Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Resignation of T.M. “Roe” Patterson as President, Chief Executive Officer and Director
On September 13, 2019, T.M. “Roe” Patterson notified the Board of Directors (the “Board”) of Basic Energy Services, Inc. (the “Company”) of his decision to voluntarily resign as President and Chief Executive Officer of the Company. On September 13, 2019, Mr. Patterson entered into a Separation and Release Agreement (the “Separation Agreement”) with the Company, pursuant to which he will remain as the President and Chief Executive Officer of the Company until (i) January 31, 2020 or (ii) such earlier time as chosen by the Board (the “Separation Date”). Starting on the Separation Date and continuing until December 31, 2021, Mr. Patterson has agreed to provide consulting services to the Company relating to his former duties, responsibilities and authorities.
Mr. Patterson also intends to resign from his position on the Board once his successor is chosen. Mr. Patterson’s resignation did not result from any disagreement with the Company regarding any matter related to the Company’s operations, policies or practices.
The Separation Agreement provides that Mr. Patterson will receive (i) a severance payment of $1,442,000, minus applicable taxes and withholdings, within ten days following the six-month anniversary of the Separation Date, (ii) a $200,000 one-time cash payment within 10 days following the six-month anniversary of the Separation Date, (iii) after-tax reimbursement of 100% of the COBRA premiums for up to 18 months after the Separation Date or the date Mr. Patterson becomes eligible for group health insurance coverage under another employer’s group health insurance, whichever is sooner, and (iv) reimbursement of attorneys’ fees in an amount up to $20,000 incurred by him in consultations related to the Separation Agreement. In addition, Mr. Patterson will receive (i) all base salary through the Separation Date, pay for any accrued unused paid time off as of the Separation Date, and his performance bonus for the year 2019, in each case to the extent payable in accordance with Mr. Patterson’s Amended and Restated Employment Agreement, dated as of October 24, 2016 (as amended, the “Employment Agreement”) and (ii) all vested benefits under the Basic Energy Services, Inc. 401(k) Plan and the Basic Energy Services, Inc. Executive Deferred Compensation Plan, in each case in accordance with the terms of the respective plan.
The Separation Agreement also provides that all equity incentive awards previously granted to Mr. Patterson shall continue to be governed by the terms and conditions of their respective award agreements. All incentive awards that are unvested immediately prior to the Separation Date shall be forfeited as of the Separation Date. All stock options which vest prior to the Separation Date shall remain exercisable for 90 days following the Separation Date and then expire.
Pursuant to the Separation Agreement, Mr. Patterson agreed to a full and final release of all legal claims against the Company and certain other released parties and will remain subject to certain confidentiality, non-solicitation, non-competition and no-recruitment restrictions applicable under his Employment Agreement.
The forgoing description of the Separation Agreement is qualified in its entirety by reference to the full text of the Separation Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.