UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☑ Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2021
OR
☐ Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from ______ to ______
Commission file number: 001-36053
Expro Group Holdings N.V.
(Exact name of registrant as specified in its charter)
The Netherlands | 98-1107145 | |||
(State or other jurisdiction of | (IRS Employer | |||
1311 Broadfield Boulevard, Suite 400 | ||||
Houston, Texas | 77084 | |||
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (713) 463-9776
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, €0.06 nominal value | XPRO | New York Stock Exchange |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☑ | Non-accelerated filer | ☐ | Smaller reporting company | ☐ | 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. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
As of June 30, 2021, the aggregate market value of the common stock of the registrant held by non-affiliates of the registrant was approximately $613.0 million.
As of February 28, 2022, there were 109,377,501 shares of common stock, €0.06 nominal value per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement in connection with the 2022 Annual Meeting of Stockholders, to be filed no later than 120 days after the end of the fiscal year to which this Form 10-K relates, are incorporated by reference into Part III of this Form 10-K.
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2021 |
||
TABLE OF CONTENTS |
||
Page |
||
PART I |
||
Item 1. |
||
Item 1A. |
||
Item 1B. |
||
Item 2. |
||
Item 3. |
||
Item 4. |
||
PART II |
||
Item 5. |
30 | |
Item 6. |
||
Item 7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
Item 7A. |
||
Item 8. |
||
Item 9. |
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure |
|
Item 9A. |
||
Item 9B. |
||
Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 111 |
PART III |
||
Item 10. |
||
Item 11. |
||
Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
112 |
Item 13. |
Certain Relationships and Related Transactions, and Director Independence |
|
Item 14. |
||
PART IV |
||
Item 15. |
||
Item 16. |
||
PART I
General
Expro Group Holdings N.V. is a Netherlands limited liability company (Naamloze Vennootschap) and includes the activities of Expro Group Holdings International Limited, Frank’s International C.V. and their wholly owned subsidiaries (either individually or together, as context requires, “Expro,” the “Company,” “we,” “us” and “our”).
On March 10, 2021, the Company and New Eagle Holdings Limited, an exempted company limited by shares incorporated under the laws of the Cayman Islands and a direct wholly owned subsidiary of the Company (“Merger Sub”), entered into an Agreement and Plan of Merger with Expro Group Holdings International Limited (“Legacy Expro”) providing for the merger of Legacy Expro with and into Merger Sub in an all-stock transaction, with Merger Sub surviving the merger as a direct, wholly owned subsidiary of the Company (the “Merger”). The Merger closed on October 1, 2021, and the Company, previously known as Frank’s International N.V. (“Frank’s”), was renamed Expro Group Holdings N.V. The Merger has been accounted for using the acquisition method of accounting with Legacy Expro being identified as the accounting acquirer. The historical financial statements presented in this Annual Report on Form 10-K (this “Form 10-K”) reflect the financial position, results of operations and cash flows of only Legacy Expro for all periods prior to the Merger and of the combined company (including activities of Frank’s) for all periods subsequent to the Merger.
Our Operations
With roots dating to 1938, the Company is a leading provider of energy services, offering cost-effective, innovative solutions and what the Company considers to be best-in-class safety and service quality. The Company’s extensive portfolio of capabilities spans well construction, well flow management, subsea well access, and well intervention and integrity solutions. The Company provides services in many of the world’s major offshore and onshore energy basins, with over 100 locations and operations in approximately 60 countries. The Company’s broad portfolio of products and services provides solutions to enhance production and improve recovery across the well lifecycle, from exploration through abandonment.
Description of Business Segments
Our operations are comprised of four operating segments which also represent our reporting segments and are aligned with our geographic regions as follows:
• |
North and Latin America (“NLA”), |
• |
Europe and Sub-Saharan Africa (“ESSA”), |
• |
Middle East and North Africa (“MENA”), and |
• |
Asia-Pacific (“APAC”). |
The table below shows our consolidated revenue and each segment’s revenue and percentage of consolidated revenue for the periods indicated (revenue in thousands):
Year Ended December 31, |
||||||||||||||||||||||||
2021 |
2020 |
2019 |
||||||||||||||||||||||
Revenue |
Percent |
Revenue |
Percent |
Revenue |
Percent |
|||||||||||||||||||
NLA |
$ | 193,156 | 23.4 | % | $ | 115,738 | 17.2 | % | $ | 174,058 | 21.5 | % | ||||||||||||
ESSA |
300,557 | 36.4 | % | 219,534 | 32.5 | % | 256,790 | 31.7 | % | |||||||||||||||
MENA |
171,136 | 20.7 | % | 194,033 | 28.7 | % | 237,065 | 29.3 | % | |||||||||||||||
APAC |
160,913 | 19.5 | % | 145,721 | 21.6 | % | 142,151 | 17.5 | % | |||||||||||||||
Total |
$ | 825,762 | 100 | % | $ | 675,026 | 100 | % | $ | 810,064 | 100 | % |
Our broad portfolio of products and services are designed to enhance production and improve recovery across the well lifecycle from exploration through abandonment, including:
Well Construction |
• |
Our well construction products and services support customers’ new wellbore drilling, wellbore completion and recompletion, and wellbore plug and abandonment requirements. In particular, we offer advanced technology solutions in drilling, tubular running services, cementing and tubulars. With a focus on innovation, we are continuing to advance the way wells are constructed by optimizing process efficiency on the rig floor, developing new methods to handle and install tubulars and mitigating well integrity risks. |
Well Management |
Our well management offerings consist of well flow management, subsea well access and well intervention and integrity services: |
• |
Well flow management: We gather valuable well and reservoir data, with a particular focus on well-site safety and environmental impact. We provide global, comprehensive well flow management systems for the safe production, measurement and sampling of hydrocarbons from a well during the exploration and appraisal phase of a new field; the flowback and clean-up of a new well prior to production; and in-line testing of a well during its production life. We also provide early production facilities to accelerate production; production enhancement packages to enhance reservoir recovery rates through the realization of production that was previously locked within the reservoir; and metering and other well surveillance technologies to monitor and measure flow and other characteristics of wells. |
• |
Subsea well access: With over 35 years of experience providing a wide range of fit-for-purpose subsea well access solutions, our technology aims to ensure safe well access and optimized production throughout the lifecycle of the well. We provide what we believe to be the most reliable, efficient and cost-effective subsea well access systems for exploration and appraisal, development, intervention and abandonment, including an extensive portfolio of standard and bespoke Subsea Test Tree Assemblies, a rig-deployed Intervention Riser System and a vessel-deployed, wire through water Riserless Well Intervention System. We also provide systems integration and project management services. |
• |
Well intervention and integrity: We provide well intervention solutions to capture well data, ensure well bore integrity and improve production. In addition to our extensive fleet of mechanical and cased hole wireline units, we have recently introduced a number of cost-effective, innovative well intervention services, including CoilHose™, a lightweight, small-footprint solution for wellbore lifting, cleaning and chemical treatments; Octopoda™, for fluid treatments in wellbore annuli; and Galea™, an autonomous well intervention solution. We also possess several other distinct technical capabilities, including non-intrusive metering technologies and wireless telemetry systems for reservoir monitoring. |
Corporate Strategy
The combination of Legacy Expro and Frank’s brought together two companies with decades of market leadership to create a leading energy services provider with an extensive portfolio of capabilities across the well lifecycle. As a result of the Merger, we believe that the Company is well positioned to support customers around the world, improve profitability and invest in emerging growth opportunities. Our corporate strategy is designed to leverage existing capabilities and position the Company as a solutions provider with a technologically differentiated offering. In particular, the Company’s objectives for 2022, which will drive our performance in the year ahead, include: (i) exceeding industry expectations in regard to safety and operational performance; (ii) advancing our products and services portfolio to provide customers with cost-effective, innovative solutions to produce oil and gas resources more efficiently and with a lower carbon footprint; (iii) improving financial performance by expediting the realization of Merger-related synergies, sustaining our relentless drive for efficiency and better utilizing existing assets; (iv) nurturing our culture based on core values and agreed behaviors, empowering our people to be innovative, agile and responsive, and embracing diversity; and (v) leveraging the power of data to improve our own business practices and deliver more value to our customers.
Human Capital
At Expro, people are at the heart of our success and we are united by our Code of Conduct (“Code of Conduct”) and our core values; People, Performance, Partnerships, and Planet. We are committed to living our values through corporate responsibility efforts that help people across the globe live better lives and build sustainable, vibrant, stable communities where highly motivated people can engineer futures. We strive to consistently improve the ways in which we work to keep our employees safe, minimize our impact on the environment and ensure our governance is robust and transparent.
At December 31, 2021, we had approximately 7,200 employees worldwide. We are a party to collective bargaining agreements or other similar arrangements in certain international areas in which we operate. At December 31, 2021, approximately 18% of our employees were subject to collective bargaining agreements, with 12% being under agreements that expire within one year. We consider our relations with our employees to be positive. In the United States, most employees are at-will employees and, therefore, not subject to any type of employment contract or agreement. Outside the United States, the Company enters into employment contracts and agreements in those countries in which such relationships are mandatory or customary. Based upon the geographic diversification of our employees, we believe any risk of loss from employee strikes or other collective actions would not be material to the conduct of our operations taken as a whole.
Diversity and Inclusion
At Expro, we strive to be a safe, diverse and inclusive people-focused company that positively impacts local communities and society. Most people recognize the importance of diversity at work and the benefits it can bring to the organization and its people. However, diversity is only half of the story. The other half is inclusion: building a work environment in which people feel valued for who they are, bring their whole selves to work and contribute fully. In an inclusive work environment, people with different backgrounds, religious beliefs, sexual orientations, ethnicity and other differences feel like they belong.
We strive to ensure the equal treatment of all employees, job applicants and associated personnel regardless of race, color, nationality, ethnic or nation originals, sex, disability, age, religion or belief, or any other factors prohibited by law. We aim to create a work environment free of harassment and bullying, where everyone is treated with dignity and respect.
Diversity and inclusiveness are important to our current and future success by providing varied experiences, ideas and insights to inform decisions, identify new approaches and solve business challenges. Our goal is to put the right people forward to do the right work for the right customers, in the right places, attracting, retaining and nurturing a talented and diverse workforce to turn our growth ambitions into reality.
Employee Learning and Development
We demonstrate our commitment to our values through our employee development initiatives. We invest in our people through learning and development programs that reinforce and update existing skill sets, and which develop employees’ competencies into new and complementary areas of expertise. Employees are empowered to drive their career progression through various learning platforms to facilitate achievement and career progression. A key tenet of our development is our strong performance management culture that enables and informs management development plans and succession planning.
We also actively solicit employee feedback and constantly strive to make the Company an employer of choice. We empower employees with an ownership mindset that encourages accountability and creativity – leading to new and better solutions.
Employee Welfare and Development
We offer opportunities for a challenging career in an energetic and friendly work environment. Providing our workforce with a career path, training, fair pay, and challenging, rewarding work are key tenets of our success. Our benefit packages are tailored to the local market of operation and are designed to attract and retain the best talent in the industry.
Safety
Safety is a critical component of our People and Performance core values. Many of our customers have safety standards we must satisfy before we can perform services. We continually monitor and improve our safety performance through the evaluation of safety observations, job and customer surveys, and safety data. The primary measures for our safety performance are the tracking of the Lost Time Injury Frequency rate (“LTIF”) and the Total Recordable Case Frequency rate (“TRCF”). LTIF is a measure of the frequency of injuries that result in lost work time, normalized on the basis of per million man-hours worked. TRCF is a measure of the frequency of recordable workplace injuries, normalized on the basis of per million man-hours worked. A recordable injury includes occupational death, nonfatal occupational illness, and other occupational injuries that involve loss of consciousness, lost time injuries, restriction of work or motion cases, transfer to another job, or medical treatment cases other than first aid.
The table below presents the combined worldwide LTIF and TRCF for Legacy Expro and Frank’s for the years ended December 31, 2021, 2020 and 2019:
Year Ended December 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
LTIF |
0.46 | 0.34 | 0.54 | |||||||||
TRCF |
1.31 | 1.34 | 1.78 |
We have comprehensive compliance policies, programs and training that are applied globally to our entire workforce. Employees are required to complete Coronavirus Disease 2019 (“COVID-19”) trainings to adhere to safe and responsible work environments. We also standardize our global training processes to ensure all jobs are executed to high standards of safety and quality.
Code of Business Conduct and Ethics
We pledge to be forthright in all our business interactions and conduct our business to the highest ethical standards. That commitment extends to strict compliance with all relevant laws, regulations and business standards. We have comprehensive compliance programs and policies that are applied globally to our entire workforce. Our ethical foundation is our Code of Conduct, the provisions of which all employees are expected to understand and comply with. Our compliance and ethics policies undergo regular review.
We require every employee worldwide to complete an online Code of Conduct training course every year, which addresses conflicts of interest, confidentiality, fair dealing with others, proper use of company assets, compliance with laws, insider trading, maintenance of books and records, zero tolerance for discrimination and harassment in the work environment, as well as reporting of violations.
Suppliers and Raw Materials
We acquire component parts, products and raw materials from suppliers, including foundries, forge shops, and original equipment manufacturers. The prices we pay for our raw materials may be affected by, among other things, energy, steel and other commodity prices, tariffs and duties on imported materials and foreign currency exchange rates. Certain equipment utilized within our product lines are only available from a limited number of suppliers.
Our ability to source low cost raw materials and components, such as steel castings and forgings, is critical to our ability to manufacture our products competitively. In order to purchase raw materials and components in a cost effective manner, we have sought to develop a broad international sourcing capability and we maintain quality assurance and testing programs to analyze and test these raw materials and components.
Intellectual Property
We own and control a variety of intellectual property, including patents, proprietary information, trade secrets and software tools and applications. We currently hold multiple U.S. and international patents and have a number of pending patent applications. Although in the aggregate our patents and licenses are important to us, we do not regard any single patent or license as critical or essential to our business as a whole.
Seasonality
Seasonal changes in weather and significant weather events can temporarily affect the delivery of our products and services and otherwise impact our business. For example, the winter months in the North Sea and the monsoon season in South and Southeast Asia can produce severe weather conditions that can temporarily reduce levels of activity. In addition, hurricanes and typhoons can disrupt coastal and offshore operations. Furthermore, customer spending patterns may result in higher or lower activity in the fourth quarter of the year based on year-to-date spending relative to their approved annual budgets and higher or lower activity in the first quarter of the year based on whether or not the new year’s budget has been approved.
Customers
We derive our revenue from services and product sales to customers primarily in the oil and gas industry. No single customer accounted for more than 10% of our revenue for the year ended December 31, 2021. One customer in our MENA segment accounted for 16% and 14% of our consolidated revenue for the years ended December 31, 2020 and 2019, respectively.
Competition
The markets in which we operate are competitive. We compete with a number of companies, some of which have financial and other resources greater than ours. We believe the principal competitive factors in the markets in which we participate include the technologies and solutions offered, the quality, price and availability of products and services, safety and service quality, operating footprint and responsiveness to customer needs.
We believe several factors support our strong competitive position. Our portfolio of technology-enabled products and services fulfill a wide range of our customers’ requirements. We also seek to differentiate ourselves from our competitors by providing a high level of customer service, by providing innovative products and solutions and by supporting our customers on a global basis. Finally, our quality assurance systems, experienced personnel and track record all support a strong reputation for safe operations, environmental stewardship, compliance with laws and ethical commercial engagement.
Governmental Regulations
We are subject to numerous environmental and other governmental and regulatory requirements related to our operations worldwide.
Environmental and Occupational Health and Safety Regulation
Our operations are subject to numerous and complex laws and regulations governing the emission and discharge of materials into the environment, occupational health and safety aspects of our operations, or otherwise relating to environmental protection. Failure to comply with these laws or regulations or to obtain or comply with permits may result in the assessment of sanctions, including administrative, civil and criminal penalties, imposition of investigatory, remedial or corrective actions, the required incurrence of capital expenditures, the occurrence of restrictions, delays or cancellations in the permitting, development or expansion of projects, and the imposition of orders or injunctions to prohibit or restrict certain activities or force future compliance.
Certain environmental laws may impose joint and several strict liability, without regard to fault or the legality of the original conduct, on classes of persons who are considered to be responsible for the release of a hazardous substance into the environment. The trend in environmental regulation is to typically place more stringent restrictions and limitations on activities that may impact the environment, and thus, any changes in environmental laws and regulations or in enforcement policies that result in more stringent and costly waste handling, storage, transport, disposal, or remediation requirements could have a material adverse effect on our operations and financial position. Moreover, accidental releases or spills of regulated substances may occur in the course of our operations, and we cannot assure that we will not incur significant costs and liabilities as a result of such releases or spills, including any third-party claims for damage to property, natural resources or persons.
The following is a summary of the more significant existing environmental and occupational health and safety laws and regulations to which our business operations are subject and for which compliance could have a material adverse impact on our capital expenditures, results of operations or financial position.
Climate Change
Climate change continues to attract considerable attention in the United States and other countries. Numerous proposals have been made and could continue to be made at the international, national, regional and state levels of government to monitor and limit existing emissions of greenhouse gases (“GHGs”) as well as to restrict or eliminate such future emissions. As a result, our operations are subject to a series of regulatory, political, litigation, and financial risks associated with the transport of fossil fuels and emission of GHGs.
Separately, various governments have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions. At the international level, there is a non-binding agreement, the United Nations-sponsored “Paris Agreement,” for nations to limit their GHG emissions through individually-determined reduction goals every five years after 2020. While the United States withdrew from the Paris Agreement under the Trump Administration, effective November 4, 2020, President Biden issued an executive order on January 20, 2021 recommitting the United States to the Paris Agreement. Under the Paris Agreement, the Biden Administration has committed the United States to reducing its greenhouse gas emissions by 50 - 52% from 2005 levels by 2030. In November 2021, the Unites States and other countries entered into the Glasgow Climate Pact, which includes a range of measures designed to address climate change, including but not limited to the phase-out of fossil fuel subsidies, reducing methane emissions by 30% by 2030, and cooperating toward the advancement of the development of clean energy. With the United States recommitting to the Paris Agreement, executive orders may be issued or federal legislation or regulatory initiatives may be adopted to achieve the agreement’s goals.
There are also increasing risks of litigation related to climate change effects. Governments and third-parties have brought suit against some fossil fuel companies alleging, among other things, that such companies created public nuisances by marketing fuels that contributed to global warming effects, such as rising sea levels, and therefore are responsible for roadway and infrastructure damages as a result, or alleging that the companies have been aware of the adverse effects of climate change for some time but defrauded their investors by failing to adequately disclose those impacts. Similar or more demanding cases are occurring in other jurisdictions where we operate. For example, in December 2019, the High Council of the Netherlands ruled that the government of the Netherlands has a legal obligation to decrease the country’s GHG emissions, and in May 2021, the Hague District Court ordered Royal Dutch Shell plc to reduce its worldwide emissions by 45% by 2030 compared to 2019 levels. Such litigation has the potential to adversely affect the production of fossil fuels, which in turn could result in reduced demand for our services.
Financial risks also exist for fossil fuel producers (and companies that provide products and services to fossil fuel producers) as shareholders who are currently invested in such fossil fuel companies but are concerned about the potential effects of climate change may elect in the future to shift some or all of their investments into other sectors. Banks and institutional lenders that provide financing to fossil fuel companies (and their suppliers and service providers) also have become more attentive to sustainable lending practices and some of them may elect not to provide funding for fossil fuel companies. Additionally, in recent years, the practices of institutional lenders have been the subject of intensive lobbying efforts not to provide funding for such companies. Oftentimes this pressure has been public in nature, by environmental activists, proponents of the international Paris Agreement, and foreign citizenry concerned about climate change. Limitation of investments in and financings for fossil fuel companies could result in the restriction, delay or cancellation of production of crude oil and natural gas, which could in turn decrease demand for our services. Our own operations could also face limitations on access to capital as a result of these trends, which could adversely affect our business and results of operation.
The adoption and implementation of new or more stringent international, federal or state legislation, regulations or other regulatory initiatives that impose more stringent standards for GHG emissions from the oil and natural gas sector or otherwise restrict the areas in which this sector may produce oil and natural gas or generate GHG emissions could result in increased costs of compliance or costs of consuming, and thereby reduce demand for, oil and natural gas, which could reduce demand for our services and products. Additionally, political, litigation and financial risks may result in our oil and natural gas customers restricting or canceling production activities, incurring liability for infrastructure damages as a result of climatic changes, or impairing their ability to continue to operate in an economic manner, which also could reduce demand for our services and products. Moreover, the increased competitiveness of alternative energy sources (such as wind, solar geothermal, tidal and biofuels) could reduce demand for hydrocarbons, and therefore for our products and services, which would lead to a reduction in our revenues. Over time, one or more of these developments could have a material adverse effect on our business, financial condition and results of operations.
Hydraulic Fracturing
Hydraulic fracturing is an important and common practice in the oil and gas industry. The process involves the injection of water, sand and chemicals under pressure into a formation to fracture the surrounding rock and stimulate production of hydrocarbons. While we may provide supporting products through our cementing product offering, we do not perform hydraulic fracturing, but many of our onshore customers utilize this technique. Certain environmental advocacy groups and regulatory agencies have suggested that additional federal, state and local laws and regulations may be needed to more closely regulate the hydraulic fracturing process, and have made claims that hydraulic fracturing techniques are harmful to surface water and drinking water resources and may cause earthquakes. Various governmental entities (within and outside the United States) are in the process of studying, restricting, regulating or preparing to regulate hydraulic fracturing, directly or indirectly. Additionally, states and local governments may also seek to limit hydraulic fracturing activities through time, place, and manner restrictions on operations or ban the process altogether. The adoption of legislation or regulatory programs that restrict hydraulic fracturing could adversely affect, reduce or delay well drilling and completion activities, increase the cost of drilling and production, and thereby reduce demand for our services. There also exists the potential for states and local governments to pursue new or amended laws, regulations, executive actions and other regulatory initiatives that could impose more stringent restrictions on hydraulic fracturing, including potential restrictions on hydraulic fracturing by banning new oil and gas permitting on federal lands.
Offshore Regulatory and Marine Safety
Spurred on by environmental and safety concerns, governing bodies from time to time have pursued moratoria and legislation or regulatory initiatives that would materially limit or prohibit offshore drilling in certain areas, including areas where we or our oil and gas exploration and production customers conduct operations such as on the federal Outer Continental Shelf waters in the United States Gulf of Mexico.
Employee Health and Safety
We are subject to a number of federal and state laws and regulations, including the Occupational Safety and Health Act and comparable state statutes, establishing requirements to protect the health and safety of workers. In addition, the U.S. Occupational Safety and Health Administration hazard communication standard, the EPA community right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act and comparable state statutes require that information be maintained concerning hazardous materials used or produced in our operations and that this information be provided to employees, state and local government authorities and the public. Substantial fines and penalties can be imposed and orders or injunctions limiting or prohibiting certain operations may be issued in connection with any failure to comply with laws and regulations relating to worker health and safety.
We also operate in non-U.S. jurisdictions, which may impose similar legal requirements. Historically, our environmental and worker safety costs to comply with existing environmental laws and regulations have not had a material adverse impact on us. However, we believe that it is reasonably likely that the trend in environmental legislation and regulation will continue toward stricter standards and, thus, we cannot give any assurance that such costs will not materially adversely affect us in the future.
Operating Risk and Insurance
We maintain insurance coverage of types and amounts that we believe to be customary and reasonable for companies of our size and with similar operations. In accordance with industry practice, however, we do not maintain insurance coverage against all of the operating risks to which our business is exposed. Therefore, there is a risk our insurance program may not be sufficient to cover any particular loss or all losses.
Currently, our insurance program includes, among other things, general liability, umbrella liability, sudden and accidental pollution, personal property, vehicle, workers’ compensation, and employer’s liability coverage. Our insurance includes various limits and deductibles or retentions, which must be met prior to or in conjunction with recovery. We generally do not procure or maintain business interruption insurance.
Available Information
Our principal executive offices are located at 1311 Broadfield Boulevard, Suite 400, Houston, Texas 77084, and our telephone number at that address is (713) 463-9776. Our website address is www.expro.com, and we make available free of charge through our website our Annual Reports on Form 10-K, Proxy Statements, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports, as soon as reasonably practicable after such materials are electronically filed with or furnished to the SEC. Our website also includes general information about us, including our Code of Conduct, Financial Code of Ethics, Corporate Governance Guidelines, Whistleblower Policy and charters for the Audit Committee, Compensation Committee and the Nominating and Governance Committee of our Board of Directors (our “Board”). We may from time to time provide important disclosures to investors by posting them in the investor relations section of our website, as allowed by Securities and Exchange Commission (“SEC”) rules. Also, it is our intention to provide disclosure of amendments and waivers by website posting. Information on our website or any other website is not incorporated by reference herein and does not constitute a part of this report.
Information about Our Executive Officers and Other Key Employees
The following table sets forth, as of February 28, 2022, the names, ages and experience of our executive officers and other key employees, including all offices and positions held by each for the past five years.
Name | Age | Current Position and Five-Year Business Experience |
Michael Jardon | 52 | President and Chief Executive Officer and Director, since October 2021; Chief Executive Officer, Legacy Expro, from April 2016 to October 2021; various technical and executive roles, Legacy Expro, Vallourec and Schlumberger Limited, from 1992 to 2016. |
Quinn Fanning | 58 | Chief Financial Officer, since October 2021; Chief Financial Officer, Legacy Expro, from October 2019 to October 2021; Executive Vice President, Tidewater Inc., from July 2008 to March 2019, Chief Financial Officer, Tidewater Inc., from July 2008 to November 2018; investment banker with Citigroup Global Markets, Inc., from 1996 to 2008. |
Alistair Geddes | 59 | Chief Operating Officer, since October 2021; Chief Operating Officer, Legacy Expro, from 2019 to October 2021; Executive Vice President, Product Lines, Technology and Business Development, Legacy Expro, from 2014 to 2019; various technical and executive roles, Expro, ExxonMobil, BG Group and Weatherford International plc from 1984 to 2014. |
Steven Russell | 54 | Chief Technology Officer, since October 2021; Senior Vice President, Operations, Frank’s, from November 2019 to October 2021; President, Tubular Running Services, Frank’s, from June 2018 to November 2019; Senior Vice President, Human Resources, Frank’s, May 2017 to June 2018; Vice President, Human Resources, Archer Ltd., from January 2011 to May 2017; various technical and executive roles, Schlumberger Limited, from 1990 to 2011. |
John McAlister | 55 | General Counsel and Secretary, since October 2021; Group General Counsel, Legacy Expro, from June 2006 to October 2021; solicitor, Clifford Chance, and various executive roles, BG Group, Lattice Group plc and National Grid plc, from 1991 to 2006. |
Michael Bentham | 59 | Principal Accounting Officer, since October 2021; Principal Accounting Officer and Vice President, Legacy Expro, from October 2019 to October 2021; Chief Financial Officer, Legacy Expro, from July 2017 to October 2019; IDS Product Line Controller, Schlumberger Limited, from July 2016 to July 2017; Vice President Finance MI Swaco, Schlumberger Limited, from August 2012 to June 2016. |
Nigel Lakey | 63 | Senior Vice President, Portfolio Advancement, since October 2021; Senior Vice President, Technology, Frank’s, from November 2019 to October 2021; and President, Tubular and Drilling Technologies, Frank’s, from June 2018 to October 2019. |
Keith Palmer | 62 | Primary Integration Lead, since October 2021; Primary Integration Lead, Legacy Expro, from September 2021 to October 2021; Executive Vice President – Product Lines, Legacy Expro, from May 2019 to September 2021; Vice President Asia Pacific, Legacy Expro, from May 2016 to May 2019; President Expro PTI, Legacy Expro, from January 2015 to May 2016. |
Natalie Questell | 48 | Senior Vice President, Human Resources, since October 2021; Vice President of Human Resources, Frank’s, from June 2018 to October 2021; Director of Global Total Rewards and HRIS, Frank’s, from 2015 to June 2018. |
Karen David-Green | 53 | Chief Communications, Stakeholder, and Sustainability Officer, since October 2021; Chief Communications, Stakeholder, and Sustainability Officer, Legacy Expro, from June 2021 to October 2021; previously Senior Vice President, Stakeholder Engagement & Chief Marketing Officer, Weatherford International plc. |
SUMMARY RISK FACTORS
Our business is subject to varying degrees of risk and uncertainty. Investors should consider the risks and uncertainties summarized below, as well as the risks and uncertainties discussed in Part I, Item 1A. Risk Factors of this Annual Report on Form 10-K. Additional risks not presently known to us or that we currently deem immaterial may also affect us. If any of these risks occur, our business, financial condition and results of operations could be materially and adversely affected.
Our business is subject to the following principal risks and uncertainties:
Risks Related to Our Business and Operations
• |
Our business depends on the level of activity in the oil and gas industry. |
• |
Physical dangers are inherent in our operations and may expose us to significant potential losses. Personnel and property may be harmed during the process of drilling for and producing oil and gas. |
• |
We are particularly vulnerable to risks associated with our offshore operations. |
• |
Our operations and revenue expose us to political, economic and other uncertainties inherent in doing business in each of the countries in which we operate. |
• |
To compete in our industry, we must continue to develop new technologies and products to support our operations, secure and maintain patents related to our current and new technologies and products and protect and enforce our intellectual property rights. |
• |
Our services and products are provided in connection with operations that are subject to potential hazards inherent in the oil and gas industry, and, as a result, we are exposed to potential liabilities that may affect our financial condition and reputation. |
• |
We may not be fully indemnified against financial losses in all circumstances. |
• |
The industry in which we operate has undergone and may continue to undergo consolidation. |
• |
We are subject to the risk of supplier concentration. |
• |
Seasonal and weather conditions, as well as natural disasters, could adversely affect demand for our services and products and could result in severe property damage or materially and adversely disrupt our operations. |
• |
Investor and public perception related to the Company’s environment, social, and governance (“ESG”) performance as well as current and future ESG reporting requirements, may affect our business and our operating results. |
• |
Events outside of our control, including the ongoing COVID-19 pandemic, have and may further materially adversely affect our business. |
• |
Our business could be negatively affected by cybersecurity threats and other disruptions. |
• |
Our executive officers and certain key personnel are critical to our business, and these officers and key personnel may not remain with us in the future. |
• |
If we are unable to adapt our business to the effects of the energy transition in a timely and effective manner, our financial condition and results of operations could be negatively impacted. |
Risks Related to the Merger
• |
The failure to integrate successfully the businesses of Frank’s and Legacy Expro could adversely affect the Company’s future results. |
• |
The combined company’s ability to utilize the historic U.S. net operating loss carryforwards of Frank’s and of Legacy Expro may be limited. |
• |
Certain of the shareholders of the Company have the ability to exercise significant influence over certain corporate actions. |
Risks Related to Accounting and Financial Matters
• |
Customer credit risks could result in losses. |
• |
If our assets are impaired, we may be required to record significant non-cash charges to our earnings. |
• |
Restrictions in the agreement governing our Revolving Credit Facility (“RCF”) could adversely affect our business, financial condition, results of operations and stock price. |
Risks Related to Legal and Regulatory Requirements
• |
Our operations and our customers’ operations are subject to a variety of governmental laws and regulations that may increase our costs, limit the demand for our services and products or restrict our operations. |
• |
Our operations are subject to environmental and operational safety laws and regulations that may expose us to significant costs and liabilities. |
• |
Our operations may be adversely affected by various laws and regulations in countries in which we operate relating to the equipment and operation of drilling units, oil and gas exploration and development, as well as import and export activities. |
• |
The imposition of restrictions or prohibitions on drilling by any governing body may have a material adverse effect on our business. |
• |
There are various risks associated with greenhouse gases and climate change legislation or regulations that could result in increased operating costs and reduced demand for our services. |
• |
We are required to comply with a number of complex laws pertaining to business conduct, including the U.S. Foreign Corrupt Practices Act and similar legislation enacted by Governments outside the U.S. |
• |
Data protection and regulations related to privacy, data protection and information security could increase our costs. |
Risks Related to Our Common Stock
• |
Our declaration of dividends is within the discretion of our Board, and subject to certain limitations under Dutch law and our financing agreements, and there can be no assurance that we will pay dividends. |
• |
As a Dutch company with limited liability, the rights of our shareholders may be different from the rights of shareholders in companies governed by the laws of U.S. jurisdictions. |
• |
Our articles of association and Dutch corporate law contain provisions that may discourage a takeover attempt. |
• |
It may be difficult for you to obtain or enforce judgments against us or some of our executive officers and directors in the United States or the Netherlands. |
Risks Related to Tax Matters
• |
Changes in tax laws, treaties or regulations or adverse outcomes resulting from examination of our tax returns could adversely affect our financial results. |
• |
We are a Netherlands limited liability company classified as a corporation for U.S. federal income tax purposes, and our U.S. holders may be subject to certain anti-deferral rules under U.S. tax law. |
• |
U.S. “anti-inversion” tax laws could adversely affect our results, result in a reduced amount of foreign tax credit for U.S. holders, or limit future acquisitions of U.S. businesses. |
You should carefully consider the risks described below together with the other information contained in this Form 10-K. Realization of any of the following risks could have a material adverse effect on our business, financial condition, cash flows and results of operations.
Risks Related to Our Business and Operations
Our business depends on the level of activity in the oil and gas industry.
Our business depends on the level of activity in oil and gas exploration, development and production in market sectors worldwide. Oil and gas prices and market expectations of potential changes in these prices significantly affect this level of activity. However, higher commodity prices do not necessarily translate into increased drilling or well construction and completion activity, since customers’ expectations of future commodity prices typically drive demand for our services and products. The availability of quality drilling prospects, exploration success, relative production costs, the stage of reservoir development and political and regulatory environments also affect the demand for our services and products. Worldwide military, political and economic events have in the past contributed to oil and gas price volatility and continue to do so at present. In addition, the effects of epidemics and concerns, such as the COVID-19 pandemic, has materially impacted the demand for crude oil and natural gas, which has contributed to further price volatility. Average daily prices for Brent crude oil ranged from a low of approximately $50 per barrel in January 2021 to a high of approximately $86 per barrel in October 2021. Even during periods of high prices for oil and natural gas, companies exploring for oil and gas may cancel or curtail programs, seek to renegotiate contract terms, including the price of our products and services, or reduce their levels of capital expenditures for exploration and production for a variety of reasons. These risks are greater during periods of low or declining commodity prices. As a result of declining commodity prices, certain of our customers may be unable to pay their vendors and service providers, including us. In addition, the transition of the global energy sector from primarily a fossil fuel-based system to renewable energy sources could affect our customers’ levels of expenditures. Reduced activity in our areas of operation as a result of decreased capital spending could have a negative long-term impact on our business, even in an environment of stronger oil and natural gas prices.
The demand for our services and products may also be generally affected by numerous factors, including:
• |
the supply and demand for energy and the resulting level of worldwide oil and gas exploration and production; |
• |
the cost of exploring for, producing and delivering oil and gas; |
• |
the ability of Organization of Petroleum Exporting Countries (“OPEC”) and OPEC+ to set and maintain production levels for oil; |
• |
the level of production by non-OPEC countries; |
• |
global or national health concerns, including health epidemics such as the outbreak of COVID-19; |
• |
the location of oil and gas drilling and production activity, including the relative amounts of activity onshore and offshore; |
• |
the technical specifications of wells including depth of wells and complexity of well design; |
• |
U.S. and global political and economic uncertainty or inactivity, socio-political unrest and instability or hostilities; |
• |
demand for, availability of and technological viability of, alternative sources of energy; and |
• |
technological advances affecting energy exploration, production, transportation and consumption. |
Demand for our offshore services and products substantially depends on the level of activity in offshore oil and gas exploration, development and production. The level of offshore activity is historically cyclical and characterized by large fluctuations in response to relatively minor changes in a variety of factors, including oil and gas prices, which could have a material adverse effect on our business, financial condition and results of operations.
Physical dangers are inherent in our operations and may expose us to significant potential losses. Personnel and property may be harmed during the process of drilling for and producing oil and gas.
Drilling for and producing oil and gas, and the associated services that we provide, include inherent dangers that may lead to property damage, personal injury, death or the discharge of hazardous materials into the environment. Many of these events are outside our control. Typically, we provide services at a well site where our personnel and equipment are located together with personnel and equipment of our customers and third parties, including other service providers. At many sites, we depend on other companies and personnel to conduct drilling operations in accordance with applicable environmental laws and regulations and appropriate safety standards. From time to time, personnel are injured or equipment or property is damaged or destroyed as a result of accidents, failed equipment, faulty products or services, failure of safety measures, uncontained formation pressures, or other dangers inherent in drilling for oil and gas. Often, our services are deployed on more challenging prospects, particularly deepwater offshore drilling sites, where the occurrence of the types of events mentioned above can have an even more catastrophic impact on people, equipment and the environment. Such events may expose us to significant potential losses, which could adversely affect our business, financial condition and results of operations.
We are particularly vulnerable to risks associated with our offshore operations.
We conduct offshore operations in almost every significant international offshore market. Our operations and financial results could be significantly impacted by conditions in some of these areas because we are vulnerable to certain unique risks associated with operating offshore, including those relating to:
• |
hurricanes, ocean currents and other adverse weather conditions; |
• |
terrorist attacks and piracy; |
• |
failure of offshore equipment and facilities; |
• |
local and international political and economic conditions and policies and regulations related to offshore drilling; |
• |
territorial disputes involving sovereignty over offshore oil and gas fields; |
• |
unavailability of offshore drilling rigs in the markets that we operate; |
• |
the cost of offshore exploration for, and production and transportation of, oil and gas; |
• |
successful exploration for, and production and transportation of, oil and gas from onshore sources; |
• |
the availability and rate of discovery of new oil and gas reserves in offshore areas; |
• |
the availability of infrastructure to support oil and gas operations; and |
• |
the ability of oil and gas companies to generate or otherwise obtain funds for exploration and production. |
While the impact of these factors is difficult to predict, any one or more of these factors could adversely affect our business, financial condition and results of operations.
Our operations and revenue expose us to political, economic and other uncertainties inherent in doing business in each of the countries in which we operate.
We are exposed to risks inherent in doing business in each of the countries in which we operate, including, but not limited to, the following:
• |
political, social and economic instability; |
• |
potential expropriation, seizure or nationalization of assets, and trapped assets; |
• |
deprivation of contract rights; |
• |
increased operating costs; |
• |
inability to collect revenue due to shortages of convertible currency; |
• |
unwillingness of foreign governments to make new onshore and offshore areas available for drilling; |
• |
civil unrest and protests, strikes, acts of terrorism, war or other armed conflict; |
• |
import/export quotas; |
• |
confiscatory taxation or other adverse tax policies; |
• |
continued application of foreign tax treaties; |
• |
currency exchange controls; |
• |
currency exchange rate fluctuations and devaluations; |
• |
inflation; |
• |
restrictions on the repatriation of funds; and |
• |
other forms of government regulation which are beyond our control. |
Instability and disruptions in the political, regulatory, economic and social conditions of the countries in which we conduct business, including economically and politically volatile areas such as Eastern Europe, Africa and the Middle East, could cause or contribute to factors that could have an adverse effect on the demand for the products and services we provide. Worldwide political, economic, and military events have contributed to oil and gas price volatility and are likely to continue to do so in the future. Depending on the market prices of oil and gas, oil and gas exploration and development companies may cancel or curtail their drilling or other programs, thereby reducing demand for our services.
In addition, in some countries our local managers may be personally liable for the acts of the Company, and may be subject to prosecution, detention, and the assessment of monetary levies, fines or penalties, or other actions by local governments in their individual capacity. Any such actions taken against our local managers could cause disruption of our business and operations, and could cause us to incur significant costs.
While the impact of these factors is difficult to predict, any one or more of these factors could adversely affect our business, financial condition and results of operations.
To compete in our industry, we must continue to develop new technologies and products to support our operations, secure and maintain patents related to our current and new technologies and products and protect and enforce our intellectual property rights.
The markets for our services and products are characterized by continual technological developments. While we believe that the proprietary equipment we have developed provides us with technological advantages in providing services to our customers, substantial improvements in the scope and quality of the equipment in the market we operate may occur over a short period of time. In addition, alternative products and services may be developed which may compete with or displace our products and services. If we are not able to develop commercially competitive products in a timely manner in response, our ability to service our customers’ demands may be adversely affected. Our future ability to develop new equipment in order to support our operations depends on our ability to design and produce equipment that allow us to meet the needs of our customers and third parties on an integrated basis and obtain and maintain patent protection.
We may encounter resource constraints, technical barriers, or other difficulties that would delay introduction of new services and products in the future. Our competitors may introduce new products or obtain patents before we do and achieve a competitive advantage. Additionally, the time and expense invested in product development may not result in commercial applications.
We currently hold multiple U.S. and international patents and have multiple pending patent applications for products and processes. Patent rights give the owner of a patent the right to exclude third parties from making, using, selling, and offering for sale the inventions claimed in the patents in the applicable country. Patent rights do not necessarily grant the owner of a patent the right to practice the invention claimed in a patent, but merely the right to exclude others from practicing the invention claimed in the patent. It may also be possible for a third party to design around our patents. Furthermore, patent rights have territorial limits. Some of our work will be conducted in international waters and would, therefore, not fall within the scope of any country’s patent jurisdiction. We may not be able to enforce our patents against infringement occurring in international waters and other “non-covered” territories. Also, we do not have patents in every jurisdiction in which we conduct business and our patent portfolio will not protect all aspects of our business and may relate to obsolete or unusual methods, which would not prevent third parties from entering the same market.
We attempt to limit access to and distribution of our technology and trade secrets by customarily entering into confidentiality agreements with our employees, customers and potential customers and suppliers. However, our rights in our confidential information, trade secrets, and confidential know-how will not prevent third parties from independently developing similar information. Publicly available information (for example, information in expired issued patents, published patent applications, and scientific literature) can also be used by third parties to independently develop technology. We cannot provide assurance that this independently developed technology will not be equivalent or superior to our proprietary technology.
In addition, we may become involved in legal proceedings from time to time to protect and enforce our intellectual property rights. Third parties from time to time may initiate litigation against us by asserting that the conduct of our business infringes, misappropriates or otherwise violates intellectual property rights. We may not prevail in any such legal proceedings related to such claims, and our products and services may be found to infringe, impair, misappropriate, dilute or otherwise violate the intellectual property rights of others. Any legal proceeding concerning intellectual property could be protracted and costly and is inherently unpredictable and could have a material adverse effect on our business, regardless of its outcome. Further, our intellectual property rights may not have the value that management believes them to have and such value may change over time as we and others develop new product designs and improvements.
Our services and products are provided in connection with operations that are subject to potential hazards inherent in the oil and gas industry, and, as a result, we are exposed to potential liabilities that may affect our financial condition and reputation.
Our services and products are provided in connection with potentially hazardous drilling, completion and production applications in the oil and gas industry where an accident can potentially have catastrophic consequences. This is particularly true in deepwater operations. Risks inherent to these applications, such as equipment malfunctions and failures, equipment misuse and defects, explosions, blowouts and uncontrollable flows of oil, gas or well fluids and natural disasters, on land or in deepwater or shallow water environments, can cause personal injury, loss of life, suspension of operations, damage to formations, damage to facilities, business interruption and damage to or destruction of property, surface water and drinking water resources, equipment, natural resources and the environment. If our services fail to meet specifications or are involved in accidents or failures, we could face warranty, contract, fines or other litigation claims, which could expose us to substantial liability for personal injury, wrongful death, property damage, loss of oil and gas production, pollution and other environmental damages. Our insurance policies may not be adequate to cover all liabilities. Further, insurance may not be generally available in the future or, if available, insurance premiums may make such insurance commercially unjustifiable. Moreover, even if we are successful in defending a claim, it could be time-consuming and costly to defend. In addition, the frequency and severity of such incidents will affect operating costs, insurability and relationships with customers, employees and regulators.
We may not be fully indemnified against financial losses in all circumstances where damage to or loss of property, personal injury, death or environmental harm occur.
As is customary in our industry, our contracts typically provide that our customers indemnify us for claims arising from the injury or death of their employees, the loss or damage of their equipment, damage to the reservoir and pollution emanating from the customer’s equipment or from the reservoir (including uncontained oil flow from a reservoir). Conversely, we typically indemnify our customers for claims arising from the injury or death of our employees, the loss or damage of our equipment, or pollution emanating from our equipment. Our contracts typically provide that our customer will indemnify us for claims arising from catastrophic events, such as a well blowout, fire or explosion.
Our indemnification arrangements may not protect us in every case. For example, from time to time (i) we may enter into contracts with less favorable indemnities or perform work without a contract that protects us, (ii) our indemnity arrangements may be held unenforceable in some courts and jurisdictions or (iii) we may be subject to other claims brought by third parties or government agencies. Furthermore, the parties from which we seek indemnity may not be solvent, may become bankrupt, may lack resources or insurance to honor their indemnities, or may not otherwise be able to satisfy their indemnity obligations to us. The lack of enforceable indemnification could expose us to significant potential losses. Further, our assets generally are not insured against loss from political violence such as war, terrorism or civil unrest. If any of our assets are damaged or destroyed as a result of an uninsured cause, we could recognize a loss of those assets.
The industry in which we operate has undergone and may continue to undergo consolidation.
Some of our largest customers have consolidated in recent years and are using their size and purchasing power to achieve economies of scale and pricing concessions. This consolidation may result in reduced capital spending by such customers or the acquisition of one or more of our other primary customers, which may lead to decreased demand for our products and services. If we cannot maintain sales levels for customers that have consolidated or replace such revenue with increased business activities from other customers, this consolidation activity could have a significant negative impact on our business, financial condition and results of operations. We are unable to predict what effect consolidations in our industry may have on prices, capital spending by customers, selling strategies, competitive position, ability to retain customers or ability to negotiate favorable agreements with customers.
Certain of our product lines depend on a limited number of third party suppliers. As a result of this concentration in some of our supply chains, our business and operations could be negatively affected if our key suppliers were to experience significant disruptions affecting the price, quality, availability or timely delivery of their products. The partial or complete loss of any one of our key suppliers, or a significant adverse change in the relationship with any of these suppliers, through consolidation or otherwise, would limit our ability to manufacture or sell certain of our products.
Seasonal and weather conditions, as well as natural disasters, could adversely affect demand for our services and products and could result in severe property damage or materially and adversely disrupt our operations.
Weather can have a significant impact on demand as consumption of energy is seasonal, and any variation from normal weather patterns, such as cooler or warmer summers and winters, can have a significant impact on demand. Adverse weather conditions, such as hurricanes and ocean currents in the U.S. Gulf of Mexico or typhoons in the Asia Pacific region, may interrupt or curtail our operations or our customers’ operations, cause supply disruptions and result in a loss of revenue and damage to our equipment and facilities, which may or may not be insured. In addition, acute or chronic physical impacts of climate change, such as sea level rise, coastal storm surge, inland flooding from intense rainfall and hurricane-strength winds may damage our facilities. Extreme winter conditions in Canada, Russia, or the North Sea, or droughts in more arid regions in which we do business may interrupt or curtail our operations, or our customers’ operations, and result in a loss of revenue. If the facilities we own are damaged by severe weather or any other disaster, accident, catastrophe or event, our operations could be significantly interrupted. Similar interruptions could result from damage to production or other facilities that provide supplies or other raw materials to our plants or other stoppages arising from factors beyond our control. These interruptions might involve significant damage to property, among other things, and repairs might take from a week or less for a minor incident to many months or more for a major interruption.
In addition, a portion of our business involves the movement of people and certain parts and supplies to or from foreign locations. Any restrictions on travel or shipments to and from foreign locations, due to the occurrence of natural disasters such as earthquakes, floods or hurricanes, in these locations, could significantly disrupt our operations and decrease our ability to provide services to our customers. If a natural disaster were to impact a location where we have a high concentration of business and resources, our local facilities and workforce could be affected by such an occurrence or outbreak which could also significantly disrupt our operations and decrease our ability to provide services and products to our customers.
Investor and public perception related to the Company’s ESG performance as well as current and future ESG reporting requirements may affect our business and our operating results.
Increasing focus on ESG factors has led to enhanced interest in, and review of performance results by investors, banks, institutional lenders and other stakeholders, and the potential for reputational risk. Regulatory requirements related to ESG or sustainability reporting have been issued in the European Union (“EU”) that apply to financial market participants, with implementation and enforcement starting in 2021. In the U.S., such regulations have been issued related to pension investments in California, and for the responsible investment of public funds in Illinois. Additional regulation is pending in other states. We expect regulatory requirements related to ESG matters to continue to expand globally. The Company is committed to transparent and comprehensive reporting of our sustainability performance. If we are not able to meet future sustainability reporting requirements of regulators or current and future expectations of investors, customers or other stakeholders, our business and ability to raise capital may be adversely affected.
Events outside of our control, including the ongoing COVID-19 pandemic, have and may further materially adversely affect our business.
We face risks related to pandemics, epidemics, outbreaks or other public health events that are outside of our control, and could significantly disrupt our operations and adversely affect our financial condition. For example, the ongoing COVID-19 pandemic has resulted in significant global economic disruption, including in the U.S. and many other geographic areas where we operate, or where our customers are located or suppliers or vendors operate. As the global economy and demand for crude oil and natural gas continues to recover from the global impact of the COVID-19 pandemic, the persistent effects from new variants, including Delta and Omicron, have further constrained recovery of global economic activity and has resulted in substantial volatility in demand for and market prices of crude oil and natural gas. Any prolonged period of economic slowdown or recession resulting from the negative effects of COVID-19 on economic and business prospects across the world may negatively impact crude oil prices and the demand for our products and services, and could have significant adverse consequences on our financial condition and the financial condition of our customers, suppliers and other counterparties.
While many governmental authorities have implemented multi-step policies towards the goal of reopening their economies, certain jurisdictions have reinstated certain restrictions due to a rise in COVID-19 cases as a result of new variants. We have experienced, and expect to continue to experience, some periodic disruptions to our business operations, as these government restrictions have significantly impacted, and may continue to impact, many sectors of the economy. Our business involves movement of people and certain parts and supplies to or from foreign locations, and the reinstatement of travel restrictions in certain countries where we operate, including the temporary closure of international borders, will continue to disrupt such movement and decrease our ability to provide products and services to our customers. In addition, the risk of infection and the associated health risks with the new variants of COVID-19 may adversely affect our operations or the health of our workforce and the workforces of our customers and service providers by rendering employees or contractors unable to work.
In addition, the technology required for the corresponding transition to remote work increases our vulnerability to cybersecurity threats, including threats to gain unauthorized access to sensitive information or to render data or systems unusable, the impact of which may have material adverse effects on our business and operations. See “—Our business could be negatively affected by cybersecurity threats and other disruptions.”
The ultimate impact of the COVID-19 pandemic is difficult to predict, and the extent to which it may negatively affect our operating results or the duration of any potential business disruption is uncertain. Any potential impact will depend on future developments, including the duration and spread of the COVID-19 pandemic and any new variants, the actions taken by authorities to contain it or treat its impact, and the impact on overall economic activity, all of which are uncertain and are outside of our control. These potential impacts, while uncertain, could adversely affect our operating results.
Our business could be negatively affected by cybersecurity threats and other disruptions.
We rely heavily on information systems to conduct and protect our business. These information systems are increasingly subject to sophisticated cybersecurity threats such as unauthorized access to data and systems, loss or destruction of data (including confidential customer information), computer viruses, ransomware, or other malicious code, phishing and cyberattacks, and other similar events. These threats arise from numerous sources, not all of which are within our control, including fraud or malice on the part of third parties, accidental technological failure, electrical or telecommunication outages, failures of computer servers or other damage to our property or assets, or outbreaks of hostilities or terrorist acts.
Given the rapidly evolving nature of cyber threats, there can be no assurance that the systems we have designed and implemented to prevent or limit the effects of cyber incidents or attacks will be sufficient in preventing all such incidents or attacks, or avoiding a material impact to our systems when such incidents or attacks do occur. If we were to be subject to a cyber incident or attack in the future, it could result in the disclosure of confidential or proprietary customer information, theft or loss of intellectual property, damage to our reputation with our customers and the market, failure to meet customer requirements or customer dissatisfaction, theft or exposure to litigation, damage to equipment (which could cause environmental or safety issues) and other financial costs and losses. In addition, as cybersecurity threats continue to evolve, we may be required to devote additional resources to continue to enhance our protective measures or to investigate or remediate any cybersecurity vulnerabilities.
Our executive officers and certain key personnel are critical to our business, and these officers and key personnel may not remain with us in the future.
We depend greatly on the efforts of our executive officers and other key employees to manage our operations. The loss or unavailability of any of our executive officers or other key employees could have a material adverse effect on our business.
If we are unable to adapt our business to the effects of the energy transition in a timely and effective manner, our financial condition and results of operations could be negatively impacted.
The transition of the global energy sector from primarily a fossil fuel-based system to renewable energy sources could affect our customers’ levels of expenditures. Our business will need to adapt to changing customer preferences and government requirements. If the energy transition occurs faster than anticipated or in a manner we do not anticipate, demand for our services and products could be adversely affected. In addition, if we fail or are perceived to not effectively implement an energy transition strategy, or if investors, banks or institutional lenders shift funding away from companies in fossil fuel-related industries, our access to capital or the market for our securities could be negatively impacted.
Risks Relating to the Merger
The failure to integrate successfully the businesses of Frank’s and Legacy Expro could adversely affect the Company’s future results.
The Merger involves the integration of two companies that prior to October 1, 2021, operated independently. The success of the Merger will depend -- in large part -- on the ability of the combined company to realize the anticipated benefits, including cost savings, among others, from combining the businesses of Frank’s and Legacy Expro. To realize these anticipated benefits, the businesses of Frank’s and Legacy Expro must be successfully integrated. This integration will be complex and time-consuming. The failure to integrate successfully and to manage successfully the challenges presented by the integration process may result in the combined company not achieving the anticipated benefits of the Merger.
In particular, the Company may fail to realize the anticipated benefits and synergies expected from the Merger, which could adversely affect its business, financial condition and operating results. The success of the Merger will depend, in significant part, on the combined company’s ability to successfully integrate the acquired business and realize the anticipated strategic benefits and synergies from the combination. Company management believes that the Merger will provide operational and financial scale, increasing free cash flow, and enhancing the combined company’s corporate returns on invested capital. However, achieving these goals requires, among other things, realization of the targeted cost synergies expected from the Merger. The anticipated benefits of the Merger and actual operating, technological, strategic and revenue opportunities may not be realized fully or at all, or may take longer to realize than expected. If the Company is not able to achieve these objectives and realize the anticipated benefits and synergies expected from the Merger within the anticipated timing or at all, the combined company’s business, financial condition and operating results may be adversely affected.
The Company will also incur significant integration-related costs and there is potential for unknown liabilities, unforeseen expenses, delays associated with post-Merger integration activities and performance shortfalls of the combined company as a result of the diversion of management’s attention caused by completing the Merger and integrating the companies’ operations. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. Additionally, there are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated, including accounting and finance, asset management, benefits, billing, health, safety and environmental, human resources, maintenance, marketing, payroll and purchasing. The expenses of integrating these systems could, particularly in the near term, exceed the savings that the combined company expects to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings.
Any of these difficulties in successfully integrating the businesses of Frank’s and Legacy Expro, or any delays in the integration process, could adversely affect the combined company’s ability to achieve the anticipated benefits of the Merger and could adversely affect the combined company’s business, financial results, financial condition and stock price.
The combined company’s ability to utilize the historic U.S. net operating loss carryforwards of Frank’s and of Legacy Expro may be limited.
As of December 31, 2021, Frank’s and Legacy Expro had U.S. federal net operating loss carryforwards (“NOLs”) of approximately $447.4 million and $98.2 million, respectively, net of existing Section 382 (as defined below) limitations. $156.4 million and $30.8 million, respectively, of these NOLs were incurred prior to January 1, 2018 and will begin to expire, if unused, in 2036 and 2022, respectively. $291.0 million and $67.4 million of these NOLs were incurred on or after January 1, 2018 and will not expire and will be carried forward indefinitely. The combined company’s ability to utilize these NOLs and other tax attributes to reduce future taxable income following the consummation of the Merger depends on many factors, including its future income, which cannot be assured. Section 382 of the Code (“Section 382”) generally imposes an annual limitation on the amount of NOLs that may be used to offset taxable income when a corporation has undergone an “ownership change” (as determined under Section 382). An ownership change generally occurs if one or more stockholders (or groups of stockholders) who are each deemed to own at least 5% of such corporation’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. In the event that an ownership change occurs, utilization of the relevant corporation’s NOLs would be subject to an annual limitation under Section 382, generally determined, subject to certain adjustments, by multiplying (i) the fair market value of such corporation’s stock at the time of the ownership change by (ii) a percentage approximately equivalent to the yield on long-term tax-exempt bonds during the month in which the ownership change occurs. Any unused annual limitation may be carried over to later years.
The Company underwent an ownership change under Section 382 as a result of the Merger, which, based on information currently available, may trigger a limitation (calculated as described above) on the combined company’s ability to utilize any historic Frank’s NOLs and could cause some of the Frank’s NOLs incurred prior to January 1, 2018 to expire before the combined company would be able to utilize them to reduce taxable income in future periods. While the exchange of ordinary shares of Legacy Expro for shares of the Company's common stock (“Company Common Stock”) in the Merger was, standing alone, insufficient to result in an ownership change with respect to Legacy Expro, we cannot assure you that the Company will not undergo an ownership change as a result of the Merger taking into account other changes in ownership of Company stock occurring within the relevant three-year period described above. If there were to be an ownership change with respect to Legacy Expro as a result of the Merger, the combined company may be prevented from fully utilizing Legacy Expro’s historic NOLs incurred prior to January 1, 2018 prior to their expiration.
Certain of the shareholders of the Company have the ability to exercise significant influence over certain corporate actions.
Entities affiliated with Oak Hill Advisors, L.P. and members of the Mosing family and entities they control could have significant influence over the outcome of matters requiring a shareholder vote, including the election of directors, the adoption of any amendment to the articles of association of the Company and the approval of mergers and other significant corporate transactions. Their influence over the Company may have the effect of delaying or preventing a change of control or may adversely affect the voting and other rights of other shareholders. In addition, entities affiliated with Oak Hill Advisors, L.P. have the right to designate two nominees for election to the combined company’s nine member board of directors and members of the Mosing family have the right to designate one nominee for election to such board. Finally, if these shareholders were in the future to sell all or a material number of shares of Company Common Stock, the market price of Company’s Common Stock could be negatively impacted.
Risks Related to Accounting and Financial Matters
Customer credit risks could result in losses.
The concentration of our customers in the energy industry may impact our overall exposure to credit risk as customers may be similarly affected by prolonged changes in economic and industry conditions. Those countries that rely heavily upon income from hydrocarbon exports would be hit particularly hard by a drop in oil prices such as the drop that has occurred this year. Further, laws in some jurisdictions in which we operate could make collection difficult or time consuming. We perform ongoing credit evaluations of our customers and do not generally require collateral in support of our trade receivables. While we maintain reserves for potential credit losses, we cannot assure such reserves will be sufficient to meet write-offs of uncollectible receivables or that our losses from such receivables will be consistent with our expectations.
In addition, customers experiencing financial difficulty may delay payment for our products and services. Such delays, even if accounts are ultimately paid in full, could reduce our cash resources available and materially and adversely impact our credit available from suppliers and financial institutions.
If our assets are impaired, we may be required to record significant non-cash charges to our earnings.
We recognize impairments of goodwill when the fair value of any of our reporting units becomes less than its carrying value. Our estimates of fair value are based on assumptions about future cash flows of each reporting unit, discount rates applied to these cash flows and current market estimates of value. Based on the uncertainty of future revenue growth rates, gross profit performance, and other assumptions used to estimate our reporting units’ fair value, future reductions in our expected cash flows could cause a material non-cash impairment charge of goodwill, which could have a material adverse effect on our results of operations and financial condition.
Please see additional discussion regarding goodwill in “Management’s Discussion & Analysis of Financial Condition and Results of Operation—Critical accounting policies and estimates—Goodwill and identified intangible assets.”
We also have certain long-lived assets, other intangible assets and other assets which could be at risk of impairment or may require reserves based upon anticipated future benefits to be derived from such assets. Any change in the valuation of such assets could have a material effect on our profitability.
Restrictions in the agreement governing our RCF could adversely affect our business, financial condition, results of operations and stock price.
The operating and financial restrictions in our RCF and any future financing agreements could restrict our ability to finance future operations or capital needs, or otherwise pursue our business activities. For example, our RCF limits our and our subsidiaries’ ability to, among other things:
• |
incur debt or issue guarantees; |
• |
incur or permit certain liens to exist; |
• |
make certain investments, acquisitions or other restricted payments; |
• |
dispose of assets; |
• |
engage in certain types of transactions with affiliates; |
• |
merge, consolidate or transfer all or substantially all of our assets; and |
• |
prepay certain indebtedness. |
Furthermore, our RCF contains financial covenants requiring us to maintain (i) a minimum cashflow cover ratio of 1.5 to 1.0 based on the ratio of cashflow to debt service, (ii) a minimum interest cover ratio of 4.0 to 1.0 based on the ratio of EBITDA to net finance charges and (iii) a maximum senior leverage ratio of 2.25 to 1.0 based on the ratio of total net debt to EBITDA, in each case tested quarterly on a last-twelve-months basis, subject to certain exceptions. In addition, the aggregate capital expenditure of the Company and its subsidiaries cannot exceed 110% of the forecasted amount in the relevant annual budget, subject to certain exceptions.
In addition, any borrowings under our RCF may be at variable rates of interest that expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness will increase even though the amount borrowed will remain the same, and our net income and cash flows will correspondingly decrease.
A failure to comply with the covenants in the agreement governing our RCF could result in an event of default, which, if not cured or waived, would permit the exercise of remedies against us that could have a material adverse effect on our business, results of operations and financial position. Remedies under our RCF include foreclosure on the collateral securing the indebtedness and termination of the commitments under our RCF, and any outstanding borrowings under our RCF may be declared immediately due and payable. Compliance with these covenants is tested quarterly (annually for capital expenditure limits). Furthermore, the facility restricts the payment of dividends, or share buybacks. Please see “Management’s Discussion & Analysis of Financial Condition and Results of Operation—Liquidity and Capital Resources—Revolving Credit Facility” for an expanded discussion regarding our RCF, including current amounts outstanding.
Risks Related to Legal and Regulatory Requirements
Our operations and our customers’ operations are subject to a variety of governmental laws and regulations that may increase our costs, limit the demand for our services and products or restrict our operations.
Our business and our customers’ businesses may be significantly affected by:
• |
federal, state and local restrictions on business activity and travel including stay at home orders and quarantines such as those enacted in response to COVID-19; |
|
• |
federal, state and local and non-U.S. laws and other regulations relating to oilfield operations, worker safety and protection of the environment and natural resources; |
|
• |
changes in these laws and regulations; and |
|
• |
the level of enforcement of these laws and regulations. |
In addition, we depend on the demand for our services and products from the oil and gas industry. This demand is affected by changing taxes, price controls and other laws and regulations relating to the oil and gas industry in general. For example, the adoption of laws and regulations curtailing exploration and development drilling for oil and gas for economic or other policy reasons could adversely affect our operations by limiting demand for our services and products. In addition, some non-U.S. countries may adopt regulations or practices that give advantage to indigenous oil companies in bidding for oil leases, or require indigenous companies to perform oilfield services currently supplied by the Company and other international service companies. To the extent that such companies are not our customers, or we are unable to develop relationships with them, our business may suffer. We cannot determine the extent to which our future operations and earnings may be affected by new legislation, new regulations or changes in existing regulations.
Because of our non-U.S. operations and sales, we are also subject to changes in non-U.S. laws and regulations that may encourage or require hiring of local contractors or require non-U.S. contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. If we fail to comply with any applicable law or regulation, our business, financial condition and results of operations may be adversely affected.
Our operations are subject to environmental and operational safety laws and regulations that may expose us to significant costs and liabilities.
Our oil and gas exploration and production customers’ operations in the United States and other countries are subject to stringent federal, state and local legal requirements governing environmental protection. These requirements may take the form of laws, regulations, executive actions and various other legal initiatives. See Part I, Item 1. “Business – Environmental and Occupational Health and Safety Regulation” for more discussion on these matters. Compliance with these regulations and other regulatory initiatives, or any other new environmental laws and regulations could, among other things, require us or our customers to install new or modified emission controls on equipment or processes, incur longer permitting timelines, and incur significantly increased capital or operating expenditures, which costs may be significant. Additionally, one or more of these developments that impact our customers could reduce demand for our products and services, which could have a material adverse effect on our business, results of operations and financial condition.
Our operations may be adversely affected by various laws and regulations in countries in which we operate relating to the equipment and operation of drilling units, oil and gas exploration and development, as well as import and export activities.
Governments in some foreign countries have been increasingly active in regulating and controlling the ownership of concessions and companies holding concessions, the exploration for oil and gas and other aspects of the oil and gas industries in their countries, including local content requirements for participating in tenders. Many governments favor or effectively require that contracts be awarded to local contractors or require foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. These practices may result in inefficiencies or put us at a disadvantage when we bid for contracts against local competitors.
In addition, the shipment of goods, services and technology across international borders subjects us to extensive trade laws and regulations. Our import and export activities are governed by unique customs laws and regulations in each of the countries where we operate. Moreover, many countries control the import and export of certain goods, services and technology and impose related import and export recordkeeping and reporting obligations. Governments also may impose economic sanctions against certain countries, persons and other entities that may restrict or prohibit transactions involving such countries, persons and entities. We are subject to U.S. anti-boycott laws. The U.S. and other countries also from time to time may impose special punitive tariff regimes targeting goods from certain countries.
The laws and regulations concerning import and export activity, recordkeeping and reporting, import and export control and economic sanctions are complex and constantly changing. These laws and regulations may be enacted, amended, enforced or interpreted in a manner materially impacting our operations. An economic downturn may increase some foreign governments’ efforts to enact, enforce, amend or interpret laws and regulations as a method to increase revenue. Materials that we import can be delayed and denied for varying reasons, some of which are outside our control and some of which may result from failure to comply with existing legal and regulatory regimes. Shipping delays or denials could cause unscheduled operational downtime. Any failure to comply with these applicable legal and regulatory obligations also could result in criminal and civil penalties and sanctions, such as fines, imprisonment, debarment from government contracts, seizure of shipments and loss of import and export privileges.
The imposition of restrictions or prohibitions on drilling by any governing body may have a material adverse effect on our business.
Events over the past decade have heightened environmental and regulatory concerns about the oil and gas industry. From time to time, governing bodies have enacted and may propose legislation or regulations that would materially limit or prohibit drilling in certain areas. If laws are enacted or other governmental action is taken that restricts or prohibits offshore drilling in our expected areas of operation, our expected future growth in offshore services could be reduced and our business could be materially adversely affected. See Part I, Item 1. “Business—Environmental and Occupational Health and Safety Regulation” for more discussion on these regulatory and safety matters. The issuance of more stringent safety and environmental guidelines, regulations or moratoria for drilling could disrupt, delay or cancel drilling operations, increase the cost of drilling operations or reduce the area of operations for drilling. The matters described above, individually or in the aggregate, could have a material adverse effect on our business, financial condition and results of operations.
There are various risks associated with greenhouse gases and climate change legislation or regulations that could result in increased operating costs and reduced demand for our services.
The threat of climate change continues to attract considerable attention. Numerous proposals have been made and could continue to be made at the international, national, regional and state levels of government to monitor and limit existing emissions of GHGs as well as to restrict or eliminate such future emissions. As a result, our operations are subject to a series of regulatory, political, litigation, and financial risks associated with the production and processing of fossil fuels and emission of GHGs. See Part I, Item 1. “Business—Environmental and Occupational Health and Safety Regulation” for more discussion on the threat of climate and restriction of GHG emissions. The adoption and implementation of new or more stringent international, federal or state legislation, regulations or other regulatory initiatives that impose more stringent standards for GHG emissions from the oil and natural gas sector or otherwise restrict the areas in which this sector may produce oil and natural gas or generate GHG emissions could result in increased costs of compliance or costs of consuming fossil fuels, and thereby reduce demand for, oil and natural gas, which could reduce demand for our services and products. Additionally, political, litigation and financial risks may result in our oil and natural gas customers restricting or canceling production activities, incurring liability for infrastructure damages as a result of climatic changes, or impairing their ability to continue to operate in an economic manner, which also could reduce demand for our services and products. One or more of these developments could have a material adverse effect on our business, financial condition and results of operations.
We are required to comply with a number of complex laws pertaining to business conduct, including the U.S. Foreign Corrupt Practices Act and similar legislation enacted by Governments outside the U.S.
We operate internationally and in some countries with high levels of perceived corruption commonly gauged according to the Transparency International Corruption Perceptions Index. We must comply with complex foreign and U.S. laws including the United States Foreign Corrupt Practices Act (“FCPA”), the U.K. Bribery Act 2010 and the United Nations Convention Against Corruption, which prohibit engaging in certain activities to obtain or retain business or to influence a person working in an official capacity. We do business and may in the future do additional business in countries and regions in which we may face, directly or indirectly, corrupt demands by officials, tribal or insurgent organizations, or by private entities in which corrupt offers are expected or demanded. Furthermore, many of our operations require us to use third parties to conduct business or to interact with people who are deemed to be governmental officials under the anticorruption laws. Thus, we face the risk of unauthorized payments or offers of payments or other things of value by our employees, contractors or agents. It is our policy to implement compliance procedures to prohibit these practices. However, despite those safeguards and any future improvements to them, our employees, contractors, and agents may engage in conduct for which we might be held responsible, regardless of whether such conduct occurs within or outside the United States. We may also be held responsible for any violations by an acquired company that occur prior to an acquisition, or subsequent to the acquisition but before we are able to institute our compliance procedures. In addition, our non-U.S. competitors that are not subject to the FCPA or similar anticorruption laws may be able to secure business or other preferential treatment in such countries by means that such laws prohibit with respect to us. A violation of any of these laws, even if prohibited by our policies, may result in severe criminal and/or civil sanctions and other penalties, and could have a material adverse effect on our business. Actual or alleged violations could damage our reputation, be expensive to defend, and impair our ability to do business.
We are currently conducting an internal investigation of the operations of certain of our foreign subsidiaries in West Africa for possible violations of the FCPA, our policies and other applicable laws, and in June 2016 we voluntarily disclosed the existence of our extensive internal review to the SEC, the U.S. Department of Justice (“DOJ”) and other governmental entities. We are unable to predict the ultimate resolution of these matters before the SEC and DOJ. Adverse action by these government agencies could have a material adverse effect on our business.
Compliance with laws and regulations on trade sanctions and embargoes including those administered by the United States Department of the Treasury’s Office of Foreign Assets Control also poses a risk to us. We cannot provide products or services to or in certain countries subject to U.S. or other international trade sanctions or to certain individuals and entities subject to sanctions. Furthermore, the laws and regulations concerning import activity, export recordkeeping and reporting, export control and economic sanctions are complex and constantly changing. Any failure to comply with applicable trade-related laws and regulations, even if prohibited by our policies, could result in criminal and civil penalties and sanctions, such as fines, imprisonment, debarment from governmental contracts, seizure of shipments and loss of import and export privileges. It is our policy to implement procedures concerning compliance with applicable trade sanctions, export controls, and other trade-related laws and regulations. However, despite those safeguards and any future improvements to them, our employees, contractors, and agents may engage in conduct for which we might be held responsible, regardless of whether such conduct occurs within or outside the United States. We may also be held responsible for any violations by an acquired company that occur prior to an acquisition, or subsequent to the acquisition but before we are able to institute our compliance procedures.
Data protection and regulations related to privacy, data protection and information security could increase our costs, and our failure to comply could result in fines, sanctions or other penalties, which could materially and adversely affect our results of operations, as well as have an impact on our reputation.
We are subject to regulations related to privacy, data protection and information security in the jurisdictions in which we do business. As privacy, data protection and information security laws are interpreted and applied, compliance costs may increase, particularly in the context of ensuring that adequate data protection and data transfer mechanisms are in place.
In recent years, there has been increasing regulatory enforcement and litigation activity in the areas of privacy, data protection and information security in the U.S. and in various countries in which we operate. In addition, legislators and/or regulators in the U.S., the EU and other jurisdictions in which we operate are increasingly adopting or revising privacy, data protection and information security laws that could create compliance uncertainty and could increase our costs or require us to change our business practices in a manner adverse to our business. Compliance with current or future privacy, data protection and information security laws could significantly impact our current and planned privacy, data protection and information security related practices, our collection, use, sharing, retention and safeguarding of employee information and information regarding others with whom we do business. Our failure to comply with privacy, data protection and information security laws could result in fines, sanctions or other penalties, which could materially and adversely affect our results of operations and overall business, as well as have an impact on our reputation. For example, the EU’s General Data Protection Regulations 2016/679 (the “GDPR”), as supplemented by any national laws (such as in the U.K., the Data Protection Act 2018) and further implemented through binding guidance from the European Data Protection Board, came into effect on May 25, 2018. The GDPR expanded the scope of the EU data protection law to all foreign companies processing personal data of European Economic Area individuals and imposed a stricter data protection compliance regime, including the introduction of administrative fines for non-compliance, as well as the right to compensation for financial or non-financial damages claimed by any individuals under Article 82 GDPR. Our business may also face reputational damages as a result of any personal data breach or violation of the GDPR.
Risks Related to Our Common Stock
Our declaration of dividends is within the discretion of our Board and subject to certain limitations under Dutch law and our financing agreements, and there can be no assurance that we will pay dividends.
Our dividend policy is within the discretion of our Board, and the amount of future dividends, if any, will depend upon various factors, including our results of operations, financial condition, capital requirements and investment opportunities. We can provide no assurance that we will pay dividends on our common stock. No dividends on our common stock will accrue in arrears. In addition, Dutch law contains certain restrictions on a company’s ability to pay cash dividends, and we can provide no assurance that those restrictions, or any dividend restrictions in our financing agreements, will not prevent us from paying a dividend in future periods.
As a Dutch company with limited liability, the rights of our shareholders may be different from the rights of shareholders in companies governed by the laws of U.S. jurisdictions.
We are a Dutch company with limited liability (Naamloze Vennootschap). Our corporate affairs are governed by our articles of association and by the laws governing companies incorporated in the Netherlands. The rights of shareholders and the responsibilities of members of our Board may be different from those in companies governed by the laws of U.S. jurisdictions.
For example, resolutions of the general meeting of shareholders may be taken with majorities different from the majorities required for adoption of equivalent resolutions in, for example, Delaware corporations. Although shareholders will have the right to approve legal mergers or demergers, Dutch law does not grant appraisal rights to a company’s shareholders who wish to challenge the consideration to be paid upon a legal merger or demerger of a company.
In addition, if a third party is liable to a Dutch company, under Dutch law shareholders generally do not have the right to bring an action on behalf of the company or to bring an action on their own behalf to recover damages sustained as a result of a decrease in value, or loss of an increase in value, of their ordinary shares. Only in the event that the cause of liability of such third party to the company also constitutes a tortious act directly against such shareholder and the damages sustained are permanent, may that shareholder have an individual right of action against such third party on its own behalf to recover damages. The Dutch Civil Code provides for the possibility to initiate such actions collectively. A foundation or an association whose objective, as stated in its articles of association, is to protect the rights of persons having similar interests may institute a collective action. The collective action cannot result in an order for payment of monetary damages but may result in a declaratory judgment (verklaring voor recht), for example declaring that a party has acted wrongfully or has breached a fiduciary duty. The foundation or association and the defendant are permitted to reach (often on the basis of such declaratory judgment) a settlement which provides for monetary compensation for damages. A designated Dutch court may declare the settlement agreement binding upon all the injured parties, whereby an individual injured party will have the choice to opt-out within the term set by the court (at least three months). Such individual injured party, may also individually institute a civil claim for damages within the before mentioned term.
Furthermore, certain provisions of Dutch corporate law have the effect of concentrating control over certain corporate decisions and transactions in the hands of our Board. As a result, holders of our shares may have more difficulty in protecting their interests in the face of actions by members of our Board than if we were incorporated in the United States. In the performance of its duties, our Board will be required by Dutch law to act in the interest of the Company and its affiliated business, and to consider the interests of our company, our shareholders, our employees and other stakeholders in all cases with reasonableness and fairness. It is possible that some of these parties will have interests that are different from, or in addition to, interests of our shareholders.
Our articles of association and Dutch corporate law contain provisions that may discourage a takeover attempt.
Provisions contained in our amended and restated articles of association and the laws of the Netherlands could make it more difficult for a third party to acquire us, even if doing so might be beneficial to our shareholders. Provisions of our articles of association impose various procedural and other requirements, which could make it more difficult for shareholders to effect certain corporate actions. Among other things, these provisions:
• |
authorize our Board, for a period of five years (which ends on May 19, 2022, unless extended) to issue common stock, including for defensive purposes, without shareholder approval; and |
• |
do not provide for shareholder action by written consent, thereby requiring all shareholder actions to be taken at a general meeting of shareholders. |
These provisions, alone or together, could delay hostile takeovers and changes in control of our company or changes in our management.
It may be difficult for you to obtain or enforce judgments against us or some of our executive officers and directors in the United States or the Netherlands.
We were formed under the laws of the Netherlands and, as such, the rights of holders of our ordinary shares and the civil liability of our directors will be governed by the laws of the Netherlands and our amended and restated articles of association.
In the absence of an applicable convention between the United States and the Netherlands providing for the reciprocal recognition and enforcement of judgments (other than arbitration awards and divorce decrees) in civil and commercial matters, a judgment rendered by a court in the United States will not automatically be recognized by the courts of the Netherlands. In principle, the courts of the Netherlands will be free to decide, at their own discretion, if and to what extent a judgment rendered by a court in the United States should be recognized in the Netherlands.
Without prejudice to the above, in order to obtain enforcement of a judgment rendered by a United States court in the Netherlands, a claim against the relevant party on the basis of such judgment should be brought before the competent court of the Netherlands. During the proceedings such court will assess, when requested, whether a foreign judgment meets the above conditions. In the affirmative, the court may order that substantive examination of the matter shall be dispensed with. In such case, the court will confine itself to an order reiterating the foreign judgment against the party against whom it had been obtained. Otherwise, a new substantive examination will take place.
In all of the above situations, we note the following rules as applied by Dutch courts:
• |
where all other elements relevant to the situation at the time of the choice are located in a country other than the country whose law has been chosen, the choice of the parties shall not prejudice the application of provisions of the law of that other country which cannot be derogated from by agreement; |
• |
the overriding mandatory provisions of the law of the courts remain applicable (irrespective of the law chosen); |
• |
effect may be given to overriding mandatory provisions of the law of the country where the obligations arising out of the relevant transaction documents have to be or have been performed, insofar as those overriding mandatory provisions render the performance of the contract unlawful; and |
• |
the application of the law of any jurisdiction may be refused if such application is manifestly incompatible with the public policy (openbare orde) of the courts. |
Under our amended and restated articles of association, we will indemnify and hold our officers and directors harmless against all claims and suits brought against them, subject to limited exceptions. Under our amended and restated articles of association, to the extent allowed by law, the rights and obligations among or between us, any of our current or former directors, officers and employees and any current or former shareholder will be governed exclusively by the laws of the Netherlands and subject to the jurisdiction of Dutch courts, unless those rights or obligations do not relate to or arise out of their capacities listed above. Although there is doubt as to whether U.S. courts would enforce such provision in an action brought in the United States under U.S. securities laws, this provision could make judgments obtained outside of the Netherlands more difficult to have recognized and enforced against our assets in the Netherlands or jurisdictions that would apply Dutch law. Insofar as a release is deemed to represent a condition, stipulation or provision binding any person acquiring our ordinary shares to waive compliance with any provision of the Securities Act or of the rules and regulations of the SEC, such release will be void.
Risks Related to Tax Matters
Changes in tax laws, treaties or regulations or adverse outcomes resulting from examination of our tax returns could adversely affect our financial results.
Our future effective tax rates could be adversely affected by changes in tax laws, treaties and regulations, both in the United States and internationally. Tax laws, treaties and regulations are highly complex and subject to interpretation. Consequently, we are subject to changing tax laws, treaties and regulations in and between countries in which we operate or are resident. Our income tax expense is based upon the interpretation of the tax laws in effect in various countries at the time that the expense was incurred. A change in these tax laws, treaties or regulations, or in the interpretation thereof, could result in a materially higher tax expense or a higher effective tax rate on our worldwide earnings. If any country successfully challenges our income tax filings based on our structure, or if we otherwise lose a material tax dispute, our effective tax rate on worldwide earnings could increase substantially and our financial results could be materially adversely affected.
We are a Netherlands limited liability company classified as a corporation for U.S. federal income tax purposes, and our U.S. holders may be subject to certain anti-deferral rules under U.S. tax law. For instance, U.S. tax authorities could treat us as a “passive foreign investment company” (“PFIC”), which could have adverse U.S. federal income tax consequences to U.S. holders.
A foreign corporation will be treated as a PFIC for U.S. federal income tax purposes if either:
(1) at least 75% of its gross income for any taxable year (including the pro-rata share of the gross income of any company, U.S. or foreign, in which it is considered to own, directly or indirectly, 25% or more of the shares by value) consists of certain types of “passive income” or
(2) at least 50% of the average value of the corporation’s assets for any taxable year (averaged over the year and ordinarily determined based on fair market value and including the pro-rata share of the assets of any company in which it is considered to own, directly or indirectly, 25% or more of the shares by value) produce or are held for the production of those types of “passive income.”
For purposes of these tests, “passive income” includes dividends, interest, gains from the sale or exchange of investment property, and rents and royalties other than certain rents and royalties which are received from unrelated parties in connection with the active conduct of a trade or business, but does not include income derived from the performance of services.
Once a foreign corporation is treated as a PFIC for any taxable year in which a U.S. holder owns stock in the corporation, it will generally continue to be treated as a PFIC for all subsequent taxable years with respect to such U.S. holder. U.S. shareholders of a PFIC are subject to a disadvantageous U.S. federal income tax regime. If we were treated as a PFIC, then a U.S. holder that does not make a “mark-to-market” election or an election to treat us as a “qualified electing fund” will be subject to unfavorable treatment on certain “excess distributions” and any gain recognized on a disposition of our shares. Among other consequences, our dividends (to the extent they constitute excess distributions) and gains from the sale of our shares would be taxed at the regular rates applicable to ordinary income, rather than the lower rate applicable to certain dividends received by an individual from a qualified foreign corporation.
Based on the current and anticipated value of our assets and the composition of our income, assets, and operations, we do not expect to be a PFIC for the current taxable year or in the foreseeable future. However, the application of the PFIC rules involves a facts and circumstances analysis and we cannot assure you that the IRS would agree with our conclusion or that the U.S. tax laws will not change significantly.
The U.S. federal income tax treatment of non-U.S. entities is complicated, and the U.S. federal income tax consequences to each shareholder depends on such shareholder’s particular circumstances. For example, if a U.S. holder owns (or is deemed to own) more than 10% of our shares (by vote or value), such holder may be subject to additional anti-deferral rules not discussed herein, such as those under the “subpart F” and “global intangible low-taxed income” regimes. Accordingly, each of our shareholders is urged to consult its own tax advisors regarding the application of the PFIC rules and other aspects of U.S. tax law that may apply to such shareholder.
U.S. “anti-inversion” tax laws could adversely affect our results, result in a reduced amount of foreign tax credit for U.S. holders, or limit future acquisitions of U.S. businesses.
Under U.S. “anti-inversion” tax laws, if, following the acquisition of a U.S. corporation (or substantially all of the assets of a U.S. corporation) by a foreign corporation, the equity owners of that U.S. corporation own at least 80% (by vote or value, calculated without regard for any stock issued in any public offering) of our stock by reason of holding stock in such U.S. corporation, then the acquiring foreign corporation could be treated as a U.S. corporation for U.S. federal tax purposes even though it is a corporation created and organized outside of the United States. In such event we would be subject to U.S. federal income tax on our worldwide income, which would reduce our cash available for distribution and the value of our common stock, and the ability of a U.S. holder to obtain a U.S. foreign tax credit with respect to any Dutch withholding tax imposed on a distribution from us could be adversely affected.
In addition, following the acquisition of a U.S. corporation (or substantially all of the assets of a U.S. corporation) by a foreign corporation, the U.S. “anti-inversion” rules can limit the ability of an acquired U.S. corporation and its U.S. affiliates to utilize U.S. tax attributes (including net operating losses and certain tax credits) to offset U.S. taxable income resulting from certain transactions if the shareholders of the acquired U.S. corporation hold at least 60% (by vote or value) but less than 80% of the shares of the foreign acquiring corporation by reason of holding shares in the U.S. corporation, and certain other conditions are met.
We do not believe these rules apply to our prior acquisitions of U.S. businesses; however, there can be no assurance that the IRS will not challenge this determination. These rules may apply with respect to any potential future acquisitions of U.S. businesses by us using our stock as consideration. As a result, these rules may impose adverse consequences or apply limitations on our ability to engage in future acquisitions.
Item 1B. Unresolved Staff Comments
None.
In order to design, manufacture and service the proprietary equipment that support our operations, as well as the products that we offer for sale directly to external customers, we maintain several manufacturing and service facilities around the world. We currently provide our services and products in over 100 locations in approximately 60 countries.
