Document:

wttr_Ex10_1

		

			 

		

		
			EMPLOYMENT AGREEMENT
		

		
			This Employment Agreement (“Agreement”) is made and entered into by and between Select Energy Services, LLC, a Delaware limited liability company (the “Company”), and Mitchell Shauf (“Employee”) effective as of January 14, 2019 (the “Effective Date”).  
		

		
			 
		

		
			WHEREAS, Employee is currently employed by the Company; and
		

		
			 
		

		
			WHEREAS, in order to further incentivize Employee to continue to develop the business and goodwill of the Company Group (as defined below), the Company will provide Employee with certain compensation and benefits pursuant to (and subject to the terms of) this Agreement and Select Energy Services, Inc., a Delaware corporation and the parent of the Company (the “Parent”) will grant to Employee shares of restricted stock pursuant to (and subject the terms of) that certain Restricted Stock Grant Notice and Restricted Stock Agreement between Parent and Employee (the “Restricted Stock Agreement”).
		

		
			 
		

		
			NOW, THEREFORE, for and in consideration of the premises and the mutual covenants and agreements herein contained, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
		

		
			 
		

			
	
			
				 1.
			Employment.    During the Employment Period (as defined in Section ‎4), the Company shall employ Employee, and Employee shall serve, as Senior Vice President, Operations, of the Company.    

			
	
			
				 2.
			Duties and Responsibilities of Employee.

			
	
			
				 (a)
			During the Employment Period, Employee shall devote Employee’s best efforts and full business time and attention to the businesses of Parent and its direct and indirect subsidiaries, including the Company (collectively, the Parent and its direct and indirect subsidiaries are referred to as the “Company Group”) as may be requested by Parent or the Company from time to time.  Employee’s duties and responsibilities shall include those normally incidental to the position(s) identified in Section ‎1, as well as such additional duties as may be assigned to Employee by the Company from time to time, which duties and responsibilities may include providing services to other members of the Company Group in addition to the Company.  Employee may, without violating this Section ‎2(a), (i) as a passive investment, own publicly traded securities in such form or manner as will not require any services by Employee in the operation of the entities in which such securities are owned; (ii) engage in charitable and civic activities; or (iii) with the prior written consent of the board of directors of Parent (the “Board”), engage in other personal and passive investment activities, in each case, so long as such ownership, interests or activities do not interfere with Employee’s ability to fulfill Employee’s duties and responsibilities under this Agreement and are not inconsistent with Employee’s obligations to any member of the Company Group or competitive with the business of any member of the Company Group. 

			
	
			
				 (b)
			Employee hereby represents and warrants that Employee is not the subject of, or a party to, any employment agreement, non-competition, non-solicitation, restrictive covenant or non-disclosure agreement, or any other agreement, obligation, restriction or understanding that would prohibit Employee from executing this Agreement or fully performing 

		 

		

			US 6049616

		

	each of Employee’s duties and responsibilities hereunder, or would in any manner, directly or indirectly, limit or affect any of the duties and responsibilities that may now or in the future be assigned to Employee hereunder.  Employee expressly acknowledges and agrees that Employee is strictly prohibited from using or disclosing any confidential information belonging to any prior employer in the course of performing services for any member of the Company Group, and Employee promises that Employee shall not do so.  Employee shall not introduce documents or other materials containing confidential information of any prior employer to the premises or property (including computers and computer systems) of any member of the Company Group.

			
	
			
				 (c)
			Employee owes each member of the Company Group fiduciary duties  (including (i) duties of loyalty and disclosure and (ii) such fiduciary duties that an officer of the Company owes under the laws of the State of Delaware), and the obligations described in this Agreement are in addition to, and not in lieu of, the obligations Employee owes each member of the Company Group under statutory and common law.

			
	
			
				 3.
			Compensation.  

			
	
			
				 (a)
			Base Salary.  During the Employment Period, the Company shall pay to Employee an annualized base salary of $285,000 (the “Base Salary”) in consideration for Employee’s services under this Agreement, payable in substantially equal installments in conformity with the Company’s customary payroll practices for similarly situated employees as may exist from time to time, but no less frequently than monthly.

			
	
			
				 (b)
			Signing Bonus.  On the Company’s first regular payroll date following the Effective Date, the Company shall pay Employee a one-time signing bonus in the amount of $206,250 (the “Signing Bonus”). Notwithstanding any provision of this Agreement to the contrary, Employee shall promptly return to the Company the full amount of the Signing Bonus (gross of applicable tax withholdings) in the event that at any time during the one (1)-year period following the Effective Date, Employee’s employment is terminated by the Company for Cause pursuant to Section 7(a) or by Employee for convenience pursuant to Section 7(e).

			
	
			
				 (c)
			STI Plan.  Employee shall be eligible to continue participating in the Company’s short-term incentive bonus program (the “STI Plan”), subject to the terms of the STI Plan in effect from time to time.  Each bonus, if any, paid pursuant to the STI Plan shall be paid as soon as administratively feasible after the Board (or a committee thereof) certifies whether the applicable performance targets for the applicable calendar year have been achieved, and in no event later than April 30 of the calendar year following the calendar year to which such bonus relates.  Such bonus, if applicable to Employee, shall not unreasonably be withheld. Notwithstanding anything in this Section ‎3(b) to the contrary, no bonus will be paid  under the STI Plan for a particular calendar year unless Employee remains continuously employed by the Company from the Effective Date through the date the Board (or a committee thereof) certifies whether the applicable performance targets for the applicable calendar year have been achieved.

			
	
			
				 4.
			Term of Employment.   Unless earlier terminated pursuant to Section 7 below, the term of Employee’s employment under this Agreement shall be for the period beginning on the Effective Date and ending on the fifth (5th) anniversary of the Effective Date (the “Term”).  Upon the expiration of the Term, this Agreement shall automatically terminate and shall cease to have 

		 

		

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	any further force or effect and, if Employee’s employment has not terminated prior to the end of the Term in accordance with Section ‎7, Employee’s employment with the Company following the expiration of the Term shall continue on an “at-will” basis and may be terminated by either party at any time and for any reason or no reason at all, so long as the reason or lack of reason is lawful;  provided,  however, that notwithstanding the foregoing, the terms of Sections 9 and 11 shall remain in effect following the expiration of the Term.  Notwithstanding any other provision of this Agreement, Employee’s employment pursuant to this Agreement may be terminated at any time during the Term in accordance with Section ‎7.  The period from the Effective Date through the expiration of this Agreement or, if sooner, the termination of Employee’s employment pursuant to this Agreement, regardless of the time or reason for such termination, shall be referred to herein as the “Employment Period.”

			
	
			
				 5.
			Business Expenses.  Subject to Section ‎23, the Company shall reimburse Employee for Employee’s reasonable out-of-pocket business-related expenses actually incurred in the performance of Employee’s duties under this Agreement so long as Employee timely submits all documentation for such expenses, as required by Company policy in effect from time to time.  Any such reimbursement of expenses shall be made by the Company upon or as soon as practicable following receipt of such documentation (but in any event not later than the close of Employee’s taxable year following the taxable year in which the expense is incurred by Employee).  In no event shall any reimbursement be made to Employee for any expenses incurred after the date of Employee’s termination of employment with the Company.    

			
	
			
				 6.
			Benefits.  During the Employment Period, Employee shall be eligible to participate in the same benefit plans and programs in which other similarly situated Company employees are eligible to participate, subject to the terms and conditions of the applicable plans and programs in effect from time to time.  The Company shall not, however, by reason of this Section 6, be obligated to institute, maintain, or refrain from changing, amending, or discontinuing, any such plan or policy, so long as such changes are similarly applicable to similarly situated Company employees generally.

