Form of Archrock, Inc. Award Notice and Agreement for Performance Units (Cash-Settled)
LONG-TERM INCENTIVE AWARD NOTICE AND AGREEMENT
Cash-Settled Performance Award Schedule
Archrock, Inc. (the “Company”) has granted to you (the “Participant”) an equity award (the “Award”) under the Archrock, Inc. 2020 Stock Incentive Plan (as may be amended from time to time, the “Plan”). All capitalized terms not explicitly defined in the Terms and Conditions and in this Schedule (together constituting the Long-Term Incentive Award Notice and Agreement (the “Award Notice”)) shall have the respective meanings ascribed to them in the Plan.
March 5, 2021
Cash-settled performance units, the payout of which is based on the attainment of certain performance objectives (the “Performance Units”). Each Performance Unit is granted in tandem with a corresponding Dividend Equivalent.
The Award is stated at target; however, the actual number of Performance Units that becomes earned and payable hereunder may be greater or less than the target number.
Archrock, Inc. 2020 Stock Incentive Plan
2020 Stock Incentive Plan Prospectus
One hundred percent (100%) of the Earned Units subject to this Award will vest on March 5, 2024 (the “Vest Date”) upon satisfaction of the following criteria:
Performance Achievement. Your Award will become payable (as provided herein) at 0% to 200% of the target Performance Units based on the achievement of the pre-determined Performance Measures over the performance period (the “Performance Period”) as set out herein. The target Performance Units equals the number of Performance Units (or the cash equivalent thereof) that would be earned and paid if the Performance Measures are met at the target level over the Performance Period; and
Employment Criteria. Except as set forth below, you must remain in continuous service as an Employee of the Company or one of its Affiliates at all times from the Grant Date up to and including the Vest Date for the Award to vest.
The Performance Units represent an unfunded, unsecured and contingent right to receive payment. You have no rights as a stockholder with respect to any Performance Units. The grant of the Performance Units under your Award shall be implemented by a credit to a bookkeeping account maintained by the Company.
Termination of Service – Voluntary or Involuntary
If you terminate employment for any reason (other than death or Disability), the unvested portion of your Award (after taking into account any accelerated vesting that occurs in connection with such termination, if any) and the Dividend Equivalents corresponding with the unvested portion of your Award will be automatically forfeited on the date of such termination unless the Committee directs otherwise.
Termination of Service – Death or Disability
If you terminate employment due to death or Disability, your Award will immediately vest and be payable as of such date based upon the Achievement Percentage (defined below) or, if the Achievement Percentage has not yet been determined, based upon the target performance level. Any date on which such accelerated vesting occurs is referred to in this Award Notice as an “Accelerated Vest Date”.
Termination of Service Following a Change of Control
Notwithstanding anything to the contrary in this Award Notice, this section will govern the vesting of your Award in the event of your Termination of Service on and after the date a Corporate Change is consummated.
(a) Determination of Achievement Percentage.
If a Corporate Change is consummated prior to the end of the Performance Period and you are employed by the Company or an Affiliate as of such consummation date, then
(b) Termination of Service Following a Corporate Change.
If your status as an Employee of the Company or an Affiliate is terminated on or within eighteen (18) months following the date a Corporate Change is consummated (i) by the Company or such Affiliate without Cause, (ii) by you for Good Reason or (iii) as a result of your death or Disability, then the unvested portion of your Award as of the date of your Termination of Service as an Employee will immediately vest in full as of the date of your Termination of Service as an Employee (the “Corporate Change Vest Date”).
If your status as an Employee is terminated by the Company with Cause or by you without Good Reason on or after the date the Corporate Change is consummated, then the unvested portion of your Award and the Dividend Equivalents (including any amounts credited thereunder) corresponding with such unvested portion of your Award will be automatically forfeited on the date of your Termination of Service as an Employee.
Unless otherwise provided in a written agreement between the Company or an Affiliate and you, “Good Reason” means the occurrence of any of the following without your express written consent:
(i)A reduction of 10% or more of your base salary;
provided, however, unless otherwise provided in a written agreement between the Company or an Affiliate and you, that Good Reason does not exist with respect to a matter unless you give the Company or an Affiliate, as applicable, a notice of termination due to such matter within 20 days of the date such matter first exists. If you fail to give a notice of termination timely, you shall be deemed to have waived all rights you may have under the Award Notice with respect to such matter. The Company or an Affiliate will have 30 days from the date of your notice of termination to cure the matter. If the Company or an Affiliate cures the matter, your notice of termination shall be deemed rescinded. If the Company or an Affiliate (as applicable) fails to cure the matter timely, your status as an Employee shall be deemed to have been terminated
by the Company for Good Reason at the end of the 30-day cure period.
