Document:

Ex.10.1

Ex. 10.1

	
		
	SunTrust Banks, Inc.

	2009 Stock Plan

	 
	2012 NONQUALIFIED

	 
	STOCK OPTION (NQO)

	 
	2-YEAR CLIFF VESTED

	 
	 

               

SunTrust Banks, Inc. ("SunTrust"), a Georgia corporation, pursuant to action of the Compensation Committee (“Committee”) of its Board of Directors and in accordance with the SunTrust Banks, Inc. 2009 Stock Plan (“Plan”), has granted a Nonqualified Stock Option (“NQO”) to purchase shares of SunTrust Common Stock, $1.00 par value (“Stock”), upon the following terms as an incentive for Optionee to promote the interests of SunTrust and its Subsidiaries:

Name of Optionee        [Name]
                    
Number of Shares        
Subject to Option        [# of Shares]

Fair Market Value Per Share    [price]
On Grant Date and Option Price    

Grant Date        [Grant Date] 

This Option Agreement (the “Option Agreement”) evidences this NQO Grant, which has been made subject to all the terms and conditions set forth on the attached Terms and Conditions and in the Plan. 

SUNTRUST BANKS, INC.

    
Authorized Officer
 

TERMS AND CONDITIONS
NONQUALIFIED STOCK OPTION (NQO)
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§ 1. EXERCISE PERIOD, EXPIRATION DATE, VESTING DATE. This NQO granted on [Grant Date] (the “Grant Date”) shall expire, unless otherwise exercised, at the end of the ten (10) year period (the “Exercise Period”) beginning on the Grant Date and ending at the end of the last day of the Exercise Period (the “Expiration Date”). This NQO, if it has not earlier vested or expired, shall vest and become exercisable in full on the second (2nd) anniversary of the Grant Date (the “Vesting Date”), provided that on the Vesting Date, Optionee is an active employee of SunTrust or a Subsidiary and has been in Service with SunTrust or a Subsidiary from the Grant Date through the Vesting Date. Once this NQO has vested, it may be exercised, in whole or in part, at any time and from time to time during the remainder of the Exercise Period unless the NQO expires before then. This NQO shall terminate on the date that Optionee is no longer an active employee of SunTrust or a Subsidiary, except as provided in this §2. Shares may vest prior to the Vesting Dates set forth above in accordance with the provisions of § 2. 

§ 2. ACCELERATED VESTING. Some or all of this NQO may vest early and become exercisable before the Vesting Date. Early vesting will occur if the Optionee has a termination of employment with SunTrust and all its Subsidiaries, as described below in § 2(a), § 2(b), § 2(c) or § 2(d), before the Vesting Date. 

(a) This NQO shall vest and become fully exercisable on the date Optionee's employment terminates because of death or Disability and shall remain exercisable for the period described in § 3(d). 

(b) If the Optionee’s employment with SunTrust and its Subsidiaries terminates prior to any Vesting Date and the date of a Change in Control, as a result of the Optionee’s Retirement, then Optionee’s employment shall be deemed to continue for purposes of the vesting of this award pursuant to Section § 2, and shall remain exercisable for the period described in § 3(c), provided that Optionee fully performs the following covenants set forth in § 10 from the date of Retirement through the applicable Vesting Date.

(c) This NQO shall vest on the date Optionee’s employment is involuntarily terminated by reason of a reduction in force, which results in Optionee’s eligibility for payment of a severance benefit pursuant to the terms of the SunTrust Banks, Inc. Severance Pay Plan, but then only a pro rata number of shares subject to this NQO shall vest and be exercisable based on Optionee’s Service completed from the Grant Date through the date of Optionee’s termination. Such vested shares shall be exercisable for the three (3) month period described in § 3(a). 

(d) This NQO shall vest in full and become exercisable on the date of Optionee’s termination of employment during the three (3) year period following the date of a Change in Control, provided that such termination of employment is either (A) involuntary on the part of Optionee, not a result of Optionee’s death or Disability, and not a Termination for Cause; or (B) voluntary on the part of Optionee and it constitutes a Termination for Good Reason. Such vested shares shall remain exercisable for the period described in § 3(e).

(e) For purposes of § 2(c) above, the pro rata calculation shall be made by multiplying the number of shares of Stock subject to this NQO that are not then vested by a fraction, with a numerator equal to the number of days from the Grant Date through the date of such termination of employment, and a denominator equal to the number of days from the Grant Date through the Vesting Date. Fractional shares shall be disregarded.

§ 3. EXPIRATION. To the extent not previously exercised, this NQO shall expire and cease to be exercisable on the Expiration Date or if earlier, on the first of the following events to occur:

(a) Except as otherwise described in this § 3, if Optionee’s employment with SunTrust and all its Subsidiaries terminates for any reason, then Optionee may, within the three (3) month period following such termination and in no event after the Expiration Date, exercise this NQO to the extent Optionee was entitled to exercise this NQO at the date of such termination of employment. 

(b) Notwithstanding anything in this Option Agreement to the contrary, if Optionee’s employment with SunTrust or a Subsidiary is Terminated for Cause, then this NQO shall expire in its entirety, and all rights under this Option Agreement shall be forfeited, as of the end of the day before the date of Optionee’s termination of employment, regardless of whether this NQO was then vested or non-vested, and under no circumstances shall Optionee be entitled to exercise all or any part of this NQO after such expiration.

TERMS AND CONDITIONS
NONQUALIFIED STOCK OPTION (NQO)
========================================================================================

(c) In the event Optionee terminates employment with SunTrust and all its Subsidiaries due to Retirement, then any part of the NQO that became vested and exercisable pursuant to § 1 or § 2(b), shall remain exercisable through the end of the five (5) year period which begins on the date of such termination of employment, but in no event may it be exercised after the Expiration Date.

(d) In the event Optionee’s termination of employment with SunTrust and all Subsidiaries is due to death or disability, then this NQO shall be exercisable through the end of the one (1) year period which begins on the date of Optionee's death or Disability and in no event after the Expiration Date.

(e) In the event of Optionee’s termination of employment during the three (3) year period following the date of SunTrust’s Change in Control, this NQO, to the extent not previously exercised, shall remain exercisable for the duration of the Exercise Period, provided that Optionee’s termination of employment is either (A) involuntary on the part of Optionee, not a result of Optionee’s death or Disability, and not a Termination for Cause; or (B) voluntary on the part of Optionee and it constitutes a Termination for Good Reason. 

(f) This NQO shall expire on the date it has been exercised in full under this Option Agreement. 

(g) This NQO shall expire on the Expiration Date to the extent it has not then been exercised. 

