exv10w1






Exhibit 10.1




CONSULTING AGREEMENT




     THIS CONSULTING AGREEMENT (this “Agreement”) is made this 9th day of June, 2009, by
and between Concho Resources Inc., a Delaware corporation (the “Company”), and Steven L. Beal
(“Consultant”) (the Company and Consultant are collectively referred to herein as the “Parties”).



W I T N E S S E T H:




     WHEREAS, the Company and Consultant have previously entered into that certain Employment
Agreement effective as of January 1, 2009 (the “Employment Agreement”); and



     WHEREAS, Consultant desires to retire as an executive officer of, and from employment with,
the Company; and



     WHEREAS, following Consultant’s retirement from the Company, the Company desires to benefit
from the experience and ability of Consultant in the capacity of a consultant to the Company; and



     WHEREAS, Consultant is willing to serve as a consultant to the Company, upon the terms and
conditions contained herein;



     NOW, THEREFORE, for and in consideration of the compensation to be paid Consultant under this
Agreement and the mutual promises, covenants, and undertakings contained in this Agreement, and
intending to be legally bound, the Parties agree as follows:



     1. Transition from Employee to Contractor:



          A. General: As of July 1, 2009 (the “Transition Date”), Consultant’s employment under
the Employment Agreement will terminate and the relationship presently existing between the Parties
shall change from an employment relationship to a contractor relationship. Notwithstanding any
provision in the Employment Agreement to the contrary, the termination of Consultant’s employment
shall not constitute (i) an automatic resignation of Consultant from the Board of Directors of the
Company (the “Board”) or (ii) a termination of the post-employment rights and obligations of the
Parties under the Employment Agreement. Consultant expressly acknowledges and agrees that he has
received all compensation to which he is entitled under the Employment Agreement through the date
hereof, and that he is not entitled to any additional compensation, severance pay, bonuses or
benefits under the Employment Agreement other than with respect to base salary and employee
benefits for the period from the date hereof and ending on the date of Consultant’s termination of
employment with the Company. Accordingly, from and after the Transition Date, the Company’s
obligations to pay compensation to Consultant for services rendered shall be governed exclusively
by this Agreement; provided, however, that during any period after the Transition Date in which
Consultant is a non-employee member of the Board, Consultant shall also be entitled to




 









 







compensation from the Company for his services as a member of the Board in accordance with the
Company’s policies in effect from time to time for compensating its non-employee directors.




          B. Confidentiality: In the course of performing his duties for the Company,
Consultant acknowledges that he will be provided, or will be in a position to access, utilize,
create, obtain, and/or receive confidential information and trade secrets, which are valuable,
special, and unique assets of the Company used in its business to obtain a competitive advantage
over the Company’s competitors who do not know or use this information. Consultant further
acknowledges that protection of the Company’s confidential information and trade secrets against
unauthorized disclosure and use is of critical importance to the Company in maintaining its
competitive position. Accordingly, Consultant hereby agrees that his actions will be governed by
the confidentiality provisions set forth in Appendix A attached hereto. The obligations of
Consultant set forth in Appendix A shall apply during the term of this Agreement and shall survive
termination of this Agreement and/or the termination of Consultant’s services under this Agreement
regardless of the reason for such termination.




          C. Non-Competition: Consultant agrees that during the term of his consulting
relationship with the Company, Consultant shall not, without the prior written approval of the
Company’s chief executive officer (which approval shall not be unreasonably withheld or delayed),
directly or indirectly participate in the ownership, management, operation or control of, or be
connected as an officer, employee, consultant, partner, director, contractor or otherwise, or have
any financial interest in or aid or assist anyone else in the conduct of, any business in the oil
and gas industry; provided, however, that this provision shall not preclude Consultant from and
after the Transition Date from serving as a member of the board of directors and/or owning
securities of any publicly held entity engaged in the oil and gas industry so long as Consultant
does not, without such prior written approval, serve as an officer, employee, consultant or
contractor to such entity.




