Document:

ex10-2.htm

Change of Control Agreement

This Change of Control Agreement (the “Agreement”) between Stratus Properties Inc., a Delaware corporation (the “Company”), and Erin D. Pickens (the “Executive”) is dated effective as of March 9, 2010 (the “Agreement Date”).

 

ARTICLE I

 

Definitions

 

1.1 Board.  “Board” shall mean the Board of Directors of the Company, or if after a Change of Control, the Post-Transaction Corporation.

 

1.2 Cause.  “Cause” shall mean:

 

(a) The Executive’s willful and continued failure to perform substantially the Executive’s duties with the Post-Transaction Corporation or its Affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board, which specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties;

 

(b) The willful engaging by the Executive in conduct that is demonstrably and materially injurious to the Post-Transaction Corporation or any or its Affiliates, monetarily or otherwise; or

 

(c) The final conviction of the Executive or an entering of a guilty plea or a plea of no contest by the Executive to a felony.

 

For purposes of this provision, no act or failure to act, on the part of the Executive, will be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without a reasonable belief that the act or omission was in the best interest of the Post-Transaction Corporation or its Affiliates.  Any act, or failure to act, based on authority given pursuant to a resolution duly adopted by the Board or the advice of counsel to the Post-Transaction Corporation or its Affiliates will be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Post-Transaction Corporation or its Affiliates.  The termination of employment of the Executive will not be deemed to be for Cause unless and until there has been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive has engaged in the conduct described in subparagraph (a), (b) or (c) above, and specifying the particulars of such conduct.

1.3 Change of Control.  (a)  “Change of Control” means (capitalized terms not otherwise defined will have the meanings ascribed to them in paragraph (b) below):

 

  

  

  

 

(i) the acquisition by any Person together with all Affiliates of such Person, of Beneficial Ownership of the Threshold Percentage or more; provided, however, that for purposes of this Section 1.3(a)(i), the following will not constitute a Change of Control:

 

(A) any acquisition (other than a “Business Combination,” as defined below, that constitutes a Change of Control under Section 1.3(a)(iii) hereof) of Common Stock directly from the Company,

 

(B) any acquisition of Common Stock by the Company or its subsidiaries,

 

(C) any acquisition of Common Stock by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation or other entity controlled by the Company, or

 

(D) any acquisition of Common Stock pursuant to a Business Combination that does not constitute a Change of Control under Section 1.3(a)(iii) hereof; or

 

(ii) individuals who, as of the effective date of this Agreement, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the effective date of this Agreement whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board will be considered a member of the Incumbent Board, unless such individual’s initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or any other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Incumbent Board; or

 

(iii) the consummation of a reorganization, merger or consolidation (including a merger or consolidation of the Company or any direct or indirect subsidiary of the Company), or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, immediately following such Business Combination:

 

(A) the individuals and entities who were the Beneficial Owners of the Company Voting Stock immediately prior to such Business Combination have direct or indirect Beneficial Ownership of more than 50% of the then outstanding shares of common stock, and more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, of the Post-Transaction Corporation, and

 

(B) no Person together with all Affiliates of such Person (excluding the Post-Transaction Corporation and any employee benefit plan or related trust of either the Company, the Post-Transaction Corporation or any subsidiary of either corporation) Beneficially Owns 30% or more of the then outstanding shares of common stock of the Post-Transaction Corporation or 30% or more of the combined voting power of the then outstanding voting securities of the Post-Transaction Corporation, and

 

  

2

  

 

(C) at least a majority of the members of the board of directors of the Post-Transaction Corporation were members of the Incumbent Board at the time of the execution of the initial agreement, and of the action of the Board, providing for such Business Combination; or

 

(iv) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

 

(b) As used in this Section 1.3 and elsewhere in this Agreement, the following terms have the meanings indicated:

 

(i) Affiliate:  “Affiliate” means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another specified Person.

 

(ii) Beneficial Owner:  “Beneficial Owner” (and variants thereof), with respect to a security, means a Person who, directly or indirectly (through any contract, understanding, relationship or otherwise), has or shares (A) the power to vote, or direct the voting of, the security, and/or (B) the power to dispose of, or to direct the disposition of, the security.

 

(iii) Company Voting Stock:  “Company Voting Stock” means any capital stock of the Company that is then entitled to vote for the election of directors.

 

(iv) Majority Shares:  “Majority Shares” means the number of shares of Company Voting Stock that could elect a majority of the directors of the Company if all directors were to be elected at a single meeting.

 

(v) Person:  “Person” means a natural person or entity, and will also mean the group or syndicate created when two or more Persons act as a syndicate or other group (including without limitation a partnership, limited partnership, joint venture or other joint undertaking) for the purpose of acquiring, holding, or disposing of a security, except that “Person” will not include an underwriter temporarily holding a security pursuant to an offering of the security.

 

(vi) Post-Transaction Corporation:  Unless a Change of Control includes a Business Combination, “Post-Transaction Corporation” means the Company after the Change of Control.  If a Change of Control includes a Business Combination, “Post-Transaction Corporation” will mean the corporation or other entity resulting from the Business Combination unless, as a result of such Business Combination, an ultimate parent entity controls the Company or all or substantially all of the Company’s assets either directly or indirectly, in which case, “Post-Transaction Corporation” will mean such ultimate parent entity.

 

(vii) Threshold Percentage:  “Threshold Percentage” means 30% of all then outstanding Company Voting Stock.

 

1.4 Code.  “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

  

3

  

 

1.5 Common Stock:  “Common Stock” shall mean the common stock, $0.01 par value per share, of the Company.

 

1.6 Company.  As used in this Agreement, “Company” shall mean the Company as defined above and any successor to or assignee of (whether direct or indirect, by purchase, merger, consolidation or otherwise) all or substantially all of the assets of the Company.

 

1.7 Disability.  “Disability” shall mean:

 

(a) A disability entitling the Executive to receive benefits under a long-term disability insurance policy maintained by the Post-Transaction Corporation or an Affiliate in effect at the time either because she is totally disabled or partially disabled, as such terms are defined in such policy in effect as of the Agreement Date or as similar terms are defined in any successor policy.

 

(b) If there is no long-term disability plan in effect covering the Executive, and if (i) a physical or mental illness renders the Executive incapable of satisfactorily discharging her duties and responsibilities to the Post-Transaction Corporation or an Affiliate for a period of 90 consecutive days, and (ii) such incapacity is certified in writing by a duly qualified physician chosen by the Post-Transaction Corporation or an Affiliate and reasonably acceptable to the Executive or her legal representatives, then the Board will have the power to determine that the Executive has become disabled.  If the Board makes such a determination, the Post-Transaction Corporation or its Affiliate will have the continuing right and option, during the period that such disability continues, and by notice given in the manner provided in this Agreement, to terminate the status of Executive as an officer and employee.  Any such termination will become effective 60 days after such notice of termination is given, unless within such 60-day period, the Executive becomes capable of rendering services of the character contemplated hereby (and a physician chosen by the Post-Transaction Corporation or an Affiliate and reasonably acceptable to the Executive or her legal representatives so certifies in writing) and the Executive in fact resumes such services.

 

(c) The “Disability Effective Date” will mean the date on which termination of Executive’s status as an officer and employee becomes effective due to Disability.

 

1.8 Good Reason.  “Good Reason” shall mean:

 

(a) Any failure of the Post-Transaction Corporation to provide the Executive with the position, authority, duties and responsibilities at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 120-day period immediately preceding the Change of Control.  Executive’s position, authority, duties and responsibilities after a Change of Control shall not be considered commensurate in all material respects with Executive’s position, authority, duties and responsibilities prior to a Change of Control unless after the Change of Control the Executive holds an equivalent position in the Post-Transaction Corporation;

 

(b) The assignment to the Executive of any duties inconsistent in any material respect with Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 2.1(b) of this Agreement, or any 

 

  

4

  

 

other action that results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith that is remedied within 10 days after receipt of written notice thereof from the Executive to the Post-Transaction Corporation;

 

(c) Any failure by the Post-Transaction Corporation or its Affiliates to comply with any of the provisions of this Agreement, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith that is remedied within 10 days after receipt of written notice thereof from the Executive to the Post-Transaction Corporation; or

 

(d) The Post-Transaction Corporation or its Affiliates requiring the Executive to be based at any office or location other than as provided in Section 2.1(b)(ii) hereof or requiring the Executive to travel on business to a substantially greater extent than required immediately prior to the Change of Control.

 

For purposes of this Section 1.4, any determination of “Good Reason” made by the Executive in good faith and based upon her reasonable belief and understanding shall be conclusive.