§ 4. METHOD OF EXERCISE. This NQO shall be exercised by properly completing and delivering the applicable form to the delegate specified by the Committee for option recordkeeping, indicating the number of shares of Stock to be purchased upon such exercise, together with the appropriate payment in full for the number of such shares to be exercised. Payment may be made in the form of a check made payable in accordance with the delegate’s payment instructions, or written confirmation of ownership of sufficient shares of previously acquired Stock or any combination of such payment methods as has been approved by the Committee. Such exercise shall be effective on the date such form and payment actually are delivered to SunTrust’s delegate; provided, however, if such form and payment are mailed to the delegate at the appropriate address by registered mail or by an overnight service, the related exercise shall be treated as effective on the date accepted for delivery by the post office or overnight mail service. Any previously acquired Stock which is designated as payment for the exercise shall be valued at its Fair Market Value (closing price) on the date the exercise is effective or, if the exercise is effective on a date other than a business day, at the Fair Market Value on the immediately preceding business day.

§ 5. WITHHOLDING. The Committee shall have the right to reduce the number of shares of Stock actually transferred to the Optionee to satisfy the minimum applicable tax withholding requirements, and the Optionee shall have the right (absent any such action by the Committee and subject to satisfying the requirements under Rule 16b-3) to elect that the minimum applicable tax withholding requirements be satisfied through a reduction in the number of shares of Stock transferred to the Optionee.

§ 6. NONTRANSFERABLE. No rights granted under this NQO shall be transferable by the Optionee other than by will or by the laws of descent and distribution.

§ 7. EMPLOYMENT AND TERMINATION. Nothing in the Plan or this Option Agreement or any related material shall give the Optionee the right to continue in employment with SunTrust or a Subsidiary or adversely affect the right of SunTrust or a Subsidiary to terminate the Optionee's employment with or without cause at any time.

§ 8. SHAREHOLDER STATUS. The Optionee shall have no rights as a shareholder with respect to any shares of Stock under this Option Agreement until the Optionee has made payment in full for such shares and such shares have been duly issued and delivered to the Optionee, and no adjustment shall be made for dividends of any kind or description whatsoever respecting such Stock except as expressly set forth in the Plan.

§ 9. OTHER LAWS. SunTrust shall have the right to refuse to issue or transfer any Stock under this Option Agreement if SunTrust acting in its absolute discretion determines that the issuance or transfer of such Stock might violate any applicable law or regulation, and any payment tendered in such event to exercise this NQO shall be promptly refunded to the Optionee.
§ 10. COVENANTS, RESTRICTIONS AND LIMITATIONS.
(a) Compliance with Securities Laws. By accepting the NQO, the Optionee agrees not to sell Stock at a time when applicable laws or SunTrust’s rules prohibit a sale. This restriction will apply as long as the Optionee is an employee, consultant or director 

TERMS AND CONDITIONS
NONQUALIFIED STOCK OPTION (NQO)
========================================================================================

of SunTrust or a Subsidiary of SunTrust. Upon receipt of nonforfeitable shares of Stock pursuant to this Option Agreement, the Optionee agrees to hold such shares for investment and not with a view of resale or distribution to the public, and if requested by SunTrust, the Optionee must deliver to SunTrust a written statement satisfactory to SunTrust to that effect. The Committee may refuse to issue any shares of Stock to the Optionee for which the Optionee refuses to provide an appropriate statement.
(b) Restrictive Covenants. Optionee must fully perform the following covenants from the Grant Date to the applicable Vesting Date (the “Restricted Period”). Failure of Optionee subject to this §10(b) to fully perform the covenants set forth below will result in a forfeiture of the unexercised portion of the NQO as of the date of such failure. 

(1) No Solicitation of Customers or Clients. Optionee shall not during the Restricted Period solicit any customer or client of SunTrust or any SunTrust Affiliate with whom Optionee had any material business contact during the two (2) year period which ends on the date Optionee's employment by SunTrust or a SunTrust Affiliate terminates for the purpose of competing with SunTrust or any SunTrust Affiliate for any reason, either individually, or as an owner, partner, employee, agent, consultant, advisor, contractor, salesman, stockholder, investor, officer or director of, or service provider to, any corporation, partnership, venture or other business entity.

(2) Anti-pirating of Employees. Absent the Compensation Committee's written consent, Optionee will not during the Restricted Period solicit to employ on Optionee's own behalf or on behalf of any other person, firm or corporation, any person who was employed by SunTrust or a SunTrust Affiliate during the term of Optionee's employment by SunTrust or a SunTrust Affiliate (whether or not such employee would commit a breach of contract), and who has not ceased to be employed by SunTrust or a SunTrust Affiliate for a period of at least one (1) year.

(3) Protection of Trade Secrets and Confidential Information. Optionee hereby agrees that Optionee will hold in a fiduciary capacity for the benefit of SunTrust and each SunTrust Affiliate, and will not directly or indirectly use or disclose, any Trade Secret that Optionee may have acquired during the term of Optionee's employment by SunTrust or a SunTrust Affiliate for so long as such information remains a Trade Secret. In addition Optionee agrees that during the Restricted Period Optionee will hold in a fiduciary capacity for the benefit of SunTrust and each SunTrust Affiliate, and will not directly or indirectly use or disclose, any Confidential or Proprietary Information that Optionee may have acquired (whether or not developed or compiled by Optionee and whether or not Optionee was authorized to have access to such information) during the term of, in the course of, or as a result of Optionee's employment by SunTrust or a SunTrust Affiliate.

(4) Reasonable and Necessary Restrictions. Optionee acknowledges that the restrictions, prohibitions and other provisions set forth in this Agreement, including without limitation the Territory and Restricted Period, are reasonable, fair and equitable in scope, terms and duration; are necessary to protect the legitimate business interests of SunTrust; and are a material inducement to SunTrust to enter into this Agreement. Optionee covenants that Optionee will not challenge the enforceability of this Agreement nor will Optionee raise any equitable defense to its enforcement. 

(c) Additional Post-Retirement Covenants. In the event of the Optionee’s Retirement, such Optionee must fully perform the following covenants from the date of such termination to the applicable Vesting Date:

(1) No Competitive Activity. Absent the Compensation Committee's written consent, Optionee shall not, during the Restricted Period and within the Territory, engage in any Managerial Responsibilities for or on behalf of any corporation, partnership, venture, or other business entity that engages directly or indirectly in the Financial Services Business whether as an owner, partner, employee, agent, consultant, advisor, contractor, salesman, stockholder, investor, officer or director; provided, however, that Optionee may own up to five percent (5%) of the stock of a publicly traded company that engages in the Financial Services Business so long as Optionee is only a passive investor and is not actively involved in such company in any way.    
    
(2) Non-Disparagement. Optionee agrees not to knowingly make false or materially misleading statements or disparaging comments about SunTrust or any SunTrust Affiliate during the Restricted Period.

(3) Reasonable and Necessary Restrictions. Optionee acknowledges that the restrictions, prohibitions and other provisions set forth in this Agreement, including without limitation the Territory and Restricted Period, are reasonable, fair and equitable in scope, terms and duration; are necessary to protect the legitimate business interests of SunTrust; and are a

TERMS AND CONDITIONS
NONQUALIFIED STOCK OPTION (NQO)
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material inducement to SunTrust to enter into this Agreement. Optionee covenants that Optionee will not challenge the enforceability of this Agreement nor will Optionee raise any equitable defense to its enforcement. 

