Document:

exv10w33

 

EXHIBIT 10.33

January 16, 2007

Mr. Paul M. Isabella

P.O. Box 8967

The Woodlands, Texas 77387

Dear Paul:

I believe we have fully discussed the terms of your departure from Cooper US, Inc. (“Cooper”).
However, I thought it would be beneficial to reduce our understandings to writing in this Agreement
to avoid any misunderstandings at a later date. Paul, in making these arrangements, we have
carefully considered the services you have rendered and the contributions you have made while
working at Cooper.

Announcements and Transition

On December 1, 2006, you received Cooper’s thirty (30) day written notice (the “Notice Period”) to
you that effective January 2, 2007, your role as Executive Vice President, Cooper Connection, would
end. During the Notice Period, in addition to your normal responsibilities, you agreed to
participate in such communications with Cooper management and other parties as may be necessary or
helpful to ensure that this management transition would not have any adverse impact on current and
future operations and/or financial results at Cooper. Effective January 2, 2007, when your active
employment terminated, and throughout the salary continuation period up to and including June 30,
2007, (the “salary continuation period”) you have agreed to continue to assist us in an orderly
transition of your management responsibilities and to provide reasonable consulting services to
Cooper. Such consulting services will not exceed an aggregate of 240 hours during the salary
continuation period.

Salary and Benefits Continuation

We have mutually agreed that your active employment ceased as of January 2, 2007, but that you will
continue to receive your current salary ($35,000.00, on a monthly basis) through June 30, 2007.
These guaranteed payments exceed and are in lieu of benefits for which you may be eligible under
Cooper’s Separation Allowance Plan and will continue even if you should find alternate employment.
It is understood that no bonuses or vacation will be earned during your salary continuation
period. Your remaining accrued but not taken current year vacation days will be paid out in a lump
sum.

We have also agreed that your salary and benefits continuation period may be extended for up to six
(6) additional months on a month-to-month basis, and in no event later than through December 31,
2007, in the event you remain unemployed as of the completion of the six (6) month salary and
benefits continuation period despite a diligent and ongoing job search. (In the event you will
require this extended benefit phase, please advise me by June 15, 2007, to ensure this occurs).
You will not be eligible for the additional salary and benefits continuation once new employment
has been obtained. Such salary and

 

 

Personal and Confidential

Mr. Paul M. Isabella

January 16, 2007

Page 2 of 7

benefits continuation will cease effective on the last day immediately proceeding the date you
commence your new employment.

In accordance with Sections IV and VI of the Cooper Industries Amended and Restated Management
Annual Incentive Plan, you acknowledge that you will not be eligible to receive any portion of the
2006 Management Annual Incentive Award, which is hereby forfeited in its entirety.

As discussed above, we have also agreed that, if requested, you will be available to provide
reasonable consulting services to facilitate a smooth management transition during the period from
January 2, 2007 to June 30, 2007, including any extension. These services will be provided at
mutually agreeable times that do not unreasonably interfere with your personal plans. In addition,
at the request of Cooper or any of its related entities you have agreed to assist us in any
threatened or actual litigation concerning it or them, where you have in your possession or
knowledge any facts or other matters which we reasonably consider is relevant to such legal
proceedings (among other things, giving statements/affidavits, meeting with our legal and other
professional advisers, attending any legal hearing, and giving evidence during your salary
continuation period. We will reimburse you for reasonable expenses properly incurred by you in
giving such assistance. If such assistance is required after the completion of your salary
continuation period, including any extension, we will pay to you Two Hundred Dollars and No Cents
($200.00) per hour for any time required.

Group insurance coverage, i.e., life, medical and dental, will continue during your salary
continuation period, including any extension, unless you sooner receive alternate coverage with
another employer even if this alternate coverage is less comprehensive. You have agreed to notify
us if and when such coverage becomes effective. You will continue to be responsible for the
appropriate employee contributions toward medical and dental insurance in order to be eligible for
coverage. Such contributions will be on the same basis as if you were an active employee. Other
non-contributory welfare benefits (business travel & accident) will terminate on your last day of
active employment. Voluntary optional life and AD&D coverage may be continued through ongoing
contributions.

You will receive a letter regarding your eligibility for eighteen (18) months of continuing medical
and dental insurance coverage under the federal COBRA law. If you wish to continue medical and
dental coverage after your salary continuation period you will need to accept the offered coverage
within sixty (60) days of your last day of work. COBRA coverage will run concurrently with the
salary continuation period. Once salary continuation ceases you will need to make monthly premium
payments directly to the insurance carrier in order to maintain medical and dental coverage.

Outplacement

Cooper will provide you access to outplacement services through Right Management Consultants at
Company expense for up to one year from your termination of employment.

 

 

Personal and Confidential

Mr. Paul M. Isabella

January 16, 2007

Page 3 of 7

Pension 

You
are covered by the Salaried Employees’ Retirement Plan (the Plan) of Cooper Industries, Inc.
In accordance with the Plan, Company contributions made on your behalf are 33% vested after three
years of service, 67% vested after four years, and 100% vested after five years of service. Plan
provisions also govern the payment of benefits. Because you have less than three years of service
with the Company, no contributions made on your behalf are vested and, therefore, will be
forfeited.

Savings Plan 

You are currently a participant in the Cooper Savings Plan (CO-SAV). You may check your
account balance at any time by contacting Diversified Direct at 1-800-755-5801 or by visiting the
Diversified Direct website at www.divinvest.com.

Employee contributions plus Company matching will continue for separation allowance payments
received for the period up to and including December 31, 2006, or the end of your separation
allowance payments, whichever is earlier. Employee contributions plus Company matching will cease
no later than January 1, 2007.

Your CO-SAV account balance may be distributed to you after December 31, 2006, or at the end of
your separation allowance period, whichever is earlier. Distribution cannot be requested while
contributions are being made.

If you elect to leave your account in the plan you will continue to receive quarterly Participant
Statements until your account is distributed. You may request distribution at any future date
before you reach age 701/2 by calling Diversified or visiting the Diversified Direct website.

Stock Options

According to our records, you currently hold Non-Qualified Stock Option (NQSO) grants issued in
2005 and 2006. A summary of current vested and non-vested options issued to you is attached.
Non-qualified stock options granted to you pursuant to an agreement dated February 13, 2006, will
terminate automatically on January 2, 2007, in accordance with Section 1(a) of such agreement,
since you will not be actively employed for one (1) year following the grant date. 10,000
Non-qualified stock options currently vested at $70.94 and 13,333 non-qualified stock options
currently vested at $65.36 awarded on April 18, 2005, will remain exercisable until ninety (90)
days after your active employment with Cooper ceases, or April 2, 2007, after which date all
outstanding options will automatically terminate and cease to be exercisable. 10,000 non-qualified
stock options at $70.94 granted to you pursuant to an agreement dated April 18, 2005, will continue
to vest in accordance with the terms of such agreement as if you were actively employed on February
7, 2007 and will remain exercisable until ninety (90) days after your active employment with Cooper
ceases, or April 2, 2007. Other than the vesting described in the preceding sentence, no
additional vesting of stock options shall occur following your termination of employment.

 

 

Personal and Confidential

Mr. Paul M. Isabella

January 16, 2007

Page 4 of 7

Consequently, in the event you elect to exercise any options you must do so prior to April 2, 2007.
In the event you die with stock options outstanding, rights of your beneficiaries and estate will
be as outlined in the applicable Stock Option Agreement.

Performance Shares 

In 2005, you received grants of Performance Shares based on the 2004-2006 and 2005-2007 cycles of
the program. These grants are administered under the terms of the Stock Incentive Plan and the
Executive Stock Incentive Agreements between you and Cooper. (As used herein, all capitalized
terms are as defined in the Stock Incentive Plan and the Executive Stock Incentive Agreement
related to each grant.). Pursuant to the terms of your employment offer, the award under the
2004-2006 cycle of the program will be paid to you, in shares (net of taxes) once performance
results, and awards related thereto, are determined by the MD&C Committee of the Board of Directors
at the February 2007 meeting. Performance share grants made to you under the 2005-2007 and
2006-2008 cycles of the program will be forfeited immediately when you cease active service.