The following table details our material facilities by segment, owned or leased by us as of December 31, 2021.
|
Leased or |
|
||
Location | Owned |
Principal/Most Significant Use | ||
All Segments |
||||
Houston, Texas |
Leased |
Corporate office |
||
Reading, United Kingdom |
Leased |
Corporate office |
||
Aberdeen, Scotland |
Owned/Leased |
Regional operations, manufacturing, engineering and administration |
||
Lafayette, Louisiana |
Owned |
Regional operations, manufacturing, engineering and administration |
||
NLA |
||||
Georgetown, Guyana |
Leased |
Regional operations |
||
Macaé, Brazil |
Owned |
Regional operations and administration |
||
Neuquen, Argentina |
Leased |
Regional operations |
||
New Iberia, Louisiana |
Leased |
Regional operations |
||
Villahermosa, Mexico |
Leased |
Regional operations |
||
ESSA |
||||
Den Helder, the Netherlands |
Owned/Leased | Regional operations and administration |
||
Stavanger, Norway |
Leased |
Regional operations |
||
MENA |
||||
Al Khobar, Saudi Arabia |
Leased |
Regional operations |
||
Dubai, United Arab Emirates |
Owned/Leased |
Regional operations and administration |
||
Hassi Messaoud, Algeria |
Leased |
Regional operations |
||
APAC |
||||
Kuala Lumpur, Malaysia |
Leased |
Regional operations and administration |
||
Labuan, Malaysia |
Leased |
Regional operations |
||
Perth, Australia |
Leased |
Regional operations |
Our largest manufacturing facilities are located in Aberdeen, Scotland and Lafayette, Louisiana, where we design and manufacture a substantial portion of our service equipment. We believe the facilities that we currently occupy are suitable for their intended use.
Information related to Item 3. Legal Proceedings is included in Note 18 “Commitments and contingencies” to the consolidated financial statements.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock is traded on the NYSE under the symbol “XPRO”. On September 30, 2021, Frank’s supervisory board of directors unanimously approved a 1-for-6 reverse stock split of the Company Common Stock, which was effected on October 1, 2021. All of the outstanding Company Common Stock share numbers, nominal value, share prices and per share amounts in this Form 10-K have been retroactively adjusted to reflect a 1-for-6 reverse stock split for all periods presented. Prior to the Merger, our common stock traded on the NYSE under the symbol “FI”.
On February 28, 2022, we had 109,377,501 shares of common stock outstanding. The common shares outstanding at February 28, 2022, were held by approximately 21 record holders. The actual number of shareholders is greater than the number of holders of record.
Dividend Policy
The declaration and payment of future dividends will be at the discretion of our Board and will depend upon, among other things, future earnings, general financial condition, liquidity, capital requirements, restrictions contained in our financing agreements and general business conditions. Accordingly, there can be no assurance that we will pay dividends.
Unregistered Sales of Equity Securities
We did not have any sales of unregistered equity securities during the year ended December 31, 2021, that we have not previously reported on a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.
Issuer Purchases of Equity Securities
Our Board has authorized a program to repurchase our common stock from time to time. Approximately $38.5 million remained authorized for repurchase as of December 31, 2021; subject to the limitation set in our shareholder authorization for repurchases of our common stock, which is currently 10% of the common stock outstanding as of August 3, 2021. From the inception of this program in February 2020 to date, we repurchased 95,007 shares of our common stock for a total cost of approximately $1.5 million. As of October 1, 2021, share buybacks are restricted under our Revolving Credit Facility, our main financing agreement.
Performance Graph
The following performance graph compares the performance of our common stock to the Russell 2000 Index, the PHLX Oil Service Sector Index (“OSX”) and to a peer group established by management. The peer group consists of the following companies: Baker Hughes Company, ChampionX Corporation, Core Laboratories N.V., Dril-Quip, Inc., TechnipFMC plc, Halliburton Company, Helix Energy Solutions Group Inc., National Energy Services Reunited Corp., NexTier Oilfield Solutions Inc., Oceaneering International, Inc., NOV Inc. and Schlumberger Limited.
The graph below compares the cumulative total return to holders of our common stock with the cumulative total returns of the Russell 2000 Index, the OSX and our peer group for the period from December 31, 2016 through December 31, 2021. The graph assumes that the value of the investment in our common stock was $100 at December 31, 2016 and for each index (including reinvestment of dividends) and tracks the return on the investment through December 31, 2021. The shareholder return set forth herein is not necessarily indicative of future performance.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Expro Group Holdings N.V., the Russell 2000 Index, the PHLX Oil Service Sector Index,
and a Peer Group
*$100 invested on 12/31/2016, including reinvestment of dividends. |
The performance graph above and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate by reference.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-K includes certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include those that express a belief, expectation or intention, as well as those that are not statements of historical fact. Forward-looking statements include information regarding our future plans and goals and our current expectations with respect to, among other things:
• |
our business strategy and prospects for growth; |
• |
post-Merger integration; |
• |
our cash flows and liquidity; |
• |
our financial strategy, budget, projections and operating results; |
• |
the amount, nature and timing of capital expenditures; |
• |
the availability and terms of capital; |
• |
the exploration, development and production activities of our customers; |
• |
the market for our existing and future products and services; |
• |
competition and government regulations; and |
• |
general economic conditions. |
These forward-looking statements are generally accompanied by words such as “anticipate,” “believe,” “estimate,” “expect,” “goal,” “plan,” “intend,” “potential,” “predict,” “project,” “may,” “outlook,” or other terms that convey the uncertainty of future events or outcomes, although not all forward-looking statements contain such identifying words. The forward-looking statements in this Form 10-K speak only as of the date of this report; we disclaim any obligation to update these statements unless required by law, and we caution you not to rely on them unduly. Forward-looking statements are not assurances of future performance and involve risks and uncertainties. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties include, but are not limited to, the following:
• | continuing uncertainty relating to global crude oil demand and crude oil prices that correspondingly may lead to further significant reductions in domestic oil and gas activity, which in turn could result in further significant declines in demand for our products and services; |
• | uncertainty regarding the extent and duration of the remaining restrictions in the United States and globally on various commercial and economic activities due to COVID-19, including uncertainty regarding the re-imposition of restrictions due to resurgences in infection rates; |
• |
uncertainty regarding the timing, pace and extent of an economic recovery in the United States and elsewhere, which in turn will likely affect demand for crude oil and therefore the demand for the products and services we provide and the commercial opportunities available to us; |
• |
the impact of current and future laws, rulings, governmental regulations, accounting standards and statements, and related interpretations; |
• |
unique risks associated with our offshore operations; |
• |
political, economic and regulatory uncertainties in our international operations, including the impact of actions taken by the OPEC and non-OPEC nations with respect to production levels and the effects thereof; |
• |
our ability to develop new technologies and products; |
• |
our ability to protect our intellectual property rights; |
• |
our ability to attract, train and retain key employees and other qualified personnel; |
• |
operational safety laws and regulations; |
• |
international trade laws and sanctions; |
• |
severe weather conditions and natural disasters, and other operating interruptions (including explosions, fires, weather-related incidents, mechanical failure, unscheduled downtime, labor difficulties, transportation interruptions, spills and releases and other environmental risks); |
• |
policy or regulatory changes; |
• |
the overall timing and level of transition of the global energy sector from fossil-based systems of energy production and consumption to more renewable energy sources; |
• |
perception related to our ESG performance as well as current and future ESG reporting requirements; and |
• |
uncertainty with respect to integration and realization of expected synergies following completion of the Merger. |
The impact of the COVID-19 pandemic and related economic, business and market disruptions continue to evolve, and its future effects are uncertain. The continued impact of COVID-19 on the Company’s business will depend on many factors, many of which are beyond management’s control and knowledge. It is therefore difficult for management to assess or predict with accuracy the broad future effects of this health crisis on the global economy, the energy industry or the Company’s business. As additional information becomes available, events or circumstances change and strategic operational decisions are made by management, further adjustments may be required which could have a material adverse impact on the Company’s consolidated financial position, results of operations and cash flows.
These and other important factors that could affect our operating results and performance are described in (i) Part I, Item 1A “Risk Factors” and in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-K, and elsewhere within this Form 10-K, (ii) our other reports and filings we make with the SEC from time to time and (iii) other announcements we make from time to time. Should one or more of the risks or uncertainties described in the documents above or in this Form 10-K occur, or should underlying assumptions prove incorrect, our actual results, performance, achievements or plans could differ materially from those expressed or implied in any forward-looking statements. All such forward-looking statements in the Form 10-K are expressly qualified in their entirety by the cautionary statements in this section.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the related notes thereto included in Part II, Item 8, “Financial Statements and Supplementary Data” included in this Form 10-K.
This section contains forward-looking statements that are based on management’s current expectations, estimates and projections about our business and operations, and involve risks and uncertainties. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements because of various factors, including those described in the sections titled “Cautionary Note Regarding Forward-Looking Statements,” Part I, Item 1A, “Risk Factors” and elsewhere in this Form 10-K.
Unless otherwise indicated, references to the terms “Frank’s” refers to Frank’s International N.V., the predecessor reporting entity prior to the Merger, references to “Legacy Expro” refer to Expro Group Holdings International Limited, the entity acquired by the Company, and references to “Expro,” the “Company,” “we,” “our,” and “us” refer to Expro Group Holdings N.V., following the consummation of the Merger and unless the context otherwise required, Frank’s prior to the consummation of the Merger.
Overview of Business
Working for clients across the entire well life cycle, we are a leading provider of energy services, offering cost-effective, innovative solutions and what we consider to be best-in-class safety and service quality. The Company’s extensive portfolio of capabilities spans well construction, well flow management, subsea well access, and well intervention and integrity solutions.
With roots dating to 1938, we have approximately 7,200 employees and provide services and solutions to leading exploration and production companies in both onshore and offshore environments in approximately 60 countries with over 100 locations.
Our broad portfolio of products and services are designed to enhance production and improve recovery across the well lifecycle from exploration through abandonment, including:
Well Construction |
• |
Our well construction products and services support customers’ new wellbore drilling, wellbore completion and recompletion, and wellbore plug and abandonment requirements. In particular, we offer advanced technology solutions in drilling, tubular running services, cementing and tubulars. With a focus on innovation, we are continuing to advance the way wells are constructed by optimizing process efficiency on the rig floor, developing new methods to handle and install tubulars and mitigating well integrity risks. |
Well Management |
Our well management offerings consist of well flow management, subsea well access and well intervention and integrity services: |
• |
Well flow management: We gather valuable well and reservoir data, with a particular focus on well-site safety and environmental impact. We provide global, comprehensive well flow management systems for the safe production, measurement and sampling of hydrocarbons from a well during the exploration and appraisal phase of a new field; the flowback and clean-up of a new well prior to production; and in-line testing of a well during its production life. We also provide early production facilities to accelerate production; production enhancement packages to enhance reservoir recovery rates through the realization of production that was previously locked within the reservoir; and metering and other well surveillance technologies to monitor and measure flow and other characteristics of wells. |
• |
Subsea well access: With over 35 years of experience providing a wide range of fit-for-purpose subsea well access solutions, our technology aims to ensure safe well access and optimized production throughout the lifecycle of the well. We provide what we believe to be the most reliable, efficient and cost-effective subsea well access systems for exploration and appraisal, development, intervention and abandonment, including an extensive portfolio of standard and bespoke Subsea Test Tree Assemblies, a rig-deployed Intervention Riser System and a vessel-deployed, wire through water Riserless Well Intervention System. We also provide systems integration and project management services. |
• |
Well intervention and integrity: We provide well intervention solutions to capture well data, ensure well bore integrity and improve production. In addition to our extensive fleet of mechanical and cased hole wireline units, we have recently introduced a number of cost-effective, innovative well intervention services, including CoilHose™, a lightweight, small-footprint solution for wellbore lifting, cleaning and chemical treatments; Octopoda™, for fluid treatments in wellbore annuli; and Galea™, an autonomous well intervention solution. We also possess several other distinct technical capabilities, including non-intrusive metering technologies and wireless telemetry systems for reservoir monitoring. |
We operate a global business and have a diverse and stable customer base that is comprised of national oil companies (“NOC”), international oil companies (“IOC”), independent exploration and production companies (“Independents”) and service partners. We have strong relationships with a number of the world’s largest NOCs and IOCs, some of which have been our customers for decades. We are dedicated to safely and sustainably delivering maximum value to our customers.
We organize and manage our operations on a geographical basis. Our reporting structure and the key financial information used by our management team is organized around our four operating segments: (i) NLA, (ii) ESSA, (iii) MENA and (iv) APAC.
How We Generate Our Revenue
Our revenue is derived primarily from providing services in well construction, well flow management, subsea well access and well intervention and integrity services to operators globally. Our revenue includes equipment service charges, personnel charges, run charges and consumables. Some of our contracts allow us to charge for additional deliverables, such as the costs of mobilization of people and equipment and customer specific engineering costs associated with a project. We also procure products and services on behalf of our customers that are provided by third parties for which we are reimbursed with a mark-up or in connection with an integrated services contract. We also design, manufacture and sell equipment, which is typically done in connection with a related operations and maintenance arrangement with a particular customer. In addition, we also generate revenue from the sale of certain well construction products.
For the year ended December 31, 2021, approximately 71% of our revenue was generated by activities related to offshore oil and gas operations and approximately 41% of our revenue was generated by production optimization activities, which are generally funded by customers’ operating expenditures rather than capital expenditures.
Market Conditions and Price of Oil and Gas
As a full-cycle energy services company, our services span the full life of an oil and gas field from appraisal, development, completion and production through eventual abandonment. While 2021 presented challenges due to ongoing COVID-19 constraints, the market showed positive signs of recovery beginning in late 2021 and continuing into the first quarter of 2022. There are a number of market factors that have had, and may continue to have, an effect on our business, including:
• |
The market for oilfield services and our business are substantially dependent on the condition of the oil and gas industry and, in particular, the willingness of oil and gas companies to make expenditures on exploration, drilling and production activities. |
• |
Oil demand in 2022 is forecast to exceed 2021 as the overall economic backdrop improves through the COVID-19 pandemic recovery with liquid demand expected to grow by 3.6 million barrels per day (“b/d”) in 2022, up from 96.9 million b/d in 2021 (which would surpass 2019 levels), rising by an additional 1.8 million b/d in 2023 to 102.3 million b/d. Due to production curtailments by OPEC+ members, investment restraint from U.S. oil producers, and other supply disruptions during the COVID-19 pandemic, oil demand has outpaced production for over a year. Following reaffirmation from OPEC+ members to increase production again, the Energy Information Administration (“EIA”) forecast that global oil production will outpace demand during both 2022 and 2023, resulting in rising global oil inventories and downward pressures on oil prices. However, the impact of new variants of COVID-19 on economic activity is unknown, and uncertainty remains in the global oil markets. |
• |
Despite the multi-year underinvestment in new reserves, we expect that operators will continue to exercise fiscal discipline in the near-term and continue to exercise caution around potential new COVID-19 variants impact on activities. As a result, we and other oilfield services companies have limited visibility on customer spending plans for 2022 and the timing of an expected further increase in activity levels. |
• |
In addition, increases in activity are not expected to be uniform across regions or type of activity, at least in the early stages of a market recovery, although international and deepwater activity is expected to continue to improve throughout 2022. We expect that the demand for services related to brownfield and production enhancement and in field development will also show increased demand. |
• |
Although the clean energy transition has continued to gain momentum, it is expected that hydrocarbons will play a vital role in the transition towards more sustainable energy resources. The existing expertise and future innovation within the oilfield services sector, both to reduce the emissions and enhance efficiency within the current industry and the new industries, will be critical. We are already active in the early-stage carbon capture and storage sector and have established operations and technologies within the geothermal and flare reduction and gas recovery segments. We continue to develop technologies to reduce the greenhouse gas impact of our customers’ operations which, along with our digital transformation initiatives, are expected to enable us to continue to support our customers’ efficiency and environmental initiatives. As the industry changes, we plan to continue to evolve our approach to adapt and help our customers address the energy transition. |
• |
Increased expectations of host countries in regard to local content is another multi-year trend, which gained additional momentum during recent years. Our commitment to developing local capabilities and in-country personnel has reduced our dependence on international staff, which has also allowed us to mitigate some of the operational challenges associated with travel restrictions related to the COVID-19 pandemic. These efforts have enabled us to continue to service our customers in their ongoing operations throughout the pandemic. |
A major factor that affects our business activity is the price of oil and, to a lesser extent, the regional price of natural gas, which are both driven by market supply and demand. Changes in oil and gas prices impact our customers' spending on exploration and appraisal, development, production and abandonment activities. The extent of the impact of a change in oil and gas prices on these activities varies extensively between geographic regions, types of customers, types of activities and the financial returns of individual projects. In response to this uncertain industry outlook, we continue to evaluate additional cost saving opportunities in order to reduce service delivery costs, increase productivity and improve profitability; however, our commitment to safety, service quality and innovation remains steadfast.
Outlook
Demand continues to improve with stabilizing Brent oil prices, and activity in 2022 is forecast to be higher than in 2021, with oil demand forecast to return to or exceed pre-pandemic levels before year end.
As discussed above, the EIA estimates that global liquid fuels consumption will grow to 100.5 million b/d in 2022, up from 96.9 million b/d in 2021 (which would surpass 2019 levels), rising to 102.3 million b/d in 2023. Counterbalancing consumption growth, the EIA expect continuing production increases from OPEC (2.5 million b/d) and an acceleration in U.S. crude oil production in 2022 (rising from 11.2 million b/d in 2021 to 11.8 million b/d in 2022 and 12.4 million b/d in 2023, the highest annual average U.S. crude oil production on record) that along with other supply increases, is expected to outpace global oil consumption growth and contribute to declining oil prices in the mid-term. As a result, the EIA forecasts Brent crude oil spot prices to average $75 per barrel in 2022 and $68 per barrel in 2023 compared to an average $71 per barrel in 2021.
In addition to the stabilized oil market outlook, global natural gas demand is continuing its recovery due to a combination of rising economic activity, lower inventory in storage, recent extreme weather events and a predicted long winter in Europe. The EIA expects Henry Hub spot prices will average $3.82/Metric Million British Thermal Unit (“MMBtu”) in the first quarter of 2022 and average $3.79/MMBtu for all of 2022 and $3.63/MMBtu in 2023 as U.S. dry gas production recovers. Rystad forecasts the European and Asian liquefied natural gas spot price to average $16.70 and $18.60 in 2022, respectively, maintaining the higher rates achieved in 2021 with slight downward pricing pressure in 2023 as liquefied natural gas production ramps up.
The outlook for 2022 indicates a continuing modest recovery in exploration and production expenditures, albeit at different rates in individual countries depending on a range of factors, including increasing crude production offset by a slower rate of demand growth with slower jet fuel recovery and uncertainty regarding COVID-19 and the impact of any new variants or a resurgence over the winter period.
We expect demand for our services and solutions to trend positively throughout 2022. The following provides an outlook for 2022 by our reporting segments based on data from Spears and Associates, Inc.
NLA: In North America, activity is projected to increase in 2022 by 23% in drilling and 10% in hydraulic fracturing activity. Operator focus remains on capital discipline, although with further drilled but uncompleted drawdowns becoming limited, new well drilling will need to continue increasing in order to maintain output. In Latin America, drilling activity is now forecast to increase 20% in 2022, driven mainly by increased activity in Guyana, Suriname and Argentina.
ESSA: In Europe, drilling activity is projected to rise in 2022 by 2%, with an average of 82 active rigs and approximately 725 new wells. Onshore and offshore activity are both projected to increase by 2% in 2022. In Sub-Saharan Africa, drilling activity is forecasted to increase by 17% overall, to an average of 109 active rigs in 2022, following the resumption of activity in the fourth quarter of 2021 and the progression of further development programs for a number of large offshore projects.
MENA: In the Middle East and North Africa, drilling activity is projected to rise by 10% in 2022, to an average of 271 active rigs, as Iraq plans to increase their production capacity and Saudi Arabia responds to increased demand for its oil. The increased focus on infield development and production optimization and enhancement projects to maintain production rates continues, with future expansion of carbon capture and storage projects, for example in the UAE, also adding to a growing future activity outlook.
APAC: In Asia Pacific, drilling activity is projected to increase by 12%, to 179 active rigs, including an increase offshore following weaker activity in 2021, especially in India where future deepwater exploration is now forecast to increase driven by the government’s ambition to reduce dependence on oil imports. Activity is driven by both new projects and expansion of existing developments through production optimization in Australia, Malaysia, Indonesia and Thailand. Indonesia and Malaysia are also progressing plans for carbon capture and storage projects.
How We Evaluate Our Operations
We use a number of financial and operational measures to routinely analyze and evaluate the performance of our business, including Revenue, Adjusted EBITDA, Adjusted Cash Flow from Operations and Cash Conversion.
Revenue: We analyze our performance by comparing actual monthly revenue by operating segments and areas of capabilities to our internal projections for each month. Our revenue is primarily derived from well construction, well flow management, subsea well access and well intervention and integrity solutions.
Adjusted EBITDA: We regularly evaluate our financial performance using Adjusted EBITDA. Our management believes Adjusted EBITDA is a useful financial performance measure as it excludes non-cash charges and other transactions not related to our core operating activities and allows more meaningful analysis of the trends and performance of our core operations.
Adjusted Cash Flow from Operations: We regularly evaluate our operating cash flow performance using Adjusted Cash Flow from Operations. Our management believes Adjusted Cash Flow from Operations is a useful tool to measure the operating cash performance of the Company as it excludes exceptional payments, interest payments and non-cash charges not related to our core operating activities and allows more meaningful analysis of the trends and performance of our core operations.
Cash Conversion: We regularly evaluate our efficiency of generating cash from operations using Cash Conversion which provides a useful tool to measure Adjusted Cash Flow from Operations as a percentage of Adjusted EBITDA.
Adjusted EBITDA, Adjusted Cash Flow from Operations and Cash Conversion are non-GAAP financial measures. Please refer to the section titled “Non-GAAP Financial Measures” for a reconciliation of Adjusted EBITDA to net (loss) income, the most directly comparable financial performance measure calculated and presented in accordance with GAAP and a reconciliation of Adjusted Cash Flow from Operations to net cash provided by operating activities, the most directly comparable liquidity measure calculated and presented in accordance with GAAP.
Executive Overview
Year ended December 31, 2021 compared to year ended December 31, 2020
Certain highlights of our financial results and other key developments include:
• |
On October 1, 2021, the Company completed the Merger with Legacy Expro. Refer to Note 3 “Business combinations and dispositions” of our consolidated financial statements for more details. |
|
• | Revenue for the year ended December 31, 2021 increased by $150.8 million, or 22.3%, to $825.8 million, compared to $675.0 million for the year ended December 31, 2020. Of the total increase of $150.8 million for the year ended December 31, 2021, $112.1 million is related to the Merger, and the balance of the increase was driven by higher activity across NLA, ESSA and APAC, partially offset by a reduction in activity in the MENA segment. Revenue for our segments is discussed separately below under the heading “Operating Segment Results”. | |
• |
We reported a net loss for the year ended December 31, 2021 of $131.9 million, compared to a net loss of $307.0 million for the year ended December 31, 2020. The overall decrease in net loss was primarily due to a combination of asset impairments totaling $287.5 million recognized during the year ended December 31, 2020, partially offset by the Merger which resulted in higher Merger and Integration expense of $46.0 million, higher stock-based compensation expense of $54.2 million and higher income tax expense of $19.7 million during the year ended December 31, 2021. |
• |
Adjusted EBITDA for the year ended December 31, 2021 increased by $25.8 million, or 25.7%, to $125.9 million from $100.2 million for the year ended December 31, 2020. Of the total increase of $25.8 million for the year ended December 31, 2021, $17.3 million is due to the Merger and the remaining increase of $8.5 million is attributable to higher activity during the year ended December 31, 2021. Adjusted EBITDA margin improved from 14.8% to 15.3% during the year ended December 31, 2021 compared to the year ended December 31, 2020. |
• |
Net cash provided by operating activities for the year ended December 31, 2021 was $16.1 million, compared to $70.4 million for the year ended December 31, 2020. |
• |
Adjusted Cash Flow from Operations and Cash Conversion for the year ended December 31, 2021 was $65.3 million and 51.9%, respectively, compared to $88.6 million and 88.5%, respectively, for the year ended December 31, 2020. |
• |
In connection with the Merger, we entered into a new revolving credit facility (“New Facility”) with an aggregate commitment of $200.0 million with up to $130.0 million available for drawdowns as loans and up to $70.0 million for bonds and guarantees. The New Facility has substantially the same conditions as Legacy Expro’s revolving credit facility and matures in October 2024. Please refer to the section titled “Liquidity and Capital Resources” for further discussion on our debt facilities. |
Selected Unaudited Financial Information for the Three Months Ended December 31, 2021
Unaudited segment revenue and Segment EBITDA for the three months ended December 31, 2021, which includes the results of Legacy Expro and Frank’s, was as follows:
Unaudited revenue by main area of capability for the three months ended December 31, 2021, which includes the results of Legacy Expro and Frank’s, was as follows:
Three Months Ended December 31, |
||||||||
(in thousands) |
2021 |
|||||||
Well construction |
$ | 112,126 | 38 | % | ||||
Well management |
183,543 | 62 | % | |||||
Total Revenue |
$ | 295,669 | 100 | % |
Year ended December 31, 2020 compared to year ended December 31, 2019
Certain highlights of our financial results, which only reflect results of Legacy Expro, and other key developments include:
• |
Revenue for the year ended December 31, 2020 decreased by $135.0 million, or 16.7%, to $675.0 million from $810.1 million for the year ended December 31, 2019. The decrease was driven by lower activity across all of our product and service offerings in all of our reporting segments other than the APAC segment due to a combination of factors, including a substantial decline in global demand for oil caused by the COVID-19 pandemic and disagreements between the members of OPEC+ regarding limits on production of oil, resulting in surplus supply and a material reduction in crude prices. Other effects of the COVID-19 pandemic have included, and may continue to include, disruptions to our operations, including suspension or deferral of drilling activities; customer shutdowns of oil and gas exploration and production; downward revisions to customer budgets and reduced customer demand for our services; and workforce reductions in response to activity declines. Revenue for our segments is discussed separately below under the heading “Operating Segment Results.” |
• |
We reported a net loss for the year ended December 31, 2020 of $307.0 million, compared to a net loss of $64.8 million for the year ended December 31, 2019. The increase in net loss was primarily driven by lower activity across all of our product and service offerings as discussed above and significant asset impairments recognized during the year ended December 31, 2020. |
• |
Adjusted EBITDA for the year ended December 31, 2020 decreased by $17.1 million, or 14.6%, to $100.2 million from $117.3 million for the year ended December 31, 2019, reflecting a reduction in overall activity in the oilfield services industry during 2020. However, Adjusted EBITDA margin increased from 14.5% to 14.8% during the year ended December 31, 2020 compared to the year ended December 31, 2019. The improvement in Adjusted EBITDA margin is primarily due to various initiatives undertaken during 2020 in response to the COVID-19 pandemic to structurally adjust Expro’s cost base in order to improve longer-term profitability and performance. |
• |
Net cash provided by operating activities for the year ended December 31, 2020 was $70.4 million, compared to $81.2 million for the year ended December 31, 2019. |
• |
Adjusted Cash Flow from Operations and Cash Conversion for the year ended December 31, 2020 was $88.6 million and 88.5%, respectively, compared to $86.5 million and 73.7%, respectively, for the year ended December 31, 2019. |
• |
Severance and other expense for the year ended December 31, 2020 increased by 213.5% to $13.9 million as compared to $4.4 million for the year ended December 31, 2019. The increase was primarily driven by activities undertaken to restructure and resize our business in response to reduced activity levels due to COVID-19 and other economic conditions in the oil and gas industry, primarily consisting of headcount reductions and the cost of exiting certain facilities. |
• |
We recorded significant asset impairments during the year ended December 31, 2020. We tested our goodwill and other long-lived assets for impairment as of the quarter ended March 31, 2020 due to the macro-economic uncertainty that was experienced beginning in March 2020 from a combination of factors, including COVID-19, which resulted in asset impairments as of March 31, 2020 totaling approximately $191.9 million relating to our goodwill and $83.7 million relating to our property, plant and equipment, intangible assets and operating lease right-of-use assets. Additionally, at year end, we recorded an impairment charge of $11.9 million relating to our property, plant and equipment and operating lease right-of-use assets. |
Non-GAAP Financial Measures
We include in this Form 10-K the non-GAAP financial measures Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Cash Flow from Operations and Cash Conversion. We provide reconciliations of net loss, the most directly comparable financial performance measure calculated and presented in accordance with GAAP, to Adjusted EBITDA. We also provide a reconciliation of Adjusted Cash Flow from Operations to net cash provided by operating activities, the most directly comparable liquidity measure calculated and presented in accordance with GAAP.
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Cash Flow from Operations and Cash Conversion are used as supplemental financial measures by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others. These non-GAAP financial measures allow our management and others to assess our financial and operating performance as compared to those of other companies in our industry, without regard to the effects of our capital structure, asset base, items outside the control of management and other charges outside the normal course of business.
We define Adjusted EBITDA as net loss adjusted for (a) income tax expense (benefit), (b) depreciation and amortization expense, (c) impairment expense, (d) severance and other expense, net, (e) stock-based compensation expense, (f) merger and integration expense, (g) gain on disposal of assets, (h) other income, net, (i) interest and finance expense, net and (j) foreign exchange losses. Adjusted EBITDA margin reflects our Adjusted EBITDA as a percentage of revenues.
We define Adjusted Cash Flow from Operations as net cash provided by operating activities adjusted for cash paid during the period for interest, net, severance and other expense and merger and integration expense. We define Cash Conversion as Adjusted Cash Flow from Operations divided by Adjusted EBITDA.
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Cash Flow from Operations and Cash Conversion have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. As Adjusted EBITDA, Adjusted Cash Flow from Operations and Cash Conversion may be defined differently by other companies in our industry, our presentation of Adjusted EBITDA, Adjusted Cash Flow from Operations and Cash Conversion may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
The following table presents a reconciliation of net loss to Adjusted EBITDA for each of the periods presented (in thousands):
Year ended |
||||||||||||
December 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Net loss |
$ | (131,891 | ) | $ | (307,045 | ) | $ | (64,761 | ) | |||
Income tax expense (benefit) |
16,267 | (3,400 | ) | (1,137 | ) | |||||||
Depreciation and amortization expense |
123,866 | 113,693 | 122,503 | |||||||||
Impairment expense (1) |
— | 287,454 | 49,036 | |||||||||
Severance and other expense |
7,826 | 13,930 | 4,444 | |||||||||
Merger and integration expense |
47,593 | 1,630 | — | |||||||||
Gain on disposal of assets |
(1,000 | ) | (10,085 | ) | — | |||||||
Other income, net (2) |
(3,992 | ) | (3,908 | ) | (226 | ) | ||||||
Stock-based compensation expense (3) |
54,162 | — | — | |||||||||
Foreign exchange losses |
4,314 | 2,261 | 4,176 | |||||||||
Interest and finance expense, net |
8,795 | 5,656 | 3,300 | |||||||||
Adjusted EBITDA |
$ | 125,940 | $ | 100,186 | $ | 117,335 | ||||||
Adjusted EBITDA Margin |
15.3 | % | 14.8 | % | 14.5 | % |
(1) |
Impairment expense represents impairments recorded on goodwill and other long-lived assets, including property, plant and equipment, intangible assets and operating lease right-of-use assets. |
(2) |
Other income, net, is comprised of immaterial, unusual or infrequently occurring transactions which, in management’s view, do not provide useful measures of the underlying operating performance of the business. |
(3) | Non-cash, stock-based compensation expense of $54.2 million includes $42.1 million associated with Legacy Expro stock options and restricted stock units recognized as a result of the completion of the Merger. Please see Note 20 “Stock-based compensation” in the Notes to the Consolidated Financial Statements for additional information. |
The following table provides a reconciliation of net cash provided by operating activities to Adjusted Cash Flow from Operations for each of the periods presented (in thousands):
Year Ended |
||||||||||||
December 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Net cash provided by operating activities |
$ | 16,144 | $ | 70,391 | $ | 81,209 | ||||||
Cash paid during the period for interest, net |
4,192 | 2,630 | 1,490 | |||||||||
Cash paid during the period for severance and other expense |
8,052 | 15,602 | 3,811 | |||||||||
Cash paid during the period for merger and integration expense |
36,921 | — | — | |||||||||
Adjusted Cash Flow from Operations |
$ | 65,309 | $ | 88,623 | $ | 86,510 | ||||||
Adjusted EBITDA |
$ | 125,940 | $ | 100,186 | $ | 117,335 | ||||||
Cash Conversion |
51.9 | % | 88.5 | % | 73.7 | % |
Results of Operations
Year ended December 31, 2021 compared to year ended December 31, 2020
Year Ended |
||||||||||||||||
December 31, |
Change |
|||||||||||||||
(in thousands) |
2021 |
2020 |
$ |
% |
||||||||||||
Total revenue |
$ | 825,762 | $ | 675,026 | $ | 150,736 | 22.3 | % | ||||||||
Operating costs and expenses: |
||||||||||||||||
Cost of revenue, excluding depreciation and amortization |
(701,165 | ) | (566,876 | ) | (134,289 | ) | ||||||||||
General and administrative expense, excluding depreciation and amortization |
(73,880 | ) | (23,814 | ) | (50,066 | ) | ||||||||||
Depreciation and amortization expense |
(123,866 | ) | (113,693 | ) | (10,173 | ) | ||||||||||
Impairment expense |
— | (287,454 | ) | 287,454 | ||||||||||||
Gain on disposal of assets |
1,000 | 10,085 | (9,085 | ) | ||||||||||||
Merger and integration expense |
(47,593 | ) | (1,630 | ) | (45,963 | ) | ||||||||||
Severance and other expense |
(7,826 | ) | (13,930 | ) | 6,104 | |||||||||||
Total operating cost and expenses |
(953,330 | ) | (997,312 | ) | 43,982 | |||||||||||
Operating loss |
(127,568 | ) | (322,286 | ) | 194,718 | (60.4 | )% | |||||||||
Other income, net |
3,992 | 3,908 | 84 | |||||||||||||
Interest and finance expense, net |
(8,795 | ) | (5,656 | ) | (3,139 | ) | ||||||||||
Loss before taxes and equity in income of joint ventures |
(132,371 | ) | (324,034 | ) | 191,663 | (59.1 | )% | |||||||||
Equity in income of joint ventures |
16,747 | 13,589 | 3,158 | |||||||||||||
Loss before income taxes |
(115,624 | ) | (310,445 | ) | 194,821 | (62.8 | )% | |||||||||
Income tax (expense) benefit |
(16,267 | ) | 3,400 | (19,667 | ) | |||||||||||
Net loss |
$ | (131,891 | ) | $ | (307,045 | ) | $ | 175,154 | (57.0 | )% |
Revenue
Revenue for the year ended December 31, 2021 increased by $150.8 million, or 22.3%, to $825.8 million, compared to $675.0 million for the year ended December 31, 2020. Of the total increase of $150.8 million for the year ended December 31, 2021, $112.1 million is related to the Merger, and the balance of the increase was driven by higher activity across NLA, ESSA and APAC, partially offset by a reduction in activity in the MENA segment. Revenue for our segments is discussed separately below under the heading “Operating Segment Results”.
Revenue for our well flow management and well intervention and integrity offerings increased by $15.6 million (3.8%) and $39.6 million (29.4%), respectively, partially offset by a decrease in subsea well access revenue by $16.7 million (-12.6%) for the year ended December 31, 2021. Additionally, the Merger resulted in well construction revenue of $112.1 million for the year ended December 31, 2021.
Cost of revenue, excluding depreciation and amortization
Cost of revenue, excluding depreciation and amortization, for the year ended December 31, 2021 was $701.2 million (84.9% of revenue), an increase of $134.3 million, or 23.7%, compared to $566.9 million (84.0% of revenue) for the year ended December 31, 2020. Of the total increase of $134.3 million for the year ended December 31, 2021, $92.1 million relates to the Merger, and the remaining increase of $42.2 million was due to higher personnel costs for operational and support staff, equipment rentals, facility costs, materials, sub-contractor costs, and research, engineering and development costs, which is in line with the higher activity, and recognition of stock-based compensation expense for Legacy Expro’s Management Incentive Plan of $10.5 million during the year ended December 31, 2021 as a result of the Merger.
General and administrative, excluding depreciation and amortization
General and administrative expenses, excluding depreciation and amortization, is comprised of costs associated with sales and marketing, costs of running the corporate head office and other central functions that support the reporting segments. General and administrative expenses for the year ended December 31, 2021 increased by $50.1 million, or 210.2%, to $73.9 million, as compared to $23.8 million for the year ended December 31, 2020. Of the total increase of $50.1 million for the year ended December 31, 2021, $15.4 million relates to the Merger, and the remaining increase was primarily driven by recognition of stock-based compensation expense for Legacy Expro’s Management Incentive Plan of $31.6 million as a result of the Merger.
Depreciation and amortization expense
Depreciation and amortization expense for the year ended December 31, 2021 increased by $10.2 million, or 8.9%, to $123.9 million, as compared to $113.7 million for the year ended December 31, 2020. The increase in depreciation and amortization expense for the year ended December 31, 2021 is primarily related to the Merger.
Gain on disposal of assets
Gain on disposal of assets of $1.0 million for the year ended December 31, 2021 represents the earn-out consideration recognized as the conditions upon which the consideration was contingent were met during the year ended December 31, 2021 related to a sale of assets which occurred in 2020.
Impairment expense
No impairment expense was recorded for the year ended December 31, 2021 as compared to $287.5 million for the year ended December 31, 2020. Impairment expense for the year ended December 31, 2020 mainly relates to impairment of goodwill of $191.9 million, intangible assets of $60.4 million, property, plant and equipment of $20.0 million and operating lease right-of-use assets of $15.2 million. For further information, refer to Note 4 “Fair value measurements” in the accompanying consolidated financial statements.
Merger and integration expense
Merger and integration expense for the year ended December 31, 2021 increased by $46.0 million, to $47.6 million as compared to $1.6 million for the year ended December 31, 2020. The increase for the year ended December 31, 2021 primarily consists of professional fees, integration, and other costs related to the Merger.
Severance and other expense
Severance and other expense for the year ended December 31, 2021 decreased by $6.1 million, or 43.8%, to $7.8 million as compared to $13.9 million for the year ended December 31, 2020. The decrease was primarily driven by higher headcount reductions and facility rationalization undertaken in the previous year to restructure and resize our business to match reduced activity levels due to COVID-19 and economic conditions in the oil and gas industry for the year ended December 31, 2020.
Interest and finance expense, net
Interest and finance expense, net for the year ended December 31, 2021, was $8.8 million, an increase of $3.1 million, or 55.5%, compared to $5.7 million for the year ended December 31, 2020. The increase in interest and finance expense was primarily driven by fees incurred with respect to the New Facility established following the Merger.
Equity in income of joint ventures
Equity in income of joint ventures for the year ended December 31, 2021 increased by $3.2 million, or 23.2%, to $16.7 million as compared to $13.6 million for the year ended December 31, 2020. The increase reflects higher income from our joint ventures compared to the previous year.
Income tax (expense) benefit
Income tax expense for the year ended December 31, 2021 was $16.3 million, compared to an income tax benefit of $3.4 million for the year ended December 31, 2020. Following the closing of the Merger on October 1, 2021, as a result of our change in domicile from the U.K. to the Netherlands, our statutory tax rate changed to 25% for the year ended December 31, 2021. The statutory rate for the year ended December 31, 2020 was 19%. The effective tax rate was (12.3%) and 1.0% for the years ended December 31, 2021 and 2020, respectively. Our effective tax rate was impacted by the Merger in 2021, impairments of goodwill in 2020, and the geographic mix of profits and losses between deemed profit and taxable profit jurisdictions.
Our effective income tax rate fluctuates from the statutory tax rate based on, among other factors, changes in pretax income in jurisdictions with varying statutory tax rates along with jurisdictions utilizing a deemed profit taxation regime, the impact of valuation allowances, foreign inclusions and other permanent differences related to the recognition of income and expense.
Year ended December 31, 2020 compared to year ended December 31, 2019
Year Ended December 31, |
Change |
|||||||||||||||
2020 |
2019 |
$ |
% |
|||||||||||||
(in thousands) |
||||||||||||||||
Total revenue |
$ | 675,026 | $ | 810,064 | $ | (135,038 | ) | (16.7 | )% | |||||||
Operating costs and expenses: |
||||||||||||||||
Cost of revenue, excluding depreciation and amortization |
(566,876 | ) | (677,184 | ) | 110,308 | |||||||||||
General and administrative expense, excluding depreciation and amortization |
(23,814 | ) | (29,360 | ) | 5,546 | |||||||||||
Depreciation and amortization expense |
(113,693 | ) | (122,503 | ) | 8,810 | |||||||||||
Impairment expense |
(287,454 | ) | (49,036 | ) | (238,418 | ) | ||||||||||
Gain on disposal of assets |
10,085 | — | 10,085 | |||||||||||||
Merger and integration expense |
(1,630 | ) | — | (1,630 | ) | |||||||||||
Severance and other expense |
(13,930 | ) | (4,444 | ) | (9,486 | ) | ||||||||||
Total operating cost and expenses |
(997,312 | ) | (882,527 | ) | (114,785 | ) | ||||||||||
Operating loss |
(322,286 | ) | (72,463 | ) | (249,823 | ) | 344.8 | % | ||||||||
Other income, net |
3,908 | 226 | 3,682 | |||||||||||||
Interest and finance expense, net |
(5,656 | ) | (3,300 | ) | (2,356 | ) | ||||||||||
Loss before taxes and equity in income of joint ventures |
(324,034 | ) | (75,537 | ) | (248,497 | ) | 329.0 | % | ||||||||
Equity in income of joint ventures |
13,589 | 9,639 | 3,950 | |||||||||||||
Loss before income taxes |
(310,445 | ) | (65,898 | ) | (244,547 | ) | 371.1 | % | ||||||||
Income tax benefit |
3,400 | 1,137 | 2,263 | |||||||||||||
Net loss |
$ | (307,045 | ) | $ | (64,761 | ) | $ | (242,284 | ) | 374.1 | % |
Revenue
Revenue for the year ended December 31, 2020, which only includes revenue of Legacy Expro, decreased by $135.0 million, or 16.7%, to $675.0 million from $810.1 million for the year ended December 31, 2019. The decrease in total revenue for the year ended December 31, 2020 compared to the year ended December 31, 2019 was driven by lower activity across all of our product and service offerings in all of our reporting segments other than the APAC segment, due to a combination of factors, including a substantial decline in global demand for oil caused by the COVID-19 pandemic and disagreements between the members of OPEC+ regarding limits on production of oil, resulting in surplus supply and reduction in crude oil prices. For reference, Brent oil price averaged $42 per barrel in 2020 as compared to an average of $64 per barrel in 2019. As a result of reduced activity, revenue for the NLA segment decreased by $58.3 million (33.5%), the MENA segment by $43.0 million (18.2%) and the ESSA segment by $37.3 million (14.5%), partially offset by a modest increase in revenue in the APAC segment of $3.6 million (2.5%). Revenue for our segments is discussed in further detail separately below under the heading “Operating Segment Results.”
Revenue for our well flow management, well intervention and integrity and subsea well access offerings decreased by $75.8 million (15.7%), $35.1 million (20.7%) and $24.1 million (15.4%), respectively, for the year ended December 31, 2019 compared to December 31, 2020.
Cost of revenue, excluding depreciation and amortization
Cost of revenue, excluding depreciation and amortization, for the year ended December 31, 2020 was $566.9 million (84.0% of revenue), a decrease of $110.3 million, or 16.3%, compared to $677.1 million (83.6% of revenue) for the year ended December 31, 2019. The decrease in the cost of revenue, which includes personnel costs for operational and support staff, equipment rentals, facility costs, materials, sub-contractor costs, and research, engineering and development costs, was in line with the lower activity. In addition, we reduced our support staff by approximately 9.1% for the year ended December 31, 2020 compared to the year ended December 31, 2019.
General and administrative, excluding depreciation and amortization
General and administrative expenses, excluding depreciation and amortization, include the costs associated with sales and marketing, costs of running our corporate head office and other central functions that support the operating segments and include foreign currency gains (losses). General and administrative expenses for the year ended December 31, 2020 decreased by $5.5 million, or 18.9%, to $23.8 million, from $29.4 million for the year ended December 31, 2019. The decrease in general and administrative expenses during the year ended December 31, 2020 compared to the year ended December 31, 2019 was primarily driven by a reduction in our corporate support staff by approximately 9.3% for the year ended December 31, 2020 compared to the year ended December 31, 2019. This contributed to lower personnel costs, lower corporate overhead costs, and lower travel costs. Additionally, we benefited from lower foreign exchange losses of $1.9 million from the revaluation of monetary assets and liabilities denominated in foreign currencies during the year ended December 31, 2020 compared to the year ended December 31, 2019.
Depreciation and amortization expense
Depreciation and amortization expense for the year ended December 31, 2020 was $113.7 million, a decrease of $8.8 million, or 7.2% compared to $122.5 million for the year ended December 31, 2019, primarily as a result of a lower depreciable asset base.
Impairment expense
Impairment expense for the year ended December 31, 2020 was $287.5 million, an increase of $238.4 million, or 486.2%, compared to $49.0 million for the year ended December 31, 2019. During the year ended December 31, 2020, we recorded impairment expense relating to our goodwill of $191.9 million, intangible assets of $60.4 million, property, plant and equipment of $20.0 million and operating lease right-of-use assets of $15.2 million. For further information, refer to Note 4 “Fair value measurements” in the accompanying consolidated financial statements.
Merger and integration expense
During the year ended December 31, 2020, we incurred $1.6 million of merger and integration expense, which consists primarily of professional fees and other costs with respect to the Merger. No such expense was incurred during the year ended December 31, 2019.
Gain on disposal of assets
Gain on disposal of assets of $10.1 million represents profit recognized on the sale of certain identified tangible and intangible assets and liabilities relating to the disposition of our pressure-control chokes product line during 2020 for a total cash consideration of $15.5 million. The carrying value of net assets transferred was $4.4 million and we incurred costs directly attributable to the sale of $1.0 million.
Severance and other expense
Severance and other expense for the year ended December 31, 2020 increased by $9.5 million, or 213.5%, to $13.9 million from $4.4 million for the year ended December 31, 2019. The increase was primarily driven by headcount reductions and facility rationalization to restructure and resize our business to match reduced activity levels due to COVID-19 and economic conditions in the oil and gas industry.
Depending on how the market evolves, further actions may be necessary, which could result in additional expense in future periods.
Interest and finance expense, net
Interest and finance expense, net for the year ended December 31, 2020, was $5.7 million, an increase of $2.4 million, or 71.4%, compared to $3.3 million for the year ended December 31, 2019. The increase in interest and finance expense was due to lower interest income earned in 2020 primarily due to lower interest rates. We earned interest income of $1.0 million during the year ended December 31, 2020 as compared to $3.3 million during the previous year.
Equity in income of joint ventures
Equity in income of joint ventures for the year ended December 31, 2020 increased by $4.0 million, or 41.0%, to $13.6 million from $9.6 million for the year ended December 31, 2019. The increase reflects higher income from our joint ventures compared to the previous year.
Income tax benefit
Income tax benefit for the year ended December 31, 2020 was $3.4 million, an increase of $2.3 million, or 199.0%, compared to $1.1 million for the year ended December 31, 2019. The statutory tax rate was 19% for both the years ended December 31, 2020 and 2019. The effective tax rate was 1.0% and 1.5% for the years ended December 31, 2020 and 2019 respectively. Our effective tax rate was impacted due to the impairment on goodwill along with the geographic mix of profits and losses between deemed profit and taxable profit jurisdictions.
Our effective income tax rate fluctuates from the statutory tax rate based on, among other factors, changes in pretax income in jurisdictions with varying statutory tax rates along with jurisdictions utilizing a deemed profit taxation regime, the impact of valuation allowances, foreign inclusions and other permanent differences related to the recognition of income and expense.
Operating Segment Results
We evaluate our business segment operating performance using segment revenue and Segment EBITDA, as described in Note 5 “Business segment reporting” in our consolidated financial statements. We believe Segment EBITDA is a useful operating performance measure as it excludes non-cash charges and other transactions not related to our core operating activities and corporate costs and allows management to more meaningfully analyze the trends and performance of our core operations by segment as well as to make decisions regarding the allocation of resources to our segments.
The following table shows revenue by segment and revenue as percentage of total revenue by segment for the years ended December 31, 2021, 2020 and 2019:
Revenues |
Percentage |
|||||||||||||||||||||||
(in thousands) |
2021 |
2020 |
2019 |
2021 |
2020 |
2019 |
||||||||||||||||||
NLA |
$ | 193,156 | $ | 115,738 | $ | 174,058 | 23.4 | % | 17.2 | % | 21.5 | % | ||||||||||||
ESSA |
300,557 | 219,534 | 256,790 | 36.4 | % | 32.5 | % | 31.7 | % | |||||||||||||||
MENA |
171,136 | 194,033 | 237,065 | 20.7 | % | 28.7 | % | 29.3 | % | |||||||||||||||
APAC |
160,913 | 145,721 | 142,151 | 19.5 | % | 21.6 | % | 17.5 | % | |||||||||||||||
Total revenue |
$ | 825,762 | $ | 675,026 | $ | 810,064 | 100.0 | % | 100.0 | % | 100.0 | % |
The following table shows Segment EBITDA and Segment EBITDA margin by segment for the years ended December 31, 2021, 2020 and 2019:
Segment EBITDA (1) |
Segment EBITDA Margin |
|||||||||||||||||||||||
(in thousands) |
2021 |
2020 |
2019 |
2021 |
2020 |
2019 |
||||||||||||||||||
NLA |
$ | 32,254 | $ | 54 | $ | 15,031 | 16.7 | % | 0.0 | % | 8.6 | % | ||||||||||||
ESSA |
53,336 | 35,393 | 45,358 | 17.7 | % | 16.1 | % | 17.7 | % | |||||||||||||||
MENA |
56,312 | 77,296 | 86,043 | 32.9 | % | 39.8 | % | 36.3 | % | |||||||||||||||
APAC |
33,444 | 34,976 | 28,762 | 20.8 | % | 24.0 | % | 20.2 | % |
(1) |
Relative to Adjusted EBITDA ($125.9 million, $100.2 million and $117.3 million for the years ended December 31, 2021, 2020 and 2019, respectively), Segment EBITDA for the years ended December 31, 2021, 2020 and 2019 excludes corporate costs of $66.2 million, $61.1 million and $67.5 million, respectively, and equity in income of joint ventures of $16.7 million, $13.6 million and $9.6 million, respectively. |
Year ended December 31, 2021 compared to the year ended December 31, 2020
NLA
Revenue for the NLA segment was $193.2 million for the year ended December 31, 2021, an increase of $77.4 million, or 66.9%, compared to $115.7 million for the year ended December 31, 2020. Of the total increase of $77.4 million for the year ended December 31, 2021, $67.0 million relates to the Merger, and the balance of the increase of $10.4 million was primarily driven by an increase in well flow management and well intervention and integrity services in Mexico, Argentina, Brazil, Colombia, and Trinidad and Tobago driven by higher customer activity. The increase in revenues was partially offset by non-recurring power chokes equipment sales as a result of disposition of our power chokes product line in 2020 and lower well flow management and subsea well access revenues in Canada due to completion of a contract in 2020.
Segment EBITDA for the NLA segment was $32.2 million, or 16.7% of revenues, during the year ended December 31, 2021, compared to $0.1 million during year ended December 31, 2020. Out of the total increase of $32.1 million during the year ended December 31, 2021, $16.1 million relates to the Merger, and the balance of the increase of $16.0 million is attributable to higher activity on higher margin contracts and a more favorable activity mix during 2021.
ESSA
Revenue for the ESSA segment was $300.6 million for the year ended December 31, 2021, an increase of $81.0 million, or 36.9%, compared to $219.5 million for the year ended December 31, 2020. Out of the total increase of $81.0 million for the year ended December 31, 2021, $28.5 million is attributable to the Merger. The remaining increase of $52.5 million in revenues was primarily driven by an early production equipment sale in Nigeria and higher well flow management and subsea well access revenues in Norway, Mozambique, United Kingdom, Ghana, and Angola due to an increase in overall customer activities and new projects. The overall increase in revenues was partially offset by a decrease in revenue in Mauritania upon completion of a subsea well access contract.
Segment EBITDA for the ESSA segment was $53.3 million, or 17.7% of revenues, for the year ended December 31, 2021, an increase of $17.9 million, or 50.7%, compared to $33.4 million, or 16.1% of revenues, for the year ended December 31, 2020. Of the total increase of $17.9 million during the year ended December 31, 2021, $8.9 million relates to the Merger, and the balance of the increase of $9.1 million is attributable to higher activity and a more favorable activity mix during 2021.
MENA
Revenue for the MENA segment decreased by $22.9 million, or 11.8%, to $171.1 million for the year ended December 31, 2021, as compared to $194.0 million for the year ended December 31, 2020. The lower revenues in the region were driven by a reduction in well flow management revenues in Algeria, Egypt, Saudi Arabia and the United Arab Emirates reflecting lower customer activities partially offset by an increase in well construction revenues of $8.3 million due to the Merger.
Segment EBITDA for the MENA segment was $56.3 million, or 32.9% of revenues, for the year ended December 31, 2021, a reduction of $20.9 million, or 27.1%, compared to $77.3 million, or 39.8% of revenues, for the year ended December 31, 2020. The reduction in Segment EBITDA was primarily due to a decrease in revenues during 2021 and lower activity on higher margin contracts, partially offset by an increase in Segment EBITDA of $1.2 million related to the Merger.
APAC
Revenue for the APAC segment was $160.9 million for the year ended December 31, 2021, an increase of $15.2 million, or 10.4%, compared to $145.7 million for the year ended December 31, 2020. Of the total, $8.4 million relates to the Merger, and the balance of the increase of $6.8 million was primarily driven by increased well flow management and well intervention and integrity revenue in Australia, Brunei, Thailand and Indonesia from new contracts or higher activity on existing contracts. This increase was partially offset by lower subsea well access revenues in China and Malaysia due to a combination of lower spare sales, completion of a contract and lower customer activities during the year ended December 31, 2021.
Segment EBITDA for the APAC segment was $33.4 million for the year ended December 31, 2021, a decrease of $1.5 million, or 4.4%, compared to $35.0 million for the year ended December 31, 2020. The reduction was primarily due to a less favorable activity mix and lower activity on higher margin contracts, partially offset by an increase in Segment EBITDA of $1.1 million related to the Merger.
Year ended December 31, 2020 compared to the year ended December 31, 2019
NLA
Revenue for the NLA segment was $115.7 million for the year ended December 31, 2020, a decrease of $58.3 million, or 33.5%, compared to $174.1 million for the year ended December 31, 2019. The decrease in revenue was mainly driven by a reduction in well flow management and subsea well access revenues in North America offshore where activity levels continued to show weakness, reflecting a combination of COVID-19 and hurricane-related project deferrals. The lower revenues in NLA also reflect reduced customer activity levels in our relatively small, pre-Merger North America land operations, resulting in lower well flow management revenues as well as lower sales within our then-owned power chokes product line. Additionally, the reduction in revenues in NLA was also driven by lower subsea well access and well flow management revenues in Canada and lower wireline intervention and integrity services revenue in Argentina during the year ended December 31, 2020, compared to the year ended December 31, 2019.
Segment EBITDA for the NLA segment was $0.1 million during the year ended December 31, 2020, compared to $15.0 million, or 8.6% of revenues, during the year ended December 31, 2019. The reduction in NLA Segment EBITDA was mainly driven by a combination of lower activity on higher margin contracts and a less favorable activity mix during 2020.
ESSA
Revenue for the ESSA segment decreased by $37.3 million, or 14.5%, to $219.5 million during the year ended December 31, 2020 from $256.8 million during the year ended December 31, 2019. The decrease in revenue was primarily due to a reduction in well flow management and subsea well access revenues, driven by a combination of lower activity, suspension of activities by customers and non-recurring projects in the U.K., Azerbaijan and several countries in the Sub-Sahara African region, including Nigeria, Ghana, Cote D’Ivoire, Mozambique and Equatorial Guinea, partially offset by an increase in revenues in Mauritania from a new subsea well access contract.
Segment EBITDA for the ESSA segment was $35.4 million, or 16.1% of revenues, for the year ended December 31, 2020, a reduction of $10.0 million, or 22.0%, compared to $45.4 million, or 17.7% of revenues, for the same period in 2019. The reduction in Segment EBITDA for ESSA was primarily due to lower revenues during 2020 combined with a less favorable activity mix, which negatively impacted the Segment EBITDA margin.
MENA
Revenue for the MENA segment decreased by $43.0 million, or 18.2%, to $194.0 million during the year ended December 31, 2020 from $237.1 million during the year ended December 31, 2019. The lower revenues in the region were driven by a reduction in well flow management revenues in Algeria, Saudi Arabia and the United Arab Emirates reflecting lower customer activities. Additionally, revenues in Egypt decreased during the year ended December 31, 2020 compared to the same period in 2019 due to non-recurring equipment sales.
Segment EBITDA for the MENA segment was $77.3 million, or 39.8% of revenues, for the year ended December 31, 2020, a reduction of $8.7 million, or 10.2%, compared to $86.0 million, or 36.3% of revenues, for the year ended December 31, 2019. The reduction in Segment EBITDA for MENA was primarily due to a decrease in revenues during 2020; however, MENA Segment EBITDA margin improved during 2020 as compared to 2019 due to various cost savings measures undertaken in the region and a modestly more favorable activity mix.
APAC
Revenue for the APAC segment was $145.7 million for the year ended December 31, 2020, an increase of $3.6 million, or 2.5%, compared to $142.2 million for the year ended December 31, 2019. The increase in revenue in APAC was primarily driven by increased well flow management and subsea well access revenue in Malaysia from new contracts and higher activity on existing contracts, and increased revenue in Australia, primarily from higher subsea well access services. This increase was partially offset by lower well flow management revenues in India due to non-recurring equipment sales and lower activity levels on continuing projects in Thailand.
Segment EBITDA for the APAC segment was $35.0 million for the year ended December 31, 2020, an increase of $6.2 million, or 21.6%, compared to $28.8 million for the year ended December 31, 2019. APAC Segment EBITDA margin was 24.0%, up from 20.2% for the year ended December 31, 2019. The improvement in APAC Segment EBITDA margin was due to increased activity combined with a more favorable activity mix and cost control measures.
Liquidity and Capital Resources
Liquidity
Our financial objectives include the maintenance of sufficient liquidity, adequate financial resources and financial flexibility to fund our business. At December 31, 2021, total available liquidity was $369.9 million, including cash and cash equivalents and restricted cash of $239.9 million and $130.0 million available for borrowings under our New Facility. Our primary sources of liquidity have been cash flows from operations. Our primary uses of capital have been for capital expenditures and acquisitions. We monitor potential capital sources, including equity and debt financing, in order to meet our investment and liquidity requirements.
Our total capital expenditures are estimated to range between $90 million and $100 million for 2022. Our total capital expenditures (exclusive of the Merger) were $81.5 million for year ended December 31, 2021, out of which approximately 90% were used for the purchase and manufacture of equipment to directly support customer-related activities and approximately 10% for other property, plant and equipment, inclusive of software costs. The actual amount of capital expenditures for the purchase and manufacture of equipment may fluctuate based on market conditions. Our total capital expenditures were $112.4 million for the year ended December 31, 2020, which were generally used for equipment required to provide services in connection with awarded contracts. We continue to focus on preserving and protecting our strong balance sheet, optimizing utilization of our existing assets and, where practical, limiting new capital expenditures.
Credit Facility
Revolving Credit Facility
On November 5, 2018, certain subsidiaries of Frank’s entered into an asset-based revolving credit facility (the “ABL Credit Facility”) with aggregate commitments of $100.0 million secured by certain assets of the subsidiary guarantors.
On December 20, 2018, subsidiaries of Legacy Expro entered into a revolving credit facility (the “2018 RCF”) with aggregate commitments of $150.0 million with up to $100.0 million available for drawdowns as loans and up to $50 million for bonds and guarantees. The 2018 RCF bore interest at U.S. dollar LIBOR plus 3.75% and was secured by a fixed and floating charge on certain assets of some of our wholly owned subsidiaries. On October 1, 2021, following the closing of the Merger, the ABL Credit Facility and 2018 RCF were cancelled.
Concurrently with the cancelation of the ABL Credit Facility and the 2018 RCF, we entered into the New Facility with DNB Bank ASA, London Branch, as agent, with total commitments of $200.0 million, of which $130.0 million is available for drawdowns as loans and $70.0 million is available for letters of credit. Subject to the terms of the New Facility, the Company has the ability to increase the commitments to $250.0 million. Proceeds of the New Facility may be used for general corporate and working capital purposes. Please see Note 16 “Interest bearing loans” in the Notes to the Consolidated Financial Statements for additional information.
Cash flow from operating, investing and financing activities
Cash flows provided by (used in) our operations, investing and financing activities are summarized below (in thousands):
Year Ended December 31, |
||||||||||||
(in thousands) |
2021 |
2020 |
2019 |
|||||||||
Net cash provided by operating activities |
$ | 16,144 | $ | 70,391 | $ | 81,209 | ||||||
Net cash provided by (used in) investing activities |
112,046 | (96,773 | ) | (151,934 | ) | |||||||
Net cash provided by (used in) financing activities |
(7,176 | ) | (625 | ) | 21,922 | |||||||
Effect of exchange rate changes on cash activities |
(1,876 | ) | 631 | 566 | ||||||||
Net increase (decrease) to cash and cash equivalents and restricted cash |
$ | 119,138 | $ | (26,376 | ) | $ | (48,237 | ) |
Analysis of cash flow changes between the years ended December 31, 2021 and 2020
Net cash provided by operating activities
Net cash provided by operating activities was $16.1 million during the year ended December 31, 2021 as compared to $70.4 million during the year ended December 31, 2020. The decrease of $54.3 million in net cash provided by operating activities for the year ended December 31, 2021 was primarily due to payment of merger and integration expenses related to the Merger of $36.9 million, unfavorable movements in working capital of $31.8 million and reimbursable payments made in connection with Frank's executive deferred compensation plan of $8.9 million, partially offset by improvements in Adjusted EBITDA of $25.7 million during the year ended December 31, 2021.
Adjusted Cash Flow from Operations during the year ended December 31, 2021 was $65.3 million compared to $88.6 million during the year ended December 31, 2020. Our primary uses of net cash provided by operating activities were capital expenditures and funding obligations related to our financing arrangements.
Net cash provided by (used in) investing activities
Net cash provided by investing activities was $112.0 million during the year ended December 31, 2021 as compared to net cash used in investing activities of $96.8 million during the year ended December 31, 2020. Our principal recurring investing activity is our capital expenditures. The increase in net cash provided by investing activities was primarily due to net cash of $189.7 million acquired as part of the Merger and a decrease in capital expenditures of $30.9 million, partially offset by a reduction in proceeds from disposal of assets of $11.8 million.
Net cash provided by (used in) financing activities
Net cash used in financing activities was $7.2 million during the year ended December 31, 2021 as compared to $0.6 million during the year ended December 31, 2020. The increase of $6.6 million in cash used by financing activities primarily related to payment of higher loan issuance and other transaction costs of $4.0 million with respect to the New Facility, payment of withholding taxes in connection with the vesting of shares underlying stock-based compensation plans of $0.8 million and lower proceeds from the release of collateral deposits of $2.1 million, partially offset by $0.6 million of lower payments on finance leases during 2021.
Analysis of cash flow changes between the years ended December 31, 2020 and 2019
Net cash provided by operating activities
Net cash provided by operating activities was $70.4 million during the year ended December 31, 2020 as compared to $81.2 million during the year ended December 31, 2019. The decrease of $10.8 million in net cash provided by operating activities for the year ended December 31, 2020 was primarily due to a decrease in Adjusted EBITDA of $17.1 million, an increase in net cash paid for income taxes of $7.8 million, and higher severance and other expense paid of $9.5 million, partially offset by improvements in working capital and favorable movements in other assets and liabilities of $21.7 million.
Adjusted Cash Flow from Operations during the year ended December 31, 2020 was $88.6 million compared to $86.5 million during the year ended December 31, 2019. Our primary uses of net cash provided by operating activities were capital expenditures and acquisitions and funding obligations related to our financing arrangements.
Net cash provided by (used in) investing activities
Net cash used in investing activities was $96.8 million during the year ended December 31, 2020 as compared to $151.9 million during the year ended December 31, 2019. Our principal recurring investing activity is our capital expenditures. The decrease in net cash used in investing activities was primarily due to a $47.9 million payment for an acquisition during the previous year and proceeds of $15.6 million from the disposal of assets in 2020. This decrease was partially offset by an increase of $8.3 million in capital expenditures during the year ended December 31, 2020, including $29.2 million of capital expenditures related to new technologies, including our coil hose, annular intervention and riserless light well intervention capabilities.
Net cash provided by (used in) financing activities
Net cash used in financing activities was $0.6 million during the year ended December 31, 2020 as compared to net cash provided by financing activities of $21.9 million during the year ended December 31, 2019. The decrease in cash provided by financing activities primarily related to lower proceeds from the release of collateral deposits of $26.0 million during the year ended December 31, 2020 as compared to the year ended December 31, 2019, partially offset by $3.5 million of lower payments of loan transaction costs and finance leases during 2020.
Off-balance sheet arrangements
We have outstanding letters of credit/guarantees that relate to performance bonds, custom/excise tax guaranties and facility lease/rental obligations. These were entered into in the ordinary course of business and are customary practices in the various countries where we operate. It is not practicable to estimate the fair value of these financial instruments. None of the off-balance sheet arrangements either has, or is likely to have, a material effect on our consolidated financial statements. As of December 31, 2021, we had no material off-balance sheet financing arrangements other than those discussed above.
Critical accounting policies and estimates
The preparation of consolidated financial statements and related disclosures in conformity with U.S. GAAP requires Expro to make estimates and assumptions that affect the reported amounts of revenues and associated costs as well as reported amounts of assets and liabilities and related disclosures of contingent liabilities. Certain accounting policies involve judgments and uncertainties. We evaluate estimates and assumptions on a regular basis. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We consider the following policies to be the most critical to understanding the judgments that are involved and the uncertainties that could impact our results of operations, financial condition and cash flows.
Revenue recognition
Service revenue is recognized over time as services are performed or rendered and the customer simultaneously consumes the benefit of the service while it is being rendered, and, therefore, reflects the amount of consideration to which we have a right to invoice. We generally perform services either under direct service purchase orders or master service agreements which are supplemented by individual call-out provisions. For customers contracted under such arrangements, an accrual is recorded in unbilled receivable for revenue earned but not yet invoiced. Revenue from the sale of goods is generally recognized at the point in time when the control has passed onto the customer which generally coincides with delivery and, where applicable, installation. We also regularly assess customer credit risk inherent in the carrying amounts of receivables, contract costs and estimated earnings, including the risk that contractual penalties may not be sufficient to offset our accumulated investment in the event of customer termination.
We also recognize revenue for “bill and hold” sales, once the following criteria have been met: (1) there is a substantive reason for the arrangement, (2) the product is identified as the customer’s asset, (3) the product is ready for delivery to the customer, and (4) we cannot use the product or direct it to another customer.
Where contractual arrangements contain multiple performance obligations, judgment is involved to analyze each performance obligation within the sales arrangement to determine whether they are distinct. The revenue for contracts involving multiple performance obligations is allocated to each distinct performance obligation based on relative selling prices and is recognized on satisfaction of each of the distinct performance obligations.
We are required to determine the transaction price in respect of each of our contracts with customers. In making such judgment, we assess the impact of any variable consideration in the contract, due to discounts or penalties, the existence of any significant financing component and any non-cash consideration in the contract. In determining the impact of variable consideration, we use the “most-likely amount” method whereby the transaction price is determined by reference to the single most likely amount in a range of possible consideration amounts.
Business Combinations
We record business combinations using the acquisition method of accounting. All of the assets acquired and liabilities assumed are recorded at fair value as of the acquisition date. The excess of the purchase price over the estimated fair values of the net tangible and intangible assets acquired is recorded as goodwill.
The application of the acquisition method of accounting for business combinations requires management to make significant estimates and assumptions in the determination of the fair value of assets acquired and liabilities assumed, in order to properly allocate purchase price consideration between assets that are depreciated and amortized from goodwill. The fair value assigned to tangible and intangible assets acquired and liabilities assumed are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. Significant assumptions and estimates include, but are not limited to, the cash flows that an asset is expected to generate in the future and the appropriate weighted-average cost of capital.
If the actual results differ from the estimates and judgments used in these estimates, the amounts recorded in the consolidated financial statements may be exposed to potential impairment of long-lived assets, including intangible assets and goodwill. The Merger of Frank’s with Legacy Expro pursuant to the Merger Agreement was completed on October 1, 2021. Refer to Note 3 “Business combinations and dispositions” of our consolidated financial statements for further details.
Goodwill and identified intangible assets
We record the excess of purchase price over the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed as goodwill. Goodwill is not subject to amortization and is tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. A qualitative assessment is allowed to determine if goodwill is potentially impaired. We have the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test. The qualitative assessment determines whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount. If it is more likely than not that the fair value of the reporting unit is less than the carrying amount, then a quantitative impairment test is performed. The quantitative goodwill impairment test is used to identify both the existence of impairment and the amount of impairment loss. The test compares the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded based on that difference.
No impairment expense was recorded for goodwill during the year ended December 31, 2021. During the years ended December 31, 2020 and 2019, we recorded impairment expense of $191.9 million and $26.4 million, respectively, relating to our goodwill. Refer to Note 4 “Fair value measurements” of our consolidated financial statements for details regarding the facts and circumstances that led to this impairment and other details. We used the income approach to estimate the fair value of our reporting units, but also considered the market approach to validate the results. The income approach estimates the fair value by discounting the reporting unit’s estimated future cash flows using an appropriate risk-adjusted rate. The market approach includes the use of comparative multiples to corroborate the discounted cash flow results and involves significant judgment in the selection of the appropriate peer group companies and valuation multiples. The inputs used in the determination of fair value are generally level 3 inputs.
We review our identified intangible assets for impairment whenever events or changes in business circumstances arise that may indicate that the carrying amount of its intangible assets may not be recoverable. These events and changes can include significant current period operating losses or negative cash flows associated with the use of an intangible asset, or group of assets, combined with a history of such factors, significant changes in the manner of use of the assets, and current expectations that it is more likely than not that an intangible asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. When impairment indicators are present, we compare undiscounted future cash flows, including the eventual disposition of the asset group at market value, to the asset group’s carrying value to determine if the asset group is recoverable. If the carrying values are in excess of undiscounted expected future cash flows, we measure any impairment by comparing the fair value of the asset or asset group to its carrying value. Estimating future cash flows requires significant judgment, and projections may vary from the cash flows eventually realized, which could impact our ability to accurately assess whether an asset has been impaired.
No impairment expense was recorded for identified intangible assets during the year ended December 31, 2021. During the year ended December 31, 2020 and 2019, we recorded impairment expense relating to our identified intangible assets of $60.4 million and $17.9 million, respectively. Refer to Note 4 “Fair value measurements” of our consolidated financial statements for further details.
Defined benefit plans
Our post-retirement benefit obligations are described in detail in Note 19 “Post-retirement benefits” of our consolidated financial statements. Defined pension benefits are calculated using significant inputs to the actuarial models that measure pension benefit obligations and related effects on operations. Two assumptions, discount rate and expected return on assets, are important elements of plan asset/liability measurement and are updated on an annual basis, or more frequently if events or changes in circumstances so indicate.
We evaluate these critical assumptions at least annually on a plan and country specific basis. We periodically evaluate other assumptions involving demographic factors such as retirement age, mortality and turnover, and update them to reflect our experience and expectations for the future. Actual results in any given year will often differ from actuarial assumptions because of economic and other factors.
The discount rate that we use reflects the market rate of a portfolio of high-quality corporate bonds with maturities matching the expected timing of payment of the related benefit obligations. The discount rates used to determine the benefit obligations for our principal pension plans were 1.8% in 2021, 1.3% in 2020 and 2.0% in 2019, reflecting market interest rates. As of December 31, 2021, we estimate that a 1% appreciation or depreciation in the discount rate would result in an impact of approximately $39.4 million to our present value of defined benefit obligations as at December 31, 2021. The weighted average expected rate of return on plan assets for the pension plans was 3.2% in 2021, 2.7% in 2020 and 3.4% in 2019. A change in the expected rate of return of 1% would impact our net periodic pension expense by $2.1 million.
Income Taxes
We use the asset and liability method to account for income taxes whereby we calculate the deferred tax asset or liability account balances using tax laws and rates in effect at that time. Under this method, the balances of deferred tax liabilities and assets at the end of each period are determined using the tax rate expected to be in effect when taxes are actually paid or recovered. Valuation allowances are recorded to reduce gross deferred tax assets when it is more likely than not that all or some portion of the gross deferred tax assets will not be realized. In determining the need for valuation allowances, we have made judgments and considered estimates regarding estimated future taxable income and available tax planning strategies. These estimates and judgments include some degree of uncertainty, therefore changes in these estimates and assumptions could require us to adjust the valuation allowances for our deferred tax assets accordingly. The ultimate realization of the deferred tax assets depends on the generation of sufficient taxable income in the applicable taxing jurisdictions.
We operate in more than 60 countries. As a result, we are subject to numerous domestic and foreign taxing jurisdictions and tax agreements and treaties among various governments. Determination of taxable income in any jurisdiction requires the interpretation of the related tax laws and regulations and the use of estimates and assumptions regarding future events, including the amount, timing and character of income, deductions, and tax credits. Changes in tax laws, regulations or agreements in each taxing jurisdiction could have an impact on the amount of income taxes that we provide during any given year.
Our tax filings for various periods are subject to audit by the tax authorities in most jurisdictions in which we operate, and these assessments can result in additional taxes. Estimating the outcome of audits and assessments by the tax authorities involves uncertainty. We review the facts of each case and apply judgments and assumptions to determine the most likely outcome and provide for taxes, interest and penalties on this basis. In line with U.S. GAAP, we recognize the effects of a tax position in the consolidated financial statements when it is more likely than not that, based on the technical merits, some level of tax benefit related to a tax position will be sustained upon audit by tax authorities. Our experience has been that the estimates and assumptions used to provide for future tax assessments have proven to be appropriate. However, past experience is only a guide, and the potential exists that tax resulting from the resolution of current and potential future tax disputes may differ materially from the amount accrued. In such an event, we will record additional tax expense or tax benefit in the period in which such resolution occurs.
New accounting pronouncements
See Note 2 “Basis of presentation and significant accounting policies” in our consolidated financial statements under the heading “Recent accounting pronouncements.”
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Financial risk factors
Our operations expose us to several financial risks, principally market risk (foreign currency risk and interest rate risk) and credit risk.
Foreign currency risk
Cash flow exposure
We expect many of the subsidiaries of our business to have future cash flows that will be denominated in currencies other than USD. Our primary cash flow exposures are revenues and expenses. Changes in the exchange rates between USD and other currencies in which our subsidiaries transact will cause fluctuations in the cash flows we expect to receive or pay when these cash flows are realized or settled. We generally attempt to minimize our currency exchange risk by seeking to naturally hedge our exposure by offsetting non-USD inflows with non-USD denominated local expenses. We generally do not enter into forward hedging agreements, and our largest exposures are to the British pound and Norwegian kroner, mainly driven by facility costs and employee compensation and benefits.
Transaction exposure
Many of our subsidiaries have assets and liabilities that are denominated in currencies other than the USD. Changes in the exchange rates between USD and the other currencies in which such liabilities are denominated can create fluctuations in our reported consolidated statements of operations and cash flows.
As of December 31, 2021, we estimate that a 5% appreciation (depreciation) in USD would result in a change in our net loss of approximately $1.9 million.
Interest rate risk
We currently have no outstanding variable interest rate bearing debt and accordingly, we are not exposed to variability in interest expense and cash flows due to interest rate changes.
Credit risk
Our exposure to credit risk is primarily through cash and cash equivalents, restricted cash and accounts receivable, including unbilled balances. Our liquid assets are invested in cash, with a mix of local and international banks, and highly rated, short-term money market deposits generally with original maturities of less than 90 days. We monitor the ratings of such investments and mitigate counterparty risks as appropriate.
We extend credit to customers and other parties in the normal course of business and are thus subject to concentrations of customer credit risk. We have established various procedures to manage our credit exposure, including credit evaluations and maintaining an allowance for credit losses. We are also exposed to credit risk because our customers are concentrated in the oil and natural gas industry. This concentration of customers impacts overall exposure to credit risk because our customers may be similarly affected by changes in economic and industry conditions, including changes in oil and gas prices. We operate in more than 60 countries and as such, our receivables are spread over many countries and customers. Accounts receivable in Algeria and the U.S. represented approximately 23% and 12%, respectively, of our net accounts receivable balance at December 31, 2021. No other country accounted for greater than 10% of our accounts receivable balance. Our customer base is comprised of a large number of IOC, NOC, Independents and service partners from all major oil and gas locations around the world. The majority of our accounts receivable are due for payment in less than 90 days and largely comprise amounts receivable from IOCs and NOCs. We closely monitor accounts receivable and raise provisions for expected credit losses where it is deemed appropriate.
To the stockholders and the Board of Directors of Expro Group Holdings N.V.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Expro Group Holdings N.V. and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows, for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the 2021 and 2020 financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
The consolidated financial statements of the Company for the year ended December 31, 2019, before the effects of the adjustments to retrospectively apply the change in accounting related to the reverse stock split discussed in Note 1 to the financial statements, were audited by other auditors whose report, dated March 17, 2020, except for Notes 2 and 5, as to which the date was March 26, 2021, expressed an unqualified opinion on those statements. We have also audited the adjustments to the 2019 consolidated financial statements to retrospectively apply the change in accounting for the reverse stock split in 2021, as discussed in Note 1 to the financial statements. Our procedures included (1) comparing the amounts shown in the per share disclosures for 2019 to the Company’s underlying accounting analysis, (2) comparing the previously reported shares outstanding and the related balance sheet and income statement amounts per the Company’s accounting analysis to the previously issued consolidated financial statements, and (3) recalculating the decrease of shares to give effect to the reverse stock split and testing the mathematical accuracy of the underlying analysis. In our opinion, such retrospective adjustments are appropriate and have been properly applied. However, we were not engaged to audit, review, or apply any other procedures to the 2019 consolidated financial statements of the Company other than with respect to the retrospective adjustments, and accordingly, we do not express an opinion or any other form of assurance on the 2019 consolidated financial statements taken as a whole.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 8, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Business combinations and dispositions – Frank’s International N.V. — Refer to Notes 1 and 3 to the financial statements
Critical Audit Matter Description
The Company completed the merger of Frank’s International N.V. (“Frank’s”) with Expro Group Holdings International Limited (“Legacy Expro”) for a total purchase price of $742.3 million on October 1, 2021 (the “Merger”). The purchase price was allocated to the assets acquired and liabilities assumed based on their respective estimated fair values. The largest asset classes acquired include Property, plant and equipment (“PP&E”) and Intangible assets, for which fair value was determined based on the cost approach for buildings and improvements, leasehold improvements, air and gas compressors, bucking/torque machines, casing/tubular running tools, cementing tools, downhole drilling tools, hydraulic hammers, oil & gas equipment, power generator assembly, power tongs, slip assembly, stabbing guides, thread protectors, training rigs, welding & soldering equipment, tooling, furniture & fixtures, office equipment, computer hardware/software, forklifts, and light duty vehicles (collectively, “Real & Personal Property”); the market approach for land; and the income approach for trademarks, trade name Frank’s International, patented technology (casing running, completions, drilling tech, and cementing), IPR&D (casing running, completions, drilling tech, tubulars, cementing, and service tools), customer relationships, and assembled workforce (collectively, “Intangible Assets”).
We identified the valuation of Real & Personal Property and Intangible Assets arising out of the Merger as a critical audit matter because of the estimates made by management to determine the fair value of these assets for purposes of recording the Merger. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our valuation specialists when performing audit procedures to determine the fair value of acquired Real & Personal Property under the cost approach, including estimating cost to replace or reproduce comparable assets adjusted for the remaining useful lives, land under the market approach, and Intangible Assets under the income approach, including forecasting of expected future cash flows either through the use of the relief-from-royalty method or the multi-period excess earnings method, estimating the discount rates used to approximate their current value, and estimating the useful lives based on management’s historical experience and expectations as to the duration of time that benefits from these assets are expected to be realized.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the fair value of Real & Personal Property and Intangible Assets acquired as part of the Merger included the following, among others:
● |
We tested the design and implementation of controls over business combinations. |
● |
With the assistance of our fair value specialists: |
o |
For Land and Real & Personal Property, we evaluated the reasonableness of the (1) valuation methodology, (2) current market data, (3) cost to replace or reproduce comparable assets, including testing the mathematical accuracy of the calculation, and developing a range of independent estimates and comparing our estimates to those used by management. |
o |
For Intangible Assets, we evaluated the reasonableness of the (1) valuation methodology, and (2) discount rate by testing the source information underlying the determination of the discount rate, testing the mathematical accuracy of the calculation, and developing a range of independent estimates and comparing those to the discount rate selected by management. |
o |
For Intangible Assets, we evaluated whether the estimated future cash flows used in the income approach were consistent with projections used by the Company, as well as evidence obtained in other areas of the audit. |
● |
We considered any events or transactions occurring after the Merger date that may indicate a different valuation for the assets acquired and liabilities assumed. |
/s/ Deloitte & Touche LLP
Houston, Texas
March 8, 2022
We have served as the Company's auditor since 2020.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Expro Group Holdings N.V.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Expro Group Holdings N.V. and subsidiaries (the “Company”) as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021 of the Company and our report dated March 8, 2022, expressed an unqualified opinion on those financial statements.
As described in Management’s Report on Internal Control Over Financial Reporting, appearing under Part II, Item 9A, management excluded from its assessment the internal control over financial reporting at Expro Group Holdings International Limited (“Legacy Expro”); rather it focused exclusively on the internal control over financial reporting related to ongoing Frank's International N.V. (“Legacy Frank’s”) operations. Accordingly, our audit did not include the internal control over financial reporting at Legacy Expro; rather it focused on the internal control over financial reporting related to ongoing Legacy Frank’s operations.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, appearing under Part II, Item 9A. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Houston, Texas
March 8, 2022
To the stockholders and the Board of Directors of Expro Group Holdings N.V.
Opinion on the Financial Statements
We have audited, before the retrospective adjustments to the basic and diluted loss per share disclosure in Note 22 as a result of the reverse stock split disclosed in Note 1, the consolidated balance sheet of Expro Group Holdings International Limited (the “Company”) as of December 31, 2019, the related consolidated statement of operations, comprehensive loss, stockholders’ equity and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements, before the effects of the retrospective adjustments to the basic and diluted loss per share in Note 22 as a result of the reverse stock split disclosed in Note 1, referred to above present fairly, in all material respects, the financial position of the Company at December 31, 2019, and the results of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.
We were not engaged to audit, review or apply any procedures to the retrospective adjustments related to the basic and diluted loss per share in Note 22 as a result of the reverse stock split disclosure in Note 1 and, accordingly, we do not express an opinion or any other form of assurance about whether such retrospective adjustments are appropriate and have been properly applied. Those retrospective adjustments were audited by other auditors.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2009. In 2020 we became the predecessor auditor.
Reading, United Kingdom
March 17, 2020, except for Notes 2 and 5, as to which the date is March 26, 2021.
