Key Energy Group, Inc.
Xxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx
August 3, 1996
Xx. Xxxxxxx X. Xxxxxxx
c/o Key Energy Group, Inc.
Xxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000
EMPLOYMENT AGREEMENT
(this "Agreement")
Dear Xx. Xxxxxxx:
Key Energy Group, Inc., a Maryland corporation (the "Company"), with its
principal offices at the address set forth above, and you, an individual with
your business address set forth above, agree as follows:
1. Employment; Term
(a) The Company agrees to employ you, and you accept employment by the
Company, as the Chief Operating Officer and an Executive Vice President of the
Company. Your employment will commence effective as of August 3, 1996 (the
"Commencement Date") and continue until the close of business on August 2, 1999,
subject to extension as provided in this Section 1(a), unless sooner terminated
in accordance with this Agreement (the "Initial Employment Period"). On each
August 3, commencing with August 3, 1999, 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 August 3, 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."
(b) You will have the usual duties of a Chief Operating Officer and an
Executive Vice President and those duties of Chief Operating Officer and Vice
President, if any, set forth in the Company's bylaws and will be responsible,
subject to the further direction of the President and Chief Executive Officer of
the Company and the Board of Directors of the Company (the "Board"), for
participating in the management and direction of the Company's business and
operations. You will, if elected, serve as a
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director of the Company and as an officer and/or director of the Company
and its subsidiaries and perform all duties incident to such offices and such
specific other tasks as may from time to time be assigned to you by the
President and Chief Executive Officer of the Company or the Board. During the
Employment Period, you will devote your full time and best efforts to the
business and affairs of the Company and its subsidiaries.
2. Salary; Bonuses; Expenses
(a) During the Employment Period, the Company will pay a salary to you at
the annual rate of Two Hundred Thousand Dollars ($200,000) 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.
(b) For each fiscal year of the Company commencing after June 30, 1996, 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 Key and
its subsidiaries (the "Incentive Plan") and in the Key Energy Group, Inc. 1995
Stock Option Plan (the "1995 Stock Option Plan"). Under the Incentive Plan, you
shall be eligible to earn a cash bonus, payable within ninety (90) days after
each fiscal year end, of up to fifty percent (50%) of your Base Salary, such
amount to be determined by the Board based upon the level of achievement of
certain goals to be mutually established by you and the President of the Company
(subject to Board approval).
(c) You will be reimbursed by the Company for reasonable travel, lodging,
meal 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.
(d) You will be entitled to a $50,000 loan from the Company to assist you
in your relocation to the New Jersey/Pennsylvania area, such loan to be
amortized and the debt represented thereby to be forgiven over the three-year
period beginning on the Commencement Date.
3. Stock Options. You have previously been granted options to acquire
100,000 shares of the Common Stock, par value $.10 per share, of the Company
(the "Common Stock") pursuant to the 1995 Stock Option Plan and subject to the
terms and provisions (including vesting provisions) of the those certain Stock
Option Agreements dated as of March 29, 1996 (the "Option Agreements") by and
between you and the Company, which agreements and plan shall remain in full
force and effect unaffected by the execution and delivery of this Agreement. In
addition , as performance-based incentive compensation to you in connection with
your services hereunder, there shall be granted to you options (the "Options")
to acquire Fifty Thousand (50,000) shares of Common Stock at an exercise price
per share equal to the fair market value (as defined in the 1995 Stock Option
Plan) of the Common Stock as of the
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date hereof, with such options to be granted pursuant to, and subject to
the terms and provisions (including vesting provisions) of the 1995 Stock Option
Plan and that certain Stock Option Agreement of even date herewith by and
between you and the Company.
4. Benefit Plans; Vacations. You will be entitled during the Employment
Period (and thereafter to the extent provided in Section 5(d) hereof) to the
following: (i) not less than twenty (20) vacation days, (ii) a Company owned or
leased automobile and payment of expenses associated therewith, and (iii) 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.