Restricted Stock Units

In 2005, you were awarded 28,000 Restricted Stock Units (“RSUs”) which were subject to restrictions
for four (4) years. Restrictions on 7,000 of those RSUs have lapsed and those shares have been
awarded to you. In accordance with the terms of your Executive Restricted Stock Agreement, the
remaining 21,000 RSUs scheduled to vest ratably on December 1, 2007, December 1, 2008, and December
1, 2009, will be forfeited immediately when you cease active service. However, the 4th
quarter dividend equivalent on these unvested shares will be paid to you on January 2, 2007.

Management
Continuity Agreement/Change-In-Control Benefits

In 2006, you entered into a Management Continuity Agreement (“MCA”) with Cooper that contains
provisions that would apply in the event that a corporate Change-In-Control took place and
you were terminated or resigned with “Good Reason”. This provision is known as a “double trigger”
as both events must take place in order for benefits to become due under the MCA. Effectively
immediately, we have agreed that the MCA will terminate and become null and void. You also agree
that this constitutes sufficient notice as required by the MCA that you will not be eligible for
any payments or benefits under any MCA with Cooper.

Non-Competition and Non-Solicitation

In your period of employment with Cooper, the nature of your duties were such that you had access
to confidential and proprietary information including, but not limited to, the following: Company
policies, objectives, strategies and long-range plans, and plans for market and product development
that are not now and will not later become part of the public domain. As a result, we have
requested and you have

 

 

Personal and Confidential

Mr. Paul M. Isabella

January 16, 2007

Page 5 of 7

agreed that under no circumstance would you use such information gained in your position with
Cooper to the advantage of any competitor or to the disadvantage of Cooper. Provisions for
confidentiality and non-disclosure, which remain in effect, include the Executive Employment
Agreement dated March 3, 2006, and the Invention Assignment and Confidentiality Agreement and the
Secrecy Agreement signed by you on April 19, 2005 (the “Agreements”), attached hereto and
incorporated herein by reference. We are also in agreement that you will not take with you any
documents or copies of documents or use in any way, directly or indirectly, any confidential or
proprietary information which you have gained during your employment with Cooper.

Recognizing the nature and scope of your responsibilities while employed as Executive Vice
President, Cooper Connection, we have agreed that during the remainder of your employment and for a
period of two (2) years following the termination of your employment, you will not become an
employee, officer, director, agent, contractor or consultant of, or advisor to, EGS/Appleton,
Hubbell Inc., Thomas and Betts Corp., Genlyte-Thomas, Acuity Brands — Lithonia Lighting, LeGrand,
Leviton, Littelfuse, Inc., Ferraz Shawmut subsidiary of Groupe Carbonne Lorraine, and Hoffman. This
paragraph supercedes Section. 10 of the Executive Employment Agreement dated March 3, 2006, which
will otherwise remain in full force and effect. We acknowledge and agree that this language
constitutes a written amendment as specified in and required by Section. 20 of the Executive
Employment Agreement dated March 3, 2006.

During the remainder of your employment and for a period of two (2) years following the termination
of your employment, you agree that you will not, on behalf of yourself or any other person, firm,
company, business, or other legal entity, directly or indirectly employ, solicit, influence, or
attempt to influence any management, sales, technical design or engineering employee,
representative or advisor of the Company to terminate his or her employment relationship with the
Company and/or to work in any manner for you, or any entity affiliated with you. This paragraph
supercedes Section. 11 of the Executive Employment Agreement dated March 3, 2006, which will
otherwise remain in full force and effect. We acknowledge and agree that this language constitutes
a written amendment as specified in and required by Section. 20 of the Executive Employment
Agreement dated March 3, 2006.

During the remainder of your employment and for a period of two (2) years following the termination
of your employment, you agree that you will not, on behalf of yourself or any other person, firm,
company, business or other legal entity, solicit, contact, call upon, initiate communications with
or attempt to initiate communications with any customer of the Company for the purpose of selling
or providing products similar to or competitive with those manufactured by the Company. This
paragraph supercedes Section. 12 of the Executive Employment Agreement dated March 3, 2006, which
will otherwise remain in full force and effect. We acknowledge and agree that this language
constitutes a written amendment as specified in and required by Section. 20 of the Executive
Employment Agreement dated March 3, 2006.

Confidentiality

The terms of this letter and the separation-related benefits available to you from Cooper are
highly personal and reflect the contributions you have made to the Company. As a result, we have
asked that you respect the personal nature of these arrangements by maintaining this information in
the strictest confidence. Consequently, we have agreed that you will reveal the terms of this
letter and the separation benefits provided to you by Cooper only to your spouse, your personal tax
advisor and your attorney, and

 

 

Personal and Confidential

Mr. Paul M. Isabella

January 16, 2007

Page 6 of 7

only to the extent these individuals agree to maintain the confidentiality of these matters. We
have also agreed that this information may be disclosed as required by law but only in proceedings
not initiated by you or on your individual behalf. We have further agreed that the Company may
cease further payments pursuant to this Agreement in the event the separation arrangements outlined
in this letter are disclosed other than as permitted herein or in the event you do not comply with
any obligations imposed on you pursuant to this Agreement.

Paul, I would appreciate it if you would make certain that any outstanding cash advances and
business expenses be reconciled as soon as reasonably possible. If not, any amounts due the
Company will be withheld from your salary during your salary continuation period. Any amounts to
which you may have been entitled will be reimbursed through the normal accounting procedures upon
submission of appropriate expense report forms.

If the foregoing clearly and fully reflects our understanding, please so indicate by signing and
returning to me the enclosed Severance Agreement and Waiver and Release. Although you may take up
to twenty-one (21) days to do so, please return the Waiver as soon as it has been signed.
Thereafter, you may revoke the Waiver of claims under the ADEA in writing within seven (7) days by
providing me with a letter stating your intent to reject the ADEA portion of the enclosed severance
package.

Sincerely,

James P. Williams

Senior Vice President, Human Resources

JPW/sc

Attachments

 

 

Personal and Confidential

Mr. Paul M. Isabella

January 16, 2007

Page 7 of 7

I acknowledge receipt of this document and the Waiver And Release.

	 	 	 
	/s/
Paul Isabella
	 	 
	 

	 	 
	Employee Signature

	 	Witness
	 
	 	 
	1/18/07
	 	 
	 

	 	 
	Date

	 	Date

 

 

Personal and Confidential

WAIVER AND RELEASE

In consideration of the Company’s agreement to provide me with 1) six (6) months of salary and
benefits continuation; 2) to provide conditional salary and benefits continuation for up to an
additional six (6) months on a month-to-month basis should I remain unemployed despite a diligent
and ongoing search that will cease effective the day immediately proceeding the date my new
employment commences; 3) out-placement; 4) 10,000 non-qualified stock options currently vested at
$70.94 and 13,333 non-qualified stock options currently vested at $65.36 awarded on April 18, 2005,
that will remain exercisable until ninety (90) days after my active employment with Cooper ceases,
or April 2, 2007; and 5) 10,000 non-qualified stock options at $70.94 granted to me pursuant to an
agreement dated April 18, 2005, that will continue to vest in accordance with the terms of such
agreement through February 7, 2007, and that will remain exercisable until ninety (90) days after
my active employment with Cooper ceases, or April 2, 2007, 50% of which is consideration for
release of any and all claims under the Age Discrimination in Employment Act, as amended (“ADEA”),
which I would not otherwise be eligible to receive, I hereby waive and release the Company from any
and all present employment or termination related claims, damages, actions, rights, demands, and
causes of action, whether known or unknown, arising from, but not limited to, discrimination on the
basis of sex, race, color, national origin, religion, disability or veteran status; Title VII of
the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, Sections 1981 through 1988
of Title 42 of the United States Code, as amended, the Employee Retirement Income Security Act of
1974, as amended, the Americans With Disabilities Act of 1990, as amended, the Workers Adjustment
and Retraining Notification Act, as amended, the Immigration Reform and Control Act, as amended,
the Occupational Safety and Health Act, as amended, the Sarbanes-Oxley Act of 2002, the Fair Credit
Reporting Act, the ADEA, the Older Workers Benefit Protection Act, as amended, the Texas Commission
on Human Rights Act, the Texas Law on Communicable Diseases, the Texas Equal Pay Act, the Texas
Military Leave and Re-Employment Rights Law, the Texas Wage and Hour Laws, and any other federal,
state, or local civil or human rights law or any other federal, state or local law, regulation or
ordinance. I further waive and release any claims or demands arising under federal, state or local
law, including but not limited to, common law claims relating to wrongful discharge (including
retaliatory discharge) or any other possible restrictions on the Company’s ability to terminate its
employees at will, including violation of public policy, breach of any express or implied covenant
of the employment contract, and breach of any covenant of good faith and fair dealing; civil
actions relating to negligence, compensation, defamation, invasion of privacy, fraud,
misrepresentation, breach of contract, denial of leave or other terms and conditions of employment,
or infliction of emotional or mental distress. I further acknowledge that this Waiver and Release
excludes any workers’ compensation claims currently pending or permitted by law and further
excludes any pension or unemployment compensation benefits to which I may be otherwise entitled,
any claims that controlling state law clearly states that may not be released by settlement, and
any claims that may arise after the date this release is signed.