Consolidated Statements of Operations
(in thousands)
Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Total revenue | $ | 825,762 | $ | 675,026 | $ | 810,064 | ||||||
Operating costs and expenses: | ||||||||||||
Cost of revenue, excluding depreciation and amortization | (701,165 | ) | (566,876 | ) | (677,184 | ) | ||||||
General and administrative expense, excluding depreciation and amortization | (73,880 | ) | (23,814 | ) | (29,360 | ) | ||||||
Depreciation and amortization expense | (123,866 | ) | (113,693 | ) | (122,503 | ) | ||||||
Impairment expense | - | (287,454 | ) | (49,036 | ) | |||||||
Gain on disposal of assets | 1,000 | 10,085 | - | |||||||||
Merger and integration expense | (47,593 | ) | (1,630 | ) | - | |||||||
Severance and other expense | (7,826 | ) | (13,930 | ) | (4,444 | ) | ||||||
Total operating cost and expenses | (953,330 | ) | (997,312 | ) | (882,527 | ) | ||||||
Operating loss | (127,568 | ) | (322,286 | ) | (72,463 | ) | ||||||
Other income, net | 3,992 | 3,908 | 226 | |||||||||
Interest and finance expense, net | (8,795 | ) | (5,656 | ) | (3,300 | ) | ||||||
Loss before taxes and equity in income of joint ventures | (132,371 | ) | (324,034 | ) | (75,537 | ) | ||||||
Equity in income of joint ventures | 16,747 | 13,589 | 9,639 | |||||||||
Loss before income taxes | (115,624 | ) | (310,445 | ) | (65,898 | ) | ||||||
Income tax (expense) benefit | (16,267 | ) | 3,400 | 1,137 | ||||||||
Net loss | $ | (131,891 | ) | $ | (307,045 | ) | $ | (64,761 | ) | |||
Loss per common share: | ||||||||||||
Basic and diluted | $ | (1.64 | ) | $ | (4.33 | ) | $ | (0.91 | ) | |||
Weighted average common shares outstanding: | ||||||||||||
Basic and diluted | 80,525,694 | 70,889,753 | 70,889,753 |
The accompanying notes are an integral part of these consolidated financial statements. |
Consolidated Statements of Comprehensive Loss
(in thousands)
Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Net loss | $ | (131,891 | ) | $ | (307,045 | ) | $ | (64,761 | ) | |||
Other comprehensive income (loss): | ||||||||||||
Actuarial gain (loss) on defined benefit plans | 22,345 | (9,356 | ) | (3,521 | ) | |||||||
Plan curtailment / amendment credit recognized | - | 5,510 | - | |||||||||
Reclassified net remeasurement (loss) gains | (244 | ) | 104 | - | ||||||||
Amortization of prior service credit | (249 | ) | - | - | ||||||||
Income taxes on pension | - | (926 | ) | - | ||||||||
Other comprehensive income (loss) | 21,852 | (4,668 | ) | (3,521 | ) | |||||||
Comprehensive loss | $ | (110,039 | ) | $ | (311,713 | ) | $ | (68,282 | ) |
The accompanying notes are an integral part of these consolidated financial statements. |
Consolidated Balance Sheets
(in thousands, except share data)
December 31, | ||||||||
2021 | 2020 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 235,390 | $ | 116,924 | ||||
Restricted cash | 4,457 | 3,785 | ||||||
Accounts receivable, net | 319,286 | 193,600 | ||||||
Inventories | 125,116 | 53,359 | ||||||
Assets held for sale | 6,386 | - | ||||||
Income tax receivables | 20,561 | 20,327 | ||||||
Other current assets | 52,938 | 39,957 | ||||||
Total current assets | 764,134 | 427,952 | ||||||
Property, plant and equipment, net | 478,580 | 294,723 | ||||||
Investments in joint ventures | 57,604 | 45,088 | ||||||
Intangible assets, net | 253,053 | 173,168 | ||||||
Goodwill | 179,903 | 25,504 | ||||||
Operating lease right-of-use assets | 83,372 | 57,247 | ||||||
Non-current accounts receivable, net | 11,531 | 11,321 | ||||||
Other non-current assets | 26,461 | 4,748 | ||||||
Total assets | $ | 1,854,638 | $ | 1,039,751 | ||||
Liabilities and stockholders’ equity | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 213,152 | $ | 136,242 | ||||
Income tax liabilities | 22,999 | 13,657 | ||||||
Finance lease liabilities | 1,147 | 1,220 | ||||||
Operating lease liabilities | 19,695 | 14,057 | ||||||
Other current liabilities | 74,213 | 59,043 | ||||||
Total current liabilities | 331,206 | 224,219 | ||||||
Deferred tax liabilities, net | 31,744 | 26,817 | ||||||
Post-retirement benefits | 29,120 | 57,946 | ||||||
Non-current finance lease liabilities | 15,772 | 16,974 | ||||||
Non-current operating lease liabilities | 73,688 | 58,585 | ||||||
Other non-current liabilities | 75,537 | 43,226 | ||||||
Total liabilities | 557,067 | 427,767 | ||||||
Commitments and contingencies (Note 18) | ||||||||
Stockholders’ equity: | ||||||||
Common stock, nominal value, and shares authorized, and shares issued and and shares outstanding | 7,844 | 585 | ||||||
Warrants | - | 10,530 | ||||||
Treasury stock (at cost), shares | (22,785 | ) | - | |||||
Additional paid-in capital | 1,827,782 | 1,006,100 | ||||||
Accumulated other comprehensive income (loss) | 20,358 | (1,494 | ) | |||||
Accumulated deficit | (535,628 | ) | (403,737 | ) | ||||
Total stockholders’ equity | 1,297,571 | 611,984 | ||||||
Total liabilities and stockholders’ equity | $ | 1,854,638 | $ | 1,039,751 |
The accompanying notes are an integral part of these consolidated financial statements. |
Consolidated Statements of Cash Flows
(in thousands)
Year Ended December 31, | ||||||||||||
Cash flows from operating activities: | 2021 | 2020 | 2019 | |||||||||
Net loss | $ | (131,891 | ) | $ | (307,045 | ) | $ | (64,761 | ) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||
Impairment expense | - | 287,454 | 49,036 | |||||||||
Depreciation and amortization expense | 123,866 | 113,693 | 122,503 | |||||||||
Equity in income of joint ventures | (16,747 | ) | (13,589 | ) | (9,639 | ) | ||||||
Stock-based compensation expense | 54,162 | - | - | |||||||||
Changes in fair value of investments | (511 | ) | - | - | ||||||||
Elimination of unrealized profit on sales to joint ventures | 174 | 2,085 | 3,558 | |||||||||
Debt issuance expense | 5,166 | - | - | |||||||||
Gain on disposal of assets | (1,000 | ) | (10,085 | ) | - | |||||||
Deferred taxes | (737 | ) | (20,596 | ) | (18,296 | ) | ||||||
Unrealized foreign exchange | 1,407 | 2,106 | 337 | |||||||||
Changes in assets and liabilities: | ||||||||||||
Accounts receivable, net | (20,256 | ) | 38,486 | (24,172 | ) | |||||||
Inventories | 906 | 2,780 | (6,797 | ) | ||||||||
Other assets | 12,683 | 532 | (1,966 | ) | ||||||||
Accounts payable and accrued liabilities | 5,371 | (25,161 | ) | 18,892 | ||||||||
Other liabilities | (5,981 | ) | 7,150 | 1,119 | ||||||||
Income taxes, net | (2,056 | ) | (4,241 | ) | 3,548 | |||||||
Dividends received from joint ventures | 4,058 | 3,646 | 3,128 | |||||||||
Other | (12,470 | ) | (6,824 | ) | 4,719 | |||||||
Net cash provided by operating activities | 16,144 | 70,391 | 81,209 | |||||||||
Cash flows from investing activities: | ||||||||||||
Capital expenditures | (81,511 | ) | (112,387 | ) | (104,062 | ) | ||||||
Cash and cash equivalents and restricted cash acquired in the Merger | 189,739 | - | - | |||||||||
Proceeds from disposal of assets | 3,818 | 15,614 | 10 | |||||||||
Payment for acquisition of business, net of cash acquired | - | - | (47,882 | ) | ||||||||
Net cash provided by (used in) investing activities | 112,046 | (96,773 | ) | (151,934 | ) | |||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from release of collateral deposits | 162 | 2,271 | 28,280 | |||||||||
Repayment of financed insurance premium | (227 | ) | - | - | ||||||||
Payments of loan issuance and other transaction costs | (5,123 | ) | (1,095 | ) | (3,036 | ) | ||||||
Payment of withholding taxes on stock-based compensation plans | (818 | ) | - | - | ||||||||
Repayments of finance leases | (1,170 | ) | (1,801 | ) | (3,322 | ) | ||||||
Net cash provided by (used in) financing activities | (7,176 | ) | (625 | ) | 21,922 | |||||||
Effect of exchange rate changes on cash and cash equivalents | (1,876 | ) | 631 | 566 | ||||||||
Net increase (decrease) to cash and cash equivalents and restricted cash | 119,138 | (26,376 | ) | (48,237 | ) | |||||||
Cash and cash equivalents and restricted cash at beginning of year | 120,709 | 147,085 | 195,322 | |||||||||
Cash and cash equivalents and restricted cash at end of year | $ | 239,847 | $ | 120,709 | $ | 147,085 |
The accompanying notes are an integral part of these consolidated financial statements. |
Consolidated Statements of Stockholders’ Equity
(in thousands)
Accumulated | ||||||||||||||||||||||||||||||||
Additional | other | Total | ||||||||||||||||||||||||||||||
Common stock | Treasury | paid-in | comprehensive | Accumulated | Stockholders’ | |||||||||||||||||||||||||||
Shares | Value | Stock | Warrants | capital | income (loss) | deficit | Equity | |||||||||||||||||||||||||
Balance at January 1, 2019 | 70,890 | $ | 585 | $ | - | $ | 10,530 | $ | 1,006,100 | $ | 6,695 | $ | (31,078 | ) | $ | 992,832 | ||||||||||||||||
Net loss | - | - | - | - | - | - | (64,761 | ) | (64,761 | ) | ||||||||||||||||||||||
Other comprehensive loss | - | - | - | - | - | (3,521 | ) | - | (3,521 | ) | ||||||||||||||||||||||
Balance at December 31, 2019 | 70,890 | $ | 585 | $ | - | $ | 10,530 | $ | 1,006,100 | $ | 3,174 | $ | (95,839 | ) | $ | 924,550 | ||||||||||||||||
Adoption of ASU 2016-13, Financial Instruments - Credit Losses (“Topic 326”) | - | - | - | - | - | - | (853 | ) | (853 | ) | ||||||||||||||||||||||
Net loss | - | - | - | - | - | - | (307,045 | ) | (307,045 | ) | ||||||||||||||||||||||
Other comprehensive loss | - | - | - | - | - | (4,668 | ) | - | (4,668 | ) | ||||||||||||||||||||||
Balance at December 31, 2020 | 70,890 | $ | 585 | $ | - | $ | 10,530 | $ | 1,006,100 | $ | (1,494 | ) | $ | (403,737 | ) | $ | 611,984 | |||||||||||||||
Net loss | - | - | - | - | - | - | (131,891 | ) | (131,891 | ) | ||||||||||||||||||||||
Other comprehensive income | - | - | - | - | - | 21,852 | - | 21,852 | ||||||||||||||||||||||||
Stock-based compensation expense | - | - | - | - | 54,162 | - | - | 54,162 | ||||||||||||||||||||||||
Common shares issued upon vesting of share-based awards | 741 | 16 | - | - | (16 | ) | - | - | - | |||||||||||||||||||||||
Treasury shares withheld | (554 | ) | - | (818 | ) | - | - | - | - | (818 | ) | |||||||||||||||||||||
Cancellation of Legacy Expro common stock | - | (585 | ) | - | - | 585 | - | - | - | |||||||||||||||||||||||
Cancellation of warrants | - | - | - | (10,530 | ) | 10,530 | - | - | - | |||||||||||||||||||||||
Merger | 38,066 | 7,828 | (21,967 | ) | - | 756,421 | - | - | 742,282 | |||||||||||||||||||||||
Balance at December 31, 2021 | 109,143 | $ | 7,844 | $ | (22,785 | ) | $ | - | $ | 1,827,782 | $ | 20,358 | $ | (535,628 | ) | $ | 1,297,571 |
The accompanying notes are an integral part of these consolidated financial statements. |
On March 10, 2021, Frank’s International N.V. (“Frank’s”) and New Eagle Holdings Limited, an exempted company limited by shares incorporated under the laws of the Cayman Islands and a direct wholly owned subsidiary of Frank’s (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Expro Group Holdings International Limited (“Legacy Expro”), an exempted company limited by shares incorporated under the laws of the Cayman Islands, providing for the merger of Legacy Expro with and into Merger Sub in an all-stock transaction, with Merger Sub surviving the merger as a direct, wholly owned subsidiary of Frank’s (the “Merger”). The Merger closed on October 1, 2021 (the “Closing Date”), and Frank's was renamed to Expro Group Holdings N.V. (the “Company”). The Merger was accounted for using the acquisition method of accounting with Legacy Expro being identified as the accounting acquirer. The consolidated financial statements of the Company reflect the financial position, results of operations and cash flows of only Legacy Expro for all periods prior to the Merger and of the combined company (including activities of Frank’s) for all periods subsequent to the Merger.
Further, the supervisory board of directors of Frank’s unanimously approved a 1-for-6 reverse stock split of Frank’s common stock, which was affected on October 1, 2021. All of the outstanding share numbers, nominal value, share prices and per share amounts in these consolidated financial statements have been retroactively adjusted to reflect the Exchange Ratio (as defined below) and the 1-for-6 reverse stock split for all periods presented, as applicable.
Pursuant to the Merger Agreement, as of the effective time of the Merger (the “Effective Time”), each outstanding ordinary share of common stock, par value $0.01 per share, of Legacy Expro was converted into the right to receive 1.2120 shares of common stock, nominal value
per share, of the Company (“Company Common Stock”). The number of shares of Company Common Stock received by the Legacy Expro shareholders was equal to 7.2720 (the “Exchange Ratio” as provided in the Merger Agreement) multiplied by the 1-for-6 reverse stock split ratio. Further, pursuant to the Merger Agreement, at the Effective Time, the articles of association of the Company (the “Company Articles”) were amended to increase the total authorized capital stock of the Company from 798,096,000 shares of Company Common Stock to 1,200,000,000 shares of Company Common Stock (200,000,000 shares of Company Common Stock on a post-reverse split basis) and to effect certain other amendments to the Company Articles contemplated by the Merger Agreement. On October 4, 2021, the first trading day following the closing of the Merger, the Company Common Stock began trading on a post-reverse split basis on the New York Stock Exchange under the new name and new ticker symbol “XPRO.”
With roots dating to 1938, the Company is a global provider of energy services with operations in approximately 60 countries. The Company’s portfolio of capabilities include products and services related to well construction, well flow management, subsea well access, and well intervention and integrity. The Company's portfolio of products and services enhance production and improve recovery across the well lifecycle, from exploration through abandonment.
2. Basis of presentation and significant accounting policies
Basis of presentation
The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The consolidated financial statements have been prepared using the U.S. dollar (“$” or “USD”) as the reporting currency.
Basis of consolidation
The consolidated financial statements reflect the accounts of the Company and its subsidiaries. All intercompany balances and transactions, including unrealized profits arising from them, have been eliminated for purposes of preparing these consolidated financial statements. Investments in which we do not have a controlling interest, but over which we do exercise significant influence, are accounted for under the equity method of accounting.
Use of estimates
Preparation of the consolidated financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. Estimates and assumptions are used for, but are not limited to, determining the following: purchase price allocation on business combinations, valuation of intangible assets, expected credit losses, inventory valuation reserves, valuation of share warrants, impairment assessment of goodwill, income tax provisions, recovery of deferred taxes, actuarial assumptions to determine costs and liabilities related to employee benefit plans and revenue recognition. While we believe that the estimates and assumptions used in the preparation of the consolidated financial statements are appropriate, actual results could differ from these estimates.
Revenue recognition
We recognize revenue from rendering of services over a period of time as the customer simultaneously consumes the benefit of the service while it is being rendered reflecting the amount of consideration to which the Company has a right to invoice. As part of rendering of services, the Company also provides rental equipment and personnel. Using practical expedients under Accounting Standards Update (“ASU”) 2014-09, the Company has elected not to separate non-lease components from the associated lease components and account for the combined component in accordance with the ASU 2014-09 with recognition over time.
Revenue from the sale of goods is generally recognized at the point in time when the control has passed onto the customer which generally coincides with delivery and installation, where applicable.
We also recognize revenue for “bill and hold” sales, associated with certain product sales, once the following criteria have been met: (1) there is a substantive reason for the arrangement, (2) the product is identified as the customer’s asset, (3) the product is ready for delivery to the customer, and (4) we cannot use the product or direct it to another customer.
Where contractual arrangements contain multiple performance obligations, we analyze each performance obligation within the sales arrangement to determine whether they are distinct. The revenue for contracts involving multiple performance obligations is allocated to each distinct performance obligation based on relative selling prices and is recognized on satisfaction of each distinct performance obligation. Further, a small number of our contracts contain penalty provisions for late delivery and installation of equipment, downtime or other equipment functionality. These penalties are typically percentage reductions in the total arrangement consideration, capped at a certain amount, or a reduction in the on-going service fee and are assessed as variable consideration in the contract.
Revenue is recognized to depict the transfer of promised services or goods to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services or goods. We do not include tax amounts collected from customers in sales transactions as a component of revenue.
Foreign currency transactions
The functional currency of all our subsidiaries is the USD. Gains and losses resulting from remeasurement of foreign currency denominated monetary assets and liabilities are included in the consolidated statements of operations as incurred. Gains and losses resulting from transactions denominated in a foreign currency are also included in the consolidated statements of operations as incurred.
Interest and finance expense, net
Our interest and finance expense primarily consists of interest and other costs that we incur in connection with our revolving credit facility and finance lease liabilities. Costs incurred that are directly related to the raising of debt financing, together with any original issue discount or premium, are capitalized and recognized over the term of the loan or facility, using the effective interest method other than for those debt instruments that we elect to account for under the fair value option, in which case such costs are expensed in the period incurred. All other finance costs are expensed in the period they are incurred.
Income taxes
We use the asset and liability method to account for income taxes whereby we calculate the deferred tax asset or liability account balances using tax laws and rates in effect at that time. Under this method, the balances of deferred tax liabilities and assets at the end of each period are determined using the tax rate expected to be in effect when taxes are actually paid or recovered. Valuation allowances are recorded to reduce gross deferred tax assets when it is more likely than not that some portion or all of the gross deferred tax assets will not be realized. In determining the need for valuation allowances, we have made judgments and considered estimates regarding estimated future taxable income and ongoing achievable tax planning strategies. These estimates and judgments include some degree of uncertainty therefore changes in these estimates and assumptions could require us to adjust the valuation allowances for our deferred tax assets accordingly. The ultimate realization of the deferred tax assets depends on the generation of sufficient taxable income in the applicable taxing jurisdictions.
We operate in more than 60 countries and are subject to domestic and numerous foreign taxing jurisdictions. Determination of taxable income in any jurisdiction requires the interpretation of the related tax laws and regulations and the use of estimates and assumptions regarding significant future events such as the amount, timing and character of income, deductions, and tax credits. Changes in tax laws, regulations or agreements in each taxing jurisdiction could have an impact on the amount of income taxes that we provide during any given year.
Our tax filings for various periods are subject to audit by the tax authorities in most jurisdictions in which we operate, and these assessments can result in additional taxes. Estimating the outcome of audits and assessments by the tax authorities involves uncertainty. We review the facts of each case and apply judgments and assumptions to determine the most likely outcome and we provide for taxes, interest and penalties on this basis.
In line with U.S. GAAP, we recognize the effects of a tax position in the consolidated financial statements when it is more likely than not that, based on the technical merits, some level of tax benefit related to a tax position will be sustained upon audit by tax authorities.
Cash, cash equivalents and restricted cash
We consider all highly liquid instruments with original maturities of three months or less at the time of purchase to be cash equivalents. Restricted cash primarily relates to bank deposits which have been pledged as cash collateral for certain guarantees issued by various banks or minimum cash balances which must be maintained in accordance with contractual arrangements.
Accounts receivable, net
Accounts receivable represents customer transactions that have been invoiced as of the balance sheet date and unbilled receivables relating to customer transactions that have not yet been invoiced as of the balance sheet date. The carrying value of our receivables, net of expected credit losses, represents the estimated net realizable value. We have an extensive global customer base comprised of a large number of international oil companies, national oil companies, independent exploration and production companies and service partners that operate in all major oil and gas locations around the world. We estimate reserves for expected credit losses using information about past events, current conditions and risk characteristics of customers, and reasonable and supportable forecasts relevant to assessing risk associated with the collectability of accounts and unbilled receivables. Past-due receivables are written off when our internal collection efforts have been unsuccessful.
Inventories
Inventories are stated at the lower of cost or net realizable value. Cost comprises direct materials and where applicable, direct labor costs and overheads that have been incurred in bringing the inventories to their current location and condition which are calculated using the average cost method.
We regularly evaluate the quantities and values of our inventories in light of current market conditions, market trends and other factors, and record inventory write-downs as appropriate. This evaluation considers historical usage, expected demand, product obsolescence and other factors. Market conditions are subject to change, and actual consumption of our inventory could differ from expected demand.
Impairment of long-lived assets
We assess long-lived assets, including our property, plant and equipment, for impairment whenever events or changes in business circumstances arise that may indicate that the carrying amount of our long-lived assets may not be recoverable. These events and changes can include significant current period operating losses or negative cash flows associated with the use of a long-lived asset, or group of assets, combined with a history of such factors, significant changes in the manner of use of the assets, and current expectations that it is more likely than not that a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. For purposes of recognition and measurement of an impairment loss, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. When impairment indicators are present, we compare undiscounted future cash flows, including the eventual disposition of the asset group at market value, to the asset group’s carrying value to determine if the asset group is recoverable. If the carrying values are in excess of undiscounted expected future cash flows, we measure any impairment by comparing the fair value of the asset or asset group to its carrying value. Fair value is generally determined by considering (i) internally developed discounted projected cash flow analysis of the asset or asset group, (ii) third-party valuations, and/or (iii) information available regarding the current market for similar assets. If the fair value of an asset or asset group is determined to be less than the carrying amount of the asset or asset group, an impairment equal to the difference is recorded in the period that the impairment indicator occurs. Estimating future cash flows requires significant judgment, and projections may vary from the cash flows eventually realized, which could impact our ability to accurately assess whether an asset has been impaired.
We consider a long-lived asset to be abandoned after we have ceased use of such asset and we have no intent to use or re-purpose the asset in the future.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation. Cost includes the price paid to acquire or construct the asset, required installation costs, interest capitalized during the construction period and any expenditure that substantially adds to the value of the asset, substantially upgrades the assets for an enhanced use or substantially extends the useful life of an existing asset. We expense costs related to the routine repair and maintenance of property, plant and equipment at the time we incur them. We capitalize interest as part of the cost of acquiring or constructing certain assets, to the extent incurred, during the period of time required to place the property, plant and equipment into service.
When properties or equipment are sold, retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the books and the resulting gain or loss is recognized on the consolidated statements of operations.
We begin depreciation for such assets, including any related capitalized interest, once an asset is placed into operational service. We consider an asset to be placed into operational service when the asset is both in the location and condition for its intended use. We compute depreciation expense, with the exception of land, using the straight-line method on a net cost basis over the estimated useful lives of the assets, as presented in the table below.
Land improvement | - | |
Buildings | - |
|
Leased property, including leasehold buildings | - | over the lesser of the remaining useful life or period of the lease |
Plant and equipment |
Useful lives and residual values are reviewed annually and where adjustments are required these are made prospectively.
For property, plant and equipment that has been placed into service, but is subsequently idled, we continue to record depreciation expense during the idle period. We adjust the estimated useful lives of the idled assets if the estimated useful lives have changed.
Goodwill
Goodwill is not subject to amortization and is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. A qualitative assessment is allowed to determine if goodwill is potentially impaired. We have the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test. The qualitative assessment determines whether it is more likely than not that a reporting unit’s fair value is less than it’s carrying amount. If it is more likely than not that the fair value of the reporting unit is less than the carrying amount, then a quantitative impairment test is performed. The quantitative goodwill impairment test is used to identify both the existence of impairment and the amount of impairment loss. The test compares the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit is less than it’s carrying value, an impairment loss is recorded based on that difference. We complete our assessment of goodwill impairment as of October 31 each year.
Intangible assets, net
Identifiable intangible assets are amortized using the straight-line method over the estimated useful lives of the assets, ranging from
year to years. We evaluate impairment of our intangible assets on an asset group basis whenever circumstances indicate that the carrying value may not be recoverable. Intangible assets deemed to be impaired are written down to their fair value using a discounted cash flow model and, if available, comparable market values. Our intangible assets are primarily associated with trademarks, customer relationships and contracts (“CR&C”), technology, and software.
Investments in joint ventures
We use the equity method of accounting for our equity investments where we hold more than 20% of the ownership interests of an investee that does not constitute a controlling interest or where we have the ability to significantly influence the operations or financial decision of the investee. Such equity investments are carried on the consolidated balance sheets at cost plus post-acquisition changes in our share of net income, less dividends received and less any impairments. Our consolidated statements of operations reflect our share of income from the joint ventures’ results after tax. Any goodwill arising on the acquisition of a joint venture, representing the excess of the cost of the investment compared to the Company’s share of the net fair value of the acquired identifiable net assets, is included in the carrying amount of the joint venture and is not amortized.
The Company evaluates its investments in joint ventures for potential impairment whenever events or changes in circumstances indicate that there may be a loss in the value of each investment that is other than temporary.
The results of the joint ventures are prepared for the same reporting period as the Company. Where necessary, adjustments are made to bring the accounting policies used in line with those of the Company, to take into account fair values assigned at the date of acquisition; and to reflect impairment losses where appropriate. Adjustments are also made in our consolidated financial statements to eliminate our share of unrealized gains and losses on transactions between us and our joint ventures.
Fair value measurements
We measure certain financial assets and liabilities at fair value at each balance sheet date and, for the purposes of impairment testing, use fair value to determine the recoverable amount of our non-financial assets.
Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) on the measurement date in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by us. Accounting standards include disclosure requirements around fair values used for certain financial instruments and establish a fair value hierarchy. The hierarchy prioritizes valuation inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value is reported in one of three levels:
Level 1 – Valuation techniques in which all significant inputs are unadjusted quoted market prices from active markets for identical assets or liabilities being measured;
Level 2 – Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques; and
Level 3 – Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect our own assumptions about the assumptions that market participants would use to price an asset or liability.
When available, we use quoted market prices to determine the fair value of an asset or liability. We determine the policies and procedures for both recurring fair value measurements and non-recurring fair value measurements, such as impairment tests.
At each reporting date, we analyze the movements in the values of assets and liabilities which are required to be remeasured or reassessed as per our accounting policies.
For the purpose of fair value disclosures, we have determined classes of assets and liabilities based on the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
Leases
We have operating and finance leases primarily related to real estate, transportation and equipment. We determine if an arrangement is a lease at inception. Upon commencement of a lease, we recognize an operating lease right-of-use asset (“ROU Asset”) and corresponding operating lease liability based on the then present value of all lease payments over the lease term. ROU Assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligations to make lease payments arising from the lease. The accounting for some of our leases may require significant judgments, which includes determining the incremental borrowing rates to utilize in our net present value calculation of lease payments for lease agreements which do not provide an implicit rate, and assessing the likelihood of renewal or termination options, which are considered as part of assessing the lease term if the extension or termination is deemed to be reasonably certain.
Leases which meet the criteria of a finance lease in accordance with Accounting Standards Codification (“ASC”) 842 Leases are capitalized and included in “Property, plant and equipment, net” and “Finance lease liabilities” on the consolidated balance sheets. Our lease contracts generally do not provide any guaranteed residual values. Payments related to finance leases are apportioned between the reduction of the lease liability and finance expense in the consolidated statement of operations so as to achieve a constant rate of interest on the remaining balance of the liability. Leases which do not meet the definition of a finance lease are classified as operating leases and are included in Operating lease right-of-use assets and operating lease liabilities on the consolidated balance sheets. Lease expense is recognized on a straight-line basis over the shorter of the estimated useful life of the underlying asset or the lease term.
We do not separate lease and non-lease components for all classes of leased assets. Also, leases with an initial term of one year or less are not recorded on the consolidated balance sheets.
Post-retirement benefits
Defined Benefit Plans
The cost of providing benefits under defined benefit plans are determined separately for each plan using the projected unit credit method, which attributes entitlement to benefits to the current and prior periods. Both current and past service costs are recognized in net income (loss) as they arise.
The interest element of the defined benefit cost represents the change in present value of plan obligations resulting from the passage of time and is determined by applying a discount rate to the opening present value of the benefit obligation, taking into account material changes in the obligation during the year. The expected return on plan assets is based on an assessment made at the beginning of the year of long-term market returns on plan assets, adjusted for the effect on the fair value of plan assets of contributions received and benefits paid during the year.
We initially recognize actuarial gains and losses as other comprehensive income in the year they arise. Where the net cumulative actuarial gains or losses for a plan exceeds 10 percent of that plan’s gross pension liability, or asset if higher, the amount of gains or losses above the 10 percent threshold are recognized in the consolidated statement of operations as a component of net pension costs (over the expected remaining working lives of the plan’s active participants or the remaining lives of plan members in the event the plan is no longer active), which is included in “Cost of revenue, excluding depreciation and amortization.”
The defined benefit pension asset or liability on the consolidated balance sheets comprise the total for each plan of the present value of the defined benefit obligation using a discount rate based on high quality corporate bonds less the fair value of plan assets out of which the obligations are to be settled directly. Fair value is based on market price information and in the case of quoted securities is the published bid price.
Defined Contribution Plans
The costs of providing benefits under a defined contribution plan are expensed at the time contributions become payable to the respective plan.
Stock-based compensation
Effective as of October 1, 2021, the Expro Group Holdings N.V. Long-Term Incentive Plan, As Amended and Restated, provides for the granting of stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), performance restricted stock units (“PRSUs”), dividend equivalent rights and other types of equity and cash incentive awards to employees, nonemployee directors and service providers.
Stock-based compensation expense is measured at the grant date of the share-based awards based on their fair value. Stock-based compensation expense is recognized on a straight-line basis over the vesting period and is included in cost of revenue and general and administrative expenses in the consolidated statements of operations. We do not estimate expected forfeitures, but recognize them as they occur.
The grant date fair value of the RSUs, which are not entitled to receive dividends until vested, is measured by reducing the share price at that date by the present value of the dividends expected to be paid during the requisite vesting period, discounted at the appropriate risk-free interest rate. The grant date fair value and compensation expense of PRSU grants is estimated based on a Monte Carlo simulation using the Company’s closing stock price as of the day before the grant date.
In October 2018, Legacy Expro established the Expro Group Holdings International Limited 2018 Management Incentive Plan (the “Management Incentive Plan”) which was comprised of the following stock-based compensation awards: (a) stock options to non-executive directors and key management personnel and (b) restricted stock units, each of which were assumed by the Company in connection with the Merger. Due to the Merger, the Company recorded stock-based compensation expense based on the fair value on the Closing Date to the extent each award was fully vested. Compensation expense associated with those awards that have a requisite service period remaining as of the Closing Date will be recognized on a straight-line basis over the remaining requisite service period based on the Closing Date fair value.
Research and development
Research and development costs are expensed as incurred and relate to spending for new product development and innovation and includes internal engineering, materials and third-party costs. We incurred $6.7 million, $10.4 million and $14.4 million of research and development costs for the years ended December 31, 2021, 2020 and 2019, respectively, which are included in “Cost of revenue, excluding depreciation and amortization” in the consolidated statements of operations.
Income (loss) per share
Basic income (loss) per share excludes dilution and is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted income (loss) per share reflects the potential dilution that could occur if securities to issue common stock were exercised or converted to common stock.
Recent accounting pronouncements
Accounting guidance adopted
Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of ASUs to the FASB’s Accounting Standards Codification. We consider the applicability and impact of all accounting pronouncements. ASUs not listed below were assessed and were either determined to be not applicable or are expected to have immaterial impact on our consolidated financial position, results of operations and cash flows.
In August 2018, the FASB used ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans, which required the following additional disclosures in the financial statements.
● | The weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates; |
● | An explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period; |
● | The projected benefit obligation and fair value of plan assets for plans with projected benefit obligations in excess of plan assets; and |
● | The accumulated benefit obligation and fair value of plan assets for plans with accumulated benefit obligations in excess of plan assets. |
We adopted the guidance on January 1, 2021. The adoption of this guidance resulted in additional disclosures related to our defined benefit pension obligations, however it did not have any impact on our results of operations, financial condition or liquidity.
3. Business combinations and dispositions
Frank’s International N.V.
As discussed in Note 1, the Merger of Frank’s with Legacy Expro pursuant to the Merger Agreement was completed on October 1, 2021. U.S. GAAP requires the determination of the accounting acquirer, the acquisition date, the fair value of assets and liabilities of the acquired and the resulting measurement of goodwill. The Merger is accounted for as a reverse merger and Legacy Expro has been identified as the acquirer for accounting purposes. As a result, the Company has in accordance with ASC 805, Business Combinations, applied the acquisition method of accounting to account for Frank’s assets acquired and liabilities assumed. Applying the acquisition method of accounting includes recording the identifiable assets acquired and liabilities assumed at their fair values and recording goodwill for the excess of the consideration transferred over the net aggregate fair value of the identifiable assets acquired and liabilities assumed.
The merger consideration was based on Frank’s closing share price on the Closing Date. In a reverse merger involving only the exchange of equity, the fair value of the equity of the accounting acquiree may be used to measure consideration transferred if the value of the accounting acquiree’s equity interests are more reliably measurable than the value of the accounting acquirer’s equity interest. As Legacy Expro was a private company and Frank’s was a public company with a quoted and reliable market price, the fair value of Frank’s equity interests was deemed to be more reliable. Under the acquisition method of accounting, total consideration exchanged was as follows:
Per share | Amount | |||||||||||
Shares issued | Price | (in thousands) | ||||||||||
Issuance of common stock attributable to Frank’s stockholders | 38,066,216 | $ | 18.90 | $ | 719,452 | |||||||
Replacement of Frank’s equity awards | 7,830 | |||||||||||
Cash payment to Mosing Holdings LLC pursuant to the amended and restated tax receivable agreement | 15,000 | |||||||||||
Total Merger Consideration Exchanged | $ | 742,282 |
The following table sets forth the preliminary allocation of the merger consideration exchanged to the fair value of identifiable tangible and intangible assets acquired and liabilities assumed as of the Closing Date, with the recording of goodwill for the excess of the consideration transferred over the net aggregate fair value of the identifiable assets acquired and liabilities assumed ($ in thousands):
Amount | ||||
Cash and cash equivalents | $ | 187,178 | ||
Restricted cash | 2,561 | |||
Accounts receivables, net | 112,234 | |||
Inventories | 69,567 | |||
Assets held for sale | 10,061 | |||
Income tax receivables | 2,030 | |||
Other current assets | 23,908 | |||
Property, plant and equipment | 212,639 | |||
Goodwill | 154,399 | |||
Intangible assets | 104,791 | |||
Operating lease right-of-use assets | 27,406 | |||
Other assets | 20,494 | |||
Total assets | 927,268 | |||
Accounts payable and accrued liabilities | 81,959 | |||
Operating lease liabilities | 8,344 | |||
Current income tax liabilities | 8,932 | |||
Other current liabilities | 19,918 | |||
Deferred tax liabilities | 5,673 | |||
Non-current operating lease liabilities | 19,607 | |||
Other non-current liabilities | 40,553 | |||
Total Liabilities | 184,986 | |||
Total Merger Consideration Exchanged | $ | 742,282 |
Due to the recency and complexity of the Merger, these amounts are preliminary and subject to change as our fair value assessments are finalized. The final fair value determination could result in material adjustments to the values presented in the preliminary purchase price allocation table above. The fair values of identifiable intangible assets were prepared using an income valuation approach, which requires a forecast of expected future cash flows either through the use of the relief-from-royalty method or the multi-period excess earnings method, which are discounted to approximate their current value. The estimated useful lives are based on management’s historical experience and expectations as to the duration of time that benefits from these assets are expected to be realized.
The intangible assets will be amortized on a straight-line basis over an estimated 10- to 15-year life. We expect annual amortization to be approximately $7.7 million associated with these intangible assets.
Goodwill will not be amortized but rather subject to an annual impairment test, absent any indicators of impairment. Goodwill is attributable to planned synergies expected to be achieved from the combined operations of Legacy Expro and Frank’s. Goodwill recorded in the Merger is not expected to be deductible for tax purposes.
Results of Frank’s for the period October 1, 2021 through December 31, 2021
The Company’s operating results for the period October 1, 2021 through December 31, 2021 include $112.1 million of revenue and $32.9 million of net loss attributable to Frank’s.
Unaudited Pro Forma Financial Information
The following unaudited pro forma consolidated results of operations for the year ended December 31, 2021 and 2020 assume the Merger was completed as of January 1, 2020 (in thousands):
Year Ended December 31, | ||||||||
2021 | 2020 | |||||||
Unaudited pro forma revenues | $ | 1,143,356 | $ | 1,065,384 | ||||
Unaudited pro forma net loss | $ | (121,546 | ) | $ | (491,091 | ) |
Estimated unaudited pro forma information is not necessarily indicative of the results that actually would have occurred had the Merger been completed on the date indicated or of future operating results.
Merger and integration expense
During the year ended December 31, 2021 and 2020, the Company incurred $47.6 million and $1.6 million of merger and integration expense, which consist primarily of legal fees, professional fees, integration, severance and other costs directly attributable to the Merger.
Below is a reconciliation of our liability balance associated with our severance plan initiated during 2021 related to the integration in connection with the Merger, which is included in “Other current liabilities” on the consolidated balance sheets (in thousands):
NLA | ESSA | MENA | APAC | Central | Total | |||||||||||||||||||
Costs expensed during the year | $ | 2,864 | $ | 4,117 | $ | 612 | $ | 1,171 | $ | 7,238 | $ | 16,002 | ||||||||||||
Payments made during the year | (807 | ) | (1,615 | ) | (188 | ) | (554 | ) | (623 | ) | (3,787 | ) | ||||||||||||
Balance at December 31, 2021 | $ | 2,057 | $ | 2,502 | $ | 424 | $ | 617 | $ | 6,615 | $ | 12,215 |
Sale of assets
On November 13, 2020, Legacy Expro entered into an agreement to transfer, sell and assign all rights, title and interest in and to certain identified tangible and intangible assets and liabilities relating to its pressure-control chokes product line for total cash consideration of $15.5 million and an additional earn-out consideration of up to a maximum of $1.0 million, contingent upon certain criteria being met in the following year. No contingent consideration was recognized during the year ended December 31, 2020. Legacy Expro recognized a gain of $10.1 million for the year ended December 31, 2020 net of the carrying value of the assets transferred of $4.4 million and costs directly attributable to the sale of $1.0 million. As of December 31, 2021, the conditions upon which the earn-out consideration was contingent were met. As a result, the Company recognized a gain of $1.0 million for the year ended December 31, 2021.
4. Fair value measurements
Recurring Basis
A summary of financial assets and liabilities that are measured at fair value on a recurring basis, as of December 31, 2021 and 2020, were as follows (in thousands):
December 31, 2021 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Investments: | ||||||||||||||||
Cash surrender value of life insurance policies- | ||||||||||||||||
Deferred compensation plan | $ | - | $ | 18,857 | $ | - | $ | 18,857 | ||||||||
Non-current accounts receivable, net | - | 11,531 | - | 11,531 | ||||||||||||
Liabilities: | ||||||||||||||||
Deferred compensation plan | - | 9,339 | - | 9,339 | ||||||||||||
Finance lease liabilities | - | 16,919 | - | 16,919 |
December 31, 2020 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Non-current accounts receivable, net | $ | - | $ | 11,321 | $ | - | $ | 11,321 | ||||||||
Liabilities: | ||||||||||||||||
Finance lease liabilities | - | 18,194 | - | 18,194 |
Our investments associated with our deferred compensation plan at December 31, 2021 consist primarily of the cash surrender value of life insurance policies and is included in other assets on the consolidated balance sheets. The liability associated with our deferred compensation plan at December 31, 2021 is included in other liabilities on the consolidated balance sheets. Our investments change as a result of contributions, payments, and fluctuations in the market. Assets and liabilities, measured using significant observable inputs, are reported at fair value based on third-party broker statements, which are derived from the fair value of the funds’ underlying investments. They are reported at fair value based on the price of the stock and are included in other assets on the consolidated balance sheets.
Non-recurring Basis
We apply the provisions of the fair value measurement standard to our non-recurring, non-financial measurements including business combinations and assets identified as held for sale, as well as impairment related to goodwill and other long-lived assets. For business combinations, the purchase price is allocated to the assets acquired and liabilities assumed based on a discounted cash flow model for most intangibles as well as market assumptions for the valuation of equipment and other fixed assets.
Goodwill is not subject to amortization and is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. A qualitative assessment is allowed to determine if goodwill is potentially impaired. We have the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test. The qualitative assessment determines whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount. If it is more likely than not that the fair value of the reporting unit is less than the carrying amount, then a quantitative impairment test is performed. The quantitative goodwill impairment test is used to identify both the existence of impairment and the amount of impairment loss. The test compares the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded based on that difference.
When conducting an impairment test on long-lived assets, other than goodwill, we first compare estimated future undiscounted cash flows associated with the asset to the asset’s carrying amount. If the undiscounted cash flows are less than the asset’s carrying amount, we then determine the asset’s fair value by using a discounted cash flow analysis. These analyses are based on estimates such as management’s short-term and long-term forecast of operating performance, including revenue growth rates and expected profitability margins, estimates of the remaining useful life and service potential of the asset, and a discount rate based on our weighted average cost of capital. For assets that meet the criteria to be classified as held for sale, a market approach is used to determine fair value based on third-party appraisal reports.
The impairment assessments discussed above incorporate inherent uncertainties, including projected commodity pricing, supply and demand for our services and future market conditions, which are difficult to predict in volatile economic environments and could result in impairment expense in future periods if actual results materially differ from the estimated assumptions utilized in our forecasts. If crude oil prices decline significantly and remain at low levels for a sustained period of time, we could be required to record an impairment of the carrying value of our long-lived assets in the future which could have a material adverse impact on our operating results. Given the unobservable nature of the inputs, the discounted cash flow models are deemed to use Level 3 inputs.
No impairment expense was recognized during the year ended December 31, 2021. The following table presents total amount of impairment expense recognized during the years ended December 31, 2020 and 2019 (in thousands):
2020 | 2019 | |||||||
Goodwill | $ | 191,893 | $ | 26,422 | ||||
Intangible assets, net | 60,394 | 17,901 | ||||||
Property, plant and equipment, net | 19,993 | 4,713 | ||||||
Operating lease right-of-use assets | 15,174 | - | ||||||
Total | $ | 287,454 | $ | 49,036 |
Goodwill
As of October 31, 2021, our annual testing date, we performed a qualitative assessment of our goodwill and determined there were no events or circumstances that indicated it is more likely than not that a reporting unit’s fair value is less than its carrying amount. Accordingly, no impairment expense related to goodwill has been recorded during the year ended December 31, 2021.
In March 2020, the Company observed a material increase in macro-economic uncertainty and a material decrease in oil and gas prices as a result of a combination of factors, including the substantial decline in global demand for oil caused by the COVID-19 pandemic and disagreements between the Organization of Petroleum Exporting Countries and other oil producing nations regarding limits on production. As a result, customers significantly decreased capital budgets and other spending, which significantly impacted our global outlook for the industry. We determined that these events constituted a triggering event that required us to perform a quantitative goodwill impairment assessment as of March 31, 2020 (“Testing Date”) and to review the recoverability of all our long-lived assets.
We used the income approach to estimate the fair value of our reporting units, but also considered the market approach to validate the results. The income approach estimates the fair value by discounting the reporting unit’s estimated future cash flows using an estimated discount rate, or expected return, that a marketplace participant would have required as of the valuation date. The market approach includes the use of comparative multiples to corroborate the discounted cash flow results and involves significant judgment in the selection of the appropriate peer group companies and valuation multiples.
Under the income approach, we utilized third-party valuation advisors to assist us with these valuations. These analyses included significant judgment, including significant Level 3 assumptions related to management’s short-term and long-term forecast of operating performance, discount rates based on our estimated weighted average cost of capital, revenue growth rates, profitability margins and capital expenditures.
Our interim quantitative impairment test in 2020 determined the carrying value of certain of our reporting units exceeded their estimated fair value as of the Testing Date, which resulted in goodwill impairment expense of $191.9 million. Our annual quantitative impairment test in 2020 determined no further impairment to goodwill was to be recorded. Our annual quantitative impairment test in 2019 determined the carrying value of certain of our reporting units exceeded their estimated fair value as of the Testing Date, which resulted in goodwill impairment expense of $26.4 million. After recording of the impairment expense, the carrying value of certain of our impaired reporting units equaled their fair value whereas the estimated fair values of other reporting units was more than their carrying values.
Long-lived Assets
The Company did
identify any indicators of impairment related to our long-lived assets during the year ended December 31, 2021. In reviewing the recoverability of our long-lived assets during 2020 and 2019, we identified certain of our long-lived assets which exceeded their respective fair values and certain of our long-lived assets which were deemed to be no longer useable. As a result, during 2020 we recorded impairment expense of $20.0 million, $60.4 million and $15.2 million relating to our property, plant and equipment, intangible assets and operating lease right-of-use assets, respectively, and during 2019, we recorded impairment expense of $4.7 million and $17.9 million relating to our property, plant and equipment and intangible assets, respectively.
Financial Instruments
The estimated fair values of the Company’s financial instruments have been determined at discrete points in time based on relevant market information. The Company’s financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, other current assets, accounts payable and accrued liabilities and interest-bearing loans. The carrying amounts of the Company’s financial instruments other than interest bearing loans approximate fair value due to the short-term nature of the items. The Company does
have any outstanding borrowings on its interest-bearing loans.
5. Business segment reporting
Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s Chief Operating Decision Maker (“CODM”), which is our Chief Executive Officer, in deciding how to allocate resources and assess performance. Our operations are comprised of four operating segments which also represent our reporting segments and are aligned with our geographic regions as below:
● | North and Latin America (“NLA”), |
● | Europe and Sub-Saharan Africa (“ESSA”), |
● | Middle East and North Africa (“MENA”), and |
● | Asia-Pacific (“APAC”). |
The following table presents our revenue disaggregated by our operating segments (in thousands):
Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
NLA | $ | 193,156 | $ | 115,738 | $ | 174,058 | ||||||
ESSA | 300,557 | 219,534 | 256,790 | |||||||||
MENA | 171,136 | 194,033 | 237,065 | |||||||||
APAC | 160,913 | 145,721 | 142,151 | |||||||||
Total | $ | 825,762 | $ | 675,026 | $ | 810,064 |
Segment EBITDA
Our CODM regularly evaluates the performance of our operating segments using Segment EBITDA, which we define as loss before income taxes adjusted for corporate costs, equity in income of joint ventures, depreciation and amortization expense, impairment expense, severance and other expense, gain on disposal of assets, foreign exchange losses, merger and integration expense, other income, interest and finance expense, net and stock-based compensation expense.
The following table presents our Segment EBITDA disaggregated by our operating segments and reconciliation to loss before income taxes (in thousands):
Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
NLA | $ | 32,254 | $ | 54 | $ | 15,031 | ||||||
ESSA | 53,336 | 35,393 | 45,358 | |||||||||
MENA | 56,312 | 77,296 | 86,043 | |||||||||
APAC | 33,444 | 34,976 | 28,762 | |||||||||
Total Segment EBITDA | 175,346 | 147,719 | 175,194 | |||||||||
Corporate costs | (66,153 | ) | (61,122 | ) | (67,498 | ) | ||||||
Equity in income of joint ventures | 16,747 | 13,589 | 9,639 | |||||||||
Depreciation and amortization expense | (123,866 | ) | (113,693 | ) | (122,503 | ) | ||||||
Impairment expense | - | (287,454 | ) | (49,036 | ) | |||||||
Severance and other expense | (7,826 | ) | (13,930 | ) | (4,444 | ) | ||||||
Stock-based compensation expense | (54,162 | ) | - | - | ||||||||
Gain on disposal of assets | 1,000 | 10,085 | - | |||||||||
Foreign exchange losses | (4,314 | ) | (2,261 | ) | (4,176 | ) | ||||||
Merger and integration expense | (47,593 | ) | (1,630 | ) | - | |||||||
Other income, net | 3,992 | 3,908 | 226 | |||||||||
Interest and finance expense, net | (8,795 | ) | (5,656 | ) | (3,300 | ) | ||||||
Loss before income taxes | $ | (115,624 | ) | $ | (310,445 | ) | $ | (65,898 | ) |
Corporate costs include the costs of running our corporate head office and other central functions that support the operating segments, including research, engineering and development, logistics, sales and marketing and health and safety and are not attributable to a particular operating segment.
We are a Netherlands based company and we derive our revenue from services and product sales to customers primarily in the oil and gas industry. No single customer accounted for more than 10% of our revenue for the year ended December 31, 2021.
customer in our MENA operating segment accounted for 16% and 14% of our consolidated revenue for the years ended December 31, 2020 and 2019, respectively. The revenue generated in the Netherlands was immaterial for the years ended December 31, 2021, 2020 and 2019. Other than Norway, no individual country represented more than 10% of our revenue for the year ended December 31, 2021. Other than Algeria, no individual country represented more than 10% of our revenue for the year ended December 31, 2020. Other than Algeria and the U.S., no individual country represented more than 10% of our revenue for the year ended December 31, 2019.
The following table presents total assets by geographic region and assets held centrally. Assets held centrally includes certain property plant and equipment, investments in joint ventures, collateral deposits, income tax related balances, corporate cash and cash equivalents, accounts receivable and other current and non-current assets, which are not included in the measure of segment assets reviewed by the CODM:
December 31, | ||||||||
2021 | 2020 | |||||||
NLA | $ | 561,482 | $ | 97,738 | ||||
ESSA | 370,638 | 221,683 | ||||||
MENA | 358,465 | 284,635 | ||||||
APAC | 231,087 | 173,688 | ||||||
Assets held centrally | 332,966 | 262,007 | ||||||
Total | $ | 1,854,638 | $ | 1,039,751 |
The following table presents our capital expenditures disaggregated by our operating segments (in thousands):
Year Ended December 31, | ||||||||
2021 | 2020 | |||||||
NLA | $ | 6,426 | $ | 10,800 | ||||
ESSA | 11,151 | 35,421 | ||||||
MENA | 14,553 | 37,000 | ||||||
APAC | 19,958 | 16,413 | ||||||
Assets held centrally | 29,423 | 12,753 | ||||||
Total | $ | 81,511 | $ | 112,387 |
6. Revenue
Disaggregation of revenue
We disaggregate our revenue from contracts with customers by geography, as disclosed in Note 5 above, as we believe this best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Additionally, we disaggregate our revenue into areas of capability.
The following table sets forth the total amount of revenue by areas of capability as follows (in thousands):
Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Well construction | $ | 112,126 | $ | - | $ | - | ||||||
Well management | 713,636 | 675,026 | 810,064 | |||||||||
Total | $ | 825,762 | $ | 675,026 | $ | 810,064 |
Contract balances
We perform our obligations under contracts with our customers by transferring services and products in exchange for consideration. The timing of our performance often differs from the timing of our customers’ payments, which results in the recognition of receivables and deferred revenue.
Unbilled receivables are initially recognized for revenue earned on completion of the performance obligation which are not yet invoiced to the customer. The amounts recognized as unbilled receivables are reclassified to accounts receivable upon billing. Deferred revenue represents the Company’s obligations to transfer goods or services to customers for which the Company has received consideration, in full or part, from the customer.
Contract balances consisted of the following as of December 31, 2021 and December 31, 2020 (in thousands):
December 31, | ||||||||
2021 | 2020 | |||||||
Accounts receivable, net | $ | 236,158 | $ | 159,421 | ||||
Unbilled receivable | $ | 94,659 | $ | 45,500 | ||||
Deferred revenue | $ | 17,038 | $ | 29,063 |
The Company recognized revenue of $15.4 million, $6.3 million and $8.9 million for the years ended December 31, 2021, 2020 and 2019, respectively, out of the deferred revenue balance as of the beginning of the applicable year. As of December 31, 2021, $15.7 million of our deferred revenue was classified as current and is included in “Other current liabilities” on the consolidated balance sheets, with the remainder classified as non-current and included in “Other non-current liabilities” on the consolidated balance sheets.
Transaction price allocated to remaining performance obligations
Remaining performance obligations represent firm contracts for which work has not been performed and future revenue recognition is expected. We have elected the practical expedient permitting the exclusion of disclosing remaining performance obligations for contracts that have an original expected duration of one year or less and for our long-term contracts we have a right to consideration from customers in an amount that corresponds directly with the value to the customer of the performance completed to date.
7. Income taxes
The components of income tax expense (benefit) for the years ended December 31, 2021, 2020 and 2019 were as follows (in thousands):
Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Current tax: | ||||||||||||
Netherlands (2020 and 2019: U.K.) | $ | 216 | $ | (707 | ) | $ | - | |||||
Foreign | 16,777 | 17,883 | 17,160 | |||||||||
Total current tax | 16,993 | 17,176 | 17,160 | |||||||||
Deferred tax: | ||||||||||||
Netherlands (2020 and 2019: U.K.) | - | - | - | |||||||||
Foreign | (726 | ) | (20,576 | ) | (18,297 | ) | ||||||
Total deferred tax | (726 | ) | (20,576 | ) | (18,297 | ) | ||||||
Income tax expense (benefit) | $ | 16,267 | $ | (3,400 | ) | $ | (1,137 | ) |
Following the closing of the Merger on October 1, 2021, the tax domicile of the Company changed from the U.K. to the Netherlands. As a result of this change in domicile due to the Merger, income tax expense (benefit) is split between the Netherlands and foreign tax jurisdictions for the year ended December 31, 2021 and between the U.K. and foreign tax jurisdictions for the year ended December 31, 2020 and 2019.
The Netherland, U.K. and foreign components of loss from continuing operations before income taxes and equity in income of joint ventures for the years ended December 31, 2021, 2020 and 2019 were as follows (in thousands):
Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Netherlands (2020 and 2019: U.K.) | $ | (19,190 | ) | $ | 22,819 | $ | 33,071 | |||||
Foreign | (113,181 | ) | (346,853 | ) | (108,608 | ) | ||||||
Total | $ | (132,371 | ) | $ | (324,034 | ) | $ | (75,537 | ) |
A reconciliation of the differences between the income tax provision computed at the Netherlands statutory rate of 25% for the year ended December 31, 2021 and the U.K. statutory rate of 19% for the years ended December 31, 2020 and 2019 to loss from continuing operations before taxes and equity in joint ventures for the reasons below (in thousands):
Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Statutory tax rate | 25 | % | 19 | % | 19 | % | ||||||
Income tax expense at statutory rate | $ | (33,093 | ) | $ | (61,566 | ) | $ | (14,352 | ) | |||
Permanent differences | 14,123 | 122,815 | 10,322 | |||||||||
Effect of overseas tax rates | 10,583 | (1,754 | ) | (4,961 | ) | |||||||
Net tax charge related to attributes with full valuation allowance | 28,607 | (71,259 | ) | 12,769 | ||||||||
Exempt dividends from joint ventures | (1,014 | ) | 14 | - | ||||||||
Return to provision adjustments | (5,001 | ) | 6,150 | (6,446 | ) | |||||||
Withholding taxes | 1,995 | 984 | 876 | |||||||||
Foreign exchange movements on tax balances | 67 | 1,216 | 655 | |||||||||
Income tax expense (benefit) | $ | 16,267 | $ | (3,400 | ) | $ | (1,137 | ) | ||||
Effective tax rate | -12.3 | % | 1.0 | % | 1.5 | % |
Deferred tax assets and liabilities are recorded for the anticipated future tax effects of temporary differences between the financial statement basis and tax basis of our assets and liabilities and are measured using the tax rates and laws expected to be in effect when the differences are projected to reverse.
The primary components of our deferred tax assets and liabilities as of December 31, 2021 and 2020 were as follows (in thousands):
December 31, | ||||||||
2021 | 2020 | |||||||
Deferred tax assets: | ||||||||
Net operating loss carry forwards | $ | 731,315 | $ | 484,695 | ||||
Employee compensation and benefits | 12,958 | 7,767 | ||||||
Depreciation | 44,253 | 24,759 | ||||||
Other | 34,734 | 19,987 | ||||||
Investment in partnership | 51,890 | - | ||||||
Intangibles | 22,980 | - | ||||||
Valuation allowance | (829,087 | ) | (512,711 | ) | ||||
Total deferred tax assets | 69,043 | 24,497 | ||||||
Deferred tax liabilities: | ||||||||
Depreciation | (1,935 | ) | (6,565 | ) | ||||
Goodwill and other intangibles | (42,784 | ) | (40,054 | ) | ||||
Investment in partnership | (48,856 | ) | - | |||||
Other | (7,212 | ) | (4,695 | ) | ||||
Total deferred tax liabilities | (100,787 | ) | (51,314 | ) | ||||
Net deferred tax liabilities | $ | (31,744 | ) | $ | (26,817 | ) |
We recognize a valuation allowance where it is more likely than not that some or all of the deferred tax assets will not be realized. The realization of a deferred tax asset is dependent upon the ability to generate sufficient taxable income in the appropriate taxing jurisdictions where the deferred tax assets are initially recognized. At December 31, 2021, we have maintained a valuation allowance with respect to substantially all U.S. foreign tax credit carryforwards as well as certain net operating loss carryforwards for various jurisdictions.
The changes in valuation allowances were as follows (in thousands):
Year Ended December 31 | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Balance at the beginning of the period | $ | 512,711 | $ | 443,398 | $ | 507,159 | ||||||
Additions attributable to the Merger | 187,319 | - | - | |||||||||
Additions not attributable to the Merger | 160,299 | 72,025 | 312 | |||||||||
Reductions | (31,242 | ) | (2,712 | ) | (64,073 | ) | ||||||
Balance at end of period | $ | 829,087 | $ | 512,711 | $ | 443,398 |
As of December 31, 2021, the Company had approximately $664 million of U.S. operating losses of which $567 million will start to expire in 2036, and the balance does not expire. The Company also has approximately $1,840.3 million and $127.7 million of losses in the U.K. and Norway respectively which do not expire.
It is our intention that all cash and earnings of our subsidiaries as of December 31, 2021, are permanently reinvested and will be used to meet operating cash flow needs. Existing plans do not demonstrate a need to repatriate foreign cash to fund parent company activity, however, should we determine that parent company funding is required, we estimate that any such cash needs may be met without adverse tax consequences.
We have performed an analysis of uncertain tax positions in the various jurisdictions in which we operate and concluded that we are adequately provided. Our tax filings are subject to regular audits by tax authorities in the various jurisdictions in which we operate. Tax liabilities are based on estimates, however due to the uncertain and complex application of tax legislation, the ultimate resolution of audits may be materially different to our estimates.
The Company is subject to income taxation in many jurisdictions around the world. The following table presents the changes in our uncertain tax positions as of December 31, 2021 and 2020 (in thousands):
Year ended December 31 | ||||||||
2021 | 2020 | |||||||
Balance at the beginning of the period | $ | 35,377 | $ | 32,515 | ||||
Additions attributable to the Merger | 40,144 | - | ||||||
Additions based on tax positions related to current period not attributable to the Merger | 5,774 | 2,182 | ||||||
Additions for tax positions of prior year period not attributable to the Merger | 5,094 | 1,787 | ||||||
Settlements with tax authorities | (2,370 | ) | (665 | ) | ||||
Reductions for tax positions of prior years | (5,138 | ) | (763 | ) | ||||
Reductions due to the lapse of statute of limitations | (2,094 | ) | (188 | ) | ||||
Effect of changes in foreign exchange rates | (673 | ) | 509 | |||||
Balance at the end of the period | $ | 76,114 | $ | 35,377 |
The amounts above include penalties and interest of $4.2 million and $1.7 million for the years ended December 31, 2021 and 2020, respectively. We classify penalties and interest relating to uncertain tax positions within income tax (expense) benefit in the consolidated statements of operations.
Approximately $30.1 million of our unrecognized tax benefit relates to certain deductions and would only impact our rate if we were subsequently able to utilize operating loss carry-forwards. We do not foresee resolution of these positions in the coming 12 months. We have recognized uncertain tax positions of approximately $46.0 million and $35.4 million as of December 31, 2021 and 2020, respectively, included in “Other non-current liabilities” on the consolidated balance sheets.
We file income tax returns in the Netherlands and in various other foreign jurisdictions in respect of the Company's subsidiaries. In all cases we are no longer subject to income tax examination by tax authorities for years prior to
Tax filings of our subsidiaries, branches and related entities are routinely examined in the normal course of business by the relevant tax authorities. We believe that there are no jurisdictions in which the outcome of unresolved issues is likely to be material to our results of operations, financial position or cash flows.
8. Investment in joint ventures
We have investments in two joint ventures, which together provide us access to certain Asian markets that otherwise would be challenging for us to penetrate or develop effectively on our own. COSL - Expro Testing Services (Tianjin) Co. Ltd (“CETS”), in which we have a 50% equity interest, has extensive offshore well testing and completions capabilities and a reputation for providing technology-driven solutions in China. Similarly, PV Drilling Expro International Co. Ltd. (“PVD-Expro”) in which we have a 49% equity interest, offers the full suite of the Company’s products and services, including well testing and completions, in Vietnam. Both of these are strategic to our activities and offer the full capabilities and technology of the Company, but each company is independently managed.
The carrying value of our investment in joint ventures as of December 31, 2021 and 2020 was as follows (in thousands):
December 31, |
||||||||
2021 |
2020 |
|||||||
CETS |
$ | 54,014 | $ | 41,504 | ||||
PVD-Expro |
3,590 | 3,584 | ||||||
Total |
$ | 57,604 | $ | 45,088 |
9. Accounts receivable, net
Accounts receivable, net consisted of the following as of December 31, 2021 and 2020 (in thousands):
December 31, |
||||||||
2021 |
2020 |
|||||||
Accounts receivable |
$ | 340,209 | $ | 211,838 | ||||
Less: Expected credit losses |
(9,392 | ) | (6,917 | ) | ||||
Total |
$ | 330,817 | $ | 204,921 | ||||
Current |
319,286 | 193,600 | ||||||
Non – current |
11,531 | 11,321 | ||||||
Total |
$ | 330,817 | $ | 204,921 |
The movement of expected credit losses for the years ended December 31, 2021, 2020 and 2019 was as follows (in thousands):
Year Ended December 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Balance at beginning of year |
$ | 6,917 | $ | 6,313 | $ | 6,315 | ||||||
Additions - Acquired in the Merger |
992 | - | - | |||||||||
Additions - Charged to expense |
1,527 | 965 | 571 | |||||||||
Deductions |
(44 | ) | (361 | ) | (573 | ) | ||||||
Balance at end of year |
$ | 9,392 | $ | 6,917 | $ | 6,313 |
10. Inventories
Inventories consisted of the following as of December 31, 2021 and 2020 (in thousands):
December 31, |
||||||||
2021 |
2020 |
|||||||
Finished goods |
$ | 34,899 | $ | - | ||||
Raw materials, equipment spares and consumables |
76,025 | 42,995 | ||||||
Work-in progress |
14,192 | 10,364 | ||||||
Total |
$ | 125,116 | $ | 53,359 |
11. Other assets and liabilities
Other assets consisted of the following as of December 31, 2021 and 2020 (in thousands):
December 31, | ||||||||
2021 | 2020 | |||||||
Cash surrender value of life insurance policies | $ | 18,857 | $ | - | ||||
Prepayments | 19,891 | 17,824 | ||||||
Value-added tax receivables | 22,524 | 19,213 | ||||||
Collateral deposits | 1,599 | 1,761 | ||||||
Deposits | 7,331 | 3,286 | ||||||
Other | 9,197 | 2,621 | ||||||
Total | $ | 79,399 | $ | 44,705 | ||||
Current | 52,938 | 39,957 | ||||||
Non – current | 26,461 | 4,748 | ||||||
Total | $ | 79,399 | $ | 44,705 |
Other liabilities consisted of the following as of December 31, 2021 and 2020 (in thousands):
December 31, | ||||||||
2021 | 2020 | |||||||
Deferred revenue | $ | 17,038 | $ | 29,063 | ||||
Other tax and social security | 27,893 | 16,830 | ||||||
Income tax liabilities - non-current portion | 45,741 | 35,377 | ||||||
Deferred compensation plan | 9,339 | - | ||||||
Other | 49,739 | 20,999 | ||||||
Total | $ | 149,750 | $ | 102,269 | ||||
Current | 74,213 | 59,043 | ||||||
Non – current | 75,537 | 43,226 | ||||||
Total | $ | 149,750 | $ | 102,269 |
Cash Surrender Value of Life Insurance Policies
At December 31, 2021, we had $18.9 million of cash surrender value of life insurance policies that are held within a Rabbi Trust for the purpose of paying future executive deferred compensation benefit obligations. Gains associated with these policies are included in other income, net on our consolidated statements of operations. Gain on changes in the cash surrender value of life insurance policies was $0.5 million for the year ended December 31, 2021.
12. Accounts payable and accrued liabilities
Accounts payable and accrued liabilities consisted of the following as of December 31, 2021 and 2020 (in thousands):
December 31, | ||||||||
2021 | 2020 | |||||||
Accounts payable – trade | $ | 84,952 | $ | 63,855 | ||||
Payroll, vacation and other employee benefits | 42,671 | 22,345 | ||||||
Accruals for goods received not invoiced | 18,666 | 6,655 | ||||||
Other accrued liabilities | 66,863 | 43,387 | ||||||
Total | $ | 213,152 | $ | 136,242 |
13. Property, plant and equipment, net
Property, plant and equipment, net consisted of the following as of December 31, 2021 and 2020 (in thousands):
December 31, | ||||||||
2021 | 2020 | |||||||
Cost: | ||||||||
Land | $ | 21,580 | $ | 3,379 | ||||
Land improvement | 3,054 | - | ||||||
Buildings and lease hold improvements | 104,660 | 30,513 | ||||||
Plant and equipment | 701,400 | 519,866 | ||||||
830,694 | 553,758 | |||||||
Less: accumulated depreciation | (352,114 | ) | (259,035 | ) | ||||
Total | $ | 478,580 | $ | 294,723 |
The carrying amount of our property, plant and equipment recognized in respect of assets held under finance leases as of December 31, 2021 and 2020 and included in amounts above is as follows (in thousands):
December 31, | ||||||||
2021 | 2020 | |||||||
Cost: | ||||||||
Buildings | $ | 18,623 | $ | 18,932 | ||||
Plant and equipment | 1,275 | 1,520 | ||||||
19,898 | 20,452 | |||||||
Less: accumulated amortization | (7,733 | ) | (6,674 | ) | ||||
Total | $ | 12,165 | $ | 13,778 |
Depreciation expense related to property, plant and equipment, including assets under finance leases, was $95.8 million, $85.4 million and $88.0 million for the years ended December 31, 2021, 2020 and 2019, respectively.
No impairment expense related to property, plant and equipment was recognized for the year ended December 31, 2021. We recognized impairment expense related to property, plant and equipment of $20.0 million and $4.7 million for the years ended December 31, 2020 and 2019 respectively, which are included in “Impairment expense” on our consolidated statement of operations. Refer to Note 4 “Fair value measurements” for further details.
During the three months ended December 31, 2021, a building classified as assets held for sale was sold for $3.8 million.
14. Intangible assets, net
The following table summarizes our intangible assets comprising of Customer Relationships & Contracts (“CR&C”), Trademarks, Technology and Software as of December 31, 2021 and 2020 (in thousands):
December 31, 2021 | December 31, 2020 | December 31, 2021 | ||||||||||||||||||||||||||
Accumulated | Accumulated | Weighted | ||||||||||||||||||||||||||
Gross | impairment | Gross | impairment | average | ||||||||||||||||||||||||
carrying | and | Net book | carrying | and | Net book | remaining | ||||||||||||||||||||||
amount | amortization | value | amount | amortization | value | life (years) | ||||||||||||||||||||||
CR&C | $ | 222,200 | $ | (98,271 | ) | $ | 123,929 | $ | 215,200 | $ | (78,846 | ) | $ | 136,354 | 6.3 | |||||||||||||
Trademarks | 57,100 | (29,392 | ) | 27,708 | 40,100 | (27,137 | ) | 12,963 | 8.4 | |||||||||||||||||||
Technology | 159,458 | (60,979 | ) | 98,479 | 79,538 | (56,635 | ) | 22,903 | 13.3 | |||||||||||||||||||
Software | 8,754 | (5,817 | ) | 2,937 | 7,387 | (6,439 | ) | 948 | 0.7 | |||||||||||||||||||
Total | $ | 447,512 | $ | (194,459 | ) | $ | 253,053 | $ | 342,225 | $ | (169,057 | ) | $ | 173,168 | 9.3 |
Amortization expense for intangible assets was $28.1 million, $28.2 million and $34.5 million for the years ended December 31, 2021, 2020 and 2019, respectively.
The following table summarizes the intangible assets which were acquired pursuant to the Merger (in thousands):
Acquired Fair Value | Weighted average life | |||||||
CR&C | $ | 7,000 | 10.0 | |||||
Trademarks | 17,000 | 10.0 | ||||||
Technology | 79,920 | 15.0 | ||||||
Software | 871 | 1.0 | ||||||
Total | $ | 104,791 | 13.7 |
No impairment expense associated with our intangible assets was recognized during the year ended December 31, 2021. We recognized impairment expense associated with our intangible assets of $60.4 million and $17.9 million for the years ended December 31, 2020 and 2019, respectively, which is included in “Impairment expense” in our consolidated statement of operations. Refer to Note 4 “Fair value measurements” for further details.
The following table summarizes our intangible asset impairment expense by operating segment for the years ended December 31, 2020 and 2019 (in thousands):
2020: | CR&C | Technology | Trademarks | Total | ||||||||||||
NLA | $ | 10,262 | $ | 20,616 | $ | 11,437 | $ | 42,315 | ||||||||
ESSA | - | 6,909 | 4,070 | 10,979 | ||||||||||||
APAC | - | 7,100 | - | 7,100 | ||||||||||||
Total | $ | 10,262 | $ | 34,625 | $ | 15,507 | $ | 60,394 |
2019: | CR&C | Technology | Trademarks | Total | ||||||||||||
NLA | $ | - | $ | 3,809 | $ | - | $ | 3,809 | ||||||||
ESSA | 7,760 | 4,712 | 1,620 | 14,092 | ||||||||||||
Total | $ | 7,760 | $ | 8,521 | $ | 1,620 | $ | 17,901 |
Expected future intangible asset amortization as of December 31, 2021 is as follows (in thousands):
Years ending December 31, | ||||
2022 | $ | 34,691 | ||
2023 | 31,755 | |||
2024 | 31,755 | |||
2025 | 31,755 | |||
2026 | 31,755 | |||
Thereafter | 91,342 | |||
Total | $ | 253,053 |
15. Goodwill
Our reporting units are either our operating segments or components of our operating segments depending on the level at which segment management oversees the business. Prior to the Merger, Legacy Expro's reporting units included Europe and the Commonwealth of Independent States, Sub-Saharan Africa, MENA, Asia, North America and Latin America. During 2021, due to the Merger we changed our internal organization and reporting structure and as a result, our operating segments, NLA, ESSA, MENA and APAC, are also our reporting units. The allocation of goodwill by operating segment was as follows (in thousands):
December 31, | ||||||||
2021 | 2020 | |||||||
NLA | $ | 93,608 | $ | - | ||||
ESSA | 66,283 | 14,504 | ||||||
MENA | 3,331 | - | ||||||
APAC | 16,681 | 11,000 | ||||||
Total | $ | 179,903 | $ | 25,504 |
The following table provides the gross carrying amount and cumulative impairment expense of goodwill for each operating segment as of December 31, 2021 and 2020 (in thousands):
2021 | 2020 | |||||||||||||||||||||||||||||||
Cost | Acquired in Merger | Accumulated impairment | Net Book Value | Cost | Additions | Accumulated impairment | Net Book Value | |||||||||||||||||||||||||
NLA | $ | 37,341 | $ | 93,608 | $ | (37,341 | ) | $ | 93,608 | $ | 37,341 | $ | - | $ | (37,341 | ) | $ | - | ||||||||||||||
ESSA | 28,982 | 51,779 | (14,478 | ) | 66,283 | 28,982 | - | (14,478 | ) | 14,504 | ||||||||||||||||||||||
MENA | 126,383 | 3,331 | (126,383 | ) | 3,331 | 126,383 | - | (126,383 | ) | - | ||||||||||||||||||||||
APAC | 51,113 | 5,681 | (40,113 | ) | 16,681 | 51,113 | - | (40,113 | ) | 11,000 | ||||||||||||||||||||||
Total | $ | 243,819 | $ | 154,399 | $ | (218,315 | ) | $ | 179,903 | $ | 243,819 | $ | - | $ | (218,315 | ) | $ | 25,504 |
No goodwill impairment expense was recognized during the year ended December 31, 2021. We recorded goodwill impairment expense of $191.9 million and $26.4 million for the years ended December 31, 2020 and 2019, respectively. Refer to Note 4 “Fair value measurements” for further details.
The following table summarizes our goodwill impairment expense by operating segment for the years ended December 31, 2021, 2020 and 2019 (in thousands):
Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
NLA | $ | - | $ | 25,397 | $ | 11,944 | ||||||
ESSA | - | - | 14,478 | |||||||||
MENA | - | 126,383 | - | |||||||||
APAC | - | 40,113 | - | |||||||||
Total | $ | - | $ | 191,893 | $ | 26,422 |
16. Interest bearing loans
On November 5, 2018, certain subsidiaries of Frank’s entered into an asset-based revolving credit facility (the “ABL Credit Facility”) with aggregate commitments of $100.0 million secured by certain assets of the subsidiary guarantors.
On December 20, 2018, subsidiaries of Legacy Expro entered into a revolving credit facility (the “2018 RCF”) with aggregate commitments of $150.0 million with up to $100.0 million available for drawdowns as loans and up to $50 million for bonds and guarantees. The 2018 RCF bore interest at U.S. dollar LIBOR plus 3.75% and was secured by a fixed and floating charge on certain assets of some of our wholly owned subsidiaries. On October 1, 2021, following the closing of the Merger, the ABL Credit Facility and 2018 RCF were cancelled.
Concurrently with the cancelation of the ABL Credit Facility and the 2018 RCF, we entered into a new revolving credit facility (the “New Facility”) with DNB Bank ASA, London Branch, as agent, with total commitments of $200.0 million, of which $130.0 million is available for cash drawings and $70.0 million is available for letters of credit. Subject to the terms of the New Facility, the Company has the ability to increase the commitments to $250.0 million. Proceeds of the New Facility may be used for general corporate and working capital purposes.
All obligations under the New Facility are guaranteed jointly and severally by the Company and certain of the Company’s subsidiaries incorporated in the U.S., the U.K., the Netherlands, Norway, Hungary, Australia, Cyprus, the Cayman Islands and Guernsey. Going forward, the guarantors must comprise at least 80% of the EBITDA and 70% of the consolidated assets of the Company and its subsidiaries, as well as subsidiaries individually representing 5% or more of the EBITDA or assets of the group, subject to customary exceptions and exclusions. In addition, the obligations under the New Facility are secured by first priority liens on certain assets of the borrowers and guarantors, including pledges of equity interests in certain of the Company’s subsidiaries, including all of the borrowers and subsidiary guarantors, material operating bank accounts, intercompany loan receivables and, in jurisdictions where customary, including the U.S., the U.K., Australia and the Cayman Islands, substantially all of the assets and property of the borrowers and guarantors incorporated in such jurisdictions, in each case subject to customary exceptions and exclusions
Borrowings under the New Facility bear interest at a rate per annum of LIBOR, subject to a 0.00% floor, plus an applicable margin of 3.75% for cash borrowings or 3.00% for letters of credit. A 0.75% per annum fronting fee applies to letters of credit, and an additional 0.25% or 0.50% per annum utilization fee is payable on cash borrowings to the extent one-third or two-thirds, respectively, or more of commitments are drawn. The unused portion of the New Facility is subject to a commitment fee of 30% per annum of the applicable margin. Interest on loans is payable at the end of the selected interest period, but no less frequently than semiannually. The Company and its subsidiaries paid $5.1 million in customary fees and expenses in connection with the New Facility in the year ended December 31, 2021, which are included in “Interest and finance expense, net” on the consolidated statements of operations.
The New Facility contains various undertakings and affirmative and negative covenants which limit, subject to certain customary exceptions and thresholds, the Company and its subsidiaries’ ability to, among other things, (1) enter into asset sales; (2) incur additional indebtedness; (3) make investments, acquisitions, or loans and create or incur liens; (4) pay certain dividends or make other distributions and (5) engage in transactions with affiliates. The New Facility also requires the Company to maintain (i) a minimum cash flow cover ratio of 1.5 to 1.0 based on the ratio of cash flow to debt service, (ii) a minimum interest cover ratio of 4.0 to 1.0 based on the ratio of EBITDA to net finance charges and (iii) a maximum senior leverage ratio of 2.25 to 1.0 based on the ratio of total net debt to EBITDA, in each case tested quarterly on a last-twelve-months basis, subject to certain exceptions. In addition, the aggregate capital expenditure of the Company and its subsidiaries cannot exceed 110% of the forecasted amount in the relevant annual budget, subject to certain exceptions. If the Company fails to perform its obligations under the agreement that results in an event of default, the commitments under the New Facility could be terminated and any outstanding borrowings under the New Facility may be declared immediately due and payable. The New Facility also contains cross-default provisions that apply to the Company and its subsidiaries’ other indebtedness.
No drawdowns as loans have been made, however, as of December 31, 2021, we had utilized $33.4 million for bonds and guarantees.
17. Leases
We are a lessee for numerous operating leases, primarily related to real estate, transportation and equipment. The terms and conditions for these leases vary by the type of underlying asset. The vast majority of our operating leases have terms ranging between
and years, some of which include options to extend the leases, and some of which include options to terminate the leases. We include the renewal or termination options in the lease terms, when it is reasonably certain that we will exercise that option. We also lease certain real estate and equipment under finance leases. Our lease contracts generally do not provide any guaranteed residual values.
The accounting for some of our leases may require significant judgment, which includes determining whether a contract contains a lease, determining the incremental borrowing rates to utilize in our net present value calculation of lease payments for lease agreements which do not provide an implicit rate, and assessing the likelihood of renewal or termination options.
The following tables illustrate the financial impact of our leases as of and for the years ended December 31, 2021, 2020 and 2019, along with other supplemental information about our existing leases (in thousands, except years and percentages):
Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Components of lease expenses: | ||||||||||||
Finance lease expense: | ||||||||||||
Amortization of right of use assets | $ | 967 | $ | 1,649 | $ | 2,243 | ||||||
Interest incurred on lease liabilities | 2,246 | 2,386 | 2,478 | |||||||||
Operating lease expense | 21,479 | 19,870 | 24,915 | |||||||||
Short term lease expense | 54,756 | 56,156 | 66,450 | |||||||||
Total lease expense | $ | 79,448 | $ | 80,061 | $ | 96,086 |
December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Other supplementary information (in thousands, except years and discount rates): | ||||||||||||
Cash paid for amounts included in measurement of lease liabilities: | ||||||||||||
Operating cash flows from operating leases | $ | 25,348 | $ | 23,134 | $ | 24,095 | ||||||
Right-of-use assets obtained in an exchange for lease obligations | ||||||||||||
Operating leases | $ | 8,529 | $ | 8,917 | $ | 18,447 | ||||||
Weighted average remaining lease term: | ||||||||||||
Operating leases | 7.3 | 8.5 | 8.7 | |||||||||
Finance leases | 11.0 | 11.7 | 11.9 | |||||||||
Weighted average discount rate for operating leases | 8.8 | % | 10.0 | % | 10.3 | % | ||||||
Weighted average discount rate for finance leases | 13.1 | % | 13.5 | % | 13.5 | % |
The operating cash flows for finance leases approximates the interest expense for the year.
As of December 31, 2021, maturity of our lease liabilities are as follows (in thousands):
Operating | Finance | |||||||
Leases | Leases | |||||||
Years ending December 31, | ||||||||
2022 | $ | 26,177 | $ | 3,291 | ||||
2023 | 21,895 | 3,024 | ||||||
2024 | 16,008 | 2,899 | ||||||
2025 | 12,742 | 2,841 | ||||||
2026 | 9,585 | 2,841 | ||||||
Due after 5 years | 45,205 | 17,372 | ||||||
$ | 131,612 | $ | 32,268 | |||||
Less: amounts representing interest | (38,229 | ) | (15,349 | ) | ||||
Total | $ | 93,383 | $ | 16,919 | ||||
Short-term portion | $ | 19,695 | $ | 1,147 | ||||
Long-term portion | 73,688 | 15,772 | ||||||
Total | $ | 93,383 | $ | 16,919 |
18. Commitments and contingencies
Commercial Commitments
During the normal course of business, we enter into commercial commitments in the form of letters of credit and bank guarantees to provide financial and performance assurance to third parties.
We entered into contractual commitments for the acquisition of property, plant and equipment totaling $26.3 million and $42.3 million as of December 31, 2021 and 2020, respectively. We also entered into purchase commitments related to inventory on an as-needed basis. As of December 31, 2021, these inventory purchase commitments were $14.2 million.
We are committed under various lease agreements primarily related to real estate, vehicles and certain equipment that expire at various dates throughout the next several years. Refer to Note 17 “Leases” for further details.
Contingencies
Certain conditions may exist as of the date our consolidated financial statements are issued that may result in a loss to us, but which will only be resolved when one or more future events occur or fail to occur. Our management, with input from legal counsel, assesses such contingent liabilities, and such assessment inherently involves an exercise in judgment. In assessing loss contingencies related to legal proceedings pending against us or unasserted claims that may result in proceedings, our management, with input from legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates it is probable a material loss has been incurred and the amount of liability can be estimated, then the estimated liability would be accrued in our consolidated financial statements. If the assessment indicates a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.
We are the subject of lawsuits and claims arising in the ordinary course of business from time to time. A liability is accrued when a loss is both probable and can be reasonably estimated. We had no material accruals for loss contingencies, individually or in the aggregate, as of December 31, 2021 and December 31, 2020. We believe the probability is remote that the ultimate outcome of these matters would have a material adverse effect on our financial position, results of operations or cash flows.
We are conducting an internal investigation of the operations of certain of our foreign subsidiaries in West Africa including possible violations of the U.S. Foreign Corrupt Practices Act (“FCPA”), our policies and other applicable laws. In June 2016, we voluntarily disclosed the existence of our extensive internal review to the SEC, the U.S. Department of Justice (“DOJ”) and other governmental entities. It is our intent to continue to fully cooperate with these agencies and any other applicable authorities in connection with any further investigation that may be conducted in connection with this matter. While our review has not indicated that there has been any material impact on our previously filed financial statements, we have continued to collect information and cooperate with the authorities, but at this time are unable to predict the ultimate resolution of these matters with these agencies.
As disclosed above, our investigation into possible violations of the FCPA remains ongoing, and we will continue to cooperate with the SEC, DOJ and other relevant governmental entities in connection therewith. At this time, we are unable to predict the ultimate resolution of these matters with these agencies, including any financial impact to us. Our board and management are committed to continuously enhancing our internal controls that support improved compliance and transparency throughout our global operations.
19. Post-retirement benefits
We operate a number of post-retirement benefit plans, primarily consisting of defined contribution plans for U.S. and non-U.S. employees. We also sponsor defined benefit pension plans for certain employees located in the U.K., Norway and Indonesia. The majority of our post-retirement expense relates to defined contribution plans. The assets of the various defined benefit plans are held separately from those of the Company. Our principal retirement savings plans and pension plans are discussed below.
Defined contribution plans
We offer certain retirement savings plans to U.S. and non-U.S. employees. These plans are managed in accordance with applicable local statutes and practices and are defined contribution plans. For U.S. employees, we offer 401k savings and investment plans as part of our employee benefits package which previously included a Safe Harbor Matching Contribution. During 2020, the Safe Harbor Matching Contribution was eliminated.
For U.K. employees, we offer the Group Personal Pension plan (“GPP”), which is a portable, personal pension plan to which the employer contributes on a matching basis between a base of 4.5% and a ceiling of 6% of base salary. In addition, we offer other defined contribution plans for our employees in the rest of the world as per local statues. Effective in 2020, the GPP for U.K. employees was temporarily modified, with the employer contribution matching basis ceiling being reduced to 4% of base salary from 6% of base salary and the employer contributions to the 401k savings and investment plan for our United States employees were temporarily suspended. As of December 31, 2021, these temporary reductions and suspensions were still in place.
Expense recognized in respect of these plans were $7.3 million, $6.4 million and $8.7 million for the years ended December 31, 2021, 2020 and 2019, respectively.
Defined benefit plans
We offer a pension plan to certain of our U.K. employees, which qualifies as a defined benefit plan. Effective October 1, 1999, this plan was closed to new entrants. The contributions to the plan are determined by a qualified external actuary on the basis of an annual valuation.
In December 2015, the decision was taken to close the U.K. defined benefit plan (“DB Plan”) to new accruals. The status of the DB Plan’s remaining active members has changed to that of deferred members. This change affected approximately 80 employees. As deferred members, these employees will no longer accrue further benefits under the DB Plan through their service. However, benefits earned through past service are retained and will continue to increase with inflation. In addition, affected individuals were auto-enrolled in the Company’s defined contribution pension plan.
On December 28, 2020, the Company, with the written consent of the trustees, amended the DB Plan rules to introduce a new pension option for members who retire before their state pension age, a bridging pension option. Under this new option, a plan member who receives his or her pension before the later of age 65 or their state pension age can elect to have their pension temporarily increased at retirement and then reduced at the time of state pension.
Key assumptions
The major assumptions, included on a weighted average basis across the defined benefit plans, used to calculate the defined benefit plan liabilities were:
December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Discount rate | 1.8 | % | 1.3 | % | 2.0 | % | ||||||
Expected return on plan assets | 3.2 | % | 2.7 | % | 3.4 | % | ||||||
Expected rate of salary increases | 0.1 | % | 0.1 | % | 0.1 | % |
The discount rate has been calculated with reference to AA rated corporate bonds of a suitable maturity. Expected rates of salary increases have been estimated by management following a review of the participant data. Within the U.K. plans pensionable salary was frozen in 2012 resulting in the reduction in the weighted average assumption for salary increases disclosed above.
The expected long-term return on cash is based on cash deposit rates available at the reporting date. The expected return on bonds is determined by reference to U.K. long term government bonds and bond yields at the reporting date. The expected rates of return on equities and property have been determined by setting an appropriate risk premium above government bond yields having regard to market conditions at the reporting date.
Net periodic benefit cost
Amounts recognized in the consolidated statements of operations and in the consolidated statements of comprehensive loss in respect of the defined benefit plans were as follows (in thousands):
Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Current service cost | $ | (439 | ) | $ | (539 | ) | $ | (1,218 | ) | |||
Interest cost | (3,407 | ) | (4,551 | ) | (6,083 | ) | ||||||
Expected return on plan assets | 5,499 | 6,064 | 6,425 | |||||||||
Plan curtailment / amendment events recognized in consolidated statements of operations | - | 2,269 | 47 | |||||||||
Amortization of prior service credit | 249 | - | - | |||||||||
Reclassified net remeasurement (loss) gains | 244 | (104 | ) | - | ||||||||
Amounts included in consolidated statements of operations | $ | 2,146 | $ | 3,139 | $ | (829 | ) | |||||
Actuarial gain (loss) on defined benefit plans | $ | 22,345 | $ | (9,356 | ) | $ | (3,521 | ) | ||||
Plan curtailment / amendment credit recognized in consolidated statements of other comprehensive loss | - | 5,510 | - | |||||||||
Amortization of prior service credit | (249 | ) | - | - | ||||||||
Reclassified net remeasurement (loss) gains | (244 | ) | 104 | - | ||||||||
Other comprehensive income (loss) | 21,852 | (3,742 | ) | (3,521 | ) | |||||||
Total comprehensive income (loss) | $ | 23,998 | $ | (603 | ) | $ | (4,350 | ) |
The service costs have primarily been included in “Cost of revenue, excluding depreciation and amortization” in the consolidated statements of operations. Interest cost, expected return on plan assets and plan curtailment / amendment events have been recognized in “Other income, net” in the consolidated statements of operations.
The actuarial gain (loss) is derived from the components shown in the table below (in thousands):
Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Actuarial gain on assets | $ | 11,378 | $ | 16,678 | $ | 18,801 | ||||||
Actuarial gain (loss) on liabilities | 10,967 | (26,034 | ) | (22,322 | ) | |||||||
Actuarial gain (loss) on defined benefit plans | $ | 22,345 | $ | (9,356 | ) | $ | (3,521 | ) |
The actuarial gain on the benefit obligation for the year ended December 31, 2021 has arisen primarily as a result of changes in financial and demographic assumptions, with a small change resulted from allowance for known inflation increases in 2021 and 2022.
