Document:

exv10w2

 

Exhibit 10.2

Form of Amendment to Nonstatutory Stock Option Agreement

related to the June 2006 Options

     In accordance with Instruction 2 to Item 601 of Regulation S-K, the Amendments to Nonstatutory
Stock Option Agreements signed by the Executive Officers are substantially identical in all
material respects except as to the parties thereto and the number of shares of common stock subject
to the original June 2006 Option award agreement. The following sets forth the material details of
each Amendment to Nonstatutory Stock Option Agreement that differs from the form of Amendment to
Nonstatutory Stock Option Agreement filed herewith:

	 	 	 	 	 
	 	 	Number of Shares of
	 	 	Common Stock Subject to
	 	 	the Original June 2006
	Name of Executive Officer	 	Option Award Agreement1
	Timothy A. Leach
	 	 	62,500	 
	Steven L. Beal
	 	 	62,500	 
	Curt F. Kamradt
	 	 	75,000	 
	David W. Copeland
	 	 	75,000	 
	E. Joseph Wright
	 	 	75,000	 
	David M. Thomas III
	 	 	100,000	 

 

			
	1	 	After giving effect to a reverse stock split on August
3, 2007.

 

 

(6/12/06 Options)

AMENDMENT TO

NONSTATUTORY STOCK OPTION AGREEMENT

     This Amendment to Nonstatutory Stock Option Agreement (this “Amendment”) is entered into
effective as of November 16, 2007 (the “Effective Date”), by and between Concho Resources Inc., a
Delaware corporation (the “Company”), and                                          (“Employee”).

W I T N E S S E T H:

     WHEREAS, the Company and Employee have heretofore entered into that certain Nonstatutory Stock
Option Agreement dated June 12, 2006 (the “Stock Option Agreement”) pursuant to which employee was
granted an option (the “Option”) to purchase shares of the common stock of the Company, par value
$.001 per share (“Common Stock”), on the terms and conditions set forth in the Stock Option
Agreement and the Concho Resources Inc. 2006 Stock Incentive Plan; and

     WHEREAS, the Stock Option Agreement originally covered                      shares at an exercise
price of $6.00 per share, but those amounts were adjusted on August 3, 2007, in connection with a
reverse stock split so that the Stock Option Agreement covers, as of the Effective Date,                     
shares at an exercise price of $12.00 per share; and

     WHEREAS, the Company has determined that the fair market value of a share of Common Stock on
the date of grant of the Option was $7.70 (which amount would be adjusted to $15.40 per share to
reflect the reverse stock split on August 3, 2007); and

     WHEREAS, the Company and Employee are concerned that the Option could be subject to the
provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), because
the original exercise price per share under the Option was less than the fair market value of a
share of Common Stock on the date of grant of the Option; and

     WHEREAS, the Company and Employee wish to amend the Stock Option Agreement pursuant to the
transition relief made available under Section 3.04 of IRS Notice 2006-79 (as modified by IRS
Notice 2007-86) so that the Option will not be subject to the provisions of Section 409A of the
Code;

     NOW, THEREFORE, in consideration of the foregoing, a restricted stock award to be made by the
Company to Employee on the Effective Date, and the mutual promises contained herein, the parties,
intending to be legally bound hereby, agree as follows, effective as of the Effective Date:

     1. The Stock Option Agreement is hereby amended be deleting paragraph 2 of the Stock Option
Agreement and substituting the following therefor:

     “2. Purchase Price. The purchase price of Stock purchased pursuant to
the exercise of this Option shall be $15.40 per share. For all purposes of this
Agreement, Fair Market Value of Stock shall be determined in accordance with
the provisions of the Plan.”

 

 

     2. (a) Employee represents and warrants to the Company that: (i) this Amendment and the terms
of this Amendment have been freely made and without duress after having consulted with
professionals of Employee’s choice; (ii) as of the Effective Date, Employee is the lawful owner of,
and has good title to, the Option; (iii) the Option is free and clear of all liens, encumbrances,
and adverse claims; (iv) Employee has not heretofore assigned, transferred, sold, delivered,
mortgaged, pledged, granted options or rights to purchase, or encumbered the Option; (v) Employee
has the right, power, and authority to enter into this Amendment; and (vi) this Amendment has been
duly executed by, and constitutes a legal, valid, binding and enforceable obligation of, Employee.

