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 12, 2018 (July 6, 2018)
ULTRA PETROLEUM CORP.
(Exact Name of Registrant as Specified in Charter)
| Yukon, Canada | 001-33614 | N/A | ||
|
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification Number) |
400 N. Sam Houston Parkway E.
Suite 1200
Houston, Texas 77060
(Address of Principal Executive Offices) (Zip Code)
281-876-0120
(Registrant’s telephone number, including area code)
(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:
| ☐ | 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 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Annual Incentive Plan
On July 6, 2018, the Compensation Committee (the “Committee”) of the Board of Directors of Ultra Petroleum Corp. (the “Company”) approved the adoption of an annual incentive compensation plan (the “Annual Incentive Plan”), which provides for the payment of short-term, cash-based incentive compensation to certain employees, including the Company’s named executive officers. Pursuant to the Annual Incentive Plan, the Committee, in its sole discretion, will (i) establish written corporate performance goals (“Performance Goals”), which may be comprised of multiple elements of Company performance, called “key performance indicators”; (ii) establish target awards for each employee, the payment of which will be contingent on achievement of the Performance Goals for the applicable period; and (iii) prescribe a formula for determining the percentage of such target awards that may be payable based upon the level of attainment of the Performance Goals for the applicable period.
Also on July 6, 2018, the Committee approved, pursuant to the Annual Incentive Plan, key performance indicators for fiscal 2018, as well as the Performance Goals applicable to, the relative weighting of, and the funding formula for each key performance indicator. The key performance indicators for fiscal 2018, each of which are weighted equally in the formula, are: (i) annual production, (ii) EBITDA, (iii) controllable cash costs (consisting of lease operating expenses plus cash general and administrative expenses), and (iv) well performance drill bit finding and development cost. The Committee also established target values under the Annual Incentive Plan for the Company’s executive officers, pursuant to which each such executive officer will be eligible to earn a bonus under the Annual Incentive Plan in respect of fiscal 2018 with a target amount equal to his or her annual base salary.
The foregoing description of the Annual Incentive Plan is qualified in its entirety by reference to the full text of the Annual Incentive Plan, of which a copy is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
Form of Restricted Stock Unit Grant Agreement — Chief Operating Officer
On July 6, 2018, the Committee also approved a form of restricted stock unit grant agreement (the “RSU Grant Agreement”) pursuant to which Mr. Jerald J. “Jay” Stratton, Jr., the Company’s Chief Operating Officer, may receive grants of restricted stock units (“RSUs”). The RSU Grant Agreement is subject to the terms and conditions of the Ultra Petroleum Corp. 2017 Stock Incentive Plan, as amended and restated June 8, 2018. The RSU Grant Agreement generally provides for the following terms:
| • | One-third of the RSUs granted will vest in equal installments on each of the first, second and third anniversaries of the grant date, provided that Mr. Stratton remains employed on the applicable vesting date. Two-thirds of the RSUs granted will vest based on the extent to which both performance-based and time-based vesting conditions are achieved. |
| • | The performance-based vesting conditions are assessed based on the volume-weighted average price of the Company’s common shares as measured over 60 consecutive trading days relative to pre-established price goals. |
| • | Once a performance-based vesting condition is achieved, the RSUs that have become performance vested will time-vest over the two or three-year period following the date on which they became performance vested. |
| • | In the event Mr. Stratton’s employment is terminated by the Company due to disability, death or without cause, or by Mr. Stratton for good reason pursuant to his existing employment agreement with the Company, a pro-rata portion of the time-vesting RSUs will vest, and any performance-based RSUs will immediately vest upon the termination. |
The foregoing description of the RSU Grant Agreement is qualified in its entirety by reference to the full text of the RSU Grant Agreement, of which a copy is attached hereto as Exhibit 10.2 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
|
Exhibit No. |
Description |
|
|
10.1 |
Ultra Petroleum Corp. Annual Incentive Plan. | |
|
10.2 |
Form of Restricted Stock Unit Grant Agreement (Stratton). | |
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.