I have signed this Agreement voluntarily and without coercion or duress. I acknowledge that I have
reviewed all aspects of this Waiver and Release; that I have carefully read and fully understand
all the provisions of this Waiver and Release; that I understand that in agreeing to this document
I am releasing the Company from any and all claims I may have against them and voluntarily agree to
all the terms set forth in this Waiver and Release; that I knowingly and willingly intend to be
bound by the same; that I was given at least 21 days to consider the terms of this Waiver and
Release; and that I have been advised in writing to consult with counsel. I knowingly and
voluntarily waive the remainder of the 21-day consideration period, if any, following the date I
signed this Waiver and Release. I have not been asked by the Company to shorten my time period for
consideration of whether to sign this release. The

 

 

Personal and Confidential

Company has not threatened to withdraw or alter the benefits due me prior to the expiration of the
21-day period nor has the Company provided different terms to me because I have decided to sign the
release prior to the expiration of the 21-day period. I agree with the Company that changes,
whether material or immaterial, do not restart the running of the 21-day consideration period. I
further acknowledge that I am voluntarily accepting the Company’s offer of additional benefits.

I understand that I have a seven-day period after signing this release in which to revoke in
writing any waiver of claims under the ADEA, and that this release will not be enforceable until
the end of the seven-day period. No benefits will be paid under this release until the eighth day
after I sign this release.

I understand that the furnishing of this Waiver and Release and corresponding consideration shall
not be deemed or construed at anytime for any purpose as an admission by the Company of any
liability or unlawful conduct of any kind. Based upon the signing of this Agreement, I affirm that
I have not filed, caused to be filed, or am presently a party to any claim, complaint, or action
against the Company in any forum or form. I further affirm that I have been paid and/or have
received all leave (paid or unpaid), compensation, wages, bonuses, commissions, and/or benefits to
which I may be entitled and that no other leave (paid or unpaid), compensation, wages, bonuses,
commissions and/or benefits are due to me, except as provided in this Agreement. I further affirm
that I have no known workplace injuries or occupational diseases and have been provided and/or have
not been denied any leave requested.

I understand and agree to return all confidential information, computer software or hardware,
files, paper, memoranda, correspondence, customer lists, financial data, credit cards, keys, tape
recordings, pictures, and security access cards, and any other items of any nature which were or
are the property of the Company. I further agree not to retain any copies of any such property in
my possession or under my control.

I agree not to disclose any information regarding the existence or substance of this Waiver and
Release, except to my spouse, tax advisor, and an attorney with whom I choose to consult regarding
consideration of this Waiver and Release.

I agree that the Executive Employment Agreement dated March 3, 2006, is attached hereto and
incorporated herein by reference. I agree that during the remainder of my employment and for a
period of two (2) years following the termination of my employment, I will not become an employee,
officer, director, agent, contractor or consultant of, or advisor to, EGS/Appleton, Hubbell Inc.,
Thomas and Betts Corp., Genlyte-Thomas, Acuity Brands — Lithonia Lighting, LeGrand, Leviton,
Littelfuse, Inc., Ferraz Shawmut subsidiary of Groupe Carbone Lorraine, and Hoffman. This
paragraph supercedes Section. 10 of the Executive Employment Agreement dated March 3, 2006, which
will otherwise remain in full force and effect. I acknowledge and agree that this language
constitutes a written amendment as specified in and required by Section. 20 of the Executive
Employment Agreement dated March 3, 2006.

I agree that during the remainder of my employment and for a period of two (2) years following the
termination of my employment, that I will not, on behalf of myself or any other person, firm,
company, business, or other legal entity, directly or indirectly employ, solicit, influence, or
attempt to influence any management, sales, technical design or engineering employee,
representative or advisor of the Company to terminate his or her employment relationship with the
Company and/or to work in any manner for me, or any entity affiliated with me. This paragraph
supercedes Section. 11 of the Executive Employment Agreement dated March 3, 2006, which will
otherwise remain in full force and effect. I acknowledge

 

 

Personal and Confidential

and agree that this language constitutes a written amendment as specified in and required by
Section. 20 of the Executive Employment Agreement dated March 3, 2006.

I agree that during the remainder of my employment and for a period of two (2) years following the
termination of my employment, that I will not, on behalf of myself or any other person, firm,
company, business or other legal entity, solicit, contact, call upon, initiate communications with
or attempt to initiate communications with any customer of the Company for the purpose of selling
or providing products similar to or competitive with those manufactured by the Company. This
paragraph supercedes Section. 12 of the Executive Employment Agreement dated March 3, 2006, which
will otherwise remain in full force and effect. I acknowledge and agree that this language
constitutes a written amendment as specified in and required by Section. 20 of the Executive
Employment Agreement dated March 3, 2006.

I agree that the Secrecy Agreement and the Invention Assignment and Confidentiality Agreement
signed by me on April 19, 2006 (the Agreements), and the accompanying letter to me (the “Letter”)
to this Waiver and Release dated January 16, 2007, are incorporated herein by reference and that I
understand that my obligations under the Agreements remain in full force and effect.

I agree that I shall not for any reason whatsoever and whether directly or indirectly, either alone
or jointly with any person, firm or corporation at any time, in any way, make disparaging
statements about the Company or any of its related entities, their products, services or employees
to any person, entity, vendor, contractor, subcontractor, competitor, customer or potential
customer of the Company.

I agree that at the request of Cooper or any of its related entities that I shall assist the
Company in any threatened or actual litigation concerning the Company or any of its related
entities, where I have in my possession or knowledge any facts or other matters which the Company
reasonably considers is relevant to such legal proceedings (among other things, giving
statements/affidavits, meeting with the Company’s legal and other professional advisers, attending
any legal hearing, and giving evidence during my salary continuation period. I further agree that
the Company will reimburse me for reasonable expenses properly incurred by me in giving such
assistance and if such assistance is required after the completion of my salary continuation
period, the Company will pay to me Two Hundred Dollars and No Cents ($200.00) per hour for any time
required.

I understand that following the seven-day revocation period, this release will be final and
binding.

Should any provision of this Agreement be declared invalid by a Court of competent jurisdiction,
the remaining provisions shall remain in full force and effect.

The validity of this Waiver and Release shall be construed under Texas law. This Waiver and
Release, the Executive Employment Agreement, the Agreements, and the Letter constitute the complete
and total agreement between the Company and me. I represent that I am not relying on any other
agreements or oral representations not fully expressed in this Agreement. I agree that this
Agreement shall not be modified, altered, or discharged except by written instrument signed by an
authorized Company representative and me.

As used in this Agreement, the word “Company” shall mean Cooper US, Inc., its parent, incorporated
divisions, wholly-owned subsidiaries, affiliates, successors and assigns, as well as its agents,
employees and officers acting in their individual and/or official capacity.

