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): July 11, 2018

 

ARCHROCK, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

001-33666

 

74-3204509

(State or other jurisdiction

 

(Commission

 

(I.R.S. Employer

of incorporation)

 

File Number)

 

Identification No.)

 

 

 

 

 

9807 Katy Freeway, Suite 100

 

 

 

 

Houston, Texas

 

 

 

77024

(Address of principal executive offices)

 

 

 

(Zip Code)

 

Registrant’s telephone number, including area code: (281) 836-8000

 

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 obligation of the registrant under any of the following provisions:

 

o             Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o             Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o             Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o             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 o

 

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. o

 

 

 



 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

On July 11, 2018, Archrock, Inc. (the “Company”) announced the appointment of Douglas S. Aron as the Company’s Senior Vice President and Chief Financial Officer, effective August 13, 2018.

 

Mr. Aron, 44, served as Executive Vice President and Chief Financial Officer of HollyFrontier Corporation from July 2011 to March 2017.  Prior to Frontier’s merger with Holly in July 2011, Mr. Aron served Frontier Oil Corporation as Executive Vice President and Chief Financial Officer, from January 2009, as Vice President of Corporate Finance, from May 2005 to December 2008 and as Director of Investor Relations, from March 2001 to May 2005.  Mr. Aron most recently served as Executive Vice President and Chief Financial Officer of Nine Energy Service, Inc. from April to September 2017.  He holds a Bachelor of Journalism from the University of Texas and an MBA from the Jesse H. Jones Graduate School of Business at Rice University.

 

In connection with his appointment, the Company provided Mr. Aron with an employment letter that provides for an annual base salary of $425,000.  He will participate in the Company’s annual (i) short-term incentive program with a target annual cash bonus of 75% of base salary and (ii) long-term incentive award program with an initial target value of $850,000.  In addition, Mr. Aron will receive a one-time $500,000 equity award consisting of restricted stock vesting ratably on an annual basis over three years, which is expected to be awarded as soon as administratively practicable when his employment commences on August 13, 2018.  Mr. Aron will be eligible to participate in the Company’s employee benefit plans and programs generally available to all employees.  Although Mr. Aron will not have an employment agreement with the Company, effective August 13, 2018, the Company will enter into the following agreements:

 

·                   An indemnification agreement which requires the Company to indemnify Mr. Aron to the fullest extent permitted under Delaware law against liability that may arise by reason of his service to the Company, and to advance expenses incurred as a result of any proceeding against him as to which he could be indemnified.

 

·                   A severance benefit agreement which provides that if Mr. Aron’s employment is terminated by the Company without cause he will be eligible to receive severance benefits, and which subjects Mr. Aron to customary restrictive covenants, including confidentiality, non-compete, non-solicitation and non-disparagement.

 

·                   A change of control agreement which provides for the payment of certain benefits only in the event of a qualifying termination of Mr. Aron’s employment within 18 months of a change of control.

 

The foregoing description of Mr. Aron ’s employment letter is qualified in its entirety by reference to the full text of the letter, which is attached to this Current Report on Form 8-K as Exhibit 10.1 and incorporated by reference.  The foregoing descriptions of the agreements to be entered into with Mr. Aron are qualified in their entirety by the forms of such agreements on file with the SEC, with respect to the indemnification agreement, Exhibit 10.7 to the Current Report on Form 8-K filed on November 5, 2015; with respect to the severance benefit agreement,  Exhibit 10.9 to the Current Report on Form 8-K filed on November 5, 2015, Exhibit 10.3 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 and Exhibit 10.73 to the Annual Report on Form 10-K for the year ended December 31, 2017; and with respect to the change of control agreement, Exhibit 10.2 to this Current Report on Form 8-K, each of which is incorporated herein by reference.

 

Mr. Aron does not have any family relationship with any member of the Company’s board of directors or any executive officer of the Company. There are no relationships or related transactions between Mr. Aron and the Company that would be required to be reported in this Current Report on Form 8-K.

 

Item 7.01      Regulation FD Disclosure.

 

A press release dated July 11, 2018, announcing the appointment of Mr. Aron as Senior Vice President and Chief Financial Officer of the Company is filed as Exhibit 99.1 to this Current Report on Form 8-K.

 

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The information contained in this Item 7.01 to this Current Report on Form 8-K and the exhibit attached hereto pertaining to this item shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information or such exhibits be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. The information set forth in the exhibits to this Current Report on Form 8-K relating to this Item 7.01 shall not be deemed an admission as to the materiality of any information in this report that is required to be disclosed solely to satisfy the requirements of Regulation FD.

 

Item 9.01      Financial Statements and Exhibits.

 

(d)    Exhibits.

 

The following exhibits are furnished as part of this report:

 

Exhibit
Number

 

Description

10.1

 

Employment letter

 

 

 

10.2

 

Form of Change of Control Agreement

 

 

 

99.1

 

Company press release dated July 11, 2018

 

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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

 

 

ARCHROCK, INC.

 

 

July 11, 2018

By:

/s/ Stephanie C. Hildebrandt

 

 

Stephanie C. Hildebrandt

 

 

Senior Vice President, General Counsel and Secretary

 

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Exhibit 10.1

 

 

July 11, 2018

 

Douglas S. Aron

602 Wellesley Drive

Houston, TX  77024

 

Re:                              Employment Terms

 

Dear Doug:

 

I am pleased to offer you the position of Senior Vice President and Chief Financial Officer of Archrock, Inc. (the “Company”) on the terms and conditions set forth below.

 

1.                                       POSITIONS, DUTIES AND RESPONSIBILITIES .  As of August 13, 2018 (the “ Effective Date ”), you will serve as Senior Vice President and Chief Financial Officer of the Company, and you will have such duties and responsibilities as are usual and customary for your position.  You will report directly to the Chief Executive Officer of the Company, and will work at the Company’s offices located in Houston, Texas, except for travel to other locations as may be reasonably necessary to fulfill your responsibilities.  At the Company’s request, you will serve the Company and/or its subsidiaries and affiliates in other offices, directorships and capacities in addition to the foregoing.  In the event that you serve in any one or more of such additional capacities, your compensation will not be increased beyond that specified in this letter.  You will be expected to devote your full business time and attention to the business and affairs of the Company and the performance of your duties hereunder.

 

2.                                       AT-WILL EMPLOYMENT .  You acknowledge and agree that your employment with the Company is “at-will” and not for any specified time, and may be terminated, with or without cause and with or without notice, at any time by you or the Company; provided , however , that you will be entitled to certain benefits and payments upon certain terminations of employment, as described in paragraphs 8 and 9 below.  The nature of your at-will employment relationship cannot be changed except in a writing signed by you and an authorized representative of the Company.