The amount of employer contributions expected to be paid to our defined benefit plans during the years to December 31, 2031 is set out below: (in thousands).
Years ending December 31: | ||||
2022 | $ | 5,646 | ||
2023 | $ | 5,888 | ||
2024 | $ | 6,123 | ||
2025 | $ | 6,329 | ||
2026 | $ | 6,575 | ||
Thereafter to December 31, 2031 | $ | 31,507 |
The amounts included in the consolidated balance sheets arising from our obligations in respect of defined retirement benefit plans and post-employment benefits was as follows (in thousands):
December 31, | ||||||||
2021 | 2020 | |||||||
Present value of defined benefit obligations | $ | (241,808 | ) | $ | (261,576 | ) | ||
Fair value of plan assets | 212,688 | 203,630 | ||||||
Deficit recognized under non-current liabilities | $ | (29,120 | ) | $ | (57,946 | ) |
Changes in the present value of defined benefit obligations were as follows (in thousands):
December 31, | ||||||||
2021 | 2020 | |||||||
Opening balance | $ | (261,576 | ) | $ | (254,271 | ) | ||
Current service cost | (439 | ) | (539 | ) | ||||
Interest cost | (3,407 | ) | (4,551 | ) | ||||
Actuarial gain (loss) | 10,967 | (26,034 | ) | |||||
Plan amendment | - | 4,873 | ||||||
Settlements | - | 17,432 | ||||||
Exchange differences | 2,378 | (8,026 | ) | |||||
Benefits paid | 10,269 | 9,505 | ||||||
Payroll tax of employer contributions | - | 35 | ||||||
Ending balance | $ | (241,808 | ) | $ | (261,576 | ) |
Movements in fair value of plan assets were as follows (in thousands):
December 31, | ||||||||
2021 | 2020 | |||||||
Opening balance | $ | 203,630 | $ | 194,554 | ||||
Actual return on plan assets | 16,877 | 22,742 | ||||||
Exchange differences | (2,245 | ) | 6,393 | |||||
Contributions from the sponsoring companies | 4,695 | 4,005 | ||||||
Settlements | - | (14,524 | ) | |||||
Benefits paid | (10,269 | ) | (9,505 | ) | ||||
Payroll tax of employer contributions | - | (35 | ) | |||||
Ending balance | $ | 212,688 | $ | 203,630 |
The actual return on plan assets consists of the following (in thousands):
December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Expected return on plan assets | $ | 5,499 | $ | 6,064 | $ | 6,425 | ||||||
Actuarial gain on plan assets | 11,378 | 16,678 | 18,801 | |||||||||
Actual return on plan assets | $ | 16,877 | $ | 22,742 | $ | 25,226 |
Information for pension plans with an accumulated benefit obligation in excess of plan assets were as follows (in thousands):
December 31, | ||||||||
2021 | 2020 | |||||||
Accumulated benefit obligation | $ | 240,644 | $ | 260,496 | ||||
Fair value of plan assets | 212,688 | 203,630 |
The investment strategy of the main U.K. plan (“U.K. Plan”) is set by the trustees and is based on advice received from an investment consultant. The primary investment objective for the U.K. Plan is to achieve an overall rate of return that is sufficient to ensure that assets are available to meet all liabilities as and when they become due. In doing so, the aim is to maximize returns at an acceptable level of risk taking into consideration the circumstances of the U.K. Plan.
The investment strategy has been determined after considering the U.K. Plan’s liability profile and requirements of the U.K. statutory funding objective, and an appropriate level of investment risk.
Taking all these factors into consideration, approximately 58% of the assets are invested in a growth portfolio, comprising diversified growth funds (“DGFs”) and property, and approximately 42% of the assets in a stabilizing portfolio, comprising corporate bonds and liability driven investments. DGFs are actively managed multi-asset funds. The managers of the DGFs aim to deliver equity like returns in the long term, with lower volatility. They seek to do this by investing in a wide range of assets and investment contracts in order to implement their market views.
The present value of the U.K. Plan’s future benefits payments to members is sensitive to changes in long term interest rates and long-term inflation expectations. Liability driven investment (“LDI”) funds are more sensitive to changes in these factors and therefore provide more efficient hedging than traditional bonds. A small proportion of the assets have therefore been invested in LDI funds to help to reduce the volatility of the U.K. Plan’s funding position. The hedging level is expected to be increased over time as the U.K. Plan’s funding position improves.
Assets of the other plans are invested in a combination of equity, bonds, real estate and insurance contracts.
The analysis of the plan assets and the expected rate of return at the reporting date were as follows (in thousands):
December 31, 2021 | December 31, 2020 | |||||||||||||||
Expected rate | Fair value of | Expected rate | Fair value of | |||||||||||||
of return % | asset | of return % | asset | |||||||||||||
Mutual funds | ||||||||||||||||
DGFs | 4.6 | $ | 123,460 | 4.2 | $ | 116,590 | ||||||||||
LDI funds | 1.1 | 61,163 | 0.7 | 67,395 | ||||||||||||
Bond funds | 1.8 | 26,571 | 1.4 | 17,382 | ||||||||||||
Equities | 1.5 | 360 | 2.3 | 233 | ||||||||||||
Other assets | 1.5 | 1,134 | 1.8 | 2,030 | ||||||||||||
Total | $ | 212,688 | $ | 203,630 |
The aggregated asset categorization for the plans were as follows (in thousands):
December 31, 2021 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Mutual funds | ||||||||||||||||
DGFs | $ | 123,460 | $ | - | $ | - | $ | 123,460 | ||||||||
LDI funds | 61,163 | - | - | 61,163 | ||||||||||||
Bond funds | 26,571 | - | - | 26,571 | ||||||||||||
Equities | 360 | - | - | 360 | ||||||||||||
Other assets | 445 | 329 | 360 | 1,134 | ||||||||||||
Total | $ | 211,999 | $ | 329 | $ | 360 | $ | 212,688 |
December 31, 2020 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Mutual funds | ||||||||||||||||
DGFs | $ | 116,590 | $ | - | $ | - | $ | 116,590 | ||||||||
LDI funds | 67,395 | - | - | 67,395 | ||||||||||||
Bond funds | 17,382 | - | - | 17,382 | ||||||||||||
Equities | 233 | - | - | 233 | ||||||||||||
Other assets | 1,301 | 437 | 292 | 2,030 | ||||||||||||
Total | $ | 202,901 | $ | 437 | $ | 292 | $ | 203,630 |
Other assets primarily represent insurance contracts. The fair value is estimated, based on the underlying defined benefit obligation assumed by the insurers.
Movements in fair value of Level 3 assets were as follows (in thousands):
December 31, | ||||||||
2021 | 2020 | |||||||
Opening balance | $ | 292 | $ | 14,786 | ||||
Actual return on plan assets | 5 | 4 | ||||||
Exchange differences | 33 | (2 | ) | |||||
Contributions from the sponsoring companies | 30 | 28 | ||||||
Settlement | - | (14,524 | ) | |||||
Ending balance | $ | 360 | $ | 292 |
Executive Deferred Compensation Plan
The Company maintains the Executive Deferred Compensation Plan (the “EDC Plan”) for certain current and former Frank’s employees. Effective during 2015, this plan was closed to new entrants. The purpose of the EDC Plan was to provide participants with an opportunity to defer receipt of a portion of their salary, bonus, and other specified cash compensation. Participant contributions were immediately vested. Company contributions vested after
years of service. All participant benefits under this EDC Plan shall be paid directly from the general funds of the applicable participating subsidiary or a grantor trust, commonly referred to as a Rabbi Trust, created for the purpose of informally funding the EDC Plan, and other than such Rabbi Trust, no special or separate fund shall be established and no other segregation of assets shall be made to assure payment. The assets of the EDC Plan’s trust are invested in a corporate owned split-dollar life insurance policy and an amalgamation of mutual funds.
As of December 31, 2021, the total liability related to the EDC Plan was $9.3 million and was included in “Other non-current liabilities” on the consolidated balance sheets. As of December 31, 2021, the cash surrender value of life insurance policies that are held within a Rabbi Trust for the purpose of paying future executive deferred compensation benefit obligations was $18.9 million.
20. Stock-based compensation
Management Incentive Plan
During October 2018, Legacy Expro’s board of directors approved the Management Incentive Plan (“MIP”) which was comprised of (a) stock options to non-executive directors and key management personnel and (b) restricted stock units. The outstanding awards under the MIP were assumed by the Company in connection with the Merger.
MIP Stock options
Stock options issued under the MIP vest over a
or year vesting period as defined in the award agreement, subject to the fulfilment of continued service and a performance condition related to the occurrence of a Liquidity Event as defined in the MIP. Additionally, a portion of the management options are subject to performance conditions linked to an internal rate of return.
There were 5.8 million and 6.4 million MIP stock options issued and outstanding as of December 31, 2020 and 2019, respectively, under the MIP. Legacy Expro granted no stock options in 2020 and granted 0.9 million stock options in 2019.
Due to the nature of the performance conditions, recognition of compensation expense for the stock options was deferred until the occurrence of a Liquidity Event as defined in the MIP as the performance condition was deemed to be improbable. On October 1, 2021, the MIP stock options were modified to redefine the occurrence of the Liquidity Event to the closing of the Merger. Upon Closing, the MIP stock options were exchanged for options to purchase Company common stock based on the post-reverse stock split Exchange Ratio of 1.2120 to 1. As of the modification date, there were 6.9 million MIP stock options issued and outstanding.
The aforementioned event was accounted for as an improbable-to-probable modification and as a result, the fair value of all of the issued and outstanding MIP stock options was determined as of the Closing Date. Compensation expense was immediately recognized upon the Merger closing for all MIP stock options in which the service period was fulfilled. For the stock options in which the service period was not fulfilled, stock based compensation expense is to be recognized based on the total modification date fair value of the associated awards on a straight-line basis over the remaining service period. The Company recognized stock-based compensation expense related to the MIP stock options of $39.5 million during the year ended December 31, 2021. As of December 31, 2021, unrecognized stock compensation expense relating to MIP stock options totaled $5.1 million, which will be expensed over a weighted average period of 0.9 years.
As of December 31, 2021, there were 6.9 million MIP stock options issued and outstanding with a weighted average Closing Date fair value of $6.52 per option. As of December 31, 2021, there were 2.2 million exercisable MIP stock options with a weighted average Closing Date fair value of $7.54 per option. As of December 31, 2021, the weighted average remaining term for the MIP stock options was 6.1 years.
The fair value of the time-based MIP stock options granted to non-executive directors and management was estimated at the Closing Date using a Black-Scholes model and the fair value of the performance-based MIP stock options granted to management was estimated at the Closing Date using a Monte-Carlo Option valuation model. The Closing Date fair value of the Company’s shares is a key input in the determination of the fair value of the awards.
The key assumptions used to estimate the fair value of the MIP stock options were as follows:
Risk free interest rate | 0.04 | % | ||
Expected volatility | 55 | % | ||
Dividend yield | 0.0 | % | ||
Stock price on valuation date | $ | 18.90 |
MIP Restricted stock units (“MIP RSUs”)
RSUs granted under the MIP were subject to vesting over a
year period. There were 0.1 million outstanding MIP RSUs as of December 31, 2020 and 2019. In February 2021, the MIP RSU awards were modified so that upon the closing of the Merger, the MIP RSUs would convert to RSUs of the Company based on the post-reverse stock split Exchange Ratio of 1.2120 to 1 and would immediately vest pursuant to the terms of the Merger Agreement.
The Company recognized $2.6 million of stock-based compensation expense attributable to the MIP RSUs during the year ended December 31, 2021. No stock-based compensation expense attributable to the MIP RSUs was recognized in the years ending December 31, 2020 and 2019 as the performance conditions within the agreements were deemed to be improbable. The Company had no unrecognized stock-based compensation expense attributable to the MIP RSUs as of December 31, 2021.
Expro Group Holdings N.V. Long-Term Incentive Plan
Effective October 1, 2021, in connection with the consummation of the Merger, the Company amended its 2013 Long-Term Incentive Plan to the Expro Group Holdings N.V. Long-Term Incentive Plan, As Amended and Restated (the “LTIP”). Pursuant to the LTIP, stock options, SARs, restricted stock, restricted stock units, dividend equivalent rights and other types of equity and cash incentive awards may be granted to employees, non-employee directors and service providers. The LTIP expires after 10 years, unless prior to that date the maximum number of shares available for issuance under the plan has been issued or our board of directors terminates the plan. There are approximately 4.2 million shares of common stock reserved for issuance under the LTIP. As of December 31, 2021, approximately 1.3 million shares remained available for issuance.
LTIP Restricted Stock Units (“LTIP RSUs”)
All RSUs granted under the LTIP vest ratably over a period of
to years. Our treasury stock primarily consists of shares that were withheld from employees to settle personal tax obligations that arose as a result of RSUs that vested. Certain RSU awards provide for accelerated vesting for qualifying terminations of employment or service.
Employees granted LTIP RSUs are not entitled to dividends declared on the underlying shares while the RSU is unvested. As such, the grant date fair value of the award is measured by reducing the grant date price of our common stock by the present value of the dividends expected to be paid on the underlying shares during the requisite service period, discounted at the appropriate risk-free interest rate.
Stock-based compensation expense relating to LTIP RSUs for the year ended December 31, 2021 was $6.8 million. No stock-based compensation expense relating to the LTIP RSUs was recognized for the years ended December 31, 2020 and 2019. The total fair value of LTIP RSUs vested during the year ended December 31, 2021 was $2.0 million. As of December 31, 2021, unrecognized stock compensation expense relating to LTIP RSUs totaled approximately $14.3 million, which will be expensed over a weighted average period of 1.6 years.
Non-vested LTIP RSUs outstanding as of December 31, 2021 and the changes since the Close Date, were as follows:
Number | Weighted Average | |||||||
of | Grant Date | |||||||
Shares | Fair Value | |||||||
Non-vested on the Closing Date | 883,079 | $ | 21.97 | |||||
Granted | 458,258 | 17.64 | ||||||
Vested | (93,688 | ) | 21.80 | |||||
Forfeited | (12,549 | ) | 22.59 | |||||
Non-vested at December 31, 2021 | 1,235,100 | $ | 20.49 |
Performance Restricted Stock Units (“PRSUs”)
The purpose of the PRSUs is to closely align the incentive compensation of the executive leadership team for the duration of the performance cycle with returns to the Company’s shareholders and thereby further motivate the executive leadership team to create sustained value to the Company shareholders. The design of the PRSU grants effectuates this purpose by placing a material amount of incentive compensation for each executive at risk by offering an extraordinary reward for the attainment of extraordinary results. Design features of the PRSU grant that in furtherance of this purpose include the following: (1) The vesting of the PRSUs is based on total shareholder return (“TSR”) based on a comparison to the returns of a peer group, which is the SPDR S&P Oil & Gas Equipment and Services ETF. (2) TSR performance is calculated separately with respect to three separate
-year achievement periods included in the -year Performance Period (as defined below), resulting in a weighted average payout at the end of the three-year Performance Period. The TSR calculation will assume reinvestment of dividends. (3) The ultimate number of shares to be issued pursuant to the PRSU awards will vary in proportion to the actual TSR achieved as a percentile compared to the peer group during the Performance Period as follows: (i) no shares will be issued if the Company’s performance falls below the 25th percentile; (ii) 50% of the Target Level (as defined below) if the Company achieves a rank in the 25th percentile (the threshold level); (iii) 100% of the Target Level if the Company achieves a rank in the 50th percentile (the target level); (iv) 150% of the Target Level if the Company achieves a rank in the 75th percentile; and 200% of the Target Level if the Company achieves a rank in the 90th percentile and above (the maximum level). (4) Unless there is a qualifying termination as defined in the PRSU award agreement, the PRSUs of an executive will be forfeited upon an executive’s termination of employment during the Performance Period.
Though the value of the PRSU grant may change for each participant, the compensation expense recorded by the Company is determined on the date of grant. Expected volatility is based on historical equity volatility of our stock-based on 50% of historical and 50% of implied volatility weighting commensurate with the expected term of the PRSU. The expected volatility considers factors such as the historical volatility of our share price and our peer group companies, implied volatility of our share price, length of time our shares have been publicly traded, and split- and dividend-adjusted closing stock prices.
In 2021, we granted 354,275 PRSUs (“Target Level”). The performance period for these grants is the
-year period from January 1, 2022 to December 31, 2024 (“Performance Period”), but with separate -year achievement periods from January 1, 2022 to December 31, 2022, January 1, 2023 to December 31, 2023, and January 1, 2024 to December 31, 2024, resulting in a weighted average payout at the end of the Performance Period.
The weighted average assumptions for the PRSUs granted in 2021 are as follows:
2021 | ||||
Total expected term (in years) | 3.25 | |||
Expected volatility | 84.2 | |||
Risk-free interest rate | 0.54 | % | ||
Correlation range | 20.8% to 79.5% |
In the event of death or disability, the restrictions related to forfeiture as defined in the performance awards agreement will lapse with respect to 100% of the PRSUs at the target level effective on the date of such event. In the event of involuntary termination except for cause, the Company may enter into a special vesting agreement with the executive under which the restrictions for forfeiture will not lapse upon such termination. In the event of a termination for any other reason prior to the end of the Performance Period, all PRSUs will be forfeited.
Stock-based compensation expense related to PRSUs for the year ended December 31, 2021 was $5.2 million. No stock based compensation expense relating to the PRSUs was recognized for the years ended December 31, 2020 and 2019. The total fair value of PRSUs vested during the year ended December 31, 2021, was $0.1 million. As of December 31, 2021, unrecognized stock compensation expense relating to PRSUs totaled approximately $8.8 million, which will be expensed over a weighted average period of 3.0 years.
Non-vested PRSUs outstanding as of December 31, 2021, and the changes since the Close Date, were as follows:
Number | Weighted Average | |||||||
of | Grant Date | |||||||
Shares | Fair Value | |||||||
Non-vested on the Closing Date | 340,071 | $ | 32.38 | |||||
Granted | 354,275 | 23.34 | ||||||
Vested | (2,715 | ) | 29.72 | |||||
Non-vested at December 31, 2021 | 691,631 | $ | 27.75 |
Employee Stock Purchase Plan
Under the Expro Group Holdings N.V. Employee Stock Purchase Program (“ESPP”), eligible employees have the right to purchase shares of common stock at the lesser of (i) 85% of the last reported sale price of our common stock on the last trading date immediately preceding the first day of the option period, or (ii) 85% of the last reported sale price of our common stock on the last trading date immediately preceding the last day of the option period. The ESPP is intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code. We have reserved 500,000 shares of our common stock for issuance under the ESPP, of which 222,995 shares were available for issuance as of December 31, 2021. For the years ended December 31, 2021, we recognized $0.1 million of compensation expense related to stock purchased under the ESPP.
21. Warrants
As of December 31, 2020, Legacy Expro had outstanding warrants consisting of the following:
● | 1,284,978 “A” Warrants which entitled its holders to purchase common stock comprising up to 2% of Legacy Expro. The “A” Warrants were exercisable at a strike price of approximately $30.40 per share on the occurrence of certain specified events and, if not exercised, expire 5 years from February 5, 2018 (the “Effective Date”). |
● | 4,497,414 “B” Warrants, which entitled its holders to purchase common stock comprising up to 7% of Legacy Expro. The “B” Warrants were exercisable at a strike price of approximately $30.40 per share on the occurrence of certain specified events and, if not exercised, expire 5 years from the Effective Date. |
Pursuant to the Merger Agreement, the Company agreed to issue replacement warrants but only so that the holders of the Legacy Expro warrants would receive, upon exercise of the warrants after Closing, the merger consideration that would have been received of the Legacy Expro shares issuable upon exercise of the Legacy Expro warrants immediately before Closing, assuming a cashless exercise. Because the fair market value of the Legacy Expro shares at the time of merger determined in accordance with the warrant agreement was below the exercise price of the Legacy Expro warrant (i.e. the Legacy Expro warrants were out of the money), no Legacy Expro shares would have been issuable upon a cashless exercise prior to Closing. Accordingly, replacement warrants were not required to be issued by the Company and the Legacy Expro warrants have been cancelled resulting in no warrants outstanding as of December 31, 2021.
22. Loss per share
Basic income (loss) per share attributable to Company stockholders is calculated by dividing net income (loss) attributable to the Company by the weighted-average number of common shares outstanding for the period. Diluted income (loss) per share attributable to Company stockholders is computed giving effect to all potential dilutive common stock, unless there is a net loss for the period. We apply the treasury stock method to determine the dilutive weighted average common shares represented by unvested restricted stock units and ESPP shares.
The calculation of basic and diluted loss per share attributable to the Company stockholder for years ended December 31, 2021, 2020 and 2019 respectively, are as follows (in thousands, except shares outstanding and per share amounts):
Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Net loss | $ | (131,891 | ) | $ | (307,045 | ) | $ | (64,761 | ) | |||
Basic and diluted weighted average number of shares outstanding | 80,525,694 | 70,889,753 | 70,889,753 | |||||||||
Total basic and diluted loss per share | $ | (1.64 | ) | $ | (4.33 | ) | $ | (0.91 | ) |
Approximately 651,736 shares of unvested restricted stock units and stock to be issued pursuant to the ESPP have been excluded from the computation of diluted loss per share as the effect would be anti-dilutive for the year ended December 31, 2021.
Additionally, since the conditions upon which shares were issuable for outstanding warrants and stock options were not satisfied as of December 31, 2020 and 2019, assuming the respective balance sheet date was at the end of the contingency period, they had not been included in determining the number of anti-dilutive shares.
23. Related party transactions
Our related parties consist primarily of CETS and PVD-Expro, the two companies in which we exert significant influence, and Mosing Holdings LLC, a company that is owned by a member of our Board and its affiliates. During the years ended December 31, 2021, 2020 and 2019, we provided goods and services to CETS and PVD-Expro totaling $6.8 million, $13.9 million and $11.7 million, respectively. Additionally, we entered into various operating lease agreements to lease facilities with affiliated companies. Rent expense associated with our related party leases was $0.5 million for the year ended December 31, 2021.
Further, during the years ended December 31, 2021, 2020 and 2019, we received dividends from CETS and PVD-Expro totaling $4.1 million, $3.6 million and $3.1 million, respectively.
As of December 31, 2021 and 2020, amounts receivable from related parties were $1.6 million and $7.2 million, respectively, and amounts payable to related parties were $2.1 million as of December 31, 2021.
As of December 31, 2021, $1.3 million of our operating lease right-of-use assets and $1.3 million of our lease liabilities were associated with related party leases. No right-of-use assets or lease liabilities associated with related party leases were outstanding as of December 31, 2020.
Tax Receivable Agreement
Mosing Holdings, LLC, a Delaware limited liability company (“Mosing Holdings”), converted all of its shares of Frank’s Series A convertible preferred stock into shares of Frank’s common stock on August 26, 2016, in connection with its delivery to Frank’s of all of its interests in Frank’s International C.V. (“FICV”) (the “Conversion”).
The tax receivable agreement (the “Original TRA”) that Frank’s entered into with FICV and Mosing Holdings in connection with Frank’s initial public offering (“IPO”) generally provided for the payment by Frank’s to Mosing Holdings of
of the net cash savings, if any, in U.S. federal, state and local income tax and franchise tax that Frank’s actually realize (or are deemed to realize in certain circumstances) in periods after the IPO as a result of (i) tax basis increases resulting from the Conversion and (ii) imputed interest deemed to be paid by Frank’s as a result of, and additional tax basis arising from, payments under the Original TRA. Frank’s retained the benefit of the remaining of these cash savings, if any.
In connection with the Merger Agreement, Frank’s, FICV and Mosing Holdings entered into the Amended and Restated Tax Receivable Agreement, dated as of March 10, 2021 (the “A&R TRA”). Pursuant to the A&R TRA, on October 1, 2021, the Company made a payment of $15 million to settle the early termination payment obligations that would otherwise have been owed to Mosing Holdings under the Original TRA as a result of the Merger. As the payment was a condition precedent to effect the Merger, it was included in the determination of Merger consideration exchanged. Refer to Note 3 “Business combinations and dispositions” for more details. The A&R TRA also provides for other contingent payments to be made by the Company to Mosing Holdings in the future in the event the Company realizes cash tax savings from tax attributes covered under the Original TRA during the
year period following October 1, 2021 in excess of $18.1 million.
24. Supplemental Cash Flow
Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Supplemental disclosure of cash flow information: | ||||||||||||
Cash paid for income taxes net of refunds | $ | (20,130 | ) | $ | (21,437 | ) | $ | (13,603 | ) | |||
Cash paid for interest, net | (4,192 | ) | (2,630 | ) | (1,490 | ) | ||||||
Change in accounts payable and accrued expenses related to capital expenditures | (8,191 | ) | (9,375 | ) | (839 | ) | ||||||
Fair value of net assets acquired in the Merger, net of cash and cash equivalents and restricted cash | 552,543 | - | - |
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Form 10-K. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure, and such information is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of December 31, 2021, at the reasonable assurance level.
Management’s Report Regarding Internal Control
Management of the Company, including the Chief Executive Officer and the Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended. Internal control over financial reporting is a process designed by, or under the supervision of, the Company’s Chief Executive Officer and Chief Financial Officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of its assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Company assets that could have a material effect on the financial statements.
On October 1, 2021, Frank’s and Legacy Expro completed the Merger, and, after giving effect to the Merger, the stockholders of Legacy Expro as of immediately prior to the Merger owned approximately 65% of Company Common Stock following Closing, and the stockholders of Frank’s as of immediately prior to the Merger owned approximately 35% of Company Common Stock following Closing. Frank’s was the legal acquirer in the Merger. Legacy Expro was the accounting acquirer in the Merger under U.S. GAAP. Prior to the Merger, Legacy Expro was a privately-held company and was not subject to Section 404 of the Sarbanes-Oxley Act (“SOX”), while Frank’s was a publicly traded company subject to Section 404 of SOX. For all filings under the Exchange Act after the Merger, the historical financial statements of the Company for the periods prior to the Merger are and will be those of Legacy Expro. The activities of Frank’s are and will be included in the Company’s financial statements for all periods subsequent to the Merger.
As noted above, Frank’s was the legal acquirer in the Merger and subject to Section 404 of SOX. As of the date of its report, management was able to evaluate the effectiveness of the design and operation of the ongoing internal controls related to Frank’s. As the Merger occurred during the fourth quarter of 2021, and Legacy Expro was the accounting acquirer and not previously subject to Section 404 of SOX, management concluded there was insufficient time for management to complete its assessment of the internal controls over financial reporting related to Legacy Expro, and, therefore, Legacy Expro internal controls over financial reporting were excluded from this report on internal control over financial reporting.
The management of the Company, with the participation of the CEO and CFO, assessed the effectiveness of the Company’s internal control over financial reporting, by focusing on those controls that relate exclusively to ongoing Frank’s operations (covering approximately 14% of the revenue on the Consolidated Statements of Operations for the year ended December 31, 2021 and 45% of the total assets on the Consolidated Balance Sheets as of December 31, 2021). Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021 based on the Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on its evaluation, management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2021.
The effectiveness of our internal control over financial reporting as of December 31, 2021 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which is included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K.
Attestation Report of the Registered Public Accounting Firm
See Report of Independent Registered Public Accounting Firm under Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K.
Changes in Control Over Financial Reporting
Upon closing of the Merger on October 1, 2021, the historical consolidated financial statements of Legacy Expro became the historical consolidated financial statements of the registrant. During the quarter ended December 31, 2021, following becoming a public company as a result of the reverse merger, we integrated our financial reporting processes of the business with Frank’s processes and implemented additional closing procedures to enable our financial reporting process. The processes and controls for significant areas including business combinations, intangible asset and goodwill valuations, income taxes, treasury, consolidations and the preparation of financial statements and related disclosures, and entity level controls have been substantially impacted by the ongoing integration activities. The primary changes in these areas are related to the consolidation of process owner leadership and control owners, and where required, the modification of inputs, processes and associated systems. For all areas of change noted, management believes the control design and implementation thereof are being appropriately modified to address underlying risks. Other than such changes, there were no other changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None.
PART III
Item 10. Directors, Executive Officers, and Corporate Governance
Item 10 is incorporated by reference to our definitive proxy statement to be filed pursuant to Regulation 14A under the Exchange Act. We expect to file the definitive proxy statement with the SEC within 120 days after December 31, 2021.
Item 11. Executive Compensation
Item 11 is incorporated by reference to our definitive proxy statement to be filed pursuant to Regulation 14A under the Exchange Act. We expect to file the definitive proxy statement with the SEC within 120 days after December 31, 2021.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 12 is incorporated by reference to our definitive proxy statement to be filed pursuant to Regulation 14A under the Exchange Act. We expect to file the definitive proxy statement with the SEC within 120 days after December 31, 2021.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 13 is incorporated by reference to our definitive proxy statement to be filed pursuant to Regulation 14A under the Exchange Act. We expect to file the definitive proxy statement with the SEC within 120 days after December 31, 2021.
Item 14. Principal Accounting Fees and Services
Item 14 is incorporated by reference to our definitive proxy statement to be filed pursuant to Regulation 14A under the Exchange Act. We expect to file the definitive proxy statement with the SEC within 120 days after December 31, 2021.
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a)(1) Financial Statements
Our Consolidated Financial Statements are included under Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K. For a listing of these statements and accompanying footnotes, see “Index to Consolidated Financial Statements” at page 58.
(a)(2) Financial Statement Schedules
Schedules not listed have been omitted because they are not applicable or not required or the information required to be set forth therein is included in Item 8, “Financial Statements and Supplementary Data” or notes thereto.
(a)(3) Exhibits
The following exhibits are filed or furnished with this Report or incorporated by reference:
EXHIBIT INDEX
Exhibit Number |
Description |
2.1 |
|
3.1 |
|
*4.1 | Description of Common Stock of the Registrant. |
4.2 |
|
4.3 | Registration Rights Agreement, dated August 14, 2013, by and among Frank’s International N.V., Mosing Holdings, Inc. and FWW B.V. (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No. 001-36053), filed on August 19, 2013). |
4.4 |
|
10.1 |
|
*10.2 |
|
10.3 |
|
10.4 |
|
†10.5 |
|
†10.6 |
†10.7 |
|
†10.8 |
|
†10.9 |
|
†10.10 |
|
*†10.11 | Service Agreement, dated as of September 29, 2021, by and between Expro North Sea Ltd and John McAlister. |
*†10.12 |
|
*†10.13 |
|
*†10.14 |
*†10.15 |
|
*†10.16 |
Expro Group Holdings N.V. Amended and Restated Employee Stock Purchase Plan. |
†10.17 |
|
†10.18 |
|
†10.19 |
|
*†10.20 |
|
*†10.21 |
|
†10.22 |
*†10.23 |
|
*†10.24 |
|
*†10.25 |
|
†10.26 |
|
†10.27 |
|
†10.28 |
|
†10.29 |
|
*†10.30 |
|
*†10.31 |
†10.32 | Frank’s International N.V. U.S. Executive Retention and Severance Plan, dated January 21, 2019 (incorporated by reference to Exhibit 10.54 to the Annual Report on Form 10-K (Filed No. 001-36053), filed on February 25, 2019). |
*†10.33 |
|
*†10.34 |
|
†10.35 |
|
10.36 |
|
*21.1 |
|
*23.1 |
|
*23.2 |
|
*31.1 |
|
*31.2 |
|
**32.1 |
Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350. |
**32.2 |
Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350. |
*101.1 |
The following materials from Expro’s Annual Report on Form 10-K for the period ended December 31, 2021 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements of Comprehensive Loss; (iv) Consolidated Statements of Stockholders’ Equity; (v) Consolidated Statements of Cash Flows; and (vi) Notes to the Consolidated Financial Statements. |
*104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
† Represents management contract or compensatory plan or arrangement.
* Filed herewith.
** Furnished herewith.
None.
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, thereunto duly authorized.
By: |
Expro Group Holdings N.V. |
|||
(Registrant) |
||||
Date: |
March 8, 2022 |
By: |
/s/ Quinn P. Fanning |
|
Quinn P. Fanning |
||||
Chief Financial Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 8, 2022.
Signature |
Title |
|
/s/ Michael Jardon |
President and Chief Executive Officer and Director |
|
Michael Jardon |
(Principal Executive Officer) |
|
/s/ Quinn P. Fanning |
Chief Financial Officer |
|
Quinn P. Fanning |
(Principal Financial Officer) |
|
/s/ Michael Bentham |
Principal Accounting Officer | |
Michael Bentham |
|
|
/s/ Michael C. Kearney |
Chairman of the Board |
|
Michael C. Kearney |
||
/s/ Eitan Arbeter |
Director |
|
Eitan Arbeter |
||
/s/ Robert W. Drummond |
Director |
|
Robert W. Drummond |
||
/s/ D. Keith Mosing |
Director |
|
D. Keith Mosing |
||
/s/ Alan Schrager | Director |
|
Alan Schrager | ||
/s/ Lisa L. Troe | Director |
|
Lisa L. Troe | ||
/s/ Brian Truelove | Director |
|
Brian Truelove | ||
/s/ Eileen G. Whelley |
Director |
|
Eileen G. Whelley |
Exhibit 4.1
DESCRIPTION OF CAPITAL STOCK
The material provisions of our articles of association and particular provisions of Dutch law relevant to our statutory existence and the Dutch Corporate Governance Code are summarized below. This summary does not restate our articles of association or relevant Dutch law in their entirety. The articles of association, and not this summary, define the rights of holders of shares of our common stock. Our articles of association are registered at the Dutch Trade Register, and an English translation has been filed with the SEC and is incorporated by reference as an exhibit to our Annual Report filed on Form 10-K.
Authorized Capital
Our authorized capital amounts to twelve million euro (EUR 12,000,000) and is divided into two hundred million (200,000,000) shares of common stock, each with a nominal value of six eurocent €0.06. No preferred shares are currently authorized by our articles of association.
Under Dutch law, our authorized capital stock is the maximum capital that we may issue without amending our articles of association. An amendment of our articles of association would require a resolution from the general meeting of shareholders.
Issuance of Capital Stock
Under Dutch law, we may only issue capital stock pursuant to a resolution of the general meeting of shareholders, unless another corporate body has been designated to do so by a resolution of the general meeting of shareholders or by our articles of association.
Our Board is designated by the articles of association for a period of five years from May 19, 2017 to issue shares and grant rights to subscribe for shares up to the amount of unissued shares in our authorized capital stock. The designation may be extended from time to time, with periods not exceeding five years, by a resolution of the general meeting of shareholders adopted with a simple majority. If and when said authority is not or no longer delegated to another corporate body, the general meeting of shareholders may only decide to issue shares and grant rights to subscribe for shares at the proposal of the Board. At the upcoming annual general meeting we will ask our shareholders to authorize the Board to issue shares up to 20% of the issued share capital, for any legal purpose, at the stock exchange or in a private purchase transaction, and during a period of 18 months starting from the date of the 2022 annual meeting. It is our intention to propose to renew such authorization at each annual general meeting.
Pre-Emptive Rights
Under Dutch law, in the event of an issuance of shares of common stock, each holder of common stock will have a pro rata preemptive right based on the number of shares of common stock held by such shareholder. Preemptive rights do not apply with respect to shares of common stock issued against contributions other than in cash or shares of common stock issued to our employees or the employees of one of our group companies. Our Board is authorized by the articles of association for a period of five years from May 19, 2017 to limit or exclude any pre-emptive rights to which shareholders may be entitled in connection with the issuance of shares. The authority to limit or exclude pre-emptive rights may be extended from time to time, with periods not exceeding five years, by a resolution of the general meeting of shareholders adopted with a simple majority. If authority is not delegated to another corporate body, the general meeting of shareholders may only decide to limit or exclude pre-emptive rights. The proposal to renew the authorization for the Board to issue shares at the upcoming annual meeting also includes the authority to restrict or exclude pre-emptive rights upon an issue of shares. It is our intention to propose to renew such authorization at each annual general meeting.
Repurchase of Shares of Capital Stock
Under Dutch law, a public company with limited liability (naamloze vennootschap) may acquire its own fully paid-up shares, subject to certain provisions of Dutch law and the articles of association. We may acquire our own fully paid-up shares either without paying any consideration, or in the event any consideration must be paid only if (i) our shareholders’ equity less the acquisition price is not less than the sum of paid-up and called-up capital and any reserve required to be maintained by law or our articles of association, (ii) we and our subsidiaries would not thereafter hold or hold shares as a pledgee with an aggregate par value exceeding 50% of our issued capital stock and (iii) the general meeting of shareholders has authorized the Board to effect such acquisitions.
Our Board is currently authorized, by resolution of the 2021 annual general meeting held on September 10, 2021, to repurchase up to a total of 10% of the issued share capital, at a price between $0.01 and 105% of the market price on the NYSE, for a period of 18 months from said annual general meeting. It is our intention to propose to renew such authorization at each annual general meeting.
Capital Reduction
Subject to Dutch law and our articles of association, pursuant to a proposal of the Board, the general meeting of shareholders may resolve to reduce the outstanding capital stock by cancellation of shares or by reducing the nominal value of the shares by means of an amendment to our articles of association. Dutch law requires that this resolution be adopted by an absolute majority of votes cast, or by a two-thirds majority of the votes cast, if less than half of the issued capital stock is present or represented at the meeting.
Dividends
Subject to certain exceptions, Dutch law provides that dividends may only be paid out of profits as shown in our annual financial statements as adopted by the general meeting of shareholders. Moreover, dividends may be distributed only to the extent the shareholders’ equity exceeds the sum of the amount of paid-up capital and any reserves that must be maintained under the law. Interim dividends may be declared as provided in the articles of association and may be distributed to the extent that the shareholders’ equity exceeds the amount of the paid-up capital plus any reserves that must be maintained under the law as apparent from an interim statement of assets and liabilities prepared on the basis of generally accepted accounting principles. Interim dividends should be regarded as advances on the final dividend that a company intends to declare with respect to the ongoing financial year or—if the annual accounts have not yet been adopted—the previous financial year.
Should it be determined that any distribution made was not permitted, the shareholders or any other person entitled to profits must repay the dividends declared to the extent such shareholder or person was or ought to have been aware that the distribution was not permitted.
Pursuant to our articles of association, the Board, decides what portion of our profit is to be held as reserves. Holders of our common stock are not entitled to any dividends unless declared by our Board.
General Meeting of Shareholders
Procedures and Admissions
Pursuant to our articles of association, general meetings of shareholders are held in the municipality of Amsterdam, The Netherlands or at Schiphol (Municipality of Haarlemmermeer, The Netherlands). A general meeting of shareholders will be held at least once a year within the period required by Dutch law, which is currently no later than six months after the end of our financial year. Under the temporary coronavirus (COVID-19) outbreak legislation from the Ministry of Justice and Security (the "Emergency Act") it is possible for the Board of the Company to extend the deadline to hold the annual general meeting with another 4 four months (so by October 31). The Emergency Act is now in force until April 1, 2022, but it is expected that anther extension of (at least) 2 months will be provided thereafter.
Extraordinary general meetings of shareholders will be held as frequently as needed; however they must be convened by the Board or by shareholders and holders of depositary receipts issued with the cooperation of the Company, together representing at least one-tenth of the issued capital (the “Requesting Shareholders”). The Requesting Shareholders are only authorized to call the extraordinary general meeting themselves if it is evidenced that the Requesting Shareholders have requested the Board to call a general meeting in writing, exactly stating the matters to be discussed, and the Board has not taken the necessary steps so that the general meeting could be held within six weeks after the request. If the Requesting Shareholders represent more than half of the issued capital, however, they shall be authorized to call the general meeting themselves without first having to request the Board to call the general meeting.
Our Board must give public notice of a general meeting of shareholders or an extraordinary meeting of shareholders, by at least such number of days prior to the day of the meeting as required by Dutch law, which is currently fifteen days.
The agenda for a meeting of shareholders must contain such items as the Board or the person or persons convening the meeting determine. The agenda shall also include any matter, the consideration of which has been requested by one or more shareholders, representing alone or jointly with others at least such percentage of the issued capital stock as determined by Dutch law, which is currently set at three percent. The request to consider such matter should have been received by us no later than on the 60th day prior to the day of the meeting accompanied by a statement containing the reasons for the request.
The agenda for the annual general meeting of shareholders shall contain, among other items, items placed on the agenda in accordance with Dutch law and our articles of association, the consideration of the annual report, the discussion and adoption of our annual accounts, our policy regarding dividends and reserves and the proposal to pay a dividend (if applicable), proposals relating to the composition of the Board, including the filling of any vacancies on the Board, the proposals placed on the agenda by the Board, including but not limited to a proposal to grant discharge to the members of the Board from liability in respect of the exercise of their duties during the financial year, together with the items proposed by shareholders in accordance with provisions of Dutch law and our articles of association.
Shareholders are entitled to attend our general meeting of shareholders, to address the general meeting of shareholders and to vote, either in person or represented by a person holding a written proxy. The requirement that a proxy must be in written form is also fulfilled when it is recorded electronically.
The holder of a right of usufruct or a pledgee with voting rights is entitled to request an item to be placed on the agenda of the general meeting of shareholders, to attend the general meeting of shareholders, to address the general meeting of shareholders and to vote.
Under Dutch law, shareholders’ resolutions may be adopted in writing without holding a meeting of shareholders, provided that (i) the articles of association explicitly allow such practice and (ii) all shareholders are in favor of the resolution to be adopted. Our articles of association, however, will not provide for shareholder action by written consent as it is not practicable for a listed company.
Members of the Board are authorized to attend general meetings of shareholders. They have an advisory vote. The general meeting shall be chaired by the Chairman of the Board or by another non-executive director appointed for that purpose by the Board.
Voting Rights
Under Dutch law and our articles of association, each share of common stock confers the right to cast one vote at the general meeting of shareholders. Resolutions by the general meeting of shareholders must be adopted by an absolute majority of votes cast, unless another standard of votes and / or a quorum is required by virtue of Dutch law or our articles of association. There is no required quorum under Dutch law for shareholder action at a properly convened shareholder meeting, except in specific instances prescribed by Dutch law or our articles of association.
Each shareholder has the right to participate in, address and exercise its right to vote at the general meeting of shareholders in person or by written proxy or by electronic means of communication, subject to certain conditions for the use of electronic means of voting set by or pursuant to the articles of association.
No votes may be cast at a general meeting of shareholders on the shares held by us or our subsidiaries. Nonetheless, the holders of a right of usufruct and the holders of a right of pledge in respect of the shares held by us or our subsidiaries in our capital stock are not excluded from the right to vote on such shares, if the right of usufruct or the right of pledge was granted prior to the time such shares were acquired by us or any of our subsidiaries. Neither we nor our subsidiaries may cast votes in respect of a share on which we or such subsidiary holds a right of usufruct or a right of pledge.
Under Dutch law, our Board is not required to set a record date for a general meeting to determine those shareholders that are entitled to vote at the general meeting. Our Board has selected to adopt a record date. Dutch law requires that the record date be on the 28th day prior to the date of the general meeting. Shareholders as of the record date shall be deemed entitled to attend and to vote at the general meeting. There is no specific provision in Dutch law relating to adjournment of the general meeting of shareholders.
Nomination Right
Pursuant to our amended and restated articles of association, our Board consists of one or more executive directors and one or more non-executive directors. The total number of directors, as well as the number of executive directors and non-executive directors, is determined by the Board.
Pursuant to the Director Nomination Agreement, T. Rowe Price Associates, Inc. (formerly, Oak Hill Advisors, L.P.) has the right to appoint two directors to the Board provided that it owns at least 20% of the Company’s outstanding common stock (and one director if it owns at least 10%, but less than 20%, of the outstanding common stock). Also, the Mosing Parties (as defined in the Director Nomination Agreement) has the right to appoint one director as long as they own at least 10% of the Company’s outstanding common stock. The remaining directors, including any directors for which the relevant shareholders do not exercise its recommendation right, are appointed on recommendation of the Board. A recommendation submitted on time is binding. However, the general meeting may disregard the recommendation if it adopts a resolution to that effect by a majority of no less than two-thirds of the votes cast, representing over one-half of the issued capital.
Shareholder Vote on Certain Reorganizations
Under Dutch law, the approval of our general meeting of shareholders is required for any significant change in the identity of us or our business.
Appraisal Rights
Subject to certain exceptions, Dutch law does not recognize the concept of appraisal or dissenters’ rights.
Anti-Takeover Provisions
Under Dutch law, protective measures against takeovers are possible and permissible, within the boundaries set by Dutch law and Dutch case law.
The following resolutions and provisions of our articles of association may have the effect of making a takeover of our company more difficult or less attractive, including:
● |
our Board, will be designated to issue shares and grant rights to subscribe for shares of common stock, up to the amount of our authorized capital stock and to limit or exclude pre-emptive rights on shares, both for a period of five years from May 19, 2017, whereby it is intended to propose to renew this designation at the 2022 general meeting; and |
● |
shareholder action by written consent will not be permitted, thereby requiring all shareholder actions to be taken at a general meeting of shareholders. |
Inspection of Books and Records
The Board provides all information required by Dutch law at the general meeting of shareholders and makes the information available to individual shareholders at the office of the company with copies available upon request. The part of our shareholders’ register kept in The Netherlands is available for inspection by the shareholders.
Amendment of the Articles of Association
The general meeting of shareholders is able to effect an amendment of the articles of association only upon a proposal of our Board. A proposal to amend the articles of association whereby any change would be made in the rights which vest in the holders of shares in a specific class in their capacity as such, shall require the prior approval of the meeting of the holders of the shares of that specific class.
Dissolution, Merger or Demerger
The general meeting of shareholders will only be able to effect a dissolution of the company. The liquidation of the company shall be carried out by the directors, if and to the extent the Board has not appointed one or more other liquidators.
Under Dutch law, a resolution for a legal merger (juridische fusie) or legal demerger (juridische splitsing) is adopted in the same manner as a resolution to amend the articles of association. The general meeting of shareholders may, in accordance with the relevant merger proposal by the Board, adopt a resolution for a legal merger or legal demerger by an absolute majority of the votes cast, unless less than half of the issued capital stock is present or represented at the meeting, in which case a two-thirds majority is required.
Shareholder Suits
If a third party is liable to a Dutch company, under Dutch law generally shareholders do not have the right to bring an action on behalf of the company or bring an action on their own behalf to recover damages sustained as a result of a decrease in value, or loss of an increase in value, of their stock. Only in the event that the cause for the liability of such third party to the company also constitutes a tortious act directly against such shareholder and the damages sustained are permanent may that shareholder have an individual right of action against such third party on its own behalf to recover such damages. The Dutch Civil Code provides for the possibility to initiate such actions collectively. A foundation or an association whose objective, as stated in its articles of association, is to protect the rights of a group of persons having similar interests may institute a collective action. The collective action cannot result in an order for payment of monetary damages but may result in a declaratory judgment (verklaring voor recht), for example, declaring that a party has acted wrongfully or has breached fiduciary duty. The foundation or association and the defendant are permitted to reach (often on the basis of such declaratory judgment) a settlement, which provides for monetary compensation of damages. A designated Dutch court may declare the settlement agreement binding upon all the injured parties whereby an individual injured party will have the choice to opt-out within the term set by the court (at least three months). Such individual injured party may also individually institute a civil claim for damages within the aforementioned term.
Squeeze-Out
Under Dutch law, a shareholder who holds at least 95% of our issued capital for its own account may institute proceedings against the other shareholders jointly for the transfer of their shares to the shareholder. The proceedings are held before the Enterprise Division (Ondernemingskamer) of the Court of Appeal in Amsterdam, which may award the claim for squeeze-out in relation to all minority shareholders and will determine the price to be paid for the shares, if necessary after appointment of one or three experts who will render an opinion to the Enterprise Chamber on the value of the shares. The court shall disallow the proceedings against all other defendants if (i) notwithstanding compensation, a defendant would sustain serious tangible loss by the transfer; (ii) the defendant is the holder of a share in which a special right of control of the company is vested under the articles of association; or (iii) a claimant has, as against a defendant, renounced his power to institute such proceedings. Once the order for transfer has become final, the acquirer must give written notice of the price and the date on which and the place where the price is payable to the minority shareholders whose addresses are known to the acquirer. Unless all addresses are known to the acquirer, it must also publish the same in a daily newspaper with nationwide distribution.
Exhibit 10.2
Execution Version
DIRECTOR NOMINATION AGREEMENT
This DIRECTOR NOMINATION AGREEMENT (this “Agreement”) is entered into on March 10, 2021 to be effective as of the Effective Time by and among the Mosing Parties (as defined herein), Oak Hill Advisors, L.P., a Delaware limited partnership (“Oak Hill”), Frank's International N.V., a public company organized under the laws of the Netherlands (the “Company”), and any other member of Expro (as defined below) validly executing a joinder to this Agreement in accordance with Section 6.10 hereof (each, a “Joinder Shareholder”). The Mosing Parties, Oak Hill and any Joinder Shareholder are sometimes referred to herein as the “Shareholders” and the Shareholders and the Company are sometimes referred to herein individually as a “Party” and collectively as the “Parties”.
WITNESSETH:
WHEREAS, on the date hereof, the Company, New Eagle Holdings Limited, an exempted company limited by shares incorporated under the laws of the Cayman Islands and a direct wholly owned subsidiary of the Company, and Expro Group Holdings International Limited, an exempted company limited by shares incorporated under the laws of the Cayman Islands (“Expro”), entered into that certain Agreement and Plan of Merger (as may be amended from time to time, the “Merger Agreement”);
WHEREAS, pursuant to the Merger Agreement and at the Effective Time, each ordinary share of common stock, par value $0.01, of Expro, including those held by the Oak Hill Group and any Joinder Shareholder immediately prior to the Effective Time, will be converted into the right to receive common shares in the capital of the Company (“Company Common Stock”) in an amount set forth in the Merger Agreement;
WHEREAS, in connection with the Merger Agreement and at the Effective Time, the Articles of Association of the Company will be amended to, among other things, provide for a one-tier board structure to replace the Company’s existing two-tier board structure; and
WHEREAS, the Parties desire to enter into this Agreement in order to, among other things, provide for certain corporate governance and related corporate matters.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Definitions. For purposes of this Agreement, the following terms shall have the meanings specified in this Section 1.1.
“Affiliate” means, as to any Person, another Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person and, in respect of a Shareholder, any investment fund, vehicle, holding company or separately managed account, in each case, for which such Shareholder, the discretionary manager or advisor of such Shareholder, or any Affiliate of such Shareholder serves as the general partner, managing member or discretionary manager or advisor; provided that limited partners, non-managing members or other similar direct or indirect investors in such Shareholder (in their capacities as such) shall not be deemed to be Affiliates of such Shareholder; provided, further, that none of the Shareholders shall be deemed to be Affiliates of the Company or any of its Subsidiaries for purposes of this Agreement and neither the Company nor any of its Subsidiaries shall be deemed to be Affiliates of the Shareholders for purposes of this Agreement.
“Agreement” has the meaning set forth in the preamble.
“beneficial ownership,” including the correlative terms “beneficially own,” “beneficial owner,” “own,” and “beneficially owning,” has the meaning ascribed to such term in Section 13(d) of the Securities Exchange Act of 1934, as amended.
“Board” means the board of directors of the Company following the amendment to the Articles of Association of the Company to provide for a one-tier board structure as described in the recitals to this Agreement.
“Business Day” means any day other than a Saturday, Sunday or a day on which banking institutions located in Houston, Texas or New York, New York are authorized pursuant to a Law to be closed and shall consist of the time period from 12:01 a.m. through 12:00 midnight at such locations.
“Closing Shares” has the meaning set forth in Section 3.2(a).
“Company” has the meaning set forth in the preamble.
“Company Common Stock” has the meaning set forth in the recitals.
“Company Confidential Information” has the meaning set forth in Section 4.1(b).
“Company Group” means the Company, each Subsidiary of the Company from and after the Closing (in each case so long as such Subsidiary remains a Subsidiary of the Company) and each other Person that is controlled either directly or indirectly by the Company from and after the Closing (in each case for so long as such Person continues to be controlled either directly or indirectly by the Company).
“Company Independent Director” means each non-executive director of the Company who (i) is not a Mosing Director, Oak Hill Director or Joinder Shareholder Director, (ii) (A) for so long as this Agreement has not terminated with respect to the Oak Hill Group, is not a director, officer or employee of, any member of the Oak Hill Group, (B) for so long as this Agreement has not terminated with respect to the Mosing Parties, is not a Mosing Family Member, (C) for so long as this Agreement has not terminated with respect to a Joinder Shareholder Group, is not a director, officer or employee of, any member of such Joinder Shareholder Group and (D) has been determined by the Nominating and Governance Committee of the Company in good faith not to have any relationship with any Mosing Party or Mosing Family Member, the Oak Hill Group or any Joinder Shareholder Group, as applicable, that would be material to the director’s ability to be independent from a Mosing Family Member, the Oak Hill Group or such Joinder Shareholder Group, respectively, (iii) is independent under the NYSE listing rules and, if applicable, the Dutch Corporate Governance Code unless any deviation from such Code is explained in the Statutory Dutch Annual Report of the Company and (iv) is designated by the Nominating and Governance Committee of the Company as a Company Independent Director.
“control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.
“Designator” means (i) the Mosing Parties holding the majority of Company Common Stock owned by the Mosing Parties, (ii) Oak Hill and (iii) the holders of the majority of Company Common Stock owned by a Joinder Shareholder Group.
“Effective Time” means the time at which the Merger shall become effective as specified in the Plan of Merger.
“Entity” means any corporation (including any nonprofit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any company limited by shares, limited liability company, or joint stock company), firm, society, or other enterprise, association, organization, or entity.
“Expro” has the meaning set forth in the recitals.
“Family Member” means with respect to any Person, a spouse, lineal ancestor, lineal descendent, legally adopted child, brother or sister of any such Person, or a lineal descendent or legally adopted child of a brother or sister of such Person.
“Governmental Body” means any: (i) nation, state, commonwealth, province, territory, region, county, city, municipality, district, or other jurisdiction of any nature; (ii) federal, state, local, municipal, non-U.S., or other government; (iii) governmental or quasi-governmental authority of any nature (including any governmental division, department, agency, commission, instrumentality, official, organization, unit, body, or Entity and any court, employment tribunal or other tribunal); or (iv) arbitrator or arbitration authority.
“Information” means information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other object and source code versions of computer programs and associated documentation, training materials and configurations to use and modify such programs, including programmer, administrator, end user and other documentation, marketing plans, customer names, communications by or to attorneys (including attorney-client privileged communications), memoranda and other materials prepared by attorneys or under their direction (including attorney work product), and other technical, financial, employee or business information or data.
“Joinder Shareholder” has the meaning set forth in the preamble.
“Joinder Shareholder Designee” has the meaning set forth in Section 3.2(b)(i).
“Joinder Shareholder Director” has the meaning set forth in Section 3.2(b)(iii).
“Joinder Shareholder Group” means any Joinder Shareholder and its Affiliates. For the avoidance of doubt, for the purposes of this Agreement no member of the Company Group shall be a member of a Joinder Shareholder Group and none of the Mosing Parties or Oak Hill (nor any of their respective Affiliates) shall be a member of a Joinder Shareholder Group.
“Joinder Shareholder Representative” has the meaning set forth in Section 6.11(c).
“Law” means any law, statute, constitution, principle of common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling, or requirement issued, enacted, adopted, promulgated, implemented, or otherwise put into effect by or under the authority of any Governmental Body (or under the authority of the NYSE or any other stock exchange on which the Company Common Stock is listed).
“Legal Proceeding” means any demand, action, claim, dispute, suit, countersuit, arbitration, inquiry, proceeding or investigation by or before any federal, state, local, foreign or international Governmental Body or any arbitration or mediation tribunal.
“Mosing Designee” has the meaning set forth in Section 3.2(c)(i).
“Mosing Director” has the meaning set forth in Section 3.2(c)(ii).
“Mosing Family Member” means the Persons set forth on Exhibit B, any Person who is a Family Member of such Persons, and each of their respective Affiliates (including trusts established for the benefit of the foregoing Persons).
“Mosing Parties” means the Shareholders executing this Agreement under the heading “Mosing Parties” on the signature pages hereto.
“Mosing Representative” has the meaning set forth in Section 6.11(a).
“Merger Agreement” has the meaning set forth in the recitals.
“Necessary Action” means, with respect to the requirement that any Party take action to achieve a specified result, all actions (to the extent such actions are permitted by Law and within such party’s control) necessary to cause such result, including (i) voting or providing a written consent or proxy with respect to the Company Common Stock owned by such party, (ii) causing the adoption of shareholders’ resolutions and amendments to the organizational documents of the Company, (iii) executing agreements and instruments and (iv) making, or causing to be made with Governmental Bodies, all filings, registrations or similar actions that are required to achieve such result.
“Non-Shareholder Designee” has the meaning set forth in Section 3.2(g).
“Non-Shareholder Director” has the meaning set forth in Section 3.2(g).
“NYSE” means the New York Stock Exchange.
“Oak Hill Designee” has the meaning set forth in Section 3.2(a)(i).
“Oak Hill Director” has the meaning set forth in Section 3.2(a)(iii).
“Oak Hill Group” means Oak Hill and its Affiliates. For the avoidance of doubt, for the purposes of this Agreement no member of the Company Group shall be a member of the Oak Hill Group.
“Oak Hill Representative” has the meaning set forth in Section 6.11(b).
“Other Shareholder” means, with respect to any member of a Shareholder Group, a holder or beneficial owner of Company Common Stock that is not a member of such Shareholder Group.
“Party” and collectively, “Parties”, has the meaning set forth in the preamble.
“Person” means an individual, Entity or Governmental Body.
“Recipient” has the meaning set forth in Section 4.1(a).
“Relevant Agreements” means (i) the Company Voting Agreements and Parent Voting Agreements entered into on the date hereof by and among the Company, Expro and the Mosing Parties, Oak Hill and certain other members of Expro, (ii) the Registration Rights Agreement (Expro Holders) entered into on the date hereof by and among the Company and the members of Expro party thereto, (iii) the Registration Rights Agreement (Mosing Holders), as amended through the date hereof, by and among the Company and certain shareholders of the Company and (iv) the Merger Agreement.
“Representatives” has the meaning set forth in Section 4.1(a).
“Shareholder” or “Shareholders” has the meaning set forth in the preamble.
“Shareholder Designees” has the meaning set forth in Section 3.2(c)(i).
“Shareholder Directors” refers to, collectively, each Mosing Director, each Oak Hill Director and, if applicable, each Joinder Shareholder Director.
“Shareholder Group” means each of (i) the Mosing Parties, (ii) the Oak Hill Group and (iii) any Joinder Shareholder Group, and their respective successors and assigns, and references to “members” of any such Shareholder Group mean any Person falling within the applicable definition of such Shareholder Group.
“Subsidiary” means, with respect to a Person, (i) another Person that is, directly or indirectly, through one or more intermediaries, controlled by such first Person or (ii) another Person in which such first Person directly or indirectly, through one or more intermediaries, owns, beneficially or of record, (A) an amount of voting securities or other interests in such Person sufficient to enable such first Person to elect at least a majority of the members of such Person’s board of directors or other governing body, or (B) at least 50% of the outstanding equity or financial interests of such Person.
“Termination Date” has the meaning set forth in Section 2.1.
Section 1.2 Definitions Incorporated from Merger Agreement. Capitalized terms used but not defined herein shall have the meanings given in the Merger Agreement.
ARTICLE II
TERM
Section 2.1 Term and Termination. This Agreement is effective as of the date hereof and shall terminate automatically (a) with respect to Oak Hill, on the first date that the Oak Hill Group, based on its collective ownership of Company Common Stock, would no longer have the right to nominate an Oak Hill Designee pursuant to Section 3.2(a), (b) with respect to any Joinder Shareholder, on the first date that such Joinder Shareholder’s Joinder Shareholder Group, based on its collective ownership of Company Common Stock, would no longer have the right to nominate a Joinder Shareholder Designee pursuant to Section 3.2(b), (c) with respect to the Mosing Parties, on the first date that the Mosing Parties, based on the collective ownership of Company Common Stock by the Mosing Family Members, would no longer have the right to nominate a Mosing Designee pursuant to Section 3.2(c), (d) with respect to the Company, on the first date that no Designator has the right to nominate a Shareholder Designee pursuant to Section 3.2, and (e) with respect to each of the Parties, if the Merger Agreement is terminated prior to the Effective Time, at the time of such termination. Notwithstanding the foregoing, the provisions of Section 4.1, Article V and Article VI, and any claim for breach of the covenants set forth in this Agreement, shall survive the termination of this Agreement. The date that this Agreement terminates with respect to any Party, as applicable, is referred to herein as such Party’s “Termination Date.”
ARTICLE III
CORPORATE GOVERNANCE MATTERS
Section 3.1 Board Composition. The Board immediately following the Effective Time shall initially consist of the Parent Designated Directors and the Company Designated Directors.
Section 3.2 Director Nomination Rights.
(a) Commencing with the annual general meeting of shareholders of the Company held in 2022, in connection with any annual or extraordinary general meeting of the shareholders of the Company at which the election of one or more non-executive directors is a voting item on the agenda for such meeting, if the Oak Hill Group receives shares of Company Common Stock in the Merger pursuant to the Merger Agreement equal to at least 20% of the number of outstanding shares of Company Common Stock as of the Effective Time (after giving effect to the issuance of Company Common Stock in the Merger pursuant to the Merger Agreement) (the “Closing Shares”), then:
(i) for so long as the Oak Hill Group collectively owns shares of Company Common Stock equal to at least 20% of the number of Closing Shares (as adjusted for stock splits, reverse stock splits, stock dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like), Oak Hill shall have the right to designate two persons as its nominees for election to the Board as non-executive directors (each, an “Oak Hill Designee”) (unless two Oak Hill Directors are already serving as non-executive directors of the Company and shall continue to serve as such following the relevant general meeting of shareholders of the Company);
(ii) for so long as the Oak Hill Group collectively owns shares of Company Common Stock equal to at least 10% (but less than 20%) of the number of Closing Shares (as adjusted for stock splits, reverse stock splits, stock dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like), Oak Hill shall have the right to designate one Oak Hill Designee for election to the Board as non-executive director (unless an Oak Hill Director is already serving as a non-executive director of the Company and shall continue to serve as such following the relevant general meeting of shareholders of the Company) and Oak Hill shall thereafter no longer have the right to designate, collectively, two Oak Hill Designees pursuant to this Agreement; and
(iii) upon the Oak Hill Group ceasing to collectively own shares of Company Common Stock equal to at least 10% of the number of Closing Shares (as adjusted for stock splits, reverse stock splits, stock dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like), Oak Hill shall thereafter not have the right to designate any Oak Hill Designee pursuant to this Agreement. Any Oak Hill Designee that is serving on the Board is referred to herein an “Oak Hill Director.”
(b) Commencing with the annual general meeting of shareholders of the Company held in 2022, in connection with any annual or extraordinary general meeting of the shareholders of the Company at which the election of one or more non-executive directors is a voting item on the agenda for such meeting, if any Joinder Shareholder Group receives shares of Company Common Stock in the Merger pursuant to the Merger Agreement equal to at least 20% of the number of Closing Shares, then:
(i) for so long as such Joinder Shareholder Group collectively owns shares of Company Common Stock equal to at least 20% of the number of Closing Shares (as adjusted for stock splits, reverse stock splits, stock dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like), the members of such Joinder Shareholder Group holding the majority of the Company Common Stock owned by such Joinder Shareholder Group shall collectively have the right to designate two persons as the nominees for such Joinder Shareholder Group for election to the Board as non-executive directors (each, a “Joinder Shareholder Designee”) (unless two Joinder Shareholder Directors for such Joinder Shareholder Group are already serving as non-executive directors of the Company and shall continue to serve as such following the relevant general meeting of shareholders of the Company);
(ii) for so long as such Joinder Shareholder Group collectively owns shares of Company Common Stock equal to at least 10% (but less than 20%) of the number of Closing Shares (as adjusted for stock splits, reverse stock splits, stock dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like), the members of such Joinder Shareholder Group holding the majority of Company Common Stock owned by such Joinder Shareholder Group shall collectively have the right to designate one Joinder Shareholder Designee for such Joinder Shareholder Group for election to the Board as non-executive director (unless a Joinder Shareholder Director for such Joinder Shareholder Group is already serving as a non-executive director of the Company and shall continue to serve as such following the relevant general meeting of shareholders of the Company) and such members of the Joinder Shareholder Group shall thereafter no longer have the right to designate, collectively, two Joinder Shareholder Designees pursuant to this Agreement;
(iii) upon such Joinder Shareholder Group ceasing to collectively own shares of Company Common Stock equal to at least 10% of the number of Closing Shares (as adjusted for stock splits, reverse stock splits, stock dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like), such Joinder Shareholder Group shall thereafter not have the right to designate any Joinder Shareholder Designee pursuant to this Agreement. Any Joinder Shareholder Designee that is serving on the Board is referred to herein as a “Joinder Shareholder Director”; and
(iv) notwithstanding anything herein to the contrary (A) a number of Company Designated Directors equal to the number of Joinder Shareholder Designees being designated as nominees for election to the Board at such general meeting of shareholders shall not be designated as nominees for election to the Board at such general meeting of shareholders by the Nominating and Governance Committee pursuant to Section 3.2(g) and (B) if the number of Non-Shareholder Designees being designated as nominees for election to the Board at such general meeting of shareholders by the Nominating and Corporate Governance Committee is insufficient for the Nominating and Governance Committee to comply with the proviso contained in Section 3.2(g), then at least one designee of any Shareholder that is entitled in connection with such general meeting of shareholders to designate two nominees for election to the Board shall be a person that qualifies as a Company Independent Director, other than pursuant to clause (i) of such definition.
(c) Commencing with the annual general meeting of shareholders of the Company held in 2022, in connection with any annual or extraordinary general meeting of the shareholders of the Company at which the election of one or more non-executive directors is a voting item on the agenda for such meeting:
(i) for so long as the Mosing Family Members collectively own shares of Company Common Stock equal to at least 10% of the number of Closing Shares (as adjusted for stock splits, reverse stock splits, stock dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like), the Mosing Parties holding the majority of Common Stock owned by the Mosing Parties shall have the right to designate one person as their nominee for election to the Board as non-executive director (the “Mosing Designee” and, together with any Oak Hill Designee or any Joinder Shareholder Designee, a “Shareholder Designee”) (unless a Mosing Director is already serving as a non-executive director of the Company and shall continue to serve as such following the relevant general meeting of shareholders of the Company); and
(ii) upon the Mosing Family Members ceasing to collectively own shares of Company Common Stock equal to at least 10% of the number of Closing Shares (as adjusted for stock splits, reverse stock splits, stock dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like), the Mosing Parties shall thereafter not have the right to designate a Mosing Designee pursuant to this Agreement. Any Mosing Designee that is serving on the Board is referred to herein as a “Mosing Director.”
(d) For the avoidance of doubt, except as set forth in this Section 3.2, directors will serve until the earlier of such director’s death, resignation or removal or the close of the next annual general meeting of shareholders of the Company held after their most recent election or re-election, and this Section 3.2(d) does not bestow nomination rights on the relevant Mosing Parties, Oak Hill or any applicable Joinder Shareholder to the extent that a Mosing Director, one or two Oak Hill Directors and/or one or two Joinder Shareholder Directors, respectively, is/are already serving as member(s) of the Board at the time of the relevant meeting of shareholders of the Company being convened and shall continue to serve as such following such meeting.
(e) Subject to Section 3.2(b)(iv), a Shareholder Designee is not required to qualify as a Company Independent Director but must satisfy any other applicable requirements for service on the Board set forth in the Articles of Association of the Company, the Dutch Corporate Governance Code unless any deviation from such Code is explained in the Statutory Dutch Annual Report of the Company (if applicable), and the rules and regulations of the NYSE or applicable Law.
(f) Each Shareholder Designee shall have a fiduciary duty to act in the interest of the Company and its business, to promote the sustainable success of the Company and to take into account the interests of all stakeholders of the Company in accordance with the standards required by applicable Law.
(g) In connection with any general or extraordinary meeting of shareholders of the Company at which the election of one or more non-executive directors is a voting item on the agenda for such meeting, the Nominating and Governance Committee of the Company shall have the right to designate persons as nominees for election as non-executive director of the Company for each vacancy on the Board for which a Designator is not entitled to designate a Shareholder Designee (such designee a “Non-Shareholder Designee” and each such designee serving on the Board and each of the Company Independent Directors initially elected to serve on the Board by the Company in accordance with Section 3.1, a “Non-Shareholder Director”); provided, however, that the Nominating and Governance Committee of the Company shall nominate a sufficient number of individuals who qualify as Company Independent Directors so that the Board (taking into account the Mosing Director, the Oak Hill Directors, any Joinder Shareholder Directors and the individuals nominated by the Nominating and Governance Committee of the Company) will consist of a majority of Company Independent Directors and otherwise satisfy the requirements of the NYSE, the Dutch Corporate Governance Code unless any deviation from such Code is explained in the Statutory Dutch Annual Report of the Company (if applicable), and applicable Law.
(h) The Company shall cause a binding nomination to be made for the election of each Shareholder Designee and Non-Shareholder Designee designated in accordance with Section 3.2(a) through Section 3.2(c) and Section 3.2(g) to the relevant general meeting of shareholders of the Company and shall cause each such person to be included in the Company’s proxy materials and form of proxy disseminated to shareholders in connection with the election of directors (including any extraordinary meeting of shareholders held for the election of directors). The Company shall use its reasonable best efforts to cause the election of each such Shareholder Designee and Non-Shareholder Designee, including soliciting proxies in favor of the election of such persons. The Company shall not be required to take the actions stipulated in the foregoing provisions of this Section 3.2(h) with respect to a Shareholder Designee if the Company reasonably believes that such Shareholder Designee does not satisfy the requirements for service on the Board set forth in the Articles of Association of the Company, the rules and regulations of the NYSE, the Dutch Corporate Governance Code unless any deviation from such Code is explained in the Statutory Dutch Annual Report of the Company (if applicable), or applicable Law.
(i) In the event that a Shareholder Director shall cease to serve as a non-executive director of the Company for any reason, the vacancy resulting therefrom shall be filled by the Board with a substitute individual, designated by the Designator that designated such Shareholder Director so long as such Designator would, at the time of such designation, have the right to designate a Shareholder Designee pursuant to this Section 3.2. Otherwise, such substitute individual shall be designated by the Board at the recommendation of the Nominating and Governance Committee of the Company.
(j) In the event that a Non-Shareholder Director shall cease to serve as a non-executive director for any reason, the vacancy resulting therefrom shall be filled by the Board with a substitute individual designated by the Board at the recommendation of the Nominating and Governance Committee of the Company.
(k) A substitute individual designated pursuant to Section 3.2(i) or Section 3.2(j) shall, subject to applicable Law, have all rights, tasks, duties and responsibility of a non-executive director of the Company until that person (or an alternate Shareholder Designee or Non-Shareholder Designee, as applicable) is elected as a Shareholder Director or Non-Shareholder Director in accordance with this Section 3.2.
(l) For the avoidance of doubt, each Designator shall have the right, in its sole discretion, to waive any and all of the rights granted to it under this Section 3.2, by delivery of written notice to the Company.
(m) Each Designator shall (i) upon making its designation pursuant to this Section 3.2, in the case of the Mosing Designee, provide evidence of the Company Common Stock held by the Mosing Family Members, in the case of the Oak Hill Designee, provide evidence of the Company Common Stock held by the Oak Hill Group and in the case of the Joinder Shareholder Designee, provide evidence of the Company Common Stock held by the applicable Joinder Shareholder Group and (ii) if the Company so requests, make such designation by such date requested by the Company, which request shall be made at least 30 days in advance of such requested date.
Section 3.3 Shareholders Agreement to Vote. From and after the date hereof, except as provided in Section 3.4, each Shareholder shall and shall cause each of its controlled Affiliates to:
(a) cause the shares of Company Common Stock owned by such Person to be present for quorum purposes at any Company shareholder meeting at which directors shall be elected; and
(b) cause the shares of Company Common Stock owned by such Person to be voted (or take action by written consent) in favor of the election of each Shareholder Designee.
Section 3.4 Meeting of Shareholders. Except with respect to the filling of vacancies on the Board in accordance with Section 3.2, the Company shall take all Necessary Action to conduct the election or removal of members of the Board only at a general meeting of shareholders and not at an extraordinary meeting of shareholders. Each Shareholder will not vote in favor of nominations made by shareholders that are not a party to this Agreement or which have not otherwise been recommended by the Board.
ARTICLE IV
OTHER AGREEMENTS
Section 4.1 Sharing of Information; Confidentiality.
(a) To the extent permitted by antitrust, competition or any other applicable Law, the Parties agree that (i) a Shareholder Director may share Company Confidential Information with the members of the Shareholder Group of the Designator that designated such Shareholder Director (a “Recipient”) and (ii) any Recipient may share Company Confidential Information with its controlled Affiliates and its and their respective officers, directors, employees, accountants, consultants, agents, legal counsel, financial advisors and other representatives who reasonably need to know such information in providing services to such Recipient (collectively, “Representatives”), subject to the provisions of this Article IV, and except to the extent sharing such information would reasonably be expected to result in a loss of privilege with respect to legal advice.
(b) During the term of this Agreement and for a period of one year following the Termination Date with respect to a Recipient, subject to Section 4.1(c) and except as contemplated by this Agreement or any Relevant Agreement, such Recipient shall not, and shall cause its Representatives not to, directly or indirectly, disclose, reveal, divulge or communicate to any Person, any Company Confidential Information. Each Recipient shall, and shall cause its Affiliates to, use the same degree of care to prevent and restrain the unauthorized disclosure of the Company Confidential Information by it or any of its or their Representatives as they currently use for their own confidential information of a like nature. For purposes of this Section 4.1(b), any Information, material or documents relating to the business currently or formerly conducted, or proposed to be conducted, by any member of the Company Group furnished to or in possession of any Recipient, irrespective of the form of communication, and all notes, analyses, compilations, forecasts, data, translations, studies, memoranda or other documents prepared by any Recipient or its Representatives, that contain or otherwise reflect such information, material or documents is hereinafter referred to as “Company Confidential Information.” Company Confidential Information does not include, and there shall be no obligation hereunder with respect to, information that (i) is or becomes generally available to the public, other than as a result of a use or disclosure by any Recipient or Representative not otherwise permissible hereunder, (ii) a Recipient can demonstrate was or became available to a Recipient or Representative from a source other than the Company or its Affiliates or a Shareholder Designee or (iii) is developed independently by a Recipient or Representative without reference to the Company Confidential Information; provided, however, that, in the case of clause (ii), the source of such information was not known by such Recipient or Representative to be bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to, any member of the Company Group with respect to such information.
(c) If any Recipient or its Affiliate is requested or required (by oral question, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) by any administrative or regulatory authority or other Governmental Body or pursuant to applicable Law or stock exchange requirements to disclose or provide any Company Confidential Information (other than with respect to any such information furnished pursuant to the provisions of Section 5.1 of this Agreement), the Person receiving such request or demand, or so required by applicable Law or stock exchange requirements, shall provide the Company with written notice of such request, demand or requirement as promptly as practicable under the circumstances so that the Company shall have an opportunity to seek an appropriate protective order, and such Recipient agrees to take, and cause its Representatives to take, at the Company’s expense, all other reasonable steps necessary to obtain confidential treatment with respect to such Company Confidential Information. Subject to the foregoing, such Recipient may thereafter disclose or provide any Company Confidential Information to the extent it is advised by legal counsel that it is required by such Law or stock exchange requirement or by lawful process or such Governmental Body.
ARTICLE V
DISPUTE RESOLUTION
Section 5.1 Governing Law; Exclusive Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be governed by, and construed in accordance with, the Laws of the State of New York, without regard to any applicable principles of conflicts of law that might require the application of the Laws of any other jurisdiction.
(b) In any action or proceeding between any of the Parties arising out of or relating to this Agreement, each of the Parties: (i) irrevocably and unconditionally consents and submits to the exclusive jurisdiction and venue of the Supreme Court of the State of New York, County of New York or to the extent such court does not have subject matter jurisdiction, the United States District Court for the Southern District of New York, (ii) agrees that all claims in respect of such action or proceeding shall be heard and determined exclusively in accordance with clause (i) of this Section 5.1, (iii) waives any objection to laying venue in any such action or proceeding in such courts, (iv) waives any objection that such courts are an inconvenient forum or do not have jurisdiction over any Party and (v) agrees that service of process upon such Party in any such action or proceeding shall be effective if such process is given as a notice in accordance with Section 6.2 of this Agreement. EACH OF THE PARTIES IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BETWEEN THE PARTIES ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(c) The Parties agree that irreparable damage would occur and that the Parties would not have any adequate remedy at Law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Each Party accordingly agrees that, in the event of any breach or threatened breach by any other Party of any covenant or obligation contained in this Agreement, the non-breaching Party shall be entitled (in addition to any other remedy that may be available to it whether in Law or equity, including monetary damages) to seek (i) a decree or order of specific performance to enforce the observance and performance of such covenant or obligation and (ii) an injunction restraining such breach or threatened breach. In circumstances where a Party is obligated to take action under this Agreement and such Party fails to take such action each of the Parties expressly acknowledges and agrees that the other Party shall have suffered irreparable harm, that monetary damages will be inadequate to compensate such other Party, and that such other Party shall be entitled to enforce specifically the breaching Party’s obligations under this Agreement. Each Party accordingly agrees not to raise any objection to the availability of the equitable remedy of specific performance to prevent or restrain breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of such Party under this Agreement all in accordance with the terms of this Section 5.1(c). Each Party further agrees that no other Party and no other Person shall be required to obtain, furnish, or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 5.1(c), and each Party irrevocably waives any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Corporate Power.
(a) Each Party represents on behalf of itself as follows:
(i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby; and
(ii) this Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms thereof.
Section 6.2 Notices. All notices and other communications hereunder shall be in writing and shall be delivered by hand, by facsimile or by overnight courier service (except for notices specifically required to be delivered orally). Such communications shall be deemed given to a Party (a) at the time and on the date of delivery, if delivered by hand or by email (provided, however, that notice given by email shall not be effective unless either (i) a duplicate copy of such email notice is promptly given by one of the other methods described in this Section 6.2 or (ii) the receiving Party delivers a written confirmation of receipt of such notice either by email or any other method described in this Section 6.2) and (b) at the end of the first Business Day following the date on which sent by overnight service by a nationally recognized courier service (costs prepaid).
Such communication in each case shall be delivered to the following addresses or facsimile numbers and marked to the attention of the Person (by name or title) designated below (or to such other address, facsimile number, or Person as a Party may designate by notice to the other Parties):
If to the Mosing Parties to:
Mosing Group
10260 Westheimer Road, Ste. 200
Houston, Texas 77042
Attention: |
Michelle Foutch |
Email: |
Michelle.Foutch@mosinggroup.com |
With a copy to:
Locke Lord LLP
600 Travis St, Suite 2800
Houston, TX 77002
Attention: |
Steve Peterson |
|
Megan Foscaldi |
Email: |
speterson@lockelord.com |
|
Megan.Foscaldi@lockelord.com |
If to Oak Hill, to:
Oak Hill Advisors, L.P.
1114 Avenue of the Americas
38th Floor
New York, New York 10036
Attention: |
Office of the General Counsel |
Email: |
EArbeter@oakhilladvisors.com; LegalOHA@ohpny.com |
If to the Company, to:
Frank's International N.V.
10260 Westheimer Road Suite 700
Houston, Texas 77042
Attention: |
Melissa Cougle, Chief Financial Officer |
|
John Symington, General Counsel |
Email: |
Melissa.Cougle@franksintl.com |
|
John.Symington@franksintl.com |
with a copy to (which copy shall not constitute notice):
Vinson & Elkins LLP
1001 Fannin Street, Suite 2500
Houston, Texas 77002-6760
Attention: |
T. Mark Kelly |
|
Stephen M. Gill | ||
Michael Telle |
Email: |
mkelly@velaw.com |
|
sgill@velaw.com | ||
mtelle@velaw.com |
Section 6.3 Severability. If any provision of this Agreement (or portion thereof) is held invalid, illegal or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement (or portion thereof) will remain in full force and effect, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any term or provision is invalid, illegal or unenforceable, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.
Section 6.4 Entire Agreement. This Agreement, including exhibits and amendments hereto, and the Relevant Agreements and any other document or instrument referred to herein constitute the entire agreement among the Parties and supersede all other prior or contemporaneous agreements and understandings, both written and oral, among or between any of the Parties with respect to the subject matter hereof and thereof.
Section 6.5 Assignment; No Third-Party Beneficiaries. No Party may assign any of its rights or delegate any of its obligations under this Agreement without the prior written consent of the other Parties. This Agreement will be binding upon, and shall be enforceable by and inure solely to the benefit of, the Parties and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person or entity (other than the Company Independent Directors pursuant to Section 6.9) any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
Section 6.6 Amendment; Waiver. No provision of this Agreement may be amended or modified except by a written instrument signed by all the Parties to this Agreement. A Party may, in its sole discretion, waive any and all rights granted to it in this Agreement; provided, that no waiver by any Party of any provision hereof shall be effective unless explicitly set forth in writing and executed by the Party so waiving. The waiver by any Party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other subsequent breach.
Section 6.7 Interpretations. When a reference is made in this Agreement to an Article, Section or Schedule, such reference shall be to an Article, Section or Schedule to this Agreement unless otherwise indicated. The words “include,” “includes” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation.” Any references in this Agreement to “the date hereof” refers to the date of execution of this Agreement. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. References to “this Agreement,” “hereof,” “herein,” and “hereunder” refer to this Agreement as a whole and not to any particular provision of this Agreement and include any schedules, annexes, exhibits or other attachments to this Agreement. The word “or” shall be deemed to mean “and/or.” All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. References to a Person are also to its permitted successors and assigns. The Parties have participated jointly in the negotiation and drafting of this Agreement with the assistance of counsel and other advisors and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement or interim drafts of this Agreement.
Section 6.8 Execution of Agreement; Counterparts; Electronic Signatures.
(a) The Agreement may be executed in several counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument and shall become effective when counterparts have been signed by each of the Parties and delivered to the other Parties it being understood that all Parties need not sign the same counterpart.
(b) The exchange of signed copies of this Agreement or of any other document contemplated by this Agreement (including any amendment or any other change thereto) by any electronic means intended to preserve the original graphic and pictorial appearance of a document shall constitute effective execution and delivery of this Agreement as to the Parties and may be used in lieu of an original Agreement or other document for all purposes. Signatures of the Parties transmitted by any electronic means referenced in the preceding sentence shall be deemed to be original signatures for all purposes.
Section 6.9 Enforceable by the Company Independent Directors. All of the Company’s rights under this Agreement may be enforced exclusively by the Company Independent Directors; provided that nothing in this Agreement shall require the Company Independent Directors to act on behalf of, or enforce any rights of, the Company. Any recovery in connection with a Legal Proceeding brought by the Company Independent Directors hereunder with respect to a Shareholder Group shall be for the proportionate benefit of all Other Shareholders.
Section 6.10 Joinder Shareholders. If any member of Expro, together with its Affiliates, received (or is to receive) in the aggregate shares of Company Common Stock in the Merger pursuant to the Merger Agreement equal to at least 20% of the number of Closing Shares, such member and any such Affiliates may, but shall not be obligated to, execute a joinder to this Agreement substantially in the form of Exhibit A no later than three Business Days following the Effective Time to become a Joinder Shareholder hereunder. No Person may become a Joinder Shareholder following the expiration of such three Business Day period. Notwithstanding the foregoing, to the extent members of Expro are Affiliates, only one of such members shall be the Joinder Shareholder and collectively all such members shall consist of one Joinder Shareholder Group.
Section 6.11 Party Representatives.
(a) Each of the Mosing Parties, by executing and delivering this Agreement, hereby appoints Michelle Foutch as its representative to act on behalf of the Mosing Parties for all purposes under this Agreement (the “Mosing Representative”), including the exercise of all rights of the Mosing Parties hereunder and the making of all elections and decisions to be made by the Mosing Parties pursuant to this Agreement. The Company and the Mosing Parties hereby acknowledge and agree that the Mosing Representative shall have the power and authority to act on behalf of the Mosing Parties pursuant to this Agreement and that the act of the Mosing Representative shall constitute the act of the Mosing Parties for all purposes under this Agreement. The Mosing Representative may assign the power and authority granted to the Mosing Representative pursuant to this Section 6.11 to any other Mosing Family Member, who shall thereafter serve as the Mosing Representative. Written notice of any such assignment shall be given to the Company promptly following the effectiveness thereof. The Company shall be entitled to rely on any act or writing executed by the Mosing Representative.
(b) Oak Hill (the “Oak Hill Representative”) hereby represents and warrants that it has been duly authorized by each member of the Oak Hill Group to act on behalf of the Oak Hill Group for all purposes under this Agreement, including the exercise of all rights of the Oak Hill Group hereunder and the making of all elections and decisions to be made by Oak Hill pursuant to this Agreement. The Company hereby acknowledges and agrees that the Oak Hill Representative shall have the power and authority to act on behalf of the Oak Hill Group pursuant to this Agreement and that the act of the Oak Hill Representative shall constitute the act of each member of the Oak Hill Group for all purposes under this Agreement. The Oak Hill Representative may assign the power and authority granted to the Oak Hill Representative pursuant to this Section 6.11 to any other member of the Oak Hill Group, who shall thereafter serve as the Oak Hill Representative. Written notice of any such assignment shall be given to the Company promptly following the effectiveness thereof. The Company shall be entitled to rely on any act or writing executed by the Oak Hill Representative.