			
	
			
				 7.
			Termination of Employment.

			
	
			
				 (a)
			Company’s Right to Terminate Employee’s Employment for Cause.  The Company shall have the right to terminate Employee’s employment hereunder at any time during the Term for Cause.  For purposes of this Agreement, “Cause” shall mean: 

			
	
			
				(i)
			Employee’s material breach of this Agreement or any other written agreement between Employee and one or more members of the Company Group;

			
	
			
				(ii)
			Employee’s material failure to follow any law applicable to the workplace or employment relationship, or Employee’s breach of any material policy or code of conduct established by Parent or the Company and applicable to Employee;

			
	
			
				(iii)
			Employee’s gross negligence, willful misconduct, breach of fiduciary duty, fraud, theft or embezzlement; 

		
			

		 

		

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				(iv)
			the commission by Employee of, or conviction or indictment of Employee for, or plea of nolo contendere by Employee to, any felony (or state law equivalent) or any crime that constitutes a misdemeanor involving moral turpitude; or

			
	
			
				(v)
			Employee’s willful failure or refusal, other than due to Disability, to perform Employee’s obligations pursuant to this Agreement or to follow any lawful directive from the Company, as determined by the Company;  provided, however, that if Employee’s actions or omissions as set forth in this Section ‎7(a)(v) are of such a nature that the Company determines that they are curable by Employee, such actions or omissions must remain uncured thirty (30) days after the Company first provided Employee written notice of the obligation to cure such actions or omissions.

			
	
			
				 (b)
			Company’s Right to Terminate for Convenience.  The Company shall have the right to terminate Employee’s employment for convenience at any time during the Term and for any reason, or no reason at all, upon written notice to Employee.

			
	
			
				 (c)
			Employee’s Right to Terminate for Good Reason.  Employee shall have the right to terminate Employee’s employment with the Company at any time during the Term for Good Reason.  For purposes of this Agreement, “Good Reason” shall mean:

			
	
			
				(i)
			a material diminution in Employee’s title,  duties or responsibilities with the Company Group; 

			
	
			
				(ii)
			the relocation of the geographic location of Employee’s principal place of employment by more than seventy-five (75) miles from the location of Employee’s principal place of employment as of the Effective Date;

			
	
			
				(iii)
			a  relocation of Employee’s principal residence required by the Company;

			
	
			
				(iv)
			a material reduction in Employee’s Base Salary, other than as part of one or more decreases that are applied to all of the Company’s similarly situated employees;

			
	
			
				(v)
			a material reduction in Employee’s target bonus opportunity under the STI Plan, other than as part of one or more decreases that are applied to all of the Company’s similarly situated employees; or

			
	
			
				(vi)
			a material breach by the Company of any material provision of this Agreement or any other written agreement between Employee and the Company.

		
			Notwithstanding the foregoing provisions of this Section ‎7(c) or any other provision of this Agreement to the contrary, any assertion by Employee of a termination for Good Reason shall not be effective unless all of the following conditions are satisfied: (A) the condition described in Section 7(c)(i),  (ii),  (iii),  (iv),  (v) or (vi)  giving rise to Employee’s termination of employment must have arisen without Employee’s consent; (B) Employee must provide written notice to the Board of the existence of such condition(s) within thirty (30) days after the initial occurrence of such condition(s); (C) the condition(s) specified in such notice must remain uncorrected for thirty 

		 

		

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(30) days following the Board’s receipt of such written notice; and (D) the date of Employee’s termination of employment must occur within sixty-five  (65) days after the initial occurrence of the condition(s) specified in such notice.
		

			
	
			
				 (d)
			Death or Disability.  Upon the death or Disability of Employee, Employee’s employment with Company shall automatically (and without any further action by any person or entity) terminate.  For purposes of this Agreement, a “Disability” shall exist if Employee is unable to perform the essential functions of Employee’s position (after accounting for reasonable accommodation, if applicable and required by applicable law), due to physical or mental impairment that continues, or can reasonably be expected to continue, for a period in excess of one hundred-twenty (120) consecutive days or one hundred-eighty (180) days, whether or not consecutive (or for any longer period as may be required by applicable law), in any twelve (12)-month period.  The determination of whether Employee has incurred a Disability shall be made in good faith by the Company.

			
	
			
				 (e)
			Employee’s Right to Terminate for Convenience.  In addition to Employee’s right to terminate Employee’s employment for Good Reason, Employee shall have the right to terminate Employee’s employment with the Company for convenience at any time during the Term and for any other reason, or no reason at all, upon fourteen  (14) days’ advance written notice to the Company; provided, however, that if Employee has provided notice to the Company of Employee’s termination of employment, the Company may determine, in its sole discretion, that such termination shall be effective on any date prior to the effective date of termination provided in such notice (and, if such earlier date is so required, then it shall not change the basis for Employee’s termination of employment nor be construed or interpreted as a termination of employment pursuant to Section ‎7(b)).

			
	
			
				 (f)
			Effect of Termination. 

			
	
			
				(i)
			If, prior to the expiration of the Term, Employee’s employment hereunder is terminated by the Company without Cause (referred to herein as the Company’s right to terminate for convenience) pursuant to Section 7(b), by Employee for Good Reason pursuant to Section 7(c) or as a result of Employee’s death or Disability pursuant to Section 7(d), then so long as (and only if) Employee (or Employee’s estate, if applicable): (A) executes on or before the Release Expiration Date (as defined below), and does not revoke within any time provided by the Company to do so, a release of all claims in a form reasonably acceptable to the Company, which shall not include additional restrictive covenants related to competition or solicitation (the “Release”), which Release shall release each member of the Company Group and their respective affiliates, and the foregoing entities’ respective shareholders, members, partners, officers, managers, directors, fiduciaries, employees, representatives, agents and benefit plans (and fiduciaries of such plans) from any and all claims, including any and all causes of action arising out of Employee’s employment with the Company and any other member of the Company Group or the termination of such employment, but excluding all claims to severance payments Employee may have under this Section ‎7; and (B) abides by the terms of each of Sections ‎9,  ‎10 and  ‎11, then:

		
			

		 

		

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				 (A)
			 the Company shall make severance payments to Employee in a total amount equal to (x) a number of months’ worth of Employee’s Base Salary equal to the lesser of (I) twelve (12) or (II) the number of complete calendar months remaining in the Term, plus (y) an amount equal to the target bonus under the STI Plan for the year in which such termination occurs (such total severance payments being referred to as the “Severance Payment”).  The Severance Payment will be divided into twenty-six (26) substantially equal installments (or such lesser number of installments equal to the number of remaining regularly scheduled pay dates in the Term).  On the Company’s first regularly scheduled pay date that is on or after the date that is sixty (60) days after the date on which Employee’s employment terminates (the “Termination Date”), the Company shall pay to Employee, without interest, a number of such installments equal to the number of such installments that would have been paid during the period beginning on the Termination Date and ending on the Company’s first regularly scheduled pay date that is on or after the date that is sixty (60) days after the Termination Date had the installments been paid on a monthly basis commencing on the Company’s first regularly scheduled pay date coincident with or next following the Termination Date, and each of the remaining installments shall be paid on a bi-weekly basis thereafter; provided, however, that to the extent, if any, that the aggregate amount of the installments of the Severance Payment that would otherwise be paid pursuant to the preceding provisions of this Section ‎7(f)(i) after March 15 of the calendar year following the calendar year in which the Termination Date occurs (the “Applicable March 15”) exceeds the maximum exemption amount under Treasury Regulation Section 1.409A-1(b)(9)(iii)(A), then such excess shall be paid to Employee in a lump sum on the Applicable March 15 (or the first Business Day preceding the Applicable March 15 if the Applicable March 15 is not a Business Day) and the installments of the Severance Payment payable after the Applicable March 15 shall be reduced by such excess (beginning with the installment first payable after the Applicable March 15 and continuing with the next succeeding installment until the aggregate reduction equals such excess).  “Business Day” shall mean any day except a Saturday, Sunday or other day on which commercial banks in New York, New York or Houston, Texas are authorized or required by law to be closed.

