exv10w1
Exhibit 10.1
`BASIC ENERGY SERVICES, INC.
[FORM OF — Non-Compliant Under Section 162(m) of the Internal Revenue Code of 1986]
PERFORMANCE-BASED AWARD AGREEMENT
For Performance Year 2011
(Officers and Employees)
Grantee: ____________________
1. Grant of Performance-Based Award; Issuance of Restricted Stock Upon Achievement of
Performance-Based Metrics.
(a) As of the effective date of this agreement (this “Agreement”), Basic Energy
Services, Inc. (formerly BES Holding Co.), a Delaware corporation (the “Company”), hereby
grants to the Grantee (identified above) shares (the “Restricted Stock”) of common stock,
$0.01 par value per share of the Company (the “Common Stock”), subject to meeting the
Performance Metrics as described in Section 12 hereof, and in accordance with the terms and
conditions of this Agreement and the Fourth Amended and Restated Basic Energy Services, Inc.
2003 Incentive Plan (the “Plan”). The Plan is hereby incorporated in this Agreement in its
entirety by reference.
(b) To determine the actual number of shares of Restricted Stock to be earned by
Grantee, the PB Peer Group (as identified in Section 12 below) will be ranked from best
performing to worst performing with regard to each company’s respective TSR Performance
Metric where the PB Peer Group company ranked 1st shall be the one with the
highest TSR Performance Metric when compared to all other PB Peer Group companies, the PB
Peer Group company ranked 2nd shall be the one with the second highest TSR
Performance Metric when compared to all other PB Peer Group companies, the PB Peer Group
company ranked 3rd shall be the one with the third highest TSR Performance Metric
when compared to all other PB Peer Group companies, and so forth. The PB Peer Group company
ranked 13th shall be the one with the lowest TSR Performance Metric when compared
to all other PB Peer Group companies. The percentage of TSR Target Shares (as identified in
Section 12 below) earned by Grantee should the Company’s TSR Performance Metric equal that
of the 1st-ranked, 2nd-ranked, 3rd-ranked, etc., PB Peer
Group company will be as set forth below:
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| PB Peer Group Company |
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| Rank Based on TSR |
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Percentage of TSR Target |
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| Performance Metric |
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Shares Earned |
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1st |
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150.0 |
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2nd |
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141.7 |
% |
3rd |
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133.3 |
% |
4th |
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125.0 |
% |
5th |
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116.7 |
% |
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| PB Peer Group Company |
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| Rank Based on TSR |
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Percentage of TSR Target |
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| Performance Metric |
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Shares Earned |
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6th |
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108.3 |
% |
7th |
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100.0 |
% |
8th |
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83.3 |
% |
9th |
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66.7 |
% |
10th |
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50.0 |
% |
11th |
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33.3 |
% |
12th |
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16.7 |
% |
13th |
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0 |
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Should the Company’s TSR Performance Metric be (1) greater than the TSR Performance Metric
of the 1st-ranked member of the PB Peer Group, the percentage of TSR Target Shares earned by
Grantee will be 150.0%, (2) less than the TSR Performance Metric of the 13th-ranked (or
last) member of the PB Peer Group, the percentage of TSR Target Shares earned by Grantee
will be 0%, and (3) greater than the TSR Performance Metric of one PB Peer Group company and
less than the TSR Performance Metric of the next highest ranked PB Peer Group company, the
percentage of TSR Target Shares earned by Grantee will be higher than the percentage
assigned to the lower ranked of the two companies and lower than the percentage assigned to
the higher ranked of the two companies with the exact percentage of Target Shares earned by
the Grantee determined by proportional interpolation (for example, if the Company’s TSR
Performance Metric were to be at the midpoint between the TSR Performance Metrics of the
6th-ranked and the 5th-ranked PB Peer Group companies, the Grantee
would earn 112.5% of the TSR Target Shares (as identified in Section 12 below), 112.5%
lying exactly halfway between the 108.3% assigned to the 6th-ranked PB Peer Group
company and the 116.7% assigned to the 5th-ranked PB Peer Group company).