 

3.                                       BASE COMPENSATION .  During your employment with the Company, your base salary will be as set forth on Exhibit A attached hereto (the “ Base Salary ”), less payroll deductions and all required withholdings, payable in accordance with the Company’s normal payroll practices but no less often than bi-weekly.  Your Base Salary will be subject to annual review in the discretion of the board of directors of the Company (the “ Board ”) or a designated committee of the Board.

 

4.                                       SHORT-TERM INCENTIVE .  For each fiscal year of the Company ending during the term of your employment, you will be eligible to receive an annual short-term incentive payment (the “ Short-Term Incentive ”) upon the achievement of performance objectives to be determined

 



 

by the Company’s Chief Executive Officer and/or the Board or a designated committee of the Board, which will be targeted at a percentage of your Base Salary as set forth on Exhibit A attached hereto (the “ Target Short-Term Incentive ”), subject to annual review in the discretion of the Board or a designated committee of the Board.  Any such Short-Term Incentive will be paid on the date on which short-term incentives are paid generally to the Company’s executive officers, but in no event later than the fifteenth (15 th ) day of the third (3 rd ) month following the end of the fiscal year in which the Short-Term Incentive is earned and, unless otherwise agreed to by the Board or a designated committee of the Board, you must be employed by the Company on the payment date in order to earn such bonus.

 

5.                                       SIGN-ON EQUITY GRANT .  As a key employee, the Company will grant you a long-term equity incentive award valued at the amount set forth on Exhibit A attached hereto (the “ Sign-On Grant ”), subject to the terms and conditions herein. The Sign-On Grant will be comprised of shares of the Company’s restricted stock and will be subject in all respects to the terms and conditions set forth in the Company’s 2013 Stock Incentive Plan, as amended from time to time, and an award notice to be entered into between you and the Company evidencing the grant of the Sign-On Grant. The Sign-On Grant is subject to the approval of the Compensation Committee of the Board and, if and when approved, will be processed as soon as practical following the Effective Date.

 

6.                                       ANNUAL EQUITY AWARDS .  For each fiscal year of the Company during the term of your employment, beginning in 2019, the Company anticipates that you will be eligible to receive an annual equity award valued at the amount set forth on Exhibit A attached hereto (the “ Annual Award ”).  The amount of your Annual Award will be subject to annual review in the discretion of the Board or a designated committee of the Board.  It is anticipated that your Annual Award will be granted in in the first quarter of each year, subject to your continued employment through the applicable grant date, in accordance with the Company’s general plans, policies and practices with respect to grants of annual equity awards to its executive officers generally.  The Board or a designated committee of the Board, in its sole discretion, will determine the type or types of equity that comprise each Annual Award (which may include, without limitation, restricted stock, stock options, performance shares and/or restricted stock units of the Company) as well as the grant dates and exercise prices, in each case, in accordance with the terms and conditions of the applicable equity plan(s) and award notice(s).

 

7.                                       BENEFITS; PAID TIME OFF .  During your employment with the Company, you will be eligible to participate in all savings, retirement, incentive, health, welfare and perquisite plans (including, but not limited to, medical, dental, disability insurance, life insurance, employee stock purchase, 401(k) and deferred compensation plans and programs) maintained or sponsored by the Company for its executive officers, as in effect from time to time and subject to the terms and conditions thereof.  In addition, you will be entitled to paid time off in accordance with the plans, policies, programs and practices of the Company generally applicable to its executive officers, as in effect from time to time. The paid time off annual accrual amount as in effect on the Effective Date is set forth on Exhibit A.  Notwithstanding the foregoing, nothing contained in this letter will require or obligate the Company to establish, maintain or continue any particular employee benefit plan, program, policy or benefit.

 

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8.                                       NON-CHANGE OF CONTROL SEVERANCE .  Effective as of the Effective Date, you and the Company will execute a severance benefit agreement substantially in the form attached hereto as Exhibit B (the “ Severance Agreement ”).  Subject to and upon the terms and conditions of the Severance Agreement, subject to your timely execution and non-revocation of a release of claims in favor of the Company and its affiliates, you will be entitled to receive certain severance benefits and payments upon certain terminations of your employment with the Company and its affiliates, as described on Exhibit A attached hereto.

 

9.                                       CHANGE OF CONTROL SEVERANCE .  In addition, effective as of the Effective Date, you and the Company will execute a change of control agreement substantially in the form attached hereto as Exhibit C (the “ Change of Control Agreement ”).  Subject to and upon the terms and conditions of the Change of Control Agreement, subject to your timely execution and non-revocation of a release of claims in favor of the Company and its affiliates, you will be entitled to receive certain severance payments and benefits upon certain terminations of your employment with the Company and its affiliates in connection with a Change of Control, as described on Exhibit A attached hereto.

 

10.                                RESTRICTIVE COVENANTS .  You acknowledge and agree that, during your employment with the Company, you will be subject to the Company’s standard policies, if any, relating to non-disparagement, non-solicitation, non-competition and confidentiality, as set forth in the Severance Agreement, the Change of Control Agreement and any other Company policies or plans generally applicable to its executive officers.

 

11.                                STOCK OWNERSHIP REQUIREMENTS .  You acknowledge and agree that, following the Effective Date and continuing through the date on which your employment with the Company terminates for any reason, you will be required to comply with the Company’s stock ownership requirements as in effect from time to time.

 

12.                                CLAWBACK AND RECOUPMENT .  All compensation and benefits payable to you by the Company and/or its affiliates will be subject to any clawback or recoupment requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act and any clawback or recoupment policies that the Company and/or its affiliates may adopt from time to time.

 

13.                                WITHHOLDING .  The Company may withhold from any amounts payable under this letter such federal, state, local or foreign taxes as are required to be withheld pursuant to any applicable law or regulation.

 

14.                                GOVERNING LAW .  This letter shall be governed by, and construed in accordance with, the laws of the State of Texas, without regard to principles of conflict of laws thereof.

 

15.                                ENTIRE AGREEMENT .  As of the Effective Date, this letter, together with the Severance Agreement and the Change of Control Agreement, constitutes the final, complete and exclusive agreement between you and the Company with respect to the subject matter of this letter, and supersedes and replaces any and all other agreements, offers or promises, whether oral or written, by the Company, its affiliates or any predecessor employer (or any representative thereof).   You agree that any such prior agreement, offer or promise between you and the Company, its

 

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affiliates or any predecessor employer (or any representative thereof), is hereby terminated and will be of no further force or effect, and you acknowledge and agree that upon your execution of this letter, you will have no right or interest in or with respect to any such agreement, offer or promise.

 

16.                                CONDITIONS TO EMPLOYMENT .  For purposes of federal immigration law, you will be required to provide to the Company documentary evidence of your identity and eligibility for employment in the United States upon your commencement of employment (and this offer of employment shall be void if you fail to timely provide such evidence as requested by the Company).  In addition, this offer of employment is contingent upon your satisfactory completion of the Company’s standard conditions to employment, including (without limitation) satisfactory completion of a background check, educational verification and drug test.  This offer of employment, including the compensation terms attached hereto as Exhibit A , is contingent upon the approval of this offer of employment (including the compensation terms attached hereto as Exhibit A ) by the Board or the Compensation Committee thereof.

