Exhibit 10.3

 

PIONEER DRILLING SERVICES, LTD.

 

EXECUTIVE SEVERANCE PLAN

 

I.              PURPOSES OF PLAN AND DEFINITIONS

 

1.1           PURPOSES.  THIS PIONEER DRILLING SERVICES, LTD. EXECUTIVE
SEVERANCE PLAN (THE “PLAN”), FOR SELECTED SENIOR MANAGEMENT EMPLOYEES OF PIONEER
DRILLING SERVICES, LTD., A TEXAS LIMITED PARTNERSHIP, AND ANY SUCCESSOR THERETO
(THE “PARTNERSHIP”) AND ITS AFFILIATES, IS INTENDED TO ASSIST THE PARTNERSHIP IN
ATTRACTING AND RETAINING COMPETENT AND CAPABLE EXECUTIVES TO PERFORM SERVICES
FOR PIONEER DRILLING COMPANY, A TEXAS CORPORATION (THE “COMPANY”) AND ITS
SUBSIDIARIES (INCLUDING THE PARTNERSHIP), TO PROVIDE GREATER INCENTIVES TO SUCH
EXECUTIVES TO ATTAIN AND MAINTAIN HIGH LEVELS OF PERFORMANCE, AND TO PROVIDE
SOME PROTECTION FOR LOSS OF SALARY AND BENEFITS IN THE EVENT OF CERTAIN
INVOLUNTARY TERMINATIONS OR CHANGES IN CONTROL OF THE COMPANY.

 

1.2           DEFINITIONS.

 

“AFFILIATE” MEANS, WITH RESPECT TO ANY PERSON, ANY OTHER PERSON THAT, DIRECTLY
OR INDIRECTLY THROUGH ONE OR MORE INTERMEDIARIES, CONTROLS, IS CONTROLLED BY OR
IS UNDER COMMON CONTROL WITH THE PERSON IN QUESTION.  AS USED HEREIN, THE TERM
“CONTROL” MEANS THE POSSESSION, DIRECT OR INDIRECT, OF THE POWER TO DIRECT OR
CAUSE THE DIRECTION OF THE MANAGEMENT AND POLICIES OF A PERSON, WHETHER THROUGH
OWNERSHIP OF VOTING SECURITIES, BY CONTRACT OR OTHERWISE.

 

“AIP” MEANS THE PIONEER DRILLING SERVICES, LTD. ANNUAL INCENTIVE COMPENSATION
PLAN, AS FROM TIME TO TIME IN EFFECT, INCLUDING ANY SUCCESSOR PLAN.

 

“ASSOCIATE” MEANS, WITH REFERENCE TO ANY PERSON (AS DEFINED BELOW), (I) ANY
CORPORATION, FIRM, PARTNERSHIP, ASSOCIATION, UNINCORPORATED ORGANIZATION OR
OTHER ENTITY (OTHER THAN THE COMPANY OR ANY OF ITS AFFILIATES (INCLUDING THE
PARTNERSHIP)) OF WHICH THAT PERSON IS AN OFFICER OR GENERAL PARTNER (OR OFFICER
OR GENERAL PARTNER OF A GENERAL PARTNER) OR IS, DIRECTLY OR INDIRECTLY, THE
BENEFICIAL OWNER (AS DEFINED BELOW) OF 10% OR MORE OF ANY CLASS OF ITS EQUITY
SECURITIES, (II) ANY TRUST OR OTHER ESTATE IN WHICH THAT PERSON HAS A
SUBSTANTIAL BENEFICIAL INTEREST OR FOR OR OF WHICH THAT PERSON SERVES AS TRUSTEE
OR IN A SIMILAR FIDUCIARY CAPACITY AND (III) ANY RELATIVE OR SPOUSE OF THAT
PERSON, OR ANY RELATIVE OF THAT SPOUSE, WHO HAS THE SAME HOME AS THAT PERSON.

 

“BASE SALARY” MEANS THE ANNUAL BASE SALARY OF A PARTICIPANT, AS ESTABLISHED BY
THE COMMITTEE (AS DEFINED BELOW) FOR A FISCAL YEAR.

 

“BENEFICIAL OWNER.” A PERSON IS DEEMED THE “BENEFICIAL OWNER” OF, AND IS DEEMED
TO “BENEFICIALLY OWN,” ANY SECURITIES:

 

(i)            of which that Person or any of its Affiliates or Associates,
directly or indirectly, is the “beneficial owner” (as determined pursuant to
Rule 13d-3 under the Exchange Act (as defined below)) or otherwise has the right
to vote or dispose of, including pursuant to any agreement, arrangement or
understanding (whether or not in

 

--------------------------------------------------------------------------------

 

writing); provided, however, that a Person will not be deemed the “Beneficial
Owner” of, or to “beneficially own,” any security under this subparagraph (i) as
a result of an agreement, arrangement or understanding to vote that security if
that agreement, arrangement or understanding:  (A) arises solely from a
revocable proxy or consent given in response to a public (that is, not including
a solicitation exempted by Exchange Act Rule 14a-2(b)(2)) proxy or consent
solicitation made pursuant to, and in accordance with, the applicable provisions
of the Exchange Act; and (B) is not then reportable by that Person on Exchange
Act Schedule 13D (or any comparable or successor report);

 

(ii)           which that Person or any of its Affiliates or Associates,
directly or indirectly, has the right or obligation to acquire (whether that
right or obligation is exercisable or effective immediately or only after the
passage of time or the occurrence of an event) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or on the exercise of
conversion rights, exchange rights, other rights, warrants or options, or
otherwise; provided, however, that a Person will not be deemed the “Beneficial
Owner” of, or to “beneficially own,” securities tendered pursuant to a tender or
exchange offer made by that Person or any of its Affiliates or Associates until
those tendered securities are accepted for purchase or exchange; or

 

(iii)          which are beneficially owned, directly or indirectly, by (A) any
other Person (or any Affiliate or Associate thereof) with which the specified
Person or any of its Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy or consent as described in the
proviso to subparagraph (i) of this definition) or disposing of any voting
securities of the Company or (B) any group (as Exchange Act Rule 13d-5(b) uses
that term) of which that specified Person is a member;

 

PROVIDED, HOWEVER, THAT NOTHING IN THIS DEFINITION WILL CAUSE A PERSON ENGAGED
IN BUSINESS AS AN UNDERWRITER OF SECURITIES TO BE THE “BENEFICIAL OWNER” OF, OR
TO “BENEFICIALLY OWN,” ANY SECURITIES THAT PERSON ACQUIRES THROUGH ITS
PARTICIPATION IN GOOD FAITH IN A FIRM COMMITMENT UNDERWRITING (INCLUDING
SECURITIES ACQUIRED PURSUANT TO STABILIZING TRANSACTIONS TO FACILITATE A PUBLIC
OFFERING IN ACCORDANCE WITH EXCHANGE ACT REGULATION M OR TO COVER OVERALLOTMENTS
CREATED IN CONNECTION WITH A PUBLIC OFFERING) UNTIL THE EXPIRATION OF 40 DAYS
AFTER THE DATE OF THAT ACQUISITION.  FOR PURPOSES OF THIS DEFINITION, “VOTING” A
SECURITY INCLUDES VOTING, GRANTING A PROXY, ACTING BY CONSENT, MAKING A REQUEST
OR DEMAND RELATING TO CORPORATE ACTION (INCLUDING CALLING A STOCKHOLDER MEETING)
OR OTHERWISE GIVING AN AUTHORIZATION (WITHIN THE MEANING OF EXCHANGE ACT SECTION
14(A)) IN RESPECT OF THAT SECURITY.

 

“BOARD” MEANS THE BOARD OF DIRECTORS OF THE COMPANY.