1.9 Termination Date.  “Termination Date” shall mean, if Executive’s status as an officer and employee is terminated (i) by reason of Executive’s death, the date of Executive’s death, (ii) by reason of Disability, the Disability Effective Date, (iii) by the Company other than by reason of death or Disability, the date of delivery of the notice of termination or any later date specified in the notice of termination, which date will not be more than 30 days after the giving of the notice, or (iv) by the Executive other than by reason of death, the date of delivery of the notice of termination or any later date specified in the notice of termination, which date will not be more than 30 days after the giving of the notice.

 

ARTICLE II

 

Change of Control Benefit

 

2.1 Employment Term and Capacity after Change of Control.  (a)  This Agreement shall commence on the Agreement Date and continue in effect through March 31, 2013.  If the Executive continues to serve as an officer of the Company and a Change of Control occurs on or before March 31, 2013, then the Executive’s employment term (the “Employment Term”) shall continue through the third anniversary of the Change of Control, subject to any earlier termination of Executive’s status as an officer and employee pursuant to this Agreement.

 

(b) After a Change of Control and during the Employment Term, (i) the Executive’s position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 120-day period immediately preceding the Change of Control and (ii) the Executive’s services shall be performed at the location where the Executive was employed immediately preceding the Change of Control or any office or location less than 35 miles from such location.  Executive’s position, authority, duties and responsibilities after a Change of Control shall not be considered commensurate in all material respects with Executive’s position, authority, duties and 

 

  

5

  

 

responsibilities prior to a Change of Control unless after the Change of Control the Executive holds an equivalent position in the Post-Transaction Corporation.

 

2.2 Compensation and Benefits.  During the Employment Term, the Executive shall be entitled to the following compensation and benefits:

 

(a) Salary.  An annual salary (“Base Salary”) at the highest rate in effect for the Executive at any time during the 120-day period immediately preceding the Change of Control, payable to the Executive at such intervals no less frequent than the most frequent intervals in effect at any time during the 120-day period immediately preceding the Change of Control or, if more favorable to the Executive, the intervals in effect at any time after the Change of Control for other most senior executives of the Post-Transaction Corporation and its Affiliates.

 

(b) Bonus.  Executive shall be entitled to participate in an annual incentive bonus program applicable to other most senior executives of the Post-Transaction Corporation and its Affiliates but in no event shall such program provide the Executive with incentive opportunities less favorable than the most favorable of those provided by the Company and its Affiliates for the Executive under the Company’s annual cash plan as in effect for Executive at any time during the 120-day period immediately preceding the Change of Control or, if more favorable to the Executive, those provided generally at any time after the Change of Control to other most senior executives of the Post-Transaction Corporation and its Affiliates.  Any such bonus shall be paid in cash no later than two and a half months following the close of the fiscal year for which it is earned.

 

(c) Fringe Benefits.  The Executive shall be entitled to fringe benefits (including, but not limited to, automobile allowance, air travel, and reimbursement for club membership dues) in accordance with the most favorable agreements, plans, practices, programs and policies of the Company and its Affiliates in effect for the Executive at any time during the 120-day period immediately preceding the Change of Control or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other most senior executives of the Post-Transaction Corporation and its Affiliates.

 

(d) Expenses.  The Executive shall be entitled to receive prompt reimbursement for all reasonable business expenses (including food and lodging) incurred by the Executive in accordance with the most favorable agreements, policies, practices and procedures of the Company and its Affiliates in effect for the Executive at any time during the 120-day period immediately preceding the Change of Control or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other most senior executives of the Post-Transaction Corporation and its Affiliates.

 

(e) Incentive, Savings and Retirement Plans.  The Executive shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to other most senior executives of the Post-Transaction Corporation and its Affiliates, but in no event shall such plans, practices, policies and programs provide the Executive with incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable), savings 

 

  

6

  

 

opportunities and retirement benefit opportunities, in each case, less favorable than the most favorable of those provided by the Company and its Affiliates for the Executive under any agreements, plans, practices, policies and programs as in effect at any time during the 120-day period immediately preceding the Change of Control.

 

(f) Welfare Benefit Plans.  The Executive and the Executive’s family shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Post-Transaction Corporation and its Affiliates (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other most senior executives of the Post-Transaction Corporation and its Affiliates, but in no event shall such plans, practices, policies and programs provide the Executive with benefits, in each case, less favorable than the most favorable of any agreements, plans, practices, policies and programs of the Company and its Affiliates in effect for the Executive at any time during the 120-day period immediately preceding the Change of Control.

 

(g) Indemnification and Insurance.  The Post-Transaction Corporation shall indemnify the Executive, to the fullest extent permitted by applicable law, for any and all claims brought against her arising out her services during or prior to the Employment Term.  In addition, the Post-Transaction Corporation shall maintain a directors’ and officers’ insurance policy covering the Executive substantially in the form of the policy maintained by the Company and its Affiliates at any time during the 120-day period immediately preceding the Change of Control or, if more favorable to the Executive, as provided generally at any time thereafter with respect to other most senior executives of the Post-Transaction Corporation and its Affiliates.

 

(h) Office and Support Staff.  The Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to exclusive personal secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Executive by the Company and its Affiliates at any time during the 120-day period immediately preceding the Change of Control or, if more favorable to the Executive, as provided generally at any time thereafter with respect to other most senior executives of the Post-Transaction Corporation and its Affiliates.

 

(i) Vacation.  The Executive shall be entitled to paid vacation in accordance with the most favorable agreements, plans, policies, programs and practices of the Company and its Affiliates as in effect for the Executive at any time during the 120-day period immediately preceding the Change of Control or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other most senior executives of the Post-Transaction Corporation and its Affiliates.

 

2.3 Obligations upon Termination after a Change of Control.

 

(a) Termination as a Result of Death, Disability or Retirement.  If, after a Change of Control and during the Employment Term, (1) the Executive’s status as an officer and employee is terminated by reason of the Executive’s death, (2) the Post-Transaction Corporation terminates the Executive’s status as an officer and employee by reason of Executive’s Disability, 

 

  

7

  

 

or (3) the Executive retires and terminates her status as an officer and employee, then, subject to Section 2.3(f) and, if applicable, the six-month delay set forth in Section 2.7:

 

(i) The Post-Transaction Corporation or an Affiliate will pay to the Executive or her legal representatives the Executive’s Base Salary earned through the Termination Date to the extent not previously paid (the “Accrued Salary”);

 

(ii) The Post-Transaction Corporation or an Affiliate will pay to the Executive or her legal representatives a pro rata bonus in an amount determined by (1) calculating the average of the annual bonus received by the Executive for the three most recently completed fiscal years prior to the Termination Date, and if such recently completed fiscal years include fiscal year 2009, the bonus amount for 2009 will be annualized, then (2) multiplying such bonus amount by the fraction obtained by dividing the number of days in the year through the Termination Date by 365 (the “Pro Rata Bonus”); and

 

(iii) The Post-Transaction Corporation or an Affiliate will pay or deliver, as appropriate, all other benefits earned by the Executive or accrued for her benefit pursuant to any employee benefit plans maintained by the Post-Transaction Corporation or its Affiliates with respect to services rendered by the Executive prior to the Termination Date.

 

(b) Termination by Company for Cause; by Executive for other than Good Reason.  If, after a Change of Control and during the Employment Term, the Executive’s status as an officer and employee is terminated by the Post-Transaction Corporation or an Affiliate for Cause, or by the Executive for other than Good Reason, the Post-Transaction Corporation or Affiliate will pay to the Executive the Accrued Salary without further obligation to the Executive other than for obligations by law and obligations for any benefits earned by the Executive or accrued for her benefit pursuant to any employee benefit plans maintained by the Post-Transaction Corporation or Affiliate with respect to services rendered by the Executive prior to the Termination Date.