			
	
			
				 (B)
			During the portion, if any, of the lesser of (x) the twelve (12)-month period following the Termination Date or (y) the remainder of the Term  (as applicable, the “Reimbursement Period”) that Employee elects to continue coverage for Employee and Employee’s spouse and eligible dependents, if any, under the Company’s group health plans pursuant to Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company shall promptly reimburse Employee on a monthly basis for the difference between the amount Employee pays to effect and continue such coverage and the employee contribution amount that similarly situated employees of the Company pay for the same or similar coverage under such group health plans (the “COBRA Benefit”). Each payment of the COBRA Benefit shall be paid to Employee on the Company’s first regularly scheduled pay date in the calendar month immediately following the calendar month in which Employee submits to the Company documentation of the 

		 

		

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	applicable premium payment having been paid by Employee, which documentation shall be submitted by Employee to the Company within thirty (30) days following the date on which the applicable premium payment is paid. Employee shall be eligible to receive such reimbursement payments until the earliest of: (x) the last day of the Reimbursement Period; (y) the date Employee is no longer eligible to receive COBRA continuation coverage; and (z) the date on which Employee becomes eligible to receive coverage under a group health plan sponsored by another employer (and any such eligibility shall be promptly reported to the Company by Employee); provided, however, that the election of COBRA continuation coverage and the payment of any premiums due with respect to such COBRA continuation coverage shall remain Employee’s sole responsibility, and the Company shall not assume any obligation for payment of any such premiums relating to such COBRA continuation coverage.  Notwithstanding the foregoing, if the provision of the benefits described in this paragraph cannot be provided in the manner described above without penalty, tax or other adverse impact on the Company or any other member of the Company Group, then the Company and Employee shall negotiate in good faith to determine an alternative manner in which the Company may provide substantially equivalent benefits to Employee without such adverse impact on the Company or such other member of the Company Group.

			
	
			
				(ii)
			Unless the parties hereto expressly agree in writing otherwise, if the Release is not executed and returned to the Company on or before the Release Expiration Date, and the required revocation period has not fully expired without revocation of the Release by Employee, then Employee (or Employee’s estate) shall not be entitled to any portion of the Severance Payment or COBRA Benefit.  As used herein, the “Release Expiration Date” is that date that is twenty-one (21) days following the date upon which the Company delivers the Release to Employee (which shall occur no later than seven (7) days after the Termination Date) or, in the event that such termination of employment is “in connection with an exit incentive or other employment termination program” (as such phrase is defined in the Age Discrimination in Employment Act of 1967), the date that is forty-five (45) days following such delivery date.

			
	
			
				(iii)
			For the avoidance of doubt, (A) the Severance Payment and COBRA Benefit (and any portions thereof) shall not be payable if Employee’s employment terminates for any reason upon or at any time following the expiration of the Term; and (B) Employee shall not be eligible for the Severance Payment or COBRA Benefit in the event that the Employment Period ends due to a  termination by the Company for Cause pursuant to Section 7(a) or by Employee for convenience pursuant to Section 7(e).

			
	
			
				 (g)
			After-Acquired Evidence.  Notwithstanding any provision of this Agreement to the contrary, in the event that the Company determines that Employee is eligible to receive the Severance Payment and COBRA Benefit pursuant to Section ‎7(f) but, after such determination, the Company subsequently acquires evidence or determines that: (i) Employee has failed to abide by the terms of Sections ‎9,  ‎10 or ‎11; or (ii) a Cause condition existed prior to the Termination Date that, had the Company been fully aware of such condition, would have given the Company the right to terminate Employee’s employment pursuant to Section ‎7(a), then the Company shall have the right to cease the payment of any future installments of the Severance 

		 

		

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	Payment or COBRA Benefit, and the Company shall have the right to require Employee to promptly return to the Company all installments of the Severance Payment and COBRA Benefit received by Employee prior to the date that the Company determines that the conditions of this Section ‎7(g) have been satisfied.

			
	
			
				 8.
			Disclosures.  Promptly (and in any event, within three (3) Business Days) upon becoming aware of (a) any actual or potential Conflict of Interest or (b) any lawsuit, claim or arbitration filed against or involving Employee or any trust or vehicle owned or controlled by Employee, in each case, Employee shall disclose such actual or potential Conflict of Interest or such lawsuit, claim or arbitration to the Board.  A “Conflict of Interest” shall exist when Employee engages in, or plans to engage in, any activities, associations, or interests that conflict with, or create an appearance of a conflict with, Employee’s duties, responsibilities, authorities, or obligations for and to the Company Group.    

			
	
			
				 9.
			Confidentiality.  In the course of Employee’s employment with the Company and the performance of Employee’s duties on behalf of the Company Group hereunder, Employee has been provided and will continue to be provided with, and have access to, Confidential Information (as defined below).  In consideration of Employee’s receipt and access to such Confidential Information, and as a condition of Employee’s employment, Employee shall comply with this Section ‎9.    

			
	
			
				 (a)
			Both during the Employment Period and thereafter, except as expressly permitted by this Agreement or by directive of the Board, Employee shall not disclose any Confidential Information to any person or entity and shall not use any Confidential Information except for the benefit of the Company Group.  Employee acknowledges and agrees that Employee would inevitably use and disclose Confidential Information in violation of this Section ‎9 if Employee were to violate any of the covenants set forth in Section ‎10.  Employee shall follow all Company policies and protocols regarding the security of all documents and other materials containing Confidential Information (regardless of the medium on which Confidential Information is stored).  The covenants of this Section ‎9(a) shall apply to all Confidential Information, whether now known or later to become known to Employee during the period that Employee is employed by or affiliated with the Company or any other member of the Company Group.

			
	
			
				 (b)
			Notwithstanding any provision of Section 9(a) to the contrary, Employee may make the following disclosures and uses of Confidential Information:

			
	
			
				(i)
			disclosures to other employees of a member of the Company Group who have a need to know the information in connection with the businesses of the Company Group;

			
	
			
				(ii)
			disclosures to customers and suppliers when, in the reasonable and good faith belief of Employee, such disclosure is in connection with Employee’s performance of Employee’s duties under this Agreement and is in the best interests of the Company Group;

			
	
			
				(iii)
			disclosures and uses that are approved in writing by the Board; or

		
			

		 

		

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				(iv)
			disclosures to a person or entity that has (x) been retained by a member of the Company Group to provide services to one or more members of the Company Group and (y) agreed in writing to abide by the terms of a confidentiality agreement.

			
	
			
				 (c)
			Upon the expiration of the Employment Period, and at any other time upon request of the Company, Employee shall promptly surrender and deliver to the Company all documents (including electronically stored information) and all copies thereof and all other materials of any nature containing or pertaining to all Confidential Information and any other Company Group property (including any Company Group-issued computer, mobile device or other equipment) in Employee’s possession, custody or control and Employee shall not retain any such documents or other materials or property of the Company Group.  Within five (5) days of any such request, Employee shall certify to the Company in writing that all such documents, materials and property have been returned to the Company.

			
	
			
				 (d)
			All trade secrets, non-public information, designs, ideas, concepts, improvements, product developments, discoveries and inventions, whether patentable or not, that are conceived, made, developed or acquired by or disclosed to Employee, individually or in conjunction with others, during the period that Employee is employed and has previously been employed by the Company or any other member of the Company Group (whether during business hours or otherwise and whether on the Company’s premises or otherwise) that relate to any member of the Company Group’s businesses or properties, products or services (including all such information relating to corporate opportunities, operations, future plans, methods of doing business, business plans, strategies for developing business and market share, research, financial and sales data, pricing terms, evaluations, opinions, interpretations, acquisition prospects, the identity of customers or acquisition targets or their requirements, the identity of key contacts within customers’ organizations or within the organization of acquisition prospects, or marketing and merchandising techniques, prospective names and marks) is defined as “Confidential Information.”  Moreover, all documents, videotapes, written presentations, brochures, drawings, memoranda, notes, records, files, correspondence, manuals, models, specifications, computer programs, e-mail, voice mail, electronic databases, maps, drawings, architectural renditions, models and all other writings or materials of any type including or embodying any of such information, ideas, concepts, improvements, discoveries, inventions and other similar forms of expression are and shall be the sole and exclusive property of the Company Group and be subject to the same restrictions on disclosure applicable to all Confidential Information pursuant to this Agreement.  For purposes of this Agreement, Confidential Information shall not include any information that (i) is or becomes generally available to the public other than as a result of a disclosure or wrongful act of Employee or any of Employee’s agents; (ii) was available to Employee on a non-confidential basis before its disclosure by a member of the Company Group; or (iii) becomes available to Employee on a non-confidential basis from a source other than a member of the Company Group; provided,  however,  that such source is not bound by a confidentiality agreement with, or other obligation with respect to confidentiality to, a member of the Company Group.  