July 12, 2018
| ULTRA PETROLEUM CORP. | ||
| By: | /s/ Garrett B. Smith | |
| Name: | Garrett B. Smith | |
| Title: | Vice President, General Counsel and | |
| Corporate Secretary | ||
Exhibit 10.1
ULTRA PETROLEUM CORP.
ANNUAL INCENTIVE PLAN
1. Background and Purpose .
1.1 Purpose . The purpose of the Ultra Petroleum Corp. Annual Incentive Plan (the “ Plan ”) is to enable the Company to attract and retain superior employees by providing a competitive short-term cash-based incentive compensation program that rewards outstanding performance.
1.2 Effective Date . The Plan is effective as of July 6, 2018 (the “ Effective Date ”), and shall remain in effect until it has been terminated pursuant to Section 7.6.
2. Definitions . The following terms shall have the following meanings:
2.1 “ Affiliate ” means any Subsidiary and any other Person that, directly or through one or more intermediaries, is controlled by the Company, as determined by the Committee.
2.2 “ Award ” means an award granted pursuant to the Plan, the payment of which shall be contingent on the attainment of Performance Goals and Key Performance Indicators with respect to a Performance Period, as determined by the Committee pursuant to Section 6.1.
2.3 “ Base Salary ” means the Participant’s annualized rate of base salary on the last day of the Performance Period before (a) deductions for taxes or benefits and (b) deferrals of compensation pursuant to any Company or Affiliate-sponsored plans.
2.4 “ Board ” means the then-current Board of Directors of the Company.
2.5 “ Code ” means the U.S. Internal Revenue Code of 1986, as amended from time to time, including any regulations or authoritative guidance promulgated thereunder and successor provisions thereto.
2.6 “ Committee ” means the Compensation Committee of the Company.
2.7 “ Company ” means Ultra Petroleum Corp., a corporation organized under the laws of Yukon, Canada, and any successor in interest thereto.
2.8 “ Discretion ” means the discretion of the Committee to increase, reduce or eliminate the size of an Award in accordance with Section 6.1(c) of the Plan.
Exhibit A-1 – Page 1 of 9
2.9 “ Key Performance Indicators ” means the performance criteria upon which the Performance Goals for a particular Performance Period are based as provided on Exhibit A attached hereto, as such may be amended from time to time for each applicable Performance Period under this Plan. Such Key Performance Indicators may relate to the performance of the Company as a whole, a business unit, division, department, individual or any combination of these and may be applied on an absolute basis and/or relative to one or more peer group companies or indices, or any combination thereof, as the Committee shall determine. In the event the Committee uses the term “Performance Measure” in place of the term and for the purpose of identifying the “Key Performance Indicators” in specific awards or the program for a Performance Period, for purposes of such Performance Period, the term “Performance Measures” should be understood as having the same meaning as the term “Key Performance Indicator” as such term used in this Plan.
2.10 “ Participant ” means as to any Performance Period, the employees of the Company or an Affiliate who are designated by the Committee to participate in the Plan for that Performance Period.
2.11 “ Performance Goals ” means the goals selected by the Committee, in its discretion to be applicable to a Participant for any Performance Period. Performance Goals shall be based upon one or more Key Performance Indicators. Performance Goals may include a threshold level of performance below which no Award will be paid and levels of performance at which specified percentages of the Target Award will be paid and may also include a maximum level of performance above which no additional Award amount will be paid. In the event the Committee uses the term “Performance Achievement” in place of the term and for the purpose of identifying the “Performance Goals” in specific awards or the program for any Performance Period, for purposes of such Performance Period, the term “Performance Achievement” should be understood as having the same meaning as the term “Performance Goals” as such term is used in this Plan.
2.12 “ Performance Period ” means the period for which performance is calculated, which unless otherwise indicated by the Committee, shall be the Plan Year.
2.13 “Person” means any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, government or political subdivision thereof or other entity.
2.14 “ Plan ” means the Ultra Petroleum Corp Annual Incentive Plan, as hereafter amended from time to time.
2.15 “ Plan Year ” means the Company’s fiscal year, which commences on January 1st and ends on December 31st.
