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Exhibit 10.4    
    

 
 

STROUD ENERGY, INC.
  RESTRICTED STOCK PLAN    
    

 
 

ARTICLE I. ESTABLISHMENT AND PURPOSE    
    

        1.1   Establishment and Purpose. Stroud Energy, Inc. ("SEI") hereby establishes the Stroud Energy, Inc.
Restricted Stock Plan, as set forth in this document. The purposes of the Plan are to attract and retain highly qualified senior management and other employees to perform services for SEI and its
Affiliates and to align the interests of such employees with those of the stockholders of SEI. SEI is committed to creating long-term stockholder value. SEI's compensation philosophy is
based on a belief that SEI can best create stockholder value if senior management and other employees act and are rewarded as business owners. SEI believes that an equity stake through equity
compensation programs effectively aligns employee and stockholder interests by motivating and rewarding long-term performance that will enhance stockholder value. 

        1.2   Replacement of SEM Class B Restricted Units. In connection with the transactions contemplated by that certain
Combination Agreement between SEI, Stroud Energy Management, Ltd. ("SEM"), Stroud Energy, Ltd., Stroud Oil Properties, Inc. and the other parties thereto dated August 1,
2005 (the "Combination Agreement"), shares of SEI Common Stock issued in exchange for the Class B Partnership Interests in SEM that were previously issued to senior management and other
employees of Stroud Oil Properties, Inc. or its affiliates during 2005 will be issued pursuant to this Plan. 

        1.3   Effectiveness and Term. This Plan shall become effective as of September 23, 2005, (the "Effective Date"), which
is the date of approval of the Plan by the holders of at least a majority of the shares of Common Stock by written action in lieu of a meeting in accordance with applicable law. Unless terminated
earlier by the Board pursuant to Section 9.1, this Plan shall terminate on the day prior to the tenth anniversary of the Effective Date. 

 
 

ARTICLE II. DEFINITIONS    
    

        2.1   "Affiliate" means (i) a "parent corporation" or a "subsidiary corporation" of SEI, as those terms are defined in
Sections 424(e) and (f) of the Code, respectively, and (ii) any other corporation, organization, association, partnership, sole proprietorship or other type of entity, whether
incorporated or unincorporated, directly or indirectly controlling or controlled by or under direct or indirect common control with SEI. 

        2.2   "Award" means an award granted to a Participant in the form of Restricted Stock. 

        2.3   "Award Agreement" means a written agreement between SEI and a Participant that sets forth the terms, conditions,
restrictions and limitations applicable to an Award. 

        2.4   "Board" means the Board of Directors of SEI. 

        2.5   "Cause" means a finding by the Committee of acts or omissions constituting willful misconduct or gross negligence in the
course of the Participant's employment or service with the Company. 

        2.6   "Change of Control" means any of the following events: 

        (a)   the
acquisition by any "person" (including a "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), but excluding SEI or an existing
stockholder of SEI who, upon closing of the Private Placement, holds 5% or more of the Common Stock) of "beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of SEI representing more than 20% of the combined voting power of SEI's then outstanding securities entitled to vote generally in the election of directors; or 

 

        (b)   the
consummation of a reorganization, merger, consolidation or other form of business transaction or series of business transactions, in each case, with respect to which
persons who were stockholders of SEI immediately prior to such reorganization, merger or consolidation or other transaction do not, immediately thereafter, own more than 50% of the combined voting
power entitled to vote generally in the election of directors of the reorganized, merged or consolidated company's then outstanding voting securities; or 

        (c)   the
sale, lease or disposition (in one or a series of related transactions) by SEI of all or substantially all of SEI's assets (including those of its subsidiaries) to
any person or its Affiliates, other than SEI or its Affiliates; or 

        (d)   the
members of the Board at the beginning of any consecutive 24-calendar-month period (the "Incumbent Directors") cease for any reason other than death to
constitute at least a majority of the members of the Board, provided that any director whose election, or nomination for election by SEI's stockholders, was approved by a vote of at least a majority
of the members of the Board then still in office who were members of the Board at the beginning of such 24-calendar-month period, shall be deemed to be an Incumbent Director; or 

        (e)   the
approval by the Board or the stockholders of SEI of a complete or substantially complete liquidation or dissolution of SEI; or 

        (f)    any
event similar to the foregoing that the Committee determines in its absolute discretion would, if consummated, materially alter the structure or business SEI. 

Notwithstanding
the foregoing, (i) a Change of Control shall not include any acquisition, merger, or reorganization by SEI in which the stockholders of SEI immediately prior to such
acquisition, merger, or reorganization will have substantially the same proportionate ownership of common stock of the surviving corporation immediately thereafter or which would be considered a
Change of Control only due to the acquisition of Common Stock by any employee benefit plan (or related trust) sponsored or maintained by SEI or any parent or subsidiary of SEI, and (ii) a
Change of Control shall not include the transactions contemplated by the Combination Agreement, the Private Placement, or the initial public offering of the Common Stock. 

        2.7   "Code" means the Internal Revenue Code of 1986, as amended from time to time, including regulations thereunder and
successor provisions and regulations. 

        2.8   "Committee" means the Compensation Committee of the Board or such other committee of the Board as may be designated by
the Board to administer the Plan, which committee shall consist of two or more members of the Board. During such time as the Common Stock is registered under Section 12 of the Exchange Act,
each member of the Committee shall be an Outside Director. To the extent that no Committee exists that has the authority to administer the Plan, the functions of the Committee shall be exercised by
the Board. 

        2.9   "Common Stock" means the common stock of SEI, $.001 par value per share, or any stock or other securities of hereafter
issued or issuable in substitution or exchange for the Common Stock. 

        2.10 "Company" means SEI and any Affiliate. 

        2.11 "Effective Date" means the date this Plan becomes effective as provided in Section 1.3. 

        2.12 "Employee" means an employee of the Company; provided, however, that the term "Employee" does not include an Outside
Director or an individual performing services for the Company who is treated for tax purposes as an independent contractor at the time of performance of the services. 

        2.13 "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

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        2.14 "Executive" means an Employee who is an executive officer or other member of senior management of the Company. 

        2.15 "Fair Market Value" means the fair market value of the Common Stock, as determined in good faith by the Committee or
(i) if the Common Stock is traded in the over-the-counter market, the average of the representative closing bid and asked prices as reported by NASDAQ for the date the
Award is granted (or if there was no quoted price for such date of grant, then for the last preceding business day on which there was a quoted price), or (ii) if the Common Stock is traded in
the NASDAQ National Market System, the average of the highest and lowest selling prices for such stock as quoted on the NASDAQ National Market System for the date the Award is granted (or if there are
no sales for such date of grant, then for the last preceding business day on which there were sales), or (iii) if the Common Stock is listed on any national stock exchange, the average of the
highest and lowest selling prices for such stock as quoted on such exchange for the date the Award is granted (or if there are no sales for such date of grant, then for the last preceding business day
on which there were sales). 

        2.16 "Grant Date" means the date an Award is determined to be effective by the Committee upon the grant of such Award. 

        2.17 "NASDAQ" means The NASDAQ Stock Market, Inc. 

        2.18 "Outside Director" means a member of the Board who: (i) meets the independence requirements of the principal
exchange or quotation system upon which the shares of Common Stock are listed or quoted, (ii) from and after the date on which the remuneration paid pursuant to the Plan becomes subject to the
deduction limitation under Section 162(m) of the Code, qualifies as an "outside director" under Section 162(m) of the Code, (iii) qualifies as a "non-employee
director" of SEI under Rule 16b-3, and (iv) satisfies independence criteria under any other applicable laws or regulations relating to the issuance of shares of Common Stock
to Employees. 

        2.19 "Participant" means an Executive or other Employee who has been granted an Award. 

        2.20 "Plan" means the Stroud Energy, Inc. Restricted Stock Plan, as in effect from time to time. 

        2.21 "Private Placement" means the private placement of shares of the Common Stock to accredited investors, qualified
institutional buyers and non-U.S. persons involving SEI and/or its stockholders scheduled to close on or about the Effective Date. 

        2.22 "Purchased Restricted Stock" shall have the meaning given such term in Section 7.2. 

        2.23 "Restricted Period" means the period established by the Committee with respect to an Award during which the Award
remains subject to forfeiture. 