     (b) Employee acknowledges and agrees that Employee is not relying upon any written or oral
statement or representation of the Company, its affiliates, or any of their respective officers,
directors, shareholders, agents, attorneys, or successors, or any failure of such individual or
entity to disclose information, or any written or oral statements or representations or failure to
disclose information by any representative or agent of such individual or entity. Employee
acknowledges and agrees that in deciding to enter into this Amendment, Employee is relying on his
or her own judgment and the judgment of the professionals of Employee’s choice with whom Employee
has consulted.

     3. As amended hereby, the Stock Option Agreement is specifically ratified and reaffirmed.

     IN WITNESS WHEREOF, the Company has caused this Amendment to be duly executed by an officer
thereunto duly authorized, and Employee has executed this Amendment, as of the 16th day of
November, 2007, effective as of the Effective Date.

	 	 	 	 	 
	 	CONCHO RESOURCES INC.

 	 
	 	By:  	 	 
	 	 	Name:  	A. Wellford Tabor 	 
	 	 	Title:  	Chairman, Compensation Committee 	 
	 

	 	 	 	 	 
	 

	 	EMPLOYEE	 	 
	 
	 
	 
	 	 	 	 
	 

	 	 

	 

	 

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Exhibit 10.3

Form of Restricted Stock Agreement

     In accordance with Instruction 2 to Item 601 of Regulation S-K, the Restricted Stock
Agreements signed by the Executive Officers are substantially identical in all material respects
except as to the parties thereto and the number of shares of common stock subject to the Restricted
Stock Agreement. The following sets forth the material details of each Restricted Stock Agreement
that differs from the form of Restricted Stock Agreement filed herewith:

	 	 	 	 	 
	 	 	Number of Shares of
	 	 	Common Stock Subject to
	 	 	the Restricted Stock
	Name of Executive Officer	 	Agreement
	Timothy A. Leach
	 	 	11,561	 
	Steven L. Beal
	 	 	11,561	 
	Curt F. Kamradt
	 	 	13,874	 
	David W. Copeland
	 	 	13,874	 
	E. Joseph Wright
	 	 	13,874	 
	David M. Thomas III
	 	 	18,498	 

 

 

RESTRICTED STOCK AGREEMENT

     THIS RESTRICTED STOCK AGREEMENT (this “Agreement”) is made as of the 19th day of November,
2007 (the “Date of Grant”), between CONCHO RESOURCES INC., a Delaware corporation (the “Company”),
and                                          (the “Employee”).

     1. Award. Pursuant to the CONCHO RESOURCES INC. 2006 STOCK INCENTIVE PLAN (the
“Plan”), as of the Date of Grant, _                     shares (the “Restricted Shares”) of the Company’s
common stock, par value $0.001 per share, shall be issued as hereinafter provided in the Employee’s
name subject to certain restrictions thereon. The Restricted Shares shall be issued upon
acceptance hereof by the Employee and upon satisfaction of the conditions of this Agreement. The
Employee acknowledges receipt of a copy of the Plan, and agrees that this award of Restricted
Shares shall be subject to all of the terms and provisions of the Plan, including future amendments
thereto, if any, pursuant to the terms thereof.

