Exhibit 10.3

 

MIDSTATES PETROLEUM COMPANY, INC.

 

PERFORMANCE STOCK UNIT AGREEMENT

 

PURSUANT TO THE

 

2016 LONG TERM INCENTIVE PLAN

 

(PERFORMANCE VESTING)

 

*  *  *  *  *

 

Participant:  David J. Sambrooks

 

Grant Date:  November 1, 2017

 

Target Number of Performance Stock Units Granted: 135,778

 

*  *  *  *  *

 

THIS PERFORMANCE STOCK UNIT AWARD AGREEMENT (this “Agreement”), dated as of the
Grant Date specified above, is entered into by and between MIDSTATES PETROLEUM
COMPANY, INC., a corporation organized in the State of Delaware (the “Company”),
and the Participant specified above, pursuant to the Midstates Petroleum
Company, Inc. 2016 Long Term Incentive Plan, as in effect and as amended from
time to time (the “Plan”), which is administered by the Committee (as defined in
the Plan); and

 

WHEREAS, it has been determined under the Plan that it would be in the best
interests of the Company to grant the Performance Stock Units (“PSUs”) provided
herein to the Participant.

 

NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto hereby
mutually covenant and agree as follows:

 

1.                                      Incorporation By Reference; Plan
Document Receipt.  This Agreement is subject in all respects to the terms and
provisions of the Plan (including, without limitation, any amendments thereto
adopted at any time and from time to time unless such amendments are expressly
intended not to apply to the Award provided hereunder), all of which terms and
provisions are made a part of and incorporated in this Agreement as if they were
each expressly set forth herein.  Except as provided otherwise herein, any
capitalized term not defined in this Agreement shall have the same meaning as is
ascribed thereto in the Plan.  The Participant hereby acknowledges receipt of a
true copy of the Plan and that the Participant has read the Plan carefully and
fully understands its content.  In the event of any conflict between the terms
of this Agreement and the terms of the Plan, the terms of the Plan shall
control.

 

2.                                      Grant of Performance Stock Unit Award. 
The Company hereby grants to the Participant, as of the Grant Date specified
above, the number of PSUs specified above.  Except as

 

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

 

otherwise provided by the Plan, the Participant agrees and understands that
nothing contained in this Agreement provides, or is intended to provide, the
Participant with any protection against potential future dilution of the
Participant’s interest in the Company for any reason, and no adjustments shall
be made for dividends in cash or other property, distributions or other rights
in respect of the shares of Stock underlying the PSUs, except as otherwise
specifically provided for in the Plan or this Agreement.

 

3.                                      Vesting.

 

(a)                                 Subject to the provisions of Sections 3(b) -
3(h) hereof, the PSUs subject to this Award shall vest, or be forfeited, at the
conclusion of the Performance Period if, and to the extent, the Performance
Conditions (each, as defined below) are satisfied; provided the Participant
remains employed by the company through the conclusion of the Performance
Period.

 

(i)                                     For purposes of this Agreement,
“Performance Period” shall mean the period commencing on October 25, 2017 and
ending on October 31, 2020.

 

(ii)                                  For purposes of this Agreement,
“Performance Conditions” shall mean, with respect to 50% of the PSUs subject to
this Award, the Company’s cumulative total shareholder return “TSR” and with
respect to the remaining 50% of the PSUs subject to this Award, the Company’s
“Relative TSR” (each, as defined below) as follows:

 

 

 

Actual TSR for the
Performance Period

 

Vesting Level as % of
one-half (1/2) of
Target Number of
PSUs

 

Relative TSR for the
Performance Period

 

Vesting Level as %
of one-half (1/2)
Target Number of
PSUs

 

Maximum

 

25% or Greater Compounded Annual Growth Rate

 

120

%

Top 5% or Better in Relative TSR to Peer Group

 

120

%

Target

 

20% or Greater Compounded Annual Growth Rate

 

100

%

Top 33.3% or Better in Relative TSR to Peer Group

 

100

%

Threshold

 

15% Compounded Annual Growth Rate

 

50

%

Top 50% or Better in Relative TSR to Peer Group

 

50

%

Below Threshold

 

Less Than 15% Compounded Annual Growth Rate

 

0

%

Less Than 50% of Relative TSR to Peer Group

 

0

%

 

(b)                                 To the extent that actual TSR or Relative
TSR for the Performance Period is between specified vesting levels, the portion
of the PSUs that shall become vested based on actual TSR and Relative TSR
performance shall be determined on a pro rata basis using straight line
interpolation; provided that the maximum portion of the PSUs that may

 

2

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

 

become vested based on actual cumulative TSR or Relative TSR for the Performance
Period shall not exceed 120% of the Target Number of PSUs.