 

“CAUSE” MEANS, (X) WITH RESPECT TO ANY LEVEL A PARTICIPANT, THAT PARTICIPANT’S
(I) COMMISSION OF ANY ACT OR OMISSION CONSTITUTING FRAUD UNDER ANY LAW OF THE
STATE OF TEXAS, (II) CONVICTION OF, OR A PLEA OF NOLO CONTENDERE TO, A FELONY,
(III) EMBEZZLEMENT OR THEFT OF PROPERTY OR FUNDS OF THE PARTNERSHIP OR ANY
AFFILIATE OR (IV) FAILURE TO FOLLOW THE INSTRUCTIONS OF THE BOARD, AS APPROVED
BY A MAJORITY OF THE BOARD MEMBERS AT A MEETING OF THE BOARD; AND (Y) WITH
RESPECT TO ANY LEVEL B PARTICIPANT, THAT PARTICIPANT’S (I)

 

2

--------------------------------------------------------------------------------

 

COMMISSION OF ANY ACT OR OMISSION CONSTITUTING FRAUD UNDER ANY LAW OF THE STATE
OF TEXAS, (II) CONVICTION OF, OR A PLEA OF NOLO CONTENDERE TO, A FELONY, (III)
EMBEZZLEMENT OR THEFT OF PROPERTY OR FUNDS OF THE PARTNERSHIP OR ANY AFFILIATE,
(IV) FAILURE TO FOLLOW THE INSTRUCTIONS OF THE BOARD OR THE BOARD OF DIRECTORS
OF THE GENERAL PARTNER (IN EITHER CASE, AS APPROVED BY A MAJORITY OF THE MEMBERS
OF SUCH BOARD AT A MEETING OF SUCH BOARD) OR ANY SUPERVISING OFFICER OF THE
PARTNERSHIP OR ANY AFFILIATE OR (V) UNACCEPTABLE PERFORMANCE, GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT WITH RESPECT TO HIS DUTIES TO THE PARTNERSHIP OR ANY
AFFILIATE.

 

“CHANGE IN CONTROL” HAS THE MEANING SET FORTH IN SECTION 5.4.

 

“COBRA” MEANS THE CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF 1985, AS
AMENDED FROM TIME TO TIME.

 

“CODE” MEANS THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.

 

“COMMITTEE” MEANS THE COMPENSATION COMMITTEE OF THE BOARD OR SUCH OTHER
COMMITTEE OF THE BOARD OR OF THE BOARD OF DIRECTORS OF THE GENERAL PARTNER AS IS
DESIGNATED BY EITHER THE BOARD OR THE BOARD OF DIRECTORS OF THE GENERAL PARTNER
TO ADMINISTER THE PLAN.

 

“Common Stock” means the common stock of the Company.

 

“COMPANY” HAS THE MEANING SET FORTH IN SECTION 1.1.

 

“DISABILITY” MEANS THE ABSENCE OF A PARTICIPANT FROM THE PARTICIPANT’S DUTIES
WITH THE PARTNERSHIP OR ANY OF ITS AFFILIATES ON A FULL-TIME BASIS FOR AT LEAST
90 CONSECUTIVE DAYS AS A RESULT OF INCAPACITY DUE TO MENTAL OR PHYSICAL ILLNESS
OR INJURY WHICH IS DETERMINED BY THE COMMITTEE IN ITS SOLE DISCRETION TO BE
PERMANENT.

 

“EFFECTIVE DATE OF A CHANGE IN CONTROL” HAS THE MEANING SET FORTH IN SECTION 
5.5.

 

“EMPLOYEE” MEANS ANY EMPLOYEE OF THE PARTNERSHIP OR ANY OF ITS AFFILIATE
(WHETHER OR NOT HE IS ALSO A DIRECTOR THEREOF) WHO IS COMPENSATED FOR EMPLOYMENT
OF THE PARTNERSHIP OR ANY AFFILIATE BY A REGULAR SALARY AND WHO IS CONSIDERED BY
THE COMMITTEE TO BE A SENIOR MANAGEMENT EMPLOYEE.

 

“EXCHANGE ACT” MEANS THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

“EXEMPT PERSON” MEANS: (I) THE PARTNERSHIP; (II) ANY OF AFFILIATE OF THE
PARTNERSHIP (INCLUDING THE COMPANY); (III) ANY EMPLOYEE BENEFIT PLAN OF THE
PARTNERSHIP OR OF ANY AFFILIATE AND ANY PERSON ORGANIZED, APPOINTED OR
ESTABLISHED BY THE PARTNERSHIP FOR OR PURSUANT TO THE TERMS OF ANY SUCH PLAN OR
FOR THE PURPOSE OF FUNDING ANY SUCH PLAN OR FUNDING OTHER EMPLOYEE BENEFITS FOR
EMPLOYEES OF THE PARTNERSHIP OR ANY AFFILIATE OF THE PARTNERSHIP; OR (IV) ANY
CORPORATION OR OTHER ENTITY OWNED, DIRECTLY OR INDIRECTLY, BY THE SHAREHOLDERS
OF THE COMPANY IN SUBSTANTIALLY THE SAME PROPORTIONS AS THEIR OWNERSHIP OF
CAPITAL STOCK OF THE COMPANY.

 

3

--------------------------------------------------------------------------------

 

“GENERAL PARTNER” MEANS PDC MGMT. CO., A TEXAS CORPORATION AND THE GENERAL
PARTNER OF THE PARTNERSHIP.

 

“GOOD REASON” MEANS, WITHOUT THE CONSENT OF THE PARTICIPANT, (I) THE
PARTNERSHIP’S FAILURE TO MAINTAIN A PARTICIPANT’S TOTAL COMPENSATION PACKAGE AT
A LEVEL COMPARABLE TO THE LEVEL IN EFFECT AS OF THE DATE THE INDIVIDUAL BECOMES
A PARTICIPANT; PROVIDED HOWEVER, THAT NOTICE OF TERMINATION OF AN EMPLOYEE’S
STATUS AS A PARTICIPANT IN ACCORDANCE WITH SECTION 3.3 SHALL NOT CONSTITUTE GOOD
REASON; (II) THE PARTNERSHIP’S FAILURE TO MAINTAIN A PARTICIPANT’S EMPLOYMENT
WITHOUT MATERIAL DIMINUTION IN THE PARTICIPANT’S DUTIES AND RESPONSIBILITIES AS
THEY EXIST ON THE DATE HE OR SHE BECOMES A PARTICIPANT, OR, IN THE EVENT OF
CHANGE IN CONTROL, AS THEY EXIST AS OF THE EFFECTIVE DATE OF A CHANGE IN
CONTROL, AND SUCH FAILURE IS NOT CURED BY THE PARTNERSHIP WITHIN TEN DAYS AFTER
THE PARTICIPANT’S WRITTEN NOTICE TO THE PARTNERSHIP OF SUCH FAILURE; OR (III) A
CHANGE IN THE LOCATION OF THE PARTICIPANT’S PRINCIPAL PLACE OF EMPLOYMENT WITH
THE PARTNERSHIP BY MORE THAN 50 MILES FROM THE LOCATION WHERE THE PARTICIPANT
WAS PRINCIPALLY EMPLOYED AT THE TIME THE PARTICIPANT BECAME A PARTICIPANT OR, IN
THE EVENT OF A CHANGE IN CONTROL, A CHANGE IN THE LOCATION OF THE PARTICIPANT’S
PRINCIPAL PLACE OF EMPLOYMENT WITH THE PARTNERSHIP BY MORE THAN 50 MILES FROM
THE LOCATION WHERE THE PARTICIPANT WAS PRINCIPALLY EMPLOYED IMMEDIATELY PRIOR TO
THE EFFECTIVE DATE OF A CHANGE IN CONTROL.

 

“INVOLUNTARY TERMINATION” MEANS THE TERMINATION OF A PARTICIPANT’S EMPLOYMENT
WITH THE PARTNERSHIP OR ANY AFFILIATE (I) BY THE PARTNERSHIP OR ANY AFFILIATE
FOR ANY REASON OTHER THAN CAUSE, DEATH, OR DISABILITY, OR (II) BY THE
PARTICIPANT FOR GOOD REASON.

 

“LEVEL A PARTICIPANT” MEANS A PARTICIPANT DESIGNATED A LEVEL A PARTICIPANT BY
THE COMMITTEE.

 

“LEVEL B PARTICIPANT” MEANS A PARTICIPANT DESIGNATED A LEVEL B PARTICIPANT BY
THE COMMITTEE.

 

“PARTICIPANT” MEANS AN EMPLOYEE WHO HAS BEEN SELECTED BY THE COMMITTEE TO
PARTICIPATE IN THE PLAN.

 

“Partnership” has the meaning set forth in Section 1.1.

 

“PERSON” HAS THE MEANING GIVEN IN SECTION 3(A)(9) OF THE EXCHANGE ACT, AS
MODIFIED AND USED IN SECTIONS 13(D) AND 14(D) THEREOF.

