defined in Paragraph 3), Cimarex will hold the
Restricted Shares.  At the end of the
Performance Period the shares will be disposed of as provided in Paragraph 7.


 


2.             Voting Rights, Ordinary Cash Dividends and Other
Distributions.  Prior to the
end of the Performance Period you are entitled to the voting rights of a holder
of Cimarex common stock (“Common Stock”) and the right to receive ordinary cash
dividends with respect to the number of shares of Restricted Stock held by you
pursuant to this Agreement.  For this
purpose, cash dividends are deemed to be ordinary unless otherwise determined
by the Board of Directors.  In the event
of distributions on Common Stock, other than ordinary cash dividends, during
the Performance Period the Governance Committee of Cimarex will determine
whether such distributions will be immediately paid to you or will be held by
Cimarex and paid to you if and when your Restricted Stock vests.


 


3.             Performance Period.  Except as provided in Paragraphs 5 and 6, the
“Performance Period” shall be the three-year period beginning with the first
trading day in January, 20       and ending on
December 31, 20    . 
You may not sell, assign, transfer by gift or otherwise, pledge,
hypothecate or otherwise dispose of, by operation of law or otherwise, any of
the shares of Restricted Stock prior to expiration of the Performance Period.  All certificates representing Restricted
Stock will bear the following legend:


 


“The shares of stock represented by this
certificate are subject to all of the terms of a Performance Award Agreement
between Cimarex Energy Co. (the “Company”) and the registered owner (“Owner”)
of this Certificate (the “Agreement”) and to the terms of the Cimarex Energy
Co. 2002 Stock Incentive Plan (the “Plan”). 
Copies of the Agreement and the Plan are on 


 





















 


file at the office of the Company.  The Agreement, among other things, limits the
right of the Owner to transfer the shares represented by this Certificate and
provides in certain circumstances that all or a portion of the shares must be
returned to the Company.”


 


4.             Performance Goals.  The number of Vested Shares will be
determined at the end of the Performance Period and will be based upon Cimarex’s
stock price performance relative to that of a defined peer group.  The peer group shall be comprised of the
exploration and production companies included in the Dow Jones Secondary Oil
Index or any successor index as of the last day of the Performance Period (“Peer
Group”).  The calculation of the exact
number of Vested Shares to be issued shall be determined as follows:


 


a.             The
calculated percentage difference between (i) and (ii), below:


 


(i)            the
average (rounded to the second decimal place) of the per share closing price of
common stock of Cimarex and of each company in the Peer Group over 30 trading
days preceding the beginning of the Performance Period, and


 


(ii)           the
average (rounded to the second decimal place) of the per share closing price of
common stock of Cimarex and of each company in the Peer Group over 30 trading
days preceding the end of the Performance Period.


 


b.             After
determination of the percentage difference as provided in 4.a., Cimarex and the
companies in the Peer Group shall be ranked from the highest percentage to the
lowest percentage.


 


c.             The
relative performance percentile of Cimarex shall be calculated by subtracting
Cimarex’s absolute rank from the total number of companies in the Peer Group
and dividing the result by the total number of companies in the Peer Group.


 


d.             The
result obtained in 4.c. will serve as the basis for the percentage of Vested Shares
to be held by you.  The applicable
percentages are set forth on Appendix A
to this Agreement.


 


5.             Termination of Employment.


 


a.             Death or Disability.  If your employment with Cimarex is terminated
on account of death or disability (as defined below) prior to the end of the
Performance Period, you will receive the number of Vested Shares calculated in
accordance with Paragraph 4, except that the end of the Performance Period
shall be the date of death or disability.


 


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You will be considered disabled if you are (i) unable to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment which 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) by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months, receiving income replacement benefits for a period
of not less than three months under an accident and health plan covering
employees of Cimarex.


 


b.             Other Terminations.  If your employment is terminated, voluntarily
or involuntarily, for any reason other than death or disability prior to the
end of the Performance Period, your Restricted Stock will be forfeited.


 


6.             Change in Control.  Notwithstanding section 10.4 of the Plan, upon
the occurrence of a Change in Control Event, as defined in the Plan, you will
receive a number of Vested Shares calculated in accordance with Paragraph 4, except
that the end of the Performance Period shall be the date of the Change in
Control Event.


 


7.             Removal of Restrictions.  Upon expiration of the Performance Period,
Cimarex will deliver to you the number of Vested Shares computed in accordance
with Paragraph 4, with the legend provided in Paragraph 3 removed.  In conformity with its insider trading
policy, Cimarex may elect to electronically deliver the shares to your account
at RBC Capital Markets or its successor. 
You shall forfeit and assign to Cimarex, without any consideration, any
shares of Restricted Stock to which you are not entitled at the end of the
Performance Period.


