UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 22, 2018
Nuverra Environmental Solutions, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware | 001-33816 | 26-0287117 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
14624 N. Scottsdale Road, Suite #300, Scottsdale, Arizona | 85254 | |||
(Address of Principal Executive Offices) | (Zip Code) |
Registrants telephone number, including area code: (602) 903-7802
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2.):
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
☐ | Emerging growth company |
☐ | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. |
Item 1.01. | Entry into a Material Definitive Agreement. |
Approval of Long Term Incentive Plan
As previously disclosed, on May 1, 2017, Nuverra Environmental Solutions, Inc. (the Company) and certain of its material subsidiaries filed voluntary petitions under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the Court) to pursue pre-packaged plans of reorganization (together, and as amended, the Plan). Also as previously disclosed, the Court confirmed the Plan on July 25, 2017 and the Company and certain of its material subsidiaries emerged from bankruptcy on August 7, 2017 (the Effective Date), when all remaining conditions to the effectiveness of the Plan were satisfied or waived. The Plan, among other things, established the principal terms of a management incentive plan, provided that such plan be effective on the Effective Date and required the Companys Board of Directors (the Board) to approve such plan and grant awards thereunder following the Effective Date.
Pursuant to the requirements of the Plan, on February 22, 2018, the Board approved the Nuverra Environmental Solutions, Inc. 2017 Long Term Incentive Plan (the Incentive Plan). The Incentive Plan is intended to provide for the grant of equity-based awards to designated members of the Companys management and employees. Pursuant to the terms of the Plan, the Incentive Plan became effective on the Effective Date. The Incentive Plan will be administered by a committee of two or more directors designated by the Board (the Committee) or by the Board, to the extent the Board elects to administer the Incentive Plan. The Committee has broad authority under the Incentive Plan to, among other things: (i) designate participants; (ii) determine the type or types of awards to be granted to a participant and the number of shares that are subject to such awards; (iii) determine the terms and conditions of any award and modify, waive, or adjust any term or condition of an award that has been granted; (iv) determine the treatment of an award upon termination of employment or other service relationship; and (v) interpret and administer the Incentive Plan.
Individuals eligible to receive awards under the Incentive Plan include officers, employees, and directors of the Company or any of its affiliates. The types of awards that may be granted under the Incentive Plan include stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards, dividend equivalents, cash awards, performance-based awards, and other forms of stock-based awards as determined by the Committee, or any combination of the foregoing.
The maximum number of shares of the Companys common stock (Common Stock) that is available for the issuance of awards under the Incentive Plan is 1,772,058. If all or any portion of an award granted under the Incentive Plan expires or is cancelled, forfeited, exchanged, settled in cash, or otherwise terminated, the shares of Common Stock subject to such award will not be considered delivered shares for purposes of the Incentive Plan and will be available for future awards under the Incentive Plan.
As is customary in management incentive plans of this nature, the number and kind of shares available and the share limitations under the Incentive Plan and any outstanding awards, as well as the exercise and purchase prices of awards, and performance targets under certain types of performance-based awards, are subject to adjustment in the event of certain recapitalization, reclassification, stock dividend, extraordinary dividend, stock split, reverse stock split, or other distribution with respect to the Common Stock or any merger, reorganization, consolidation, combination, spin-off, or other similar corporate change or any other change affecting the Common Stock.
The foregoing description of the Incentive Plan is only a summary and does not purport to be a complete description of the terms and conditions under the Incentive Plan, and such description is qualified in its entirety by reference to the full text of the Incentive Plan, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference herein.
Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
The disclosure with respect to the Incentive Plan under Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 5.02.
Grants of Restricted Stock Units to Executive Officers
On February 22, 2018, the Compensation and Nominating Committee of the Board (the Compensation Committee) authorized the grant of performance-based restricted stock units (PRSUs) and time-based restricted stock units (TRSUs) under the Incentive Plan to Mark D. Johnsrud, the Companys Chairman and Chief Executive Officer, Edward A. Lang, the Companys Executive Vice President and Chief Financial Officer, and Joseph M. Crabb, the Companys Executive Vice President and Chief Legal Officer (Mr. Johnsrud, Mr. Lang, and Mr. Crabb, each an Executive and, collectively, the Executives). On the applicable vesting date, the PRSUs and TRSUs will be settled for shares of Common Stock if all applicable conditions have been met.
The Compensation Committee authorized the following grants of PRSUs with the following performance measurement periods and vesting dates:
| Mr. Johnsrud received an award of 531,618 PRSUs. The award vests in equal installments on the first two anniversaries of the Effective Date pursuant to Mr. Johnsruds Amended and Restated Employment Agreement (the Johnsrud Employment Agreement), as previously disclosed. The first installment is subject to a performance measurement period beginning on January 1, 2018 and ending on June 30, 2018, and the second installment is subject to a performance measurement period beginning on July 1, 2018 and ending on June 30, 2019. |
| Mr. Lang and Mr. Crabb each received an award of 62,022 PRSUs. The awards vest in three equal installments on December 31, 2018, December 31, 2019, and December 31, 2020, respectively. The first installment is subject to a performance measurement period beginning on January 1, 2018 and ending on December 31, 2018, the second installment is subject to a performance measurement period beginning on January 1, 2019 and ending on December 31, 2019, and the third installment is subject to a performance measurement period beginning on January 1, 2020 and ending on December 31, 2020. |
Vesting of the PRSUs issued to the Executives is subject to the achievement of pre-established performance targets during the applicable performance measurement periods relating to adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA) and total shareholder return (TSR), with the Adjusted EBITDA target weighted at 80% and the TSR target weighted at 20%. The performance targets will be established by the Compensation Committee, in consultation with the Companys compensation consultant, and communicated to the Executives in writing not later than the beginning of the applicable performance period or as soon as reasonably practicable thereafter.
Executives must remain in the continuous service of the Company through the applicable vesting date and the performance target for the applicable performance measurement period must have been satisfied on the applicable vesting date in order for the PRSUs to vest, subject to accelerated vesting upon certain circumstances.
If employment is terminated by the Company without Cause, as defined in each Executives employment agreement, or terminated by the Executive for Good Reason, as defined in each Executives employment agreement, and such termination does not occur within six (6) months prior to or twelve (12) months following a Change in Control, as defined in the Incentive Plan, unvested PRSUs will be subject to pro rata accelerated vesting if and to the extent the performance criteria are ultimately satisfied. With respect to Mr. Lang and Mr. Crabb, if employment is terminated by the Company without cause or terminated by the Executive for Good Reason, and such termination occurs within six (6) months prior to or twelve (12) months following a Change in Control, all unvested PRSUs will be subject to accelerated vesting regardless of whether the performance criteria are or would ultimately be satisfied. With respect to Mr. Johnsrud, in the event of a Change in Control transaction, unvested PRSUs are subject to partial vesting on a sliding scale based upon the enterprise valuation of the Company reflected in the Change in Control transaction.
The Compensation Committee authorized the following grants of TRSUs with the following vesting dates:
| Mr. Johnsrud received an award of 531,618 TRSUs, which vest in three equal installments. The first installment will vest on the date of issuance, and the second and third installments vest on the first two anniversaries of the Effective Date, pursuant to the Johnsrud Employment Agreement. |
| Mr. Lang and Mr. Crabb each received an award of 62,022 TRSUs, which vest in three equal installments on December 31, 2018, December 31, 2019, and December 31, 2020, respectively. |
TRSUs held by an Executive become fully vested upon the termination of the Executive by the Company without Cause, as defined in their respective employment agreements, or termination by the executive for Good Reason, as defined in their respective employment agreements.
The PRSUs and TRSUs do not carry voting rights, except with respect to shares of Common Stock that are delivered upon settlement of vested PRSUs or TRSUs. All PRSUs and TRSUs granted are subject to forfeiture if, prior to the applicable vesting date, the Company terminates an Executives employment for Cause, as defined in each Executives employment agreement with the Company, or an Executive voluntarily terminates employment without Good Reason, as defined in each Executives employment agreement with the Company. Both PRSUs and TRSUs become fully vested upon death or disability.
The PRSUs and TRSUs have such other terms and conditions as included in the Form of Notice of Grant of Performance Restricted Stock Units and Award Agreement, Form of Notice of Grant of Time-Based Restricted Stock Units and Award Agreement, CEO Notice of Grant of Performance Restricted Stock Units and Award Agreement, and CEO Notice of Grant of Time-Based Restricted Stock Units and Award Agreement, each entered into between the Company and the applicable Executive, copies of which are filed as Exhibit 10.2, 10.3, 10.4, and 10.5 respectively, to this Current Report on Form 8-K.
Senior Executive Bonus Plan
On February 22, 2018, the Compensation Committee adopted the Senior Executive Bonus Plan (the Bonus Plan), which will provide for potential annual cash bonus awards to the Executives, with a target payment amount determined as a specified percentage of each Executives annual base salary. Target payment amounts in fiscal 2018 as a specified percentage of base salary will be 125% for Mr. Johnsrud and 85% for Mr. Lang and Mr. Crabb, respectively. It is anticipated that in fiscal 2019 and subsequent years, the target percentage of base salary will be 100% for Mr. Johnsrud and 65% for Mr. Lang and Mr. Crabb, respectively.
Under the Bonus Plan, the Executives will be eligible to receive annual bonus awards for fiscal 2018 and subsequent years based upon three performance targets relating to Adjusted EBITDA, Company-wide safety statistics, and individual performance. Bonus awards will be weighted with 70% of the payment amount based on Adjusted EBITDA, 10% based on Company-wide safety statistics, and 20% based on individual performance.
Awards for the Adjusted EBITDA component will be payable starting at the achievement of at least 80% of the goal approved by the Board for the applicable fiscal year, with increasing payment up to achievement of 140% or more of the goal approved by the Board. Payment amounts will be determined by linear interpolation between 80% and 100% of the Board approved Adjusted EBITDA goal, and between 100% and 140% of Adjusted EBITDA goal, as follows: (i) Adjusted EBITDA below 80% of goal, no payment; (ii) Adjusted EBITDA at 80% of goal, 50% of target payment; (iii) Adjusted EBITDA from 80% to 100% of goal, linear interpolation between 50% and 100% of target payment; (iv) Adjusted EBITDA at 100% of goal, 100% of target payment; (v) Adjusted EBITDA from 100% to 140% of goal, linear interpolation between 100% and 200% of target payment; and (vi) Adjusted EBITDA at or above 140% of goal, 200% of target payment.
Awards for the Company-wide safety statistics will be measured using a total recordable incident rate (TRIR) and will only be awarded if there is 100% achievement of the pre-determined goal, with a target amount equal to 10% of each Executives target annual bonus. The TRIR target for each year will be determined based on the Companys internal TRIR goals. Awards for individual performance will be discretionary and will be determined by the Compensation Committee based on each Executives individual performance. Individual payment amounts will be determined by the Compensation Committee in its discretion, with a target amount equal to 20% of each Executives target annual bonus; provided, that actual bonus amounts attributable to individual performance may be more or less than such amount, in the discretion of the Compensation Committee. Both the awards for the Company-wide safety statistics and individual performance may be achieved even if the Adjusted EBITDA minimum threshold (80% of target) is not achieved.
The foregoing description of the Bonus Plan is provided pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K, which requires a written description of a compensatory plan, contract, or arrangement when there is no formal document.
Grant of Stock Options to Chief Executive Officer
As previously disclosed, the Johnsrud Employment Agreement, which was assumed by the Company on the Effective Date, provides for the issuance to Mr. Johnsrud of two tranches of options to purchase (i) 2.5% of the outstanding equity securities of the reorganized Company, on a fully diluted basis, at a premium exercise price equal to the value of a share of the reorganized Companys Common Stock at an enterprise valuation of $475 million (Tranche 1) and (ii) 2.5% of the outstanding equity securities of the reorganized Company, on a fully diluted basis, at a premium exercise price equal to the value of a share of the reorganized Companys Common Stock at an enterprise valuation of $525 million (Tranche 2), with the per share exercise price determined based on the Companys capital structure as of the Effective Date. Pursuant to the Johnsrud Employment Agreement and the Plan, the grant of stock options to Mr. Johnsrud was effective as of the Effective Date.
On February 23, 2018, following approval of the form of option agreement by the Compensation Committee, the Company and Mr. Johnsrud entered into a Notice of Grant of CEO Stock Options and Stock Option Award Agreement (the Award Agreement) to provide for the terms and conditions of Mr. Johnsruds stock option grant. Pursuant to the Award Agreement, Mr. Johnsrud was awarded 354,411 options to purchase Common Stock, with an exercise price of $37.03 per share, in Tranche 1, and 354,411 options to purchase Common Stock, with an exercise price of $41.31 per share, in Tranche 2. The stock options in Tranche 1 and Tranche 2 vest in three equal installments on the first three anniversaries of the Effective Date.
Pursuant to the Award Agreement, the stock options granted to Mr. Johnsrud may be exercised at the applicable exercise price beginning on the applicable vesting date and ending on the earliest to occur of the following dates: (i) the effective date and time of Mr. Johnsruds termination of employment by the Company or any of its subsidiaries for Cause (as defined in the Johnsrud Employment Agreement); (ii) the last day following the 90-day period following the effective date of termination by Mr. Johnsrud of his employment with the Company or any of its subsidiaries without Good Reason (as defined in the Johnsrud Employment Agreement); (iii) the last day following the one-year period following the effective date of a Change in Control of the Company (as defined in the Johnsrud Employment Agreement); (iv) the earlier of (a) August 7, 2024 or (b) the last day of the one-year period commencing on the date and time of the termination of Mr. Johnsruds service with the Company and/or its subsidiaries by the Company other than for Cause or by Mr. Johnsrud for Good Reason or due to death or disability; and (v) August 7, 2024.
To become vested in the stock options, Mr. Johnsrud must be in continuous service with the Company and/or its subsidiaries during the period beginning on August 7, 2017 and ending on the applicable vesting date; provided, however, that all of the stock options become immediately vested if Mr. Johnsruds service is terminated by the Company other than for Cause or Mr. Johnsruds service is terminated by Mr. Johnsrud for Good Reason. Additionally, in the event of a Change in Control, all options automatically become fully vested, subject to Mr. Johnsruds continued service with the Company through such closing.
The foregoing description of the Award Agreement is only a summary and does not purport to be a complete description of the terms and conditions under the Award Agreement, and such description is qualified in its entirety by reference to the full text of the Award Agreement, a copy of which is filed as Exhibit 10.6 to this Current Report on Form 8-K and is incorporated by reference herein.
Adoption of Restricted Stock Plan for Directors
On February 22, 2018, the Compensation Committee adopted the 2018 Restricted Stock Plan for Directors (the Restricted Stock Plan), which will be administered by the Compensation Committee, and is subject to ratification by the Companys shareholders at the Companys 2018 annual meeting. The Restricted Stock Plan provides for the grant of restricted stock to the non-employee directors of the Company (the Non-Employee Directors). The Compensation Committee has full authority and discretion to, among other things: (i) determine which Non-Employee Directors will be granted awards, the times at which awards will be granted, and the number of shares of restricted stock covered by each award; (ii) to interpret the plan; and (iii) to determine the terms and provisions of each respective award agreement. The Restricted Stock Plan limits the number of shares that may be issued thereunder to 100,000 shares of Common Stock. In the event a Non-Employee Director shall cease to be a Non-Employee Director for any reason, except due to death, disability or retirement after age 70, the Non-Employee Director shall forfeit all shares of restricted stock to the Company that have not previously vested for no consideration; provided, however, that the Compensation Committee may decide to accelerate the vesting of all or any portion of the shares of restricted stock that have not vested prior to the date the Non-Employee Directors service terminates.
The foregoing description of the Restricted Stock Plan is only a summary and does not purport to be a complete description of the terms and conditions under the Restricted Stock Plan, and such description is qualified in its entirety by reference to the full text of the Restricted Stock Plan, a copy of which is filed as Exhibit 10.7 to this Current Report on Form 8-K and is incorporated by reference herein.
Grants of Awards to Directors
On February 22, 2018, the Compensation Committee authorized award grants of restricted stock to the current Non-Employee Directors pursuant to the Restricted Stock Plan, which will be issued upon ratification of the Restricted Stock Plan by the Companys shareholders at the 2018 annual meeting. The award of restricted stock to the Non-Employee Directors is in lieu of an annual grant of stock options previously approved by the Compensation Committee, which was previously disclosed by the Company on its Current Report on Form 8-K filed with the SEC on August 21, 2017. The current Non-Employee Directors, John B. Griggs, Michael Y. McGovern, and Charles K. Thompson, will receive an award grant of 3,342 shares of restricted stock in February 2018 for service during fiscal year 2018 and an additional partial-year award grant of 1,346 shares of restricted stock for service during a portion of fiscal 2017, all of which will fully vest on the first anniversary of the grant date, subject to accelerated vesting upon death, disability, or the consummation of a Change in Control transaction. For fiscal years subsequent to fiscal 2018, it is anticipated that the Non-Employee Directors will receive an annual grant of restricted stock with a target grant-date value of $50,000. The restricted stock has such other terms and conditions as included in the form of Restricted Stock Grant Agreement entered into between the Company and each Non-Employee Director, a copy of which is filed as Exhibit 10.8 to this Current Report on Form 8-K and is incorporated by reference herein.
Item 9.01. | Financial Statements and Exhibits. |
(d) | Exhibits |
Exhibit Number |
Description | |
10.1 | Nuverra Environmental Solutions, Inc. 2017 Long Term Incentive Plan | |
10.2 | Form of Notice of Grant of Performance Restricted Stock Units and Award Agreement | |
10.3 | Form of Notice of Grant of Time-Based Restricted Stock Units and Award Agreement | |
10.4 | CEO Notice of Grant of Performance Restricted Stock Units and Award Agreement | |
10.5 | CEO Notice of Grant of Time-Based Restricted Stock Units and Award Agreement | |
10.6 | Notice of Grant of CEO Stock Options and Stock Option Award Agreement between the Company and Mark D. Johnsrud, dated February 23, 2018 | |
10.7 | 2018 Restricted Stock Plan for Directors | |
10.8 | Form of Restricted Stock Grant Agreement |
EXHIBIT INDEX
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
NUVERRA ENVIRONMENTAL SOLUTIONS, INC. | ||||||||
Date: February 23, 2018 | By: | /s/ Joseph M. Crabb | ||||||
Name: | Joseph M. Crabb | |||||||
Title: | Executive Vice President and Chief Legal Officer |
Exhibit 10.1
Nuverra Environmental Solutions, Inc.
2017 Long Term Incentive Plan
1. Purpose. The purpose of the Nuverra Environmental Solutions, Inc. 2017 Long Term Incentive Plan (the Plan) is to provide a means through which (a) Nuverra Environmental Solutions, Inc., a Delaware corporation (the Company), and its Affiliates may attract, retain and motivate qualified persons as employees, directors and consultants, thereby enhancing the profitable growth of the Company and its Affiliates, and (b) persons upon whom the responsibilities of the successful administration and management of the Company and its Affiliates rest, and whose present and potential contributions to the Company and its Affiliates are of importance, can acquire and maintain stock ownership or awards the value of which is tied to the performance of the Company, thereby strengthening their concern for the Company and its Affiliates. Accordingly, the Plan provides for the grant of Options, SARs, Restricted Stock, Restricted Stock Units, Stock Awards, Dividend Equivalents, Other Stock-Based Awards, Cash Awards, Substitute Awards, Performance Awards, or any combination of the foregoing, as determined by the Committee in its sole discretion.