     2. Definitions. Capitalized terms used in this Agreement that are not defined below
or in the body of this Agreement shall have the meanings given to them in the Plan. In addition to
the terms defined in the body of this Agreement, the following capitalized words and terms shall
have the meanings indicated below:

     (a) “Change of Control” shall mean:

     (i) a merger of the Company with another entity, a consolidation involving the Company,
or the sale of all or substantially all of the assets of Company to another entity if, in
any such case, (1) the holders of equity securities of the Company immediately prior to such
transaction or event do not beneficially own immediately after such transaction or event
equity securities of the resulting entity entitled to 50% or more of the votes then eligible
to be cast in the election of directors generally (or comparable governing body) of the
resulting entity in substantially the same proportions that they owned the equity securities
of the Company immediately prior to such transaction or event or (2) the persons who were
members of the Board immediately prior to such transaction or event shall not constitute at
least a majority of the board of directors of the resulting entity immediately after such
transaction or event;

     (ii) the dissolution or liquidation of the Company;

     (iii) when any person or entity, including a “group” as contemplated by Section
13(d)(3) of the Exchange Act, other than an Excluded Person acquires or gains ownership or
control (including, without limitation, power to vote) of more than 50% of the combined
voting power of the outstanding securities of the Company; or

     (iv) as a result of or in connection with a contested election of directors, the
persons who were members of the Board immediately before such election shall cease to
constitute a majority of the Board.

 

 

For purposes of the preceding sentence, (1) “resulting entity” in the context of a transaction or
event that is a merger, consolidation or sale of all or substantially all assets shall mean the
surviving entity (or acquiring entity in the case of an asset sale) unless the surviving entity (or
acquiring entity in the case of an asset sale) is a subsidiary of another entity and the holders of
common stock of the Company receive capital stock of such other entity in such transaction or
event, in which event the resulting entity shall be such other entity, and (2) subsequent to the
consummation of a merger or consolidation that does not constitute a Change of Control, the term
“Company” shall refer to the resulting entity and the term “Board” shall refer to the board of
directors (or comparable governing body) of the resulting entity.

     (b) “Earned Shares” means the Restricted Shares after the lapse of the Forfeiture Restrictions
without forfeiture.

     (c) “Excluded Person” means Chase Oil Corporation, Yorktown Partners LLC, and their respective
affiliates. For purposes of this Section 2(c), (i) an “affiliate” of an entity means any other
person or entity that, directly or indirectly, controls, is controlled by or is under common
control with, such specified entity through one or more intermediaries or otherwise, and (ii)
“control” means, where used with respect to any person or entity, the possession, directly or
indirectly, of the power to direct or cause the direction of the management and policies of such
person or entity, whether through the ownership of voting securities, by contract or otherwise, and
the terms “controlling” and “controlled” have correlative meanings.

     (d) “Forfeiture Restrictions” shall have the meaning specified in Section 3(a) hereof.

     3. Restricted Shares. The Employee hereby accepts the Restricted Shares when issued
and agrees with respect thereto as follows:

     (a) Forfeiture Restrictions. The Restricted Shares may not be sold, assigned,
pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of, and in the
event of termination of the Employee’s employment with the Company for any reason, the Employee
shall, for no consideration, forfeit to the Company all Restricted Shares. The prohibition against
transfer and the obligation to forfeit and surrender Restricted Shares to the Company upon
termination of employment as provided in the preceding sentence are herein referred to as the
“Forfeiture Restrictions.” The Forfeiture Restrictions shall be binding upon and enforceable
against any transferee of Restricted Shares.

     (b) Lapse of Forfeiture Restrictions. Provided that the Employee has been
continuously employed by the Company from the Date of Grant through the lapse date set forth in the
following schedule, the Forfeiture Restrictions shall lapse with respect to a percentage of the
Restricted Shares determined in accordance with the following schedule:

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	 	 	Percentage of Total Number
	 	 	of Restricted Shares as to Which
	Lapse Date	 	Forfeiture Restrictions Lapse
	January 1, 2008
	 	 	25	%
	June 12, 2008
	 	 	25	%
	June 12, 2009
	 	 	25	%
	June 12, 2010
	 	 	25	%

Notwithstanding the foregoing, if a Change of Control occurs after December 31, 2007, and on or
before the date of the termination of the Employee’s employment with the Company, then the
Forfeiture Restrictions shall lapse with respect to 100% of the Restricted Shares effective as of
the date upon which the Change of Control occurs. Any shares with respect to which the Forfeiture
Restrictions do not lapse in accordance with the preceding provisions of this Section 3(b) shall be
forfeited to the Company for no consideration as of the date of the termination of the Employee’s
employment with the Company.

