EXHIBIT 10.1
TRANSITION
AGREEMENT
THIS
TRANSITION AGREEMENT (this “Agreement”) is entered into
effective as of May 5, 2009 (the “Effective
Date”), by and among TETRA TECHNOLOGIES, INC., a Delaware
corporation (the “Company”) and GEOFFREY M. HERTEL (the
“Employee”).
W I T N E S S E
T H :
WHEREAS, the
Employee has been employed by the Company in various capacities
since 1993, most recently serving as its President and Chief
Executive Officer;
WHEREAS, the
Employee has as of the Effective Date resigned from the position of
President and Chief Executive Officer and the parties have mutually
agreed to continue the Employee’s employment by the Company
as herein provided; and
WHEREAS, the
Employee and the Company desire to enter into this Agreement to set
forth the terms and conditions of the Employee’s continued
employment by the Company.
NOW,
THEREFORE, in consideration of the mutual covenants and promises
herein contained, and intending to be legally bound hereby, the
Company and the Employee hereby agree as follows:
1.1
The
Company hereby agrees to continue to employ the Employee, and the
Employee hereby agrees to accept continued employment with the
Company, upon the terms and for the period set forth in this
Agreement.
1.2
Unless sooner terminated in accordance with the terms of this
Agreement, the Employee’s term of employment hereunder shall
mean the period commencing on the Effective Date and ending on
January 5, 2012 (the “Employment
Period”).
2.1
During the Employment Period, the Employee shall serve in such
positions as the Company’s Board of Directors (the
“Board”) may determine from time to time. The Employee
shall be subject to the supervision of, and shall have such
authority as is delegated to him by the Chief Executive
Officer.
2.2
In
addition to the foregoing description of the Employee’s
duties, during the Employment Period the Company shall, if so
recommended by the Nominating and Corporate Governance Committee
(the “Governance Committee”) of the Board,
(i) nominate and recommend the Employee for membership on the
Board, and (ii) use commercially reasonable efforts to cause
the Employee to be nominated and recommended for membership on the
board of directors of Compressco Partners GP Inc.
(“Compressco GP”), the general partner of Compressco
Partners, L.P. (“Compressco Partners”), and to serve as
chairman of that board of directors. If so elected, the
Employee shall, without further compensation during the
Employment
Period and on a basis consistent with other directors after the
Employment Period, serve as a member of the Board and as a member
of the board of directors of Compressco GP.
2.3
During the Employment Period, the Employee agrees to devote such
time as reasonably required to carry out and perform the
responsibilities assigned to the Employee
hereunder. Notwithstanding the foregoing, during the
Employment Period it shall not be a violation of this Agreement for
the Employee (i) to serve on industry-related, civic or
charitable boards or committees, (ii) with the approval of the
Company’s Governance Committee and the Board, to serve on
other corporate boards or committees, and (iii) to continue to
own and manage his personal investments including, without
limitation, his current oil and gas interests as described on
Exhibit A attached hereto and incorporated herein and,
with the approval of the Board, invest in, acquire and/or manage
additional oil and gas interests, so long as any activities
described in clauses (i), (ii) and (iii) do not significantly
interfere with the performance of the Employee’s
responsibilities as an employee of the Company in accordance with
this Agreement and, in the case of the activities described in
clause (ii), will not, in the good faith judgment of the
Board, constitute an actual or potential conflict of interest with
the business activities of the Company or its affiliated
companies. It is expressly understood and agreed that to
the extent that any such activities have been conducted by the
Employee prior to the date hereof, the continued conduct of such
activities (or the conduct of activities similar in nature and
scope thereto) subsequent to the date hereof shall not thereafter
be deemed to interfere with the performance of the Employee’s
responsibilities to the Company.
2.4
In
connection with the Employee’s employment hereunder, the
Employee shall be based at the Company’s headquarters located
in The Woodlands, Texas, or at any other office which is the
headquarters of the Company and is less than 50 miles from such
location, provided, however, that the Employee may be required to
travel on the business of the Company to the extent consistent with
the duties and obligations of the Employee pursuant to this
Agreement. The Company acknowledges that Employee may
work remotely either from his home office or his vacation home as
he has in the past from time to time.