 

 

Personal and Confidential

I SIGN THIS RELEASE VOLUNTARILY AND AM NOT RELYING ON ANY STATEMENT OR PROMISE OTHER THAN AS
CONTAINED IN THIS RELEASE. I AGREE THAT I HAVE BEEN AND AM ADVISED IN WRITING TO CONSULT WITH AN
ATTORNEY PRIOR TO SIGNING THIS RELEASE:

	 	 	 
	Signed by:

	 	For the Company:
	 
	 	 
	/s/ Paul Isabella
	 	/s/ James P. Williams
	 

	 	 
	Paul M. Isabella

	 	James P. Williams
	 
	 	 
	 
	 	 
	Dated: 1/18/07

	 	Dated: 1/16/07
	 
	 	 
	Witnessed by:exv10w1

 

Exhibit 10.1

NEWFIELD EXPLORATION COMPANY

2004 OMNIBUS STOCK PLAN

(As Amended and Restated Effective February 7, 2007)

I. PURPOSE

     The purpose of this NEWFIELD EXPLORATION COMPANY 2004 OMNIBUS STOCK PLAN (this “Plan”) is to
provide a means through which NEWFIELD EXPLORATION COMPANY, a Delaware corporation (the “Company”),
and its subsidiaries may attract and retain able employees and to provide a means whereby those
individuals upon whom the responsibilities of the successful administration and management of the
Company and its subsidiaries rest, and whose present and potential contributions to the welfare of
the Company and its subsidiaries are of importance, can acquire and maintain stock ownership,
thereby strengthening their concern for the welfare of the Company and its subsidiaries. A further
purpose of this Plan is to provide employees with additional incentive and reward opportunities
designed to enhance the profitable growth of the Company and its subsidiaries and to better align
the interests of such employees with those of the Company’s stockholders. Accordingly, this Plan
provides for granting Incentive Stock Options, options that do not constitute Incentive Stock
Options, Restricted Stock Awards, Restricted Stock Unit Awards and any combination of the
foregoing, as is best suited to the circumstances of a particular employee.

II. DEFINITIONS AND CONSTRUCTION

     (a) Definitions. Where the following words and phrases are used in this Plan, they
shall have the respective meanings set forth below, unless the context clearly indicates to the
contrary:

     “Award” means, individually or collectively, any Option, Restricted Stock Award or Restricted
Stock Unit Award.

     “Board” means the Board of Directors of the Company.

     “Change of Control” means the occurrence of any of the following events: (i) the Company is
not the surviving Person in any merger, consolidation or other reorganization (or survives only as
a subsidiary of another Person), (ii) the consummation of a merger or consolidation of the Company
with another Person and as a result of such merger or consolidation less than 50% of the
outstanding voting securities of the surviving or resulting corporation will be issued in respect
of the capital stock of the Company, (iii) the Company sells, leases or exchanges all or
substantially all of its assets to any other Person, (iv) the Company is to be dissolved and
liquidated, (v) any Person, including a “group” as contemplated by Section 13(d)(3) of the Exchange
Act, acquires or gains ownership or control (including the power to vote) of more than 50% of the
outstanding shares of the Company’s voting stock (based upon voting power) or (vi) as a result of
or in connection with a contested election of directors, the Persons who were directors of the
Company before such election cease to constitute a majority of the Board. Notwithstanding the
foregoing, for purposes of Paragraph X(d), (A) the

 

 

definition of “Change of Control” shall not include clause (i) above or any merger,
consolidation, reorganization, sale, lease, exchange, or similar transaction involving solely the
Company and one or more Persons that were wholly owned, directly or indirectly, by the Company
immediately prior to such event and (B) with respect to Restricted Stock Unit Awards, the
definition of “Change of Control” shall be limited to the extent necessary to comply with the
definition of “change in ownership or effective control” as defined in section 409A of the Code.

     “Change of Control Value” means (i) the price per share offered to stockholders of the Company
in any merger, consolidation, reorganization, sale of assets or dissolution transaction that
constitutes a Change of Control, (ii) the price per share offered to stockholders of the Company in
any tender offer or exchange offer whereby a Change of Control takes place, or (iii) if a Change of
Control occurs other than pursuant to a tender offer or exchange offer, the fair market value per
share of the shares into which Awards are exercisable, as determined by the Committee. If the
consideration offered to stockholders of the Company in any Change of Control transaction consists
of anything other than cash, the Committee shall determine the fair cash equivalent of the portion
of the consideration offered that is other than cash.

     “Code” means the Internal Revenue Code of 1986, as amended. Reference in this Plan to any
section of the Code shall be deemed to include any amendments or successor provisions to such
section and any regulations under such section.

     “Committee” means, subject to Paragraph IV(d), the Compensation & Management Development
Committee of the Board.

     “Common Stock” means the common stock, par value $.01 per share, of the Company, or any
security into which such Common Stock may be changed by reason of any transaction or event of the
type described in Paragraph X.

     “Company” has the meaning specified in Paragraph I.

     An “employee” means any Person (including an officer or a director) in an employment
relationship with the Company or any parent or subsidiary corporation (as defined in section 424 of
the Code).

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Fair Market Value” means, as of any specified date, the mean of the high and low sales prices
of the Common Stock (i) reported by the National Market System of NASDAQ on that date or (ii) if
the Common Stock is listed on a national stock exchange, reported on the stock exchange composite
tape on that date (or such other reporting service approved by the Committee); or, in either case,
if no prices are reported on that date, on the last preceding date on which such prices of the
Common Stock were so reported. If the Common Stock is traded over the counter at the time a
determination of its fair market value is required to be made hereunder, its fair market value
shall be deemed to be equal to the average between the reported high and low or closing bid and
asked prices of Common Stock on the most recent date on which Common Stock was publicly traded. If
the Common Stock is not publicly traded at the time a determination of its value is required to be
made hereunder, the determination of its fair market value shall be made by the Committee in such
manner as it deems appropriate.

2

 

     “Forfeiture Restrictions” has the meaning specified in Paragraph VIII(a).

     “Holder” means an employee who has been granted an Award, all or any portion of which remains
outstanding.

     “Incentive Stock Option” means an incentive stock option within the meaning of section 422 of
the Code.

     “Option” means an Award granted under Paragraph VII of this Plan and includes both Incentive
Stock Options to purchase Common Stock and Options to purchase Common Stock that do not constitute
Incentive Stock Options.

     “Option Agreement” means a written agreement between the Company and a Holder with respect to
an Option.

     “Person” means any individual, partnership, corporation, limited liability company, trust,
incorporated or unincorporated organization or association or other legal entity of any kind.

     “Plan” means the Newfield Exploration Company 2004 Omnibus Stock Plan, as hereby amended and
restated and as the same may be hereafter amended from time to time.

     “Requirements” has the meaning specified in Paragraph XII(g).

     “Restricted Stock Agreement” means a written agreement between the Company and a Holder with
respect to a Restricted Stock Award.

     “Restricted Stock Award” means an Award granted under Paragraph VIII of this Plan.

     “Restricted Stock Unit Agreement” means a written agreement between the Company and a Holder
with respect to a Restricted Stock Unit Award.

     “Restricted Stock Unit Award” means an Award granted under Paragraph IX of this Plan.

     “Rule 16b-3” means Securities and Exchange Commission Rule 16b-3 promulgated under the
Exchange Act, as it may be amended from time to time, and any successor rule, regulation or statute
fulfilling the same or a similar function.

     “Unit Forfeiture Restrictions” has the meaning specified in Paragraph IX(b).

     (b) Construction. Unless the context otherwise requires, as used in this Plan (i) a
term has the meaning ascribed to it; (ii) “or” is not exclusive; (iii) “including” means
“including, without limitation;” (iv) words in the singular include the plural; (v) words in the
plural include the singular; (vi) words applicable to one gender shall be construed to apply to
each gender; (vii) the terms “hereof,” “herein,” “hereby,” “hereto,” and derivative or similar
words refer to this entire Plan; (viii) the term “Paragraph” refers to the specified Paragraph of
this Plan; (ix) the descriptive headings contained in this Plan are included for convenience of
reference only and shall not affect in any way the meaning or interpretation of this Plan; (x) all
references to

3

 

amounts of money are to U.S. dollars; and (xi) a reference to any Person includes such
Person’s successors and permitted assigns.