 

(c) Termination by Company for Reasons other than Death, Disability or Cause; by Executive for Good Reason.  If, after a Change of Control and during the Employment Term, (1) the Post-Transaction Corporation or an Affiliate terminates the Executive’s status as an officer and employee other than for Cause, death or Disability, or (2) the Executive terminates her status as an officer and employee for Good Reason, then, subject to Section 2.3(f):

 

(i) The Post-Transaction Corporation or an Affiliate will pay to the Executive the Accrued Salary;

 

(ii) The Post-Transaction Corporation or an Affiliate will pay to the Executive in a lump sum in cash on the first business day that is more than six months after the Termination Date (A) the Pro Rata Bonus, and (B) an amount equal to 2.99 times the sum of (x) the Executive’s Base Salary in effect at the Termination Date and (y) the highest annual bonus awarded to the Executive for the three fiscal years immediately preceding the Termination Date (excluding any payments for long-term incentives), and if such fiscal years include fiscal year 2009, the bonus amount awarded to the Executive for 2009 will be annualized;

 

  

8

  

 

(iii) For the period commencing on the Termination Date and ending on the earlier of (A) December 31st of the first calendar year following the calendar year in which the Termination Date occurs, or (B) the date that the Executive accepts new employment (the “Continuation Period”), the Post-Transaction Corporation or an Affiliate will at its expense maintain and administer for the continued benefit of Executive all insurance and welfare benefit plans in which Executive was entitled to participate as an employee as of the Termination Date; provided that Executive’s continued participation is possible under the general terms and provisions of such plans and all applicable laws.  If the Executive is a “specified employee” governed by Section 2.7 hereof, to the extent that any benefits provided to the Executive under this Section 2.3(c)(iii) are taxable to the Executive, then, with the exception of nontaxable medical insurance benefits, the value of the aggregate amount of such taxable benefits provided to the Executive pursuant to this Section 2.3(c)(iii) during the six month period following the Termination Date shall be limited to the amount specified by Section 402(g)(1)(B) of Code for the year in which the termination occurred.  The Executive shall pay the cost of any benefits that exceed the amount specified in the previous sentence during the six month period following the date of termination, and shall be reimbursed in full by the Company during the seventh month after the Termination Date.  The coverage and benefits (including deductibles and costs) provided under any such benefit plan in accordance with this paragraph during the Continuation Period will be no less favorable to Executive than the most favorable of such coverages and benefits as of the Termination Date.  If Executive’s participation in any such benefit plan is barred or any such benefit plan is terminated, the Post-Transaction Corporation or its Affiliate will provide Executive with benefits substantially similar or comparable in value to those Executive would otherwise have been entitled to receive under such plans.  At the end of the Continuation Period, the Executive will have the option to have assigned to her, at no cost and with no apportionment of prepaid premiums, any assignable insurance owned by the Post-Transaction Corporation or its Affiliate that relates specifically to the Executive.  To the maximum extent permitted by law, the Executive will be eligible for coverage under COBRA at the end of the Continuation Period or earlier cessation of the Post-Transaction Corporation’s obligation under the foregoing provisions of this paragraph;

 

(iv) All benefits that the Executive is entitled to receive pursuant to benefit plans maintained by the Post-Transaction Corporation or an Affiliate under which benefits are calculated based upon years of service or age will be calculated by treating the Executive as having attained two additional years of age and as having provided two additional years of service as of the Termination Date; and

 

(v) The Post-Transaction Corporation or an Affiliate will pay or deliver, as appropriate, all other benefits earned by the Executive or accrued for her benefit pursuant to any employee benefit plans maintained by the Post-Transaction Corporation or Affiliate with respect to services rendered by the Executive prior to the Termination Date.

 

(d) Resignation from Board of Directors.  If the Executive is a director of the Post-Transaction Corporation or any of its Affiliates and her status as an officer and employee is terminated for any reason other than death, the Executive will, if requested by the Post-Transaction Corporation, immediately resign as a director of the Post-Transaction Corporation and its Affiliates.  If such resignation is not received within 20 business days after the Executive actually receives written notice from the Post-Transaction Corporation requesting the 

 

  

9

  

 

resignation, the Executive will forfeit any right to receive any payments pursuant to this Agreement.

 

(e) Nondisclosure and Proprietary Rights.  The rights and obligations of the Company and the Executive contained in Article III hereof will continue to apply notwithstanding a termination following a Change of Control.

 

(f) Most Favorable Benefits.  It is the intention of the parties that the terms of this Agreement provide payments and benefits to the Executive that are equivalent or more beneficial to the Executive than are otherwise available to the Executive under the terms of any applicable benefit plan or related compensation agreement.  To that end, the terms of the Agreement shall govern the payments and benefits to which the Executive shall be entitled upon the termination of the Executive’s status as an officer and employee as provided herein, except that if the terms of any applicable benefit plan or related compensation agreement provide more favorable benefits to the Executive than are provided hereunder, the terms of such plan or agreement shall control.

 

2.4 Excise Tax Provision.

 

(a) Notwithstanding any other provisions of this Agreement, if a Change of Control occurs during the original or extended term of this Agreement, in the event that any payment or benefit received or to be received by the Executive in connection with the Change of Control of the Company or the termination of the Executive’s employment under this Agreement or any other agreement between the Company and the Executive (all such payments and benefits, including the payments and benefits under Section 2.3(c) hereof, being hereinafter called “Total Payments”) would be subject (in whole or in part), to an excise tax imposed by section 4999 of the Code (the “Excise Tax”), then the cash payments under Section 2.3(c) hereof shall first be reduced, and the noncash payments and benefits under the other sections hereof shall thereafter be reduced, to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax but only if (A) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income and employment taxes on such reduced Total Payments) is greater than or equal to (B) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income and employment taxes on such Total Payments and the amount of Excise Tax to which the Employee would be subject in respect of such unreduced Total Payments); provided, however, that the Executive may elect to have the noncash payments and benefits hereof reduced (or eliminated) prior to any reduction of the cash payments under Section 2.3(c) hereof.

 

(b) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of section 280G(b) of the Code shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the accounting firm (the “Auditor”) which was, immediately prior to a Change of Control or other event giving rise to a potential Excise Tax, the Company’s independent auditor, does not constitute a “parachute payment” within the meaning of section 280G(b)(2) of the Code 

 

  

10

  

 

(including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments shall be taken into account which, in the opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered, within the meaning of section 280G(b)(4)(B) of the Code, in excess of the “Base Amount” (within the meaning set forth in section 280G(b)(3) of the Code) allocable to such reasonable compensation, and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code.

 

(c) At the time that payments are made under this Agreement, the Post-Transaction Corporation shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Post-Transaction Corporation has received from Tax Counsel, the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).

 

2.5 Stock Options; Restricted Stock Units.  The foregoing benefits are intended to be in addition to the value of any options to acquire Common Stock of the Company, the exercisability of which is accelerated pursuant to the terms of any stock option agreement, any restricted stock units the vesting of which is accelerated pursuant to the terms of the restricted stock unit agreement, and any other incentive or similar plan heretofore or hereafter adopted by the Company.

 

2.6 Legal Fees.  The Company agrees to pay as incurred all legal fees and expenses that the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement (including as a result of any contest by the Executive about the amount or timing of any payment pursuant to this Agreement).

 

2.7 Section 409A of the Internal Revenue Code.

 

(a) It is the intention of the parties that payments or benefits payable under this Agreement not be subject to the additional tax imposed pursuant to Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and guidance issued thereunder (together, “Section 409A”), and the provisions of this Agreement shall be construed and administered in accordance with such intent.  To the extent any potential payments or benefits could become subject to Section 409A, the parties shall cooperate to amend this Agreement with the goal of giving the Executive the economic benefits described herein in a manner that does not result in such tax being imposed.  If the parties are unable to agree on a mutually acceptable amendment, the Company may, without the Executive’s consent and in such manner as it deems appropriate, amend or modify this Agreement or delay the payment of any amounts hereunder to the minimum extent necessary to meet the requirements of Section 409A.

 

(b) No payments or benefits provided herein that are paid because of a termination of employment under circumstances described herein shall be paid, unless such termination of employment also constitutes a “separation from service” within the meaning of “Section 409A”).

 

  

11

  

 

(c) If Executive is a “specified employee,” any payments payable as a result of Executive’s termination of employment (other than as a result of death) shall not be payable before the earlier of (i) the first business day that is more than six months after Executive’s Termination Date, (ii) the date of Executive’s death, or (iii) the date that otherwise complies with the requirements of Section 409A.  “Specified employee” shall mean the Executive if the Executive is a key employee under Treasury Regulations Section 1.409A-1(i) because of final and binding action taken by the Board or its Corporate Personnel Committee, or by operation of law or such regulation.

 

(d) No acceleration of payments and benefits provided for in this Agreement shall be permitted, except that the Company may accelerate payment, if permitted by Section 409A, as necessary to allow the Executive to pay FICA taxes on amounts payable hereunder and additional taxes resulting from the payment of such FICA amount, or as necessary to pay taxes and penalties arising as a result of the payments provided for in this Agreement failing to meet the requirements of Section 409A.  In no event shall the Executive, directly or indirectly, designate the calendar year of payment.