(c) The Joinder Shareholder (a “Joinder Shareholder Representative”), by executing and delivering a joinder to this Agreement, hereby represents and warrants that it has been duly authorized by each member of its Joinder Shareholder Group to act on behalf of such Joinder Shareholder Group for all purposes under this Agreement, including the exercise of all rights of such Joinder Shareholder Group hereunder and the making of all elections and decisions to be made by such Joinder Shareholder Group pursuant to this Agreement. Upon such appointment, the Company hereby acknowledges and agrees that the Joinder Shareholder Representative shall have the power and authority to act on behalf of such Joinder Shareholder Group pursuant to this Agreement and that the act of the Joinder Shareholder Representative shall constitute the act of each such Joinder Shareholder Group for all purposes under this Agreement. Any Joinder Shareholder Representative may assign the power and authority granted to such Joinder Shareholder Representative pursuant to this Section 6.11 to any other member of the Joinder Shareholder Group, who shall thereafter serve as such Joinder Shareholder Representative. Written notice of any such assignment shall be given to the Company promptly following the effectiveness thereof. The Company shall be entitled to rely on any act or writing executed by a Joinder Shareholder Representative.
[The remainder of this page has been intentionally left blank;
the next page is the signature page.]
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be executed as of the date first written above by its respective officer thereunto duly authorized, all as of the date first written above.
|
Frank's International N.V. |
|
|
|
|
|
|
|
|
|
|
|
By: |
/s/ Michael C. Kearney |
|
|
Name: |
Michael C. Kearney |
|
|
Title: |
Chairman, President and Chief Executive Officer |
|
[Signature Page to Director Nomination Agreement]
|
MOSING PARTIES: |
|
|
|
|
|
|
|
|
|
|
|
By: |
/s/ Kirkland D. Mosing |
|
|
Name: |
Kirkland D. Mosing |
|
|
|
|
|
By: | /s/ Erich L. Mosing | ||
Name: | Erich L. Mosing | ||
By: | /s/ S. Brent Mosing | ||
Name: | S. Brent Mosing | ||
By: | /s/ D. Keith Mosing | ||
Name: | D. Keith Mosing | ||
By: | /s/ Jeffrey Louis Mosing | ||
Name: | Jeffrey Louis Mosing | ||
By: | /s/ Michael F. Mosing | ||
Name: | Michael F. Mosing | ||
By: | /s/ Sharon M. Mosing | ||
Name: | Sharon M. Mosing | ||
By: | /s/ Melanie Mosing | ||
Name: | Melanie Mosing | ||
By: | /s/ Kendall Mosing | ||
Name: | Kendall Mosing |
[Signature Page to Director Nomination Agreement]
Oak Hill Advisors, L.P. | |||
By: | /s/ Gregory S. Rubin | ||
Name: | Gregory S. Rubin | ||
Title: | Authorized Signatory | ||
[Signature Page to Director Nomination Agreement]
Exhibit A
Form of Joinder to Director Nomination Agreement
This Joinder Agreement (this “Joinder Agreement”) is made as of the date written below by the undersigned (the “Joinder Shareholder”) in accordance with the Director Nomination Agreement, dated March 10, 2021 (as amended from time to time, the “Director Nomination Agreement”), by and among the Mosing Parties, Oak Hill Advisors, L.P., Frank's International N.V., a public company organized under the laws of the Netherlands (the “Company”), and the other shareholders parties thereto.
The Joinder Shareholder hereby acknowledges, agrees and confirms that, by its execution of this Joinder Agreement, such Joinder Shareholder shall be deemed to be a party to the Director Nomination Agreement as of the date hereof and shall have all of the rights and obligations of a “Joinder Shareholder” thereunder as if it had been an original party to the Director Nomination Agreement. The Joinder Shareholder hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in the Director Nomination Agreement.
The Joinder Shareholder hereby represents and warrants that it: (i) has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Joinder Agreement and to consummate the transactions contemplated hereby, (ii) this Joinder Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with its terms and (iii) together with its Affiliates, received (or is to receive) in the aggregate shares of Company Common Stock in the Merger pursuant to the Merger Agreement equal to at least 20% of the number of Closing Shares.
[signature page follows]
IN WITNESS WHEREOF, the undersigned has executed this Joinder Agreement as of the date written below.
Date: ___________ ___, ______
|
JOINDER SHAREHOLDER: |
|
|
[NAME] | |||
|
|
|
|
|
|
|
|
|
By: |
|
|
|
Name: |
|
|
|
Title: |
|
|
Notice Address: | |||
[_________________] | |||
[_________________] | |||
Attention: [_________________] | |||
Email: [_________________] | |||
COMPANY: | |||
Frank's International N.V. | |||
By: | |||
Name: | |||
Title: |
Exhibit B
Mosing Family Members
D. Keith Mosing
Donald Keith Mosing Family Partnership, Ltd
M. Mosing 2010 IRREV Trust
N. Mosing 2010 IRREV Trust
2015 Mosing Family Delaware Trust fbo Keith Mosing
ByPass Corporate Stock Trust ulw Janice P. Mosing fbo Donald Keith Mosing
Gregory Stanton Mosing
2009 Mosing Family Delaware Dynasty Trust fbo Gregory Stanton Mosing
G. Stanton Investments, LP
ByPass Corporate Stock Trust ulw Janice P. Mosing fbo Gregory Stanton Mosing
Trust ulw Janice P.Mosing fbo Lindsey R.Mosing
William Bradford Mosing
WBM Partnership, LP
Trust ulw Janice P.Mosing fbo Victoria R.Mosing
Trust ulw Janice P.Mosing fbo Jaclyn E.Mosing
The 2016 Mosing Family Delaware Dynasty fbo William Bradford Mosing
Melanie Christine Mosing
To Look Within, LLC (Melanie)
2009 Mosing Family Delaware Dynasty Trust fbo Melanie Christine Mosing
ByPass Corporate Stock Trust ulw Janice P. Mosing fbo Melanie Christine Mosing
Clara Belle LeBlanc Mosing
Estate of Clara Belle LeBlanc Mosing
S. Brent Mosing
Steven Brent Mosing Family, L.L.C
Stephanie Mosing Godwin
Michael Frank Mosing
Michael Frank Mosing Family L.L.C.
Bryn Patrick Mosing
Vohn Patrick Mosing
Sharon M. Miller
Miller Ginsoma Holdings, Ltd. (Sharon Mosing Miller)
Ryan Charles Miller
Mallory Miller
Erich Mosing
Timothy Dupre Mosing
Estate of Timothy Dupre Mosing
Jeffrey Louis Mosing
JLM Partners, Ltd. (Jeff Mosing)
Delores B. Mosing
Kirkland D. Mosing
Kirkland D. Mosing Family, L.L.C.
Lori Mosing Thomas
Bryceton G. Thomas Trust (Kirk is trustee)
Kendall G. Mosing
Kendall G. Mosing Family, L.L.C.
DBM 2009 QSST-IDG Trust uta December 17, 2009
Exhibit 10.11
(1) EXPRO NORTH SEA LTD
(2) MR JOHN MCALISTER
SERVICE AGREEMENT
CONTENTS
Clause |
Page | |
1 |
DEFINITIONS |
1 |
2 |
APPOINTMENT, NOTICE AND PLACE OF WORK |
5 |
3 |
DUTIES |
6 |
4 |
REMUNERATION |
8 |
5 |
EXPENSES |
9 |
6 |
CAR ALLOWANCE |
9 |
7 |
PENSION ALLOWANCE |
9 |
8 |
MEDICAL AND LIFE INSURANCE |
9 |
9 |
SICKNESS |
10 |
10 |
HOLIDAYS |
10 |
11 |
CONFIDENTIALITY |
10 |
12 |
INVENTIONS AND COPYRIGHT |
12 |
13 |
TERMINATION |
13 |
14 |
RESTRICTIONS |
15 |
15 |
PRIOR AGREEMENTS |
16 |
16 |
DISCIPLINARY AND GRIEVANCE PROCEDURE |
16 |
17 |
GENERAL |
16 |
THIS AGREEMENT is made 29 September 2021
BETWEEN:-
(1) |
EXPRO NORTH SEA LTD (Registered in England No 1108011) whose registered office is at Second Floor, Davidson House Forbury Square, Reading RG1 3EU ("Company"); and |
(2) |
Mr John McAlister, The Old Farmhouse, Ginge OX12 8QR("Executive"). |
NOW IT IS HEREBY AGREED as follows:
1. |
DEFINITIONS |
1.1 |
In this Agreement the following words and expressions shall unless the context otherwise requires have the following meanings: |
"Act" |
Employment Rights Act 1996 as amended; |
"Board" |
the board of directors of Expro Group Holdings NV for the time being and from time to time or a duly constituted committee thereof; |
"Commencement Date" |
1 October 2021; |
"Confidential Information" |
the information and trade secrets referred to in Clause 11.1; |
"Director" |
any director of the Company or any company in the Group with whom the Executive has dealt personally in the six months preceding the Termination Date; |
"directly or indirectly" |
whether as principal or agent; whether alone, jointly, in partnership with another or for or on behalf of another; whether as a shareholder (other than a minority shareholder beneficially entitled to not more than 3% of the issued share capital of another company), director, agent, principal, partner, consultant, employee or otherwise; or by virtue of providing direct or indirect financial assistance; |
"Group" |
any person which is from time to time a subsidiary, subsidiary undertaking, or holding company of the Company or of such subsidiary, subsidiary undertaking, or holding company as the case may be from time to time, and each a “Group Company”; |
"holding company", "subsidiary", "subsidiary undertaking" |
the same meanings given in s.1159 and s.1161 Companies Act 2006, save that: (a) a company shall be treated, for the purposes only of the membership requirement contained in s.1159(1)(b) and (c), as a member of another company even if its shares in that other company are registered in the name of (i) another person (or that person’s nominee), whether by way of security or in connection with the taking of security, or (ii) its nominee; and (b) in the case of a limited liability partnership which is a subsidiary of a company or another limited liability partnership, s.1159 Companies Act 2006 shall apply as if: (i) references in s.1159(1)(a) and (c) to voting rights are to the members’ rights to vote on all or substantially all matters which are decided by a vote of the members of the limited liability partnership; and (ii) the reference in s.1159(1)(b) to the right to appoint or remove a majority of its board of directors is to the right to appoint or remove members holding a majority of the voting rights; |
"Pension Scheme" |
the Expro North Sea Limited Retirement and Death Benefits Plan (a money purchase scheme), or such other pension arrangement as the Company may provide or agree to contribute to; |
"Relevant Company" |
any company in relation to which the Executive shall either as part of his duties under his employment or by virtue of any directorship held from time to time by him pursuant to such employment render any services or perform any function in the twelve months prior to the Termination Date and which for the time being or from time to time is a member of the Group; |
"Restricted Person" |
any person, firm or company whom the Executive knows or ought reasonably to know: |
● was at the Termination Date or at any time during the period of 12 months prior to such date a customer in respect of products or services of a Relevant Company and with whom the Executive has had contact during such period; or |
|
● was a potential customer of a Relevant Company with whom the Executive has had contact during such period, in respect of Restricted Products and/or Restricted Services by virtue of negotiations which were either in progress at the Termination Date or would have been but for the direct or indirect act or omission of the Executive; |
"Restricted Products" |
all and any products the same as or similar to those with which the Executive was concerned in the ordinary course of his duties under his employment or by virtue of his holding of any directorship in any Relevant Company or in relation to which he possessed any Confidential Information and which have been produced marketed sold or otherwise dealt in by the Company and/or any Relevant Company in the ordinary course of its or their respective business and in respect of which the Company and/or any Relevant Company has not discontinued such production marketing sale or dealings; |
"Restricted Services" |
all and any services the same as or similar to those with which the Executive was concerned in the ordinary course of his duties under his employment or by virtue of his holding of any directorship in any Relevant Company or in relation to which he possessed any Confidential Information and which have been provided by the Company and/or any Relevant Company in the ordinary course of its or their respective business and in respect of which the Company and/or any Relevant Company has not discontinued such provision; |
"Recognised Investment Exchange" |
a recognised investment exchange or an overseas investment exchange, each as defined by section 285 Financial Services and Markets Act 2000; |
"Review Date" |
as determined by the compensation committee of the Company’s ultimate holding company from time to time; |
"Salary" |
the payment set out in Clause 4.1 as reviewed on the Review Date; |
"Senior Employee" |
any person who has been employed by or provided services to a Relevant Company in a managerial, technical, marketing, research, legal, account handling, strategic, customer relations or similar capacity during the six months immediately prior to the Termination Date and with whom the Executive dealt personally; |
“Settlement Agreement”
|
a customary settlement agreement containing a release of claims against the Company and its Affiliates, in a form to be provided by the Company, which shall exclude (i) any claims arising after the date on which such release is executed by the Executive, (ii) any claims to rights of indemnification from the Company or any of its Affiliates pursuant to the terms of this Agreement, any other agreement between the Executive and the Company and/or such Affiliate(s), the Company's or its Affiliate's bylaws or other organizational documents, or applicable law, (iii) any claims that the Executive may have in his capacity as a holder of vested equity of the Company or any of its Affiliates (including, for the avoidance of doubt, any equity that vests in connection with such termination of employment or remains eligible to vest following such termination based on the attainment of the applicable performance goals), and (iv) any claims that cannot, under applicable law, be waived; |
"Supplier" | any person, firm, company or other entity which or whom at any time during the period of twelve months preceding the Termination Date was a supplier to any Relevant Company; |
"Term" |
the period commencing on the Commencement Date and terminating on the Termination Date; |
"Termination Date" |
the date on which this Agreement terminates. |
1.2 |
References to any enactment shall be construed as references thereto as from time to time re-enacted and to any previous enactment consolidated therein and to any regulation or order made thereunder. |
1.3 |
Words denoting the singular shall include the plural and vice versa and words denoting any gender shall include all genders. |
1.4 |
The terms set out in a schedule to this Agreement shall be deemed to be incorporated herein except where expressly stated otherwise. |
1.5 |
Unless otherwise stated a reference to a clause or a schedule is a reference to respectively a clause in or a schedule to this Agreement. |
1.6 |
Clause headings are for the ease of reference only and shall not affect the construction of this Agreement. |
1.7 |
Any phase introduced by the terms "including", "include", "in particular" or any similar expression shall be construed as illustrative and shall not limit the sense of words preceding those terms. |
2. |
APPOINTMENT, NOTICE AND PLACE OF WORK |
2.1 |
The Company employs the Executive and the Executive agrees to serve the Company as its Group General Counsel, or in such other capacity or capacities of equivalent status as shall reasonably be nominated by the Board. |
2.2 |
Subject to the provisions for termination contained in Clause 13.1 this Agreement shall commence on the Commencement Date and shall continue until determined by not less than X weeks prior written notice given by either party to the other. For the purpose of this Clause, X shall be equal to one week’s notice for every complete year of the Executive’s continuous service with the Company or any Group Company up to a maximum of 12 weeks. The date of commencement of the Executive’s continuous service for statutory purposes is 6 July 2006. |
2.3 |
The Company may terminate this Agreement without notice at any time including in those circumstances contained within Clause 13.1 of this Agreement. Subject always to Clause 2.4 below, in circumstances where this Agreement is terminated by the Company other than in accordance with Clause 13.1 below, the Company shall, subject to and conditional upon: (a) the rules, terms and conditions of the Frank’s International N.V. U.S. Executive Retention and Severance Plan (as amended from time to time, the “Retention Plan”); (b) the Executive executing a Settlement Agreement within 14 days of termination of his employment with the Company; and (c) the Executive’s employment terminating in circumstances where he would be entitled to receive Severance Benefits under the Retention Plan, pay to the Executive Severance Benefits subject to such deductions as are required by law or otherwise permitted under the Retention Plan, which Severance Benefits would, for the avoidance of doubt, be inclusive of any payments or other benefits to which the Executive would otherwise be entitled in connection with his employment or its termination (including any payment in lieu of any unexpired portion of his notice period). For the avoidance of doubt, the Executive is a Covered Executive under the Retention Plan, agrees to participate in the Retention Plan and to comply with its terms, conditions and restrictions and specifically acknowledges and agrees to the restrictions imposed upon him under Sections 11, 12 and 14 of this Agreement. The Company agrees to participate in the Retention Plan as a participating Employer. This Agreement shall serve as the Executive’s Participation Agreement under the Retention Plan. Capitalised terms used in this Clause 2.3 shall have the meanings given to them in the Retention Plan. If the Company decides not to exercise its rights under this Clause, the Executive's sole remedy shall be a claim in damages, which is subject to a duty to mitigate his loss. Any payment the Company may decide to make under this Clause shall be in full and final settlement of all contractual claims. |
2.4 |
Subject to and conditional upon: (i) the rules, terms and conditions of the Frank’s International N.V. Amended and Restated U.S. Executive Change-in-control Severance Plan (as amended from time to time, the “Change in Control Plan”); and (ii) the Executive executing a Settlement Agreement within 14 days of termination of his employment with the Company; and (iii) the Executive’s employment terminating in circumstances where he would be entitled to receive severance payments under Section 3 of the Change in Control Plan (“Change in Control Severance Benefits”), the Company will pay to the Executive Change in Control Severance Benefits, subject to such deductions as are required by law or otherwise permitted under the Change in Control Plan. The Change in Control Severance Benefits would, for the avoidance of doubt, be inclusive of any payments or other benefits to which the Executive would otherwise be entitled in connection with his employment or its termination. For the avoidance of doubt, the Executive is a Covered Executive under the Change in Control Plan, agrees to participate in the Change in Control Plan and to comply with its terms, conditions and restrictions and the Company agrees to participate in the Change in Control Plan as a participating Employer. This Agreement shall serve as the Executive’s Participation Agreement under the Change in Control Plan. If the Executive becomes eligible for change in Control Severance Benefits under the Change in Control Plan, the outplacement assistance benefits described therein shall consist of outplacement assistance provided for the period beginning on the Termination Date and ending on the last day of the second calendar year following the Termination Date, or until subsequent employment is obtained, whichever occurs first, and shall not exceed US$ 15,000 in the aggregate. Such outplacement assistance shall be provided through a vendor selected by a Group Company, with any Group Company providing direct payment to such vendor. Capitalised terms used in this Clause 2.4 shall, unless defined elsewhere in this Agreement, have the meanings given to them in the Change in Control Plan. |
2.5 |
The Executive's normal place of work shall be Reading or such place or places in the United Kingdom or elsewhere (on an accompanied family basis) as the Company may from time to time determine upon giving him reasonable prior notice. In such an event the Company shall reimburse to the Executive his reasonable removal and other expenses as per the Company's relocation policy from time to time in force. |
2.6 |
The Executive represents and warrants that he is not bound by or subject to any court order, agreement, arrangement or undertaking which in any way restricts or prohibits him from entering into this Agreement or from performing his duties under it. |
3. |
DUTIES |
3.1 |
The Executive shall (subject always to the directions of the Board) carry out such duties and exercise such powers in relation to the Group as may from time to time be assigned to or vested in him by the Board having regard to his responsibilities as Group General Counsel and subject to such restrictions as the Board may from time to time impose. |
3.2 |
Whilst the appointment is full time the nature of the Executive's employment including his seniority and the scope of his responsibilities is such that his working time can be determined by him in a manner consistent with his employment under this agreement. The agreed hours of work of the Executive will be such hours as may reasonably be required for the proper performance of his duties under this Agreement. |
3.3 |
During this Agreement the Executive shall (without prejudice to the generality of Clause 3.1) in the course of his duties: |
3.3.1 |
diligently, well and faithfully serve the Group and use his best endeavours to promote and develop its interests and those of any other Relevant Company; |
3.3.2 |
give to the Board or such persons as it shall nominate such information regarding the affairs of the Company as shall be required; |
3.3.3 |
at all times conform to the reasonable directions of the Board or of anyone duly authorised by it; |
3.3.4 |
undertake such travel as may reasonably be required for the proper performance of his duties both inside and outside the United Kingdom as the Board may from time to time determine; and |
3.3.5 |
at all times comply with all relevant rules and procedures of the Company and of any association or professional body to which the Company and/or the Executive may from time to time belong. |
3.4 |
The Executive shall not at any time during the course of his employment, without the prior consent of the Board: |
3.4.1 |
incur on behalf of the Company or the Group any capital expenditure in excess of such sum as may be authorised from time to time, via the Company's financial policies and procedures; |
3.4.2 |
enter into on behalf of the Company or the Group any commitment, contract or arrangement which is otherwise than in the normal course of business or is outside the scope of his normal duties or is of an unusual or onerous or long term nature; |
3.4.3 |
engage any person on terms which vary from those established via HR policies and procedures; |
3.4.4 |
dismiss any employee or worker of the Company or the Group without taking HR advice and without giving proper statutory or (if longer) contractual notice or without following the appropriate procedures and in any case the Executive shall immediately report any dismissal effected by him and the reason for it to the Board; or |
3.4.5 |
(and shall use every reasonable endeavour to procure that his spouse, infant children and other persons connected with him within the meaning of section 346 of the Companies Act 1985 shall not) deal or become or cease to be interested (within the meaning contained in Part I of Schedule 13 to the Companies Act 1985) in any securities of the Company or any company in the Group except in accordance with the Company's Code of Practice in force from time to time in relation to such transactions with which Code the Executive shall comply and copies of which are obtainable from the Company Secretary. |
3.5 |
The Executive shall during this Agreement, unless prevented by incapacity, devote the whole of his time attention and ability to the performance of his duties under this Agreement and shall not directly or indirectly enter into or be concerned or interested in any trade or business or occupation whatsoever other than the business of the Group except with the prior written consent of the Board provided always that such consent may be given subject to any terms or conditions which the Board may require and any breach of any such terms and conditions by the Executive shall be deemed to be a breach of the terms of this Agreement; |
3.6 |
For the avoidance of doubt nothing in Clause 3.5 shall prevent the Executive from holding less than 3% of the issued share capital of another company. |
3.7 |
Without prejudice to the generality of Clause 3.5 above the Executive shall not during the course of his employment: |
3.7.1 |
make any preparations to compete with the Group; |
3.7.2 |
encourage any employee or contractor to terminate their employment or services with the Group; and/or |
3.7.3 |
encourage any client or customer or supplier of the Group to terminate or reduce the value of any contract or relationship with the Group. |
3.8 |
The Company shall be under no obligation to vest in or assign to the Executive any powers or duties or to provide any work for the Executive and the Company may at its discretion at any time or from time to time during any period of notice given by either party to terminate this Agreement: |
3.8.1 |
suspend the Executive from the performance of his duties; |
3.8.2 |
exclude the Executive from any premises of the Company or any company in the Group; |
3.8.3 |
require the Executive to work from home and/or to perform special projects; |
3.8.4 |
require the Executive to abstain from contacting any customers, clients, suppliers, agents, contractors, or employees of the Company or any company in the Group; and/or |
3.8.5 |
require the Executive to resign from any or all offices in the Company and any company in the Group; and/or |
3.8.6 |
require the Executive to return to the Company all documents and other materials (including copies) belonging to any company in the Group or any of its customers except that the Executive shall be entitled for as long as he may be a statutory Director of any such company, to retain copies of documents received by him during the course of his employment in his capacity as a statutory Director of such a company. |
3.9 |
Salary and benefits will continue to be paid to the Executive during any period of suspension, exclusion or requirement as described in Clause 3.8 and the Executive shall throughout any such period continue to be an employee of the Company and shall comply with all his obligations under this Agreement without limitation. |
3.10 |
The Executive agrees that during any period of notice given by either party to terminate this Agreement, he will give to the Company or such person nominated by it all such assistance and co-operation in effecting a smooth and orderly handover of his duties as the Company may require. |
3.11 |
The Executive irrevocably authorises the other directors of the Company from time to time, in his name and on his behalf, to execute all documents and do all things necessary to effect any resignation required pursuant to Clause 3.8.5 if the appropriate notices have not been delivered to the Company within seven days of the Executive being required to so resign. |
4. |
REMUNERATION |
4.1 |
Subject as hereinafter provided the Company shall pay to the Executive a base salary at the rate of £311,000 per annum, less statutory deductions, (which is inclusive of any fees in relation to the Executive's position as Director) which shall accrue from day to day and be payable by equal instalments in arrears at the end of every calendar month (or such other date as the Company may determine). |
4.2 |
The Salary shall be reviewed on each Review Date and the Company may in its entire discretion vary the Salary having regard to the performance of the Executive and the profitability of the Group. Any variation of Salary would not be downwards. |
4.3 |
Any benefits provided by the Company to the Executive or his family which are not expressly referred to in this Agreement shall be regarded as ex-gratia and at the entire discretion of the Company and shall not form part of the Executive's contract of employment. |
4.4 |
The Executive authorises the Company to deduct from his remuneration under this Agreement any sums due from him to the Company including any overpayments, loans or advances made to him by the Company. |
5. |
EXPENSES |
In addition to his remuneration the Executive shall be reimbursed all reasonable expenses properly (wholly and exclusively) incurred by him in the discharge of his duties hereunder upon production of receipts or other evidence of those expenses to the Board.
6. |
CAR ALLOWANCE |
6.1 |
The Executive shall be entitled to a car allowance of £749.66 per month in the performance of his duties under this Agreement subject to and in accordance with the Company's car allowance policy as implemented by the Board and as varied by it from time to time and notified to the Executive. |
6.2 |
The Executive shall be entitled to claim business mileage as per Company policy. Private fuel is not reimbursed by the Company. |
6.3 |
The Executive shall comply with all provisions of the Company's car allowance policy notified to the Executive pursuant to Clause 6.1. |
7. |
PENSION ALLOWANCE |
7.1 |
In lieu of any contribution to the Pension Scheme, the Company will pay the Executive an amount equal to 20% of the Executive's base salary subject to statutory deductions in equal monthly instalments at the same time as Salary. |
7.2 |
A contracting-out certificate is not in force in respect of the employment. |
8. |
MEDICAL AND LIFE INSURANCE |
8.1 |
The Company will, subject to the Executive (and, where relevant, his wife and children under the age of 21) being eligible for cover and/or accepted at standard rates of premium under the general provisions of the applicable plan or policy from time to time in force provide: (i) medical cover for the Executive, (and, where relevant, his wife and children under the age of 21); and (ii) life assurance cover for the Executive. |
9. |
SICKNESS |
9.1 |
If the Executive is unable to work because of sickness or injury he should telephone his superior before 10:00 am on the morning in question. |
9.2 |
If the Executive is absent from work for more than seven consecutive days he shall on the eighth day send the Company a certificate of his disability, signed by a registered medical practitioner, and shall send further certificates in respect of any continued absence. If the Company requires the Executive to obtain such a certificate during the first seven days of any absence, he must do so. If the Executive fails to comply with any of these provisions, he will not be paid for the relevant period of absence. |
9.3 |
If the Executive is at any time required by the Company to undergo a medical examination by any doctor(s) nominated by the Company, he must do so. The Company will bear the expense of any such examination. |
9.4 |
In the event of sickness and injury involving absence from work, the Company's Occupational Sick Pay Scheme will pay the Executive full Salary less the appropriate, according to earnings, weekly (or daily) rate of Statutory Sick Pay for a continuous or cumulative period of up to 180 days' absence in any twelve consecutive months. |
9.5 |
On the expiry of the continuous or cumulative period of 180 days absence in any twelve month period, the Executive will receive Statutory Sick Pay in accordance with the rules for the payment of Statutory Sick pay but there is no further entitlement to Occupational Sick Pay. |
10. |
HOLIDAYS |
10.1 |
The Executive shall in addition to statutory holidays be entitled to twenty five days holiday in every calendar year and a rateable proportion for any part of such calendar year to be taken at such time or times as shall be agreed with the Board. |
10.2 |
On the termination of this Agreement: |
10.2.1 |
the Executive shall be entitled to remuneration in lieu of holidays accrued but not taken; |
10.2.2 |
the Company shall be entitled to deduct from any sum owed to the Executive an amount representing holidays taken but not accrued; and |
10.2.3 |
such remuneration or deduction referred to in Clauses 10.2.1 and 10.2.2 shall be calculated at the rate of 1/227th of Salary for each day of holiday and fractions of a day shall be rounded down to the nearest whole number of days. |
11. |
CONFIDENTIALITY |
11.1 |
Subject as set out in Clause 11.2 the Executive shall during the continuance of this Agreement and after the Termination Date observe strict secrecy as to the affairs and dealings of the Company and of any company in the Group and shall not at any time during the Term (except in the proper performance of his duties of employment) or after the Termination Date without the prior written consent of the Board make use of or divulge to any person and during the Term shall use his best endeavours to prevent the publication or disclosure of Confidential information which shall include: |
11.1.1 |
any information concerning the business, accounts, finances, research projects, discount policy, pricing policy, future business strategy, marketing, tenders, price sensitive information, plans or strategies of the Company or of any company in the Group or of any client of any company in the Group; |
11.1.2 |
any confidential report or information relating to research activities, inventions or secret processes commissioned by or on behalf of the Company or any company in the Group or of any of their respective clients in connection with the business or affairs of the Company or any company in the Group or any of their respective clients; |
11.1.3 |
any trade secrets of the Company or any company in the Group including know-how confidential transactions, designs and engineering information and models and any other such technical information; |
11.1.4 |
lists of or details of the clients or customers (or prospective customers) or other contractors of the Company or any company in the Group and the terms upon which they do business with the Company or any company in the Group; |
11.1.5 |
any other information confidential to the Company or any company in the Group which has or may have come to his knowledge during this Agreement or previously or in any other manner; and |
11.1.6 |
any information which the Executive is told or should reasonably know to be confidential and any information which has been given to the Company in the Group in confidence by third parties, including (but not limited to) contractors, agents, suppliers of the Company or any company in the Group. |
11.2 |
The obligations contained in Clause 11.1 shall apply to any Confidential Information referred to in that Clause unless and until such information shall have come into the public domain otherwise than as a result of any direct or indirect disclosure by the Executive in breach of the terms of Clause 11.1. Nothing in this Clause 11 shall prevent the Executive from disclosing such information which he may be required to disclose by law and the Company acknowledges that the restrictions contained in this Clause are subject to the Public Interest Disclosure Act 1998. |
11.3 |
The Executive consents to the Company (or any company in the Group) holding and processing, both electronically and manually, the data it collects in relation to the Executive in the course of his employment, as it may reasonably require for the reasonable purposes of the Company's administration and management of its business. In addition, to ensure compliance with applicable procedures, laws and regulations, the Executive also consents to the transfer, storage and processing by the Company or any company in the Group of such data outside the European Economic area and in particular to any other country in which the Company or any company in the Group has offices. |
11.4 |
The Executive agrees that the Company and its employees and agents, may at any time and from time to time, intercept, record and/or otherwise monitor all communications, including telephone calls, e-mails, use of the internet, faxes and instant messaging and similar services effected by the Executive using the Company's equipment. The Executive acknowledges that such action is necessary for the Company's lawful business practice. |
12. |
INVENTIONS AND COPYRIGHT |
12.1 |
The Executive shall subject to Section 40 Patents Act 1977 assign to the Company all his interest in improvements inventions, discoveries, processes, systems and designs, sole or joint which he or he and others may make during the continuance of this Agreement including any registered or unregistered service or trade marks devised by the Executive pertaining to the operations or business for the time being of the Company or any other member of the Group or pertaining to or resulting from or suggested by any work which he has done or may during the continuance of this Agreement do for the Company or any other member of the Group whether or not such improvements inventions processes systems or designs are capable of being protected by letters patent or other similar protection. |
12.2 |
For the purpose of Clause 12.1 the Executive shall promptly disclose and deliver to the Company or as it may direct all information and data in his possession necessary to impart a full understanding of the said improvements inventions discoveries processes systems or designs and shall assist the Company or its nominees in every proper way without charge to but at the cost and expense of the Company in obtaining protection for the said improvements inventions discoveries processes systems or designs in any or all countries. |
12.3 |
All such improvements inventions discoveries processes system and designs shall be and remain the property of the Company whether patented or not and the Executive shall, during or after the employment, without charge to but at the cost and expense of the Company execute and do all such acts matters documents and things as may be necessary or reasonably required to obtain patent or other protection for the said improvements inventions processes systems or designs and to vest title to them in the Company (or such company as it may direct) absolutely. |
12.4 |
The Executive (to the extent that the same does not vest in the Company or any member of the Group by operation of law or under this Agreement) hereby assigns to the Company with full title guarantee by way of present and future assignment of copyright all the rights title and interest of the Executive in and to the copyright in all material written or devised by the Executive either alone or jointly with any other person(s) during the course of his employment and relating to the operation or business for the time being or from time to time of the Company or any member of the Group or resulting from or suggested by any work which the Executive shall do pursuant to his employment or has already done prior to the date of this Agreement pursuant to his employment and all rights of action for damages for infringement of such copyright material to hold such rights throughout the world absolutely for the entire period of copyright and any renewals and extensions to that period. |
12.5 |
The Company shall be under no obligation to apply for or seek to obtain patent design or other protection in relation to any such improvement, invention, design, discovery process or system as aforesaid or in any way to use, exploit or seek to benefit from any such improvement, invention, process, system, design discovery and/or copyright. |
12.6 |
The provisions of Clauses 12.1, 12.2 and 12.3 shall not exclude or limit Sections 40 and 41 Patents Act 1977. |
12.7 |
The Executive hereby irrevocably and unconditionally waives any and all moral rights under the Copyright Designs and Patents Act 1988 or any right of a similar nature under any law in any other jurisdiction in and to any and all material in any medium whatsoever written created or devised by him whether solely or jointly and pertaining to the operation or business of the Company or any company in the Group or resulting from or suggested by anything which the Executive shall do pursuant to his employment. |
12.8 |
The Executive hereby irrevocably appoints the Company to be his attorney in his name and on his behalf to execute any deeds and documents as aforesaid and generally to act and to use his name for the purpose of giving to the Company (or its nominee) the full benefit of the provisions of Clauses 12.1 to 12.4 and in favour of any third party a certificate in writing signed by any director or the secretary of the Company that any instrument or act falls within the authority hereby conferred shall be conclusive evidence that such is the case. |
12.9 |
The provisions of this Clause 12 shall not be affected by reason of the termination of this Agreement for whatever reason and shall continue thereafter. |
13. |
TERMINATION |
13.1 |
The Company shall be entitled to terminate this Agreement by summary notice in writing without liability for compensation or damages (save under Clause 13.1.1 where the Company shall comply with any obligation to give statutory minimum notice) if the Executive: |
13.1.1 |
has at any time become or is unable properly to perform his duties hereunder by reason of ill health or accident either for a period or periods aggregating at least 180 working days in any period of 12 consecutive calendar months; |
13.1.2 |
is guilty of any material or persistent breach of a material term of this Agreement other than a breach which (being capable of remedy) is remedied by him within 14 days upon his being called upon to do so in writing by the Board; |
13.1.3 |
is guilty of any misconduct which in the reasonable opinion of the Board brings himself or the Company or any member of the Group into disrepute or seriously damages any commercial relationship which the Company or any member of the Group has with its customers; |
13.1.4 |
commits an act of bankruptcy or compounds with his creditors generally; |
13.1.5 |
is convicted of any criminal offence other than a minor motoring offence which does not render him unable to discharge his duties; |
13.1.6 |
becomes of unsound mind or a patient for the purpose of any statute relating to mental health; |
13.1.7 |
becomes prohibited by law from being a company director; and/or |
13.1.8 |
shall resign (at his own choice) as a statutory director of the Company, not being at the request of the Company or Board. |
This list is not exhaustive.
13.2 |
The Company reserves the right to suspend the Executive on full pay from his duties for such a period as may be reasonably necessary to investigate any allegation of any misconduct. Further examples of misconduct are set out in the Company's disciplinary policy. |
13.3 |
The termination by the Company of this Agreement shall be without prejudice to any claim which the Company may have for damages arising from any breach thereof by the Executive giving rise to such termination. |
13.4 |
If before the expiry or termination of this Agreement it shall be terminated by reason of the winding up of the Company or otherwise for the purpose of reconstruction or amalgamation and the Executive shall be offered employment with any company concern or undertaking resulting from such reconstruction or amalgamation on terms which are not materially less favourable to him than the terms of this Agreement then he shall have no claim against the Company in respect of the termination of this Agreement. |
13.5 |
Upon termination of this Agreement for whatsoever reason: |
13.5.1 |
the Executive shall deliver up to the Company all notes memoranda and other correspondence documents papers, computer discs and property belonging to or containing material relating to the Company or any other member of the Group which may have been prepared by him or have come into his possession and shall not retain any copies thereof and shall not permit the same to be used by any party; and |
13.5.2 |
without prejudice to any rights of the Executive to compensation damages or otherwise the Executive shall forthwith upon the request of the Company resign from office as a director of the Company and from all offices held by him in any other member of the Group. If the appropriate resignations are not signed and delivered by the Executive to the Board within seven days after such request the Board may appoint any one of its members to sign the notices of resignation as attorney for and on behalf of the Executive and the Executive hereby irrevocably appoints any of the other members of the Board as his attorney for such purpose and to do all other things requisite to give effect thereto. |
13.6 |
It shall be a condition of participation in any share option, share award, share purchase or other share based scheme from time to time operated by the Company or any other company in the Group in which the Executive participates or shall be entitled to participate that, in the event of the termination of the Executive's employment with the Company for whatever reason whether lawful or not, in circumstances which could give rise to a claim for wrongful and/or unfair dismissal (whether or not it is known at the time of dismissal that such a claim may ensue), the Executive shall not by virtue of such dismissal become entitled to any damages or any additional damages in respect of any rights or expectations of whatsoever nature he may have under any such schemes. |
13.7 |
The Executive will be required to execute a Settlement Agreement , within 14 days of when the Executive is provided notice that his employment is terminated, in order for the Executive to continue to receive his Salary, any payments or benefits to which he may be entitled under the Retention Plan or the Change in control Plan, or any other compensation or benefits to which the Executive may be entitled pursuant to the terms of this Agreement, after the Executive is provided notice by the Company that his employment is terminated, other than Salary, compensation, or benefits accrued for service provided through the date of such notice. |
14. |
RESTRICTIONS |
14.1 |
The Executive agrees, without prejudice to any other duty implied by law or equity that he will not, directly or indirectly, without the express written consent of the Board for his own account or for any other person, firm or company: |
14.1.1 |
for a period of twelve months from the Termination Date (the "Restricted Period'') carry on or be engaged or concerned or interested in any business concerning Restricted Products and/or Restricted Services in competition with any Relevant Company in any country in which such Relevant Company is conducting such business at the Termination Date; provided, that the Restricted Period shall be reduced by any period of notice prior to the Termination Date provided pursuant to Section 2.2 hereof; |
14.1.2 |
for the Restricted Period employ in any capacity or offer employment in any capacity to or enter into or offer to enter into partnership with any Director and/or Senior Employee; |
14.1.3 |
for the Restricted Period in competition with any Relevant Company, canvas or solicit business orders or custom for Restricted Products or Restricted Services from, or deal with any Restricted Persons; |
14.1.4 |
for the Restricted Period solicit or entice away or endeavour to entice away from any Relevant Company any Director and/or Senior Employee; |
14.1.5 |
for the Restricted Period entice or endeavour to entice away from any Relevant Company any Restricted Person or induce or attempt to induce any Supplier of any Relevant Company to cease to supply or to restrict or vary the terms of supply to the Relevant Company; |
14.1.6 |
at any time following the Termination Date or, if sooner, the cessation of his directorship of a Relevant Company, represent himself or permit himself to be held out as being in anyway connected with or interested (except as a shareholder or consultant if that is the case) in the business of such company; or |
14.1.7 |
at any time following the Termination Date publish or otherwise communicate any disparaging or derogatory statements whether in writing or otherwise concerning the Relevant Company or any of their officers or employees or consultants. |
14.2 |
The Executive shall not induce procure or authorise any other person firm corporation or organisation to do or procure to be done anything which if done by the Executive would be a breach of any of the provisions of Clause 14.1. |
14.3 |
The period of the restrictions set out in Clause 14.1 above shall be reduced pro rata by any period during which the Company suspends the Executive from the performance of his duties pursuant to Clause 3.8 above. |
14.4 |
Each of the restrictions contained in Clause 14.1 shall be construed as separate restrictions and are considered reasonable by the Executive but in the event that any such restriction shall be found to be void but would be valid if some part thereof were deleted or the period or area of application reduced such restriction shall apply with such modification as may be necessary to make it valid and effective. |
15. |
PRIOR AGREEMENTS |
15.1 |
This Agreement shall take effect on and from the Commencement Date as from which date all other agreements or arrangements whether written or oral express or implied between the Executive and the Company or any member of the Group relating to the services or employment of the Executive shall be deemed to have been cancelled. |
16. |
DISCIPLINARY AND GRIEVANCE PROCEDURE |
16.1 |
A copy of the disciplinary and grievance rules of the Company for the time being in force can be obtained from the Human Resources Department of the Company on request. |
16.2 |
If the Executive wishes to seek redress of any grievance relating to his employment he should apply in the first instance to the Chief Executive of the Company. |
16.3 |
For the avoidance of doubt, to the extent permitted by law: |
16.3.1 |
any disciplinary or grievance procedure adopted by the Company shall be of a policy nature only; |
16.3.2 |
the Company reserves the right to changes these policies from time to time; and |
16.3.3 |
the Company may apply these policies to the extent it sees fit at its sole discretion in the circumstances. |
17. |
GENERAL |
17.1 |
Any notices required to be given under the provisions of this Agreement shall be in writing and shall be deemed to have been duly served if hand delivered or sent by facsimile by first class registered or recorded delivery post correctly addressed to the relevant party's address as specified in this Agreement or at such other address as either party may designate from time to time in accordance with this Clause. |
17.2 |
Any notice under this Agreement shall be deemed to have been served: |
17.2.1 |
if hand delivered, at the time of delivery; |
17.2.2 |
if sent by facsimile, within eight hours of transmission during business hours at its destination or within 24 hours if not within business hours but subject to proof by the sender that he holds an acknowledgement from the addressee confirming receipt of the transmitted notice in readable form; and |
17.2.3 |
if sent by post, within 48 hours of posting (exclusive of the hours of Sunday); |
17.3 |
There are no collective agreements which affect the terms and conditions of the Executive's employment. |
17.4 |
The construction validity and performance of this Agreement shall be governed by and construed in accordance with the laws of England. Each party irrevocably submits to the exclusive jurisdiction of the courts of England over any claim or matter arising under or in connection with the Agreement or the legal relationships established by it. |
IN WITNESS whereof these presents have been duly executed as a Deed by the Executive and under hand by the Company the day and the year first above written.
EXECUTED and DELIVERED as |
||
a DEED by MR JOHN MCALISTER |
) |
/s/ John McAlister |
in the presence of: /s/ Gordan M Bentham |
) |
|
Name of witness, please print Gordan M Bentham |
) |
|
Date 29 September 2021 |
) |
|
SIGNED by |
) |
/s/ Alistair Geddes |
a director duly authorised for an on behalf |
||
of EXPRO NORTH SEA LTD |
||
in the presence of: /s/ Anthony Cooke |
) |
|
Name of witness, please print Anthony Cooke |
) |
|
Date 30 September 2021 |
) |
Exhibit 10.12
SEPARATION AGREEMENT AND RELEASE
This Separation Agreement and Release (“Agreement”) is by and between Michael Kearney (“Employee”) and Expro Group Holdings N.V. f/k/a Frank’s International N.V. and its affiliated or subsidiary/parent/related companies (collectively referred to as the “Company”). Employee and the Company are collectively referred to as “the Parties.”
1. Separation Date. Employee separated from his employment with Frank’s International, LLC (“Employer”) effective October 01, 2021 (“Separation Date”) and, as of the Separation Date, Employee was no longer employed by Employer or any other entity within the definition of “Company” herein.
2. Severance Benefits Provided to Employee. Subject to Employee’s timely entry into this Agreement, continued compliance with this Agreement, and compliance with the Expro Group Holdings N.V. f/k/a Frank’s International N.V. Amended and Restated U.S. Executive Change-in-Control Severance Plan (“Plan”), the Expro Group Holdings N.V. f/k/a Frank’s International N.V. Executive Change-in-Control Severance Plan Participation Agreement to which Employee is a party (the “Participation Agreement”), the Expro Group Holdings N.V. f/k/a Frank’s International N.V. U.S. Employee Restricted Stock Unit (RSU) Agreement to which Employee is a party (the “RSU Agreement”) and any other agreements with the Company, the Company will provide the following severance benefits (“Severance Benefits”) to Employee:
(a) A cash payment of $3,000,000.00, payable under Section 3 of the Plan in ten (10) equal monthly installments on the last business day of each of the ten (10) calendar months following the date that is sixty (60) days after the Separation Date;
(b) A lump sum cash payment of $22,500.00, which may be used to pay COBRA premiums following termination, payable under Section 3 of the Plan in a lump sum on the last business day of the month that is sixty (60) days after the Separation Date;
(c) A lump sum cash payment of $562,500.00, which equals a prorated portion of Employee’s target annual bonus for the year of termination, payable under Section 3 of the Plan in a lump sum on the last business day of the month that is sixty (60) days after the Separation Date;
(d) Accelerated vesting to the Separation Date of a minimum of 1,909,838 shares under outstanding equity awards previously granted to Employee, calculated pursuant to the terms of the outstanding award agreements and the Offer Letter (as such term is defined below), which provide for (i) 100% vesting of all outstanding time-based awards and (ii) vesting of outstanding performance-based awards at a level equal to the greater of actual performance through the Separation Date or the 100% target payout level under the applicable award agreement, such final amount of shares to be determined and communicated to Employee within fifteen (15) business days following the Separation Date; and
(e) Outplacement assistance benefits up to $15,000.00, payable under the Section 1.6 of the Participation Agreement directly to the vendor of such outplacement assistance.
Except with respect to the treatment of outstanding equity awards described in Section 2(d) of this Agreement, which shall be paid as described in that certain Employment Offer Letter dated as of September 25, 2017 between the parties hereto and as amended March 3, 2021 (the “Offer Letter”), the Severance Benefits will be paid to Employee as defined and described in Section 3 of the Plan and Section 1 of the Participation Agreement (providing for payment to be made or to commence no earlier than sixty (60) days after termination of employment, subject to the execution and non-revocation of this Agreement). Employee understands and acknowledges that the Severance Benefits are made available to him pursuant to the Plan and the Offer Letter and that Employee is not otherwise entitled to any other severance pay or benefits. Severance Benefits are not payable under the terms of the Plan unless and until Employee signs and returns this Agreement to the Company and does not revoke this Agreement in the time provided herein to do so.
Notwithstanding that Employee’s employment ends as of the Separation Date, Employee shall be entitled pursuant to the RSU Agreement to satisfy any tax withholding obligations that may arise upon lapse of restrictions (vesting) or on delivery of any shares described in Section 2(d) above through withholding of shares as described in Section 4 of the RSU Agreement.
3. Compensation Paid in Final Paycheck. Employee acknowledges that, in addition to the Severance Benefits provided in Section 2, that Employee has already received or will receive by the date required by applicable law, his final paycheck (“Final Paycheck”) including his salary owed for all work performed through the Separation Date and any unused but accrued earned paid time off for vacation as existed on the Separation Date. Once this Final Paycheck is paid, Employee represents that he will have received all compensation due to him, including salary, bonuses, or any other compensation or benefits to which Employee is or has been entitled for all services provided by Employee to the Company through the Separation Date, other than the Severance Benefits provided in Section 2. Employee further acknowledges and represents that Employee has received all leaves (paid and unpaid) that Employee has been entitled to receive from the Company.
4. Release of all Claims and Promise Not to Sue. In entering into this Agreement, Employee hereby voluntarily and knowingly waives, releases, and discharges the Company, each of the current and former parent, predecessor, successor, subsidiary, and affiliated companies of each entity within the “Company” definition, and each of the foregoing entities’ respective current and former employees, officers, directors, managers, members, partners, owners, agents, representatives, and assigns (collectively the “Released Parties”) from all claims, liabilities, demands, and causes of action, known or unknown, fixed or contingent, which Employee may have or claim to have against any of them as a result of Employee’s employment, engagement or affiliation and/or termination from employment, engagement or affiliation and/or as a result of any other matter arising through the date that Employee signs this Agreement. Employee agrees not to file a lawsuit against any Released Parties to assert any such released claims, and Employee agrees not to accept any monetary damages or other personal relief (including legal or equitable relief) in connection with any administrative agency report, disclosure, claim, or lawsuit filed by any person or entity or governmental agency with the exception of the same in connection with a report or disclosure to the Securities and Exchange Commission (“SEC”). Employee represents he has not made, transferred, or assigned any rights to the claims released in this Agreement and that he has not brought any suit, charge, claim or other action with respect to any claims released herein. This waiver, release and discharge includes, but is not limited to:
(a) claims arising under federal, state, or local laws regarding employment or prohibiting employment discrimination or retaliation such as, without limitation, Title VII of the Civil Rights Act of 1964, the Equal Pay Act, the Age Discrimination in Employment Act (including as amended by the Older Workers’ Benefit Protection Act), the Genetic Information Nondiscrimination Act, the Occupational Safety and Health Act, the National Labor Relations Act, the Civil Rights Act of 1866 (42 U.S.C. § 1981), the Americans with Disabilities Act, the Fair Labor Standards Act, the Family and Medical Leave Act (FMLA), Chapters 21, 61 and 451 of the Texas Labor Code, all employment and civil rights portions of any Texas or Louisiana statutes or applicable law, the Comprehensive Omnibus Budget Reconciliation Act of 1985 (COBRA), the Worker Adjustment and Retraining Notification (WARN) Act;
(b) claims for breach of oral or written contract, whether express or implied, and claims for promissory estoppel or quantum meruit;
(c) claims for personal injury, harm, or other damages (whether intentional or unintentional and whether occurring on the job or not, including, without limitation, negligence, defamation, misrepresentation, fraud, intentional infliction of emotional distress, assault, battery, invasion of privacy, and other such tort or injury claims);
(d) claims growing out of any restrictions on the Company’s right to terminate employment of its employees including any claims based on any violation of public policy or retaliation for taking a protected action;
(e) claims regarding any restrictions on the Company’s right to enforce any of Employee’s post-termination obligations regarding non-disclosure, non-disparagement, non-competition, non-solicitation, and non-interference;
(f) claims for wages, overtime pay, bonuses, incentive compensation, vacation pay, or any other form of compensation;
(g) claims for compensation and/or benefits under any severance plans or programs, except for the Severance Benefits; or
(h) claims for benefits including, without limitation, those arising under the Employee Retirement Income Security Act.
NOTHING IN THIS AGREEMENT SHALL WAIVE OR MODIFY THE FOLLOWING RIGHTS IF EMPLOYEE OTHERWISE HAS SUCH RIGHTS:
(i) any right or claim provided under this Agreement;
(j) any right or claim which is not waivable as a matter of law;
(k) any right to seek unemployment compensation benefits if Employee is otherwise qualified or believes that Employee is otherwise qualified under applicable law (provided, however, the Company may provide accurate information in response to any such application);
(l) any rights regarding a pending workers’ compensation claim or any right to seek workers’ compensation benefits, however, Employee states that he has no unfiled workers’ compensation claim or unreported injury, and Employee acknowledges that the Company may provide accurate information in response to any such claim; or
(m) any claim based on facts occurring after the date this Agreement is signed by Employee.
5. Employee’s Release of Age Discrimination Claims. In addition, Employee acknowledges the following:
(a) This Agreement is written in a manner calculated to be understood by Employee and that Employee in fact understands the terms, conditions, and effect of this Agreement.
(b) This Agreement refers to rights or claims arising under the Age Discrimination in Employment Act, including as amended by the Older Workers’ Benefit Protection Act.
(c) Employee does not waive rights or claims that may arise after the date this Agreement is executed.
(d) Employee waives rights or claims only in exchange for consideration in addition to anything of value to which Employee is already entitled.
(e) Employee has been advised, and is hereby advised in writing, to consult with an attorney prior to Employee executing the Agreement.
(f) Employee has forty-five (45) days in which to consider this Agreement before accepting, but need not take that long if the Employee does not wish to. Employee acknowledges that any decision to sign this Agreement before the forty-five (45) days have expired was done so voluntarily and not because of any fraud or coercion or improper conduct by Company.
(g) This Agreement allows a period of seven (7) days following Employee’s signature on the Agreement during which Employee may revoke this Agreement. This Agreement is not effective until after the revocation period has been exhausted without any revocation by Employee. No payments shall be made until after the Agreement becomes effective.
(h) Employee fully understands all of the terms of this waiver agreement and knowingly and voluntarily enters into this Agreement.
(i) Employee has been given this Agreement to consider on October 01, 2021. Any notice of acceptance or revocation must be made by Employee to the Company as specified in the Notices section at the end of this Agreement.
6. Employee’s Representations. Employee expressly represents and warrants that he is, and will continue to be, in full compliance with any non-disclosure, non-disparagement, non-competition, and non-solicitation obligations owed to the Company under any agreement or applicable law.
7. Non-Disclosure of Confidential Information. Employee acknowledges that he has had access to confidential, proprietary, or competitively valuable information of or regarding the Company (collectively, “Confidential Information”), including without limitation such information obtained by Employee during the course of Employee's employment or affiliation with the Company. In entering into this Agreement, Employee reaffirms all of Employee’s obligations to the Company (whether arising from contract, statute, common law, or otherwise) with respect to the protection and non-disclosure of Confidential Information and provides the further acknowledgments and promises below.
(a) Confidential Information includes any information about the Company that has not been intentionally publicly disclosed by the Company. Confidential Information likewise includes all information provided to the Company by its customers, suppliers, contractors, subcontractors, business partners, joint venturers, agents, or representatives, which has not been intentionally publicly disclosed by these persons or entities. While Employee is obligated to comply with all non-disclosure requirements in place with the Company’s customers, suppliers, contractors, subcontractors, business partners, joint venturers, agents or representatives, the obligations under this Agreement are broader and apply to any non-public information the Company or Employee receives from or has access to regarding these third parties, regardless of whether the Company is contractually obligated to a third party to keep such information confidential. Confidential Information subject to the protections and restrictions described herein includes, without limitation, information relating to the services, products, policies, practices, pricing, costs, suppliers, vendors, methods, processes, techniques, finances, administration, employees, devices, trade secrets and operations of the Company, any inventions, modifications, discoveries, designs, developments, improvements, processes, software programs, work of authorship, documentation, formula, data, technique, know-how, secret or intellectual property right by any Company employee, Company customers or potential customers, marketing, sales activities, development programs, promotions, manufacturing, machining, drawings, future and current plans regarding business and customers, e-mails, notes, manufacturing documents, engineering documents, formulas, financial statements, bids, project reports, handling documentation, machinery and compositions, all financial data relating to the Company, business methods, accounting and tracking methods, books, inventory handling procedure, credit, credit procedures, indebtedness, financing procedures, investments, trading, shipping, production, processing, welding, fabricating, assembling, renting, domestic and foreign operations, customer and vendor and supplier lists, data storage in any medium (electronic or hard copy) contact information, lab reports, lab work, and any data or materials used in and created during the development of any of the aforementioned materials or processes. Confidential Information does not include information that is, or becomes, generally available to the public other than as a result of a breach of any obligations that Employee has, or that any other individual or entity with a duty of confidentiality with respect to such information has, to the Company.
(b) Employee acknowledges that Confidential Information is confidential, proprietary, or competitively valuable, not known outside of the Company’s business, and is valuable, special and/or a unique asset of the Company which belongs to the Company and gives the Company a competitive advantage. If Confidential Information were disclosed to third parties or used by third parties and/or Employee, such disclosure or use would seriously and irreparably damage the Company and cause the loss of certain competitive advantages. Employee represents, warrants, and promises that he has not and will not disclose in any way, or use for Employee’s own benefit or for the benefit of anyone besides the Company, Confidential Information described above and obtained by Employee as part of his employment with the Company. Employee acknowledges that this promise of non-disclosure and non-use continues indefinitely and specifically does not expire at the end of Employee’s employment with the Company.
(c) Notwithstanding the foregoing, pursuant to the federal Defend Trade Secrets Act of 2016, an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (A) is made (1) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney and (2) solely for the purpose of reporting or investigating a suspected violation of law; (B) is made to the individual’s attorney in relation to a lawsuit for retaliation against the individual for reporting a suspected violation of law; or (C) is made in a complaint or other document filed in a lawsuit or proceeding, if such filing is made under seal. Nothing in this Agreement requires Employee to obtain prior authorization before engaging in any conduct described in this paragraph, or to notify the Company that he has engaged in any such conduct.
8. Reporting to Government Agencies. Nothing in this Agreement shall prevent Employee from filing a charge or making a disclosure or report of possible unlawful activity, including a challenge to the validity of this Agreement, with any governmental agency, including but not limited to the Equal Employment Opportunity Commission (“EEOC”), the National Labor Relations Board (“NLRB”), or the SEC, or from participating in any investigation or proceeding conducted by the EEOC, NLRB, SEC, or any federal, state or local agency, or from otherwise making disclosures that are protected under the whistleblower provisions of applicable law. This Agreement does not impose any condition precedent (such as prior disclosure to the Company), any penalty, or any other restriction or limitation adversely affecting Employee’s rights regarding any governmental agency disclosure, report, claim or investigation. Employee understands and recognizes, however, that even if a report or disclosure is made or a charge is filed by him or on his behalf with a governmental agency other than the SEC, Employee will not be entitled to any damages or payment of any money or other relief personal to him relating to any event which occurred prior to his execution of this Agreement.
9. Non-Disparagement. Employee agrees that he shall not at any time make, publish, or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments or statements concerning the Company or its businesses, business practices, or any of its employees or officers, and existing and prospective customers, suppliers, investors and other associated third parties. This Section does not apply to or in any way restrict or impede Employee from any communications with government agencies as stated above, or complying with any applicable law or court order, or exercising whistleblower or other protected non-waivable legal rights.
10. Section 409A Compliance. It is intended that the severance benefits and other payments payable under this Agreement satisfy, to the greatest extent possible, the exemptions from the application of Section 409A of the Internal Revenue Code of 1986, as amended, provided under Treasury Regulations Sections 1.409A-1(b)(4), 1.409A-1(b)(5), and 1.409A-(b)(9) and this Agreement will be construed to the greatest extent possible as consistent with those provisions. To the extent any amount paid under this Agreement is subject to Section 409A, the commencement of payment or provision of any payment or benefit under this Agreement shall be deferred to the minimum extent necessary to prevent the imposition of any excise taxes or penalties on the Company or Employee. Although the Company shall use its best efforts to avoid the imposition of taxation, interest and penalties under Section 409A, the tax treatment of the benefits provided under this Agreement is not warranted or guaranteed. Neither the Company, its affiliates, nor their respective directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by Employee or other taxpayer as a result of the Agreement.
11. Return of Confidential Information and Company Property. All written, electronic, or other data, materials, records and other documents made by, or coming into the possession or control of, Employee, which contain or disclose Confidential Information shall be and remain the property of the Company. Employee expressly represents and agrees that he has returned to the Company, without deletion, copying, or alteration, all property (including property purchased or paid for by the Company in Employee’s possession, custody or control) which belongs to the Company, including any keys, access cards, computers, cell phones, pagers, or other equipment and all written or electronic materials, data, information, records, and any other property in Employee’s possession or control, whether located on or off Company premises, which may concern the Company, its current or potential customers, vendors or suppliers, whether or not confidential or proprietary in nature; provided, however, that Employee shall be entitled to retain his current Company cell phone at no expense to the Company, and provided further, that Employee shall not be required to return written or electronic materials, data, information, records for so long as he continues to serve on the Company’s board of directors. Employee shall immediately report to Company any passwords for Employee’s computer or other access codes for anything associated with Employee’s employment with Company.
12. Post-Employment Cooperation. Employee agrees to make reasonable efforts to assist Company after the Separation Date, including but not limited to, transitioning of Employee’s job duties as well as assisting with any legal proceeding or lawsuit or claim involving matters occurring during his/her employment with Company; provided, however, that Employee shall be promptly reimbursed for any out of pocket expenditures incurred in connection with such assistance.
13. Neutral Reference. For reference inquiries directed to Employer’s Human Resources department, Employer shall provide a neutral reference regarding Employee’s employment, including Employee’s position and dates of employment and base pay. The Company will not be required to respond to, nor is it responsible for, reference inquiries or responses to such inquiries not directed to Employer’s Human Resources department.
14. Entire Agreement. Employee has carefully read and fully understands all of the terms of this Agreement. Employee agrees that this Agreement sets forth the entire agreement between the Company and Employee regarding all issues involving his termination of employment except that it does not replace or alter in any way any obligations Employee owes to the Company under applicable law, or owed under any agreements (or arising from any other obligation) regarding confidentiality, non-disclosure, non-disparagement, non-solicitation, non-competition, duties of loyalty or fiduciary duty. Applicable laws may include, but are not limited to, federal and state laws protecting Company trade secrets or other confidential information. Employee further understands that this Agreement does not alter or replace any of the terms or obligations of the Plan.
15. No Admission. Employee understands this Agreement is not and shall not be deemed or construed to be an admission by the Company of any wrongdoing of any kind or of any breach of any contract, law, obligation, policy, or procedure of any kind or nature.
16. Injunctive Relief. Employee acknowledges that damages would be difficult to calculate and/or wholly inadequate for certain breaches of this Agreement. The Company may seek immediate injunctive or other equitable relief to enforce the terms of this Agreement, in addition to any legal or other relief to which the Company may be entitled, including damages and attorneys’ fees.
17. Representations; Modifications; Severability. Employee acknowledges that he has not relied upon any representations or statements, written or oral, not set forth in this Agreement. This Agreement cannot be modified except in writing and signed by Employee and an authorized representative of Employer and Expro Group Holdings N.V. f/k/a Frank’s International N.V. The foregoing notwithstanding, if any part of this Agreement is found to be unenforceable by a court of competent jurisdiction, then such unenforceable portion will be modified to be enforceable, or severed from this Agreement if it cannot be modified, and such modification or severance shall have no effect upon the remaining portions of the Agreement which shall remain in full force and effect.
18. Applicable Law; Venue; Waiver of Jury Trial. This Agreement shall be governed by and interpreted under the laws of the State of Texas without regard to conflict of laws. The parties agree that any dispute concerning this Agreement shall be brought only in a court of competent jurisdiction in Harris County, Texas, unless another forum or venue is required by law. The Company and Employee agree to waive a trial by jury of any or all issues arising under or connected with this Agreement, and consent to trial by the judge.
To the extent Employee shall prevail in any proceeding pursuant to this Section 18 to resolve any dispute or controversy between Employee and the Company arising under or in connection with this Agreement, then the Company shall reimburse Employee, or pay on Employee’s behalf, all of Employee’s reasonable expenses, including without limitation attorneys’ fees, incurred by Employee in connection with the proceeding or arbitration, it being understood that any claim under this Agreement relating to Employee’s right to payments under the Plan shall be subject to the Plan’s claims procedures, which must be exhausted prior to Employee bringing any cause of action with respect to the payment of Plan benefits.
19. Successors and Assigns. This Agreement may be assigned by the Company to an affiliate, provided that the Company shall not be relieved of its obligations under this Agreement, and shall be binding upon and shall inure to the benefit of Employer, Expro Group Holdings N.V. f/k/a Frank’s International N.V., and each other entity within the definition of “Company” herein, and automatically to any other person, association, or entity which may hereafter acquire or succeed to all or substantially all of the business or assets of the Company by any means whether direct or indirect, by purchase, merger, consolidation, or otherwise and which expressly assumes and agrees to perform this Agreement. Employee’s obligations under this Agreement are personal and such obligations of Employee shall not be voluntarily or involuntarily assigned, alienated, or transferred by Employee without the prior written consent of Expro Group Holdings N.V. f/k/a Employer and Frank’s International N.V., and Employee represents no such rights have previously been transferred.
20. Notices. For purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall considered as effective (i) when received if delivered personally or by courier; or (ii) on the date receipt is acknowledged if delivered by (a) certified mail, postage prepaid, return receipt requested, or (b) e-mail, with confirmation receipt required, as follows:
If to Employee, addressed to: the last known residential address reflected in the Company’s records.
If to the Company or Employer, addressed to: | Expro Group Holdings N.V. |
1311 Broadfield Blvd, Suite 400 | |
Houston, TX 77084 | |
Attention: Natalie Questell, Senior Vice President of Human Resources | |
E-mail: Natalie.Questell@expro.com |
Notice of change in address should be provided as stated in this section.
21. Interpretation. All references herein to an agreement, instrument or other document or statute or other applicable law shall be deemed to refer to such agreement, instrument or other document or statute or other applicable law as amended, supplemented, modified and restated from time to time to the extent permitted by the provisions thereof. The word “or” as used herein is not exclusive and is deemed to have the meaning “and/or.” All references to “dollars” or “$” in this Agreement refer to United States dollars. The words “herein”, “hereof”, “hereunder” and other compounds of the word “here” shall refer to the entire Agreement, and not to any particular provision hereof. The use herein of the word “including” following any general statement, term or matter shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation”, “but not limited to”, or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter. Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against any party hereto, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by each of the parties hereto and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of the parties hereto.
AGREED AND ACCEPTED on this 15th day of October, 2021.
/s/ Michael C. Kearney
Employee Signature
Michael C. Kearney
Employee Printed Name
AGREED AND ACCEPTED on this 15th day of October, 2021.
Expro Group Holdings N.V.
f/k/a Frank’s International N.V.
By: /s/ Natalie E. Questell
Printed Name: Natalie E. Questell
Printed Title: SVP, HR
Exhibit A
You and other designated employees of the Company were selected for a separation from employment that will occur on or about October 01, 2021. Eligible employees for this program include: Chief Executive Officers. All employees 40 and over who are selected for separation under this program are being given forty-five (45) days to consider whether to accept the separation pay and sign the Separation Agreement and Release and also are being given seven (7) days to revoke this Agreement after signing it.
The job titles and ages of all individuals in the above-referenced category who have been considered for this separation program, as well as the decision for each regarding selection, is provided below:
Location |
Unit |
Job Title |
Age |
Number Selected 10/01/2021 |
Number Not Selected |
Houston, TX |
CEO |
Chief Executive Officer |
51 |
1 |
1 |
Exhibit 10.13
EXPRO GROUP HOLDINGS N.V.
U.S. EMPLOYEE SEPARATION AGREEMENT AND RELEASE
This Separation Agreement and Release (“Agreement”) is by and between Melissa Cougle (“Employee”) and Expro Group Holdings N.V. and its affiliated or subsidiary/parent/related companies (collectively referred to as the “Company”). Employee and the Company are collectively referred to as “the Parties.”
1. Separation Date. Employee separated from his/her employment with the Company effective November 01, 2021. (“Separation Date”).
2. Severance Benefits Provided to Employee. Only in exchange for Employee’s promises made by signing this Agreement, continued compliance with this Agreement, and compliance with the Amended and Restated U.S. Executive Change-in-Control Severance Plan (“Plan”), the Company will provide the following severance benefits (“Severance Benefits”) to Employee:
(a) A cash payment of $1,600,000.00;
(b) A lump sum of $22,500.00, which may be used to pay COBRA premiums following termination;
(c) A lump sum of $332,000.00 which equals 100% of the Employee’s target annual bonus for the year of termination;
(d) Accelerated vesting to the Separation Date of a minimum of 56,059 shares under outstanding equity awards previously granted to Employee, calculated pursuant to the terms of the outstanding award agreements and the Offer Letter (as such term is defined below), which provide for (i) 100% vesting of all outstanding time-based awards and (ii) vesting of outstanding performance-based awards at a level equal to the greater of actual performance through the Separation Date or the 100% target payout level under the applicable award agreement, such final amount of shares to be determined and communicated to Employee within fifteen (15) business days following the Separation Date; and
(e) Outplacement assistance benefits of $15,000.00
The Severance Benefits will be paid to Employee as defined and described in Section 3 of the Amended and Restated U.S. Executive Change-in-Control Severance Plan (providing for payment in ten (10) equal monthly installments following sixty (60) days after termination of employment, subject to the execution and non-revocation of this Agreement). Employee understands and acknowledges that the Severance Benefits are made available to him/her pursuant to the Plan and that Employee is not otherwise entitled to any other compensation or severance pay or benefits. Severance Benefits are not payable under the terms of the Plan unless and until Employee signs and returns this Agreement to the Company, and does not revoke the Agreement.
3. Compensation Paid in Final Paycheck. Employee acknowledges that in addition to the Severance Benefits provided in Section 2, that Employee has already or will receive by the date required by applicable law, his/her final paycheck (“Final Paycheck”) including his/her salary or hourly wages owed for time worked through the Separation Date and any unused but accrued/earned paid time off for vacation. If paid hourly, Employee represents that he/she has reported all hours worked and that he/she has been paid for all hours worked, including all overtime. Once this Final Paycheck is paid, Employee represents that he/she will have received all compensation due to him/her, including salary, bonuses, or any other compensation or benefits which Employee believes are owed for any time worked through the Separation Date.
Separation Agreement and Release
4. Release of all Claims and Promise Not to Sue. In return for Company’s promises in this Agreement, Employee voluntarily and knowingly hereby waives, releases, and discharges the Company, its current and former parent, predecessor, successor, subsidiary, and affiliate companies, and all of their current and former employees, officers, directors, owners, agents and assigns (collectively the “Released Parties”) from all claims, liabilities, demands, and causes of action, known or unknown, fixed or contingent, which Employee may have or claim to have against any of them as a result of Employee’s employment and/or termination from employment and/or as a result of any other matter arising through the date of Employee’s signature on this Agreement. In addition, if Employee continues to work for the Company after signing this Agreement, Employee agrees to sign a separate but similar release of all claims and promise not to sue on his/her Separation Date to cover anything occurring between the signing of this Agreement and the Separation Date. Employee agrees not to file a lawsuit against any Released Parties to assert any such released claims, and Employee agrees not to accept any monetary damages or other personal relief (including legal or equitable relief) in connection with any administrative agency report, disclosure, claim or lawsuit filed by any person or entity or governmental agency with the exception of the same in connection with a report or disclosure to the Securities and Exchange Commission (“SEC”). Employee represents he/she has not already made, transferred or assigned any rights to the claims released in this Agreement. This waiver, release and discharge includes, but is not limited to:
(a) claims arising under federal, state, or local laws regarding employment or prohibiting employment discrimination such as, without limitation, Title VII of the Civil Rights Act of 1964, the Equal Pay Act, the Age Discrimination in Employment Act, the Older Workers’ Benefit Protection Act, the Genetic Information Nondiscrimination Act, the Occupational Safety and Health Act, the National Labor Relations Act, the Civil Rights Act of 1866 (42 U.S.C. § 1981), the Americans with Disabilities Act, the Family and Medical Leave Act (FMLA), Chapters 21, 61 and 451 of the Texas Labor Code, all employment and civil rights portions of any Texas or Louisiana statutes or applicable law, Comprehensive Omnibus Budget Reconciliation Act of 1985 (COBRA), the Worker Adjustment and Retraining Notification (WARN) Act;
(b) claims for breach of oral or written contract, whether express or implied, promissory estoppel or quantum meruit;
(c) claims for personal injury, harm, or other damages (whether intentional or unintentional and whether occurring on the job or not, including, without limitation, negligence, defamation, misrepresentation, fraud, intentional infliction of emotional distress, assault, battery, invasion of privacy, and other such tort or injury claims);
(d) claims growing out of any legal restrictions on the Company’s right to terminate employment of its employees including any claims based on any violation of public policy or retaliation for taking a protected action;
(e) claims regarding any restrictions on the Company’s right to enforce any of Employee’s post-termination obligations regarding non-disclosure, non-disparagement, non-competition, non-solicitation, and non-interference;
(f) claims for wages, overtime, bonuses, incentive compensation, vacation pay, or any other form of compensation;
Separation Agreement and Release
(g) claims for compensation and/or benefits under any other severance plans or programs, except for the Plan referenced and incorporated in this Agreement; or
(h) claims for benefits including, without limitation, those arising under the Employee Retirement Income Security Act.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, NOTHING IN THIS AGREEMENT SHALL WAIVE OR MODIFY THE FOLLOWING RIGHTS IF EMPLOYEE OTHERWISE HAS SUCH RIGHTS:
(i) any right or claim provided under this Agreement;
(j) any right or claim which is not waivable as a matter of law;
(k) any right to seek unemployment compensation benefits if Employee is otherwise qualified under applicable law;
(l) any rights regarding a pending workers’ compensation claim, however, Employee states that he/she has no unfiled workers’ compensation claim or unreported injury; or
(m) any claim based on facts or events occurring after this Agreement is signed.
(f) any right to indemnification including but not limited to any rights arising from the Indemnification Agreement with Frank's International N.V. and/or Expro Group Holdings N.V.
5. Employee’s Release of Age Discrimination Claims. In addition, Employee acknowledges the following:
(a) This Agreement is written in a manner calculated to be understood by Employee and that Employee in fact understands the terms, conditions and effect of this Agreement.
(b) This Agreement refers to rights or claims arising under the Age Discrimination in Employment Act and Older Workers’ Benefit Protection Act.
(c) Employee does not waive rights or claims that may arise after the date this Agreement is executed.
(d) Employee waives rights or claims only in exchange for consideration in addition to anything of value to which Employee is already entitled.
(e) Employee is advised in writing to consult with an attorney prior to executing the Agreement.
(f) Employee has forty-five (45) days in which to consider this Agreement before accepting, but need not take that long if the Employee does not wish to. Employee acknowledges that any decision to sign this Agreement before the forty-five (45) days have expired was done so voluntarily and not because of any fraud or coercion or improper conduct by Company.
(g) This Agreement allows a period of seven (7) days following Employee’s signature on the agreement during which Employee may revoke this Agreement. This Agreement is not effective until after the revocation period has been exhausted without any revocation by Employee. No payments shall be made until after the Agreement becomes effective.
Separation Agreement and Release
(h) Employee fully understands all of the terms of this waiver agreement and knowingly and voluntarily enters into this Agreement.
(i) Employee has received and reviewed the disclosures contained on Exhibit A regarding the employees considered for separation from employment and the eligibility factors.
(j) Employee has been given this Agreement to consider on November 01, 2021. Any notice of acceptance or revocation should be made by Employee to the Company as specified in the Notices section at the end of this Agreement.
6. Employee’s Representations. Employee is, and will continue to be, in full compliance with any non-disclosure, non-disparagement, non-competition, and non-solicitation obligations owed to the Company Group (defined below), under any agreement or applicable law.
7. Non-Disclosure of Confidential Information. Employee acknowledges that he/she has had access to confidential information, training, and Company goodwill (“Confidential Information”) while employed by the Company, including without limitation, any information obtained by Employee during the course of Employee's employment with the Company, concerning the business or affairs of the Company and its subsidiary and affiliated companies (collectively referred to as the “Company Group”) or that of their customers, suppliers, contractors, subcontractors, agents or representatives.
(a) Confidential Information includes any information about the Company Group that has not been intentionally publicly disclosed by the Company Group. Confidential Information likewise includes all information provided to the Company Group by its customers, suppliers, contractors, subcontractors, business partners, joint venturers, agents or representatives, which has not been intentionally publicly disclosed by these persons or entities. While Employee is obligated to comply with all non-disclosure requirements in place with the Company Group’s customers, suppliers, contractors, subcontractors, business partners, joint venturers, agents or representatives, the obligations under this Agreement are broader and apply to any non-public information the Company Group or Employee receives from or has access to regarding these third parties, regardless of whether the Company Group is contractually obligated to a third party to keep such information confidential. Confidential Information includes, without limitation, information relating to the services, products, policies, practices, pricing, costs, suppliers, vendors, methods, processes, techniques, finances, administration, employees, devices, trade secrets and operations of the Company Group, any inventions, modifications, discoveries, designs, developments, improvements, processes, software programs, work of authorship, documentation, formula, data, technique, know-how, secret or intellectual property right by any Company Group employee, Company Group customers or potential customers, marketing, sales activities, development programs, promotions, manufacturing, machining, drawings, future and current plans regarding business and customers, e-mails, notes, manufacturing documents, engineering documents, formulas, financial statements, bids, project reports, handling documentation, machinery and compositions, all financial data relating to the Company Group, business methods, accounting and tracking methods, books, inventory handling procedure, credit, credit procedures, indebtedness, financing procedures, investments, trading, shipping, production, processing, welding, fabricating, assembling, renting, domestic and foreign operations, customer and vendor and supplier lists, data storage in any medium (electronic or hard copy) contact information, lab reports, lab work, and any data or materials used in and created during the development of any of the aforementioned materials or processes.
Separation Agreement and Release
(b) Employee acknowledges that this Confidential Information is confidential, proprietary, not known outside of the Company Group’s business, valuable, special and/or a unique asset of the Company Group which belongs to the Company Group and gives the Company Group a competitive advantage. If this Confidential Information were disclosed to third parties or used by third parties and/or Employee, such disclosure or use would seriously and irreparably damage the Company Group and cause the loss of certain competitive advantages. Employee promises he/she has not and will not disclose in any way, or use for Employee’s own benefit or for the benefit of anyone besides the Company Group, the Confidential Information described above and obtained by Employee as part of his/her employment with the Company. Employee acknowledges that this promise of non-disclosure and non-use continues indefinitely and specifically does not expire at the end of Employee’s employment with the Company.
8. Reporting to Government Agencies. Nothing in this Agreement shall prevent Employee from filing a charge or complaint or making a disclosure or report of possible unlawful activity, including a challenge to the validity of this Agreement, with any governmental agency, including but not limited to the Equal Employment Opportunity Commission (“EEOC”), the National Labor Relations Board (“NLRB”), or the SEC, or from participating in any investigation or proceeding conducted by the EEOC, NLRB, SEC, or any federal, state or local agency. This Agreement does not impose any condition precedent (such as prior disclosure to the Company), any penalty, or any other restriction or limitation adversely affecting Employee’s rights regarding any governmental agency disclosure, report, claim or investigation. Employee understands and recognizes, however, that even if a report or disclosure is made or a charge is filed by him/her or on his/her behalf with a governmental agency other than the SEC, Employee will not be entitled to any damages or payment of any money or other relief personal to him/her relating to any event which occurred prior to his/her execution of this Agreement.
9. Non-Disparagement. Employee agrees that he/she shall not at any time make, publish or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments or statements concerning the Company Group or its businesses, business practices, or any of its employees or officers, and existing and prospective customers, suppliers, investors and other associated third parties. The Company agrees that the current executive management team of the Company shall not at any time make, publish or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments or statements concerning Employee. This Section does not apply to or in any way restrict or impede Employee or the Company from any communications with government agencies as stated above, or complying with any applicable law or court order, or exercising whistleblower or other protected non-waivable legal rights.
10. Section 409A Compliance. It is intended that the severance benefits and other payments payable under this Agreement satisfy, to the greatest extent possible, the exemptions from the application of Section 409A of the Internal Revenue Code of 1986, as amended, provided under Treasury Regulations Sections 1.409A-1(b)(4), 1.409A-1(b)(5), and 1.409A-(b)(9) and this Agreement will be construed to the greatest extent possible as consistent with those provisions. To the extent any amount paid under this Agreement is subject to Section 409A, the commencement of payment or provision of any payment or benefit under this Agreement shall be deferred to the minimum extent necessary to prevent the imposition of any excise taxes or penalties on the Company or Employee. Although the Company shall use its best efforts to avoid the imposition of taxation, interest and penalties under Section 409A, the tax treatment of the benefits provided under this Agreement is not warranted or guaranteed. Neither the Company, its affiliates, nor their respective directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by Employee or other taxpayer as a result of the Agreement.
Separation Agreement and Release
11. Return of Confidential Information and Company Property. All confidential written, electronic, or other data, materials, records and other documents made by, or coming into the possession or control of, Employee, which contain or disclose Confidential Information shall be and remain the property of the Company. Employee agrees that he/she has returned to the Company, without deletion, copying, or alteration, all property (including property purchased or paid for by the Company in Employee’s possession, custody or control) which belongs to the Company, including any keys, access cards, computers, cell phones, pagers, or other equipment and all written or electronic materials, data, information, records, and any other property in Employee’s possession or control, whether located on or off Company premises, which may concern the Company, its current or potential customers, vendors or suppliers, whether or not confidential or proprietary in nature. Employee shall immediately report to Company any passwords for Employee’s computer or other access codes for anything associated with Employee’s employment with Company.
12. Post-Employment Cooperation. Employee agrees to make reasonable efforts to assist Company after his/her separation of employment, including but not limited to, transitioning of Employee’s job duties as well as assisting with any legal proceeding or lawsuit or claim involving matters occurring during his/her employment with Company. The Company agrees to reimburse Employee for any reasonable time, fees, costs and expenses Employee incurs related to any Company requests regarding transitioning Employee’s job duties.
13. Neutral Reference. For reference inquiries directed to Human Resources, the Company shall provide a neutral reference regarding Employee’s employment, including Employee’s position and dates of employment and base pay. Company will not respond to, nor is it responsible for, reference inquiries or responses to such inquiries not directed to Human Resources.
14. Entire Agreement. Employee has carefully read and fully understands all of the terms of this Agreement. Employee agrees that this Agreement sets forth the entire agreement between the Company and Employee regarding all issues involving his/her termination of employment except that it does not replace or alter in any way any obligations Employee owes to the Company under applicable law, or owed under any agreements regarding confidentiality, non-disclosure, non-disparagement, non-solicitation, non-competition, duties of loyalty or fiduciary duty. Applicable laws may include, but are not limited to, state laws protecting company trade secrets or other confidential information. Employee further understands that this Agreement does not alter or replace any of the terms or obligations of the Plan.
15. No Admission. Employee understands this Agreement is not and shall not be deemed or construed to be an admission by Company of any wrongdoing of any kind or of any breach of any contract, law, obligation, policy, or procedure of any kind or nature.
16. Injunctive Relief. Employee acknowledges that damages would be difficult to calculate and/or wholly inadequate for certain breaches of this Agreement. The Company may seek immediate injunctive or other equitable relief to enforce the terms of this Agreement, in addition to any legal or other relief to which Company may be entitled, including damages and attorneys’ fees.
17. Representations; Modifications; Severability. Employee acknowledges that he/she has not relied upon any representations or statements, written or oral, not set forth in this Agreement. This Agreement cannot be modified except in writing and signed by both parties. The foregoing notwithstanding, if any part of this Agreement is found to be unenforceable by a court of competent jurisdiction, then such unenforceable portion will be modified to be enforceable, or severed from this Agreement if it cannot be modified, and such modification or severance shall have no effect upon the remaining portions of the Agreement which shall remain in full force and effect.
Separation Agreement and Release
18. Applicable Law; Venue; Waiver of Jury Trial. This Agreement shall be governed by and interpreted under the laws of the State of Texas without regard to Conflict of Laws. The parties agree that any dispute concerning this Agreement shall be brought only in a court of competent jurisdiction in Harris County, Texas, unless another forum or venue is required by law. Both the Company and Employee agree to waive a trial by jury of any or all issues arising under or connected with this Agreement, and consent to trial by the judge.
19. Successors and Assigns. This Agreement may be assigned by the Company and shall be binding upon and shall inure to the benefit of the Company Group, and automatically to any other person, association, or entity which may hereafter acquire or succeed to all or substantially all of the business or assets of the Company Group by any means whether direct or indirect, by purchase, merger, consolidation, or otherwise. Employee’s obligations under this Agreement are personal and such obligations of Employee shall not be voluntarily or involuntarily assigned, alienated, or transferred by Employee without the prior written consent of the Company, and Employee represents no such rights have previously been transferred.
20. Notices. For purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall considered as effective (i) when received if delivered personally or by courier; or (ii) on the date receipt is acknowledged if delivered by (a) certified mail, postage prepaid, return receipt requested, or (b) e-mail, with confirmation receipt required, as follows:
If to Employee, addressed to: | the last known residential address reflected in the Company’s records. |
If to the Company/Employer, addressed to: | Expro Group Holdings N.V. |
1311 Broadfield Boulevard, Ste 400 | |
Houston, TX 77084 | |
Attention: Natalie Questell, Senior Vice President, | |
Human Resources | |
E-mail: Natalie.Questell@franksintl.com |
Notice of change in address should be provided as stated in this section.
AGREED AND ACCEPTED on this 2nd day of November, 2021.
/s/ Melissa Cougle
Employee Signature
Melissa Cougle
Employee Printed Name
AGREED AND ACCEPTED on this 10th day of November, 2021.
Expro Group Holdings N.V.
By: /s/ Natalie E. Questell
Printed Name: /s/ Natalie E. Questell
Printed Title: SVP, HR
Separation Agreement and Release
Exhibit A
You and other designated employees of the Company were selected for a separation from employment that will occur on or about October 05, 2021. Eligible employees for this program include: Houston Chief Financial Officers. All employees 40 and over who are selected for separation under this program are being given forty-five (45) days to consider whether to accept the separation pay and sign the Separation Agreement and Release and also are being given seven (7) days to revoke this Agreement after signing it.
The job titles and ages of all individuals in the above-referenced category who have been considered for this separation program, as well as the decision for each regarding selection, is provided below:
Location |
Unit |
Job Title |
Age |
Number Selected 10/05/2021 |
Number Not Selected |
Houston |
Corporate Executive Team |
Chief Financial Officer |
45 |
1 |
1 |
Houston |
Corporate Executive Team |
Chief Financial Officer |
58 |
0 |
1 |
Separation Agreement and Release
Exhibit 10.14
EXPRO GROUP HOLDINGS N.V.
U.S. EMPLOYEE SEPARATION AGREEMENT AND RELEASE
This Separation Agreement and Release (“Agreement”) is by and between John Symington (“Employee”) and Expro Group Holdings N.V. f/k/a Frank’s International N.V. and its affiliated or subsidiary/parent/related companies (collectively referred to as the “Company”). Employee and the Company are collectively referred to as “the Parties.”
1. Separation Date. Employee separated from his/her employment with the Company effective December 1, 2021. (“Separation Date”).
