Exhibit 10.50
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (as from time to
time amended in accordance with the provisions hereof, this "AGREEMENT"), is
entered into this 16th day of October, 2001 by and between XXXXXXX X. XXXX,
residing at 0000 Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxxx 00000 (the "EXECUTIVE"), and
KEY ENERGY SERVICES, INC., a Maryland corporation with its principal executive
offices at 000 Xxxxx Xxxxx Xxxx, Xxx Xxxx, Xxxxxxxxxxxx 00000 (the "COMPANY").
RECITALS
A. The Company and the Executive previously entered into the Amended and
Restated Employment Agreement dated as of July 1, 1999, as now in effect (the
"1999 EMPLOYMENT AGREEMENT"), pursuant to which the Executive serves as Chairman
of the Board, President and Chief Executive Officer of the Company.
B. In recognition of the fact that the members of the Compensation
Committee (the "COMPENSATION COMMITTEE") of the Board of Directors of the
Company (the "BOARD") are of the view that obtaining a commitment from the
Executive to continue to serve in his capacities as Chairman of the Board,
President and Chief Executive Officer of the Company until June 30, 2006 is
essential to the continued growth and success of the Company and is in the best
interests of the Company and its shareholders, the Company desires to amend and
restate the 1999 Employment Agreement and continue to retain the services of the
Executive as Chairman of the Board, President and Chief Executive Officer of the
Company pursuant to the terms and conditions hereinafter set forth effective as
of July 1, 2001 (the "COMMENCEMENT DATE").
C. The Executive is willing to amend and restate the 1999 Employment
Agreement and to continue to serve in such capacities pursuant to the terms and
conditions hereinafter set forth effective as of the Commencement Date.
AGREEMENT
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the Company and the Executive hereby agree as follows:
1. EMPLOYMENT; TERM.
(a) Effective as of the Commencement Date, the 1999 Employment Agreement shall
be terminated and shall be of no further force or effect except for the
Company's obligations (i) to make any payments to the Executive under Section 2
thereof for services rendered and expenses incurred prior to the Commencement
Date, (ii) to make any payments to the Executive under benefit plans for
expenses incurred prior to the Commencement Date and (iii) pertaining to any
options previously granted to the Executive; PROVIDED, HOWEVER, that the
deletion of Section
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6(d) of the 1999 Employment Agreement shall be effective as of January 1, 2001.
The Company hereby agrees to employ the Executive, and the Executive hereby
accepts employment by the Company, as the Company's Chairman of the Board,
President and Chief Executive Officer, such employment to commence as of the
Commencement Date, and to continue until the close of business on June 30, 2006,
subject to extension as provided in this Section 1(a), unless sooner terminated
in accordance with Section 5(b) hereof (the "INITIAL EMPLOYMENT PERIOD"). On
each June 30, commencing with June 30, 2006, the term of the Executive's
employment hereunder shall be automatically extended for an additional twelve
(12) months unless either (x) the Company shall have given written notice to the
Executive that such automatic extension shall not occur (a "COMPANY NONRENEWAL
NOTICE"), which notice shall have been given no later than the March 15
immediately preceding the relevant June 30 or (y) the Executive shall have given
written notice to the Company that such automatic extension shall not occur (an
"EXECUTIVE NONRENEWAL NOTICE"), which notice shall have been given no later than
the April 1 immediately preceding the relevant June 30. The Initial Employment
Period, together with any such extensions, until terminated in accordance with
the terms hereof, is referred to herein as the "EMPLOYMENT PERIOD."
(b) The Executive currently serves as a director on the Board, and as a
director, the President or a Vice President of each material domestic Subsidiary
(as defined in Section 16 hereof), and the Executive hereby agrees to continue
in such positions.
(c) The Executive shall have the responsibilities, duties and authority
commensurate with his positions as the Chairman of the Board, President and
Chief Executive Officer of the Company, including, without limitation, the
general supervision and control over, and responsibility for, the general
management and operation of the Company and its Subsidiaries, subject, however,
to the supervision of the Board insofar as such supervision is required by the
Maryland General Corporation Law, and the Company's Articles of Incorporation
and By-Laws. Such responsibilities, duties and authority shall not be expanded
or contracted without the express consent of the Executive. The Executive will
report only to the Board.
(d) The Executive will devote his full time and his reasonable best efforts to
the business and affairs of the Company and its Subsidiaries; PROVIDED, HOWEVER,
that nothing contained in this Section 1 shall be deemed to prevent or limit the
Executive's right to: (i) make investments in the securities of any
publicly-owned corporation; or (ii) make any other investments with respect to
which he is not obligated or required to, and to which he does not in fact,
devote substantial managerial efforts which materially interfere with his
fulfillment of his duties hereunder; or (iii) to continue to serve on boards of
directors on which he currently serves and to serve in such other positions with
non-profit and for-profit organizations as to which the Board may from time to
time consent, which consent shall not be unreasonably withheld, delayed or
conditioned.
