KEY ENERGY SERVICES, INC.
Xxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx
As of July 1, 1999
Xxxxx X. Xxxxxxxxxx
0 Xxxxxx Xxxxx
Xxxxxxx, XX 00000
EMPLOYMENT AGREEMENT
(this "Agreement")
Dear Xxx:
Key Energy Services, Inc., a Maryland corporation formerly known as Key
Energy Group, Inc. (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 Executive
Vice President of Domestic Well Service and Drilling Operations, 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 Eighty-
Five Thousand Dollars ($185,000) 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.
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 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 the State of Texas.
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 (which for
the purposes hereof shall include drilling oil and gas xxxxx) 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 November
13, 1998 (the "Prior Employment Agreement") between you and the Company,
are hereby terminated and of no further force or effect; provided that the
following agreements are NOT so terminated and remain in full force and
effect: (i) that certain Confidential Separation and Release Agreement
dated as of November 13, 1998 between you and the Company and (ii) the
agreements referred to in Section 16 thereof (other than the Prior
Employment Agreement).
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
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Xxxxxxx X. Xxxx
PRESIDENT
ACCEPTED AND AGREED:
/s/ Xxxxx X. Xxxxxxxxxx
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Xxxxx X. Xxxxxxxxxx