 

(e) To the extent that the amounts payable under this Article II are reimbursements and other separation payments described under Treasury Regulations Section 1.409A-1(b)(9)(v), such payments do not provide for the deferral of compensation.  If they do constitute deferral of compensation governed by Section 409A, they shall be deemed to be reimbursements or in-kind benefits governed by Treasury Regulations Section 1.409A-3(i)(1)(iv).  If the previous sentence applies, (i) the amount of expenses eligible for reimbursement or in-kind benefits provided during the Executive’s taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits in any other taxable year, (ii) the reimbursement of an eligible expense must be made on or before the last day of the Executive’s taxable year following the taxable year in which the expense was incurred and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

 

ARTICLE III

 

Nondisclosure and Proprietary Rights

 

3.1 Confidential Information.  For purposes of this Agreement, the term “Confidential Information” means any information, knowledge or data of any nature and in any form (including information that is electronically transmitted or stored on any form of magnetic or electronic storage media) relating to the past, current or prospective business or operations of the Company and its Affiliates, that at the time or times concerned is not generally known to persons engaged in businesses similar to those conducted or contemplated by the Company and its Affiliates (other than information known by such persons through a violation of an obligation of confidentiality to the Company), whether produced by the Company and its Affiliates or any of their consultants, agents or independent contractors or by Executive, and whether or not marked confidential, including without limitation information relating to the Company’s or its Affiliates’ products and services, business plans, business acquisitions, processes, product or service research and development ideas, methods or techniques, training methods and materials, and other operational methods or techniques, quality assurance procedures or standards, operating procedures, files, plans, specifications, proposals, drawings, charts, graphs, support 

 

  

12

  

 

data, trade secrets, supplier lists, supplier information, purchasing methods or practices, distribution and selling activities, consultants’ reports, marketing and engineering or other technical studies, maintenance records, employment or personnel data, marketing data, strategies or techniques, financial reports, budgets, projections, cost analyses, price lists, formulae and analyses, employee lists, customer records, customer lists, customer source lists, proprietary computer software, and internal notes and memoranda relating to any of the foregoing.

 

3.2 Nondisclosure of Confidential Information.  Executive will hold in a fiduciary capacity for the benefit of the Company all Confidential Information obtained by Executive during Executive’s employment (whether prior to or after the Agreement Date) and will use such Confidential Information solely within the scope of her employment with and for the exclusive benefit of the Company.  For a period of five years after the Termination Date, Executive agrees (a) not to communicate, divulge or make available to any person or entity (other than the Company) any such Confidential Information, except upon the prior written authorization of the Company or as may be required by law or legal process, and (b) to deliver promptly to the Company any Confidential Information in her possession, including any duplicates thereof and any notes or other records Executive has prepared with respect thereto.  In the event that the provisions of any applicable law or the order of any court would require Executive to disclose or otherwise make available any Confidential Information, Executive will give the Company prompt prior written notice of such required disclosure and an opportunity to contest the requirement of such disclosure or apply for a protective order with respect to such Confidential Information by appropriate proceedings.

 

3.3 Injunctive Relief; Other Remedies.  Executive acknowledges that a breach by Executive of Section 3.2 would cause immediate and irreparable harm to the Company for which an adequate monetary remedy does not exist; hence, Executive agrees that, in the event of a breach or threatened breach by Executive of the provisions of Section 3.2, the Company will be entitled to injunctive relief restraining Executive from such violation without the necessity of proof of actual damage or the posting of any bond, except as required by non waivable, applicable law.  Nothing herein, however, will be construed as prohibiting the Company from pursuing any other remedy at law or in equity to which the Company may be entitled under applicable law in the event of a breach or threatened breach of this Agreement by Executive, including without limitation the recovery of damages and/or costs and expenses, such as reasonable attorneys’ fees, incurred by the Company as a result of any such breach or threatened breach.  In addition to the exercise of the foregoing remedies, the Company will have the right upon the occurrence of any such breach to offset the damages of such breach as determined by the Company, against any unpaid salary, bonus, commissions or reimbursements otherwise owed to Executive.  In particular, Executive acknowledges that the payments provided under Article II are conditioned upon Executive fulfilling the nondisclosure agreements contained in this Article III.  If Executive at any time materially breaches nondisclosure agreements contained in this Article III, then the Company may offset the damages of such breach, as determined solely by the Company, against payments otherwise due to Executive under Article II or, at the Company’s option, suspend payments otherwise due to Executive under Article II during the period of such breach.  Executive acknowledges that any such offset or suspension of payments would be an exercise of the Company’s right to offset or suspend its performance hereunder upon Executive’s breach of this Agreement; such offset or suspension of payments would not constitute, and shall not be characterized as, the imposition of liquidated damages.

 

  

13

  

 

3.4 Governing Law of this Article III; Consent to Jurisdiction.  Any dispute regarding the reasonableness of the covenants and agreements set forth in this Article III or duration thereof, or the remedies available to the Company upon any breach of such covenants and agreements, will be governed by and interpreted in accordance with the laws of the State of the United States or other jurisdiction in which the alleged prohibited disclosure occurs, and, with respect to each such dispute, the Company and Executive each hereby consent to the jurisdiction of the state and federal courts sitting in the relevant State (or, in the case of any jurisdiction outside the United States, the relevant courts of such jurisdiction) for resolution of such dispute, and agree that service of process may be made upon her or it in any legal proceeding relating to this Article III by any means allowed under the laws of such jurisdiction.

 

3.5 Executive’s Understanding of this Article.  Executive hereby represents to the Company that she has read and understands, and agrees to be bound by, the terms of this Article III.  Executive acknowledges that the duration of the covenants contained in Article III are the result of arm’s length bargaining and are fair and reasonable in light of (a) the importance of the functions performed by Executive and the length of time it would take the Company to find and train a suitable replacement, and (b) Executive’s level of control over and contact with the business and operations of the Company and its Affiliates in various jurisdictions where same are conducted.  It is the desire and intent of the parties that the provisions of this Agreement be enforced to the fullest extent permitted under applicable law, whether now or hereafter in effect and, therefore, to the extent permitted by applicable law, the parties hereto waive any provision of applicable law that would render any provision of this Article III invalid or unenforceable.

 

ARTICLE IV

 

Miscellaneous

 

4.1 Binding Effect; Successors.

 

(a) This Agreement shall be binding upon and inure to the benefit of the Company and any of its successors or assigns.

 

(b) This Agreement is personal to the Executive and shall not be assignable by the Executive without the consent of the Company (there being no obligation to give such consent) other than such rights or benefits as are transferred by will or the laws of descent and distribution.

 

(c) The Company shall require any successor to or assignee of (whether direct or indirect, by purchase, merger, consolidation or otherwise) all or substantially all of the assets or businesses of the Company (i) to assume unconditionally and expressly this Agreement and (ii) to agree to perform or to cause to be performed all of the obligations under this Agreement in the same manner and to the same extent as would have been required of the Company had no assignment or succession occurred, such assumption to be set forth in a writing reasonably satisfactory to the Executive.

 

(d) The Company shall also require all entities that control or that after the transaction will control (directly or indirectly) the Company or any such successor or assignee to 

 

  

14

  

 

agree to cause to be performed all of the obligations under this Agreement, such agreement to be set forth in a writing reasonably satisfactory to the Executive.

 

4.2 Notices.  All notices hereunder must be in writing and, unless otherwise specifically provided herein, will be deemed to have been given upon receipt of delivery by: (a) hand (against a receipt therefor), (b) certified or registered mail, postage prepaid, return receipt requested, (c) a nationally recognized overnight courier service (against a receipt therefor) or (d) telecopy transmission with confirmation of receipt.  All such notices must be addressed as follows:

 

If to the Company, to:

Stratus Properties Inc.

98 San Jacinto Boulevard

Suite 220

Austin, Texas  78701

Attention:  Chairman of Corporate Personnel Committee

If to the Executive, to:

Erin D. Pickens

[intentionally omitted]

or such other address as to which any party hereto may have notified the other in writing.

4.3 Governing Law.  Except as provided in Article III hereof, this Agreement shall be construed and enforced in accordance with and governed by the internal laws of the State of Delaware without regard to principles of conflict of laws.

 

4.4 Withholding.  The Executive agrees that the Company has the right to withhold, from the amounts payable pursuant to this Agreement, all amounts required to be withheld under applicable income and/or employment tax laws, or as otherwise stated in documents granting rights that are affected by this Agreement.

 

4.5 Amendment, Waiver.  No provision of this Agreement may be modified, amended or waived except by an instrument in writing signed by both parties.

 

4.6 Severability.  If any term or provision of this Agreement, or the application thereof to any person or circumstance, shall at any time or to any extent be invalid, illegal or unenforceable in any respect as written, Executive and the Company intend for any court construing this Agreement to modify or limit such provision so as to render it valid and enforceable to the fullest extent allowed by law.  Any such provision that is not susceptible of such reformation shall be ignored so as to not affect any other term or provision hereof, and the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid, illegal or unenforceable, shall not be 

 

  

15

  

 

affected thereby and each term and provision of this Agreement shall be valid and enforced to the fullest extent permitted by law.