 

“PLAN” HAS THE MEANING SET FORTH IN SECTION 1.1.

 

“VOTING STOCK” MEANS THE COMMON STOCK AND ANY OTHER SECURITIES ISSUED BY THE
COMPANY WHICH ENTITLE THE HOLDER THEREOF TO VOTE GENERALLY IN THE ELECTION OF
MEMBERS OF THE BOARD.

 

“WAIVER AND RELEASE” MEANS A LEGAL DOCUMENT, IN A FORM SUBSTANTIALLY SIMILAR TO
THE FORM ATTACHED HERETO AS EXHIBIT B, IN WHICH A PARTICIPANT, IN EXCHANGE FOR
SEVERANCE BENEFITS UNDER THE PLAN, RELEASES, AMONG OTHER PARTIES, THE
PARTNERSHIP AND ALL OF ITS AFFILIATES AND THEIR DIRECTORS, OFFICERS, EMPLOYEES
AND AGENTS, THEIR EMPLOYEE BENEFIT

 

4

--------------------------------------------------------------------------------

 

PLANS, AND THE FIDUCIARIES AND AGENTS OF SAID PLANS FROM LIABILITY AND DAMAGES
IN ANY WAY RELATED TO THE PARTICIPANT’S EMPLOYMENT WITH OR SEPARATION FROM
EMPLOYMENT WITH THE PARTNERSHIP OR ANY OF ITS AFFILIATES.

 

“WAIVER EFFECTIVE DATE” MEANS THE EIGHTH DAY FOLLOWING THE DATE ON WHICH THE
PARTICIPANT EXECUTES THE WAIVER AND RELEASE.

 

II.            ADMINISTRATION OF THE PLAN

 

2.1           INTERPRETATIONS.  THE COMMITTEE SHALL HAVE FULL POWER AND
AUTHORITY TO INTERPRET, CONSTRUE AND ADMINISTER THE PLAN.

 

2.2           COMMITTEE DETERMINATIONS CONCLUSIVE.  ALL DETERMINATIONS BY THE
COMMITTEE AS TO WHICH EMPLOYEES SHALL BE OFFERED THE OPPORTUNITY TO PARTICIPATE
HEREIN, AND ANY INTERPRETATION ADOPTED BY THE COMMITTEE WITH RESPECT TO ANY
PROVISION OF THE PLAN AND THE EFFECT THEREOF, SHALL BE FINAL, BINDING AND
CONCLUSIVE UPON THE PARTNERSHIP, ALL AFFILIATES AND ALL PERSONS WHO MAY CLAIM
ANY RIGHTS OR BENEFITS HEREUNDER; PROVIDED, HOWEVER, THAT A CHANGE IN CONTROL
SHALL OCCUR ONLY PURSUANT TO THE PROVISIONS OF SECTION 5.4.

 

III.           ELIGIBILITY OF EMPLOYEES

 

3.1           ELIGIBILITY REQUIREMENTS.  THE COMMITTEE SHALL IN ITS SOLE
DISCRETION FROM TIME TO TIME DESIGNATE THE EMPLOYEES WHO ARE TO BE PARTICIPANTS.

 

3.2           NOTIFICATION OF PARTICIPATION.  EACH EMPLOYEE WHO IS DESIGNATED A
PARTICIPANT BY THE COMMITTEE SHALL BE PROVIDED A PARTICIPATION CERTIFICATION, IN
THE FORM ATTACHED HERETO AS EXHIBIT A, SPECIFYING THAT THE EMPLOYEE IS A
PARTICIPANT, TOGETHER WITH A COPY OF THE PLAN.  THE COMMITTEE SHALL IN ITS SOLE
DISCRETION DESIGNATE EACH PARTICIPANT AS EITHER A LEVEL A PARTICIPANT OR A LEVEL
B PARTICIPANT ON THE BASIS OF THE POSITION WHICH THE PARTICIPANT HOLDS WITH THE
PARTNERSHIP OR ANY AFFILIATE.

 

3.3           TERMINATION OF PARTICIPATION.  AN EMPLOYEE’S STATUS AS A
PARTICIPANT SHALL TERMINATE AT SUCH TIME AS MAY BE DETERMINED BY THE COMMITTEE,
PROVIDED SUCH PARTICIPANT SHALL BE GIVEN NOTICE OF SUCH TERMINATION OF STATUS AS
A PARTICIPANT BY THE COMMITTEE AT LEAST ONE YEAR PRIOR TO THE EFFECTIVENESS OF
SUCH TERMINATION; PROVIDED, HOWEVER, THAT IN THE CASE OF AN EMPLOYEE WHO IS A
PARTICIPANT IMMEDIATELY PRIOR TO THE EFFECTIVE DATE OF A CHANGE IN CONTROL, SUCH
EMPLOYEE’S STATUS AS A PARTICIPANT MAY NOT BE TERMINATED WITHOUT HIS OR HER
WRITTEN CONSENT AT ANY TIME WITHIN TWO YEARS OF THE EFFECTIVE DATE OF SUCH
CHANGE IN CONTROL.

 

IV.           INVOLUNTARY TERMINATION NOT INCIDENT TO CHANGE IN CONTROL

 

4.1           CASH SEVERANCE PAYMENT.  IN THE EVENT OF AN INVOLUNTARY
TERMINATION OF A PARTICIPANT THAT DOES NOT OCCUR WITHIN TWO YEARS FOLLOWING THE
EFFECTIVE DATE OF A CHANGE IN CONTROL, THE PARTICIPANT SHALL BE ENTITLED TO THE
FOLLOWING CASH SEVERANCE BENEFIT FOLLOWING HIS OR HER EXECUTION, WITHOUT
REVOCATION, OF A WAIVER AND RELEASE:

 

5

--------------------------------------------------------------------------------

 

(A)           IF THE PARTICIPANT IS A LEVEL A PARTICIPANT, A LUMP-SUM CASH
PAYMENT, PAYABLE NOT LATER THAN 30 DAYS FOLLOWING THE WAIVER EFFECTIVE DATE, IN
AN AMOUNT EQUAL TO THE PARTICIPANT’S BASE SALARY, AS IN EFFECT ON THE DATE OF
SUCH INVOLUNTARY TERMINATION; OR

 

(B)           IF THE PARTICIPANT IS A LEVEL B PARTICIPANT, A LUMP-SUM CASH
PAYMENT, PAYABLE NOT LATER THAN 30 DAYS FOLLOWING THE WAIVER EFFECTIVE DATE, IN
AN AMOUNT EQUAL TO ONE-HALF OF THE PARTICIPANT’S BASE SALARY, AS IN EFFECT ON
THE DATE OF SUCH INVOLUNTARY TERMINATION.

 

4.2           VESTING OF STOCK OPTIONS.

 

(A)           SUBJECT TO THE PARTICIPANT’S EXECUTION OF THE WAIVER AND RELEASE,
ANY LEVEL A PARTICIPANT ENTITLED TO A CASH SEVERANCE BENEFIT UNDER SECTION 4.1
SHALL BE ENTITLED TO IMMEDIATE AND FULL VESTING OF ALL STOCK OPTIONS AND OTHER
EQUITY-BASED AWARDS HELD BY THE PARTICIPANT ON THE DATE OF HIS OR HER
TERMINATION OF EMPLOYMENT, TO THE EXTENT SUCH STOCK OPTIONS OR OTHER
EQUITY-BASED AWARDS WOULD HAVE OTHERWISE VESTED DURING THE 12-MONTH PERIOD
IMMEDIATELY FOLLOWING THE PARTICIPANT’S INVOLUNTARY TERMINATION.

 

(B)           SUBJECT TO THE PARTICIPANT’S EXECUTION OF THE WAIVER AND RELEASE,
ANY LEVEL B PARTICIPANT ENTITLED TO A CASH SEVERANCE BENEFIT UNDER SECTION 4.1
SHALL BE ENTITLED TO IMMEDIATE AND FULL VESTING OF ALL STOCK OPTIONS AND OTHER
EQUITY-BASED AWARDS HELD BY THE PARTICIPANT ON THE DATE OF HIS OR HER
TERMINATION OF EMPLOYMENT TO THE EXTENT SUCH STOCK OPTIONS OR OTHER EQUITY-BASED
AWARDS WOULD HAVE OTHERWISE VESTED DURING THE SIX-MONTH PERIOD IMMEDIATELY
FOLLOWING THE PARTICIPANT’S INVOLUNTARY TERMINATION.

