This Employment
Agreement (the “Agreement”) is made and entered into
effective as of the 23rd day of March, 2009 (the “Effective
Date”) by and between T-3 Energy Services, Inc., a Delaware
corporation (“Employer”) and Steven W. Krablin
(“Employee”).
The term of
Employee’s employment under this Agreement shall commence as
of the Effective Date first set forth above and shall expire on the
day prior to the second (2nd) anniversary of the Effective Date
(collectively, the “Term of Employment”).
Notwithstanding the foregoing definition of “Term of
Employment”, Employee’s employment may be sooner
terminated as hereinafter provided, and if so terminated, the Term
of Employment shall expire as of the effective date of such
termination and all references herein to the “Term of
Employment” shall mean the original term as so shortened,
except as otherwise expressly provided herein.
In the event that
Employee continues to provide services to Employer after the
conclusion of the Term of Employment (including any extensions
thereto pursuant to Section 3 below), or to any company owned
or controlled by Employer, any and all of Employer’s
subsidiaries or ventures, or any affiliated entity of Employer
(individually the “Company” and collectively the
“Companies”) after the conclusion of the Term of
Employment, this Agreement shall terminate, subject to the
obligations of confidentiality set forth in Section 3 below
and the survival provisions set forth in Section 10 below, and
Employee shall be an “employee at will” from that time
forth subject to the terms and conditions of employment specified
by Employer for all of its employees at will.
2. Duties
and Reporting Relationship.
(a) Employee
agrees to serve Employer as Chairman, President and Chief Executive
Officer of Employer and in such other executive capacities as may
be requested from time to time by the Board of Directors of
Employer (the “Board”), or a duly authorized committee
thereof, and Employee’s authority shall at all times remain
subject to the authority of the Board.
(b) Employee
shall have all of the powers, authority, duties and
responsibilities usually incident to the position and role of
Chairman, President and Chief Executive Officer and shall perform
such other reasonable duties, consistent with such
position.
(c) During
the Term of Employment, Employee shall devote himself to a full
time schedule of work on behalf of Employer and shall use his best
efforts to advance the business and welfare of Employer, and
Employee will not engage in any other employment. The foregoing
shall not be construed as prohibiting Employee from:
(i) making personal investments in such form or manner as will
not require Employee’s services in the operation or affairs
of the companies or enterprises in which such investments are made;
or (ii) serving on the board of directors of other companies
or entities, as long as such is with the prior written consent of
the Board. At all times while Employee is employed by Employer,
Employee shall abide by any written Company policies which are
presented to Employee.
3.
Confidential Information and Covenants Not to
Compete.
3.1
Confidential Information.
(i) In order to
assist Employee with his duties, Employer shall provide Employee
with access to confidential and proprietary operational information
and other confidential information which is either information not
known by actual or potential competitors, customers and third
parties of Employer or is proprietary information of the Employer
(“Confidential Information”). Such Confidential
Information shall include all non-public information Employee
acquires as a result of his positions with Employer which would be
of value to a competitor of Employer, or which might cause economic
loss or substantial embarrassment to the Employer, its affiliates
or its customers if used or disclosed. In consideration of the
benefits received by Employee under this Agreement which he
otherwise would not have had but for his entry into this Agreement,
Employee hereby agrees that at all times while Employee is employed
by Employer, whether during the Term of Employment or thereafter if
Employee becomes an employee at will, and thereafter, he will not,
without the written consent of Employer, disclose to any person,
enterprise, entity or association or otherwise use or exploit for
himself or others any Confidential Information.
(ii) The term
“Confidential Information” shall include, without
limitation, all proprietary or confidential information or
knowledge of or regarding Employer or the Companies,, whether of a
technical, operational, economic, or other nature, and including
any trade secrets (including customer lists, identities, and
contacts and Company pricing information, know-how, formulas,
patterns, inventions, engineering records or data, interpretive or
analytical information or data, drilling logs, operating agreements
and related records, records of research, proposals, manuals,
compilations, programs, devices, methods, processes, techniques,
budgets or other financial information, and any other records or
information that derive independent economic value, from not being
generally known to and not being readily ascertained by proper
means by persons other than the holders, licensees, or other
authorized holders thereof who can obtain economic value from its
disclosure or use).
