EMPLOYMENT AGREEMENT
Vice President — Western Operations
THIS
EMPLOYMENT AGREEMENT (“Agreement”) is made by and
between Superior Well Services, Inc., a Delaware corporation
(“Company”), and Arty Straehla
(“Executive”).
WHEREAS,
Executive is currently employed by Diamondback Energy and Company
desires to employ Executive in accordance with the terms of this
Agreement in connection with the Company’s purchase of the
business of Diamondback Energy;
WHEREAS,
Executive recognizes that Company operates in a highly competitive
environment and the importance to Company of ensuring
Executive’s loyalty and protecting Company’s customers,
employees, business information and inventions, and goodwill.
Accordingly, Executive has entered into and agrees to be bound by
this Agreement in consideration of Employee’s employment with
Company and being given access to Company’s confidential
information; and
WHEREAS,
Executive acknowledges he is receiving good and valuable
consideration for entering into this Agreement, including the
Non-Competition/Non-Solicitation provisions contained in
Article 7 of this Agreement, and Employee acknowledges that
his Agreement was negotiated between the parties hereto, that
because Employee is being newly-hired by Company, Employee was not
previously entitled to the benefits conferred to Employee under
this Agreement, and that Employee received bargained for
consideration, in exchange for agreeing to the
Non-Competition/Non-Solicitation provisions of this Agreement set
forth in Article 7 of this Agreement;
NOW,
THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein, Company and Executive
agree as follows:
ARTICLE 1:
DEFINITIONS AND INTERPRETATIONS
(a)
“Affiliate” shall mean with respect to any natural person,
firm, partnership, association, corporation, limited liability
company, company, trust, entity, public body or government (a
“Person”), any Person which, directly or
indirectly, controls, is controlled by, or is under a common
control with, such Person. The term “control”
(including the terms “controlled by” and “under
common control with”) as used in this definition means the
possession, directly or indirectly, of the power to direct or cause
the direction of management and policies of a Person, whether
through the ownership of voting securities, by contract, or
otherwise. With respect to any natural person, the term
“Affiliate” shall also mean (1) the spouse
or children (including those by adoption) and siblings of such
Person; and any trust whose primary beneficiary is such Person,
such Person’s spouse, such Person’s siblings and/or one
or more of such Person’s
lineal
descendants, (2) the legal representative or guardian of such
Person or of any such immediate family member in the event such
Person or any such immediate family member becomes mentally
incompetent and (3) any Person controlled by or under the
common control with any one or more of such Person and the Persons
described in clauses (1) or (2) preceding.
(b)
“Annual Base Salary” shall mean, as of a
specified date, Executive’s annual base salary as of such
date determined pursuant to Section 4.1.
(c)
“Annual Compensation” shall mean an amount equal
to the greater of:
(i)
Executive’s Annual Base Salary at the annual rate in effect
at the date of his Involuntary Termination;
(ii)
Executive’s Annual Base Salary at the annual rate in effect
60 days prior to the date of his Involuntary Termination;
or
(iii)
Executive’s Annual Base Salary at the annual rate in effect
immediately prior to a Change of Control if Executive’s
employment shall be subject to an Involuntary Termination during
the Change of Control Period.
(d)
“Board” means the Board of Directors of
Company.
(e)
“Cause” shall mean Executive (i) has
engaged in gross negligence, gross incompetence or willful
misconduct in the performance of his duties, (ii) has refused,
without proper reason, to perform his duties, (iii) has
willfully engaged in conduct which is materially injurious to
Company or its subsidiaries (monetarily or otherwise),
(iv) has committed an act of fraud, embezzlement or willful
breach of a fiduciary duty to Company or an Affiliate (including
the unauthorized disclosure of confidential or proprietary material
information of Company or an Affiliate), (v) has been
convicted of (or pleaded no contest to) a crime involving fraud,
dishonesty or moral turpitude or any felony or (vi) has
engaged in any other act of misconduct.