2.16 “ Pro-Rated Award ” means an amount equal to the Award otherwise payable to the Participant for a Performance Period in which the Participant was actively employed by the Company or an Affiliate for only a portion thereof, multiplied by a fraction, the numerator of which is the number of days the Participant was actively employed by the Company or an Affiliate during the Performance Period and the denominator of which is the number of days in the Performance Period.
Exhibit A-1 – Page 2 of 9
2.17 “ Shares ” means the shares of the Company’s common stock.
2.18 “ Subsidiary ” means any corporation (whether now or hereafter existing) which constitutes a “subsidiary” of the Company, as defined in Code Section 424(f) or any other form of entity in which the Company (or an Affiliate of the Company in which the Company owns a greater than 50% equity interest, directly or indirectly) owns a greater than 50% equity interest.
2.19 “ Target Award ” means the target award payable under the Plan to a Participant for a particular Performance Period, expressed as a percentage of the Participant’s Base Salary. In special circumstances, the target award may be expressed as a fixed amount of cash. In the event the Committee uses the term “Target Value” in place of the term and for the purpose of identifying the “Target Award” in specific awards or the program for any Performance Period, for purposes of such Performance Period, the term “Target Value” should be understood as having the same meaning as the term “Target Award” as such term is used in this Plan.
3. Administration .
3.1 Administration by the Compensation Committee . The Plan shall be administered by the Committee.
3.2 Authority of the Committee . Subject to the provisions of the Plan and applicable law, the Committee shall have the power, in addition to other express powers and authorizations conferred on the Committee by the Plan, to: (a) designate Participants; (b) determine the terms and conditions of any Award; (c) determine whether, to what extent, and under what circumstances Awards may be forfeited or suspended; (d) interpret, administer, reconcile any inconsistency, correct any defect and/or supply any omission in the Plan or any instrument or agreement relating to, or Award granted under, the Plan; (e) establish, amend, suspend, or waive any rules for the administration, interpretation and application of the Plan; (f) adopt such procedures and subplans as are necessary or appropriate to permit participation in the Plan by employees who are foreign nationals or employed outside of the United States; and (g) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan.
3.3 Decisions Binding . All determinations and decisions made by the Committee, the Board, and any delegate of the Committee pursuant to the provisions of the Plan shall be final, conclusive and binding on all persons, and shall be given the maximum deference permitted by law.
3.4 Delegation by the Committee . The Committee, in its sole discretion, may delegate all or part of its authority and powers under the Plan to one or more directors and/or officers of the Company; provided, however, that the Committee may not delegate its responsibility to make Awards to executive officers.
3.5 Agents; Limitation of Liability . The Committee may appoint agents to assist in administering the Plan. The Committee and each member thereof shall be entitled to, in good faith, rely or act upon any report or other information furnished to it or him by any officer or
Exhibit A-1 – Page 3 of 9
employee of the Company, the Company’s certified public accountants, consultants or any other agent assisting in the administration of the Plan. Members of the Committee and any officer or employee of the Company 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 extent permitted by law, be fully indemnified and protected by the Company with respect to any such action or determination.
4. Eligibility and Participation .
4.1 Eligibility . Employees of the Company and its Affiliates, are eligible to participate in the Plan.
4.2 Participation . The Committee, in its discretion, shall select the persons who shall be Participants for the Performance Period. Only eligible individuals who are designated by the Committee to participate in the Plan with respect to a particular Performance Period may participate in the Plan for that Performance Period. An individual who is designated as a Participant for a given Performance Period is not guaranteed or assured of being selected for participation in any subsequent Performance Period.
4.3 New Hires; Newly Eligible Participants . A newly hired or newly eligible Participant will be eligible to receive a Pro-Rated Award.
4.4 Leaves of Absence . If a Participant is on a leave of absence for a portion of a Performance Period, the Participant will be eligible to receive a Pro-Rated Award reflecting participation for the period during which he or she was actively employed and not any period when he or she was on leave.
5. Terms of Awards .
5.1 Determination of Target Awards . Prior to, or reasonably promptly following the commencement of each Performance Period the Committee, in its sole discretion, shall establish the Target Award for each Participant, the payment of which shall be conditioned on the achievement of the Performance Goals for the Performance Period.
