Exhibit 10.1

 

PROPETRO SERVICES, INC.

AMENDED AND RESTATED EXECUTIVE SEVERANCE PLAN

 

1.                  Purpose. ProPetro Services, Inc. (the “Company”), has
adopted the ProPetro Services, Inc. Amended and Restated Executive Severance
Plan (the “Plan”) to provide severance pay to Eligible Executives (as defined
below) who experience a Qualifying Termination (as defined below) on or after
April 10, 2020 (the “Effective Date”). The Plan is intended to be maintained
primarily for the purposes of providing benefits for a select group of
management or highly compensated employees and is intended to be a top hat
welfare benefit plan under ERISA.

 

2.                  Definitions. For purposes of the Plan, the following terms
shall have the respective meanings set forth below:

 

(a)               “Accrued Amounts” means (i) all accrued and unpaid Base Salary
through the Date of Termination and all paid time off accrued but unused as of
the Date of Termination, which shall be paid within seven business days
following the Date of Termination (or earlier if required by applicable law);
(ii) reimbursement for all incurred but unreimbursed expenses for which an
Eligible Executive is entitled to reimbursement in accordance with the expense
reimbursement policies of the Company in effect as of the Date of Termination;
and (iii) benefits to which an Eligible Executive may be entitled pursuant to
the terms of any plan or policy sponsored by the Company or any of its
Affiliates as in effect from time to time.

 

(b)               “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.

 

(c)               “Applicable March 15” means March 15 of the calendar year
following the calendar year in which the Date of Termination occurs.

 

(d)               “Applicable Severance Multiple” means (i) with respect to each
Tier 1 Executive, 2.0; (ii) with respect to each Tier 2 Executive, 1.5; and
(iii) with respect to each Tier 3 Executive, 1.0.

 

(e)               “Applicable CIC Severance Multiple” (i) with respect to each
Tier 1 Executive, 3.0; (ii) with respect to each Tier 2 Executive, 2.0; and
(iii) with respect to each Tier 3 Executive, 1.5.

 

(f)                “Base Salary” means the amount an Eligible Executive is
entitled to receive as base salary on an annualized basis, calculated as of the
Date of Termination, including any amounts that an Eligible Executive could have
received in cash had he not elected to contribute to an employee benefit plan
maintained by the Company, but excluding all annual cash incentive awards,
bonuses, equity awards, and incentive compensation payable by the Company as
consideration for an Eligible Executive’s services.

 

(g)              “Board” means the Board of Directors of ProPetro Holding Corp.

 

 

 

 

(h)              “Cause” means (i) an Eligible Executive’s material breach of
the Plan or any written agreement between such Eligible Executive and any member
of the Company Group, including such Eligible Executive’s material breach of any
representation, warranty, or covenant made under any such agreement; (ii) an
Eligible Executive’s material breach of any policy or code of conduct
established by any member of the Company Group and applicable to such Eligible
Executive; (iii) an Eligible Executive’s violation of any law applicable to the
workplace (including any law regarding anti-harassment, anti-discrimination, or
anti-retaliation); (iv) an Eligible Executive’s gross negligence, material
misconduct reflecting negatively on the Company, breach of fiduciary duty,
fraud, theft, or embezzlement; (v) the conviction by a court of competent
jurisdiction of an Eligible Executive for, or plea of nolo contendere by an
Eligible Executive to, any felony (or state law equivalent) or any crime
involving moral turpitude; (vi) an Eligible Executive’s material failure or
refusal, other than due to Disability, to perform such Eligible Executive’s
duties or to follow any lawful directive from the Board or an officer of the
Company, as determined by the Committee; (vii) an Eligible Executive’s unlawful
use (including being under the influence) or possession of illegal drugs on the
Company’s premises or while performing Employee’s duties and responsibilities
hereunder; (viii) failure of an Eligible Executive, in connection with his or
her work on behalf of the Company Group, to exercise that degree of care, skill,
and diligence as employees of ordinary skill and knowledge commonly possess and
exercise; or (ix) the failure of an Eligible Executive to act with undivided
loyalty on behalf of the Company Group. For items (i), (vi) and (viii) above,
such item will not be considered a breach unless the Company provides an
Eligible Executive written notice of the existence of such condition(s) within
30 days after the Committee becomes aware of such condition(s) and the
condition(s) specified in such notice are not corrected for 15 days following
such Eligible Executive’s receipt of such written notice; provided, however,
that an Eligible Executive shall not be provided with an opportunity to correct
such condition(s) if the Committee determines, in its sole and absolute
discretion, that such condition(s) cannot be corrected.

 

(i)                “Change in Control” has the meaning assigned to such term in
the Incentive Plan, as in effect from time to time.

 

(j)                “COBRA” means the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended.

 

(k)               “COBRA Continuation Period” means the period beginning on the
first day of the first calendar month following such Eligible Executive’s Date
of Termination and continuing until the earliest to occur of: (i)(a) 18 months
following the Date of Termination for a Tier 1 Executive and (b) 12 months
following the Date of Termination for a Tier 2 Executive and a Tier 3 Executive;
(ii) the time such Eligible Executive becomes eligible to be covered under a
group health plan sponsored by another employer (and such Eligible Executive
shall promptly notify the Company in the event that such Eligible Executive
becomes so eligible) and (iii) the date such Eligible Executive is no longer
eligible to receive COBRA continuation coverage.