 

4.3           LIFE INSURANCE AND MEDICAL BENEFITS CONTINUATION.

 

(A)           SUBJECT TO THE PARTICIPANT’S EXECUTION OF THE WAIVER AND RELEASE,
ANY LEVEL A PARTICIPANT ENTITLED TO A SEVERANCE BENEFIT UNDER SECTION 4.1 SHALL
BE ENTITLED TO RECEIVE FOR HIMSELF OR HERSELF AND, WHERE APPLICABLE, HIS OR HER
ELIGIBLE DEPENDENTS, FOR THE 12 MONTHS FOLLOWING HIS OR HER INVOLUNTARY
TERMINATION, CONTINUED LIFE INSURANCE COVERAGE AND COVERAGE UNDER THE
PARTNERSHIP’S MEDICAL BENEFITS PLAN IN WHICH THE PARTICIPANT IS PARTICIPATING AS
OF THE DATE OF HIS OR HER INVOLUNTARY TERMINATION (OR ANY SUCCESSOR MEDICAL PLAN
MAINTAINED BY THE PARTNERSHIP OR AN AFFILIATE, AS APPLICABLE, UNDER WHICH THE
ACTIVE EMPLOYEES OF THE PARTNERSHIP PARTICIPATE) AT THE SAME RATE AND UNDER THE
SAME TERMS AND CONDITIONS AS MAY THEN BE IN EFFECT FOR ACTIVE EMPLOYEE
PARTICIPANTS.  THE PERIOD OF COVERAGE PROVIDED UNDER THIS SECTION SHALL NOT
CONSTITUTE CONTINUATION COVERAGE REQUIRED BY COBRA.  FOLLOWING THE BENEFITS
CONTINUATION PERIOD PROVIDED HEREIN, THE PARTICIPANT SHALL BE ELIGIBLE TO
COMMENCE CONTINUED MEDICAL COVERAGE IN ACCORDANCE WITH, AND FOR THE APPLICABLE
PERIOD REQUIRED BY, COBRA.  IN THE EVENT OF A PARTICIPANT’S DEATH DURING THE
BENEFITS CONTINUATION PERIOD, THAT PARTICIPANT’S BENEFICIARIES SHALL BE ELIGIBLE
TO COMMENCE CONTINUED MEDICAL COVERAGE IN ACCORDANCE WITH, AND FOR THE
APPLICABLE PERIOD REQUIRED BY, COBRA.

 

(B)           SUBJECT TO THE PARTICIPANT’S EXECUTION OF THE WAIVER AND RELEASE,
ANY LEVEL B PARTICIPANT ENTITLED TO A SEVERANCE BENEFIT UNDER SECTION 4.1 SHALL
BE ENTITLED TO RECEIVE FOR HIMSELF OR HERSELF AND, WHERE APPLICABLE, HIS OR HER
ELIGIBLE DEPENDENTS, FOR

 

6

--------------------------------------------------------------------------------

 

THE SIX MONTHS FOLLOWING HIS OR HER INVOLUNTARY TERMINATION, CONTINUED LIFE
INSURANCE COVERAGE AND COVERAGE UNDER THE PARTNERSHIP’S MEDICAL BENEFITS PLAN IN
WHICH THE PARTICIPANT IS PARTICIPATING AS OF THE DATE OF HIS OR HER INVOLUNTARY
TERMINATION (OR ANY SUCCESSOR MEDICAL PLAN MAINTAINED BY THE PARTNERSHIP OR AN
AFFILIATE, AS APPLICABLE, UNDER WHICH THE ACTIVE EMPLOYEES OF THE PARTNERSHIP
PARTICIPATE) AT THE SAME RATE AND UNDER THE SAME TERMS AND CONDITIONS AS MAY
THEN BE IN EFFECT FOR ACTIVE EMPLOYEE PARTICIPANTS.  THE PERIOD OF COVERAGE
PROVIDED UNDER THIS SECTION SHALL NOT CONSTITUTE CONTINUATION COVERAGE REQUIRED
BY COBRA.  FOLLOWING THE BENEFITS CONTINUATION PERIOD PROVIDED HEREIN, THE
PARTICIPANT SHALL BE ELIGIBLE TO COMMENCE CONTINUED MEDICAL COVERAGE IN
ACCORDANCE WITH, AND FOR THE APPLICABLE PERIOD REQUIRED BY, COBRA.  IN THE EVENT
OF A PARTICIPANT’S DEATH DURING THE BENEFITS CONTINUATION PERIOD, THAT
PARTICIPANT’S BENEFICIARIES SHALL BE ELIGIBLE TO COMMENCE CONTINUED MEDICAL
COVERAGE IN ACCORDANCE WITH, AND FOR THE APPLICABLE PERIOD REQUIRED BY, COBRA.

 

Notwithstanding the foregoing, the continuation of life insurance coverage and
medical benefits for any Participant shall immediately end upon the
Participant’s eligibility for similar life insurance and medical coverage by
reason of employment with any entity other than the Partnership or any
Affiliate.

 

V.            INVOLUNTARY TERMINATION UPON CHANGE IN CONTROL

 

5.1           CASH SEVERANCE PAYMENT.  IN THE EVENT OF AN INVOLUNTARY
TERMINATION OF A PARTICIPANT WITHIN TWO YEARS FOLLOWING THE EFFECTIVE DATE OF A
CHANGE IN CONTROL, THEN IN LIEU OF THE CASH SEVERANCE BENEFIT PROVIDED IN
SECTION 4.1, THE PARTICIPANT SHALL BE ENTITLED TO THE FOLLOWING CASH SEVERANCE
BENEFIT FOLLOWING HIS OR HER EXECUTION, WITHOUT REVOCATION, OF A WAIVER AND
RELEASE:

 

(A)           IF THE PARTICIPANT IS A LEVEL A PARTICIPANT, A LUMP-SUM CASH
PAYMENT, PAYABLE NOT LATER THAN 30 DAYS FOLLOWING THE WAIVER EFFECTIVE DATE, IN
AN AMOUNT EQUAL TO THREE TIMES THE SUM OF (I) THE PARTICIPANT’S BASE SALARY
(WHICH SHALL, FOR THIS PURPOSE, BE THE HIGHER OF (X) THE BASE SALARY IN EFFECT
ON THE DATE IMMEDIATELY PRIOR TO SUCH EFFECTIVE DATE OF A CHANGE IN CONTROL OR
(Y) THE BASE SALARY IN EFFECT ON THE DATE OF TERMINATION OF EMPLOYMENT) AND (II)
THE AMOUNT EQUAL TO THE PARTICIPANT’S MAXIMUM AWARD OPPORTUNITY UNDER THE AIP
DURING THE 12 MONTHS PRECEDING HIS TERMINATION OF EMPLOYMENT; OR

 

(B)           IF THE PARTICIPANT IS A LEVEL B PARTICIPANT, A LUMP-SUM CASH
PAYMENT, PAYABLE NOT LATER THAN 30 DAYS FOLLOWING THE WAIVER EFFECTIVE DATE, IN
AN AMOUNT EQUAL TO ONE AND ONE-HALF TIMES THE SUM OF (I) THE PARTICIPANT’S BASE
SALARY (WHICH SHALL, FOR THIS PURPOSE, BE THE HIGHER OF (X) THE BASE SALARY IN
EFFECT ON THE DATE IMMEDIATELY PRIOR TO SUCH EFFECTIVE DATE OF A CHANGE IN
CONTROL OR (Y) THE BASE SALARY IN EFFECT ON THE DATE OF TERMINATION OF
EMPLOYMENT) AND (II) THE PARTICIPANT’S MAXIMUM AWARD OPPORTUNITY UNDER THE AIP
DURING THE 12 MONTHS PRECEDING HIS TERMINATION OF EMPLOYMENT.

 

5.2           VESTING OF STOCK OPTIONS.  SUBJECT TO THE PARTICIPANT’S EXECUTION
OF THE WAIVER AND RELEASE, ANY PARTICIPANT ENTITLED TO A CASH SEVERANCE BENEFIT
UNDER SECTION 5.1 SHALL BE ENTITLED TO IMMEDIATE AND FULL VESTING OF ALL STOCK
OPTIONS AND OTHER EQUITY-BASED AWARDS HELD BY THE PARTICIPANT ON THE DATE OF HIS
OR HER TERMINATION OF EMPLOYMENT.