5. Termination
(a) Termination upon Death; Termination by Company. If you should die
during the Employment Period, the Company shall have no further obligations to
your estate under this Agreement other than payment of the amounts, if any, owed
to you under Section 2(a) and 2(c) hereof through the date of death. The Company
shall have the right to terminate your employment under this Agreement for Cause
(defined below) at any time without obligation to make any further payments to
you hereunder (other than amounts owed under Section 2(a) and 2(c) hereunder
through the date of termination). The Company shall have the right to terminate
your employment for any reason other than for Cause (including for Disability as
provided in Section 5(b) hereof) with no further obligations hereunder except as
provided in Section 5(d) hereof. As used in this Agreement, the term "Cause"
shall mean the willful and continued failure by you to substantially perform
your duties hereunder (other than any such wilful or continued failure resulting
from your incapacity due to physical or mental illness or physical injury), or
the willful engaging by you in misconduct which is materially injurious to the
Company, monetarily or otherwise, or your conviction of a felony by a court of
competent jurisdiction.
(b) Termination by the Company or the Employee for Disability. If you
become totally and permanently disabled during the Employment Period so that you
are unable to perform your obligations hereunder by reasons involving physical
or mental illness or physical injury ("Disability"), then the term of your
employment hereunder may be terminated by either you or the Company; provided,
however, that in the event you elect to terminate your employment for Disability
pursuant to this Section 5(b), the Company may require, before becoming subject
to the obligations set forth in Section 5(d) hereof, that a physician mutually
agreed to by you and the Company (such agreement not to be unreasonably
withheld), based upon a physical and/or mental examination of you, concurs that
a Disability exists pursuant to the terms of this Agreement and delivers a
written opinion to the Company to such effect (such condition being referred to
elsewhere herein as the "Examination Condition").
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(c) Termination by the Employee. You may terminate your employment for
Disability as provided in Section 5(b) hereof, in which event the Company shall
have no further obligations to you hereunder except as provided in Section 5(d)
hereof. Subject to the provisions of this Section 5(c), you may terminate your
employment for Good Reason (defined below) at any time during the Employment
Period by providing the Company with at least thirty (30) days' written notice,
in which event the Company shall have no further obligations to you hereunder
except as provided in Section 5(d) hereof. As used in this Agreement, the term
"Good Reason" shall mean (i) a material adverse change in your functions,
duties, authority and responsibilities as the Chief Operating Officer and a Vice
President of the Company; or (ii) a material breach by the Company of its
obligations under this Agreement, which breach has not been cured within fifteen
(15) days following the Company's receipt of notice from you of such material
breach. You may terminate your employment for any reason other than for
Disability or Good Reason by providing the Company with at least thirty (30)
days' written notice, in which event the Company shall have no further
obligations to you under this Agreement other than payment of the amounts, if
any, owed to you under Section 2(a) and 2(c) hereof through the date of
termination.
(d) Severance Compensation. In the event your employment hereunder is
terminated (i) by you for Disability only if Examination Condition is met or
waived, (ii) by you for Good Reason, (iii) by the Company other than for Cause
or (iv) 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:
(1) receive severance compensation at your Base Salary at the monthly rate
in effect on the termination date, payable in arrears, during the period
expiring twenty-four (24) months after the termination date, commencing at the
end of the calendar month in which the termination date occurs; and
(2) receive the benefits specified in Section 4 hereof during the period
expiring on the earlier of (i) twenty-four (24) months after the termination
date and (ii) the date on which you commence full-time employment with another
employer;
provided, however, that (A) in the event your employment should be
terminated by the Company other than for Cause following a Change of Control
(defined below) or in anticipation of a Change of Control, the severance
compensation referred to in clause (1) 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 Disability in accordance with Section
5(b) above, then the severance compensation referred to in clause (1) 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 "Change of Control" shall have that meaning set forth in the
1995 Stock Option Plan.
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6. Limitation on Competition. During the Employment Period, and for such
period thereafter as you are entitled to receive severance compensation under
this Agreement (or if you are not entitled to receive severance compensation
under this Agreement, for a period of one year after your termination; or if you
are entitled to receive severance compensation in one lump sum payment, for a
period of two years after your termination), 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, consultant,
stockholder, partner, joint venturer, owner or in any other capacity, any
business engaged in the business of furnishing oilfield services (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; and, for that same period of time, 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.
7. Termination of Prior Agreement. Except as otherwise provided herein,
effective as of the Commencement Date, that certain Employment Agreement dated
March 29, 1996 (the "Prior Agreement") by and between you and WellTech Eastern,
Inc. is terminated and of no further force or effect.
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 GROUP, INC.
By: Xxxxxxx X. Xxxx, President
ACCEPTED AND AGREED:
Xxxxxxx X. Xxxxxxx
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