 

(l)                “Code” means the Internal Revenue Code of 1986.

 

(m)             “Committee” means the Compensation Committee of the Board or
such other committee designated by the Board to administer the Plan.

 

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(n)              “Company Group” means ProPetro Holding Corp., the Company, and
each of their respective direct and indirect subsidiaries as may exist from time
to time.

 

(o)              “Date of Termination” means the effective date of the
termination of an Eligible Executive’s employment with the Company and its
Affiliates, as applicable, such that the Eligible Executive is no longer
employed by the Company or any of its Affiliates.

 

(p)              “Disability” means an Eligible Executive is unable to perform
the essential functions of such Eligible Executive’s position (after accounting
for reasonable accommodation, if applicable and required by applicable law), due
to physical or mental impairment or other incapacity that continues, or can
reasonably be expected to continue, for a period in excess of 120 consecutive
days or 180 days, whether or not consecutive (or for any longer period as may be
required by applicable law), in any 12-month period.  The determination of
whether an Eligible Executive has incurred a Disability shall be made in good
faith by the Board.

 

(q)              “Eligible Executive” means any employee of the Company or an
Affiliate of the Company who (i) is designated by the Committee as an “Eligible
Executive” who is eligible to participate in the Plan; (ii) has executed and
returned a Participation Agreement to the Company; (iii) is not covered under
any other severance plan, policy, program or arrangement sponsored or maintained
by the Company or any of its Affiliates; and (iv) is not a party to an
employment or severance agreement with the Company or any of its Affiliates
pursuant to which such employee is eligible for severance payments or benefits.
The Committee shall have the sole discretion to determine whether an employee is
an Eligible Executive. Eligible Executives shall be limited to a select group of
management or highly compensated employees within the meaning of Sections 201,
301 and 401 of ERISA.

 

(r)                “ERISA” means the Employee Retirement Income Security Act of
1974.

 

(s)               “Good Reason” means (i) a material diminution in an Eligible
Executive’s Base Salary or authority, duties, and responsibilities with the
Company or its subsidiaries, including his or her removal as an officer of the
Company; provided, however, that if the Eligible Executive is serving as an
officer or member of the board of directors (or similar governing body) of any
member of the Company Group, in no event shall the removal of the Eligible
Executive as an officer or board member of such member of the Company Group,
other than the Company, regardless of the reason for such removal, constitute
Good Reason; provided, further, that a reduction in an Eligible Executive’s Base
Salary in connection with a general reduction in base salaries that affects all
similarly situated employees of the Company in substantially the same
proportions will not constitute Good Reason; provided, further, that a temporary
reduction in an Eligible Executive’s authority, duties, and responsibilities in
connection with any internal investigation by the Company, including an
investigation into whether circumstances constituting Cause exist, shall not
constitute Good Reason; (ii) a material breach by the Company of any of its
obligations under the Plan; or (iii) the relocation of the geographic location
of an Eligible Executive’s principal place of employment by more than 50 miles
from the location of such Eligible Executive’s principal place of employment as
of the Effective Date. Notwithstanding the foregoing clauses (i), (ii) and
(iii), any assertion by an Eligible Executive of a termination for Good Reason
shall not be effective unless all of the following conditions are satisfied:
(A) the condition described in clauses (i), (ii) or (iii) giving rise to such
Eligible Executive’s termination of employment must have arisen without such
Eligible Executive’s consent; (B) such Eligible Executive must provide written
notice to the Committee of the existence of such condition(s) within 30 days
after the initial occurrence of such condition(s); (C) the condition(s)
specified in such notice must remain uncorrected for 30 days following the
Committee’s receipt of such written notice; and (D) the date of such Eligible
Executive’s termination of employment must occur within 75 days after the
initial occurrence of the condition(s) specified in such notice.

 

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(t)               “Incentive Plan” means the ProPetro Holding Corp. 2017
Incentive Award Plan.

 

(u)              “Participation Agreement” means the participation agreement
delivered to each Eligible Executive by the Committee prior to his or her entry
into the Plan evidencing the Eligible Executive’s agreement to participate in
the Plan and to comply with all terms, conditions and restrictions within the
Plan.

 

(v)              “Prior Year Annual Bonus” means the amount of the annual cash
bonus, if any, that an Eligible Executive earned for the fiscal year of the
Company immediately preceding the year in which the Date of Termination occurs.

 

(w)             “Pro-Rata Annual Bonus” means an amount equal to an Eligible
Executive’s Target Annual Bonus multiplied by a fraction, the numerator of which
is the number of days in such fiscal year during which such Eligible Executive
was employed by the Company and its Affiliates, and the denominator of which is
365; provided, however, the calculation of the Pro-Rata Annual Bonus shall not
take into account any temporary reduction in such Eligible Executive’s
annualized base salary in connection with a general reduction in base salaries
that affects all similarly situated employees of the Company in substantially
the same proportions, as determined by the Committee in its sole discretion.

 

(x)               “Qualifying Termination” means the termination of an Eligible
Executive’s employment (i) by the Company without Cause (which, for the
avoidance of doubt, does not include a termination of employment due to death or
Disability) or (ii) due to an Eligible Executive’s resignation for Good Reason.

 

(y)               “Release Consideration Period” means the period of 21 days or
45 days, as applicable, following the date the Company provides the Eligible
Executive with a general release of claims before the Eligible Executive must
execute such release of claims to fulfill the Release Requirement.