III. DURATION OF THIS PLAN

     No further Awards may be granted under the Plan after the expiration of ten years from the
date the Plan was originally adopted by the Board. The Plan shall remain in effect until all
Options granted under the Plan have been satisfied or expired, and all Restricted Stock Awards and
Restricted Stock Unit Awards granted under the Plan have vested or been forfeited.

IV. ADMINISTRATION

     (a) Committee Administration. Subject to Paragraph IV(d), this Plan shall be
administered by the Committee.

     (b) Powers. Subject to the express provisions of this Plan, the Committee shall have
authority, in its sole discretion, to determine which employees shall receive an Award, the time or
times when such Award shall be made, whether an Incentive Stock Option, nonqualified Option,
Restricted Stock Award or Restricted Stock Unit Award shall be granted, the number of shares to be
subject to each Option or Restricted Stock Award, and the number of shares reflected by each
Restricted Stock Unit Award. In making such determinations, the Committee shall take into account
the nature of the services rendered by the respective employees, their present and potential
contribution to the Company’s success and such other factors as the Committee in its sole
discretion may deem relevant.

     (c) Additional Powers. The Committee shall have such additional powers as are
delegated to it by the other provisions of this Plan. Subject to the express provisions of this
Plan, this shall include the power to construe this Plan and the respective agreements executed
hereunder, to prescribe rules and regulations relating to this Plan, and to determine the terms,
restrictions and provisions of the agreement relating to each Award, including such terms,
restrictions and provisions as shall be requisite in the judgment of the Committee to cause
designated Options to qualify as Incentive Stock Options, and to make all other determinations
necessary or advisable for administering this Plan. The Committee may correct any defect or supply
any omission or reconcile any inconsistency in this Plan or in any agreement relating to an Award
in the manner and to the extent it shall deem expedient to carry it into effect. The
determinations of the Committee on the matters referred to in this Paragraph IV shall be
conclusive.

     (d) Delegation of Authority by the Committee. Notwithstanding the preceding
provisions of this Paragraph IV or any other provision of this Plan to the contrary, the Committee
may from time to time, in its sole discretion, delegate all or any portion of its powers, duties
and responsibilities under this Plan to a subcommittee of the Committee. In particular, the
Committee may delegate the administration (or interpretation of any provision) of this Plan and the
right to grant Awards under this Plan to a subcommittee consisting solely of two or more members of
the Committee who are outside directors (within the meaning of the term “outside directors” as used
in section 162(m) of the Code and applicable interpretive authority thereunder and within the
meaning of “Non-Employee Director” as defined in Rule 16b-3). The Committee may put any

4

 

conditions and restrictions on the powers that may be exercised by such subcommittee upon such
delegation as the Committee determines in its sole discretion, and the Committee may revoke such
delegation at any time.

V. SHARES SUBJECT TO THIS PLAN; GRANT OF OPTIONS;

GRANT OF RESTRICTED STOCK AWARDS;

GRANT OF RESTRICTED STOCK UNIT AWARDS

     (a) Shares Subject to this Plan and Award Limits. Subject to adjustment from time to
time in accordance with the terms of this Plan, the aggregate number of shares of Common Stock that
may be issued under this Plan shall not exceed 6,000,000 shares. With respect to each Option
granted under this Plan, the number of shares of Common Stock available for issuance under this
Plan shall be reduced by the number of shares subject to such Option, and to the extent that such
Option lapses or the rights of its Holder terminate, any shares not issued pursuant to such Option
shall again be available for the grant of an Award under this Plan. With respect to each
Restricted Stock Award granted under this Plan, the number of shares of Common Stock available for
issuance under this Plan shall be reduced by two times the number of shares subject to such
Restricted Stock Award, and to the extent that such Restricted Stock Award lapses or the rights of
its Holder terminate, two times the number of shares subject to such Restricted Stock Award that
were forfeited shall again be available for the grant of an Award under this Plan. With respect to
each Restricted Stock Unit Award granted under this Plan, the number of shares of Common Stock
available for issuance under this Plan shall be reduced by two times the number of shares reflected
by such Restricted Stock Unit Award, and to the extent that such Restricted Stock Unit Award lapses
or the rights of its Holder terminate, two times the number of shares reflected by such Restricted
Stock Unit Award that were forfeited shall again be available for the grant of an Award under this
Plan. Notwithstanding any provision in this Plan to the contrary, the maximum number of shares of
Common Stock that may be subject to Awards granted to any one individual during any calendar year
is 250,000 shares of Common Stock (as adjusted from time to time in accordance with the terms of
this Plan). Notwithstanding any provision in this Plan to the contrary, the aggregate grant date
Fair Market Value of shares of Common Stock that may be subject to Restricted Stock Awards granted
to any one individual during any calendar year may not exceed $10,000,000 and the aggregate grant
date Fair Market Value of shares of Common Stock that may be reflected by Restricted Stock Unit
Awards granted to any one individual during any calendar year may not exceed $10,000,000 (such
amounts to be adjusted from time to time proportionately with any adjustments to the aggregate
number of shares of Common Stock that may be issued under this Plan). The limitations set forth in
the preceding sentences shall be applied in a manner that will permit compensation generated under
this Plan that is intended to constitute “performance-based” compensation for purposes of section
162(m) of the Code to qualify as such, including counting against such maximum number of shares or
such aggregate grant date Fair Market Value, to the extent required under section 162(m) of the
Code and applicable interpretive authority thereunder, any shares subject to Options that are
canceled or repriced or the aggregate grant date Fair Market Value of shares subject to Restricted
Stock Awards and Restricted Stock Unit Awards that are forfeited.

5

 

     (b) Grant of Options. The Committee may from time to time grant Options to one or
more employees determined by it to be eligible for participation in this Plan in accordance with
the terms of this Plan.

     (c) Grant of Restricted Stock Awards. The Committee may from time to time grant
Restricted Stock Awards to one or more employees determined by it to be eligible for participation
in this Plan in accordance with the terms of this Plan.

     (d) Grant of Restricted Stock Unit Awards. The Committee may from time to time grant
Restricted Stock Unit Awards to one or more employees determined by it to be eligible for
participation in this Plan in accordance with the terms of this Plan.

     (e) Stock Offered. Subject to the limitations set forth in Paragraph V(a), the stock
to be offered pursuant to the grant of an Award may be authorized but unissued Common Stock or
Common Stock previously issued and outstanding and reacquired by the Company. Any of such shares
that remain unissued and that are not subject to outstanding Awards at the termination of this Plan
shall cease to be subject to this Plan but, until termination of this Plan, the Company shall at
all times make available a sufficient number of shares to meet the requirements of this Plan.

VI. ELIGIBILITY

     Awards may be granted only to Persons who, at the time of grant, are employees. An Award may
be granted on more than one occasion to the same Person, and, subject to the limitations set forth
in this Plan, such Award may include an Incentive Stock Option, an Option that is not an Incentive
Stock Option, a Restricted Stock Award, a Restricted Stock Unit Award or any combination thereof.

VII. STOCK OPTIONS

     (a) Option Period. The term of each Option shall be as specified by the Committee at
the date of grant, but in no event shall an Option be exercisable after the expiration of ten years
from the date of grant.

     (b) Limitations on Exercise of Option. An Option shall be exercisable in whole or in
such installments and at such times as determined by the Committee.