        2.24 "Restricted Stock" means a share of Common Stock granted to a Participant pursuant to Article VII that is subject
to such terms, conditions, and restrictions as may be determined by the Committee. 

        2.25 "Rule 16b-3" means Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Exchange Act, or any successor rule or regulation that may be in effect from time to time. 

        2.26 "SEI" means Stroud Energy, Inc., a Delaware corporation, or any successor thereto. 

 
 

ARTICLE III. PLAN ADMINISTRATION    
    

        3.1   Plan Administrator and Discretionary Authority. The Plan shall be administered by the Committee. The Committee shall have
total and exclusive responsibility to control, operate, manage and administer the Plan in accordance with its terms. The Committee shall have all the authority that may be necessary or helpful to
enable it to discharge its responsibilities with respect to the Plan. 

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Without
limiting the generality of the preceding sentence, the Committee shall have the exclusive right to: (i) interpret the Plan and the Award Agreements executed hereunder;
(ii) decide all questions concerning eligibility for, and the amount of, Awards granted under the Plan; (iii) construe any ambiguous provision of the Plan or any Award Agreement;
(iv) prescribe the form of Award Agreements; (v) correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award Agreement; (vi) issue
administrative guidelines as an aid to administering the Plan and make changes in such guidelines as the Committee from time to time deems proper; (vii) make regulations for carrying out the
Plan and make changes in such regulations as the Committee from time to time deems proper; (viii) to the extent permitted under the Plan, grant waivers of Plan terms, conditions, restrictions
and limitations; (ix) accelerate the vesting or payment of an Award when such action or actions would be in the best interests of the Company; (x) require Participants to hold a stated
number or percentage of shares of Common Stock acquired pursuant to an Award for a stated period; and (xi) take any and all other actions the Committee deems necessary or advisable for the
proper operation or administration of the Plan. The Committee shall have authority in its sole discretion with respect to all matters related to the discharge of its responsibilities and the exercise
of its authority under the Plan, including without limitation its construction of the terms of the Plan and its determination of eligibility for participation in, and the terms of Awards granted
under, the Plan. The decisions of the Committee and its actions with respect to the Plan shall be final, conclusive and binding on all persons having or claiming to have any right or interest in or
under the Plan, including without limitation Participants and their respective estates, beneficiaries and legal representatives. 

        3.2   Liability; Indemnification. No member of the Committee, nor any person to whom it has delegated authority, shall be
personally liable for any action, interpretation or determination made in good faith with respect to the Plan or Awards granted hereunder, and each member of the Committee (or delegatee of the
Committee) shall be fully indemnified and protected by SEI with respect to any liability he may incur with respect to any such action, interpretation or determination, to the maximum extent permitted
by applicable law. 

 
 

ARTICLE IV. SHARES SUBJECT TO THE PLAN    
    

        4.1   Available Shares.

        (a)   Subject
to adjustment as provided in Section 4.2, the maximum number of shares of Common Stock that shall be available for grant of Awards under the Plan shall be
801,861 shares of Common Stock. Of the maximum number of shares of Common Stock that are available for grant of Awards under the Plan, 735,861 shares of Common Stock shall be available for the grant
of Awards to Executives and the remaining 66,000 shares shall be available for the grant of Awards to Employees other than Executives. 

        (b)   Shares
of Common Stock issued pursuant to the Plan may be original issue or treasury shares or a combination of the foregoing, as the Committee, in its sole discretion,
shall from time to time determine. SEI will, during the term of this Plan, will at all times reserve and keep available such number of shares of Common Stock as shall be sufficient to satisfy the
requirements of the Plan. 

        4.2   Adjustments for Recapitalizations and Reorganizations. Subject to Article VIII, if there is any change in the
number or kind of shares of Common Stock outstanding (i) by reason of a stock dividend, spin-off, recapitalization, stock split, or combination or exchange of shares, (ii) by
reason of a merger, reorganization, or consolidation, (iii) by reason of a reclassification or change in par value, or (iv) by reason of any other extraordinary or unusual event
affecting the outstanding Common Stock as a class without SEI's receipt of consideration, or if the value of outstanding shares of Common Stock is reduced as a result of a spin-off or
SEI's payment of an extraordinary cash dividend, or distribution or dividend or distribution consisting of any assets of SEI other than cash, the maximum number and kind 

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of
shares of Common Stock available for issuance under the Plan and the number and kind of shares of Common Stock covered by outstanding Awards may be appropriately adjusted by the Committee to
reflect any increase or decrease in the number of, or change in the kind or value of, issued shares of Common Stock to preclude, to the extent practicable, the enlargement or dilution of rights under
such Awards; provided, however, that any fractional shares resulting from such adjustment shall be eliminated. 

        4.3   Adjustments for Awards. The Committee shall have sole discretion to determine the manner in which shares of Common Stock
available for grant of Awards under the Plan are counted. Without limiting the discretion of the Committee under this Section 4.3, unless otherwise determined by the Committee, the following
rules shall apply for the purpose of determining the number of shares of Common Stock available for grant of Awards under the Plan: 

        (a)   Restricted Stock. The grant Restricted Stock shall reduce the number of shares of Common Stock available for grant of
Awards under the Plan by the number of shares of Common Stock subject to such an Award. 

        (b)   Cancellation, Forfeiture and Termination. If any Award referred to in Section 4.3(a) is canceled or forfeited, or
terminates, expires or lapses, for any reason, the shares then subject to such Award shall again be available for grant of Awards under the Plan. 

        (c)   Payment of Withholding Taxes. If previously acquired shares of Common Stock are used to pay withholding taxes payable
upon vesting or payment of an Award, the number of shares available for grant of Awards under the Plan shall be increased by the number of shares delivered or withheld as payment of such withholding
taxes. 

 
 

ARTICLE V. ELIGIBILITY    
    

        The Committee shall select Participants from those Employees providing services to the Company that, in the opinion of the Committee, are in a position to make a
significant contribution to the success of the Company. Once a Participant has been selected for an Award by the Committee, the Committee shall determine the size of Award to be granted to the
Participant and shall establish in the related Award Agreement the terms, conditions, restrictions and limitations applicable to the Award, in addition to those set forth in the Plan and the
administrative guidelines and regulations, if any, established by the Committee. 

 
 

ARTICLE VI. FORM OF AWARDS    
    

        6.1   Form of Awards. Awards may be granted under the Plan in the form of Restricted Stock pursuant to Article VII. All
Awards shall be subject to the terms, conditions, restrictions and limitations of the Plan. The Committee may, in its sole discretion, subject any Award to such other terms, conditions, restrictions
and/or limitations (including without limitation the time and conditions of vesting or payment of an Award and restrictions on transferability of any shares of Common Stock issued or delivered
pursuant to an Award), provided they are not inconsistent with the terms of the Plan. The Committee may, but is not required to, subject an Award to such conditions as it determines are necessary or
appropriate to ensure than an Award constitutes "qualified performance based compensation" within the meaning of Section 162(m) of the Code and the regulations thereunder. Awards need not be
uniform. Subject to compliance with applicable tax law, an Award Agreement may provide that a Participant may elect to defer receipt of income attributable to the vesting or settlement of an Award. 

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ARTICLE VII. RESTRICTED STOCK    
    

        7.1   General. Awards may be granted in the form of Restricted Stock in such numbers and at such times as the Committee shall
determine. The Committee shall impose such terms, conditions and restrictions on Restricted Stock as it may deem advisable, including without limitation providing for vesting upon the achievement of
specified performance goals pursuant to an Award and restrictions under applicable Federal or state securities laws. A Participant shall not be required to make any payment for Restricted Stock unless
required by the Committee pursuant to Section 7.2. 

        7.2   Purchased Restricted Stock. The Committee may in its sole discretion require a Participant to pay a stipulated purchase
price for each share of Restricted Stock ("Purchased Restricted Stock"). 

        7.3   Restricted Period. At the time an Award is granted, the Committee shall establish a Restricted Period applicable to the
Award. Each Award may have a different Restricted Period in the sole discretion of the Committee. 