 


8.             Withholding Taxes.  Unless you make other arrangements with
Cimarex, Cimarex shall withhold a number of Vested Shares having a Fair Market
Value (as defined in the Plan) on the date of payment equal to the minimum
statutory total tax which could be withheld on the transaction.  You may also make arrangements with Cimarex
to pay the amount of taxes required by law or to deliver to Cimarex previously
owned shares of common stock having a Fair Market Value on the date of payment
equal to the minimum statutory total tax. 
In no event shall any form of payment made by you be permitted if it
would result in an accounting charge with respect to shares delivered to pay
such taxes, unless otherwise approved by Cimarex’s Governance Committee.


 


9.             Effect of Prohibited Transfer.  If any transfer of Restricted Stock is made
or attempted to be made contrary to the terms of this Agreement, Cimarex shall
have the right to acquire, without the payment of any consideration, such
shares from you or your transferee, at any time before or after a prohibited
transfer.  In addition to any other legal
or equitable remedies it may have, Cimarex may enforce its rights to specific
performance to the extent permitted by law and may exercise such other
equitable remedies then available to it. 
Cimarex may refuse for any purpose to recognize any transferee who receives
shares contrary to the provisions of this Agreement as a stockholder and may
retain and/or recover all dividends on such shares that were paid or payable
subsequent to the date on which the prohibited transfer was made or attempted.


 


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10.           Adjustments to the Stock.


 


(a)           Adjustment by Merger, Stock Split, Stock Dividend, Etc. If the Common
Stock, as presently constituted, shall be changed into or exchanged for a
different number or kind of shares of stock or other securities of Cimarex or
of another corporation (whether by reason of merger, consolidation,
recapitalization, reclassification, stock split, spin-off, combination of
shares or otherwise), or if the number of shares of Common Stock shall be increased
through the payment of a stock dividend, or a dividend on the shares of Common Stock
or rights or warrants to purchase securities of Cimarex shall be issued to
holders of all outstanding Common Stock, then there shall be substituted for or
added to each share of Restricted Stock, the number and kind of shares of stock
or other securities into which each outstanding share of Common Stock shall be
so changed or for which each such share shall be exchanged or to which each
such share shall be entitled.


 


(b)           Other Distributions and Changes in the Stock. In the event
there shall be any other change in the number or kind of the outstanding shares
of Common Stock, or any stock or other securities into which the Common Stock
shall have been changed or for which it shall have been exchanged, then if the Governance
Committee, in its sole discretion, determines that the change equitably
requires an adjustment in the shares of Restricted Stock, an adjustment shall
be made in accordance with the Committee’s determination, except that no
adjustment of the number of shares of Restricted Stock that would otherwise be
required shall be made unless and until the adjustment either by itself or with
other adjustments not previously made would require an increase or decrease of
at least one percent in the number of shares of stock available under the Plan
or to which any Award granted under the Plan relates immediately prior to
making the adjustment (the “Minimum Adjustment”). Any adjustment representing a
change of less than the minimum amount shall be carried forward and made as
soon as the adjustment together with other adjustments required by Article VIII
of the Plan and not previously made would result in a Minimum Adjustment.
Notwithstanding the foregoing, any adjustment required by Article VIII of the
Plan which would not result in a Minimum Adjustment shall be made with respect
to shares of Restricted Stock immediately prior to vesting or transferability
of the Restricted Stock.


 


11.           Miscellaneous.


 


(a)           Notices. 
Any notice required or permitted to be given under this Agreement shall
be in writing and shall be given by first class registered or certified mail,
postage prepaid, or by personal delivery to the appropriate party, addressed:


 


(i)            If to Cimarex:  Cimarex Energy Co., Attention: Corporate
Secretary, 1700 Lincoln Street, Suite 1800, Denver, Colorado 80203, or at such
other address as may have been furnished to the Grantee in writing by the
Company; or


 


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(ii)           If to you:  c/o Cimarex Energy Co., 1700 Lincoln Street,
Suite 1800, Denver, Colorado 80203, or at other address as may have been
furnished to the Company by you.


 


Any such notice shall be deemed to have been given as of the second day
after deposit in the United States mails, postage prepaid, properly addressed
as set forth above, in the case of mailed notice, or as of the date delivered
in the case of personal delivery.


 


(b)           Amendment. 
Except as provided herein, this Agreement may not be amended or
otherwise modified unless evidenced in writing and signed by the Company and
you.