 

7

--------------------------------------------------------------------------------

 

5.3           LIFE INSURANCE AND MEDICAL BENEFITS CONTINUATION.

 

(A)           SUBJECT TO THE PARTICIPANT’S EXECUTION OF THE WAIVER AND RELEASE,
ANY LEVEL A PARTICIPANT ENTITLED TO A SEVERANCE BENEFIT UNDER SECTION 5.1 SHALL
BE ENTITLED TO RECEIVE FOR HIMSELF OR HERSELF AND, WHERE APPLICABLE, HIS OR HER
ELIGIBLE DEPENDENTS, FOR THE 12 MONTHS FOLLOWING HIS OR HER INVOLUNTARY
TERMINATION, CONTINUED LIFE INSURANCE COVERAGE AND COVERAGE UNDER THE
PARTNERSHIP’S MEDICAL BENEFITS PLAN IN WHICH THE PARTICIPANT IS PARTICIPATING AS
OF THE DATE OF THE EFFECTIVE DATE OF A CHANGE IN CONTROL GIVING RISE TO THE
BENEFIT PAYMENT UNDER SECTION 5.1, AT THE SAME RATE AS MAY THEN BE IN EFFECT FOR
ACTIVE PARTICIPANTS.  THE PERIOD OF COVERAGE PROVIDED UNDER THIS SECTION SHALL
NOT CONSTITUTE CONTINUATION COVERAGE REQUIRED BY COBRA.  FOLLOWING THE BENEFITS
CONTINUATION PERIOD PROVIDED HEREIN, THE PARTICIPANT SHALL BE ELIGIBLE TO
COMMENCE CONTINUED MEDICAL COVERAGE IN ACCORDANCE WITH, AND FOR THE APPLICABLE
PERIOD REQUIRED BY, COBRA.  IN THE EVENT OF PARTICIPANT’S DEATH DURING THE
BENEFITS CONTINUATION PERIOD, THE PARTICIPANT’S BENEFICIARIES SHALL BE ELIGIBLE
TO COMMENCE CONTINUED MEDICAL COVERAGE IN ACCORDANCE WITH, AND FOR THE
APPLICABLE PERIOD REQUIRED BY, COBRA.

 

(B)           SUBJECT TO THE PARTICIPANT’S EXECUTION OF THE WAIVER AND RELEASE,
ANY LEVEL B PARTICIPANT ENTITLED TO A SEVERANCE BENEFIT UNDER SECTION 5.1 SHALL
BE ENTITLED TO RECEIVE FOR HIMSELF OR HERSELF AND, WHERE APPLICABLE, HIS OR HER
ELIGIBLE DEPENDENTS, FOR THE SIX MONTHS FOLLOWING HIS OR HER INVOLUNTARY
TERMINATION, CONTINUED LIFE INSURANCE COVERAGE AND COVERAGE UNDER THE
PARTNERSHIP’S MEDICAL BENEFITS PLAN IN WHICH THE PARTICIPANT IS PARTICIPATING AS
OF THE DATE OF THE EFFECTIVE DATE OF A CHANGE IN CONTROL GIVING RISE TO THE
BENEFIT PAYMENT UNDER SECTION 5.1, AT THE SAME RATE AS MAY THEN BE IN EFFECT FOR
ACTIVE PARTICIPANTS.  THE PERIOD OF COVERAGE PROVIDED UNDER THIS SECTION SHALL
NOT CONSTITUTE CONTINUATION COVERAGE REQUIRED BY COBRA.  FOLLOWING THE BENEFITS
CONTINUATION PERIOD PROVIDED HEREIN, THE PARTICIPANT SHALL BE ELIGIBLE TO
COMMENCE CONTINUED MEDICAL COVERAGE IN ACCORDANCE WITH, AND FOR THE APPLICABLE
PERIOD REQUIRED BY, COBRA.  IN THE EVENT OF PARTICIPANT’S DEATH DURING THE
BENEFITS CONTINUATION PERIOD, THE PARTICIPANT’S BENEFICIARIES SHALL BE ELIGIBLE
TO COMMENCE CONTINUED MEDICAL COVERAGE IN ACCORDANCE WITH, AND FOR THE
APPLICABLE PERIOD REQUIRED BY, COBRA.

 

Notwithstanding the foregoing, the continuation of life insurance coverage and
medical benefits for any Participant shall immediately end upon the
Participant’s eligibility for similar life insurance and medical coverage by
reason of employment with an entity other than the Partnership or any Affiliate.

 

5.4           CHANGE IN CONTROL OF THE COMPANY.  FOR PURPOSES OF THE PLAN, A
“CHANGE IN CONTROL” OF THE COMPANY SHALL CONCLUSIVELY BE DEEMED TO HAVE OCCURRED
IF AN EVENT SET FORTH IN ANY ONE OF THE FOLLOWING PARAGRAPHS SHALL HAVE
OCCURRED:

 

(A)           ANY PERSON (OTHER THAN AN EXEMPT PERSON) IS OR BECOMES THE
BENEFICIAL OWNER OF VOTING STOCK (NOT INCLUDING IN THE SECURITIES BENEFICIALLY
OWNED BY SUCH PERSON ANY SECURITIES ACQUIRED DIRECTLY FROM THE COMPANY AFTER THE
DATE THE PLAN FIRST BECAME EFFECTIVE) REPRESENTING 40% OR MORE OF THE COMBINED
VOTING POWER OF THE VOTING STOCK THEN OUTSTANDING; PROVIDED, HOWEVER, THAT A
CHANGE OF CONTROL WILL NOT BE DEEMED TO OCCUR UNDER THIS CLAUSE (A) IF A PERSON
BECOMES THE BENEFICIAL OWNER OF VOTING STOCK REPRESENTING 40% OR MORE OF THE
COMBINED VOTING POWER OF THE VOTING STOCK THEN

 

8

--------------------------------------------------------------------------------

 

OUTSTANDING SOLELY AS A RESULT OF A REDUCTION IN THE NUMBER OF SHARES OF VOTING
STOCK OUTSTANDING WHICH RESULTS FROM THE COMPANY’S REPURCHASE OF VOTING STOCK,
UNLESS AND UNTIL SUCH TIME AS THAT PERSON OR ANY AFFILIATE OR ASSOCIATE OF THAT
PERSON PURCHASES OR OTHERWISE BECOMES THE BENEFICIAL OWNER OF ADDITIONAL SHARES
OF VOTING STOCK CONSTITUTING 1% OR MORE OF THE COMBINED VOTING POWER OF THE
VOTING STOCK THEN OUTSTANDING, OR ANY OTHER PERSON (OR PERSONS) WHO IS (OR
COLLECTIVELY ARE) THE BENEFICIAL OWNER OF SHARES OF VOTING STOCK CONSTITUTING 1%
OR MORE OF THE COMBINED VOTING POWER OF THE VOTING STOCK THEN OUTSTANDING
BECOMES AN AFFILIATE OR ASSOCIATE OF THAT PERSON, UNLESS, IN EITHER SUCH CASE,
THAT PERSON, TOGETHER WITH ALL ITS AFFILIATES AND ASSOCIATES, IS NOT THEN THE
BENEFICIAL OWNER OF VOTING STOCK REPRESENTING 40% OR MORE OF THE VOTING STOCK
THEN OUTSTANDING; OR

 

(B)           THE FOLLOWING INDIVIDUALS CEASE FOR ANY REASON TO CONSTITUTE A
MAJORITY OF THE NUMBER OF DIRECTORS THEN SERVING:  INDIVIDUALS WHO, ON THE DATE
THE PLAN FIRST BECAME EFFECTIVE, CONSTITUTE THE BOARD; AND ANY NEW DIRECTOR
(OTHER THAN A DIRECTOR WHOSE INITIAL ASSUMPTION OF OFFICE IS IN CONNECTION WITH
AN ACTUAL OR THREATENED ELECTION CONTEST RELATING TO THE ELECTION OF DIRECTORS
OF THE COMPANY) WHOSE APPOINTMENT OR ELECTION BY THE BOARD OF THE COMPANY OR
NOMINATION FOR ELECTION BY THE COMPANY’S STOCKHOLDERS WAS APPROVED OR
RECOMMENDED BY A MAJORITY VOTE OF THE DIRECTORS THEN STILL IN OFFICE WHO EITHER
WERE DIRECTORS ON THE DATE THE PLAN FIRST BECAME EFFECTIVE OR WHOSE APPOINTMENT,
ELECTION OR NOMINATION FOR ELECTION WAS PREVIOUSLY SO APPROVED OR RECOMMENDED;
OR