 

17.                                SUCCESSORS; ASSIGNS .  This letter is personal to you and, without the prior written consent of the Company, shall not be assignable by you otherwise than by will or the laws of descent and distribution.

 

Please confirm your acceptance of, and agreement to, the foregoing terms and conditions by signing and dating this letter in the space provided below and returning it to the Company.  Please retain one fully-executed original for your files.

 

Sincerely,

 

 

 

ARCHROCK, INC.

 

 

 

 

 

By:

/s/ D. Bradley Childers

 

 

D. Bradley Childers

 

 

Chief Executive Officer

 

 

 

 

 

Agreed and Accepted,

 

this 11th day of July, 2018:

 

 

 

By:

/s/ Douglas S. Aron

 

 

Douglas S. Aron

 

 

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EXHIBIT A

COMPENSATION TERMS

 

Base Salary

$425,000 per year

 

Target Short-Term Incentive

75% of Base Salary

 

Sign-On Grant Value

$500,000 in restricted stock, subject to continued employment and ratable vesting in August of 2019, 2020 and 2021

 

Annual Equity Award Value

$850,000 in award type(s) determined by the Compensation Committee, time-vested awards currently subject to continued employment and ratable vesting in August 2020, 2021 and 2022 and performance-based awards subject to multi-year ratable vesting or cliff vesting in August 2022 (or such other vesting schedule as may be determined by the Compensation Committee).

 

Paid Time Off Annual Accrual

208 hours per year

 

Non-Change of Control Severance*

Upon a Qualifying Termination of Employment (as defined in the Severance Agreement), subject to your timely execution and non-revocation of a release of claims in favor of the Company and its affiliates, you will be eligible to receive:

 

·              a lump-sum severance payment equal to (i) your Base Salary plus (ii) your Target Short-Term Incentive plus (iii) your Target Short-Term Incentive prorated through the date of termination plus (iv) any earned but unpaid Short-Term Incentive for the fiscal year ending prior to the date of termination;

 

·              full accelerated vesting of your then-outstanding unvested equity awards that would have otherwise vested on the next vesting date immediately following your termination; and

 

·              a lump-sum payment equal to 12 months of the premiums that would be payable by the Company under the Company’s group health plan, had your employment not terminated, together with the monthly administrative fee that would be assessed under COBRA.

 

Change of Control Severance*

Upon a Qualifying Termination of Employment (as defined in the Change of Control Agreement), subject to your timely execution and non-revocation of a release of claims in favor of the Company and its affiliates, you will be eligible to receive:

 

·              a lump-sum severance payment equal to (i) two times your Base Salary plus (ii) two times your Target Short-Term Incentive plus (iii) your Target Short-Term Incentive prorated through the date of termination plus (iv) any earned but unpaid Short-Term Incentive for the fiscal year ending prior to the date of termination;

 



 

 

·              an amount equal to two times the total employer matching contributions that would have been credited to your account under the Company’s 401(k) plan and any deferred compensation plan had you made elective deferrals or contributions during the twelve (12) months preceding your termination;

 

·              any amounts previously deferred by you or earned but not previously paid under the Company’s incentive and nonqualified deferred compensation programs as of your termination date;

 

·              full accelerated vesting of your then-outstanding unvested equity awards; and

 

·              a lump-sum payment equal to 24 months of the premiums that would be payable by the Company under the Company’s group health plan, had your employment not terminated, together with the monthly administrative fee that would be assessed under COBRA.

 


* The terms of each agreement summarized herein are qualified in their entirety by the full text of each such agreement.

 

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EXHIBIT B

 

SEVERANCE BENEFIT AGREEMENT

 



 

EXHIBIT C

 

CHANGE OF CONTROL AGREEMENT

 

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Exhibit 10.2

 

CHANGE OF CONTROL AGREEMENT

 

THIS CHANGE OF CONTROL AGREEMENT (the “ Agreement ”), is made and entered into effective as of [            ] (the “ Effective Date ”), by and between Archrock, Inc., a Delaware corporation (the “ Company ”), and [            ] (“ Executive ”).

 

WHEREAS , the Company and Executive desire to enter into an agreement regarding their respective rights and obligations in connection with a Change of Control during the Term; and

 

WHEREAS , (i) concurrently with the execution of this Agreement, the Company and Executive have entered into a Severance Benefit Agreement (the “ Severance Agreement ”), and (ii) if there is a Qualifying Termination of Employment under the Severance Agreement that does not constitute a Qualifying Termination of Employment for purposes of this Agreement, then the Severance Agreement shall apply in lieu of this Agreement.

 

THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Executive agree as follows:

 

1.                                       Term.   This Agreement shall begin on the Effective Date and shall continue until the second (2 nd ) anniversary of the Effective Date (the “ Initial Term ”); provided, however , that thereafter, the term of this Agreement shall automatically be extended for successive one (1) year periods (each, a “ Renewal Term ”) (the Initial Term, plus any Renewal Terms, plus, in the event of Executive’s Qualifying Termination of Employment (as defined below) for Good Reason, any additional time period necessitated by the Company’s right to cure as set forth in the definition of Good Reason, are collectively referred to as the “ Term ”), unless at least ninety (90) days prior to the expiration of the Initial Term or any Renewal Term, the Board shall give written notice to Executive that the Term of this Agreement shall cease to be so extended.  However, if a Change of Control shall occur during the Term, the Term shall automatically continue in effect for a period of eighteen (18) months following the Change of Control plus, in the event of Executive’s Qualifying Termination of Employment for Good Reason, any additional time period necessitated by the Company’s right to cure as set forth in the definition of Good Reason, and thereafter shall automatically terminate.  In addition, this Agreement shall automatically terminate upon Executive’s termination of employment.  Termination of this Agreement shall not alter or impair any rights of Executive arising under this Agreement on or prior to such termination.

 

2.                                       Termination of Employment.    Upon a termination of Executive’s employment with the Company during the Term for any reason, the Company shall pay to Executive, not later than the sixtieth (60 th ) day following the Date of Termination (or such earlier date as may be required by applicable law), an amount, in a lump sum payment, equal to the sum of: (A) Executive’s earned but unpaid Base Salary through the Date of Termination, (B) any portion of Executive’s vacation pay accrued, but not used, through the Date of Termination, and (C) any unreimbursed business expenses as of the Date of Termination.  In addition to the foregoing, if Executive incurs a Qualifying Termination of Employment during the Term, Executive shall be entitled to the benefits provided in Section 3 hereof.  If Executive’s employment terminates during the Term for any reason other than due to a Qualifying Termination of Employment, then Executive shall not be entitled to any benefits under Section 3 of this Agreement.