(e) The Executive may perform his duties at the Company's principal executive
offices or at such other locations as the Executive may from time to time in his
sole discretion determine. The location of the Company's principal executive
offices may be transferred by the Executive or, with the Executive's consent, by
the Board, in which event the Company will pay moving, temporary living and
other reasonable expenses in connection with the Executive's relocation from his
present primary residence to a location in proximity to the Company's
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principal offices. The Company will pay travel, living and all other reasonable
expenses incurred by the Executive in connection with his travel to and from,
and the performance of services by him at, the Company's principal executive
offices.
2. SALARY; BONUSES; EXPENSES.
(a) During the Employment Period, the Company will pay a salary to the
Executive, payable in substantially equal installments in accordance with the
Company's existing payroll practices, but no less frequently than biweekly, at
the following annual rates (the "BASE SALARY"): (i) at all times on or prior to
December 31, 2002, Five Hundred Ninety-Five Thousand Dollars ($595,000) per
year, and (ii) at all times on or after January 1, 2003, Six Hundred Ninety-Five
Thousand Dollars ($695,000) per year. The Company will review the Base Salary on
a yearly basis promptly following the end of each Fiscal Year of the Company (a
"FISCAL YEAR" of the Company being the twelve-month period beginning each July
1) to determine if an increase is advisable, and the Base Salary may be
increased but not decreased at the discretion of the Board or the Compensation
Committee, taking into account, among other factors, the Executive's performance
and the performance of the Company.
(b) For each six-month or other applicable period commencing on July 1, 2001 and
thereafter, the Executive shall be eligible to participate in the Company's
Performance Compensation Plan (the "PERFORMANCE COMPENSATION PLAN") for the
Company's executives providing for the payment of cash bonuses, which plan will
provide for the payment of bonuses based upon the achievement of goals set forth
in the Company's strategic plan as developed by the Compensation Committee after
consultation with the Executive, payable within ninety (90) days after the end
of such period. The performance goals for the Performance Compensation Plan will
be based on objective criteria specified in good faith in advance by the
Compensation Committee after consultation with the Executive, and, if such
criteria are achieved, the minimum annual bonus to which the Executive shall be
entitled pursuant to this Section 2(b) shall be equal to 100% of the Base Salary
(for example, if the bonus is earned with respect to a six-month period, the
bonus will be 50% of the Base Salary). Each bonus determined in accordance with
this Section 2(b) is referred to herein as a "SPECIFIED BONUS."
(c) The Executive shall also receive such bonuses other than pursuant to the
Performance Compensation Plan in such amounts and at such times as the
Compensation Committee in its discretion determines are appropriate to recognize
extraordinary performance by the Executive or the Company or extraordinary
actions by the Company, which shall include, without limitation: (i) the
acquisition of the stock or assets, or the merger or consolidation with or into,
another company or other entity; (ii) the acquisition or sale of a division or
divisions of the Company; (iii) the acquisition or sale of a Subsidiary or
Subsidiaries, or the acquisition or sale of the Company; (iv) financings or
refinancings, debt or equity, relating to the Company or any of its
Subsidiaries; (v) restructurings, recapitalizations, reorganizations or other
similar events relating to the Company or any of its Subsidiaries; or (vi) any
other event relating to the Company or any of its Subsidiaries that is outside
of the ordinary course of business and material to the Company or any of its
Subsidiaries. Any bonus paid to the Executive pursuant to this Section 2(c) is
referred to herein as a "SPECIAL BONUS".
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(d) SUBSTITUTION OF RETENTION INCENTIVE BONUS FOR LOANS.
(i) Pursuant to an Agreement dated as of August 2, 1999 (the "LOAN
Agreement") between the Executive and the Company: (A) the Executive and the
Company acknowledged that the Executive was indebted to the Company in the
aggregate principal amount of Five Million Dollars ($5,000,000.00); (B) such
indebtedness, including all accrued and unpaid interests thereon, was to have
been forgiven with respect to 20% of the principal amount thereof, and all
accrued and unpaid interest thereon, on July 1, 2000 and on each July 1
thereafter, to and including July 1, 2004; and (C) the Executive was to be
"grossed up" by the Company so that the Company would pay all taxes incurred by
the Executive by virtue of such forgiveness.
(ii) The Loan Agreement was subsequently amended: (A) as of December 1,
1999 to provide that such forgiveness would occur only if the price of the
Company's stock reached a level which was approximately 2.4 times the price on
the date of such amendment, which condition was subsequently satisfied; (B) as
of June 16, 2000, in contemplation of the Executive entering into an employment
arrangement different from that contained in this Agreement, to change the dates
and rate of forgiveness; and (C) as of May 14, 2001 to further change the dates
of forgiveness and to include the loan referred to in Section 2(d)(iii) hereof
in the indebtedness to be forgiven under the Loan Agreement.
(iii) In recognition of the Executive's past services to the Company in
respect of the successful integration of the business and operations of Xxxxxx
Production Services, Inc. ("XXXXXX") with the business and operations of the
Company, the significant reduction in the Company's long-term debt and leverage
since the Xxxxxx acquisition and the Company's successful public equity and debt
offerings, on May 14, 2001 the Company loaned to the Executive an additional
$1,500,000 subject to the terms and conditions, including the dates and rate of
forgiveness, set forth in the Loan Agreement, as amended.