 

(c)                                  Certain Definitions.

 

(i)                                     For purposes of this Agreement, “TSR”
shall mean the change in the value of Stock over the Performance Period, taking
into account both Stock price appreciation and the reinvestment of dividends. 
The beginning and ending Stock prices will be based on a 20-day average Stock
price.  TSR will be calculated on a compound annualized basis over the
Performance Period.

 

(ii)                                  For purposes of this Agreement, “Relative
TSR” shall mean the percentile rank of the Company’s TSR compared to the TSR of
the Peer Group over the performance period.  If any of the companies in the peer
group are no longer publicly traded at the end of the Performance Period due to
bankruptcy, they will continue to be included in the Relative TSR calculation by
force ranking them at the bottom of the array.  If any companies are no longer
publicly traded due to acquisition, they will be excluded from the calculation.

 

(iii)                               For purposes of this Agreement, “Peer Group”
shall mean the following: Approach Resources, Inc.; Bill Barrett Corporation;
Bonanza Creek Energy, Inc.; Clayton Williams Energy, Inc.; Comstock
Resources, Inc.; Goodrich Petroleum Corporation; Halcon Resources Corporation;
Jones Energy, Inc.; Magnum Hunter Resources; Matador Resources Company; Parsley
Energy, Inc.; PDC Energy, Inc.; Penn Virginia Corporation; RSP Permian, Inc.;
Sanchez Energy Corporation; Stone Energy Corporation; and SilverBow
Resources, Inc.

 

(d)                                 Termination Without Cause, due to death or
Disability; Resignation for Good Reason.  In the event of the Participant’s
Termination by the Company without Cause, due to the Participant’s death or
Disability or by the Participant for Good Reason (each, a “Qualifying
Termination”), Participant shall be eligible to receive, subject to the
satisfaction of all applicable performance-based vesting conditions, a pro-rata
portion of the PSUs, based on actual performance and prorated based on the
number of days during the Performance Period during which the Participant was an
employee of the Company.

 

(e)                                  Change in Control.

 

(i)                                     Committee Discretion to Adjust Awards. 
Upon a Change in Control the Committee, acting in its sole discretion without
the consent or approval of the Participant, may affect one or more of the
following alternatives: (A) accelerate the vesting of all or a portion of the
PSUs, (B) cancel all PSUs and pay to the Participant an amount of cash, shares
of stock, or a combination thereof equal to the Change in Control Price for each
share subject to the Target Number of PSUs, (C) provide for the assumption or
substitution or continuation of PSUs by the successor company or a parent or
subsidiary of the successor company, (D) certify the extent to which the
Performance Conditions have been achieved prior to the conclusion of the
Performance Period based on all information reasonably available to the
Committee

 

3

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

 

prior to the Change in Control, or (E) make such adjustments to PSUs then
outstanding as the Committee deems appropriate to reflect such Change in
Control; provided, however, that the Committee may determine in its sole
discretion that no adjustment is necessary to PSUs then outstanding.

 

(ii)                                  Termination of Employment.  All unvested
PSUs shall become immediately and fully vested at the Target Number of PSUs set
forth above upon the occurrence of a Qualifying Termination on or within twelve
(12) months following a Change in Control.

 

(f)                                   Committee Discretion.  In addition to the
foregoing, the Committee may, in its sole discretion, (i) accelerate vesting of
the PSUs at any time and for any reason and (ii) reduce the number of shares of
Stock otherwise deliverable in respect of PSUs following the conclusion of the
Performance Period based on the Committee’s assessment of overall Company
performance or other factors the Committee deems appropriate to take into
consideration.

 

(g)                                  Forfeiture.  Subject to the terms of this
Section 3, all unvested PSUs (taking into account any vesting that may occur
upon the Participant’s Termination in accordance with Section 3(d) and
Section 3(e) hereof) shall be immediately forfeited upon the Participant’s
Termination for any reason.