2. Definitions. For purposes of the Plan, the following terms shall be defined as set forth below:
(a) Affiliate means any corporation, partnership, limited liability company, limited liability partnership, association, trust or other organization that, directly or indirectly, controls, is controlled by, or is under common control with, the Company. For purposes of the preceding sentence, control (including, with correlative meanings, the terms controlled by and under common control with), as used with respect to any entity or organization, shall mean the possession, directly or indirectly, of the power (i) to vote more than 50% of the securities having ordinary voting power for the election of directors of the controlled entity or organization, or (ii) to direct or cause the direction of the management and policies of the controlled entity or organization, whether through the ownership of voting securities, by contract, or otherwise.
(b) ASC Topic 718 means the Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation - Stock Compensation, as amended or any successor accounting standard.
(c) Award means any Option, SAR, Restricted Stock, Restricted Stock Unit, Stock Award, Dividend Equivalent, Other Stock-Based Award, Cash Award, Substitute Award or Performance Award, together with any other right or interest, granted under the Plan.
(d) Award Agreement means any written instrument (including any employment, severance or change in control agreement) that sets forth the terms, conditions, restrictions and/or limitations applicable to an Award, in addition to those set forth under the Plan.
(e) Board means the Board of Directors of the Company.
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(f) Cash Award means an Award denominated in cash granted under Section 6(i).
(g) Change in Control means, except as otherwise provided in an Award Agreement, the occurrence of any of the following events after the Effective Date:
(i) | any Person or any group of Persons acting together which would constitute a group for purposes of Section 13(d) of the Exchange Act (excluding a corporation or other entity owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) is or becomes the beneficial owner, as defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Companys then outstanding voting securities; or |
(ii) | there is consummated a reorganization, recapitalization, merger or consolidation, in a single transaction or series of related transactions, involving the Company, unless (A) immediately after the consummation of such transaction, the voting securities of the Company immediately prior to such transaction continue to represent or are converted into more than 50% of the combined voting power of the then-outstanding voting securities of the Person resulting from such transaction, and (B) no Person, as a result of such transaction or series of related transactions, is or becomes the beneficial owner, as defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors (or comparable governing body) of the successor entity, except to the extent that such ownership existed prior to any such transaction; or |
(iii) | the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company; or |
(iv) | there is consummated an agreement or series of related agreements for the sale or other disposition, directly or indirectly, by the Company of all or substantially all of the Companys assets, other than such sale or other disposition by the Company of all or substantially all of the Companys assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale. |
Notwithstanding the foregoing, except with respect to clause (ii) above, a Change in Control shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the shares of the
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Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in, and own substantially all of the shares of, an entity which owns, either directly or through a subsidiary, all or substantially all of the assets of the Company immediately following such transaction or series of transactions.
(h) Change in Control Price means the amount determined in the following clause (i), (ii), (iii), (iv) or (v), whichever the Committee determines is applicable, as follows: (i) the price per share offered to holders of Stock in any merger or consolidation, (ii) the per share Fair Market Value of the Stock immediately before the Change in Control or other event without regard to assets sold in the Change in Control or other event and assuming the Company has received the consideration paid for the assets in the case of a sale of the assets, (iii) the amount distributed per share of Stock in a dissolution transaction, (iv) the price per share offered to holders of Stock in any tender offer or exchange offer whereby a Change in Control or other event takes place, or (v) if such Change in Control or other event occurs other than pursuant to a transaction described in clauses (i), (ii), (iii), or (iv) of this Section 2(h), the value per share of the Stock that may otherwise be obtained with respect to such Awards or to which such Awards track, as determined by the Committee as of the date determined by the Committee to be the date of cancellation and surrender of such Awards. In the event that the consideration offered to stockholders of the Company in any transaction described in this Section 2(h) or in Section 8(e) consists of anything other than cash, the Committee shall determine the fair cash equivalent of the portion of the consideration offered which is other than cash and such determination shall be binding on all affected Participants to the extent applicable to Awards held by such Participants.
(i) Code means the Internal Revenue Code of 1986, as amended from time to time, including the guidance and regulations promulgated thereunder and successor provisions, guidance and regulations thereto.
(j) Committee means a committee of two or more directors designated by the Board to administer the Plan; provided, however, that, unless otherwise determined by the Board, the Committee shall consist solely of two or more Qualified Members.
(k) Dividend Equivalent means a right, granted to an Eligible Person under Section 6(g), to receive cash, Stock, other Awards or other property equal in value to dividends paid with respect to a specified number of shares of Stock, or other periodic payments.
(l) Effective Date means August 7, 2017, the effective date of the Companys plan of reorganization pursuant to chapter 11 of the United States Bankruptcy Code.
(m) Eligible Person means any individual who, as of the date of grant of an Award, is an officer or employee of the Company or of any of its Affiliates, and any other person who provides services to the Company or any of its Affiliates, including directors of the Company. An employee on leave of absence may be an Eligible Person.
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(n) Exchange Act means the Securities Exchange Act of 1934, as amended from time to time, including the guidance, rules and regulations promulgated thereunder and successor provisions, guidance, rules and regulations thereto.
(o) Fair Market Value of a share of Stock means, as of any specified date, (i) if the Stock is listed on a national securities exchange, the closing sales price of the Stock, as reported on the stock exchange composite tape on that date (or if no sales occur on such date, on the last preceding date on which such sales of the Stock are so reported); (ii) if the Stock is not traded on a national securities exchange but is traded over the counter on such date, the average between the reported high and low bid and asked prices of Stock on the most recent date on which Stock was publicly traded on or preceding the specified date; or (iii) in the event Stock is not publicly traded at the time a determination of its value is required to be made under the Plan, the amount determined by the Committee in its discretion in such manner as it deems appropriate, taking into account all factors the Committee deems appropriate, including the Nonqualified Deferred Compensation Rules. Notwithstanding this definition of Fair Market Value, with respect to one or more Award types, or for any other purpose for which the Committee must determine the Fair Market Value under the Plan, the Committee may elect to choose a different measurement date or methodology for determining Fair Market Value so long as the determination is consistent with the Nonqualified Deferred Compensation Rules and all other applicable laws and regulations.
(p) ISO means an Option intended to be and designated as an incentive stock option within the meaning of Section 422 of the Code.
(q) Nonqualified Deferred Compensation Rules means the limitations or requirements of Section 409A of the Code, as amended from time to time, including the guidance and regulations promulgated thereunder and successor provisions, guidance and regulations thereto.
(r) Nonstatutory Option means an Option that is not an ISO.
(s) Option means a right, granted to an Eligible Person under Section 6(b), to purchase Stock at a specified price during specified time periods, which may either be an ISO or a Nonstatutory Option.
(t) Other Stock-Based Award means an Award granted to an Eligible Person under Section 6(h).
(u) Participant means a person who has been granted an Award under the Plan that remains outstanding, including a person who is no longer an Eligible Person.
(v) Performance Award means an award granted to an Eligible Person under Section 6(k), the grant, vesting, exercisability and/or settlement of which (and/or the timing or amount thereof) is subject to the achievement of one or more performance goals specified by the Committee.
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(w) Person means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity or other entity.
(x) Qualified Member means a member of the Board who is (i) a non-employee director within the meaning of Rule 16b-3(b)(3), and (ii) independent under the listing standards or rules of the securities exchange upon which the Stock is traded, but only to the extent such independence is required in order to take the action at issue pursuant to such standards or rules.
(y) Restricted Stock means Stock granted to an Eligible Person under Section 6(d) that is subject to certain restrictions and to a risk of forfeiture.
(z) Restricted Stock Unit means a right, granted to an Eligible Person under Section 6(e), to receive Stock, cash or a combination thereof at the end of a specified period (which may or may not be coterminous with the vesting schedule of the Award).
(aa) Rule 16b-3 means Rule 16b-3, promulgated by the SEC under Section 16 of the Exchange Act.
(bb) SAR means a stock appreciation right granted to an Eligible Person under Section 6(c).
(cc) SEC means the Securities and Exchange Commission.
(dd) Securities Act means the Securities Act of 1933, as amended from time to time, including the guidance, rules and regulations promulgated thereunder and successor provisions, guidance, rules and regulations thereto.
(ee) Stock means the Companys common stock, par value $0.01 per share, and such other securities as may be substituted (or re-substituted) for Stock pursuant to Section 8.
(ff) Stock Award means unrestricted shares of Stock granted to an Eligible Person under Section 6(f).
(gg) Subsidiary means, with respect to any Person, as of any date of determination, any other Person as to which such Person, owns, directly or indirectly, or otherwise controls more than 50% of the voting power or other similar interests or the sole general partner interest or managing member or similar interest of such Person.
(hh) Substitute Award means an Award granted under Section 6(j).
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3. Administration.
(a) Authority of the Committee. The Plan shall be administered by the Committee except to the extent the Board elects to administer the Plan, in which case references herein to the Committee shall be deemed to include references to the Board. Subject to the express provisions of the Plan, Rule 16b-3 and other applicable laws, the Committee shall have the authority, in its sole and absolute discretion, to:
(i) | designate Eligible Persons as Participants; |
(ii) | determine the type or types of Awards to be granted to an Eligible Person; |
(iii) | determine the number of shares of Stock or amount of cash to be covered by Awards; |
(iv) | determine the terms and conditions of any Award, including whether, to what extent and under what circumstances Awards may be vested, settled, exercised, cancelled or forfeited (including conditions based on continued employment or service requirements or the achievement of one or more performance goals); |
(v) | modify, waive or adjust any term or condition of an Award that has been granted, which may include the acceleration of vesting, waiver of forfeiture restrictions, modification of the form of settlement of the Award (for example, from cash to Stock or vice versa), early termination of a performance period, or modification of any other condition or limitation regarding an Award; |
(vi) | determine the treatment of an Award upon a termination of employment or other service relationship; |
(vii) | impose a holding period with respect to an Award or the shares of Stock received in connection with an Award; |
(viii) | interpret and administer the Plan and any Award Agreement; |
(ix) | correct any defect, supply any omission or reconcile any inconsistency in the Plan, in any Award, or in any Award Agreement; and |
(x) | make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan. |
The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee. Any action of the Committee shall be final, conclusive and binding on all persons, including the Company, its Affiliates, stockholders, Participants, beneficiaries, and permitted transferees under Section 7(a) or other persons claiming rights from or through a Participant.
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(b) Exercise of Committee Authority. At any time that a member of the Committee is not a Qualified Member, any action of the Committee relating to an Award granted or to be granted to an Eligible Person who is then subject to Section 16 of the Exchange Act in respect of the Company where such action is not taken by the full Board, may be taken either (A) by a subcommittee, designated by the Committee, composed solely of two or more Qualified Members, or (B) by the Committee but with each such member who is not a Qualified Member abstaining or recusing himself or herself from such action; provided, however, that upon such abstention or recusal, the Committee remains composed solely of two or more Qualified Members. Such action, authorized by such a subcommittee or by the Committee upon the abstention or recusal of such non-Qualified Member(s), shall be the action of the Committee for purposes of the Plan. For the avoidance of doubt, the full Board may take any action relating to an Award granted or to be granted to an Eligible Person who is then subject to Section 16 of the Exchange Act in respect of the Company.
(c) Delegation of Authority. The Committee may delegate any or all of its powers and duties under the Plan to a subcommittee of directors or to any officer of the Company, including the power to perform administrative functions and grant Awards; provided, however, that such delegation does not (i) violate state or corporate law, or (ii) result in the loss of an exemption under Rule 16b-3(d)(1) for Awards granted to Participants subject to Section 16 of the Exchange Act in respect of the Company. Upon any such delegation, all references in the Plan to the Committee, other than in Section 8, shall be deemed to include any subcommittee or officer of the Company to whom such powers have been delegated by the Committee. Any such delegation shall not limit the right of such subcommittee members or such an officer to receive Awards; provided, however, that such subcommittee members and any such officer may not grant Awards to himself or herself, a member of the Board, or any executive officer of the Company or an Affiliate, or take any action with respect to any Award previously granted to himself or herself, a member of the Board, or any executive officer of the Company or an Affiliate. The Committee may also appoint agents who are not executive officers of the Company or members of the Board to assist in administering the Plan, provided, however, that such individuals may not be delegated the authority to grant or modify any Awards that will, or may, be settled in Stock.
(d) Limitation of Liability. The Committee and each member thereof shall be entitled to, in good faith, rely or act upon any report or other information furnished to him or her by any officer or employee of the Company or any of its Affiliates, the Companys legal counsel, independent auditors, consultants or any other agents assisting in the administration of the Plan. Members of the Committee and any officer or employee of the Company or any of its Affiliates acting at the direction or on behalf of the Committee shall not be personally liable for any action or determination taken or made in good faith with respect to the Plan, and shall, to the fullest extent permitted by law, be indemnified and held harmless by the Company with respect to any such action or determination.
(e) Participants in Non-U.S. Jurisdictions. Notwithstanding any provision of the Plan to the contrary, to comply with applicable laws in countries other than the United States in which the Company or any of its Affiliates operates or has employees, directors or other service
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providers from time to time, or to ensure that the Company complies with any applicable requirements of foreign securities exchanges, the Committee, in its sole discretion, shall have the power and authority to: (i) determine which of the Companys Affiliates shall be covered by the Plan; (ii) determine which Eligible Persons outside the United States are eligible to participate in the Plan; (iii) modify the terms and conditions of any Award granted to Eligible Persons outside the United States to comply with applicable foreign laws or listing requirements of any foreign exchange; (iv) establish sub-plans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable (any such sub-plans and/or modifications shall be attached to the Plan as appendices), provided, however, that no such sub-plans and/or modifications shall increase the share limitations contained in Section 4(a); and (v) take any action, before or after an Award is granted, that it deems advisable to comply with any applicable governmental regulatory exemptions or approval or listing requirements of any such foreign securities exchange. For purposes of the Plan, all references to foreign laws, rules, regulations or taxes shall be references to the laws, rules, regulations and taxes of any applicable jurisdiction other than the United States or a political subdivision thereof.
4. Stock Subject to Plan.
(a) Number of Shares Available for Awards. Subject to adjustment in a manner consistent with Section 8, as of the Effective Date a total of 1,772,058 shares of Stock are reserved and available for delivery with respect to Awards, and up to 100% of such total shall be available for the issuance of shares upon the exercise of ISOs.
(b) Application of Limitation to Grants of Awards. Subject to Section 4(c), no Award may be granted if the number of shares of Stock that may be delivered in connection with such Award exceeds the number of shares of Stock remaining available under the Plan minus the number of shares of Stock issuable in settlement of or relating to then-outstanding Awards. The Committee may adopt reasonable counting procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of tandem or Substitute Awards) and make adjustments if the number of shares of Stock actually delivered differs from the number of shares previously counted in connection with an Award.
(c) Availability of Shares Not Delivered under Awards. If all or any portion of an Award expires or is cancelled, forfeited, exchanged, settled in cash or otherwise terminated, the shares of Stock subject to such Award (including (i) shares forfeited with respect to Restricted Stock, and (ii) the number of shares withheld or surrendered to the Company in payment of any exercise or purchase price of an Award or taxes relating to Awards) shall not be considered delivered shares under the Plan, shall be available for delivery with respect to Awards, and shall no longer be considered issuable or related to outstanding Awards for purposes of Section 4(b), except that if any such shares could not again be available for Awards granted to a particular Participant under any applicable law or regulation, such shares shall be available exclusively for Awards to Participants who are not subject to such limitation. If an Award may be settled only in cash, such Award need not be counted against any share limit under this Section 4.
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(d) Stock Offered. The shares of Stock to be delivered under the Plan shall be made available from (i) authorized but unissued shares of Stock, (ii) Stock held in the treasury of the Company, or (iii) previously issued shares of Stock reacquired by the Company, including shares purchased on the open market.
5. Eligibility; Per Person Award Limitations.
(a) Eligibility. Awards may be granted under the Plan only to Eligible Persons.
(b) Non-Employee Director Limitations. In each calendar year during any part of which the Plan is in effect, a non-employee member of the Board may not be granted Awards (i) relating to more than 100,000 shares of Stock, subject to adjustment in a manner consistent with any adjustment made pursuant to Section 8, or (ii) if greater, Awards having a value (determined, if applicable, pursuant to ASC Topic 718) on the date of grant in excess of $500,000, in each case multiplied by the number of full or partial calendar years in any performance period established with respect to an Award, if applicable; provided, that, for the calendar year in which a non-employee member of the Board first commences service on the Board only, the foregoing limitations shall be doubled; provided, further that, the limits set forth in this Section 5(c) shall be without regard to grants of Awards, if any, made to a non-employee member of the Board during any period in which such individual was an employee of the Company or of any of its Affiliates or was otherwise providing services to the Company or to any of its Affiliates other than in the capacity as a director of the Company.
6. Specific Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set forth in this Section 6. Awards granted under the Plan may, in the discretion of the Committee, be granted either alone, in addition to, or in tandem with any other Award. In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to Section 10), such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine.