 

(C)           THERE IS CONSUMMATED A MERGER OR CONSOLIDATION OF THE COMPANY OR
ANY DIRECT OR INDIRECT SUBSIDIARY OF THE COMPANY WITH OR INTO ANY OTHER
CORPORATION, OTHER THAN: (I) A MERGER OR CONSOLIDATION WHICH RESULTS IN THE
VOTING STOCK OUTSTANDING IMMEDIATELY PRIOR TO SUCH MERGER OR CONSOLIDATION
CONTINUING TO REPRESENT (EITHER BY REMAINING OUTSTANDING OR BY BEING CONVERTED
INTO VOTING SECURITIES OF THE SURVIVING ENTITY OR ANY PARENT THEREOF) AT LEAST
50% OF THE COMBINED VOTING POWER OF THE SECURITIES WHICH ENTITLE THE HOLDER
THEREOF TO VOTE GENERALLY IN THE ELECTION OF MEMBERS OF THE BOARD OF DIRECTORS
OR SIMILAR GOVERNING BODY OF THE COMPANY OR SUCH SURVIVING ENTITY OR ANY PARENT
THEREOF OUTSTANDING IMMEDIATELY AFTER SUCH MERGER OR CONSOLIDATION; OR (II) A
MERGER OR CONSOLIDATION EFFECTED TO IMPLEMENT A RECAPITALIZATION OF THE COMPANY
(OR SIMILAR TRANSACTION) IN WHICH NO PERSON (OTHER THAN AN EXEMPT PERSON) IS OR
BECOMES THE BENEFICIAL OWNER OF VOTING STOCK (NOT INCLUDING, FOR PURPOSES OF
THIS DETERMINATION, ANY VOTING STOCK ACQUIRED DIRECTLY FROM THE COMPANY OR ITS
SUBSIDIARIES AFTER THE DATE THE PLAN FIRST BECAME EFFECTIVE OTHER THAN IN
CONNECTION WITH THE ACQUISITION BY THE COMPANY OR ONE OF ITS SUBSIDIARIES OF A
BUSINESS) REPRESENTING 40% OR MORE OF THE COMBINED VOTING POWER OF THE VOTING
STOCK THEN OUTSTANDING; OR

 

(D)           THE STOCKHOLDERS OF THE COMPANY APPROVE A PLAN OF COMPLETE
LIQUIDATION OR DISSOLUTION OF THE COMPANY, OR THERE IS CONSUMMATED AN AGREEMENT
FOR THE SALE OR DISPOSITION BY THE COMPANY OF ALL OR SUBSTANTIALLY ALL OF THE
COMPANY’S ASSETS, OTHER THAN A SALE OR DISPOSITION BY THE COMPANY OF ALL OR
SUBSTANTIALLY ALL OF THE COMPANY’S ASSETS TO AN ENTITY, OF WHICH AT LEAST 50% OF
THE COMBINED VOTING POWER OF THE SECURITIES WHICH ENTITLE THE HOLDER THEREOF TO
VOTE GENERALLY IN THE ELECTION OF MEMBERS OF THE BOARD OF DIRECTORS OR SIMILAR
GOVERNING BODY OF SUCH ENTITY ARE OWNED BY STOCKHOLDERS OF THE

 

9

--------------------------------------------------------------------------------

 

COMPANY IN SUBSTANTIALLY THE SAME PROPORTIONS AS THEIR OWNERSHIP OF THE VOTING
STOCK IMMEDIATELY PRIOR TO SUCH SALE OR DISPOSITION.

 

5.5           EFFECTIVE DATE OF A CHANGE IN CONTROL.  THE “EFFECTIVE DATE OF A
CHANGE IN CONTROL” SHALL BE:

 

(A)           THE FIRST DATE THAT THE DIRECT OR INDIRECT OWNERSHIP OF 40% OR
MORE COMBINED VOTING POWER OF THE COMPANY’S OUTSTANDING SECURITIES RESULTS IN A
CHANGE IN CONTROL AS DESCRIBED IN SECTION 4.2(A);

 

(B)           THE DATE OF THE ELECTION OF DIRECTORS THAT RESULTS IN A CHANGE IN
CONTROL AS DESCRIBED IN SECTION 4.2(B);

 

(C)           THE EFFECTIVE DATE OF THE MERGER OR CONSIDERATION THAT RESULTS IN
A CHANGE IN CONTROL AS DESCRIBED IN SECTION 4.2(C); OR

 

(D)           THE DATE OF STOCKHOLDER APPROVAL THAT RESULTS IN A CHANGE IN
CONTROL AS DESCRIBED IN SECTION 4.2(D).

 

VI.           RIGHTS OF PARTICIPANTS

 

6.1           LIMITATION OF RIGHTS.  NOTHING IN THE PLAN SHALL BE CONSTRUED TO:

 

(A)           GIVE ANY EMPLOYEE ANY RIGHT TO PARTICIPATE IN THE PLAN IN THE
ABSENCE OF A SPECIFIC DESIGNATION BY THE COMMITTEE OF THAT EMPLOYEE AS A
PARTICIPANT IN ACCORDANCE WITH SECTIONS 3.1 AND 3.2;

 

(B)           LIMIT IN ANY WAY THE RIGHT OF THE PARTNERSHIP OR ANY AFFILIATE TO
TERMINATE A PARTICIPANT’S EMPLOYMENT WITH THE PARTNERSHIP OR ANY AFFILIATE AT
ANY TIME;

 

(C)           GIVE A PARTICIPANT OR ANY SPOUSE OF A DECEASED PARTICIPANT ANY
INTEREST IN ANY FUND OR ANY SPECIFIC ASSET OR ASSETS OF THE PARTNERSHIP OR ANY
AFFILIATE; OR

 

(D)           BE EVIDENCE OF ANY AGREEMENT OR UNDERSTANDING, EXPRESS OR IMPLIED,
THAT THE PARTNERSHIP OR ANY AFFILIATE WILL EMPLOY A PARTICIPANT IN ANY
PARTICULAR POSITION OR AT ANY PARTICULAR RATE OF REMUNERATION.

 

6.2           NON-ALIENATION OF BENEFITS.  NO RIGHT OR BENEFIT UNDER THE PLAN
SHALL BE SUBJECT TO ANTICIPATION, ALIENATION, SALE, ASSIGNMENT, PLEDGE,
ENCUMBRANCE OR CHARGE, AND ANY ATTEMPT TO ANTICIPATE, ALIENATE, SELL, ASSIGN,
PLEDGE, ENCUMBER OR CHARGE THE SAME WILL BE VOID.  NO RIGHT OR BENEFIT HEREUNDER
SHALL IN ANY MANNER BE LIABLE FOR OR SUBJECT TO ANY DEBTS, CONTRACTS,
LIABILITIES OR TORTS OF THE PERSON ENTITLED TO SUCH BENEFITS.

 

6.3           PREREQUISITES TO BENEFITS.  NO PARTICIPANT, OR ANY PERSON CLAIMING
THROUGH A PARTICIPANT, SHALL HAVE ANY RIGHT OR INTEREST IN THE PLAN, OR IN ANY
BENEFITS HEREUNDER, UNLESS AND UNTIL ALL OF THE TERMS, CONDITIONS AND PROVISIONS
OF THE PLAN WHICH AFFECT SUCH PARTICIPANT OR SUCH OTHER PERSON SHALL HAVE BEEN
COMPLIED WITH AS SPECIFIED HEREIN.

 

10

--------------------------------------------------------------------------------

 

VII.         MISCELLANEOUS

 

7.1           RELEASE AND FULL SETTLEMENT.  ANYTHING TO THE CONTRARY HEREIN
NOTWITHSTANDING, AS A CONDITION TO THE RECEIPT OF ANY SEVERANCE PAYMENTS OR
BENEFITS UNDER THE PLAN, A PARTICIPANT WHOSE EMPLOYMENT HAS BEEN SUBJECT TO AN
INVOLUNTARY TERMINATION SHALL FIRST EXECUTE A WAIVER AND RELEASE, IN
SUBSTANTIALLY THE FORM ATTACHED HERETO AS EXHIBIT B.