     (c) Special Limitations on Incentive Stock Options. To the extent that the aggregate
Fair Market Value (determined at the time the respective Incentive Stock Option is granted) of
Common Stock with respect to which Incentive Stock Options are exercisable for the first time by an
individual during any calendar year under all incentive stock option plans of the Company and its
parent and subsidiary corporations exceeds $100,000, such Incentive Stock Options shall be treated
as Options that do not constitute Incentive Stock Options. The Committee shall determine, in
accordance with applicable provisions of the Code, Treasury Regulations and other administrative
pronouncements, which of a Holder’s Incentive Stock Options will not constitute Incentive Stock
Options because of such limitation and shall notify the Holder of such determination as soon as
practicable after such determination. No Incentive

6

 

Stock Option shall be granted to an individual if, at the time the Option is granted, such
individual owns stock possessing more than 10% of the total combined voting power of all classes of
stock of the Company or of its parent or subsidiary corporation, within the meaning of section
422(b)(6) of the Code, unless (i) at the time such Option is granted the option price is at least
110% of the Fair Market Value of the Common Stock subject to the Option and (ii) such Option by its
terms is not exercisable after the expiration of five years from the date of grant. An Incentive
Stock Option shall not be transferable otherwise than by will or the laws of descent and
distribution, and shall be exercisable during the Holder’s lifetime only by such Holder or the
Holder’s guardian or legal representative.

     (d) Option Agreement. Each Option shall be evidenced by an Option Agreement in such
form and containing such provisions not inconsistent with the provisions of this Plan as the
Committee from time to time shall approve, including provisions to qualify an Incentive Stock
Option under section 422 of the Code. Each Option Agreement shall specify the effect of
termination of employment on the exercisability of the Option. An Option Agreement may provide for
the payment of the option price, in whole or in part, by the constructive delivery of a number of
shares of Common Stock (plus cash if necessary) having a Fair Market Value equal to such option
price. Moreover, an Option Agreement may provide for a “cashless exercise” of the Option by
establishing procedures satisfactory to the Committee with respect thereto. The terms and
conditions of the respective Option Agreements need not be identical. Subject to the consent of
the Holder, the Committee may, in its sole discretion, amend an outstanding Option Agreement from
time to time in any manner that is not inconsistent with the provisions of this Plan (including an
amendment that accelerates the time at which the Option, or any portion thereof, may be
exercisable).

     (e) Option Price and Payment. The price at which a share of Common Stock may be
purchased upon exercise of an Option shall be determined by the Committee but, subject to
adjustment as provided in Paragraph X, such purchase price shall not be less than the Fair Market
Value of a share of Common Stock on the date such Option is granted. The Option or portion thereof
may be exercised by delivery of an irrevocable notice of exercise to the Company, as specified by
the Committee. The purchase price of the Option or portion thereof shall be paid or otherwise
satisfied in full in the manner prescribed by the Committee and the applicable Option Agreement.
Separate stock certificates shall be issued by the Company for those shares acquired pursuant to
the exercise of an Incentive Stock Option and for those shares acquired pursuant to the exercise of
any Option that does not constitute an Incentive Stock Option.

     (f) Restrictions on Repricing Options. Except as provided in Paragraph X, the
Committee may not, without approval of the stockholders of the Company, amend any outstanding
Option Agreement to lower the option price (or cancel and replace any outstanding Option Agreement
with Option Agreements having a lower option price).

     (g) Stockholder Rights and Privileges. The Holder shall be entitled to all the
privileges and rights of a stockholder only with respect to such shares of Common Stock as have
been purchased under the Option and for which certificates of stock have been registered in the
Holder’s name.

7

 

     (h) Options and Rights in Substitution for Stock Options Granted by Other
Corporations. Options may be granted under this Plan from time to time in substitution for
stock options held by individuals employed by corporations or other Persons who become employees as
a result of a merger or consolidation or other business transaction with the Company or a
subsidiary of the Company.

VIII. RESTRICTED STOCK AWARDS

     (a) Forfeiture Restrictions To Be Established by the Committee. Shares of Common
Stock that are the subject of a Restricted Stock Award shall be subject to restrictions on
disposition by the Holder and an obligation of the Holder to forfeit and surrender the shares to
the Company under certain circumstances (“Forfeiture Restrictions”). Applicable Forfeiture
Restrictions shall be determined by the Committee in its sole discretion, and the Committee may
provide that the Forfeiture Restrictions shall lapse upon (i) the attainment of one or more
performance targets established by the Committee that are based on the price of a share of Common
Stock, the Company’s consolidated earnings per share, the Company’s market share, the market share
of a business unit of the Company designated by the Committee, the Company’s sales, the sales of a
business unit of the Company designated by the Committee, the consolidated net income (before or
after taxes) of the Company or any business unit of the Company designated by the Committee, the
consolidated cash flow return on investment of the Company or any business unit of the Company
designated by the Committee, the consolidated earnings before or after interest, taxes and
depreciation, depletion and amortization of the Company or any business unit of the Company
designated by the Committee, the economic value added, the return on stockholders’ equity achieved
by the Company, reserve additions or revisions, economic value added from reserves, total
capitalization, total stockholder return, assets, exploration successes, production volumes,
finding and development costs, cost reductions and savings, return on sales or profit margins, (ii)
the Holder’s continued employment as an employee for a specified period of time, (iii) the
occurrence of any event or the satisfaction of any other condition specified by the Committee in
its sole discretion or (iv) a combination of any of the foregoing. The performance measures
described in clause (i) of the preceding sentence may be subject to adjustment for specified
significant extraordinary items or events; provided, however, that with respect to a Restricted
Stock Award that has been granted to a “covered employee” (within the meaning of Treasury
Regulation section 1.162-27(c)(2)) that has been designed to meet the exception for
performance-based compensation under section 162(m) of the Code, such performance measures may only
be subject to adjustment to the extent that such adjustment would not cause such Award to cease to
be performance-based under applicable Treasury Regulations. In addition, such performance measures
may be absolute, relative to one or more other companies or relative to one or more indexes, and
may be contingent upon future performance of the Company or any subsidiary, division or department
thereof. Each Restricted Stock Award may, in the sole discretion of the Committee, have Forfeiture
Restrictions that are the same as or different from the Forfeiture Restrictions with respect to
other Restricted Stock Awards.

     (b) Other Terms and Conditions. Common Stock awarded pursuant to a Restricted Stock
Award shall be represented by a stock certificate registered in the name of the Holder of such
Restricted Stock Award. Unless provided otherwise in a Restricted Stock Agreement, the

8

 

Holder shall have the right to receive ordinary dividends with respect to Common Stock subject
to a Restricted Stock Award, to vote Common Stock subject thereto and to enjoy all other
stockholder rights, except that (i) the Holder shall not be entitled to delivery of the stock
certificate until the Forfeiture Restrictions have expired, (ii) the Company shall retain custody
of the stock until the Forfeiture Restrictions have expired, (iii) the Holder may not sell,
transfer, pledge, exchange, hypothecate or otherwise dispose of the stock until the Forfeiture
Restrictions have expired and (iv) a breach of the terms and conditions established by the
Committee pursuant to the Restricted Stock Agreement shall cause a forfeiture of the Restricted
Stock Award. At the time of such Award, the Committee may, in its sole discretion, prescribe
additional terms, conditions or restrictions relating to Restricted Stock Awards, including rules
pertaining to the termination of employment (by retirement, disability, death or otherwise) of a
Holder prior to expiration of the Forfeitures Restrictions. Such additional terms, conditions or
restrictions, if any, shall be set forth in a Restricted Stock Agreement made in conjunction with
the Award.

     (c) Payment for Restricted Stock. The Committee shall determine the amount and form
of any payment for Common Stock received pursuant to a Restricted Stock Award, provided that, in
the absence of such a determination, a Holder shall not be required to make any payment for Common
Stock received pursuant to a Restricted Stock Award except to the extent otherwise required by law.

     (d) Committee’s Discretion to Accelerate Vesting of Restricted Stock Awards. The
Committee may, in its sole discretion and as of a date determined by the Committee, fully vest any
or all Common Stock awarded to a Holder pursuant to a Restricted Stock Award and, upon such
vesting, all restrictions applicable to such Restricted Stock Award shall terminate as of such
date. Any action by the Committee pursuant to this Paragraph VIII(d) may vary among individual
Holders and may vary among the Restricted Stock Awards held by any individual Holder.
Notwithstanding the preceding provisions of this Paragraph VIII(d), the Committee may not take any
action described in this Paragraph VIII(d) with respect to a Restricted Stock Award that has been
granted to a covered employee (as defined in Paragraph VIII(a)) if such Award has been designed to
meet the exception for performance-based compensation under section 162(m) of the Code (unless such
action would not cause such Award to cease to be performance-based under applicable Treasury
Regulations).