(b) Options. The Committee is authorized to grant Options, which may be designated as either ISOs or Nonstatutory Options, to Eligible Persons on the following terms and conditions:
(i) | Exercise Price. Each Award Agreement evidencing an Option shall state the exercise price per share of Stock (the Exercise Price) established by the Committee; provided, however, that except as provided in Section 6(j) or in Section 8, the Exercise Price of an Option shall not be less than the greater of (A) the par value per share of the Stock or (B) 100% of the Fair Market Value per share of the Stock as of the date of grant of the Option (or in the case of an ISO granted to an individual who owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or its parent or any of its subsidiaries, 110% of the |
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Fair Market Value per share of the Stock on the date of grant). Notwithstanding the foregoing, the Exercise Price of a Nonstatutory Option may be less than 100% of the Fair Market Value per share of Stock as of the date of grant of the Option if the Option (1) does not provide for a deferral of compensation by reason of satisfying the short-term deferral exception set forth in the Nonqualified Deferred Compensation Rules or (2) provides for a deferral of compensation and is compliant with the Nonqualified Deferred Compensation Rules. |
(ii) | Time and Method of Exercise; Other Terms. The Committee shall determine the methods by which the Exercise Price may be paid or deemed to be paid, the form of such payment, including cash or cash equivalents, Stock (including previously owned shares or through a cashless exercise, i.e., net settlement, a broker-assisted exercise, or other reduction of the amount of shares otherwise issuable pursuant to the Option), other Awards or awards granted under other plans of the Company or any Affiliate, other property, or any other legal consideration the Committee deems appropriate (including notes or other contractual obligations of Participants to make payment on a deferred basis), the methods by or forms in which Stock will be delivered or deemed to be delivered to Participants, including the delivery of Restricted Stock subject to Section 6(d), and any other terms and conditions of any Option. In the case of an exercise whereby the Exercise Price is paid with Stock, such Stock shall be valued based on the Stocks Fair Market Value as of the date of exercise. No Option may be exercisable for a period of more than ten years following the date of grant of the Option (or in the case of an ISO granted to an individual who owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or its parent or any of its subsidiaries, for a period of more than five years following the date of grant of the ISO). |
(iii) | ISOs. The terms of any ISO granted under the Plan shall comply in all respects with the provisions of Section 422 of the Code. ISOs may only be granted to Eligible Persons who are employees of the Company or employees of a parent or any subsidiary corporation of the Company. Except as otherwise provided in Section 8, no term of the Plan relating to ISOs (including any SAR in tandem therewith) shall be interpreted, amended or altered, nor shall any discretion or authority granted under the Plan be exercised, so as to disqualify either the Plan or any ISO under Section 422 of the Code, unless the Participant has first requested the change that will result in such disqualification. ISOs shall not be granted more than ten years after the earlier of the adoption of the Plan or the approval of the Plan by the Companys stockholders. Notwithstanding the foregoing, to the extent that the aggregate Fair Market Value of shares of Stock subject to an ISO and the aggregate Fair Market Value of shares of stock of any parent or subsidiary corporation (within the meaning of |
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Sections 424(e) and (f) of the Code) subject to any other incentive stock options of the Company or a parent or subsidiary corporation (within the meaning of Sections 424(e) and (f) of the Code) that are exercisable for the first time by a Participant during any calendar year exceeds $100,000, or such other amount as may be prescribed under Section 422 of the Code, such excess shall be treated as Nonstatutory Options in accordance with the Code. As used in the previous sentence, Fair Market Value shall be determined as of the date the ISO is granted. If a Participant shall make any disposition of shares of Stock issued pursuant to an ISO under the circumstances described in Section 421(b) of the Code (relating to disqualifying dispositions), the Participant shall notify the Company of such disposition within the time provided to do so in the applicable award agreement. |
(c) SARs. The Committee is authorized to grant SARs to Eligible Persons on the following terms and conditions:
(i) | Right to Payment. An SAR is a right to receive, upon exercise thereof, the excess of (A) the Fair Market Value of one share of Stock on the date of exercise over (B) the grant price of the SAR as determined by the Committee. |
(ii) | Grant Price. Each Award Agreement evidencing an SAR shall state the grant price per share of Stock established by the Committee; provided, however, that except as provided in Section 6(j) or in Section 8, the grant price per share of Stock subject to an SAR shall not be less than the greater of (A) the par value per share of the Stock, or (B) 100% of the Fair Market Value per share of the Stock as of the date of grant of the SAR. Notwithstanding the foregoing, the grant price of an SAR may be less than 100% of the Fair Market Value per share of Stock subject to an SAR as of the date of grant of the SAR if the SAR (1) does not provide for a deferral of compensation by reason of satisfying the short-term deferral exception set forth in the Nonqualified Deferred Compensation Rules or (2) provides for a deferral of compensation and is compliant with the Nonqualified Deferred Compensation Rules. |
(iii) | Method of Exercise and Settlement; Other Terms. The Committee shall determine the form of consideration payable upon settlement, the method by or forms in which Stock (if any) will be delivered or deemed to be delivered to Participants, and any other terms and conditions of any SAR. SARs may be either free-standing or granted in tandem with other Awards. No SAR may be exercisable for a period of more than ten years following the date of grant of the SAR. |
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(iv) | Rights Related to Options. An SAR granted in connection with an Option shall entitle a Participant, upon exercise, to surrender that Option or any portion thereof, to the extent unexercised, and to receive payment of an amount determined by multiplying (A) the difference obtained by subtracting the Exercise Price with respect to a share of Stock specified in the related Option from the Fair Market Value of a share of Stock on the date of exercise of the SAR, by (B) the number of shares as to which that SAR has been exercised. The Option shall then cease to be exercisable to the extent surrendered. SARs granted in connection with an Option shall be subject to the terms and conditions of the Award Agreement governing the Option, which shall provide that the SAR is exercisable only at such time or times and only to the extent that the related Option is exercisable and shall not be transferable except to the extent that the related Option is transferrable. |
(d) Restricted Stock. The Committee is authorized to grant Restricted Stock to Eligible Persons on the following terms and conditions:
(i) | Restrictions. Restricted Stock shall be subject to such restrictions on transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose. Except as provided in Section 7(a)(iii) and Section 7(a)(iv), during the restricted period applicable to the Restricted Stock, the Restricted Stock may not be sold, transferred, pledged, hedged, hypothecated, margined or otherwise encumbered by the Participant. |
(ii) | Dividends and Splits. As a condition to the grant of an Award of Restricted Stock, the Committee may allow a Participant to elect, or may require, that any cash dividends paid on a share of Restricted Stock be automatically reinvested in additional shares of Restricted Stock, applied to the purchase of additional Awards or deferred without interest to the date of vesting of the associated Award of Restricted Stock. Unless otherwise determined by the Committee and specified in the applicable Award Agreement, Stock distributed in connection with a Stock split or Stock dividend, and other property (other than cash) distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock with respect to which such Stock or other property has been distributed. |
(e) Restricted Stock Units. The Committee is authorized to grant Restricted Stock Units to Eligible Persons on the following terms and conditions:
(i) | Award and Restrictions. Restricted Stock Units shall be subject to such restrictions (which may include a risk of forfeiture) as the Committee may impose. |
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(ii) | Settlement. Settlement of vested Restricted Stock Units shall occur upon vesting or upon expiration of the deferral period specified for such Restricted Stock Units by the Committee (or, if permitted by the Committee, as elected by the Participant). Restricted Stock Units shall be settled by delivery of (A) a number of shares of Stock equal to the number of Restricted Stock Units for which settlement is due, or (B) cash in an amount equal to the Fair Market Value of the specified number of shares of Stock equal to the number of Restricted Stock Units for which settlement is due, or a combination thereof, as determined by the Committee at the date of grant or thereafter. |
(f) Stock Awards. The Committee is authorized to grant Stock Awards to Eligible Persons as a bonus, as additional compensation, or in lieu of cash compensation any such Eligible Person is otherwise entitled to receive, in such amounts and subject to such other terms as the Committee in its discretion determines to be appropriate.
(g) Dividend Equivalents. The Committee is authorized to grant Dividend Equivalents to Eligible Persons, entitling any such Eligible Person to receive cash, Stock, other Awards, or other property equal in value to dividends or other distributions paid with respect to a specified number of shares of Stock. Dividend Equivalents may be awarded on a free-standing basis or in connection with another Award (other than an Award of Restricted Stock or a Stock Award). The Committee may provide that Dividend Equivalents shall be paid or distributed when accrued or at a later specified date and, if distributed at a later date, may be deemed to have been reinvested in additional Stock, Awards, or other investment vehicles or accrued in a bookkeeping account without interest, and subject to such restrictions on transferability and risks of forfeiture, as the Committee may specify. With respect to Dividend Equivalents granted in connection with another Award, absent a contrary provision in the Award Agreement, such Dividend Equivalents shall be subject to the same restrictions and risk of forfeiture as the Award with respect to which the dividends accrue and shall not be paid unless and until such Award has vested and been earned.
(h) Other Stock-Based Awards. The Committee is authorized, subject to limitations under applicable law, to grant to Eligible Persons such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Stock, as deemed by the Committee to be consistent with the purposes of the Plan, including convertible or exchangeable debt securities, other rights convertible or exchangeable into Stock, purchase rights for Stock, Awards with value and payment contingent upon performance of the Company or any other factors designated by the Committee, and Awards valued by reference to the book value of Stock or the value of securities of, or the performance of, specified Affiliates of the Company. The Committee shall determine the terms and conditions of such Other Stock-Based Awards. Stock delivered pursuant to an Other-Stock Based Award in the nature of a purchase right granted under this Section 6(h) shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including cash, Stock, other Awards, or other property, as the Committee shall determine.
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(i) Cash Awards. The Committee is authorized to grant Cash Awards, on a free-standing basis or as an element of, a supplement to, or in lieu of any other Award under the Plan to Eligible Persons in such amounts and subject to such other terms as the Committee in its discretion determines to be appropriate.
(j) Substitute Awards; No Repricing. Awards may be granted in substitution or exchange for any other Award granted under the Plan or under another plan of the Company or an Affiliate or any other right of an Eligible Person to receive payment from the Company or an Affiliate. Awards may also be granted under the Plan in substitution for awards held by individuals who become Eligible Persons as a result of a merger, consolidation or acquisition of another entity or the assets of another entity by or with the Company or an Affiliate. Such Substitute Awards referred to in the immediately preceding sentence that are Options or SARs may have an exercise price that is less than the Fair Market Value of a share of Stock on the date of the substitution if such substitution complies with the Nonqualified Deferred Compensation Rules and other applicable laws and exchange rules. Except as provided in this Section 6(j) or in Section 8, without the approval of the stockholders of the Company, the terms of outstanding Awards may not be amended to (i) reduce the Exercise Price or grant price of an outstanding Option or SAR, (ii) grant a new Option, SAR or other Award in substitution for, or upon the cancellation of, any previously granted Option or SAR that has the effect of reducing the Exercise Price or grant price thereof, (iii) exchange any Option or SAR for Stock, cash or other consideration when the Exercise Price or grant price per share of Stock under such Option or SAR exceeds the Fair Market Value of a share of Stock or (iv) take any other action that would be considered a repricing of an Option or SAR under the applicable listing standards of the national securities exchange on which the Stock is listed (if any).
(k) Performance Awards. The Committee is authorized to designate any of the Awards granted under the foregoing provisions of this Section 6 as Performance Awards. The Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance goals applicable to a Performance Award, and may exercise its discretion to reduce or increase the amounts payable under any Performance Award. Performance goals may differ among Performance Awards granted to any one Participant or to different Participants. The performance period applicable to any Performance Award shall be set by the Committee in its discretion but shall not exceed ten years.
(i) | Performance Goals Generally. The performance goals for Performance Awards shall consist of one or more business criteria and a targeted level or levels of performance with respect to each of such criteria as specified by the Committee. |
(ii) | Business Criteria for Performance Goals. One or more of the following business criteria for the Company, on a consolidated basis, and/or for specified subsidiaries, business or geographical units or operating areas of the Company (except with respect to the total stockholder return and earnings per share criteria), shall be used by the Committee in establishing performance goals for |
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Performance Awards: (1) revenues, sales or other income; (2) cash flow, discretionary cash flow, cash flows from operations, cash flows from investing activities, and/or cash flows from financing activities; (3) return on net assets, return on assets, return on investment, return on capital, return on capital employed or return on equity; (4) income, operating income or net income; (5) earnings or earnings margin determined before or after any one or more of depletion, depreciation and amortization expense; exploration and abandonments; impairment of oil and gas properties; impairment of inventory and other property and equipment; accretion of discount on asset retirement obligations; interest expense; net gain or loss on the disposition of assets; income or loss from discontinued operations, net of tax; noncash derivative related activity; amortization of stock-based compensation; income taxes; or other items; (6) equity; net worth; tangible net worth; book capitalization; debt; debt, net of cash and cash equivalents; capital budget or other balance sheet goals; (7) debt or equity financings or improvement of financial ratings; (8) general and administrative expenses; (9) net asset value; (10) Fair Market Value of the Stock, share price, share price appreciation, total stockholder return or payments of dividends; (11) achievement of savings from business improvement projects and achievement of capital projects deliverables; (12) working capital or working capital changes; (13) operating profit or net operating profit; (14) internal research or development programs; (15) geographic business expansion; (16) corporate development (including licenses, innovation, research or establishment of third party collaborations); (17) performance against environmental, ethics or sustainability targets; (18) safety performance and/or incident rate; (19) human resources management targets, including medical cost reductions, employee satisfaction or retention, workforce diversity and time to hire; (20) satisfactory internal or external audits; (21) consummation, implementation or completion of a Change in Control or other strategic partnerships, transactions, projects, processes or initiatives or other goals relating to acquisitions or divestitures (in whole or in part), joint ventures or strategic alliances; (22) regulatory approvals or other regulatory milestones; (23) legal compliance or risk reduction; (24) market share; (25) economic value added; (26) cost reduction targets, or (27) any other performance metric determined by the Committee. Any of the above goals may be determined pre-tax or post-tax, on an absolute or relative basis, as compared to the performance of a published or special index deemed applicable by the Committee including the Standard & Poors 500 Stock Index or a group of comparable companies, as a ratio with other business criteria, as a ratio over a period of time or on a per unit of measure, on a per-share basis (basic or diluted), and on a basis of continuing operations only. The terms above may, but shall not be required to be, used as applied under generally accepted accounting principles, as applicable. |
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(iii) | Effect of Certain Events. The Committee may, at the time the performance goals in respect of a Performance Award are established, provide for the manner in which actual performance and performance goals with regard to the business criteria selected will reflect the impact of specified events or occurrences during the relevant performance period, which may mean excluding the impact of one or more events or occurrences, as specified by the Committee. |
(iv) | Timing for Establishing Performance Goals. No later than 90 days after the beginning of any performance period applicable to a Performance Award, or at such other date as may be required or permitted, the Committee shall establish (1) the Eligible Persons who will be granted Performance Awards, and (2) the formula used to calculate the amount of cash or Stock payable, if any, under such Performance Awards, based upon the level of achievement of a performance goal or goals with respect to one or more of the business criteria selected by the Committee from the list set forth in Section 6(k)(i)(B) and, if desired, the effect of any events set forth in Section 6(k)(i)(C). |
(v) | Performance Award Pool. The Committee may establish an unfunded pool, with the amount of such pool calculated using a formula based upon the level of achievement of one or more performance goals with respect to business criteria selected from the list set forth in Section 6(k)(i)(B) during the given performance period, as specified by the Committee in accordance with Section 6(k)(i)(D). The Committee may specify the amount of the pool as a percentage of any of such business criteria, a percentage in excess of a threshold amount with respect to such business criteria, or as another amount which need not bear a direct relationship to such business criteria but shall be determinable and calculated based upon the level of achievement of pre-established goals with regard to the business criteria. |
(vi) | Settlement or Payout of Awards; Other Terms. After the end of each performance period and before any Performance Award is settled or paid, the Committee shall determine the level of performance achieved with regard to each business criteria established with respect to each Performance Award and shall determine the amount of cash or Stock, if any, payable to each Participant with respect to each Performance Award. The Committee may, in its discretion, reduce or increase the amount of a payment or settlement otherwise to be made in connection with a Performance Award. |
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7. Certain Provisions Applicable to Awards.
(a) Limit on Transfer of Awards.
(i) | Except as provided in Sections 7(a)(iii) and (iv), each Option and SAR shall be exercisable only by the Participant during the Participants lifetime, or by the person to whom the Participants rights shall pass by will or the laws of descent and distribution. Notwithstanding anything to the contrary in this Section 7(a), an ISO shall not be transferable other than by will or the laws of descent and distribution. |
(ii) | Except as provided in Sections 7(a)(i), (iii) and (iv), no Award, other than a Stock Award, and no right under any such Award, may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any Affiliate. |
(iii) | To the extent specifically provided by the Committee, an Award may be transferred by a Participant without consideration to immediate family members or related family trusts, limited partnerships or similar entities or on such terms and conditions as the Committee may from time to time establish. |
(iv) | An Award may be transferred pursuant to a domestic relations order entered or approved by a court of competent jurisdiction upon delivery to the Company of a written request for such transfer and a certified copy of such order. |
(b) Form and Timing of Payment under Awards; Deferrals. Subject to the terms of the Plan and any applicable Award Agreement, payments to be made by the Company or any of its Affiliates upon the exercise or settlement of an Award may be made in such forms as the Committee shall determine in its discretion, including cash, Stock, other Awards or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis (which may be required by the Committee or permitted at the election of the Participant on terms and conditions established by the Committee); provided, however, that any such deferred or installment payments will be set forth in the Award Agreement. Payments may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of Dividend Equivalents or other amounts in respect of installment or deferred payments denominated in Stock.
(c) Evidencing Stock. The Stock or other securities of the Company delivered pursuant to an Award may be evidenced in any manner deemed appropriate by the Committee in its sole discretion, including in the form of a certificate issued in the name of the Participant or by book entry, electronic or otherwise, and shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and
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other requirements of the SEC, any stock exchange upon which such Stock or other securities are then listed, and any applicable federal, state or other laws, and the Committee may cause a legend or legends to be inscribed on any such certificates to make appropriate reference to such restrictions. Further, if certificates representing Restricted Stock are registered in the name of the Participant, the Company may retain physical possession of the certificates and may require that the Participant deliver a stock power to the Company, endorsed in blank, related to the Restricted Stock.
(d) Consideration for Grants. Awards may be granted for such consideration, including services, as the Committee shall determine, but shall not be granted for less than the minimum lawful consideration.
(e) Additional Agreements. Each Eligible Person to whom an Award is granted under the Plan may be required to agree in writing, as a condition to the grant of such Award or otherwise, to subject an Award that is exercised or settled following such Eligible Persons termination of employment or service to a general release of claims and/or a noncompetition or other restricted covenant agreement in favor of the Company and its Affiliates, with the terms and conditions of such agreement(s) to be determined in good faith by the Committee.
8. Subdivision or Consolidation; Recapitalization; Change in Control; Reorganization.
(a) Existence of Plans and Awards. The existence of the Plan and the Awards granted hereunder shall not affect in any way the right or power of the Company, the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Companys capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities ahead of or affecting Stock or the rights thereof, the dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or proceeding.
(b) Additional Issuances. Except as expressly provided herein, the issuance by the Company of shares of stock of any class, including upon conversion of shares or obligations of the Company convertible into such shares or other securities, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Stock subject to Awards theretofore granted or the purchase price per share of Stock, if applicable.