Notwithstanding the foregoing in this Section 1(b), if the Company’s TSR Performance Metric
exceeds that of both Key Energy Services, Inc. and Complete Production Services, Inc.,
Grantee shall earn the higher of (A) 100% of the TSR Target Shares or (B) the percentage
derived above in this Section 1(b).
(c) The stock certificate(s) or book entry evidencing the shares of Restricted Stock
shall not be issued or registered on the Company’s books and records until (i) the
achievement of the Performance Metrics set forth above and described in Section 12 below
have been met and approved by the Committee and (ii) the Committee has determined the
specific number of shares of Restricted Stock to be issued pursuant to this Agreement. Upon
resolution and certification by the Committee that the applicable Performance Metrics have
been achieved, and subject to the other terms and conditions of this Agreement, the Company
will promptly issue by book entry or a stock certificate(s) the aggregate number of shares
of Restricted Stock certified by the Committee for issuance under this Agreement.
2. Definitions. All capitalized terms used herein shall have the meanings set forth
in the Plan unless otherwise provided herein. Section 12 below sets forth meanings for certain of
the capitalized terms used in this Agreement.
3. Vesting Term. Any Restricted Stock earned by and issued to Grantee pursuant to
this Agreement will vest in the Grantee as set forth in Section 12 below.
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4. Purchase Price. No consideration shall be payable by the Grantee to the Company
for the Restricted Stock.
5. Restrictions on Restricted Stock.
(a) The Restricted Stock earned and issued to Grantee hereunder shall be maintained in
book entry form or the stock certificates shall be retained in the possession of the Company
until vested in the Grantee as provided in Sections 3 and 12 hereof.
(b) All unvested shares of Restricted Stock will be forfeited by the Grantee (a) if the
Grantee’s employment with the Company is terminated by the Company for “Cause” before the
Restricted Stock is vested or (b) if the Grantee terminates his employment with the Company
before the Restricted Stock is vested for any reason other than (i) “Good Reason” or (ii)
the death or “Disability” of the Grantee, as such terms “Cause,” “Disability” or “Good
Reason” or equivalent terms (such as “Termination for Cause” or “Termination for Good
Reason”) are defined in the employment agreement in effect between the Grantee and the
Company as of the effective date hereof or, if no such employment agreement exists, as such
terms are defined in the Plan at the time of such termination of employment to the extent
not modified in Section 12 below, or as otherwise defined in this Agreement. “Retirement”
shall also have the effect as set forth in Section 12(e) below.
(c) At such time as the vesting period is satisfied, a certificate for the Common Stock
no longer subject to forfeiture will be delivered to the Grantee without the legend set
forth in Section 5(e) below.
(d) From and after the date the stock certificate for the Restricted Stock is issued
and prior to any forfeiture of the Restricted Stock, the Grantee shall be entitled to vote
the shares of Restricted Stock and shall be entitled to receive any cash dividends payable
on such shares at the time such dividends are paid with respect to the Common Stock. Any
dividends paid or payable in shares of Common Stock or other stock of the Company applicable
to the Restricted Stock shall be retained by the Company until the vesting period of the
Restricted Stock on which the stock dividend was issued is satisfied.
(e) Any book entry shares or certificate representing the Restricted Stock awarded
hereunder shall be issued to the Grantee pursuant to the terms of the Plan and this
Agreement and shall be marked with the following legend:
“The shares represented by this certificate have been issued pursuant to the terms of the
Fourth Amended and Restated Basic Energy Services, Inc. 2003 Incentive Plan and may not be
sold, pledged, transferred, assigned or otherwise encumbered in any manner except as set
forth in the terms of such Plan or Award Agreement dated effective March 10, 2011.”