 

(z)               “Release Requirement” means the requirement that an Eligible
Executive execute and deliver to the Company a general release of claims, in a
form acceptable to the Company, on or prior to the date that is 21 days
following the date upon which the Company delivers the release to an Eligible
Executive (which shall occur no later than seven days following the Date of
Termination) or, in the event that such termination of employment is “in
connection with an exit incentive or other employment termination program” (as
such phrase is defined in the Age Discrimination in Employment Act of 1967), the
date that is 45 days following such delivery date. Notwithstanding the foregoing
or any other provision in the Plan to the contrary, the Release Requirement
shall not be considered satisfied if the release described in the preceding
sentence is revoked by the Eligible Executive within any time provided by the
Company for such revocation.

 

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(aa)            “Section 409A” means Section 409A of the Code and the U.S.
Department of Treasury regulations and other interpretive guidance issued
thereunder.

 

(bb)           “Severance Amount” means, with respect to an Eligible Executive,
an amount equal to the product of (i) the Applicable Severance Multiple or, in
the event of a Qualifying Termination that occurs within the 12-month period
following a Change of Control, the Applicable CIC Severance Multiple and (ii)
the sum of such Eligible Executive’s (A) Base Salary and (B) Target Annual
Bonus; provided, however, that for purposes of calculating the Severance Amount,
neither the Base Salary nor the Target Annual Bonus shall take into account any
temporary reduction in such Eligible Executive’s annualized base salary in
connection with a general reduction in base salaries that affects all similarly
situated employees of the Company in substantially the same proportions, as
determined by the Committee in its sole discretion.

 

(cc)            “Target Annual Bonus” means the target amount of an Eligible
Executive’s annual cash bonus immediately prior to the Date of Termination,
unless such Date of Termination occurs during the 12 months following a Change
in Control, in which case the Target Annual Bonus shall equal the target amount
of an Eligible Executive’s annual cash bonus immediately prior to the Change in
Control.

 

(dd)           “Tier” means an “Executive Tier” used for purposes of determining
the level of severance benefits an Eligible Executive is eligible to receive.
Each Eligible Executive shall be designated by the Committee as a Tier 1
Executive, Tier 2 Executive or a Tier 3 Executive.

 

3.                  Administration of the Plan.

 

(a)               Administration by the Committee. The Committee shall be
responsible for the management and control of the operation and the
administration of the Plan, including interpretation of the Plan, decisions
pertaining to eligibility to participate in the Plan, computation of severance
payments, granting or denial of severance claims and review of claims denials.
The Committee has absolute discretion in the exercise of its powers and
responsibilities. For this purpose, the Committee’s powers shall include the
following authority, in addition to all other powers provided by the Plan:

 

(i)                 to make and enforce such rules and regulations as it deems
necessary or proper for the efficient administration of the Plan;

 

(ii)                to interpret the Plan, the Committee’s interpretation
thereof to be final and conclusive on all persons claiming payments under the
Plan;

 

(iii)               to decide all questions concerning the Plan and the
eligibility of any person to participate in the Plan;

 

(iv)              to make a determination as to the right of any person to a
payment under the Plan (including to determine whether and when there has been a
termination of an Eligible Executive’s employment and the cause of such
termination);

 

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(v)               to appoint such agents, counsel, accountants, consultants,
claims administrator and other persons as may be required to assist in
administering the Plan;

 

(vi)             to allocate and delegate its responsibilities under the Plan
and to designate other persons to carry out any of its responsibilities under
the Plan, any such allocation, delegation or designation to be in writing;

 

(vii)             to sue or cause suit to be brought in the name of the Plan;
and

 

(viii)            to obtain from the Company, its Affiliates and from Eligible
Executives such information as is necessary for the proper administration of the
Plan.

 

(b)               Indemnification of the Committee. The Company shall, without
limiting any rights that the Committee may have under the Company’s charter or
bylaws, applicable law or otherwise, indemnify and hold harmless the Committee
and each member thereof (and any other individual acting on behalf of the
Committee or any member thereof) against any and all expenses and liabilities
arising out of such person’s administrative functions or fiduciary
responsibilities, excepting only expenses and liabilities arising out of the
person’s own gross negligence or willful misconduct. Expenses against which such
person shall be indemnified hereunder include the amounts of any settlement,
judgment, attorneys’ fees, costs of court, and any other related charges
reasonably incurred in connection with a claim, proceeding, settlement, or other
action under the Plan.

 

(c)               Compensation and Expenses. The Committee shall not receive
additional compensation with respect to services for the Plan. To the extent
required by applicable law, but not otherwise, the Committee shall furnish bond
or security for the performance of their duties hereunder. Any expenses properly
incurred by the Committee incident to the administration, termination or
protection of the Plan, including the cost of furnishing bond, shall be paid by
the Company.