(f)
“Change in Terms of Service” shall
mean:
(i) The
occurrence, prior to a Change of Control or after the expiration of
a Change of Control Period, of any one or more of the
following:
(1) a reduction in
Executive’s Annual Base Salary; or
(2) a material
diminution in employee benefits (including but not limited to
medical, dental, life insurance and long-term disability plans) and
perquisites applicable to Executive from those substantially
similar to the employee benefits and perquisites provided by
Company (including its subsidiaries) to executives with comparable
duties.
(ii) The
occurrence, within a Change of Control Period, of any one or more
of the following:
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(1) a reduction in
Executive’s Annual Base Salary from that provided to him
immediately prior to the date on which a Change of Control
occurs;
(2) a diminution
in Executive’s eligibility to participate in bonus, stock
option, incentive award and other compensation plans which provide
opportunities to receive compensation which are the greater of
(A) the opportunities provided by Company (including its
subsidiaries) for executives with comparable duties or (B) the
opportunities under any such plans under which he was participating
immediately prior to the date on which a Change of Control occurs;
or
(3) a material
diminution in employee benefits (including but not limited to
medical, dental, life insurance and long-term disability plans) and
perquisites applicable to Executive from the greater of
(A) the employee benefits and perquisites provided by Company
(including its subsidiaries) to executives with comparable duties
or (B) the employee benefits and perquisites to which he was
entitled immediately prior to the date on which a Change of Control
occurs.
(g)
“Change of Control” shall mean:
(i) a merger of
Company with another entity, a consolidation involving Company, or
the sale of all or substantially all of the assets of Company to
another entity if, in any such case, (A) the holders of equity
securities of Company immediately prior to such transaction or
event do not beneficially own immediately after such transaction or
event equity securities of the resulting entity entitled to 50% or
more of the votes then eligible to be cast in the election of
directors generally (or comparable governing body) of the resulting
entity in substantially the same proportions that they owned the
equity securities of Company immediately prior to such transaction
or event or (B) the persons who were members of the Board
immediately prior to such transaction or event shall not constitute
at least a majority of the board of directors of the resulting
entity immediately after such transaction or event; or
(ii) the
dissolution or liquidation of Company.
For purposes of
the preceding sentence, (1) “resulting entity” in the
context of a transaction or event that is a merger, consolidation
or sale of all or substantially all assets shall mean the surviving
entity (or acquiring entity in the case of an asset sale) unless
the surviving entity (or acquiring entity in the case of an asset
sale) is a subsidiary of another entity and the holders of common
stock of Company receive capital stock of such other entity in such
transaction or event, in which event the resulting entity shall be
such other entity, and (2) subsequent to the consummation of a
merger or consolidation that does not constitute a Change of
Control, the term “Company” shall refer to the
resulting entity.
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(h)
“Change of Control Period” means, with respect
to a Change of Control, the six-month period beginning on the date
upon which such Change of Control occurs.
(i)
“Code” shall mean the Internal Revenue Code of
1986, as amended.
(j)
“Compensation Committee” shall mean the
Compensation Committee of the Board.
(k)
“Disability” shall mean that, as a result of
Executive’s incapacity due to physical or mental illness, he
shall have been absent from the full-time performance of his duties
for six consecutive months and he shall not have returned to
full-time performance of his duties within 30 days after written
notice of termination is given to Executive by Company (provided,
however, that such notice may not be given prior to 30 days
before the expiration of such six-month period).
(l)
“Effective Date” shall mean November 18,
2008.
(m)
“Involuntary Termination” shall mean any
termination of Executive’s employment with Company
which:
(i) does not
result from a resignation by Executive (other than a resignation
pursuant to clause (ii) of this Section 1.1 (m));
or
(ii) results from
a resignation by Executive on or before the date which is
60 days after the date upon which Executive receives notice of
a Change in Terms of Service;
provided,
however, the term “Involuntary Termination”
shall not include a termination for Cause or any termination as a
result of death or Disability.
(n)
“Monthly Severance Amount” shall mean an amount
equal to one-twelfth of Executive’s Annual
Compensation.
(o)
“Severance Amount” shall mean an amount equal to
one-half times Executive’s Annual Compensation.
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(p)
“Severance Period” shall mean the period
commencing on the date of an Involuntary Termination and continuing
for six months.