(d) Additional Definitions. (A) The term "Confidential or Proprietary Information" for purposes of this Agreement shall mean any secret, confidential, or proprietary information of SunTrust or a SunTrust Affiliate (other than a Trade Secret) that has not become generally available to the public by the act of one who has the right to disclose such information without violating any right of SunTrust or a SunTrust Affiliate. (B) The term "Financial Services Business" for purposes of this Agreement shall mean the business of banking, including deposit, credit, trust and investment services, mortgage banking, asset management, and brokerage and investment banking services. (C) The term "Managerial Responsibilities" for purposes of this Agreement shall mean managerial and supervisory responsibilities and duties that are substantially the same as those Optionee is performing for SunTrust or a SunTrust Affiliate on the date of this Agreement. (D) For purposes of §10(c) only, the term "Restricted Period" shall mean the period which starts on the date Optionee's retirement from employment by SunTrust or a SunTrust Affiliate and which ends on the third anniversary of this Agreement. (E) The term "SunTrust Affiliate" for purposes of this Agreement shall mean any corporation which is a subsidiary corporation (within the meaning of Section 424(f) of the Code) of SunTrust except a corporation which has subsidiary corporation status under Section 424(f) of the Code exclusively as a result of SunTrust or a SunTrust Affiliate holding stock in such corporation as a fiduciary with respect to any trust, estate, conservatorship, guardianship or agency. (F) The term "Territory" for purposes of this Agreement shall mean the states of Alabama, Florida, Georgia, Maryland, North Carolina, South Carolina, Tennessee, Virginia, and the District of Columbia, which are the states and Territories in which SunTrust has significant operations on the date of this Agreement. (G) "Trade Secret" for purposes of Agreement shall mean information, including, but not limited to, technical or nontechnical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, or a list of actual or potential customers or suppliers that: (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from it is disclosure or use, and (ii) is the subject of reasonable efforts by SunTrust or a SunTrust Affiliate to maintain its secrecy.
§11. RECOVERY OF AWARDS. By accepting this NQO, Optionee agrees to return to SunTrust (or to the cancellation of) all or a portion of this NQO, vested or unvested, exercised or unexercised, previously granted to such Optionee based upon a determination made by the Committee pursuant to §11(a) or §11(b) below. The Committee shall impose a clawback authorized below only to the extent determined appropriate by the Committee. All determinations by the Committee shall be final and binding. All references to the “Committee” in this §11 shall include the Committee and the Committee’s designee.
(a) Detrimental Conduct. If the Committee determines that Optionee has engaged in Detrimental Conduct, then the Optionee shall be required to reimburse the Company for all or a portion of the exercised portion of the NQO, and/or the Committee may cancel all or a portion of the NQO. “Detrimental Conduct” means any one of the following: (1) the commission of an act of fraud or dishonesty in the course of the Optionee’s employment; (2) improper conduct by the Optionee including, but not limited to, fraud, unethical conduct, falsification of SunTrust’s records, unauthorized removal of SunTrust property or information, theft, violent acts or threats of violence, unauthorized possession of controlled substances on the property of SunTrust, conduct causing reputational harm to SunTrust or its clients, or the use of SunTrust property, facilities or services for unauthorized or illegal purposes; (3) the improper disclosure by the Optionee of proprietary, privileged or confidential information of SunTrust or a SunTrust client or former client or breach of a fiduciary duty owed to SunTrust or a SunTrust client or former client; (4) the commission of a criminal act by the Optionee, whether or not performed in the workplace, that constitutes a felony or a crime of comparable magnitude under applicable law as determined by SunTrust in its sole discretion, or that subjects, or if generally known, would subject SunTrust to public ridicule or embarrassment; (5) the commission of an act or omission which causes the Optionee or SunTrust to be in violation of federal or state securities laws, rules or regulations, and/or the rules of any exchange or association of which SunTrust is a member, including statutory disqualification; (6) the Optionee’s failure to perform the duties of Optionee’s job which are set forth in Optionee’s written job description, written operating policies, inBalance goals or other written document available to Optionee and which in each case SunTrust views as being material to Optionee’s position and the overall business of SunTrust under circumstances where such failure is detrimental to SunTrust; (7) the material breach of a written policy applicable to teammates of SunTrust including, but not limited to, the SunTrust Code of Business Conduct and Ethics; (8) an act or omission by the Optionee which results or is intended to result in personal gain at the expense of SunTrust; or (9) an other act or omission which constitutes “cause” for termination.

(b) Loss. In order to encourage sustainable, long-term performance, exercise of the NQO shall be specifically conditioned on the Company and its lines of business remaining profitable during the calendar year preceding the applicable Vesting Date. If 

TERMS AND CONDITIONS
NONQUALIFIED STOCK OPTION (NQO)
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a loss is determined to have occurred, then the Committee, together with key control functions, shall review such losses and Optionee’s accountability for such losses, and may require reimbursement of all or part of a NQO previously exercised by Optionee and/or authorize the cancellation of unexercised or unvested NQOs. In making such determination, the Committee shall consider all relevant facts and circumstances, including (i) the magnitude of the loss (including positive or negative variance from plan); (ii) Optionee’s degree of involvement (including such factors as Optionee’s current or former leadership role with respect to SunTrust or the relevant line of business, and the degree to which Optionee was involved in decisions that are determined to have contributed to the loss); and (iii) Optionee’s performance.

§ 12. MISCELLANEOUS.

(a) TRANSFER OF EMPLOYMENT. A transfer of Optionee’s employment between or among SunTrust and Subsidiaries or between or among Subsidiaries shall not be deemed a termination of employment under this Option Agreement.

(b) CANCELLATION OF RIGHTS. Optionee's rights under this Option Agreement may be canceled in accordance with the terms of the Plan.

(c) INCORPORATION OF PLAN. This Option Agreement shall be subject to all of the provisions, definitions, terms and conditions set forth in the Plan and any interpretations, rules and regulations promulgated by the Committee from time to time, all of which are incorporated by reference in this Option Agreement.

(d) GOVERNING LAW. The Plan and this Option Agreement shall be governed by the laws of the State of Georgia (without regard to its choice-of-law provisions), except to the extent superseded by federal law.

(e) NOTICES. Except as otherwise provided herein, any written notices provided for in this Option Agreement that are sent by mail shall be deemed received three (3) business days after mailing, but not later than the date of actual receipt. Notices shall be directed, if to Optionee, at Optionee’s address indicated by SunTrust’s records and, if to SunTrust, at SunTrust’s principal executive office.

(f) SEVERABILITY. If one or more of the provisions of this Option Agreement shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and the invalid, illegal or unenforceable provisions shall be deemed null and void; however, to the extent permissible by law, any provisions which could be deemed null and void shall first be construed, interpreted or revised retroactively to permit this Option Agreement to be construed so as to foster the intent of this Option Agreement and the Plan.