6. Independent Legal and Tax Advice. Grantee acknowledges that the Company has
advised Grantee to obtain independent legal and tax advice regarding the grant of the Restricted
Stock in accordance with this Agreement and any disposition of any such shares.
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7. Reorganization of Company. The existence of this Agreement shall not affect in any
way the right or power of the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in Company’s capital structure or
its business, or any merger or consolidation of the Company, or any issue or bonds, debentures,
preferred or prior preference stock ahead of or affecting the Restricted Stock or the rights
thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding, whether of a similar
character or otherwise.
8. Investment Representation. Grantee will enter into such written representations,
warranties and agreements as Company may reasonably request in order to comply with any federal or
state securities law. Moreover, any stock certificate for any Restricted Stock (and/or Common
Stock) issued to Grantee hereunder may contain a legend restricting their transferability as
determined by the Company in its discretion. Grantee agrees that Company shall not be obligated to
take any affirmative action in order to cause the issuance or transfer of shares of Common Stock
hereunder to comply with any law, rule or regulation that applies to the shares subject to this
Agreement.
9. No Guarantee of Employment. This Agreement shall not confer upon Grantee any right
to continued employment with the Company or any Affiliate thereof.
10. Withholding of Taxes. The Grantee shall have the responsibility of discharging
all taxes owed by the Grantee as a result of any Restricted Stock awarded to Grantee pursuant to
this Agreement and no issuance of Common Stock pursuant to this Agreement shall be made until
appropriate arrangements satisfactory to the Company have been made for the payment of any tax
amounts that may be required to be withheld or paid to the Company with respect thereto.
Notwithstanding the foregoing, in accordance with Section 9(b) of the Plan, the Company hereby
agrees that the Grantee may direct the Company to satisfy the Company’s actual withholding tax
obligations through the “constructive” tender and withholding of vested Restricted Stock under this
Agreement; provided, the Company may revoke such right at any time prior to the vesting date of
Awards under this Agreement by giving written notice to the Grantee. Grantee agrees that, if he
makes an election under Section 83(b) of the Internal Revenue Code of 1986, as amended, with regard
to the Restricted Stock, he will so notify the Company in writing within two (2) weeks after making
such election, so as to enable the Company to timely comply with any applicable governmental
reporting requirements.
11. General.
(a) Notices. All notices under this Agreement shall be mailed or delivered by
hand to the parties at their respective addresses set forth beneath their signatures below
or at such other address as may be designated in writing by either of the parties to one
another, or to their permitted transferees if applicable. Notices shall be effective upon
receipt.
(b) Transferability of Award. The rights of the Grantee pursuant to this
Agreement are not transferable by Grantee. No right or benefit hereunder shall in any
manner be liable for or subject to any debts, contracts, liabilities, obligations or torts
of
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Grantee or any permitted transferee thereof. Any purported assignment, alienation,
pledge, attachment, sale, transfer or other encumbrance of the Restricted Stock, prior to
the lapse of restrictions, that does not satisfy the requirements hereunder shall be void
and unenforceable against the Company.
(c) Amendment and Termination. No amendment, modification or termination of
this Agreement shall be made at any time without the written consent of Grantee and the
Company.
(d) No Guarantee of Tax Consequences. The Company and the Committee make no
commitment or guarantee that any federal or state tax treatment will apply or be available
to any person eligible for benefits under this Agreement. The Grantee has been advised and
been provided the opportunity to obtain independent legal and tax advice regarding the award
of Restricted Stock pursuant to this Agreement and the disposition of any Common Stock
acquired thereby.
(e) Severability. In the event that any provision of this Agreement shall be
held illegal, invalid or unenforceable for any reason, such provision shall be fully
severable, but shall not affect the remaining provisions of the Agreement, and the Agreement
shall be construed and enforced as if the illegal, invalid or unenforceable provision had
not been included therein.
(f) Supersedes Prior Agreements. This Agreement shall supersede and replace
all prior agreements and understandings, oral or written, between the Company and the
Grantee regarding the grant of the Restricted Stock covered hereby.