 

7.2           AMENDMENT OR TERMINATION OF THE PLAN.  UPON AUTHORIZATION BY THE
BOARD, THE PARTNERSHIP MAY AMEND OR TERMINATE THE PLAN AT ANY TIME; PROVIDED,
HOWEVER, THAT NO AMENDMENT OR TERMINATION THAT WOULD ADVERSELY AFFECT THE RIGHTS
OF ANY PARTICIPANT UNDER THE PLAN SHALL BE MADE WITHOUT THE CONSENT OF SUCH
PARTICIPANT, EXCEPT AS EXPRESSLY PROVIDED IN SECTION 3.3.

 

7.3           CASH SEVERANCE PAYMENT IN LIEU OF OTHER COMPENSATION. 
NOTWITHSTANDING ANYTHING IN THE PLAN TO THE CONTRARY, THE AMOUNT OF ANY CASH
SEVERANCE BENEFIT CALCULATED PURSUANT TO SECTION 4.1 OR SECTION 5.1 OF THE PLAN,
AS APPLICABLE, SHALL SUPERSEDE, AND BE AWARDED IN LIEU OF, ANY CASH COMPENSATION
PAYABLE TO THE PARTICIPANT BY THE PARTNERSHIP OR ANY AFFILIATE ON ACCOUNT OF THE
TERMINATION OF THE PARTICIPANT’S EMPLOYMENT, PURSUANT TO (A) A WRITTEN
EMPLOYMENT AGREEMENT WITH THE PARTNERSHIP OR ANY AFFILIATE, (B) ANOTHER
SEVERANCE PLAN OR PROGRAM OF THE PARTNERSHIP OR ANY AFFILIATE, OR (C) ANY OTHER
OBLIGATION, WHETHER BY CONTRACT, APPLICABLE LAW OR OTHERWISE, OF THE
PARTNERSHIP, OR ANY OTHER INDIVIDUAL OR ENTITY TO PROVIDE A PAYMENT TO SUCH
PARTICIPANT IN THE EVENT OF AN INVOLUNTARY TERMINATION OF SUCH PARTICIPANT’S
EMPLOYMENT WITH THE PARTNERSHIP OR ANY AFFILIATE.

 

7.4           REDUCTION OF CASH SEVERANCE PAYMENT.  NOTWITHSTANDING ANYTHING IN
THE PLAN TO THE CONTRARY, THE AMOUNT OF ANY CASH SEVERANCE BENEFIT OTHERWISE
PAYABLE TO A PARTICIPANT SHALL BE REDUCED BY ANY MONIES OWED BY THE PARTICIPANT
TO THE PARTNERSHIP OR ANY AFFILIATE, INCLUDING, BUT NOT LIMITED TO, ANY
OVERPAYMENTS MADE TO THE PARTICIPANT BY THE PARTNERSHIP OR ANY AFFILIATE, AND
THE BALANCE OF ANY LOAN BY THE PARTNERSHIP OR ANY AFFILIATE TO THE PARTICIPANT
THAT IS OUTSTANDING AT THE TIME THAT THE CASH SEVERANCE PAYMENT IS MADE.

 

7.5           TAXES.  THE PARTNERSHIP MAY DEDUCT APPLICABLE TAXES WITH RESPECT
TO THE PAYMENT OF ANY BENEFIT UNDER THE PLAN.

 

7.6           PARACHUTE PAYMENT LIMITATION.  NOTWITHSTANDING ANY CONTRARY
PROVISION OF THE PLAN, THE AGGREGATE PRESENT VALUE OF ALL PARACHUTE PAYMENTS
PAYABLE TO OR FOR THE BENEFIT OF A PARTICIPANT, WHETHER PAYABLE PURSUANT TO THE
PLAN OR OTHERWISE, SHALL BE LIMITED TO THREE TIMES THE PARTICIPANT’S BASE AMOUNT
LESS ONE DOLLAR AND, TO THE EXTENT NECESSARY, THE PAYMENT OF BENEFITS UNDER THE
PLAN SHALL BE REDUCED.  FOR PURPOSES OF THIS SECTION 7.6, THE TERMS “PARACHUTE
PAYMENT,” “BASE AMOUNT” AND “PRESENT VALUE” SHALL HAVE THE MEANINGS ASSIGNED
THERETO UNDER SECTION 280G OF THE CODE.  IT IS THE INTENTION OF THIS SECTION
7.6, IN THE ABSENCE OF ANY AGREEMENT WITH THE PARTICIPANT TO THE CONTRARY, TO
AVOID EXCISE TAXES ON THE PARTICIPANT UNDER SECTION 4999 OF THE CODE OR THE
DISALLOWANCE OF A DEDUCTION TO THE COMPANY OR ANY AFFILIATE PURSUANT TO SECTION
280G OF THE CODE.

 

7.7           APPLICABLE LAWS.  THE PLAN SHALL BE CONSTRUED, ADMINISTERED AND
GOVERNED IN ALL RESPECTS UNDER THE LAWS OF THE STATE OF TEXAS.

 

11

--------------------------------------------------------------------------------

 

7.8           UNFUNDED PLAN.  THE BENEFITS PROVIDED HEREIN SHALL BE UNFUNDED AND
SHALL BE PROVIDED FROM THE PARTNERSHIP’S GENERAL ASSETS.

 

7.9           CODE SECTION 409A.  THE PARTNERSHIP INTENDS THAT THE PLAN COMPLY
IN FORM AND OPERATION WITH THE PROVISIONS OF SECTION 409A OF THE CODE AND
RELATED REGULATIONS AND TREASURY PRONOUNCEMENTS (“SECTION 409A”) TO THE EXTENT
APPLICABLE.  NOTWITHSTANDING ANYTHING IN THE PLAN TO THE CONTRARY, IF ANY PLAN
PROVISION OR PAYMENT MADE UNDER THE PLAN WOULD RESULT IN THE IMPOSITION OF AN
EXCISE TAX UNDER SECTION 409A, THE PARTNERSHIP SHALL USE ITS BEST EFFORTS TO
REFORM SUCH PROVISION OR PAYMENT IN A MANNER THE PARTNERSHIP DETERMINES IS
APPROPRIATE TO COMPLY WITH SECTION 409A, AND NO ACTION TAKEN WITH THE EXPRESS
PURPOSE OF COMPLYING WITH SECTION 409A SHALL BE DEEMED TO ADVERSELY AFFECT THE
RIGHTS OF ANY PARTICIPANT UNDER THE PLAN.

 

 

                                IN WITNESS WHEREOF, the Partnership has executed
the Plan this 5th day of August, 2005, but effective as of April 1, 2005.

 

 

PIONEER DRILLING SERVICES, LTD.

 

 

 

 

 

 

 

By:

PDC MGMT. CO,

 

 

its general partner

 

 

 

 

 

By:

 /s/ William D. Hibbetts

 

 

Name:

William D. Hibbetts

 

 

Title:

Senior Vice President, Chief

 

 

 

Financial Officer & Secretary

 

12

--------------------------------------------------------------------------------

 

EXHIBIT A

 

PIONEER DRILLING SERVICES, LTD. EXECUTIVE SEVERANCE PLAN

 

PARTICIPATION CERTIFICATE

 

This Participation Certificate given this          day of               ,
              , by Pioneer Drilling Services, Ltd., a Texas limited partnership
(the “Partnership”), and the Committee to                          
(“Employee”), with capitalized terms used but not defined herein having the
respective meanings assigned to such terms in the Pioneer Drilling Services,
Ltd. Executive Severance Plan unless otherwise stated.

 

1.             THE COMMITTEE HEREBY DESIGNATES EMPLOYEE AS A LEVEL        
PARTICIPANT IN THE PLAN EFFECTIVE AS OF
                                            .

 

2.             UPON EMPLOYEE’S TERMINATION OF EMPLOYMENT UNDER THE CIRCUMSTANCES
AND SUBJECT TO THE TERMS AND CONDITIONS DESCRIBED ARTICLE IV OF THE PLAN,
EMPLOYEE WILL BE ENTITLED TO THE BENEFITS SPECIFIED IN ARTICLE IV OF THE PLAN

 

3.             UPON EMPLOYEE’S TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN
CONTROL OF THE COMPANY UNDER THE CIRCUMSTANCES AND SUBJECT TO THE TERMS AND
CONDITIONS DESCRIBED IN ARTICLE V OF THE PLAN, EMPLOYEE WILL BE ENTITLED TO THE
BENEFITS SPECIFIED IN ARTICLE V OF THE PLAN.

