Document:

Exhibit 4.4

 

THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE SUPPLEMENTAL INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE SUPPLEMENTAL INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE SUPPLEMENTAL INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE SUPPLEMENTAL INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

 

CUSIP 45031U BT7

ISIN: US45031UBT79

 

4.875% Senior Notes due 2018

 

	
No. 1
    	
 
    	
$300,000,000
    

 

iSTAR FINANCIAL INC.

 

promises to pay to CEDE & Co., or registered assigns, the principal sum of $300,000,000 (as revised by the Schedule of Exchanges of Interests in the Global Note attached hereto) on July 1, 2018.

 

Interest Payment Dates:  January 1 and July 1, commencing January 1, 2014

 

Record Dates:  December 15 and June 15

 

Reference is made to the further provisions of this Note set forth on the reverse hereof.  Such further provisions shall for all purposes have the same effect as though fully set forth at this place.

 

	
 
    	
iSTAR   FINANCIAL INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Nina Matis
    
	
 
    	
 
    	
Name:   Nina Matis
    
	
 
    	
 
    	
Title:   Chief Investment Officer
    

 

 

This is one of the Notes referred to
 in the within-mentioned Supplemental Indenture:

 

 

	
U.S.   BANK NATIONAL ASSOCIATION
    	
 
    
	
as Trustee
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Gagendra Hiralal
    	
 
    
	
 
    	
Authorized   Signatory
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Dated:   May 10, 2013
    	
 
    

 

 

4.875% Senior Notes due 2018

 

Capitalized terms used herein shall have the meanings assigned to them in the Supplemental Indenture referred to below unless otherwise indicated.

 

1.                                      Interest.  iStar Financial Inc., a Maryland corporation (the “Company”), promises to pay interest on the principal amount of this Note at the rate of 4.875% per annum from May 10, 2013 until Maturity.  The Company will pay interest semi-annually in arrears on January 1 and July 1 of each year, commencing January 1, 2014, or if any such day is not a Business Day, on the next succeeding Business Day (each an “Interest Payment Date”).  Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from May 10, 2013.  The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful.  Interest will be computed on the basis of a 360-day year of twelve 30-day months.

 

2.                                      Method of Payment.  The Company will pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders of Notes at the close of business on the December 15 or June 15 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Supplemental Indenture with respect to defaulted interest.  The Notes will be payable as to principal, premium, if any, and interest at the office or agency of the Company maintained for such purpose within or without the City and State of New York, or, at the option of the Company, payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, and premium, if any, on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent.  Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  The Company reserves the right to pay interest to Holders of Notes by check mailed to such Holders at their registered addresses or by wire transfer to Holders of at least $5.0 million aggregate principal amount of Notes.

 

3.                                      Paying Agent and Registrar.  Initially, U.S. Bank National Association, the Trustee under the Supplemental Indenture, will act as Paying Agent and Registrar.  The Company may change any Paying Agent or Registrar without notice to any Holder.  The Company or any of its Subsidiaries may act in any such capacity.

 

4.                                      Indenture.  The Company issued the Notes under an Indenture, dated as of February 5, 2001 (the “Base Indenture”), as amended and supplemented, including as supplemented by the Supplemental Indenture, dated as of May 10, 2013 (the “Supplemental Indenture” and together with the Base Indenture, the “Indenture”), between the Company and the Trustee.  The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code §§ 77aaa-77bbbb).  The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms.  To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.  The Notes are obligations of the Company.  The Company is issuing $300,000,000 in aggregate principal amount of Notes on the Issue Date and may issue Additional Notes in accordance with the terms of the Indenture.

 

5.                                      Optional Redemption.  Prior to July 1, 2016, the Notes may be redeemed in whole or in part at the Company’s option at any time and from time to time at a Redemption Price equal to 100% of the principal amount thereof plus the Applicable Premium as of, and accrued but unpaid interest, if any, to, but excluding, the date of the redemption (the “Redemption Date”) (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date).