2. Severance Benefits Provided to Employee. Only in exchange for Employee’s promises made by signing this Agreement, continued compliance with this Agreement, and compliance with the Amended and Restated U.S. Executive Change-in-Control Severance Plan (“Plan”) and any other agreements with the Company, the Company will provide the following severance benefits (“Severance Benefits”) to Employee:
(a) A cash payment of $1,312,500.00;
(b) A lump sum of $22,500.00, which may be used to pay COBRA premiums following termination;
(c) A lump sum of $257,812.50, which equals 100% of the Employee’s target annual bonus for the year of termination;
(d) Accelerated vesting to the Separation Date of a minimum of 52,093 shares under outstanding equity awards previously granted to Employee, calculated pursuant to the terms of the outstanding award agreements and the Offer Letter (as such term is defined below), which provide for (i) 100% vesting of all outstanding time-based awards and (ii) vesting of outstanding performance-based awards at a level equal to the greater of actual performance through the Separation Date or the 100% target payout level under the applicable award agreement, such final amount of shares to be determined and communicated to Employee within fifteen (15) business days following the Separation Date; and
(e) Outplacement assistance benefits of $15,000.00
The Severance Benefits will be paid to Employee as defined and described in Section 3 of the Amended and Restated U.S. Executive Change-in-Control Severance Plan (providing for payment of the sum set forth in subsection (a) above in ten (10) equal monthly installments following sixty (60) days after termination of employment, subject to the execution and non-revocation of this Agreement). Employee understands and acknowledges that the Severance Benefits are made available to him/her pursuant to the Plan and that Employee is not otherwise entitled to any other compensation or severance pay or benefits. Severance Benefits are not payable under the terms of the Plan unless and until Employee signs and returns this Agreement to the Company, and does not revoke the Agreement.
3. Compensation Paid in Final Paycheck. Employee acknowledges that in addition to the Severance Benefits provided in Section 2, that Employee has already or will receive by the date required by applicable law, his/her final paycheck (“Final Paycheck”) including his/her salary or hourly wages owed for time worked through the Separation Date and any unused but accrued/earned paid time off for vacation. If paid hourly, Employee represents that he/she has reported all hours worked and that he/she has been paid for all hours worked, including all overtime. Once this Final Paycheck is paid, Employee represents that he/she will have received all compensation due to him/her, including salary, bonuses, or any other compensation or benefits which Employee believes are owed for any time worked through the Separation Date.
Separation Agreement and Release
4. Release of all Claims and Promise Not to Sue. In return for Company’s promises in this Agreement, Employee voluntarily and knowingly hereby waives, releases, and discharges the Company, its current and former parent, predecessor, successor, subsidiary, and affiliate companies, and all of their current and former employees, officers, directors, owners, agents and assigns (collectively the “Released Parties”) from all claims, liabilities, demands, and causes of action, known or unknown, fixed or contingent, which Employee may have or claim to have against any of them as a result of Employee’s employment and/or termination from employment and/or as a result of any other matter arising through the date of Employee’s signature on this Agreement. In addition, if Employee continues to work for the Company after signing this Agreement, Employee agrees to sign a separate but similar release of all claims and promise not to sue on his/her Separation Date to cover anything occurring between the signing of this Agreement and the Separation Date. Employee agrees not to file a lawsuit against any Released Parties to assert any such released claims, and Employee agrees not to accept any monetary damages or other personal relief (including legal or equitable relief) in connection with any administrative agency report, disclosure, claim or lawsuit filed by any person or entity or governmental agency with the exception of the same in connection with a report or disclosure to the Securities and Exchange Commission (“SEC”). Employee represents he/she has not already made, transferred or assigned any rights to the claims released in this Agreement. This waiver, release and discharge includes, but is not limited to:
(a) claims arising under federal, state, or local laws regarding employment or prohibiting employment discrimination such as, without limitation, Title VII of the Civil Rights Act of 1964, the Equal Pay Act, the Age Discrimination in Employment Act, the Older Workers’ Benefit Protection Act, the Genetic Information Nondiscrimination Act, the Occupational Safety and Health Act, the National Labor Relations Act, the Civil Rights Act of 1866 (42 U.S.C. § 1981), the Americans with Disabilities Act, the Fair Labor Standards Act, the Family and Medical Leave Act (FMLA), Chapters 21, 61 and 451 of the Texas Labor Code, all employment and civil rights portions of any Texas or Louisiana statutes or applicable law, Comprehensive Omnibus Budget Reconciliation Act of 1985 (COBRA), the Worker Adjustment and Retraining Notification (WARN) Act;
(b) claims for breach of oral or written contract, whether express or implied, promissory estoppel or quantum meruit;
(c) claims for personal injury, harm, or other damages (whether intentional or unintentional and whether occurring on the job or not, including, without limitation, negligence, defamation, misrepresentation, fraud, intentional infliction of emotional distress, assault, battery, invasion of privacy, and other such tort or injury claims);
(d) claims growing out of any legal restrictions on the Company’s right to terminate employment of its employees including any claims based on any violation of public policy or retaliation for taking a protected action;
(e) claims regarding any restrictions on the Company’s right to enforce any of Employee’s post-termination obligations regarding non-disclosure, non-disparagement, non-competition, non-solicitation, and non-interference;
(f) claims for workers’ compensation, wages, overtime, bonuses, incentive compensation, vacation pay, or any other form of compensation;
Separation Agreement and Release
(g) claims for compensation and/or benefits under any other severance plans or programs, except for the Plan referenced and incorporated in this Agreement; or
(h) claims for benefits including, without limitation, those arising under the Employee Retirement Income Security Act.
NOTHING IN THIS AGREEMENT SHALL WAIVE OR MODIFY THE FOLLOWING RIGHTS IF EMPLOYEE OTHERWISE HAS SUCH RIGHTS:
(i) any right or claim provided under this Agreement;
(j) any right or claim which is not waivable as a matter of law;
(k) any right to seek unemployment compensation benefits if Employee is otherwise qualified under applicable law;
(l) any rights regarding a pending workers’ compensation claim, however, Employee states that he/she has no unfiled workers’ compensation claim or unreported injury; or
(m) any claim based on facts occurring after this Agreement is signed.
5. Employee’s Release of Age Discrimination Claims. In addition, Employee acknowledges the following:
(a) This Agreement is written in a manner calculated to be understood by Employee and that Employee in fact understands the terms, conditions and effect of this Agreement.
(b) This Agreement refers to rights or claims arising under the Age Discrimination in Employment Act and Older Workers’ Benefit Protection Act.
(c) Employee does not waive rights or claims that may arise after the date this Agreement is executed.
(d) Employee waives rights or claims only in exchange for consideration in addition to anything of value to which Employee is already entitled.
(e) Employee is advised in writing to consult with an attorney prior to executing the Agreement.
(f) Employee has forty-five (45) days in which to consider this Agreement before accepting, but need not take that long if the Employee does not wish to. Employee acknowledges that any decision to sign this Agreement before the forty-five (45) days have expired was done so voluntarily and not because of any fraud or coercion or improper conduct by Company.
(g) This Agreement allows a period of seven (7) days following Employee’s signature on the agreement during which Employee may revoke this Agreement. This Agreement is not effective until after the revocation period has been exhausted without any revocation by Employee. No payments shall be made until after the Agreement becomes effective.
(h) Employee fully understands all of the terms of this waiver agreement and knowingly and voluntarily enters into this Agreement.
Separation Agreement and Release
(i) Employee has received and reviewed the disclosures contained on Exhibit A regarding the employees considered for separation from employment and the eligibility factors.
(j) Employee has been given this Agreement to consider on December 1, 2021. Any notice of acceptance or revocation should be made by Employee to the Company as specified in the Notices section at the end of this Agreement.
6. Employee’s Representations. Employee is, and will continue to be, in full compliance with any non-disclosure, non-disparagement, non-competition, and non-solicitation obligations owed to the Company Group (defined below), under any agreement or applicable law.
7. Non-Disclosure of Confidential Information. Employee acknowledges that he/she has had access to confidential information, training, and Company goodwill (“Confidential Information”) while employed by the Company, including without limitation, any information obtained by Employee during the course of Employee's employment with the Company, concerning the business or affairs of the Company and its subsidiary and affiliated companies (collectively referred to as the “Company Group”) or that of their customers, suppliers, contractors, subcontractors, agents or representatives.
(a) Confidential Information includes any information about the Company Group that has not been intentionally publicly disclosed by the Company Group. Confidential Information likewise includes all information provided to the Company Group by its customers, suppliers, contractors, subcontractors, business partners, joint venturers, agents or representatives, which has not been intentionally publicly disclosed by these persons or entities. While Employee is obligated to comply with all non-disclosure requirements in place with the Company Group’s customers, suppliers, contractors, subcontractors, business partners, joint venturers, agents or representatives, the obligations under this Agreement are broader and apply to any non-public information the Company Group or Employee receives from or has access to regarding these third parties, regardless of whether the Company Group is contractually obligated to a third party to keep such information confidential. Confidential Information includes, without limitation, information relating to the services, products, policies, practices, pricing, costs, suppliers, vendors, methods, processes, techniques, finances, administration, employees, devices, trade secrets and operations of the Company Group, any inventions, modifications, discoveries, designs, developments, improvements, processes, software programs, work of authorship, documentation, formula, data, technique, know-how, secret or intellectual property right by any Company Group employee, Company Group customers or potential customers, marketing, sales activities, development programs, promotions, manufacturing, machining, drawings, future and current plans regarding business and customers, e-mails, notes, manufacturing documents, engineering documents, formulas, financial statements, bids, project reports, handling documentation, machinery and compositions, all financial data relating to the Company Group, business methods, accounting and tracking methods, books, inventory handling procedure, credit, credit procedures, indebtedness, financing procedures, investments, trading, shipping, production, processing, welding, fabricating, assembling, renting, domestic and foreign operations, customer and vendor and supplier lists, data storage in any medium (electronic or hard copy) contact information, lab reports, lab work, and any data or materials used in and created during the development of any of the aforementioned materials or processes.
Separation Agreement and Release
(b) Employee acknowledges that this Confidential Information is confidential, proprietary, not known outside of the Company Group’s business, valuable, special and/or a unique asset of the Company Group which belongs to the Company Group and gives the Company Group a competitive advantage. If this Confidential Information were disclosed to third parties or used by third parties and/or Employee, such disclosure or use would seriously and irreparably damage the Company Group and cause the loss of certain competitive advantages. Employee promises he/she has not and will not disclose in any way, or use for Employee’s own benefit or for the benefit of anyone besides the Company Group, the Confidential Information described above and obtained by Employee as part of his/her employment with the Company. Employee acknowledges that this promise of non-disclosure and non-use continues indefinitely and specifically does not expire at the end of Employee’s employment with the Company.
8. Reporting to Government Agencies. Nothing in this Agreement shall prevent Employee from filing a charge or complaint or making a disclosure or report of possible unlawful activity, including a challenge to the validity of this Agreement, with any governmental agency, including but not limited to the Equal Employment Opportunity Commission (“EEOC”), the National Labor Relations Board (“NLRB”), or the SEC, or from participating in any investigation or proceeding conducted by the EEOC, NLRB, SEC, or any federal, state or local agency. This Agreement does not impose any condition precedent (such as prior disclosure to the Company), any penalty, or any other restriction or limitation adversely affecting Employee’s rights regarding any governmental agency disclosure, report, claim or investigation. Employee understands and recognizes, however, that even if a report or disclosure is made or a charge is filed by him/her or on his/her behalf with a governmental agency other than the SEC, Employee will not be entitled to any damages or payment of any money or other relief personal to him/her relating to any event which occurred prior to his/her execution of this Agreement.
9. Non-Disparagement. Employee agrees that he/she shall not at any time make, publish or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments or statements concerning the Company Group or its businesses, business practices, or any of its employees or officers, and existing and prospective customers, suppliers, investors and other associated third parties. This Section does not apply to or in any way restrict or impede Employee from any communications with government agencies as stated above, or complying with any applicable law or court order, or exercising whistleblower or other protected non-waivable legal rights.
10. Section 409A Compliance. It is intended that the severance benefits and other payments payable under this Agreement satisfy, to the greatest extent possible, the exemptions from the application of Section 409A of the Internal Revenue Code of 1986, as amended, provided under Treasury Regulations Sections 1.409A-1(b)(4), 1.409A-1(b)(5), and 1.409A-(b)(9) and this Agreement will be construed to the greatest extent possible as consistent with those provisions. To the extent any amount paid under this Agreement is subject to Section 409A, the commencement of payment or provision of any payment or benefit under this Agreement shall be deferred to the minimum extent necessary to prevent the imposition of any excise taxes or penalties on the Company or Employee. Although the Company shall use its best efforts to avoid the imposition of taxation, interest and penalties under Section 409A, the tax treatment of the benefits provided under this Agreement is not warranted or guaranteed. Neither the Company, its affiliates, nor their respective directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by Employee or other taxpayer as a result of the Agreement.
11. Return of Confidential Information and Company Property. All written, electronic, or other data, materials, records and other documents made by, or coming into the possession or control of, Employee, which contain or disclose Confidential Information shall be and remain the property of the Company. Employee agrees that he/she has returned to the Company, without deletion, copying, or alteration, all property (including property purchased or paid for by the Company in Employee’s possession, custody or control) which belongs to the Company, including any keys, access cards, computers, cell phones, pagers, or other equipment and all written or electronic materials, data, information, records, and any other property in Employee’s possession or control, whether located on or off Company premises, which may concern the Company, its current or potential customers, vendors or suppliers, whether or not confidential or proprietary in nature. Employee shall immediately report to Company any passwords for Employee’s computer or other access codes for anything associated with Employee’s employment with Company.
Separation Agreement and Release
12. Post-Employment Cooperation. Employee agrees to make reasonable efforts to assist Company after his/her separation of employment, including but not limited to, transitioning of Employee’s job duties as well as assisting with any legal proceeding or lawsuit or claim involving matters occurring during his/her employment with Company.
13. Neutral Reference. For reference inquiries directed to Human Resources, the Company shall provide a neutral reference regarding Employee’s employment, including Employee’s position and dates of employment and base pay. Company will not respond to, nor is it responsible for, reference inquiries or responses to such inquiries not directed to Human Resources.
14. Entire Agreement. Employee has carefully read and fully understands all of the terms of this Agreement. Employee agrees that this Agreement, together with the Amended and Restated U.S. Executive Change-in-Control Severance Plan, sets forth the entire agreement between the Company and Employee regarding all issues involving his/her termination of employment except that it does not replace or alter in any way any obligations Employee owes to the Company under applicable law, or owed under any agreements regarding confidentiality, non-disclosure, non-disparagement, non-solicitation, non-competition, duties of loyalty or fiduciary duty. Applicable laws may include, but are not limited to, state laws protecting company trade secrets or other confidential information. Employee further understands that this Agreement does not alter or replace any of the terms or obligations of the Plan.
15. No Admission. Employee understands this Agreement is not and shall not be deemed or construed to be an admission by Company of any wrongdoing of any kind or of any breach of any contract, law, obligation, policy, or procedure of any kind or nature.
16. Injunctive Relief. Employee acknowledges that damages would be difficult to calculate and/or wholly inadequate for certain breaches of this Agreement. The Company may seek immediate injunctive or other equitable relief to enforce the terms of this Agreement, in addition to any legal or other relief to which Company may be entitled, including damages and attorneys’ fees.
17. Representations; Modifications; Severability. Employee acknowledges that he/she has not relied upon any representations or statements, written or oral, not set forth in this Agreement. This Agreement cannot be modified except in writing and signed by both parties. The foregoing notwithstanding, if any part of this Agreement is found to be unenforceable by a court of competent jurisdiction, then such unenforceable portion will be modified to be enforceable, or severed from this Agreement if it cannot be modified, and such modification or severance shall have no effect upon the remaining portions of the Agreement which shall remain in full force and effect.
18. Applicable Law; Venue; Waiver of Jury Trial. This Agreement shall be governed by and interpreted under the laws of the State of Texas without regard to Conflict of Laws. The parties agree that any dispute concerning this Agreement shall be brought only in a court of competent jurisdiction in Harris County, Texas, unless another forum or venue is required by law. Both the Company and Employee agree to waive a trial by jury of any or all issues arising under or connected with this Agreement, and consent to trial by the judge.
Separation Agreement and Release
19. Successors and Assigns. This Agreement may be assigned by the Company and shall be binding upon and shall inure to the benefit of the Company Group, and automatically to any other person, association, or entity which may hereafter acquire or succeed to all or substantially all of the business or assets of the Company Group by any means whether direct or indirect, by purchase, merger, consolidation, or otherwise. Employee’s obligations under this Agreement are personal and such obligations of Employee shall not be voluntarily or involuntarily assigned, alienated, or transferred by Employee without the prior written consent of the Company, and Employee represents no such rights have previously been transferred.
20. Notices. For purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall considered as effective (i) when received if delivered personally or by courier; or (ii) on the date receipt is acknowledged if delivered by (a) certified mail, postage prepaid, return receipt requested, or (b) e-mail, with confirmation receipt required, as follows:
If to Employee, addressed to: | the last known residential address reflected in the Company’s records. |
If to the Company/Employer, addressed to: | Expro Group Holdings N.V. |
1311 Broadfield Blvd, Suite 400 | |
Houston, TX 77084 | |
Attention: Natalie Questell, Senior Vice President of | |
Human Resources | |
E-mail: Natalie.Questell@expro.com |
Notice of change in address should be provided as stated in this section.
AGREED AND ACCEPTED on this 1st day of December, 2021.
/s/ John C. Symington
Employee Signature
John C. Symington
Employee Printed Name
AGREED AND ACCEPTED on this 9th day of December, 2021.
Expro Group Holdings N.V.
f/k/a Frank’s International N.V.
By: /s/ Natalie E. Questell
Printed Name: /s/ Natalie E. Questell
Printed Title: SVP, HR
Separation Agreement and Release
Exhibit A
You and other designated employees of the Company were selected for a separation from employment that will occur on or about December 1, 2021. Eligible employees for this program include: Houston Senior Vice President, General Counsel. All employees 40 and over who are selected for separation under this program are being given forty-five (45) days to consider whether to accept the separation pay and sign the Separation Agreement and Release and also are being given seven (7) days to revoke this Agreement after signing it.
The job titles and ages of all individuals in the above-referenced category who have been considered for this separation program, as well as the decision for each regarding selection, is provided below:
Location |
Unit |
Job Title |
Age |
Number Selected 10/01/2021 |
Number Not Selected |
Houston |
Corporate Executive Team |
SVP, General Counsel |
60 |
1 |
1 |
Houston |
Corporate Executive Team |
SVP, General Counsel |
55 |
0 |
1 |
Separation Agreement and Release
Exhibit 10.15
Execution Version
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this “Agreement”) dated the 1st day of October, 2021, by and between Expro Group Holdings N.V., a public limited liability company organized and existing under the laws of The Netherlands (the “Company”), and [__________], an individual (“Indemnitee”).
RECITALS
A. Competent and experienced persons may be reluctant to serve or to continue to serve as directors, officers or in other capacities unless they are provided with adequate protection through insurance or indemnification (or both) against claims against them arising out of their service and activities on behalf of the corporation.
B. The current uncertainties relating to the availability of adequate insurance have increased the difficulty of attracting and retaining competent and experienced persons to serve in such capacity.
C. The board of directors of the Company (the “Board”) has determined that the continuation of present trends in litigation will make it more difficult to attract and retain competent and experienced persons to serve as directors of the Company, that this situation is detrimental to the best interests of the Company’s stockholders and that the Company should act to assure such persons that there will be increased certainty of adequate protection in the future.
D. As a supplement to and in the furtherance of the Company’s Articles of Association, as amended (the “Articles”), it is reasonable, prudent, desirable and necessary for the Company contractually to obligate itself to indemnify, and to pay in advance expenses on behalf of, directors and officers to the fullest extent permitted by Applicable Law, consistent with the Company’s Liability Insurance, so that they will serve or continue to serve the Company free from concern that they will not be so indemnified and that their expenses will not be so paid in advance;
E. This Agreement is not a substitute for, nor is it intended to diminish or abrogate any rights of Indemnitee under, Liability Insurance, the Articles, any resolutions adopted pursuant thereto (including any contractual rights of Indemnitee that may exist) or otherwise;
F. Indemnitee is a director or officer of the Company and his or her willingness to continue to serve in such capacity is predicated, in substantial part, upon the Company’s willingness to indemnify him or her to the fullest extent permitted by Applicable Law, consistent with the Company’s Liability Insurance, and upon the other undertakings set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and covenants contained herein, the Company and Indemnitee hereby agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
Capitalized terms used but not otherwise defined in this Agreement have the meanings set forth below:
“Applicable Law” means the laws of The Netherlands.
“Claims” means any and all liabilities, claims, judgments, fines (including excise taxes and penalties assessed with respect to employee benefit plans), penalties and all interest, assessments and other charges paid or payable in connection with or in respect of any of the foregoing.
“Corporate Status” means the status of a person who is or was a director, officer, employee, partner, member, manager, trustee, fiduciary or agent of the Company or of any other Enterprise which such person is or was serving at the request of the Company. In addition to any service at the actual request of the Company, Indemnitee will be deemed, for purposes of this Agreement, to be serving or to have served at the request of the Company as a director, officer, employee, partner, member, manager, trustee, fiduciary or agent of another Enterprise if Indemnitee is or was serving as a director, officer, employee, partner, member, manager, fiduciary, trustee or agent of such Enterprise and (i) such Enterprise is or at the time of such service was a Controlled Affiliate, (ii) such Enterprise is or at the time of such service was an employee benefit plan (or related trust) sponsored or maintained by the Company or a Controlled Affiliate or (iii) the Company or a Controlled Affiliate caused Indemnitee to be nominated, elected, appointed, designated, employed, engaged or selected to serve in such capacity on its behalf.
“Controlled Affiliate” means any corporation, limited liability company, partnership, joint venture, trust or other Enterprise, whether or not for profit, that is directly or indirectly controlled by the Company. For purposes of this definition, the term “control” means the possession, directly or indirectly, of the power to direct, or cause the direction of, the management or policies of an Enterprise, whether through the ownership of voting securities, through other voting rights, by contract or otherwise; provided, however, that direct or indirect beneficial ownership of capital stock or other interests in an Enterprise entitling the holder to cast 10% or more of the total number of votes generally entitled to be cast in the election of directors (or persons performing comparable functions) of such Enterprise will be deemed to constitute “control” for purposes of this definition.
“Disinterested Director” means a director of the Company who is not and was not a party to the Legal Action, decision or Enterprise action in respect of which indemnification is sought by Indemnitee.
“Enterprise” means the Company and any other corporation, partnership, limited liability company, joint venture, employee benefit plan, trust or other entity or other enterprise of which Indemnitee is or was serving at the request of the Company in a Corporate Status.
“Expenses” means all reasonable expenses, including attorney’s fees and litigation costs, paid or incurred in connection with a Legal Action, or in connection with seeking indemnification under this Agreement. Expenses will also include Expenses reasonably paid or incurred in connection with any appeal resulting from any Legal Action. Notwithstanding the foregoing, the Company’s obligation to pay “Expenses” is limited to Expenses incurred after written notice is given to the Company of a Legal Action. When a Legal Action subject to the indemnity obligation in this Agreement presents both matters that are covered by the indemnity obligation and matters that are not, Expenses shall refer solely to Expenses incurred for the defense of those parts of the Legal Action that are covered by the indemnity obligation in this Agreement.
“Independent Counsel” means an attorney or firm of attorneys that is experienced in matters of corporation law in the appropriate jurisdictions and neither currently is, nor in the past five (5) years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement and/or the indemnification provisions of the Articles, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Legal Action giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” does not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.
“Legal Action” means any expected, threatened, pending or completed action, investigation, or other proceeding, whether civil, criminal or administrative, and in each case commenced after the date of this Agreement, in which Indemnitee was, is or will be involved as a party or otherwise, by reason of or relating to Indemnitee’s Corporate Status and by reason of or relating to either (i) any action or alleged action taken by Indemnitee (or failure or alleged failure to act) or of any action or alleged action (or failure or alleged failure to act) on Indemnitee’s part, while acting in his or her Corporate Status or (ii) the fact that Indemnitee is or was serving at the request of the Company as director, officer, employee, partner, member, manager, trustee, fiduciary or agent of another Enterprise, in each case whether or not serving in such capacity at the time any Loss or Expense is paid or incurred for which indemnification or advancement of Expenses can be provided under this Agreement, except one initiated by Indemnitee to enforce his or her rights under this Agreement.
“Liability Insurance” means such director and officer liability insurance (or the equivalent), which the Company purchases for the benefit of its directors and officers.
“Person” shall be construed broadly and shall include, without limitation, an individual, a partnership, stichting, commanditaire vennootschap, besloten vennootschap, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.
References to “serving at the request of the Company” include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to any employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he or she reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan will be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to under applicable law or in this Agreement.
ARTICLE 2
SERVICES TO THE COMPANY
2.1 Services to the Company. Indemnitee agrees to serve as an officer or as a director on the Board. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law), in which event the Company will have no obligation under this Agreement to continue Indemnitee in such position. This Agreement will not be construed as giving Indemnitee any right to be retained as an officer, as a director on the Board or in any other position with the Company (or any other Enterprise).
ARTICLE 3
INDEMNIFICATION
3.1 Company Indemnification. Except as otherwise provided in this Article 3, if Indemnitee was, is or becomes a party to, or was or is threatened to be made a party to, or was or is otherwise involved in, any Legal Action, the Company will indemnify and hold harmless Indemnitee to the fullest extent permitted by the Articles and Applicable Law, as the same exists or may hereafter be amended, interpreted or replaced, against any and all Expenses, Claims or amounts paid in settlement, and any federal, state, local or foreign taxes imposed as a result of the actual or deemed receipt of any payments under this Agreement, that are paid or incurred by Indemnitee in connection with such Legal Action.
3.2 Mandatory Indemnification if Indemnitee is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement (other than Section 6.9), to the extent that Indemnitee has been successful, on the merits or otherwise, in defense of any Legal Action or any part thereof, the Company will indemnify Indemnitee against all Expenses that are paid or incurred by Indemnitee in connection therewith. If Indemnitee is not wholly successful in such Legal Action, but is successful, on the merits or otherwise, as to one or more but fewer than all Claims, issues or matters in such Legal Action, the Company will indemnify and hold harmless Indemnitee against all Expenses paid or incurred by Indemnitee in connection with each successfully resolved Claim, issue or matter on which Indemnitee was successful. For purposes of this Section 3.2, the termination of any Legal Action, or any Claim, issue or matter in such Legal Action, by dismissal with or without prejudice will be deemed to be a successful result as to such Legal Action, Claim, issue or matter.
3.3 Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his or her Corporate Status, a witness in any Legal Action to which Indemnitee is not a party, the Company will advance all reasonable expenses and indemnify Indemnitee against all Expenses paid or incurred by Indemnitee on his or her behalf in connection therewith.
3.4 Exclusions. Notwithstanding any other provision of this Agreement, the Company will not be obligated under this Agreement to provide indemnification in connection with the following:
(a) Any Legal Action (or part of any Legal Action) initiated or brought voluntarily by Indemnitee against the Company or its directors, officers, employees or other indemnities, unless the Board has authorized or consented to the initiation of the Legal Action (or such part of any Legal Action).
(b) An accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute or for any Claims to the extent that they represent the gain in fact of any profit or advantage to which the Indemnitee is not legally entitled.
(c) If a court of competent jurisdiction has made a final and binding judgment that the act or omission of the Indemnitee can be characterized as a result of willful misconduct (opzet), willful recklessness (bewuste roekeloosheid) or serious culpability (ernstig verwijt) under Applicable Law.
(d) For any Legal Action arising out of, based upon or attributable to the committing in fact by the Indemnitee of any deliberate criminal or deliberate fraudulent act.
ARTICLE 4
ADVANCEMENT OF EXPENSES
4.1 Expense Advances. Except as set forth in Section 4.2, the Company will, if requested by Indemnitee, advance, to the fullest extent permitted by Applicable Law, to Indemnitee (hereinafter an “Expense Advance”) any and all Expenses paid or incurred by Indemnitee in connection with any Legal Action (whether prior to or after its final disposition). Indemnitee’s right to each Expense Advance will be subject to the requirements of the next sentence but not otherwise subject to the satisfaction of any standard of conduct and will be made without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement, or under provisions of the Articles or otherwise. Each Expense Advance will be unsecured and interest free and will be made by the Company upon a resolution of the Board; provided, however, that an Expense Advance will be made only upon delivery to the Company of an undertaking (hereinafter an “Undertaking”), in a form satisfactory to the Company, by or on behalf of Indemnitee, to immediately repay such Expense Advance if it is ultimately determined, by final and binding judgment by a court or arbitrator, as applicable, from which there is no further right to appeal, that Indemnitee is not entitled to be indemnified for such Expenses under the Articles or Applicable Law. An Expense eligible for an Expense Advance will include any and all reasonable Expenses incurred pursuing an action to enforce the right of advancement provided for in this Article 4.
4.2 Exclusions. Indemnitee will not be entitled to any Expense Advance in connection with any of the matters for which indemnity is excluded pursuant to Section 3.4.
4.3 Timing. An Expense Advance pursuant to Section 4.1 will be made within fifteen business days after the Board approves the resolution with respect to such Expense Advance; provided, however, that no such Expense Advance will be made by the Company prior to receipt by the Company of the Undertaking.
ARTICLE 5
CONTRIBUTION IN THE EVENT OF JOINT LIABILITY
5.1 Contribution by Company. To the fullest extent permitted by Applicable Law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, will contribute to the amount of Expenses and Claims incurred or paid by Indemnitee in connection with any Legal Action in proportion to the relative benefits received by the Company and all officers, directors and employees of the Company other than Indemnitee who are jointly liable with Indemnitee, on the one hand, and Indemnitee, on the other hand, from the transaction from which such Legal Action arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors and employees of the Company other than Indemnitee who are jointly liable with Indemnitee, on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such Expenses and Claims, as well as any other equitable considerations which applicable law may require to be considered. The relative fault of the Company and all officers, directors and employees of the Company other than Indemnitee who are jointly liable with Indemnitee, on the one hand, and Indemnitee, on the other hand, will be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary, and the degree to which their conduct was active or passive.
5.2 Indemnification for Contribution Claims by Others. To the fullest extent permitted by Applicable Law, the indemnification herein will include claims of contribution which may be brought by other officers, directors or employees of the Company who may be jointly liable with Indemnitee for any Loss or Expense arising from a Legal Action.
ARTICLE 6
PROCEDURES AND PRESUMPTIONS FOR THE
DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION
6.1 Notification of Claims; Request for Indemnification. Indemnitee agrees to notify promptly the Company in writing of any claim made against Indemnitee for which indemnification will or could be sought under this Agreement; provided, however, that a delay in giving such notice will not deprive Indemnitee of any right to be indemnified under this Agreement unless, and then only to the extent that, the Company did not otherwise learn of the Legal Action and such delay is materially prejudicial to the Company’s ability to defend or to obtain coverage under the Company’s Liability Insurance for such Legal Action; and, provided, further, that notice will be deemed to have been given without any action on the part of Indemnitee in the event the Company is a party to the same Legal Action. The omission to notify the Company will not relieve the Company from any liability for indemnification which it may have to Indemnitee otherwise than under this Agreement. Indemnitee may deliver to the Company a written request to have the Company indemnify and hold harmless Indemnitee in accordance with this Agreement. Subject to Section 6.9, such request may be delivered from time to time and at such time(s) as Indemnitee deems appropriate in his or her sole discretion. Following such a written request for indemnification, Indemnitee’s entitlement to indemnification shall be determined according to Section 6.2. The Secretary of the Company will, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification. The Company will be entitled to participate in any Legal Action at its own expense.
6.2 Determination of Right to Indemnification. Upon written request by Indemnitee for indemnification pursuant to Section 6.1 hereof with respect to any Legal Action, a determination with respect to Indemnitee’s entitlement thereto will be made by one of the following, at the election of the Company: (1) so long as there are Disinterested Directors with respect to such Legal Action, a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (2) so long as there are Disinterested Directors with respect to such Legal Action, a committee of such Disinterested Directors designated by a majority vote of such Disinterested Directors, even though less than a quorum of the Board or (3) Independent Counsel in a written opinion delivered to the Board, a copy of which will also be delivered to Indemnitee. The election by the Company to use a particular person, persons or entity to make such determination is to be included in a written notification to Indemnitee. The person, persons or entity chosen to make a determination under this Agreement of the Indemnitee’s entitlement to indemnification shall act reasonably and in good faith in making such determination.
6.3 Selection of Independent Counsel. If the determination of entitlement to indemnification pursuant to Section 6.2 will be made by an Independent Counsel, the Independent Counsel will be selected as provided in this Section 6.3. The Independent Counsel will be selected by the Company (unless the Company requests that such selection be made by the Indemnitee, in which event the immediately following sentence will apply), and the Company will give written notice to Indemnitee advising Indemnitee of the identity of the Independent Counsel so selected. If the Independent Counsel is selected by the Indemnitee, Indemnitee will give written notice to the Company advising of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Company, as the case may be, may, within ten days after such written notice of selection is given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in this Agreement, and the objection will set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected will act as Independent Counsel. If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within 30 days after submission by Indemnitee of a written request for indemnification pursuant to Section 6.1, no Independent Counsel is selected, or an Independent Counsel for which an objection thereto has been properly made remains unresolved, either the Company or Indemnitee may petition a court of competent jurisdiction for resolution of any objection which has been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court may designate, and the person with respect to whom all objections are so resolved or the person so appointed will act as Independent Counsel under Section 6.2. The Company will pay any and all reasonable and necessary fees and expenses incurred by such Independent Counsel in connection with acting pursuant to Section 6.2 hereof, and the Company will pay all fees and expenses incident to the procedures of this Section 6.3, regardless of the manner in which such Independent Counsel was selected or appointed.
6.4 Burden of Proof. In making a determination with respect to entitlement to indemnification hereunder, the person, persons or entity making such determination will presume that Indemnitee is entitled to indemnification under this Agreement. Anyone seeking to overcome this presumption will have the burden of proof. Indemnitee will be deemed to have acted in good faith if Indemnitee’s action with respect to a particular Enterprise is based on the records or books of account of such Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of such Enterprise in the course of their duties, or on the advice of legal counsel for such Enterprise or on information or records given or reports made to such Enterprise by an independent certified public accountant or by an appraiser or other expert selected by such Enterprise; provided, however this sentence will not be deemed to limit in any way the other circumstances in which Indemnitee may be deemed to have met the appropriate standard of conduct and provided further that this sentence shall not excuse fraudulent or other knowing improper actions taken by Indemnitee. In addition, the knowledge and/or actions, or failure to act, of any other director, officer, agent or employee of such Enterprise will not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.
6.5 No Presumption in Absence of a Determination or As Result of an Adverse Determination; Presumption Regarding Success. Neither the failure of any person, persons or entity chosen to make a determination as to whether Indemnitee has met any particular standard of conduct or had any particular belief to make such determination, nor an actual determination by such person, persons or entity that Indemnitee has not met such standard of conduct or did not have such belief, prior to or after the commencement of legal proceedings by Indemnitee to secure a judicial determination that Indemnitee should be indemnified under this Agreement under Applicable Law, will be a defense to Indemnitee’s claim or create a presumption that Indemnitee has not met any particular standard of conduct or did not have any particular belief. In addition, the termination of any Legal Action by settlement approved by the Board (whether with or without court approval) or upon a plea of nolo contendere, or its equivalent, will not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by this Agreement or Applicable Law.
6.6 Timing of Determination. The Company will use its reasonable best efforts to cause any determination required to be made pursuant to Section 6.2 to be made as promptly as practicable after Indemnitee has submitted a written request for indemnification pursuant to Section 6.1.
6.7 Timing of Payments. All payments of Expenses, including any Expense Advance, and other amounts by the Company to the Indemnitee pursuant to this Agreement will be made as soon as practicable after a written request or demand therefor by Indemnitee is presented to the Company, but in no event later than 30 days after (i) such demand is presented or (ii) such later date as a determination of entitlement to indemnification is made in accordance with Section 6.6, if applicable; provided, however, that an Expense Advance will be made within the time provided in Section 4.3 hereof.
6.8 Cooperation. Indemnitee will cooperate with the person, persons or entity making a determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity, upon reasonable advance request, any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any Expenses incurred by Indemnitee in so cooperating with the person, persons or entity making such determination will be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification).
6.9 Time for Submission of Request. Indemnitee will be required to submit any request for Indemnification pursuant to this Article 6 within a reasonable time, not to exceed two years, after any judgment, order, settlement, dismissal, arbitration award, conviction, acceptance of a plea of nolo contendere (or its equivalent) or other full or partial final determination or disposition of the Legal Action (with the latest date of the occurrence of any such event to be considered the commencement of the two year period).
ARTICLE 7
LIABILITY INSURANCE
7.1 Liability Insurance. The Company will use its reasonable endeavors to obtain and maintain a policy or policies of Liability Insurance with one or more reputable insurance companies providing Indemnitee with coverage in such amount as will be determined by the Board for Claims and Expenses paid or incurred by Indemnitee as a result of acts or omissions of Indemnitee in his or her Corporate Status, and to ensure the Company’s performance of its indemnification obligations under this Agreement, to the extent that a policy covering the indemnification obligations under this Agreement is reasonably attainable; provided, however, in all policies of director and officer liability insurance obtained by the Company, Indemnitee will be named as an Insured in such manner as to provide Indemnitee with the same rights and benefits as are afforded to the other directors or officers, as applicable, of the Company under such policies. Any reductions to the amount of director and officer liability insurance coverage maintained by the Company as of the date hereof will be subject to the approval of the Board.
7.2 Notice to Insurers. If, at the time of receipt by the Company of a notice from any source of a Legal Action as to which Indemnitee is a party or participant, the Company will give prompt notice of such Legal Action to the insurers in accordance with the procedures set forth in the respective policies, the Company will provide Indemnitee with a copy of such notice. The Company will thereafter take all necessary or desirable actions to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Legal Action in accordance with the terms of such policies.
7.3 Cooperation with Company. The Indemnitee will cooperate in all ways with the Company and its counsel and, if required by the Company, with the insurers issuing the Company’s Liability Insurance, to the extent the Company deems such cooperation reasonably necessary in connection with the tender, evaluation, investigation, and pursuant of insurance coverage for any Legal Action.
ARTICLE 8
REMEDIES OF INDEMNITEE
8.1 Action by Indemnitee. In the event that (i) a determination is made pursuant to Article 6 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) an Expense Advance is not timely made pursuant to Section 4.3 of this Agreement, (iii) no determination of entitlement to indemnification is made within the applicable time periods specified in Section 6.6 or (iv) payment of indemnified amounts is not made within the applicable time periods specified in Section 6.7, Indemnitee will be entitled to seek an award in arbitration to be conducted by a single arbitrator pursuant to the rules of the American Arbitration Association; such award to be made within 60 days following the filing of the demand for arbitration. The provisions of the laws of the State of Texas (without regard to its conflict of laws rules that would cause the application of the laws of another jurisdiction) will apply to any such arbitration. The Company will not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.
8.2 Company Bound by Favorable Determination by Reviewing Party. If a determination is made that Indemnitee is entitled to indemnification pursuant to Article 6, the Company will be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Article 8, absent (i) a misstatement by Indemnitee of a material fact or an omission of a material fact necessary to make Indemnitee’s statements in connection with the request for indemnification not materially misleading or (ii) a prohibition of such indemnification under Applicable Law.
8.3 Company Bound by Provisions of this Agreement. The Company and Indemnitee will each be precluded from asserting in any judicial or arbitration proceeding commenced pursuant to this Article 8 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and will stipulate in any such judicial or arbitration proceeding that the Company is bound by all the provisions of this Agreement.
ARTICLE 9
NON-EXCLUSIVITY, SUBROGATION; NO DUPLICATIVE PAYMENTS
9.1 Non-Exclusivity. The rights of indemnification and to receive Expense Advances as provided by this Agreement are not exclusive of any other rights to which Indemnitee may at any time be entitled under Applicable Law, the Articles, any agreement, a vote of stockholders, a resolution of the directors or otherwise. To the extent Indemnitee otherwise would have any greater right to indemnification or payment of any advancement of Expenses under any other provisions under Applicable Law, the Articles, any agreement, vote of stockholders, a resolution of directors or otherwise, Indemnitee will be entitled under this Agreement to such greater right. No amendment, alteration or repeal of this Agreement or of any provision hereof limits or restricts any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee prior to such amendment, alteration or repeal. To the extent that a change in Applicable Law, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the Articles and this Agreement, it is the intent of the parties hereto that Indemnitee enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy will be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, will not prevent the concurrent assertion or employment of any other right or remedy.
9.2 Subrogation. In the event of any payment by the Company under this Agreement, the Company will be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee with respect thereto, including rights under any policy of insurance or other indemnity agreement or obligation, and Indemnitee will execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights (it being understood that all of Indemnitee’s reasonable Expenses related thereto will be borne by the Company).
9.3 No Duplicative Payments. The Company will not be liable under this Agreement to make any payment of amounts otherwise indemnifiable (or any Expense for which advancement is provided) hereunder if and to the extent that Indemnitee is otherwise entitled to receive such payment under any insurance policy, contract, agreement or otherwise. The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee in respect of Legal Actions relating to Indemnitee’s service at the request of the Company as a director, officer, employee, partner, member, manager, trustee, fiduciary or agent of any other Enterprise will be reduced by any amount Indemnitee is actually entitled to receive as indemnification or advancement of Expenses from such other Enterprise. Subject to Section 4.1, the indemnity obligations of this Agreement shall apply in excess of the Company’s Liability Insurance and to any other insurance or indemnities available to the Indemnitee.
ARTICLE 10
DEFENSE OF PROCEEDINGS
10.1 Company Assuming the Defense. In the event the Company is obligated to pay in advance the Expenses of any Legal Action pursuant to Article 4, the Company will be entitled, by written notice to Indemnitee, to assume the defense of such Legal Action, with counsel approved by Indemnitee, which approval will not be unreasonably withheld or delayed. The Company will identify the counsel it proposes to employ in connection with such defense as part of the written notice sent to Indemnitee notifying Indemnitee of the Company’s election to assume such defense, and Indemnitee will be required, within ten days following Indemnitee’s receipt of such notice, to inform the Company of its approval of such counsel or, if it has objections, the reasons therefor. If such objections cannot be resolved by the parties, the Company will identify alternative counsel, which counsel will also be subject to approval by Indemnitee in accordance with the procedure described in the prior sentence. In the absence of an actual conflict of interest that would prevent defense counsel from representing both the Indemnitee and other defendants in the Legal Action, the Indemnitee agrees that the Company may assign defense counsel to represent Indemnitee and other defendants in that Legal Action.
10.2 Right of Indemnitee to Employ Counsel. Following approval of counsel by Indemnitee pursuant to Section 10.1 and retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees and expenses of counsel subsequently incurred by Indemnitee with respect to the same Legal Action; provided, however, that (a) Indemnitee has the right to employ counsel in any such Legal Action at Indemnitee’s expense and (b) the Company will be required to pay the fees and expenses of Indemnitee’s counsel if (i) the employment of counsel by Indemnitee is authorized by the Company, (ii) an actual conflict of interest arises between the Company (or any other person or persons included in a joint defense) and Indemnitee in the conduct of such defense or representation by such counsel retained by the Company and the Company has not appointed new counsel without such conflict of interest to represent the Indemnitee or (iii) the Company does not continue to retain such counsel approved by the Indemnitee and the Company has not appointed new counsel to represent the Indemnitee in accordance with Section 10.1.
ARTICLE 11
SETTLEMENT
11.1 Company Bound by Provisions of this Agreement. Notwithstanding anything in this Agreement to the contrary, the Company will have no obligation to indemnify Indemnitee under this Agreement for any amounts paid in settlement of any Legal Action effected without the Company’s prior written consent, which consent shall not be unreasonably withheld.
11.2 When Indemnitee’s Prior Consent Required. The Company will not, without the prior written consent of Indemnitee, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise which (i) contains any non-monetary remedy imposed on Indemnitee or a Loss for which Indemnitee is not wholly indemnified hereunder or (ii) with respect to any Legal Action with respect to which Indemnitee is made a party or a participant or is otherwise entitled to seek indemnification hereunder, does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Legal Action. Neither the Company nor Indemnitee will unreasonably withhold its consent to any proposed settlement; provided, however, Indemnitee may withhold consent to any settlement that does not provide a full and unconditional release of Indemnitee from all liability in respect of such Legal Action.
ARTICLE 12
DURATION OF AGREEMENT; PERIOD OF LIMITATIONS
12.1 Duration of Agreement. This Agreement will continue until and terminate upon the latest of (a) the statute of limitations applicable to any claim that could be asserted against an Indemnitee with respect to which Indemnitee may be entitled to indemnification and/or an Expense Advance under this Agreement, (b) ten years after the date that Indemnitee has ceased to serve as a director or officer of the Company or as a director, officer, employee, partner, member, manager, fiduciary or agent of any other Enterprise which Indemnitee served at the request of the Company, or (c) if, at the later of the dates referred to in (a) and (b) above, there is pending a Legal Action in respect of which Indemnitee is granted rights of indemnification or the right to an Expense Advance under this Agreement or a Legal Action commenced by Indemnitee pursuant to Article 8 of this Agreement, one year after the final termination of such Legal Action, including any and all appeals.
ARTICLE 13
MISCELLANEOUS
13.1 Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties in respect of the subject matter hereof and supersedes all prior understandings, agreements or representations by or among the parties, written or oral, to the extent they relate in any way to the subject matter hereof; provided, however, it is agreed that the provisions contained in this Agreement are a supplement to, and not a substitute for, any provisions regarding the same subject matter contained in the Articles and any employment or similar agreement between the parties.
13.2 Assignment; Binding Effect; Third Party Beneficiaries. No party may assign either this Agreement or any of its rights, interests or obligations hereunder without the prior written approval of the other party and any such assignment by a party without prior written approval of the other parties will be deemed invalid and not binding on such other parties. All of the terms, agreements, covenants, representations, warranties and conditions of this Agreement are binding upon, and inure to the benefit of and are enforceable by, the parties and their respective successors, permitted assigns, heirs, executors and personal and legal representatives. There are no third party beneficiaries having rights under or with respect to this Agreement.
13.3 Notices. All notices, requests and other communications provided for or permitted to be given under this Agreement must be in writing and be given by personal delivery, by certified or registered mail (postage prepaid, return receipt requested), by a nationally recognized overnight delivery service for next day delivery, or by facsimile transmission, as follows (or to such other address as any party may give in a notice given in accordance with the provisions hereof):
If to the Company:
Expro Group Holdings N.V.
Mastenmakersweg 1
1786 PB Den Helder, The Netherlands
Attention: General Counsel
with a copy to:
Expro Group Holdings N.V.
1311 Broadfield Blvd.
Suite 400
Houston, Texas 77084
Attention: General Counsel
If to Indemnitee:
[_________]
1311 Broadfield Blvd.
Suite 400
Houston, Texas 77084
All notices, requests or other communications will be effective and deemed given only as follows: (i) if given by personal delivery, upon such personal delivery, (ii) if sent by certified or registered mail, on the fifth business day after being deposited in the United States mail, (iii) if sent for next day delivery by overnight delivery service, on the date of delivery as confirmed by written confirmation of delivery, (iv) if sent by facsimile, upon the transmitter’s confirmation of receipt of such facsimile transmission, except that if such confirmation is received after 5:00 p.m. (in the recipient’s time zone) on a business day, or is received on a day that is not a business day, then such notice, request or communication will not be deemed effective or given until the next succeeding business day. Notices, requests and other communications sent in any other manner, including by electronic mail, will not be effective.
13.4 Specific Performance; Remedies. Each party acknowledges and agrees that the other party would be damaged irreparably if any provision of this Agreement were not performed in accordance with its specific terms or were otherwise breached. Accordingly, the parties will be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and its provisions in any action or proceeding instituted in any court having jurisdiction over the parties and the matter, in addition to any other remedy to which they may be entitled, at law or in equity. Except as expressly provided for herein, the rights, obligations and remedies created by this Agreement are cumulative and in addition to any other rights, obligations or remedies otherwise available at law or in equity. Except as expressly provided herein, nothing herein will be considered an election of remedies.
13.5 Submission to Jurisdiction. Any Legal Action seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement may only be brought in any courts in the State of Texas, which will be the exclusive and only proper forums for adjudicating such Legal Action, and each party consents to the exclusive jurisdiction and venue of such courts (and of the appropriate appellate courts therefrom) in any such Legal Action and irrevocably waives, to the fullest extent permitted by Applicable Law, any objection that it may now or hereafter have to the laying of the venue of any such Legal Action in any such court or that any such Legal Action brought in any such court has been brought in an inconvenient forum. Process in any such action, suit or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court.
13.6 Headings. The article and section headings contained in this Agreement are inserted for convenience only and will not affect in any way the meaning or interpretation of this Agreement.
13.7 Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Texas, without giving effect to any choice of law principles.
13.8 Amendment. This Agreement may not be amended or modified except by a writing signed by all of the parties.
13.9 Extensions; Waivers. Any party may, for itself only, (i) extend the time for the performance of any of the obligations of any other party under this Agreement, (ii) waive any inaccuracies in the representations and warranties of any other party contained herein or in any document delivered pursuant hereto and (iii) waive compliance with any of the agreements or conditions for the benefit of such party contained herein. Any such extension or waiver will be valid only if set forth in a writing signed by the party to be bound thereby. No waiver by any party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, may be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising because of any prior or subsequent such occurrence. Neither the failure nor any delay on the part of any party to exercise any right or remedy under this Agreement will operate as a waiver thereof, nor will any single or partial exercise of any right or remedy preclude any other or further exercise of the same or of any other right or remedy.
13.10 Severability. The provisions of this Agreement will be deemed severable and the invalidity or unenforceability of any provision will not affect the validity or enforceability of the other provisions hereof; provided that if any provision of this Agreement, as applied to any party or to any circumstance, is judicially determined not to be enforceable in accordance with its terms, the parties agree that the court judicially making such determination may modify the provision in a manner consistent with its objectives such that it is enforceable, and/or to delete specific words or phrases, and in its modified form, such provision will then be enforceable and will be enforced.
13.11 Counterparts; Effectiveness. This Agreement may be executed in two or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument. This Agreement will become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, which delivery may be made by exchange of copies of the signature page by facsimile or other electronic transmission.
13.12 Construction. This Agreement has been freely and fairly negotiated among the parties. If an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties and no presumption or burden of proof will arise favoring or disfavoring any party because of the authorship of any provision of this Agreement. Any reference to any law will be deemed also to refer to such law as amended and all rules and regulations promulgated thereunder, unless the context requires otherwise. The words “include,” “includes,” and “including” will be deemed to be followed by “without limitation.” Pronouns in masculine, feminine, and neuter genders will be construed to include any other gender, and words in the singular form will be construed to include the plural and vice versa, unless the context otherwise requires. The words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder,” and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The parties intend that each representation, warranty, and covenant contained herein will have independent significance. If any party has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) which the party has not breached will not detract from or mitigate the fact that the party is in breach of the first representation, warranty, or covenant. Time is of the essence in the performance of this Agreement.
[Signature page follows]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
|
EXPRO GROUP HOLDINGS N.V. |
|
|
|
|
|
|
|
By: |
|
|
|
Name: |
|
|
|
Title: |
|
|
|
Indemnitee |
|
|
|
|
|
|
|
|
|
|
|
Signature |
|
|
|
|
|
|
Name: | [______] |
[Signature Page to Indemnification Agreement]
Exhibit 10.16
EXPRO GROUP HOLDINGS N.V.
AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
PURPOSE AND SCOPE OF THE PLAN
Section 1.1 Purpose. The Expro Group Holdings N.V. Amended and Restated Employee Stock Purchase Plan is intended to encourage employee participation in the ownership and economic progress of the Company.
Section 1.2 Definitions. Unless the context clearly indicates otherwise, the following terms have the meaning set forth below:
“Board of Directors” or “Board” means the Company’s Board of Directors.
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, together with any applicable regulations issued thereunder.
“Committee” shall mean the committee of officers established by the Board to administer the Plan, which Committee shall administer the Plan as provided in Section 1.3 hereof.
“Common Stock” shall mean shares of the common stock, par value €0.01 per share, of the Company.
“Company” shall mean Expro Group Holdings N.V., a limited liability company organized in the Netherlands.
“Compensation” shall mean the total cash compensation paid by the Company to an Employee as reported by the Company to the applicable government for income tax purposes, excluding the amount of any compensation deferrals made by the Employee to a deferred compensation plan, a tax-qualified retirement plan pursuant to Code Section 401(k) or a cafeteria plan pursuant to Code Section 125.
“Continuous Service” shall mean the period of time, uninterrupted by a termination of employment (other than a termination as a result of a transfer of employment among the Company or a Designated Subsidiary that does not constitute a “separation from service” pursuant to the Nonqualified Deferred Compensation Rules), that an Employee has been employed by the Company or a Designated Subsidiary (or any combination of the foregoing) immediately preceding an Offering Date. Such period of time shall include any approved leave of absence.
“Designated Subsidiary” shall mean each subsidiary (within the meaning of Section 424(f) of the Code) of the Company set forth on the attached Schedule A and as may be authorized from time to time by the Committee to participate in the Plan. The addition or deletion of a subsidiary from Schedule A will not require a formal amendment to this Plan.
“Employee” shall mean any person who is employed by the Company or a Designated Subsidiary as a common law employee. Any individual who performs services for the Company or a Designated Subsidiary solely through a leasing or employment agency shall not be considered an Employee.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.
“Exercise Date” shall mean the last business day of each Option Period, or such other date(s) as determined by the Committee.
“Fair Market Value” means, as of any specified date, (i) if the Common Stock is listed on a national securities exchange, the closing sales price of the Common Stock, as reported on the stock exchange composite tape on the immediately preceding date (or if no sales occur on that date, on the last preceding date on which such sales of the Common Stock are so reported); (ii) if the Common Stock is not traded on a national securities exchange but is traded over the counter at the time a determination of its fair market value is required to be made under the Plan, the average between the reported high and low bid and asked prices of Common Stock on the most recently preceding date on which Common Stock was publicly traded; or (iii) in the event Common Stock is not publicly traded at the time a determination of its value is required to be made under the Plan, the amount determined by the Committee in its discretion in such manner as it deems appropriate, taking into account all factors the Committee deems appropriate, including, without limitation, the Nonqualified Deferred Compensation Rules.
“Maximum Offering” shall mean the maximum number of shares of Common Stock that may be issued to each Participant under the Plan during any given time period. Unless otherwise determined by the Committee, the Maximum Offering during any single Option Period shall be the largest number of whole shares of Common Stock determined by multiplying $2,083 by the number of full months in the Option Period and dividing the result by the Fair Market Value on the Option Period commencement date of such Option Period.
“Nonqualified Deferred Compensation Rules” shall mean the limitations or requirements of Code Section 409A and the guidance and regulations promulgated thereunder.
“Offering Date” shall mean, as applicable, (i) the first business day of each Plan Year, and (ii) the date that is six months following the first business day of each Plan Year, or such other date(s) as determined by the Committee.
“Option Period” or “Period” shall mean the six month period beginning on each Offering Date.
“Option Price” shall mean the purchase price of a share of Common Stock hereunder as provided in Section 3.1 hereof.
“Participant” shall mean any Employee who (i) is eligible to participate in the Plan under Section 2.1 hereof and (ii) elects to participate.
“Plan” shall mean the Company’s Employee Stock Purchase Plan, as the same may be amended from time to time.
“Plan Account” or “Account” shall mean an account established and maintained in the name of each Participant.
“Plan Manager” shall mean any Employee appointed pursuant to Section 1.3 hereof.
“Plan Year” shall mean the twelve (12) month period commencing on the Effective Date as determined by the Committee pursuant to Section 1.4, and each successive twelve (12) month period thereafter, or such other period as may be specified by the Committee.
“Stock Purchase Agreement” shall mean the form prescribed by the Committee or the Company which must be completed and executed by an Employee who elects to participate in the Plan.
Section 1.3 Administration of Plan. Subject to oversight by the Board of Directors or the Board’s Compensation Committee, the Committee shall have the authority to administer the Plan and to make and adopt rules and regulations not inconsistent with the provisions of the Plan or the Code. In addition, the Committee shall correct any defect or supply any omission or reconcile any inconsistency in the Plan, or in any option granted under the Plan. The Committee shall adopt the form of Stock Purchase Agreement and all notices required hereunder. Its interpretations and decisions in respect to the Plan shall, subject as aforesaid, be final and conclusive. The Committee shall not be liable for any decision, determination or action made or taken in good faith in connection with the administration of the Plan. The Committee shall have the authority to appoint an Employee as Plan Manager and to delegate to the Plan Manager such authority with respect to the administration of the Plan as the Committee, in its sole discretion, deems advisable from time to time.
Section 1.4 Effective Date of Plan. The Plan has been amended and restated as of January 1, 2022 and was originally effective on January 1, 2015 (the “Effective Date”).
Section 1.5 Extension or Termination of Plan. The Plan shall continue in effect through the tenth anniversary of the Effective Date, unless terminated prior thereto pursuant to Section 4.3 hereof, or by the Board of Directors or the Compensation Committee of the Board, each of which shall have the right to extend the term of or terminate the Plan at any time. Upon any such termination, the balance, if any, in each Participant’s Account shall be refunded to him, or otherwise disposed of in accordance with policies and procedures prescribed by the Committee in cases where such a refund may not be possible.
ARTICLE II
PARTICIPATION
Section 2.1 Eligibility. Subject to the restrictions in Section 2.2 below, each Employee as of an Offering Date who is customarily employed as a full time employee of the Company or a Designated Subsidiary shall be eligible to participate in the Plan with respect to options granted under the Plan as of such date. Part-time Employees of the Company or a Designated Subsidiary shall be eligible to participate in the Plan; provided, however, that if the Employee is customarily employed for 20 hours or less per week, or if the Employee’s customary employment is for no more than five months in any calendar year, that part-time Employee will not be eligible to participate. For purposes of this Section 2.1, whether an Employee is “customarily” employed shall be determined by the Committee based on the Company’s or Designated Subsidiary’s policies and procedures in effect from time to time. Notwithstanding the foregoing, the Committee may from time to time prior to an Offering Date elect to exclude employees of the Company and the Designated Subsidiaries who would otherwise be eligible to participate pursuant to the preceding provisions of this Section 2.1 with respect to the Option Period beginning on such Offering Date (and any subsequent Option Periods as determined by the Committee) so long as such exclusion is permitted under Section 423 of the Code.
Section 2.2 Ineligible Employees. Notwithstanding any provisions of the Plan to the contrary, no Employee shall be granted a right to purchase shares of Common Stock under the Plan to the extent that:
(a) immediately after the grant, such Employee would own stock, and/or hold or own options, possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or any subsidiary corporation (determined under the rules of Sections 423(b)(3) and 424(d) of the Code); or
(b) immediately after the grant, such Employee’s right to purchase Company Stock under all employee stock purchase plans (as defined in Section 423 of the Code) of the Company and any related company would accrue at a rate which exceeds $25,000 in Fair Market Value of such Company Stock (determined at the time such purchase right is granted) for each calendar year in which such purchase right would be outstanding at any time; or
(c) the Employee is a citizen or resident of a jurisdiction other than the United States and (i) the grant of an option under this Plan would be prohibited under the laws of such jurisdiction, or (ii) compliance with the laws of the applicable foreign jurisdiction would cause the Plan to violate the requirements of Code Section 423.
Section 2.3 Payroll Deductions. Payment for shares of Common Stock purchased hereunder shall be made by authorized payroll deductions from each payment of Compensation in accordance with instructions received from a Participant. Said deductions shall be expressed as a percentage of the Participant’s Compensation. A Participant may increase or decrease the deduction on one occasion per Option Period. During an Option Period, a Participant may discontinue payroll deductions but have the payroll deductions previously made during that Option Period remain in the Participant’s Account to purchase Common Stock on the next Exercise Date, provided that he or she is an Employee as of that Exercise Date. Any amount remaining in the Participant’s Account after the purchase of Common Stock shall be refunded without interest upon the written request of the Participant. Any Participant who discontinues payroll deductions during an Option Period may again become a Participant for a subsequent Option Period by executing and filing another Stock Purchase Agreement in accordance with Section 2.1. Amounts deducted from a Participant’s Compensation pursuant to this Section 2.3 shall be credited to said Participant’s Account.
Section 2.4 Leaves of Absence. During a paid leave of absence approved by the Company and meeting the requirements of Treasury Regulation § 1.421-1(h)(2), a Participant's elected payroll deductions shall continue. If a Participant takes an unpaid leave of absence that is approved by the Company and meets the requirements of Treasury Regulation § 1.421-1(h)(2), then such Participant’s payroll deductions for such Option Period that were made prior to such leave may remain in the Plan and be used to purchase Common Stock under the Plan on the Exercise Date relating to such Option Period. If a participant takes a leave of absence that does not satisfy one of the two sentences above, then for purposes of the Plan he shall be considered to have terminated his employment and withdrawn from the Plan.
ARTICLE III
PURCHASE OF SHARES
Section 3.1 Option Price. The Option Price per share of the Common Stock sold to Participants hereunder shall be the lesser of (i) eighty-five percent (85%) of the Fair Market Value of the Common Stock on the Offering Date, or (ii) eighty-five percent (85%) of the Fair Market Value of the Common Stock on the last day of the Option Period; provided, however, that the Option Price per share of the Common Stock may be adjusted for subsequent Option Periods by the Committee subject to the requirements of Section 423 of the Code (and in no event shall the Option Price per share be less than the par value of the Common Stock).
Section 3.2 Purchase of Shares. On each Exercise Date, the amount in a Participant's Account shall be charged with the aggregate Option Price of the largest number of whole shares of Common Stock which can be purchased with said amount. The remaining balance, if any, in such account shall be refunded to Participant via payroll within one month of the Exercise Date. If the total number of shares of Common Stock for which options are exercised on any Exercise Date exceeds the maximum number of shares then available for sale under the Plan, the Company shall allocate the available shares by reducing the Participants’ designated payroll deduction authorization percentages in order of the highest percentages until the excess is eliminated, and any remaining balance of payroll deductions credited to the account of a participant under the Plan shall be refunded to him promptly.
Section 3.3 Limitations on Purchase. Notwithstanding any provisions of the Plan to the contrary, no Employee shall be granted an option under the Plan if, immediately after the grant, such Employee’s right to purchase Common Stock under all employee stock purchase plans (as defined in Section 423 of the Code) of the Company and any related company would accrue at a rate which exceeds $25,000 in Market Value of such Common Stock (determined at the time such purchase right is granted) for each calendar year in which such purchase right would be outstanding at any time.
To the extent necessary to comply with Code Section 423(b)(8) and the limitations on purchase in this Section 3.3, a Participant’s payroll deductions may be decreased to 0% during any Option Period which is scheduled to end during any calendar year, such that the aggregate of all payroll deductions accumulated with respect to such Option Period and any other Option Period ending within the same calendar year is no greater than twenty-five thousand dollars ($25,000). Payroll deductions shall re-commence at the rate provided in such Participant’s Stock Purchase Agreement at the beginning of the first Option Period which is scheduled to end in the following calendar year, unless suspended by the Participant pursuant to Section 2.3 of the Plan.
ARTICLE IV
PROVISIONS RELATING TO COMMON STOCK
Section 4.1 Common Stock Reserved. There shall be a maximum of 3,000,000 shares of Common Stock reserved for the Plan, subject to adjustment in accordance with Section 4.2 hereof. The aggregate number of shares which may be purchased under the Plan shall not exceed the number of shares reserved for the Plan.
Section 4.2 Adjustment for Changes in Common Stock. In the event that adjustments are made in the number of outstanding shares of Common Stock or said shares are exchanged for a different class of stock of the Company or for shares of stock of any other corporation by reason of merger, consolidation, stock dividend, stock split or otherwise, the Committee shall make appropriate adjustments in (i) the number and class of shares or other securities that may be reserved for purchase, or purchased, hereunder, and (ii) the Option Price. All such adjustments shall be made in the sole discretion of the Committee, and its decision shall be binding and conclusive.
Section 4.3 Insufficient Shares. If the aggregate funds available for purchase of Common Stock on any Exercise Date would cause an issuance of shares in excess of (x) the number provided for in Section 4.1 hereof or (y) the Maximum Offering, (i) the Committee shall proportionately reduce the number of shares which would otherwise be purchased by each Participant in order to eliminate such excess and (ii) the Plan shall automatically terminate immediately after such Exercise Date.
Section 4.4 Confirmation. Confirmation of each purchase of Common Stock hereunder shall be made available to the Participant in either written or electronic format. A record of purchases shall be maintained by appropriate entries on the books of the Company (or in such other manner as specified by the Committee).
Section 4.5 Rights as Shareholders. The shares of Common Stock purchased by a Participant on an Exercise Date shall, for all purposes, be deemed to have been issued and sold as of the close of business on such Exercise Date. Prior to that time, none of the rights or privileges of a shareholder of the Company shall exist with respect to such shares.
ARTICLE V
TERMINATION OF PARTICIPATION
Section 5.1 Voluntary Withdrawal. A Participant may withdraw from the Plan at any time by filing notice of withdrawal prior to the close of business on an Exercise Date. Upon withdrawal, the entire amount, if any, in a Participant’s Account shall be refunded to him without interest. Any Participant who withdraws from the Plan may again become a Participant in accordance with Section 2.1 hereof.
Section 5.2 Termination of Eligibility. If a Participant retires, he may elect to (i) withdraw the entire amount, if any, in his Plan Account, or (ii) have said amount used to purchase whole shares of Common Stock pursuant to Section 3.2 hereof on the next succeeding Exercise Date and have any remaining balance refunded without interest. For purposes of this Section 5.2, a Participant’s retirement age shall be 59 ½.
If a Participant ceases to be eligible under Section 2.1 hereof for any reason other than retirement, the dollar amount and the number of unissued shares in such Participant’s Account will be refunded or distributed to the Participant, or, in the case of death, the Participant’s designated beneficiary or estate, or otherwise disposed of in accordance with policies and procedures prescribed by the Committee in cases where such a refund or distribution may not be possible.
ARTICLE VI
GENERAL PROVISION
Section 6.1 Notices. Any notice which a Participant files pursuant to the Plan shall be made on forms prescribed by the Committee and shall be effective only when received by the Company.
Section 6.2 Condition of Employment. Neither the creation of the Plan nor participation therein shall be deemed to create any right of continued employment or in any way affect the right of the Company or a Designated Subsidiary to terminate an Employee.
Section 6.3 Transfer and Assignment. An option granted under the Plan shall not be transferable otherwise than by will or the laws of descent and distribution. Each option shall be exercisable, during his lifetime, only by the Employee to whom the option is granted. The Company shall not recognize and shall be under no duty to recognize any assignment or purported assignment by an Employee of his option or of any rights under his option or under the Plan.
Section 6.4 Withholding of Taxes; Other Charges. Each Participant shall, no later than the date as of which the value of an option under the Plan and/or shares of Common Stock first becomes includible in the income of the Participant for income tax purposes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any taxes of any kind required by law to be withheld with respect to such option or shares of Common Stock. The obligations of the Company under the Plan shall be conditional on the making of such payments or arrangements, and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant.
In particular, to the extent a Participant is subject to taxation under U.S. Federal income tax law, if the Participant makes a disposition, within the meaning of Code Section 424(c) of any share or shares of Common Stock issued to Participant pursuant to Participant’s exercise of an option, and such disposition occurs within the two-year period commencing on the day after the Offering Date or within the one-year period commencing on the day after the Exercise Date, Participant shall, within ten (10) days of such disposition, notify the Company thereof and thereafter immediately deliver to the Company any amount of federal, state or local income taxes and other amounts which the Company informs the Participant the Company may be required to withhold.
Participants shall be solely responsible for any commissions or other charges imposed with respect to the purchase or sale of shares of Common Stock pursuant to the terms of this Plan.
Section 6.5 Amendment of the Plan. The Compensation Committee may at any time, or from time to time, amend the Plan in any respect, except that, without approval of the shareholders, no amendment may increase the aggregate number of shares reserved under the Plan other than as provided in Section 4.2 hereof, materially increase the benefits accruing to Participants or materially modify the requirements as to eligibility for participation in the Plan. Any amendment of the Plan must be made in accordance with applicable provisions of the Code and/or any regulations issued thereunder, any other applicable law or regulations, and the requirements of the principal exchange upon which the Common Stock is listed.
Section 6.6 Application of Funds. All funds received by the Company by reason of purchases of Common Stock hereunder may be used for any corporate purpose.
Section 6.7 Legal Restrictions. The Company shall not be obligated to sell shares of Common Stock hereunder if counsel to the Company determines that such sale would violate any applicable law or regulation. Further, all Common Stock acquired pursuant to this Plan shall be subject to the Company’s policies concerning compliance with securities laws and regulations, as such policies may be amended from time to time. The terms and conditions of options granted hereunder to, and the purchase of shares by, persons subject to Section 16 of the Exchange Act, shall comply with any applicable provisions of Rule 16b-3. As to such persons, the Plan shall be deemed to contain, and such options shall contain, and the shares issued upon exercise thereof shall be subject to, such additional conditions and restrictions as may be required from time to time by Rule 16b-3 to qualify for the maximum exemption from Section 16 of the Exchange Act with respect to Plan transactions.
Section 6.8 Severability. If any provision of the Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions hereof; instead, each provision shall be fully severable and the Plan shall be construed and enforced as if said illegal or invalid provision had never been included herein.
Section 6.9 Gender. Whenever used herein, use of any gender shall be applicable to both genders.
Section 6.10 Electronic and/or Telephonic Documentation and Submission. Any of the payroll deduction authorizations, notices, forms, designations and other documents referenced in the Plan and their submission may be electronic and/or telephonic, as directed by the Committee.
Section 6.11 Governing Law. The Plan and all rights and obligations thereunder shall be constructed and enforced in accordance with the laws of the State of Texas and any applicable provisions of the Code and the related regulations, without giving effect to any conflict of law provisions thereof, except to the extent Texas law is preempted by federal law.
SCHEDULE A
DESIGNATED SUBSIDIARIES
(Effective January 1, 2022)
Frank’s International, LLC
Expro Americas, LLC
Expro Meters, Inc.
Expro Midstream Services, LLC
Schedule A
1
Exhibit 10.20
FRANK’S INTERNATIONAL N.V.
U.S. EMPLOYEE RESTRICTED STOCK UNIT (RSU) AGREEMENT
THIS RESTRICTED STOCK UNIT AGREEMENT including Exhibits A and B (this “Agreement”) evidences an award made as of the _____ day of February, XX 2020 (the “Date of Grant”), between FRANK’S INTERNATIONAL N.V., a limited liability company organized in the Netherlands (the “Company”), and __________________ (the “Employee”). The Company and Employee may be referred to individually as “Party,” and/or collectively as the “Parties.”
1. The Grant.
(a) Pursuant to the FRANK’S INTERNATIONAL N.V. 2013 LONG-TERM INCENTIVE PLAN, as the same may be amended from time to time (the “Plan”), and subject to the conditions set forth below, the Company hereby awards to Employee, effective as of the Date of Grant, an award consisting of an aggregate number of __________ restricted stock units (the “Restricted Stock Units” or “RSUs”), whereby each Restricted Stock Unit represents the right to receive one share of the Company’s common stock, par value €0.01 per share (“Common Stock”), in accordance with the terms and conditions set forth herein and in the Plan (the “Award”). The Restricted Stock Units subject to this Agreement are hereby designated as Performance Awards for purposes of Section 8 of the Plan. The number of Restricted Stock Units subject to this Award, as described in this Section 1(a), is the “target” number of shares that may become vested and shall be adjusted based on the attainment of the Performance Criteria described in Section 1(b) below and on Exhibit A.
(b) The Award’s performance period (“Performance Period”) and Performance Criteria (the “Performance Criteria”) are set forth in Exhibit A to this Agreement. The Performance Criteria has been established by the Compensation Committee of the Supervisory Board, which shall determine and certify whether such criteria have been satisfied.
(c) To the extent any provision of this Agreement conflicts with the expressly applicable terms of the Plan, those terms of the Plan shall control, and if necessary, the applicable terms of this Agreement shall be deemed amended so as to carry out the purpose and intent of the Plan.
2. Definitions. Capitalized terms used in this Agreement that are not defined below or in the body of this Agreement shall have the meanings given to them in the Plan. In addition to the terms defined in the body of this Agreement, the following capitalized words and terms shall have the meanings indicated below:
(a) “Cause” shall mean a determination by the Company or its employing affiliate (the “Employer”) that Employee (i) has engaged in gross negligence, incompetence, or misconduct in the performance of his or her duties with respect to the Employer or any of its affiliates; (ii) has failed to materially perform Employee’s duties and responsibilities to the Employer or any of its affiliates (other than due to Disability); (iii) has breached any material provision of this Agreement or any written agreement or corporate policy or code of conduct established by the Employer or any of its affiliates; (iv) has engaged in conduct that is, or could reasonably expected to be, materially injurious to the Employer or any of its affiliates; (v) has committed an act of theft, fraud, embezzlement, misappropriation, or breach of a fiduciary duty to the Employer or any of its affiliates; or (vi) has been convicted of, pleaded no contest to, or received adjudicated probation or deferred adjudication in connection with a crime involving fraud, dishonesty, or moral turpitude or any felony (or a crime of similar import in a foreign jurisdiction).
(b) “Disability” shall have the meaning set forth in any written employment or consulting agreement between the Employer and Employee. If Employee is not party to such an agreement that defines these terms, then for purposes of this Agreement, “Disability” shall mean Employee being unable to perform Employee’s duties or fulfill Employee’s obligations under the terms of his or her employment by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months as determined by the Employer and certified in writing by a competent medical physician selected by the Employer.
(c) “Forfeiture Restrictions” shall have the meaning specified in Section 3(a) hereof.
(d) “Involuntary Termination” shall mean a termination of Employee’s employment by the Company or an affiliate for a reason other than for Cause.
(e) “Section 409A” shall mean Section 409A of the Internal Revenue Code of 1986, as amended.
(f) “CIC Severance Plan” shall mean the Company’s Amended and Restated U.S. Executive Change-In-Control Severance Plan adopted on January 21, 2019, and any amendments or restatements of this plan.
(g) “Special Vesting Agreement” means an agreement which permits Employee’s RSUs to continue vesting following termination of Employee’s employment or service with the Company or with an affiliate, as applicable, in exchange for Employee’s strict compliance with designated post-termination conditions, as determined by the Committee pursuant to a written agreement executed at the time Employee’s termination of employment occurs. The Compensation Committee may, in is sole discretion, elect to limit coverage of a Special Vesting Agreement to only a portion of Employee’s RSUs.
3. Restricted Stock Units. By acceptance of this Restricted Stock Unit award, Employee agrees with respect thereto as follows:
(a) Forfeiture Restrictions. The Restricted Stock Units are restricted in that they may not be sold, assigned, pledged, exchanged, hypothecated, or otherwise alienated or transferred, encumbered, or disposed of, and in the event of termination of Employee’s employment or service with the Company for any reason other than death or Disability, or, to the extent provided in Section 3(c)(4) below, on account of an Involuntary Termination, Employee shall, for no consideration, forfeit to the Company all Restricted Stock Units to the extent then subject to the Forfeiture Restrictions. The prohibition against transfer and the obligation to forfeit and surrender Restricted Stock Units to the Company upon termination of employment or services as provided in this Section 3(a) are herein referred to as the “Forfeiture Restrictions.” The Forfeiture Restrictions shall be binding upon and enforceable against any transferee of Restricted Stock Units.
(b) Lapse of Forfeiture Restrictions (Vesting). Provided that: (i) Employee has been continuously employed by the Company from the Date of Grant through the _____th of February, 2023 (the scheduled “Lapse (Vesting) Date”), (ii) the Company attains the Performance Criteria as described on Exhibit A, and (iii) Employee is in compliance with Exhibit B and all other agreements or obligations to the Company, the Forfeiture Restrictions shall lapse, and the number of Restricted Stock Units as determined on Exhibit A shall become vested. Except as provided in Subsection (c) below, the Company will issue one share of Common Stock to Employee for each vested Restricted Stock Unit as soon as practicable after the Lapse (Vesting) Date but in no event later than seventy-five (75) days after the end of the Performance Period. Any Restricted Stock Units with respect to which the Forfeiture Restrictions do not lapse in accordance with this Section 3(b) (and any associated unvested dividend equivalents) shall be forfeited to the Company for no consideration as of the date of the termination of Employee’s employment with the Company.
(c) Accelerated Vesting.
(1) Death. If Employee’s employment with the Company is terminated by reason of death, then the Forfeiture Restrictions shall lapse with respect to 100% of the Restricted Stock Units at the “target” level effective on the date such death occurs and Employee’s vested RSUs shall be settled in the manner provided under Section 3(d) below.
(2) Disability. If Employee’s employment with the Company is terminated by reason of Disability, then the Forfeiture Restrictions shall lapse with respect to 100% of the Restricted Stock Units at the “target level” effective as of the date of Employee’s “separation from service” (as defined under the Section 409A) due to the Employee’s Disability and Employee’s vested RSUs shall be settled in the manner provided under Section 3(d) below.
(3) Change in Control. If a Change in Control occurs and Employee is a participant in the CIC Severance Plan, then the terms of Section 3 of such plan are hereby incorporated by reference into this Agreement.
(4) Involuntary Termination. If Employee’s employment with the Company is terminated due to an Involuntary Termination then, the Company may, in its complete discretion, elect to enter into a Special Vesting Agreement with Employee pursuant to which the Forfeiture Restrictions shall not lapse upon such termination of employment, but instead this Award shall continue to remain outstanding and Employee will be treated, solely for purposes of satisfying the requirements for a lapse of Forfeiture Restrictions under Section 3(b), as continuing in the employment of the Company throughout the period during which he/she continuously satisfies the obligations set forth in Exhibit B attached hereto and incorporated herein by reference as part of this Agreement. If the provisions of this Section 3(c)(4) apply with respect to Employee, the number of Restricted Stock Units that vest under this Agreement shall be determined based on the Company’s attainment of the Performance Criteria described on Exhibit A and such vested Restricted Stock Units shall be settled in the manner provided under Section 3(d) below. As further condition to receiving any Special Vesting Agreement, Employee shall provide a release of all claims against the Company in a form acceptable to the Company upon entering the Special Vesting Agreement and also Employee must continuously comply with any other obligations to, or agreements with, the Company.
(d) Payments. Subject to compliance with all terms of this Agreement and Exhibit B, the Company will issue one share of Common Stock for each vested Restricted Stock Unit to Employee as soon as practicable after (i) the scheduled Lapse (Vesting) Date with respect to the number of Restricted Stock Units as determined pursuant to Exhibit A (but in no event later than seventy-five (75) days after the end of the Performance Period), (ii) the date of Employee’s death or (iii) the date of the Employee’s separation from service due to the Employee’s Disability. The Company shall deliver the shares of Common Stock in book-entry form, with such legends or restrictions thereon as the Committee may determine to be necessary or advisable in order to comply with applicable securities laws. Employee shall complete and sign any documents and take any additional action that the Company may request to enable it to deliver shares of Common Stock on Employee’s behalf. In the event that all or part of the Restricted Stock Units granted pursuant to this Agreement provides for a deferral of compensation within the meaning of the Section 409A, it is the general intention, but not the obligation, of the Company to design this Award to comply with the Section 409A and such Award should be interpreted accordingly. Notwithstanding anything to the contrary contained herein, in the event that Employee is a “specified employee” (as defined under the Section 409A) when Employee becomes entitled to a payment or settlement under the Award which is subject to the Section 409A on account of a “separation from service” (as defined under the Section 409A), to the extent required by the Code, such payment shall not occur until the date that is six months plus one day from the date of such separation from service. Any amount that is otherwise payable within the six-month period described herein will be aggregated and paid in a lump sum without interest. Further, for purposes of the Section 409A, each payment or settlement of any portion of the Restricted Stock Units under this Agreement shall be treated as a separate payment of compensation.
(e) Restrictive Covenants. Employee acknowledges and recognizes the highly competitive nature of the businesses of the Company and accordingly agrees, in his/her capacity as an employee and equity holder in the Company, to the provisions of Exhibit B to this Agreement. Employee acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Exhibit B or any other similar obligations Employee has towards the Company under applicable law or other agreements (which includes any attempt to have any provision in Exhibit B or other similar obligations of Employee declared overbroad or unenforceable) (a “Restrictive Covenant Violation”) would be available but inadequate and the Company would suffer irreparable damages as a result of such a Restrictive Covenant Violation. In recognition of this fact, Employee agrees that, in the event of a Restrictive Covenant Violation, in addition to any remedies available to the Company under law, including damages and attorneys’ fees, remedies available the Company, without posting any bond, shall be to (i) cease making any dividend or other payments or providing any benefit otherwise required by this Agreement; (ii) terminate future vesting and cause forfeiture of all vested and unvested RSUs and common stock issued or issuable under this Agreement without consideration; (iii) cause forfeiture of the gross value of the common stock issued to Employee in the one year period prior to the Restrictive Covenant Violation (determined as of the date such stock was issued to Employee and using the Fair Market Value (as defined in the Plan) of the Company’s common stock on that date); (iv) receive repayment of any cash payments made to Employee with respect to the RSUs during the prior twelve month period; (v) obtain a temporary restraining order, temporary or permanent injunction; or (vi) specific performance or any other equitable remedy which may then be available.
(f) Corporate Acts. The existence of the Restricted Stock Units shall not affect in any way the right or power of the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization, or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities, the dissolution or liquidation of the Company or any sale, lease, exchange, or other disposition of all or any part of its assets or business, or any other corporate act or proceeding.
4. Withholding of Tax. To the extent that the receipt of the Restricted Stock Units (or any Common Stock or dividend equivalents related thereto) or the lapse of any Forfeiture Restrictions results in compensation, income or wages to Employee for federal, state, or local tax purposes, Employee shall deliver to the Company at the time of such receipt or lapse, as the case may be, such amount of money as the Company may require to meet its minimum obligation under applicable tax laws or regulations, and if Employee fails to do so (or if Employee instructs the Company to withhold cash or stock to meet such obligation), the Company shall withhold from any cash or stock remuneration (including withholding any shares of the Common Stock distributable to Employee under this Agreement) then or thereafter payable to Employee, any tax required to be withheld by reason of such resulting compensation income or wages. The Company is making no representation or warranty as to the tax consequences to Employee as a result of the receipt of the Restricted Stock Units, the treatment of dividend equivalents, the lapse of any Forfeiture Restrictions, or the forfeiture of any Restricted Stock Units pursuant to the Forfeiture Restrictions.
5. No Shareholder Rights. The Restricted Stock Units granted pursuant to this Agreement do not and shall not entitle Employee to any rights of a holder of Common Stock prior to the date that shares of Common Stock are issued to Employee in settlement of the Award. Employee’s rights with respect to the Restricted Stock Units shall remain forfeitable as stated in this Agreement.
6. Clawback. Notwithstanding any provisions in the Agreement to the contrary, any compensation, payments, or benefits provided hereunder (or profits realized from the sale of the Common Stock delivered hereunder), whether in the form of cash or otherwise, shall be subject to a clawback (i) to the extent necessary to comply with the requirements of any applicable law, including but not limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, section 304 of the Sarbanes Oxley Act of 2002 or any regulations promulgated thereunder; (ii) to the extent provided by any policy or procedure adopted by the Company or any individual agreement between Employee and the Company; or (iii) pursuant to the terms of this Agreement in the event of a Restrictive Covenant Violation.
7. Employment Relationship. For purposes of this Agreement (except as otherwise provided in Section 3(c)(4) hereof), Employee shall be considered to be in the employment of the Company as long as Employee remains an employee of either the Company or a Subsidiary. Without limiting the scope of the preceding sentence, it is specifically provided that Employee shall be considered to have terminated employment or service with the Company at the time of the termination of the “Subsidiary” status of the entity or other organization that employs or engages Employee. Nothing in the adoption of the Plan, nor the award of the Restricted Stock Units thereunder pursuant to this Agreement, shall confer upon Employee the right to continued employment by or service with the Company or affect in any way the right of the Company to terminate such employment or service at any time. Unless otherwise provided in a written employment or consulting agreement or by applicable law, Employee’s employment by or service with the Company shall be on an at-will basis, and the employment or service relationship may be terminated at any time by either Employee or the Company for any reason whatsoever, with or without cause or notice. Any question as to whether and when there has been a termination of such employment or service, and the cause of such termination, shall be determined by the Committee or its delegate, in its sole discretion, and its determination shall be final.
8. Notices. Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case of Employee, such notices or communications shall be effectively delivered if hand delivered to Employee at Employee’s principal place of employment or if sent by registered or certified mail or other mail delivery method that provides a receipt, to Employee at the last address Employee has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered if sent by registered or certified mail or other mail delivery service that provides a receipt, to the General Counsel of Company at its principal executive offices.
9. Entire Agreement; Amendment. This Agreement (including Exhibit B) and the documents incorporated by reference herein replace and merge all previous agreements and discussions relating to the same or similar subject matters between Employee and the Company and constitute the entire agreement between Employee and the Company with respect to the subject matter of this Agreement, except as otherwise provided herein. This Agreement including Exhibit B may not be modified in any respect by any verbal statement, representation or agreement made by any employee, officer, or representative of the Company or by any written agreement unless signed by an officer of the Company who is expressly authorized by the Company to execute such document. The foregoing notwithstanding, this Agreement does not modify or replace in any way any obligations Employee has to the Company or its related entities, under any agreement or applicable law, for non-disclosure, non-competition, non-solicitation, or non-interference.
10. Protection of Benefits. Without the consent of an affected Participant, no such Board or Committee action (including but not limited to any amendment, alteration, suspension, discontinuance or termination of the Plan or this Agreement) may materially and adversely affect the rights of Employee under this Award Agreement, subject to section 10(c) of the Plan.
11. Severability. If any part of this Agreement including Exhibit B is found to be unenforceable by a court of competent jurisdiction, then such unenforceable portion will be modified to be enforceable, or severed from this Agreement if it cannot be modified, and such modification or severance shall have no effect upon the remaining portions of this Agreement and Exhibit B which shall remain in full force and effect.
12. No Waiver. No failure by either Party at any time to give notice of any breach by the other Party of, or to require compliance with, any condition or provision of this Agreement shall (i) be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time or (ii) preclude insistence upon strict compliance in the future.