(iii)
Notwithstanding the foregoing, Employee may utilize Confidential
Information to the extent required by his performance of assigned
duties for Employer or which:
(A) was known to
Employee or the public prior to disclosure to Employee in the
course of his employment by Employer,
(B) becomes
generally known to the public through no fault of Employee or
others owing duties of trust or confidentiality to
Employee,
(C) is lawfully
obtained by Employee from another source not under obligation to
Employer or any of the Companies regarding disclosure of such
Confidential Information, or
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(D) is developed
after the Term of Employment and independently by Employee or his
agents without access to or reliance on any Confidential
Information.
3.2 Return of
Confidential Information.
Upon termination
of employment with Employer, whether during the Term of Employment
or thereafter if employee becomes an employee at will, Employee
will deliver to Employer all tangible displays and repositories of
Confidential Information including, without limitation, trade
secrets and other materials or records or writings of any other
type (including any copies thereof) made, used or obtained by
Employee in connection with his employment by Employer or its
predecessor in interest prior to or subsequent to the execution of
this Agreement. Employee agrees that all inventions, improvements
in any of the Companies’ methods of conducting their
businesses or innovations (in each case, including, by way of
expansion and not limitation, policies, procedures, products,
improvements, software, ideas and discoveries, whether or not
patentable or copyrightable) conceived or made by him during any
time of his employment by Employer belong to the Employer or any
other of the Companies and to the extent Employee participated in
the creation of any of the foregoing he did so on a work for hire
basis. Upon termination of his Employment with Employer, Employee
shall promptly disclose such inventions, improvements or
innovations to the Board and perform all actions reasonably
requested by the Board to establish and confirm such ownership by
Employer or any other of the Companies and to protect the
intellectual property of Employer and the Companies contained
therein or represented thereby.
3.3 Covenant
Not to Compete.
Employee hereby
agrees that:
(i) During the
Term of Employment and until the first (1st) anniversary of the
date of termination of Employee’s employment whether by
Employee’s resignation or by Employer’s termination of
the relationship (the “Non-Compete Period”), Employee
shall not within the states of Texas and Wyoming, the parishes of
Louisiana listed on Exhibit B, and Canada and Mexico
(a) perform any duties similar in nature to the duties
performed by Employee for any of the Companies for any competitor
of any of the Companies, whether as an employee, officer,
principal, member, advisor, agent, partner, director, stockholder,
owner, or consultant, and (b) compete against any acquisition
or development of any line of business, property, or project on
which the Companies are then involved or which has been worked on
or evaluated by Employee as part of his services for Employer
during the preceding twelve (12) months and which are still being
worked with or evaluated by Employer or any of the Companies. For
purposes of this Agreement, “competitor” means any
entity engaged in the business of manufacture, remanufacture, sale
and distribution of same or similar oilfield products and services
to customers in the drilling and completion of new oil and gas
wells, the work-over of existing wells.
(ii) With respect
to the preceding paragraph, Employee shall not be deemed to be an
owner of a competitor of Employer or any of the Companies where
Employee’s
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ownership
interest is less than one percent (1%) of the outstanding stock or
membership units of a company.
(iii) During the
Term of Employment and during the Non-Compete Period, and as a
condition to Employee receiving any payments from Employer pursuant
to this Agreement to which Employee otherwise would not have been
entitled after Employee is no longer employed by Employer, Employee
shall not:
(A) solicit any
person for employment by Employee or Employee’s employer if
such person is (i) employed by Employer or any of the
Companies at that time, or (ii) who has left the employment of
any of the Companies for sixty (60) days or less, for any
employment position or investment opportunity where such position
or opportunity would either interfere with or compete against the
activities or businesses of Employer or any of the
Companies.
(B) otherwise
induce any person to discontinue his or her employment with
Employer or any of the Companies.
(C) request any
present or future customer or supplier of Employer or any of the
Companies to curtail or cancel its business with Employer or any of
the Companies, or
(D) unless
otherwise required by law, disclose to any person, firm or
corporation any details of organization or business affairs of
Employer or any of the Companies, any names of past or present
customers of Employer or any of the Companies or any other
non-public information concerning Employer or any of the
Companies.
