exv10w1



 





Exhibit 10.1




January 8, 2008

 




Mr. Joe Eustace

via hand delivery




Dear Joe:




On behalf of Pioneer Drilling Company (the “Company”), it is my pleasure to extend to you
the offer of employment described below. This offer of employment is subject to the closing of the
acquisition by the Company of WEDGE Wireline Services, Inc., WEDGE Fishing and Rental Services,
L.L.C. and WEDGE Well Services, L.L.C (the “Acquisition”). This offer expires on January
18, 2008.



Position




Effective as of the closing of the Acquisition, you will be employed by the Company as the
President of the Well Servicing Division of Pioneer Drilling Company. You will report to the Wm.
Stacy Locke, President and CEO of Pioneer Drilling Company.



Responsibilities




You will be expected, at all times during your employment, to loyally and conscientiously perform
all of the duties and obligations required of and from you pursuant to the express and implicit
terms hereof to the best of your ability and experience and to the reasonable satisfaction of the
Company. You will also be expected to comply with and be bound by the Company’s operating policies,
procedures and practices that are from time to time in effect during the term of your employment.
You will be required to acknowledge that you have read and understood 1) the Company’s Employee
Handbook by signing the last page of the handbook and returning it to the Company; 2) the Company’s
Code of Conduct and Ethics by signing and returning the acknowledgement form; and 3) the Company’s
Foreign Corrupt Practices Act Policy by signing and returning the acknowledgement form.



Given the nature of your position with the Company and your attendant responsibilities, the Company
expects that you will, at all times during your employment, devote your full business time and
attention to the business of the Company and you will not render commercial or professional
services of any nature to any person or organization, whether or not for compensation, without the
prior written consent of the Company’s Chief Financial Officer. The Company will be entitled to
all of the benefits and profits arising from or incident to all such work services and advice.



 









 





“At-Will” Employment




Your employment with the Company will be “at-will.” As a result, either you or the Company may
terminate your employment at any time, for any reason or for no reason, without further obligation
or liability, except to the extent provided in the Pioneer Drilling Company Key Employee Severance
Plan (the “Severance Plan”), attached hereto and described in further detail below.



Salary




You will be paid an annual base salary of $230,000. Your base salary will be reviewed at the end of
each calendar year and adjusted from time to time, at the discretion of the Company.



Incentive Compensation




You will be designated as a Level II employee in the Company’s incentive compensation program. The
incentive compensation is comprised of a cash incentive award and a stock incentive award. The
goals and objectives connected with the cash incentive award will be developed jointly between the
Company, the Compensation Committee and you. Based on your level and the achievement of both
individual and Company performance goals, you will be eligible to receive a cash incentive award
with a target amount of $115,000 and a maximum amount of $230,000.



The stock incentive award is comprised of an annual grant of stock options determined at the
discretion of the Company’s Compensation Committee and subject to terms and conditions as the
Company shall determine as of the date of any such grant. Given the discretionary nature of the
award, the grant varies from year to year. However, had you been an employee of the Company for the
fiscal year March 31, 2008 award which occurred in April of 2007, you would have be eligible to
receive up to 85,000 options to purchase Company stock.



The exercise price for all options granted to you will be the fair market value of the Common Stock
on the date of grant. Subject to your continued employment by the Company and its affiliates, the
options granted to you will vest in equal annual installments over a three year period following
the date of grant. The vesting of the options may accelerate in certain circumstances, to the
extent provided in the Severance Plan.



All options granted to you will be subject to the terms of the Company’s incentive plan from which
the options are being granted and a stock option grant agreement between you and the Company.



Benefits




You will be entitled to participate in the Company’s medical, dental, disability and life insurance
plans. You will be eligible to participate in the Company’s 401(k) Plan and to receive other
benefits offered to other executives of similar rank and status. You will also receive a car
allowance of $1000 per month. You will be entitled to 3 weeks paid vacation/sick leave per year,
plus the paid holidays established by the Company each year.