5.2 Determination of Performance Goals and Performance Formula . Prior to, or reasonably promptly following the commencement of, each Performance Period, the Committee, in its sole discretion, shall establish in writing the Performance Goals for the Performance Period and shall prescribe a formula for determining the percentage of the Target Award which may be payable based upon the level of attainment of the Performance Goals for the Performance Period (the “Performance Formula”). The Performance Goals shall be based on one or more Key Performance Indicators, each of which may carry a different weight, and which may differ from Participant to Participant.
5.3 Adjustments . The Committee is authorized, in its sole discretion, to adjust or modify the calculation of a Performance Goal for a Performance Period in connection with any one or more of the following events:
(a) asset write-downs;
Exhibit A-1 – Page 4 of 9
(b) significant litigation or claim judgments or settlements;
(c) the effect of changes in tax laws, accounting standards or principles, or other laws or regulatory rules affecting reporting results;
(d) any reorganization and restructuring programs;
(e) extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 (or any successor pronouncement thereto) and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to shareholders for the applicable year or period;
(f) acquisitions or divestitures;
(g) any other specific unusual or nonrecurring events or objectively determinable category thereof;
(h) foreign exchange gains and losses; and
(i) a change in the Company’s fiscal year.
6. Payment of Awards .
6.1 Determination of Awards; Certification .
(a) Following the completion of each Performance Period, the Committee shall determine the extent to which the Performance Goals have been achieved or exceeded. If the minimum Performance Goals established by the Committee are not achieved, then no payment will be made unless the Committee determines in its Discretion that circumstances warrant a payment to be made.
(b) To the extent that the Performance Goals are achieved, the Committee shall certify the extent to which the Performance Goals applicable to each Participant have been achieved and shall then determine, in accordance with the prescribed formula, the amount of each Participant’s Award.
(c) In determining the amount of each Award, the Committee may increase, reduce or eliminate the amount of an Award by applying Discretion if, in its sole discretion, such increase, reduction or elimination is appropriate.
6.2 Form and Timing of Payment . Except as otherwise provided herein, as soon as practicable following the Committee’s certification pursuant to Section 6.1 for the applicable Performance Period, each Participant shall receive a cash lump sum payment of his or her Award, less required withholding. In no event shall such payment be made later than 2 1/2 months following the end of the Performance Period.
Exhibit A-1 – Page 5 of 9
6.3 Employment Requirement . Except as otherwise determined by the Committee in its sole discretion, no Award shall be paid to any Participant who is not actively employed by the Company or an Affiliate on the date that Awards are paid.
6.4 Deferral of Awards . The Committee, in its sole discretion, may permit a Participant to defer the payment of an Award that would otherwise be paid under the Plan. Any deferral election shall be subject to such rules and procedures as shall be determined by the Committee in its sole discretion.
7. General Provisions .
7.1 Compliance with Legal Requirements . The Plan and the granting of Awards shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency as may be required.
7.2 Non-transferability . A person’s rights and interests under the Plan, including any Award previously made to such person or any amounts payable under the Plan may not be assigned, pledged, or transferred, except in the event of the Participant’s death, to a designated beneficiary in accordance with the Plan, or in the absence of such designation, by will or the laws of descent or distribution.
7.3 No Right to Employment . Nothing in the Plan or in any notice of Award shall confer upon any person the right to continue in the employment of the Company or any Affiliate or affect the right of the Company or any Affiliate to terminate the employment of any Participant.
7.4 No Right to Award . Unless otherwise expressly set forth in an employment agreement signed by the Company and a Participant, a Participant shall not have any right to any Award under the Plan until such Award has been paid to such Participant and participation in the Plan in one Performance Period Year does not connote any right to become a Participant in the Plan in any future Performance Period.
7.5 Withholding . The Company shall have the right to withhold from any Award, any federal, state or local income and/or payroll taxes required by law to be withheld and to take such other action as the Committee may deem advisable to enable the Company and Participants to satisfy obligations for the payment of withholding taxes and other tax obligations relating to an Award.