 

4.7 Waiver of Breach.  The waiver by either party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach thereof.

 

4.8 Remedies Not Exclusive.  No remedy specified herein shall be deemed to be such party’s exclusive remedy, and accordingly, in addition to all of the rights and remedies provided for in this Agreement, the parties shall have all other rights and remedies provided to them by applicable law, rule or regulation.

 

4.9 Company’s Reservation of Rights.  Executive acknowledges and understands that the Executive serves at the pleasure of the Board and that the Company has the right at any time to terminate Executive’s status as an employee of the Company or any of its Affiliates, or to change or diminish her status during the Employment Term, subject to the rights of the Executive to claim the benefits conferred by this Agreement.

 

4.10 Prior Change of Control Agreement.  Effective as of the Agreement Date, this Agreement supersedes any prior change of control or nondisclosure agreement between the Executive and the Company.

 

4.11 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 together shall constitute one and the same instrument.

 

  

16

  

IN WITNESS WHEREOF, the Company and the Executive have caused this Agreement to be executed as of the Agreement Date.

 

Stratus Properties Inc.

By:                    /s/ James C. Leslie                                                  

James C. Leslie

Director and Chairman of the

Corporate Personnel Committee of the

Board of Directors

Executive

                                     /s/ Erin D. Pickens                       

Erin D. Pickens

 

Signature Page of Change of Control Agreement

between Stratus Properties Inc. and Erin D. Pickens

  

17ex10_1.htm

    
Exhibit
10.1

      

      TETRA
Technologies, Inc.

      CASH
INCENTIVE COMPENSATION PLAN

      Plan
Provisions

      Effective January 1, 2010

       

      This TETRA
Technologies, Inc. Cash Incentive Compensation Plan (the “Plan”) is adopted by
TETRA Technologies, Inc., a Delaware corporation (the “Company”).  The
terms of the Plan have been approved by the Company’s Management and
Compensation Committee of the Board of Directors (the “Committee”) and are as
follows:

       

      
        	
                I.  

              	
                PURPOSE

              

      

       

      The purpose of the
Plan is to advance the best interests of the Company by providing designated
officers, managers, other key employees and consultants with additional
incentives through the grant of performance-based short-term and long-term
awards providing an opportunity to share in the performance of the Company by
achieving specific corporate and divisional/business unit financial and
operational goals, and personal objectives.

       

      
        	
                II.  

              	
                DEFINITIONS

              

      

       

      
        	
                (a)  

              	
                “Administrator”
      shall mean the Committee; provided, however, that the Company’s Chief
      Executive Officer (“CEO”) shall be the Administrator with respect to
      Participants other than Senior Managers, subject to the ultimate authority
      of the Committee.

              

      

       

      
        	
                (b)  

              	
                “Affiliate”
      shall mean (i) any entity in which the Company, directly or indirectly,
      owns 10% or more of the combined voting power, as determined by the
      Committee, (ii) any “parent corporation” of the Company (as defined in
      Section 424(e) of the Code), (iii) any “subsidiary corporation” of any
      such parent corporation (as defined in Section 424(f) of the Code) of the
      Company and (iv) any trades or businesses, whether or not incorporated
      which are members of a controlled group or are under common control (as
      defined in Sections 414(b) or (c) of the Code) with the
      Company.

              

      

       

      
        	
                (c)  

              	
                “Annual
      Incentive Award” means an annual incentive award providing a Participant
      the opportunity to receive incentive compensation based upon performance
      over a Performance Period of one Plan
Year.

              

      

       

      
        	
                (d)  

              	
                 “Award”
      shall mean any Annual Incentive Award or a Long-Term Incentive Award
      granted under the Plan.

              

      

       

      
        	
                (e)  

              	
                “Base Salary”
      shall mean with respect to a Participant who is an Employee, such
      Participant’s annual base salary rate in effect at the end of a Plan
      Year.  With respect to a Participant who is a Consultant, “Base
      Salary” shall mean such Participant’s annual compensation for the Plan
      Year.  Base Salary does not include Awards under this Plan or
      any other short-term or long-term incentive plan or imputed income from
      programs such as group term life insurance.  Base Salary is
      based on annual salary 

              

      

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

         

      

      
        	
                 

              	
                before
      reductions for deferrals under Company-sponsored deferred compensation
      plans, contributions under Code Section 401(k) and contributions to
      flexible spending accounts under Code
  Section 125.

              

      

       

      
        	
                (f)  

              	
                “Board” shall
      mean the Company’s Board of
Directors.

              

      

       

      
        	
                (g)  

              	
                “Change in
      Control” shall be deemed to have occurred upon any of the following
      events:

              

      

       

      
        	
                (i)  

              	
                any “person”
      (as defined in Section 3(a)(9) of the Exchange Act, and as modified in
      Section 13(d) and 14(d) of the Exchange Act) other than (A) the Company or
      any of its subsidiaries, (B) any employee benefit plan of the Company or
      any of its subsidiaries, (C) any Affiliate, (D) a company owned, directly
      or indirectly, by stockholders of the Company in substantially the same
      proportions as their ownership of the Company, or (E) an underwriter
      temporarily holding securities pursuant to an offering of such securities
      (collectively referred to as a “Person”), becomes the “beneficial owner”
      (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of
      securities of the Company representing more than 50% of the shares of
      voting stock of the Company then
outstanding;

              

      

       

      
        	
                (ii)  

              	
                the
      consummation of any merger, organization, business combination or
      consolidation of the Company or one of its subsidiaries with or into any
      other company, other than a merger, reorganization, business combination
      or consolidation which would result in the holders of the voting
      securities of the Company outstanding immediately prior thereto holding
      securities which represent immediately after such merger, reorganization,
      business combination or consolidation more than 50% of the combined voting
      power of the voting securities of the Company or the surviving company or
      the parent of such surviving
company;

              

      

       

      
        	
                (iii)  

              	
                the
      consummation of a sale or disposition by the Company of all or
      substantially all of the Company’s assets, other than a sale or
      disposition if the holders of the voting securities of the Company
      outstanding immediately prior thereto hold securities immediately
      thereafter which represent more than 50% of the combined voting power of
      the voting securities of the acquiror, or parent of the acquiror, of such
      assets;

              

      

       

      
        	
                (iv)  

              	
                the
      stockholders of the Company approve a plan of complete liquidation or
      dissolution of the Company; or

              

      

       

      
        	
                (v)  

              	
                individuals
      who, as of the Effective Date, constitute the Board (the “Incumbent
      Board”) cease for any reason to constitute at least a majority of the
      Board; provided, however, that any individual becoming a director
      subsequent to the Effective Date whose election by the Board, was approved
      by a vote of at least a majority of the directors then comprising the
      Incumbent Board 

              

      

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                shall be
      considered as though such individual were a member of the Incumbent Board,
      but excluding, for this purpose, any such individual whose initial
      assumption of office occurs as a result of an election contest with
      respect to the election or removal of directors or other solicitation of
      proxies or consents by or on behalf of a person other than the
      Board.

              

      

       

      Notwithstanding the
foregoing, however, in any circumstance or transaction in which compensation
resulting from or in respect of an Award would be subject to the income tax
under Section 409A of the Code if the foregoing definition of “Change in
Control” were to apply, but would not be so subject if the term “Change in
Control” were defined herein to mean a “change in control event” within the
meaning of Treas. Reg. § 1.409A-3(i)(5), then “Change in Control” shall mean,
but only to the extent necessary to prevent such compensation from becoming
subject to the income tax under Section 409A of the Code, a transaction or
circumstance that satisfies the requirements of both (1) a Change of Control
under clauses (i) through (v) above, and (2) a “change in control event” within
the meaning of Treas. Reg. § 1.409A-3(i)(5).

       

      
        	
                (h)  

              	
                “Code” shall
      mean the Internal Revenue Code of 1986, as amended, or any successor
      statute thereto.

              

      

       

      
        	
                (i)  

              	
                “Consultant”
      means any individual, other than an Employee or director of the Company,
      who renders consulting or advisory services to the Company or an
      Affiliate, provided such services are not in connection with the offer or
      sale of securities in a capital-raising
  transaction.