        7.4   Other Terms and Conditions. Restricted Stock shall constitute issued and outstanding shares of Common Stock for all
corporate purposes. Restricted Stock awarded to a Participant under the Plan shall be registered in the name of the Participant or, at the option of SEI, in the name of a nominee of SEI, and shall be
issued in book-entry form or represented by a stock certificate. Subject to the terms and conditions of the Award Agreement, a Participant to whom Restricted Stock has been awarded shall
have the right to receive dividends thereon during the Restricted Period, to vote the Restricted Stock and to enjoy all other stockholder rights with respect thereto, except that (i) SEI shall
retain custody of any certificates evidencing the Restricted Stock during the Restricted Period, and (ii) the Participant may not sell, transfer, pledge, exchange, hypothecate or otherwise
dispose of the Restricted Stock during the Restricted Period. A breach of the terms and conditions established by the Committee pursuant to the Award may result in a forfeiture of the Restricted
Stock. At the time of an Award, the Committee may, in its sole discretion, prescribe additional terms, conditions, restrictions and limitations applicable to the Restricted Stock, including without
limitation rules pertaining to the termination of employment or service (by reason of death, permanent and total disability, retirement, cause or otherwise) of a Participant prior to expiration of the
Restricted Period. 

        7.5   Miscellaneous. Nothing in this Article shall prohibit the exchange of shares of Restricted Stock pursuant to a plan of
merger or reorganization for stock or other securities of SEI or another corporation that is a party to the reorganization, provided that the stock or securities so received in exchange for shares of
Restricted Stock shall, except as provided in Article VIII, become subject to the restrictions applicable to such Restricted Stock. Any shares of Common Stock received as a result of a stock
split or stock dividend with respect to shares of Restricted Stock shall also become subject to the restrictions applicable to such Restricted Stock. 

        7.6   Code Section 162(m) Requirements. From and after the date on which remuneration paid pursuant to the Plan becomes
subject to the deduction limitation under Section 162(m) of the Code, the Committee shall determine in its sole discretion whether all or any portion of an Award shall be intended to satisfy
the requirements for "performance-based compensation" under Section 162(m) of the Code (the "162(m) Requirements"). The performance criteria for any Award that is intended to satisfy the 162(m)
Requirements shall be established in writing by the Committee based on one or more performance goals as set forth in Section 7.7 not later than 90 days after commencement of the
performance period with respect to such Award, provided that the outcome of the performance in respect of the goals remains substantially uncertain as of such time. The maximum number of shares of
Common Stock that may be awarded to any Participant during any calendar year pursuant to any Award that is intended to satisfy the 162(m) Requirements is 100,000 shares; provided, however, that such
maximum number of shares with respect to an Award that provides for a performance period longer than one calendar year shall be the foregoing limit multiplied by the number of full calendar 

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years
in the performance period. At the time of the grant of an Award and to the extent permitted under Code Section 162(m) and regulations thereunder for an Award intended to satisfy the
162(m) Requirements, the Committee may provide for the manner in which the performance goals will be measured in light of specified corporate transactions, extraordinary events, accounting changes and
other similar occurrences. 

        7.7   Performance Goals. The performance measure(s) to be used for purposes of an Award may be described in terms of objectives
that are related to the individual Participant or objectives that are Company-wide or related to a subsidiary, division, department, region, function or business unit of the Company in
which the Participant is employed or with respect to which the Participant performs services, and may consist of one or more or any combination of the following criteria: (i) earnings or
earnings per share (whether on a pre-tax, after-tax, operational or other basis), (ii) return on equity, (iii) return on assets or net assets, (iv) return
on capital or invested capital and other related financial measures, (v) cash flow, (vi) revenues, (vii) income or operating income, (viii) expenses or expense levels,
(ix) one or more operating ratios, (x) stock price, (xi) total stockholder return, (xii) market share, (xiii) operating profit, (xiv) profit margin,
(xv) growth in production, (xvi) capital expenditures, (xvii) net borrowing, debt leverage levels, credit quality or debt ratings, (xviii) the accomplishment of mergers,
acquisitions, dispositions, public offerings or similar extraordinary business transactions, (xix) net asset value per share, (xx) economic value added, (xxi) individual business
objectives or (xxii) added reserves. The performance goals based on these performance measures may be made relative to the performance of other business entities. 

        7.8   Certification and Negative Discretion. Prior to the payment of any compensation pursuant to an Award that is intended to
satisfy the 162(m) Requirements, the Committee shall certify the extent to which the performance goals and other material terms of the Award have been achieved or satisfied. The Committee in its sole
discretion shall have the authority to reduce, but not to increase, the amount payable and the number of shares to be granted, issued, retained or vested pursuant to an Award that is intended to
satisfy the Section 162(m) Requirements. 

 
 

ARTICLE VIII. CHANGE OF CONTROL    
    

        Unless otherwise determined by the Committee at the time of grant of an Award or unless otherwise provided in the applicable Award Agreement, if the stockholders
of SEI shall approve a transaction which upon consummation would constitute a Change of Control of SEI, or in the event of any Change of Control of SEI not subject to stockholder approval, then
effective immediately prior to the Change of Control, all Awards shall be fully vested, all restrictions and limitations shall lapse and all performance criteria or other conditions related to such
Awards shall be deemed to be achieved or fulfilled to the maximum extent possible. 

 
 

ARTICLE IX. AMENDMENT AND TERMINATION    
    

        9.1   Plan Amendment and Termination. The Board may at any time suspend, terminate, amend or modify the Plan, in whole or in
part; provided, however, that no amendment or modification of the Plan shall become effective without the approval of such amendment or modification by the holders of at least a majority of the shares
of Common Stock if (i) such amendment or modification increases the maximum number of shares subject to the Plan (except as provided in Article IV) or changes the designation or class of
persons eligible to receive Awards under the Plan, or (ii) counsel for SEI determines that such approval is otherwise required by or necessary to comply with applicable law or the listing
requirements of NASDAQ or such other exchange or association on which the Common Stock is then listed or quoted. An amendment to the Plan shall not require stockholder approval if it curtails rather
than expands the scope of the Plan, nor if it is made to conform the Plan to new statutory or regulatory requirements that arise after submission of the Plan to stockholders for their approval, such
as, without limitation, changes to Section 409A of the Code, or regulations issued 

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thereunder.
Upon termination of the Plan, the terms and provisions of the Plan shall, notwithstanding such termination, continue to apply to Awards granted prior to such termination. Except as
otherwise provided herein, no suspension, termination, amendment or modification of the Plan shall adversely affect in any material way any Award previously granted under the Plan, without the consent
of the Participant holding such Award. 

        9.2   Award Amendment and Cancellation. The Committee may amend the terms of any outstanding Award granted pursuant to the
Plan, but except as otherwise provided herein, no such amendment shall adversely affect in any material way the Participant's rights under an outstanding Award without the consent of the Participant
holding such Award. 

 
 

ARTICLE X. MISCELLANEOUS    
    

        10.1 Award Agreements. After the Committee grants an Award under the Plan to a Participant, SEI and the Participant shall
enter into an Award Agreement setting forth the terms, conditions, restrictions and limitations applicable to the Award and such other matters as the Committee may determine to be appropriate. The
Committee may permit or require a Participant to defer receipt of the payment of cash or the delivery of shares of Common Stock that would otherwise be due to the Participant in connection with any
Award; provided, however, that any permitted deferrals shall be structured to avoid negative tax consequences to the Participant under Section 409A of the Code. The terms and provisions of the
respective Award Agreements need not be identical. All Award Agreements shall be subject to the provisions of the Plan, and in the event of any conflict between an Award Agreement and the Plan, the
terms of the Plan shall govern. 

        10.2 Listing; Suspension.

        (a)   As
long as the Common Stock is listed on a national securities exchange or system sponsored by a national securities association, the issuance of any shares of Common
Stock pursuant to an Award shall be conditioned upon such shares being listed on such exchange or system. SEI shall have no obligation to issue such shares unless and until such shares are so listed. 

        (b)   If
at any time counsel to SEI or its Affiliates shall be of the opinion that any sale or delivery of shares of Common Stock pursuant to an Award is or may in the
circumstances be unlawful or result in the imposition of excise taxes on SEI or its Affiliates under the laws of any applicable jurisdiction, SEI or its Affiliates shall have no obligation to make
such sale or delivery, or to make any application or to effect or to maintain any qualification or registration under the Securities Act of 1933, as amended, or otherwise, with respect to shares of
Common Stock or Awards. 

