An employee retention agreement is a contract between an employer and an employer for the purposes of enticing the employee to continue working for the company. When a company has a top-performing employee or undergoes a merger or acquisition, they will offer the employees they want to keep financial incentives to stay with the company. Both employers and employees can greatly benefit from a well-executed employee retention agreement. Employers can retain employees who have knowledge and experience and can help the company, while employees receive benefits like bonuses and job security. Employee retention agreements can be negotiated so that both parties are happy with the final contract.
GREAT WHITE ENERGY SERVICES LLC
EMPLOYEE RETENTION AGREEMENT
This Employee Retention Agreement (“Agreement”) is made and entered into between Great White Energy Services LLC, a Delaware limited liability company (“Great White”), and Phillip G. Lancaster (“Employee”) effective as of August 16, 2010 (the “Effective Date”).
1. Employee is currently employed by Great White as its Chief Executive Officer . Great White wishes to encourage Employee to remain with Great White through November 16, 2010, (the “Search Period”) and for a subsequent period ending November 16, 2011 (the “Continuation Period”).
2. Unless Employee’s employment is earlier terminated for Cause , by voluntary departure or by reason of death or permanent disability, the following shall apply: (a) Employee’s base salary and benefits during the Search Period shall remain as it is on the Effective Date, (b) Starting at the end of the Search Period until the end of the Continuation Period, Employee’s base salary shall be One Hundred and Twenty Thousand Dollars ($120,000.00) and Employee shall continue to receive benefits as they are on the Effective Date, and (c) at the end of the Continuation Period, Great White will, no later than thirty (30) days thereafter, pay Employee Five Hundred Thousand Dollars ($500,000.00) (a “Completion Event Payment”) subject to the limitation in Section 7 and the condition in Section 11(G) of this Agreement.
3. If prior to the expiration of the Continuation Period (1) Great White enters into an agreement with a third party buyer to convey all or substantially all of the assets , accounts or ownership of Great White to such third party, or (2) a reorganization or consolidation of Great White or its assets is undertaken as part of an initial public offering (either of (1) or (2) hereinafter referred to as a “Control Event”), Great White wishes to encourage Employee to remain with Great White through the consummation of any such conveyance, reorganization or consolidation pursuant to the Control Event (a “Control Event Closing”) and for ninety (90) days thereafter (a “Qualifying Date”) in no event shall the Qualifying Date occur after November 16, 2011. Should a Control Event Closing occur, in consideration for Employee’s continuous employment by Great White through the Qualifying Date, Great White will pay Employee Five Hundred Thousand Dollars ($500,000.00) (a “Control Event Payment”). Such payment shall be made within thirty (30) days following a Qualifying Date, subject to the limitation in Section 7 and the condition in Section 11(G) of this Agreement.
4. If prior to the end of the Continuation Period Great White terminates Employee’s employment without Cause and other than by reason of death or permanent disability , Employee will be entitled to (a) a severance payment of five hundred thousand dollars ($500,000.00) payable within sixty (60) days following the effective date of such termination (a “Severance Event Payment”), subject to the limitation in Section 7 and the condition in Section 11(G) of this Agreement; and (b) the remaining amount of unpaid base salary owed to Employee for the Continuation Period.
P. Lancaster Retention Agmt.
5. If Employee’s employment is terminated after the Effective Date by reason of death or permanent disability , Employee and/or Employee’s Beneficiary as described below will be entitled to (a) the Severance Event Payment (subject to the limitation in Section 7 below) payable within thirty (30) days following the effective date of such termination; and (b) the remaining amount of unpaid base salary owed to Employee for the Continuation Period. Any payment which becomes payable after the death of Employee shall be paid first to Employee’s Primary Beneficiary and if such Primary Beneficiary does not survive Employee to Employee’s Contingent Beneficiary. As used in this Agreement, Employee’s Primary Beneficiary and Contingent Beneficiary shall mean the persons designated as such by Employee pursuant to a Designation of Beneficiary Form provided by Great White and executed by Employee pursuant to procedure established by Great White. At any time prior to Employee’s death, Employee may change the Designation of Beneficiary or, contingent Beneficiary by filing a properly executed Beneficiary Designation Form with Great White which meets the requirements hereof. For purposes of this Agreement, Employee shall be deemed to be permanently disabled only if the Employee is eligible for long-term disability benefits under the Great White Basic Life with Accidental Death & Dismemberment Policy.
6. In the event Great White terminates Employee’s employment for Cause neither Employee nor any Beneficiary of Employee will be entitled to any payment not yet payable under this Agreement .
7. For the purposes of this Section 7 and Sections 10 and 11(A) below , a Completion Event Payment, Control Event Payment and Severance Event Payment are together referred to as an “Event Payment.” Notwithstanding anything to the contrary in this Agreement, under no circumstances shall Employee (together with any Beneficiary of Employee, if applicable) ever be entitled to more than one Event Payment under this Agreement (in other words, the total amount payable by Great White for all Event Payments combined is limited to Five Hundred Thousand Dollars ($500,000.00)).
8. Any payments due under Sections 2(c) , 3, 4 or 5 above shall paid to Employee (or any Beneficiary of Employee, if applicable) as a lump sum, less appropriate deductions and/or withholdings, pursuant to the Company’s customary human resource and employee payroll practices.
9. This Agreement is not a contract of employment . No provision of this Agreement shall be construed to affect the employment-at-will relationship between Great White and Employee. The employment relationship may be terminated at any time by either Great White or Employee, whether for Cause, without Cause or otherwise.
10. Solely for the purpose of establishing Employee’s rights to an Event Payment , “Cause” as a basis for termination of Employee’s employment shall mean (a) Employee’s conviction of any criminal violation involving dishonesty, fraud or moral turpitude; (b) Employee’s failure to comply with reasonable directives of the Company that result in material injury to Great White; or (c) Employee’s material breach of any term or provision of this Agreement.
P. Lancaster Retention Agmt.
11. Miscellaneous Provisions .