Document:

exv10w4

 

Exhibit 10.4

Strategic Team Restricted Stock

RESTRICTED STOCK AWARD AGREEMENT

     This Restricted Stock Award Agreement (“Agreement”) is effective as of February 11, 2008,
between Encore Acquisition Company, a Delaware corporation (the “Company”) and                      (the
“Executive”).

     WHEREAS, pursuant to the provisions of the Company’s 2000 Incentive Stock Plan as amended and
restated effective March 18, 2004, and as such plan may be thereafter amended (the “Plan”), the
Compensation Committee (the “Committee”) of the Board of Directors of the Company (the “Board of
Directors”), which administers the Plan, has determined to grant a Restricted Stock Award to the
Executive upon the terms set forth below;

     NOW, THEREFORE, the Company and the Executive agree as follows:

     1. Grant of Restricted Stock. The Company hereby awards to the Executive under the Plan,
subject to the terms and conditions hereinafter set forth,                      shares of common stock, par
value $0.01 per share (the “Common Stock”), of the Company (the “Restricted Stock”). The Company
will issue to the Executive stock certificates evidencing the shares of Restricted Stock, which
certificates will be registered in the name of the Executive and will bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to the Restricted Stock,
substantially in the following form:

The transferability of this certificate and the shares of Common Stock represented
hereby are subject to the terms, conditions and restrictions (including forfeiture)
contained in the Restricted Stock Award Agreement, effective as of February 11,
2008, between Encore Acquisition Company and the registered owner hereof. Copies of
such Agreement are on file in the offices of Encore Acquisition Company, 777 Main
Street, Suite 1400, Fort Worth, Texas 76102.

The certificates evidencing the shares of Restricted Stock shall be held in custody by the Company
or, if specified by the Committee, by a third party custodian or trustee, until the restrictions on
such shares shall have lapsed, and, as a condition of this award of Restricted Stock, the Executive
shall deliver a stock power, duly endorsed in blank, relating to the shares of Restricted Stock.

     2. Transfer Restrictions. Except as expressly provided herein, the shares of Restricted Stock
are non-transferable, otherwise than by will or the laws of descent and distribution, and may not
otherwise be assigned, pledged, hypothecated or otherwise disposed of and shall not be subject to
execution, attachment or similar process. Upon any attempt to effect any such disposition, or upon
the levy of any such process, the award provided for herein shall immediately become null and void,
and the shares of Restricted Stock shall be immediately forfeited to the Company.

     3. Restrictions. Subject to the forfeiture provision of Section 4 hereof, the restrictions on
the shares of Restricted Stock shall lapse and such shares shall vest in the Executive upon the
later of the satisfaction of the Performance-Based Conditions and the Service-Based Conditions, as
defined below:

1

 

(a) The “Performance-Based Conditions” shall be deemed satisfied if and only if the Company shall
achieve any one of the following performance goals during either the 2008 fiscal year or the 2009
fiscal year:

	 	(i)	 	on a barrels of oil equivalent basis using prices of $89.00 per barrel of oil
and $8.00 per thousand cubic feet of natural gas, the Company’s proved oil and natural
gas reserves at December 31, 2008, minus the Company’s proved oil and natural gas
reserves at December 31, 2007, is greater than zero; or
	 
	 	(ii)	 	the Company’s finding and development costs for the year ended December 31,
2008 shall be less than the finding and development costs of at least 50% of the
companies constituting the compensation peer group set forth in Exhibit A hereto; with
the finding and development costs determined as (A) the sum of (a) the capital invested
for development of oil and natural gas properties during the year ended December 31,
2008, plus (b) the capital invested for acquisition of oil and natural gas properties
during the year ended December 31, 2008, (B) divided by the sum of (x) the increase in
proved oil and natural gas reserves from December 31, 2007 to December 31, 2008, plus
(y) oil and natural gas production during the year ended December 31, 2008; or
	 