(iv) In order to stop interest accruing on the loans which later will be
forgiven, the Company has requested, and the Executive has agreed, to have such
extinguishment and gross-up to occur on such date on or prior to December 31,
2001 as the Company may specify by not less than five business days' prior
notice to the Executive (the "RETENTION INCENTIVE BONUS PAYMENT DATE"), subject
to the provisions of Section 2(d)(vi) hereof; PROVIDED, HOWEVER, that if the
Company fails to give such notice, the Retention Incentive Bonus Payment Date
shall be December 31, 2001.
(v) On the Retention Incentive Bonus Payment Date, the Company shall pay
to the Executive an extraordinary bonus (the "RETENTION INCENTIVE BONUS") in an
amount equal to the aggregate principal amount of, and all accrued and unpaid
interest on, all indebtedness of the Executive to the Company under the Loan
Agreement PLUS the aggregate amount payable by the Company as "gross up"
payments pursuant to the Loan Agreement in respect of all payments pursuant to
this Section 2(d)(v) as if such payments were forgiveness of indebtedness and
payments entitled to such "gross up" payments. The Executive and the Company
shall agree on the amount of the Retention Incentive
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Bonus not less than one business day prior to the Retention Incentive Bonus
Payment Date. The Executive will be entitled to retain the Retention Incentive
Bonus subject to the provisions of Section 2(d)(vi) hereof. The Retention
Incentive Bonus shall be paid to the Executive subject to the following
withholdings: first, the Company shall withhold such amount of the Retention
Incentive Bonus as may be necessary to satisfy tax withholding requirements with
respect thereto; and second, the Company shall withhold and apply such amount of
the remainder of the Retention Incentive Bonus as may be necessary for the
payment in full of all indebtedness of the Executive of the Company under the
Loan Agreement, including all accrued and unpaid interest thereon. In connection
with the satisfaction of such indebtedness, the Company shall deliver to the
Executive all notes evidencing such indebtedness marked "Paid in Full" and shall
release and discharge of record the mortgages securing such indebtedness. The
Company and the Executive acknowledge that the application of the Retention
Incentive Bonus to amounts payable under the Loan Agreement pursuant to this
Section 2(d)(v) shall constitute payment in full of all indebtedness subject
thereto.
(vi) In the event that, prior to June 30, 2011, the Executive's employment
is terminated pursuant to Section 5(b)(i), Section 5(b)(ix) or Section 5(b)(x)
hereof (it being understood that an Executive Nonrenewal Notice that is intended
to be effective on or after June 30, 2011 is not such a termination), then the
Executive shall, on or before the date which is sixty (60) days after the
effective date of such termination, pay to the Company an amount equal to the
percentage of the Retention Incentive Bonus specified in the table below with
respect to such effective date:
PERCENTAGE OF
EFFECTIVE DATE RETENTION INCENTIVE BONUS
OF TERMINATION TO BE RETURNED TO THE COMPANY
--------------------------- -----------------------------
Prior to June 30, 2002 100%
On and after June 30, 2002 90%
and prior to June 30, 2003
On and after June 30, 2003 80%
and prior to June 30, 2004
On and after June 30, 2004 70%
and prior to June 30, 2005
On and after June 30, 2005 60%
and prior to June 30, 2006
On and after June 30, 2006 50%
and prior to June 30, 2007
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On and after June 30, 2007 40%
and prior to June 30, 2008
On and after June 30, 2008 30%
and prior to June 30, 2009
On and after June 30, 2009 20%
and prior to June 30, 2010
On and after June 30, 2010 10%
and prior to June 30, 2011
On and after June 30, 2011 0%
(e) The Executive is authorized to incur and shall be reimbursed by the
Company for all reasonable expenses, including, but not limited to travel,
lodging, meal and other expenses, in each case as determined by him in his sole
discretion, incurred by him in carrying out his duties hereunder. All commercial
air travel by the Executive may be in first class. In addition, it is the
Company's desire for security and other safety related issues that the
Executive, in his sole discretion, have the authority to lease or otherwise
contract for the services of a private aircraft for business related or for
personal travel, the cost of which shall be paid or reimbursed by the Company;
PROVIDED, HOWEVER, that, in the event that such private aircraft is used solely
for personal travel, the Executive shall reimburse the Company for such travel
in the amount of a first class ticket for air travel to the applicable
destination for each person engaging in such personal travel with the Executive.
3. STOCK OPTIONS.
(a) The Company acknowledges that the Executive has previously been
awarded stock options that are either fully vested or not fully vested, as the
case may be, and the Company reaffirms herein its contractual commitments in the
agreements awarding such options. Except as otherwise modified by the terms of
this Agreement, the terms of the stock option agreements pertaining to such
outstanding stock options shall continue to apply and be construed so as not to
change or modify any rights of the Executive set forth therein.
(b) For each Fiscal Year beginning on or after July 1, 2001, the Executive
shall be eligible to participate in stock option grants made to the Company's
executives. The amount and terms of such grants will be specified in good faith
by the Compensation Committee after consultation with the Executive. The options
granted to the Executive during each Fiscal Year are referred to herein as the
"ANNUAL STOCK OPTION GRANT."