(c) Subdivision or Consolidation of Shares. The terms of an Award and the share limitations under the Plan shall be subject to adjustment by the Committee from time to time, in accordance with the following provisions:
(i) | If at any time, or from time to time, the Company shall subdivide as a whole (by reclassification, by a Stock split, by the issuance of a distribution on Stock payable in Stock, or otherwise) the number of |
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shares of Stock then outstanding into a greater number of shares of Stock or in the event the Company distributes an extraordinary cash dividend, then, as appropriate (A) the maximum number of shares of Stock available for delivery with respect to Awards and applicable limitations with respect to Awards provided in Section 4 and Section 5 (other than cash limits) shall be increased proportionately, and the kind of shares or other securities available for the Plan shall be appropriately adjusted, (B) the number of shares of Stock (or other kind of shares or securities) that may be acquired under any then outstanding Award shall be increased proportionately, and (C) the price (including the Exercise Price or grant price) for each share of Stock (or other kind of shares or securities) subject to then outstanding Awards shall be reduced proportionately, without changing the aggregate purchase price or value as to which outstanding Awards remain exercisable or subject to restrictions; provided, however, that in the case of an extraordinary cash dividend that is not an Adjustment Event, the adjustment to the number of shares of Stock and the Exercise Price or grant price, as applicable, with respect to an outstanding Option or SAR may be made in such other manner as the Committee may determine that is permitted pursuant to applicable tax and other laws, rules and regulations. |
(ii) | If at any time, or from time to time, the Company shall consolidate as a whole (by reclassification, by reverse Stock split, or otherwise) the number of shares of Stock then outstanding into a lesser number of shares of Stock, then, as appropriate (A) the maximum number of shares of Stock available for delivery with respect to Awards and applicable limitations with respect to Awards provided in Section 4 and Section 5 (other than cash limits) shall be decreased proportionately, and the kind of shares or other securities available for the Plan shall be appropriately adjusted, (B) the number of shares of Stock (or other kind of shares or securities) that may be acquired under any then outstanding Award shall be decreased proportionately, and (C) the price (including the Exercise Price or grant price) for each share of Stock (or other kind of shares or securities) subject to then outstanding Awards shall be increased proportionately, without changing the aggregate purchase price or value as to which outstanding Awards remain exercisable or subject to restrictions. |
(d) Recapitalization. In the event of any change in the capital structure or business of the Company or other corporate transaction or event that would be considered an equity restructuring within the meaning of ASC Topic 718 and, in each case, that would result in an additional compensation expense to the Company pursuant to the provisions of ASC Topic 718, if adjustments to Awards with respect to such event were discretionary or otherwise not required (each such an event, an Adjustment Event), then the Committee shall equitably adjust (i) the aggregate number or kind of shares that thereafter may be delivered under the Plan, (ii) the
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number or kind of shares or other property (including cash) subject to an Award, (iii) the terms and conditions of Awards, including the purchase price or Exercise Price of Awards and performance goals, as applicable, and (iv) the applicable limitations with respect to Awards provided in Section 4 and Section 5 (other than cash limits) to equitably reflect such Adjustment Event (Equitable Adjustments). In the event of any change in the capital structure or business of the Company or other corporate transaction or event that would not be considered an Adjustment Event, and is not otherwise addressed in this Section 8, the Committee shall have complete discretion to make Equitable Adjustments (if any) in such manner as it deems appropriate with respect to such other event.
(e) Change in Control and Other Events. Except to the extent otherwise provided in any applicable Award Agreement, vesting of any Award shall not occur solely upon the occurrence of a Change in Control and, in the event of a Change in Control or other changes in the Company or the outstanding Stock by reason of a recapitalization, reorganization, merger, consolidation, combination, exchange or other relevant change occurring after the date of the grant of any Award, the Committee, acting in its sole discretion without the consent or approval of any holder, may exercise any power enumerated in Section 3 (including the power to accelerate vesting, waive any forfeiture conditions or otherwise modify or adjust any other condition or limitation regarding an Award) and may also effect one or more of the following alternatives, which may vary among individual holders and which may vary among Awards held by any individual holder:
(i) | accelerate the time of exercisability of an Award so that such Award may be exercised in full or in part for a limited period of time on or before a date specified by the Committee, after which specified date all unexercised Awards and all rights of holders thereunder shall terminate; |
(ii) | redeem in whole or in part outstanding Awards by requiring the mandatory surrender to the Company by selected holders of some or all of the outstanding Awards held by such holders (irrespective of whether such Awards are then vested or exercisable) as of a date, specified by the Committee, in which event the Committee shall thereupon cancel such Awards and pay to each holder an amount of cash or other consideration per Award (other than a Dividend Equivalent or Cash Award, which the Committee may separately require to be surrendered in exchange for cash or other consideration determined by the Committee in its discretion) equal to the Change in Control Price, less the Exercise Price with respect to an Option and less the grant price with respect to a SAR, as applicable to such Awards; provided, however, that to the extent the Exercise Price of an Option or the grant price of an SAR exceeds the Change in Control Price, such Award may be cancelled for no consideration; |
(iii) | cancel Awards that remain subject to a restricted period as of the date of a Change in Control or other such event without payment of any consideration to the Participant for such Awards; or |
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(iv) | make such adjustments to Awards then outstanding as the Committee deems appropriate to reflect such Change in Control or other such event (including the substitution, assumption, or continuation of Awards by the successor company or a parent or subsidiary thereof); provided, however, that so long as the event is not an Adjustment Event, the Committee may determine in its sole discretion that no adjustment is necessary to Awards then outstanding. If an Adjustment Event occurs, this Section 8(e) shall only apply to the extent it is not in conflict with Section 8(d). |
9. General Provisions.
(a) Tax Withholding. The Company and any of its Affiliates are authorized to withhold from any Award granted, or any payment relating to an Award, including from a distribution of Stock, taxes due or potentially payable in connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Company, its Affiliates and Participants to satisfy the payment of withholding taxes and other tax obligations relating to any Award in such amounts as may be determined by the Committee. The Committee shall determine, in its sole discretion, the form of payment acceptable for such tax withholding obligations, including the delivery of cash or cash equivalents, Stock (including previously owned shares, net settlement, a broker-assisted sale, or other cashless withholding or reduction of the amount of shares otherwise issuable or delivered pursuant to the Award), other property, or any other legal consideration the Committee deems appropriate. Any determination made by the Committee to allow a Participant who is subject to Rule 16b-3 to pay taxes with shares of Stock through net settlement or previously owned shares shall be approved by either a committee made up of solely two or more Qualified Members or the full Board. If such tax withholding amounts are satisfied through net settlement or previously owned shares, the maximum number of shares of Stock that may be so withheld or surrendered shall be the number of shares of Stock that have an aggregate Fair Market Value on the date of withholding or surrender equal to the aggregate amount of such tax liabilities determined based on the greatest withholding rates for federal, state, foreign and/or local tax purposes, including payroll taxes, that may be utilized without creating adverse accounting treatment for the Company with respect to such Award, as determined by the Committee.
(b) Limitation on Rights Conferred under Plan. Neither the Plan nor any action taken hereunder shall be construed as (i) giving any Eligible Person or Participant the right to continue as an Eligible Person or Participant or in the employ or service of the Company or any of its Affiliates, (ii) interfering in any way with the right of the Company or any of its Affiliates to terminate any Eligible Persons or Participants employment or service relationship at any time, (iii) giving an Eligible Person or Participant any claim to be granted any Award under the Plan or to be treated uniformly with other Participants and/or employees and/or other service providers, or (iv) conferring on a Participant any of the rights of a stockholder of the Company unless and until the Participant is duly issued or transferred shares of Stock in accordance with the terms of an Award.
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(c) Governing Law; Submission to Jurisdiction. All questions arising with respect to the provisions of the Plan and Awards shall be determined by application of the laws of the State of Delaware, without giving effect to any conflict of law provisions thereof, except to the extent Delaware law is preempted by federal law. The obligation of the Company to sell and deliver Stock hereunder is subject to applicable federal and state laws and to the approval of any governmental authority required in connection with the authorization, issuance, sale, or delivery of such Stock. With respect to any claim or dispute related to or arising under the Plan, the Company and each Participant who accepts an Award hereby consent to the exclusive jurisdiction, forum and venue of the state and federal courts located in Phoenix, Arizona.
(d) Severability and Reformation. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable law or, if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, person or Award and the remainder of the Plan and any such Award shall remain in full force and effect. If any of the terms or provisions of the Plan or any Award Agreement conflict with the requirements of Rule 16b-3 (as those terms or provisions are applied to Eligible Persons who are subject to Section 16 of the Exchange Act) or Section 422 of the Code (with respect to ISOs), then those conflicting terms or provisions shall be deemed inoperative to the extent they so conflict with the requirements of Rule 16b-3 (unless the Board or the Committee, as appropriate, has expressly determined that the Plan or such Award should not comply with Rule 16b-3) or Section 422 of the Code, in each case, only to the extent Rule 16b-3 and Section 422 of the Code are applicable. With respect to ISOs, if the Plan does not contain any provision required to be included herein under Section 422 of the Code, that provision shall be deemed to be incorporated herein with the same force and effect as if that provision had been set out at length herein; provided, further, that, to the extent any Option that is intended to qualify as an ISO cannot so qualify, that Option (to that extent) shall be deemed a Nonstatutory Option for all purposes of the Plan.
(e) Unfunded Status of Awards; No Trust or Fund Created. The Plan is intended to constitute an unfunded plan for certain incentive awards. Neither the Plan nor any Award shall 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 Participant or any other person. To the extent that any person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any general unsecured creditor of the Company or such Affiliate.
(f) Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board nor its submission to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or a committee thereof to adopt such other incentive arrangements as it may deem desirable. Nothing contained in the Plan shall be construed to prevent the Company or any of its Affiliates from taking any corporate action which is deemed by the
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Company or such Affiliate to be appropriate or in its best interest, whether or not such action would have an adverse effect on the Plan or any Award made under the Plan. No employee, beneficiary or other person shall have any claim against the Company or any of its Affiliates as a result of any such action.
(g) Fractional Shares. No fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine in its sole discretion whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional shares of Stock or whether such fractional shares of Stock or any rights thereto shall be cancelled, terminated, or otherwise eliminated with or without consideration.
(h) Interpretation. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. Words in the masculine gender shall include the feminine gender, and, where appropriate, the plural shall include the singular and the singular shall include the plural. In the event of any conflict between the terms and conditions of an Award Agreement and the Plan, the provisions of the Plan shall control. The use herein of the word including following any general statement, term or matter shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as without limitation, but not limited to, or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter. References herein to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and not prohibited by the Plan.
(i) Facility of Payment. Any amounts payable hereunder to any individual under legal disability or who, in the judgment of the Committee, is unable to manage properly his financial affairs, may be paid to the legal representative of such individual, or may be applied for the benefit of such individual in any manner that the Committee may select, and the Company shall be relieved of any further liability for payment of such amounts.
(j) Conditions to Delivery of Stock. Nothing herein or in any Award Agreement shall require the Company to issue any shares with respect to any Award if that issuance would, in the opinion of counsel for the Company, constitute a violation of the Securities Act, any other applicable statute or regulation, or the rules of any applicable securities exchange or securities association, as then in effect. In addition, each Participant who receives an Award under the Plan shall not sell or otherwise dispose of Stock that is acquired upon grant, exercise or vesting of an Award in any manner that would constitute a violation of any applicable federal or state securities laws, the Plan or the rules, regulations or other requirements of the SEC or any stock exchange upon which the Stock is then listed. At the time of any exercise of an Option or SAR, or at the time of any grant of any other Award, the Company may, as a condition precedent to the exercise of such Option or SAR or settlement of any other Award, require from the
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Participant (or in the event of his or her death, his or her legal representatives, heirs, legatees, or distributees) such written representations, if any, concerning the holders intentions with regard to the retention or disposition of the shares of Stock being acquired pursuant to the Award and such written covenants and agreements, if any, as to the manner of disposal of such shares as, in the opinion of counsel to the Company, may be necessary to ensure that any disposition by that holder (or in the event of the holders death, his or her legal representatives, heirs, legatees, or distributees) will not involve a violation of the Securities Act, any other applicable state or federal statute or regulation, or any rule of any applicable securities exchange or securities association, as then in effect. Stock or other securities shall not be delivered pursuant to any Award until payment in full of any amount required to be paid pursuant to the Plan or the applicable Award Agreement (including any Exercise Price, grant price, or tax withholding) is received by the Company.
(k) Section 409A of the Code. It is the general intention, but not the obligation, of the Committee to design Awards to comply with or to be exempt from the Nonqualified Deferred Compensation Rules, and Awards will be operated and construed accordingly. Neither this Section 9(k) nor any other provision of the Plan is or contains a representation to any Participant regarding the tax consequences of the grant, vesting, exercise, settlement, or sale of any Award (or the Stock underlying such Award) granted hereunder, and should not be interpreted as such. In no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Participant on account of non-compliance with the Nonqualified Deferred Compensation Rules. Notwithstanding any provision in the Plan or an Award Agreement to the contrary, in the event that a specified employee (as defined under the Nonqualified Deferred Compensation Rules) becomes entitled to a payment under an Award that would be subject to additional taxes and interest under the Nonqualified Deferred Compensation Rules if the Participants receipt of such payment or benefits is not delayed until the earlier of (i) the date of the Participants death, or (ii) the date that is six months after the Participants separation from service, as defined under the Nonqualified Deferred Compensation Rules (such date, the Section 409A Payment Date), then such payment or benefit shall not be provided to the Participant until the Section 409A Payment Date. Any amounts subject to the preceding sentence that would otherwise be payable prior to the Section 409A Payment Date will be aggregated and paid in a lump sum without interest on the Section 409A Payment Date. The applicable provisions of the Nonqualified Deferred Compensation Rules are hereby incorporated by reference and shall control over any Plan or Award Agreement provision in conflict therewith.
(l) Clawback. The Plan and all Awards granted hereunder are subject to any written clawback policies that the Company, with the approval of the Board or an authorized committee thereof, may adopt either prior to or following the Effective Date, including any policy adopted to conform to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and rules promulgated thereunder by the SEC and that the Company determines should apply to Awards. Any such policy may subject a Participants Awards and amounts paid or realized with respect to Awards to reduction, cancelation, forfeiture or recoupment if certain specified events or wrongful conduct occur, including an accounting restatement due to the Companys material noncompliance with financial reporting regulations or other events or wrongful conduct specified in any such clawback policy.
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(m) Status under ERISA. The Plan shall not constitute an employee benefit plan for purposes of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended.
(n) Plan Effective Date and Term. The Plan became effective on the Effective Date, pursuant to the Companys plan of reorganization under chapter 11 of the United States Bankruptcy Code. No Awards may be granted under the Plan on and after the ten year anniversary of the Effective Date. However, any Award granted prior to such termination (or any earlier termination pursuant to Section 10), and the authority of the Board or Committee to amend, alter, adjust, suspend, discontinue, or terminate any such Award or to waive any conditions or rights under such Award in accordance with the terms of the Plan, shall extend beyond such termination until the final disposition of such Award.
10. Amendments to the Plan and Awards. The Committee may amend, alter, suspend, discontinue or terminate any Award or Award Agreement, the Plan or the Committees authority to grant Awards without the consent of stockholders or Participants, except that any amendment or alteration to the Plan, including any increase in any share limitation, shall be subject to the approval of the Companys stockholders not later than the annual meeting next following such Committee action if such stockholder approval is required by any federal or state law or regulation or the rules of any stock exchange or automated quotation system on which the Stock may then be listed or quoted, and the Committee may otherwise, in its discretion, determine to submit other changes to the Plan to stockholders for approval; provided, that, without the consent of an affected Participant, no such Committee action may materially and adversely affect the rights of such Participant under any previously granted and outstanding Award. For purposes of clarity, any adjustments made to Awards pursuant to Section 8 will be deemed not to materially and adversely affect the rights of any Participant under any previously granted and outstanding Award and therefore may be made without the consent of affected Participants.
* * *
Approved by the Board on February 22, 2018
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Exhibit 10.2
NUVERRA ENVIRONMENTAL SOLUTIONS, INC.
Federal Taxpayer Identification No.: 26-0287117
14624 North Scottsdale Road, Suite 300
Scottsdale, Arizona 85254
Notice of Grant of Performance Restricted Stock Units and Award Agreement (Award Agreement)
PART I
Name of Participant:
Plan: Nuverra Environmental Solutions, Inc. 2017 Long Term Incentive Plan
Effective , 2018, (Award Date) you have been granted an Award of Performance Restricted Stock Units (Awarded Performance Units) for settlement in shares of NUVERRA ENVIRONMENTAL SOLUTIONS, INC. (the Company) common stock, par value $0.01 per share (Shares). This Award is not settled in Shares until the vesting date shown below, conditioned upon both the Service Condition and Performance Condition being met.
The Service Condition and Performance Condition will be determined on the vesting date below with respect to the Awarded Performance Units:
Performance Period |
Number of Awarded Performance Units |
Vesting Date | ||
By your signature and the Companys signature below, you and the Company agree that this Award is granted under and governed by the terms and conditions of the Plan and the Award Agreement (including PART I and PART II), all of which are made a part of this document.
[remainder of page intentionally left blank]
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NUVERRA ENVIRONMENTAL SOLUTIONS, INC.
Signature: | Date: | |||
Print Name: | ||||
Title: | ||||
PARTICIPANT | ||||
Signature: | Date: | |||
Print Name: |
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PART II
General Terms and Conditions
Section 1. Size and Type of Award. The Performance Units in respect of Shares covered by this Award (Awarded Performance Units) are listed in PART I of this Award Agreement (Award Notice). This Award Agreement is subject to all of the terms and conditions of the Nuverra Environmental Solutions, Inc. 2017 Long Term Incentive Plan (the Plan).
Section 2. Vesting.
(a) Vesting Conditions. There are conditions you must satisfy before your Awarded Performance Units will vest:
(i) | You must remain in the continuous service of the Company and/or its Affiliates through the vesting date (the Vesting Date) shown in the Award Notice (the Service Condition). |
(ii) | Any Performance Goal(s) specified in Appendix A of this Award Agreement must be met as of the end of the Performance Period as determined by the Committee in accordance with the terms of the Plan (the Performance Condition). |
(iii) | Awarded Performance Units (including any adjustments thereto), based on satisfaction of the Performance Condition as determined by the Committee in accordance with the terms of the Plan, will vest and become non-forfeitable on the Vesting Date. |
(b) Vesting Date. The Vesting Date for your Awarded Performance Units, as adjusted, is specified in the Award Notice. If both the Service Condition and the Performance Condition are satisfied on the Vesting Date, you will obtain ownership of the Shares issued upon the settlement of the vested Awarded Performance Units.
(c) Forfeitures. Other than as provided in Section 2(d) below, if you terminate service with the Company and/or its subsidiaries prior to the Vesting Date, you will forfeit Awarded Performance Units that are scheduled to vest on the Vesting Date. If you remain in continuous service with the Company and/or its subsidiaries through the Vesting Date but the Performance Condition is not satisfied, you will forfeit the Awarded Performance Units. When you forfeit Awarded Performance Units, all of your interest in the Awarded Performance Units will be canceled.
(d) Termination Without Cause or For Good Reason. Notwithstanding any provisions of this Award Agreement to the contrary, if prior to the expiration of the Performance Period:
(i) | Your service with the Company and/or its subsidiaries is terminated by the Company other than for Cause (as used in this Award Agreement, Cause means cause as defined in your employment agreement, dated |
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as of (as amended from time to time in accordance with the terms thereof, the Employment Agreement)) or your service with the Company and/or its subsidiaries is terminated by you for Good Reason (as used in this Award Agreement, the term Good Reason shall mean good reason as defined in the Employment Agreement), and in either case such termination does not occur within six (6) months prior to or twelve (12) months following a Change in Control (as defined in the Plan), then unvested Awarded Performance Units shall become vested pro rata based on the actual number of days elapsed in the applicable Performance Period as of the date of termination, if any, to the extent Performance Goals are ultimately satisfied. |
(ii) | Your service with the Company and/or its subsidiaries is terminated by the Company other than for Cause or your service with the Company and/or its subsidiaries is terminated by you for Good Reason, and in either case such termination occurs within six (6) months prior to or twelve (12) months following a Change in Control, then all conditions (including both the Service and Performance Conditions) applicable to the Awarded Performance Units shall be deemed satisfied at the target level of the Performance Goals specified in Appendix A and the Awarded Performance Units shall become fully vested. |
(e) Death or Disability. Notwithstanding any provisions of this Award Agreement to the contrary, in the event your service terminates due to death or disability (within the meaning of Section 22(e)(3) of the Code), all unvested Awarded Performance Units shall fully vest upon your death or disability, subject to your continued service with the Company though the period ending on such termination.
