ALLIS-CHALMERS ENERGY
INC.
EMPLOYEE PERFORMANCE AWARD
AGREEMENT
as amended and restated, effective December 31, 2008
Pursuant to the terms of the Allis-Chalmers Energy Inc. 2006
Incentive Plan
1. Grant
of Performance Award. Allis-Chalmers Energy Inc., a Delaware
corporation (“Company”), hereby grants to
___(“Participant”) performance awards in the form of
[ xx,xxx ] shares (the “Performance
Award”) of common stock, $0.01 par value per share, of the
Company (“Common Stock”), subject to meeting the
Performance Objectives as described in Section 4 hereof, and
in accordance with the terms and conditions of this document. This
Performance Award Agreement is dated as of [ xx/xx/xx
] . The Performance Award in the form of Common Stock is
awarded pursuant to and to implement in part the Allis-Chalmers
Energy Inc. 2006 Incentive Plan (as amended and in effect from time
to time, the “Plan”) and is subject to the
restrictions, forfeiture provisions and other terms and conditions
of the Plan, which is hereby incorporated herein and is made a part
hereof, and this Performance Award Agreement. By execution of this
Performance Award Agreement, Participant agrees to be bound by all
of the terms, provisions, conditions and limitations of the Plan as
implemented by the Performance Award Agreement, together with all
rules and determinations from time to time issued by the Committee
pursuant to the Plan. All capitalized terms have the meanings set
forth in the Plan unless otherwise specifically provided. All
references to specified paragraphs pertain to paragraphs of this
Performance Award Agreement unless otherwise provided.
2. Settlement of Performance Award. The stock
certificate(s) evidencing the Performance Award shall not be issued
or registered on the Company’s books and records until the
Performance Objectives set forth in paragraph 4 below have been met
by the Participant and approved by the Committee and all other
restrictions contained in this Performance Award Agreement have
lapsed. Upon resolution by the Committee that the Participant has
achieved the Performance Objectives, and subject to the other terms
and conditions of this Performance Award Agreement, the Company
will promptly issue a stock certificate with respect to the vested
portion of the shares of the Performance Award for which the
Performance Objectives have been met. However, in no event shall
such stock certificate be issued to the Participant later than
90 days after such shares have vested.
3. Risk
of Forfeiture. Participant shall immediately forfeit all rights
to any Performance Award which have not vested and with respect to
which the Performance Objectives have not been met or in the event
of termination, resignation, or removal of Participant from
employment with the Company or any Affiliate under circumstances
that do not cause Participant to become fully vested, under the
terms of the Plan.
4. Performance Objectives. Subject to the provisions of
this Performance Award Agreement including, without limitation, the
following provisions of this Paragraph 4, the Performance
Award shall vest upon Participant meeting performance criteria
based on any one or more of the Performance Objectives described
below, as more specifically determined by the Compensation
Committee and approved by the Board of Directors of the
Company:
(i) increase in earnings per share;
(ii) increase in price per share, (iii) increase in
revenues; (iv) increase in cash flow; (v) return on net
assets; (vi) return on assets; (vii) return on
investment; (viii) return on equity; (ix) economic
value
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added;
(x) gross margin; (xi) net income; (xii) pretax
earnings; (xiii) pretax earnings before interest,
depreciation, depletion and amortization; (xiv) pretax
operating earnings after interest expense and before incentives,
service fees, and extraordinary or special items;
(xv) operating income; (xvi) total stockholder return;
(xvii) debt reduction
Any of the
above goals may be determined on an absolute or relative basis or
as compared to the performance of a published or special index of
companies as determined by the Compensation Committee.
The period from
the date hereof until Performance Awards have become one hundred
percent (100%) vested and the Committee has determined that such
Performance Objectives have been met shall be referred to as the
“Restricted Period.”
5. Transferability. During the Restricted Period, the
Participant shall not sell, assign, transfer, pledge, exchange,
hypothecate, or otherwise dispose of any right, title or interest
in the Performance Award prior to vesting in accordance with this
Performance Award Agreement. Upon receipt by the Participant of
stock certificate(s) representing the vested shares pursuant to
Paragraph 2 above, the Participant may hold or dispose of the
shares represented by such certificate(s), subject to compliance
with (i) the terms and conditions of the Plan and this
Performance Award Agreement, (ii) applicable federal or state
securities laws or other applicable law, (iii) applicable
rules of any exchange on which the Company’s securities are
traded or listed, and (iv) the Company’s rules or
policies as established by the Company in its sole
discretion.
6. No
Ownership Rights. Prior to the vesting of the Performance
Award, the Participant shall not have any rights with respect to
the shares of Common Stock represented by the Performance Award
hereunder including the right to vote the shares of Common Stock
and the right to receive any dividends.
7. Termination of Employment. If employment of
Participant by the Company or any Affiliate is terminated for any
reason, including death, disability or retirement, all Performance
Awards outstanding at the time of such termination and all rights
thereunder shall be forfeited and no further vesting shall
occur.
(a) Change in
Control. Upon the occurrence of a Change in Control (as defined
in the Plan), all restrictions and conditions of the Performance
Award shall automatically be waived without any required action by
the Company, Committee or the Board with the result that the
Performance Award shall be fully vested and the restrictions
thereon shall have lapsed.
(b) Right of
Cash-Out. If approved by the Board prior to or
within
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