3.
Compensation
and Related Matters.
3.1
Base Salary . During the Employment Period, the
Employee shall receive a monthly base salary equal to $33,333
(“Base Salary”), which shall be paid in accordance with
the Company’s standard payroll practice.
(a)
During the Employment Period, the Employee shall be eligible for an
annual bonus (the “Annual Bonus”) for each calendar
year ending during the Employment Period (calendar years ending
December 31, 2009, 2010 and 2011) on the same basis as other
executive officers under the Company’s then current
discretionary performance-based cash bonus program (or its
successor), which shall be payable in accordance with the terms of
such program. The Employee’s target payout for the
Annual Bonus will be $200,000 for the 2009 and 2010 calendar years
and $83,200 for the 2011 calendar year. Payment of the
Annual Bonus, if awarded, will be made in a lump sum cash payment
in accordance with the terms of the Company’s
discretionary
performance-based
cash bonus program (or its successor) but in no event earlier than
January 1 of, and no later than March 31 of the calendar
year immediately following the calendar year in respect of which
the Annual Bonus is awarded. Except as otherwise
expressly provided in Section 5 hereof, any Annual Bonus
payable under this Section 3.2 shall not be payable unless the
Employee is employed by the Company on the last day of the period
to which such Annual Bonus relates.
(b)
Notwithstanding the foregoing, in the event a Change in Control (as
herein defined) occurs on or before December 31, 2009,
Employee shall be entitled to receive the target payout for the
Annual Bonus for 2009. Any payment of the 2009 Annual
Bonus pursuant to this Section 3.2(b) shall be made within 7
calendar days of the effective date of the Change in
Control. The foregoing shall only apply to a Change in
Control that occurs on or before December 31, 2009. In
the event a Change in Control occurs during the Employment Period
and after December 31, 2009, the Employee’s right to receive
any Annual Bonus hereunder shall remain subject to the discretion
of the Board and satisfaction of any applicable performance
criteria.
(c)
For
purposes of this Agreement, a “Change in Control” shall
be deemed to have occurred upon any of the following
events:
(i)
any
“person” (as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the “Exchange Act”),
and as modified in Section 13(d) and 14(d) of the Exchange Act)
other than (A) the Company or any of its subsidiaries, (B) any
employee benefit plan of the Company or any of its subsidiaries,
(C) any entity controlled by the Company, (D) a company owned,
directly or indirectly, by stockholders of the Company in
substantially the same proportions as their ownership of the
Company, or (E) an underwriter temporarily holding securities
pursuant to an offering of such securities ( a
“Person”), becomes the “beneficial owner”
(as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Company representing more than 50%
of the shares of voting stock of the Company then
outstanding;
(ii)
the
consummation of any merger, organization, business combination or
consolidation of the Company or one of its subsidiaries with or
into any other company, other than a merger, reorganization,
business combination or consolidation which would result in the
holders of the voting securities of the Company outstanding
immediately prior thereto holding securities which represent
immediately after such merger, reorganization, business combination
or consolidation more than 50% of the combined voting power of the
voting securities of the Company or the surviving company or the
parent of such surviving company;
(iii)
the
consummation of a sale or disposition by the Company of all or
substantially all of the Company’s assets, other than a sale
or disposition if the holders of the voting securities of the
Company outstanding immediately prior thereto hold securities
immediately thereafter which represent more than 50% of
the combined
voting power of the voting securities of the acquiror, or parent of
the acquiror, of such assets;
(iv)
the
stockholders of the Company approve a plan of complete liquidation
or dissolution of the Company; or
(v)
individuals who, as of the Effective Date, constitute the Board
(the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the Effective
Date whose election by the Board, was approved by a vote of at
least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of
an election contest with respect to the election or removal of
directors or other solicitation of proxies or consents by or on
behalf of a person other than the Board.