1.2
Interpretations . In this Agreement, unless a clear
contrary intention appears, (a) the words
“herein,” “hereof and “hereunder” and
other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision,
(b) reference to any Article or Section, means such Article or
Section hereof, (c) the words “including” (and
with correlative meaning “include”) means including,
without limiting the generality of any description preceding such
term, and (d) where any provision of this Agreement refers to
action to be taken by either party, or which such party is
prohibited from taking, such provision shall be applicable whether
such action is taken directly or indirectly by such
party.
ARTICLE 2:
EMPLOYMENT AND DUTIES
2.1
Employment . Effective as of the Effective Date and
continuing for the period of time set forth in Section 3.1 of
this Agreement, Executive’s employment by Company shall be
subject to the terms and conditions of this Agreement.
2.2
Positions . From and after the Effective Date, Company
shall employ Executive in the position of Vice President- Western
Operations of Company, or in such other positions as the parties
mutually may agree.
2.3 Duties
and Services . Executive agrees to serve in the positions
referred to in Section 2.2 and to perform diligently and to
the best of his abilities the duties and services appertaining to
such offices, as well as such additional duties and services
appropriate to such offices which the parties mutually may agree
upon from time to time. Executive’s employment shall also be
subject to the policies maintained and established by Company that
are of general applicability to Company’s executive
employees, as such policies may be amended from time to
time.
2.4 Other
Interests . Executive agrees, during the period of his
employment by Company, to devote substantially all of his business
time, energy and best efforts to the business and affairs of
Company and its Affiliates and not to engage, directly or
indirectly, in any other business or businesses, whether or not
similar to that of Company, except with the consent of the Board.
The foregoing notwithstanding, the parties recognize and agree that
Executive may engage in passive personal investment and charitable
activities that do not conflict with the business and affairs of
Company or interfere with Executive’s performance of his
duties hereunder, which shall be at the sole determination of the
Board.
2.5 Duty of
Loyalty . Executive acknowledges and agrees that Executive
owes a fiduciary duty of loyalty to act at all times in the best
interests of Company. In keeping with such duty, Executive shall
make full disclosure to Company of all business opportunities
pertaining to Company’s business and shall not appropriate
for Executive’s own benefit business opportunities concerning
Company’s business.
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ARTICLE 3:
TERM AND TERMINATION OF EMPLOYMENT
3.1
Term . Unless sooner terminated pursuant to other
provisions hereof, Company agrees to employ Executive for the
period beginning on the Effective Date and ending on the third
anniversary of the Effective Date (the “Initial Expiration
Date” ); provided, however, that beginning on the Initial
Expiration Date, and on each anniversary of the Initial Expiration
Date thereafter, if this Agreement has not been terminated pursuant
to Section 3.2 or 3.3, then said term of employment shall
automatically be extended for an additional one-year period unless
on or before the date that is 90 days prior to the first day
of any such extension period either party shall give written notice
to the other that no such automatic extension shall
occur.
3.2
Company’s Right to Terminate . Notwithstanding the
provisions of Section 3.1, Company shall have the right to
terminate Executive’s employment under this Agreement at any
time for any of the following reasons:
(a) upon
Executive’s death;
(b) upon
Executive’s Disability;
(d) for
any other reason whatsoever, in the sole discretion of the
Board.
3.3
Executive’s Right to Terminate . Notwithstanding
the provisions of Section 3.1 Executive shall have the right
to terminate his employment under this Agreement for any of the
following reasons:
(a) as a result of
a Change in Terms of Service; provided, however, that prior to
Executive’s termination as a result of a Change of Terms of
Service, Executive must give written notice to Company of the
specific occurrence that resulted in the Change in Terms of Service
and such occurrence must remain uncorrected for 10 days
following such written notice; or
(b) at any time
for any other reason whatsoever, in the sole discretion of
Executive.
3.4 Notice
of Termination . If Company desires to terminate
Executive’s employment hereunder at any time prior to
expiration of the term of employment as provided in
Section 3.1, it shall do so by giving written notice to
Executive that it has elected to terminate Executive’s
employment hereunder and stating the effective date and reason for
such termination, provided that no such action shall alter or amend
any other provisions hereof or rights arising hereunder. If
Executive desires to terminate his employment hereunder at any time
prior to expiration of the term of employment as provided in
Section 3.1, he shall do so by giving a 30-day written notice
to Company that he has elected to terminate his employment
hereunder and stating the effective date and reason for such
termination, provided that no such action shall alter or amend any
other provisions hereof or rights arising hereunder.