 

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3.                                       Benefits Upon a Qualifying Termination of Employment . If Executive incurs a Qualifying Termination of Employment during the Term, then subject to Sections 3(e) and 3(g) below, the Executive will be entitled to receive the following payments and benefits:

 

(a)                                  Lump Sum .  The Company shall pay to Executive, not later than the sixtieth (60 th ) day following the Date of Termination, an amount, in a lump sum payment, equal to the sum of:

 

(i)                                       An amount equal to two times Executive’s Base Salary plus two times Executive’s Target Short-Term Incentive; plus

 

(ii)                                    Executive’s Target Short-Term Incentive for the Termination Year (prorated to the Date of Termination); plus

 

(iii)                                 Any earned but unpaid Short-Term Incentive for the Company’s fiscal year ending prior to the Termination Year (and, if the prior year’s Short-Term Incentive has not yet been calculated as of the Date of Termination, such amount shall be payable when calculated, but in no event later than March 15 th  of the year following the Termination Year); plus

 

(iv)                                An amount equal to the total employer matching contributions that would have been credited to Executive’s account under the 401(k) Plan and any other deferred compensation plan of the Company (or any of its affiliated companies) had Executive made the required amount of elective deferrals or contributions to receive such maximum employer matching contributions under the 401(k) Plan and any other deferred compensation plan (and regardless of whether Executive actually made any such elective deferrals or contributions) during the twelve (12)-month period immediately preceding the month of Executive’s Date of Termination, multiplied by two; plus

 

(iv)                                Amounts previously deferred by Executive, if any, or earned but not paid, if any, under any Company incentive and nonqualified deferred compensation plans or programs as of the Date of Termination.

 

(b)                                  Continuing Medical Coverage.  The Company shall pay the Executive a lump-sum amount on the sixtieth (60th) day after the Separation Date equal to twenty-four (24) months of the portion of the monthly premiums that would be payable by the Company under the Company’s group health plan following the Separation Date had the Executive’s employment not terminated, based upon the Executive’s elections as in effect on the Separation Date, together with the monthly administrative fee that would be assessed under COBRA. Should the Executive elect to continue health insurance coverage through COBRA beyond the Separation Date (for as long as COBRA permits), the Executive will be solely responsible for enrolling in such coverage, the cost of that coverage (including the associated administrative fee), and for ensuring the full amount of the premium payments are timely made. The Executive acknowledges that the lump-sum payment representing the Company’s monthly portion of the premiums and administrative fees paid to the Executive will constitute taxable income to the Executive.

 

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(c)                                   Awards.  All stock options, restricted stock, restricted stock units, or other awards based in common stock of the Company and all cash-based incentive awards held by Executive and not previously vested shall become 100% vested as of the later of: (x) the Date of Termination and (y) the Change of Control to which such Qualifying Termination of Employment Relates; provided , that if Executive’s Date of Termination occurs prior to a Change of Control, such awards shall remain outstanding and eligible to vest upon a Change of Control occurring within six (6) months thereafter and shall automatically terminate upon the earlier of the six (6)-month anniversary of the Date of Termination (to the extent such awards do not become vested on or prior to such six (6)-month anniversary) or the applicable expiration date that would apply to such awards had Executive remained employed by the Company; and provided, further , that with respect to an award that is subject to Code Section 409A, such acceleration of vesting under this Section 3(c) shall not cause an impermissible acceleration of payment or change in form of payment of such award under Code Section 409A.  Notwithstanding the terms of any Company (or affiliate) plan or agreement between the Company (or affiliate) and Executive to the contrary, the accelerated vesting of all equity awards required pursuant to the terms of this Section 3(c) shall govern.

 

(d)                                  Interest If any payment due under the terms of this Agreement is not timely made by the Company, its successors or assigns, interest shall accrue on such payment at the highest maximum legal rate permissible under applicable law from the date such payment first became due through the date it is paid (with such interest paid in a single lump sum on the date on which the Company or its successor or assign, as applicable, makes the late payment).

 

(e)                                   Release Notwithstanding anything in this Agreement to the contrary, no payment shall be made or benefits provided pursuant to Sections 3(a), 3(b) or 3(c) of this Agreement unless Executive signs and returns to the Company within fifty (50) days following the date of a Qualifying Termination of Employment, and does not revoke within seven (7) days thereafter, a complete release and waiver in a form provided by the Company (the “ Release ”), in exchange for the severance payments described in Sections 3(a), 3(b) and 3(c) above, among other items, of all claims for liability and damages in any way related to Executive’s employment with the Company and its affiliates against the Company, its affiliates, their directors, officers, employees and agents, and their employee benefit plans and the fiduciaries and agents of such plans.

 

(f)                                    Severance Offset .  Except as otherwise expressly provided in a written agreement between Executive and the Company, any cash severance payments payable under Section 3(a) shall be offset or reduced by the amount of any cash severance amounts payable to Executive under any other individual agreement the Company or an affiliate may have entered into with Executive or any severance plan or program maintained by the Company or any affiliate for employees in general, but only to the extent such severance amounts are payable in the same form and in the same calendar year in which such cash severance payments under this Agreement are to be made.

 

(g)                                   Statutory Severance.    Notwithstanding anything herein to the contrary, if (i) Executive resides outside of the United States and is entitled to receive severance or

 

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similar benefits (“ Statutory Severance ”) under the laws of the Executive’s country of residence and (ii) the Executive incurs a Qualifying Termination of Employment during the Term and becomes entitled to the payments and benefits provided in Sections 3(a), 3(b) and 3(c) hereof, then such Executive will be entitled to receive either (i) the Statutory Severance or (ii) the payments and benefits described in Sections 3(a), 3(b) and 3(c), whichever is greater.

 

(h)                                  Code Section 409A Matters .

 

(i)                                       This Agreement is intended to comply with, and shall be interpreted consistent with the applicable requirements of, Code Section 409A and accompanying Department of Treasury regulations and other interpretive guidance promulgated thereunder (collectively, “ Code Section 409A ”) and any ambiguous provisions will be construed in a manner that is compliant with or exempt from the application of Code Section 409A.  Executive shall have no right to specify the calendar year during which any payment hereunder shall be made.  In the event the time period during which Executive is provided to consider and/or revoke the release and waiver under Section 3(e) spans two calendar years, the payment under Section 3(a) shall be made during the second such calendar year (or any later date specified under an applicable provision of the Agreement), even if the release and waiver is executed by Executive and becomes irrevocable during the first such calendar year.