			
	
			
				 (e)
			Notwithstanding the foregoing, nothing in this Agreement shall prohibit or restrict Employee from lawfully (i) initiating communications directly with, cooperating with, providing information to, causing information to be provided to, or otherwise assisting in an 

		 

		

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	investigation by, any governmental authority (including the Securities and Exchange Commission) regarding a possible violation of any law; (ii) responding to any inquiry or legal process directed to Employee from any such governmental authority; (iii) testifying, participating or otherwise assisting in any action or proceeding by any such governmental authority relating to a possible violation of law, or (iv) making any other disclosures that are protected under the whistleblower provisions of any applicable law.  Additionally, pursuant to the federal Defend Trade Secrets Act of 2016, an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (A) is made (1) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney and (2) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made to the individual’s attorney in relation to a law suit for retaliation against the individual for reporting a suspected violation of law or (C) is made in a complaint or other document filed in a law suit or proceeding, if such filing is made under seal.  Nothing in this Agreement requires Employee to obtain prior authorization before engaging in any conduct described in this paragraph, or to notify the Company that Employee has engaged in any such conduct. 

			
	
			
				 10.
			Non-Competition; Non-Solicitation.

			
	
			
				 (a)
			The Company has provided and shall, during the Employment Period, continue to provide Employee access to Confidential Information for use only during the Employment Period, and Employee acknowledges and agrees that the Company Group will be entrusting Employee, in Employee’s unique and special capacity, with developing the goodwill of the Company Group, and in consideration of the Company providing Employee with access to Confidential Information, in further consideration of Parent granting restricted shares to Employee pursuant to the Restricted Stock Agreement, and as an express incentive for the Company to enter into this Agreement and employ Employee hereunder, Employee has voluntarily agreed to the covenants set forth in this Section ‎10.  Employee agrees and acknowledges that the limitations and restrictions set forth herein, including geographical and temporal restrictions on certain competitive activities, are reasonable in all respects, will not cause Employee undue hardship, and are material and substantial parts of this Agreement intended and necessary to prevent unfair competition and to protect the Company Group’s Confidential Information, goodwill and legitimate business interests.

			
	
			
				 (b)
			During the Prohibited Period, Employee shall not, without the prior written approval of the Board, directly or indirectly, for Employee or on behalf of or in conjunction with any other person or entity of any nature:

			
	
			
				(i)
			engage in or participate within the Market Area in competition with any member of the Company Group in any aspect of the Business, which prohibition shall prevent Employee from directly or indirectly: (A) owning, managing, operating, or being an officer or director of, any business that competes with any member of the Company Group in the Market Area, or (B) joining, becoming an employee or consultant of, or otherwise being affiliated with, any person or entity engaged in, or planning to engage in, the Business in the Market Area in competition, or anticipated competition, with any member of the Company Group in any capacity (with respect to this clause (B)) in which Employee’s duties or responsibilities are the same as or similar to the duties or responsibilities that Employee had on behalf of any member of the Company Group;

		
			

		 

		

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				(ii)
			appropriate any Business Opportunity of, or relating to, any member of the Company Group located in the Market Area;

			
	
			
				(iii)
			solicit, canvass, approach, encourage, entice or induce any customer or supplier of any member of the Company Group to cease or lessen such customer’s or supplier’s business with any member of the Company Group; or

			
	
			
				(iv)
			solicit, canvass, approach, encourage, entice or induce any employee or contractor of any member of the Company Group to terminate his, her or its employment or engagement with any member of the Company Group.

			
	
			
				 (c)
			Notwithstanding the foregoing, following the Termination Date, the above-referenced limitations in Sections 10(b)(i),  (ii) and (iii) shall not apply in those portions of the Market Area located within the State of Oklahoma.  Instead, Employee agrees that, following the Termination Date, the restrictions on Employee’s activities within those portions of the Market Area located within the State of Oklahoma (in addition to those restrictions set forth in Section 10(b)(iv) above) shall be as follows: during that portion of the Prohibited Period that follows the Termination Date, Employee will not directly solicit the sale of goods, services, or a combination of goods and services from the established customers of the Company or any other member of the Company Group.  Further, Employee will not be deemed to be engaging in the Business in violation of Section 10(b)(i)(B) by virtue of performing duties similar to those performed for a member of the Company Group in the course of employment with an entity whose primary business is as an operator in the oil and gas exploration and production industry (an “Operator”), so long as such Operator only performs the services that constitute the Business for its own operations, and such Operator does not perform such services for customers.

			
	
			
				 (d)
			Because of the difficulty of measuring economic losses to the Company Group as a result of a breach or threatened breach of the covenants set forth in Section 9 and in this Section ‎10, and because of the immediate and irreparable damage that would be caused to the members of the Company Group for which they would have no other adequate remedy, the Company and each other member of the Company Group shall be entitled to enforce the foregoing covenants, in the event of a breach or threatened breach, by injunctions and restraining orders from any court of competent jurisdiction, without the necessity of showing any actual damages or that money damages would not afford an adequate remedy, and without the necessity of posting any bond or other security.  The aforementioned equitable relief shall not be the Company’s or any other member of the Company Group’s exclusive remedy for a breach but instead shall be in addition to all other rights and remedies available to the Company and each other member of the Company Group at law and equity.

			
	
			
				 (e)
			The covenants in this Section ‎10, and each provision and portion hereof, are severable and separate, and the unenforceability of any specific covenant (or portion thereof) shall not affect the provisions of any other covenant (or portion thereof).  Moreover, in the event any arbitrator or court of competent jurisdiction shall determine that the scope, time or territorial restrictions set forth are unreasonable, then it is the intention of the parties that such restrictions be enforced to the fullest extent which such arbitrator or court deems reasonable, and this Agreement shall thereby be reformed.

		
			

		 

		

			11

		

		

			 

		

		

			
	
			
				 (f)
			The following terms shall have the following meanings:

			
	
			
				(i)
			“Business” shall mean the business and operations that are the same or similar to those performed by the Company and any other member of the Company Group for which Employee provides services or about which Employee obtains Confidential Information during the Employment Period, which business and operations include such businesses and operations as may be described in Parent’s periodic and current reports filed with the Securities and Exchange Commission from time to time, and other services ancillary thereto, specifically as applied to any equipment, hardware, software, knowledge, processes, customers, strategies, known future plans, and vendors which are contained, classified, known or performed in connection with such services.

			
	
			
				(ii)
			“Business Opportunity” shall mean any commercial, investment or other business opportunity relating to the Business. 

			
	
			
				(iii)
			“Market Area” shall mean: (A) the counties and parishes set forth on Exhibit A hereto; and (B) and any other geographic area or market where or with respect to which (x) Employee provides or has provided services on behalf of the Company or any other member of the Company Group during the Employment Period or (y)  the Company or any other member of the Company Group has specific plans to conduct any business and Employee provides material services with respect to such plans.

			
	
			
				(iv)
			“Prohibited Period”  shall mean the period starting on the Effective Date and ending on the date that is the earlier to occur of: (A) one year following the Termination Date; or (B) the fifth (5th) anniversary of the Effective Date.  

