KEY ENERGY SERVICES, INC.
Xxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx
As of July 1, 1999
Xxxxx X. Xxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
EMPLOYMENT AGREEMENT
(this "Agreement")
Dear Xxxxx:
Key Energy Services, Inc., a Maryland corporation (the "Company"), with
its principal offices at the address set forth above, and you, an individual
with your address set forth above agree as follows:
1.EMPLOYMENT; TERM. The Company agrees to employ you, and you agree to
devote your full time and best efforts to serve as the Company's Vice
President of Financial Operations, Chief Accounting Officer and Chief
Information Officer, having those duties specified from time to time by
members of the Company's senior management or the Company's Board of
Directors (the "Board"). Your employment will commence effective as of
July 1, 1999 (the "Commencement Date") and continue until the close of
business on June 30, 2002, subject to extension as provided in this Section
1, unless earlier terminated in accordance with this Agreement (the
"Initial Employment Period"). On each July 1, commencing with July 1,
2002, the term of your employment will be automatically extended for a
period of twelve (12) months unless either you or the Company gives written
notice to the other, no later than thirty (30) days prior to the relevant
July 1, that such automatic extension shall not occur. The Initial
Employment Period, together with any extensions, until termination in
accordance herewith is referred to herein as the "Employment Period." You
will, if elected, serve as an officer and/or director of the Company and
its subsidiaries and perform all duties incident to such offices.
2. SALARY; BONUS; EXPENSES. During the Employment Period, the Company will
pay a salary to you at the annual rate of not less than One Hundred
Forty-Five Thousand Dollars ($145,000) per year (the "Base Salary"),
payable in substantially equal installments in accordance with the
Company's existing payroll practices, but no less frequently than monthly.
For each fiscal year of the Company commencing after June 30, 1999, you
shall be eligible to participate in an incentive plan for the Company's
executives, key employees and other persons involved in the business of the
Company and its subsidiaries (the "Incentive Plan") and in the Company's
stock-based incentive plans outstanding from time
to time. Under the Incentive Plan, you shall be eligible to earn a cash
bonus, in an amount to be determined by the senior management of the
Company or the Board based upon the level of achievement of certain goals
to be mutually established by you and the senior management of the Company
(subject to Board approval). You will be reimbursed by the Company for
reasonable travel, lodging, meals and other expenses incurred by you in
connection with performing your services hereunder in accordance with the
Company's policies from time to time in effect. You will be entitled to a
vehicle allowance of $950 per month (plus a Company fuel card and
reimbursement for reasonable insurance expenses).
3. VACATIONS; BENEFITS;. You will be entitled during the Employment
Period to (i) not less than 15 vacation days per calendar year (prorated
for any partial year of service) and (ii) such other fringe benefits,
including, without limitation, group medical and dental, life, executive
life, accident and disability insurance, retirement plans and supplemental
and excess retirement benefits as the Company may provide from time to time
for its senior management.
4. TERMINATION AND SEVERANCE. In the event your employment hereunder is
terminated (i) by the Company for Cause (defined below) or (ii) by you for
any reason other than Good Reason (defined below), the Company shall have
no further obligations to you except that you will be entitled to receive
(x) any accrued but unpaid salary through your termination date and (y) any
expense reimbursements owed you through the date of termination. In the
event your employment hereunder is terminated (i) by the Company other than
for Cause (including your death or Disability (defined below)), (ii) by you
for Good Reason or (iii) automatically as a result of the Company's
providing notice to you that automatic extension of the Employment Period
shall not occur, you will be entitled to receive severance compensation
equal to two (2) times your Base Salary in effect on the termination date,
payable in arrears, in twenty-four (24) equal monthly installments
commencing at the end of the calendar month in which the termination date
occurs; PROVIDED, HOWEVER, that (A) in the event your employment should be
terminated by the Company other than for Cause (including your death or
Disability) within six months following a Change of Control (defined below)
or in anticipation of a Change of Control, the severance compensation
referred to above shall be paid in one lump sum on the date of such
termination, and (B) in the event your employment should be terminated by
the Company as a result of your Disability, then the severance compensation
referred to above shall be reduced by the amount of any disability
insurance proceeds actually paid to you or for your benefit during the said
time period. As used in this Agreement, the term "Cause" shall mean (i)
the willful and continued failure by you to substantially perform your
duties hereunder (other than any such willful or continued failure
resulting from your incapacity due to physical or mental illness or
physical injury), (ii) the willful engaging by you in misconduct which is
materially injurious to the Company, monetarily or otherwise, (iii) your
conviction of a felony by a court of competent jurisdiction, (iv) the
material breach of any of the provisions hereof, or (v) the material
violation of any of the Company's policies, rules or regulations from time
to time in effect. As used in this Agreement, the term "Change of Control"
shall have that meaning set forth in the Key Energy Group, Inc. 1997
Incentive Plan. As used in this Agreement, the term "Disability" means
total and permanent disability rendering you unable
2
to perform your obligations and duties hereunder by reasons of physical or
mental illness or injury. As used in this Agreement, the term "Good
Reason" means the Company requiring you to perform your duties hereunder
at a permanent location outside a 100-mile radius of your current primary
residence set forth above.
5. LIMITATION ON COMPETITION. During the Employment Period, and for an
additional period (the "Non-Compete Period") of (i) twenty four (24) months
after your termination if you ARE entitled to receive severance
compensation pursuant to Section 4 hereof, or (ii) twelve (12) months after
your termination if you ARE NOT entitled to receive severance compensation
pursuant to Section 4 hereof, you shall not, directly or indirectly,
without the prior written consent of the Company, participate or engage in,
whether as a director, officer, employee, advisor, lender, consultant,
stockholder, partner, joint venturer, owner or in any other capacity, any
business engaged in the business of furnishing oilfield services in any of
the onshore oil or gas producing regions in the continental United States
and Argentina or in any other oil or gas producing region throughout the
world in which the Company or any of its subsidiaries conduct their
business or operations during the Employment Period or the Non-Compete
Period (a "Competing Enterprise"); PROVIDED, HOWEVER, that you shall not be
deemed to be participating or engaging in any such business solely by
virtue of your ownership of not more than five percent of any class of
stock or other securities which is publicly traded on a national securities
exchange or in a recognized over-the-counter market. In addition, during
the Employment Period and the Non-Compete Period, you shall not, directly
or indirectly, solicit, raid, entice or otherwise induce any employee of
the Company or any of its subsidiaries to be employed by a Competing
Enterprise or to otherwise leave the employ of the Company. You hereby
agree and acknowledge that a portion of the consideration to be paid by the
Company to you pursuant to this Agreement is consideration for your
covenants under this Section 5 and such consideration is fair and adequate
whether or not you receive any severance compensation pursuant to Section 4
hereof.
6. PRIOR EMPLOYMENT AGREEMENTS TERMINATED. Effective as of the
Commencement Date, any and all prior agreements and understandings between
you and the Company and any of its subsidiaries or affiliates regarding
your employment relationship therewith, whether written or oral, including
without limitation that certain employment agreement dated as of July 1,
1995 between you and Key Energy Group, Inc., are hereby terminated and of
no further force or effect.
[Signature Page Follows]
3
If this Agreement correctly sets forth your understanding of the
agreement between the Company and you, please indicate your agreement hereto
by signing this Agreement in the space for that purpose below.
KEY ENERGY SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxx
----------------------------------------
Xxxxxxx X. Xxxx
PRESIDENT
ACCEPTED AND AGREED:
/s/ Xxxxx X. Xxxxx
-------------------------
Xxxxx X. Xxxxx
4