        (c)   Upon
termination of any period of suspension under this Section, any Award affected by such suspension that shall not then have expired or terminated shall be reinstated
as to all shares available before such suspension and as to shares that would otherwise have become available during the period
of such suspension, but no such suspension shall extend the term of any Award unless otherwise determined by the Committee in its sole discretion. 

        10.3 Additional Conditions. Notwithstanding anything in the Plan to the contrary: (i) the Committee may, if it shall
determine it necessary or desirable in its sole discretion, at the time of grant of any Award or the issuance of any shares of Common Stock pursuant to any Award, require the recipient of the Award or
such shares of Common Stock, as a condition to the receipt thereof, to deliver to SEI a written representation of present intention to acquire the Award or such shares of Common Stock for his own
account for investment and not for distribution, (ii) the certificate for shares of Common Stock issued to a Participant may include any legend that the Committee deems appropriate to reflect
any restrictions on transfer, and (iii) all certificates for shares of Common Stock delivered under the Plan shall be subject to such stop transfer orders and other restrictions as the 

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Committee
may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange or association upon which the Common Stock is then listed
or quoted, any applicable federal or state securities law, and any applicable corporate law, and the Committee may cause a legend or legends to be placed on any such certificates to make appropriate
reference to such restrictions. 

        10.4 Transferability.

        (a)   Any
action to be taken during the Participant's lifetime in connection with an Award shall be taken only by such Participant; provided, however, that in the event of a
Participant's legal incapacity, such action may be taken by his guardian or legal representative. When a Participant dies, the personal representative, beneficiary, or other person entitled to succeed
to the rights of the Participant may acquire the rights under an Award. Any such successor must furnish proof satisfactory to SEI of the successor's entitlement to receive the rights under an Award
under the Participant's will or under the applicable laws of descent and distribution. 

        (b)   Except
as otherwise provided in this Section, no Award shall be subject to execution, attachment or similar process, and no Award may be sold, transferred, pledged,
exchanged, hypothecated or otherwise disposed of, other than by will or pursuant to the applicable laws of descent and distribution. Any attempted sale, transfer, pledge, exchange, hypothecation or
other disposition of an Award not specifically permitted by the Plan or the Award Agreement shall be null and void and without effect. 

        (c)   Incident
to a Participant's divorce, the Participant may request that SEI agree to observe the terms of a domestic relations order which may or may not be part of a
qualified domestic relations order (as defined in Code Section 414(p)) with respect to all or a part of one or more Awards made to the Participant under the Plan to the Participant's alternate
payee. SEI's decision regarding such a request shall be made by the Committee, in its sole and absolute discretion, based upon the best interests of
SEI. The Committee's decision need not be uniform among Participants. As a condition of participation, a Participant agrees to hold SEI harmless from any claim that may arise out of SEI's observance
of the terms of any such domestic relations order. 

        10.5 Withholding Taxes. The Company shall be entitled to deduct from any payment made under the Plan, regardless of the form
of such payment, the amount of all applicable income and employment taxes required by law to be withheld with respect to such payment, may require the Participant to pay to the Company such
withholding taxes prior to and as a condition of the making of any payment or the issuance or delivery of any shares of Common Stock under the Plan, and shall be entitled to deduct from any other
compensation payable to the Participant any withholding obligations with respect to Awards. In accordance with any applicable administrative guidelines it establishes, the Committee may allow a
Participant to pay the amount of taxes required by law to be withheld from or with respect to an Award by (i) withholding shares of Common Stock from any payment of Common Stock due as a result
of such Award, or (ii) permitting the Participant to deliver to the Company previously acquired shares of Common Stock, in each case having an aggregate Fair Market Value equal to the amount of
such required withholding taxes. No shares of Common Stock shall be issued pursuant to any Award unless and until the applicable tax withholding obligations have been satisfied. 

        10.6 No Fractional Shares. No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan or an Award
granted hereunder, provided that the Committee in its sole discretion may round fractional shares down to the nearest whole share or settle fractional shares in cash. 

        10.7 Notices. All notices required or permitted to be given or made under the Plan or pursuant to any Award Agreement (unless
provided otherwise in such Award Agreement) shall be in writing and shall be deemed to have been duly given or made if (i) delivered personally, (ii) transmitted by first 

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class
registered or certified United States mail, postage prepaid, return receipt requested, (iii) sent by prepaid overnight courier service, or (iv) sent by telecopy or facsimile
transmission, with confirmation receipt, to the person who is to receive it at the address that such person has theretofore specified by written notice delivered in accordance herewith. Such notices
shall be effective (i) if delivered personally or sent by courier service, upon actual receipt by the intended recipient, (ii) if mailed, upon the earlier of five days after deposit in
the mail or the date of delivery as shown by the return receipt therefor, or (iii) if sent by telecopy or facsimile transmission, when the answer back is received. SEI or a Participant may
change, at any time and from time to time, by written notice to the other, the address that it or such Participant had theretofore specified for receiving notices. Until such address is changed in
accordance herewith, notices hereunder or under an Award Agreement shall be delivered or sent (i) to a Participant at his address as set forth in the records of the Company or (ii) to
SEI at the principal executive offices of SEI clearly marked "Attention: General Counsel." 

        10.8 Compliance with Law and Stock Exchange or Association Requirements. In addition, it is the intent of the SEI that Awards
intended to constitute "qualified performance-based awards" comply with the applicable provisions of Section 162(m) of the Code and that any deferral of the receipt of the payment of cash or
the delivery of shares of Common Stock that the Committee may permit or require, and any Award granted that is subject to Section 409A of the Code, comply with the requirements of
Section 409A of the Code. To the extent that any legal requirement of Section 16 of the Exchange Act or Sections 162(m) or 409A of the Code as set forth in the Plan ceases to be required
under Section 16 of the Exchange Act or Sections 162(m) or 409A of the Code, that Plan provision shall cease to apply. Any provision of this Plan to the contrary notwithstanding, the Committee
may revoke any Award if it is contrary to law, governmental regulation, or stock exchange or association requirements or modify an Award to bring it into compliance with any government regulation or
stock exchange or association requirements. The Committee may agree to limit its authority under this Section. 

        10.9 Binding Effect. The obligations of SEI under the Plan shall be binding upon any successor corporation or organization
resulting from the merger, consolidation or other reorganization of SEI, or upon any successor corporation or organization succeeding to all or substantially all of the assets and business of SEI. The
terms and conditions of the Plan shall be binding upon each Participant and his heirs, legatees, distributees and legal representatives. 

        10.10 Severability. If any provision of the Plan or any Award Agreement is held to be illegal or invalid for any reason, the
illegality or invalidity shall not affect the remaining provisions of the Plan or such agreement, as the case may be, but such provision shall be fully severable and the Plan or such agreement, as the
case may be, shall be construed and enforced as if the illegal or invalid provision had never been included herein or therein. 

        10.11 No Restriction of Corporate Action. Nothing contained in the Plan shall be construed to prevent SEI or any Affiliate
from taking any corporate action (including any corporate action to suspend, terminate, amend or modify the Plan) that is deemed by SEI or such Affiliate to be appropriate or in its best interest,
whether or not such action would have an adverse effect on the Plan or any Awards made or to be made under the Plan. No Participant or other person shall have any claim against SEI or any Affiliate as
a result of such action. 

        10.12 Governing Law. The Plan shall be governed by and construed in accordance with the internal laws (and not the principles
relating to conflicts of laws) of the State of Texas except as superseded by applicable federal law. 

        10.13 No Right, Title or Interest in Company Assets. No Participant shall have any rights as a stockholder of SEI as a result
of participation in the Plan until the date of issuance of Common Stock in his name and, in the case of Restricted Stock, unless and until such rights are granted to the Participant pursuant to the
Plan. To the extent any person acquires a right to receive payments from the Company under the Plan, such rights shall be no greater than the rights of an unsecured general 

10

 

creditor
of the Company, and such person shall not have any rights in or against any specific assets of the Company. All Awards shall be unfunded. 