(g) Governing Law. This Agreement shall be construed in accordance with the
laws of the State of Texas without regard to its conflict of law provisions, to the extent
federal law does not supersede and preempt Texas law.
(h) No Trust or Fund Created. This Agreement shall not create or be construed
to create a trust or separate fund of any kind or a fiduciary relationship between the
Company or any Affiliate and a Grantee or any other Person. To the extent that any Person
acquires a right to receive payments from the Company or any Affiliates pursuant to this
Agreement, such right shall be no greater than the right of any general unsecured creditor
of the Company or any Affiliate.
(i) Other Laws. The Company retains the right to refuse to issue or transfer
any Common Stock if it determines that the issuance or transfer of such shares might violate
any applicable law or regulation or entitle the Company to recover under Section 16(b) of
the Securities Exchange Act of 1934.
(j) Binding Effect. This Agreement shall be binding upon and inure to the
benefit of any successors to the Company and all persons lawfully claiming under the
Grantee.
12. Definitions and Other Terms. The following capitalized terms shall have those
meanings set forth opposite them:
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(a) Grantee. The person specified as the Grantee on page 1 and the signature
page of this Agreement.
(b) Vesting. Subject to Section 5 above and the terms of the Plan, the Grantee
shall vest in all rights to the Restricted Stock and any rights of the Company to such
Restricted Stock shall lapse on the earlier of (i) the dates set forth below; (ii)
termination by the Company without Cause; (iii) the death or Disability of the Grantee; or
(iv) Termination for Good Reason.
With respect to any of the events set forth in clauses (ii), (iii) or (iv) above in this
Section 12(b) prior to the end of the Performance Period, the Grantee shall also be deemed
to have met the TSR Performance Metric and earned 100% of each of the TSR Target Shares. In
the event of a Change of Control as defined in the Plan and related termination events,
Section 8(b) of the Plan shall be applicable, including the potential deemed meeting of the
TSR Performance Metric at the highest level set forth in this Agreement.
If not earlier vested, the Restricted Stock shall vest according to the following schedule:
March 15, 2013 — 1/3 of such shares
March 15, 2014 — 1/3 of such shares
March 15, 2015 — 1/3 of such shares
(c) Termination for Good Reason. Termination for Good Reason shall have the
meaning set forth in the Plan, except that clause (ii) of the definition thereof is hereby
amended and restated in its entirety as follows: (ii) reduction in (a) the Participant’s
annual base salary immediately prior to the Change in Control, (b) the Participant’s target
bonus opportunity (expressed as a percentage of the Participant’s annual base salary or
other method approved by the Committee) immediately prior to the Change in Control or (c)
benefits comparable in the aggregate to those enjoyed by the Participant under the Company’s
retirement, life insurance, medical, dental, health, accident and disability plans in which
Participant was participating immediately prior to the Change in Control;
(d) Disability. “Disability” shall mean that Grantee is entitled to receive
long-term disability (“LTD”) income benefits under the LTD plan or policy maintained by the
Company that covers Grantee. If, for any reason, Grantee is not covered under such LTD plan
or policy, then “Disability” shall mean a “permanent and total disability” as defined in
Section 22(e)(3) of the Code and Treasury regulations thereunder. Evidence of such
Disability shall be certified by a physician acceptable to the Company. Grantee agrees to
submit to any examinations that are reasonably required by the attending physician or other
healthcare service providers to determine whether he or she has a Disability.
(e) Retirement. “Retirement” means the voluntary termination of Grantee’s
employment for normal retirement at or after attaining age 62 provided that, on the date of
his retirement, Grantee has accrued at least ten continuous years of active employment
service with the Company; provided, if the Grantee is party to an employment agreement in
effect between the Grantee and the Company as of the date hereof in which the term
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“Retirement” is defined for purposes of that agreement, such term shall apply to this
Agreement.