(g) ENTIRE AGREEMENT. This Option Agreement (which incorporates the terms and conditions of the Plan) constitutes the entire agreement of the parties with respect to the subject matter hereof. This Option Agreement supersedes all prior discussions, negotiations, understandings, commitments and agreements with respect to such matters.

§ 13. DEFINITIONS. Whenever the following terms are used in this Option Agreement, they shall have the meanings set forth below. Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan.

(a) CHANGE IN CONTROL AGREEMENT – means a change in control agreement by and between SunTrust and the Optionee.

(b) CODE – means the Internal Revenue Code of 1986, as amended.

(c) DISABILITY – means a disability within the meaning of Code Section 22(e)(3).

(d) RETIREMENT – means the voluntary termination of employment by the Optionee from SunTrust or its Subsidiaries on or after attaining age 55 and having completed five (5) or more years of service as determined in accordance with the terms of the SunTrust Banks, Inc. Retirement Plan, as amended from time to time (the “Retirement Plan”). For purposes of this Option Agreement, an Optionee who is vested in the Retirement Plan benefit but terminates employment before attaining age 55 or completing at least five (5) years of service is not treated as terminating employment due to Retirement.

(e) SERVICE – means Optionee’s period of continuous employment with SunTrust and its Subsidiaries beginning on the Grant Date of this NQO through the Vesting Date or the date of Optionee’s termination of employment, whichever is applicable.

TERMS AND CONDITIONS
NONQUALIFIED STOCK OPTION (NQO)
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(f) TERMINATION FOR CAUSE OR TERMINATED FOR CAUSE - means a termination of employment which is made primarily because of (i) the Optionee’s willful and continued failure to perform his job duties in a satisfactory manner after written notice from SunTrust to Optionee and a thirty (30) day period in which to cure such failure, (ii) the Optionee’s conviction of a felony or engagement in a dishonest act, misappropriation of funds, embezzlement, criminal conduct or common law fraud, (iii) the Optionee’s material violation of the Code of Business Conduct and Ethics of SunTrust or the Code of Conduct of a Subsidiary, (iv) the Optionee’s engagement in an act that materially damages or materially prejudices SunTrust or any Subsidiary or the Optionee’s engagement in activities materially damaging to the property, business or reputation of SunTrust or any Subsidiary; or (v) the Optionee’s failure and refusal to comply in any material respect with the current and any future amended policies, standards and regulations of SunTrust, any Subsidiary and their regulatory agencies, if such failure continues after written notice from SunTrust to the Optionee and a thirty (30) day period in which to cure such failure, or the determination by any such governing agency that the Optionee may no longer serve as an officer of SunTrust or a Subsidiary.

Notwithstanding anything herein to the contrary, if the Optionee is subject to the terms of a Change in Control Agreement at the time of his termination of employment with SunTrust or a Subsidiary, solely for purposes this Option Agreement, “Cause” shall have the meaning provided in the Change in Control Agreement.

(h) TERMINATION FOR GOOD REASON - means a termination of employment made primarily because of (i) a failure to elect or reelect or to appoint or to reappoint Optionee to, or the removal of Optionee from, the position which he or she held with SunTrust prior to the Change in Control, (ii) a substantial change by the Board or supervising management in Optionee’s functions, duties or responsibilities, which change would cause Optionee’s position with SunTrust to become of less dignity, responsibility, importance or scope than the position held by Optionee prior to the Change in Control or (iii) a substantial reduction of Optionee’s annual compensation from the lesser of: (A) the level in effect prior to the Change in Control or (B) any level established thereafter with the consent of Optionee.

Notwithstanding anything herein to the contrary, if the Optionee is subject to the terms of a Change in Control Agreement at the time of his termination of employment with SunTrust or a Subsidiary, solely for purposes of this Option Agreement, “Good Reason” shall have the meaning provided in the Change in Control Agreement.ex10_1.htm

EXHIBIT 10.1

 

SEPARATION AND RELEASE AGREEMENT

This Separation and Release Agreement (“Release”) is entered into effective as of the 31st day of July, 2012 by and between Joseph M. Abell, III (“Employee”) and TETRA Technologies, Inc., a Delaware corporation (“Employer”), as follows:

1. Separation Payments and Conditions.

(a)           Employer and Employee hereby acknowledge, agree and confirm that the Employee’s employment with Employer is terminated effective July 31, 2012 (“Effective Termination Date”).  In consideration for Employee’s promises and undertakings contained herein, and provided that Employee does not revoke the Age Discrimination in Employment Act (“ADEA”) release contained in Paragraph 3 below, Employer will, subject to the provisions of Paragraph 6(d) below, provide Employee the following separation benefits:

(i)           Eight (8) days following the Employee’s execution and delivery of this Release, Employer will pay Employee the first of five (5) monthly payments in an amount equal to $100,000 per month, less legally required withholdings.  Employer will pay the remaining four (4) monthly payments of $100,000 to Employee on or before the first day of each consecutive month thereafter, beginning on the first day of the month immediately following the month in which Employee receives his initial payment;

(ii)           On February 1, 2013, Employer will pay Employee an additional lump sum payment of $58,000, less legally required withholdings;

(iii)           Employee’s stock options granted by Employer prior to the Effective Termination Date that have vested as of the Effective Termination Date will, as of the date that is eight (8) days following Employee’s execution and delivery of this Release, continue to be exercisable until the respective expiration dates of such options;

(iv)           Employee elects to receive continuation coverage for medical, prescription and dental benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) and Employer will, for a period of up to eighteen (18) months following the Effective Termination Date, waive or otherwise pay any contribution that would otherwise be required from the Employee for such COBRA benefits for Employee and his spouse and dependents if they are qualified beneficiaries under COBRA.  If Employee accepts employment during this eighteen-month period (whether or not comparable coverage is made available in connection with said employment), Employer shall not be required to waive or otherwise pay any such contribution in accordance with the preceding sentence following the date Employee commences such employment and becomes eligible for medical, prescription and dental benefits.  Employee has an affirmative obligation to inform Employer in writing if he becomes employed during this eighteen-month period, and if Employee fails to so notify Employer, Employee shall be required to promptly reimburse any contributions paid by Employer from and after the date Employee commences such employment; and

 

  

  

  

 

(v)           Employee will continue to have the opportunity to receive certain bonuses based on the satisfaction of applicable performance criteria, as more specifically set forth in Exhibit A.

(vi)           As a condition to the receipt of the separation benefits that are described above in this Paragraph 1,  Employee must execute and return this Release to Employer within thirty (30) days following the date of his receipt of the Release.  If the Release delivery and non-revocation period spans two taxable years, the severance benefits will always commence or be made in the second taxable year.