 


(c)           Defined Terms.  Capitalized terms shall have the meaning set
forth in the Plan or herein, as the case may be.


 


(d)           Construction; Severability.  The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.  The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
and each other provision of this Agreement shall be severable and enforceable
to the extent permitted by law.


 


(e)           Waiver. 
Any provision contained in this Agreement may be waived, either
generally or in any particular instance, by the Committee appointed under the
Plan, but only to the extent permitted under the Plan.


 


(f)            Binding Effect.  This Agreement shall be binding upon and
inure to the benefit of Cimarex and you and their respective heirs, executors,
administrators, legal representatives, successors and assigns.


 


(g)           Rights to Employment.  Nothing contained in this Agreement shall be
construed as giving you any right to be retained in the employ of Cimarex and
this Agreement is limited solely to governing the your rights and obligations
with respect to the Restricted Stock.


 


(h)           Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.


 


 


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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above, to be effective as of the beginning date of the
Performance Period.


 


 


	
   

  	
  CIMAREX ENERGY CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


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Appendix A


to Cimarex Energy Co.


Performance Award Agreement


 


	
  Performance
  

  Percentile

  	
   

  	
  Percent of Target 

  Award

  	
   

  	
  Performance 

  Percentile

  	
   

  	
  Percent of Target 

  Award

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  75% & greater

  	
   

  	
  100

  	
  %

  	
  49

  	
  %

  	
  74

  	
  %

  
	
  74%

  	
   

  	
  99

  	
  %

  	
  48

  	
  %

  	
  73

  	
  %

  
	
  73%

  	
   

  	
  98

  	
  %

  	
  47

  	
  %

  	
  72

  	
  %

  
	
  72%

  	
   

  	
  97

  	
  %

  	
  46

  	
  %

  	
  71

  	
  %

  
	
  71%

  	
   

  	
  96

  	
  %

  	
  45

  	
  %

  	
  70

  	
  %

  
	
  70%

  	
   

  	
  95

  	
  %

  	
  44

  	
  %

  	
  69

  	
  %

  
	
  69%

  	
   

  	
  94

  	
  %

  	
  43

  	
  %

  	
  68

  	
  %

  
	
  68%

  	
   

  	
  93

  	
  %

  	
  42

  	
  %

  	
  67

  	
  %

  
	
  67%

  	
   

  	
  92

  	
  %

  	
  41

  	
  %

  	
  66

  	
  %

  
	
  66%

  	
   

  	
  91

  	
  %

  	
  40

  	
  %

  	
  65

  	
  %

  
	
  65%

  	
   

  	
  90

  	
  %

  	
  39

  	
  %

  	
  64

  	
  %

  
	
  64%

  	
   

  	
  89

  	
  %

  	
  38

  	
  %

  	
  63

  	
  %

  
	
  63%

  	
   

  	
  88

  	
  %

  	
  37

  	
  %

  	
  62

  	
  %

  
	
  62%

  	
   

  	
  87

  	
  %

  	
  36

  	
  %

  	
  61

  	
  %

  
	
  61%

  	
   

  	
  86

  	
  %

  	
  35

  	
  %

  	
  60

  	
  %

  
	
  60%

  	
   

  	
  85

  	
  %

  	
  34

  	
  %

  	
  59

  	
  %

  
	
  59%

  	
   

  	
  84

  	
  %

  	
  33

  	
  %

  	
  58

  	
  %

  
	
  58%

  	
   

  	
  83

  	
  %

  	
  32

  	
  %

  	
  57

  	
  %

  
	
  57%

  	
   

  	
  82

  	
  %

  	
  31

  	
  %

  	
  56

  	
  %

  
	
  56%

  	
   

  	
  81

  	
  %

  	
  30

  	
  %

  	
  55

  	
  %

  
	
  55%

  	
   

  	
  80

  	
  %

  	
  29

  	
  %

  	
  54

  	
  %

  
	
  54%

  	
   

  	
  79

  	
  %

  	
  28

  	
  %

  	
  53

  	
  %

  
	
  53%

  	
   

  	
  78

  	
  %

  	
  27

  	
  %

  	
  52

  	
  %

  
	
  52%

  	
   

  	
  77

  	
  %

  	
  26

  	
  %

  	
  51

  	
  %

  
	
  51%

  	
   

  	
  76

  	
  %

  	
  25% & less

  	
   

  	
  50

  	
  %

  
	
  50%

  	
   

  	
  75

  	
  %

  	
   

  	
   

  	
   

  	
   

  



 


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