Notwithstanding
the foregoing, however, in any circumstance or transaction in which
compensation would be subject to the income tax under Section 409A
of the Internal Revenue Code of 1986, as amended (the
“Code”) if the foregoing definition of “Change in
Control” were to apply, but would not be so subject if the
term “Change in Control” were defined herein to mean a
“change in control event” within the meaning of
Treasury Regulation § 1.409A-3(i)(5), then “Change in
Control” shall mean a “change in control event”
within the meaning of Treasury Regulation § 1.409A-3(i)(5),
but only to the extent necessary to prevent such compensation from
becoming subject to the income tax under Section 409A of the
Code
3.3
Compressco IPO Bonus .
(a)
It is
contemplated that the duties of the Employee hereunder will include
assisting the Company and Compressco GP and Compressco Partners, in
completing an initial public offering by Compressco
Partners. If on or before June 30, 2010 Compressco
Partners shall complete the Compressco IPO (as herein defined),
Employee shall be entitled to a cash bonus (the “Compressco
IPO Bonus”) from the Company in the applicable amount set
forth below based upon the Market Capitalization (as herein
defined) of Compressco Partners:
|
Market
Capitalization
|
|
Compressco
IPO
Bonus
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$0.00 to
$300,000,000
|
|
$250,000
|
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$300,000,001 to
$500,000,000
|
|
$500,000
|
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$500,000,001 to
$700,000,000
|
|
$700,000
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in
excess of $700,000,000
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$900,000
|
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For purposes of
this Agreement, the “Market Capitalization” of
Compressco Partners shall be an amount equal to (i) the
initial public offering price of the common units of Compressco
Partners offered to the public in the Compressco IPO, multiplied by
(ii) the total number of common units of Compressco Partners
which are outstanding immediately following the exercise or
expiration of the underwriters’ overallotment option in the
Compressco IPO.
(b)
The
Compressco IPO Bonus, if earned, shall be payable in a lump sum
cash payment at such time as determined by the Board but in any
event no later than the sooner to occur of (i) the date which
is 120 days after the consummation of the Compressco IPO, or
(ii) the date which is two and one-half months following the
end of the year in which such Compressco IPO is
completed.
(c)
For
purposes of this Agreement, the “Compressco IPO” shall
mean the issuance by Compressco Partners of its common units
representing limited partnership interests in an underwritten
primary public offering (other than a registration statement on
Form S-4, S-8 or any similar form) pursuant to an effective
registration statement filed with the United States Securities and
Exchange Commission (the “SEC”) in accordance with the
Securities Act of 1933, as amended.
(a)
It is
further contemplated that the duties of the Employee hereunder will
include assisting in the transition of leadership to Stuart M.
Brightman, the Company’s Chief Executive Officer, and the
succession of Mr. Brightman into his role as Chief Executive
Officer and the succession of Edwin H. Goldman into his role as
Senior Vice President of the Company’s Offshore
Division. Subject to the terms hereof, the Employee
shall be entitled to receive, at the discretion of the Board and
the Compensation Committee, the following lump sum cash bonus
payments (i) up to $120,000 based upon the performance of Mr.
Brightman during the period from May 5, 2009 until May 4, 2010 (the
“First Performance Period”) in his succession as the
Chief Executive Officer (the “Brightman First Period
Bonus”), (ii) up to $120,000 based upon the performance of
Mr. Brightman during the period from May 5, 2010 until May 4, 2011
(the “Second Performance Period”) in his succession as
the Chief Executive Officer, (iii) up to $80,000 based upon the
performance of Mr. Goldman during the First Performance Period as
Senior Vice President of the Company’s Offshore Division (the
“Goldman First Period Bonus”), and (iv) up to $80,000
based upon the performance of Mr. Goldman during the Second
Performance Period as Senior Vice President of the Company’s
Offshore Division (the foregoing may be referred to individually as
a “Transition Bonus” and collectively as the
“Transition Bonuses”).