 

4.                  Eligibility. Only individuals who are Eligible Executives
may participate in the Plan. The Committee has full and absolute discretion to
determine which employees of the Company and its Affiliates are Eligible
Executives. Once an employee has been designated as an Eligible Executive, he or
she shall automatically continue to be an Eligible Executive until he or she
ceases to be an employee or is removed as an Eligible Executive by the
Committee; provided, however, that if an employee is an Eligible Executive as of
the date of a Change in Control, then he or she may not be removed as an
Eligible Executive by the Committee during the 12-month period following the
date of such Change in Control. For the avoidance of doubt, the Committee may
determine that an employee who was previously designated as an Eligible
Executive shall no longer be an Eligible Executive any time prior to a Change in
Control or any time after the one-year anniversary of a Change in Control. The
Plan shall supersede all prior practices, policies, agreements, procedures and
plans relating to severance payments from the Company and its Affiliates with
respect to the Eligible Executives; provided, however, that the terms and
provisions of the Incentive Plan, the ProPetro Holding Corp. 2013 Stock Option
Plan, and the award agreements under each such plan shall continue to govern the
equity-based awards granted under such plans to an Eligible Executive following
such Eligible Executive’s termination of employment.

 

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5.                  Plan Benefits.

 

(a)               Qualifying Termination. If an Eligible Executive’s employment
with the Company and, as applicable, each of its Affiliates, ends due to a
Qualifying Termination, then such Eligible Executive shall be entitled to
receive the Accrued Amounts, and so long as such Eligible Executive satisfies
the Release Requirement, abides by the terms of Section 7 below and continues to
abide by the terms of all other written agreements between such Eligible
Executive and any member of the Company Group, including the restrictive
covenants set forth in the award agreements entered into between the Company and
such Eligible Executive pursuant to the Incentive Plan, such Eligible Executive
shall also be entitled to receive:

 

(i)                 A cash payment equal to the Severance Amount payable in a
lump-sum on or prior to the Company’s first regularly scheduled pay date that
occurs on or after the 14th day following the Release Consideration Period, but
in no event later than 75 days following the Date of Termination;

 

(ii)              If the Prior Year Annual Bonus has not yet been paid to the
Eligible Executive, the Prior Year Annual Bonus, payable in a lump sum at the
time annual bonuses for such prior fiscal year of are paid to executives of the
Company, but in no event later than the Applicable March 15; and

 

(iii)            If such Eligible Executive timely and properly elects to
continue coverage for such Eligible Executive and such Eligible Executive’s
spouse and eligible dependents, if any, under the Company’s group health plans
pursuant to COBRA, then the Company shall promptly reimburse the Eligible
Executive for the amount by which the premiums paid to effectuate such coverage
during the COBRA Continuation Period exceeds the amount of the employee
contribution that active executive employees of the Company pay for the same or
similar coverage under such group health plans during the same period, less
applicable taxes and withholdings (the “COBRA Benefit”). Each payment of the
COBRA Benefit shall be paid to the Eligible Executive on the Company’s first
regularly scheduled pay date in the calendar month immediately following the
calendar month in which the Eligible Executive submits to the Company
documentation of the applicable premium payment having been paid by the Eligible
Executive, which documentation shall be submitted by the Eligible Executive to
the Company within 30 days following the date on which the applicable premium
payment is paid. Notwithstanding anything in the preceding provisions of this
Section 5(a)(iii) to the contrary, (A) the election of COBRA continuation
coverage and the payment of any premiums due with respect to such COBRA
continuation coverage will remain such Eligible Executive’s sole responsibility,
and the Company will assume no obligation for payment of any such premiums
relating to such COBRA continuation coverage and (B) if the provision of the
benefit described in this Section 5(a)(iii) cannot be provided in the manner
described above without penalty, tax, or other adverse impact on the Company,
then the Company and such Eligible Executive shall negotiate in good faith to
determine an alternative manner in which the Company may provide a substantially
equivalent benefit to such Eligible Executive without such adverse impact on the
Company.

 

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(b)               Qualifying Termination Following a Change in Control. If an
Eligible Executive’s employment with the Company and, as applicable, each of its
Affiliates, ends due to a Qualifying Termination within 12 months following a
Change in Control, then such Eligible Executive shall be entitled to receive the
Accrued Amounts, and so long as such Eligible Executive satisfies the Release
Requirement, abides by the terms of Section 7 below and continues to abide by
the terms of all other written agreements between such Eligible Executive and
any member of the Company Group, such Eligible Executive shall also be entitled
to receive:

 

(i)                 A cash payment equal to the Severance Amount payable in a
lump-sum on or prior to the Company’s first regularly scheduled pay date that
occurs on or after the 14th day following the Release Consideration Period, but
in no event later than 75 days following the Date of Termination;

 

(ii)                If the Prior Year Annual Bonus has not yet been paid to the
Eligible Executive, the Prior Year Annual Bonus, payable in a lump sum at the
time annual bonuses for such prior fiscal year of are paid to executives of the
Company, but in no event later than the Applicable March 15;

 

(iii)              The Pro-Rata Annual Bonus for the fiscal year of the Company
in which the Date of Termination occurs, payable in a lump sum on or prior to
the Company’s first regularly scheduled pay date that occurs on or after the
14th day following the Release Consideration Period, but in no event later than
75 days following the Date of Termination; and

 