 

4.                                      Delivery of Shares.

 

(a)                                 General.  Following the conclusion of the
Performance Period the Committee shall certify the extent to which the
Performance Conditions have been achieved and the extent to which the PSUs shall
vest hereunder.  Subject to the provisions of Section 4(b) and
Section 4(c) hereof, following the Committee’s certification and within sixty
(60) days following the conclusion of the Performance Period the Participant
shall receive the number of shares of Stock that correspond to the number of
PSUs that have become vested, less any shares of Stock withheld by the Company
pursuant to Section 7 hereof. Notwithstanding the foregoing, in the event of a
Qualifying Termination in accordance with Section 3(e) hereof and subject to the
provisions of Section 4(b) and Section 4(c) hereof, the Participant shall
receive the number of shares of Stock that correspond to the number of PSUs that
have become vested, less any shares of Stock withheld by the Company pursuant to
Section 7 hereof, within ten (10) days following the Participant’s Qualifying
Termination.  For the avoidance of doubt, any portion of the PSUs that do not
become vested in accordance with this Section 4(a) will be forfeited following
the conclusion of the Performance Period.

 

(b)                                 Administrative Provisions.  Any portion of
the PSUs that does not become vested in accordance with the provisions of this
Agreement shall be automatically forfeited and cancelled for no value without
any consideration being paid therefor and otherwise without any further action
of the Company whatsoever.  The Committee shall in good faith make all
determinations necessary or appropriate to determine whether the performance
vesting conditions hereunder have been satisfied.  The Committee’s
determinations shall be final, binding and conclusive upon all parties, absent
manifest error or bad faith.

 

4

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

 

(c)                                  Blackout Periods. If the Participant is
subject to any Company “blackout” policy or other trading restriction imposed by
the Company on the date such distribution would otherwise be made pursuant to
Section 4(a) hereof, such distribution shall be instead made on the earlier of
(i) the date that the Participant is not subject to any such policy or
restriction and (ii) the later of (A) the end of the calendar year in which such
distribution would otherwise have been made and (B) a date that is immediately
prior to the expiration of two and one-half months following the date such
distribution would otherwise have been made hereunder.

 

(d)                                 Dividends; Rights as Stockholder.  Cash
dividends on the number of shares of Stock issuable hereunder shall be credited
to a dividend book entry account on behalf of the Participant with respect to
each PSU granted to the Participant; provided that such cash dividends shall not
be deemed to be reinvested in shares of Stock and shall be held uninvested and
without interest and paid in cash at the same time (and to the same extent) that
the shares of Stock underlying the PSUs are delivered to the Participant in
accordance with the provisions hereof.  Stock dividends on shares of Stock shall
be credited to a dividend book entry account on behalf of the Participant with
respect to each PSU granted to the Participant; provided that such stock
dividends shall be paid in shares of Stock at the same time (and to the same
extent) that the shares of Stock underlying the PSUs are delivered to the
Participant in accordance with the provisions hereof.  Except as otherwise
provided herein, the Participant shall have no rights as a stockholder with
respect to any shares of Stock covered by any PSU unless and until the
Participant has become the holder of record of such shares.

 

5.                                      Non-Transferability.  The PSUs, and any
rights and interests with respect thereto, issued under this Agreement and the
Plan shall not be sold, exchanged, transferred, assigned, pledged, encumbered or
otherwise disposed of or hypothecated in any way by the Participant (or any
beneficiary of the Participant who holds the PSUs as a result of a Transfer by
will or by the laws of descent and distribution), other than in accordance with
the provisions of Section 10(a) of the Plan.

 

6.                                      Governing Law; Jurisdiction and Venue. 
All questions arising with respect to the provisions of this Agreement shall be
determined by application of the laws of Delaware, without giving any effect to
any conflict of law provisions thereof, except to the extent Delaware state law
is preempted by federal law. The obligation of the Company to sell and deliver
Stock hereunder is subject to applicable laws and to the approval of any
governmental authority required in connection with the authorization, issuance,
sale, or delivery of such Stock. The Company and the Participant shall
irrevocably and unconditionally (a) submit in any proceeding relating to the
Plan or this Agreement, or for the recognition and enforcement of any judgment
in respect thereof (a “Proceeding”), to the exclusive jurisdiction of the courts
located in Tulsa County, Oklahoma, the court of the United States of America for
the Northern District of Oklahoma, and appellate courts having jurisdiction of
appeals from any of the foregoing, and agree that all claims in respect of any
such Proceeding shall be heard and determined in such Oklahoma State court or,
to the extent permitted by law, in such federal court, (b) consent that any such
Proceeding may and shall be brought in such courts and waives any objection that
the Company and the Participant may now or thereafter have to the venue or
jurisdiction of any such Proceeding in any such court or that such Proceeding
was brought in an inconvenient court and agree not to plead or claim the same,
(c)

 

5

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

 

waive all right to trial by jury in any Proceeding (whether based on contract,
tort or otherwise) arising out of or relating to the Plan or this Agreement,
(d) agree that service of process in any such Proceeding may be effected by
mailing a copy of such process by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such party, in the case
of a Participant, at the Participant’s address shown in the books and records of
the Company or, in the case of the Company, at the Company’s principal offices,
attention General Counsel, and (e) agree that nothing in the Plan shall affect
the right to effect service of process in any other manner permitted by the laws
of the State of Delaware.

