FORM OF EXECUTIVE
AGREEMENT
This Executive
Agreement (this “Agreement”) is made effective as of
the Effective Date between Complete Production Services, Inc., a
Delaware corporation and its subsidiaries (collectively, the
“Company”) and ___(“Executive”).
WHEREAS, the Company currently employs Executive;
and
WHEREAS, the Company believes it to be in the best
interests of its stockholders to attract, retain and motivate key
officers and to ensure continuity of management, and that this will
further those interests; and
WHEREAS, the Company recognizes that the possibility of a
Change of Control of the Company may result in the departure of key
executives to the detriment of the Company and its
stockholders.
In consideration
of Executive’s continued employment as an executive officer
with the Company and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
Company and Executive agree as follows:
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A.
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This Agreement shall be for an
initial term that continues in effect, through the second
anniversary of the Effective Date. The term of this Agreement shall
automatically be extended for one or more additional terms of one
(1) year, as of each anniversary date of the Effective Date
that occurs while this Agreement is in effect. The term of
Agreement, however, may be terminated by written notice of
termination of this Agreement provided to Executive, and in the
event any such termination notice is delivered to Executive then,
notwithstanding the preceding sentence concerning automatic
renewals, the term of this Agreement shall be deemed terminated
effective as of December 31 of the second full calendar year
following the date on which such notice of termination of the
Agreement is delivered to Executive.
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B.
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Notwithstanding the foregoing, the
term of this Agreement shall terminate upon the expiration of the
“Severance Payout Period” or the “Change of
Control Payout Period,” as applicable, subject to all rights
and benefits hereunder having been paid and satisfied in
full.
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A.
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“Bonus”
“Bonus”
shall mean the greater of (i) Target EV for the year of the
Date of Termination, or (iii) the highest annual bonus paid
during any of the three full fiscal years preceding the Date of
Termination.
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B.
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“Cause”
“Cause”
shall mean:
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(i)
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Executive’s conviction of a
felony involving moral turpitude, dishonesty or a breach of trust
as regards the Company;
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(ii)
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Executive’s commission of any
act of theft, fraud, embezzlement or misappropriation against the
Company that is materially injurious to it regardless of whether a
criminal conviction is obtained;
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(iii)
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Executive’s willful and
continued failure to devote substantially all of his business time
to the Company’s business affairs (excluding failures due to
illness, incapacity, vacations, incidental civic activities and
incidental personal time), which failure is not remedied within a
reasonable time after written demand is delivered by the Company,
which demand specifically identifies the manner in which the
Company believes that Executive has failed to devote substantially
all of his business time to the Company’s business
affairs;
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(iv)
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Executive’s unauthorized
disclosure of confidential information of the Company that is
materially injurious to the Company; or
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(v)
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Executive’s knowing or willful
material violation of federal or state securities laws, as
determined in good faith by the Company’s Board of
Directors.
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For purposes of
this definition, no act, or failure to act, on Executive’s
part shall be deemed “willful” unless done, or omitted
to be done, by Executive not in good faith and without reasonable
belief that Executive’s action or omission was in the best
interest of the Company.
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C.
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“Change of
Control” of the Company will occur for
purposes of this Agreement if:
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(i)
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Any
person or group of persons is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934), directly or indirectly, of securities in the
Company representing 20% or more of the combined voting power of
the Company’s outstanding securities;
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(ii)
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A
change in the majority of the membership of the Board occurs
without approval by two-thirds of the Directors who are Continuing
Directors. For these purposes, Continuing Directors are persons who
(i) were Directors on the Effective Date or (ii) are new
Directors whose election was approved by two-thirds of the members
of the Board who were Directors on the Effective Date
(“Approved Directors”), or (iii) are new Directors
whose election was approved by two-thirds of the members of the
Board who were Directors on the Effective Date or are subsequently
Approved Directors;
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(iii)
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The
Company is merged, consolidated or combined with another
corporation or entity, including without limitation, a reverse or
forward triangular merger, and the Company’s stockholders
prior to such transaction own less than 55% of the outstanding
voting securities of the surviving or resulting corporation or
entity after the transaction;
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(iv)
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A
tender offer or exchange offer is made and consummated by a person
or group of persons other than the Company for the ownership of 20%
or more of the Company’s voting securities; or
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(v)
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There is a disposition, transfer,
sale or exchange of all or substantially all of the Company’s
assets, or stockholder approval of a plan of liquidation or
dissolution of the Company.
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D.
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“Change of Control Payout
Period” shall mean the period of [two
(2)] 1 [two and a half (2.5)]
2
years following the
Date of Termination of Executive, which termination is covered by
Section 5 hereof.
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E.