Dividends / Dividend Equivalent Rights
A dividend equivalent right (a “DER”) is granted in tandem with each Performance Unit granted hereunder and is subject to the same terms as the associated Performance Unit. A DER is a right to receive the equivalent value in cash of any dividend (including any extraordinary or non-recurring dividend) paid on a share of Common Stock (the “Dividend Equivalent”).
The DER shall remain outstanding from the Grant Date until the earlier of the vesting and payment or the forfeiture of the Performance Unit to which it corresponds (the “DER Period”).
During the DER Period and no later than thirty (30) days following the date on which a dividend is paid to the Company’s stockholders, the Dividend Equivalent on each unvested Performance Unit shall be credited and entered into a bookkeeping account on your behalf. However, payments shall not be made to you prior to the date on which the following two conditions are satisfied: (1) the associated Performance Unit becomes an Earned Unit and (2) the associated Performance Unit vests.
Dividend Equivalent book entry credits shall be forfeited if the associated Performance Unit is forfeited (1) because it does not become an Earned Unit or (2) due to your termination of service prior to vesting of the associated Performance Unit.
Upon the vesting of a Performance Unit, the book-entry Dividend Equivalents payable on such Performance Unit shall be paid in cash in a single lump sum no later than sixty (60) days following the Vest Date. Upon expiration of the DER Period, the DERs on the Performance Unit shall automatically terminate and no further Dividend Equivalents shall be allocated thereunder.
As soon as administratively practicable following the conclusion of the Performance Period (or, if earlier, the date on which a Corporate Change is consummated), the Committee shall certify in writing the level of performance achieved with respect to the Performance Measures (the “Achievement Percentage”). The actual number of Performance Units payable under your Award shall be equal to the product of the target number of Performance Units multiplied by the Achievement Percentage or, in the event of your termination due to your death or Disability during the Performance Period a Qualifying Termination during the Performance Period or a Corporate Change during the Performance Period in connection with which the Committee determines, in its discretion, it cannot reasonably determine the Achievement Percentage, 100% of the Performance Units (in any case, such number of Performance Units payable under your Award, the “Earned Units”).
As soon as administratively practicable after your Earned Units vest, but in no event later than the sixtieth (60th) day following the applicable Vest Date, Accelerated Vest Date, or Corporate Change Vest Date of such Earned Units, you will receive payment in respect of such vested Earned Units in the form of cash equal to the Fair Market Value of an equivalent number of shares of Common Stock of the Company as of the applicable Vest Date, Accelerated Vest Date, or Corporate Change Vest Date of such vested Earned Units. Payments in respect of any corresponding Dividend Equivalents shall be paid in the form of cash.
Except as provided below, this Award and the Dividend Equivalents are intended to be exempt under Section 409A of the Code (“Section 409A”) under the short-term deferral exclusion and will be interpreted and operated consistent with such intent. If, for any reason, the Company determines that this Award and/or the Dividend
Equivalents are subject to Section 409A, the Company shall have the right in its sole discretion (without any obligation to do so or to indemnify you or any other person for failure to do so) to adopt such amendments to the Plan or the Award Notice, or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, as the Company determines are necessary or appropriate to provide for either the Performance Units and/or Dividend Equivalents to be exempt from the application of Section 409A or to comply with the requirements of Section 409A. The Dividend Equivalents and any amounts that may become distributable in respect thereof shall be treated separately from the Performance Units and the rights arising in connection therewith for purposes of Section 409A (as defined below) (including for purposes of the designation of the time and form of payments required by Section 409A).
LONG-TERM INCENTIVE AWARD NOTICE AND AGREEMENT
EXHIBIT – Cash-Settled Performance Award Schedule
LONG-TERM INCENTIVE AWARD NOTICE AND AGREEMENT
Terms and Conditions
Archrock, Inc. (the “Company”) has granted to you (the “Participant”) an equity award (the “Award”) under the Archrock, Inc. 2020 Stock Incentive Plan (as may be amended from time to time, the “Plan”). All capitalized terms not explicitly defined in these Term and Conditions and the Schedule (together constituting the Long-Term Incentive Award Notice and Agreement (the “Award Notice”) but defined in the Plan shall have the respective meanings ascribed to them in the Plan.
The material terms of your Award are provided below and in the Schedule.
To satisfy the Required Withholding for Employees, the Company and its Affiliates shall withhold
a.a sufficient amount of cash payable to you in connection with the payment of Dividend Equivalents, and
b,prior to the delivery of shares of Common Stock, a sufficient number of shares otherwise issuable to you (which shall be determined in a manner consistent with the Plan and, as determined by the Committee in its discretion, in an amount no less than the minimum and no greater than the maximum Required Withholding) with all such shares valued at their Fair Market Value on the date of vesting.
If you are a Director or non-employee Contractor, the Company and its Affiliates shall not withhold cash or shares of Common Stock pursuant to this Award and any associated Dividend Equivalents; the payment of the Required Withholding shall be the responsibility of such individual.