 

(ii)                                    All reimbursements and in-kind benefits provided pursuant to this Agreement shall be made in accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv) such that any reimbursements or in-kind benefits will be deemed payable at a specified time or on a fixed schedule relative to a permissible payment event.  Specifically, (A) the amounts reimbursed and in-kind benefits under this Agreement, other than with respect to medical benefits provided under Section 3(b), during Executive’s taxable year may not affect the amounts reimbursed or in-kind benefits provided in any other taxable year, (B) the reimbursement of an eligible expense shall be made on or before the last day of Executive’s taxable year following the taxable year in which the expense was incurred, and (C) the right to reimbursement or an in-kind benefit is not subject to liquidation or exchange for another benefit.

 

(iii)                                 Notwithstanding any provision of this Agreement to the contrary, the Company and Executive agree that no benefit or benefits under this Agreement, including, without limitation, any severance payments or benefits payable under Section 3 hereof, shall be paid to Executive during the six (6)-month period following the Separation Date if paying such amounts at the time or times indicated in this Agreement would constitute a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code.  If the payment of any such amounts is delayed as a result of the previous sentence, then on the first (1st) business day next following the earlier of (i) the date that is six (6) months and one day following the date of Executive’s termination of employment, (ii) the date of Executive’s death or (iii) such earlier date as complies with the requirements of Section 409A, the Company

 

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shall pay Executive a lump-sum amount equal to the cumulative amount that would have otherwise been payable to Executive during such period.  In addition, in the event of a payment delayed under this Section 3(g)(iii), the Company agrees to pay to Executive, as of the date it makes the delayed payment, simple interest on such delayed amount at the applicable federal rate provided for in Code Section 7872(f)(2)(A), based on the number of days the payment was delayed.  If Executive disagrees with the Company’s determination that Code Section 409A requires such six (6)-month delay with respect to a payment or benefit, such payment or benefit can be made prior to such delayed payment date if Executive agrees in writing (in the form approved by the Company) that should the IRS subsequently assert that some or all of the payments or benefits made pursuant to this Agreement do not comply with the requirements of Code Section 409A, then (i) Executive agrees that Executive is solely responsible for all taxes, excise taxes, penalties and interest resulting from such determination, and that Executive will not seek contribution, reimbursement or any other recovery from the Company or any of its affiliates, officers, employees or directors for any taxes, excise taxes, interest or penalties paid or due or any costs Executive incurs in challenging such position of the IRS, and (ii) Executive will reimburse, and hold the Company, its affiliates, officers, employees or directors harmless for, any costs, including attorneys’ fees and costs of court, penalties or fees, that it may incur in connection with a later determination that the payments made pursuant to this Agreement are covered by Code Section 409A and were not properly reported as such.

 

4.                                       Limitation on Payments .

 

(a)                                  Notwithstanding anything in this Agreement to the contrary, if any payment or distribution received or to be received by Executive (including any payment or benefit received in connection with a termination of Executive’s employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement) (all such payments and benefits, including the payments and benefits under Section 3 of this Agreement, the “ Total Payments ”) would be subject (in whole or part) to the excise tax imposed by Code Section 4999 (the “ Excise Tax ”), then, after taking into account any reduction in the Total Payments provided by reason of Code Section 280G in such other plan, arrangement or agreement, Executive’s remaining Total Payments shall be reduced to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax, but only if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income taxes applicable to such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such reduced Total Payments) is greater than or equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income taxes on such Total Payments and the amount of Excise Tax to which Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).  The reduction undertaken pursuant to this Section 4 shall be accomplished first by reducing or eliminating any cash payments subject to Code Section 409A as deferred compensation (with payments to be made furthest in the future being reduced first), then by reducing or

 

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eliminating cash payments that are not subject to Code Section 409A, then by reducing payments attributable to equity-based compensation (or the accelerated vesting thereof) subject to Code Section 409A as deferred compensation (with payments to be made furthest in the future being reduced first), and finally by reducing payments attributable to equity-based compensation (or the accelerated vesting thereof) that is not subject to Code Section 409A.

 

(b)                                  For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion of the Total Payments, the receipt or retention of which Executive has waived at such time and in such manner so as not to constitute a “payment” within the meaning of Code Section 280G(b), will be taken into account; (ii) no portion of the Total Payments will be taken into account which, in the written opinion of an independent, nationally recognized accounting firm (the “ Independent Advisors ”) selected by the Company, does not constitute a “parachute payment” within the meaning of Code Section 280G(b)(2) (including by reason of Code Section 280G(b)(4)(A)) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Independent Advisors, constitutes reasonable compensation for services actually rendered, within the meaning of Code Section 280G(b)(4)(B), in excess of the “base amount”(as defined in Code Section 280G(b)(3)) allocable to such reasonable compensation; and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Independent Advisors in accordance with the principles of Code Sections 280G(d)(3) and (4).

 

5.                                       Restrictions and Obligations of Executive.

 

(a)                                  Consideration for Restrictions and Covenants .  The Company and Executive agree that the principal consideration for the Company’s agreement to make the payments provided in this Agreement to Executive is Executive’s compliance with the undertakings set forth in this Section 5.  Notwithstanding any other provision of this Agreement to the contrary, Executive agrees to comply with the provisions of this Section 5 only if Executive actually receives any such payments from the Company pursuant to this Agreement.

 

(b)                                  Confidentiality .  Executive acknowledges that the Company will provide Executive with Confidential Information and has previously provided Executive with Confidential Information.  In return for consideration provided under this Agreement, Executive agrees that Executive will not, while employed by the Company or any affiliate and thereafter for a period of two (2) years, disclose or make available to any other person or entity, or use for Executive’s own personal gain, any Confidential Information, except for such disclosures as required in the performance of Executive’s duties with the Company or as may otherwise be required by law or legal process (in which case Executive shall notify the Company of such legal or judicial proceeding as soon as practicable following Executive’s receipt of notice of such a proceeding, and permit the Company to seek to protect its interests and information).  Notwithstanding the foregoing or anything herein to the contrary, Executive understands that (i) nothing herein is intended to or will prohibit Executive from filing a charge with, reporting possible violations of law or regulation to,

 

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participating in any investigation by, cooperating with, or communicating directly with, or providing information in confidence to, any governmental entity or making other disclosures that are protected under the whistleblower provisions of applicable law or regulation; and (ii) pursuant to 18 U.S.C. Section 1833(b), (A) Executive will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made: (x) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (y) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal and (B) if Executive files a lawsuit for retaliation by the Company or any of its affiliates for reporting a suspected violation of law, Executive may disclose trade secrets to his attorney and use trade secret information in the court proceeding, if Executive (x) files any document containing trade secrets under seal and (y) does not disclose trade secrets, except pursuant to court order.