	 	(iii)	 	on a barrels of oil equivalent basis using prices of $89.00 per barrel of oil
and $8.00 per thousand cubic feet of natural gas, the Company’s proved oil and natural
gas reserves at December 31, 2009, minus the Company’s proved oil and natural gas
reserves at December 31, 2008 is greater than zero; or
	 
	 	(iv)	 	the Company’s finding and development costs for the year ended December 31,
2009 shall be less than the finding and development costs of at least 50% of the
companies constituting the compensation peer group set forth in Exhibit A hereto; with
the finding and development costs determined as (A) the sum of (a) the capital invested
for development of oil and natural gas properties during the year ended December 31,
2009, plus (b) the capital invested for acquisition of oil and natural gas properties
during the year ended December 31, 2009, (B) divided by the sum of (x) the increase in
proved oil and natural gas reserves from December 31, 2008 to December 31, 2009, plus
(y) oil and natural gas production during the year ended December 31, 2009.

If as of December 31, 2009, the Company shall not have achieved one of the Performance-Based
Conditions set forth above, then all shares of Restricted Stock shall be immediately
forfeited to the Company.

     (b) If the Executive remains continuously employed by the Company, the “Service-Based
Conditions” shall be deemed satisfied with respect to twenty-five percent (25%) of the shares of
Restricted Stock awarded hereunder on each February 11 of the years 2009, 2010, 2011 and 2012;
provided that restrictions shall not lapse with respect to any fraction of a share. If the
Executive does not remain continuously employed by the Company until the dates specified above, the
Service-Based Conditions shall not be satisfied with respect to the specified portion of

2

 

the shares (except as expressly provided otherwise in Section 4), and all shares of
then-outstanding Restricted Stock shall be immediately forfeited to the Company.

     (c) Restrictions on shares as to which both the Performance-Based Conditions and the
Service-Based Conditions shall have been satisfied will lapse, and such shares shall no longer be
deemed Restricted Stock.

     4. Termination of Employment; Forfeiture.

     (a) Upon termination of the Executive’s employment with the Company or any subsidiary of the
Company (or the successor of any such company) as a result of the retirement of the Executive, the
shares of Restricted Stock, after such retirement, shall continue to be subject to the restrictions
set forth herein, which restrictions shall lapse and such shares shall vest in the Executive in
accordance with the provisions of Section 3 hereof as if the Executive had remained employed by the
Company. Retirement of the Executive shall mean (i) the termination of employment with the Company
on or after the last day the month in which the Executive attains age 65 and has, as of such date
of termination, been continuously employed by the Company for at least two years or (ii) otherwise
as the Committee shall determine, in its sole discretion.

     (b) Upon termination of the Executive’s employment with the Company or any subsidiary of the
Company (or the successor of any such company) as a result of the death of the Executive, the
Service-Based Conditions on all shares of Restricted Stock shall be deemed satisfied, and the
restrictions on such shares shall lapse and such shares shall vest in the Executive’s legal
representative, beneficiary or heir only if, and immediately after, the Company achieves one of the
Performance-Based Conditions set forth in Section 3 hereof.

     (c) Upon termination of the Executive’s employment with the Company or any subsidiary of the
Company (or the successor of any such company) as a result of the disability of the Executive, the
shares of Restricted Stock, after such disability, shall continue to be subject to the restrictions
set forth herein, which restrictions shall lapse and such shares shall vest in the Executive in
accordance with the provisions of Section 3 hereof as if the Executive had remained employed by the
Company; provided that if the Executive shall be disabled for a continuous period of 18 months,
then the Service-Based Conditions on all shares of Restricted Stock shall be deemed satisfied, and
the restrictions on such shares shall lapse and such shares shall vest in the Executive if and only
if prior to or during such disability the Company shall achieve one of the Performance-Based
Conditions set forth in Section 3 hereof, which lapse of restrictions and vesting shall occur on
the later of (i) the last day of such 18 months of continuous disability or (ii) the date the
Company shall achieve one of such Performance-Based Conditions if the Executive shall remain so
continuously disabled on such date. The disability of the Executive shall mean the total disability
of the Executive as determined in accordance with the Company’s long-term disability insurance
benefit plan, or if no such plan is then in existence, total and permanent disability as determined
by the Committee in its sole discretion.