2. General Release.  Employee hereby fully, finally, and completely releases Employer, its predecessors, successors, subsidiaries, stockholders and affiliates and the officers, directors, managers, control persons, employees, agents, attorneys, representatives and assigns of any of them (collectively, the “Released Parties”), of and from any and all liabilities, claims, actions, losses, expenses, demands, costs, fees, damages and/or causes of action, of whatever kind or character, whether now known or unknown (collectively, “Claims”), arising from, relating to, or in any way connected with any facts or events occurring on or before the execution of this Release, that he may have against Employer or any Released Parties, including, but not limited to any such Claims arising out of or in any way related to Employee’s employment with the Employer, or any affiliate thereof, or the termination of such employment, including but not limited to, any violation of any federal, state or local statute, any breach of contract, any wrongful termination, or other tort or cause of action.  Employee confirms that this Release was neither procured by fraud nor signed under duress or coercion.  Further, Employee waives and releases Employer from any Claims that this Release was procured by fraud or signed under duress or coercion so as to make the Release not binding.  Employee understands and agrees that by signing this Release, he is giving up the right to pursue any legal Claims released herein that he may currently have against the Employer or any Released Parties, whether or not he is aware of such Claims, and specifically agrees and covenants not to bring any legal action for any Claims released herein.  The only Claims that are excluded from this Release are Claims arising after the date of this Release, if any, including any future Claims relating to the Employer’s performance of its obligations hereunder and any Claims that cannot be waived by law; Employee does waive, however, his right to any monetary recovery if any governmental agency pursues any claims on his behalf.  This Release shall not release any claim or cause of action arising after the date of this Release by or on behalf of the Employee for (a) any payment or other benefit that is required under this Agreement or, subject to any conditions contained therein, the terms of any employee benefit plan covering Employee or (b) a breach of this Agreement by the Employer.

3. ADEA Release.  Employee hereby completely and forever releases and irrevocably discharges the Released Parties of and from any and all Claims arising under the ADEA on or before the date of this Release, and hereby acknowledges and agrees that: (i) this Release was negotiated at arm’s length; (ii) this Release is worded in a manner that Employee fully understands; (iii) Employee specifically waives any rights or claims under the ADEA; (iv) Employee knowingly and voluntarily agrees to all of the terms set forth in the Release; (v) Employee acknowledges and understands that any Claims under the 

 

  

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ADEA that may arise after the date of this Release are not waived; (vi) the rights and claims waived in this Release are in exchange for consideration over and above anything to which Employee was already entitled; (vii) Employee has been and hereby is advised in writing to consult with an attorney prior to executing the Release; (viii) Employee acknowledges that he has been given a period of up to twenty-one (21) days to consider the release contained in this Paragraph 3 (the “ADEA Release”) prior to executing it and acknowledges and agrees that any discussions between Employee and Employer concerning the terms of this  Release and/or any change in the terms of this Release after the date that Employee first receives this Release shall not affect or restart such twenty-one (21) day consideration period; and (ix) Employee understands that he has a period of seven (7) days from the date of the execution of the ADEA Release to revoke the ADEA Release, and understands and acknowledges that the ADEA Release will not become effective or enforceable until the revocation period has expired.  If Employee elects to revoke his ADEA Release, revocation must be in writing and presented to Linden Price, Vice President-Administration, TETRA Technologies, Inc., 24955 Interstate 45 North, The Woodlands, Texas 77380, within seven (7) days from the date of the execution of the Release.

4. Confidential Information and Nondisclosure.

(a)           Employee acknowledges that during the course of his employment with Employer he has been, and during such period of time Employee is providing any transitional services pursuant to Paragraph 6(b) below he may be, involved in the development of the Confidential Information (as herein defined) of Employer and its affiliated companies, and he has had access, and may continue to have access during such period of time he is providing any transitional services, to Confidential Information relating to the business and affairs of Employer and its affiliated companies.  “Confidential Information” means and includes all confidential and/or proprietary information, trade secrets and “know-how” and compilations of information of any kind, type or nature (tangible and intangible, written or oral, and including information contained, stored or transmitted through any electronic medium), whether owned by Employer or its affiliated companies, disclosed to Employer or its affiliated companies in confidence by third parties or licensed from any third parties, which, at any time during Employee’s employment by Employer or during such period of time Employee is providing any transitional services pursuant to Paragraph 6(b) below, is developed, designed or discovered or otherwise acquired or learned by Employee and which relates to Employer or its affiliated companies, partners, business, services, products, processes, properties or assets, customers, clients, suppliers, vendors or markets or such third parties.  Confidential Information includes, by way of example and without limitation, the following: all patents, inventions, processes and formulae including any proprietary information regarding existing and proposed products and services; information regarding existing and potential customers, employees, contractors, and the industry; strategies, books, records and documents; the names of and other information concerning customers, investors, and business affiliates such as contact name, service or product provided, pricing for that customer, type and amount of products and services used, credit and financial data, and/or other information relating to the relationship with that 

 

  

3

  

 

customer; plans and strategies for expansion or acquisition; budgets, financial and sales data, pricing and costing data; sources of capacity and sources of supply; contracts benefiting or obligating Employer or its affiliated companies; bids or proposals submitted to or by any third parties; organizational structure; personnel information, including salaries and responsibilities of personnel; payment amounts or rates paid to consultants or other service providers; and other confidential or proprietary information.  Notwithstanding the foregoing, Confidential Information shall not include any information that becomes generally available to the public other than as a result of any disclosure or act of the Employee in violation of the terms of this Release.

(b)           Employee acknowledges and agrees that such Confidential Information constitutes a valuable, special and unique asset used by Employer and its affiliated companies in their businesses to obtain a competitive advantage over their competitors and was and is developed or acquired by Employer and its affiliated companies at considerable time and expense and is intended to be used solely for the benefit of Employer and its affiliated companies.  Employee further acknowledges and agrees that Employer and its affiliated companies have put in place certain policies and practices to safeguard such Confidential Information, and that as a condition of his employment with Employer, Employee executed an Employment Agreement dated April 15, 2001 (the “Employment Agreement”) with Employer pursuant to which Employee agreed, both during and after his employment, not to disclose or use for his benefit or the benefit of others any Confidential Information and to comply with the Employer’s policies regarding Confidential Information.  Employee agrees that he is subject to the obligations contained in the Employment Agreement to the extent such obligations continue after his termination, including the confidentiality provisions therein, as well as Employer’s policies and limitations on disclosure of Confidential Information.  Employee further agrees that he will (i) hold all Confidential Information in strict confidence and will not, directly or indirectly, disclose, make available, discuss, transmit, publish or use such Confidential Information other than for Employer’s benefit and/or the benefit of its affiliated companies and (ii) not, directly or indirectly, disclose, use, cause, facilitate or allow any third party to use such Confidential Information in any way, except as may be (A) authorized by Employer’s Chief Executive Officer in writing, or (B) required by law or applicable legal process.  In the event Employee becomes legally compelled to disclose any Confidential Information, Employee will provide the Employer with prompt written notice so that the Employer may seek a protective order or other appropriate remedy with respect to such disclosure.