     (c) Certificates. A certificate evidencing the Restricted Shares shall be issued by
the Company in the Employee’s name, pursuant to which the Employee shall have all of the rights of
a stockholder of the Company with respect to the Restricted Shares, including, without limitation,
voting rights and the right to receive dividends (provided, however, that dividends paid in shares
of the Company’s stock shall be subject to the Forfeiture Restrictions and further provided that
dividends that are paid other than in shares of the Company’s stock shall be paid no later than the
end of the calendar year in which the dividend for such class of stock is paid to stockholders of
such class or, if later, the 15th day of the third month following the date the dividend is paid to
stockholders of such class of stock). Notwithstanding the foregoing, the Company may, in its
discretion, elect to complete the delivery of the Restricted Shares by means of electronic,
book-entry statement, rather than issuing physical share certificates. The Employee may not sell,
transfer, pledge, exchange, hypothecate or otherwise dispose of the stock until the Forfeiture
Restrictions have expired, and a breach of the terms of this Agreement shall cause a forfeiture of
the Restricted Shares. The certificate, if any, shall be delivered upon issuance to the Secretary
of the Company or to such other depository as may be designated by the Committee as a depository
for safekeeping until the forfeiture of such Restricted Shares occurs or the Forfeiture
Restrictions lapse pursuant to the terms of the Plan and this Agreement. At the Company’s request,
the Employee shall deliver to the Company a stock power, endorsed in blank, relating to the
Restricted Shares. Upon the lapse of the Forfeiture Restrictions without forfeiture, the Company
shall cause a new certificate or certificates to be issued without legend (except for any legend
required pursuant to applicable securities laws or any other agreement to which the Employee is a
party) in the name of the Employee in exchange for the certificate evidencing the Restricted Shares
or, as may be the case, the Company shall issue appropriate instructions to the transfer agent if
the electronic, book-entry method is utilized.

     (d) Corporate Acts. The existence of the Restricted Shares shall not affect in any
way the 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 capital structure or
its business, any merger or consolidation of the Company, any issue of debt or equity securities,
the dissolution or liquidation of the Company or any sale, lease, exchange or other

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disposition of all or any part of its assets or business or any other corporate act or
proceeding. The prohibitions of Section 3(a) hereof shall not apply to the transfer of Restricted
Shares pursuant to a plan of reorganization of the Company, but the stock, securities or other
property received in exchange therefor shall also become subject to the Forfeiture Restrictions and
provisions governing the lapsing of such Forfeiture Restrictions applicable to the original
Restricted Shares for all purposes of this Agreement, and the certificates, if any, representing
such stock, securities or other property shall be legended to show such restrictions.

     4. Withholding of Tax. To the extent that the receipt of the Restricted Shares or the
lapse of any Forfeiture Restrictions results in compensation income or wages to the Employee for
federal, state or local tax purposes, the Employee shall deliver to the Company at the time of such
receipt or lapse, as the case may be, such amount of money as the Company may require to meet its
minimum obligation under applicable tax laws or regulations, and if the Employee fails to do so,
the Company is authorized to withhold from any cash or stock remuneration (including withholding
any Restricted Shares or Earned Shares distributable to the Employee under this Agreement) then or
thereafter payable to the Employee any tax required to be withheld by reason of such resulting
compensation income or wages. The Employee acknowledges and agrees that the Company is making no
representation or warranty as to the tax consequences to the Employee as a result of the receipt of
the Restricted Shares, the lapse of any Forfeiture Restrictions or the forfeiture of any Restricted
Shares pursuant to the Forfeiture Restrictions.