 

7.                                      Withholding of Tax.  The Company may
require the Participant to pay to the Company (or the Company’s Subsidiary if
the Participant is an employee of a Subsidiary of the Company), an amount the
Company deems necessary to satisfy its (or its Subsidiary’s) current or future
obligation to withhold federal, state or local income or other taxes that the
Participant incurs as a result of the Award. With respect to any required tax
withholding, the Participant may (a) direct the Company to withhold from the
shares of Stock to be issued to the Participant under this Agreement, an amount
sufficient to satisfy any federal, state, local and foreign taxes of any kind
(including, but not limited to, the Participant’s FICA and SDI obligations)
which the Company, in its sole discretion, deems necessary to be withheld or
remitted to comply with the Code and/or any other applicable law, rule or
regulation with respect to the PSUs (such amount, in the aggregate, the
“Withholding Obligation”), which determination will be based on the shares’ Fair
Market Value at the time such determination is made; (b) deliver to the Company
shares of Stock sufficient to satisfy the Withholding Obligation, based on the
shares’ Fair Market Value at the time such determination is made; or (c) deliver
cash to the Company sufficient to satisfy the Withholding Obligation. Without
limiting the foregoing, the Company shall withhold shares of Stock otherwise
deliverable to the Participant hereunder in order to pay the Participant’s
income and employment taxes due upon vesting of the PSUs, but only to the extent
permitted by applicable accounting rules so as not to affect accounting
treatment.

 

8.                                      Legend.  The Company may at any time
place legends referencing any applicable federal, state or foreign securities
law restrictions on all certificates, if any, representing shares of Stock
issued pursuant to this Agreement.  The Participant shall, at the request of the
Company, promptly present to the Company any and all certificates, if any,
representing shares of Stock acquired pursuant to this Agreement in the
possession of the Participant in order to carry out the provisions of this
Section 8.

 

9.                                      Securities Representations.  This
Agreement is being entered into by the Company in reliance upon the following
express representations and warranties of the Participant.  The Participant
hereby acknowledges, represents and warrants that:

 

(a)                                 The Participant has been advised that the
Participant may be an “affiliate” within the meaning of Rule 144 under the
Securities Act and in this connection the Company is relying in part on the
Participant’s representations set forth in this Section 9.

 

(b)                                 If the Participant is deemed an affiliate
within the meaning of Rule 144 of the Securities Act, the shares of Stock
issuable hereunder must be held indefinitely unless an exemption from any
applicable resale restrictions is available or the Company files an additional
registration statement (or a “re-offer prospectus”) with regard to such shares
of

 

6

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

 

Stock and the Company is under no obligation to register such shares of Stock
(or to file a “re-offer prospectus”).

 

(c)                                  If the Participant is deemed an affiliate
within the meaning of Rule 144 of the Securities Act, the Participant
understands that (i) the exemption from registration under Rule 144 will not be
available unless (A) a public trading market then exists for the Stock of the
Company, (B) adequate information concerning the Company is then available to
the public, and (C) other terms and conditions of Rule 144 or any exemption
therefrom are complied with, and (ii) any sale of the shares of Stock issuable
hereunder may be made only in limited amounts in accordance with the terms and
conditions of Rule 144 or any exemption therefrom.

 

10.                               Entire Agreement; Amendment.  This Agreement,
together with the Plan, contains the entire agreement between the parties hereto
with respect to the subject matter contained herein, and supersedes all prior
agreements or prior understandings, whether written or oral, between the parties
relating to such subject matter.  This Agreement may be amended the Board or by
the Committee at any time (a) if the Board or the Committee determines, in its
sole discretion, that amendment is necessary or advisable in light of any
addition to or change in any federal or state, tax or securities law or other
law or regulation, which change occurs after the Grant Date and by its terms
applies to the Award; or (b) other than in the circumstances described in clause
(a) or provided in the Plan, with the Participant’s consent.

 

11.                               Notices.  All notices required or permitted
under this Agreement must be in writing and personally delivered or sent by
certified mail, return receipt requested, and shall be deemed to be delivered on
the date on which it is actually received by the person to whom it is properly
addressed, in the case of a Participant, at the Participant’s address shown in
the books and records of the Company or, in the case of the Company, at the
Company’s principal offices, attention General Counsel. Any person entitled to
notice hereunder may waive such notice in writing.