     (d) Upon termination of the Executive’s employment with the Company or any subsidiary of the
Company (or the successor of any such company) for any reason other than as described in
subsections (a), (b) and (c) above, all shares of Restricted Stock as to which the

3

 

restrictions thereon shall not have previously lapsed shall be immediately forfeited to the
Company.

     5. Distribution Following Termination of Restrictions. Upon the vesting and expiration of the
restrictions as to any portion of the Restricted Stock, the Company will cause a new certificate
evidencing such number of shares of Common Stock to be delivered to the Executive, or in the case
of his death to his legal representative, beneficiary or heir, free of the legend regarding
transferability; provided that the Company shall not be obligated to issue any fractional shares of
Common Stock.

     6. Voting and Dividend Rights. During the period in which the restrictions provided herein
are applicable to the Restricted Stock, the Executive shall have the right to vote the shares of
Restricted Stock and to receive any cash dividends paid with respect thereto unless and until
forfeiture thereof. Any dividend or distribution payable with respect to shares of Restricted
Stock that shall be paid or distributed in shares of Common Stock shall be subject to the same
restrictions provided for herein, and the shares so paid or distributed shall be deemed Restricted
Stock subject to all terms and conditions herein. Any dividend or distribution (other than cash or
Common Stock) payable or distributable on shares of Restricted Stock, unless otherwise determined
by the Committee, shall be subject to the terms and conditions of this Agreement to the same extent
and in the same manner as the Restricted Stock is subject; provided that the Committee may make
such modifications and additions to the terms and conditions (including restrictions on transfer
and the conditions to the timing and degree of lapse of such restrictions) that shall become
applicable to such dividend or distribution as the Committee may provide in its absolute
discretion.

     7. Corporate Structure Change. Except as otherwise provided in the Plan in the case of a
Change in Control of the Company, in the event of any merger, consolidation, reorganization,
recapitalization, reclassification or other capital or corporate structure change of the Company,
the securities or other consideration receivable for or in conversion of or exchange for shares of
Restricted Stock shall be subject to the terms and conditions of this Agreement to the same extent
and in the same manner as the Restricted Stock is subject; provided that the Board of Directors may
make such modifications and additions to the terms and conditions (including restrictions on
transfer and the conditions to the timing and degree of lapse of such restrictions) that shall
become applicable to the securities or other consideration so receivable as the Board of Directors
may provide in its absolute discretion.

     8. Tax Withholding. The obligation of the Company to deliver any certificate to the Executive
pursuant to Section 5 hereof shall be subject to the receipt by the Company from the Executive of
any withholding taxes required as a result of the award of the Restricted Stock or lapsing of
restrictions thereon. Unless the Committee or the Board of Directors shall determine otherwise at
any time after the date hereof, the Executive may satisfy all or part of such withholding tax
requirement by electing to sell to the Company a designated number of unrestricted shares of Common
Stock held by the Executive at a price per share equal to the Fair Market Value of such shares,
provided that the aggregate value of the shares sold does not exceed the minimum required tax
withholding obligation.

4

 

     9. Securities Laws Requirements. The Company shall not be required to issue shares of
Restricted Stock unless and until (i) such shares have been duly listed upon each stock exchange on
which the Common Stock is then registered and (ii) the Company has complied with applicable federal
and state securities laws.

     The Company may require the Executive to furnish to the Company, prior to the issuance of any
shares of Restricted Stock, an instrument, in such form as the Committee may from time to time deem
appropriate, in which the Executive represents that the shares of Restricted Stock acquired by him
hereunder are being acquired for investment and not with a view to the sale or distribution
thereof.

     10. Incorporation of Plan Provisions. This Agreement and the award of Restricted Stock
hereunder are made pursuant to the Plan and are subject to all of the terms and provisions of the
Plan as if the same were fully set forth herein. In the event that any provision of this Agreement
conflicts with the Plan, the provisions of the Plan shall control. The Executive acknowledges
receipt of a copy of the Plan and agrees that all decisions under and interpretations of the Plan
by the Committee shall be final, binding and conclusive upon the Executive. Capitalized terms not
otherwise defined herein shall have the same meanings set forth in the Plan for such terms.