     2. Consulting: There shall be created pursuant to this Agreement an independent
contractor relationship between the Company and Consultant whereby Consultant shall supply
consulting services to the Company in accordance with and subject to the terms and conditions set
forth in this Agreement.



     3. Term: The term of this Agreement shall be for the period beginning on the
Transition Date and ending on the date this Agreement is terminated pursuant to Section 8 hereof.
If for any reason the employment relationship between Consultant and the Company is terminated
prior to the Transition Date, then this Agreement shall be void and of no further force and effect
as of the date of the termination of such employment relationship.



     4. Services: During the term of this Agreement, Consultant shall make himself
available to the Company to perform consulting and advisory services related to the oil and gas
industry. The Parties intend that the level of such consulting and advisory services that
Consultant will perform after the Transition Date will be greater than 20% of the average level of
bona fide services Consultant performed as an employee of the Company over the 36-month period
immediately preceding the Transition Date and, accordingly, the transition from employee to
independent contractor provided for in this Agreement shall not give rise to a “separation from
service” under Section 409A of the Internal Revenue Code of 1986, as amended, and applicable



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administrative guidance issued thereunder. In providing such consulting and advisory
services, Consultant shall provide the Company with such of his assessments and evaluations as the
Company may deem necessary. Consultant agrees to attend such meetings as the Company may require
for proper communication of his advice and consultation. Consultant shall coordinate the
furnishing of his services pursuant to this Agreement with representatives of the Company in order
that such services can be provided in such a way as to generally conform to the business schedules
and requirements of the Company, but the method of performance, place of performance, hours
utilized in such performance, and other details of the manner of performance of Consultant’s
services hereunder shall be within the sole control of Consultant. Subject to the provisions of
Section 1C hereof, while retained as a consultant by the Company, Consultant shall have the right
to devote his business day and working efforts to other business, professional, public service,
community and other pursuits as do not interfere with the rendering of consulting services by
Consultant hereunder.



     5. Compensation and Expense Reimbursement:



          A. Compensation: As compensation to Consultant for his services under this Agreement,
Consultant shall receive, during the term of this Agreement, a monthly consulting fee equal to the
sum of (i) $20,000 plus (ii) the Health Care Reimbursement Amount, which sum shall be payable on
the last day of each calendar month and shall be prorated for any fractional calendar month at the
end of such term. For purposes of the preceding sentence, the term “Health Care Reimbursement
Amount” means (a) for each month during the period Consultant receives reimbursements pursuant to
Section 5B hereof, $0, and (b) for each month thereafter, the lesser of (I) the amount actually
paid by Consultant for medical and dental coverage for such month for Consultant and his dependents
who would otherwise be eligible to participate in the medical and dental plans of the Company had
Consultant been employed by the Company during such month (and Consultant shall provide the Company
with reasonable documentation evidencing such amount) and (II) the difference, if any, between (x)
the amount the Company would be allowed to charge for such month for COBRA Continuation Coverage
(as defined in Section 5B hereof) with respect to Consultant and such dependents assuming they were
eligible for such coverage for such month and (y) the employee contribution amount that active
senior executive employees of the Company pay for the same or similar coverage for such month.




          B. COBRA: During the portion, if any, of the period during which Consultant is (i)
providing consulting services to the Company under this Agreement and (ii) eligible and elects to
continue coverage for Consultant and Consultant’s eligible dependents under the Company’s group
health plans under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and/or
Sections 601 through 608 of the Employee Retirement Income Security Act of 1974, as amended,
(“COBRA Continuation Coverage”), the Company shall promptly reimburse Consultant on a monthly basis
for the difference between the amount Consultant pays to effect and continue such coverage and the
employee contribution amount that active senior executive employees of the Company pay for the same
or similar coverage under such group health plans.




          C. Expenses: The Company shall reimburse Consultant for all reasonable out-of-pocket
expenses actually incurred by Consultant in performance of his services hereunder,




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provided that such expenses are incurred and submitted to the Company (with proper supporting
documentation) in accordance with the Company’s policy then in effect for employee expense
reimbursements. Upon receipt of the expense statements (but in no event later than the close of
Consultant’s taxable year following the taxable year in which the expense is incurred by
Consultant), the Company shall promptly reimburse Consultant for his expenses.