			
	
			
				 11.
			Ownership of Intellectual Property.    Employee agrees that the Company shall own, and Employee shall (and hereby does) assign, all right, title and interest (including patent rights, copyrights, trade secret rights, mask work rights, trademark rights, and all other intellectual and industrial property rights of any sort throughout the world) relating to any and all inventions (whether or not patentable), works of authorship, mask works, designs, know-how, ideas and information authored, created, contributed to, made or conceived or reduced to practice, in whole or in part, by Employee during the period in which Employee is or has been employed by or affiliated with the Company or any other member of the Company Group that either (a) relate, at the time of conception, reduction to practice, creation, derivation or development, to any member of the Company Group’s businesses or actual or anticipated research or development, or (b) were developed on any amount of the Company’s or any other member of the Company Group’s time or with the use of any member of the Company Group’s equipment, supplies, facilities or trade secret information (all of the foregoing collectively referred to herein as “Company Intellectual Property”), and Employee shall promptly disclose all Company Intellectual Property to the Company.  All of Employee’s works of authorship and associated copyrights created during the period in which Employee is employed by or affiliated with the Company or any other member of the Company Group and in the scope of Employee’s employment or engagement shall be deemed to be “works made for hire” within the meaning of the Copyright Act.  Employee shall perform, during and after the period in which Employee is or has been employed by or affiliated with the Company or any other member of the Company Group, all acts deemed necessary by the Company to assist each member of the Company Group, at the Company’s expense, in obtaining and 

		 

		

			12

		

		

			 

		

	enforcing its rights throughout the world in the Company Intellectual Property.  Such acts may include execution of documents and assistance or cooperation (i) in the filing, prosecution, registration, and memorialization of assignment of any applicable patents, copyrights, mask work, or other applications, (ii) in the enforcement of any applicable patents, copyrights, mask work, moral rights, trade secrets, or other proprietary rights, and (iii) in other legal proceedings related to the Company Intellectual Property.

			
	
			
				 12.
			Arbitration.    

			
	
			
				 (a)
			Subject to Section ‎12(b), any dispute, controversy or claim between Employee and any member of the Company Group arising out of or relating to this Agreement or Employee’s employment or engagement with any member of the Company Group will be finally settled by arbitration in Houston, Texas in accordance with the then-existing American Arbitration Association (“AAA”) Employment Arbitration Rules.  The arbitration award, if any, shall be final and binding on both parties.  Any arbitration conducted under this Section ‎12 shall be heard by a single arbitrator (the “Arbitrator”) selected in accordance with the then-applicable rules of the AAA.  The Arbitrator shall expeditiously hear and decide all matters concerning the dispute.  Except as expressly provided to the contrary in this Agreement, the Arbitrator shall have the power to (i) gather such materials, information, testimony and evidence as the Arbitrator deems relevant to the dispute before him or her (and each party will provide such materials, information, testimony and evidence requested by the Arbitrator), and (ii) grant injunctive relief and enforce specific performance.  The decision of the Arbitrator shall be reasoned, rendered in writing, be final and binding upon the disputing parties and the parties agree that judgment upon the award may be entered by any court of competent jurisdiction.  The Company shall pay the applicable AAA fees (including filing and Arbitrator’s fees), recognizing that each side bears its own deposition, witness, expert,  attorneys’ and other fees and expenses.

			
	
			
				 (b)
			Notwithstanding Section ‎12(a), either party may make a timely application for, and obtain, judicial emergency or temporary injunctive relief to enforce any of the provisions of Sections ‎9 through ‎11;  provided, however, that the remainder of any such dispute (beyond the application for emergency or temporary injunctive relief) shall be subject to arbitration under this Section ‎12.

			
	
			
				 (c)
			By entering into this Agreement and entering into the arbitration provisions of this Section ‎12, THE PARTIES EXPRESSLY ACKNOWLEDGE AND AGREE THAT THEY ARE KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVING THEIR RIGHTS TO A JURY TRIAL.

			
	
			
				 (d)
			Nothing in this Section ‎12 shall prohibit a party to this Agreement from (i) instituting litigation to enforce any arbitration award, or (ii) joining the other party to this Agreement in a litigation initiated by a person or entity that is not a party to this Agreement.  Further, nothing in this Section ‎12 precludes Employee from filing a charge or complaint with a federal, state or other governmental administrative agency.

			
	
			
				 13.
			Defense of Claims.    During the Employment Period and thereafter, upon request from the Company, Employee shall cooperate with the Company Group in the defense of any claims or actions that may be made by or against any member of the Company Group that relate 

		 

		

			13

		

		

			 

		

	to Employee’s actual or prior areas of responsibility.  The Company shall reimburse Employee for any reasonable out of pocket expenses incurred by Employee in providing such cooperation, so long as Employee provides documentation of such expenses in a form satisfactory to the Company.

			
	
			
				 14.
			Withholdings; Deductions.    The Company may withhold and deduct from any benefits and payments made or to be made pursuant to this Agreement (a) all federal, state, local and other taxes as may be required pursuant to any law or governmental regulation or ruling and (b) any deductions consented to in writing by Employee.

			
	
			
				 15.
			Title and Headings; Construction.   Titles and headings to Sections hereof are for the purpose of reference only and shall in no way limit, define or otherwise affect the provisions hereof.  Any and all Exhibits or Attachments referred to in this Agreement are, by such reference, incorporated herein and made a part hereof for all purposes.  Unless the context requires otherwise, all references to laws, regulations, contracts, agreements and instruments refer to such laws, regulations, contracts, agreements and instruments as they may be amended from time to time, and references to particular provisions of laws or regulations include a reference to the corresponding provisions of any succeeding law or regulation.    All references to “dollars” or “$” in this Agreement refer to United States dollars.  The word “or” is not exclusive. The words “herein”, “hereof”, “hereunder” and other compounds of the word “here” shall refer to the entire Agreement, including all Exhibits attached hereto, and not to any particular provision hereof.  Wherever the context so requires, the masculine gender includes the feminine or neuter, and the singular number includes the plural and conversely.  All references to “including” shall be construed as meaning “including without limitation.”  Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against any party hereto, whether under any rule of construction or otherwise.  On the contrary, this Agreement has been reviewed by each of the parties hereto and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of the parties hereto.

			
	
			
				 16.
			Applicable Law; Submission to Jurisdiction.  This Agreement shall in all respects be construed according to the laws of the State of Texas without regard to its conflict of laws principles that would result in the application of the laws of another jurisdiction.  With respect to any claim or dispute related to or arising under this Agreement, the parties hereby consent to the arbitration provisions of Section ‎12 and recognize and agree that should any resort to a court be necessary and permitted under this Agreement, then they consent to the jurisdiction, forum and venue of the state and federal courts (as applicable) located in Harris County, Texas.

			
	
			
				 17.
			Entire Agreement and Amendment.   This Agreement, the Restricted Stock Agreement and the award agreement for each outstanding award granted to Employee under the Select Energy Services, Inc. 2016 Equity Incentive Plan contain the entire agreement of the parties with respect to the matters covered herein and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties hereto concerning the subject matter hereof.  In entering into this Agreement, Employee expressly acknowledges and agrees that Employee has received all sums and compensation that Employee has been owed, is owed, or ever could be owed for services provided to any member of the Company Group through the date Employee signs this Agreement, with the exception of any unpaid Base Salary for the pay period that includes the date on which Employee signs this Agreement. This Agreement may be amended only by a written instrument executed by both parties hereto.

		
			

		 

		

			14

		

		

			 

		

		

			
	
			
				 18.
			Waiver of Breach.  Any waiver of this Agreement must be executed by the party to be bound by such waiver.  No waiver by either party hereto of a breach of any provision of this Agreement by the other party, or of compliance with any condition or provision of this Agreement to be performed by such other party, will operate or be construed as a waiver of any subsequent breach by such other party or any similar or dissimilar provision or condition at the same or any subsequent time.  The failure of either party hereto to take any action by reason of any breach will not deprive such party of the right to take action at any time.

			
	
			
				 19.
			Assignment.  This Agreement is personal to Employee, and neither this Agreement nor any rights or obligations hereunder shall be assignable or otherwise transferred by Employee.  The Company may assign this Agreement without Employee’s consent, including to any member of the Company Group and to any successor to or acquirer of (whether by merger, purchase or otherwise) all or substantially all of the equity, assets or businesses of the Company.