(b)
The
Transition Bonuses shall be evaluated and determined over the First
Performance Period and the Second Performance Period,
respectively. Employee’s right to receive all or
any part of each of the Transition Bonuses shall be subject to the
complete discretion of the Board and the Compensation Committee,
taking into
consideration
such factors as they may deem relevant. The Board and
the Compensation Committee must make their determination of whether
one or more Transition Bonuses is payable for the First Performance
Period between May 5, 2010 and May 15, 2010 and if one or more
Transition Bonuses is determined to be payable, the Company shall
pay such Transition Bonus(es) on or before May 15,
2010. The Board and the Compensation Committee must make
their determination of whether one or more Transition Bonuses is
payable for the Second Performance Period between May 5, 2011 and
May 15, 2011 and if one or more Transition Bonuses is determined to
be payable, the Company shall pay such Transition Bonus(es) on or
before May 15, 2011. Except as otherwise expressly
provided in Section 5 hereof, any Transition Bonus payable under
this Section 3.4 shall not be payable unless the Employee is
employed by the Company on the date the payment is
determined.
(c)
Notwithstanding the foregoing, in the event of a Change in Control
occurs on or before May 4, 2010, then:
(i) if
Mr. Brightman shall remain employed by the Company immediately
prior to the effective date of the Change in Control, the Employee
shall be entitled to receive the full amount of the Brightman First
Period Bonus, and
(ii) if
Mr. Goldman shall remain employed by the Company immediately prior
to the effective date of the Change in Control, the Employee shall
be entitled to receive the full amount of the Goldman First Period
Bonus.
Any Transition
Bonus payable pursuant to this Section 3.4(c) shall be payable
within seven (7) calendar days of the effective date of the Change
in Control. If Mr. Brightman or Mr. Goldman are not employed by the
Company immediately prior to the Change in Control, then Employee
shall have no further right to receive the applicable Transition
Bonuses.
The foregoing
provisions of this Section 3.4(c) shall only be applicable to a
Change in Control occurring on or before May 4, 2010. In the event
the Change in Control shall occur at any subsequent time during the
Employment Period, the Employee’s right to receive any
Transition Bonus shall remain subject to the complete discretion of
the Board and the Compensation Committee, taking into consideration
such factors as they may deem relevant.
(a)
Incentive, Savings and Retirement Plans . During
the Employment Period and at the discretion of the Board, the
Employee shall be entitled to participate in all incentive, stock
option, savings and retirement plans, practices, policies and
programs generally available to other executive officers of the
Company.
(b)
Welfare Benefit Plans . During the Employment Period, the
Employee and/or the Employee’s family, as the case may be,
shall be eligible to participate in and shall receive all benefits
under welfare benefit plans, practices, policies and
programs
provided by the
Company (including, without limitation, medical, prescription,
dental, disability, employee life, group life, and accidental death
insurance plans and programs) to the extent generally available to
other executive officers of the Company.
(c)
Expenses . During the Employment Period, the
Employee shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Employee in performing the
Employee’s duties and responsibilities hereunder in
accordance with the policies, practices and procedures of the
Company as in effect for its executive officers from time to
time.
4.
Termination of
Employment.
4.1
Death . The Employee’s employment shall terminate
automatically upon the Employee’s death during the Employment
Period.
4.2
Disability . If the Company determines in good
faith that a Disability of the Employee has occurred during the
Employment Period (pursuant to the definition of Disability set
forth below), the Company may give to the Employee written notice
of its intention to terminate the Employee’s employment. In
such event, the Employee’s employment with the Company shall
terminate effective thirty (30) days after receipt of such notice
by the Employee (the “Disability Effective Date”),
provided that within the thirty (30) day period after such receipt,
the Employee shall not have returned to full-time performance of
the Employee’s duties. For purposes of this Agreement,
“Disability” shall mean and be deemed to have occurred
if (i) the Employee is receiving benefits under the
Company’s long-term disability plan, or (ii) in the
absence of the Employee’s receipt of such benefits, the
Employee has been unable to perform the essential functions of his
position, despite any reasonable accommodation required by law, by
reason of illness or injury for an aggregate of 180 days within any
given period of 360 consecutive days.
4.3
Termination by the Company . The Company may
terminate the Employee’s employment during the Employment
Period for Cause. For purposes of this Agreement,
“Cause” shall mean:
(a)
the
willful and continued failure of the Employee to perform
substantially the Employee’s duties and obligations hereunder
(other than any such failure resulting from bodily injury or
disease or any other incapacity due to physical or mental illness),
after a written demand for substantial performance is delivered to
the Employee by the Chief Executive Office
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