     6. Capacity and Benefits: At all times while serving under this Agreement, Consultant
shall be an independent contractor and not a common-law employee. Therefore, except as provided in
Sections 5B and 7 hereof, Consultant shall not, during the term of this Agreement, be entitled to
participate in the Company’s benefit plans and programs for its employees. Further, Consultant
will in no way be considered to be an agent, employee, executive officer, or servant of the
Company. In his capacity as a consultant under this Agreement, Consultant shall have no authority
to bind the Company in any capacity for any purpose. It is not the purpose or intention of this
Agreement or the parties to create, and the same shall not be construed as creating, any
partnership, partnership relation, joint venture, agency, or employment relationship.



     7. Stock Options and Restricted Stock:



          A. Stock Options: Consultant was granted various stock options by the Company or its
predecessors while employed by such entities, including, without limitation, (i) a nonstatutory
stock option to purchase 150,000 shares of the common stock of the Company pursuant to the Concho
Resources Inc. 2006 Stock Incentive Plan (the “2006 Plan”) on February 27, 2008 (the “2008
Option”), (ii) a nonstatutory stock option to purchase 62,500 shares of the common stock of the
Company (after taking into account certain adjustments previously made to the option) pursuant to
the 2006 Plan on June 12, 2006 (the “2006 Option”), and (iii) a nonstatutory stock option to
purchase 89,269 shares of the common stock of the Company (after taking into account certain
adjustments previously made to the option) pursuant to the Concho Equity Holdings Corp. 2004 Stock
Option Plan (which plan was assumed by the Company and amended and restated into the 2006 Plan) on
August 13, 2004 (the “2004 Option,” and together with the 2008 Option and the 2006 Option, the
“Stock Options”). Notwithstanding anything to the contrary in the agreements evidencing the grants
of the Stock Options and the amendments thereto (collectively, the “Stock Option Agreements”), (a)
Consultant shall not be treated as having terminated employment with the Company on the Transition
Date for purposes of the Stock Option Agreements, (b) Consultant shall be deemed to be continuing
in the employment of the Company for purposes of the Stock Option Agreements for so long as
Consultant is providing consulting services to the Company under this Agreement, (c) if the Company
terminates Consultant’s service relationship with the Company under this Agreement prior to June
12, 2010, in the case of the 2006 Option, or prior to February 27, 2012, in the case of the 2008
Option, for any reason other than for Cause (as such term is defined in Section 8B hereof), then to
the extent outstanding and unvested at the time of such termination, the Stock Option shall become
fully vested and exercisable with respect to 100% of the shares subject to such Stock Option as of
the date of such termination, and (d) if Consultant’s service relationship with the Company under
this Agreement is terminated by Consultant for any reason whatsoever or by the Company for Cause
prior to June 12, 2010, in the case of the 2006 Option, or prior to February 27, 2012, in the case
of the 2008 Option, then to the extent outstanding at the time of such termination, the portion, if
any, of the Stock Option that remains unvested as of the date of




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such termination shall be immediately forfeited to the Company as of the date of such
termination.




          B. Restricted Stock: Consultant was granted 11,561 restricted shares of the Company’s
common stock (the “Restricted Stock Award”) pursuant to the 2006 Plan on November 19, 2007.
Notwithstanding anything to the contrary in the Restricted Stock Agreement evidencing the
Restricted Stock Award (the “Restricted Stock Agreement”), (i) Consultant shall not be treated as
having terminated employment with the Company on the Transition Date for purposes of the Restricted
Stock Agreement, (ii) Consultant shall be deemed to be continuing in the employment of the Company
for purposes of the Restricted Stock Agreement for so long as Consultant is providing consulting
services to the Company under this Agreement, (iii) if the Company terminates Consultant’s service
relationship with the Company under this Agreement prior to June 12, 2010 for any reason other than
for Cause, then any portion of the shares subject to such award that would otherwise remain subject
to the Forfeiture Restrictions (as such term is defined in the Restricted Stock Agreement) as of
the date of such termination shall vest in full and shall cease to be subject to the Forfeiture
Restrictions as of the date of such termination, and (iv) if Consultant’s service relationship with
the Company under this Agreement is terminated prior to June 12, 2010 by Consultant for any reason
whatsoever, by the Company for Cause or by reason of Consultant’s death, then any portion of the
shares subject to such award that would otherwise remain subject to the Forfeiture Restrictions as
of the date of such termination shall be immediately forfeited to the Company as of the date of
such termination.