3.5 Deemed
Resignations . Any termination of Executive’s
employment shall constitute an automatic resignation of Executive
as an officer of Company and each Affiliate of Company, and an
automatic resignation of Executive from the Board (if applicable)
and from the
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board of
directors of any Affiliate of Company and from the board of
directors or similar governing body of any corporation, limited
liability company or other entity in which Company or any Affiliate
holds an equity interest and with respect to which board or similar
governing body Executive serves as Company’s or such
Affiliate’s designee or other representative.
ARTICLE 4:
COMPENSATION AND BENEFITS
4.1 Base
Salary . During the period of this Agreement, Executive
shall receive a minimum Annual Base Salary of $300,000.
Executive’s Annual Base Salary shall be reviewed by the
Compensation Committee on an annual basis, and, in the sole
discretion of the Compensation Committee, such Annual Base Salary
may be increased, but not decreased, effective as of any date
determined by the Compensation Committee. Executive’s Annual
Base Salary shall be paid in equal installments in accordance with
Company’s standard policy regarding payment of compensation
to executives but no less frequently than monthly.
4.2
Bonuses . Executive shall be eligible to participate in
Company’s annual bonus plan or plans applicable to Executive
as approved from time to time by the Board or the Compensation
Committee in amounts to be determined by the Compensation Committee
based upon criteria established by the Compensation Committee.
Executive shall initially be entitled to earn up to 100% of his
base pay in bonuses under such plan.
4.3
Restricted Stock Grant . Promptly following Executive
entering into this Agreement, Company shall grant Executive 10,000
shares of restricted stock of Company, to vest annually after the
date of grant at the following rates: 1 st anniversary — 15%; 2
nd anniversary — 15%; 3
rd anniversary — 15%; 4
th anniversary — 15%; and 5
th anniversary — 40%. Such restricted stock
shall be subject to the restricted stock agreement to be provided
by Company to Executive in connection with the grant.
4.4 Other
Perquisites . During his employment hereunder, Executive
shall be afforded the following benefits as incidences of his
employment:
(a) Business
and Entertainment Expenses — Subject to Company’s
standard policies and procedures with respect to expense
reimbursement as applied to its executive employees generally,
Company shall reimburse Executive for, or pay on behalf of
Executive, reasonable and appropriate expenses incurred by
Executive for business related purposes, including dues and fees to
industry and professional organizations and costs of entertainment
and business development.
(b)
Vacation — During his employment hereunder, Executive
shall be entitled to four weeks of paid vacation each calendar year
(or such greater amount of vacation as provided to executives of
Company generally) and to all holidays provided to executives of
Company generally.
(c)
Automobile — Company shall lease for and provide to
Executive a vehicle designated by Executive; provided, however,
that the lease cost to Company of such vehicle shall not exceed
$800 per month.
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(d) Other
Company Benefits — Executive and, to the extent
applicable, Executive’s spouse, dependents and beneficiaries,
shall be allowed to participate in all benefits, plans and
programs, including improvements or modifications of the same,
which are now, or may hereafter be, available to other executive
employees of Company. Such benefits, plans and programs shall
include, without limitation, any profit sharing plan, thrift plan,
health insurance or health care plan, life insurance, disability
insurance, pension plan, supplemental retirement plan, vacation and
sick leave plan, and the like which may be maintained by Company.
Company shall not, however, by reason of this paragraph be
obligated to institute, maintain, or refrain from changing,
amending, or discontinuing, any such benefit plan or program, so
long as such changes are similarly applicable to executive
employees generally.
ARTICLE 5:
EFFECT OF TERMINATION ON COMPENSATION; ADDITIONAL
PAYMENTS
5.1
Termination Other Than an Involuntary Termination . If
Executive’s employment hereunder shall terminate upon
expiration of the term provided in Section 3.1 hereof because
either party has provided the notice contemplated in such
paragraph, or if Executive’s emp
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