(iv) Employee
understands that the provisions of Sections 3.1, 3.2 and 3.3
may limit his ability to earn a livelihood in a business similar to
the business of Employer and the Companies, but as an executive
officer of Employer and certain of the Companies, he nevertheless
agrees and hereby acknowledges that:
(A) the terms and
provisions of this Agreement are reasonable and constitute an
otherwise enforceable agreement;
(B) the
consideration provided by the Company under this Agreement is not
illusory;
(C) the
consideration given by the Company under this Agreement, including,
without limitation, any amounts or benefits contemplated to be
provided to Employee hereunder following Employee’s
termination of employment other than for cause or by
Employee’s resignation, gives rise to the Company’s
interest in restraining and prohibiting Employee from engaging in
the competitive activities within the relevant geographic area as
provided under this Section 3.3, and Employee’s covenant
not to engage in the prohibited activities within the relevant
geographic area pursuant to this Section 3.3 is designed to
enforce Employee’s consideration (or return promises),
including, without
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limitation,
Employee’s promise to not disclose Confidential Information
under this Agreement; and
(D) such
provisions do not impose a greater restraint than is necessary to
protect the goodwill or other business interests of Employer and
the Companies.
(v) In
consideration of the foregoing, and in light of Employee’s
education, skills, and abilities, Employee agrees that he will not
assert that, and it should not be considered that, any provisions
of Sections 3.1, 3.2, or 3.3 hereof are otherwise void,
voidable, or unenforceable or should be voided or held
unenforceable.
(vi) Employee
agrees that the period during which the covenants contained in this
Section 3.3 shall be effective shall be computed by excluding
from such computation any time during which Employee is in
violation of any provision of this Section 3.3.
(vii) The
unenforceability of any specific covenant shall not affect the
provisions of any other covenant. If it is judicially determined
that any provision of this Section 3.3 or any part thereof is
unenforceable under applicable law(s) (statute, common law, or
otherwise), then the unenforceable portion shall be deemed to be
modified to the extent necessary to render it enforceable, while
leaving the remaining portions intact. Employee and the Employer
further agree that in the event the said non-competition covenants
should be held by any court or other constituted legal authority to
be effective in any particular area or jurisdiction only if said
covenant is modified to limit its duration or scope, then the
parties shall thereupon consider such non-competition covenants to
be amended and modified with respect to that particular area or
jurisdiction so as to comply with the order of any such court or
other constituted legal authority, and, as to all other
jurisdictions or political subdivisions thereof, the said
non-competition covenant shall remain in full force and effect as
originally written.
By agreeing to
this contractual modification prospectively at this time, the
parties intend to make Section 3.3 enforceable under the
law(s) of all applicable states so that the entire agreement not to
compete or to solicit and any other provisions of this Agreement as
prospectively modified shall remain in full force and effect and
shall not be rendered void or illegal. Thus, if for any reason, the
Agreement should be found to be unenforceable in one jurisdiction,
the separate and severable covenants of Section 3.3 covering
the other jurisdictions will remain in full force and
effect.
(viii) For the
purposes of this Section 3, the business of the Employer is
described as follows: Employer engages in the manufacture,
remanufacture, sale and distribution of oilfield products and
services to the oil and gas industry. Employer provides products
and services through facilities located throughout North America
and internationally (the “Business”).
3.4 Executive
Nature of Employment.
Employee
acknowledges and agrees that his duties with Employer are of an
executive nature and that he is a member of Employer’s
management group.
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Employee agrees
that the remedy at law for any breach by him of any of the
covenants and agreements set forth in this Section 3 will be
inadequate and that in the event of any such breach, Employer may,
in addition to the other remedies which may be available to it at
law, obtain injunctive relief prohibiting Employee (together with
all those persons associated with him) from the breach of such
covenants and agreements.
Each of the
covenants of this Section 3 are given by Employee as part of
the consideration for this Agreement and as an inducement to
Employer to enter into this Agreement and accept the obligations
hereunder.
3.6
Application to Subsidiaries
For purposes of
this Section 3 and of Section 2 hereof, the term
“Employer” shall include Employer and the Companies,
whether currently existing or hereafter formed.
3.7 Assignment
of Intellectual Property Rights.
Employee agrees
that all ideas, concepts, processes, discoveries, devices,
machines, tools, materials, designs, improvements, inventions,
computer software and other things of value (hereinafter
collectively referred to as “intangible rights”),
whether patentable or not, which are conceived, made, invented or
suggested either by him alone or in collaboration with others while
employed by Employer and relating to the “Business” (as
defined above) and whether or not during regular working hours,
shall be the sole and exclusive property of Employer. Employee
hereby assigns all of his right, title and interest in and to all
such intangible rights and to any trade secrets developed by
Employee during the Term of Employment to Employer and its
successors or assigns. Employee further agrees to execute, from
time to time upon the request of Employer, such documentation as
may be required by Employer to confirm Employee’s intent to
so assign and transfer such intangible rights.