          C. Amendment of Award Agreements: The actions described in this Section 7 have been
approved by the Compensation Committee of the Board and the Parties hereby agree that the
provisions of this Section 7 constitute amendments to the Stock Option Agreements and the
Restricted Stock Agreement.




     8. Termination:



          A. Death: If Consultant dies during the term of this Agreement, the Company’s
obligations under this Agreement shall terminate, and Consultant’s estate shall be entitled to an
amount equal to the sum of (i) pro-rata compensation under Section 5A hereof for the month that
includes the date of his death and (ii) a lump sum cash payment in an amount equal to $60,000. The
amount described in the preceding sentence shall be paid by the Company within 30 days after the
date of Consultant’s death.




          B. Termination by the Company for Cause: The Company may terminate Consultant’s
service relationship with the Company under this Agreement for Cause at any time by giving prior
written notice to Consultant which notice shall set forth the grounds for Cause. For purposes of
this Agreement, the term “Cause” shall mean Consultant (i) has engaged in gross negligence, gross
incompetence or willful misconduct in the performance of Consultant’s duties hereunder, (ii) has
refused, without proper reason, to perform Consultant’s duties hereunder, (iii) has materially
breached any material provision of this Agreement or corporate policy or code of conduct
established by the Company that is known to Consultant and is generally applicable to consultants
of the Company, (iv) has willfully engaged in conduct which is materially injurious to the Company
or its subsidiaries (monetarily or otherwise), (v) has committed an act of fraud,




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embezzlement or willful breach of a fiduciary duty to the Company or an affiliate (including
the unauthorized disclosure of confidential or proprietary material information of the Company or
an affiliate), or (vi) has been convicted of (or pleaded no contest to) a crime involving fraud,
dishonesty or moral turpitude or any felony. Upon termination of Consultant’s service relationship
with the Company under this Agreement for Cause, the Company’s obligations under this Agreement
shall terminate.




          C. Termination by the Company Without Cause and Termination by Consultant: The
Company may terminate Consultant’s service relationship with the Company under this Agreement
without Cause at any time by giving prior written notice to Consultant at least 90 days prior to
the effective date of such termination. Likewise, Consultant may terminate Consultant’s service
relationship with the Company under this Agreement for any reason at any time by giving prior
written notice to the Company at least 90 days prior to the effective date of such termination. In
either event, Consultant shall be entitled to pro-rata compensation under Section 5A hereof for the
month that includes the effective date of such termination.




          D. Effect of Termination on Stock Options and Restricted Stock: Notwithstanding
anything in this Section 8 to the contrary, the provisions of this Section 8 shall not apply to the
Stock Options and the Restricted Stock Award, and the treatment of the Stock Options and the
Restricted Stock Award following the termination of Consultant’s service relationship with the
Company for any reason shall be governed exclusively by Section 7 hereof.




     9. Notices: For purposes of this Agreement, notice, demands and all other
communications provided for in this Agreement shall be in writing and shall be deemed to have been
duly given when delivered or mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:



	 	 	 	 	 
	 

	 	If to the Company to:
	 	Concho Resources Inc.
	 

	 	 	 	550 W. Texas Avenue, Suite 100
	 

	 	 	 	Midland, Texas 79701
	 

	 	 	 	Attention: Chairman of the Board of Directors
	 
	 	 	 	 
	 

	 	 	 	With a copy to:
	 
	 	 	 	 
	 

	 	 	 	Concho Resources Inc.
	 