 

(c)                                   Non- Solicitation or Hire .  During the term of Executive’s employment with the Company or any affiliate thereof and for a two (2)-year period following the termination of Executive’s employment for any reason, Executive shall not, directly or indirectly (i) employ or seek to employ any person who is at the date of termination, or was at any time within the six (6)-month period preceding the date of termination, an officer, general manager or director or equivalent or more senior level employee of the Company or any of its subsidiaries or otherwise solicit, encourage, cause or induce any such employee of the Company or any of its subsidiaries to terminate such employee’s employment with the Company or such subsidiary for the employment of another company (including for this purpose the contracting with any person who was an independent contractor (excluding consultant) of the Company during such period) or (ii) take any action that would interfere with the relationship of the Company or its subsidiaries with their suppliers or customers without, in either case, the prior written consent of the Company’s Board of Directors, or engage in any other action or business that would have a material adverse effect on the Company.

 

(d)                                  Non-Competition .  During the term of Executive’s employment with the Company, or any affiliate thereof and for a two (2)-year period following the termination of Executive’s employment for any reason, Executive shall not, directly or indirectly:

 

(i)                                       engage in any managerial, administrative, advisory, consulting, operational or sales activities in a Restricted Business anywhere in the Restricted Area, including, without limitation, as a director or partner of such Restricted Business, or

 

(ii)                                    organize, establish, operate, own, manage, control or have a direct or indirect investment or ownership interest in a Restricted Business or in any corporation, partnership (limited or general), limited liability company, enterprise or other business entity that engages in a Restricted Business anywhere in the Restricted Area.

 

Nothing contained in this Section 5 shall prohibit or otherwise restrict Executive from acquiring or owning, directly or indirectly, for passive investment purposes not intended

 

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to circumvent this Agreement, securities of any entity engaged, directly or indirectly, in a Restricted Business if either (i) such entity is a public entity and Executive (A) is not a controlling Person of, or a member of a group that controls, such entity and (B) owns, directly or indirectly, no more than three percent (3%) of any class of equity securities of such entity or (ii) such entity is not a public entity and Executive (A) is not a controlling Person of, or a member of a group that controls, such entity and (B) does not own, directly or indirectly, more than one percent (1%) of any class of equity securities of such entity.

 

(e)                                   Injunctive Relief .  Executive acknowledges that monetary damages for any breach of Sections 5(b), (c), and (d) above will not be an adequate remedy and that irreparable injury will result to the Company, its business and property, in the event of such a breach.  For that reason, Executive agrees that in the event of a breach of Sections 5(b), (c), and (d) above, in addition to recovering legal damages, the Company is entitled to proceed in equity for specific performance or to enjoin Executive from violating such provisions.

 

6.                                       Miscellaneous Provisions.

 

(a)                                  Definitions Incorporated by Reference .  Reference is made to Annex I hereto for definitions of certain capitalized terms used in this Agreement, and such definitions are incorporated herein by such reference with the same effect as if set forth herein.

 

(b)                                  No Other Mitigation or Offset; Legal Fees .  The provisions of this Agreement are not intended to, nor shall they be construed to, require that Executive mitigate the amount of any payment or benefit provided for in this Agreement by seeking or accepting other employment.  Except as provided in Section 3(b), the amount of any payment or benefit provided for in this Agreement shall not be reduced by any compensation earned or health benefits received by Executive as the result of employment outside of the Company.

 

(c)                                   Cooperation .  If Executive becomes entitled to severance benefits under Section 3 of this Agreement, Executive agrees, for a one (1)-year period following the Date of Termination, to provide reasonable cooperation to the Company in response to reasonable requests made by the Company for information or assistance, including but not limited to, participating upon reasonable notice in conferences and meetings, providing documents or information, aiding in the analysis of documents, or complying with any other reasonable requests by the Company, including execution of any agreements that are reasonably necessary, provided that such cooperation relates to matters concerning Executive’s duties with the Company and the requests do not, in the good faith opinion of Executive, materially interfere with Executive’s other activities.

 

(d)                                  Successors ; Binding Agreement.

 

(i)                                      Except in the case of a merger involving the Company with respect to which under applicable law the surviving corporation of such merger will be obligated under this Agreement in the same manner and to the same extent as the

 

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Company would have been required if no such merger had taken place, the Company will require any successor, by purchase or otherwise, to all or substantially all of the business and/or assets of the Company, to execute an agreement whereby such successor expressly assumes and agrees to perform this Agreement in the same manner and to the same extent as the Company would have been required if no such succession had taken place and expressly agrees that Executive may enforce this Agreement against such successor.  Failure of the Company to obtain any such required agreement and to deliver such agreement to Executive prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle Executive to payment from the Company in the same amount and on the same terms as Executive would be entitled hereunder if Executive’s employment had terminated for Good Reason and such termination constituted a Qualifying Termination of Employment, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination.  As used in this Agreement, “ Company ” shall mean the Company as hereinbefore defined and any successor to its business and/or assets that executes and delivers the agreement provided for in this Section 6(d)(i) or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

 

(ii)                                   This Agreement shall inure to the benefit of and be enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If Executive should die while any amounts would still be payable to Executive hereunder if Executive had continued to live, all such amounts shall be paid in accordance with the terms of this Agreement to Executive’s beneficiary as filed with the Company pursuant to this Agreement or, if there is no such designated beneficiary, to Executive’s estate.

 

(e)                                   Notice.  All notices, consents, waivers, and other communications required under this Agreement must be in writing and will be deemed to have been duly given when (i) delivered by hand (with written confirmation of receipt), (ii) sent by facsimile (with confirmation of receipt), provided that a copy is mailed by certified mail, return receipt requested, or (iii) when received by the addressee, if sent by a nationally recognized overnight delivery service, in each case to the appropriate addresses and facsimile numbers set forth below (or to such other addresses and facsimile numbers as a party may designate by notice to the other parties):

 

If to the Company:

 

Archrock, Inc.

9807 Katy Freeway, Suite 100

Houston, Texas 77024

Attn:  [                     ]

 

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If to Executive:

 

[                  ]

[                  ]

[                  ]

 

(f)                                    Miscellaneous.  No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in a writing signed by Executive and by the Executive Chairman of the Board or an authorized officer of the Company.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

 

(g)                                   Choice of Law; Validity.  The interpretation, construction and performance of this Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Texas without regard to conflicts of laws principles.  The invalidity or unenforceability of any provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, each of which shall remain in full force and effect.

 

(h)                                  Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.

 

(i)                                      Descriptive Headings.  Descriptive headings are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement.

 

(j)                                     Corporate Approval.  This Agreement has been approved by the Board, and has been duly executed and delivered by Executive and on behalf of the Company by its duly authorized representative.

 

(k)                                  Disputes.  The parties agree to resolve any claim or controversy arising out of or relating to this Agreement by binding arbitration under the Federal Arbitration Act before one arbitrator in the City of Houston, State of Texas, administered by the American Arbitration Association under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.  The Company shall reimburse Executive, not later than December 31st of the calendar year incurred (or, if later, the last day of the month following the month incurred), for all legal fees and expenses incurred by Executive in connection with any dispute arising under this Agreement on or after the Effective Date, including, without limitation, the fees and expenses of the arbitrator, unless the arbitrator finds Executive brought such claim in bad faith, in which event each party shall pay its own costs and expenses and Executive shall repay the Company any fees and expenses previously paid on Executive’s behalf by the Company.