 

12.                               No Right to Employment.  Any questions as to
whether and when there has been a Termination and the cause of such Termination
shall be determined in the sole discretion of the Committee.  Nothing in this
Agreement confers upon you the right to continue in the employ of or performing
services for the Company or any Subsidiary, or interfere in any way with the
rights of the Company or any Subsidiary to terminate your employment or service
relationship at any time, subject to any employment agreement or other service
agreement in effect between the Company and the Participant.

 

13.                               Transfer of Personal Data.  The Participant
authorizes, agrees and unambiguously consents to the transmission by the Company
(or any Subsidiary) of any personal data information related to the PSUs awarded
under this Agreement for legitimate business purposes (including, without
limitation, the administration of the Plan).  This authorization and consent is
freely given by the Participant.

 

14.                               Compliance with Laws.  Notwithstanding any
provision of this Agreement to the contrary, the issuance of the PSUs (and the
shares of Stock upon settlement of the PSUs) pursuant to this Agreement will be
subject to compliance with all applicable requirements of federal, state, or
foreign law with respect to such securities and with the requirements of any
stock exchange or

 

7

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

 

market system upon which the Stock may then be listed. No Stock will be issued
hereunder if such issuance would constitute a violation of any applicable
federal, state, or foreign securities laws or other law or regulations or the
requirements of any stock exchange or market system upon which the Stock may
then be listed. In addition, Stock will not be issued hereunder unless (a) a
registration statement under the Securities Act of 1933, as amended (the “Act”),
is at the time of issuance in effect with respect to the shares issued or (b) in
the opinion of legal counsel to the Company, the shares issued may be issued in
accordance with the terms of an applicable exemption from the registration
requirements of the Act. The inability of the Company to obtain from any
regulatory body having jurisdiction the authority, if any, deemed by the
Company’s legal counsel to be necessary to the lawful issuance and sale of any
shares subject to the Award will relieve the Company of any liability in respect
of the failure to issue such shares of Stock as to which such requisite
authority has not been obtained. As a condition to any issuance hereunder, the
Company may require the Participant to satisfy any qualifications that may be
necessary or appropriate to evidence compliance with any applicable law or
regulation and to make any representation or warranty with respect to such
compliance as may be requested by the Company. From time to time, the Board and
appropriate officers of the Company are authorized to take the actions necessary
and appropriate to file required documents with governmental authorities, stock
exchanges, and other appropriate Persons to make shares of Stock available for
issuance.

 

15.                               Section 409A. Notwithstanding anything herein
or in the Plan to the contrary, the PSUs are intended to be exempt from the
applicable requirements of Section 409A of the Code and shall be limited,
construed and interpreted in accordance with such intent.

 

16.                               Binding Agreement; Assignment.  This Agreement
shall inure to the benefit of, be binding upon, and be enforceable by the
Company and its successors and assigns.  The Participant shall not assign any
part of this Agreement without the prior express written consent of the Company,
which consent may not be unreasonably withheld, conditioned or delayed.

 

17.                               Headings.  The titles and headings of the
various sections of this Agreement have been inserted for convenience of
reference only and shall not be deemed to be a part of this Agreement.

 

18.                               Counterparts.  This Agreement may be executed
in one or more counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same instrument.

 

19.                               Further Assurances.  Each party hereto shall
do and perform (or shall cause to be done and performed) all such further acts
and shall execute and deliver all such other agreements, certificates,
instruments and documents as either party hereto reasonably may request in order
to carry out the intent and accomplish the purposes of this Agreement and the
Plan and the consummation of the transactions contemplated thereunder.

 

20.                               Severability.  If any provision of this
Agreement is held to be illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining provisions hereof, but such provision
shall be fully severable and this Agreement shall be construed and enforced as
if the illegal or invalid provision had never been included herein.

 

8

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

 

[Remainder of Page Intentionally Left Blank]

 

9

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

 

By signing below, the Participant hereby acknowledges receipt of the PSUs issued
on the Grant Date indicated above, which have been issued under the terms and
conditions of the Plan and this Agreement.

 

MIDSTATES PETROLEUM COMPANY, INC.

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

Kim Harding

 

 

Title:

Vice President — Human Resources and Administration

 

 

 

 

 

Accepted by:

 

 

 

 

 

 

 

 

 

 

 

David J. Sambrooks

 

 

 

 

 

Date:

 

 

 

 

 

 

 

 

Confirmation of Receipt by Company:

 

 

 

 

 

By:

 

 

 

 

 

 

 

Date:

 

 

 

 

10

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