        10.14 Risk of Participation. Nothing contained in the Plan shall be construed either as a guarantee by SEI or the Affiliates,
or their respective stockholders, directors, officers or employees, of the value of any assets of the Plan or as an agreement by SEI or the Affiliates, or their respective stockholders, directors,
officers or employees, to indemnify anyone for any losses, damages, costs or expenses resulting from participation in the Plan. 

        10.15 No Guarantee of Tax Consequences. No person connected with the Plan in any capacity, including without limitation SEI
and the Affiliates and their respective directors, officers, agents and employees, makes any representation, commitment or guarantee that any tax treatment, including without limitation federal, state
and local income, estate and gift tax treatment, will be applicable with respect to any Awards or payments thereunder made to or for the benefit of a Participant under the Plan or that such tax
treatment will apply to or be available to a Participant on account of participation in the Plan. 

        10.16 Continued Employment. Nothing contained in the Plan or in any Award Agreement shall confer upon any Participant the
right to continue in the employ of the Company, or interfere in any way with the rights of the Company to terminate a Participant's employment at any time, with or without cause. The loss of existing
or potential profit in Awards will not constitute an element of damages in the event of termination of employment for any reason, even if the termination is in violation of an obligation of SEI or an
Affiliate to the Participant. 

        10.17 Miscellaneous. Headings are given to the articles and sections of the Plan solely as a convenience to facilitate
reference. Such headings shall not be deemed in any way material or relevant to the construction of the Plan or any provisions hereof. The use of the masculine gender shall also include within its
meaning the feminine. Wherever the context of the Plan dictates, the use of the singular shall also include within its meaning the plural, and vice versa. 

        IN
WITNESS WHEREOF, this Plan has been executed as of the Effective Date. 

	

 	
 	

 	

 	

 
	

 	
 	

STROUD ENERGY, INC.	

 
	

 	
 	

By:	

/s/  PATRICK J. NOYES      
 Patrick J. Noyes

President & Chief Executive Officer	

 

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QuickLinks

Exhibit 10.4

STROUD ENERGY, INC. RESTRICTED STOCK PLAN

ARTICLE I. ESTABLISHMENT AND PURPOSE

ARTICLE II. DEFINITIONS

ARTICLE III. PLAN ADMINISTRATION

ARTICLE IV. SHARES SUBJECT TO THE PLAN

ARTICLE V. ELIGIBILITY

ARTICLE VI. FORM OF AWARDS

ARTICLE VII. RESTRICTED STOCK

ARTICLE VIII. CHANGE OF CONTROL

ARTICLE IX. AMENDMENT AND TERMINATION

ARTICLE X. MISCELLANEOUSQuickLinks
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Exhibit 10.5    
    

COMBINATION AGREEMENT  

        This Combination Agreement (this "Agreement") is entered into as of August 1, 2005 by and among Stroud Oil
Properties, Inc., an Oklahoma corporation ("SOP"), all the shareholders of SOP as listed on the signature page to this Agreement, Stroud Energy
Management, Ltd., a Texas limited partnership ("Management"), all the limited partners of Management as listed on the signature page to this
Agreement, Stroud Energy, Ltd., a Texas limited partnership ("Stroud Ltd."), all the limited partners of Stroud Ltd. as listed on
the signature page to this Agreement, and Stroud Energy, Inc., a Delaware corporation ("Newco"). The shareholders (and limited partners after the
merger described below) of SOP and the limited partners of Management and Stroud Ltd. (other than SOP) are collectively referred to as the
"Owners". 

RECITALS  

        The Owners desire to exchange their ownership interests in SOP, Management and Stroud Ltd. for stock in Newco through the series of transactions
contemplated by this Agreement. 

        The
following actions have been taken prior to the date hereof or will be taken prior to the date of the closing described herein: 

        1.     Newco
was formed immediately prior to the date hereof to participate in this reorganization. 

        2.     Newco
formed a new wholly-owned Delaware limited liability company ("GP LLC"). 

        3.     Newco
formed a new wholly-owned Delaware limited liability company ("LP LLC"). 

        4.     GP
LLC and Newco have formed a new Delaware limited partnership ("SOP Ltd.") to participate in the merger described
in Section 1.6, with GP LLC serving as sole general partner with a 0.1% general partnership interest in SOP Ltd. and Newco serving as sole limited partner with a 99.9% limited
partnership interest in SOP Ltd. 

        Pursuant
to this Agreement, each of the following matters shall occur in the order stated: 

        1.     Stroud Ltd.,
Management and SOP will make any tax distribution required to allow their owners to pay tax on their share of undistributed taxable income for 2005. 

        2.     All
Owners will transfer their ownership interests in SOP, Management and Stroud Ltd. (except the preferred limited partnership interests) to Newco in exchange for
Newco common stock. 

        3.     Newco
will issue Newco common stock to the Owners. 

        4.     Immediately
after the preceding step, Newco will transfer 0.1% of its stock in SOP to GP LLC. 

        5.     Immediately
after the preceding step, SOP will be merged into SOP Ltd., and will elect to be treated as a corporation for tax purposes. 

        6.     Newco
will transfer all its 99.9% limited partnership interests in SOP Ltd. to LP LLC. 

        7.     Management
will be converted into a Texas limited liability company ("SEM LLC"). 

        8.     Newco
will transfer all its membership interests in SEM LLC to SOP Ltd. 

        9.     Newco
will transfer all its limited partnership interests in Stroud Ltd. to SOP Ltd. 

        10.   Newco
will transfer offering proceeds to SOP Ltd. in an amount sufficient for the purchase of the preferred partnership interests in Stroud Ltd. 

        11.   SOP Ltd.
will purchase the preferred partnership interests in Stroud Ltd. 

 

 
 

ARTICLE I
  Transfers of Various Ownership Interests    
    

        The parties hereby agree, as promptly as reasonably practicable, to undertake the following transactions in the order set forth in this Article. 

        Section 1.1
Tax Distribution. Prior to the transfer of ownership interests to Newco pursuant to
Section 1.2, Stroud Ltd. will estimate its "Presumed Partnership Tax Liability" (as defined in Section 5.8 of the Third Amended and Restated Agreement of Limited Partnership of
Stroud Ltd., dated January 1, 2004 ("Stroud Ltd.'s Partnership Agreement")) as of the Closing (as hereinafter defined) and make a
tax distribution in accordance with such Section 5.8 of Stroud Ltd.'s Partnership Agreement to allow the Owners to pay tax on their direct or indirect share of Stroud Ltd.'s
undistributed taxable income for the short taxable year ending on the Closing. Following this distribution by Stroud Ltd., Management and SOP will make similar tax distributions to allow their
Owners to pay tax on their direct or indirect shares of Management's and SOP's undistributed taxable income for the short taxable year ending on the Closing. 

        Section 1.2
Transfer of Ownership Interests to Newco. Pursuant to the form of Assignment attached hereto as  Exhibit A or the
form of Assignment and Stock Power attached hereto as Exhibit B, as
applicable, each Owner will grant, contribute, transfer, assign and convey to Newco, its successors and assigns, all its right, title and interest in and to all its ownership interests in SOP,
Management and Stroud Ltd. as shown on Schedule I attached hereto, and Newco will accept these ownership interests as a contribution to
the capital of Newco. 

        Section 1.3
Receipt of Stock in Newco. The parties hereto acknowledge that the transactions described in
this Agreement constitute "Capital Transactions" and the proceeds thereof constitute "Capital Proceeds" as defined in Stroud Ltd.'s Partnership Agreement. In exchange for the transfers
described above, Newco will issue shares of Newco common stock to each Owner assuming a relative value for each Owner's ownership interest and calculated in accordance with Section 5.6(c) of
Stroud Ltd.'s
Partnership Agreement (except for the preferred partnership interests in Stroud Ltd. which will be purchased pursuant to Section 1.12) and in keeping with the examples of calculations
shown on Schedule II attached hereto; provided, however, that the Reserved Class B Interests that were to be issued to members of
management under Management's Partnership Agreement, but have not been specifically allocated, will become reserved shares (the "Unallocated Class B Interest
Shares") retained by Newco for future issuance in accordance with the Stroud Energy, Inc. 2005 Restricted Stock Plan (the "Newco Restricted Stock
Plan") and, independent of the calculation referred to above, shall be fixed in number at 226,608 shares. The Unallocated Class B Interest Shares would otherwise have
been issued to Owners of SOP by virtue of SOP's ownership of Class B Partnership Interests in Management as of the Closing. Shares of Newco common stock issued in exchange for the
Class B Partnership Interests in Management that were granted to management employees in May 2005 and that are subject to forfeiture restrictions as of the Closing shall be issued
pursuant to the Newco Restricted Stock Plan and such shares of Newco common stock shall be subject to the same forfeiture restrictions as were in effect with respect to such Class B Partnership
Interests prior to the Closing. Shares of Newco common stock issued in exchange for Class B Partnership Interests in Management that were issued to management employees prior to May 2005
shall not be subject to forfeiture and shall be fully vested. 