			
	
			
				 20.
			Notices.   Notices provided for in this Agreement shall be in writing and shall be deemed to have been duly received (a) when delivered in person, (b) when sent by facsimile transmission (with confirmation of transmission) on a Business Day to the number set forth below, if applicable; provided,  however, that if a notice is sent by facsimile transmission after normal business hours of the recipient or on a non-Business Day, then it shall be deemed to have been received on the next Business Day after it is sent,  (c) on the first Business Day after such notice is sent by express overnight courier service, or (d) on the second Business Day following deposit with an internationally-recognized second-day courier service with proof of receipt maintained,  in each case, to the following address, as applicable:

		
			If to the Company, addressed to:
		

		
			Select Energy Services, LLC
1820 N I-35
		

		
			Gainesville, Texas 76240
Attn: Senior Vice President, General Counsel and Corporate Secretary
		

		
			If to Employee, addressed to Employee’s last known address on file with the Company
		

			
	
			
				 21.
			Counterparts.   This Agreement may be executed in any number of counterparts, including by electronic mail or facsimile, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.  Each counterpart may consist of a copy hereof containing multiple signature pages, each signed by one party, but together signed by both parties hereto.

			
	
			
				 22.
			Deemed Resignations.    Except as otherwise determined by the Board or as otherwise agreed to in writing by Employee and any member of the Company Group prior to the termination of Employee’s employment with the Company or any member of the Company Group, any termination of Employee’s employment shall constitute, as applicable, an automatic resignation of Employee: (a) as an officer of the Company and each member of the Company Group; (b) from the Board; and (c) from the board of directors or board of managers (or similar governing body) of any member of the Company Group and from the board of directors or board 

		 

		

			15

		

		

			 

		

	of managers (or similar governing body) of any corporation, limited liability entity, unlimited liability entity or other entity in which any member of the Company Group holds an equity interest and with respect to which board of directors or board of managers (or similar governing body) Employee serves as such Company Group member’s designee or other representative. 

			
	
			
				 23.
			Section 409A.    

			
	
			
				 (a)
			Notwithstanding any provision of this Agreement to the contrary, all provisions of this Agreement are intended to comply with Section 409A of the Internal Revenue Code of 1986 (the “Code”), and the applicable Treasury regulations and administrative guidance issued thereunder (collectively, “Section 409A”) or an exemption therefrom and shall be construed and administered in accordance with such intent. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments to be made under this Agreement upon a termination of Employee’s employment shall only be made if such termination of employment constitutes a “separation from service” under Section 409A.  

			
	
			
				 (b)
			To the extent that any right to reimbursement of expenses or payment of any benefit in-kind under this Agreement constitutes nonqualified deferred compensation (within the meaning of Section 409A), (i) any such expense reimbursement shall be made by the Company no later than the last day of Employee’s taxable year following the taxable year in which such expense was incurred by Employee, (ii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) the amount of expenses eligible for reimbursement or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year; provided, that the foregoing clause shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period in which the arrangement is in effect.    

			
	
			
				 (c)
			Notwithstanding any provision in this Agreement to the contrary, if any payment or benefit provided for herein would be subject to additional taxes and interest under Section 409A if Employee’s receipt of such payment or benefit is not delayed until the earlier of  the date of Employee’s death or  the date that is six (6) months after the Termination Date (such date, the “Section 409A Payment Date”), then such payment or benefit shall not be provided to Employee (or Employee’s estate, if applicable) until the Section 409A Payment Date.  Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement are exempt from, or compliant with, Section 409A and in no event shall any member of the Company Group be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by Employee on account of non-compliance with Section 409A.

			
	
			
				 24.
			Certain Excise Taxes.    Notwithstanding anything to the contrary in this Agreement, if Employee is a “disqualified individual” (as defined in Section 280G(c) of the Code), and the payments and benefits provided for in this Agreement, together with any other payments and benefits which Employee has the right to receive from the Company or any of its affiliates, 

		 

		

			16

		

		

			 

		

	would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code), then the payments and benefits provided for in this Agreement shall be either (a) reduced (but not below zero) so that the present value of such total amounts and benefits received by Employee from the Company or any of its affiliates shall be one dollar ($1.00) less than three times Employee’s “base amount” (as defined in Section 280G(b)(3) of the Code) and so that no portion of such amounts and benefits received by Employee shall be subject to the excise tax imposed by Section 4999 of the Code or (b) paid in full, whichever produces the better net after-tax position to Employee (taking into account any applicable excise tax under Section 4999 of the Code and any other applicable taxes).  The reduction of payments and benefits hereunder, if applicable, shall be made by reducing, first, payments or benefits to be paid in cash hereunder in the order in which such payment or benefit would be paid or provided (beginning with such payment or benefit that would be made last in time and continuing, to the extent necessary, through to such payment or benefit that would be made first in time) and, then, reducing any benefit to be provided in-kind hereunder in a similar order.  The determination as to whether any such reduction in the amount of the payments and benefits provided hereunder is necessary shall be made by the Company in good faith.  If a reduced payment or benefit is made or provided and through error or otherwise that payment or benefit, when aggregated with other payments and benefits from the Company or any of its affiliates used in determining if a “parachute payment” exists, exceeds one dollar ($1.00) less than three times Employee’s base amount, then Employee shall immediately repay such excess to the Company upon notification that an overpayment has been made.  Nothing in this Section 24 shall require the Company to be responsible for, or have any liability or obligation with respect to, Employee’s excise tax liabilities under Section 4999 of the Code.

			
	
			
				 25.
			Clawback.  To the extent required by applicable law or any applicable securities exchange listing standards, or as otherwise determined by the Board (or a committee thereof), amounts paid or payable under this Agreement shall be subject to the provisions of any applicable clawback policies or procedures adopted by the Company, which clawback policies or procedures may provide for forfeiture and/or recoupment of amounts paid or payable under this Agreement.  Notwithstanding any provision of this Agreement to the contrary, the Company reserves the right, without the consent of Employee, to adopt any such clawback policies and procedures, including such policies and procedures applicable to this Agreement with retroactive effect.

			
	
			
				 26.
			Effect of Termination.  The provisions of Sections ‎7,  ‎9-‎14 and ‎22 and those provisions necessary to interpret and enforce them, shall survive any termination of this Agreement and any termination of the employment relationship between Employee and the Company.

			
	
			
				 27.
			Third-Party Beneficiaries.  Each member of the Company Group that is not a signatory to this Agreement shall be a third-party beneficiary of Employee’s obligations under Sections ‎8,  ‎9,  ‎10,  ‎11, ‎12 and ‎22 and shall be entitled to enforce such obligations as if a party hereto.

			
	
			
				 28.
			Severability.  If an arbitrator or court of competent jurisdiction determines that any provision of this Agreement (or portion thereof) is invalid or unenforceable, then the invalidity or unenforceability of that provision (or portion thereof)  shall not affect the validity or enforceability of any other provision of this Agreement, and all other provisions shall remain in full force and effect.

		
			

		 

		

			17

		

		

			 

		

		

		
			 [Remainder of Page Intentionally Blank;
Signature Page Follows]
		

		
			

		 

		

			18

		

		

			 

		

		

			 

		

		

		
			IN WITNESS WHEREOF, Employee and the Company each have caused this Agreement to be executed and effective as of the Effective Date.
		