13. Binding Effect; Survival. The provisions of Sections 3(e) and 6 and Exhibit B shall survive the lapse of the Forfeiture Restrictions without forfeiture. This Agreement and Exhibit B shall be binding upon and shall inure to the benefit of the Company, and automatically to any other person, association, or entity which may hereafter acquire or succeed to all or substantially all of the business or assets of the Company by any means whether direct or indirect, by purchase, merger, consolidation, or otherwise. Employee’s obligations under this Agreement and Exhibit B are personal and such obligations of Employee shall not be voluntarily or involuntarily assigned, alienated, or transferred by Employee without the prior written consent of the Company.
14. Governing Law/Forum/Jury Waiver. The Parties agree and acknowledge that this Agreement and Exhibit B shall be governed by, and construed in accordance with, the laws of the State of Texas, without regard to conflicts of laws principles. With respect to any claim or dispute arising out of or related to this Agreement or Exhibit B, the Parties hereby consent to the exclusive jurisdiction, forum and venue of the state and federal courts located in Harris County, Texas, unless another forum or venue is required by law. Both the Company and Employee agree to waive a trial by jury of any or all issues arising under or connected with this Agreement or Exhibit B, and consent to trial by the judge.
IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the date first above written.
FRANK’S INTERNATIONAL N.V. | ||||
By: | ||||
Name: | ||||
Title: | ||||
EMPLOYEE: | ||||
By: | ||||
Print Name: |
Exhibit A
Performance Period and Criteria
Performance Period: January 1, 2020 to December 31, 2022
First Achievement Period: January 1, 2020 to December 31, 2020
Second Achievement Period: January 1, 2021 to December 31, 2021
Third Achievement Period: January 1, 2022 to December 31, 2022
Performance Criteria:
Payment under this Award is determined based on relative performance using Total Stockholder Return (“TSR”). No portion of this Award will be earned if the Company’s performance during the Performance Period is below the threshold level of the Performance Criteria as described below. Any determination of performance under this Agreement shall be determined by the Committee in accordance with the Plan’s terms.
The Company’s TSR shall be as measured against the TSR of the Comparator Group during the Performance Period. For this purpose, the companies included in the SPDR® S&P® Oil & Gas Equipment and Services ETF (XES) on the Date of Grant will be the “Comparator Group”. Such comparison will be based on a percentile approach as detailed below with any payment based on linear interpolation if performance is between threshold and maximum levels. TSR for the Company and the Comparator Group shall be calculated separately for the First Achievement Period, Second Achievement Period and Third Achievement Period resulting in a weighted average payout at the end of the Performance Period (using a 30-day averaging period for the first 30 calendar days and the last 30 calendar days of each annual achievement period to mitigate the effect of stock price volatility). TSR calculation to assume reinvestment of dividends.
* Based on the Target Level for the TSR Based Award set forth on the first page of this Agreement.
Adjustments to Comparator Group. The Comparator Group may be adjusted or changed by the Committee as circumstances warrant, including the following:
(1) If a Comparator Group company becomes bankrupt, the bankrupt company will remain in the Comparator Group positioned at one level below the lowest performing non-bankrupt Comparator Group. In the case of multiple bankruptcies, the bankrupt Comparator Group companies will be positioned below the non-bankrupt companies in chronological order by bankruptcy date with the first to go bankrupt at the bottom.
(2) If a Comparator Group company is acquired by another company, including through a management buy-out or going-private transaction, the acquired Comparator Group company will be removed from the Comparator Group for the entire Performance Period; provided that if the acquired Comparator Group company became bankrupt prior to its acquisition it shall be treated as provided in paragraph (1), above, or if it shall become delisted according to paragraph (5) below prior to its acquisition it shall be treated as provided in paragraph (5).
(3) If a Comparator Group company spins-off a portion of its business in a manner which results in the Comparator Group company and the spin-off company both being publicly traded, the Comparator Group company will be removed from the Comparator Group for the entire Performance Period and the spin-off company will not be added to the Comparator Group.
(4) If a Comparator Group company acquires another company, the acquiring Comparator Group company will remain in the Comparator Group for the Performance Period and the acquired Comparator Group Company will be removed from the Comparator Group for the entire Performance Period
(5) If a Comparator Group company is delisted from either the New York Stock Exchange (NYSE) or the National Association of Securities Dealers Automated Quotations (NASDAQ) such that it is no longer listed on either exchange, such delisted Comparator Group company will remain in the Comparator Group positioned at one level below the lowest performing listed company and above the highest ranked bankrupt Comparator Group company (see paragraph (1) above). In the case of multiple delistings, the delisted Comparator Group companies will be positioned below the listed and above the bankrupt Comparator Group companies in chronological order by delisting date with the first to be delisted at the bottom of the delisted companies. If a delisted company shall become bankrupt, it shall be treated as provided in paragraph (1) above. If a delisted company shall be later acquired, it shall be treated as a delisted company under this paragraph. If a delisted company shall relist during the Performance Period, it shall remain in its relative delisted position determined under this paragraph.
(6) If the Company’s or any Comparator Group company’s stock splits (or if there are other similar subdivisions, consolidations or changes in such company’s stock or capitalization), such company’s TSR performance will be adjusted for the stock split so as not to give an advantage or disadvantage to such company by comparison to the other Comparator Group companies.
EXHIBIT B
U.S. EMPLOYEE CONFIDENTIALITY AND RESTRICTIVE COVENANT AGREEMENT
This U.S. Employee Confidentiality and Restrictive Covenant Agreement (“Agreement”) is made and entered as of the XX day of February, 2020, between __________________ (“Employee”) and Frank’s International, LLC and Blackhawk Specialty Tools, LLC (the “Company”) and for the benefit of the Company, Frank’s International N.V. and their subsidiary and affiliated companies (collectively referred to as the “Company Group”). The Company and Employee may be referred to individually as “Party,” and/or collectively as the “Parties.” The Parties agree as follows:
1. Company Promise to Provide Access to Company Group Confidential Information and Goodwill. Employee recognizes that the Company Group has made significant investments of time and resources in establishing substantial relationships with the Company Group’s employees and Company Relationships (defined below) including existing and prospective customers, suppliers, contractors, sub-contractors, and other business relationships and developing the Company Group’s reputation and goodwill. Employee further recognizes that the Company Group has further invested valuable time and resources to obtain and develop and protect the Company Group’s proprietary business information, trade secrets, know-how, and other Confidential Information (defined below). The protection of Confidential Information and Company Relationships is vital to the interests of the Company Group.
1.1. In exchange for Employee’s promises made in this Agreement, the Company promises to provide to Employee, consistent with Employee’s position, access to certain information regarding the business and activities of the Company Group. Employee acknowledges that he/she will have access to confidential information, training and related goodwill (“Confidential Information,” defined more fully below) as well as Company Relationships (defined below) while employed by the Company, including without limitation, any information and goodwill obtained by Employee during the course of Employee’s employment with the Company, concerning the business or affairs of the Company Group or that of its customers, suppliers, contractors, subcontractors, agents or representatives.
1.2. Confidential Information includes any information about the Company Group that has not been intentionally publicly disclosed by the Company Group. Confidential Information likewise includes all information provided to the Company Group by its customers, suppliers, contractors, subcontractors, business partners, joint venturers, agents or representatives which has not been intentionally publicly disclosed by these persons or entities. While Employee is obligated to comply with all non-disclosure requirements in place with the Company Group’s customers, suppliers, contractors, subcontractors, business partners, joint venturers, agents or representatives, the obligations under this Agreement are broader and apply to any non-public information the Company Group or Employee receives from or has access to regarding these third parties, regardless of whether the Company Group is contractually obligated to a third party to keep such information confidential. Confidential Information includes, without limitation, information relating to the services, products, policies, practices, pricing, costs, suppliers, vendors, methods, processes, techniques, finances, administration, employees, devices, trade secrets and operations of the Company Group, any inventions, modifications, discoveries, designs, developments, improvements, processes, software programs, work of authorship, documentation, formula, data, technique, technology, know-how, secret or intellectual property right by any Company Group employee, Company Group customers or potential customers, marketing, sales activities, development programs, promotions, manufacturing, machining, drawings, future and current plans regarding business and customers, e-mails, notes, manufacturing documents, engineering documents, formulas, financial statements, bids, project reports, handling documentation, machinery and compositions, all financial data relating to the Company Group, business methods, accounting and tracking methods, books, inventory handling procedure, credit, credit procedures, indebtedness, financing procedures, investments, trading, shipping, production, processing, welding, fabricating, assembling, renting, domestic and foreign operations, customer and vendor and supplier lists, data storage in any medium (electronic or hard copy) contact information, lab reports, lab work, and any data or materials used in and created during the development of any of the aforementioned materials or processes.
2. Employee Promise Not to Disclose Confidential Information. Employee acknowledges that this Confidential Information is confidential, proprietary, not known outside of the Company Group’s business, valuable, special and/or a unique asset of the Company Group which belongs to the Company Group and gives the Company Group a competitive advantage. If this Confidential Information were disclosed to third parties or used by third parties and/or Employee, such disclosure or use would seriously and irreparably damage the Company Group and cause the loss of certain competitive advantages. Employee promises he/she has not and will not disclose in any way, or use for Employee’s own benefit or for the benefit of anyone besides the Company Group, the Confidential Information described above and obtained by Employee as part of his/her employment with the Company. Employee acknowledges that this promise of non-disclosure and non-use continues indefinitely and specifically does not expire at the end of Employee’s employment with the Company. This Section does not apply to or in any way restrict or impede Employee from any communications with government agencies as stated below, or complying with any applicable law or court order, or exercising whistleblower or other protected non-waivable legal rights.
3. Non-Disparagement. Employee agrees that he/she shall not at any time make, publish, or communicate to any person or entity or in any public forum, any defamatory or disparaging remarks, comments, or statements concerning the Company Group or its businesses, business practices, or any of its employees or officers, and existing and prospective customers, suppliers, investors and other associated third parties. This Section does not apply to or in any way restrict or impede Employee from any communications with government agencies as stated below, or complying with any applicable law or court order, or exercising whistleblower or other protected non-waivable legal rights.
4. Non-Competition/Non-Solicitation/Non-Interference. Employee acknowledges that the highly competitive nature of the Company’s business, Employee’s position with the Company, and the Confidential Information, Company Relationships, training, and goodwill provided to Employee during his/her employment with the Company, support Employee’s promises not to compete with the Company, and not to solicit or interfere with the Company’s relationships with its customers and employees as stated below in the rest of this Section 4, during his/her employment with the Company and for twelve (12) months following his/her separation from the Company (“the Restricted Period”) regardless of the reason for the separation, within the Restricted Area, which is defined as the Louisiana parishes of Lafayette, Iberia, and Terrebonne and the Texas counties of Harris, Fort Bend, Montgomery, Brazoria, and Galveston, as well as any county/parish in which the Employee engaged in Company Business during the last twelve (12) months of Employee’s employment with the Company.
4.1. Non-Competition. During the Restricted Period and in the Restricted Area, Employee will not engage in or carry on, directly or indirectly, a business similar to and competitive with the business of the Company (“Competing Business”). The business of the Company (“Company Business”) specifically includes, but is not limited to, the business involved with the land operations, offshore operations, tubular sales, casing installation, completion installation, Blackhawk cementing and well construction, and specialty products divisions of the Company’s business as well as any divisions in operation during Employee’s employment with the Company, and includes the Company’s current and planned (future) business, bids, projects, contracts, and Company Relationships. Accordingly, during the Restricted Period and in the Restricted Area, Employee will not, directly or indirectly, own, manage, operate, join, become employed or engaged by, partner in, control, participate in, be connected with, loan money or sell or lease equipment or property to, or otherwise be affiliated with any Competing Business. For further clarity, Competing Business shall include the design, sales, marketing, fabrication, installation, provision, rental, repair, or manufacturing of products or services similar to or functionally equivalent to those designed, sold, installed, repaired, fabricated, manufactured, produced, provided, rented, marketed or licensed by the Company. The foregoing notwithstanding, Employee may own less than two percent (2%) of the outstanding stock of any class for a Competing Business which sells its stock on a national securities exchange and if Employee is not involved in the management of such Competing Business. Further, Competing Business and Restricted Area, as defined above, shall not include any geographic areas, services, or products of the Company in which Employee had no responsibility, no involvement, and about which he/she had no access to Confidential Information or Company Relationships during the last twelve (12) months of Employee’s employment with the Company.
4.2. Non-Solicitation/Non-Interference of Employees/Contractors. During the Restricted Period and in the Restricted Area, Employee further agrees that he/she will not, directly or indirectly, interfere with the Company’s relationship with, solicit or hire or otherwise encourage to change or leave their employment or contractor position with the Company, any person currently employed by or engaged as a contractor to the Company, and who was employed by or engaged by the Company during Employee’s employment with the Company. This restriction shall not include any current or potential employee or contractor of the Company for whom Employee had no responsibility, no involvement, and about whom he/she had no access to Confidential Information during his/her employment with the Company. This restriction does not apply to postings and advertisements regarding job opportunities which are made available to the public and are not directed specifically toward Company employees or contractors.
4.3. Non-Solicitation/Non-Interference of Customers, Vendors, Suppliers. During the Restricted Period and in the Restricted Area, Employee further agrees that he/she will not, directly or indirectly, solicit business of a similar nature to that provided by the Company from any customer of the Company, nor encourage or otherwise cause any current or potential customer, vendor or supplier of the Company, including those for the Company’s current or planned (future) projects, bids, or contracts, to cease or materially change their current or potential business relationship with the Company or otherwise attempt to interfere with these current or potential Company Relationships. For purposes of this Section, “current and potential customer, vendor or supplier” shall mean any entity or person with whom the Company has been pursuing a business relationship during Employee’s employment with the Company, and any “potential business relationship” shall mean any relationship pursued by the Company during Employee’s employment with the Company, including any current or planned (future) bids, projects or contracts. All of these relationships in the aggregate are defined as “Company Relationships.” This restriction shall not include any Company Relationship for which Employee had no responsibility, no involvement, and about which he/she had no access to Confidential Information during his/her employment with the Company.
5. Intellectual Property. Employee assigns to the Company all right, title and interest Employee has or may acquire in and to any Intellectual Property that results from Employee’s efforts, either alone or jointly with others, during the period of Employee’s employment with the Company. “Intellectual Property” means any and all inventions, discoveries, developments, innovations, processes, designs, methods, technologies, formulae, models, research and development, patents, patent applications, trade secrets and other Confidential Information and works of authorship (including copyrightable works, copyrights and copyright applications), and improvements to any of the foregoing that, either alone or jointly with others: (a) result from any work performed on behalf of the Company, or from a research project suggested by the Company; (b) relate in any way to the existing or contemplated business of the Company; or (c) result from the use of the Company’s time, material, employees or facilities. Employee acknowledges and agrees that any work Employee performs for the Company during employment that constitutes copyrightable subject matter shall be considered a “work made for hire” as that term is defined in the United States Copyright Act (17 U.S.C. Section 101). Employee hereby ratifies and otherwise transfers and assigns to the Company, and waives and agrees never to assert, any and all rights to claim authorship, rights to object to any modification or other moral rights that Employee may have in or with respect to any Intellectual Property and/or works made for hire, even after termination of Employee’s employment. Employee further agrees that if, in the course of providing services to the Company, Employee incorporates any intellectual property owned by Employee, the Company is hereby granted a nonexclusive, royalty-free, perpetual, irrevocable, worldwide right and license to make, have made, copy, modify, use, distribute and sell such intellectual property or products incorporating such intellectual property of Employee. During and after Employee’s employment, Employee will assist and cooperate with the Company for no additional compensation, but with the Company reimbursing any of Employee’s necessary out of pocket expenses. Employee will complete and sign documents requested by the Company to acquire, transfer, maintain, perfect and enforce the Company’s rights to the Intellectual Property, including patent, copyright, trade secret and other protections for the Company’s Intellectual Property.
6. Employee Acknowledgement of Need For Protections and Restrictions Promised; Modifications of Restrictions. Employee acknowledges and understands that his/her promises in this Agreement restrict some of his/her actions during and after employment with the Company. However, Employee acknowledges and agrees that he/she has or will receive sufficient consideration from the Company under this Agreement to justify such restrictions and that such restrictions are reasonable and necessary to protect the Company’s legitimate business interests. Employee understands and agrees that the restrictions in this Agreement shall continue beyond the termination of Employee’s employment, regardless of the reason for such termination.
7. Remedies. Employee acknowledges that money damages would not be a sufficient remedy for any breach of this Agreement by Employee, and that the Company shall be entitled to enforce this Agreement by specific performance and immediate injunctive relief as remedies for such breach or any threatened breach. Such remedies shall not be deemed the exclusive remedies for a breach of this Agreement, but shall be in addition to all remedies available to the Company at law, under common and statutory law, the Texas Uniform Trade Secrets Act, Louisiana Uniform Trade Secrets Act, the Defend Trade Secrets Act, under other agreements, or in equity, including, without limitation, the recovery of attorneys’ fees incurred by the Company in enforcing this Agreement or otherwise protecting its rights, as well as damages caused by Employee and his/her agents involved in such breach.
8. Notification to Subsequent Employers. Employee further acknowledges that in order to enforce his/her obligations under this Agreement, the Company may need to notify subsequent actual or potential employers of Employee’s obligations under this Agreement. Employee agrees to notify the Company of the identity of his/her employers for the Restricted Period before accepting a position with such employers, and Employee consents to the Company providing notification to these employers of Employee’s ongoing obligations to the Company under this Agreement or under other applicable law. Notices to the Company should be made in a manner that provides a receipt of delivery and addressed to: Senior Vice-President Human Resources, 10260 Westheimer Road, Suite 700, Houston, Texas 77042.
9. Tolling of Restricted Period. The duration of the Restricted Period shall be tolled and suspended for any period that Employee is in violation of these covenants up to a period of one (1) year, unless such tolling is disallowed under applicable law.
10. Return of Confidential Information and Company Property. All written, electronic, or other data, materials, records and other documents made by, or coming into the possession or control of, Employee which contain or disclose Confidential Information shall be and remain the property of the Company. Upon request, and in any event, without request upon termination of Employee’s employment with the Company for any reason, Employee shall promptly return, without deletion, copying or alteration, all written or electronic materials, data, information, records and any other property in Employee’s possession or control, whether located on or off Company premises, which may concern the Company, its current or potential customers, vendors or suppliers, whether or not confidential or proprietary in nature.
11. At-Will Employment. Employee acknowledges and agrees that nothing in this Agreement is a guarantee or assurance of employment for any specific period of time. Rather, Employee understands that he/she is an at-will employee and that either Employee or the Company may terminate this at-will employment relationship at any time for any reason or no reason.
12. No Interference with Rights. Employee acknowledges and agrees that nothing in this Agreement is intended to, nor does it, interfere with or restrain any employee’s right to share or discuss information regarding his/her wages, hours, or other terms and conditions of employment in the exercise of any rights provided by the National Labor Relations Act or other applicable laws. Further, Employee acknowledges and agrees that this Agreement is not intended to, nor does it, interfere with or restrain Employee’s right to report unlawful actions to the Securities and Exchange Commission or any other law enforcement or administrative agency, or to participate in any such agency’s investigation, or to engage in any whistleblower or other activity protected or required by law. Further, neither this Agreement nor any other agreement or policy of the Company shall impose civil or criminal liability under any trade secret law or otherwise prohibit Employee from the following disclosures: (a) disclosures of trade secrets made in confidence to a federal, state, or local government official, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law, or (b) disclosures of trade secrets made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal or per court order, or (c) disclosures of trade secrets by a plaintiff to his/her attorney in a lawsuit for retaliation for reporting a suspected violation of law and use of the trade secret information in the court proceeding, if any document containing the trade secrets is filed under seal and does not disclose the trade secrets, except pursuant to court order. Employee is not required to notify Company of these allowed reports or disclosures.
13. Governing Law/Forum/Jury Waiver. The Parties agree and acknowledge that this Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas, without regard to conflicts of laws principles. With respect to any claim or dispute arising out of or related to this Agreement, the Parties hereby consent to the exclusive jurisdiction, forum and venue of the state and federal courts located in Harris County, Texas, unless another forum or venue is required by law. The Parties agree to waive a trial by jury of any or all issues arising under or connected with this Agreement, and consent to trial by the judge.
14. No Duties to Other Employers. Employee represents that he/she is not bound by the terms of any agreement with any previous employer or other party other than the Company to: (a) refrain from using or disclosing any information that would be necessary to and/or reasonably expected to be utilized by Employee in the course of the performance of his/her duties in the employ of the Company or (b) refrain from engaging in any business activity that would otherwise preclude Employee from performance of his/her duties in the employ of the Company. Employee further represents that Employee’s performance of his/her duties does not and will not violate any agreement with any prior employer or third party. Employee agrees not to use or disclose during his/her employment with the Company any information which belongs to another entity or person.
15. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Company Group, and automatically to any other person, association, or entity which may hereafter acquire or succeed to all or substantially all of the business or assets of the Company Group by any means whether direct or indirect, by purchase, merger, consolidation, or otherwise. Employee’s obligations under this Agreement are personal and such obligations of Employee shall not be voluntarily or involuntarily assigned, alienated, or transferred by Employee without the prior written consent of the Company.
16. Representations; Modifications; Other Agreements; Severability. Employee acknowledges that he/she has not relied upon any representations or statements, written or oral, not set forth in this Agreement. This Agreement cannot be modified except in writing and signed by both parties. This Agreement supplements and does not limit or restrict or alter in any way any obligations that the Employee may have undertaken in other agreements with the Company Group or which apply to Employee under any applicable law, including but not limited to, the Texas Uniform Trade Secrets Act, the Louisiana Uniform Trade Secrets Act, and the Defend Trade Secrets Act. If any part of this Agreement is found to be unenforceable by a court of competent jurisdiction, then such unenforceable portion will be modified to be enforceable, or severed from this Agreement if it cannot be modified, and such modification or severance shall have no effect upon the remaining portions of the Agreement which shall remain in full force and effect.
Executed this ______________ day of ____________________, 20___.
EMPLOYEE:
___________________________________________________
EMPLOYEE SIGNATURE
___________________________________________________
Printed Name
COMPANY:
________________________________________________
COMPANY REPRESENTATIVE SIGNATURE
___________________________________________________
COMPANY REPRESENTATIVE TITLE
___________________________________________________
Printed Name
Exhibit 10.21
FRANK’S INTERNATIONAL N.V.
U.S. EMPLOYEE RESTRICTED STOCK UNIT (RSU) AGREEMENT
THIS RESTRICTED STOCK UNIT AGREEMENT including Exhibits A and B (this “Agreement”) evidences an award made as of the _____ day of February, 2021 (the “Date of Grant”), between FRANK’S INTERNATIONAL N.V., a limited liability company organized in the Netherlands (the “Company”), and __________________ (the “Employee”). The Company and Employee may be referred to individually as “Party,” and/or collectively as the “Parties.”
1. The Grant.
(a) Pursuant to the FRANK’S INTERNATIONAL N.V. 2013 LONG-TERM INCENTIVE PLAN, as the same may be amended from time to time (the “Plan”), and subject to the conditions set forth below, the Company hereby awards to Employee, effective as of the Date of Grant, an award consisting of an aggregate number of __________ restricted stock units (the “Restricted Stock Units” or “RSUs”), whereby each Restricted Stock Unit represents the right to receive one share of the Company’s common stock, par value €0.01 per share (“Common Stock”), in accordance with the terms and conditions set forth herein and in the Plan (the “Award”). The Restricted Stock Units subject to this Agreement are hereby designated as Performance Awards for purposes of Section 8 of the Plan. The number of Restricted Stock Units subject to this Award, as described in this Section 1(a), is the “target” number of shares that may become vested and shall be adjusted based on the attainment of the Performance Criteria described in Section 1(b) below and on Exhibit A.
(b) The Award’s performance period (“Performance Period”) and Performance Criteria (the “Performance Criteria”) are set forth in Exhibit A to this Agreement. The Performance Criteria has been established by the Compensation Committee of the Supervisory Board, which shall determine and certify whether such criteria have been satisfied.
(c) To the extent any provision of this Agreement conflicts with the expressly applicable terms of the Plan, those terms of the Plan shall control, and if necessary, the applicable terms of this Agreement shall be deemed amended so as to carry out the purpose and intent of the Plan.
2. Definitions. Capitalized terms used in this Agreement that are not defined below or in the body of this Agreement shall have the meanings given to them in the Plan. In addition to the terms defined in the body of this Agreement, the following capitalized words and terms shall have the meanings indicated below:
(a) “Cause” shall mean a determination by the Company or its employing affiliate (the “Employer”) that Employee (i) has engaged in gross negligence, incompetence, or misconduct in the performance of his or her duties with respect to the Employer or any of its affiliates; (ii) has failed to materially perform Employee’s duties and responsibilities to the Employer or any of its affiliates (other than due to Disability); (iii) has breached any material provision of this Agreement or any written agreement or corporate policy or code of conduct established by the Employer or any of its affiliates; (iv) has engaged in conduct that is, or could reasonably expected to be, materially injurious to the Employer or any of its affiliates; (v) has committed an act of theft, fraud, embezzlement, misappropriation, or breach of a fiduciary duty to the Employer or any of its affiliates; or (vi) has been convicted of, pleaded no contest to, or received adjudicated probation or deferred adjudication in connection with a crime involving fraud, dishonesty, or moral turpitude or any felony (or a crime of similar import in a foreign jurisdiction).
(b) “Disability” shall have the meaning set forth in any written employment or consulting agreement between the Employer and Employee. If Employee is not party to such an agreement that defines these terms, then for purposes of this Agreement, “Disability” shall mean Employee being unable to perform Employee’s duties or fulfill Employee’s obligations under the terms of his or her employment by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months as determined by the Employer and certified in writing by a competent medical physician selected by the Employer.
(c) “Forfeiture Restrictions” shall have the meaning specified in Section 3(a) hereof.
(d) “Involuntary Termination” shall mean a termination of Employee’s employment by the Company or an affiliate for a reason other than for Cause.
(e) “Section 409A” shall mean Section 409A of the Internal Revenue Code of 1986, as amended.
(f) “CIC Severance Plan” shall mean the Company’s Amended and Restated U.S. Executive Change-In-Control Severance Plan adopted on January 21, 2019, and any amendments or restatements of this plan.
(g) “Special Vesting Agreement” means an agreement which permits Employee’s RSUs to continue vesting following termination of Employee’s employment or service with the Company or with an affiliate, as applicable, in exchange for Employee’s strict compliance with designated post-termination conditions, as determined by the Committee pursuant to a written agreement executed at the time Employee’s termination of employment occurs. The Compensation Committee may, in is sole discretion, elect to limit coverage of a Special Vesting Agreement to only a portion of Employee’s RSUs.
3. Restricted Stock Units. By acceptance of this Restricted Stock Unit award, Employee agrees with respect thereto as follows:
(a) Forfeiture Restrictions. The Restricted Stock Units are restricted in that they may not be sold, assigned, pledged, exchanged, hypothecated, or otherwise alienated or transferred, encumbered, or disposed of, and in the event of termination of Employee’s employment or service with the Company for any reason other than death or Disability, or, to the extent provided in Section 3(c)(4) below, on account of an Involuntary Termination, Employee shall, for no consideration, forfeit to the Company all Restricted Stock Units to the extent then subject to the Forfeiture Restrictions. The prohibition against transfer and the obligation to forfeit and surrender Restricted Stock Units to the Company upon termination of employment or services as provided in this Section 3(a) are herein referred to as the “Forfeiture Restrictions.” The Forfeiture Restrictions shall be binding upon and enforceable against any transferee of Restricted Stock Units.
(b) Lapse of Forfeiture Restrictions (Vesting). Provided that: (i) Employee has been continuously employed by the Company from the Date of Grant through the _____th of February, 2024 (the scheduled “Lapse (Vesting) Date”), (ii) the Company attains the Performance Criteria as described on Exhibit A, and (iii) Employee is in compliance with Exhibit B and all other agreements or obligations to the Company, the Forfeiture Restrictions shall lapse, and the number of Restricted Stock Units as determined on Exhibit A shall become vested. Except as provided in Subsection (c) below, the Company will issue one share of Common Stock to Employee for each vested Restricted Stock Unit as soon as practicable after the Lapse (Vesting) Date but in no event later than seventy-five (75) days after the end of the Performance Period. Any Restricted Stock Units with respect to which the Forfeiture Restrictions do not lapse in accordance with this Section 3(b) (and any associated unvested dividend equivalents) shall be forfeited to the Company for no consideration as of the date of the termination of Employee’s employment with the Company.
(c) Accelerated Vesting.
(1) Death. If Employee’s employment with the Company is terminated by reason of death, then the Forfeiture Restrictions shall lapse with respect to 100% of the Restricted Stock Units at the “target” level effective on the date such death occurs and Employee’s vested RSUs shall be settled in the manner provided under Section 3(d) below.
(2) Disability. If Employee’s employment with the Company is terminated by reason of Disability, then the Forfeiture Restrictions shall lapse with respect to 100% of the Restricted Stock Units at the “target level” effective as of the date of Employee’s “separation from service” (as defined under the Section 409A) due to the Employee’s Disability and Employee’s vested RSUs shall be settled in the manner provided under Section 3(d) below.
(3) Change in Control. If a Change in Control occurs and Employee is a participant in the CIC Severance Plan, then the terms of Section 3 of such plan are hereby incorporated by reference into this Agreement.
(4) Involuntary Termination. If Employee’s employment with the Company is terminated due to an Involuntary Termination then, the Company may, in its complete discretion, elect to enter into a Special Vesting Agreement with Employee pursuant to which the Forfeiture Restrictions shall not lapse upon such termination of employment, but instead this Award shall continue to remain outstanding and Employee will be treated, solely for purposes of satisfying the requirements for a lapse of Forfeiture Restrictions under Section 3(b), as continuing in the employment of the Company throughout the period during which he/she continuously satisfies the obligations set forth in Exhibit B attached hereto and incorporated herein by reference as part of this Agreement. If the provisions of this Section 3(c)(4) apply with respect to Employee, the number of Restricted Stock Units that vest under this Agreement shall be determined based on the Company’s attainment of the Performance Criteria described on Exhibit A and such vested Restricted Stock Units shall be settled in the manner provided under Section 3(d) below. As further condition to receiving any Special Vesting Agreement, Employee shall provide a release of all claims against the Company in a form acceptable to the Company upon entering the Special Vesting Agreement and also Employee must continuously comply with any other obligations to, or agreements with, the Company.
(d) Payments. Subject to compliance with all terms of this Agreement and Exhibit B, the Company will issue one share of Common Stock for each vested Restricted Stock Unit to Employee as soon as practicable after (i) the scheduled Lapse (Vesting) Date with respect to the number of Restricted Stock Units as determined pursuant to Exhibit A (but in no event later than seventy-five (75) days after the end of the Performance Period), (ii) the date of Employee’s death or (iii) the date of the Employee’s separation from service due to the Employee’s Disability. The Company shall deliver the shares of Common Stock in book-entry form, with such legends or restrictions thereon as the Committee may determine to be necessary or advisable in order to comply with applicable securities laws. Employee shall complete and sign any documents and take any additional action that the Company may request to enable it to deliver shares of Common Stock on Employee’s behalf. In the event that all or part of the Restricted Stock Units granted pursuant to this Agreement provides for a deferral of compensation within the meaning of the Section 409A, it is the general intention, but not the obligation, of the Company to design this Award to comply with the Section 409A and such Award should be interpreted accordingly. Notwithstanding anything to the contrary contained herein, in the event that Employee is a “specified employee” (as defined under the Section 409A) when Employee becomes entitled to a payment or settlement under the Award which is subject to the Section 409A on account of a “separation from service” (as defined under the Section 409A), to the extent required by the Code, such payment shall not occur until the date that is six months plus one day from the date of such separation from service. Any amount that is otherwise payable within the six-month period described herein will be aggregated and paid in a lump sum without interest. Further, for purposes of the Section 409A, each payment or settlement of any portion of the Restricted Stock Units under this Agreement shall be treated as a separate payment of compensation.
(e) Restrictive Covenants. Employee acknowledges and recognizes the highly competitive nature of the businesses of the Company and accordingly agrees, in his/her capacity as an employee and equity holder in the Company, to the provisions of Exhibit B to this Agreement. Employee acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Exhibit B or any other similar obligations Employee has towards the Company under applicable law or other agreements (which includes any attempt to have any provision in Exhibit B or other similar obligations of Employee declared overbroad or unenforceable) (a “Restrictive Covenant Violation”) would be available but inadequate and the Company would suffer irreparable damages as a result of such a Restrictive Covenant Violation. In recognition of this fact, Employee agrees that, in the event of a Restrictive Covenant Violation, in addition to any remedies available to the Company under law, including damages and attorneys’ fees, remedies available the Company, without posting any bond, shall be to (i) cease making any dividend or other payments or providing any benefit otherwise required by this Agreement; (ii) terminate future vesting and cause forfeiture of all vested and unvested RSUs and common stock issued or issuable under this Agreement without consideration; (iii) cause forfeiture of the gross value of the common stock issued to Employee in the one year period prior to the Restrictive Covenant Violation (determined as of the date such stock was issued to Employee and using the Fair Market Value (as defined in the Plan) of the Company’s common stock on that date); (iv) receive repayment of any cash payments made to Employee with respect to the RSUs during the prior twelve month period; (v) obtain a temporary restraining order, temporary or permanent injunction; or (vi) specific performance or any other equitable remedy which may then be available.
(f) Corporate Acts. The existence of the Restricted Stock Units shall not affect in any way the right or power of the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization, or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities, the dissolution or liquidation of the Company or any sale, lease, exchange, or other disposition of all or any part of its assets or business, or any other corporate act or proceeding.
4. Withholding of Tax. To the extent that the receipt of the Restricted Stock Units (or any Common Stock or dividend equivalents related thereto) or the lapse of any Forfeiture Restrictions results in compensation, income or wages to Employee for federal, state, or local tax purposes, Employee shall deliver to the Company at the time of such receipt or lapse, as the case may be, such amount of money as the Company may require to meet its minimum obligation under applicable tax laws or regulations, and if Employee fails to do so (or if Employee instructs the Company to withhold cash or stock to meet such obligation), the Company shall withhold from any cash or stock remuneration (including withholding any shares of the Common Stock distributable to Employee under this Agreement) then or thereafter payable to Employee, any tax required to be withheld by reason of such resulting compensation income or wages. The Company is making no representation or warranty as to the tax consequences to Employee as a result of the receipt of the Restricted Stock Units, the treatment of dividend equivalents, the lapse of any Forfeiture Restrictions, or the forfeiture of any Restricted Stock Units pursuant to the Forfeiture Restrictions.
5. No Shareholder Rights. The Restricted Stock Units granted pursuant to this Agreement do not and shall not entitle Employee to any rights of a holder of Common Stock prior to the date that shares of Common Stock are issued to Employee in settlement of the Award. Employee’s rights with respect to the Restricted Stock Units shall remain forfeitable as stated in this Agreement.
6. Clawback. Notwithstanding any provisions in the Agreement to the contrary, any compensation, payments, or benefits provided hereunder (or profits realized from the sale of the Common Stock delivered hereunder), whether in the form of cash or otherwise, shall be subject to a clawback (i) to the extent necessary to comply with the requirements of any applicable law, including but not limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, section 304 of the Sarbanes Oxley Act of 2002 or any regulations promulgated thereunder; (ii) to the extent provided by any policy or procedure adopted by the Company or any individual agreement between Employee and the Company; or (iii) pursuant to the terms of this Agreement in the event of a Restrictive Covenant Violation.
7. Employment Relationship. For purposes of this Agreement (except as otherwise provided in Section 3(c)(4) hereof), Employee shall be considered to be in the employment of the Company as long as Employee remains an employee of either the Company or a Subsidiary. Without limiting the scope of the preceding sentence, it is specifically provided that Employee shall be considered to have terminated employment or service with the Company at the time of the termination of the “Subsidiary” status of the entity or other organization that employs or engages Employee. Nothing in the adoption of the Plan, nor the award of the Restricted Stock Units thereunder pursuant to this Agreement, shall confer upon Employee the right to continued employment by or service with the Company or affect in any way the right of the Company to terminate such employment or service at any time. Unless otherwise provided in a written employment or consulting agreement or by applicable law, Employee’s employment by or service with the Company shall be on an at-will basis, and the employment or service relationship may be terminated at any time by either Employee or the Company for any reason whatsoever, with or without cause or notice. Any question as to whether and when there has been a termination of such employment or service, and the cause of such termination, shall be determined by the Committee or its delegate, in its sole discretion, and its determination shall be final.
8. Notices. Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case of Employee, such notices or communications shall be effectively delivered if hand delivered to Employee at Employee’s principal place of employment or if sent by registered or certified mail or other mail delivery method that provides a receipt, to Employee at the last address Employee has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered if sent by registered or certified mail or other mail delivery service that provides a receipt, to the General Counsel of Company at its principal executive offices.
9. Entire Agreement; Amendment. This Agreement (including Exhibit B) and the documents incorporated by reference herein replace and merge all previous agreements and discussions relating to the same or similar subject matters between Employee and the Company and constitute the entire agreement between Employee and the Company with respect to the subject matter of this Agreement, except as otherwise provided herein. This Agreement including Exhibit B may not be modified in any respect by any verbal statement, representation or agreement made by any employee, officer, or representative of the Company or by any written agreement unless signed by an officer of the Company who is expressly authorized by the Company to execute such document. The foregoing notwithstanding, this Agreement does not modify or replace in any way any obligations Employee has to the Company or its related entities, under any agreement or applicable law, for non-disclosure, non-competition, non-solicitation, or non-interference.
10. Protection of Benefits. Without the consent of an affected Participant, no such Board or Committee action (including but not limited to any amendment, alteration, suspension, discontinuance or termination of the Plan or this Agreement) may materially and adversely affect the rights of Employee under this Award Agreement, subject to section 10(c) of the Plan.
11. Severability. If any part of this Agreement including Exhibit B is found to be unenforceable by a court of competent jurisdiction, then such unenforceable portion will be modified to be enforceable, or severed from this Agreement if it cannot be modified, and such modification or severance shall have no effect upon the remaining portions of this Agreement and Exhibit B which shall remain in full force and effect.
12. No Waiver. No failure by either Party at any time to give notice of any breach by the other Party of, or to require compliance with, any condition or provision of this Agreement shall (i) be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time or (ii) preclude insistence upon strict compliance in the future.
13. Binding Effect; Survival. The provisions of Sections 3(e) and 6 and Exhibit B shall survive the lapse of the Forfeiture Restrictions without forfeiture. This Agreement and Exhibit B shall be binding upon and shall inure to the benefit of the Company, and automatically to any other person, association, or entity which may hereafter acquire or succeed to all or substantially all of the business or assets of the Company by any means whether direct or indirect, by purchase, merger, consolidation, or otherwise. Employee’s obligations under this Agreement and Exhibit B are personal and such obligations of Employee shall not be voluntarily or involuntarily assigned, alienated, or transferred by Employee without the prior written consent of the Company.
14. Governing Law/Forum/Jury Waiver. The Parties agree and acknowledge that this Agreement and Exhibit B shall be governed by, and construed in accordance with, the laws of the State of Texas, without regard to conflicts of laws principles. With respect to any claim or dispute arising out of or related to this Agreement or Exhibit B, the Parties hereby consent to the exclusive jurisdiction, forum and venue of the state and federal courts located in Harris County, Texas, unless another forum or venue is required by law. Both the Company and Employee agree to waive a trial by jury of any or all issues arising under or connected with this Agreement or Exhibit B, and consent to trial by the judge.
IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the date first above written.
FRANK’S INTERNATIONAL N.V. |
||||
By: |
||||
Name: |
||||
Title: |
||||
EMPLOYEE: |
||||
By: |
||||
Print Name: |
Exhibit A
Performance Period and Criteria
Performance Period: January 1, 2021 to December 31, 2023
First Achievement Period: January 1, 2021 to December 31, 2021
Second Achievement Period: January 1, 2022 to December 31, 2022
Third Achievement Period: January 1, 2023 to December 31, 2023
Performance Criteria:
Payment under this Award is determined based on relative performance using Total Stockholder Return (“TSR”). No portion of this Award will be earned if the Company’s performance during the Performance Period is below the threshold level of the Performance Criteria as described below. Any determination of performance under this Agreement shall be determined by the Committee in accordance with the Plan’s terms.
The Company’s TSR shall be as measured against the TSR of the Comparator Group during the Performance Period. For this purpose, the companies included in the SPDR® S&P® Oil & Gas Equipment and Services ETF (XES) on the Date of Grant will be the “Comparator Group”. Such comparison will be based on a percentile approach as detailed below with any payment based on linear interpolation if performance is between threshold and maximum levels. TSR for the Company and the Comparator Group shall be calculated separately for the First Achievement Period, Second Achievement Period and Third Achievement Period resulting in a weighted average payout at the end of the Performance Period (using a 30-day averaging period for the first 30 calendar days and the last 30 calendar days of each annual achievement period to mitigate the effect of stock price volatility). TSR calculation to assume reinvestment of dividends.
* Based on the Target Level for the TSR Based Award set forth on the first page of this Agreement.
SPDR® S&P® Oil & Gas Equipment and Services ETF (XES) Listing
The companies that comprise the index at the 1st day of the Performance Period (January 1, 2021) are listed below:
# of Instruments |
% Wgt |
Market Value |
Position |
Closing Price |
Currency |
Ticker |
||||||||||||||||
Energy |
22 | 99.91 | 130,562,528 | |||||||||||||||||||
ARCHROCK INC |
4.51 | 5,899,859 | 681,277.00 | 8.66 |
USD |
AROC US |
||||||||||||||||
ASPEN AEROGELS INC |
5.38 | 7,035,219 | 421,523.00 | 16.69 |
USD |
ASPN US |
||||||||||||||||
BAKER HUGHES CO |
4.37 | 5,714,443 | 274,074.00 | 20.85 |
USD |
BKR US |
||||||||||||||||
BRISTOW GROUP INC |
4.29 | 5,610,029 | 213,147.00 | 26.32 |
USD |
VTOL US |
||||||||||||||||
CACTUS INC - A |
4.60 | 6,017,060 | 230,804.00 | 26.07 |
USD |
WHD US |
||||||||||||||||
CHAMPIONX CORP |
5.25 | 6,858,791 | 448,287.00 | 15.30 |
USD |
CHX US |
||||||||||||||||
CORE LABORATORIES N.V. |
4.34 | 5,670,012 | 213,882.00 | 26.51 |
USD |
CLB US |
||||||||||||||||
DMC GLOBAL INC |
4.36 | 5,701,734 | 131,832.00 | 43.25 |
USD |
BOOM US |
||||||||||||||||
DRIL-QUIP INC |
4.30 | 5,619,418 | 189,717.00 | 29.62 |
USD |
DRQ US |
||||||||||||||||
HALLIBURTON CO |
4.53 | 5,921,861 | 313,326.00 | 18.90 |
USD |
HAL US |
||||||||||||||||
HELIX ENERGY SOLUTIONS GROUP |
4.77 | 6,228,083 | 1,482,877.00 | 4.20 |
USD |
HLX US |
||||||||||||||||
HELMERICH & PAYNE |
4.35 | 5,685,456 | 245,486.00 | 23.16 |
USD |
HP US |
||||||||||||||||
LIBERTY OILFIELD SERVICES -A |
4.42 | 5,781,467 | 560,763.00 | 10.31 |
USD |
LBRT US |
||||||||||||||||
NEXTIER OILFIELD SOLUTIONS I |
4.20 | 5,494,495 | 1,597,237.00 | 3.44 |
USD |
NEX US |
||||||||||||||||
NOV INC |
4.56 | 5,957,255 | 433,886.00 | 13.73 |
USD |
NOV US |
||||||||||||||||
OCEANEERING INTL INC |
4.61 | 6,023,826 | 757,714.00 | 7.95 |
USD |
OII US |
||||||||||||||||
PATTERSON-UTI ENERGY INC |
4.50 | 5,878,003 | 1,117,491.00 | 5.26 |
USD |
PTEN US |
||||||||||||||||
PROPETRO HOLDING CORP |
4.71 | 6,154,954 | 832,876.00 | 7.39 |
USD |
PUMP US |
||||||||||||||||
SCHLUMBERGER LTD |
4.52 | 5,912,612 | 270,848.00 | 21.83 |
USD |
SLB US |
||||||||||||||||
TECHNIPFMC PLC |
4.62 | 6,039,763 | 642,528.00 | 9.40 |
USD |
FTI US |
||||||||||||||||
TIDEWATER INC |
4.33 | 5,662,708 | 655,406.00 | 8.64 |
USD |
TDW US |
||||||||||||||||
TRANSOCEAN LTD |
4.36 | 5,695,481 | 2,465,576.00 | 2.31 |
USD |
RIG US |
||||||||||||||||
Not Classified |
1 | 0.09 | 116,034 | |||||||||||||||||||
STATE ST INST LIQ RES-PREM |
0.09 | 116,034 | 116,033.73 | 1.00 |
USD |
SSIXX US |
Adjustments to Comparator Group. The Comparator Group may be adjusted or changed by the Committee as circumstances warrant, including the following:
(1) If a Comparator Group company becomes bankrupt, the bankrupt company will remain in the Comparator Group positioned at one level below the lowest performing non-bankrupt Comparator Group. In the case of multiple bankruptcies, the bankrupt Comparator Group companies will be positioned below the non-bankrupt companies in chronological order by bankruptcy date with the first to go bankrupt at the bottom.
(2) If a Comparator Group company is acquired by another company, including through a management buy-out or going-private transaction, the acquired Comparator Group company will be removed from the Comparator Group for the entire Performance Period; provided that if the acquired Comparator Group company became bankrupt prior to its acquisition it shall be treated as provided in paragraph (1), above, or if it shall become delisted according to paragraph (5) below prior to its acquisition it shall be treated as provided in paragraph (5).
(3) If a Comparator Group company spins-off a portion of its business in a manner which results in the Comparator Group company and the spin-off company both being publicly traded, the Comparator Group company will be removed from the Comparator Group for the entire Performance Period and the spin-off company will not be added to the Comparator Group.
(4) If a Comparator Group company acquires another company, the acquiring Comparator Group company will remain in the Comparator Group for the Performance Period and the acquired Comparator Group Company will be removed from the Comparator Group for the entire Performance Period
(5) If a Comparator Group company is delisted from either the New York Stock Exchange (NYSE) or the National Association of Securities Dealers Automated Quotations (NASDAQ) such that it is no longer listed on either exchange, such delisted Comparator Group company will remain in the Comparator Group positioned at one level below the lowest performing listed company and above the highest ranked bankrupt Comparator Group company (see paragraph (1) above). In the case of multiple delistings, the delisted Comparator Group companies will be positioned below the listed and above the bankrupt Comparator Group companies in chronological order by delisting date with the first to be delisted at the bottom of the delisted companies. If a delisted company shall become bankrupt, it shall be treated as provided in paragraph (1) above. If a delisted company shall be later acquired, it shall be treated as a delisted company under this paragraph. If a delisted company shall relist during the Performance Period, it shall remain in its relative delisted position determined under this paragraph.
(6) If the Company’s or any Comparator Group company’s stock splits (or if there are other similar subdivisions, consolidations or changes in such company’s stock or capitalization), such company’s TSR performance will be adjusted for the stock split so as not to give an advantage or disadvantage to such company by comparison to the other Comparator Group companies.
EXHIBIT B
U.S. EMPLOYEE CONFIDENTIALITY AND RESTRICTIVE COVENANT AGREEMENT
This U.S. Employee Confidentiality and Restrictive Covenant Agreement (“Agreement”) is made and entered as of the XX day of February, 2021, between __________________ (“Employee”) and Frank’s International, LLC (the “Company”) and for the benefit of the Company, Frank’s International N.V. and their subsidiary and affiliated companies (collectively referred to as the “Company Group”). The Company and Employee may be referred to individually as “Party,” and/or collectively as the “Parties.” The Parties agree as follows:
1. Company Promise to Provide Access to Company Group Confidential Information and Goodwill. Employee recognizes that the Company Group has made significant investments of time and resources in establishing substantial relationships with the Company Group’s employees and Company Relationships (defined below) including existing and prospective customers, suppliers, contractors, sub-contractors, and other business relationships and developing the Company Group’s reputation and goodwill. Employee further recognizes that the Company Group has further invested valuable time and resources to obtain and develop and protect the Company Group’s proprietary business information, trade secrets, know-how, and other Confidential Information (defined below). The protection of Confidential Information and Company Relationships is vital to the interests of the Company Group.
1.1. In exchange for Employee’s promises made in this Agreement, the Company promises to provide to Employee, consistent with Employee’s position, access to certain information regarding the business and activities of the Company Group. Employee acknowledges that he/she will have access to confidential information, training and related goodwill (“Confidential Information,” defined more fully below) as well as Company Relationships (defined below) while employed by the Company, including without limitation, any information and goodwill obtained by Employee during the course of Employee’s employment with the Company, concerning the business or affairs of the Company Group or that of its customers, suppliers, contractors, subcontractors, agents or representatives.
1.2. Confidential Information includes any information about the Company Group that has not been intentionally publicly disclosed by the Company Group. Confidential Information likewise includes all information provided to the Company Group by its customers, suppliers, contractors, subcontractors, business partners, joint venturers, agents or representatives which has not been intentionally publicly disclosed by these persons or entities. While Employee is obligated to comply with all non-disclosure requirements in place with the Company Group’s customers, suppliers, contractors, subcontractors, business partners, joint venturers, agents or representatives, the obligations under this Agreement are broader and apply to any non-public information the Company Group or Employee receives from or has access to regarding these third parties, regardless of whether the Company Group is contractually obligated to a third party to keep such information confidential. Confidential Information includes, without limitation, information relating to the services, products, policies, practices, pricing, costs, suppliers, vendors, methods, processes, techniques, finances, administration, employees, devices, trade secrets and operations of the Company Group, any inventions, modifications, discoveries, designs, developments, improvements, processes, software programs, work of authorship, documentation, formula, data, technique, technology, know-how, secret or intellectual property right by any Company Group employee, Company Group customers or potential customers, marketing, sales activities, development programs, promotions, manufacturing, machining, drawings, future and current plans regarding business and customers, e-mails, notes, manufacturing documents, engineering documents, formulas, financial statements, bids, project reports, handling documentation, machinery and compositions, all financial data relating to the Company Group, business methods, accounting and tracking methods, books, inventory handling procedure, credit, credit procedures, indebtedness, financing procedures, investments, trading, shipping, production, processing, welding, fabricating, assembling, renting, domestic and foreign operations, customer and vendor and supplier lists, data storage in any medium (electronic or hard copy) contact information, lab reports, lab work, and any data or materials used in and created during the development of any of the aforementioned materials or processes.
2. Employee Promise Not to Disclose Confidential Information. Employee acknowledges that this Confidential Information is confidential, proprietary, not known outside of the Company Group’s business, valuable, special and/or a unique asset of the Company Group which belongs to the Company Group and gives the Company Group a competitive advantage. If this Confidential Information were disclosed to third parties or used by third parties and/or Employee, such disclosure or use would seriously and irreparably damage the Company Group and cause the loss of certain competitive advantages. Employee promises he/she has not and will not disclose in any way, or use for Employee’s own benefit or for the benefit of anyone besides the Company Group, the Confidential Information described above and obtained by Employee as part of his/her employment with the Company. Employee acknowledges that this promise of non-disclosure and non-use continues indefinitely and specifically does not expire at the end of Employee’s employment with the Company. This Section does not apply to or in any way restrict or impede Employee from any communications with government agencies as stated below, or complying with any applicable law or court order, or exercising whistleblower or other protected non-waivable legal rights.
3. Non-Disparagement. Employee agrees that he/she shall not at any time make, publish, or communicate to any person or entity or in any public forum, any defamatory or disparaging remarks, comments, or statements concerning the Company Group or its businesses, business practices, or any of its employees or officers, and existing and prospective customers, suppliers, investors and other associated third parties. This Section does not apply to or in any way restrict or impede Employee from any communications with government agencies as stated below, or complying with any applicable law or court order, or exercising whistleblower or other protected non-waivable legal rights.
4. Non-Competition/Non-Solicitation/Non-Interference. Employee acknowledges that the highly competitive nature of the Company’s business, Employee’s position with the Company, and the Confidential Information, Company Relationships, training, and goodwill provided to Employee during his/her employment with the Company, support Employee’s promises not to compete with the Company, and not to solicit or interfere with the Company’s relationships with its customers and employees as stated below in the rest of this Section 4, during his/her employment with the Company and for twelve (12) months following his/her separation from the Company (“the Restricted Period”) regardless of the reason for the separation, within the Restricted Area, which is defined as the Louisiana parishes of Lafayette, Iberia, and Terrebonne and the Texas counties of Harris, Fort Bend, Montgomery, Brazoria, and Galveston, as well as any county/parish in which the Employee engaged in Company Business during the last twelve (12) months of Employee’s employment with the Company.
4.1. Non-Competition. During the Restricted Period and in the Restricted Area, Employee will not engage in or carry on, directly or indirectly, a business similar to and competitive with the business of the Company (“Competing Business”). The business of the Company (“Company Business”) specifically includes, but is not limited to, the business involved with the land operations, offshore operations, tubular sales, casing installation, completion installation, cementing and well construction, and specialty products divisions of the Company’s business as well as any divisions in operation during Employee’s employment with the Company, and includes the Company’s current and planned (future) business, bids, projects, contracts, and Company Relationships. Accordingly, during the Restricted Period and in the Restricted Area, Employee will not, directly or indirectly, own, manage, operate, join, become employed or engaged by, partner in, control, participate in, be connected with, loan money or sell or lease equipment or property to, or otherwise be affiliated with any Competing Business. For further clarity, Competing Business shall include the design, sales, marketing, fabrication, installation, provision, rental, repair, or manufacturing of products or services similar to or functionally equivalent to those designed, sold, installed, repaired, fabricated, manufactured, produced, provided, rented, marketed or licensed by the Company. The foregoing notwithstanding, Employee may own less than two percent (2%) of the outstanding stock of any class for a Competing Business which sells its stock on a national securities exchange and if Employee is not involved in the management of such Competing Business. Further, Competing Business and Restricted Area, as defined above, shall not include any geographic areas, services, or products of the Company in which Employee had no responsibility, no involvement, and about which he/she had no access to Confidential Information or Company Relationships during the last twelve (12) months of Employee’s employment with the Company.
4.2. Non-Solicitation/Non-Interference of Employees/Contractors. During the Restricted Period and in the Restricted Area, Employee further agrees that he/she will not, directly or indirectly, interfere with the Company’s relationship with, solicit or hire or otherwise encourage to change or leave their employment or contractor position with the Company, any person currently employed by or engaged as a contractor to the Company, and who was employed by or engaged by the Company during Employee’s employment with the Company. This restriction shall not include any current or potential employee or contractor of the Company for whom Employee had no responsibility, no involvement, and about whom he/she had no access to Confidential Information during his/her employment with the Company. This restriction does not apply to postings and advertisements regarding job opportunities which are made available to the public and are not directed specifically toward Company employees or contractors.
4.3. Non-Solicitation/Non-Interference of Customers, Vendors, Suppliers. During the Restricted Period and in the Restricted Area, Employee further agrees that he/she will not, directly or indirectly, solicit business of a similar nature to that provided by the Company from any customer of the Company, nor encourage or otherwise cause any current or potential customer, vendor or supplier of the Company, including those for the Company’s current or planned (future) projects, bids, or contracts, to cease or materially change their current or potential business relationship with the Company or otherwise attempt to interfere with these current or potential Company Relationships. For purposes of this Section, “current and potential customer, vendor or supplier” shall mean any entity or person with whom the Company has been pursuing a business relationship during Employee’s employment with the Company, and any “potential business relationship” shall mean any relationship pursued by the Company during Employee’s employment with the Company, including any current or planned (future) bids, projects or contracts. All of these relationships in the aggregate are defined as “Company Relationships.” This restriction shall not include any Company Relationship for which Employee had no responsibility, no involvement, and about which he/she had no access to Confidential Information during his/her employment with the Company.
5. Intellectual Property. Employee assigns to the Company all right, title and interest Employee has or may acquire in and to any Intellectual Property that results from Employee’s efforts, either alone or jointly with others, during the period of Employee’s employment with the Company. “Intellectual Property” means any and all inventions, discoveries, developments, innovations, processes, designs, methods, technologies, formulae, models, research and development, patents, patent applications, trade secrets and other Confidential Information and works of authorship (including copyrightable works, copyrights and copyright applications), and improvements to any of the foregoing that, either alone or jointly with others: (a) result from any work performed on behalf of the Company, or from a research project suggested by the Company; (b) relate in any way to the existing or contemplated business of the Company; or (c) result from the use of the Company’s time, material, employees or facilities. Employee acknowledges and agrees that any work Employee performs for the Company during employment that constitutes copyrightable subject matter shall be considered a “work made for hire” as that term is defined in the United States Copyright Act (17 U.S.C. Section 101). Employee hereby ratifies and otherwise transfers and assigns to the Company, and waives and agrees never to assert, any and all rights to claim authorship, rights to object to any modification or other moral rights that Employee may have in or with respect to any Intellectual Property and/or works made for hire, even after termination of Employee’s employment. Employee further agrees that if, in the course of providing services to the Company, Employee incorporates any intellectual property owned by Employee, the Company is hereby granted a nonexclusive, royalty-free, perpetual, irrevocable, worldwide right and license to make, have made, copy, modify, use, distribute and sell such intellectual property or products incorporating such intellectual property of Employee. During and after Employee’s employment, Employee will assist and cooperate with the Company for no additional compensation, but with the Company reimbursing any of Employee’s necessary out of pocket expenses. Employee will complete and sign documents requested by the Company to acquire, transfer, maintain, perfect and enforce the Company’s rights to the Intellectual Property, including patent, copyright, trade secret and other protections for the Company’s Intellectual Property.
6. Employee Acknowledgement of Need For Protections and Restrictions Promised; Modifications of Restrictions. Employee acknowledges and understands that his/her promises in this Agreement restrict some of his/her actions during and after employment with the Company. However, Employee acknowledges and agrees that he/she has or will receive sufficient consideration from the Company under this Agreement to justify such restrictions and that such restrictions are reasonable and necessary to protect the Company’s legitimate business interests. Employee understands and agrees that the restrictions in this Agreement shall continue beyond the termination of Employee’s employment, regardless of the reason for such termination.
7. Remedies. Employee acknowledges that money damages would not be a sufficient remedy for any breach of this Agreement by Employee, and that the Company shall be entitled to enforce this Agreement by specific performance and immediate injunctive relief as remedies for such breach or any threatened breach. Such remedies shall not be deemed the exclusive remedies for a breach of this Agreement, but shall be in addition to all remedies available to the Company at law, under common and statutory law, the Texas Uniform Trade Secrets Act, Louisiana Uniform Trade Secrets Act, the Defend Trade Secrets Act, under other agreements, or in equity, including, without limitation, the recovery of attorneys’ fees incurred by the Company in enforcing this Agreement or otherwise protecting its rights, as well as damages caused by Employee and his/her agents involved in such breach.
8. Notification to Subsequent Employers. Employee further acknowledges that in order to enforce his/her obligations under this Agreement, the Company may need to notify subsequent actual or potential employers of Employee’s obligations under this Agreement. Employee agrees to notify the Company of the identity of his/her employers for the Restricted Period before accepting a position with such employers, and Employee consents to the Company providing notification to these employers of Employee’s ongoing obligations to the Company under this Agreement or under other applicable law. Notices to the Company should be made in a manner that provides a receipt of delivery and addressed to: Senior Vice-President Human Resources, 10260 Westheimer Road, Suite 700, Houston, Texas 77042.
9. Tolling of Restricted Period. The duration of the Restricted Period shall be tolled and suspended for any period that Employee is in violation of these covenants up to a period of one (1) year, unless such tolling is disallowed under applicable law.
10. Return of Confidential Information and Company Property. All written, electronic, or other data, materials, records and other documents made by, or coming into the possession or control of, Employee which contain or disclose Confidential Information shall be and remain the property of the Company. Upon request, and in any event, without request upon termination of Employee’s employment with the Company for any reason, Employee shall promptly return, without deletion, copying or alteration, all written or electronic materials, data, information, records and any other property in Employee’s possession or control, whether located on or off Company premises, which may concern the Company, its current or potential customers, vendors or suppliers, whether or not confidential or proprietary in nature.
11. At-Will Employment. Employee acknowledges and agrees that nothing in this Agreement is a guarantee or assurance of employment for any specific period of time. Rather, Employee understands that he/she is an at-will employee and that either Employee or the Company may terminate this at-will employment relationship at any time for any reason or no reason.
12. No Interference with Rights. Employee acknowledges and agrees that nothing in this Agreement is intended to, nor does it, interfere with or restrain any employee’s right to share or discuss information regarding his/her wages, hours, or other terms and conditions of employment in the exercise of any rights provided by the National Labor Relations Act or other applicable laws. Further, Employee acknowledges and agrees that this Agreement is not intended to, nor does it, interfere with or restrain Employee’s right to report unlawful actions to the Securities and Exchange Commission or any other law enforcement or administrative agency, or to participate in any such agency’s investigation, or to engage in any whistleblower or other activity protected or required by law. Further, neither this Agreement nor any other agreement or policy of the Company shall impose civil or criminal liability under any trade secret law or otherwise prohibit Employee from the following disclosures: (a) disclosures of trade secrets made in confidence to a federal, state, or local government official, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law, or (b) disclosures of trade secrets made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal or per court order, or (c) disclosures of trade secrets by a plaintiff to his/her attorney in a lawsuit for retaliation for reporting a suspected violation of law and use of the trade secret information in the court proceeding, if any document containing the trade secrets is filed under seal and does not disclose the trade secrets, except pursuant to court order. Employee is not required to notify Company of these allowed reports or disclosures.
13. Governing Law/Forum/Jury Waiver. The Parties agree and acknowledge that this Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas, without regard to conflicts of laws principles. With respect to any claim or dispute arising out of or related to this Agreement, the Parties hereby consent to the exclusive jurisdiction, forum and venue of the state and federal courts located in Harris County, Texas, unless another forum or venue is required by law. The Parties agree to waive a trial by jury of any or all issues arising under or connected with this Agreement, and consent to trial by the judge.
14. No Duties to Other Employers. Employee represents that he/she is not bound by the terms of any agreement with any previous employer or other party other than the Company to: (a) refrain from using or disclosing any information that would be necessary to and/or reasonably expected to be utilized by Employee in the course of the performance of his/her duties in the employ of the Company or (b) refrain from engaging in any business activity that would otherwise preclude Employee from performance of his/her duties in the employ of the Company. Employee further represents that Employee’s performance of his/her duties does not and will not violate any agreement with any prior employer or third party. Employee agrees not to use or disclose during his/her employment with the Company any information which belongs to another entity or person.
15. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Company Group, and automatically to any other person, association, or entity which may hereafter acquire or succeed to all or substantially all of the business or assets of the Company Group by any means whether direct or indirect, by purchase, merger, consolidation, or otherwise. Employee’s obligations under this Agreement are personal and such obligations of Employee shall not be voluntarily or involuntarily assigned, alienated, or transferred by Employee without the prior written consent of the Company.
16. Representations; Modifications; Other Agreements; Severability. Employee acknowledges that he/she has not relied upon any representations or statements, written or oral, not set forth in this Agreement. This Agreement cannot be modified except in writing and signed by both parties. This Agreement supplements and does not limit or restrict or alter in any way any obligations that the Employee may have undertaken in other agreements with the Company Group or which apply to Employee under any applicable law, including but not limited to, the Texas Uniform Trade Secrets Act, the Louisiana Uniform Trade Secrets Act, and the Defend Trade Secrets Act. If any part of this Agreement is found to be unenforceable by a court of competent jurisdiction, then such unenforceable portion will be modified to be enforceable, or severed from this Agreement if it cannot be modified, and such modification or severance shall have no effect upon the remaining portions of the Agreement which shall remain in full force and effect.
Executed this ______________ day of ____________________, 20___.
EMPLOYEE:
___________________________________________________
EMPLOYEE SIGNATURE
___________________________________________________
Printed Name
COMPANY:
________________________________________________
COMPANY REPRESENTATIVE SIGNATURE
___________________________________________________
COMPANY REPRESENTATIVE TITLE
___________________________________________________
Printed Name
Exhibit 10.23
EXPRO GROUP HOLDINGS N.V.
RESTRICTED STOCK UNIT (RSU) AGREEMENT
THIS RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) evidences an award made as of the 1st day of October, 2021 (the “Date of Grant”), between EXPRO GROUP HOLDINGS N.V., a limited liability company organized in the Netherlands (the “Company”), and [NAME] (the “Grantee”).
1. The Grant. Pursuant to the EXPRO GROUP HOLDINGS N.V. LONG-TERM INCENTIVE PLAN, AS AMENDED AND RESTATED, as the same may be amended from time to time (the “Plan”), and subject to the conditions set forth below, the Company hereby awards to the Grantee, effective as of the Date of Grant, an award consisting of an aggregate number of [XXXX] restricted stock units (the “Restricted Stock Units” or “RSUs”), whereby each Restricted Stock Unit represents the right to receive one share of the Company’s common stock, par value €0.06 per share (“Common Stock”), plus the additional rights to Dividend Equivalents set forth in Section 3(d) hereof, in accordance with the terms and conditions set forth herein and in the Plan (the “Award”). To the extent any provision of this Agreement conflicts with the expressly applicable terms of the Plan, those terms of the Plan shall control, and if necessary, the applicable terms of this Agreement shall be deemed amended so as to carry out the purpose and intent of the Plan.
2. Definitions. Capitalized terms used in this Agreement that are not defined below or in the body of this Agreement shall have the meanings given to them in the Plan. In addition to the terms defined in the body of this Agreement, the following capitalized words and terms shall have the meanings indicated below for purposes of this Agreement:
(a) “Director” shall mean the Grantee’s service as a member of the Company’s Board of Directors, which shall include membership on the Board of the Company.
(b) “Disability” shall mean the Grantee being unable to perform the Grantee’s duties or fulfill the Grantee’s obligations as a member of the Board of Directors of the Company by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than three months as determined by the Company and certified in writing by a competent medical physician selected by the Company.
(c) “Forfeiture Restrictions” shall have the meaning specified in Section 3(a) hereof.
(d) “Involuntary Termination” shall mean a termination of the Grantee’s service as a Director that occurs either by (i) the Company’s failure to re-nominate the Grantee as a Director for any new term or (ii) by a failure to secure shareholder approval of the Grantee’s service as a Director for any new term.
3. Restricted Stock Units. By acceptance of this Restricted Stock Unit award, Grantee agrees with respect thereto as follows:
(a) Forfeiture Restrictions. The Restricted Stock Units are restricted in that they may not be sold, assigned, pledged, exchanged, hypothecated, or otherwise alienated or transferred, encumbered, or disposed of, and in the event of termination of Grantee’s service with the Company for any reason other than death, Disability, or on account of an Involuntary Termination, Grantee shall, for no consideration, forfeit to the Company all Restricted Stock Units to the extent then subject to the Forfeiture Restrictions. The prohibition against transfer and the obligation to forfeit and surrender Restricted Stock Units to the Company upon termination of services as provided in this Section 3(a) are herein referred to as the “Forfeiture Restrictions.” The Forfeiture Restrictions shall be binding upon and enforceable against any transferee of Restricted Stock Units.
(b) Lapse of Forfeiture Restrictions (Vesting). Provided that the Grantee has continuously served as a Director of the Company from the Date of Grant through the lapse date set forth in the following schedule, the Forfeiture Restrictions shall lapse, and the Restricted Stock Units will vest, with respect to a percentage of the Restricted Stock Units determined in accordance with the following schedule:
Lapse (Vesting) Date |
Percentage of Total Number of RSUs as to Which Forfeiture Restrictions Lapse |
[TBD] | [TBD] |
Notwithstanding the schedule set forth above, (i) if the Grantee’s service as a Director is terminated by reason of death or Disability or due to an Involuntary Termination, then the Forfeiture Restrictions shall lapse with respect to 100% of the Restricted Stock Units effective as of the date of such termination, and (ii) if a Change in Control occurs and the Grantee has continuously served as a Director of the Company from the Date of Grant to the date upon which such Change in Control occurs, then the Forfeiture Restrictions shall lapse with respect to 100% of the Restricted Stock Units on the date upon which such Change in Control occurs. Any Restricted Stock Units with respect to which the Forfeiture Restrictions do not lapse in accordance with the preceding provisions of this Section 3(b) (and any associated unvested Dividend Equivalents) shall be forfeited to the Company for no consideration as of the date of the termination of the Grantee’s service as a Director.
(c) Payments. Subject to Section 4 hereof, as soon as reasonably practicable after the lapse of the Forfeiture Restrictions with respect to the specified number of Restricted Stock Units as provided in Section 3(b) hereof (but in no event later than the end of the calendar year in which the Forfeiture Restrictions so lapse), the Company shall cause to be issued to the Grantee with respect to each share of Common Stock covered by each such Restricted Stock Unit one share of Common Stock registered in the Grantee’s name. The Company shall deliver the shares of Common Stock in book-entry form, with such legends or restrictions thereon as the Committee may determine to be necessary or advisable in order to comply with applicable securities laws. The Grantee shall complete and sign any documents and take any additional action that the Company may request to enable it to deliver shares of Common Stock on the Grantee’s behalf.
(d) Dividend Equivalents. In the event the Company declares and pays a dividend in respect of its outstanding shares of Common Stock and, on the record date for such dividend, the Grantee holds Restricted Stock Units granted pursuant to this Agreement that have become vested pursuant to Section 3(b) hereof and have not been settled in accordance with Section 3(c) hereof, the Grantee shall be entitled to receive a payment, subject to Section 4 hereof, in respect of the number of shares of Common Stock relating to such Restricted Stock Units, with such Dividend Equivalent payment being made in the amount and form that such payment would have been made if, as of such record date, the Grantee actually held the underlying shares of Common Stock related to the portion of the vested Restricted Stock Units that have not been settled or forfeited as of such record date. Such Dividend Equivalent payment shall be made commensurate with the date the Company pays such dividend in respect of its outstanding shares of Common Stock (however, in no event shall the Dividend Equivalents be paid later than the earlier of 30 days following, or the end of the calendar year that includes, the date on which the Company pays such dividends to its shareholders generally).
(e) Corporate Acts. The existence of the Restricted Stock Units shall not affect in any way the right or power of the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization, or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities, the dissolution or liquidation of the Company or any sale, lease, exchange, or other disposition of all or any part of its assets or business, or any other corporate act or proceeding.
4. Withholding of Tax. To the extent that the receipt of the Restricted Stock Units (or any dividend equivalents related thereto) or the lapse of any Forfeiture Restrictions results in compensation income or wages to the Grantee for federal, state, or local tax purposes, the Grantee shall deliver to the Company at the time of such receipt or lapse, as the case may be, such amount of money as the Company may require to meet its minimum obligation under applicable tax laws or regulations, and if the Grantee fails to do so (or if the Grantee instructs the Company to withhold cash or stock to meet such obligation), the Company shall withhold from any cash or stock remuneration (including withholding any shares of the Common Stock distributable to the Grantee under this Agreement) then or thereafter payable to the Grantee any tax required to be withheld by reason of such resulting compensation income or wages. The Company is making no representation or warranty as to the tax consequences to the Grantee as a result of the receipt of the Restricted Stock Units, the treatment of dividend equivalents, the lapse of any Forfeiture Restrictions, or the forfeiture of any Restricted Stock Units pursuant to the Forfeiture Restrictions.
5. No Shareholder Rights. The Restricted Stock Units granted pursuant to this Agreement do not and shall not entitle Grantee to any rights of a holder of Common Stock prior to the date that shares of Common Stock are issued to Grantee in settlement of the Award. Grantee’s rights with respect to the Restricted Stock Units shall remain forfeitable at all times prior to the date on which rights become vested, and the restrictions with respect to the Restricted Stock Units lapse in accordance with Section 3(b).
6. Clawback. Notwithstanding any provisions in the Agreement to the contrary, any compensation, payments, or benefits provided hereunder (or profits realized from the sale of the Common Stock delivered hereunder), whether in the form of cash or otherwise, shall be subject to a clawback to the extent necessary to comply with the requirements of any applicable law, including but not limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, section 304 of the Sarbanes Oxley Act of 2002, or any regulations promulgated thereunder.
7. Service as a Director. Nothing in the adoption of the Plan, nor the award of the Restricted Stock Units thereunder pursuant to this Agreement, shall confer upon the Grantee the right to continued service as a Director or affect in any way the right of the Company to terminate such service at any time. Any question as to whether and when there has been a termination of such service, and the cause of such termination, shall be determined by the Board or its delegate, and its determination shall be final.
8. Notices. Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case of the Grantee, such notices or communications shall be effectively delivered if sent by registered or certified mail to the Grantee at the last address the Grantee has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered if sent by registered or certified mail to the Company at its principal executive offices.
9. Entire Agreement; Amendment. This Agreement replace and merge all previous agreements and discussions relating to the same or similar subject matters between the Grantee and the Company and constitute the entire agreement between the Grantee and the Company with respect to the subject matter of this Agreement. This Agreement may not be modified in any respect by any verbal statement, representation or agreement made by any Grantee, officer, or representative of the Company or by any written agreement unless signed by an officer of the Company who is expressly authorized by the Company to execute such document.
10. Binding Effect; Survival. This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under the Grantee. The provisions of Section 6 shall survive the lapse of the Forfeiture Restrictions without forfeiture.
11. Controlling Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas, without regard to conflicts of law principles thereof, or, if applicable, the laws of the United States.
IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the date first above written.
|
EXPRO GROUP HOLDINGS N.V. |
|
|
|
|
|
|
|
|
|
|
|
By: |
|
|
|
|
Name: |
|
|
|
Title: |
|
GRANTEE | |||
Print Name: |
Exhibit 10.24
EXPRO GROUP HOLDINGS N.V.
U.S. EMPLOYEE RESTRICTED STOCK UNIT (RSU) AGREEMENT
THIS RESTRICTED STOCK UNIT AGREEMENT including Exhibit A (this “Agreement”) evidences an award made as of the _____ day of ________, 2021 (the “Date of Grant”), between EXPRO GROUP HOLDINGS N.V., a limited liability company organized in the Netherlands (the “Company”), and ____________________________ (the “Employee”). The Company and Employee may be referred to individually as “Party,” and/or collectively as the “Parties.”
1. The Grant. Pursuant to the EXPRO GROUP HOLDINGS N.V. 2013 LONG-TERM INCENTIVE PLAN, as the same may be amended from time to time (the “Plan”), and subject to the conditions set forth below, the Company hereby awards to Employee, effective as of the Date of Grant, an award consisting of an aggregate number of ________________ restricted stock units (the “Restricted Stock Units” or “RSUs”), whereby each Restricted Stock Unit represents the right to receive one share of the Company’s common stock, par value €0.01 per share (“Common Stock”), plus the potential rights to Dividend Equivalents set forth in Section 3(e) hereof, in accordance with the terms and conditions set forth herein and in the Plan (the “Award”). To the extent any provision of this Agreement conflicts with the expressly applicable terms of the Plan, those terms of the Plan shall control, and if necessary, the applicable terms of this Agreement shall be deemed amended so as to carry out the purpose and intent of the Plan.
2. Definitions. Capitalized terms used in this Agreement that are not defined below or in the body of this Agreement shall have the meanings given to them in the Plan. In addition to the terms defined in the body of this Agreement, the following capitalized words and terms shall have the meanings indicated below:
(a) “Cause” shall mean a determination by the Company or its employing affiliate (the “Employer”) that Employee (i) has engaged in gross negligence, incompetence, or misconduct in the performance of his or her duties with respect to the Employer or any of its affiliates; (ii) has failed to materially perform Employee’s duties and responsibilities to the Employer or any of its affiliates; (iii) has breached any material provision of this Agreement or any written agreement or corporate policy or code of conduct established by the Employer or any of its affiliates; (iv) has engaged in conduct that is, or could reasonably expected to be, materially injurious to the Employer or any of its affiliates; (v) has committed an act of theft, fraud, embezzlement, misappropriation, or breach of a fiduciary duty to the Employer or any of its affiliates; or (vi) has been convicted of, pleaded no contest to, or received adjudicated probation or deferred adjudication in connection with a crime involving fraud, dishonesty, or moral turpitude or any felony (or a crime of similar import in a foreign jurisdiction).
(b) “Disability” shall have the meaning set forth in any written employment or consulting agreement between the Employer and Employee. If Employee is not party to such an agreement that defines these terms, then for purposes of this Agreement, “Disability” shall mean Employee being unable to perform Employee’s duties or fulfill Employee’s obligations under the terms of his or her employment by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months as determined by the Employer and certified in writing by a competent medical physician selected by the Employer.
(c) “Forfeiture Restrictions” shall have the meaning specified in Section 3(a) hereof.
(d) “Involuntary Termination” shall mean a termination of Employee’s employment by the Company or an affiliate for a reason other than for Cause.
(e) “Section 409A” shall mean Section 409A of the Internal Revenue Code of 1986, as amended.
(f) “CIC Severance Plan” shall mean the Company’s U.S. Executive Change-In-Control Severance Plan adopted on May 20, 2015, and any amendments or restatements of this plan.
(g) “Special Vesting Agreement” means an agreement in which the Company, in its sole discretion, elects to permit some or all of Employee’s RSUs to continue vesting following Employee’s employment with the Company or with an affiliate, as applicable, in exchange for Employee’s strict compliance with designated post-termination conditions, as determined by the Company pursuant to a written agreement executed at the time the Participant’s termination of employment occurs.
3. Restricted Stock Units. By acceptance of this Restricted Stock Unit award, Employee agrees with respect thereto as follows:
(a) Forfeiture Restrictions. The Restricted Stock Units are restricted in that they may not be sold, assigned, pledged, exchanged, hypothecated, or otherwise alienated or transferred, encumbered, or disposed of, and in the event of termination of Employee’s employment or service with the Company for any reason other than death or Disability, or, to the extent provided in Section 3(c) below, on account of an Involuntary Termination, Employee shall, for no consideration, forfeit to the Company all Restricted Stock Units to the extent then subject to the Forfeiture Restrictions. The prohibition against transfer and the obligation to forfeit and surrender Restricted Stock Units to the Company upon termination of employment or services as provided in this Section 3(a) are herein referred to as the “Forfeiture Restrictions.” The Forfeiture Restrictions shall be binding upon and enforceable against any transferee of Restricted Stock Units.
(b) Lapse of Forfeiture Restrictions (Vesting). Provided that Employee has been continuously employed by the Company from the Date of Grant through the scheduled “Lapse (Vesting) Date” set forth in the following schedule, and in compliance with Exhibit A and all other agreements or obligations to the Company, the Forfeiture Restrictions shall lapse, and the Restricted Stock Units will vest, with respect to a percentage of the Restricted Stock Units determined in accordance with the following schedule:
Lapse (Vesting) Date |
Percentage of Total Number of RSUs as to Which Forfeiture Restrictions Lapse |
[TBD] | [TBD] |
Except as provided in Subsection 3(c) below, the Company will issue one share of Common Stock to Employee on the date each RSU is scheduled to become vested under this Section 3(b). Any Restricted Stock Units with respect to which the Forfeiture Restrictions do not lapse in accordance with the preceding provisions of this Section 3(b) (and any associated unvested dividend equivalents) shall be forfeited to the Company for no consideration as of the date of the termination of Employee’s employment with the Company.
(c) Accelerated Vesting.
(1) Death. If Employee’s employment with the Company is terminated by reason of death, then the Forfeiture Restrictions shall lapse with respect to 100% of the Restricted Stock Units effective on the date such death occurs and Employee’s RSUs shall be settled in the manner provided under Section 3(d) below.
(2) Disability. If Employee’s employment with the Company is terminated by reason of Disability, then the Forfeiture Restrictions shall lapse with respect to 100% of the Restricted Stock Units effective as of the date of Employee’s “separation from service” (as defined under the Section 409A) and Employee’s RSU’s shall be settled in the manner provided under Section 3(d) below on the dates such awards were scheduled to become vested under Section 3(b) above.
(3) Change in Control. If a Change in Control occurs and Employee is a participant in the CIC Severance Plan, then the terms of Section 3 of such plan are hereby incorporated by reference into this Agreement. If Employee is not a participant in the CIC Severance Plan and his or her employment with the Company is terminated during the twenty-four (24) month period immediately following the date the Change in Control occurs due to an Involuntary Termination, then the Forfeiture Restrictions shall lapse with respect to 100% of the Restricted Stock Units effective as of the date of Employee’s “separation from service” (as defined under the Section 409A) and Employee’s RSUs shall be settled in the manner provided under Section 3(d) below.
(4) Involuntary Termination. If Employee’s employment with the Company is terminated due to an Involuntary Termination, then Company may, in its complete discretion, elect to enter into a Special Vesting Agreement with Employee pursuant to which the Forfeiture Restrictions shall not lapse upon such termination of employment, but instead this Award shall continue to remain outstanding and Employee will be treated, solely for purposes of satisfying the requirements for a lapse of Forfeiture Restrictions under Section 3(b), as continuing in the employment of the Company throughout the period during which he or she continuously satisfies the obligations set forth in Exhibit A attached hereto and incorporated herein by reference as part of this Agreement. As further condition to receiving any Special Vesting Agreement, Employee shall provide a release of all claims against the Company in a form acceptable to the Company, upon entering the Special Vesting Agreement, as well as upon the last date on which the Forfeiture Restrictions lapse, and also Employee must continuously comply with any other obligations to, or agreements with, the Company.
(d) Payments. Subject to compliance with all terms of this Agreement and Exhibit A, as soon as reasonably practicable after (i) each scheduled Lapse (Vesting) Date with respect to the specified number of Restricted Stock Units as provided in Section 3(b) hereof (but in no event later than the end of the calendar year in which the Forfeiture Restrictions so lapse), (ii) the date of Employee’s death, or (iii) to the extent provided in Section 3(c)(4), the date Employee is Involuntarily Terminated, the Company shall cause to be issued to Employee with respect to each share of Common Stock covered by each such Restricted Stock Unit one share of Common Stock registered in Employee’s name. The Company shall deliver the shares of Common Stock in book-entry form, with such legends or restrictions thereon as the Administrator may determine to be necessary or advisable in order to comply with applicable securities laws. Employee shall complete and sign any documents and take any additional action that the Company may request to enable it to deliver shares of Common Stock on Employee’s behalf. In the event that all or part of the Restricted Stock Units granted pursuant to this Agreement provides for a deferral of compensation within the meaning of the Section 409A, it is the general intention, but not the obligation, of the Company to design this Award to comply with the Section 409A and such Award should be interpreted accordingly. Notwithstanding anything to the contrary contained herein, in the event that Employee is a “specified employee” (as defined under the Section 409A) when Employee becomes entitled to a payment or settlement under the Award which is subject to the Section 409A on account of a “separation from service” (as defined under the Section 409A), to the extent required by the Code, such payment shall not occur until the date that is six (6) months plus one (1) day from the date of such separation from service. Any amount that is otherwise payable within the six (6) month period described herein will be aggregated and paid in a lump sum without interest. Further, for purposes of the Section 409A, each payment or settlement of any portion of the Restricted Stock Units under this Agreement shall be treated as a separate payment of compensation.
(e) Dividend Equivalents. In the event the Company declares and pays a dividend in respect of its outstanding shares of Common Stock and, on the record date for such dividend, Employee holds Restricted Stock Units granted pursuant to this Agreement that have become vested pursuant to Section 3(c) hereof and have not been settled in accordance with Section 3(d) hereof, Employee shall be entitled to receive a payment, subject to compliance with all terms of this Agreement as well as Section 4 hereof, in respect of the number of shares of Common Stock relating to such vested Restricted Stock Units, with such Dividend Equivalent payment being made in the amount and form that such payment would have been made if, as of such record date, Employee actually held the underlying shares of Common Stock related to the portion of the vested Restricted Stock Units that have not been settled or forfeited as of such record date. Such Dividend Equivalent payment shall be made commensurate with the date the Company pays such dividend in respect of its outstanding shares of Common Stock (however, in no event shall the Dividend Equivalents be paid later than the earlier of thirty (30) days following, or the end of the calendar year that includes, the date on which the Company pays such dividends to its shareholders generally).
(f) Restrictive Covenants. Employee acknowledges and recognizes the highly competitive nature of the businesses of the Company and accordingly agrees, in his or her capacity as an employee and equity holder in the Company, to the provisions of Exhibit A to this Agreement. Employee acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Exhibit A or any other similar obligations Employee has towards the Company under applicable law or other agreements (which includes any attempt to have any provision in Exhibit A or other similar obligations of Employee declared overbroad or unenforceable) (a “Restrictive Covenant Violation”) would be available but inadequate and the Company would suffer irreparable damages as a result of such a Restrictive Covenant Violation. In recognition of this fact, Employee agrees that, in the event of a Restrictive Covenant Violation, in addition to any remedies available to the Company under law, including damages and attorneys’ fees, remedies available the Company, without posting any bond, shall be to (i) cease making any dividend or other payments or providing any benefit otherwise required by this Agreement; (ii) terminate future vesting and cause forfeiture of all vested and unvested RSUs and common stock issued or issuable under this Agreement without consideration, (iii) cause forfeiture of the gross value of the common stock issued to Employee in the one (1) year period prior to the Restrictive Covenant Violation (determined as of the date such stock was issued to Employee and using the Fair Market Value (as defined in the Plan) of the Company’s common stock on that date), (iv) receive repayment of any cash payments made to Employee with respect to the RSUs during the prior twelve (12) month period, (v) obtain a temporary restraining order, temporary or permanent injunction or (vi) specific performance or any other equitable remedy which may then be available.
(g) Corporate Acts. The existence of the Restricted Stock Units shall not affect in any way the right or power of the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization, or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities, the dissolution or liquidation of the Company or any sale, lease, exchange, or other disposition of all or any part of its assets or business, or any other corporate act or proceeding.