 

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The parties stipulate that the provisions hereof shall be a complete defense to any suit, action, or proceeding instituted in any federal, state, or local court or before any administrative tribunal with respect to any controversy or dispute arising during the period of this Agreement and which is arbitrable as herein set forth.  The arbitration provisions hereof shall, with respect to such controversy or dispute, survive the termination of this Agreement.  This Section 6(k) shall be administered in accordance with the disputed payment provisions of Treasury Regulation Section 1.409A-3(g).

 

(l)                                      Withholding of Taxes .   The Company may withhold from any amounts payable under this Agreement all taxes it is required to withhold pursuant to any applicable law or regulation.

 

(m)                              No Employment Agreement.   Nothing in this Agreement shall give Executive any rights to (or impose any obligations for) continued employment by the Company or any of its affiliates or any successors, nor shall it give the Company any rights (or impose any obligations) with respect to continued performance of duties by Executive for the Company or any of its affiliates or successors.

 

(n)                                  Entire Agreement .   This Agreement constitutes the entire agreement of Executive and the Company with respect to the subject matter hereof, and hereby expressly terminates, rescinds and replaces in full any prior and contemporaneous promises, representations, understandings, arrangements and agreements between the parties relating to the subject matter hereof, whether written or oral.  However, the Severance Agreement shall remain in full force and effect, subject to any termination provisions contained therein, through the Date of Termination (and if there is a Qualifying Termination of Employment under the Severance Agreement that does not constitute a Qualifying Termination of Employment for purposes of this Agreement, then the Severance Agreement shall apply in lieu of this Agreement (and this Agreement shall be of no further force and effect)).  Nothing in this Agreement shall affect Executive’s rights under such compensation and benefit plans and programs of the Company in which Executive may participate, except as may be explicitly provided in this Agreement.

 

[Execution Page Follows]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement in multiple counterparts, all of which shall constitute one agreement, effective as of the Effective Date.

 

 

ARCHROCK, INC.

 

 

 

 

By:

 

 

 

[                   ]

 

 

 

 

EXECUTIVE

 

 

 

 

 

 

 

[                      ]

 

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ANNEX I
TO
CHANGE OF CONTROL AGREEMENT

 

Definitions :

 

1.                                       401(k) Plan.  401(k) Plan ” shall mean any Code Section 401(a) qualified plan that includes a cash or deferral arrangement under Code Section 401(k) maintained by the Company.

 

2.                                       Base Salary.  Base Salary ” shall mean an Executive’s annual rate of base salary (without regard to bonus compensation) as in effect immediately prior to the Change of Control or as the same may be increased from time to time thereafter.

 

3.                                       Board .  “ Board ” shall mean the Board of Directors of the Company.

 

4.                                       Cause.  Cause ” shall mean a termination of Executive’s employment due to (a) the commission by Executive of an act of fraud, embezzlement or willful breach of a fiduciary duty to the Company or an affiliate (including the unauthorized disclosure of confidential or proprietary material information of the Company or an affiliate), (b) a conviction of Executive of (or a plea of nolo contendere to) a felony or a crime involving fraud, dishonesty or moral turpitude, (c) willful failure of Executive to follow the written directions of the Board; (d) the willful failure of Executive to render services to the Company or an affiliate in accordance with Executive’s employment arrangement, which failure amounts to a material neglect of Executive’s duties to the Company or an affiliate; or (e) Executive’s substantial dependence, as determined in the sole discretion of the Board, on any drug, immediate precursor or other substance listed on Schedule IV of the Federal Comprehensive Drug Abuse Prevention and Control Act of 1970, as amended.

 

5.                                       Change of Control.  A “ Change of Control ” of the Company shall mean:

 

(a)                                  The acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of forty percent (40%) or more of either (A) the then outstanding shares of common stock of the Company (the “ Outstanding Company Common Stock ”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “ Outstanding Company Voting Securities ”); provided, however , that for purposes of this subsection (a), any acquisition by any Person pursuant to a transaction which complies with clause (A) of subsection (c) of this definition shall not constitute a Change of Control; or

 

(b)                                  Individuals who, as of the date hereof, constitute the Board (the “ Incumbent Board ”) cease for any reason to constitute at least a majority of the Board; provided, however , that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered for purposes of this definition as though such

 

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individual was a member of the Incumbent Board, but excluding, for these purposes, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

 

(c)                                   The consummation of a reorganization, merger or consolidation involving the Company or any of its subsidiaries, or the sale, lease or other disposition of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole (other than to an entity wholly owned, directly or indirectly, by the Company) (each, a “ Corporate Transaction ”), in each case, unless, following such Corporate Transaction, (A) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction beneficially own, directly or indirectly, more than sixty percent (60%) of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the Resulting Corporation in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, and (B) at least a majority of the members of the board of directors of the Resulting Corporation were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Corporate Transaction.  The term “ Resulting Corporation ” means (1) the Company or its successor, or (2) if as a result of a Corporate Transaction the Company or its successor becomes a subsidiary of another entity, then such entity or the parent of such entity, as applicable, or (3) in the event of a Corporate Transaction involving the sale, lease or other disposition of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, then the transferee of such assets or the parent of such transferee, as applicable, in such Corporate Transaction.

 

Notwithstanding the foregoing, if a Change of Control constitutes a payment event with respect to any payment (or portion thereof) that provides for the deferral of compensation that is subject to Code Section 409A, to the extent required to avoid the imposition of additional taxes under Code Section 409A, the transaction or event described in clauses (a), (b) or (c) above with respect to such payment (or portion thereof) shall only constitute a Change of Control for purposes of the payment timing of such payment if such transaction also constitutes a “change in control event,” as defined in Treasury Regulation Section 1.409A-3(i)(5).

 

6.                                       Code .  “ Code ” shall mean the Internal Revenue Code of 1986, as amended.

 

7.                                       Confidential Information .  “ Confidential Information ” shall mean any and all information, data and knowledge that has been created, discovered, developed or otherwise become known to the Company or any of its affiliates or ventures or in which property rights have been assigned or otherwise conveyed to the Company or any of its affiliates or

 

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ventures, which information, data or knowledge has commercial value in the business in which the Company is engaged, except such information, data or knowledge as is or becomes known to the public without violation of the terms of this Agreement.

 

8.                                       Date of Termination.   “ Date of Termination ” shall mean (a) if Executive terminates Executive’s employment for Good Reason, that date on which Executive’s employment is deemed terminated as provided in the definition of Good Reason, (b) with respect to a termination of employment prior to a Change of Control that is deemed to be during the Protected Period, the date of such termination, or (c) if Executive’s employment is terminated for any other reason on or after a Change of Control, the date of such termination, provided, in the case of each of clauses (a), (b) and (c) above, that such termination is also a “separation from service” within the meaning of Code Section 409A.