In the event of the Retirement of the Grantee, Grantee is hereby given the option to have
any unvested shares forfeited in connection with such Retirement in accordance with Section
5(b) reissued to the Grantee upon, and as partial consideration for, Grantee’s execution and
delivery of a non-compete agreement (in the form required by the Company in its sole
discretion with a term of not longer than the final vesting date set forth in Section 12(d)
above) within the period of time specified by the Company after delivery of such agreement
to the Grantee for execution. In addition, with respect to a Retirement after the end of the
Performance Period but prior to the determination of the achievement of the TSR Performance
Metric by the Committee, the Grantee shall also be deemed to have met the TSR Performance
Metric and earn TSR Target Shares if and when determined in accordance with the terms of
this Agreement.
(f) TSR Target Shares and Maximum Number of Shares of Restricted Stock. “TSR
Target Shares” means _______ shares of Common Stock. Accordingly, based on the potential
achievement that may be obtained in Section 1(b) hereof, the maximum number of shares of
Restricted Stock that may be issued by the Company pursuant to this Agreement is 150% of the
TSR Target Shares.
(g) Performance Metric. For purposes of this Agreement:
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“TSR Performance Metric” means the cumulative total
shareholder return (“TSR”) for the Common Stock of the Company as
calculated below for the Performance Period. The award will be earned as
set forth in Section 1(b) based on the Company’s TSR performance relative
to the PB Peer Group. |
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(ii) |
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“TSR for the Performance Period” shall be defined and
calculated as follows, where “Beginning Price” is the average closing price
on the New York Stock Exchange (“NYSE”) for the last 20 NYSE trading days
of 2010, and “Ending Price” is the average closing price on the NYSE for
the last 20 NYSE trading days of 2011, in each case as applied to the
applicable equity security: |
TSR = (Ending Price - Beginning Price + cash dividends (if any) per share paid*)
Beginning Price
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Stock dividends paid in securities rather than cash in which there is a
distribution of less than 25 percent of the outstanding shares (as calculated prior to
the distribution) shall be treated as cash for purposes of this calculation. |
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To the extent a security of the Company or any member of the PB Peer Group is not listed
or traded on the NYSE, “NYSE” as used above above shall mean the principal |
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national securities exchange or quotation service on which the security is listed or
quoted. |
(h) PB Peer Group. “PB Peer Group” means each of the following companies: (1)
Bronco Drilling Company, Inc.; (2) Complete Production Services, Inc.; (3) Hercules Offshore
Inc.; (4) Key Energy Services, Inc; (5) Natural Gas Services Group, Inc.; (6) Oil States
International, Inc.; (7) Patterson-UTI Energy Inc.; (8) Pioneer Drilling Co.; (9) Superior
Energy Services, Inc.; (10) Team Inc.; (11) Tesco Corp.; (12) Tetra Technologies, Inc.; and
(13) Union Drilling, Inc.; provided, in the event any such company ceases to exist, ceases
to file public reports timely with the U.S. Securities and Exchange Commission with respect
to the Performance Period or merges or combines with any other entity that, in the
determination of the Committee makes such combined company not comparable for use as part of
the PB Peer Group, the Committee in its sole discretion may continue to include or exclude
such company in the PB Peer Group, but in no event may substitute any other company in its
place as part of the PB Peer Group.
(i) Performance Period. “Performance Period” means the one-year calculation
period starting on the 20th NYSE trading day prior to and including the last NYSE trading
day of 2010 and ending on the last NYSE trading day of 2011.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by its
duly authorized officer and Grantee has hereunto executed this Agreement as of the same date, to be
effective as of March 10, 2011.
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BASIC ENERGY SERVICES, INC.
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By: |
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Name: |
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Title: |
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Address for Notices:
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Basic Energy Services, Inc. |
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P.O. Box 10460 |
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Midland, Texas 79702 |
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Fax: (432) 620-5501 |
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Attn: President |
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GRANTEE |
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[NAME] |
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Address for Notices: |
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Fax: |
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