7.6 Amendment or Termination of the Plan . The Board or the Committee may, at any time, amend, suspend or terminate the Plan in whole or in part. Notwithstanding the foregoing, no amendment shall adversely affect the rights of any Participant to Awards allocated prior to such amendment, suspension or termination.
7.7 Unfunded Status . Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind or a fiduciary relationship between the Company and any Participant, beneficiary or legal representative or any other person. To the extent that a person acquires a right to receive payments under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the
Exhibit A-1 – Page 6 of 9
Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in the Plan. The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA).
7.8 Governing Law . The Plan shall be construed, administered and enforced in accordance with the laws of Colorado without regard to conflicts of law.
7.9 Beneficiaries . To the extent that the Committee permits beneficiary designations, any payment of Awards due under the Plan to a deceased Participant shall be paid to the beneficiary duly designated by the Participant in accordance with the Company’s practices. If no such beneficiary has been designated or survives the Participant, payment shall be made by will or the laws of descent or distribution.
7.10 Section 409A of the Code . It is intended that payments under the Plan qualify as short-term deferrals exempt from the requirements of Section 409A of the Code. In the event that any Award does not qualify for treatment as an exempt short-term deferral, it is intended that such amount will be paid in a manner that satisfies the requirements of Section 409A of the Code. The Plan shall be interpreted and construed accordingly.
7.11 Expenses . All costs and expenses in connection with the administration of the Plan shall be paid by the Company.
7.12 Section Headings . The headings of the Plan have been inserted for convenience of reference only and in the event of any conflict, the text of the Plan, rather than such headings, shall control.
7.13 Severability . In the event that any provision of the Plan shall be considered illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions of the Plan, but shall be fully severable, and the Plan shall be construed and enforced as if such illegal or invalid provision had never been contained therein.
7.14 Gender and Number . Except where otherwise indicated by the context, wherever used, the masculine pronoun includes the feminine pronoun; the plural shall include the singular, and the singular shall include the plural.
7.15 Non-exclusive . Nothing in the Plan shall limit the authority of the Company, the Board or the Committee to adopt such other compensation arrangements, as it may deem desirable for any Participant.
7.16 Notice . Any notice to be given to the Company or the Committee pursuant to the provisions of the Plan shall be in writing and sent and directed to the SECRETARY of the Company at the then location of the headquarters of the Company.
7.17 Successors . All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding upon any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the assets of the Company.
Exhibit A-1 – Page 7 of 9
7.18 Clawback . In the event the Board determines that a significant restatement of the Company’s financial results or other Company metrics for any of the three prior fiscal years for which audited financial statements have been prepared is required and (i) such restatement is the result of fraud or willful misconduct and (ii) the Participant’s Award amount would have been lower had the results or metrics been properly calculated, the Committee has the authority to obtain reimbursement from any Participant responsible for the fraud or willful misconduct resulting in the restatement. Such reimbursement shall consist of any portion of any Award previously paid that is greater than it would have been if calculated based upon the restated financial results or metrics.
The action permitted to be taken by the Board under this Section 7.18 is in addition to, and not in lieu of, any and all other rights of the Board and/or the Company under applicable law and shall apply notwithstanding anything to the contrary in the Plan.
<signature page follows>
Exhibit A-1 – Page 8 of 9
IN WITNESS WHEREOF, the Company has caused this Plan to be duly executed in its name and on its behalf by its duly authorized officer effective as of the Effective Date.
| ULTRA PETROLEUM CORP. | ||
| By: | /s/ Brad Johnson | |
| Name: Brad Johnson | ||
| Title: Interim Chief Executive Officer | ||
Exhibit A-1 – Page 9 of 9
Exhibit 10.2
FORM OF RESTRICTED STOCK UNIT AGREEMENT
(“AGREEMENT”)
PURSUANT TO THE AMENDED AND RESTATED
ULTRA PETROLEUM 2017 STOCK INCENTIVE PLAN
| Name of Participant: | <<NAME>> (“Participant”) | |
| Date of Grant of RSUs: | <<GRANT DATE>> (“Grant Date”) | |
| Restricted Stock Units Granted: | <<RSU TOTAL>> (the “Target Number”) |
The Compensation Committee of the Board of Directors of Ultra Petroleum Corp., a Yukon corporation (the “ Company ”) has approved an award of restricted stock units (“ RSUs ”) to you, an employee of Ultra Resources, Inc. (“ Employer ”), and the Company does hereby grant to you, as of the Grant Date specified above, the number of RSUs specified above. The RSUs will only vest to the extent provided in and subject to the conditions described in the attached Schedule 1 .