All payments of base salary, incentive compensation and certain benefits are subject to deductions
for taxes and other withholdings as authorized by you or required by law or the policies of the
Company.



 









 





Severance




You will be designated as a “Participant”/“Other than a Level I, Level II or Level III Participant”
in the Company’s Severance Plan, a copy of which is attached hereto. If your employment with the
Company and its affiliates is terminated by you for “Good Reason” or by the Company other than for
“Cause” or upon your death or disability, then you will be entitled to certain cash severance
payments, the continuation of certain insurance benefits and the acceleration of vesting of some or
all of your unvested stock options, all as provided in the Severance Plan. Should you be
“Involuntarily Terminated” as defined in the Severance Plan not within two years of a “Change in
Control” of the Company, you will receive a lump sum cash payment of 200 percent of your base
salary and your annual cash incentive award, vesting of all unvested options that would otherwise
vest within the twelve months following your termination date, COBRA premium reimbursement for
twelve months and continuation of life insurance coverage for twelve months. Should you be
“Involuntarily Terminated” as defined in the Severance Plan within two years of a “Change of
Control” of the Company, you will receive 300 percent of base salary and maximum annual cash
incentive award, vesting of all unvested options, COBRA premium reimbursement for a period of
eighteen months and continuation of life insurance for a period of eighteen months.



Indemnification Agreement




You will be given an Indemnification Agreement by the Company which provides certain protections
for activities undertaken by you in conjunction with your position with the Company.



Additional Conditions of Employment





Initial Stock Award and Confidentiality and Non-Competition Agreement





This offer of employment is contingent upon your execution of a Confidentiality and Non-Competition
Agreement, a copy of the form of which is attached hereto. The Confidentiality and Non-Competition
Agreement contains covenants of confidentiality, non-competition, non-interference with Company
relationships, non-solicitation of Company employees and non-disparagement. The non-competition,
non-interference and non-solicitation covenants continue in force until the three-year anniversary
of the Confidentiality and Non-Competition Agreement. Upon
execution of the Confidentiality and Non-Competition Agreement, the Company will grant you an
option to purchase 85,000 shares of the Common Stock of the Company. The exercise price for all
options granted to you will be the fair market value of the Common Stock on the date of grant.
Subject to your continued employment by the Company and its affiliates, the options granted to you
will vest in equal annual installments over a three year period following the date of grant. The
vesting of the options may accelerate in certain circumstances, to the extent provided in the
Severance Plan.



All options granted to you will be subject to the terms of the Company’s incentive plan from which
the options are being granted and a stock option grant agreement between you and the Company.



 









 





Arbitration Agreement




This offer of employment is contingent upon your review of and agreement to the Company’s standard
form of arbitration agreement, a copy of which is attached hereto.



This letter, together with the other agreements and documents described above, sets forth the terms
of your employment with the Company and supersedes any prior representations or agreements, whether
written or oral. This letter may not be modified or amended except by a written agreement signed
by both you and the Company. The policies, procedures, and benefits of the Company are subject to
change at any time and, if and to the extent changed, will apply to you in the same manner as other
employees of the Company similarly situated. The Company may change your position, duties, and
work location, from time to time, as it deems necessary.



To indicate your acceptance of this offer, please sign and date one copy of this letter in the
space provided below and return it to me no later than January 18, 2008. A duplicate copy of this
offer letter is enclosed for your records.



We are pleased to offer you a position within our Company and look forward to working with you.



Very truly yours,




 

/s/ Wm. Stacy Locke                    




Wm. Stacy Locke,

CEO



 




I have read and accept this employment offer subject to the terms and conditions set forth herein
and hereby grant my permission to the Company to conduct a drug test as a condition of my
employment by Pioneer Drilling Company.



By:

 




	 	 	 	 	 
	/s/ Joseph B. Eustace

	 	January 17, 2008  
	 	 
	 

	 	 	 	 
	Signature

	 	Date	 	 
	 
	 	 	 	 
	Joseph B. Eustace
	 	 	 	 
	 
	 	 	 	 
	Printed Name