     5. Status of Stock. The Employee agrees that the Restricted Shares and Earned Shares
issued under this Agreement will not be sold or otherwise disposed of in any manner which would
constitute a violation of any applicable federal or state securities laws. The Employee also
agrees that (a) the certificates, if any, representing the Restricted Shares and Earned Shares may
bear such legend or legends as the Committee deems appropriate in order to reflect the Forfeiture
Restrictions and to assure compliance with the terms and provisions of this Agreement and
applicable securities laws, (b) the Company may refuse to register the transfer of the Restricted
Shares or Earned Shares on the stock transfer records of the Company if such proposed transfer
would constitute a violation of the Forfeiture Restrictions or, in the opinion of counsel
satisfactory to the Company, of any applicable securities law, and (c) the Company may give related
instructions to its transfer agent, if any, to stop registration of the transfer of the Restricted
Shares.

     6. Employment Relationship. For purposes of this Agreement, the Employee shall be
considered to be in the employment of the Company as long as the Employee remains an employee of
either the Company or an Affiliate. Without limiting the scope of the preceding sentence, it is
specifically provided that the Employee shall be considered to have terminated employment with the
Company at the time of the termination of the “Affiliate” status of the entity or other
organization that employs the Employee. Nothing in the adoption of the Plan, nor the award of the
Restricted Shares thereunder pursuant to this Agreement, shall confer upon the Employee the right
to continued employment by the Company or affect in any way the right of the Company to terminate
such employment at any time. Unless otherwise provided in a written employment agreement or by
applicable law, the Employee’s employment by the Company shall be on an at-will basis, and the
employment relationship may be terminated at any time by either the Employee or the Company for any
reason whatsoever, with or without cause or notice. Any question as to whether and when there has
been a termination of such employment, and the cause

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of such termination, shall be determined by the Committee or its delegate, and its
determination shall be final.

     7. Notices. Any notices or other communications provided for in this Agreement shall
be sufficient if in writing. In the case of the Employee, such notices or communications shall be
effectively delivered if hand delivered to the Employee at the Employee’s principal place of
employment or if sent by registered or certified mail to the Employee at the last address the
Employee has filed with the Company. In the case of the Company, such notices or communications
shall be effectively delivered if sent by registered or certified mail to the Company at its
principal executive offices.

     8. Entire Agreement; Amendment. This Agreement replaces and merges all previous
agreements and discussions relating to the same or similar subject matters between the Employee and
the Company and constitutes the entire agreement between the Employee and the Company with respect
to the subject matter of this Agreement. This Agreement may not be modified in any respect by any
verbal statement, representation or agreement made by any employee, officer, or representative of
the Company or by any written agreement unless signed by an officer of the Company who is expressly
authorized by the Company to execute such document.

     9. Binding Effect; Survival. This Agreement shall be binding upon and inure to the
benefit of any successors to the Company and all persons lawfully claiming under the Employee. The
provisions of Section 5 shall survive the lapse of the Forfeiture Restrictions without forfeiture.

     10. Controlling Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Texas, without regard to conflicts of law principles thereof, or, if
applicable, the laws of the United States.

[Signatures begin on next page.]

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     IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by a person
thereunto duly authorized, and the Employee has executed this Agreement, all as of the date first
above written.

	 	 	 	 	 
	 	CONCHO RESOURCES INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	A. Wellford Tabor 	 
	 	 	Title:  	Chairman, Compensation Committee 	 
	 

	 	 	 	 	 
	 

	 	 
 	 
 	 
	 

	 	EMPLOYEE	 	 

SPOUSAL CONSENT

     Employee’s spouse, if any, is fully aware of, understands and fully consents and agrees to the
provisions of this Agreement and its binding effect upon any marital or community property
interests he/she may now or hereafter own, and agrees that the termination of his/her and
Employee’s marital relationship for any reason shall not have the effect of removing any Restricted
Shares and Earned Shares otherwise subject to this Agreement from coverage hereunder and that
his/her awareness, understanding, consent and agreement are evidenced by his/her signature below.

	 	 	 	 	 
	 
	 
	
Signature of Spouse	 
	 
	 	 	 	 
	 

	 
	 	 	 
	 

	 
	 

Printed Name of Spouse	 

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