 

9.                                       Disability.    A “ Disability ” shall mean Executive becoming entitled to long-term disability benefits under the Company’s long-term disability plan.

 

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

 

11.                                Good Reason.  Good Reason ” shall mean the occurrence of any of the following without Executive’s express written consent:

 

(a)                                  a permanent change in Executive’s duties or responsibilities which is materially inconsistent with either the type of duties and responsibilities of Executive then in effect or with Executive’s title, but excluding any such change that is in conjunction with and consistent with a promotion of Executive;

 

(b)                                  a material reduction in Executive’s Base Salary;

 

(c)                                   a material reduction in Executive’s annual Target Short-Term Incentive as a percentage of Base Salary as in effect immediately prior to the Change of Control;

 

(d)                                  a material reduction in Executive’s employee benefits (without regard to bonus compensation, if any) if such reduction results in Executive receiving benefits which are, in the aggregate, materially less than the benefits received by other comparable employees of the Company generally;

 

(e)                                   Executive’s being required to be based at any other office or location of employment more than fifty (50) miles from (i) the Company’s then-current headquarters office in Houston, Texas, or (ii) Executive’s primary office or location of employment immediately prior to a Change of Control; or

 

(f)                                    the willful failure by the Company to pay any compensation to Executive when due.

 

However, Good Reason shall not exist with respect to a matter unless Executive gives the Company a Notice of Termination by the later of: (i) the ninetieth (90 th ) day following the date of first occurrence of such event or (ii) the twelve (12)-month anniversary of the

 

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Change in Control.  If Executive fails to give such Notice of Termination timely, Executive shall be deemed to have waived all rights Executive may have under this Agreement with respect to such matter.  The Company shall have thirty (30) business days from the date of receipt of such Notice of Termination to cure the matter.  If the Company timely cures the matter, such Notice of Termination shall be deemed rescinded.  If the Company fails to cure the matter timely, Executive shall be deemed to have terminated at the end of such thirty (30)-day period.

 

12.                                IRS.   “ IRS ” shall mean the Internal Revenue Service.

 

13.                                Notice of Termination.  Notice of Termination ” shall mean a written notice that sets forth in reasonable detail the facts and circumstances for termination of Executive’s employment.

 

14.                                Person .  “ Person ” shall mean any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act).

 

15.                                Protected Period.  The “ Protected Period ” shall mean the period of time beginning with the Change of Control and ending on the eighteen (18)-month anniversary of such Change of Control or Executive’s death, if earlier; provided, however , (a) if Executive’s employment with the Company is terminated during the Term and within six (6) months prior to the date on which a Change of Control occurs (e.g., not during the Protected Period), and (b) it is reasonably demonstrated by Executive that such termination was at the request of a third party who has taken steps reasonably calculated to effect the Change of Control, or otherwise arose in connection with or anticipation of the Change of Control, then for purposes of this Agreement the Change of Control shall be deemed to have occurred on the date immediately prior to the date of Executive’s termination (except as otherwise expressly set forth herein) and Executive shall be deemed terminated by the Company during the Protected Period other than for Cause.

 

16.                                Qualifying Termination of Employment.  A “ Qualifying Termination of Employment ” shall mean a termination of Executive’s employment during the Protected Period either (a) by the Company other than for Cause or (b) by Executive for a Good Reason.  A termination of employment due to the Executive’s death or Disability during the Protected Period shall not constitute a Qualifying Termination of Employment.

 

17.                                Restricted Area.  “ Restricted Area ” shall mean any state in the United States, or any country in which the Company or its subsidiaries engage in any Restricted Business at any time during the term of Executive’s employment with the Company.

 

18.                                Restricted Business.   “ Restricted Business ” shall mean any business in which the Company or its subsidiaries may be engaged as of Executive’s Date of Termination.  To the extent that any entity is primarily engaged in a business other than a Restricted Business, the term “ Restricted Business ” shall mean the operations, division, segment or subsidiary of such entity that is engaged in any Restricted Business.

 

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19.                                Short-Term Incentive .  “ Short-Term Incentive ” shall mean, with respect to any fiscal year of the Company, the specific annual incentive award (if any) approved for Executive by the Board or a designated committee of the Board with respect to such year.

 

20.                                Target Short-Term Incentive.  Target Short-Term Incentive ” shall mean the target annual short-term incentive opportunity for Executive expressed as a percentage of salary, as set forth in connection with the annual management incentive plan covering such Executive.

 

21.                                Termination Year.   “ Termination Year ” shall mean the calendar year during which Executive’s Date of Termination occurs.

 

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Exhibit 99.1

 

ARCHROCK APPOINTS DOUG ARON AS SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER

 

HOUSTON, July 11, 2018 (GLOBE NEWSWIRE) — Archrock, Inc. (NYSE:AROC) today announced that Douglas S. Aron has been appointed Senior Vice President and Chief Financial Officer, effective August 13, 2018.

 

Mr. Aron, 44, brings extensive energy industry experience, previously serving in various senior roles at HollyFrontier Corporation and its predecessors for more than 15 years, including as Executive Vice President and Chief Financial Officer of HollyFrontier Corporation from July 2011 to March 2017.  Prior to Frontier’s merger with Holly in 2011, Mr. Aron served Frontier Oil Corporation as Executive Vice President and Chief Financial Officer, from 2009, as Vice President of Corporate Finance, from 2005 to 2009 and as Director of Investor Relations, from 2001 to 2005.  Mr. Aron most recently served as Executive Vice President and Chief Financial Officer of Nine Energy Service, Inc. during 2017.  He holds a Bachelor of Journalism from the University of Texas and an MBA from the Jesse H. Jones Graduate School of Business at Rice University.

 

“We are excited to have Doug join the Archrock team, lead our finance organization and serve as a key member of our leadership team,” said Brad Childers, President and CEO of Archrock. “Doug’s experience, values and track record of achieving results are well-aligned with Archrock, and position us well as we continue to execute our plan, capitalize on significant growth opportunities in the natural gas market and create long-term shareholder value.”

 

Mr. Aron will succeed Randy Guba, current Interim Chief Financial Officer of Archrock. “I want to thank Randy for his contributions while serving as Interim Chief Financial Officer,” added Childers.  “His efforts provided a seamless transition for which we are grateful.”

 

About Archrock

 

Archrock, Inc. (NYSE:AROC) is a pure play U.S. natural gas contract compression services business and a leading supplier of aftermarket services to customers that own compression equipment in the United States. Archrock is headquartered in Houston, Texas, operating in the major oil and gas producing regions in the United States, with approximately 1,700 employees. For more information, visit www.archrock.com.

 

For information, contact:
Paul Burkhart, Vice President Finance
281-836-8688
investor.relations@archrock.com