     (e) Restricted Stock Agreements. At the time any Award is made under this Paragraph
VIII, the Company and the Holder shall enter into a Restricted Stock Agreement setting forth each
of the matters contemplated hereby and such other matters as the Committee may, in its sole
discretion, determine to be appropriate. The terms and provisions of the respective Restricted
Stock Agreements need not be identical. Subject to the consent of the Holder and the restriction
set forth in the last sentence of Paragraph VIII(d), the Committee may, in its sole discretion,
amend an outstanding Restricted Stock Agreement at any time and from time to time in any manner
that is not inconsistent with the provisions of this Plan.

IX. RESTRICTED STOCK UNIT AWARDS

     (a) Restricted Stock Unit Awards. Each Restricted Stock Unit Award shall represent
the right to receive in specified circumstances (as determined by the Committee) either

9

 

(i) one share of Common Stock for each unit represented by such Award or (ii) the value, in
cash, of each unit represented by such Award. The value of each unit represented by such Award
shall be equal to the Fair Market Value of one share of Common Stock.

     (b) Unit Forfeiture Restrictions To Be Established by the Committee. Restricted Stock
Unit Awards shall be subject to restrictions on disposition by the Holder and an obligation of the
Holder to forfeit and surrender the units to the Company under certain circumstances (“Unit
Forfeiture Restrictions”). Applicable Unit Forfeiture Restrictions shall be determined by the
Committee in its sole discretion, and the Committee may provide that the Unit Forfeiture
Restrictions shall lapse upon (i) the attainment of one or more performance targets established by
the Committee that are based on the price of a share of Common Stock, the Company’s consolidated
earnings per share, the Company’s market share, the market share of a business unit of the Company
designated by the Committee, the Company’s sales, the sales of a business unit of the Company
designated by the Committee, the consolidated net income (before or after taxes) of the Company or
any business unit of the Company designated by the Committee, the consolidated cash flow return on
investment of the Company or any business unit of the Company designated by the Committee, the
consolidated earnings before or after interest, taxes and depreciation, depletion and amortization
of the Company or any business unit of the Company designated by the Committee, the economic value
added, the return on stockholders’ equity achieved by the Company, reserve additions or revisions,
economic value added from reserves, total capitalization, total stockholder return, assets,
exploration successes, production volumes, finding and development costs, cost reductions and
savings, return on sales or profit margins, (ii) the Holder’s continued employment as an employee
for a specified period of time, (iii) the occurrence of any event or the satisfaction of any other
condition specified by the Committee in its sole discretion or (iv) a combination of any of the
foregoing. The performance measures described in clause (i) of the preceding sentence may be
subject to adjustment for specified significant extraordinary items or events; provided, however,
that with respect to a Restricted Stock Unit Award that has been granted to a “covered employee”
(within the meaning of Treasury Regulation section 1.162-27(c)(2)) that has been designed to meet
the exception for performance-based compensation under section 162(m) of the Code, such performance
measures may only be subject to adjustment to the extent that such adjustment would not cause such
Award to cease to be performance-based under applicable Treasury Regulations. In addition, such
performance measures may be absolute, relative to one or more other companies or relative to one or
more indexes, and may be contingent upon future performance of the Company or any subsidiary,
division or department thereof. Each Restricted Stock Unit Award may, in the sole discretion of
the Committee, have Unit Forfeiture Restrictions that are the same as or different from the Unit
Forfeiture Restrictions with respect to other Restricted Stock Unit Awards.

     (c) Other Terms and Conditions. Unless provided otherwise in a Restricted Stock Unit
Agreement, there shall be no adjustment to Restricted Stock Unit Awards for dividends paid by the
Company other than for dividend equivalent adjustments made by the Committee for stock dividends in
accordance with Paragraph X(b). A Holder shall not have any right to vote the shares of Common
Stock reflected by a Restricted Stock Unit Award. A breach of the terms and conditions established
by the Committee pursuant to the Restricted Stock Unit Agreement shall cause a forfeiture of the
Restricted Stock Unit Award. At the time of such Award, the Committee may, in its sole discretion,
prescribe additional terms, conditions or restrictions relating to Restricted Stock Unit Awards,
including rules pertaining to the termination of

10

 

employment (by retirement, disability, death or otherwise) of a Holder prior to expiration of
the Unit Forfeitures Restrictions. Such additional terms, conditions or restrictions, if any,
shall be set forth in a Restricted Stock Unit Agreement made in conjunction with the Award.

     (d) Payment for Restricted Stock Units. Unless provided otherwise in a Restricted
Stock Unit Agreement, payment of a vested Restricted Stock Unit Award or, if an Award provides for
partial vesting, the vested portion of such Award shall be made in a single sum of cash or shares
of Common Stock (as provided in the Restricted Stock Unit Agreement) as soon as practicable after
the Committee certifies that the Award or portion of the Award is payable, but in no event later
than 21/2 months after the calendar year in which the Award or portion of the Award becomes vested.

     (e) Restricted Stock Unit Agreements. At the time any Award is made under this
Paragraph IX, the Company and the Holder shall enter into a Restricted Stock Unit Agreement setting
forth each of the matters contemplated hereby and such other matters as the Committee may, in its
sole discretion, determine to be appropriate. The terms and provisions of the respective
Restricted Stock Unit Agreements need not be identical. Subject to the consent of the Holder, the
Committee may, in its sole discretion, amend an outstanding Restricted Stock Unit Agreement at any
time and from time to time in any manner that is not inconsistent with the provisions of this Plan.

X. RECAPITALIZATION OR REORGANIZATION

     (a) No Effect on Right or Power. The existence of this Plan and the Awards granted
hereunder shall not affect in any way any right or power of the Board or the stockholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or other change in
the Company’s or any subsidiary’s capital structure or its business, any merger or consolidation of
the Company or any subsidiary, any issue of debt or equity securities ahead of or affecting Common
Stock or the rights thereof, the dissolution or liquidation of the Company or any subsidiary or any
sale, lease, exchange or other disposition of all or any part of its assets or business or any
other corporate act or proceeding.

     (b) Subdivision or Consolidation of Shares; Stock Dividends. The shares with respect
to which Options may be granted are shares of Common Stock as presently constituted, but if, and
whenever, prior to the expiration of an Option theretofore granted, the Company shall effect a
subdivision or consolidation of shares of Common Stock or the payment of a stock dividend on Common
Stock without receipt of consideration by the Company that is not otherwise covered by Paragraph
X(c), the number of shares of Common Stock with respect to which such Option may thereafter be
exercised (i) in the event of an increase in the number of outstanding shares shall be
proportionately increased, and the purchase price per share shall be proportionately reduced and
(ii) in the event of a reduction in the number of outstanding shares shall be proportionately
reduced, and the purchase price per share shall be proportionately increased. If, prior to the
vesting of a Restricted Stock Unit Award, the Company shall effect a subdivision or consolidation
of shares of Common Stock or the payment of a stock dividend on Common Stock without receipt of
consideration by the Company, the number of shares reflected by the Restricted Stock Unit Award (i)
in the event of an increase in the number of outstanding shares shall be proportionately increased
and (ii) in the event of a reduction in the number of

11

 

outstanding shares shall be proportionately reduced. Any fractional share resulting from such
adjustments shall be rounded down to the next whole share.

     (c) Recapitalizations. If the Company recapitalizes, reclassifies its capital stock
or otherwise changes its capital structure, the number and class of shares of Common Stock covered
by an Option theretofore granted or reflected by a Restricted Stock Unit Award shall be adjusted so
that such Option shall thereafter cover or such Restricted Stock Unit Award shall thereafter
reflect the number and class of shares of stock and securities to which the Holder would have been
entitled pursuant to the terms of such transaction if, immediately prior to such transaction, the
Holder had been the holder of record of the number of shares of Common Stock then covered by such
Option or reflected by such Restricted Stock Unit Award.