(c) The Company agrees, so long as the Company shall be subject to the
reporting requirements of Section 13 or 15(d) (or any successor provision) of
the 1934 Act, it shall use its reasonable best efforts to cause to become
effective a registration statement on Form S-3 or S-8 (or a successor form), and
to maintain the effectiveness of such registration statement, such that any
issuance of stock by the Company to the Executive (or his permitted assignee)
upon the
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exercise of any such options shall be registered under the Securities Act of
1933, as amended (or any successor provision).
4. BENEFIT PLANS; VACATIONS. In connection with the Executive's employment
hereunder, he shall be entitled during the Employment Period (and thereafter to
the extent provided in Section 5(g) hereof) to the following additional
benefits:
(a) At the Company's expense, the Executive shall be entitled to such
fringe benefits, including, without limitation, group medical and dental, life,
executive life, accident and disability insurance and retirement plans and
supplemental and excess retirement benefits, as the Company may provide from
time to time for its senior management, but, in any case, at least the benefits
described on Schedule A hereto.
(b) The Executive shall be entitled to no less than the number of vacation
days in each Fiscal Year determined in accordance with the Company's vacation
policy as in effect from time to time, but in any event no less than thirty (30)
business days in any Fiscal Year (prorated in any Fiscal Year during which he is
employed hereunder for less than the entire Fiscal Year in accordance with the
number of days in such Fiscal Year in which he is so employed), PROVIDED that,
beginning with the Fiscal Year beginning July 1, 2002, such 30 business day
period shall be increased by a number of days equal to the excess, if any, of 30
business days over the number of business days taken by the Executive as
vacation during the immediately preceding Fiscal Year. The Executive shall also
be entitled to all paid holidays and personal days given by the Company to its
executives.
(c) The Company acknowledges that a substantial amount of the business
travel undertaken by the Executive is done by means of his driving himself or
being driven in an automobile. The Company shall lease one automobile for the
Executive substantially similar to the automobile currently leased for the
Executive and shall pay all expenses, including but not limited to insurance,
repair and maintenance, incurred by the Executive in connection with the use of
the automobile during the Employment Period as well as a driver trained in
security techniques if needed for his use. In addition, the Executive shall have
the authority, in his sole discretion, to contract for the services of a car and
driver for security and safety reasons to be at his disposal 24 hours a day, 7
days a week, the cost of which shall be paid or reimbursed by the Company.
(d) The Company will pay the reasonable fees for personal (i) financial
advisory, counseling, accounting and related services; (ii) legal advisory or
attorneys' fees and related expenses; and (iii) income tax return preparation
and tax audit services as reasonably requested by the Executive, provided by
certified public accountants and tax attorneys acceptable to him.
(e) The Company shall pay or reimburse the reasonable expenses for the
Executive to be able to perform his duties hereunder from his home or any other
location from time to time chosen by the Executive. It is also the Company's
desire that the Executive be entitled to establish Company paid offices for his
use at or near locations in which he may be staying for periods in excess of
twenty-four (24) hours and that the Executive shall be entitled (i) to incur (at
the Company's expense) all expenses deemed reasonably necessary by him in his
sole discretion to establish and maintain Company offices at such locations for
such periods and (ii) to employ
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at the Company's expense such number of administrative assistants at appropriate
compensation levels as are considered necessary by him. In addition, the Company
will provide the Executive with a security system or security coverage at the
job location, at his residence or otherwise, if reasonably requested by the
Executive.
(f) Nothing herein contained shall preclude the Executive, to the extent
he is otherwise eligible, from participation in all group insurance programs or
other fringe benefit plans which the Company may from time to time in its sole
and absolute discretion make available generally to its personnel, or for
personnel similarly situated, but the Company shall not be required to establish
or maintain any such program or plan except as may be otherwise expressly
provided herein.
(g) The Company shall pay all membership costs, including, without
limitation, all initiation and membership fees and expenses and all annual or
other periodic fees, dues and costs (including any bond requirement), for the
Executive to become and remain a member of any one private country club, golf
club, tennis club, dining club or similar club or association and any one health
club, spa or similar club or association, in each case as the Executive
determines in his sole discretion is desirable for the maintenance of his
well-being or position in the business or local community.
(h) The Executive shall be entitled to participate in all other Company
benefit plans, as well as any supplemental benefit or perquisite plans, as the
Company may provide from time to time for its senior executives, on a basis
commensurate with his position.
(i) The Executive shall, after taking into account any taxes on
reimbursements or other benefits, be kept whole with respect to each
reimbursement or other benefit referred to in this Section 4 (other than those
referred to in Sections 4(b) hereof). Accordingly, to the extent the Executive
is taxed on any such reimbursements or benefits, the Company shall pay the
Executive, in connection therewith, an amount which, after all taxes incurred by
the Executive on payments pursuant to this Section 4(i), shall equal the amount
of the taxes on the reimbursement or benefit being provided.