              

      

       

      
        	
                (j)  

              	
                “Disability”
      means an inability to perform the Participant’s material services for the
      Company for a period of 90 consecutive days or a total of 180 days, during
      any 365-day period, in either case as a result of incapacity due to mental
      or physical illness, which is determined to be total and permanent. A
      determination of Disability shall be made by a physician satisfactory to
      both the Participant (or his guardian) and the Company, provided that if
      the Participant and the Company do not agree on a physician, the
      Participant and the Company shall each select a physician and these two
      together shall select a third physician, whose determination as to
      Disability shall be final, binding and conclusive with respect to all
      parties. Notwithstanding the above, eligibility for disability benefits
      under any policy for long-term disability benefits provided to the
      Participant by the Company shall conclusively establish the Participant’s
      disability.

              

      

       

      
        	
                (k)  

              	
                “Employee”
      shall mean any employee of the Company or an
  Affiliate.

              

      

       

      
        	
                (l)  

              	
                “Exchange
      Act” shall mean the Securities Exchange Act of 1934, as
      amended.

              

      

       

      
        	
                (m)  

              	
                “Long-Term
      Incentive Award” means a long-term incentive award providing a Participant
      the opportunity to receive compensation based upon performance over a
      Performance Period extending beyond one Plan
  Year.

              

      

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      
        	
                  

              	
                upon
      performance over a Performance Period extending beyond one Plan
      Year.

              

      

       

      
        	
                (n)  

              	
                “Participant”
      for any Plan Year shall mean an officer, manager, other key Employee or
      Consultant of the Company or any Affiliate who is designated by the
      Administrator to participate in the Plan and receive either or both of an
      Annual Incentive Award or Long-Term Incentive Award under the
      Plan.

              

      

       

      
        	
                (o)  

              	
                “Performance
      Goal” shall mean the goal or level of performance established by the
      Administrator with respect to any Award for the purpose of determining
      when an Award may be earned.

              

      

       

      
        	
                (p)  

              	
                “Performance
      Measures” shall mean (i) the performance measures for the Company, on
      a consolidated basis, and/or for specified subsidiaries, divisions or
      business or geographical units of the Company as determined by the
      Administrator that may include any one or more of the
      following:  earnings per share; increase in price per share;
      increase in revenues; increase in cash flow; return on assets; return on
      investments; return on equity; return on net capital employed; economic
      value added; gross margin; net income; earnings before interest, taxes,
      depreciation, depletion and amortization; earnings before interest and
      taxes; profit before taxes; operating income; total stockholder return;
      debt reduction; health/safety/environmental performance; other financial
      and non-financial measures deemed by the Administrator material to the
      short or long-term success of the Company; and any of the foregoing
      determined on the absolute or relative basis or as compared to the
      performance of a published or special index deemed applicable by the
      Administrator including, but not limited to, the Standard &
      Poor’s 500 Stock Index, the Oil Service Index (“OSX”) or components
      thereof or a group of comparable companies, and (ii) the personal
      objectives or performance measures for each Participant as may be
      established by the Administrator pursuant to the
  Plan.

              

      

       

      
        	
                (q)  

              	
                “Performance
      Period” for an Award means the one or more periods of time of at least one
      (1) Plan Year in duration, as the Administrator may select, during which
      any Performance Goals specified with respect to such Award are to be
      measured.  Performance Periods applicable to outstanding Awards
      may be overlapping.

              

      

       

      
        	
                (r)  

              	
                “Retirement”
      means termination of Employment of an Employee or the termination of
      service of a Consultant, in each case under circumstances as shall
      constitute retirement as determined by the
  Administrator.

              

      

       

      
        	
                (s)  

              	
                “Senior
      Manager” shall refer to any officer, manager or other Employee whose
      compensation is established, on an annual basis, by the
      Committee.

              

      

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

         

      

      
        	
                III.  

              	
                TERM

              

      

       

      The effective date
of this Plan is January 1, 2010 (the “Effective Date”).  The Plan
will remain in effect for successive fiscal years beginning on January 1,
2010 (each, a “Plan Year”) unless and until terminated in accordance with the
terms herein.

       

      
        	
                IV.  

              	
                ELIGIBILITY

              

      

       

      
        	
                4.1  

              	
                All officers,
      managers, other key Employees and Consultants may be eligible to
      participate in the Plan. Directors who are not Employees of the Company
      shall not be eligible to participate in the Plan. For each Plan Year, the
      Committee shall designate the Senior Managers who shall participate in the
      Plan and the CEO shall designate all other
  Participants.

              

      

       

      
        	
                4.2  

              	
                A newly
      hired, engaged, transferred or promoted Employee or Consultant may be
      selected by the CEO for participation in the Plan after the commencement
      of the Plan Year; however, the participation of any such Employee who is a
      Senior Manager of the Company must be approved by the
      Committee.  Participants who are selected for participation
      after the commencement of a Performance Period will be eligible to
      participate in the Plan on a pro-rata basis for such a Performance Period
      as of the date the Participant was approved into the
  Plan.

              

      

       

      
        	
                4.3  

              	
                Participants
      will be assigned to a specific eligibility level by the CEO and in the
      case of Senior Managers, such designation will be approved by the
      Committee. For purposes of the Annual Incentive Awards, Threshold, Target,
      Stretch and Over Achievement incentive award opportunities will be
      determined and approved by the Committee annually for each eligibility
      level.

              

      

       

      
        	
                V.  

              	
                ESTABLISHMENT
      OF AWARDS

              

      

       

      
        	
                5.1  

              	
                In connection
      with the grant of each Award, the Administrator shall (i) determine the
      Performance Period applicable to such Award and identify the Award as
      either an Annual Incentive Award or Long-Term Incentive Award; (ii)
      determine the Performance Measures and Performance Goals applicable to
      such Award in accordance with the terms of the Plan; (iii) determine
      the applicable vesting schedule for each Long-Term Incentive Award; and
      (iv) establish such other terms and conditions for the Award as the
      Administrator may deem appropriate.

              

      

       

      
        	
                5.2  

              	
                For each
      Annual Incentive Award, a Participant will receive an individual Annual
      Incentive Award Determination Worksheet or other document that illustrates
      his or her specific Annual Incentive Award opportunity and the applicable
      Performance Measures and Performance
Goals.

              

      

       

      
        	
                5.3  

              	
                For each
      Long-Term Incentive Award, a Participant will receive a document that
      illustrates his or her specific Long-Term Incentive Award opportunity, the
      applicable Performance Measures and Performance Goals and the applicable
      vesting schedule.  Unless otherwise provided in any Long-Term
      Incentive Award, the Performance Period for a Long-Term Incentive Award
      shall be a period of three (3) fiscal years commencing on January 1 of the
      year the Long-Term Incentive Award is granted and shall vest at the end of
      the Performance Period based upon the performance achieved during the
      Performance Period.

              

      

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

       

      
        	
                5.4  

              	
                All Awards
      under the Plan shall be payable in cash.  The actual dollar
      amount paid to a Participant under any Award (the “Award Payment”)
      pursuant to the Plan shall be discretionary, and no Participant shall be
      automatically entitled to an Award Payment under the Plan.  The
      Administrator shall have the sole discretion to increase, reduce or
      eliminate the amount of a Participant’s Award Payment otherwise payable
      under the Plan.

              

      

       

      
        	
                VI.  

              	
                PERFORMANCE
      MEASURES AND WEIGHTS

              

      

       

      
        	
                6.1  

              	
                Performance
      Measures are generally selected and weighted to give emphasis to
      performance over which Participants have the most direct control.
      Performance Measures may (i) vary among Participants, (ii) vary between
      Annual Incentive Award and Long-Term Incentive Awards,  and
      (iii) change from Performance Period to Performance
  Period.

              

      

       

      
        	
                6.2  

              	
                (a)           Annual
      Incentive Awards.  Each Participant receiving an Annual
      Incentive Award will have a Performance Measure based upon (i) the overall
      financial performance of the Company, on a consolidated basis; and (ii)
      one or more health/safety/environmental indicators.  Designated
      Participants will also have Performance Measures based upon the financial
      performance of any one or more of the Company’s subsidiaries, divisions,
      business or geographical units. In
      addition, each
      Participant will also have a “personal objectives” component which may
      include (i) personal performance objectives and measures such as teamwork,
      interpersonal skills, communication skills, leadership and other similar
      skills, and (ii) individual business objectives including those described
      in clause (i) of the definition of Performance Measures.  The
      personal objectives component will also include an overall assessment of
      the Participant’s contribution to the Company and/or the subsidiary,
      division, business or geographical unit of the Company in which he or she
      is employed or to which he or she provides
  services.

              

      

       

      
        	
                  

              	
                (b)           Long-Term Incentive Awards. Each Participant
      receiving a Long-Term Incentive Award will have Performance Measures which
      may be based upon the overall financial performance of the Company, on a
      consolidated basis, or the financial performance of any one or more of the
      Company’s subsidiaries, divisions, business or geographical
      units.  A Participant receiving a Long-Term Incentive Award may,
      at the discretion of the Administrator, also have a “personal objectives”
      component.