In the event that
any of said intangible rights shall be deemed by Employer to be
patentable or otherwise registerable under any Federal, state or
foreign law, Employee further agrees that at the expense of
Employer, he will execute all documents and do all things
necessary, advisable or proper to obtain patents therefor or
registration thereof, and to vest in Employer full title
thereto.
4. Base
Salary and Benefits.
During the Term of
Employment, Employer shall pay Employee a salary at the rate of
Five Hundred Thousand Dollars ($500,000) per annum payable in equal
installments at least as frequently as semi-monthly and subject to
payroll deductions as may be necessary or customary in respect of
Employer’s salaried employees in general. Such salary shall
be subject to adjustment under the Employer’s periodic
compensation review procedure which shall take into account such
factors as job responsibilities, performance and cost of living
considerations. In no event shall such salary be adjusted to less
than the initial amount set forth above.
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During the Term of
Employment, Employee shall be entitled to vacation of the greater
of four (4) weeks or the amount of time provided under the
vacation policy applicable to employees of Employer generally, as
amended from time to time.
From the Effective
Date through the Term of Employment, Employee will be eligible for
an Annual Bonus to be awarded, if at all, based on the achievement
of performance goals (the “Target Annual Goals”)
established annually by the Board or a committee thereof, in
consultation with Employee. The Target Annual Goals and the formula
for computing the Annual Bonus shall be determined by taking into
account Employee’s position, responsibilities, and
accomplishments with Employer and Employer’s past performance
and projected future performance. The target value of the Annual
Bonus shall be 100% of Employee’s base salary, with a maximum
Annual Bonus of 200% of Employee’s base salary. For purposes
of clarification, Employee may be awarded an Annual Bonus of less
than 100% of his base salary. The Annual Bonus, if earned, for a
fiscal year shall be paid to Employee not later than the 15th day
of the third month following the end of such fiscal
year.
4.4 401(k)
Savings and Retirement Plan.
Employee will be
entitled to participate in Employer’s 401(k) Savings and
Retirement Plan, applicable to employees of Employer
generally.
4.5 Incentive
Compensation
(a)
Initial Phantom Option Grant . Employer shall grant
Employee, after the execution and delivery of this Agreement,
phantom stock options representing the value of the right to
acquire 100,000 shares of Employer’s stock at a strike price
equal to the fair market of Employer’s common stock on the
date of grant. The phantom stock options granted pursuant to this
Agreement shall vest one-half (1/2) on the first anniversary of the
Effective Date and 1/2 on the second anniversary of the Effective
Date, conditioned on Employee’s continued employment with
Employer. Employer retains the right, in its sole discretion, to
convert the 100,000 phantom stock options granted pursuant to this
Section 4.5(a) to 100,000 stock options granted pursuant to
Employer’s 2002 Stock Incentive Plan, or such other
arrangement that receives approval of the shareholders of Employer
(the “Plan”), with such stock options having the same
strike price as the phantom stock options granted pursuant to this
Section 4.5(a).
(b)
Initial Phantom Restricted Stock Grant . Employee shall
receive an initial phantom restricted stock grant of 10,000 shares
upon the execution and delivery of this Agreement, with each share
of phantom restricted stock representing the same value as a share
of restricted stock granted pursuant to the Plan. Said phantom
restricted stock grant shall be subject to the same vesting
schedule as defined in Section 4.5(a). Employer retains the
right, in its sole discretion, to convert the shares of phantom
restricted stock granted pursuant to this Section 4.5(b) to
shares of restricted stock granted pursuant to the Plan. On the
earlier to occur of (i) the first anniversary of the Effective
Date, (ii) a Change of Control, as defined in Section 8,
or (iii) a termination of employment that has the effect set
forth in Section 9, and provided that the
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phantom
restricted stock shares granted pursuant to this
Section 4.5(b) have not been converted to restricted stock
pursuant to the Plan prior to such time set forth in clause (i),
(ii) or (iii) of this Section 4.5(b), then Employer will
pay to Employee an amount in cash equal to 10,000 multiplied by the
closing share price of the Employer’s stock on the day set
forth in clause (i), (ii) or (iii) of this
Section 4.5(b), as applicable.
(c) Long
Term Incentive Awards . Employee shall be eligible for a
long-term incentiv
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