5. TERMINATION, CHANGE IN CONTROL AND REASSIGNMENT OF DUTIES.
(a) CERTAIN DEFINITIONS. As used herein:
(i) The term "CAUSE" shall mean any of the of the following:
(A) the willful and continued (after a reasonable period following
such demand) failure by the Executive to substantially perform
his duties hereunder (other than (I) any such willful or
continued failure resulting from his incapacity due to physical
or mental illness or physical injury or (II) any such actual or
anticipated failure after the issuance of a notice of
termination by the Executive pursuant to Section 5(b)(vi), (vii)
or (viii)), after written demand for substantial performance is
delivered by the Company to the Executive that specifically
identifies the manner in which the Company believes the
Executive has not substantially performed his duties;
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(B) the willful engaging by the Executive in misconduct which is
materially injurious to the Company, monetarily or otherwise; or
(C) the conviction of the Executive of a felony by a court of
competent jurisdiction in a judgment which has become final and
nonappealable if such conviction would render it impossible for
the Executive to perform his obligations hereunder or if the
reputation of the Company would be materially damaged by the
continuance of the Executive's employment hereunder.
For purposes of this definition, no act, or failure to act, on the part of
the Executive shall be considered "willful" unless done or omitted to be
done by him in bad faith and without reasonable belief that his action or
omission was in the best interest of the Company.
(ii) The term "CHANGE IN CONTROL" shall have the same meaning as set
forth in Section 6.7 of the Company's 1997 Incentive Plan.
(iii) The term "EXECUTIVE'S DEATH" shall mean the death of the
Executive.
(iv) The term "EXECUTIVE'S DISABILITY" shall mean the Executive's
becoming totally and permanently disabled during the Employment Period so
that he is unable to perform his obligations hereunder by reasons
involving physical or mental illness or physical injury (A) for a period
of ninety (90) consecutive days, or (B) for an aggregate of one hundred
fifty (150) days during any period of twelve (12) consecutive months.
(v) The term "FINAL AVERAGE COMPENSATION" means the sum of
(A) the greater of (x) $595,000 or (y) the average of the Base
Salary as in effect during the three Fiscal Years preceding the
date of termination and commencing no earlier than July 1, 2001
(or, if shorter, the number of Fiscal Years from July 1, 2001 to
the date of termination) plus
(B) the greater of (x) $595,000 or (y) the average of the Specified
Bonuses awarded to the Executive pursuant to Section 2(b) hereof
during the three Fiscal Years preceding the date of termination
and commencing no earlier than July 1, 2001 (or, if shorter, the
number of Fiscal Years from July 1, 2001 to the date of
termination) plus
(C) the greater of (x) $250,000 or (y) the average of all Special
Bonuses awarded to the Executive pursuant to Section 2(c) of
this Agreement during the three Fiscal Years preceding the date
of termination and commencing no earlier than July 1, 2001 (or,
if shorter, the number of Fiscal Years from July 1, 2001 to the
date of termination);
PROVIDED, HOWEVER, that in no event shall either the Retention Incentive
Bonus be included in the computation of Final Average Compensation.
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(vi) The term "GOOD REASON" shall mean any of the following:
(A) failure by the Board to nominate the Executive for election to
the Board at any time such nominations are made, or failure of
the stockholders of the Company to elect the Executive to the
Board, or failure of the Board to elect the Executive as
Chairman of the Board, President and Chief Executive Officer of
the Company, or failure by the Board of Directors or
stockholders of any Subsidiary to elect the Executive to such
Board of Directors or other executive office as may be requested
by the Executive from time to time, or removal of the Executive
from the Board, the Board of Directors of a Subsidiary or any
such office of the Company or of a Subsidiary, PROVIDED that
such failure or removal is not in connection with a termination
of the Executive's employment hereunder for Cause in accordance
with Section 5(b)(i), and PROVIDED FURTHER that any notice of
termination hereunder shall be given by the Executive within
ninety (90) days of such failure or removal;
(B) material change by the Company in the Executive's authority,
functions, duties or responsibilities as Chairman of the Board,
President and Chief Executive Officer of the Company (including,
without limitation, material changes in the control or structure
of the Company) which would cause his position with the Company
to become of less responsibility, importance, scope or dignity
than his position as of the Commencement Date, PROVIDED that (I)
such material change is not in connection with a termination of
Executive's employment hereunder for Cause in accordance with
Section 5(b)(i), (II) such material change is not made in
accordance with Section 5(c)(ii) following a termination of
Executive's employment pursuant to Section 5(b)(iv) or (x),
(III) such material change is not made in accordance with
Section 5(b)(ii) pertaining to disability, including without
limitation the time period restrictions applicable thereunder,
and (IV) any notice of termination hereunder shall be given by
the Executive within ninety (90) days of when the Executive
becomes aware of such change;
(C) failure by the Company to comply with any provision of Section
1, 2, 3, 4, 5(h) or 8 of this Agreement, which has not been
cured within fifteen (15) days after notice of such
noncompliance has been given by the Executive to the Company,
PROVIDED that no such opportunity for cure need be given if
there has been a previous failure described in this clause (C)
in the twelve months immediately preceding such failure, and
PROVIDED, FURTHER, that any notice of termination hereunder
shall be given by the Executive within ninety (90) days after
the end of such fifteen (15) day period or such failure (as
applicable);
(D) failure by the Company to obtain an assumption of this Agreement
by a successor in accordance with Section 14 hereof unless
payment or provision for continuation of benefits under this
Agreement have been made in a manner permitted by this Section
5; or
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(E) any purported termination by the Company of the Executive's
employment which is not effected in accordance with the terms of
this Agreement, including without limitation pursuant to a
notice of termination not satisfying the requirements set forth
herein (and for purposes of this Agreement no such purported
termination by the Company shall be effective), which has not
been cured within ten (10) days after notice of such
nonconformance has been given by the Executive to the Company,
PROVIDED that no such opportunity for cure need be given if
there has been a previous purported termination described in
this clause (E) in the twelve months immediately preceding such
purported termination, and PROVIDED, FURTHER any notice of
termination hereunder shall be given by the Executive within
thirty (30) days of receipt of notice of such purported
termination.