     11. No Rights to Employment. Nothing contained in this Agreement shall confer upon the
Executive any right to continued employment by the Company or any subsidiary of the Company, or
limit in any way the right of the Company or any subsidiary to terminate or modify the terms of the
Executive’s employment at any time.

     12. Miscellaneous.

     (a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF DELAWARE WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICT OF LAWS.

     (b) This Agreement shall be binding upon and inure to the benefit of the Company and its
successors and assigns.

     (c) If any term or provision of this Agreement should be invalid or unenforceable, such
provision shall be severed from this Agreement, and all other terms and provisions hereof shall
remain in full force and effect.

     (d) This Agreement, including the relevant provisions of the Plan, constitutes the entire
agreement between the parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings, both written and oral, with respect to the subject hereof. This
Agreement may not be amended, except by an instrument in writing signed by the Company and the
Executive.

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

5

 

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

	 	 	 	 	 
	 	ENCORE ACQUISITION COMPANY

 	 
	 	By  	 	 
	 	 	Jon S. Brumley 	 
	 	 	President and Chief Executive Officer 	 
	 
	 	EXECUTIVE

 	 
	 	
 	 
	 	[Name] 	 
	 	 	 

6

 

	 	 	 	 	 

Compensation Peer Group

     The following companies constitute the Company’s peer group for employee compensation
purposes. The following group may be modified from time to time by the Committee by adding or
deleting one or more companies as the Committee deems appropriate in its sole discretion; provided
that the peer group hereunder at any particular time shall be the same group of companies as the
peer group then used for employee compensation purposes.

Berry Petroleum Company

Bill Barrett Corporation

Cabot Oil & Gas Corporation

Chesapeake Energy Corporation

Cimarex Energy Co.

Comstock Resources, Inc.

Denbury Resources Inc.

Energy Partners, Ltd.

EOG Resources, Inc.

Forest Oil Corporation

Newfield Exploration Co.

Petrohawk Energy Corporation

Pioneer Natural Resources Company

Plains Exploration & Production Company

Quicksilver Resources Inc.

Range Resources Corporation

Southwestern Energy Company

St. Mary Land & Exploration Company

Swift Energy Company

Whiting Petroleum Corporation

XTO Energy Inc.

7exv10w5

 

Exhibit 10.5

AMENDMENT NO. 1

TO

SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

OF

ENCORE ENERGY PARTNERS LP

     This Amendment No. 1 (this “Amendment No. 1”) to the Second Amended and Restated Agreement of
Limited Partnership (the “Partnership Agreement”) of Encore Energy Partners LP (the “Partnership”)
is hereby adopted effective as of May 10, 2007, by Encore Energy Partners GP LLC, a Delaware
limited liability company (the “General Partner”), as general partner of the Partnership.
Capitalized terms used but not defined herein are used as defined in the Partnership Agreement.

     WHEREAS, the General Partner has determined that it is in the best interests of the
Partnership and the Limited Partners to amend the Partnership Agreement to, among other things,
modify the income and loss allocations made among the General Partner, the holders of Management
Incentive Units and Unitholders after an offering of Units by the Partnership in order to simplify
the preparation of annual federal income tax information reports by the Partnership to Unitholders;
and

     WHEREAS, acting pursuant to the power and authority granted to it under Section 13.1(d) of the
Partnership Agreement, the General Partner has determined, in its discretion, that the following
amendment to the Partnership Agreement does not require the approval of any Partner or Assignee.

     NOW THEREFORE, the General Partner does hereby amend the Partnership Agreement as follows:

     Section 1. Amendment.

     (a) Section 1.1 is hereby amended to add or amend and restate the following definitions:

     (i) “Disposed of Adjusted Property” has the meaning assigned to such term in
Section 6.1(d)(xii)(B).