        Section 1.4
Newco Stock Incentive Plan and Restricted Stock Plan. In connection with the transactions
contemplated by this Agreement but prior to the merger of SOP described in Section 1.6 and the consummation of the Private Offering, (i) the Stroud Oil Properties, Inc. 2001 Stock
Incentive Plan (the "SOP Plan") will be assumed and adopted by Newco and restated into the form of the Newco Stock Incentive Plan and (ii) the
Newco Stock Incentive Plan and the Newco Restricted Stock Plan will be approved and adopted by the board of directors and the stockholders of Newco. Upon the 

2

 

consummation
of the Private Offering, outstanding options under the SOP Plan will be assumed by Newco and adjusted to become options to purchase shares of Newco common stock in accordance with the
rules set forth in Treasury Regulations Section 1.424-1(a). 

        Section 1.5
Transfer of Ownership Interests in SOP by Newco. Pursuant to the form of Assignment and Stock
Power attached hereto as Exhibit B, Newco will grant, contribute, transfer, assign and convey to GP LLC, its successors and assigns, all its
right, title and interest in and to 0.1% of its stock in SOP as shown on Schedule I attached hereto, and GP LLC will accept these ownership
interests as a contribution to the capital of GP LLC. 

        Section 1.6
Merger of SOP. Newco will take all actions necessary or convenient under the Oklahoma General
Corporation Act and the Limited Partnership Act of the State of Delaware to cause SOP to merge into SOP Ltd. and the surviving entity will file an election to be treated as a corporation for
federal tax purposes. 

        Section 1.7  Transfer of Ownership Interests in SOP Ltd. by Newco. Pursuant to the form of
Assignment
attached hereto as Exhibit A, Newco will grant, contribute, transfer, assign and convey to LP LLC, its successors and assigns, all its right,
title and interest in and to all its 99.9% limited partnership interests
in SOP Ltd. as shown on Schedule I attached hereto, and LP LLC will accept these ownership interests as a contribution to the capital of
LP LLC. 

        Section 1.8  Conversion of Management. Newco will take all actions necessary or convenient under the
Texas
Revised Limited Partnership Act and the Texas Limited Liability Company Act to cause Management to convert to a Texas limited liability company. 

        Section 1.9
Transfer of Ownership Interests in SEM LLC by Newco to SOP Ltd. Pursuant to the form of
Assignment attached hereto as Exhibit A, Newco will grant, contribute, transfer, assign and convey to SOP Ltd., its successors and
assigns, all its right, title and interest in and to all its membership interests in SEM LLC as shown on Schedule I attached hereto, and
SOP Ltd. will accept these membership interests. 

        Section 1.10
Transfer of Ownership Interests in Stroud Ltd. by Newco. Pursuant to the form of
Assignment attached hereto as Exhibit A, Newco will grant, contribute, transfer, assign and convey to SOP Ltd., its successors and
assigns, all its right, title and interest in and to all its limited partnership interests in Stroud Ltd. as shown on Schedule I attached
hereto, and SOP Ltd. will accept these ownership interests. 

        Section 1.11  Contribution of Proceeds by Newco. Newco will contribute proceeds of the Private
Offering (as
hereinafter defined) to SOP Ltd. in an amount sufficient to make the purchase of preferred partnership interests in Stroud Ltd. pursuant to Section 1.12. 

        Section 1.12
Purchase of Preferred Partnership Interests. Pursuant to the form of Purchase Agreement
attached hereto as Exhibit C, SOP Ltd. will purchase, and the EnCap Partners (as hereinafter defined) will sell, the preferred partnership
interests in Stroud Ltd. for a cash purchase price using proceeds of the Private Offering received pursuant to Section 1.11. 

 
 

ARTICLE II
  Closing    
    

        Section 2.1 Closing. The closing of the transactions described in ARTICLE I (the
"Closing") will occur immediately prior to, and at the place of, the closing of the private offering of Newco common stock with proceeds and on terms
satisfactory to Newco in its sole discretion (the "Private Offering"). 

        Section 2.2
Registration Rights. Prior to the Closing, each Owner will have entered into a Registration
Rights Agreement with Newco in substantially the form attached hereto as Exhibit D. 

3

 

 
 

ARTICLE III
  Tax Matters    
    

        Section 3.1 Tax Treatment.

        (a)   The
parties hereto intend for the transactions described in Section 1.2 to qualify under Section 351(a) of the Internal Revenue Code of 1986, as amended
(the "Code"). The parties agree to report the transactions in accordance with the foregoing sentence on all federal income tax and information returns
and reports. 

        (b)   Although
the parties will report the transactions described in Section 1.2 as a tax-free exchange under Section 351 of the Code, Newco is
giving no assurances in this regard. Further, the tax treatment of the transactions may differ for various Owners. Accordingly, each Owner is expected to consult his, her, or its own tax advisor
regarding the tax effects of the exchange. 

        (c)   Immediately
after the Closing, the parties hereto intend for (i) each of GP LLC and LP LLC to be treated as disregarded as separate entities from Newco for
federal tax purposes and (ii) each of SEM LLC and Stroud Ltd. to be treated as disregarded as separate entities from SOP Ltd. for federal tax purposes. The parties agree to file
all federal income tax returns and reports in accordance with the foregoing sentence. 

        Section 3.2
Allocation of 2005 Taxable Income. The parties hereto agree to allocate the taxable income of
Stroud Ltd. for the 2005 taxable year between the period ending on the Closing and the period thereafter based on an interim closing of the books as of the Closing. 

        Section 3.3  Tax Distribution. The parties hereto agree that Stroud Ltd., Management and SOP
will
make tax distributions to their Owners as provided in Section 1.1. 

        Section 3.4
Partnership Termination. Each party hereto acknowledges that Stroud Ltd. will be treated
as terminated for federal income tax purposes under Section 708 of the Code as of the Closing. 

 
 

ARTICLE IV
  Further Assurances    
    

        From time to time after the date hereof, and without any further consideration, each of the parties to this Agreement shall execute, acknowledge and deliver all
such additional instruments, notices and other documents and will do all such other acts and things, all in accordance with applicable law, as may be necessary or convenient to more fully and
effectively carry out the purposes and intent of this Agreement. 

 
 

ARTICLE V
  Consents and Other Requirements    
    

        Section 5.1 Admission of Limited Partners in Management.

        (a)   SOP,
as the general partner of Management, hereby consents, as required for such transfers by Article VII of the Limited Partnership Agreement of Management,
dated January 1, 2004 ("Management's Partnership Agreement"), to all transfers of limited partnership interests in Management provided for in
this Agreement. 

        (b)   SOP,
as the general partner of Management and sole owner of SEM LLC, hereby consents, as required by Article VII of Management's Partnership Agreement, to the
admission of Newco and SOP Ltd., pursuant to Section 1.2 and Section 1.9 respectively, as substituted partners or members of Management and SEM LLC, respectively. 