(b) TERMINATION OF EXECUTIVE'S EMPLOYMENT. The Executive's employment
under this Agreement may be terminated as follows and in no other way:
(i) The Company may terminate the Executive's employment under this
Agreement at any time for Cause; PROVIDED, HOWEVER, that the Executive's
employment shall not be deemed to have been terminated for Cause pursuant
to this Section 5(b)(i) unless (x) notice shall have been given to him
setting forth in reasonable detail the reasons for the Company's intention
to terminate for Cause; (y) an opportunity shall have been provided for
the Executive, together with his counsel, to be heard before the Board;
and (z) delivery shall have been made to the Executive of a notice of
termination from the Board finding that in the good faith opinion of a
majority of the Board (excluding the Executive) he was guilty of conduct
constituting "Cause" and specifying the particulars thereof in detail.
(ii) The Company may terminate the Executive's employment under this
Agreement at any time for the Executive's Disability; PROVIDED, HOWEVER,
that Board must give notice of such termination within sixty (60) days
after the expiration of applicable period for determining the Executive's
Disability, said termination to be effective ten (10) days after written
notice to the Executive. During any period that the Executive's Disability
has not yet been determined and the Executive is totally disabled such
that he is unable to perform his obligations hereunder by reason involving
physical or mental illness or physical injury, as determined by a
physician chosen by the Company and reasonably acceptable to the Executive
(or his legal representative), the Company may reassign the Executive's
duties hereunder to another person or other persons, PROVIDED that if the
Executive shall again be able to perform his obligations hereunder, all
such duties shall again be the Executive's duties. The cost of any
examination by such physician shall be borne by the Company. Any such
reassignment shall not be a termination of employment and in no event
shall such reassignment reduce the Company's obligations to make salary,
bonus and other payments to the Executive and to provide other benefits to
him under this Agreement during his employment.
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(iii) The Company may terminate the Executive's employment under
this Agreement by giving a Company Nonrenewal Notice in accordance with
Section 1(a) hereof.
(iv) The Company may terminate the Executive's employment under this
Agreement at any time other than pursuant to Sections 5(b)(i), (ii) or
(iii) hereof; PROVIDED, HOWEVER, that if the Company desires to terminate
the Executive's employment pursuant to this Section 5(b)(iv) (a "COMPANY
VOLUNTARY TERMINATION"), it shall give the Executive not less than ninety
(90) days' prior written notice of such termination.
(v) The Executive's employment under this Agreement shall be
automatically terminated upon the Executive's Death.
(vi) The Executive may terminate his employment under this Agreement
at any time for Good Reason effective upon his giving notice to the
Company of such termination setting forth in reasonable detail the reasons
for the Executive's intention to terminate for Good Reason.
(vii) The Executive may terminate his employment under this
Agreement at any time following but prior to the date which is one year
after the occurrence of a Change in Control, effective upon his giving
notice to the Company of such termination.
(viii) The Executive may terminate his employment under this
Agreement at any time, effective upon his giving notice to the Company of
such termination, if it becomes probable that Executive Disability will
occur, PROVIDED that he has obtained a written statement from a qualified
doctor to such effect.
(ix) The Executive may terminate his employment under this Agreement
by giving an Executive Nonrenewal Notice in accordance with Section 1(a)
hereof.
(x) The Executive may terminate his employment under this Agreement
at any time other than pursuant to Sections 5(b)(vi), (vii), (viii) or
(ix) hereof; PROVIDED, HOWEVER, that if the Executive desires to terminate
his employment pursuant to this Section 5(b)(x) (an "EXECUTIVE VOLUNTARY
TERMINATION"), he shall give the Company not less than ninety (90) days'
prior written notice of such termination.
In the event that the Executive's employment hereunder terminates: (x) for any
reason within one year of a Change in Control, then such termination shall be
conclusively deemed to have been occurred pursuant to Section 5(b)(vii) hereof
for all purposes of this Agreement; (y) for any reason after the Company has
given a notice pursuant to Section 5(b)(iii) or (iv) hereof or the Executive has
or could have given a notice pursuant to Section 5(b)(vi) hereof, then such
termination shall be conclusively deemed to have occurred pursuant to such
Section 5(b)(iii), (iv) or (vi), as applicable, for all purposes of this
Agreement
(c) EFFECT OF TERMINATION.