5. Nondisparagement and Nonsolicitation.

(a)           Employee agrees not to make any statements or otherwise do anything that will disparage or damage the corporate, personal or professional reputation of Employer, its respective affiliates, Chief Executive Officer, General Counsel, Vice President of Administration, or Board of Directors, as applicable.  Employer agrees that it will use commercially reasonable efforts to ensure that neither its Chief Executive Officer, General Counsel, Vice President of Administration, nor its Board of Directors shall make 

 

  

4

  

 

any statements or otherwise do anything that will disparage Employee or otherwise damage the personal or professional reputation of Employee.

(b)           Employee further agrees that for a period of two (2) years following the Effective Termination Date, Employee will not, directly or indirectly (i) on Employee’s own behalf or on behalf of any other person or entity, solicit, encourage, facilitate, induce or attempt to solicit, encourage, facilitate or induce anyone employed or otherwise retained by Employer and/or its affiliates to cease or leave their employment or contractual relationship with any of the foregoing parties to work in any capacity for any other person or entity, or (ii) hire, on Employee’s own behalf or on behalf of any other person or entity, anyone who has been employed by Employer or its affiliates within the six (6) month period prior to the time of such hiring.  The foregoing provisions of this Paragraph 5(b) shall be restricted to the State of Texas.

6. Current and Continuing Obligations.

(a)           Nothing contained in this Release shall be deemed to affect or relieve Employee from any continuing obligations contained in the Employment Agreement or other policies of Employer to which Employee is subject during and, as applicable, following his employment with Employer, and Employee agrees to comply with such ongoing obligations in accordance with their terms.   To the extent that any provision of this Release conflicts with the Employment Agreement or other policies of the Employer, this Release controls.

(b)           To ensure an orderly transition from Employee’s employment with Employer, Employee hereby agrees to provide reasonable and necessary assistance to, and cooperation with, Employer in connection with any matters with respect to which Employee had knowledge or responsibility while employed by the Employer.  Employee agrees to provide such assistance from the date that he executes this Release through the end of the month in which he receives his fifth monthly separation payment as set forth in Paragraph 1(a)(i).  Employer and Employee will cooperate in all reasonable respects to schedule any such requested assistance.

(c)           Nothing contained in this Release shall be deemed to affect or relieve Employer from any continuing obligations contained in the Indemnification Agreement executed by the parties.

(d)           Employee's entitlement to the separation benefits referenced in Paragraph 1 is expressly contingent on Employee's compliance with the obligations contained in Paragraphs 4, 5, 6(a) and 10 herein.  If at any time after the Effective Termination Date, Employee breaches or violates any of the covenants and obligations contained in Paragraphs 4, 5, 6(a) or 10, (i) Employer shall have no obligation to continue any payments or benefits provided for in Paragraph 1 above, except as required by COBRA, (ii) the extension of the exercise period for Employee’s vested options shall no longer be effective and such options shall remain exercisable only for the applicable period following the Effective Termination Date as set for in the respective plan and 

 

  

5

  

 

option agreement, and (iii) any bonuses shall no longer be available and Employee shall have no right to receive any payment with respect to any bonuses that are unpaid at such time.

7. No Oral Modification.  This Release cannot be modified orally and can only be modified through a written document signed by all parties.

8. Severability.  If any provision contained in this Release is determined to be void, illegal or unenforceable, in whole or in part, then the other provisions contained herein shall remain in full force and effect as if the provision which was determined to be void, illegal or unenforceable had not been contained herein.

9. Reinstatement.  Employee acknowledges and agrees that by execution of this Release, he waives all rights or claims for reinstatement of employment with Employer and its Affiliates.

10. Return of Property.  Employee acknowledges that all property of Employer and its affiliates in Employee’s possession or control including, without limitation, documents, files, records, manuals, handbooks, client and customer lists and information, manuals, maintenance manuals, and other documentation and information (whether in paper or electronic form) relating to the business of Employer or any affiliate, and any and all equipment, computers, digital data storage devices and the like obtained by Employee in connection with his employment with Employer (collectively, “Recipient Materials”) shall at all times be the property of Employer.  Employee shall return to Employer all Recipient Materials and any copies thereof which to Employee’s knowledge are in his possession, custody or control, including Recipient Materials retained by Employee in his office or at his home, within thirty (30) days of the Effective Termination Date; provided, Employee: (i) has sixty (60) days from the Effective Termination Date to return to Employer the laptop and cell phone previously provided by Employer to Employee; and (ii) may retain all contact information contained on said laptop or cell phone (or otherwise developed during his employment) as well as copies of Recipient Materials that Employer agrees in writing he may retain.  In the event that Employee has electronic version(s) of Recipient Materials in his possession, Employee will, subject to clause (ii) in the preceding sentence, return a copy of the electronic version of Recipient Materials and delete all copies of the electronic version(s) of Recipient Materials in his possession.  Further, if Employee discovers Recipient Materials after any requirement to return same has passed, he will immediately return all copies to Employer and delete any electronic version(s) of such Recipient Materials.

11. Injunctive Relief.   In recognition of the fact that a breach by the Employee of any of the provisions of Paragraphs 4, 5, 6(a) or 10 of this Agreement will cause irreparable damage to Employer and/or its affiliated companies for which monetary damages alone will not constitute an adequate remedy, and any breach by Employer of Paragraph 5(a) of this Release will cause irreparable harm to Employee for which monetary damages alone will not constitute an adequate remedy, Employer and Employee shall be entitled as a matter of right (without being required to prove damages or furnish any bond or other security) to obtain a restraining order, an injunction, an order of specific performance, or other equitable or extraordinary relief from any court of competent jurisdiction restraining any further violation of such provisions by the 

 

  

6

  

 

Employee or Employer or requiring the Employee or Employer to perform the Employee’s or Employer’s obligations thereunder.  Such right to equitable or extraordinary relief shall not be exclusive but shall be in addition to all other rights and remedies to which Employer or any of its affiliated companies or Employee may be entitled at law or in equity, including without limitation the right to recover monetary damages for the breach of any of the provisions of this Agreement.

12. Attorneys' Fees. The parties hereto agree that each party shall pay its respective costs, including attorney's fees, if any, associated with this Release.

13. Taxes. Employer may withhold from any amounts payable under this Release such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.  Notwithstanding any other provision of this Release, each party hereto agrees to be responsible for and to pay the taxes imposed on it by applicable law without any contribution from the other.

14. Section 409A.  The parties acknowledge that the form and timing of the separation payments and the other payments and benefits to be provided pursuant to this Release are intended to be exempt from or to comply with one or more exceptions to the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and applicable Treasury Regulations thereunder (“Section 409A”).  The parties further acknowledge that for purposes of Section 409A Employee does not have discretion with respect to the timing of the payment of any amounts provided under this Release.  Employee's right to receive any payment, benefit or amounts that might otherwise constitute installment payments shall be treated for purposes of Section 409A as a right to receive a series of separate and distinct payments.  Notwithstanding the foregoing, Employer does not make any representation that the payments or benefits provided under this Release are exempt from, or satisfy, the requirements of Section 409A, and Employer shall have no liability to Employee for any tax, interest or penalties that Employee may incur in the event that any provision of this Agreement does not comply with Section 409A.