     (ii) “Net Termination Gain” means, for any taxable year, the sum, if positive,
of all items of income, gain, loss or deduction recognized by the Partnership (a)
after the Liquidation Date or (b) upon the sale, exchange or other disposition of
all or substantially all of the assets of the Partnership Group, taken as a whole,
in a single transaction or a series of related transactions (excluding any
disposition to a member of the Partnership Group). The items included in the
determination of Net Termination Gain shall be determined in accordance with Section
5.5(b) and shall include Simulated Gains, Simulated Losses and

 

 

Simulated Depletion, but shall not include any items of income, gain or loss
specially allocated under Section 6.1(d).

     (iii) “Net Termination Loss” means, for any taxable year, the sum, if negative,
of all items of income, gain, loss or deduction recognized by the Partnership (a)
after the Liquidation Date or (b) upon the sale, exchange or other disposition of
all or substantially all of the assets of the Partnership Group, taken as a whole,
in a single transaction or a series of related transactions (excluding any
disposition to a member of the Partnership Group). The items included in the
determination of Net Termination Loss shall be determined in accordance with Section
5.5(b) and shall include Simulated Gains, Simulated Losses and Simulated Depletion,
but shall not include any items of income, gain or loss specially allocated under
Section 6.1(d).

     (b) Section 5.5(d) is hereby amended and restated in its entirety as follows:

     (i) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f), on an
issuance of additional Partnership Interests for cash or Contributed Property, the
issuance of Partnership Interests as consideration for the provision of services or
the conversion of the General Partner’s Combined Interest to Common Units pursuant
to Section 11.3(b), the Capital Accounts of all Partners and the Carrying Value of
each Partnership property immediately prior to such issuance shall be adjusted
upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to
such Partnership property, as if such Unrealized Gain or Unrealized Loss had been
recognized on an actual sale of each such property for an amount equal to its fair
market value immediately prior to such issuance and had been allocated to the
Partners at such time pursuant to Section 6.1(c) in the same manner as any item of
gain, loss, Simulated Gain or Simulated Loss actually recognized following an event
giving rise to the dissolution of the Partnership would have been allocated. In
determining such Unrealized Gain or Unrealized Loss, the aggregate cash amount and
fair market value of all Partnership assets (including cash or cash equivalents)
immediately prior to the issuance of additional Partnership Interests shall be
determined by the General Partner using such method of valuation as it may adopt;
provided, however, that the General Partner, in arriving at such valuation, must
take fully into account the fair market value of the Partnership Interests of all
Partners at such time. The General Partner shall allocate such aggregate value among
the assets of the Partnership (in such manner as it determines) to arrive at a fair
market value for individual properties.

     (ii) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f),
immediately prior to any actual or deemed distribution to a Partner of any
Partnership property (other than a distribution of cash that is not in redemption or
retirement of a Partnership Interest), the Capital Accounts of all Partners and the
Carrying Value of all Partnership property shall be adjusted upward or downward to
reflect any Unrealized Gain or Unrealized Loss attributable to such Partnership
property, as if such Unrealized Gain or Unrealized

2

 

Loss had been recognized on an actual sale of each such property immediately
prior to such distribution for an amount equal to its fair market value, and had
been allocated to the Partners, at such time, pursuant to Section 6.1(c) in the same
manner as any item of gain, loss, Simulated Gain or Simulated Loss actually
recognized following an event giving rise to the dissolution of the Partnership
would have been allocated. In determining such Unrealized Gain or Unrealized Loss
the aggregate cash amount and fair market value of all Partnership assets (including
cash or cash equivalents) immediately prior to a distribution shall (A) in the case
of an actual distribution that is not made pursuant to Section 12.4 or in the case
of a deemed distribution, be determined and allocated in the same manner as that
provided in Section 5.5(d)(i) or (B) in the case of a liquidating distribution
pursuant to Section 12.4, be determined and allocated by the Liquidator using such
method of valuation as it may adopt.