(i) Upon termination of the Executive's employment hereunder
pursuant to Section 5(b) hereof, then, effective upon the date such
termination is effective, he will be
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deemed automatically to have resigned from all positions as an officer and
Director of the Company and of any of its Subsidiaries, except as the
parties (or with respect to positions with a Subsidiary, the Executive and
the Subsidiary) may otherwise agree.
(ii) In the event that either the Company gives the Executive notice
of a Company Voluntary Termination or the Executive gives the Company
notice of an Executive Voluntary Termination, then for the purpose of
effecting a transition during the ninety (90) day notice period of the
management of the Company from the Executive to another person or persons,
during such period the Company may reassign the Executive's duties
hereunder to another person or other persons. Such reassignment shall not
reduce the Company's obligations hereunder to make salary, bonus and other
payments to the Executive and to provide other benefits to him during the
remainder of his employment, including without limitation the use of his
office and secretarial services during the remainder of his employment.
(d) ACCRUED COMPENSATION. In the event of any termination of the
Executive's employment under this Agreement for any reason, the Executive (or
his estate) shall be paid such portion of his Base Salary and bonuses as he has
accrued (including without limitation as provided below) by virtue of his
employment during the period prior to termination and has not yet been paid,
together with any amounts for expense reimbursement and similar items which have
been properly incurred in accordance with the provisions hereof prior to
termination and have not yet been paid. Such amounts shall be paid within ten
(10) days of the date his employment hereunder terminates. The amount due to the
Executive (or his estate) under this Section 5(d) in payment of any bonus,
including without limitation the Specified Bonus and/or Annual Stock Option
Grant, shall be a proportionate amount of the bonus or stock option grant (as
applicable) that would next be payable or awardable to him and would otherwise
have been due to the Executive if such termination had not occurred and such
bonus or stock options (as applicable) had been fully earned, and which
proportion shall be based on the number of elapsed days in the applicable bonus
period prior to the termination date and in which the termination date occurs.
If and to the extent the Executive has any accrued vacation days that he has not
then taken as vacation, he shall be compensated for such unused vacation days in
an amount equal to the number of such days MULTIPLIED BY Base Salary then in
effect DIVIDED BY 255.
(e) SEVERANCE COMPENSATION. In addition to all other amounts payable to
the Executive hereunder:
(i) In the event the Executive's employment hereunder is terminated
pursuant to Section 5(b)(iii), (iv), (vi) or (vii) hereof, the Executive
shall be entitled to severance compensation in an aggregate amount equal
to five times the Final Average Compensation, payable in a lump sum on the
date such termination occurs.
(ii) In the event the Executive's employment hereunder is terminated
pursuant to Section 5(b)(ii) or (viii) hereof, the Executive shall be
entitled to severance compensation in an aggregate amount equal to three
times the Final Average Compensation, reduced by the amount of any
Company-paid disability insurance proceeds actually paid to the Executive
or for his benefit during the three years
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immediately following such termination, payable in a lump sum on the date
such termination occurs.
(iii) In the event the Executive's employment hereunder is
terminated to Section 5(b)(i), (v), (ix) or (x), the Executive shall not
be entitled to any additional severance compensation pursuant to this
Section 5(e).
(f) EFFECT OF TERMINATION OR CHANGE IN CONTROL UPON EQUITY COMPENSATION.
(i) In the event the Executive's employment hereunder is terminated
pursuant to Section 5(b)(ii), (iii), (iv), (v), (vi), (vii) or (viii)
hereof, then, effective upon the date such termination is effective, any
restricted stock or unexpired options held by the Executive (or his
assignee) entitling the Executive (or his assignee) to purchase securities
of the Company shall, notwithstanding any contrary provision in the
agreement or plan pursuant to which such restricted stock or options were
granted, become fully vested and all such options shall become exercisable
as of such date and shall remain exercisable during the respective terms
of such options as set forth in the pertinent option agreement.
(ii) In the event the Executive's employment hereunder is terminated
pursuant to Section 5(b)(i), (ix) or (x) hereof, then, effective upon the
date such termination is effective, any restricted stock or options not
previously vested shall be forfeited, unless there shall be a contrary
provision in the agreement or plan pursuant to which such restricted stock
or options were granted.
(iii) In the event of a Change in Control while the Executive is
employed, and whether or not the Executive's employment hereunder is
subsequently terminated, then, as of the date immediately prior to the
date such Change in Control shall occur, any restricted stock or unexpired
options held by the Executive (or his assignee) entitling the Executive
(or his assignee) to purchase securities of the Company shall,
notwithstanding any contrary provision in the agreement or plan pursuant
to which such restricted stock or options were granted, become fully
vested and all such options shall become exercisable as of such date and
shall remain exercisable during the respective terms of such options as
set forth in the pertinent option agreement.
(g) CONTINUATION OF BENEFITS, ETC.