		
			 
		

		
			 
		

		
			EMPLOYEE
		

		
			 
		

		
			 
		

		
			
		

		
			Mitchell Shauf
		

		
			 
		

		
			 
		

		
			SELECT ENERGY SERVICES, LLC
		

		
			 
		

		
			 
		

		
			By:
Name:Holli C. Ladhani
Title:President and Chief Executive Officer
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			

		 

		

			Signature Page to

		

		

			Employment Agreement

		

		

			US 6049616

		

		

			 

		

		

		
			EXHIBIT A
		

		
			MARKET AREA
		

			
					
						STATE

					
					
						COUNTY/PARISH

				
	
					
						COLORADO

					
					
						Adams

					
					
						Arapahoe

					
					
						Weld

					
					
						 

				
	
					
						LOUISIANA

					
					
						Bossier

					
						Caddo

					
					
						De Soto

					
						Jackson

					
					
						Lincoln

					
						Red River

					
					
						Sabine

				
	
					
						NEW MEXICO

					
					
						Chaves

					
					
						Eddy

					
					
						Lea

					
					
						San Juan

				
	
					
						NORTH DAKOTA

					
					
						Billings

					
						Burke

					
					
						Divide

					
						Dunn

					
					
						Golden Valley

					
						McKenzie

					
					
						Mountrail

					
						Williams

				
	
					
						OHIO

					
					
						Ashland

					
						Belmont

					
					
						Guernsey

					
						Harrison

					
					
						Jefferson

					
						Monroe

					
					
						Summit

					
						Trumbull

				
	
					
						OKLAHOMA

					
					
						Alfalfa

					
						Beckham

					
						Blaine

					
						Canadian

					
						Carter

					
						Coal

					
						Custer 

					
					
						Dewey

					
						Ellis

					
						Garfield

					
						Garvin

					
						Grady

					
						Hughes

					
						Kingfisher

					
					
						Lincoln

					
						Logan

					
						Love

					
						Major

					
						McClain

					
						Oklahoma

					
					
						Pittsburg

					
						Roger Mills

					
						Stephens

					
						Washita

					
						Woods

					
						Woodward

				
	
					
						PENNSYLVANIA

					
					
						Armstrong

					
						Bradford

					
						Elk

					
					
						Greene

					
						Lycoming

					
						Sullivan

					
					
						Tioga

					
						Washington

					
					
						Westmoreland

					
						Wyoming

				
	
					
						TEXAS

					
					
						Andrews

					
						Angelina

					
						Atascosa

					
						Borden

					
						Culberson

					
						DeWitt

					
						Dimmit

					
						Ector

					
						Frio

					
						Glasscock

					
						Gonzales

					
					
						Hemphill

					
						Henderson

					
						Howard

					
						Irion

					
						Jackson

					
						Karnes

					
						La Salle

					
						Lavaca

					
						Live Oak

					
						Loving 

					
						Martin

					
					
						Maverick McMullen

					
						Midland

					
						Nacogdoches

					
						Panola

					
						Pecos

					
						Reagan

					
						Reeves

					
						Roberts

					
						Rusk

					
						San Augustine

					
					
						Shelby

					
						Tarrant

					
						Tom Green

					
						Upton

					
						Ward

					
						Webb

					
						Wheeler

					
						Winkler

					
						Wise

					
						Zavala

				
	
					
						UTAH

					
					
						Duchesne

					
					
						 

					
					
						 

					
					
						 

				
	
					
						WEST VIRGINIA

					
					
						Brooke

					
						Doddridge

					
						Harrison

					
					
						Marion

					
						Marshall

					
						Monongalia

					
					
						Ohio

					
						Ritchie

					
					
						Tyler

					
						Wetzel

				
	
					
						WYOMING

					
					
						Campbell

					
						Converse

					
					
						Johnson

					
					
						Laramie

					
					
						Sweetwater

				

		
			 
		

		 

		

			Exhibit A

		

		

			US 6049616Exhibit

EXHIBIT 10.2
ATHERSYS, INC.
EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT

This Employee Incentive Stock Option Agreement (“Agreement”) is made as of the [[GRANTDATE]] (the “Date of Grant”) by and between Athersys, Inc., a Delaware corporation (the “Company”), and [[FIRSTNAME]] [[LASTNAME]] (“Optionee”) with respect to the grant of an Incentive Stock Option by the Company to Optionee pursuant to the Athersys, Inc. 2019 Equity and Incentive Compensation Plan (the "Plan").

		
	1.
	Grant of Stock Option.  Subject to and upon the terms, conditions, and restrictions set forth in this Agreement, the Company hereby grants to Optionee an Option Right (the “Option”) to purchase [[SHARESGRANTEDWORDS]] ([[SHARESGRANTED]]) Common Shares (the “Option Shares”).  The Option may be exercised from time to time in accordance with the terms of this Agreement.

		
	2.
	Type of Option.  Except to the extent of the $100,000 limitation set forth in Section 422(d) of the Code, the Option is intended to be an Incentive Stock Option, and this Agreement shall be construed in a manner that will enable this Option to be so qualified.  To the extent, if any, that the $100,000 limitation set forth in Section 422(d) of the Code is exceeded, the Option shall constitute two separate options with the first option covering the number of Common Shares up to the $100,000 limitation intended to be an Incentive Stock Option and the second option covering any excess Common Shares intended to be a nonqualified stock option.

		
	3.
	Option Price.  The Option Shares may be purchased pursuant to this Option at a price of [[GRANTPRICE]] per Common Share, subject to adjustment as hereinafter provided (the “Option Price”).

		
	4.
	Term of Option/Agreement.  The term of the Option shall commence on the Date of Grant and, unless earlier terminated in accordance with Section 7 hereof, shall terminate and expire automatically and without further notice ten (10) years from the Date of Grant.

		
	5.
	Right to Exercise.

		
	(a)
	Subject to Sections 5(b) and (c), Section 7 and Section 10 below, the Option will vest and become exercisable as provided in the attached Exhibit A, for so long as Optionee remains continuously employed with the Company or any Subsidiary.  To the extent the Option is exercisable, it may be exercised in whole or in part.  In no event shall Optionee be entitled to acquire a fraction of one Option Share pursuant to this Option.  Optionee shall be entitled to the privileges of ownership, including dividends, only with respect to Option Shares purchased and delivered to Optionee upon the exercise of all or part of this Option.

		
	(b)  
	Notwithstanding Section 5(a) above, the Option shall become immediately exercisable in full, if at any time prior to the termination of the Option, a Change in Control shall occur.

1

		
	(c)    
	Notwithstanding Section 5(a) above, if the Optionee should die or become permanently disabled while in the employ of the Company or any Subsidiary, this Option shall immediately become exercisable in full and shall remain exercisable until terminated in accordance with Section 7 below.  The Optionee shall be considered to have become permanently disabled if the Optionee’s employment terminates on account of the Optionee having become “permanently and totally disabled”, as defined in Section 22(e)(3) of the Code.  

		
	6.
	Notice of Exercise; Payment.  To the extent then exercisable, the Option may be exercised in whole or in part by written notice to the Company stating the number of Option Shares for which the Option is being exercised and the intended manner of payment.  The date of such notice shall be the exercise date.  The Option Price shall be payable (a) in cash or by check acceptable to the Company or by wire transfer of immediately available funds, (b) by actual or constructive transfer to the Company of nonforfeitable, unrestricted Common Shares that have been owned by the Optionee for more than six (6) months prior to the date of exercise, (c) for exercises of Options that occur more than one (1) year following the Date of Grant, by transfer to the Company of shares or vested Options (including Options under this Agreement) for the purchase of Common Shares having a fair market value (net of the exercise price) at the time of exercise equal to the portion of the Option Price for which such transfer is made, or (d) by a combination of such methods of payment.  The requirement of payment in cash shall be deemed satisfied if the Optionee shall have made arrangements satisfactory to the Company with a bank or a broker who is a member of the National Association of Securities Dealers, Inc. to sell on the exercise date a sufficient number of the shares being purchased so that the net proceeds of the sale transaction will at least equal the Option Price plus payment of any applicable withholding taxes and pursuant to which the bank or broker undertakes to deliver the full Option Price plus payment of any applicable withholding taxes to the Company on a date satisfactory to the Company, but not later than the date on which the sale transaction will settle in the ordinary course of business. As soon as practicable upon the Company’s receipt of Optionee’s notice of exercise and payment, the Company shall direct the due issuance of the Option Shares so purchased.  

As a further condition precedent to the exercise of this Option in whole or in part, Optionee shall comply with all regulations and the requirements of any regulatory authority having control of, or supervision over, the issuance of the Common Shares and in connection therewith shall execute any documents which the Board shall in its sole discretion deem necessary or advisable.
		