(iv)              If such Eligible Executive timely and properly elects to
continue coverage for such Eligible Executive and such Eligible Executive’s
spouse and eligible dependents, if any, under the Company’s group health plans
pursuant to COBRA, then the Company shall promptly reimburse the Eligible
Executive for the full amount of the premiums paid to effectuate such coverage
during the COBRA Continuation Period, less applicable taxes and withholdings
(the “CIC COBRA Benefit”). Each payment of the CIC COBRA Benefit shall be paid
to the Eligible Executive on the Company’s first regularly scheduled pay date in
the calendar month immediately following the calendar month in which the
Eligible Executive submits to the Company documentation of the applicable
premium payment having been paid by the Eligible Executive, which documentation
shall be submitted by the Eligible Executive to the Company within 30 days
following the date on which the applicable premium payment is paid.
Notwithstanding anything in the preceding provisions of this Section 5(b)(iv) to
the contrary, (A) the election of COBRA continuation coverage and the payment of
any premiums due with respect to such COBRA continuation coverage will remain
such Eligible Executive’s sole responsibility, and the Company will assume no
obligation for payment of any such premiums relating to such COBRA continuation
coverage and (B) if the provision of the benefit described in this Section
5(b)(iv) cannot be provided in the manner described above without penalty, tax,
or other adverse impact on the Company, then the Company and such Eligible
Executive shall negotiate in good faith to determine an alternative manner in
which the Company may provide a substantially equivalent benefit to such
Eligible Executive without such adverse impact on the Company.

 

(c)               Termination as a Result of Death or Disability. In the event
an Eligible Executive’s employment with the Company and, as applicable, each of
its Affiliates, ends due to such Eligible Executive’s death or Disability, such
Eligible Executive shall be entitled to receive the Accrued Amounts, and so long
as such Eligible Executive satisfies the Release Requirement, abides by the
terms of Section 7 below and continues to abide by the terms of all other
written agreements between such Eligible Executive and any member of the Company
Group, such Eligible Executive shall also be entitled to receive:

 

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(i)                 If the Prior Year Annual Bonus has not yet been paid to the
Eligible Executive, the Prior Year Annual Bonus, payable in a lump sum at the
time annual bonuses for such prior fiscal year of are paid to executives of the
Company, but in no event later than the Applicable March 15; and

 

(ii)               A Pro-Rata Annual Bonus for the fiscal year of the Company in
which the Date of Termination occurs, payable in a lump sum on or prior to the
Company’s first regularly scheduled pay date that occurs on or after the 14th
day following the Release Consideration Period, but in no event later than 75
days following the Date of Termination.

 

(d)               Other Non-Qualifying Terminations of Employment. If an
Eligible Executive’s employment with the Company and each of its Affiliates
terminates other than pursuant to a Qualifying Termination or due to the
Eligible Executive’s death or Disability, then all compensation and benefits to
such Eligible Executive shall terminate contemporaneously with such termination
of employment, except that such Eligible Executive shall be entitled to the
Accrued Amounts.

 

(e)               After-Acquired Evidence. Notwithstanding any provision of the
Plan to the contrary, in the event that the Company determines that an Eligible
Executive is eligible to receive the payments or benefits other than the Accrued
Obligations pursuant to Section 5 but, after such determination, the Company
subsequently acquires evidence or determines that: (i) such Eligible Executive
has failed to abide by the terms Section 7 below or the terms of any other
written agreement between such Eligible Executive and any member of the Company
Group; or (ii) a Cause condition existed prior to the Date of Termination that,
had the Company been fully aware of such condition, would have given the Company
the right to terminate such Eligible Executive’s employment for Cause, then the
Company shall have no obligation to pay any amount in excess of the Accrued
Obligations, and such Eligible Executive shall promptly return to the Company
any payment in excess of the Accrued Obligations received by such Eligible
Executive prior to the date that the Company determines that the conditions of
this Section 5(c) have been satisfied.

 

6.                  Certain Excise Taxes. Notwithstanding anything to the
contrary in the Plan, if an Eligible Executive is a “disqualified individual”
(as defined in Section 280G(c) of the Code), and the payments provided for in
the Plan, together with any other payments and benefits which such Eligible
Executive has the right to receive from the Company or any of its Affiliates,
would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the
Code), then the payments provided for in the Plan shall be either (a) reduced
(but not below zero) so that the present value of such total amounts and
benefits received by such Eligible Executive from the Company and its Affiliates
will be one dollar less than three times such Eligible Executive’s “base amount”
(as defined in Section 280G(b)(3) of the Code) and so that no portion of such
amounts and benefits received by such Eligible Executive shall be subject to the
excise tax imposed by Section 4999 of the Code or (b) paid in full, whichever
produces the better net after-tax position to such Eligible Executive (taking
into account any applicable excise tax under Section 4999 of the Code and any
other applicable taxes). The determination as to whether any such reduction in
the amount of the payments provided hereunder is necessary shall be made by the
Company in good faith. If a reduced payment is made and through error or
otherwise that payment, when aggregated with other payments and benefits from
the Company (or its Affiliates) used in determining if a “parachute payment”
exists, exceeds one dollar less than three times such Eligible Executive’s base
amount, then such Eligible Executive shall immediately repay such excess to the
Company upon notification that an overpayment has been made. Nothing in this
Section 6 shall require the Company to be responsible for, or have any liability
or obligation with respect to, such Eligible Executives’ excise tax liabilities
under Section 4999 of the Code.

 

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7.                  Defense and Pursuit of Claims. An Eligible Executive shall,
following the termination of his or her employment, cooperate with the Company
Group and its counsel in any litigation or human resources matters in which such
Eligible Executive may be a witness or potential witness or with respect to
which such Eligible Executive may have knowledge of relevant facts or evidence.
The Company shall reimburse such Eligible Executive for reasonable and necessary
expenses incurred in the course of complying with this Section provided that the
Eligible Executive provides reasonable documentation of the same and obtains the
Company’s prior approval for incurring such expenses.

