Exhibit 10.5

 

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Ted W. Beneski

Chairman of the Board

817.488.7720 direct

tbeneski@insightequity.com

 

May 29, 2013

 

Mr. Richard L. DeShazo

 

Dear Dick:

 

We are very pleased to offer you the position of Chief Accounting Officer of
Emerge Energy Services GP LLC (the “GP” and, including any successors or
assigns, the “Company”). Your annual salary will be $225,000, less payroll
deductions and all required withholdings, payable in installments in accordance
with the Company’s normal payroll practices (but in no event less often than
monthly).  At the Company’s request, you will also serve the Company and/or its
affiliates (including Emerge Energy Services LP, the “MLP”) in such additional
capacities as the Company may designate.  In the event that you serve in such
additional capacities, your compensation will not be increased on account of
such additional service beyond that specified in this letter.

 

Beginning in fiscal year 2013 and for each fiscal year of the Company during
your employment, you will be eligible to receive an annual cash bonus at a
target rate of 45% of the salary you actually receive during the applicable
fiscal year, provided that you remain employed by the Company through the
applicable payment date. With respect to 2013, your bonus will be determined
based on 55% of what you would have earned had you participated in the Allied
Energy Company LLC (“AEC”) bonus plan for the entire year with a target payout
of 45% of your base salary. Similarly, you will participate at a rate of 35% of
what you would have earned under the Superior Silica Sands, LLC bonus plan and
at 10% of what you would have earned under the Direct Fuels LLC f/k/a/ Insight
Equity Acquisition Partners LP bonus plan, in each case based on a target payout
of 45% of your base salary. Your actual bonus rate may be higher than 45% if
company performance exceeds the applicable performance targets but there may
also be no payout if performance does not meet minimum hurdles. Following 2013,
the performance targets will be determined at the discretion of the Company’s
Board of Directors. The 2013 annual bonus will be paid (to the extent such
annual bonus becomes payable) as soon as administratively practicable in the
calendar year following the calendar year with respect to which the annual bonus
is earned, following the completion of the audit for the applicable year. You
will also be considered for future long-term equity incentive awards at the
discretion of the Board of Directors.

 

Finally, you will also be eligible to participate in all health, welfare and
retirement plans maintained by the Company from time to time on the same basis
as other similarly situated employees, subject to the terms and conditions
thereof, but nothing contained in this letter will, or will be construed so as
to, obligate the Company or its affiliates to adopt, sponsor, maintain or
continue any benefit plans or programs at any time.

 

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This will be an at-will employment arrangement, so either you or the Company may
end your employment at any time for any reason with or without notice, at which
point this letter will terminate in its entirety subject to subsections (a) and
(b) below to the extent any such subsection is applicable:

 

(a)                     In the event the Company terminates your employment
without “cause” (other than due to your death or “disability” (within the
meaning of Section 409A of the Code)) or you terminate your employment for “good
reason”, in each case, within six months following a “change of control,” you
will be entitled to receive (i) a severance payment in an amount equal to 12
months of your then current base salary plus (ii) an amount equal to your target
bonus for the year in which the termination occurs, pro-rated through the date
of your separation from the Company, each paid as a single cash lump sum
payment.  All payments described in this subsection (a) will be made on the 60th
day following your termination date, subject to your timely execution and
non-revocation of a general release of claims in a form that is satisfactory to
the Company and its affiliates.

 

(b)                     As used in subsection (a) above, the term “cause” means
any of the following as determined by the Company in the exercise of good faith
and reasonable judgment:  (i) willful and continued refusal to perform your
duties, other than by reasons of disability; (ii) committing an act constituting
a felony under state or federal law; (iii) engaging in an act of fraud,
dishonesty or gross misconduct in connection with the business of the Company or
its affiliates; (iv) theft or misappropriation, or attempted theft or
misappropriation, of funds, property or a business opportunity from the Company
or its affiliates; or (v) violation of any express policy or procedure of the
Company or its affiliates, or any law or regulation applicable to the Company,
its affiliates or its business; provided, however, that in the case of clauses
(i) and (v) of the preceding portion of this sentence the Company will have
given you at least 30 days’ notice of its initial determination that your
conduct may provide the Company with a basis for terminating your employment for
“cause,” and you will be provided with a reasonable opportunity during the
30-day period following such notice to cure the conditions that are the alleged
basis for terminating your employment for “cause.”