4. Withholding of Tax. To the extent that the receipt of the Restricted Stock Units (or any Common Stock or dividend equivalents related thereto) or the lapse of any Forfeiture Restrictions results in compensation, income or wages to Employee for federal, state, or local tax purposes, Employee shall deliver to the Company at the time of such receipt or lapse, as the case may be, such amount of money as the Company may require to meet its minimum obligation under applicable tax laws or regulations, and if Employee fails to do so (or if Employee instructs the Company to withhold cash or stock to meet such obligation), the Company shall withhold from any cash or stock remuneration (including withholding any shares of the Common Stock distributable to Employee under this Agreement) then or thereafter payable to Employee, any tax required to be withheld by reason of such resulting compensation income or wages. The Company is making no representation or warranty as to the tax consequences to Employee as a result of the receipt of the Restricted Stock Units, the treatment of dividend equivalents, the lapse of any Forfeiture Restrictions, or the forfeiture of any Restricted Stock Units pursuant to the Forfeiture Restrictions.
5. No Shareholder Rights. The Restricted Stock Units granted pursuant to this Agreement do not and shall not entitle Employee to any rights of a holder of Common Stock prior to the date that shares of Common Stock are issued to Employee in settlement of the Award. Employee’s rights with respect to the Restricted Stock Units shall remain forfeitable as stated in this Agreement.
6. Clawback. Notwithstanding any provisions in the Agreement to the contrary, any compensation, payments, or benefits provided hereunder (or profits realized from the sale of the Common Stock delivered hereunder), whether in the form of cash or otherwise, shall be subject to a clawback (i) to the extent necessary to comply with the requirements of any applicable law, including but not limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, section 304 of the Sarbanes Oxley Act of 2002 or any regulations promulgated thereunder; (ii) to the extent provided by any policy or procedure adopted by the Company or any individual agreement between Employee and the Company; or (iii) pursuant to the terms of this Agreement in the event of a Restrictive Covenant Violation.
7. Employment Relationship. For purposes of this Agreement (except as otherwise provided in Section 3(c)(4) hereof), Employee shall be considered to be in the employment of the Company as long as Employee remains an employee of either the Company or a Subsidiary. Without limiting the scope of the preceding sentence, it is specifically provided that Employee shall be considered to have terminated employment or service with the Company at the time of the termination of the “Subsidiary” status of the entity or other organization that employs or engages Employee. Nothing in the adoption of the Plan, nor the award of the Restricted Stock Units thereunder pursuant to this Agreement, shall confer upon Employee the right to continued employment by or service with the Company or affect in any way the right of the Company to terminate such employment or service at any time. Unless otherwise provided in a written employment or consulting agreement or by applicable law, Employee’s employment by or service with the Company shall be on an at-will basis, and the employment or service relationship may be terminated at any time by either Employee or the Company for any reason whatsoever, with or without cause or notice. Any question as to whether and when there has been a termination of such employment or service, and the cause of such termination, shall be determined by the Committee or its delegate, in its sole discretion, and its determination shall be final.
8. Notices. Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case of Employee, such notices or communications shall be effectively delivered if hand delivered to Employee at Employee’s principal place of employment or if sent by registered or certified mail or other mail delivery method that provides a receipt, to Employee at the last address Employee has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered if sent by registered or certified mail or other mail delivery service that provides a receipt, to the General Counsel of Company at its principal executive offices.
9. Entire Agreement; Amendment. This Agreement (including Exhibit A) and the documents incorporated by reference herein replace and merge all previous agreements and discussions relating to the same or similar subject matters between Employee and the Company and constitute the entire agreement between Employee and the Company with respect to the subject matter of this Agreement, except as otherwise provided herein. This Agreement, including Exhibit A, may not be modified in any respect by any verbal statement, representation, or agreement made by any employee, officer, or representative of the Company or by any written agreement unless signed by an officer of the Company who is expressly authorized by the Company to execute such document. The foregoing notwithstanding, this Agreement does not modify or replace in any way any obligations Employee has to the Company or its related entities, under any agreement or applicable law, for non-disclosure, non-competition, non-solicitation, or non-interference.
10. Severability. If any part of this Agreement, including Exhibit A, is found to be unenforceable by a court of competent jurisdiction, then such unenforceable portion will be modified to be enforceable, or severed from this Agreement if it cannot be modified, and such modification or severance shall have no effect upon the remaining portions of this Agreement and Exhibit A which shall remain in full force and effect.
11. No Waiver. No failure by either Party at any time to give notice of any breach by the other Party of, or to require compliance with, any condition or provision of this Agreement shall (i) be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time or (ii) preclude insistence upon strict compliance in the future.
12. Binding Effect; Survival. The provisions of Sections 3(f) and 6, and Exhibit A shall survive the lapse of the Forfeiture Restrictions without forfeiture. This Agreement and Exhibit A shall be binding upon and shall inure to the benefit of the Company, and automatically to any other person, association, or entity which may hereafter acquire or succeed to all or substantially all of the business or assets of the Company by any means whether direct or indirect, by purchase, merger, consolidation, or otherwise. Employee’s obligations under this Agreement and Exhibit A are personal and such obligations of Employee shall not be voluntarily or involuntarily assigned, alienated, or transferred by Employee without the prior written consent of the Company.
13. Governing Law/Forum/Jury Waiver. The Parties agree and acknowledge that this Agreement and Exhibit A shall be governed by, and construed in accordance with, the laws of the State of Texas, without regard to conflicts of laws principles. With respect to any claim or dispute arising out of or related to this Agreement or Exhibit A, the Parties hereby consent to the exclusive jurisdiction, forum, and venue of the state and federal courts located in Harris County, Texas, unless another forum or venue is required by law. Both the Company and Employee agree to waive a trial by jury of any or all issues arising under or connected with this Agreement or Exhibit A, and consent to trial by the judge.
IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the date first above written.
EXPRO GROUP HOLDINGS N.V.
By: ____________________________________
Name:
Title:
EMPLOYEE
By: ____________________________________
Print Name: ________________________________
EXHIBIT A
U.S. EMPLOYEE CONFIDENTIALITY AND RESTRICTIVE COVENANT AGREEMENT
This U.S. Employee Confidentiality and Restrictive Covenant Agreement (“Agreement”) is made and entered as of the _____ day of __________, 2021, between _______________ (“Employee”) and Expro Americas, LLC (the “Company”) and for the benefit of the Company, Expro Group Holdings N.V. and their subsidiary and affiliated companies (collectively referred to as the “Company Group”). The Company and Employee may be referred to individually as “Party,” and/or collectively as the “Parties.” The Parties agree as follows:
1. Company Promise to Provide Access to Company Group Confidential Information and Goodwill. Employee recognizes that the Company Group has made significant investments of time and resources in establishing substantial relationships with the Company Group’s employees and Company Relationships (defined below) including existing and prospective customers, suppliers, contractors, sub- contractors, and other business relationships and developing the Company Group’s reputation and goodwill. Employee further recognizes that the Company Group has further invested valuable time and resources to obtain and develop and protect the Company Group’s proprietary business information, trade secrets, know- how, and other Confidential Information (defined below). The protection of Confidential Information and Company Relationships is vital to the interests of the Company Group.
(a) In exchange for Employee’s promises made in this Agreement, the Company promises to provide to Employee, consistent with Employee’s position, access to certain information regarding the business and activities of the Company Group. Employee acknowledges that he/she will have access to confidential information, training and related goodwill (“Confidential Information,” defined more fully below) as well as Company Relationships (defined below) while employed by the Company, including without limitation, any information and goodwill obtained by Employee during the course of Employee’s employment with the Company, concerning the business or affairs of the Company Group or that of its customers, suppliers, employees, contractors, subcontractors, agents, representatives or other third parties.
(b) Confidential Information includes any information about the Company Group that has not been intentionally and with authority publicly disclosed by the Company Group. Confidential Information likewise includes all information provided to the Company Group by its customers, suppliers, contractors, subcontractors, business partners, joint venturers, agents or representatives which has not been intentionally and with authority publicly disclosed by these persons or entities. While Employee is obligated to comply with all non-disclosure requirements in place with the Company Group’s customers, suppliers, contractors, subcontractors, business partners, joint venturers, agents or representatives, the obligations under this Agreement are broader and apply to any non-public information the Company Group or Employee receives from or has access to regarding these third parties, regardless of whether the Company Group is contractually obligated to a third party to keep such information confidential. Confidential Information includes, without limitation, information relating to the services, products, policies, practices, pricing, costs, suppliers, vendors, methods, processes, techniques, finances, administration, employees, devices, trade secrets and operations of the Company Group, any inventions, modifications, discoveries, designs, developments, improvements, processes, software programs, work of authorship, documentation, formula, data, technique, technology, know-how, secret or intellectual property right by any Company Group employee, Company Group customers or potential customers, marketing, sales activities, development programs, promotions, manufacturing, machining, drawings, future and current plans regarding business and customers, e-mails, notes, manufacturing documents, engineering documents, formulas, financial statements, bids, project reports, handling documentation, machinery and compositions, all financial data relating to the Company Group, business methods, accounting and tracking methods, books, inventory handling procedure, credit, credit procedures, indebtedness, financing procedures, investments, trading, shipping, production, processing, welding, fabricating, assembling, renting, domestic and foreign operations, customer and vendor and supplier lists, data storage in any medium (electronic or hard copy) contact information, lab reports, lab work, and any data or materials used in and created during the development of any of the aforementioned materials or processes.
2. Employee Promise Not to Disclose Confidential Information. Employee acknowledges that this Confidential Information is confidential, proprietary, not known outside of the Company Group’s business, valuable, special and/or a unique asset of the Company Group, which belongs to the Company Group and gives the Company Group a competitive advantage. If this Confidential Information were disclosed without authority to third parties or accessed or used by third parties and/or Employee for the benefit of anyone other than the Company Group, such disclosure, access, or use would seriously and irreparably damage the Company Group and cause the loss of certain competitive advantages. Employee promises he/she has not and will not disclose, provide access, or use for Employee’s own benefit or for the benefit of anyone besides the Company Group, the Confidential Information described above and learned or obtained by Employee as part of his/her employment with the Company. Employee acknowledges that this promise of non-disclosure, non-access, and non-use continues indefinitely and specifically does not expire at the end of Employee’s employment with the Company. This Section does not apply to, or in any way restrict or impede Employee from, any communications with government agencies as stated below, or complying with any applicable law or court order, or exercising whistleblower or other protected non-waivable legal rights.
3. Non-Disparagement. Employee agrees that he/she shall not at any time make, publish, or communicate to any person or entity or in any public forum, any defamatory or disparaging remarks, comments, or statements concerning the Company Group or its businesses, business practices, or any of its employees or officers, and existing and prospective customers, suppliers, investors and other associated third parties. This Section does not apply to, or in any way restrict, or impede Employee from, any communications with government agencies as stated below, or complying with any applicable law or court order, or exercising whistleblower or other protected non-waivable legal rights.
4. Non-Competition/Non-Solicitation/Non-Interference. Employee acknowledges that the highly competitive nature of the Company’s business, Employee’s position with the Company, and the Confidential Information, Company Relationships, training, and goodwill provided to Employee during his/her employment with the Company, support Employee’s promises not to compete with the Company, and not to solicit or interfere with the Company’s relationships with its customers and employees as stated below in the rest of this Section 4, during his/her employment with the Company and for twelve (12) months following Employee’s separation from the Company (“the Restricted Period”) regardless of the reason for the separation, within the Restricted Area.
For the purposes of this Agreement, “Restricted Area” is defined as follows:
For residents of all states except Louisiana: The Louisiana parishes of Lafayette, Iberia, and Terrebonne and the Texas counties of Harris, Fort Bend, Montgomery, Brazoria, and Galveston, where the Company does business. Restricted Area also includes any county/parish in which the Employee directed or conducted efforts to further the Company Business during the last twelve (12) months of Employee’s employment with the Company. The Restricted Area as defined above shall be reduced to exclude any county/parish in which Employee did not conduct or direct efforts to further the Company Business and about which Employee had no responsibility and no involvement, during Employee’s last twelve (12) months of employment with the Company.
For Louisiana residents: The Louisiana parishes of Lafayette, Iberia, and Terrebonne and the Texas counties of Harris, Fort Bend, Montgomery, Brazoria, and Galveston, where the Company does business. Employee agrees that if the Company’s Business and Employee’s duties for the Company expand to other parishes or counties, the Company may give Employee written notice of expansion to this Restricted Area definition which will have the same force and effect of the original Restricted Area definition, unless Employee disputes in writing this expansion within seven (7) days. The Restricted Area as defined above shall be reduced to exclude any county/parish in which Employee did not conduct or direct efforts to further the Company Business and about which Employee had no responsibility and no involvement, during Employee’s last twelve (12) months of employment with the Company.
(a) Non-Competition. During the Restricted Period and in the Restricted Area, Employee will not engage in or carry on, directly or indirectly, a business similar to and competitive with the Company Business (“Competing Business”). “Company Business” specifically includes, but is not limited to, the business involved with well construction, well intervention integrity, subsea well access, and well flow management and production solutions divisions of the Company’s business as well as any divisions in operation during Employee’s last twelve (12) months of employment with the Company, and includes the Company’s current and planned (future) business, bids, projects, contracts, and Company Relationships (defined below). Accordingly, during the Restricted Period and in the Restricted Area, Employee will not, directly or indirectly, own, manage, operate, join, become employed or engaged by, partner in, control, participate in, be connected with, loan money or sell or lease equipment or property to, or otherwise be affiliated with any Competing Business. For further clarity, Competing Business shall include the design, sales, marketing, fabrication, installation, provision, rental, repair, or manufacturing of products or services similar to or functionally equivalent to those designed, sold, installed, repaired, fabricated, manufactured, produced, provided, rented, marketed or licensed by the Company. The foregoing notwithstanding, Employee may own less than two percent (2%) of the outstanding stock of any class for a Competing Business which sells its stock on a national securities exchange and if Employee is not involved in the management of such Competing Business. Further, Competing Business and Restricted Area, as defined above, shall not include any geographic areas, services, business segment, or products of the Company for which Employee had no responsibility, no involvement, and about which he/she had no access to Confidential Information or Company Relationships during the last twelve (12) months of Employee’s employment with the Company. For Oklahoma residents, this non-competition obligation ends upon Employee’s last day of employment with the Company.
(b) Non-Solicitation/Non-Interference of Employees/Contractors. During the Restricted Period and in the Restricted Area, Employee further agrees that he/she will not, directly or indirectly, interfere with the Company’s relationship with, solicit or hire or otherwise encourage to change or leave their employment or contractor position with the Company, any person currently employed by or engaged as a contractor to the Company, and who was employed by or engaged by the Company during Employee’s last twelve (12) months of employment with the Company. This restriction shall not include any current or potential employee or contractor of the Company for whom Employee had no responsibility, no involvement, and about whom he/she had no access to Confidential Information during his/her employment with the Company. This restriction does not apply to postings and advertisements regarding job opportunities which are made available to the public and are not directed specifically toward Company employees or contractors.
(c) Non-Solicitation/Non-Interference of Customers, Vendors, Suppliers. During the Restricted Period and in the Restricted Area, Employee further agrees that he/she will not, directly or indirectly, solicit business of a similar nature to that provided by the Company from any customer of the Company, nor encourage or otherwise cause any current or potential customer, vendor or supplier of the Company, including those for the Company’s current or planned (future) projects, bids, or contracts, to cease or materially change their current or potential business relationship with the Company or otherwise attempt to interfere with these current or potential Company Relationships. For purposes of this Section, “current and potential customer, vendor or supplier” shall mean any entity or person with whom the Company has been engaged in a business relationship during the last twelve (12) months of Employee’s employment with the Company, and any “potential business relationship” shall mean any relationship pursued by the Company during the last twelve (12) months of Employee’s employment with the Company, including any current or planned (future) bids, projects or contracts. All of these relationships in the aggregate are defined as “Company Relationships.” This restriction shall not include any Company Relationship for which Employee had no responsibility, no involvement, and about which he/she had no access to Confidential Information during his/her last twelve (12) months of employment with the Company. For residents of Oklahoma, during the post-employment portion of the Restricted Period, these non-solicitation obligations are limited to directly soliciting any of the Company’s Established Customers relating to any Competing Business. “Established Customers” shall mean the current clients and/or customers of the Company, determined as of the last day of Employee’s employment with the Company, and as allowed by applicable law.
5. Intellectual Property. Employee assigns to the Company all right, title and interest Employee has or may acquire in and to any Intellectual Property that results from Employee’s efforts, either alone or jointly with others, during the period of Employee’s employment with the Company. “Intellectual Property” means any and all inventions, discoveries, developments, innovations, processes, designs, methods, technologies, formulae, models, research and development, patents, patent applications, trade secrets and other Confidential Information and works of authorship (including copyrightable works, copyrights and copyright applications), and improvements to any of the foregoing that, either alone or jointly with others: (a) result from any work performed on behalf of the Company, or from a research project suggested by the Company; (b) relate in any way to the existing or contemplated business of the Company; or (c) result from the use of the Company’s time, material, employees or facilities. Employee acknowledges and agrees that any work Employee performs for the Company during employment that constitutes copyrightable subject matter shall be considered a “work made for hire” as that term is defined in the United States Copyright Act (17 U.S.C. Section 101). Employee hereby ratifies and otherwise transfers and assigns to the Company, and waives and agrees never to assert, any and all rights to claim authorship, rights to object to any modification or other moral rights that Employee may have in or with respect to any Intellectual Property and/or works made for hire, even after termination of Employee’s employment. Employee further agrees that if, in the course of providing services to the Company, Employee incorporates any intellectual property owned by Employee, the Company is hereby granted a nonexclusive, royalty-free, perpetual, irrevocable, worldwide right and license to make, have made, copy, modify, use, distribute and sell such intellectual property or products incorporating such intellectual property of Employee. During and after Employee’s employment, Employee will assist and cooperate with the Company for no additional compensation, but with the Company reimbursing any of Employee’s necessary out of pocket expenses. Employee will complete and sign documents requested by the Company to acquire, transfer, maintain, perfect and enforce the Company’s rights to the Intellectual Property, including patent, copyright, trade secret and other protections for the Company’s Intellectual Property.
6. Employee Acknowledgement of Need for Protections and Restrictions Promised; Modifications of Restrictions. Employee acknowledges and understands that his/her promises in this Agreement restrict some of his/her actions during and after employment with the Company. However, Employee acknowledges and agrees that he/she has or will receive sufficient consideration from the Company under this Agreement to justify such restrictions and that such restrictions are reasonable and necessary to protect the Company’s legitimate business interests. Employee understands and agrees that the restrictions in this Agreement shall continue beyond the termination of Employee’s employment, regardless of the reason for such termination.
7. Remedies. Employee acknowledges that money damages would not be a sufficient remedy for any breach of this Agreement by Employee, and that the Company shall be entitled to enforce this Agreement by specific performance and immediate injunctive relief as remedies for such breach or any threatened breach. Such remedies shall not be deemed the exclusive remedies for a breach of this Agreement, but shall be in addition to all remedies available to the Company at law, under common and statutory law, the Texas Uniform Trade Secrets Act, Louisiana Uniform Trade Secrets Act, the Defend Trade Secrets Act, under other agreements, or in equity, including, without limitation, the recovery of attorneys’ fees incurred by the Company in enforcing this Agreement or otherwise protecting its rights, as well as damages caused by Employee and his/her agents involved in such breach.
8. Notification to Subsequent Employers. Employee further acknowledges that in order to enforce his/her obligations under this Agreement, the Company may need to notify subsequent actual or potential employers of Employee’s obligations under this Agreement. Employee agrees to notify the Company of the identity of his/her employers for the Restricted Period before accepting a position with such employers, and Employee consents to the Company providing notification to these employers of Employee’s ongoing obligations to the Company under this Agreement or under other applicable law. Notices to the Company should be made in a manner that provides a receipt of delivery and addressed to: Senior Vice-President Human Resources, 10260 Westheimer Road, Suite 700, Houston, Texas 77042.
9. Tolling of Restricted Period. The duration of the Restricted Period shall be tolled and suspended for any period that Employee is in violation of these covenants up to a period of one (1) year, unless such tolling is disallowed under applicable law.
10. Return of Confidential Information and Company Property. All written, electronic, or other data, materials, records and other documents made by, or coming into the possession or control of, Employee which contain or disclose Confidential Information shall be and remain the property of the Company. Upon request and upon notice of termination/resignation of Employee’s employment with the Company for any reason, Employee shall, unless directed otherwise by the Company, cease accessing and promptly return, without deletion, copying or alteration, all written or electronic materials, data, information, records and any other property in Employee’s possession or control or to which Employee has access, whether located on or off Company premises, which may concern the Company, its current or potential customers, vendors or suppliers, whether or not confidential or proprietary in nature.
11. At-Will Employment. Employee acknowledges and agrees that nothing in this Agreement is a guarantee or assurance of employment for any specific period of time. Rather, Employee understands that he/she is an at-will employee and that either Employee or the Company may terminate this at-will employment relationship at any time for any reason or no reason.
12. No Interference with Rights. Employee acknowledges and agrees that nothing in this Agreement is intended to, nor does it, interfere with or restrain any employee’s right to share or discuss information regarding his/her wages, hours, or other terms and conditions of employment in the exercise of any rights provided by the National Labor Relations Act or other applicable laws. Further, Employee acknowledges and agrees that this Agreement is not intended to, nor does it, interfere with or restrain Employee’s right to report unlawful actions to the Securities and Exchange Commission or any other law enforcement or administrative agency, or to participate in any such agency’s investigation, or to engage in any whistleblower or other activity protected or required by law. Further, neither this Agreement nor any other agreement or policy of the Company shall impose civil or criminal liability under any trade secret law or otherwise prohibit Employee from the following disclosures: (a) disclosures of trade secrets made in confidence to a federal, state, or local government official, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law, or (b) disclosures of trade secrets made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal or per court order, or (c) disclosures of trade secrets by a plaintiff to his/her attorney in a lawsuit for retaliation for reporting a suspected violation of law and use of the trade secret information in the court proceeding, if any document containing the trade secrets is filed under seal and does not disclose the trade secrets, except pursuant to court order. Employee is not required to notify Company of these allowed reports or disclosures.
13. Governing Law/Forum/Jury Waiver. The Parties agree and acknowledge that this Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas, without regard to conflicts of laws principles. With respect to any claim or dispute arising out of or related to this Agreement, the Parties hereby consent to the exclusive jurisdiction, forum and venue of the state and federal courts located in Harris County, Texas, unless another forum or venue is required by law. The Parties agree to waive a trial by jury of any or all issues arising under or connected with this Agreement, and consent to trial by the judge.
14. No Duties to Other Employers. Employee represents that he/she is not bound by the terms of any agreement with any previous employer or other party other than the Company to: (a) refrain from using or disclosing any information that would be necessary to and/or reasonably expected to be utilized by Employee in the course of the performance of his/her duties in the employ of the Company or (b) refrain from engaging in any business activity that would otherwise preclude Employee from performance of his/her duties in the employ of the Company. Employee further represents that Employee’s performance of his/her duties does not and will not violate any agreement with any prior employer or third party. Employee agrees not to use or disclose during his/her employment with the Company any information which belongs to another entity or person.
15. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Company Group, and automatically to any other person, association, or entity which may hereafter acquire or succeed to all or substantially all of the business or assets of the Company Group by any means whether direct or indirect, by purchase, merger, consolidation, or otherwise. Employee’s obligations under this Agreement are personal and such obligations of Employee shall not be voluntarily or involuntarily assigned, alienated, or transferred by Employee without the prior written consent of the Company.
16. Representations; Modifications; Other Agreements; Severability. Employee acknowledges that he/she has not relied upon any representations or statements, written or oral, not set forth in this Agreement. This Agreement cannot be modified except in writing and signed by both parties. This Agreement supplements and does not limit or restrict or alter in any way any non-disclosure, non-use, non-access, non-interference, non-solicitation, non-competition, non-disparagement or other similar obligations that the Employee may have undertaken in other agreements with the Company Group or which apply to Employee under any applicable law, including but not limited to any law regarding trade secrets, fiduciary duties, confidentiality, the Texas Uniform Trade Secrets Act, the Louisiana Uniform Trade Secrets Act, and the Defend Trade Secrets Act. If any part of this Agreement is found to be unenforceable by a court of competent jurisdiction, then such unenforceable portion will be modified to be enforceable, or severed from this Agreement if it cannot be modified, and such modification or severance shall have no effect upon the remaining portions of the Agreement which shall remain in full force and effect.
Executed this _____ day of __________, 20___.
EMPLOYEE:
EMPLOYEE SIGNATURE
Printed Name
COMPANY:
COMPANY REPRESENTATIVE SIGNATURE
COMPANY REPRESENTATIVE TITLE
Printed Name
Exhibit 10.25
EXPRO GROUP HOLDINGS N.V.
U.S. EMPLOYEE RESTRICTED STOCK UNIT (RSU) AGREEMENT
THIS RESTRICTED STOCK UNIT AGREEMENT including Exhibits A and B (this “Agreement”) evidences an award made as of the _____ day of ________, 2021 (the “Date of Grant”), between EXPRO GROUP HOLDINGS N.V., a limited liability company organized in the Netherlands (the “Company”), and __________________ (the “Employee”). The Company and Employee may be referred to individually as “Party,” and/or collectively as the “Parties.”
1. The Grant.
(a) Pursuant to the EXPRO GROUP HOLDINGS N.V. 2013 LONG-TERM INCENTIVE PLAN, as the same may be amended from time to time (the “Plan”), and subject to the conditions set forth below, the Company hereby awards to Employee, effective as of the Date of Grant, an award consisting of an aggregate number of __________ restricted stock units (the “Restricted Stock Units” or “RSUs”), whereby each Restricted Stock Unit represents the right to receive one share of the Company’s common stock, par value €0.01 per share (“Common Stock”), in accordance with the terms and conditions set forth herein and in the Plan (the “Award”). The Restricted Stock Units subject to this Agreement are hereby designated as Performance Awards for purposes of Section 8 of the Plan. The number of Restricted Stock Units subject to this Award, as described in this Section 1(a), is the “target” number of shares that may become vested and shall be adjusted based on the attainment of the Performance Criteria described in Section 1(b) below and on Exhibit A.
(b) The Award’s performance period (“Performance Period”) and Performance Criteria (the “Performance Criteria”) are set forth in Exhibit A to this Agreement. The Performance Criteria has been established by the Compensation Committee of the Supervisory Board, which shall determine and certify whether such criteria have been satisfied.
(c) To the extent any provision of this Agreement conflicts with the expressly applicable terms of the Plan, those terms of the Plan shall control, and if necessary, the applicable terms of this Agreement shall be deemed amended so as to carry out the purpose and intent of the Plan.
2. Definitions. Capitalized terms used in this Agreement that are not defined below or in the body of this Agreement shall have the meanings given to them in the Plan. In addition to the terms defined in the body of this Agreement, the following capitalized words and terms shall have the meanings indicated below:
(a)“ Cause” shall mean a determination by the Company or its employing affiliate (the “Employer”) that Employee (i) has engaged in gross negligence, incompetence, or misconduct in the performance of his or her duties with respect to the Employer or any of its affiliates; (ii) has failed to materially perform Employee’s duties and responsibilities to the Employer or any of its affiliates (other than due to Disability); (iii) has breached any material provision of this Agreement or any written agreement or corporate policy or code of conduct established by the Employer or any of its affiliates; (iv) has engaged in conduct that is, or could reasonably expected to be, materially injurious to the Employer or any of its affiliates; (v) has committed an act of theft, fraud, embezzlement, misappropriation, or breach of a fiduciary duty to the Employer or any of its affiliates; or (vi) has been convicted of, pleaded no contest to, or received adjudicated probation or deferred adjudication in connection with a crime involving fraud, dishonesty, or moral turpitude or any felony (or a crime of similar import in a foreign jurisdiction).
(b)“ Disability” shall have the meaning set forth in any written employment or consulting agreement between the Employer and Employee. If Employee is not party to such an agreement that defines these terms, then for purposes of this Agreement, “Disability” shall mean Employee being unable to perform Employee’s duties or fulfill Employee’s obligations under the terms of his or her employment by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months as determined by the Employer and certified in writing by a competent medical physician selected by the Employer.
(c)“ Forfeiture Restrictions” shall have the meaning specified in Section 3(a) hereof.
(d)“ Involuntary Termination” shall mean a termination of Employee’s employment by the Company or an affiliate for a reason other than for Cause.
(e)“ Section 409A” shall mean Section 409A of the Internal Revenue Code of 1986, as amended.
(f)“ CIC Severance Plan” shall mean the Company’s Amended and Restated U.S. Executive Change-In-Control Severance Plan adopted on January 21, 2019, and any amendments or restatements of this plan.
(g)“ Special Vesting Agreement” means an agreement which permits Employee’s RSUs to continue vesting following termination of Employee’s employment or service with the Company or with an affiliate, as applicable, in exchange for Employee’s strict compliance with designated post-termination conditions, as determined by the Committee pursuant to a written agreement executed at the time Employee’s termination of employment occurs. The Compensation Committee may, in is sole discretion, elect to limit coverage of a Special Vesting Agreement to only a portion of Employee’s RSUs.
3. Restricted Stock Units. By acceptance of this Restricted Stock Unit award, Employee agrees with respect thereto as follows:
(a) Forfeiture Restrictions. The Restricted Stock Units are restricted in that they may not be sold, assigned, pledged, exchanged, hypothecated, or otherwise alienated or transferred, encumbered, or disposed of, and in the event of termination of Employee’s employment or service with the Company for any reason other than death or Disability, or, to the extent provided in Section 3(c)(4) below, on account of an Involuntary Termination, Employee shall, for no consideration, forfeit to the Company all Restricted Stock Units to the extent then subject to the Forfeiture Restrictions. The prohibition against transfer and the obligation to forfeit and surrender Restricted Stock Units to the Company upon termination of employment or services as provided in this Section 3(a) are herein referred to as the “Forfeiture Restrictions.” The Forfeiture Restrictions shall be binding upon and enforceable against any transferee of Restricted Stock Units.
(b) Lapse of Forfeiture Restrictions (Vesting). Provided that: (i) Employee has been continuously employed by the Company from the Date of Grant through the 22nd of February, 2025 (the scheduled “Lapse (Vesting) Date”), (ii) the Company attains the Performance Criteria as described on Exhibit A, and (iii) Employee is in compliance with Exhibit B and all other agreements or obligations to the Company, the Forfeiture Restrictions shall lapse, and the number of Restricted Stock Units as determined on Exhibit A shall become vested. Except as provided in Subsection (c) below, the Company will issue one share of Common Stock to Employee for each vested Restricted Stock Unit as soon as practicable after the Lapse (Vesting) Date but in no event later than seventy-five (75) days after the end of the Performance Period. Any Restricted Stock Units with respect to which the Forfeiture Restrictions do not lapse in accordance with this Section 3(b) (and any associated unvested dividend equivalents) shall be forfeited to the Company for no consideration as of the date of the termination of Employee’s employment with the Company.
(c) Accelerated Vesting.
(1) Death. If Employee’s employment with the Company is terminated by reason of death, then the Forfeiture Restrictions shall lapse with respect to 100% of the Restricted Stock Units at the “target” level effective on the date such death occurs and Employee’s vested RSUs shall be settled in the manner provided under Section 3(d) below.
(2) Disability. If Employee’s employment with the Company is terminated by reason of Disability, then the Forfeiture Restrictions shall lapse with respect to 100% of the Restricted Stock Units at the “target level” effective as of the date of Employee’s “separation from service” (as defined under the Section 409A) due to the Employee’s Disability and Employee’s vested RSUs shall be settled in the manner provided under Section 3(d) below.
(3) Change in Control. If a Change in Control occurs and Employee is a participant in the Executive Severance Plan (as such plan may be amended from time to time), then the terms of Section 3 of such plan are hereby incorporated by reference into this Agreement. If a Change in Control occurs and Employee is not a participant in the Executive Severance Plan, then upon such Employee’s Involuntary Termination that occurs on or within twenty-four (24) months following a Change in Control and subject to the Employee’s entry into a release of all claims against the Company in a form acceptable to the Company, the Forfeiture Restrictions shall lapse with respect to the greater of (i) the number of Restricted Stock Units determined based on the Company’s attainment of the Performance Criteria described on Exhibit A, as measured through the date of such Employee’s Involuntary Termination, or (ii) the number of Restricted Stock Units determined based on a 100% of Target Level Payout Percentage.
(4) Involuntary Termination. If Employee’s employment with the Company is terminated due to an Involuntary Termination occurring other than as provided in clause (3) of this Section 3(c), then, unless otherwise determined by the Compensation Committee in its sole discretion, which shall be treated as an exercise of negative discretion for purposes of Code Section 162(m), the Company shall enter into a Special Vesting Agreement with Employee pursuant to which the Forfeiture Restrictions shall not lapse upon such termination of employment and that this Award shall continue to remain outstanding and Employee will be treated, solely for purposes of satisfying the requirements for a lapse of Forfeiture Restrictions under Section 3(b), as continuing in the employment of the Company throughout the period during which he/she continuously satisfies the obligations set forth in Exhibit B attached hereto and incorporated herein by reference as part of this Agreement. If the provisions of this Section 3(c)(4) apply with respect to Employee, the number of Restricted Stock Units that vest under this Agreement shall be determined based on the Company’s attainment of the Performance Criteria described on Exhibit A and such vested Restricted Stock Units shall be settled in the manner provided under Section 3(d) below. As further condition to receiving any Special Vesting Agreement, Employee shall provide a release of all claims against the Company in a form acceptable to the Company upon entering the Special Vesting Agreement and also Employee must continuously comply with any other obligations to, or agreements with, the Company.
(d) Payments. Subject to compliance with all terms of this Agreement and Exhibit B, the Company will issue one share of Common Stock for each vested Restricted Stock Unit to Employee as soon as practicable after (i) the scheduled Lapse (Vesting) Date with respect to the number of Restricted Stock Units as determined pursuant to Exhibit A (but in no event later than seventy-five (75) days after the end of the Performance Period), (ii) the date of Employee’s death or (iii) the date of the Employee’s separation from service due to the Employee’s Disability. The Company shall deliver the shares of Common Stock in book-entry form, with such legends or restrictions thereon as the Committee may determine to be necessary or advisable in order to comply with applicable securities laws. Employee shall complete and sign any documents and take any additional action that the Company may request to enable it to deliver shares of Common Stock on Employee’s behalf. In the event that all or part of the Restricted Stock Units granted pursuant to this Agreement provides for a deferral of compensation within the meaning of the Section 409A, it is the general intention, but not the obligation, of the Company to design this Award to comply with the Section 409A and such Award should be interpreted accordingly. Notwithstanding anything to the contrary contained herein, in the event that Employee is a “specified employee” (as defined under the Section 409A) when Employee becomes entitled to a payment or settlement under the Award which is subject to the Section 409A on account of a “separation from service” (as defined under the Section 409A), to the extent required by the Code, such payment shall not occur until the date that is six months plus one day from the date of such separation from service. Any amount that is otherwise payable within the six-month period described herein will be aggregated and paid in a lump sum without interest. Further, for purposes of the Section 409A, each payment or settlement of any portion of the Restricted Stock Units under this Agreement shall be treated as a separate payment of compensation.
(e) Restrictive Covenants. Employee acknowledges and recognizes the highly competitive nature of the businesses of the Company and accordingly agrees, in his/her capacity as an employee and equity holder in the Company, to the provisions of Exhibit B to this Agreement. Employee acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Exhibit B or any other similar obligations Employee has towards the Company under applicable law or other agreements (which includes any attempt to have any provision in Exhibit B or other similar obligations of Employee declared overbroad or unenforceable) (a “Restrictive Covenant Violation”) would be available but inadequate and the Company would suffer irreparable damages as a result of such a Restrictive Covenant Violation. In recognition of this fact, Employee agrees that, in the event of a Restrictive Covenant Violation, in addition to any remedies available to the Company under law, including damages and attorneys’ fees, remedies available the Company, without posting any bond, shall be to (i) cease making any dividend or other payments or providing any benefit otherwise required by this Agreement; (ii) terminate future vesting and cause forfeiture of all vested and unvested RSUs and common stock issued or issuable under this Agreement without consideration; (iii) cause forfeiture of the gross value of the common stock issued to Employee in the one year period prior to the Restrictive Covenant Violation (determined as of the date such stock was issued to Employee and using the Fair Market Value (as defined in the Plan) of the Company’s common stock on that date); (iv) receive repayment of any cash payments made to Employee with respect to the RSUs during the prior twelve month period; (v) obtain a temporary restraining order, temporary or permanent injunction; or (vi) specific performance or any other equitable remedy which may then be available.
(f) Corporate Acts. The existence of the Restricted Stock Units shall not affect in any way the right or power of the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization, or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities, the dissolution or liquidation of the Company or any sale, lease, exchange, or other disposition of all or any part of its assets or business, or any other corporate act or proceeding.
4. Withholding of Tax. To the extent that the receipt of the Restricted Stock Units (or any Common Stock or dividend equivalents related thereto) or the lapse of any Forfeiture Restrictions results in compensation, income or wages to Employee for federal, state, or local tax purposes, Employee shall deliver to the Company at the time of such receipt or lapse, as the case may be, such amount of money as the Company may require to meet its minimum obligation under applicable tax laws or regulations, and if Employee fails to do so (or if Employee instructs the Company to withhold cash or stock to meet such obligation), the Company shall withhold from any cash or stock remuneration (including withholding any shares of the Common Stock distributable to Employee under this Agreement) then or thereafter payable to Employee, any tax required to be withheld by reason of such resulting compensation income or wages. The Company is making no representation or warranty as to the tax consequences to Employee as a result of the receipt of the Restricted Stock Units, the treatment of dividend equivalents, the lapse of any Forfeiture Restrictions, or the forfeiture of any Restricted Stock Units pursuant to the Forfeiture Restrictions.
5. No Shareholder Rights. The Restricted Stock Units granted pursuant to this Agreement do not and shall not entitle Employee to any rights of a holder of Common Stock prior to the date that shares of Common Stock are issued to Employee in settlement of the Award. Employee’s rights with respect to the Restricted Stock Units shall remain forfeitable as stated in this Agreement.
6. Clawback. Notwithstanding any provisions in the Agreement to the contrary, any compensation, payments, or benefits provided hereunder (or profits realized from the sale of the Common Stock delivered hereunder), whether in the form of cash or otherwise, shall be subject to a clawback (i) to the extent necessary to comply with the requirements of any applicable law, including but not limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, section 304 of the Sarbanes Oxley Act of 2002 or any regulations promulgated thereunder; (ii) to the extent provided by any policy or procedure adopted by the Company or any individual agreement between Employee and the Company; or (iii) pursuant to the terms of this Agreement in the event of a Restrictive Covenant Violation.
7. Employment Relationship. For purposes of this Agreement (except as otherwise provided in Section 3(c)(4) hereof), Employee shall be considered to be in the employment of the Company as long as Employee remains an employee of either the Company or a Subsidiary. Without limiting the scope of the preceding sentence, it is specifically provided that Employee shall be considered to have terminated employment or service with the Company at the time of the termination of the “Subsidiary” status of the entity or other organization that employs or engages Employee. Nothing in the adoption of the Plan, nor the award of the Restricted Stock Units thereunder pursuant to this Agreement, shall confer upon Employee the right to continued employment by or service with the Company or affect in any way the right of the Company to terminate such employment or service at any time. Unless otherwise provided in a written employment or consulting agreement or by applicable law, Employee’s employment by or service with the Company shall be on an at-will basis, and the employment or service relationship may be terminated at any time by either Employee or the Company for any reason whatsoever, with or without cause or notice. Any question as to whether and when there has been a termination of such employment or service, and the cause of such termination, shall be determined by the Committee or its delegate, in its sole discretion, and its determination shall be final.
8. Notices. Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case of Employee, such notices or communications shall be effectively delivered if hand delivered to Employee at Employee’s principal place of employment or if sent by registered or certified mail or other mail delivery method that provides a receipt, to Employee at the last address Employee has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered if sent by registered or certified mail or other mail delivery service that provides a receipt, to the General Counsel of Company at its principal executive offices.
9. Entire Agreement; Amendment. This Agreement (including Exhibit B) and the documents incorporated by reference herein replace and merge all previous agreements and discussions relating to the same or similar subject matters between Employee and the Company and constitute the entire agreement between Employee and the Company with respect to the subject matter of this Agreement, except as otherwise provided herein. This Agreement including Exhibit B may not be modified in any respect by any verbal statement, representation or agreement made by any employee, officer, or representative of the Company or by any written agreement unless signed by an officer of the Company who is expressly authorized by the Company to execute such document. The foregoing notwithstanding, this Agreement does not modify or replace in any way any obligations Employee has to the Company or its related entities, under any agreement or applicable law, for non-disclosure, non-competition, non-solicitation, or non-interference.
10. Protection of Benefits. Without the consent of an affected Participant, no such Board or Committee action (including but not limited to any amendment, alteration, suspension, discontinuance or termination of the Plan or this Agreement) may materially and adversely affect the rights of Employee under this Award Agreement, subject to section 10(c) of the Plan.
11. Severability. If any part of this Agreement including Exhibit B is found to be unenforceable by a court of competent jurisdiction, then such unenforceable portion will be modified to be enforceable, or severed from this Agreement if it cannot be modified, and such modification or severance shall have no effect upon the remaining portions of this Agreement and Exhibit B which shall remain in full force and effect.
12. No Waiver. No failure by either Party at any time to give notice of any breach by the other Party of, or to require compliance with, any condition or provision of this Agreement shall (i) be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time or (ii) preclude insistence upon strict compliance in the future.
13. Binding Effect; Survival. The provisions of Sections 3(e) and 6 and Exhibit B shall survive the lapse of the Forfeiture Restrictions without forfeiture. This Agreement and Exhibit B shall be binding upon and shall inure to the benefit of the Company, and automatically to any other person, association, or entity which may hereafter acquire or succeed to all or substantially all of the business or assets of the Company by any means whether direct or indirect, by purchase, merger, consolidation, or otherwise. Employee’s obligations under this Agreement and Exhibit B are personal and such obligations of Employee shall not be voluntarily or involuntarily assigned, alienated, or transferred by Employee without the prior written consent of the Company.
14. Governing Law/Forum/Jury Waiver. The Parties agree and acknowledge that this Agreement and Exhibit B shall be governed by, and construed in accordance with, the laws of the State of Texas, without regard to conflicts of laws principles. With respect to any claim or dispute arising out of or related to this Agreement or Exhibit B, the Parties hereby consent to the exclusive jurisdiction, forum and venue of the state and federal courts located in Harris County, Texas, unless another forum or venue is required by law. Both the Company and Employee agree to waive a trial by jury of any or all issues arising under or connected with this Agreement or Exhibit B, and consent to trial by the judge.
IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the date first above written.
EXPRO GROUP HOLDINGS N.V.
By: ____________________________________
Name:
Title:
EMPLOYEE:
By: ____________________________________
Print Name: __________________________________
EXHIBIT A
Performance Period and Criteria
Performance Period: October 1, 2021 to December 31, 2024
First Achievement Period: October 1, 2021 to December 31, 2022
Second Achievement Period: January 1, 2023 to December 31, 2023
Third Achievement Period: January 1, 2024 to December 31, 2024
Performance Criteria:
Payment under this Award is determined based on relative performance using Total Stockholder Return (“TSR”). No portion of this Award will be earned if the Company’s performance during the Performance Period is below the threshold level of the Performance Criteria as described below. Any determination of performance under this Agreement shall be determined by the Committee in accordance with the Plan’s terms. If the Company’s TSR for the Performance Period is negative, the Payout Percentage used to calculate the payment under this Award shall not exceed 100% of the Target Level.
The Company’s TSR shall be as measured against the TSR of the Comparator Group during the Performance Period. For this purpose, the companies included in the SPDR® S&P® Oil & Gas Equipment and Services ETF (XES) on the Date of Grant will be the “Comparator Group”. Such comparison will be based on a percentile approach as detailed below with any payment based on linear interpolation if performance is between threshold and maximum levels. TSR for the Company and the Comparator Group shall be calculated separately for the First Achievement Period, Second Achievement Period and Third Achievement Period resulting in a weighted average payout at the end of the Performance Period (using a 30-day averaging period for the first 30 calendar days and the last 30 calendar days of each annual achievement period to mitigate the effect of stock price volatility). TSR calculation to assume reinvestment of dividends.
* Based on the Target Level for the TSR Based Award set forth on the first page of this Agreement.
SPDR® S&P® Oil & Gas Equipment and Services ETF (XES) Listing
The companies that comprise the index at the 1st day of the Performance Period (October 1, 2021) are listed below:
Company Name |
Ticker |
Archrock Inc. |
AROC |
Aspen Aerogels Inc |
ASPN |
Baker Hughes Company Class A |
BKR |
Bristow Group Inc |
VTOL |
Cactus Inc. Class A |
WHD |
ChampionX Corporation |
CHX |
Core Laboratories NV |
CLB |
DMC Global Inc. |
BOOM |
Dril-Quip Inc. |
DRQ |
Expro Group Holdings N.V. |
XPRO |
Halliburton Company |
HAL |
Helix Energy Solutions Group Inc. |
HLX |
Helmerich & Payne Inc. |
HP |
Liberty Oilfield Services Inc. Class A |
LBRT |
Nabors Industries Ltd. |
NBR |
NexTier Oilfield Solutions Inc. |
NEX |
NOV Inc. |
NOV |
Oceaneering International Inc. |
OII |
Oil States International Inc. |
OIS |
Patterson-UTI Energy Inc. |
PTEN |
ProPetro Holding Corp. |
PUMP |
Schlumberger NV |
SLB |
TechnipFMC Plc |
FTI |
TETRA Technologies Inc. |
TTI |
Tidewater Inc |
TDW |
Transocean Ltd. |
RIG |
U.S. Silica Holdings Inc. |
SLCA |
Adjustments to Comparator Group. The Comparator Group may be adjusted or changed by the Committee as circumstances warrant, including the following:
(1) If a Comparator Group company becomes bankrupt, the bankrupt company will remain in the Comparator Group positioned at one level below the lowest performing non-bankrupt Comparator Group. In the case of multiple bankruptcies, the bankrupt Comparator Group companies will be positioned below the non-bankrupt companies in chronological order by bankruptcy date with the first to go bankrupt at the bottom.
(2) If a Comparator Group company is acquired by another company, including through a management buy-out or going-private transaction, the acquired Comparator Group company will be removed from the Comparator Group for the entire Performance Period; provided that if the acquired Comparator Group company became bankrupt prior to its acquisition it shall be treated as provided in paragraph (1), above, or if it shall become delisted according to paragraph (5) below prior to its acquisition it shall be treated as provided in paragraph (5).
(3) If a Comparator Group company spins-off a portion of its business in a manner which results in the Comparator Group company and the spin-off company both being publicly traded, the Comparator Group company will be removed from the Comparator Group for the entire Performance Period and the spin-off company will not be added to the Comparator Group.
(4) If a Comparator Group company acquires another company, the acquiring Comparator Group company will remain in the Comparator Group for the Performance Period and the acquired Comparator Group Company will be removed from the Comparator Group for the entire Performance Period
(5) If a Comparator Group company is delisted from either the New York Stock Exchange (NYSE) or the National Association of Securities Dealers Automated Quotations (NASDAQ) such that it is no longer listed on either exchange, such delisted Comparator Group company will remain in the Comparator Group positioned at one level below the lowest performing listed company and above the highest ranked bankrupt Comparator Group company (see paragraph (1) above). In the case of multiple delistings, the delisted Comparator Group companies will be positioned below the listed and above the bankrupt Comparator Group companies in chronological order by delisting date with the first to be delisted at the bottom of the delisted companies. If a delisted company shall become bankrupt, it shall be treated as provided in paragraph (1) above. If a delisted company shall be later acquired, it shall be treated as a delisted company under this paragraph. If a delisted company shall relist during the Performance Period, it shall remain in its relative delisted position determined under this paragraph.
(6) If the Company’s or any Comparator Group company’s stock splits (or if there are other similar subdivisions, consolidations or changes in such company’s stock or capitalization), such company’s TSR performance will be adjusted for the stock split so as not to give an advantage or disadvantage to such company by comparison to the other Comparator Group companies.
EXHIBIT B
U.S. EMPLOYEE CONFIDENTIALITY AND RESTRICTIVE COVENANT AGREEMENT
This U.S. Employee Confidentiality and Restrictive Covenant Agreement (“Agreement”) is made and entered as of the _____ day of _________, 2021, between _______________ (“Employee”) and Expro Americas, LLC (the “Company”) and for the benefit of the Company, Expro Group Holdings N.V. and their subsidiary and affiliated companies (collectively referred to as the “Company Group”). The Company and Employee may be referred to individually as “Party,” and/or collectively as the “Parties.” The Parties agree as follows:
1. Company Promise to Provide Access to Company Group Confidential Information and Goodwill. Employee recognizes that the Company Group has made significant investments of time and resources in establishing substantial relationships with the Company Group’s employees and Company Relationships (defined below) including existing and prospective customers, suppliers, contractors, sub- contractors, and other business relationships and developing the Company Group’s reputation and goodwill. Employee further recognizes that the Company Group has further invested valuable time and resources to obtain and develop and protect the Company Group’s proprietary business information, trade secrets, know- how, and other Confidential Information (defined below). The protection of Confidential Information and Company Relationships is vital to the interests of the Company Group.
(a) In exchange for Employee’s promises made in this Agreement, the Company promises to provide to Employee, consistent with Employee’s position, access to certain information regarding the business and activities of the Company Group. Employee acknowledges that he/she will have access to confidential information, training and related goodwill (“Confidential Information,” defined more fully below) as well as Company Relationships (defined below) while employed by the Company, including without limitation, any information and goodwill obtained by Employee during the course of Employee’s employment with the Company, concerning the business or affairs of the Company Group or that of its customers, suppliers, employees, contractors, subcontractors, agents, representatives or other third parties.
(b) Confidential Information includes any information about the Company Group that has not been intentionally and with authority publicly disclosed by the Company Group. Confidential Information likewise includes all information provided to the Company Group by its customers, suppliers, contractors, subcontractors, business partners, joint venturers, agents or representatives which has not been intentionally and with authority publicly disclosed by these persons or entities. While Employee is obligated to comply with all non-disclosure requirements in place with the Company Group’s customers, suppliers, contractors, subcontractors, business partners, joint venturers, agents or representatives, the obligations under this Agreement are broader and apply to any non-public information the Company Group or Employee receives from or has access to regarding these third parties, regardless of whether the Company Group is contractually obligated to a third party to keep such information confidential. Confidential Information includes, without limitation, information relating to the services, products, policies, practices, pricing, costs, suppliers, vendors, methods, processes, techniques, finances, administration, employees, devices, trade secrets and operations of the Company Group, any inventions, modifications, discoveries, designs, developments, improvements, processes, software programs, work of authorship, documentation, formula, data, technique, technology, know-how, secret or intellectual property right by any Company Group employee, Company Group customers or potential customers, marketing, sales activities, development programs, promotions, manufacturing, machining, drawings, future and current plans regarding business and customers, e-mails, notes, manufacturing documents, engineering documents, formulas, financial statements, bids, project reports, handling documentation, machinery and compositions, all financial data relating to the Company Group, business methods, accounting and tracking methods, books, inventory handling procedure, credit, credit procedures, indebtedness, financing procedures, investments, trading, shipping, production, processing, welding, fabricating, assembling, renting, domestic and foreign operations, customer and vendor and supplier lists, data storage in any medium (electronic or hard copy) contact information, lab reports, lab work, and any data or materials used in and created during the development of any of the aforementioned materials or processes.
2. Employee Promise Not to Disclose Confidential Information. Employee acknowledges that this Confidential Information is confidential, proprietary, not known outside of the Company Group’s business, valuable, special and/or a unique asset of the Company Group, which belongs to the Company Group and gives the Company Group a competitive advantage. If this Confidential Information were disclosed without authority to third parties or accessed or used by third parties and/or Employee for the benefit of anyone other than the Company Group, such disclosure, access, or use would seriously and irreparably damage the Company Group and cause the loss of certain competitive advantages. Employee promises he/she has not and will not disclose, provide access, or use for Employee’s own benefit or for the benefit of anyone besides the Company Group, the Confidential Information described above and learned or obtained by Employee as part of his/her employment with the Company. Employee acknowledges that this promise of non-disclosure, non-access, and non-use continues indefinitely and specifically does not expire at the end of Employee’s employment with the Company. This Section does not apply to, or in any way restrict or impede Employee from, any communications with government agencies as stated below, or complying with any applicable law or court order, or exercising whistleblower or other protected non-waivable legal rights.
3. Non-Disparagement. Employee agrees that he/she shall not at any time make, publish, or communicate to any person or entity or in any public forum, any defamatory or disparaging remarks, comments, or statements concerning the Company Group or its businesses, business practices, or any of its employees or officers, and existing and prospective customers, suppliers, investors and other associated third parties. This Section does not apply to, or in any way restrict, or impede Employee from, any communications with government agencies as stated below, or complying with any applicable law or court order, or exercising whistleblower or other protected non-waivable legal rights.
4. Non-Competition/Non-Solicitation/Non-Interference. Employee acknowledges that the highly competitive nature of the Company’s business, Employee’s position with the Company, and the Confidential Information, Company Relationships, training, and goodwill provided to Employee during his/her employment with the Company, support Employee’s promises not to compete with the Company, and not to solicit or interfere with the Company’s relationships with its customers and employees as stated below in the rest of this Section 4, during his/her employment with the Company and for twelve (12) months following Employee’s separation from the Company (“the Restricted Period”) regardless of the reason for the separation, within the Restricted Area.
For the purposes of this Agreement, “Restricted Area” is defined as follows:
For residents of all states except Louisiana: The Louisiana parishes of Lafayette, Iberia, and Terrebonne and the Texas counties of Harris, Fort Bend, Montgomery, Brazoria, and Galveston, where the Company does business. Restricted Area also includes any county/parish in which the Employee directed or conducted efforts to further the Company Business during the last twelve (12) months of Employee’s employment with the Company. The Restricted Area as defined above shall be reduced to exclude any county/parish in which Employee did not conduct or direct efforts to further the Company Business and about which Employee had no responsibility and no involvement, during Employee’s last twelve (12) months of employment with the Company.
For Louisiana residents: The Louisiana parishes of Lafayette, Iberia, and Terrebonne and the Texas counties of Harris, Fort Bend, Montgomery, Brazoria, and Galveston, where the Company does business. Employee agrees that if the Company’s Business and Employee’s duties for the Company expand to other parishes or counties, the Company may give Employee written notice of expansion to this Restricted Area definition which will have the same force and effect of the original Restricted Area definition, unless Employee disputes in writing this expansion within seven (7) days. The Restricted Area as defined above shall be reduced to exclude any county/parish in which Employee did not conduct or direct efforts to further the Company Business and about which Employee had no responsibility and no involvement, during Employee’s last twelve (12) months of employment with the Company.
(a) Non-Competition. During the Restricted Period and in the Restricted Area, Employee will not engage in or carry on, directly or indirectly, a business similar to and competitive with the Company Business (“Competing Business”). “Company Business” specifically includes, but is not limited to, the business involved with well construction, well intervention integrity, subsea well access, and well flow management and production solutions divisions of the Company’s business as well as any divisions in operation during Employee’s last twelve (12) months of employment with the Company, and includes the Company’s current and planned (future) business, bids, projects, contracts, and Company Relationships (defined below). Accordingly, during the Restricted Period and in the Restricted Area, Employee will not, directly or indirectly, own, manage, operate, join, become employed or engaged by, partner in, control, participate in, be connected with, loan money or sell or lease equipment or property to, or otherwise be affiliated with any Competing Business. For further clarity, Competing Business shall include the design, sales, marketing, fabrication, installation, provision, rental, repair, or manufacturing of products or services similar to or functionally equivalent to those designed, sold, installed, repaired, fabricated, manufactured, produced, provided, rented, marketed or licensed by the Company. The foregoing notwithstanding, Employee may own less than two percent (2%) of the outstanding stock of any class for a Competing Business which sells its stock on a national securities exchange and if Employee is not involved in the management of such Competing Business. Further, Competing Business and Restricted Area, as defined above, shall not include any geographic areas, services, business segment, or products of the Company for which Employee had no responsibility, no involvement, and about which he/she had no access to Confidential Information or Company Relationships during the last twelve (12) months of Employee’s employment with the Company. For Oklahoma residents, this non-competition obligation ends upon Employee’s last day of employment with the Company.
(b) Non-Solicitation/Non-Interference of Employees/Contractors. During the Restricted Period and in the Restricted Area, Employee further agrees that he/she will not, directly or indirectly, interfere with the Company’s relationship with, solicit or hire or otherwise encourage to change or leave their employment or contractor position with the Company, any person currently employed by or engaged as a contractor to the Company, and who was employed by or engaged by the Company during Employee’s last twelve (12) months of employment with the Company. This restriction shall not include any current or potential employee or contractor of the Company for whom Employee had no responsibility, no involvement, and about whom he/she had no access to Confidential Information during his/her employment with the Company. This restriction does not apply to postings and advertisements regarding job opportunities which are made available to the public and are not directed specifically toward Company employees or contractors.
(c) Non-Solicitation/Non-Interference of Customers, Vendors, Suppliers. During the Restricted Period and in the Restricted Area, Employee further agrees that he/she will not, directly or indirectly, solicit business of a similar nature to that provided by the Company from any customer of the Company, nor encourage or otherwise cause any current or potential customer, vendor or supplier of the Company, including those for the Company’s current or planned (future) projects, bids, or contracts, to cease or materially change their current or potential business relationship with the Company or otherwise attempt to interfere with these current or potential Company Relationships. For purposes of this Section, “current and potential customer, vendor or supplier” shall mean any entity or person with whom the Company has been engaged in a business relationship during the last twelve (12) months of Employee’s employment with the Company, and any “potential business relationship” shall mean any relationship pursued by the Company during the last twelve (12) months of Employee’s employment with the Company, including any current or planned (future) bids, projects or contracts. All of these relationships in the aggregate are defined as “Company Relationships.” This restriction shall not include any Company Relationship for which Employee had no responsibility, no involvement, and about which he/she had no access to Confidential Information during his/her last twelve (12) months of employment with the Company. For residents of Oklahoma, during the post-employment portion of the Restricted Period, these non-solicitation obligations are limited to directly soliciting any of the Company’s Established Customers relating to any Competing Business. “Established Customers” shall mean the current clients and/or customers of the Company, determined as of the last day of Employee’s employment with the Company, and as allowed by applicable law.
5. Intellectual Property. Employee assigns to the Company all right, title and interest Employee has or may acquire in and to any Intellectual Property that results from Employee’s efforts, either alone or jointly with others, during the period of Employee’s employment with the Company. “Intellectual Property” means any and all inventions, discoveries, developments, innovations, processes, designs, methods, technologies, formulae, models, research and development, patents, patent applications, trade secrets and other Confidential Information and works of authorship (including copyrightable works, copyrights and copyright applications), and improvements to any of the foregoing that, either alone or jointly with others: (a) result from any work performed on behalf of the Company, or from a research project suggested by the Company; (b) relate in any way to the existing or contemplated business of the Company; or (c) result from the use of the Company’s time, material, employees or facilities. Employee acknowledges and agrees that any work Employee performs for the Company during employment that constitutes copyrightable subject matter shall be considered a “work made for hire” as that term is defined in the United States Copyright Act (17 U.S.C. Section 101). Employee hereby ratifies and otherwise transfers and assigns to the Company, and waives and agrees never to assert, any and all rights to claim authorship, rights to object to any modification or other moral rights that Employee may have in or with respect to any Intellectual Property and/or works made for hire, even after termination of Employee’s employment. Employee further agrees that if, in the course of providing services to the Company, Employee incorporates any intellectual property owned by Employee, the Company is hereby granted a nonexclusive, royalty-free, perpetual, irrevocable, worldwide right and license to make, have made, copy, modify, use, distribute and sell such intellectual property or products incorporating such intellectual property of Employee. During and after Employee’s employment, Employee will assist and cooperate with the Company for no additional compensation, but with the Company reimbursing any of Employee’s necessary out of pocket expenses. Employee will complete and sign documents requested by the Company to acquire, transfer, maintain, perfect and enforce the Company’s rights to the Intellectual Property, including patent, copyright, trade secret and other protections for the Company’s Intellectual Property.
6. Employee Acknowledgement of Need for Protections and Restrictions Promised; Modifications of Restrictions. Employee acknowledges and understands that his/her promises in this Agreement restrict some of his/her actions during and after employment with the Company. However, Employee acknowledges and agrees that he/she has or will receive sufficient consideration from the Company under this Agreement to justify such restrictions and that such restrictions are reasonable and necessary to protect the Company’s legitimate business interests. Employee understands and agrees that the restrictions in this Agreement shall continue beyond the termination of Employee’s employment, regardless of the reason for such termination.
7. Remedies. Employee acknowledges that money damages would not be a sufficient remedy for any breach of this Agreement by Employee, and that the Company shall be entitled to enforce this Agreement by specific performance and immediate injunctive relief as remedies for such breach or any threatened breach. Such remedies shall not be deemed the exclusive remedies for a breach of this Agreement, but shall be in addition to all remedies available to the Company at law, under common and statutory law, the Texas Uniform Trade Secrets Act, Louisiana Uniform Trade Secrets Act, the Defend Trade Secrets Act, under other agreements, or in equity, including, without limitation, the recovery of attorneys’ fees incurred by the Company in enforcing this Agreement or otherwise protecting its rights, as well as damages caused by Employee and his/her agents involved in such breach.
8. Notification to Subsequent Employers. Employee further acknowledges that in order to enforce his/her obligations under this Agreement, the Company may need to notify subsequent actual or potential employers of Employee’s obligations under this Agreement. Employee agrees to notify the Company of the identity of his/her employers for the Restricted Period before accepting a position with such employers, and Employee consents to the Company providing notification to these employers of Employee’s ongoing obligations to the Company under this Agreement or under other applicable law. Notices to the Company should be made in a manner that provides a receipt of delivery and addressed to: Senior Vice-President Human Resources, 10260 Westheimer Road, Suite 700, Houston, Texas 77042.
9. Tolling of Restricted Period. The duration of the Restricted Period shall be tolled and suspended for any period that Employee is in violation of these covenants up to a period of one (1) year, unless such tolling is disallowed under applicable law.
10. Return of Confidential Information and Company Property. All written, electronic, or other data, materials, records and other documents made by, or coming into the possession or control of, Employee which contain or disclose Confidential Information shall be and remain the property of the Company. Upon request and upon notice of termination/resignation of Employee’s employment with the Company for any reason, Employee shall, unless directed otherwise by the Company, cease accessing and promptly return, without deletion, copying or alteration, all written or electronic materials, data, information, records and any other property in Employee’s possession or control or to which Employee has access, whether located on or off Company premises, which may concern the Company, its current or potential customers, vendors or suppliers, whether or not confidential or proprietary in nature.
11. At-Will Employment. Employee acknowledges and agrees that nothing in this Agreement is a guarantee or assurance of employment for any specific period of time. Rather, Employee understands that he/she is an at-will employee and that either Employee or the Company may terminate this at-will employment relationship at any time for any reason or no reason.
12. No Interference with Rights. Employee acknowledges and agrees that nothing in this Agreement is intended to, nor does it, interfere with or restrain any employee’s right to share or discuss information regarding his/her wages, hours, or other terms and conditions of employment in the exercise of any rights provided by the National Labor Relations Act or other applicable laws. Further, Employee acknowledges and agrees that this Agreement is not intended to, nor does it, interfere with or restrain Employee’s right to report unlawful actions to the Securities and Exchange Commission or any other law enforcement or administrative agency, or to participate in any such agency’s investigation, or to engage in any whistleblower or other activity protected or required by law. Further, neither this Agreement nor any other agreement or policy of the Company shall impose civil or criminal liability under any trade secret law or otherwise prohibit Employee from the following disclosures: (a) disclosures of trade secrets made in confidence to a federal, state, or local government official, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law, or (b) disclosures of trade secrets made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal or per court order, or (c) disclosures of trade secrets by a plaintiff to his/her attorney in a lawsuit for retaliation for reporting a suspected violation of law and use of the trade secret information in the court proceeding, if any document containing the trade secrets is filed under seal and does not disclose the trade secrets, except pursuant to court order. Employee is not required to notify Company of these allowed reports or disclosures.
13. Governing Law/Forum/Jury Waiver. The Parties agree and acknowledge that this Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas, without regard to conflicts of laws principles. With respect to any claim or dispute arising out of or related to this Agreement, the Parties hereby consent to the exclusive jurisdiction, forum and venue of the state and federal courts located in Harris County, Texas, unless another forum or venue is required by law. The Parties agree to waive a trial by jury of any or all issues arising under or connected with this Agreement, and consent to trial by the judge.
14. No Duties to Other Employers. Employee represents that he/she is not bound by the terms of any agreement with any previous employer or other party other than the Company to: (a) refrain from using or disclosing any information that would be necessary to and/or reasonably expected to be utilized by Employee in the course of the performance of his/her duties in the employ of the Company or (b) refrain from engaging in any business activity that would otherwise preclude Employee from performance of his/her duties in the employ of the Company. Employee further represents that Employee’s performance of his/her duties does not and will not violate any agreement with any prior employer or third party. Employee agrees not to use or disclose during his/her employment with the Company any information which belongs to another entity or person.
15. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Company Group, and automatically to any other person, association, or entity which may hereafter acquire or succeed to all or substantially all of the business or assets of the Company Group by any means whether direct or indirect, by purchase, merger, consolidation, or otherwise. Employee’s obligations under this Agreement are personal and such obligations of Employee shall not be voluntarily or involuntarily assigned, alienated, or transferred by Employee without the prior written consent of the Company.
16. Representations; Modifications; Other Agreements; Severability. Employee acknowledges that he/she has not relied upon any representations or statements, written or oral, not set forth in this Agreement. This Agreement cannot be modified except in writing and signed by both parties. This Agreement supplements and does not limit or restrict or alter in any way any non-disclosure, non-use, non-access, non-interference, non-solicitation, non-competition, non-disparagement or other similar obligations that the Employee may have undertaken in other agreements with the Company Group or which apply to Employee under any applicable law, including but not limited to any law regarding trade secrets, fiduciary duties, confidentiality, the Texas Uniform Trade Secrets Act, the Louisiana Uniform Trade Secrets Act, and the Defend Trade Secrets Act. If any part of this Agreement is found to be unenforceable by a court of competent jurisdiction, then such unenforceable portion will be modified to be enforceable, or severed from this Agreement if it cannot be modified, and such modification or severance shall have no effect upon the remaining portions of the Agreement which shall remain in full force and effect.
Executed this ______________ day of ____________________, 20___.
EMPLOYEE:
___________________________________________________
EMPLOYEE SIGNATURE
___________________________________________________
Printed Name
COMPANY:
________________________________________________
COMPANY REPRESENTATIVE SIGNATURE
___________________________________________________
COMPANY REPRESENTATIVE TITLE
___________________________________________________
Printed Name
Exhibit 10.30
AMENDMENT ONE TO THE
FRANK’S INTERNATIONAL N.V.
AMENDED AND RESTATED U.S. EXECUTIVE CHANGE-IN-CONTROL
SEVERANCE PLAN
RECITALS
WHEREAS, Expro Group Holdings N.V (f/k/a Frank’s International N.V.) (the “Company”) previously adopted the Frank’s International N.V. Amended and Restated U.S. Executive Change in Control Severance Plan (the “Plan”) for the benefit of its qualifying employees;
WHEREAS, the Company desires to amend the Plan to expand the group of employees eligible to receive benefits to include non-U.S. based executives; and
WHEREAS, the Company has the authority to amend the Plan pursuant to Section 7(e) thereof.
NOW, THEREFORE, BE IT RESOLVED that effective October 1, 2021,
(a) Section 2(h) of the Plan is hereby amended by revising Subsection (i) in its entirety, to be and read as follows:
“(i) The individual must be a full-time salaried employee of the Employer who, at the time of selection and through the date a Change in Control occurs, is (A) holding the title of Chief Executive Officer (“CEO”); (B) serving as an executive officer who reports directly to the CEO; (C) serving as any other senior vice president, vice president, or executive vice president of the Employer who does not report directly to the CEO; or (D) serving as any other full-time salaried management employee of the Employer at the time of selection.;”
(b) “Company” as defined in the plan shall refer to “Expro Group Holdings N.V.”
************
IN WITNESS WHEREOF, the Company has caused the Plan to be executed in its name and on its behalf as of October 1, 2021 by a duly authorized officer.
Expro Group Holdings N.V. | |||
By: | /s/ Michael D. Jardon | ||
Its: | CEO | ||
Exhibit 10.31
EXPRO GROUP HOLDINGS N.V.
AMENDED AND RESTATED U.S. EXECUTIVE CHANGE-IN-CONTROL
SEVERANCE PLAN PARTICIPATION AGREEMENT INCLUDING
CONFIDENTIALITY AND RESTRICTIVE COVENANT AGREEMENT
This Amended and Restated U.S. Executive Change-in-Control Severance Plan Participation Agreement (the “Participation Agreement” or this “Agreement”) is entered into effective as of _______________ (the “Participation Date”), by and between ____________________ (the “Employer”) and you (the “Participant”), pursuant to the Expro Group Holdings N.V. Amended and Restated U.S. Executive Change-in-Control Severance Plan (the “Plan” or the “CIC Severance Plan”).
ARTICLE I
PARTICIPATION AGREEMENT
1.1 Participant Acceptance. The Participant accepts the designation as a Covered Executive under the Plan and agrees that the terms and conditions of this Agreement and the Plan will govern the Participant’s rights with respect to the severance benefits provided under the Plan (the “Severance Benefits”), notwithstanding any contrary provision in any employment agreement or other severance plan. Participant has read and understands all terms and conditions of the Plan and this Agreement and agrees to comply with all such terms.
1.2 Employer Acceptance. The Employer accepts the designation as a participating employer under the Plan and agrees to be bound by all the terms of the Plan that apply to it as an Employer so designated to participate in the Plan. In accordance with, and subject to, the terms and conditions of the Plan, the Employer hereby allows the Participant to participate in the Executive Change-in-Control Severance Plan.
1.3 Further Agreements. The Participant and the Employer agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Participation Agreement.
1.4 Capitalized Terms. Except as defined in this Participation Agreement (including Exhibit A attached hereto), capitalized terms have the same meanings ascribed to them in the Plan.
1.5 Timing of Signing of this Agreement. The terms and conditions of this Participation Agreement as offered must be accepted by the Participant within 30 days of the date this Agreement is signed by the Employer below. Failure to timely accept the terms will result in immediate and irrevocable cancellation of the participation offered.
1.6 Outplacement Benefits. If the Participant becomes eligible for Severance Benefits under the Plan, the outplacement assistance benefits described in the Plan shall consist of outplacement assistance provided for the period beginning on the date of termination and ending on the last day of the second calendar year following the date on which the termination of employment occurred, or until subsequent employment is obtained, whichever occurs first, and shall not exceed $15,000 in the aggregate. Such outplacement assistance shall be provided through a vendor selected by the Employer or the Company, with the Employer directly providing payment to such vendor.
ARTICLE II
Confidentiality and Restrictive Covenants attached as Exhibit A
2.1 Exhibit A. The Participant and the Employer have agreed to the terms and conditions included in Exhibit A as an express incentive for the Participant and the Employer to enter into the Participation Agreement and for the Employer or any of its affiliates providing the consideration set forth in the Plan and the Participation Agreement and in Exhibit A. Exhibit A is incorporated into this Agreement in full by reference.
2.2 Protection of Legitimate Business Interests. Participant’s agreement to Exhibit A is also consideration for the provision of Confidential Information to the Participant by Employer or its affiliates, and is intended to further and reasonably protect the Confidential Information and Company Relationships of Employer or its affiliates which are disclosed or entrusted to the Participant, to protect the business goodwill of the Employer and its affiliates, to protect the business opportunities disclosed or entrusted to the Participant, and to protect the other legitimate business interests of the Employer and its affiliates.
2.3 Reasonably Related Restrictions. In executing this Participation Agreement, the Participant expressly acknowledges and agrees that the Participation Agreement aligns the Participant’s interests with the Employer’s and its affiliates’ long-term business interests and creates a further incentive for the Participant to build the Employer’s and its affiliates’ goodwill, and the provisions contained in Exhibit A are reasonably related to the Employer’s and its affiliates’ legitimate interests in protecting their goodwill. The Participant understands that the Employer has hereby promised to provide to the Participant Confidential Information during the Participant’s employment with the Employer, or new Confidential Information following the Participant’s promotion to a new position or following the Participant’s designation of eligibility under the Plan and Participant’s acceptance of this Agreement, as applicable.
2.4 Recovery of Payments. If the Committee determines that the Participant has committed a material breach of Exhibit A or any other non-disclosure, non-disparagement, non-competition, or non-solicitation obligation owing to the Employer or its affiliates under any agreement or applicable law, upon notice from the Employer, the Participant shall no longer be eligible to receive any benefits under the Plan and Participant shall repay to the Company the Severance Benefits Participant has already received under the Plan. Such notice shall be provided within the earlier to occur of one year after discovery of the alleged breach or the second anniversary of the Participant’s date of termination.
EXPRO GROUP HOLDINGS N.V.
By:
Name:
Title:
___________________________ (the “Employer”)
By:
Name:
Title:
Date:
PARTICIPANT
Date:
EXHIBIT A
TO EXPRO GROUP AMENDED AND RESTATED U.S. EXECUTIVE CIC
SEVERANCE PLAN PARTICIPATION AGREEMENT
Exhibit A-1
Exhibit 10.33
AMENDMENT ONE TO THE
FRANK’S INTERNATIONAL N.V.
U.S. EXECUTIVE RETENTION AND SEVERANCE PLAN
RECITALS
WHEREAS, Expro Group Holdings N.V. (f/k/a Frank’s International N.V.) (the “Company”) previously adopted the Frank’s International N.V. U.S. Executive Retention and Severance Plan (the “Plan”) for the benefit of its qualifying employees;
WHEREAS, the Company desires to amend the Plan to expand the group of employees eligible to receive benefits to include non-U.S. based executives; and
WHEREAS, the Company has the authority to amend the Plan pursuant to Section 7.3 thereof.
NOW, THEREFORE, BE IT RESOLVED that effective October 1, 2021,
(a) Section 1.10 of the Plan is hereby amended by revising Subsection (c) in its entirety, to be and read as follows:
“(c) is employed by the Employer as a regular employee of the Employer;”
(b) Section 1.13 of the Plan is hereby amended and restated in its entirety to be and read as follows:
“1.13 “Executive” means a full-time salaried employee of the Employer, who, at the time of selection and through the date of a Qualifying Termination, is (A) holding the title of Chief Executive Officer (“CEO”); (B) serving as an executive officer who reports directly to the CEO; (C) serving as any other senior vice president, vice president, or executive vice president of the Employer who does not report directly to the CEO; or (D) serving as any other full-time salaried management employee of the Employer at the time of selection.”
(c) Section 1.9 of the Plan is hereby amended and restated in its entirety to be and read as follows:
“1.9 “Company” means Expro Group Holdings N.V. and any successor entity that adopts the Plan, or any subsidiary or affiliate of the Company, which is designated by the Administrator as having adopted the Plan.”
************
IN WITNESS WHEREOF, the Company has caused the Plan to be executed in its name and on its behalf as of October 1, 2021 by a duly authorized officer.
Expro Group Holdings N.V. | |||
By: | /s/ Michael D. Jardon | ||
Its: | CEO | ||
Exhibit 10.34
![]() |
Expro Group Holdings N.V. 1311 Broadfield Boulevard, Ste 400 Houston, Texas 77084 |
|
exprogroup.com |
EXPRO GROUP HOLDINGS N.V.
U.S. EXECUTIVE RETENTION AND SEVERANCE PLAN PARTICIPATION
AGREEMENT INCLUDING CONFIDENTIALITY AND RESTRICTIVE COVENANT
AGREEMENT
This U.S. Executive Retention and Severance Plan Participation Agreement (the “Participation Agreement” or this “Agreement”) is entered into effective as of _______________, (the “Participation Date”), by and between ____________________ (the “Employer”) and you (the “Participant”), pursuant to the Expro Group Holdings N.V. U.S. Executive Retention and Severance Plan (the “Plan” or the “Executive Retention and Severance Plan”).
ARTICLE I
PARTICIPATION AGREEMENT
1.1 Participant Acceptance. The Participant accepts the designation as a Covered Executive under the Plan and agrees that the terms and conditions of this Agreement and the Plan will govern the Participant’s rights with respect to the severance benefits provided under the Plan (the “Severance Benefits”), notwithstanding any contrary provision in any employment agreement or other severance plan. Participant has read and understands all terms and conditions of the Plan and this Agreement and agrees to comply with all such terms.
1.2 Employer Acceptance. The Employer accepts the designation as a participating employer under the Plan and agrees to be bound by all the terms of the Plan that apply to it as an Employer so designated to participate in the Plan. In accordance with, and subject to, the terms and conditions of the Plan, the Employer hereby allows the Participant to participate in the Executive Retention and Severance Plan.
1.3 Further Agreements. The Participant and the Employer agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Participation Agreement.
1.4 Capitalized Terms. Except as defined in this Participation Agreement (including Exhibit A attached hereto), capitalized terms have the same meanings ascribed to them in the Plan.
1.5 Timing of Signing of this Agreement. The terms and conditions of this Participation Agreement as offered must be accepted by the Participant within thirty (30) days of the date this Agreement is signed by the Employer below. Failure to timely accept the terms will result in immediate and irrevocable cancellation of the participation offered.
ARTICLE II
Confidentiality and Restrictive Covenants attached as Exhibit A
2.1 Exhibit A. The Participant and the Employer have agreed to the terms and conditions included in Exhibit A as an express incentive for the Participant and the Employer to enter into the Participation Agreement and for the Employer or any of its affiliates providing the consideration set forth in the Plan and the Participation Agreement and in Exhibit A. Exhibit A is incorporated into this Agreement in full by reference.
2.2 Protection of Legitimate Business Interests. Participant’s agreement to Exhibit A is also consideration for the provision of Confidential Information to the Participant by Employer or its affiliates, and is intended to further and reasonably protect the Confidential Information and Company Relationships of Employer or its affiliates which are disclosed or entrusted to the Participant, to protect the business goodwill of the Employer and its affiliates, to protect the business opportunities disclosed or entrusted to the Participant, and to protect the other legitimate business interests of the Employer and its affiliates.
2.3 Reasonably Related Restrictions. In executing this Participation Agreement, the Participant expressly acknowledges and agrees that the Participation Agreement aligns the Participant’s interests with the Employer’s and its affiliates’ long-term business interests and creates a further incentive for the Participant to build the Employer’s and its affiliates’ goodwill, and the provisions contained in Exhibit A are reasonably related to the Employer’s and its affiliates’ legitimate interests in protecting their goodwill. The Participant understands that the Employer has hereby promised to provide to the Participant Confidential Information during the Participant’s employment with the Employer, or new Confidential Information following the Participant’s promotion to a new position or following the Participant’s designation of eligibility under the Plan and Participant’s acceptance of this Agreement, as applicable.
2.4 Recovery of Payments. If the Committee determines that the Participant has committed a material breach of Exhibit A or any other non-disclosure, non-disparagement, non-competition or non-solicitation obligation owing to the Employer or its affiliates under any agreement or applicable law, upon notice from the Employer, the Participant shall no longer be eligible to receive any benefits under the Plan and Participant shall repay to the Company the Severance Benefits Participant has already received under the Plan. Such notice shall be provided within the earlier to occur of one (1) year after discovery of the alleged breach or the second anniversary of the Participant’s date of termination.
EXPRO GROUP HOLDINGS N.V.
By:
Name:
Title:
___________________________ (the “Employer”)
By:
Name:
Title:
Date:
PARTICIPANT
Date:
EXHIBIT A
TO EXPRO GROUP U.S. EXECUTIVE RETENTION AND
SEVERANCE PLAN PARTICIPATION AGREEMENT
Exhibit A-1
Exhibit 21.1 |
||
LIST OF SUBSIDIARIES OF EXPRO GROUP HOLDINGS N.V. |
||
Entity |
Jurisdiction |
|
Blackhawk Specialty Tools de Mexico S. de RL de C.V. |
Mexico |
|
Blackhawk Specialty Tools, LLC |
Texas, USA |
|
Exploration and Production Services (Holdings) Ltd |
United Kingdom |
|
Expro Americas LLC |
Delaware, USA |
|
Expro Argentina, S.R.L. |
Argentina |
|
Expro Benelux Limited |
United Kingdom |
|
Expro Eurasia Limited |
United Kingdom |
|
Expro Group Australia PTY |
Australia |
|
Expro Gulf Ltd |
Cyprus |
|
Expro Holdings UK 2 Ltd |
United Kingdom |
|
Expro Holdings UK 3 Ltd |
United Kingdom |
|
Expro Holdings UK 4 Ltd |
United Kingdom |
|
Expro Holdings US Inc. |
Delaware, USA |
|
Expro International B.V. |
The Netherlands |
|
Expro International Group Ltd |
United Kingdom |
|
Expro North Sea Ltd |
United Kingdom |
|
Expro Norway AS |
Norway |
|
Expro Overseas Inc. |
Panama |
|
Expro Resources Ltd |
United Kingdom |
|
Expro Tool, S.de RL de CV |
Mexico |
|
Expro US Holdings LLC |
Delaware, USA |
|
Expro Worldwide B.V. |
The Netherlands |
|
Exprotech Nigeria Ltd. |
Nigeria |
|
FI Oilfield Services Canada ULC |
Alberta, Canada |
|
Frank’s International Asset Management, Inc |
Texas, USA |
|
Frank’s International GP, LLC |
Delaware, USA |
|
Frank’s International Guyana, Inc. |
Guyana |
|
Frank’s International Hungary Kft. |
Hungary |
|
Frank's Canada Holding B.V. |
The Netherlands |
|
Frank's Eiendom AS |
Norway |
|
Frank's International (Bermuda) Ltd |
Bermuda |
|
Frank's International (Gibraltar) Limited |
Gibraltar |
|
Frank's International A.S. |
Norway |
Frank's International Americas B.V. |
The Netherlands |
|
Frank's International Brasil Ltda. |
Brazil |
|
Frank's International C.V. |
The Netherlands |
|
Frank's International Coöperatief U.A. |
The Netherlands |
|
Frank's International ITL, Ltd. |
British Virgin Islands |
|
Frank's International Limited |
United Kingdom |
|
Frank's International LP B.V. |
The Netherlands |
|
Frank's International Mexico S. de RL de C.V. |
Mexico |
|
Frank's International Middle East (BVI) Ltd |
British Virgin Islands |
|
Frank's International Middle East FZCO |
United Arab Emirates |
|
Frank's International Operations B.V. |
The Netherlands |
|
Frank's International Sdn Bhd |
Brunei |
|
Frank's International Trinidad Unlimited |
Trinidad |
|
Frank's International Tubular Products Ltd |
British Virgin Islands |
|
Frank's International West Africa (B.V.I.) Limited |
British Virgin Islands |
|
Frank's International, LLC |
Texas, USA |
|
Frank's Oilfield Services (Aust) Pty Ltd |
Australia |
|
Frank's Rawabi (S.A.) Limited |
Saudi Arabia |
|
Integrated Services (Intl) Limited |
United Kingdom |
|
New Eagle 2 Limited |
Cayman Islands |
|
New Eagle Holdings Ltd |
Cayman Islands |
|
Oilfield Equipment Rentals B.V. |
The Netherlands |
|
Oilfield Equipment Rentals Limited |
Ireland |
|
Petrotech A.S. |
Norway |
|
PT Frank's Indonesia |
Indonesia |
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement Nos. 333-190607 and 333-260033 on Form S-8 of our reports dated March 8, 2022, relating to the financial statements of Expro Group Holdings N.V. and the effectiveness of Expro Group Holdings N.V.’s internal control over financial reporting appearing in this Annual Report on Form 10-K for the year ended December 31, 2021.
/s/ DELOITTE & TOUCHE LLP
Houston, Texas
March 8, 2022
Exhibit 23.2
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
1. |
Registration Statement (Form S-8 No. 333-190607) of Expro Group Holdings N.V. (formerly Frank’s International N.V.) and |
2. |
Registration Statement (Form S-8 No. 333-260033) of Expro Group Holdings N.V. (formerly Frank’s International N.V.); |
of our report dated March 17, 2020 (except Notes 2 and 5, as to which the date is March 26, 2021) with respect to the consolidated financial statements of Expro Group Holdings N.V (formally Expro Group Holdings International Limited) for the year ended December 31, 2019 included in this Annual Report (Form 10-K) of Expro Group Holdings N.V. Company for the year ended December 31, 2021.
/s/ Ernst & Young LLP
Reading, United Kingdom
March 8, 2022
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Michael Jardon, certify that:
1. |
I have reviewed this Annual Report on Form 10-K (this “report”) of Expro Group Holdings N.V. (the “registrant”); |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: March 8, 2022
/s/ Michael Jardon
Michael Jardon
President and Chief Executive Officer
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Quinn P. Fanning, certify that:
1. |
I have reviewed this Annual Report on Form 10-K (this “report”) of Expro Group Holdings N.V. (the “registrant”); |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: March 8, 2022
/s/ Quinn P. Fanning
Quinn P. Fanning
Chief Financial Officer
EXHIBIT 32.1
CERTIFICATION OF
CHIEF EXECUTIVE OFFICER UNDER SECTION 906 OF THE
SARBANES OXLEY ACT OF 2002, 18 U.S.C. § 1350
In connection with the Annual Report of Expro Group Holdings N.V. (the “Company”) on Form 10-K for the period ended December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Jardon, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002, that, to my knowledge:
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
March 8, 2022 |
/s/ Michael Jardon |
||
Michael Jardon |
|||
President and Chief Executive Officer |
EXHIBIT 32.2
CERTIFICATION OF
CHIEF FINANCIAL OFFICER UNDER SECTION 906 OF THE
SARBANES OXLEY ACT OF 2002, 18 U.S.C. § 1350
In connection with the Annual Report of Expro Group Holdings N.V. (the “Company”) on Form 10-K for the period ended December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Quinn P. Fanning, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002, that, to my knowledge:
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
March 8, 2022 |
/s/ Quinn P. Fanning |
||
Quinn P. Fanning |
|||
Chief Financial Officer |