Please indicate your acceptance of this Agreement by signing below, and then returning the original to Jeanette Bowen, our Senior Director of Human Resources, by <<DATE>>.
You should keep a copy of this Agreement for your records.
| ULTRA RESOURCES, INC. | ||
| By: |
|
|
| Brad Johnson | ||
| President | ||
| AGREED AND ACCEPTED: | ||
| Participant: | Jerald J. Stratton, Jr. | |
| Signature: |
|
|
Exhibit D-1 – Page 1 of 5
RESTRICTED STOCK UNIT AGREEMENT
SCHEDULE 1
The award described in the cover letter to which this Schedule 1 is attached (the “ Letter ”) is subject to the terms and conditions set forth herein and in the Plan. Definitions of certain terms used herein are in the last section hereof.
| 1. | Incorporation By Reference; Plan Document . Except as provided herein, this Agreement is subject in all respects to the terms and provisions of the Plan (including, without limitation, any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the Award provided hereunder), all of which terms and provisions are made a part of and incorporated in this Agreement as if they were each expressly set forth herein. Except as provided otherwise herein, any capitalized term not defined in this Agreement shall have the same meaning as is ascribed thereto in the Plan. Participant acknowledges the Plan has been made available to Participant and Participant has read or could have read and understood the Plan. |
| 2. | Grant of Award . The Company hereby grants to Participant, as of the Grant Date specified in the Letter, the number of RSUs specified in the Letter. Except as otherwise provided by the Plan, Participant understands and agrees that nothing contained in this Agreement provides, or is intended to provide, Participant with any protection against potential future dilution of Participant’s interest in the Company for any reason, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of the shares of common stock underlying the RSUs, except as otherwise specifically provided for in the Plan or this Agreement. |
| 3. | Vesting; Forfeiture . |
| 3.1. | One-third (1/3) of the Target Number of RSUs will be subject to time-vesting conditions (the “TSUs”) and will vest in equal installments on each of May 25, 2019, May 25, 2020, and May 25, 2021 (each, a “Vesting Date”). |
| 3.2. | In the event of Participant’s termination due to death, disability, termination by the Company without Cause or termination by the Participant for “good reason” (if the Participant may terminate employment for “good reason” pursuant to any employment agreement or severance arrangement between the Employer and the Participant), subject to executing and not revoking a customary release of claims provided by the Company no later than the 60th day following the Participant’s termination of employment, the Pro Rata Portion (as defined below) of the TSUs that otherwise would have vested on the Vesting Date immediately following the date of the Participant’s termination of employment will vest. The “Pro Rata Portion” means the percentage equal to the number of days that have elapsed since the later of the Grant Date or most recent Vesting Date to the Participant’s date of termination, divided by 365 All RSUs that have time vested in accordance with Section 3.1 or Section 3.2 hereof, a “Vested TSU”. |
| 3.3. | Two-thirds (2/3) of the Target Number of RSUs will be subject to both time-based and performance-based vesting (the “PSUs”). The PSUs will performance-vest based on the extent to which the Performance Criterion outlined in Exhibit A are satisfied on or before the third anniversary of the Grant Date (such three-year period, the “Performance Period”). |
| 3.4. | All PSUs that have not fully vested as of Participant’s date of termination (determined after application of Section 3.7) shall be immediately forfeited. Any PSU that does not performance vest prior to the conclusion of the Performance Period will automatically be forfeited for no consideration at the conclusion of the Performance Period. |
| 3.5. | Any PSUs that performance vest during the Performance Period in accordance with the Performance Criterion will be subject to time-based vesting in accordance with the following schedule: |
| (i) | one-third (1/3) of any Base PSUs (as defined below) and one-fourth (1/4) of any Supplemental PSUs (as defined below) that have previously performance vested will time-vest on the date on which such PSUs performance vest; and |
| (ii) |
one-third (1/3) of any Base PSUs and one-fourth (1/4) of any Supplemental PSUs that have previously performance vested will time-vest on the first two (in the case of Base PSUs) or three (in the case of |
Exhibit D-1 – Page 2 of 5