 

On or after July 1, 2016, the Company may redeem all or part of the Notes at the following Redemption Prices (expressed as a percentage of principal amount of the Notes to be redeemed) plus accrued and unpaid interest on the Notes, if any, to the Redemption Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date), if redeemed during the periods beginning on the dates set forth below:

 

 

	
Date
    	
 
    	
Percentage
    	
 
    
	
July 1, 2016 
    	
 
    	
102.438
    	
%
    
	
April 1, 2017
    	
 
    	
101.219
    	
%
    
	
January 1, 2018 and thereafter 
    	
 
    	
100.000
    	
%
    

 

Prior to July 1, 2016, the Company shall be entitled at its option on one or more occasions to redeem the Notes in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the Notes originally issued at a Redemption Price (expressed as a percentage of principal amount) of 104.875%, plus accrued and unpaid interest to, but excluding, the Redemption Date, with the Net Cash Proceeds from one or more Qualified Equity Offerings; provided, however, that:

 

(1) at least 65% of such aggregate principal amount of the Notes remains outstanding immediately after the occurrence of each such redemption (other than Notes held, directly or indirectly, by the Company or its Affiliates); and

 

(2) each such redemption occurs within 120 days after the date of the closing of the related Qualified Equity Offering.

 

“Applicable Premium” means, at any Redemption Date, the greater of:  (1) 1.0% of the principal amount of the Notes; and (2) the excess of (a) the present value at such Redemption Date of (i) the principal amount of the Notes on the Redemption Date plus (ii) all required remaining scheduled interest payments due on the Notes through the maturity date of the Notes (excluding accrued but unpaid interest to the Redemption Date), computed using a discount rate equal to the Treasury Rate plus 50 basis points over (b) the principal amount of the Notes on such Redemption Date.  Calculation of the Applicable Premium will be made by the Company or on behalf of the Company by such Person as the Company shall designate; provided, however, that such calculation shall not be a duty or obligation of the Trustee.

 

“Treasury Rate” means, with respect to a Redemption Date, the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15(519) that has become publicly available on the third Business Day prior to the Company providing notice of redemption (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from such Redemption Date to the maturity date of the Notes; provided, however, that if the period from such Redemption Date to the maturity date of the Notes is not equal to the constant maturity of the United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from such Redemption Date to the maturity date of the Notes is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used.

 

6.                                      Mandatory Redemption.  Except as set forth in paragraph 7, the Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes.

 

7.                                      Repurchase at Option of Holder.  Upon the occurrence of a Change of Control Triggering Event with respect to the Notes, the Company will be required to offer to purchase all of the outstanding Notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the date of purchase.

 

8.                                      Notice of Redemption.  Notice of redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder whose Notes are to be redeemed at its registered address.  Notes in denominations larger than $2,000 may be redeemed in part but only in whole multiples of $1,000 in excess thereof, unless all of the Notes held by a Holder are to be redeemed.  On and after the Redemption Date interest ceases to accrue on Notes or portions thereof called for redemption.

 

 

9.                                      Denominations, Transfer, Exchange.  The Notes are in registered form without coupons in denominations of $2,000 and integral multiples of $1,000 in excess thereof.  The transfer of Notes may be registered and Notes may be exchanged as provided in the Supplemental Indenture.  The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company and the Trustee may require a Holder to pay any taxes and fees required by law or permitted by the Supplemental Indenture.  The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part.  Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date.

 

10.                               Persons Deemed Owners.  The registered Holder of a Note may be treated as its owner for all purposes.

 

11.                               Amendment, Supplement and Waiver.  Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in principal amount of the Notes then outstanding voting as a single class, and any existing Default or compliance with any provision of the Indenture or the Notes may be waived with the written consent of the Holders of a majority in principal amount of the Notes then outstanding voting as a single class.  Without the consent of any Holder of a Note, the Indenture or the Notes may be amended or supplemented:  (a) to cure any ambiguity, defect or inconsistency that does not adversely affect in any material respect the rights hereunder of any Holder of the Notes under the Indenture; (b) to provide for uncertificated Notes in addition to or in place of certificated Notes; (c) to alter the provisions of the Indenture to provide for the assumption of the Company’s obligations to the Holders by a successor to the Company pursuant to Article 5 of the Supplemental Indenture; (d) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect in any material respect the rights hereunder of any Holder of the Notes; (e) to conform the provisions of the Notes to the “Description of the Notes” and “Description of Debt Securities” section of the Prospectus; (f) to comply with requirements of the Commission in connection with the qualification of the Indenture under the Trust Indenture Act; (g) to comply with the rules of any applicable depositary; or (h) to evidence and provide for the acceptance of appointment under the Supplemental Indenture of a successor Trustee.