15. Choice of Law/Venue. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS.  WITH RESPECT TO ANY SUIT, ACTION, OR OTHER PROCEEDING ARISING FROM OR RELATING TO THIS AGREEMENT, EMPLOYER AND EMPLOYEE HEREBY IRREVOCABLY AGREE TO THE EXCLUSIVE PERSONAL JURISDICTION AND VENUE OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS AND ANY TEXAS STATE COURT WITHIN HARRIS COUNTY, TEXAS.

16. Fully Understood/Sufficiency of Benefits.  By signing this Release, Employee acknowledges and affirms that he has (i) read and understands this Release, (ii) consulted with legal counsel of his choosing, (iii) agreed to the terms of the Release, and (iv) received a copy of the Release.  Employee also hereby acknowledges and affirms the sufficiency of the benefits recited therein and that Employee shall not be entitled to any further payment, compensation or remuneration of any kind from the Employer with respect to Employee’s employment with the Employer or otherwise.

 

  

7

  

 

17. Successors.

(a)           This Release is personal to Employee and shall not be assignable by Employee. This Release shall inure to the benefit of and be enforceable by Employee’s legal representatives.

(b)           This Release shall inure to the benefit of and be binding upon Employer and its successors and assigns.

18. Notices.  All notices required hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed to the Employee, at the address maintained in Employer’s records, and to Employer as follows:

 

 

	If to Employer:	TETRA Technologies, Inc.
	 	24955 Interstate 45 North
	 	The Woodlands, TX 77380
	 	Attention: President
	 	 
	With a copy to:	TETRA Technologies, Inc.
	 	24955 Interstate 45 North
	 	The Woodlands, TX 77380
	 	Attention: General Counsel
	 	 

 

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notices and communications shall be effective when actually received by the addressee.

19. Multiple Counterparts.  This Release may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Facsimile or e-mail transmission of any signed original of this Release will be deemed the same as delivery of an original.

20.  Entire Agreement.  This Release supersedes any and all prior agreements between the parties, oral or written, except with respect to any of Employee’s continuing obligations contained elsewhere, which shall continue and remain in full force and effect per the terms of those covenants.

	
TETRA TECHNOLOGIES, INC.

 

By: /s/Stuart M. Brightman

Its: President & Chief Executive Officer

Date: July 31, 2012

 

	
JOSEPH M. ABELL, III

 

/s/Joseph M. Abell, III

 

Date: July 31, 2012

 

  

8

  

 

EXHIBIT A

 

This Exhibit A is attached to and a part of the Separation and Release Agreement (“Release”) dated July 31, 2012, by and between TETRA Technologies, Inc. (“Employer”) and Joseph M. Abell, III (“Employee”).  Capitalized terms not otherwise defined in this Exhibit A shall have the meanings ascribed thereto in the Release.

 

1. Bonus Opportunities.  Subject to the terms and conditions of the Release, Employer shall provide Employee the opportunity to receive the following annual cash bonus payment (“Annual Bonus”) and long-term cash bonus payments (each, a “Long Term Bonus” and collectively, the “Long Term Bonuses” which, together with the Annual Bonus, are collectively referred to as the “Bonuses” and individually as a “Bonus”).  The Bonuses set forth below are being provided in replacement of any and all existing bonus opportunities that Employee may currently have under Employer’s Cash Incentive Compensation Plan (“CICP”) or otherwise (“Existing Bonuses”).  Employee and Employer agree that all of Employee’s rights and all of Employer’s obligations related to the Existing Bonuses are terminated effective as of the date this Release is fully executed and that Employee shall have no further right to receive the Existing Bonuses or any future bonuses under the CICP.

 

2. Annual Bonus.

 

(a)           Subject to the terms and conditions of the Release, including the achievement of the performance objective set forth below in this Paragraph 2(a), Employee shall have an Annual Bonus opportunity related to Employer’s fiscal year ending December 31, 2012 (“2012 Annual Bonus”).  The 2012 Annual Bonus shall be based upon Employer’s earnings per share (“EPS”) for the year ended December 31, 2012 relative to the EPS target established by Employer, as it may be adjusted by the Compensation Committee of the Board of Directors, for the 2012 fiscal year applicable to annual bonus awards previously established for executive officers of Employer for the 2012 fiscal year pursuant to the CICP.  The determination of Employer’s EPS as a percentage of the EPS target used to determine threshold, target and stretch or interpolated bonus payout will be the same for Employee as it is for the executive officers of the Employer.  The 2012 Annual Bonus opportunities for Employee shall be as follows:

 

	

•  

	
Threshold                     $   37,440

	

•  

	
Target                           $ 187,200

	

•  

	
Stretch                          $ 299,520

 

Employee shall not have the opportunity to earn or participate in any over achievement award with respect to the 2012 Annual Bonus.

 

For purposes of the 2012 Annual Bonus, the 2012 EPS performance objective will be consistent with that previously established for the executive officers of the Employer pursuant to the CICP.  In addition, the threshold, target and stretch performance levels 

 

  

Exhibit A-1

  

 

relating to the 2012 EPS performance objective shall be consistent with those previously established for the executive officers of the Employer pursuant to the CICP.  Straight-line interpolation will be used for purposes of determining the amount of the 2012 Annual Bonus payable when performance falls between threshold and target, or target and stretch.  Full payment of any 2012 Annual Bonus that is otherwise payable in accordance with the foregoing provisions will be made without proration.

 

3. Long Term Bonuses.

 

(a)   2010-2012 Performance Period. Subject to the terms and conditions of the Release, including the achievement of the performance objectives set forth below in this Paragraph 3(a), Employee shall have a Long Term Bonus opportunity related to the three-year performance period of Employer commencing January 1, 2010 and ending December 31, 2012 (“2010-2012 LT Bonus”). The 2010-2012 LT Bonus shall be based upon (i) Employer’s Average Return on Net Capital Employed, or “RONCE” (as such measure is defined below), relative to the target established by Employer for the 2010-2012 performance period applicable to long-term bonus awards previously established for executive officers of the Employer for the 2010-2012 performance period pursuant to the CICP, as such target may be adjusted by the Compensation Committee of the Board of Directors for the executive officers of the Employer, and (ii) Employer’s Total Stockholder Return, or “TSR” (as such measure is defined below) during the 2010-2012 performance period relative to the peer group established by Employer for the 2010-2012 performance period applicable to long-term bonus awards previously established for executive officers of the Employer for the 2010 -2012 performance period pursuant to the CICP, as such target may be adjusted by the Compensation Committee of the Board of Directors for the executive officers of the Employer. The 2010-2012 LT Bonus opportunities for Employee shall be as follows:

 

	
RONCE

	  	
TSR

	  	  	  	  	  	  	  
	
•

	
Threshold

	
$ $  7,286.50

	  	
•

	
Threshold

	
$  7,286.50

	
•

	
Target

	
$ $36,432.50

	  	
•

	
Target

	
$36,432.50

	
•

	
Stretch

	
$ $58,292.00

	  	
•

	
Stretch

	
$58,292.00

	
•

	
Over Achievement

	
$ $72,865.00

	  	
•

	
Over Achievement

	
$72,865.00

Straight-line interpolation will be used for purposes of determining the amount of the 2010-2012 LT Bonus for each performance objective when performance falls between threshold and target, target and stretch, or stretch and over achievement.  Any  2010-2012 LT Bonus that is that is otherwise payable in accordance with the foregoing provisions will be paid without proration.