(f) Definition of Service. For purposes of determining the vesting of your Awarded Shares, you will be deemed to be in the service of the Company and/or its subsidiaries for so long as you serve in any capacity as an employee, officer, non-employee director or consultant of the Company and/or its subsidiaries.
(g) Voting and Other Rights. You shall have no voting or other rights of a shareholder and will not be treated as an owner of Shares for tax purposes, except with respect to Shares that have been delivered upon the vesting of Awarded Performance Units.
Section 3. Settlement. As soon as reasonably practicable, but in no event more than 30 days, after any Awarded Performance Units have vested, the Company shall, subject to Sections 4 and 6, issue and deliver to you one or more stock certificates in respect of such Shares issued upon settlement of the vested Awarded Performance Units.
Section 4. Application of Clawback Policy. Notwithstanding anything in this Award Agreement to the contrary, the Awarded Performance Units and any related Shares shall be subject to adjustment and/or recovery, in whole or in part, following the date on which they become vested and payable if and to the extent (i) required by any applicable law, rule or regulation or (ii) provided under the terms of any clawback policy or other policy of similar import adopted by the Company and in effect on the date the Awarded Performance Units become vested and payable.
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Section 5. No Right to Continued Service. Nothing in this Award Agreement, or any action of the Board or Committee with respect to this Award Agreement, shall be held or construed to confer upon you any right to a continuation of service by the Company or its subsidiaries. You may be dismissed or otherwise dealt with as though this Award Agreement had not been entered into.
Section 6. Taxes. Where any person is entitled to receive Shares pursuant to the Awarded Performance Units granted hereunder, the Company shall have the right to require such person to pay to the Company the amount of any tax that the Company is required to withhold with respect to such Shares, or, in lieu thereof, to retain, or to sell without notice, a sufficient number of Shares to cover the amount required to be withheld.
Section 7. Notices. Any communication required or permitted to be given under the Plan, including any notice, direction, designation, comment, instruction, objection or waiver, shall be in writing and shall be deemed to have been given at such time as it is delivered personally or five (5) days after mailing if mailed, postage prepaid, by registered or certified mail, return receipt requested, addressed to such party at the address listed below, or at such other address as one such party may by written notice specify to the other party:
If to the Participant, to the Participants address as shown in the Companys records. If to the Committee:
Nuverra Environmental Solutions, Inc.
14624 North Scottsdale Road, Suite 300
Scottsdale, Arizona 85254
Attention: Compensation Committee of the Board of Directors
(with a copy to the Chief Legal Officer of the Company)
Section 8. Restrictions on Transfer. The Awarded Performance Units granted hereunder shall not be subject in any manner to anticipation, alienation or assignment, nor shall such Award be liable for, or subject to, debts, contracts, liabilities, engagements or torts, nor shall it be transferable by you other than by will or by the laws of descent and distribution or as otherwise permitted by the Plan.
Section 9. Successors and Assigns. This Award Agreement shall inure to the benefit of and shall be binding upon the Company and you and each partys respective heirs, successors and assigns.
Section 10. Construction of Language. Whenever appropriate in this Award Agreement, words used in the singular may be read in the plural, words used in the plural may be read in the singular, and words importing the masculine gender may be read as referring equally to the feminine or the neuter. Any reference to a section shall be a reference to a section of this Award Agreement, unless the context clearly indicates otherwise. Capitalized terms not specifically defined herein or in the Award Notice shall have the meanings assigned to them under the Plan.
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Section 11. Governing Law. This Award Agreement shall be construed, administered and enforced according to the laws of the State of Delaware without giving effect to the conflict of laws principles thereof, except to the extent that such laws are preempted by federal law. The federal and state courts having jurisdiction in the State of Delaware shall have exclusive jurisdiction over any claim, action, complaint or lawsuit brought under the terms of the Plan. By accepting any Awarded Performance Units, you, and any other person claiming any rights under this Award Agreement, agrees to submit himself or herself, and any such legal action as he or she shall bring under the Plan, to the sole jurisdiction of such courts for the adjudication and resolution of any such disputes.
Section 12. Amendment. This Award Agreement may be amended, in whole or in part and in any manner not inconsistent with the provisions of the Plan, at any time and from time to time, by written agreement between the Company and you.
Section 13. Plan Provisions Control. This Award Agreement and the rights and obligations created hereunder shall be subject to all of the terms and conditions of the Plan. In the event of any conflict between the provisions of the Plan and the provisions of this Award Agreement, the terms of the Plan, which are incorporated herein by reference, shall control. By signing this Award Agreement, you acknowledge receipt of a copy of the Plan. You acknowledge that you may not and will not rely on any statement of account or other communication or document issued in connection with the Awarded Performance Units other than the Plan, this Award Agreement, or any document signed by an authorized representative of the Company that is designated as an amendment of the Plan or this Award Agreement.
Section 14. 409A Compliance. It is intended that the Awarded Performance Units granted pursuant to this Award Agreement comply with Section 409A of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations and other guidance promulgated thereunder (Section 409A), and all provisions of this Award Notice shall be construed, interpreted, and administered in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A. It is further intended that all payments related to, or settlements of, the Awarded Performance Units hereunder qualify for the short-term deferral exception under Section 409A.
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APPENDIX A TO
NUVERRA ENVIRONMENTAL SOLUTIONS, INC.
NOTICE OF GRANT OF PERFORMANCE RESTRICTED STOCK UNITS AND
AWARD AGREEMENT
For the applicable Performance Period, the Awarded Performance Units will vest (i) 80% based on the achievement of a minimum cumulative Adjusted EBITDA during the Performance Period and (ii) 20% based on Total Shareholder Return as compared to the Companys peer group during the Performance Period.
For purpose hereof, the term Adjusted EBITDA means, with respect to the Company and its subsidiaries, income (loss) from continuing operations before interest, taxes, depreciation, amortization, gain or loss on early extinguishment of debt and non-cash stock-based compensation, excluding extraordinary items, other nonrecurring items, and material out-of-period adjustments, but may also include such other items as the Compensation Committee of the Board, in its discretion, may deem reasonable or appropriate. For the avoidance of doubt, Adjusted EBITDA targets applicable to any performance period need not correspond to any budget, forecast or other financial or operating projections of the Company and shall be established at levels reasonably determined by the Compensation Committee to effectively motivate and reward Participant over the applicable Performance Period.
Performance Period - 1/1/2018 through 12/31/2018
Adjusted EBITDA target (80%) to be established by the Compensation Committee and communicated to the Participant in writing as soon as reasonably practicable, but in any event not later than March 2, 2018
TSR (20%) to be established by the Compensation Committee (in consultation with Pearl Meyer & Partners as the Compensation Committees outside advisory firm) and communicated to the Participant in writing as soon as reasonably practicable, but in any event not later than March 2, 2018, which communication shall identify companies comprising the peer group as well as methodology for determining the Companys relative TSR performance
Performance Period 1/1/2019 through 12/31/2019
Adjusted EBITDA target (80%) to be established by the Compensation Committee and communicated to the Participant in writing not later than January 18, 2019
TSR (20%) to be established by the Compensation Committee and communicated to the Participant in writing not later than January 18, 2019, which communication shall identify companies comprising the peer group as well as methodology for determining the Companys relative TSR performance
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Performance Period 1/1/2020 through 12/31/2020
Adjusted EBITDA target (80%) to be established by the Compensation Committee and communicated to the Participant in writing not later than January 17, 2020
TSR (20%) to be established by the Compensation Committee and communicated to the Participant in writing not later than January 17, 2020, which communication shall identify companies comprising the peer group as well as methodology for determining the Companys relative TSR performance
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Exhibit 10.3
NUVERRA ENVIRONMENTAL SOLUTIONS, INC.
Federal Taxpayer Identification No.: 26-0287117
14624 North Scottsdale Road, Suite 300
Scottsdale, Arizona 85254
Notice of Grant of Restricted Stock Units and Award Agreement (Award Agreement)
PART I
Name of Participant:
Plan: Nuverra Environmental Solutions, Inc. 2017 Long Term Incentive Plan
Effective , 2018, (Award Date) you have been granted an Award of Restricted Stock Units (Awarded RSUs) for shares of NUVERRA ENVIRONMENTAL SOLUTIONS, INC. (the Company) common stock, par value $0.01 per share (Shares). This Award is not settled in Shares until the vesting date(s) shown below.
The Award will vest in increments on the dates shown
Number of RSUs |
Vesting Date(s) | |
By your signature and the Companys signature below, you and the Company agree that this Award is granted under and governed by the terms and conditions of the Plan and the Award Agreement (including PART I and PART II), all of which are made a part of this document.
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NUVERRA ENVIRONMENTAL SOLUTIONS, INC.
Signature: | Date: | |||
Print Name: | ||||
Title: |
PARTICIPANT
Signature: | Date: | |||
Print Name: |
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PART II
General Terms and Conditions
Section 1. Size and Type of Award. The Restricted Stock Units in respect of Shares covered by this Award (Awarded RSUs) are listed in PART I of this Award Agreement (Award Notice). This Award Agreement is subject to all of the terms and conditions of the Nuverra Environmental Solutions, Inc. 2017 Long Term Incentive Plan (the Plan).
Section 2. Vesting.
(a) Vesting Date(s.) The Vesting Dates for your Awarded RSUs are specified in the Award Notice. On each Vesting Date, you will obtain ownership of the Shares issued upon the settlement of the vested Awarded RSUs.
(b) Vesting Conditions. There are conditions you must satisfy before your Awarded RSUs will vest. You must, except as otherwise provided herein, remain in continuous service of the Company and/or its Affiliates from the Award Date through the relevant Vesting Date.
(c) Forfeitures. Other than as provided in Section 2(d) below, if you terminate service with the Company and/or its subsidiaries prior to a Vesting Date, you will forfeit any Awarded RSUs that are scheduled to vest on or after such termination of service date. When you forfeit Awarded RSUs, all of your interest in such unvested Awarded RSUs will be canceled.
(d) Termination Without Cause or For Good Reason. Notwithstanding any provisions of this Award Agreement to the contrary, all conditions (including the condition of continuous service from the Award Date through the relevant Vesting Date) applicable to the Awarded RSUs shall be deemed satisfied and the Awarded RSUs shall become fully vested if, prior to the applicable Vesting Date (1) your service with the Company and/or its subsidiaries is terminated by the Company other than for Cause (as used in this Award Agreement, Cause shall have the meaning as set forth in your employment agreement with the Company (as amended from time to time in accordance with the terms thereof, the Employment Agreement)) or (2) your service with the Company and/or its subsidiaries is terminated by you for Good Reason (as used in this Award Agreement, the term Good Reason shall mean good reason as defined in Section 8(b) of the Employment Agreement).
(e) Death or Disability. If your service with the Company and/or its subsidiaries ends due to death or disability (within the meaning of Section 22(e)(3) of the Code), all unvested Awarded RSUs shall fully vest upon your death or disability, subject to your continued service with the Company though the period ending on such termination.
(f) Definition of Service. For purposes of determining the vesting of your Awarded RSUs, you will be deemed to be in the service of the Company and/or its subsidiaries for so long as you serve in any capacity as an employee, officer, non-employee director or consultant of the Company and/or its subsidiaries.
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(g) Voting and Other Rights. You shall have no voting or other rights of a shareholder and will not be treated as an owner of Shares for tax purposes, except with respect to Shares that have been delivered upon the vesting of Awarded RSUs.
Section 3. Settlement. As soon as reasonably practicable, but in no event more than 30 days, after any Awarded RSU has vested, the Company shall, subject to Sections 4 and 6, issue and deliver to you Shares issued upon settlement of such vested Awarded RSUs.
Section 4. Application of Clawback Policy. Notwithstanding anything in this Award Agreement to the contrary, the Awarded RSUs and any related Shares shall be subject to adjustment and/or recovery, in whole or in part, following the date on which they become vested and payable if and to the extent (i) required by any applicable law, rule or regulation or (ii) provided under the terms of any clawback policy or other policy of similar import adopted by the Company and in effect on the date the Awarded RSUs become vested and payable.
Section 5. No Right to Continued Service. Nothing in this Award Agreement, or any action of the Board or Committee with respect to this Award Agreement, shall be held or construed to confer upon you any right to a continuation of service by the Company or its subsidiaries. You may be dismissed or otherwise dealt with as though this Award Agreement had not been entered into.
Section 6. Taxes. Where any person is entitled to receive Shares pursuant to the Awarded RSUs granted hereunder, the Company shall have the right to require such person to pay to the Company the amount of any tax that the Company is required to withhold with respect to such Shares, or, in lieu thereof, to retain, or to sell without notice, a sufficient number of Shares to cover the amount required to be withheld.
Section 7. Notices. Any communication required or permitted to be given under the Plan, including any notice, direction, designation, comment, instruction, objection or waiver, shall be in writing and shall be deemed to have been given at such time as it is delivered personally or five (5) days after mailing if mailed, postage prepaid, by registered or certified mail, return receipt requested, addressed to such party at the address listed below, or at such other address as one such party may by written notice specify to the other party:
If to the Participant, to the Participants address as shown in the Companys records.
If to the Committee:
Nuverra Environmental Solutions, Inc.
14624 North Scottsdale Road, Suite 300
Scottsdale, Arizona 85254
Attention: Compensation Committee of the Board of Directors
(with a copy to the Chief Legal Officer of the Company)
Section 8. Restrictions on Transfer. The Awarded RSUs granted hereunder shall not be subject in any manner to anticipation, alienation or assignment, nor shall such Award be liable for, or subject to, debts, contracts, liabilities, engagements or torts, nor shall it be transferable by you other than by will or by the laws of descent and distribution or as otherwise permitted by the Plan.
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Section 9. Successors and Assigns. This Award Agreement shall inure to the benefit of and shall be binding upon the Company and you and each partys respective heirs, successors and assigns.
Section 10. Construction of Language. Whenever appropriate in this Award Agreement, words used in the singular may be read in the plural, words used in the plural may be read in the singular, and words importing the masculine gender may be read as referring equally to the feminine or the neuter. Any reference to a section shall be a reference to a section of this Award Agreement, unless the context clearly indicates otherwise. Capitalized terms not specifically defined herein or in the Award Notice shall have the meanings assigned to them under the Plan.
Section 11. Governing Law. This Award Agreement shall be construed, administered and enforced according to the laws of the State of Delaware without giving effect to the conflict of laws principles thereof, except to the extent that such laws are preempted by federal law. The federal and state courts having jurisdiction in the State of Delaware, shall have exclusive jurisdiction over any claim, action, complaint or lawsuit brought under the terms of the Plan. By accepting the Award granted under this Award Agreement, you, and any other person claiming any rights under this Award Agreement, agrees to submit himself or herself, and any such legal action as he or she shall bring under the Plan, to the sole jurisdiction of such courts for the adjudication and resolution of any such disputes.
Section 12. Amendment. This Award Agreement may be amended, in whole or in part and in any manner not inconsistent with the provisions of the Plan, at any time and from time to time, by written agreement between the Company and you.
Section 13. Plan Provisions Control. This Award Agreement and the rights and obligations created hereunder shall be subject to all of the terms and conditions of the Plan. In the event of any conflict between the provisions of the Plan and the provisions of this Award Agreement, the terms of the Plan, which are incorporated herein by reference, shall control. By signing this Award Agreement, you acknowledge receipt of a copy of the Plan. You acknowledge that you may not and will not rely on any statement of account or other communication or document issued in connection with the Awarded RSUs other than the Plan, this Award Agreement, or any document signed by an authorized representative of the Company that is designated as an amendment of the Plan or this Award Agreement.
Section 14. 409A Compliance. It is intended that the Awarded RSUs granted pursuant to this Award Agreement comply with Section 409A of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations and other guidance promulgated thereunder (Section 409A), and all provisions of this Award Agreement shall be construed, interpreted, and administered in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A. It is further intended that all payments related to, or settlements of, the Awarded RSUs hereunder qualify for the short-term deferral exception under Section 409A.
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Exhibit 10.4
NUVERRA ENVIRONMENTAL SOLUTIONS, INC.
Federal Taxpayer Identification No.: 26-0287117
14624 North Scottsdale Road, Suite 300
Scottsdale, Arizona 85254
Notice of Grant of Performance Restricted Stock Units and Award Agreement (CEO) (Award Agreement)
PART I
Name of Participant: Mark D. Johnsrud
Plan: Nuverra Environmental Solutions, Inc. 2017 Long Term Incentive Plan
Effective February 23, 2018, (Award Date) you have been granted an Award of Performance Restricted Stock Units (Awarded Performance Units) for settlement in 531,618 shares of NUVERRA ENVIRONMENTAL SOLUTIONS, INC. (the Company) common stock, par value $0.01 per share (Shares). This Award is not settled in Shares until the vesting date shown below, conditioned upon both the Service Condition and Performance Condition being met.
The Service Condition and Performance Condition will be determined on the vesting date below with respect to the Awarded Performance Units:
Performance Period |
Number of Awarded Performance Units |
Vesting Date | ||
1/1/2018 through 6/30/2018 |
265,809 | August 7, 2018 | ||
7/1/2018 through 6/30/2019 |
265,809 | August 7, 2019 |
By your signature and the Companys signature below, you and the Company agree that this Award is granted under and governed by the terms and conditions of the Plan and the Award Agreement (including PART I and PART II), all of which are made a part of this document.
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NUVERRA ENVIRONMENTAL SOLUTIONS, INC.
Signature: | /s/ Joseph M. Crabb |
Date: February 23, 2018 | ||||
Print Name: | Joseph M. Crabb | |||||
Title: | Executive Vice President and Chief Legal Officer |
PARTICIPANT
Signature: | /s/ Mark D. Johnsrud |
Date: February 23, 2018 | ||||
Print Name: | Mark D. Johnsrud |
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PART II
General Terms and Conditions
Section 1. Size and Type of Award. The Performance Units in respect of Shares covered by this Award (Awarded Performance Units) are listed in PART I of this Award Agreement (Award Notice). This Award Agreement is subject to all of the terms and conditions of the Nuverra Environmental Solutions, Inc. 2017 Long Term Incentive Plan (the Plan).
Section 2. Vesting.