 

(c)                      As used in subsection (a) above, the term “change of
control” means the acquisition by any person other than the current owners (or
their affiliates) of the GP of more than 50% of the voting equity interests of
the GP.

 

(d)                     As used in subsection (a) above, the term “good reason”
will mean your resignation from service with the Company within 90 days after
the occurrence of one of the following events without your express written
consent, provided, however, that you must provide written notice to the Company
within 60 days after the initial occurrence of the event allegedly constituting
“good reason”, and the Company will have 30 days after such notice is given to
cure:  (i) a material diminution in your title, authority or responsibility with
the Company and its subsidiaries, excluding for this purpose any isolated,
insubstantial or inadvertent actions not taken in bad faith and which are
remedied by the Company promptly after receipt of notice thereof given by you;
(ii) a material reduction in your then-current annual base salary; provided,
however, that in no event will a reduction of less than 15% be deemed material
if such reduction occurs as part of an across-the-board reduction in salary
level of all other employees in positions similar to yours as part of a general
salary level reduction, or (iii) a material relocation of your current principal
place of business, it being understood that travel to other locations may be
required for extended periods of time, and such travel will in no event
constitute a relocation of your principal place of business, and provided that
in no event will either a relocation to a location within a sixty (60)-mile
radius of your current business location.

 

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To the extent that any payment under this letter constitutes nonqualified
deferred compensation for purposes of Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”), and such payment would otherwise be payable
hereunder by reason of a termination of your employment, then, to the extent
required by Section 409A, all references to your termination of employment will
be construed to mean a “separation from service” (within the meaning of
Section 409A(a)(2)(A)(i) of the Code and Treasury Regulation
Section 1.409A-1(h)) (“Separation from Service”), and such amounts will only be
paid upon or by reference to your Separation from Service.  Notwithstanding
anything to the contrary in this letter, no compensation or benefits will be
paid to you prior to the expiration of the six (6)-month period following your
Separation from Service to the extent that the Company determines that paying
such amounts at the time or times indicated in this letter would result in a
prohibited distribution under Section 409A(a)(2)(B)(i) of the Code.  If the
payment of any such amounts is delayed as a result of the previous sentence,
then on the first day following the end of such six (6)-month period (or such
earlier date upon which such amount can be paid under Section 409A of the Code
without resulting in a prohibited distribution, including as a result of your
death), the Company will pay you a lump-sum amount equal to the cumulative
amount that would have otherwise been payable to you during such period.  For
purposes of Section 409A of the Code, each payment made under this letter will
be treated as a separate payment

 

The Company may assign or transfer your employment and this letter to any of its
affiliates or to any successor to its business or assets at any time. This
letter may not be amended except by a signed writing executed by the parties
hereto.

 

We hope that you find this employment offer to be compelling. It is a package
that can generate significant personal value for you as long as there is
significant value created for the MLP.

 

We would very much enjoy having you as part of the team and are confident that
you can help us create something special here. In order for us to achieve our
current timetable, we need to move this process along fairly quickly. As a
result, this offer of employment will expire on 5 pm on        , 2013.  Also, we
ask that you treat the terms of this offer in confidence.  We all look forward
to the possibility of working with you.

 

Best Regards,

 

Ted Beneski

Chairman of the Board

 

 

Acknowledged, Accepted and Agreed:

 

 

 

 

 

/s/ Richard L. Deshazo

 

Richard L. DeShazo, individually

 

Date:

May 29,2013

 

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