              

      

       

      
        	
                6.3  

              	
                The
      Performance Measures and weights for all Awards with respect to Senior
      Managers shall be determined and approved by the Committee for each
      Performance Period.  The Performance Measures and weights for
      all Awards with respect to all other Participants shall be determined and
      approved by the CEO.  The determination of the Performance
      Measures and weights for each Annual Incentive Award shall be established
      on or before March 31 of the respective Plan Year.  The
      determination of the Performance Measures and weights for each Long-Term
      Incentive Award shall be established on or before May 31 of the first Plan
      Year of the respective Performance
Period.

              

      

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

       

      
        	
                VII.  

              	
                PERFORMANCE
      GOALS

              

      

       

      
        	
                7.1  

              	
                (a)           Annual
      Incentive Awards.  A Threshold, Target and Stretch
      Performance Goal will be established for each Performance Measure
      applicable to an Annual Incentive Award.  Based on the weighting
      of each Performance Measure, an incentive award opportunity for each
      Participant will be established for each such Performance Goal and
      expressed as a percentage of Base Salary.  The Over Achievement
      incentive award opportunity established by the Committee for each
      eligibility level pursuant to Section 4.3 will be applied to designated
      financial Performance Measures for corporate and each major division to
      create an additional Incentive Award opportunity pursuant to provisions of
      Section 8.4.

              

      

       

      
        	
                  

              	
                (b)           Long-Term Incentive Awards.  A
      Threshold, Target, Stretch and Over Achievement Performance Goal will be
      established for each Performance Measure applicable to a Long-Term
      Incentive Award.  Based on the weighting of each Performance
      Measure, an incentive award opportunity for each Participant will be
      established for each such Performance
  Goal.

              

      

       

      
        	
                7.2  

              	
                The Target
      level of performance is generally set at the budgeted level for the Plan
      Year; the Threshold level of performance is generally set at 80% of
      budget; the Stretch level of performance is generally set at 115% of
      budget; and the maximum Over Achievement level of performance is generally
      set at 125% of budget. These are general guidelines and may vary between
      Annual Incentive Awards and Long-Term Incentive Awards, from Performance
      Period to Performance Period, and between subsidiaries, divisions,
      business and geographical units to reflect specific circumstances. The
      Committee has final authority to set performance levels under the
      Plan.

              

      

       

      
        	
                7.3  

              	
                Financial
      Performance Goals shall be based on the financial budgets approved by the
      Board, to the extent applicable.

              

      

       

      
        	
                7.4  

              	
                The
      Performance Goals for Senior Managers will be established by the
      Committee.  The CEO will establish the Performance Goals for all
      other Participants; provided, however, that if the Committee has
      established Threshold, Target, Stretch and Over Achievement Performance
      Goals for any Senior Manager with respect to a financial or operational
      Performance Measure, the CEO must also use such Performance Goals for any
      other Participants who have similar Awards containing Performance Goals
      based upon such Performance Measures.  The Performance Goals
      will be established on or before (i) March 31 of the respective Plan
      Year for Annual Incentive Awards, and (ii) May 31 of the first Plan
      Year of the respective Performance Period for Long-Term Incentive
      Awards.

              

      

       

      
        	
                7.5  

              	
                Personal
      Performance Goals for each Participant will be established based on such
      Participant’s ability to impact the outcome of such Performance Goals and
      they will include an overall assessment of the individual’s contributions
      to the Company and/or the subsidiary, division, business or geographical
      unit of the Company in which he or she is employed or provides services.
      The Committee is responsible for establishing the personal Performance
      Goals for the CEO. The CEO (in conjunction with other officers) shall
      establish the personal Performance Goals for all other
      Participants.  The personal Performance Goals for all
      

              

      

       

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

       

      
        	
                  

              	
                Participants
      shall be established on or before (i) March 31 of the respective Plan Year
      for Annual Incentive Awards, and (ii) May 31 of the first Plan Year of the
      respective Performance Period for Long-Term Incentive
    Awards.

              

      

       

      
        	
                VIII.  

              	
                DETERMINING
      THE PAYMENT AWARD

              

      

       

      
        	
                8.1  

              	
                Once the
      applicable Performance Period has been completed and the Company has
      received its audited financial statements covering the applicable
      Performance Period, the financial performance of the Company, on a
      consolidated basis, and each applicable subsidiary, division and business
      or geographical unit will be determined over such Performance
      Period.  The financial performance shall then be evaluated to
      determine the extent to which the financial Performance Goals have been
      achieved, based on the standards established at the beginning of the
      Performance Period. In making any such determination, the Administrator
      may make adjustments for the following:  (i) cumulative
      effect of accounting changes; (ii) extraordinary items, as that term
      is defined in FASB Codification, Topic 225-20, “Extraordinary and Unusual
      Items”; (iii) discontinued operations; and (iv) unusual or
      infrequently occurring items (less the amount of related income taxes), as
      that term is used in FASB Codification, Topic 225-20, “Extraordinary and
      Unusual Items”.  The Administrator may also make other
      adjustments with respect to the financial results for purposes of
      evaluating the Performance Goals and the amount of the Award Payment
      payable on the basis thereof, including without limitation, adjustments
      related to:  asset write-downs; the acquisition or disposition
      of any business(es) or material asset(s); acquisition-related charges;
      litigation or claim judgments or settlements; the effects of changes in
      tax law or other laws or provisions affecting reported results; accruals
      for reorganization and restructuring programs; unrealized gains or losses
      on investments; weather related events including business interruption and
      losses related to the damage or destruction of facilities from hurricanes;
      and, other adjustments determined by the Administrator to be appropriate
      under the circumstances.  Any adjustments affecting a financial
      Performance Goal applicable to an Award to the CEO or any other Senior
      Managers shall be approved by the
Committee.

              

      

       

      Straight-line
interpolation will be used for purposes of determining the amount of the Award
earned when performance falls between Threshold and Target, Target and Stretch,
and Stretch and Over Achievement Performance Goals.

       

      
        	
                8.2  

              	
                Each
      Participant will meet with his or her supervisor to evaluate the results
      achieved for each personal Performance Goal and the overall assessment of
      the Participant’s contributions to the Company and/or the subsidiary,
      division, business or geographical unit of the Company in which he or she
      is employed or to which he or she provides services. The performance level
      for the personal component will be determined based on an assessment of
      results achieved compared to the personal Performance Goals established at
      the beginning of the Performance Period and the assessment of such
      Participant’s contributions during the Performance Period.  The
      determination of whether a Participant has achieved his or her personal
      Performance Goals shall be within the sole discretion of the supervisor,
      subject to the approval of the CEO, and in the case of the CEO and other
      Senior Managers, the sole discretion of the
  Committee.

              

      

       

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

       

      
        	
                8.3  

              	
                The actual
      Award Payment which may be received by a Participant under an Annual
      Incentive Award will be determined on an individual basis and based upon
      the sum of the awards determined by the Performance Goals achieved under
      the respective Annual Incentive Award for each applicable Performance
      Measure, up to the Stretch award level.  The actual Award
      Payment which may be received by a Participant under a Long-Term Incentive
      Award will be determined on an individual basis and based upon the sum of
      the awards determined by the Performance Goals achieved under the
      respective Long-Term Incentive Award for each applicable Performance
      Measure up to the Over Achievement award level.  The amount of
      the Award Payment to be received under any Award shall be within the sole
      discretion of the Committee, in the case of the CEO and other Senior
      Managers, and the CEO with respect to all other Participants, and no
      Participant shall be automatically entitled to an Award Payment under any
      Award.  The Administrator shall have the discretion to increase,
      decrease or eliminate the amount of a Participant’s Award Payment
      otherwise payable under any Award.