 

8.                  Enforcement. Money damages would not be a sufficient remedy
for any breach of Section 7 or any breach of the terms of any other written
agreement between an Eligible Executive and any member of the Company Group, in
each case, by such Eligible Executive, and any member of the Company Group shall
be entitled to enforce the provisions of Section 7 and the terms of such other
written agreements as may be applicable by terminating payments or additional
benefits then owing to the Eligible Executive and to specific performance,
injunctive relief and other equitable relief, without bond, as remedies for such
breach or any threatened breach. In addition, in the event of a breach by an
Eligible Executive of Section 7 or the terms of any other written agreement
between such Eligible Executive and any member of the Company Group, the
Eligible Executive shall repay to the Company any and all payments received or
paid or deemed paid by the Company for the benefit of the Eligible Executive
pursuant to the Plan. Such remedies shall not be deemed the exclusive remedies
for a breach of Section 7 or the terms of such other written agreements as may
be applicable, but shall be in addition to all remedies available at law or in
equity, including the recovery of damages from the Eligible Executive and the
Eligible Executive’s agents. This Section 8, Section 7 and the terms of any
other written agreements between the Eligible Executive and any member of the
Company Group, and each provision and portion thereof, are severable and
separate, and the unenforceability of any specific Section or provision (or
portion thereof) shall not affect the enforceability of any other Section or
provision (or portion thereof).

 

9.                  Claims Procedure and Review.

 

(a)               Filing a Claim. Any Eligible Executive that the Committee
determines is entitled to payment of severance benefits under the Plan is not
required to file a claim for such benefit. Any employee (i) who is not paid
severance benefits hereunder and who believes that he or she is entitled to
severance benefits hereunder or (ii) who has been paid severance benefits
hereunder and believes that he or she is entitled to greater benefits hereunder
may file a written claim for severance benefits under the Plan with the
Committee setting forth the facts and arguments for Committee consideration
within 90 days after such employee knew or reasonably should have known of the
principal facts upon which his or her claim is based.

 

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(b)               Initial Determination of a Claim. Within 90 days of the date
the Committee receives a claim, the claimant will receive (i) a decision or (ii)
a written notice describing special circumstances requiring a specified amount
of additional time (up to 90 additional days) to reach a decision and the date
by which it expects to reach a decision. If a claim for severance benefits
hereunder is wholly or partially denied, the Committee shall, within a
reasonable period of time but no later than 90 days after receipt of the claim
(or 180 days after receipt of the claim if special circumstances require an
extension of time for processing the claim), notify the claimant of the denial.
Such notice shall (A) be in writing, (B) be written in a manner calculated to be
understood by the claimant, (C) contain the specific reason or reasons for
denial of the claim, (D) refer specifically to the pertinent Plan provisions
upon which the denial is based, (E) describe any additional material or
information necessary for the claimant to perfect the claim (and explain why
such material or information is necessary), and (F) describe the Plan’s claim
review procedures and time limits applicable to such procedures, including a
statement of the claimant’s right to bring a civil action under Section 502(a)
of ERISA following an adverse benefit determination on review.

 

(c)               Appeal of a Denied Claim. Within 60 days of the receipt by the
claimant of the notice that the claim was denied, the claimant may file a
written appeal with the Committee. In connection with the appeal, the claimant
may review Plan documents and may submit written issues and comments. Within 60
days of the date the Committee receives an appeal, the claimant will receive (i)
a decision or (ii) a written notice describing special circumstances requiring a
specified amount of additional time (up to 60 additional days) to reach a
decision and the date by which it expects to reach a decision. The Committee
shall deliver to the claimant a written decision on the appeal promptly, but not
later than 60 days after the receipt of the claimant’s appeal (or 120 days after
receipt of the claimant’s appeal if there are special circumstances which
require an extension of time for processing). Such decision shall (A) be in
writing, (B) be written in a manner calculated to be understood by the claimant,
(C) include specific reasons for the decision, (D) refer specifically to the
Plan provisions upon which the decision is based, (E) state that the claimant is
entitled to receive, on request and free of charge, reasonable access to and
copies of all documents, records, and other information relevant to the
claimant’s claim for benefits, and (F) a statement of the Eligible Executive’s
right to bring an action under Section 502(a) of ERISA. If special circumstances
require an extension of up to 180 days for an initial claim or 120 days for an
appeal, whichever applies, the Committee shall send written notice of the
extension. This notice shall indicate the special circumstances requiring the
extension and state when the Committee expects to render the decision.

 

(d)               Additional Information for a Claim on Review. If the Committee
determines it needs further information to complete its review of a claim, the
claimant will receive a written notice describing the additional information
necessary to make the decision. The claimant will then have 60 days from the
date the claimant receives the notice to provide the requested information to
the Committee. The time between the date the Committee sends its information
request to the claimant and the date the Committee receives the requested
information from the claimant does not count against the 60-day period in which
the Committee has to decide the claim on review. If the Committee does not
receive a response to its request for additional information from the claimant,
then the period by which the Committee must reach its decision shall be extended
by the 60-day period that was provided to the claimant to submit the additional
information. If special circumstances exist, this period may be further
extended.