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“Date of
Termination” shall mean the date specified in the
Notice of Termination relating to termination of Executive’s
employment with the Company; provided that such date shall not be
less than 20 days nor more than 45 days following:
(i) involuntary termination, not for Cause, pursuant to
Section 4 or 5 hereof, or (ii) the date within the Protective
Period that Executive voluntarily terminates his employment for
Good Reason so governed by Section 5 hereof, and provided
further that such termination qualifies as a “separation from
service” within the meaning given to it under
Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986,
as amended (the “ Code ”), and any Treasury
Regulations or other guidance issued thereunder.
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F.
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“Effective
Date” shall mean November 13,
2006.
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G.
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“Executive”
shall mean the executive
of the Company who is a party to this Agreement and in the event of
the Executive’s death after a “qualifying”
termination pursuant to Section 4 hereof or a Change of
Control pursuant to Section 5 hereof, then the term
“Executive” shall include his estate.
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H.
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“Good Reason”
shall mean:
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(i)
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a
failure to re-elect or appoint the Executive to any corporate
office or directorship held at the time of the Change of Control or
a material reduction in Executive’s authority, duties or
responsibilities (including status, offices, titles and reporting
requirements) or if Executive is assigned duties or
responsibilities inconsistent in any material respect
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1
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For
Messrs. Flato, Boyd, Burke, Bayardo and Weisgarber
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2
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For
Messrs. Mayer, Maroney, Nibling, and Moore
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from those of
Executive at the time of the relevant Change of Control all on the
basis of which Executive makes a good faith determination that the
terms of his employment have been detrimentally and materially
affected;
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(ii)
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a
material reduction of Executive’s compensation, benefits or
perquisites, including annual base salary, annual bonus,
intermediate or long-term cash or equity incentive opportunities or
plans from those in effect prior to the Change of
Control;
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(iii)
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the
Company fails to obtain a written agreement satisfactory to
Executive from any successor or assigns of the Company to assume
and perform this Agreement as provided in Section 9 hereof;
or
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(v)
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the
Company requires Executive to be based at any office located more
than fifty (50) miles from the Company’s current offices
without Executive’s consent.
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I.
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“Notice of
Termination” shall mean a written notice
delivered to the other party indicating the specific termination
provision in this Agreement relied upon for termination of
Executive’s employment and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of Executive’s employment under the provision so
indicated. Any purported termination by either party other than
pursuant to a Notice of Termination shall not be
effective.
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J.
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“Option
Plans” shall mean the Company’s stock
option plans, incentive plans, equity participation plans, or other
similar plans, and any stock option agreements or other equity
award agreements used in connection therewith.
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K.
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“Protective
Period” shall mean the period that commences
six months prior to and ends two years following the effective date
of a Change of Control.
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L.
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“Severance Payout
Period” shall mean the period of [sixteen
(16) months] 3 [twenty (20) months]
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following the Date of
Termination of Executive, which termination is covered by
Section 4 hereof.
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M.
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“Target EV”
shall mean the amount
payable to Executive, which is expressed as a percentage of
Executive’s Termination Base Salary, as a bonus or incentive
payment to Executive under the Company’s annual bonus or
incentive program presuming that the Company and individual
performed at target under all applicable performance criteria and
objectives.
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N.
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“Termination Base
Salary” shall mean Executive’s base
salary at the rate in effect at the time the Notice of Termination
is given or, for purposes of a Change of
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3
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For
Messrs. Flato, Boyd, Burke, Bayardo and Weisgarber
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4
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For
Messrs. Mayer, Maroney, Nibling, and Moore
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Control, if a
greater amount, Executive’s base salary at the rate in effect
immediately prior to the Change of Control.
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3.
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Termination for Cause.
The Company may
terminate Executive for Cause at any time, including following a
Change of Control, upon written notice to the Executive.
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4.
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Standard Severance Plan.
If Executive is
terminated involuntarily (i.e., without the consent of Executive)
by the Company for any reason other than for Cause (and such
termination is not pursuant to a Change of Control) the Executive
shall receive the following compensation and benefits from the
Company:
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A.
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The
Company shall pay to Executive when otherwise due Executive’s
Termination Base Salary through the Date of Termination.
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B.
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Effective as of the Date of
Termination, the Company shall pay to Executive an amount equal to
[1.33] 5 [1.67] 6 times the sum of Executive’s
Termination Base Salary plus Bonus, payable in a lump sum within
thirty days following such Date of Termination.
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C.
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Effective as of the Date of
Termination and in consideration of service through the Date of
Termination, the Company shall pay to Executive a bonus for the
year in which the Date of Termination occurred in an amount
determined in good faith by the Company’s Board of Directors
in accordance with the performance criteria established under the
Company’s incentive plan and the Company’s actual
performance relative to such criteria for such year though the Date
of Termination, which amount, however, shall not be less than
Target EV, and shall be pro-rated through and including the Date of
Termination (on the basis of a 365 day year), payable in a
lump sum within thirty days following such Date of
Termination.
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D.
