Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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On September 5, 2017, Patterson-UTI announced the appointment, effective September 8, 2017, of C. Andrew Smith, 47, as the Executive Vice President
and Chief Financial Officer of Patterson-UTI. From April 2014 until September 2017, Mr. Smith served as Executive Vice President and Chief Financial Officer of Kirby Corporation, a
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marine transportation and diesel engine services company. From January 2014 to April 2014, Mr. Smith served as Executive Vice President Finance of Kirby Corporation. Prior to joining
Kirby Corporation, Mr. Smith served as Senior Vice President and Chief Financial Officer of Benthic Geotech and was previously Chief Financial Officer for both Global Industries, LTD and NATCO Group. Mr. Smith is a Certified Public
Accountant and holds a degree in business administration from the University of Houston.
Pursuant to an employment agreement with Mr. Smith (the
Employment Agreement), Mr. Smith will be entitled to receive a base salary of $450,000 per year and will be eligible to participate in Patterson-UTIs annual bonus arrangements and in all benefit plans generally available to
other employees and in our incentive plans. Patterson-UTI will also pay to Mr. Smith a sign-on bonus of $250,000 at the conclusion of the first payroll period following the commencement of his employment. In addition, Mr. Smith has been
awarded restricted stock units valued at $1.6 million pursuant to the Patterson-UTI Energy, Inc. 2014 Long-Term Incentive Plan, which will vest in equal installments on the first and second anniversary of the commencement of his employment.
The Employment Agreement has an initial three-year term, subject to automatic annual renewal. Mr. Smith may terminate his employment under his Employment
Agreement by providing written notice of such termination at least 30 days before the effective date of such termination. Under specified circumstances, Patterson-UTI may terminate Mr. Smiths employment under his Employment Agreement for
Cause (as defined in the Employment Agreement) by either (i) providing written notice 10 days before the effective date of such termination and by granting at least 10 days to cure the cause for such termination or (ii) by
providing written notice of such termination at least 30 days before the effective date of such termination and by granting at least 20 days to cure the cause for such termination; provided that if the matter is reasonably determined by
Patterson-UTI to not be capable of being cured, Mr. Smith may be terminated for cause on the date the written notice is delivered.
The Employment
Agreement also provides for, among other things, severance payments and the continuation of certain benefits following termination by Patterson-UTI of Mr. Smith other than for Cause, or termination by Mr. Smith for Good Reason
(as defined in the Employment Agreement). Under these provisions, if Mr. Smiths employment is terminated by Patterson-UTI without Cause, or Mr. Smith terminates his employment for Good Reason, (i) Mr. Smith will have the
right to receive a lump-sum payment consisting of 2.5 times the sum of his base salary plus the average annual cash bonus received by him for the three years prior to the date of termination, payable on the 60th day following his termination,
(ii) Mr. Smith will have the right to receive a pro-rated lump-sum payment equal to his annual cash bonus based on actual results for the year, payable at the same time as annual cash bonuses are paid to active employees,
(iii) Patterson-UTI will accelerate vesting of all options and restricted stock awards on the 60th day following Mr. Smiths termination, and (iv) Patterson-UTI will pay Mr. Smith certain accrued obligations and certain
obligations pursuant to the terms of employee benefit plans. If a termination by Patterson-UTI other than for Cause or by Mr. Smith for Good Reason occurs following a Change in Control (as defined in his Employment Agreement),
Mr. Smith will generally be entitled to the same severance payments and benefits described above except that the pro-rated lump-sum payment for annual cash bonuses will be based on his highest annual cash bonus for the last three years, and the
executive will be entitled to thirty months of subsidized benefits continuation coverage.
All of the foregoing severance benefits (other than the accrued
obligations and benefit obligations) are conditioned on Mr. Smiths execution of a release within 50 days of his termination that is not revoked during any applicable revocation period provided in such release.
The Employment Agreement also contains a non-disparagement covenant and certain confidentiality covenants prohibiting Mr. Smith from, among other things,
disclosing confidential information. The Employment Agreement also contains non-competition and non-solicitation restrictions, pursuant to which Mr. Smith will not be permitted to compete with Patterson-UTI in certain circumstances for a period
of one year following termination of employment.
The foregoing summary does not purport to be complete and is qualified in its entirety by reference to
the Employment Agreement, a copy of which is filed as Exhibit 10.2.
Patterson-UTI has also entered into an indemnification agreement (the
Indemnification Agreement) with Mr. Smith. Under the Indemnification Agreement, in exchange for his service to Patterson-UTI, Patterson-UTI has agreed to, among other things, indemnify him against liabilities that may arise by
reason of his status or service as
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an executive officer (subject to certain exceptions) and to advance expenses incurred as a result of any proceeding against him as to which he could be indemnified. This Indemnification Agreement
is substantially similar to the indemnification agreements that have been entered into with each of the other executive officers and directors of Patterson-UTI. The foregoing description of the Indemnification Agreement is qualified in its entirety
by reference to the full text of the form of the Indemnification Agreement, a copy of which was filed on April 28, 2004 as Exhibit 10.11 to Patterson-UTIs Annual Report on Form 10-K, as amended, for the year ended December 31, 2003
(SEC File No. 000-22664) and is incorporated herein by reference.