 

    (b)   2011-2013 Performance Period. Subject to the terms and conditions of the Release, including the achievement of the performance objectives set forth below in this Paragraph 3(b), Employee shall have a Long Term Bonus opportunity related to the three-year performance period of Employer commencing January 1, 2011 and ending December 31, 2013 (the “2011-2013 LT Bonus”). The 2011-2013 LT Bonus shall be based upon (i) Employer’s RONCE relative to the target established by Employer for the

 

  

Exhibit A-2

  

 

2011-2013 performance period applicable to long-term bonus awards previously established for executive officers of the Employer for the 2011-2013 performance period pursuant to the CICP, as such target may be adjusted by the Compensation Committee of the Board of Directors for the executive officers of the Employer, and (ii) Employer’s TSR during the 2011-2013 performance period relative to the peer group established by Employer for the 2011-2013 performance period applicable to long-term bonus awards previously established for executive officers of the Employer for the 2011-2013 performance period pursuant to the CICP, as such target may be adjusted by the Compensation Committee of the Board of Directors for the executive officers of the Employer. The 2011-2013 LT Bonus opportunities for Employee shall be as follows:

 

	
RONCE

	  	
TSR

	  	  	  	  	  	  	  
	
•

	
Threshold

	
   $  6,200

	  	
•

	
Threshold

	
$  6,200

	
•

	
Target

	
   $31,000

	  	
•

	
Target

	
$31,000

	
•

	
Stretch

	
   $49,600

	  	
•

	
Stretch

	
$49,600

	
•

	
Over Achievement

	
   $62,000

	  	
•

	
Over Achievement

	
$62,000

The threshold, target, stretch and over achievement performance levels relating to the RONCE and TSR performance objectives shall be consistent with those previously established for the executive officers of the Employer pursuant to the CICP.  The amount of any 2011-2013 LT Bonus shall be prorated through the end of 2012.

 

Straight-line interpolation will be used for purposes of determining the amount of the 2011-2013 LT Bonus for each performance objective when performance falls between threshold and target, target and stretch, or stretch and over achievement.

 

4. Procedures.

 

(a)    After an applicable performance period has been completed and Employer has received its audited financial statements covering such performance period, the financial performance of Employer, on a consolidated basis, will be determined over such performance period. The financial performance shall then be evaluated to determine the extent to which the performance objectives for the Bonus related to such performance period have been achieved. In making any such determination, Employer 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.” Employer may also make other adjustments with respect to the financial results for purposes of evaluating the performance objectives and the amount of the Bonus 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 

 

  

Exhibit A-3

  

 

including business interruption and losses related to the damage or destruction of facilities from hurricanes; currency fluctuations; unrealized gains or losses on derivative or currency hedges; and, other adjustments determined by Employer to be appropriate under the circumstances. Any such adjustments shall be consistent with any adjustments made under the CICP for awards covering similar performance periods. The Bonus for each applicable performance period will be accrued and charged as an expense before the final determination of Employer’s financial performance.

 

(b)           Bonus payments, less applicable tax withholdings, will be paid in cash as soon as practicable after the calculation thereof, but in no event later than the earlier of (1) two and one-half (2 1/2) months after the end of the performance period to which the Bonus relates, or (2) the date the bonuses are paid to the executive officers of the Employer.

 

5. Definitions.

 

(a)           Average Return on Net Capital Employed from Continuing Operations. Employer’s Average Return on Net Capital Employed, or “RONCE,” for any performance period shall be expressed as a percentage and determined by dividing (1) the sum of the Employer’s Return on Net Capital Employed for each year during the performance period, by (2) the number of years in the performance period.  Return on Net Capital Employed is defined as earnings before interest and taxes (“EBIT”) divided by one-half of the sum of the beginning period date (January 1 of a given year in the performance period) net capital employed (“NCE”) and the ending period date (December 31 of a given year in the performance period) NCE. NCE is the book value of equity plus long-term and short-term debt, plus long-term and short-term asset retirement obligations, less cash, excluding restricted cash.

 

 (b)           Total Stockholder Return. Total Stockholder Return, or “TSR,” during the performance period, will be expressed as a percentage that is determined by dividing (1) the sum of (i) the difference between (A) the per share closing price of the common stock with respect to which such computation is being made as reported by the principal stock exchange on which such entity’s common stock is traded, and (B) the closing price per share for the trading day immediately preceding the first day of the performance period of the common stock with respect to which such computation is being made as reported on such exchange (the “Beginning Stock Price”), plus (ii) the amount of all dividends per share paid on such common stock during the performance period, by (2) the Beginning Stock Price.

 

TSR shall be equitably adjusted to reflect any spin-off, stock split, reverse stock split, stock dividend, recapitalization, reclassification or other similar change in the number of outstanding shares of common stock of Employer and any entity included in the designated peer group.

 

  

Exhibit A-4

  

 

For the January 1, 2010 through December 31, 2012 performance period, the designated peer group will consist of the following companies:

 

	
Carbo Ceramics

	
Lufkin Industries

	
Core Labs

	
RPC, Inc.

	
Cal Dive International

	
Newpark Resources

	
Basic Energy Services

	
Key Energy Services

	
Superior Energy Services

	
Oceaneering International

	
Oil States International

	
Helix Energy Solutions

	
Exterran Holdings

	
Complete Production

	
Global Industries

	  

For the January 1, 2011 through December 31, 2013 Performance Period, the designated Peer Group will consist of the following companies:

 

	
Carbo Ceramics

	
Lufkin Industries

	
Core Labs

	
RPC, Inc.

	
Cal Dive International

	
Newpark Resources

	
Basic Energy Services

	
Key Energy Services

	
Superior Energy Services

	
Oceaneering International

	
Oil States International

	
Helix Energy Solutions

	
Exterran Holdings

	
Complete Production

	
Global Industries

	  

If any peer group company’s TSR ceases to be publicly available due to business combination, receivership, bankruptcy or other event, or if any peer group company ceases to be publicly held, such company will be excluded from the peer group.  Any modifications to definitions or calculations of TSR that are made for the purpose of calculating the 2010-2012 bonus or the 2011-2013 bonus under the CICP for the executives of the Employer will also apply for Employee.

 

 Exhibit A-5

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