 

12.                               Defaults and Remedies.  Events of Default are set forth in the Supplemental Indenture.  If any Event of Default occurs with respect to the Notes and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable.  Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes will become due and payable without further action or notice.  Holders may not enforce the Indenture or the Notes except as provided in the Indenture.  Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in writing in its exercise of any trust or power.  The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest.  The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Notes.  The Company is required to deliver to the Trustee annually a statement regarding compliance with the Supplemental Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default.

 

13.                               Trustee Dealings with Company.  The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee.

 

15.                               No Recourse Against Others.  A director, officer, employee, incorporator or stockholder, of the Company, as such, shall not have any liability for any obligations of the Company under the Notes or the Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation.  Each Holder by accepting a Note waives and releases all such liability.  The waiver and release are part of the consideration for the issuance of the Notes.

 

16.                               Authentication.  This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

 

 

17.                               Abbreviations.  Customary abbreviations may be used in the name of a Holder or an assignee, such as:  TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

 

18.                               CUSIP Numbers.  Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders.  No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

 

19.                               Governing Law.  THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

The Company will furnish to any Holder upon written request and without charge a copy of the Supplemental Indenture.  Requests may be made to:

 

iStar Financial Inc.
 1114 Avenue of the Americas, 39th Floor
 New York, NY  10036
 Attention:  Investor Relations

 

 

ASSIGNMENT FORM

 

To assign this Note, fill in the form below:

 

	
(I) or   (we) assign and transfer this Note to:
    	
 
    
	
 
    	
(Insert assignee’s legal name)
    
	
 
    
	
 
    
	
(Insert assignee’s Soc. Sec. or tax I.D. no.)
    
	
 
    
	
 
    
	
 
    
	
 
    
	
 
    
	
 
    
	
(Print or type assignee’s name, address and zip code)
    

 

and irrevocably appoint                                                                                                                                          to transfer this Note on the books of the Company.  The agent may substitute another to act for him.

 

	
Date:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Your   Signature:
    	
 
    
	
 
    	
 
    	
 
    	
(Sign   exactly as your name appears on the face of this Note)
    
	
 
    	
 
    	
 
    
	
Signature   Guarantee*:
    	
 
    	
 
    	
 
    
						

 

*                                         Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

 

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 of the Supplemental Indenture, check the following box:  o

 

If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 of the Supplemental Indenture, state the amount you elect to have purchased.

 

	
 
    	
 
    	
 
    	
$                     
    
	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Your   Signature:
    	
 
    
	
 
    	
 
    	
 
    	
(Sign   exactly as your name appears on the face of this Note)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Tax   Identification No.:
    	
 
    
	
 
    	
 
    	
 
    
	
Signature   Guarantee*:
    	
 
    	
 
    	
 
    
							

 

*                                         Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

 

 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE

 

The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

 

	
Date of Exchange
    	
 
    	
Amount of
   decrease in
   Principal Amount
   of this Global
   Note
    	
 
    	
Amount of
   increase in
   Principal Amount
   of this Global
   Note
    	
 
    	
Principal Amount
   of this Global
   Note following
   such decrease
   (or increase)
    	
 
    	
Signature of
   authorized
   signatory of
   Trustee or Note
   CustodianExhibit 10.1

 

 

Lone Pine Resources

 

Annual Incentive Plan

 

2013

 

 

Lone Pine Resources 2013 Annual Incentive Plan

 

Summary

 

Plan Objectives

 

The Annual Incentive Plan (the “Plan”) has been designed to meet the following objectives:

 

·                  Provide an incentive framework that is performance-driven and focused on objectives that are critical to the success of Lone Pine Resources Inc. (the “Company”);

·                  Offer competitive cash compensation opportunities to employees; and

·                  Reward outstanding achievement.

 

Basic Plan Concept

 

The Plan provides annual incentive awards, which will be determined primarily on the basis of the Company’s consolidated results on selected financial and operating performance measures as well as departmental objectives.  Individual performance will also be considered in determining the participant award payout.  The Company shall have the flexibility to adjust individual awards to reflect individual or team performance.

 

Performance Measures and Weighting

 

Each year the Company will establish the target levels for each financial and operating measure and its appropriate weighting, subject to the confirmation of the Compensation Committee of the Board of Directors (the “Committee”).  These financial and operating measures and their weighting will be reviewed (and modified, if appropriate) in light of changing Company priorities and strategic objectives.