     (d) Change of Control; Automatic Vesting of Awards. Except to the extent specifically
set forth in an Award agreement, effective upon or immediately prior to a Change of Control (i) all
Restricted Stock Awards and Restricted Stock Unit Awards then outstanding shall automatically be
fully vested and nonforfeitable and (ii) all Options then outstanding shall automatically be fully
exercisable.

     (e) Change of Control; Discretionary Actions. Effective upon or immediately prior to
a Change of Control, the Committee, acting in its sole discretion without the consent or approval
of any Holder, may effect one or more of the following alternatives with respect to outstanding
Options, which alternatives may vary among individual Holders and which may vary among Options held
by any individual Holder: (i) cancel some or all of the outstanding Options as of such time and
cause the Company to pay to each Holder an amount of cash per share equal to the excess, if any, of
the Change of Control Value of the shares subject to such Option over the exercise price(s) under
such Options for such shares, (ii) make such adjustments to Options then outstanding as the
Committee deems appropriate, in its sole discretion, to reflect such Change of Control, or (iii)
provide that the number and class of shares of Common Stock covered by an outstanding Option be
adjusted so that such Option thereafter covers the number and class of shares of stock or other
securities or property (including cash) to which the Holder would have been entitled pursuant to
the terms of the agreement of merger, consolidation or sale of assets and dissolution if,
immediately prior to such transaction, the Holder had been the holder of record of the number of
shares of Common Stock then covered by such Option. The provisions of Paragraphs X(d) and X(e)
shall not terminate any rights of the Holder to further payments pursuant to any other agreement
with the Company following a Change of Control.

     (f) Other Changes in the Common Stock. If the outstanding Common Stock is changed by
reason of a recapitalization, reorganization, merger, consolidation, combination, split-up,
split-off, spin-off, exchange, distribution to the holders of Common Stock or other relevant change
in capitalization occurring after the date of the grant of any Award and not otherwise provided for
by this Paragraph X, such Award and any agreement evidencing such Award shall be subject to
adjustment by the Committee at its sole discretion as to the number and price of shares of Common
Stock or other consideration subject to such Award. If the outstanding Common Stock is so changed,
or upon the occurrence of any other event described in this Paragraph X or a Change of Control, the
aggregate number of shares available under this Plan and the maximum number of shares that may be
subject to Awards granted to any one

12

 

individual shall be appropriately adjusted to the extent, if any, determined by the Committee
in its sole discretion, which determination shall be conclusive.

     (g) Stockholder Action. Any adjustment provided for in this Paragraph X shall be
subject to any required stockholder action.

     (h) No Adjustments unless Otherwise Provided. Except as hereinbefore expressly
provided, the issuance by the Company of shares of stock of any class or securities convertible
into shares of stock of any class, for cash, property, labor or services, upon direct sale, upon
the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or
obligations of the Company convertible into such shares or other securities, and in any case
whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number of shares of Common Stock subject to Awards theretofore granted or the
purchase price per share, if applicable.

XI. AMENDMENT AND TERMINATION OF THIS PLAN

     The Board may, in its sole discretion, terminate this Plan at any time with respect to any
shares of Common Stock for which Awards have not theretofore been granted. The Board shall have
the right to alter or amend this Plan or any part hereof from time to time; provided that no change
in this Plan may be made that would impair the rights of a Holder with respect to an Award
theretofore granted without the consent of such Holder; and provided further that the Board may
not, without the approval of the stockholders of the Company, amend this Plan to (a) increase the
maximum aggregate number of shares that may be issued under this Plan, (b) change the class of
individuals eligible to receive Awards under this Plan, (c) change or delete Paragraph VII(f), (d)
increase the maximum number of shares of Common Stock that may be subject to Awards granted to any
one individual during any calendar year, (e) permit the award of shares of Common Stock other than
in the form of a Restricted Stock Award, (f) provide for additional types of awards, (g) permit the
price at which a share of Common Stock may be purchased upon exercise of an Option to be less than
the Fair Market Value of a share of Common Stock on the date such Option is granted or (h) alter or
otherwise change any provision of this Paragraph XI.

XII. MISCELLANEOUS

     (a) No Right To An Award. Neither the adoption of this Plan nor any action of the
Board or of the Committee shall be deemed to give any employee any right to be granted an Option, a
right to a Restricted Stock Award, a right to a Restricted Stock Unit Award or any other rights
hereunder except as may be evidenced by an Option Agreement, a Restricted Stock Agreement or a
Restricted Stock Unit Agreement duly executed on behalf of the Company, and then only to the extent
and on the terms and conditions expressly set forth therein. This Plan shall be unfunded. The
Company shall not be required to establish any special or separate fund or to make any other
segregation of funds or assets to assure the performance of its obligations under any Award.

     (b) No Employment Rights Conferred; Employment Relationship. Nothing contained in
this Plan shall (i) confer upon any employee any right with respect to continuation

13

 

of employment with the Company or any subsidiary or (ii) interfere in any way with the right
of the Company or any subsidiary to terminate his or her employment at any time. An employee shall
be considered to have terminated employment for purposes of this Plan if such employee’s employer
ceases to be a parent or subsidiary corporation of the Company (as defined in section 424 of the
Code).

     (c) Other Laws; Withholding. The Company shall not be obligated to issue any Common
Stock pursuant to any Award granted under this Plan at any time when the shares covered by such
Award have not been registered under the Securities Act of 1933, as amended, and such other state
and federal laws, rules and regulations as the Company or the Committee deems applicable and, in
the opinion of legal counsel for the Company, there is no exemption from the registration
requirements of such laws, rules and regulations available for the issuance and sale of such
shares. No fractional shares of Common Stock shall be delivered, nor shall any cash in lieu of
fractional shares be paid. The Company may (i) withhold, or cause to be withheld, from any payment
to a Holder by or on behalf of the Company or any of its subsidiaries or (ii) require a Holder to
pay to the Company or any of its subsidiaries any amount necessary to satisfy all tax withholding
obligations arising under applicable local, state or federal laws with respect to an Award granted
to such Holder.

     (d) No Restriction on Corporate Action. Nothing contained in this Plan shall be
construed to prevent the Company or any of its subsidiaries from taking any corporate action that
is deemed by the Company or any such subsidiary to be appropriate or in its best interest, whether
or not such action would have an adverse effect on this Plan or any Award under this Plan. No
employee, beneficiary or other Person shall have any claim against the Company or any of its
subsidiaries as a result of any such action.

     (e) Restrictions on Transfer. An Award (other than an Incentive Stock Option, which
shall be subject to the transfer restrictions set forth in Paragraph VII(c)) shall not be
transferable otherwise than (i) by will or the laws of descent and distribution, (ii) pursuant to a
qualified domestic relations order as defined by the Code or Title I of the Employee Retirement
Income Security Act of 1974, as amended, or the rules thereunder, or (iii) with the consent of the
Committee.

     (f) Governing Law. This Plan shall be governed by, and construed in accordance with,
the laws of the State of Delaware, without regard to conflicts of law principles thereof.

     (g) Section 409A Compliance. The Company intends that any Award granted under this
Plan either (a) comply (in form and operation) with section 409A of the Code and the regulations,
rulings and other guidance issued thereunder (the “Requirements”) or (b) be exempt from the
application of the Requirements. Any ambiguities in this Plan shall be construed to effect the
intent as described in this Paragraph XII(g). If any provision of this Plan is found to be in
violation of the Requirements, then such provision shall be deemed to be modified or restricted to
the extent and in the manner necessary to render such provision in conformity with the
Requirements, or shall be deemed excised from this Plan, and this Plan shall be construed and
enforced to the maximum extent permitted by the Requirements as if such provision had been
originally incorporated in this Plan as so modified or restricted, or as if such provision had not
been originally incorporated in this Plan, as the case may be.

14

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