 

4.             AN EMPLOYEE’S STATUS AS A PARTICIPANT SHALL TERMINATE AT SUCH
TIME AS MAY BE DETERMINED BY THE COMMITTEE, PROVIDED SUCH PARTICIPANT SHALL BE
GIVEN NOTICE OF SUCH TERMINATION OF STATUS AS A PARTICIPANT BY THE COMMITTEE AT
LEAST ONE YEAR PRIOR TO THE EFFECTIVENESS OF SUCH TERMINATION; PROVIDED,
HOWEVER, THAT IN THE CASE OF AN EMPLOYEE WHO IS A PARTICIPANT IMMEDIATELY PRIOR
TO THE EFFECTIVE DATE OF A CHANGE IN CONTROL, SUCH EMPLOYEE’S STATUS AS A
PARTICIPANT MAY NOT BE TERMINATED WITHOUT HIS OR HER WRITTEN CONSENT AT ANY TIME
WITHIN TWO YEARS OF THE EFFECTIVE DATE OF SUCH CHANGE IN CONTROL.

 

 

 

 

Compensation Committee

 

 

 

 

 

 

 

 

By:

 

 

--------------------------------------------------------------------------------

 

EXHIBIT B

 

PIONEER DRILLING SERVICES, LTD. EXECUTIVE SEVERANCE PLAN

 

FORM OF WAIVER AND RELEASE

 

Pioneer Drilling Services, Ltd. has offered to pay me certain benefits (the
“Benefits”) pursuant to the Pioneer Drilling Services, Ltd. Executive Severance
Plan (the “Plan”).  The Benefits are offered to me subject to my agreement,
among other things, to waive any and all of my claims against and release
Pioneer Drilling Services, Ltd. and its predecessors, successors and assigns
(collectively referred to as the “Partnership”), all of the affiliates
(including parents and subsidiaries) of the Partnership (collectively referred
to as the “Affiliates”), and the Partnership’s and Affiliates’ directors and
officers, employees and agents, counsel, insurers, employee benefit plans and
the fiduciaries and agents of said plans (collectively, with the Partnership and
Affiliates, referred to as the “Corporate Group”) from any and all claims,
demands, actions, liabilities and damages arising out of or relating in any way
to my employment with or separation from the Partnership or any Affiliate
(including any act or failure to act that constitutes ordinary or gross
negligence or reckless or willful, wanton misconduct on the part of the
Partnership or any Affiliate); provided, however, that this Waiver and Release
shall not apply to (i) any claim or cause of action to enforce or interpret any
provision contained in the Plan or (ii) any claims for indemnification under any
charter documents or bylaws of the Partnership or any Affiliate.  I have read
this Waiver and Release and the Plan (which, together, are referred to herein as
the “Plan Materials”) and the Plan is incorporated herein by reference.  The
provision of the Benefits is voluntary on the part of the Partnership and is not
required by any legal obligation other than the Plan.  I choose to accept this
offer.

 

I understand that signing this Waiver and Release is an important legal act. I
acknowledge that the Partnership has advised me to consult an attorney before
signing this Waiver and Release. I understand that, in order to be eligible for
the Benefits, I must sign (and return to Human Resources Manager, Pioneer
Drilling Company, 1250 N.E. Loop 410, Suite 1000, San Antonio, Texas 78209) this
Waiver and Release by 5:00 p.m. on                . I acknowledge that I have
been given at least 21 days to consider whether to sign and execute the Release.

 

In exchange for the payment to me of Benefits, I (1) agree not to sue in any
local, state and/or federal court regarding or relating in any way to my
employment with or separation from the Partnership or any Affiliate and (2)
knowingly and voluntarily waive all claims and release the Corporate Group from
any and all claims, demands, actions, liabilities and damages, whether known or
unknown, arising out of or relating in any way to my employment with or
separation from the Partnership or any Affiliate, except to the extent that my
rights are vested under the terms of employee benefit plans sponsored by the
Partnership or any Affiliate and except with respect to such rights or claims as
may arise after the date this Waiver and Release is executed.  The claims
subject to this Waiver and Release include, but are not limited to, claims and
causes of action under: Title VII of the Civil Rights Act of 1964, as amended
(“Title VII”); the Age Discrimination in Employment Act of 1967, as amended,
including the Older Workers

 

--------------------------------------------------------------------------------

 

Benefit Protection Act of 1990 (“ADEA”); the Civil Rights Act of 1866, as
amended; the Civil Rights Act of 1991; the Americans with Disabilities Act of
1990 (“ADA”); the Energy Reorganization Act, as amended, 42 U.S.C. § 5851; the
Workers Adjustment and Retraining Notification Act of 1988; the Pregnancy
Discrimination Act of 1978; the Employee Retirement Income Security Act of 1974,
as amended; the Family and Medical Leave Act of 1993; the Fair Labor Standards
Act; the Occupational Safety and Health Act; the Texas Labor Code § 21.001 et
seq.; the Texas Labor Code; claims in connection with workers’ compensation or
“whistle blower” statutes; and/or contract, tort, defamation, slander, wrongful
termination or any other state or federal regulatory, statutory or common law. 
Further, I expressly represent that no promise or agreement which is not
expressed in the Plan Materials has been made to me in executing this Waiver and
Release, and that I am relying on my own judgment in executing this Waiver and
Release, and that I am not relying on any statement or representation of the
Partnership, any of the Affiliates or any other member of the Corporate Group or
any of their agents.  I agree that this Waiver and Release is valid, fair,
adequate and reasonable, is with my full knowledge and consent, was not procured
through fraud, duress or mistake and has not had the effect of misleading,
misinforming or failing to inform me.

 

I acknowledge that payment of Benefits to me by the Partnership is not an
admission by the Partnership or any other member of the Corporate Group that
they engaged in any wrongful or unlawful act or that the Partnership or any
member of the Corporate Group violated any federal or state law or regulation.

 

Should any of the provisions set forth in this Waiver and Release be determined
to be invalid by a court, agency or other tribunal of competent jurisdiction, it
is agreed that such determination shall not affect the enforceability of other
provisions of this Waiver and Release.  I acknowledge that this Waiver and
Release and the other Plan Materials set forth the entire understanding and
agreement between me and the Partnership or any other member of the Corporate
Group concerning the subject matter of this Waiver and Release and supersede any
prior or contemporaneous oral and/or written agreements or representations, if
any, between me and the Partnership or any other member of the Corporate Group. 
I understand that for a period of seven calendar days following the date that I
sign this Waiver and Release, I may revoke my acceptance of the offer referred
to above, provided that my written statement of revocation is received on or
before that seventh day by Human Resources Manager, Pioneer Drilling Company,
1250 N.E. Loop 410, Suite 1000, San Antonio, Texas 78209, in which case the
Waiver and Release will not become effective.  In the event I revoke my
acceptance of the offer referred to above, the Partnership shall have no
obligation to provide me the Benefits.  I understand that failure to revoke my
acceptance of the offer referred to above within seven calendar days from the
date I sign this Waiver and Release will result in this Waiver and Release being
permanent and irrevocable.

 

I acknowledge that I have read this Waiver and Release, I have had an
opportunity to ask questions and have it explained to me and that I understand
that this Waiver and Release will have the effect of knowingly and voluntarily
waiving any action I might pursue, including breach of contract, personal
injury, retaliation, discrimination on the basis of race, age, sex, national
origin or disability and any other claims arising prior to the date of this
Waiver and Release. By execution of this document, I do not waive or release or
otherwise relinquish any

 

--------------------------------------------------------------------------------

 

legal rights I may have which are attributable to or arise out of acts,
omissions or events of the Partnership or any other member of the Corporate
Group which occur after the date of the execution of this Waiver and Release.

 

 

 

 

 

 

 

Employee’s Printed Name

 

 

Partnership Representative

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee’s Signature

 

 

Partnership Execution Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee’s Signature Date

 

 

Employee’s Social Security Number

 

 

--------------------------------------------------------------------------------