 

The Company will also establish departmental performance objectives, the achievement of which will be determined by the President and Chief Executive Officer (the “CEO”) at year end, subject to the confirmation of the Committee.

 

The performance measures and their relative weightings are:

 

	
Performance Measure
    	
 
    	
Weighting
    	
 
    
	
Production
    	
 
    	
25
    	
%
    
	
Cash Cost
    	
 
    	
25
    	
%
    
	
Relative Corporate   FD&A Costs
    	
 
    	
15
    	
%
    
	
Department   Performance Objectives
    	
 
    	
25
    	
%
    
	
Discretionary   Achievement Factor
    	
 
    	
10
    	
%
    

 

1

 

Plan Administration

 

The Plan will be administered by the Committee and the CEO (with the exception of his own position).  Certain elements of the Plan administration will be delegated to the Company’s senior Human Resources representative.  The Chief Financial Officer will verify the performance calculation for the financial and operating measures in consultation with the Vice President, Engineering and Exploitation, who shall be responsible for overseeing the estimation of the Company’s oil and gas reserves by the Company’s external reserves evaluator.

 

Actual performance goals, standards, award determinations and modifications to the Plan design must be approved by the Committee.

 

Once the total bonus pool has been established, the CEO shall have the discretion to distribute bonus monies within departments or to move monies from one group to another, and to allocate incentive monies to individuals, based on the CEO’s assessment (with input from the Executive team) as to individual or group performance.

 

Performance Targets

 

Targets for the total Plan will be set consistent with the following:

 

	
Performance Level
    	
 
    	
% of Total Award
    
	
Below Threshold
    	
 
    	
0
    
	
Threshold
    	
 
    	
50
    
	
Target
    	
 
    	
100
    
	
Above Target
    	
 
    	
150
    
	
Outstanding
    	
 
    	
Maximum of   200%
    

 

Targets shall be adjusted for material changes made during the year to the Company’s market guidance and business plan.

 

The maximum award under the Annual Incentive Plan will be limited to 200% of target.

 

Participants

 

The CEO shall determine which employees are participants in the Plan.  If a participant’s employment with the Company terminates for any reason prior to payment, no bonus award will be paid.

 

The target award percentages for the CEO and other officers of the Company are established by the Committee.  Any changes to target award percentages for Company officers are subject to the approval of the Committee. The CEO is authorized to apply discretion to the target award percentages for non-officer Plan participants. All awards to officers under the Plan are subject to approval of the Committee.

 

Plan participants who change positions and/or have their individual target incentive levels changed during the Plan year will have their award prorated accordingly.  All awards paid

 

2

 

will be rounded to the nearest $100. All dollar amounts stated in the Plan are stated in Canadian dollars.

 

Incentive compensation awards will be calculated based upon the participant’s base salary in effect at the end of the Plan year or earned salary during the Plan year if the participant was a new hire during the year.

 

Plan Effective Date

 

Plan effective date will be January 1, 2013.

 

3

 

Lone Pine Resources Annual Incentive Plan

 

Operating Measure: Production

 

Objective

 

Measure Working Interest (WI) Production compared to the Company’s WI Production target.

 

Definition

 

Working Interest Production excludes the impact of royalty and other burdens, thus eliminating the impact of changes in commodity price that influence Canadian royalty calculations.

 

The performance metric is to exclude the impact of Acquisitions and/or Divestitures with associated production.

 

Targets

 

Measured against the Company’s Production targets as follows:

 

	
Level
    	
 
    	
Performance
    	
 
    	
% of Total Award
    
	
Below “Low” Target   Value
    	
 
    	
Below Threshold
    	
 
    	
0%
    
	
Meet “Low” Target   Value
    	
 
    	
Threshold
    	
 
    	
50%
    
	
Mid-point of   Target Range
    	
 
    	
Target
    	
 
    	
100%
    
	
Meet “High” Target   Value
    	
 
    	
Above Target
    	
 
    	
150%
    
	
Exceed “High”   Target Value
    	
 
    	
Outstanding
    	
 
    	
Maximum of 200%
    

 

4

 

Lone Pine Resources Annual Incentive Plan

 

Financial Measure: Cash Cost

 

Objective

 

Measure a key component of the Working Interest (WI) Production Expense compared to the Company’s WI Production Expense target.