	7.
	Termination.  This Option shall terminate on the earliest of the following dates:

		
	(a)  
	The date on which the Optionee ceases to be an employee of the Company or any Subsidiary, if the Optionee’s employment with the Company or a Subsidiary is terminated for Cause ("Cause" being defined as (i) the commission of an act of fraud, embezzlement, theft or other criminal act constituting a felony; or (ii) the material breach of any provision contained in a written non-competition, confidentiality or non-disclosure agreement between the Company or any of its Subsidiaries and Optionee);

		
	(b)
	Three (3) months after the Optionee ceases to be an employee of the Company or a Subsidiary, unless the Optionee ceases to be such employee by reason of death, permanent and total disability, Retirement or termination for Cause;

		
	(c)
	One (1) year after the death of the Optionee if the Optionee dies (i) while an employee of the Company or a Subsidiary (in which case the Option becomes immediately exercisable in full pursuant to Section 5(c) herein), (ii) within the three (3) month period following a termination without Cause or (iii) within the three (3) month period following Retirement;

2

		
	(d)
	One (1) year after the permanent and total disability of the Optionee if the Optionee becomes permanently and totally disabled (as described in Section 5(c) above) while an employee of the Company or a Subsidiary (in which case the Option becomes immediately exercisable in full pursuant to Section 5(c) herein);

		
	(e)
	Five (5) years after the date that the Optionee shall Retire.  For this purpose, “Retire” (or similar terms) shall mean that Optionee terminates Optionee’s employment by reason of Optionee’s retirement entitling Optionee to early, normal or late retirement benefits under the provisions of any retirement plan of the Company or its Subsidiaries in which Optionee participates (or if no such plan exists, at or after age sixty-five (65)); and

		
	(f)
	Ten (10) years from the Date of Grant.

		
	8.
	Option Nontransferable.  This Option is not transferable by the Optionee otherwise than by will or the laws of descent and distribution.  In no event will any such award granted under this Agreement be transferred for value.  This Option may be exercised, during the lifetime of the Optionee, only by Optionee, or in the event of Optionee’s legal incapacity, by Optionee’s guardian or legal representative acting on behalf of Optionee in a fiduciary capacity under state law or court supervision.

		
	9.
	Compliance with Law.  This Option shall not be exercisable if such exercise would involve a violation of any applicable federal, state or other securities law.

		
	10.
	Adjustments.  This Option and the Option Shares subject thereto, and the other terms and conditions of the grant evidenced by this Agreement, are subject to mandatory adjustment, including as provided in Section 12 of the Plan.

		
	11.
	Taxes and Withholding.  To the extent that the Company is required to withhold federal, state, local or foreign taxes or other amounts in connection with any payment made or benefit realized by the Grantee or another person under this Agreement, the Grantee agrees that the Company will withhold any taxes required to be withheld by the Company under federal, state, local or foreign law from the Option Shares in an amount sufficient to satisfy the minimum statutory withholding amount permissible (unless the Committee takes action subsequent to the Date of Grant requiring such withholding amount to be paid by the Grantee in cash).  The Option Shares so retained shall be credited against any such withholding requirement at the market value of such Common Shares on the date of such withholding.  In no event will the market value of the Common Shares to be withheld pursuant to this Section 11 to satisfy applicable withholding taxes exceed the maximum amount of taxes or other amounts that could be required to be withheld.

		
	12.
	Mandatory Notice of Disqualifying Disposition.  Without limiting any other provision hereof, Optionee hereby agrees that if Optionee disposes (whether by sale, exchange, gift or otherwise) of any of the Option Shares acquired pursuant to the exercise of any Incentive Stock Option memorialized by this Agreement within two (2) years of the Date of Grant or within one (1) year after the transfer of such share or shares to Optionee, Optionee shall notify the Company of such disposition in writing within thirty (30) days from the date of such disposition.  Such written notice shall state the principal terms of such disposition and the type and amount of the consideration received for such share or shares by Optionee in connection therewith.

3

		
	13.
	Continuous Employment.  For purposes of this Agreement, the continuous employment of the Optionee with the Company or a Subsidiary shall not be deemed to have been interrupted, and the Optionee shall not be deemed to have ceased to be an employee of the Company or Subsidiary, by reason of the (a) transfer of the Optionee’s employment among the Company and its Subsidiaries or (b) an approved leave of absence.

		
	14.
	No Employment Contract.  This Option is a voluntary, discretionary award being made on a one-time basis and it does not constitute a commitment to make any future awards.  This Option and any payments made hereunder will not be considered salary or other compensation for purposes of any severance pay or similar allowance, except as otherwise required by law.  Nothing in this Agreement will give the Optionee any right to continue employment with the Company or any Subsidiary, as the case may be, or interfere in any way with the right of the Company or a Subsidiary to terminate the employment of the Optionee.

		
	15.
	Information.  Information about the Optionee and the Optionee’s participation in the Plan may be collected, recorded and held, used and disclosed for any purpose related to the administration of the Plan.  The Optionee understands that such processing of this information may need to be carried out by the Company and its Subsidiaries and by third party administrators whether such persons are located within the Optionee’s country or elsewhere, including the United States of America.  The Optionee consents to the processing of information relating to the Optionee and the Optionee’s participation in the Plan in any one or more of the ways referred to above.

		
	16.
	Relation to Plan.  This Agreement is subject to the terms and conditions of the Plan.  In the event of any inconsistency between the provisions of this Agreement and the Plan, the Plan shall govern.  All terms used herein with initial capital letters and not otherwise defined herein that are defined in the Plan shall have the meanings assigned to them in the Plan.  The Board (or a committee of the Board) acting pursuant to the Plan, as constituted from time to time, shall, except as expressly provided otherwise herein, have the right to determine any questions which arise in connection with the grant of the Option hereunder.

		
	17.
	Amendments.  Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided, however, that no amendment shall materially adversely affect the rights of the Optionee under this Agreement without the Optionee’s consent.

		
	18.
	Severability.  If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to any other person or circumstances shall not be affected, and the provisions so held to be invalid, unenforceable or otherwise illegal shall be reformed to the extent (and only to the extent) necessary to make it enforceable, valid and legal.

		
	19.
	Successors and Assigns.  Without limiting Section 8 hereof, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of the Optionee, and the successors and assigns of the Company.

		
	20.
	Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same Agreement.

4

		
	21.
	Governing Law.  This Agreement shall be governed by and construed in accordance with the internal substantive laws of the State of Delaware, without giving effect to any principle of law that would result in the application of the law of any other jurisdiction.

		
	22.
	Notices.  Any notice to the Company provided for herein shall be in writing to the Company, marked Attention:  President, and any notice to Optionee shall be addressed to said Optionee at Optionee’s address on file with the Company at the time of such notice.  Except as otherwise provided herein, any written notice shall be deemed to be duly given if and when delivered personally or deposited in the United States mail, first class registered mail, postage and fees prepaid, and addressed as aforesaid.  Any party may change the address to which notices are to be given hereunder by written notice to the other party as herein specified (provided that for this purpose any mailed notice shall be deemed given on the third business day following deposit of the same in the United States mail).

[Remainder of page left blank intentionally]
Executed in the name and on behalf of the Company at 3201 Carnegie Avenue,
Cleveland, Ohio, as of the [[GRANTDATE]].

ATHERSYS, INC.

___________________________________
Name:  William Lehmann
Title:  President and COO

The undersigned Optionee hereby accepts the Option evidenced by this Employee Incentive Stock Option Agreement on the terms and conditions set forth herein and in the Plan.  

Dated:  _____ __, 20__            ___________________________________
[[FIRSTNAME]] [[LASTNAME]]

* For grants accepted electronically by the Optionee, the acceptance date and electronic acceptance will be recorded as the official acceptance of the terms and conditions of this Employee Incentive Stock Option Agreement as of the date when the electronic acceptance has been made.

5

EXHIBIT A

Participant Name: [[FIRSTNAME]] [[LASTNAME]]
Option Shares Granted: [[SHARESGRANTED]]
Award Type: [[GRANTTYPE]]                Award Price: [[GRANTPRICE]]
Award Date: [[GRANTDATE]]            Expiration Date: [[GRANTEXPIRATIONDATE]]

VESTING SCHEDULE
[[ALLVESTSEGS]]

6

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