 

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(e)               In General. The Committee will make all decisions on claims
and review of denied claims. The Committee has the sole discretion, authority
and responsibility to decide all factual and legal questions under the Plan,
including interpreting and construing the Plan and any ambiguous or unclear
terms, and determining whether a claimant is eligible for benefits and the
amount of benefits, if any, a claimant is entitled to receive. The Committee may
hold hearings and reserves the right to delegate its authority to make
decisions. The Committee may rely on any applicable statute of limitations as a
basis to deny a claim. The Committee’s decisions are conclusive and binding on
all Parties. The claimant may, at his or her own expense, have an attorney or
representative act on his or her behalf, but the Committee reserves the right to
require a written authorization for a person to act on the claimant’s behalf.

 

(f)                Time Periods. The time period for the Committee to decide a
claim begins to run on the date the Committee receives a claimant’s written
claim. If a claimant files a timely request for review of a denied claim, the
time period for the Committee to decide begins to run on the date the Committee
receives the written request. In both cases, the time period begins to run
whether or not the claimant submits comments or information that he or she would
like considered by the Committee.

 

(g)               Limitations Period. If a claimant files a claim within the
required time, completes the entire claims procedure and the Committee denies
such claim after the claimant requests a review, the claimant may sue over the
claim (unless he or she has executed a release of such claim). The claimant must
commence this lawsuit within six months after the claims process is completed.
Regardless of when the claimant files the claim, the claimant may not, under any
circumstances, commence a lawsuit more than 30 months after he or she knew or
should have known the facts supporting the claim. Before commencing legal action
to recover benefits or to enforce or clarify rights, the claimant must complete
all of the Plan’s claim procedures.

 

(h)              The benefits claim procedure provided in this Section 9 is
intended to comply with the provisions of 29 C.F.R. §2560.503-1. All provisions
of this Section 9 shall be interpreted, construed, and limited in accordance
with such intent.

 

10.              General Provisions.

 

(a)               Taxes. The Company and its Affiliates are authorized to
withhold from all payments made hereunder amounts of withholding and other taxes
due or potentially payable in connection therewith, and to take such other
action as the Company may deem advisable to enable the Company and its
Affiliates and the Eligible Executive to satisfy obligations for the payment of
withholding taxes and other tax obligations relating to any payments made under
the Plan.

 

(b)               Offset. The Company may set off against, and each Eligible
Executive authorizes the Company to deduct from, any payments due to the
Eligible Executive, or to his or her estate, heirs, legal representatives, or
successors, any amounts which may be due and owing to the Company or an
Affiliate of the Company by the Eligible Executive, whether arising under the
Plan or otherwise; provided, however, that any such offset must be compliant
with applicable law and no such offset may be made with respect to amounts
payable that are subject to the requirements of Section 409A unless the offset
would not result in a violation of the requirements of Section 409A.

 

12

 

 

(c)               Amendment and Termination. Prior to a Change in Control, the
Plan may be amended or modified in any respect and may be terminated by the
Board; provided, however, that the Plan may not be amended, modified or
terminated in any manner that would in any way adversely affect the benefits or
protections provided hereunder to any individual who is an Eligible Executive
under the Plan at such time, (i) at the request of a third party who has
indicated an intention or taken steps to effect a Change in Control and who
effectuates a Change in Control, or (ii) otherwise in connection with, or in
anticipation of, a Change in Control that actually occurs, and any such
attempted amendment, modification or termination shall be null and void ab
initio. Any action taken to amend, modify or terminate the Plan which is taken
subsequent to the execution of an agreement providing for a transaction or
transactions which, if consummated, would constitute a Change in Control shall
conclusively be presumed to have been taken in connection with a Change in
Control. For the duration of the 12-month period following a Change in Control,
the Plan may not be amended or modified in any manner that would in any way
adversely affect the benefits or protections provided hereunder to any
individual who is an Eligible Executive under the Plan on the date a Change in
Control occurs.

 

(d)               Successors. The Plan will be binding upon any successor to the
Company, its assets, its businesses or its interest (whether as a result of the
occurrence of a Change in Control or otherwise), in the same manner and to the
same extent that the Company would be obligated under the Plan if no succession
had taken place. All payments and benefits that become due to an Eligible
Executive under the Plan will inure to the benefit of his or her heirs, assigns,
designees or legal representatives.

 

(e)               Transfer and Assignment. Neither an Eligible Executive nor any
other person shall have any right to sell, assign, transfer, pledge, anticipate
or otherwise encumber, transfer, hypothecate or convey any amounts payable under
the Plan prior to the date that such amounts are paid.

 

(f)                Unfunded Obligation. All benefits due an Eligible Executive
under the Plan are unfunded and unsecured and are payable out of the general
assets of the Company. The Company is not required to segregate any monies or
other assets from its general funds with respect to these obligations. Eligible
Executives shall not have any preference or security interest in any assets of
the Company other than as a general unsecured creditor.

 

(g)               Severability. If any provision of the Plan (or portion
thereof) is held to be illegal or invalid for any reason, the illegality or
invalidity of such provision (or portion thereof) will not affect the remaining
provisions (or portions thereof) of the Plan, but such provision (or portion
thereof) will be fully severable and the Plan will be construed and enforced as
if the illegal or invalid provision (or portion thereof) had never been included
herein.