	 	 	 	550 W. Texas Avenue, Suite 100
	 

	 	 	 	Midland, Texas 79701
	 

	 	 	 	Attention: Vice President, General Counsel
	 
	 	 	 	 
	 

	 	If to Consultant to:
	 	Steven L. Beal
	 

	 	 	 	9400 County Road 258
	 

	 	 	 	Early, Texas 76802





or to such other address as either party may furnish to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt.




     10. Successor Obligations and Assignment: The rights and obligations of the Company
under this Agreement shall inure to the benefit of and be binding upon the successors



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and assigns of the Company. Consultant cannot assign any rights accruing to him under this
Agreement.



     11. Amendment: This Agreement may not be modified except by an agreement in writing
executed by both the Company and Consultant.



     12. Governing Laws: This Agreement shall be subject to and governed by the laws of
the State of Texas, without giving effect to principles of conflicts of law.



     13. Validity: In the event that any portion or provision of this Agreement is found
to be invalid or unenforceable, the other portions or provisions hereof shall not be affected
thereby.



     14. 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 instrument.



     15. Effect of Agreement: This Agreement constitutes the entire agreement of the
parties with regard to the subject matter hereof, and contains all the covenants, promises,
representations, warranties and agreements between the parties with respect to the independent
contractor relationship between the Company and Consultant. Without limiting the scope of the
preceding sentence, but subject to the second sentence of Section 1A hereof, all understandings and
agreements preceding the date of execution of this Agreement and relating to the subject matter
hereof are hereby null and void and of no further force and effect.



[Signatures begin on the following page.]





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



	 	 	 	 	 
	 	Concho Resources Inc.

 	 
	 	By:  	/s/ Timothy A. Leach
 	 
	 	 	Name:  	Timothy A. Leach 	 
	 	 	Title:  	Chief Executive Officer 	 
	 



COMPANY




	 	 	 	 	 
	 	Steven L. Beal

 	 
	 	/s/ Steven L. Beal
 	 
	 	 	 
	 	 	 
	 



CONSULTANT





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APPENDIX A

TO

CONSULTING AGREEMENT

BY AND BETWEEN CONCHO RESOURCES INC.

AND STEVEN L. BEAL

DATED JUNE 9, 2009




PROTECTION OF CONFIDENTIAL INFORMATION




     1. Disclosure to and Property of the Company: All information, designs, ideas,
concepts, improvements, product developments, discoveries and inventions, whether patentable or
not, that are conceived, made, developed or acquired by Consultant, individually or in conjunction
with others, during the period of Consultant’s service relationship with the Company (whether
during business hours or otherwise and whether on the Company’s premises or otherwise) that relate
to the Company’s (or any of its affiliates’) business, trade secrets, products or services
(including, without limitation, all such information relating to corporate opportunities, product
specification, compositions, manufacturing and distribution methods and processes, research,
financial and sales data, pricing terms, evaluations, opinions, interpretations, acquisitions
prospects, the identity of customers or their requirements, the identity of key contacts within the
customer’s organizations or within the organization of acquisition prospects, marketing and
merchandising techniques, business plans, computer software or programs, computer software and
database technologies, prospective names and marks) (collectively, “Confidential Information”)
shall be disclosed to the Company and are and shall be the sole and exclusive property of the
Company (or its affiliates). Moreover, all documents, videotapes, written presentations,
brochures, drawings, memoranda, notes, records, files, correspondence, manuals, models,
specifications, computer programs, E-mail, voice mail, electronic databases, maps, drawings,
architectural renditions, models and all other writings or materials of any type embodying any of
such information, ideas, concepts, improvements, discoveries, inventions and other similar forms of
expression (collectively, “Work Product”) are and shall be the sole and exclusive property of the
Company (or its affiliates). Upon the termination of Consultant’s service relationship with the
Company, for any reason, Consultant promptly shall deliver such Confidential Information and Work
Product, and all copies thereof, to the Company.