(a) Vesting Conditions. There are conditions you must satisfy before your Awarded Performance Units will vest:
(i) | You must remain in the continuous service of the Company and/or its Affiliates through the vesting date (the Vesting Date) shown in the Award Notice (the Service Condition). |
(ii) | Any Performance Goal(s) specified in Appendix A of this Award Agreement must be met as of the end of the Performance Period as determined by the Committee in accordance with the terms of the Plan (the Performance Condition). |
(iii) | Awarded Performance Units (including any adjustments thereto), based on satisfaction of the Performance Condition as determined by the Committee in accordance with the terms of the Plan, will vest and become non-forfeitable on the Vesting Date. |
(b) Vesting Date. The Vesting Date for your Awarded Performance Units, as adjusted, is specified in the Award Notice. If both the Service Condition and the Performance Condition are satisfied on the Vesting Date, you will obtain ownership of the Shares issued upon the settlement of the vested Awarded Performance Units.
(c) Change in Control. Notwithstanding any provisions of this Award Agreement to the contrary, in the event of a Change in Control (as defined in the Plan) unvested Awarded Performance Units shall become immediately subject to partial vesting as specified in Appendix B of this Award Agreement.
(d) Forfeitures. Other than as provided in Section 2(e) below, if you terminate service with the Company and/or its subsidiaries prior to the Vesting Date, you will forfeit Awarded Performance Units that are scheduled to vest on the Vesting Date. If you remain in continuous service with the Company and/or its subsidiaries through the Vesting Date but the Performance Condition is not satisfied, you will forfeit the Awarded Performance Units. When you forfeit Awarded Performance Units, all of your interest in the Awarded Performance Units will be canceled.
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(e) Termination Without Cause or For Good Reason. Notwithstanding any provisions of this Award Agreement to the contrary, if prior to the expiration of the Performance Period:
(i) | Your service with the Company and/or its subsidiaries is terminated by the Company other than for Cause (as used in this Award Agreement, Cause means good cause as defined in Section 8(b)(ii) of your April 28, 2017 Amended and Restated Employment Agreement with the Company (as amended from time to time in accordance with the terms thereof, the Employment Agreement)) or your service with the Company and/or its subsidiaries is terminated by you for Good Reason (as used in this Award Agreement, the term Good Reason shall mean good reason as defined in Section 8(b) of the Employment Agreement), and in either case such termination does not occur within six (6) months prior to or twelve (12) months following a Change in Control (as defined in the Plan), then unvested Awarded Performance Units shall become vested pro rata based on the actual number of days elapsed in the applicable Performance Period as of the date of termination, if any, to the extent Performance Goals are ultimately satisfied. |
(ii) | Your service with the Company and/or its subsidiaries is terminated by the Company other than for Cause or your service with the Company and/or its subsidiaries is terminated by you for Good Reason, and in either case such termination occurs within six (6) months prior to or twelve (12) months following a Change in Control, then the provisions of Section 2(c) hereof shall apply upon the occurrence of the Change in Control and unvested Awarded Performance Units shall become immediately subject to partial vesting as specified in Appendix B of this Award Agreement. |
(f) Death or Disability. Notwithstanding any provisions of this Award Agreement to the contrary, in the event your service terminates due to death or disability (within the meaning of Section 22(e)(3) of the Code), all unvested Awarded Performance Units shall fully vest upon your death or disability, subject to your continued service with the Company though the period ending on such termination.
(g) Definition of Service. For purposes of determining the vesting of your Awarded Shares, you will be deemed to be in the service of the Company and/or its subsidiaries for so long as you serve in any capacity as an employee, officer, non-employee director or consultant of the Company and/or its subsidiaries.
(h) Voting and Other Rights. You shall have no voting or other rights of a shareholder and will not be treated as an owner of Shares for tax purposes, except with respect to Shares that have been delivered upon the vesting of Awarded Performance Units.
Section 3. Settlement. As soon as reasonably practicable, but in no event more than 30 days, after any Awarded Performance Units have vested, the Company shall, subject to Sections 4 and 6, issue and deliver to you one or more stock certificates in respect of such Shares issued upon settlement of the vested Awarded Performance Units.
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Section 4. Application of Clawback Policy. Notwithstanding anything in this Award Agreement to the contrary, the Awarded Performance Units and any related Shares shall be subject to adjustment and/or recovery, in whole or in part, following the date on which they become vested and payable if and to the extent (i) required by any applicable law, rule or regulation or (ii) provided under the terms of any clawback policy or other policy of similar import adopted by the Company and in effect on the date the Awarded Performance Units become vested and payable.
Section 5. No Right to Continued Service. Nothing in this Award Agreement, or any action of the Board or Committee with respect to this Award Agreement, shall be held or construed to confer upon you any right to a continuation of service by the Company or its subsidiaries. You may be dismissed or otherwise dealt with as though this Award Agreement had not been entered into.
Section 6. Taxes. Where any person is entitled to receive Shares pursuant to the Awarded Performance Units granted hereunder, the Company shall have the right to require such person to pay to the Company the amount of any tax that the Company is required to withhold with respect to such Shares, or, in lieu thereof, to retain, or to sell without notice, a sufficient number of Shares to cover the amount required to be withheld.
Section 7. Notices. Any communication required or permitted to be given under the Plan, including any notice, direction, designation, comment, instruction, objection or waiver, shall be in writing and shall be deemed to have been given at such time as it is delivered personally or five (5) days after mailing if mailed, postage prepaid, by registered or certified mail, return receipt requested, addressed to such party at the address listed below, or at such other address as one such party may by written notice specify to the other party:
If to the Participant, to the Participants address as shown in the Companys records. If to the Committee:
Nuverra Environmental Solutions, Inc.
14624 North Scottsdale Road, Suite 300
Scottsdale, Arizona 85254
Attention: Compensation Committee of the Board of Directors
(with a copy to the Chief Legal Officer of the Company)
Section 8. Restrictions on Transfer. The Awarded Performance Units granted hereunder shall not be subject in any manner to anticipation, alienation or assignment, nor shall such Award be liable for, or subject to, debts, contracts, liabilities, engagements or torts, nor shall it be transferable by you other than by will or by the laws of descent and distribution or as otherwise permitted by the Plan.
Section 9. Successors and Assigns. This Award Agreement shall inure to the benefit of and shall be binding upon the Company and you and each partys respective heirs, successors and assigns.
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Section 10. Construction of Language. Whenever appropriate in this Award Agreement, words used in the singular may be read in the plural, words used in the plural may be read in the singular, and words importing the masculine gender may be read as referring equally to the feminine or the neuter. Any reference to a section shall be a reference to a section of this Award Agreement, unless the context clearly indicates otherwise. Capitalized terms not specifically defined herein or in the Award Notice shall have the meanings assigned to them under the Plan.
Section 11. Governing Law. This Award Agreement shall be construed, administered and enforced according to the laws of the State of Delaware without giving effect to the conflict of laws principles thereof, except to the extent that such laws are preempted by federal law. The federal and state courts having jurisdiction in the State of Delaware shall have exclusive jurisdiction over any claim, action, complaint or lawsuit brought under the terms of the Plan. By accepting any Awarded Performance Units, you, and any other person claiming any rights under this Award Agreement, agrees to submit himself or herself, and any such legal action as he or she shall bring under the Plan, to the sole jurisdiction of such courts for the adjudication and resolution of any such disputes.
Section 12. Amendment. This Award Agreement may be amended, in whole or in part and in any manner not inconsistent with the provisions of the Plan, at any time and from time to time, by written agreement between the Company and you.
Section 13. Plan Provisions Control. This Award Agreement and the rights and obligations created hereunder shall be subject to all of the terms and conditions of the Plan. In the event of any conflict between the provisions of the Plan and the provisions of this Award Agreement, the terms of the Plan, which are incorporated herein by reference, shall control. By signing this Award Agreement, you acknowledge receipt of a copy of the Plan. You acknowledge that you may not and will not rely on any statement of account or other communication or document issued in connection with the Awarded Performance Units other than the Plan, this Award Agreement, or any document signed by an authorized representative of the Company that is designated as an amendment of the Plan or this Award Agreement.
Section 14. 409A Compliance. It is intended that the Awarded Performance Units granted pursuant to this Award Agreement comply with Section 409A of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations and other guidance promulgated thereunder (Section 409A), and all provisions of this Award Notice shall be construed, interpreted, and administered in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A. It is further intended that all payments related to, or settlements of, the Awarded Performance Units hereunder qualify for the short-term deferral exception under Section 409A.
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APPENDIX A TO
NUVERRA ENVIRONMENTAL SOLUTIONS, INC.
NOTICE OF GRANT OF PERFORMANCE RESTRICTED STOCK UNITS AND
AWARD AGREEMENT
For the applicable Performance Period, the Awarded Performance Units will vest (i) 80% based on the achievement of a minimum cumulative Adjusted EBITDA during the Performance Period and (ii) 20% based on Total Shareholder Return as compared to the Companys peer group during the Performance Period.
For purpose hereof, the term Adjusted EBITDA means, with respect to the Company and its subsidiaries, income (loss) from continuing operations before interest, taxes, depreciation, amortization, gain or loss on early extinguishment of debt and non-cash stock-based compensation, excluding extraordinary items, other nonrecurring items, and material out-of-period adjustments, but may also include such other items as the Compensation Committee of the Board, in its discretion, may deem reasonable or appropriate. For the avoidance of doubt, Adjusted EBITDA targets applicable to any performance period need not correspond to any budget, forecast or other financial or operating projections of the Company and shall be established at levels reasonably determined by the Compensation Committee to effectively motivate and reward Participant over the applicable Performance Period.
Performance Period - 1/1/2018 through 6/30/2018
Adjusted EBITDA target (80%) to be established by the Compensation Committee and communicated to the Participant in writing as soon as reasonably practicable, but in any event not later than March 2, 2018
TSR (20%) to be established by the Compensation Committee (in consultation with Pearl Meyer & Partners as the Compensation Committees outside advisory firm) and communicated to the Participant in writing as soon as reasonably practicable, but in any event not later than March 2, 2018, which communication shall identify companies comprising the peer group as well as methodology for determining the Companys relative TSR performance
Performance Period - 7/1/2018 through 6/30/2019
Adjusted EBITDA target (80%) to be established by the Compensation Committee and communicated to the Participant in writing not later than June 30, 2018
TSR (20%) to be established by the Compensation Committee and communicated to the Participant in writing not later than June 30, 2018, which communication shall identify companies comprising the peer group as well as methodology for determining the Companys relative TSR performance
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APPENDIX B TO
NUVERRA ENVIRONMENTAL SOLUTIONS, INC.
NOTICE OF GRANT OF PERFORMANCE RESTRICTED STOCK UNITS AND
AWARD AGREEMENT
Upon a Change in Control, if the enterprise valuation of the Company reflected in the Change in Control transaction is at least $200 million, then the unvested portion of Awarded Performance Units would vest as follows:
(i) enterprise valuation of $200 million, 25% of unvested Awarded Performance Units vest;
(ii) enterprise valuation from $200 million to $250 million, vesting percentage of unvested Awarded Performance Units determined by linear interpolation between 25% and 50%;
(iii) enterprise valuation of $250 million, 50% of unvested Awarded Performance Units vest;
(iv) enterprise valuation from $250 mill to $300 million, vesting percentage of unvested Awarded Performance Units determined by linear interpolation between 50% and 100%; and
(v) enterprise valuation of $300 million or more, 100% of unvested Awarded Performance Units vest.
If the enterprise valuation of the Company reflected in the Change in Control transaction is less than $200 million, no vesting of unvested Awarded Performance Units.
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Exhibit 10.5
NUVERRA ENVIRONMENTAL SOLUTIONS, INC.
Federal Taxpayer Identification No.: 26-0287117
14624 North Scottsdale Road, Suite 300
Scottsdale, Arizona 85254
Notice of Grant of Restricted Stock Units and Award Agreement (CEO) (Award Agreement)
PART I
Name of Participant: Mark D. Johnsrud
Plan: Nuverra Environmental Solutions, Inc. 2017 Long Term Incentive Plan
Effective February 23, 2018, (Award Date) you have been granted an Award of Restricted Stock Units (Awarded RSUs) for 531,618 shares of NUVERRA ENVIRONMENTAL SOLUTIONS, INC. (the Company) common stock, par value $0.01 per share (Shares). This Award is not settled in Shares until the vesting date(s) shown below.
The Award will vest in increments on the dates shown
Number of RSUs |
Vesting Date(s) | |
177,206 |
Award Date of February 23, 2018 | |
177,206 |
August 7, 2018 | |
177,206 |
August 7, 2019 |
By your signature and the Companys signature below, you and the Company agree that this Award is granted under and governed by the terms and conditions of the Plan and the Award Agreement (including PART I and PART II), all of which are made a part of this document.
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NUVERRA ENVIRONMENTAL SOLUTIONS, INC. | ||||||
Signature: | /s/ Joseph M. Crabb | Date: February 23, 2018 | ||||
Print Name: | Joseph M. Crabb | |||||
Title: | Executive Vice President and Chief Legal Officer |
PARTICIPANT |
Signature: | /s/ Mark D. Johnsrud | Date: February 23, 2018 | ||||
Print Name: | Mark D. Johnsrud |
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PART II
General Terms and Conditions
Section 1. Size and Type of Award. The Restricted Stock Units in respect of Shares covered by this Award (Awarded RSUs) are listed in PART I of this Award Agreement (Award Notice). This Award Agreement is subject to all of the terms and conditions of the Nuverra Environmental Solutions, Inc. 2017 Long Term Incentive Plan (the Plan).
Section 2. Vesting.
(a) Vesting Date(s.) The Vesting Dates for your Awarded RSUs are specified in the Award Notice. On each Vesting Date, you will obtain ownership of the Shares issued upon the settlement of the vested Awarded RSUs. Additionally and notwithstanding anything in the Award Notice or in this Award Agreement to the contrary, in the event of a Change in Control of the Company (as defined in the Plan), all Awarded RSUs shall automatically become fully vested upon the closing of the Change in Control transaction, subject to your continued service with the Company through such closing.
(b) Vesting Conditions. There are conditions you must satisfy before your Awarded RSUs will vest. You must, except as otherwise provided herein, remain in continuous service of the Company and/or its Affiliates from the Award Date through the relevant Vesting Date.
(c) Forfeitures. Other than as provided in Section 2(d) below, if you terminate service with the Company and/or its subsidiaries prior to a Vesting Date, you will forfeit any Awarded RSUs that are scheduled to vest on or after such termination of service date. When you forfeit Awarded RSUs, all of your interest in such unvested Awarded RSUs will be canceled.
(d) Termination Without Cause or For Good Reason. Notwithstanding any provisions of this Award Agreement to the contrary, all conditions (including the condition of continuous service from the Award Date through the relevant Vesting Date) applicable to the Awarded RSUs shall be deemed satisfied and the Awarded RSUs shall become fully vested if, prior to the applicable Vesting Date (1) your service with the Company and/or its subsidiaries is terminated by the Company other than for Cause (as used in this Award Agreement, Cause means good cause as defined in Section 8(b)(ii) of your April 28, 2017 Amended and Restated Employment Agreement with the Company (as amended from time to time in accordance with the terms thereof, the Employment Agreement)) or (2) your service with the Company and/or its subsidiaries is terminated by you for Good Reason (as used in this Award Agreement, the term Good Reason shall mean good reason as defined in Section 8(b) of the Employment Agreement).
(e) Death or Disability. If your service with the Company and/or its subsidiaries ends due to death or disability (within the meaning of Section 22(e)(3) of the Code), all unvested Awarded RSUs shall fully vest upon your death or disability, subject to your continued service with the Company though the period ending on such termination.
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(f) Definition of Service. For purposes of determining the vesting of your Awarded RSUs, you will be deemed to be in the service of the Company and/or its subsidiaries for so long as you serve in any capacity as an employee, officer, non-employee director or consultant of the Company and/or its subsidiaries.
(g) Voting and Other Rights. You shall have no voting or other rights of a shareholder and will not be treated as an owner of Shares for tax purposes, except with respect to Shares that have been delivered upon the vesting of Awarded RSUs.
Section 3. Settlement. As soon as reasonably practicable, but in no event more than 30 days, after any Awarded RSU has vested, the Company shall, subject to Sections 4 and 6, issue and deliver to you Shares issued upon settlement of such vested Awarded RSUs.
Section 4. Application of Clawback Policy. Notwithstanding anything in this Award Agreement to the contrary, the Awarded RSUs and any related Shares shall be subject to adjustment and/or recovery, in whole or in part, following the date on which they become vested and payable if and to the extent (i) required by any applicable law, rule or regulation or (ii) provided under the terms of any clawback policy or other policy of similar import adopted by the Company and in effect on the date the Awarded RSUs become vested and payable.
Section 5. No Right to Continued Service. Nothing in this Award Agreement, or any action of the Board or Committee with respect to this Award Agreement, shall be held or construed to confer upon you any right to a continuation of service by the Company or its subsidiaries. You may be dismissed or otherwise dealt with as though this Award Agreement had not been entered into.
Section 6. Taxes. Where any person is entitled to receive Shares pursuant to the Awarded RSUs granted hereunder, the Company shall have the right to require such person to pay to the Company the amount of any tax that the Company is required to withhold with respect to such Shares, or, in lieu thereof, to retain, or to sell without notice, a sufficient number of Shares to cover the amount required to be withheld.
Section 7. Notices. Any communication required or permitted to be given under the Plan, including any notice, direction, designation, comment, instruction, objection or waiver, shall be in writing and shall be deemed to have been given at such time as it is delivered personally or five (5) days after mailing if mailed, postage prepaid, by registered or certified mail, return receipt requested, addressed to such party at the address listed below, or at such other address as one such party may by written notice specify to the other party:
If to the Participant, to the Participants address as shown in the Companys records.
If to the Committee:
Nuverra Environmental Solutions, Inc.
14624 North Scottsdale Road, Suite 300
Scottsdale, Arizona 85254
Attention: Compensation Committee of the Board of Directors
(with a copy to the Chief Legal Officer of the Company)
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Section 8. Restrictions on Transfer. The Awarded RSUs granted hereunder shall not be subject in any manner to anticipation, alienation or assignment, nor shall such Award be liable for, or subject to, debts, contracts, liabilities, engagements or torts, nor shall it be transferable by you other than by will or by the laws of descent and distribution or as otherwise permitted by the Plan.
Section 9. Successors and Assigns. This Award Agreement shall inure to the benefit of and shall be binding upon the Company and you and each partys respective heirs, successors and assigns.
Section 10. Construction of Language. Whenever appropriate in this Award Agreement, words used in the singular may be read in the plural, words used in the plural may be read in the singular, and words importing the masculine gender may be read as referring equally to the feminine or the neuter. Any reference to a section shall be a reference to a section of this Award Agreement, unless the context clearly indicates otherwise. Capitalized terms not specifically defined herein or in the Award Notice shall have the meanings assigned to them under the Plan.
Section 11. Governing Law. This Award Agreement shall be construed, administered and enforced according to the laws of the State of Delaware without giving effect to the conflict of laws principles thereof, except to the extent that such laws are preempted by federal law. The federal and state courts having jurisdiction in the State of Delaware, shall have exclusive jurisdiction over any claim, action, complaint or lawsuit brought under the terms of the Plan. By accepting the Award granted under this Award Agreement, you, and any other person claiming any rights under this Award Agreement, agrees to submit himself or herself, and any such legal action as he or she shall bring under the Plan, to the sole jurisdiction of such courts for the adjudication and resolution of any such disputes.