        (C)  AS REQUIRED BY SECTION 7.02 OF MANAGEMENT'S PARTNERSHIP AGREEMENT, EACH OWNER OF MANAGEMENT HEREBY AGREES TO INDEMNIFY AND  

4

 

 HOLD HARMLESS MANAGEMENT AND ALL THE OTHER OWNERS OF MANAGEMENT FROM AND AGAINST ANY COSTS, DAMAGES, CLAIMS, SUITS OR FEES SUFFERED OR INCURRED BY MANAGEMENT OR THE OTHER OWNERS OF MANAGEMENT ARISING
OUT OF OR RESULTING FROM ANY CLAIMS IN CONNECTION WITH THE TRANSFERS BY SUCH OWNER OF LIMITED PARTNERSHIP INTERESTS IN MANAGEMENT PROVIDED FOR IN THIS AGREEMENT. EACH OWNER OF SEM LLC ALSO HEREBY
AGREES TO INDEMNIFY AND HOLD HARMLESS SEM LLC AND ALL THE OTHER OWNERS OF SEM LLC FROM AND AGAINST ANY COSTS, DAMAGES, CLAIMS, SUITS OR FEES SUFFERED OR INCURRED BY SEM LLC OR THE OTHER OWNERS OF SEM
LLC ARISING OUT OF OR RESULTING FROM ANY CLAIMS IN CONNECTION WITH THE TRANSFERS BY SUCH OWNER OF MEMBERSHIP INTERESTS IN SEM LLC PROVIDED FOR IN THIS AGREEMENT.

        Section 5.2  Admission of Limited Partners in Stroud Ltd.

        (a)   Management
(and after the conversion described in Section 1.8, SEM LLC), as the general partner of Stroud Ltd., hereby consents, as required for such
transfers by Article XI of Stroud Ltd.'s Partnership Agreement, to all transfers of limited partnership interests in Stroud Ltd. provided for in this Agreement. 

        (b)   EnCap
Energy Capital Fund IV, L.P. and EnCap IV-B Acquisitions, L.P. (the "EnCap Partners") hereby consent,
as required for such transfers by Article XI of Stroud Ltd.'s Partnership Agreement, to all transfers of limited partnership interests in Stroud Ltd. provided for in this
Agreement. 

        (c)   Management
(and after the conversion described in Section 1.8, SEM LLC), as the general partner of Stroud Ltd., hereby consents, as required by
Article XI of Stroud Ltd.'s Partnership Agreement, to the admission of Newco and SOP Ltd., pursuant to Section 1.2 and Section 1.12 respectively, as substituted
partners of Stroud Ltd. 

        (d)   The
EnCap Partners hereby consent, as required by Article XI of Stroud Ltd.'s Partnership Agreement, to the admission of Newco and SOP Ltd.,
pursuant to Section 1.2 and Section 1.12 respectively, as substituted partners of Stroud Ltd. 

        Section 5.3
Transfers of Stock in SOP. As they relate to the transfers of stock in SOP provided for in this
Agreement, SOP and each Owner of SOP hereby waive all rights of notice and first refusal related to
transfers of stock in SOP provided by Section 6 of the Omnibus Agreement between SOP, the Owners of SOP, Management, and the EnCap Partners, dated January 1, 2004 (the
"Omnibus Agreement"). 

        Section 5.4  Termination of Omnibus Agreement. Pursuant to Section 10(e) of the Omnibus
Agreement,
the EnCap Partners and SOP hereby agree to terminate the Omnibus Agreement effective as of the date of this Agreement. 

 
 

ARTICLE VI
  Miscellaneous    
    

        Section 6.1 Order of Completion of Transactions. The transactions provided for in
ARTICLE I of this Agreement shall be completed in the order set forth in that article. 

        Section 6.2  Headings; References; Interpretation. All article and section headings in this
Agreement are
for convenience only and shall not be deemed to control or affect the meaning or construction of any of the provisions hereof. The words "hereof," "herein" and "hereunder" and words of similar import,
when used in this Agreement, shall refer to this Agreement as a whole, including without limitation, all exhibits attached hereto, and not to any particular provision of this Agreement. All 

5

 

references
herein to articles, sections, and exhibits shall, unless the context requires a different construction, be deemed to be references to the articles, sections and exhibits of this Agreement,
respectively, and all such exhibits and schedules attached hereto are hereby incorporated herein and made a part hereof for all purposes. All personal pronouns used in this Agreement, whether used in
the masculine, feminine or neuter gender, shall include all other genders, and the singular shall include the plural and vice versa. The use herein of the word "including" following any general
statement, term or matter shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters,
whether or not non-limiting language (such as "without limitation," "but not limited to," or words of similar import) is used with reference thereto, but rather shall be deemed to refer to
all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter. 

        Section 6.3
Successors and Assigns. The Agreement shall be binding upon and inure to the benefit of the
parties signatory hereto and their respective successors and assigns. 

        Section 6.4
No Third Party Rights. The provisions of this Agreement are intended to bind the parties
signatory hereto as to each other and are not intended to and do not create rights in any other person
or confer upon any other person any benefits, rights or remedies and no person is or is intended to be a third party beneficiary of any of the provisions of this Agreement. 

        Section 6.5
Counterparts. This Agreement may be executed in any number of counterparts, all of which
together shall constitute one agreement binding on the parties hereto. 

        Section 6.6  Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of
Texas
applicable to contracts made and to be performed wholly within such state without giving effect to conflict of law principles thereof, except to the extent that it is mandatory that the law of some
other jurisdiction shall apply. 

        Section 6.7
Severability. If any of the provisions of this Agreement are held by any court of competent jurisdiction to contravene,
or to be invalid under, the laws of any political body having jurisdiction over the subject matter hereof, such contravention or invalidity shall not invalidate the entire Agreement. Instead, this
Agreement shall be construed as if it did not contain the particular provision or provisions held to be invalid, and an equitable adjustment shall be made and necessary provision added so as to give
effect to the intention of the parties as expressed in this Agreement at the time of execution of this Agreement. 

        Section 6.8
Amendment or Modification. This Agreement may be amended or modified from time to time only by
the written agreement of all the parties hereto. 

        Section 6.9
Integration. This Agreement supersedes all previous understandings or agreements between the
parties, whether oral or written, with respect to its subject matter. This document is an integrated agreement which contains the entire understanding of the parties. No understanding, representation,
promise or agreement, whether oral or written, is intended to be or shall be included in or form part of this Agreement unless it is contained in a written amendment hereto executed by the parties
hereto after the date of this Agreement. 

        Section 6.10
Representations and Warranties. Each party hereto represents and warrants to each of the other parties hereto as
follows: 

        (a)   Such
party has the right, power and authority for, and has taken all necessary corporate and other action to authorize, the execution, delivery and performance of the
transactions contemplated by this Agreement; and 

        (b)   This
Agreement has been duly executed and delivered by the duly authorized officers of such party and constitutes the legal, valid and binding obligation of such party,
enforceable in accordance with its terms. 

6

 

        Section 6.11  Additional Representations and Warranties of the Owners. Each Owner represents and
warrants to
each of the other parties hereto as follows: 

        (a)   That
the ownership interests shown on Schedule I attached hereto constitute all such Owner's interests in SOP,
Management and Stroud Ltd.; and 

        (b)   That
such Owner has, and will transfer in the transactions described herein, valid title to the ownership interests shown on  Schedule I attached hereto, free and clear of all encumbrances except for
restrictions imposed by applicable federal and state securities laws
and arising under existing agreements between the parties hereto. 

        (c)   That
such Owner, either alone or with the assistance of professional advisors, has such knowledge and experience in financial and business matters to be capable of
evaluating the merits and risk of an investment in Newco common stock and has the net worth to undertake such risks. 

        (d)   That
such Owner believes that an investment in Newco common stock is suitable for such Owner based upon his investment objectives and financial needs, and such Owner has
adequate means for providing for his current financial needs and personal contingencies and has no need for liquidity of investment with respect to the Newco common stock. 

        (e)   That
such Owner has received, had the opportunity to fully review and has fully reviewed and understands the Preliminary Offering Memorandum describing the Private
Offering, together with all exhibits and addenda thereto, and has been given ample access to all other information regarding an investment in Newco common stock and has utilized such access to his
satisfaction to obtain such information as he has reasonably requested; and, particularly, such Owner has been given reasonable opportunity to ask questions and receive answers concerning the terms
and conditions of the offering of Newco common stock and to obtain any additional information, to the extent reasonably available. 

        (f)    That
such Owner understands that the Newco common stock to be received pursuant to this Agreement is being issued under exemptions from registration provided for in the
Securities Act of 1933, as amended, and this transaction has not been reviewed by the United States Securities and
Exchange Commission or by any administrative agency charged with the administration of the securities or "blue sky" laws of any state. 