     2. No Unauthorized Use or Disclosure: Consultant agrees to preserve and protect the
confidentiality of all Confidential Information or Work Product of the Company (or its affiliates).
Consultant agrees that he will not, at any time during or after Consultant’s service relationship
with the Company, make any unauthorized disclosure of, and will prevent the removal from the
Company premises of, Confidential Information or Work Product of the Company (or its affiliates),
or make any use thereof, except in the carrying out of Consultant’s responsibilities during the
course of Consultant’s service relationship with the Company. Consultant shall use commercially
reasonable efforts to cause all persons or entities to whom any Confidential Information shall be
disclosed by him hereunder to observe the terms and conditions set forth herein as though each such
person or entity was bound hereby. Consultant shall have no obligation hereunder to keep
confidential any Confidential Information if and to



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the extent disclosure thereof is specifically required by law; provided, however, that in the
event disclosure is required by applicable law, Consultant shall provide the Company with prompt
notice of such requirement prior to making any such disclosure, so that the Company may seek an
appropriate protective order. At the request of the Company at any time, Consultant agrees to
deliver to the Company all Confidential Information that he may possess or control. Consultant
agrees that all Confidential Information of the Company (whether now or hereafter existing)
conceived, discovered or made by him during the period of Consultant’s service relationship with
the Company exclusively belongs to the Company (and not to Consultant), and Consultant will
promptly disclose such Confidential Information to the Company and perform all actions reasonably
requested by the Company to establish and confirm such exclusive ownership. Affiliates of the
Company shall be third party beneficiaries of Consultant’s obligations under this Appendix A. As a
result of Consultant’s service relationship with the Company, Consultant may also from time to time
have access to, or knowledge of, Confidential Information or Work Product of third parties, such as
customers, suppliers, partners, joint venturers, and the like, of the Company and its affiliates.
Consultant also agrees to preserve and protect the confidentiality of such third party Confidential
Information and Work Product to the same extent, and on the same basis, as the Company’s
Confidential Information and Work Product.



     3. Ownership by the Company: If, during Consultant’s service relationship with the
Company, Consultant creates any work of authorship fixed in any tangible medium of expression that
is the subject matter of copyright (such as videotapes, written presentations, or acquisitions,
computer programs, E-mail, voice mail, electronic databases, drawings, maps, architectural
renditions, models, manuals, brochures, or the like) relating to the Company’s business, products,
or services, whether such work is created solely by Consultant or jointly with others (whether
during business hours or otherwise and whether on the Company’s premises or otherwise), including
any Work Product, the Company shall be deemed the author of such work if the work is prepared by
Consultant in the scope of Consultant’s service relationship with the Company; or, if the work is
not prepared by Consultant within the scope of Consultant’s service relationship with the Company
but is specially ordered by the Company as a contribution to a collective work, as a part of a
motion picture or other audiovisual work, as a translation, as a supplementary work, as a
compilation, or as an instructional text, then the work shall be considered to be work made for
hire and the Company shall be the author of the work. If such work is neither prepared by
Consultant within the scope of Consultant’s service relationship with the Company nor a work
specially ordered that is deemed to be a work made for hire, then Consultant hereby agrees to
assign, and by these presents does assign, to the Company all of Consultant’s worldwide right,
title, and interest in and to such work and all rights of copyright therein.



     4. Assistance by Consultant: During the period of Consultant’s service relationship
with the Company and thereafter, Consultant shall, at the Company’s expense, assist the Company and
its nominee, at any time, in the protection of the Company’s (or its affiliates’) worldwide right,
title and interest in and to Work Product and the execution of all formal assignment documents
requested by the Company or its nominee and the execution of all lawful oaths and applications for
patents and registration of copyright in the United States and foreign countries.



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     5. Remedies: Consultant acknowledges that money damages would not be sufficient
remedy for any breach of this Appendix A by Consultant, and the Company or its affiliates shall be
entitled to enforce the provisions of this Appendix A by terminating payments then owing to
Consultant under this Agreement or otherwise and to specific performance and injunctive relief as
remedies for such breach or any threatened breach. Such remedies shall not be deemed the exclusive
remedies for a breach of this Appendix A but shall be in addition to all remedies available at law
or in equity, including the recovery of damages from Consultant and his agents.




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