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Notwithstanding any provisions to
the contrary in any of the Option Plans, (i) all outstanding
unvested stock options of Executive shall be and become fully
vested and exercisable as to all shares of stock covered thereby,
and (ii) all outstanding shares of restricted stock,
restricted stock units, performance shares and performance units of
Executive shall be and become 100% vested and all restrictions
thereon shall lapse, in each case as of the Date of
Termination. 7
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E.
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For
all options granted after the Effective Date, Executive (or in the
event of his death, his estate) shall be entitled to exercise his
vested options until 12 months following the Date of Termination.
Notwithstanding the provisions of this Section E, no option
may be exercised at any time past the term of such
option.
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5
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For
Messrs. Flato, Boyd, Burke, Bayardo and Weisgarber
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6
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For
Messrs. Mayer, Maroney, Nibling, and Moore
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7
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For
Messrs. Mayer, Maroney, Nibling, and Moore.
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F.
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The
Company shall provide Executive with additional benefits described
in Section 6 hereof.
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5.
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Change of Control Severance
Plan. In the
event that during the Protective Period either (a) Executive
voluntarily terminates employment for Good Reason or (b) the
Company terminates Executive’s employment other than for
Cause, the Executive shall receive the following compensation and
benefits from the Company:
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A.
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The
Company shall pay to Executive when otherwise due Termination Base
Salary through the Date of Termination.
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B.
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Effective as of the Date of
Termination, the Company shall pay to Executive an amount equal to
[two] 8 [two and a half]
9
times the sum of
Executive’s Termination Base Salary plus Bonus, payable in a
lump sum within thirty days following such Date of
Termination.
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C.
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Effective as of the Date of
Termination and in consideration of service through the Date of
Termination, the Company shall pay to Executive a bonus for the
year in which the Date of Termination occurred in an amount
determined in good faith by the Company’s Board of Directors
in accordance with the performance criteria established under the
Company’s incentive plan and the Company’s performance
relative to such criteria for such year though the Date of
Termination, which amount, however, shall not be less than Target
EV and shall be pro-rated through and including the Date of
Termination (on the basis of a 365 day year), payable in a
lump sum within thirty days following such Date of
Termination.
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D.
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Effective as of the Date of
Termination, the Company shall pay to executive an amount equal to
[two] 10 [two and a half]
11
times the amount the
Company would be required to contribute on Executive’s behalf
under all qualified pension, nonqualified pension, profit sharing,
401(k), deferred compensation and supplemental plans based on
Executive’s Termination Base Salary and the applicable
maximum Company contribution percentages in effect as of the Date
of Termination, payable in a lump sum within thirty days following
such Date of Termination.
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E.
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Effective as of the Date of
Termination, Executive shall become and be fully vested in
Executive’s accrued benefits under all qualified pension,
nonqualified pension, profit sharing, 401(k), deferred compensation
and supplemental plans maintained by the Company for
Executive’s benefit, except to that the extent the
acceleration of vesting of such benefits would violate any
applicable law or require the Company to accelerate the vesting of
the accrued benefits of all participants in such plan or plans, in
which case the Company shall pay Executive
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For
Messrs. Flato, Boyd, Burke, Bayardo and Weisgarber
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9
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For
Messrs. Mayer, Maroney, Nibling, and Moore
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10
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For
Messrs. Flato, Boyd, Burke, Bayardo and Weisgarber
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11
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For
Messrs. Mayer, Maroney, Nibling, and Moore
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a lump sum
payment, within 30 days following the Date of Termination, in
an amount equal to the present value of such unvested accrued
benefits. In addition, if such a lump sum payment is payable, the
Company shall make an additional gross-up payment to Executive in
an amount such that the net amount of the lump sum payment and such
additional gross-up payment retained by Executive, after the
calculation and deduction of all federal, state and local income
tax and employment tax (including any interest or penalties imposed
with respect to such taxes) on such lump sum payment and additional
gross-up payment, and taking into account any lost or reduced tax
deductions on account of such gross-up payment, shall be equal to
such lump sum payment. Such additional gross-up payment shall be
made in a lump sum payment within 30 days following the Date
of Termination.
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F.
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For
all options granted after the Effective Date, Executive (or in the
event of his death, his estate) shall be entitled to exercise his
vested options until 12 months following the Date of
Termination. Notwithstanding the provisions of this Section F,
no option may be exercised at any time past the term of such
option.
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G.
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The
Company shall provide Executive with additional benefits described
in Section 6 hereof.
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A.
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Health, Dental, Disability and Life
Insurance and Benefits. Throughout the term of the Severance
Payout Period for a termination of Executive’s employment
covered by Section 4, or of the Change of Control Payout
Period for a termination of Executive’s employment covered by
Section 5, the Company shall provide Executive and
Executive’s eligible family members, based on the cost
sharing arrangement in effect between Executive (or persons of
similar position) and the Company on the Date of Termination, with
medical and dental health benefits and disability and life
insurance coverage and benefits at least equal to those in effect
for Executive or persons of similar position on the Date of
Termination or, if more favorable to Executive, as in
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