Section 12. Amendment. This Award Agreement may be amended, in whole or in part and in any manner not inconsistent with the provisions of the Plan, at any time and from time to time, by written agreement between the Company and you.
Section 13. Plan Provisions Control. This Award Agreement and the rights and obligations created hereunder shall be subject to all of the terms and conditions of the Plan. In the event of any conflict between the provisions of the Plan and the provisions of this Award Agreement, the terms of the Plan, which are incorporated herein by reference, shall control. By signing this Award Agreement, you acknowledge receipt of a copy of the Plan. You acknowledge that you may not and will not rely on any statement of account or other communication or document issued in connection with the Awarded RSUs other than the Plan, this Award Agreement, or any document signed by an authorized representative of the Company that is designated as an amendment of the Plan or this Award Agreement.
Section 14. 409A Compliance. It is intended that the Awarded RSUs granted pursuant to this Award Agreement comply with Section 409A of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations and other guidance promulgated thereunder (Section 409A), and all provisions of this Award Agreement shall be construed, interpreted, and administered in a manner consistent with the requirements for avoiding taxes or penalties under
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Section 409A. It is further intended that all payments related to, or settlements of, the Awarded RSUs hereunder qualify for the short-term deferral exception under Section 409A.
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Exhibit 10.6
NUVERRA ENVIRONMENTAL SOLUTIONS, INC.
Federal Taxpayer Identification No.: 26-0287117
14624 North Scottsdale Road, Suite 300
Scottsdale, Arizona 85254
Notice of Grant of CEO Stock Options and Stock Option Award Agreement (Stock Option Award Agreement)
PART I
A. | Tranche 1 |
Name of Option Holder: Mark D. Johnsrud
Effective August 7, 2017 (Grant Date), you (Option Holder) have been granted a nonqualified stock option to buy 354,411 Shares of NUVERRA ENVIRONMENTAL SOLUTIONS, INC., a Delaware corporation (the Company) common stock, par value $0.01 per share (Shares), at an exercise price of $37.03 per Share (Exercise Price).
Options for the following Shares will become vested and expire on the date(s) shown:
Number of Shares |
Vesting Date(s) | Expiration Date(s) | ||
118,137 |
August 7, 2018 | August 7, 2024 | ||
118,137 |
August 7, 2019 | August 7, 2024 | ||
118,137 |
August 7, 2020 | August 7, 2024 |
By your signature and the Companys signature below, you and the Company agree that these options are granted under and governed by the terms and conditions of this Stock Option Award Agreement (including PART I.A. and PART II), all of which are made a part of this document.
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NUVERRA ENVIRONMENTAL SOLUTIONS, INC.
Signature: | /s/ Joseph M. Crabb |
Date: February 23, 2018 | ||||
Print Name: | Joseph M. Crabb | |||||
Title: | Executive Vice President and Chief Legal Officer |
OPTION HOLDER
Signature: | /s/ Mark D. Johnsrud |
Date: February 23, 2018 | ||||
Print Name: | Mark D. Johnsrud |
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B. | Tranche 2 |
Name of Option Holder: Mark D. Johnsrud
Effective August 7, 2017 (Grant Date), you (Option Holder) have been granted a nonqualified Option to buy 354,411 Shares of NUVERRA ENVIRONMENTAL SOLUTIONS, INC., a Delaware corporation (the Company) common stock, par value $0.01 per share (Shares), at an exercise price of $41.31 per Share (Exercise Price).
Options for the following Shares will become vested and expire on the date(s) shown:
Number of Shares |
Vesting Date(s) | Expiration Date(s) | ||
118,137 |
August 7, 2018 | August 7, 2024 | ||
118,137 |
August 7, 2019 | August 7, 2024 | ||
118,137 |
August 7, 2020 | August 7, 2024 |
By your signature and the Companys signature below, you and the Company agree that these options are granted under and governed by the terms and conditions of this Stock Option Award Agreement (including PART I.B. and PART II), all of which are made a part of this document.
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NUVERRA ENVIRONMENTAL SOLUTIONS, INC.
Signature: | /s/ Joseph M. Crabb |
Date: February 23, 2018 | ||||
Print Name: | Joseph M. Crabb | |||||
Title: | Executive Vice President and Chief Legal Officer |
OPTION HOLDER
Signature: | /s/ Mark D. Johnsrud |
Date: February 23, 2018 | ||||
Print Name: | Mark D. Johnsrud |
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PART II
General Terms and Conditions
Section 1. Stock Option. Part I designates the Option as a nonqualified stock option.
Section 2. Exercise Period.
(a) Subject to Section 2(b), the Option Holder shall have the right to purchase all or any portion of the optioned Shares at any time during the period (Exercise Period) commencing on the applicable vesting date specified in Part I that the vested portion of the Option may be exercised (the Earliest Exercise Date) and ending on the earliest to occur of the following dates:
(i) | the effective date and time of the Option Holders termination of service with the Company and/or any of its subsidiaries that is a termination for Cause (as used in this Stock Option Award Agreement, the term Cause shall mean good cause as defined in Section 8(b)(ii) of the Option Holders April 28, 2017 Amended and Restated Employment Agreement with the Company (as amended from time to time in accordance with the terms thereof, the Employment Agreement)); |
(ii) | the last day following the 90-day period following the effective date of Option Holders termination of service with the Company and/or any of its subsidiaries that is a termination without Good Reason (as used in this Stock Option Award Agreement, the term Good Reason shall mean good reason as defined in Section 8(b) of the Employment Agreement); |
(iii) | the last day following the 1-year period following the effective date of a Change in Control of the Company (as used in this Stock Option Award Agreement, the term Change in Control shall have the meaning set forth or referenced in the Employment Agreement); and |
(iv) | the earlier of (A) the expiration date(s) specified in Part I of this Stock Option Award Agreement, or (B) the last day of the 1-year period commencing on the date and time of the termination of all service with the Company and/or its subsidiaries by the Company other than for Cause or by the Option Holder for Good Reason or due to death or disability (within the meaning of Section 22(e)(3) of the Code); and |
(v) | the expiration date(s) specified in Part I. |
(b) To become vested in an Option, the Option Holder must be in continuous service with the Company and/or its subsidiaries during the period beginning on the Grant Date and ending on the applicable vesting date specified in Part I; provided, however, that all Options not previously vested will become fully and immediately vested if either (1) the Option Holders service with the Company and/or its subsidiaries is terminated by the Company other than for Cause or (2) the Option Holders service with the Company and/or its subsidiaries is terminated by the Option Holder for Good Reason. Additionally and notwithstanding anything in the Award Notice or in this
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Stock Option Award Agreement to the contrary, in the event of a Change in Control of the Company (as defined in the Companys 2017 Long Term Incentive Plan, as amended from time to time), all Options shall automatically become fully vested upon the closing of the Change in Control transaction, subject to the Option Holders continued service with the Company through such closing.
(c) If the Option Holder terminates service with the Company and/or its subsidiaries prior to a vesting date other than for Good Reason, any unvested Options granted hereunder that are scheduled to vest after such termination of service date are deemed forfeited by the Option Holder. Options that are forfeited will be immediately canceled and will cease to be exercisable.
(d) Notwithstanding the foregoing, in the event of the Option Holders termination of service with the Company and/or its subsidiaries due to death or disability (within the meaning of Section 22(e)(3) of the Code), unvested Options will be deemed vested as of the Option Holders termination of service date. In addition, if the Option Holders termination of service with the Company and/or its subsidiaries is by the Company other than for Cause (as defined in Section 2(a)(i) above), the Committee may, in its discretion, vest, as of the Option Holders termination of service date, unvested Options.
Section 3. Exercise Price. During the Exercise Period, and after the applicable Earliest Exercise Date, the Option Holder shall have the right to purchase all or any portion of the optioned Shares at the Exercise Price.
Section 4. Method of Exercise. The Option Holder may, at any time during the Exercise Period provided by Section 2, exercise his or her right to purchase all or any part of the optioned Shares then available for purchase; provided, however, that the minimum number of optioned Shares which may be purchased shall be one thousand (1,000) or, if less, the total number of optioned Shares then available for purchase. The Option Holder shall exercise such right by:
(a) giving written notice to the Committee, in the form attached hereto as Appendix A; and
(b) delivering to the Committee full payment of the Exercise Price for the optioned Shares to be purchased.
The date of exercise shall be the earliest date practicable following the date the requirements of this Section 4 have been satisfied. Payment shall be made (i) in United States dollars by certified check, money order, official bank check, or wire transfer of immediately available funds, made payable to the order of Nuverra Environmental Solutions, Inc., (ii) with the Committees approval, in Shares duly endorsed for transfer (or using a constructive delivery method approved by the Committee), already owned by the Option Holder for more than six (6) months as of the exercise date and having an aggregate Fair Market Value on the date the Option is exercised equal to the aggregate Exercise Price to be paid, such Fair Market Value to be determined in such manner as may be provided by the Committee or as may be required in order to comply with or conform to the requirements of any applicable laws or regulations, (iii) if and to the extent permitted by the Committee, by directing the Company to withhold from the Shares to be issued upon exercise of the Option (or a portion thereof) being exercised a number of Shares having a Fair Market Value equal to the aggregate Exercise
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Price to be paid (a cashless exercise), or (iv) in a combination of (i), (ii) and (iii). Payment for any Shares to be purchased upon exercise of an Option may also be made by delivering a properly executed exercise notice to the Company, together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds to pay the Exercise Price and applicable tax withholding amounts (if any).
Section 5. Delivery of Optioned Shares. As soon as is practicable following the date on which the Option Holder has satisfied the requirements of Section 4, the Committee shall take such action as is necessary to cause such Shares to be issued in the name of the Option Holder (either by book-entry registration or issuance of a stock certificate) evidencing the Option Holders ownership of the optioned Shares that have been purchased. The Option Holder shall have no right to vote or to receive dividends, nor have any other rights with respect to the optioned Shares, prior to the date as of which such optioned Shares are transferred to the Option Holder on the stock transfer records of the Company, and no adjustments shall be made for any dividends or other rights for which the record date is prior to the effective date of such transfer. The obligation of the Company to deliver Shares under this Stock Option Award Agreement shall, if the Committee so requests, be conditioned upon the receipt of a representation as to the investment intention of the person to whom such Shares are to be delivered, in such form as the Committee shall determine to be necessary or advisable to comply with the provisions of applicable federal, state or local law.
Section 6. No Right to Continued Service. Nothing in this Stock Option Award Agreement nor any action of the Board or Committee with respect to this Stock Option Award Agreement shall be held or construed to confer upon the Option Holder any right to a continuation of service by the Company or any of its subsidiaries. The Option Holder may be dismissed or otherwise dealt with as though this Stock Option Award Agreement had not been entered into.
Section 7. Application of Clawback Policy. Notwithstanding anything in this Stock Option Award Agreement to the contrary, the Option shall be subject to adjustment and/or recovery, in whole or in part, following the date on which they become vested and payable if and to the extent (i) required by any applicable law, rule or regulation or (ii) provided under the terms of any clawback policy or other policy of similar import adopted by the Company and in effect on the date the Option becomes vested and payable.
Section 8. Taxes. Where any person is entitled to receive Shares pursuant to the exercise of the Option granted hereunder, the Company shall have the right to require such person to pay to the Company the amount of any tax which the Company is required to withhold with respect to such Shares, or, in lieu thereof, to retain, or to sell without notice, a sufficient number of Shares to cover the amount required to be withheld.
Section 9. Notices. Any communication required or permitted to be given under this Stock Option Award Agreement, including any notice, direction, designation, comment, instruction, objection or waiver, shall be in writing and shall be deemed to have been given at such time as it is delivered personally or five (5) days after mailing if mailed, postage prepaid, by registered or certified
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mail, return receipt requested, addressed to such party at the address listed below, or at such other address as one such party may by written notice specify to the other party:
(a) If to the Committee:
Nuverra Environmental Solutions, Inc.
14624 North Scottsdale Road, Suite 300
Scottsdale, Arizona 85254
Attention: Compensation Committee and Corporate Secretary
(b) If to the Option Holder, to the Option Holders address as shown in the Companys records.
Section 10. Restrictions on Transfer. During Option Holders lifetime, the Option granted hereunder is not transferable.
Section 11. Successors and Assigns. This Stock Option Award Agreement shall inure to the benefit of and shall be binding upon the Company and the Option Holder and their respective heirs, successors and assigns.
Section 12. Construction of Language. Whenever appropriate in this Stock Option Award Agreement, words used in the singular may be read in the plural, words used in the plural may be read in the singular, and words importing the masculine gender may be read as referring equally to the feminine or the neuter. Any reference to a section shall be a reference to a section of this Stock Option Award Agreement, unless the context clearly indicates otherwise.
Section 13. Governing Law. This Stock Option Award Agreement shall be construed, administered and enforced according to the laws of the State of Arizona without giving effect to the conflict of laws principles thereof, except to the extent that such laws are preempted by federal law. The federal and state courts having jurisdiction in Phoenix, Arizona shall have exclusive jurisdiction over any claim, action, complaint or lawsuit brought under the terms of this Stock Option Award Agreement. By accepting any Option granted under this Stock Option Award Agreement, the Option Holder, and any other person claiming any rights under the Stock Option Award Agreement, agrees to submit himself or herself, and any such legal action as he or she shall bring, to the sole jurisdiction of such courts for the adjudication and resolution of any such disputes.
Section 14. Amendment. This Stock Option Award Agreement may be amended, in whole or in part, at any time and from time to time, by written agreement between the Company and the Option Holder.
Section 15. Miscellaneous.
(a) Existence of Options. The existence of the Options granted hereunder shall not affect in any way the right or power of the Company, the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Companys capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities ahead of or affecting Shares or the rights thereof, the dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or proceeding.
(b) Additional Issuances. Except as expressly provided herein, the issuance by the Company of shares of stock of any class (including Shares), including upon conversion of shares
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or obligations of the Company convertible into such shares or other securities, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of Shares subject to the Options theretofore granted or the Exercise Price per Share.
(c) Subdivision or Consolidation of Shares. The terms of the Options shall be subject to adjustment by the Committee from time to time, in accordance with the following provisions:
(i) | If at any time, or from time to time, the Company shall subdivide as a whole (by reclassification, by a stock split, by the issuance of a distribution on stock payable in stock, or otherwise) the number of shares of stock then outstanding into a greater number of shares of stock or in the event the Company distributes an extraordinary cash dividend, then, as appropriate (A) the maximum number of Shares available for delivery with respect to the Options shall be increased proportionately, (B) the number of Shares that may be acquired under any then outstanding Options shall be increased proportionately, and (C) the Exercise Price for each Share subject to then outstanding Options shall be reduced proportionately, without changing the aggregate Exercise Price as to which outstanding Options remain exercisable; provided, however, that the adjustment to the number of Shares and the Exercise Price with respect to an outstanding Option may be made in such other manner as the Committee may determine that is permitted pursuant to applicable tax and other laws, rules and regulations. |
(ii) | If at any time, or from time to time, the Company shall consolidate as a whole (by reclassification, by reverse stock split, or otherwise) the number of Shares then outstanding into a lesser number of Shares, then, as appropriate (A) the maximum number of Shares available for delivery with respect to the Options shall be decreased proportionately, (B) the number of Shares that may be acquired under any then outstanding Options shall be decreased proportionately, and (C) the Exercise Price for each Share subject to then outstanding Options shall be increased proportionately, without changing the aggregate Exercise Price as to which outstanding Options remain exercisable. |
(d) Recapitalization. Subject to the vesting provisions of Section 2(b), in the event of any change in the capital structure or business of the Company or other corporate transaction or event that would be considered an equity restructuring within the meaning of ASC Topic 718 and, in each case, that would result in an additional compensation expense to the Company pursuant to the provisions of ASC Topic 718, if adjustments to the Options with respect to such event were discretionary or otherwise not required (each such an event, an Adjustment Event), then the Committee shall equitably adjust (i) the aggregate number or kind of Shares that thereafter may be delivered upon exercise of the Options, (ii) the number or kind of Shares subject to the Options, and (iii) the terms and conditions of the Options, including the Exercise Price of the Options to equitably reflect such Adjustment Event (Equitable Adjustments). In the event of any change in the capital structure or business of the Company or other corporate transaction or event that would not be considered an Adjustment Event, and is not otherwise addressed in this
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Section 15, and subject to the vesting provisions of Section 2(b), the Committee shall have complete discretion to make Equitable Adjustments (if any) in such manner as it deems appropriate with respect to such other event.
* * *
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APPENDIX A TO
NUVERRA ENVIRONMENTAL SOLUTIONS, INC.
NOTICE OF GRANT OF STOCK OPTIONS AND STOCK OPTION AWARD AGREEMENT
NOTICE OF EXERCISE
Notice is hereby given pursuant to Section 4 of the General Terms and Conditions of my Stock Option Award Agreement that I elect to purchase the number of Shares set forth below at the Exercise Price set forth in my Stock Option Award Agreement:
Stock Option Award Agreement dated: February 23, 2018
Number of Shares being purchased:
Total Exercise Price: $
This Notice of Exercise is accompanied by the following (check one):
☐ | certified check, money order, official bank check or personal check made payable to the order of the Company in an amount equal to the Exercise Price; |
☐ | Shares of the Company already in my possession with a Fair Market Value of ;* |
☐ | I direct the Company to withhold from the Shares to be issued upon exercise of the Option (or portion thereof) being exercised a number of Shares having a Fair Market Value equal to the aggregate Exercise Price to be paid (a cashless exercise); |
OR
☐ | A combination of the above; I have specified below how I will pay for the Exercise Price and the specific amount for each payment option: |
$ | Payment made in certified check, money order, official bank check or personal check | |||
$ | Other Company stock in my possession* | |||
$ | Cashless exercise | |||
$ | Total Exercise Price |
I agree to provide to the Company such additional documents or information as may be required by the Company.
OPTION HOLDER
By: |
| |
Print Name: Mark D. Johnsrud |
* | If I elect to exercise by exchanging shares I already own, I will constructively return shares that I already own to purchase the new option shares. If my shares are in certificate form, I must attach a separate statement indicating the certificate number of the shares I am treating as having exchanged. If the shares are held in street name by a registered broker, I must provide the Company with a notarized statement attesting to the number of shares owned that will be treated as having been exchanged. I will keep the shares that I already own and treat them as if they are shares acquired by the option exercise. In addition, I will receive additional shares equal to the difference between the shares I constructively exchanged and the total new option shares that I acquired. |
Exhibit 10.7
NUVERRA ENVIRONMENTAL SOLUTIONS, INC.
2018 RESTRICTED STOCK PLAN FOR DIRECTORS
THIS NUVERRA ENVIRONMENTAL SOLUTIONS, INC. 2018 RESTRICTED STOCK PLAN FOR DIRECTORS (the Plan) is made effective this 22nd day of February, 2018, to govern the grant of shares of restricted stock to Directors of the Company.