| Supplemental PSUS) anniversaries of the date on which such PSUs performance vest. For this purpose, “Base PSUs” means the number of PSUs that performance vest up to 100% of the Target Number of PSUs granted hereby, and “Supplemental PSUs” means the number of PSUs that performance vest in excess of 100% of the Target Number of PSUs granted hereby. |
| 3.6. | Any PSU that have both performance vested and time vested (including time vesting pursuant to Section 3.7 hereof) shall be referred to herein as a “Vested PSU”. |
| 3.7. | One-hundred percent (100%) of any Base PSUs and Supplemental PSUs that have previously performance vested will immediately vest in the event of Participant’s termination due to death, disability, termination by the Company without Cause, subject to the Participant executing and not revoking a customary release of claims provided by the Company no later than the 60th day following the Participant’s termination of employment. Any PSUs that have not performance-vested in accordance with Section 3.3 hereof will automatically expire and terminate for no consideration as of the date of the Participant’s termination of employment. |
| 4. | Payment; Withholding . |
| 4.1. | Except as otherwise provided herein or in the Plan, the Company will deliver to Participant an amount of shares of its common stock equal to the number of Vested TSUs awarded to Participant herein no later than thirty (30) days following each applicable Vesting Date. |
| 4.2. | Except as otherwise provided herein or in the Plan, the Company will deliver to Participant an amount of shares of its common stock equal to the number of Vested PSUs awarded to Participant herein no later than the conclusion of the fiscal quarter in which such PSU first became a Vested PSU. |
| 4.3. | Participant agrees and acknowledges that the Company has the power and right to deduct or withhold, or require Participant to remit to the Company, an amount sufficient to satisfy any federal, state, local and foreign taxes of any kind (including, but not limited to, Participant’s FICA and SDI obligations) which the Company, in its good faith discretion, deems necessary to be withheld or remitted to comply with the Code and/or any other applicable law, rule or regulation with respect to the RSUs, and if the withholding requirement cannot be satisfied, the Company may otherwise refuse to issue or transfer any shares of common stock otherwise required to be issued pursuant to this Agreement. Without limiting the foregoing, Participant agrees that the Company may withhold shares of common stock otherwise deliverable to Participant hereunder with a Fair Market Value equal to Participant’s total income and employment taxes imposed as a result of the vesting and/or settlement of the RSUs to the extent provided in the Plan. |
| 5. | Non-Transferability . No portion of or interest in the RSUs may be sold, assigned, transferred, encumbered, hypothecated or pledged by Participant, other than to the Company as a result of forfeiture of the RSUs as provided herein. |
| 6. | Dividends; Rights as Stockholder . Cash dividends on the number of shares of Common Stock issuable hereunder shall be credited to a dividend book entry account on behalf of Participant with respect to each RSU granted to Participant, provided that such cash dividends shall not be deemed to be reinvested in shares of Common Stock and shall be held uninvested and without interest and paid in cash at the same time that the shares of Common Stock underlying the RSUs are delivered to Participant in accordance with the provisions hereof. Stock or property dividends on shares of Common Stock shall be credited to a dividend book entry account on behalf of Participant with respect to each RSU granted to Participant, provided that such stock or property dividends shall be paid in (i) shares of Common Stock, (ii) in the case of a spin-off, shares of stock of the entity that is spun-off from the Company, or (iii) other property, as applicable and in each case, at the same time that the shares of Common Stock underlying the RSUs are delivered to Participant in accordance with the provisions hereof. Except as otherwise provided herein, Participant shall have no rights as a stockholder with respect to any shares of Common Stock covered by any RSU unless and until Participant has become the holder of record of such shares. |
| 7. | Additional Provisions . |
| 7.1. | All questions concerning the construction, validity and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas, without regard to the choice of law principles thereof. |
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| 7.2. | The Company may at any time place legends referencing any applicable federal, state or foreign securities law restrictions on all certificates, if any, representing shares of common stock issued pursuant to this Agreement. Participant shall, at the request of the Company, promptly present to the Company any and all certificates, if any, representing shares of common stock acquired pursuant to this Agreement in the possession of Participant in order to carry out the provisions of this paragraph. |
