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TRANSITION AGREEMENT

Transition Agreement

TRANSITION AGREEMENT | Document Parties: TETRA TECHNOLOGIES INC You are currently viewing:
This Transition Agreement involves

TETRA TECHNOLOGIES INC

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Title: TRANSITION AGREEMENT
Governing Law: Texas     Date: 5/8/2009
Industry: Oil Well Services and Equipment     Sector: Energy

TRANSITION AGREEMENT, Parties: tetra technologies inc
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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.   Employment.

 

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.   Duties.

 

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.

 

3.2   Annual Bonus .

 

(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

 

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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

 

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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

$0.00 to $300,000,000

 

$250,000

$300,000,001 to $500,000,000

 

$500,000

$500,000,001 to $700,000,000

 

$700,000

in excess of $700,000,000

 

$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.

 

3.4   Transition Bonus .

 

(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

 

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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.

 

3.5   Employee Benefits .

 

(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

 

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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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