ARTICLE I
Definitions
As used herein, the following terms have the meanings hereinafter set forth unless the context clearly indicates to the contrary:
(a) Award means a grant of Restricted Stock under the Plan, subject to the terms and conditions of the Plan and the applicable Award Agreement.
(b) Award Agreement means a Restricted Stock Award Agreement between the Company and a Director evidencing the terms and conditions of an Award of Restricted Stock.
(c) Board or Board of Directors shall mean the board of directors of the Company.
(d) Change in Control means, except as otherwise provided in an Award Agreement, the occurrence of any of the following events after the Effective Date:
(i) | any Person or any group of Persons acting together which would constitute a group for purposes of Section 13(d) of the Exchange Act (excluding a corporation or other entity owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) is or becomes the beneficial owner, as defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Companys then outstanding voting securities; or |
(ii) | there is consummated a reorganization, recapitalization, merger or consolidation, in a single transaction or series of related transactions, involving the Company, unless (i) immediately after the consummation of such transaction, the voting securities of the Company immediately prior to such transaction continue to represent or are converted into more than 50% of the combined voting power of the then-outstanding voting securities of the Person resulting from such transaction, and (ii) no Person, as a result of such transaction or series of related transactions, is or becomes the beneficial owner, as defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors (or comparable governing body) of the successor entity, except to the extent that such ownership existed prior to any such transaction; or |
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(iii) | the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company; or |
(iv) | there is consummated an agreement or series of related agreements for the sale or other disposition, directly or indirectly, by the Company of all or substantially all of the Companys assets, other than such sale or other disposition by the Company of all or substantially all of the Companys assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale. |
Notwithstanding the foregoing, except with respect to clause (ii) above, a Change in Control shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the shares of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in, and own substantially all of the shares of, an entity which owns, either directly or through a subsidiary, all or substantially all of the assets of the Company immediately following such transaction or series of transactions.
(e) Code means the Internal Revenue Code of 1986, as amended from time to time, including the guidance and regulations promulgated thereunder and successor provisions, guidance and regulations thereto.
(f) Company means Nuverra Environmental Solutions, Inc., a Delaware corporation.
(g) Compensation Committee shall mean such Board committee as may be designated by the Board to administer the Plan.
(h) Director shall mean any non-employee who is serving as a member of the Board of Directors.
(i) Exchange Act means the Securities Exchange Act of 1934, as amended.
(j) Person means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity or other entity.
(k) Restricted Stock means Stock issued pursuant to the Plan.
(l) Restricted Period means the time period(s) over which an Award vests as set forth in Section 5.3 of the Plan.
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(m) Plan shall mean this Nuverra Environmental Solutions, Inc. 2018 Restricted Stock Plan for Directors.
(n) Service shall mean the tenure of an individual as a Director.
(o) Stock shall mean the Companys common stock, par value $0.01 per share, and such other securities as may be substituted (or re-substituted) therefor pursuant to Section 4.3.
ARTICLE II
The Plan
2.1 Purpose. The purpose of the Plan is to advance the interests of the Company and its shareholders by affording to the Directors an opportunity to increase their proprietary interest in the Company and recognize their efforts in connection with the organization of the Company by the grant of shares of Restricted Stock to such Directors under the terms set forth herein.
2.2 Effective Date. The Plan shall become effective on the approval of the Plan by the Board of Directors.
2.3 Participants. Only Directors shall be eligible to receive Awards under the Plan.
ARTICLE III
Plan Administration
3.1 Compensation Committee. This Plan shall be administered by the Compensation Committee.
3.2 Power of the Compensation Committee. The Compensation Committee shall have full authority and discretion: (a) to determine, consistent with the provisions of this Plan, which of the Directors will be granted Awards, the times at which Awards shall be granted, and the number of shares of Restricted Stock covered by each Award; (b) to construe and interpret the Plan; (c) to determine the terms and provisions of each respective Award Agreement, which need not be identical; and (d) to make all other determinations and take all other actions deemed necessary or advisable for the proper administration of the Plan. All such actions and determinations shall be conclusively binding upon all persons for all purposes.
ARTICLE IV
Shares of Stock Subject to Plan
4.1 Limitations. Subject to adjustment pursuant to the provisions of Section 4.3 hereof, the number of shares of Stock which may be issued hereunder pursuant to Award Agreements shall not exceed an aggregate of one hundred thousand (100,000) shares. Shares of Restricted Stock granted shall be issuable only from authorized and unissued shares or treasury shares of Stock.
4.2 Restricted Stock Granted Under Plan. Shares of Restricted Stock granted hereunder shall not again be available for the grant of Awards hereunder. If Awards granted hereunder shall forfeit in whole or in part, then the Compensation Committee shall have the discretion to grant new Awards hereunder covering the number of shares of forfeited Stock to which such forfeited Restricted Stock related.
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4.3 Stock Adjustments; Mergers and Combinations. Notwithstanding any other provision in this Plan, if the outstanding shares of Stock are increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company or of any other corporation by reason of any merger, consolidation, liquidation, recapitalization, reclassification, stock split up, combination of shares, or stock dividend, the total number of shares set forth in Section 4.1 of the Plan shall be proportionately and appropriately adjusted by the Compensation Committee.
4.4 Acceleration of Vesting. Subject to Section 4.3, upon a Change in Control, Awards, to the extent not previously vested, shall vest with the restrictions lapsing notwithstanding the provisions of Section 5.3 hereof.
ARTICLE V
Restricted Stock
5.1 Awards and Award Agreements. Each Award granted hereunder shall be evidenced by minutes of a meeting of the Compensation Committee authorizing the same and by a written Award Agreement dated as of the date of grant and executed by the Company and the Director, which Award Agreement shall set forth such terms and conditions as may be determined by the Compensation Committee to be consistent with the Plan. Each Award shall have a Restricted Period of one (1) or more years as determined by the Committee. After the Committee determines that it will grant an Award to a Director, it will deliver an Award Agreement to the Director containing the terms under which the Restricted Stock may become vested and the number of shares of Restricted Stock that the Director shall be entitled to receive upon vesting of the Award. The Award shall be accepted by the Director executing and delivering the award Agreement in the manner specified by the Committee.
5.2 Purchase Price. Restricted Stock shall be offered under the Plan for such consideration in cash or services as is determined by the Committee and set forth in the applicable Award Agreement.
5.3 Restricted Period. At the time an Award is made, the Committee shall establish period(s) of time during which the shares of Restricted Stock granted shall be restricted and subject to forfeiture (the Restricted Period). The duration of the Restricted Period and the limitations on transferability will be set forth in the Award Agreement. Each Award may have a different Restricted Period as determined by the Committee in its discretion.
5.4 Risk of Forfeiture. In the event a Director shall cease to be a Director for any reason, then except as otherwise set forth in this Section 5.4 or in Section 5.9, the Director shall, for no consideration, forfeit to the Company all shares of Restricted Stock granted to the Director pursuant to an Award Agreement that have not previously vested. Upon the unanimous approval of the Committee (except that if the Director whose Restricted Stock is at issue is a member of the Committee, then that Director will abstain from the decision), the Committee may decide to accelerate the vesting of all or any portion of the shares of Restricted Stock that had not vested prior to the date the Directors Service terminates.
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5.5 Non-transferability of Awards. No Restricted Stock awarded under the Plan shall be transferred, sold, exchanged, pledged or otherwise disposed of by a Director during the Restricted Period, other than (i) by the Directors last will and testament, (ii) by the applicable laws of descent and distribution, or (iii) as otherwise determined by the Committee. The provisions of the Plan and each applicable Award Agreement shall be binding upon the Directors executors, administrators, personal representatives, and heirs.
5.6 Stock Certificate Representing Restricted Stock and Book Entry. At the time of grant of an Award, the Company may issue stock certificates or cause such shares to be issued in the name of the Director on the books and records of the Company that evidence the Restricted Stock pending the lapse of applicable restrictions; and if a stock certificate is issued, such certificate shall bear a legend making reference to such restrictions substantially in the following form (or such other form as the Committee shall specify):
The transferability of this certificate and the shares of stock represented by this certificate are subject to the terms and conditions (including forfeiture) of the Nuverra Environmental Solutions, Inc. 2018 Restricted Stock Plan For Directors and an Award Agreement entered into by the registered owner and Nuverra Environmental Solutions, Inc. Copies of such Plan and Award Agreement are on file in the offices of Nuverra Environmental Solutions, Inc.
5.7 Escrow of Restricted Stock. To facilitate enforcement of the transfer restrictions prior to vesting, such shares of Restricted Stock granted to a Director shall be held in custody by the Company as escrow agent until the restrictions thereon have lapsed. Each Director shall execute and deliver to the Company a stock power endorsed in blank for the shares of Restricted Stock covered by an Award.
5.8 Shares Upon Vesting. Upon the expiration of the Restricted Period and the satisfaction of any other conditions specified in an applicable Award Agreement, the restrictions applicable to an Award of Restricted Stock shall lapse and the number of shares of Stock shall be delivered by the Company as soon as administratively feasible, free and clear of such restrictions and legends, except any that may be imposed by law. A new stock certificate or record on the books and records of the Company for the balance of any shares of Restricted Stock shall be issued with applicable restrictive legends and held in escrow by the Company pending lapse of such restrictions.
5.9 Effect of Death, Disability, Retirement or Other Termination of Service.
(a) If a Directors Service shall be terminated by reason of retirement after age seventy (70) or the disability (as defined in Section 5.9(b) hereof) or death of the Director, then all outstanding Awards granted to such Director shall become one hundred percent (100%) vested on the date of such termination of Service.
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(b) For purposes of this Section 5.9, the term disability shall have the meaning set forth in Code Section 22(e)(3).
5.10 Investment Intent. Upon or prior to a Directors execution and delivery of an applicable Award Agreement, the Director shall furnish to the Company in writing such information or assurances as, in the Companys opinion, may be necessary to enable it to comply fully with the Securities Act of 1933, as amended, and the rules and regulations thereunder and any other applicable statutes, rules, and regulations. Without limiting the foregoing, if a registration statement is not in effect under the Securities Act of 1933, as amended, with respect to the shares of Restricted Stock to be issued as a result of an Award, the Company shall have the right to require, as a condition to the grant of such Award, that the Director represent to the Company in writing that the shares of Restricted Stock to be received upon grant of such Award and the shares of Stock upon vesting of the Award will be acquired by the Director for investment and not with a view to distribution and that the Director agree, in writing, that such shares will not be disposed of except pursuant to an effective registration statement, unless the Company shall have received an opinion of counsel reasonably acceptable to it to the effect that such disposition is exempt from the registration requirements of the Securities Act of 1933, as amended. The Company shall have the right to endorse on certificates representing shares of Restricted Stock and Stock such legends referring to the foregoing representations and restrictions or any other applicable restrictions on resale or disposition as the Company, in its discretion, shall deem appropriate.
ARTICLE VI
Termination, Amendment, and Modification of Plan
The Board may at any time terminate, and may at any time and from time to time and in any respect amend or modify, the Plan; provided, however, that no such action of the Board without approval of the shareholders of the Company may increase the total number of shares of Stock subject to the Plan except as contemplated in Section 4.3 hereof, and provided further that no termination, amendment, or modification of the Plan shall without the written consent of the Director holding an Award adversely affect the rights of the Director with respect to such Award.
ARTICLE VII
Miscellaneous
7.1 Service. Nothing in the Plan or in any Award granted hereunder or in any Award Agreement relating thereto shall confer upon any Director the right to continue Service.
7.2 Other Compensation Plans. The adoption of the Plan shall not affect any other compensation plans in effect for the Company, nor shall the Plan preclude the Company from establishing any other forms of incentive or other compensation for Directors.
7.3 Plan Binding on Successors. The Plan shall be binding upon the successors and assigns of the Company.
7.4 Singular; Plural; Gender. Whenever used herein, nouns in the singular shall include the plural, and the masculine pronoun shall include the feminine gender.
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7.5 Applicable Law. This Plan shall be governed by and construed in accordance with the laws of the State of Delaware.
7.6 Headings, etc., No Part of Plan. Headings of articles and sections hereof are inserted for convenience and reference; they constitute no part of the Plan.
7.7 Severability. If any provision or provisions of this Plan shall be held to be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
7.8 Code Section 83(b) Elections; Tax Withholdings. Section 83(b) of the Code permits a recipient of Restricted Stock to elect, within thirty (30) days following the date of grant of the Award, to elect to immediately recognize ordinary income in an amount equal to the fair market value of the Stock on the date of the grant (an 83(b) Election). A Director shall only make an 83(b) Election in accordance with requirements of the Committee relating to 83(b) Elections. The Company is authorized to withhold from any cash or Stock remuneration payable to a Director any taxes required to be withhold by the Company.
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Exhibit 10.8
RESTRICTED STOCK GRANT AGREEMENT
PURSUANT TO THE NUVERRA ENVIRONMENTAL SOLUTIONS, INC.
2018 RESTRICTED STOCK PLAN FOR DIRECTORS
RESTRICTED STOCK GRANT AGREEMENT (the Agreement), dated as of , (the Date of Grant) between Nuverra Environmental Solutions, Inc., a Delaware corporation (the Company), and (the Grantee).
RECITALS:
WHEREAS, the Company has adopted the Nuverra Environmental Solutions, Inc. 2018 Restricted Stock Plan for Directors (the Plan). Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan; and
WHEREAS, the Company has determined that it would be in the best interests of the Company and its stockholders to issue and grant to the Grantee, a Director, shares of Restricted Stock pursuant to the Plan, and the Grantee desires to accept, shares of Restricted Stock, upon the terms and subject to the conditions hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties agree as follows:
1. Grant of Restricted Stock. Subject to the terms and conditions of the Plan and this Agreement, the Committee hereby determines and the Company hereby grants to the Grantee shares of Restricted Stock. Except as otherwise provided herein including, without limitation, the provisions of Paragraph 3 hereof, the Grantee shall have with respect to the Restricted Stock all of the rights of a holder of Stock, including the right to receive dividends, if paid, and the right to vote the shares of Restricted Stock, provided, however, that, prior to the record date for any dividend, the Committee shall determine, in its sole discretion, whether (i) the Grantee shall immediately receive the dividend on the Restricted Stock on the payment date, notwithstanding the vesting date of the underlying Restricted Stock as set forth in Paragraph 2 below or (ii) the amount of the dividend otherwise payable on the Restricted Stock shall be held in escrow from and after the dividend payment date until the Restricted Stock vests, at which time the amount of the dividend shall be paid to the Grantee. The Company shall cause the Restricted Stock to be issued in the name of the Grantee on the books and records of the Company promptly following execution of this Agreement by the Grantee. The Grantee acknowledges that the Restricted Stock is uncertificated and shall be credited to an escrow account until the lapse of the restriction period. Upon the request of the Company, the Grantee agrees to execute and deliver to the Company a stock power in a form satisfactory to the Company, duly endorsed in blank, relating to the Restricted Stock.
2. Vesting.
A. Subject to the terms and conditions set forth herein and in the Plan the Restricted Stock shall vest as to 100% of the Restricted Stock on the first anniversary of the Date of Grant.
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B. Notwithstanding the foregoing, the Restricted Stock shall vest immediately, without any action on the part of the Company (or its successor as applicable) or the Grantee if, prior to a Forfeiture (as defined below) by the Grantee, any of the following events occur:
(i) | the death of the Grantee; |
(ii) | the disability of the Grantee; or |
(iii) | the occurrence of a Change in Control. |
3. Forfeiture. Except as set forth in Paragraph 2.B. hereof, upon termination of the Grantees Service, any unvested shares of this Award of Restricted Stock shall not vest and all such unvested shares of Restricted Stock shall immediately thereupon be forfeited by the Grantee to the Company without any consideration therefor (a Forfeiture).
4. Representations and Warranties of Grantee. The Grantee hereby represents and warrants to the Company as follows:
A. The Grantee has the legal right and capacity to enter into this Agreement and fully understands the terms and conditions of this Agreement.
B. The Grantee is acquiring the Restricted Stock for investment purposes only and not with a view to, or in connection with, the public distribution thereof in violation of the United States Securities Act of 1933, as amended (the Securities Act).
C. The Grantee understands and agrees that none of the shares of the Restricted Stock may be offered, sold, assigned, transferred, pledged, hypothecated or otherwise disposed of except in compliance with this Agreement and the Securities Act pursuant to an effective registration statement or applicable exemption from the registration requirements of the Securities Act and applicable state securities or blue sky laws, and then only in accordance with the Companys insider trading policy (the Insider Trading Policy). The Grantee further understands that the Company has no obligation to cause or to refrain from causing the resale of any of the shares of the Restricted Stock or any other shares of its capital stock to be registered under the Securities Act or to comply with any exemption under the Securities Act which would permit the shares of the Restricted Stock to be sold or otherwise transferred by the Grantee. The Grantee further understands that, without approval in writing pursuant to the Insider Trading Policy, no trade may be executed in any interest or position relating to the future price of Company securities, such as a put option, call option, or short sale (which prohibition includes, among other things, establishing any collar or other mechanism for the purpose of establishing a price).
5. Transferability. The Grantee shall not transfer or assign the Restricted Stock except as permitted in accordance with Section 5.5 of the Plan.
6. Notices. Any notice required or permitted hereunder shall be deemed given only when delivered personally or when deposited in a United States Post Office as certified mail, postage prepaid, addressed, as appropriate, if to the Grantee, at such address as the Company shall maintain for the Grantee in its personnel records or such other address as he may designate in writing to the Company, and if to the Company, at 14624 N. Scottsdale Road, Suite #300, Scottsdale, Arizona 85254, Attention: General Counsel or such other address as the Company may designate in writing to the Grantee.
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7. Entire Agreement. This Agreement and the Plan contain the entire understanding of the parties hereto with respect to the subject matter hereof and supersede all prior agreements, discussions and understandings (whether oral or written and whether express or implied) with respect to such subject matter. If there is any inconsistency between the terms of the Plan and the terms of this Agreement, the Plans terms shall supersede and replace the conflicting term of this Agreement.
8. Failure to Enforce Not a Waiver. The failure of the Company to enforce at any time any provision of this Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof.
9. Tenure. The Grantees right, if any, to continue Service shall not be enlarged or otherwise affected by the Award hereunder or his or her designation as a participant under the Plan.
10. Benefit and Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the Company, its successors and assigns, and the Grantee, his or her executors, administrators, personal representatives and heirs. In the event that any part of this Agreement shall be held to be invalid or unenforceable, the remaining parts hereof shall nevertheless continue to be valid and enforceable as though the invalid portions were not a part hereof.
11. Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without giving effect to principles and provisions thereof relating to conflict or choice of laws.
12. Amendment and Termination. This Agreement may not be amended or terminated unless such amendment or termination is in writing and duly executed by each of the parties hereto.
13. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the Company has executed this Agreement on the date and year first above written.
Nuverra Environmental Solutions, Inc. | ||
By: |
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Title: |
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The undersigned hereby accepts, and agrees to, all terms and provisions of this Agreement as of the date and year first above written.
Signature: |
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Printed Name: |
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