     (c) Section 6.1(d)(xii) is hereby amended and restated in its entirety as follows:

     Corrective and Other Allocations. In the event of any allocation of Additional
Book Basis Derivative Items or any Book-Down Event or any recognition of a Net
Termination Loss, the following rules shall apply:

     (A) Except as provided in Section 6.1(d)(xii)(B), in the case of any
allocation of Additional Book Basis Derivative Items (other than an
allocation of Unrealized Gain or Unrealized Loss under Section 5.5(d)
hereof) with respect to any Partnership property, the General Partner shall
allocate such Additional Book Basis Derivative Items (1) to (aa) the holders
of Management Incentive Units and (bb) the General Partner in the same
manner that the Unrealized Gain or Unrealized Loss attributable to such
property is allocated pursuant to Section 5.5(d)(i) or Section 5.5(d)(ii)
and (2) to all Unitholders, Pro Rata, to the extent that the Unrealized Gain
or Unrealized Loss attributable to such property is allocated to any
Unitholders pursuant to Section 5.5(d)(i) or Section 5.5(d)(ii).

     (B) In the case of any allocation of Additional Book Basis Derivative
Items (other than an allocation of Unrealized Gain or Unrealized Loss under
Section 5.5(d) hereof or an allocation of Net Termination Gain or Net
Termination Loss pursuant to Section 6.1(c) hereof) as a result of a sale or
other taxable disposition of any Partnership asset that is an Adjusted
Property (“Disposed of Adjusted Property”), the General Partner shall
allocate (1) additional items of income and gain (aa) away from the holders
of Management Incentive Units and the General Partner and (bb) to the
Unitholders, or (2) additional items of deduction and loss (aa) away from
the Unitholders and (bb) to the holders of Management Incentive Units and
the General Partner, to the extent that the Additional Book Basis Derivative
Items allocated to the Unitholders exceed their Share of Additional Book
Basis Derivative Items with respect to such Disposed of Adjusted Property.
For this purpose, the Unitholders

3

 

shall be treated as being allocated Additional Book Basis Derivative
Items to the extent that such Additional Book Basis Derivative Items have
reduced the amount of income that would otherwise have been allocated to the
Unitholders under this Agreement (e.g., Additional Book Basis Derivative
Items taken into account in computing cost of goods sold would reduce the
amount of book income otherwise available for allocation among the
Partners). Any allocation made pursuant to this Section 6.1(d)(xii)(B) shall
be made after all of the other Agreed Allocations have been made as if this
Section 6.1(d)(xii) were not in this Agreement and, to the extent necessary,
shall require the reallocation of items that have been allocated pursuant to
such other Agreed Allocations.

     (C) In the case of any negative adjustments to the Capital Accounts of
the Partners resulting from a Book-Down Event or from the recognition of a
Net Termination Loss, such negative adjustment (1) shall first be allocated,
to the extent of the Aggregate Remaining Net Positive Adjustments, in such a
manner, as determined by the General Partner, that to the extent possible
the aggregate Capital Accounts of the Partners will equal the amount that
would have been the Capital Account balance of the Partners if no prior
Book-Up Events had occurred, and (2) any negative adjustment in excess of
the Aggregate Remaining Net Positive Adjustments shall be allocated pursuant
to Section 6.1(c) hereof.

     (D) In making the allocations required under this Section 6.1(d)(xii),
the General Partner may apply whatever conventions or other methodology it
determines will satisfy the purpose of this Section 6.1(d)(xii).

     Section 2. Ratification of Partnership Agreement. Except as expressly modified and
amended herein, all of the terms and conditions of the Partnership Agreement shall remain in full
force and effect.

     Section 3. Governing Law. This Amendment No. 1 will be governed by and construed in
accordance with the laws of the State of Delaware.

     IN WITNESS WHEREOF, the General Partner has executed this Amendment No. 1 as of the date first
set forth above.

	 	 	 	 	 
	 	GENERAL PARTNER:

ENCORE ENERGY PARTNERS GP LLC

 	 
	 	By:  	/s/ Jon S. Brumley
 	 
	 	 	Jon S. Brumley 	 
	 	 	Chief Executive Officer and President 	 
	 

4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}]]