        (g)   That
such Owner is receiving the Newco common stock for his own investment portfolio and account (and not on behalf of, and without the participation of, any other
person) with the intent of holding them for investment and without the intent of participating, directly or indirectly, in a distribution of the Newco common stock and not with a view to, or for
resale in connection with, any distribution of Newco common stock or any portion thereof. 

        Section 6.12
Costs. Each transferee/assignee hereunder shall pay all sales, use and similar taxes arising
out of the contributions, conveyances and deliveries to be made hereunder, and shall pay all documentary, filing, recording, transfer, deed, and conveyance taxes and fees required in connection
therewith. 

        Section 6.13
Joinder of Spouses. The spouses of each individual Owner are joining in the execution of this
Agreement to acknowledgment its existence and its provisions, and to evidence the desire to bind their interests in the ownership interests transferred under this Agreement, if any, to the performance
of this Agreement. 

        Section 6.14
Assignment. To the extent required by applicable law, this Agreement shall also constitute a
"deed," "bill of sale" or "assignment" of assets such that no additional assignment document shall be necessary to effect the assignments described herein. 

[THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] 

7

   
        IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the date first above written. 

	SOP:	 	STROUD OIL PROPERTIES, INC.,

an Oklahoma corporation
	

 	
 	

By:	

/s/  PATRICK J. NOYES      
 Name: Patrick J. Noyes

Title: President & Chief Executive Officer
	
MANAGEMENT:	
 	

STROUD ENERGY MANAGEMENT, LTD.,

a Texas limited partnership
	

 	
 	

By:	

Stroud Oil Properties, Inc., an Oklahoma

corporation, its general partner
	

 	
 	

By:	

/s/  PATRICK J. NOYES      
 Name: Patrick J. Noyes

Title: President & Chief Executive Officer
	
STROUD LTD.:	
 	

STROUD ENERGY, LTD.,

a Texas limited partnership
	

 	
 	

By:	

Stroud Energy Management, Ltd.,

a Texas limited partnership,

its general partner
	

 	
 	

 	

By:	
 	

Stroud Oil Properties, Inc.,

an Oklahoma corporation,

its general partner
	

 	
 	

 	

By:	
 	

/s/  PATRICK J. NOYES      
 Name: Patrick J. Noyes

Title: President & Chief Executive Officer
	
NEWCO:	
 	

STROUD ENERGY, INC.,

a Delaware corporation
	

 	
 	

By:	

/s/  PATRICK J. NOYES      
 Patrick J. Noyes, President
	OWNERS OF SOP:	 	 	 	 	 
	

 	
 	

/s/  BRUCE F. BRADEN      
 Bruce F. Braden
	

 	
 	

/s/  CHRISTOPHER A. WRIGHT      
 Christopher A. Wright
	 	 	 	 	 	 

S-1

 

	

 	
 	

/s/  ELIZABETH S. WRIGHT      
 Elizabeth S. Wright
	

 	
 	

/s/  ROBERT S. COLMAN      
 Robert S. Colman, Trustee of the

Robert S. Colman Trust u/d/t 3/18/85
	

 	
 	

/s/  ROBERT S. COLMAN      
 Robert S. Colman, Trustee, Edwin W. Colman

Children's Trust FBO Robert S. Colman
	

 	
 	

/s/  DANIEL I. KEMPER      
 Daniel I. Kemper, Trustee,

Daniel I. Kemper Family Trust
	

 	
 	

/s/  ROCKWELL A. SCHNABEL      
 Rockwell A. Schnabel
	

 	
 	

/s/  MARNA SCHNABEL      
 Spouse of Rockwell A. Schnabel,

joining for the limited purposes set forth in Section 6.13
	

 	
 	

/s/   PATRICK J. NOYES      
 Patrick J. Noyes
	

 	
 	

/s/   CINDY NOYES      
 Spouse of Patrick J. Noyes, joining for the limited

purposes set forth in Section 6.13
	

 	
 	

/s/   EDWARD H. SCHWEITZER      
 Edward H. Schweitzer
	

 	
 	

/s/   CHRIS A. SCHWEITZER      
 Spouse of Edward H. Schweitzer, joining for the

limited purposes set forth in Section 6.13
	
OWNERS OF MANAGEMENT:	
 	

/s/   GREGORY P. SMITH      
 Gregory P. Smith
	

 	
 	

/s/   LINDA K. SMITH      
 Spouse of Gregory P. Smith, joining for the

limited purposes set forth in Section 6.13
	

 	
 	

/s/   PATRICK J. NOYES      
 Patrick J. Noyes
	 	 	 	 	 	 

S-2

 

	

 	
 	

/s/   CINDY NOYES      
 Spouse of Patrick J. Noyes, joining for the

limited purposes set forth in Section 6.13
	

 	
 	

/s/   CHRISTOPHER L. HAMMACK      
 Christopher L. Hammack
	

 	
 	

/s/   GREGORY D. FRAZIER      
 Gregory D. Frazier
	

 	
 	

/s/   STEPHEN M. CLARK      
 Stephen M. Clark
	

 	
 	

/s/   CONNIE S. CLARK      
 Spouse of Stephen M. Clark, joining for the

limited purposes set forth in Section 6.13
	

 	
 	

/s/   G. CHRISTOPHER VEEDER      
 G. Christopher Veeder
	

 	
 	

/s/   PRISCILLA VEEDER      
 Spouse of G. Christopher Veeder, joining for the

limited purposes set forth in Section 6.13
	
OWNERS OF STROUD LTD.:	
 	

STROUD OIL PROPERTIES, INC.,

an Oklahoma corporation
	

 	
 	

By:	

/s/   PATRICK J. NOYES      
 Name: Patrick J. Noyes

Title: President & Chief Executive Officer
	

 	
 	

/s/   BRUCE F. BRADEN      
 Bruce F. Braden
	

 	
 	

/s/   ROBERT S. COLMAN      
 Robert S. Colman, Trustee of the Robert S. Colman Trust u/d/t 3/18/85
	

 	
 	

/s/   CHRISTOPHER A. WRIGHT      
 Christopher A. Wright
	

 	
 	

/s/   ELIZABETH S. WRIGHT      
 Elizabeth S. Wright
	 	 	 	 	 	 

S-3

 

	

 	
 	
ENCAP ENERGY CAPITAL FUND IV, L.P.
	 	 	By:	EnCap Equity Fund IV GP, L.P., General Partner of EnCap Energy Capital Fund IV, L.P.
	

 	
 	

By:	

EnCap Investments L.P., General Partner of EnCap Equity Fund IV GP, L.P.
	

 	
 	

By:	

EnCap Investments GP, L.L.C., General Partner of EnCap Investments L.P.
	

 	
 	

 	

By:	
 	

/s/   DAVID B. MILLER      
 David B. Miller, Senior Managing Director
	

 	
 	

 	
ENCAP IV-B ACQUISITIONS, L.P.
	

 	
 	

By:	

EnCap IV-B Acquisitions GP, LLC, General Partner of EnCap IV-B Acquisitions, L.P.
	

 	
 	

By:	

EnCap Energy Capital Fund IV-B, L.P., Sole Member of EnCap IV-B Acquisitions GP, LLC
	

 	
 	

By:	

EnCap Equity Fund IV GP, L.P., General Partner of EnCap Energy Capital Fund IV-B, L.P.
	

 	
 	

By:	

EnCap Investments L.P., General Partner of EnCap Equity Fund IV GP, L.P.
	

 	
 	

By:	

EnCap Investments GP, L.L.C., General Partner of EnCap Investments L.P.
	

 	
 	

By:	

/s/   DAVID B. MILLER      
 David B. Miller, Senior Managing Director
	
ADDITIONAL OWNER OF MANAGEMENT:	
 	

NOYES FAMILY PARTNERSHIP
	

 	
 	

By:	

/s/   PATRICK J. NOYES      
 Patrick J. Noyes, Partner

S-4

QuickLinks

Exhibit 10.5

ARTICLE I Transfers of Various Ownership Interests

ARTICLE II Closing

ARTICLE III Tax Matters

ARTICLE IV Further Assurances

ARTICLE V Consents and Other Requirements

ARTICLE VI Miscellaneous

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00101-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00101-of-00352.parquet"}]]