 

Definition

 

The sum of direct operating expense and expensed workovers and transportation expense for the Company divided by total WI Production for the Company measured in Mcfe. This calculation will exclude ad valorem taxes, production taxes and total expensed G&A.

 

Targets

 

Measured against the Cash Cost component (see Definition above) of the Production Expense target:

 

	
Level
    	
 
    	
Performance
    	
 
    	
% of Total Award
    
	
Below “Low” Target   Value
    	
 
    	
Outstanding
    	
 
    	
Maximum of 200%
    
	
Meet “Low” Target   Value
    	
 
    	
Above Target
    	
 
    	
150%
    
	
Mid-point of   Target Range
    	
 
    	
Target
    	
 
    	
100%
    
	
Meet “High” Target   Value
    	
 
    	
Threshold
    	
 
    	
50%
    
	
Exceed “High”   Target Value*
    	
 
    	
Below Threshold
    	
 
    	
0%
    

 

5

 

Lone Pine Resources Annual Incentive Plan

 

Financial Measure: Relative Corporate FD&A Costs

 

Objective

 

Measure the Company’s relative efficiency at adding proved + probable (“P+P”) reserves.  The goal of this target is to reward participants for adding reserves at a lower cost than the Company’s peers.

 

Definition

 

Relative Corporate FD&A Costs compares the Company’s finding, development and acquisition (“FD&A”) costs on a $/boe basis with those of its Canadian peers.

 

The measurement will be based on year-end NI 51-101 P+P reserves, and include changes in future development capital (“FDC”).  FD&A costs will be calculated by dividing (x) exploration costs, development costs and acquisition costs for the period, plus changes in FDC during the period, by (y) P+P reserve additions for the period, including acquired reserves.

 

Peer Group

 

The Company’s Corporate FD&A Costs will be compared to those of its Canadian “compensation peers”, as determined by the Committee. As of the date this Plan is adopted, the peers include:

 

	
Pace Oil & Gas Ltd.
    	
 
    	
NuVista Energy Ltd.
    
	
Surge   Energy Inc.
    	
 
    	
Perpetual   Energy Inc.
    
	
Birchcliff   Energy Ltd.
    	
 
    	
Angle   Energy Inc.
    
	
Legacy   Oil + Gas Inc.
    	
 
    	
Santonia   Energy Inc.
    
	
Crew   Energy Inc.
    	
 
    	
Bellatrix   Exploration Ltd.
    
	
Advantage   Oil & Gas Ltd.
    	
 
    	
 
    

 

Targets (applying straight line interpolation between levels)

 

	
Company’s Rank
   Among Peers
    	
 
    	
Performance
    	
 
    	
% of Total Award
    
	
Top
    	
 
    	
Outstanding
    	
 
    	
Maximum of 200%
    
	
75th Percentile
    	
 
    	
Above Target
    	
 
    	
150%
    
	
Median
    	
 
    	
Target
    	
 
    	
100%
    
	
25th Percentile
    	
 
    	
Threshold
    	
 
    	
50%
    
	
Bottom
    	
 
    	
Below Threshold
    	
 
    	
0%
    

 

6

 

Lone Pine Resources Annual Incentive Plan

 

Operating Measure: Department Performance Objectives

 

Objective

 

Measure the achievement of key objectives that are established annually for each department.

 

Definition

 

Key objectives are established by the CEO, in consultation with the Executive team, for each department.  These departmental objectives will directly support the achievement of Company goals. The objectives are department specific and are well-defined and measurable.

 

Targets

 

Awards for participants will be based on the achievement of performance objectives established for the department in which they work.

 

At year-end the achievement of performance objectives for each department will be evaluated and assigned a completion percentage by the CEO over a range of 0 to 200%.  This completion percentage will be multiplied by the 25% relative weighting for the Department Performance Objectives.

 

7

 

Lone Pine Resources Annual Incentive Plan

 

Operating Measure: Discretionary Achievement

 

Definition

 

To recognize significant achievements that are not addressed elsewhere in the Plan.

 

Target

 

During the Committee’s review of the overall performance of the Company at year end it will consider any instances of significant value being added to the Company and/or shareholders through the initiatives of management and employees that were not specifically targeted in the Plan. The Committee, based on recommendations from the CEO, will assign, at its discretion, a completion percentage from 0% to 200% of the Discretionary Achievement performance factor for such results. This completion percentage will be multiplied by the 10% relative weighting for Discretionary Achievement.

 

8

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