| 7.3. | No waiver or non-action by either party hereto with respect to any breach by the other party of any provision of this Agreement shall be deemed or construed to be a waiver of any succeeding breach of such provision, or as a waiver of the provision itself. |
| 7.4. | This Agreement, together with the Plan, contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter. The Compensation Committee shall have the right, in its sole discretion, to modify or amend this Agreement from time to time in accordance with and as provided in the Plan. This Agreement may also be modified or amended by a writing signed by both the Company and Participant. The Company shall give written notice to Participant of any such modification or amendment of this Agreement as soon as practicable after the adoption thereof. |
| 7.5. | Any notice hereunder by Participant shall be given to the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the Director of Human Resources and Legal Departments of the Company. Any notice by the Company shall be given to Participant in writing and such notice shall be deemed duly given only upon receipt thereof at such address as Participant may have on file with the Company. |
| 7.6. | Any questions as to whether and when there has been a Termination and the cause of such Termination shall be determined in the sole discretion of the Committee. Nothing in this Agreement shall interfere with or limit in any way the right of the Company, its Subsidiaries or its Affiliates to terminate Participant’s employment or service at any time, for any reason and with or without Cause. |
| 7.7. | Participant unambiguously authorizes, agrees and consents to transmission by the Company (or any Subsidiary) of any personal data information related to the RSUs awarded under this Agreement for legitimate business purposes (including, without limitation, the administration of the Plan). This consent and authorization is freely given. |
| 7.8. | The grant of RSUs and the issuance of shares of common stock hereunder shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act, the Exchange Act and in each case any respective rules and regulations promulgated thereunder) and any other applicable law, rule, regulation or exchange requirement. The Company shall not be obligated to issue RSUs or shares of common stock pursuant to this Agreement if any such issuance would violate any such requirements. As a condition to settlement of the RSUs, the Company may require Participant to satisfy any qualifications necessary or appropriate to evidence compliance with any applicable law or regulation. |
| 7.9. | This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns. Participant shall not assign any part of this Agreement without the prior express written consent of the Company. |
| 7.10. | The titles and headings herein are for convenience of reference only and shall not be deemed to be a part of this Agreement. |
| 7.11. | This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument. |
| 7.12. | Each party hereto shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as either party hereto reasonably may request in order to carry out the intent and accomplish the purposes hereof and the consummation of the transactions contemplated in this Agreement and the Plan; provided that no such additional documents shall contain terms or conditions inconsistent with the terms and conditions of this Agreement. |
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| 7.13. | The invalidity or unenforceability of any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law. |
| 7.14. | Participant acknowledges and agrees that: (a) the Company may terminate or amend the Plan at any time; (b) the award of RSUs made under this Agreement is completely independent of any other award or grant and is made at the sole discretion of the Company; (c) no past grants or awards (including, without limitation, the RSUs awarded hereunder) give Participant any right to any grants or awards in the future whatsoever; and (d) any benefits granted under this Agreement are not part of Participant’s ordinary salary, and shall not be considered as part of such salary in the event of severance, redundancy or resignation. |
| 8. | Definitions . Certain terms used herein are defined in the Plan. Certain other terms are defined below: |
| 8.1. | “Code” means the Internal Revenue Code of 1986, as amended. |
| 8.2. | “Employer” means Ultra Resources, Inc. |
| 8.3. | “Participant” is defined in the Letter. |
| 8.4. | “Plan” means the Ultra Petroleum Corp. 2017 Stock Incentive Plan as Amended and Restated June 8, 2018. |
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