 

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(h)               Section 409A. The Plan is intended to comply with Section 409A
or an exemption thereunder and shall be construed and administered in accordance
with Section 409A. Notwithstanding any other provision of the Plan, payments
provided under the Plan may only be made upon an event and in a manner that
complies with Section 409A or an applicable exemption. Any payments under the
Plan that may be excluded from Section 409A either as separation pay due to an
involuntary separation from service or as a short-term deferral shall be
excluded from Section 409A to the maximum extent possible. For purposes of
Section 409A, each installment payment provided under the Plan shall be treated
as a separate payment. Any payments to be made under the Plan upon the
termination of an Eligible Executive’s employment shall only be made if such
termination of employment constitutes a “separation from service” under Section
409A. Notwithstanding any provision in the Plan to the contrary, if any payment
or benefit provided for herein would be subject to additional taxes and interest
under Section 409A if an Eligible Executive’s receipt of such payment or benefit
is not delayed until the earlier of (i) the date of such Eligible Executive’s
death or (ii) the date that is six months after such Eligible Executive’s Date
of Termination (such date, the “Section 409A Payment Date”), then such payment
or benefit shall not be provided to such Eligible Executive (or such Eligible
Executive’s estate, if applicable) until the Section 409A Payment Date.
Notwithstanding the foregoing, the Company makes no representations that the
payments and benefits provided under the Plan are exempt from, or compliant
with, Section 409A and in no event shall the Company or any of its Affiliates be
liable for all or any portion of any taxes, penalties, interest or other
expenses that may be incurred by any Eligible Executive on account of
non-compliance with Section 409A.

 

(i)                Governing Law; Submission to Jurisdiction. All questions
arising with respect to the provisions of the Plan and payments due hereunder
will be determined by application of the laws of the State of Texas, without
giving effect to any conflict of law provisions thereof, except to the extent
preempted by federal law (including ERISA, which is the federal law that governs
the Plan, the administration of the Plan and any claims made under the Plan).
Any action to obtain emergency, temporary or preliminary injunctive relief as
permitted by Section 7 will be brought only in the state and federal courts
residing in, or with jurisdiction over, Midland County, Texas. The Eligible
Executives recognize that such forum and venue is convenient.

 

(j)               Third-Party Beneficiaries. Each Affiliate of the Company shall
be a third-party beneficiary of the Eligible Executive’s covenants and
obligations under Section 7 and the terms and provisions of any other written
agreement between such Eligible Executive and the Company and shall be entitled
to enforce such obligations as if a party hereto.

 

(k)              No Right to Continued Employment. The adoption and maintenance
of the Plan shall not be deemed to be a contract of employment between the
Company or any of its Affiliates and any person, or to have any impact
whatsoever on the at-will employment relationship between the Company or any of
its Affiliates and the Eligible Executives. Nothing in the Plan shall be deemed
to give any person the right to be retained in the employ of the Company or any
of its Affiliates for any period of time or to restrict the right of the Company
or any of its Affiliates to terminate the employment of any person at any time.

 

14

 

 

(l)                Title and Headings; Construction. Titles and headings to
Sections hereof are for the purpose of reference only and shall in no way limit,
define or otherwise affect the provisions hereof. Unless the context requires
otherwise, all references to laws, regulations, contracts, documents, agreements
and instruments refer to such laws, regulations, contracts, agreements and
instruments as they may be amended from time to time, and references to
particular provisions of laws or regulations include a reference to the
corresponding provisions of any succeeding law or regulation. The word “or” as
used herein is not exclusive and is deemed to have the meaning “and/or.” The
words “herein”, “hereof”, “hereunder” and other compounds of the word “here”
shall refer to the entire Plan, and not to any particular provision hereof.
Wherever the context so requires, the masculine gender includes the feminine or
neuter, and the singular number includes the plural and conversely. The use
herein of the word “including” following any general statement, term or matter
shall not be construed to limit such statement, term or matter to the specific
items or matters set forth immediately following such word or to similar items
or matters, whether or not non-limiting language (such as “without limitation”,
“but not limited to”, or words of similar import) is used with reference
thereto, but rather shall be deemed to refer to all other items or matters that
could reasonably fall within the broadest possible scope of such general
statement, term or matter. Neither the Plan nor any uncertainty or ambiguity
herein shall be construed or resolved against any party hereto, whether under
any rule of construction or otherwise. On the contrary, the Plan shall be
construed and interpreted according to the ordinary meaning of the words used so
as to fairly accomplish the purposes and intentions of the Company.

 

(m)             Overpayment. If, due to mistake or any other reason, a person
receives severance payments under the Plan in excess of what the Plan provides,
such person shall repay the overpayment to the Company in a lump sum within 30
days of notice of the amount of overpayment. If such person fails to so repay
the overpayment, then without limiting any other remedies available to the
Company, the Company may deduct the amount of the overpayment from any other
amounts which become payable to such person under the Plan or otherwise.

 

(n)               Clawback. Any amounts payable under the Plan are subject to
any policy (whether in existence as of the Effective Date or later adopted)
established by the Company providing for clawback or recovery of amounts that
were paid to the Eligible Executive; provided, however, that the establishment
or modification of any clawback policy by the Company on or after the date of a
Change in Control shall only apply to amounts payable under the Plan to the
extent required by applicable law. The Company will make any determination for
clawback or recovery in its sole discretion and in accordance with applicable
laws, regulations, and securities exchange listing standards.

 

(o)               Agent for Service of Legal Process. Legal process may be
served on the Committee, which is the plan administrator, at the following
address: Compensation Committee of the Board of Directors, c/o ProPetro Holding
Corp., 1706 Midkiff Road, Bldg. B, Midland, Texas 79107.

 

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