              

      

       

      
        	
                8.4  

              	
                In addition
      to Award Payments which may be received under any Annual Incentive Award
      on an individual basis, Participants receiving Annual Incentive Awards
      shall have the opportunity to participate in an annual bonus pool (the
      “Over Achievement Pool”) which may be established for corporate and each
      major division, including Maritech Resources, Inc. and Compressco, Inc.,
      providing an opportunity for additional annual bonus
      payments.  Participants receiving Long-Term Incentive Awards but
      not Annual Incentive Awards shall not have an opportunity to participate
      in the Over Achievement Pool.  The establishment of the Over
      Achievement Pool for any Plan Year for corporate will be based upon
      achievement of a financial Performance Goal established by the Committee
      with respect to the Annual Incentive Awards for the Senior Managers within
      corporate for such Plan Year.  The establishment of the Over
      Achievement Pool for any Plan Year for a major division will be based upon
      achievement of a financial Performance Goal established by the Committee
      with respect to the Annual Incentive Awards for the Senior Managers within
      such major division for such Plan Year.  If the actual results
      for the designated financial Performance Measure for corporate or any
      major division exceeds the respective Stretch level of performance for
      such Plan Year, an Over Achievement Pool shall be established for
      corporate or the respective major division, as applicable.  An
      Over Achievement Pool shall only be established for corporate or a major
      division if the actual results for the designated financial Performance
      Measure for corporate or the respective major division exceed the Stretch
      level of performance. One or more Over Achievement Pools may be
      established for any Plan Year.  The amount of the Over
      Achievement Pool for corporate or the respective major division shall be
      equal to the aggregate amount of the incremental annual bonus
      opportunities available to all Participants in corporate or such major
      division, based upon their respective eligibility levels.  The
      maximum bonus amount which may be contributed on behalf of any Participant
      to an Over Achievement Pool for any Plan Year will not exceed two times
      the Target Award opportunity for such Participant less the Stretch Award
      opportunity for such Participant.  The Over Achievement Pool
      shall be allocated among the Participants in corporate or the respective
      division, as applicable, at the discretion of management, with the
      approval of the CEO; provided that any allocation of funds from an Over
      

              

      

       

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

       

      
        	
                  

              	
                Achievement
      Pool to the CEO or other Senior Manager shall be approved by the
      Committee, in its sole discretion.

              

      

       

      
        	
                8.5  

              	
                Award
      Payments will be paid in cash as soon as practicable after the end of the
      Performance Period and completion of the outside audit of financial
      results. Award Payments will be paid no later than two and one-half
      (2 1/2) months after the end of the Performance Period to which the
      Award relates. Except as provided in Section 9.5 and 9.6, a Participant
      must be employed on the date Award Payments are paid in order to receive
      payment under an Award.

              

      

       

      
        	
                IX.  

              	
                ADMINISTRATION
      OF PLAN

              

      

       

      
        	
                9.1  

              	
                The Committee
      administers the Plan; provided, however, that the CEO will be responsible
      for administration of the Plan with respect to all Participants other than
      Senior Managers.  The CEO will be responsible for the day-to-day
      management of the Plan.  The authority of the Administrator in
      administering the Plan shall include, in particular, the authority
      to:

              

      

       

      
        	
                (a)  

              	
                designate
      Participants for a particular Plan Year in accordance with the
      Plan;

              

      

       

      
        	
                (b)  

              	
                establish,
      for each Performance Period, the Performance Measures, Performance Goals
      and specific Plan terms for each Participant in accordance with the
      Plan;

              

      

       

      
        	
                (c)  

              	
                establish
      regulations for the administration of the Plan and make all determinations
      deemed necessary for the administration of the Plan, in each case which
      are not inconsistent with the Plan;
and

              

      

       

      
        	
                (d)  

              	
                interpret the
      provisions of the Plan and make final decisions with respect to the
      entitlement of any Participant to an
Award.

              

      

       

      The Committee shall
have the sole authority to approve the aggregate amount of Award Payments for
all Participants (inclusive of any Over Achievement Pool(s)) which may be paid
for any Performance Period.

       

      
        	
                9.2  

              	
                The Committee
      will review the performance results of the Company and the specified
      subsidiaries, divisions or business or geographical units of the Company
      and will determine whether the Performance Goals under any Award for
      Senior Managers established for the Performance Period have been
      met.  If the Performance Goals established by the Committee for
      a Senior Manager have been met, the Committee shall document the
      achievement of such Performance Goals and the total amount of the Award to
      be paid in the minutes of the Committee meeting or in accordance with the
      policies and procedures as may be established by the Committee from time
      to time.  For all Participants who are not Senior Managers, the
      CEO shall determine whether the Performance Goals under any Award
      established for the Performance Period have been met by the respective
      Participants and document such determination in accordance with the
      Company’s policies and procedures, as may be established from time to
      time.  The Committee and each of its members shall be entitled
      to rely upon information provided by appropriate officers of the Company
      with respect to 

              

      

       

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

       

      
        	
                  

              	
                financial and
      other data in order to determine if the Performance Goals for a Plan Year
      have been met.  Neither the Committee nor any member shall be
      liable for any action or determination made in good faith with respect to
      the Plan or any Award made
hereunder.

              

      

       

      
        	
                9.3  

              	
                The Awards
      for each applicable Performance Period will be accrued and charged as an
      expense before determining the financial performance under the
      Plan.

              

      

       

      
        	
                9.4  

              	
                Except as
      provided in Section 9.6, Participants whose employment or period of
      service is terminated for any reason other than death, Disability or
      Retirement prior to payment of any Award Payment will not be eligible to
      receive payment under any Award.

              

      

       

      
        	
                9.5  

              	
                Upon the
      recommendation of management and with the approval of the Administrator
      (which may be given or withheld at the Administrator’s sole discretion),
      Participants whose employment or period of service is terminated for
      reason of death, Disability, or Retirement prior to the payment of any
      Award Payment may be eligible for a pro-rated Award Payment if the
      applicable Performance Goals are achieved for the then current Performance
      Period. Any such prorated payment will be made to the Participant or his
      or her guardian or estate, as applicable, in accordance with the
      provisions of the Plan, including Section 8.5
  above.

              

      

       

      
        	
                9.6  

              	
                Unless the
      Committee determines otherwise, upon the effective date of any Change in
      Control, all potential Awards payable hereunder attributable to the
      Performance Period in which the Change in Control occurs will become
      payable on a pro rata basis based upon the Target incentive amount that
      may be paid under such Award.  Payment shall be made as soon as
      practicable (and no more than two and one-half months) following the
      Change in Control.

              

      

       

      
        	
                9.7  

              	
                The Committee
      may, in its sole discretion, discontinue the Plan at any time, or amend it
      from time to time.  The Administrator shall have the authority
      to amend any grant to include any provision which, at the time of such
      amendment, is authorized under the terms of the
  Plan.

              

      

       

      
        	
                X.  

              	
                ADDITIONAL
      PROVISIONS

              

      

       

      
        	
                10.1  

              	
                No
      Right to Employment.  Neither the Plan nor the grant of
      any Award shall be construed as giving a Participant the right to be
      retained in the employ or service of the Company or any
      Affiliate.  Further, the Company or any Affiliate may at any
      time dismiss a Participant from employment or service as a Consultant,
      free from any liability or any claim under the Plan or any Award
      hereunder.

              

      

       

      
        	
                10.2  

              	
                No
      Assignment.  A Participant’s rights and interests under
      the Plan or any Award may not be assigned or transferred except by will or
      by the laws of descent and distribution.  Any other attempted
      assignment or alienation shall be void and of no force or
      effect.

              

      

       

      
        	
                10.3  

              	
                Participant’s
      Rights.  The Plan shall be unfunded.  The right
      of any Participant to receive any Award Payment under an Award granted to
      such Participant pursuant to the provisions of the Plan shall be an
      unsecured claim against the 

              

      

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

       

      
        	
                  

              	
                general assets of the
      Company.  The Company shall not be required to establish any
      special or separate fund or to make any other segregation of assets to
      assure the payment of any Awards under the
  Plan.

              

      

       

      
        	
                10.4  

              	
                Withholding
      Taxes.  All Awards under the Plan shall be subject to
      applicable federal (including FICA), state and local tax withholding
      requirements.  The Company may require that the Participant or
      his or her personal representative pay to the Company the amount of any
      federal, state or local taxes that the Company is required to withhold
      with respect to such Awards, or the Company may deduct from other wages
      paid by the Company the amount of any withholding taxes due with respect
      to such Awards.

              

      

       

      
        	
                10.5  

              	
                Governing
      Law.  The validity, construction and interpretation and
      effect of the Plan shall be governed by and determined in accordance with
      the laws of the State of Texas, without giving effect to the conflict of
      laws provisions thereof.

              

      

       

      
        	
                10.6  

              	
                Section
      409A.  The Plan is intended to comply with
      Section 409A and the interpretive guidance thereunder, including the
      exemption for short-term deferrals, and shall be administered
      accordingly.  The Plan shall be construed and interpreted with
      such intent.  The Company makes no representations that the
      Plan, the administration of the Plan, or the amounts hereunder comply
      with, or are exempt from, Section 409A.  If an operational
      failure occurs with respect to Section 409A, any affected Participant
      shall fully cooperate with the Company to correct the failure, to the
      extent possible, in accordance with any correction procedure established
      by the Secretary of the
Treasury.

              

      

       
12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00170-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00170-of-00352.parquet"}]]