(i) Subject to the provisions of Section 5(g)(ii) hereof, in the
event the Executive's employment hereunder is terminated pursuant to
Section 5(b)(ii), (iii), (iv), (vi), (vii) or (viii) hereof:
(A) The Executive (or his family, as applicable) shall continue to
be entitled to the benefits that the Executive was receiving or
to which the Executive was entitled, as of the date immediately
preceding the applicable termination date, pursuant to Section 4
hereof (except for the benefit described in Section 4(i) hereof)
at the Company's expense for a period of time following the
termination date ending on the first to occur of (I) the third
anniversary of the date such employment terminated or (II) the
date on which the Executive commences full-time employment by
another
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employer, but only if and to the extent the Executive is
eligible to receive through such other employer benefits which
are at least equivalent on an aggregate basis to those benefits
the Executive was receiving or to which the Executive was
entitled under Section 4 hereof as of the date immediately
preceding such date of termination. If, because of limitations
required by third parties or imposed by law, the Executive
cannot be provided such benefits through the Company's plans,
then the Company will provide the Executive (or his family, as
applicable) with substantially equivalent benefits, on an
aggregate basis, at the Company's expense. For purposes of the
determination of any benefits which require a particular period
of employment by the Company and/or the attainment of a
particular age while employed by the Company in order to be
payable, the Executive shall be treated as having continued in
the employment of the Company during such period of time as the
Executive (or his family, as applicable) is entitled to receive
benefits under this Section 5(g). At such time as the Company is
no longer required to provide the Executive with life insurance,
the Executive shall be entitled at the Executive's expense to
obtain ownership of such life insurance, except and to the
extent such transfer of ownership is not available from the
provider of such insurance.
(B) The Executive shall be entitled, at the Company's expense for a
period of time following the termination date ending on the
first to occur of (A) the third anniversary of the termination
date or (B) the date on which a Executive commences full-time
employment by another employer, to office space at such location
as the Executive may from time to time specify and secretarial
services, in each case substantially commensurate with the
office space and secretarial services furnished by the Company
to the Executive prior to the termination date, and to be
furnished executive job search and employment services by an
executive employment firm of national reputation selected by the
Executive and approved by the Board, which approval shall not be
unreasonably withheld or delayed.
(ii) In the event the Executive's employment is terminated pursuant
to Section 5(b)(vii) hereof or is terminated by the Company in
anticipation of a Change in Control for any reason other than pursuant to
Section 5(b)(i) hereof, the Company shall pay to the Executive, in lieu of
providing the benefits contemplated by Section 5(g)(i) hereof, an amount
in cash equal to the aggregate reasonable expenses that the Company would
incur if it were to provide such benefits for a period of time following
the termination date ending on the third anniversary of the termination
date, which amount shall be paid in one lump sum within ten (10) days
after the date of such termination.
(iii) With respect to any termination of the Executive's employment
pursuant to Section 5(b)(v) hereof, the Executive's family shall be
entitled to receive continued participation in medical and dental
insurance coverage until the death of the Executive's spouse; PROVIDED
that (A) if the Executive's family is precluded from continuing its
participation in any such coverage, they shall be provided with the
after-tax economic equivalent of the benefits provided under the plan or
program in which they are to
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participate for the period specified above, (B) the economic equivalent of
any benefit forgone shall be deemed to be the lowest cost that would be
incurred by the Executive's family in obtaining such benefit themselves on
an individual or family (as applicable) basis, and (C) payment of such
after-tax economic equivalent shall be made quarterly in advance.
(h) NEW EXECUTIVE OFFICE BUILDING.
(i) The Company is in the process of moving its executive offices
from East Brunswick, New Jersey to a building located in New Hope,
Pennsylvania (together with the real property, fixtures and other assets
associated therewith, the "NEW EXECUTIVE OFFICE BUILDING") in which the
Company has leased office space pursuant to a lease (the "EXECUTIVE OFFICE
Lease"). In connection with entering into the Executive Office Lease, the
Company was granted by the landlord an option (the "BUILDING PURCHASE
OPTION") to purchase, at a specified price, the New Executive Office
Building.
(ii) In the event the Executive's employment is terminated pursuant
to Section 5(b)(vii) hereof or is terminated by the Company in
anticipation of a Change in Control for any reason other than pursuant to
Section 5(b)(i) hereof, the Board may, by notice (the "BUILDING RETENTION
NOTICE") given to the Executive within one (1) month of the date that the
Executive's employment is terminated, elect have the provisions of this
Section 5(b)(ii) apply instead of the provisions of Section 5(b)(iii)
hereof if, in good faith, it reasonably determines that the retention by
the Company of the Executive Office Lease and the Building Purchase Option
is desirable in connection with the continued conduct of its business from
the New Executive Office Building, in which event the Company shall pay to
the Executive an amount (the "BUILDING AMOUNT") equal to the sum of the
Option Amount PLUS the Lease Amount. The term "OPTION AMOUNT" shall mean
the fair market value of the Building Purchase Option to the holder
thereof as at the time of such termination (but in no event less than $0),
and the term "LEASE AMOUNT" shall mean the fair market value of the
Executive Office Lease to the lessee thereunder as at the time of such
termination (but in no event less than $0), in each case as determined by
a real estate appraiser, selected by the Executive and the Board, having
experience in the rentals of executive office buildings in the area in
which the New Executive Office Building is located; PROVIDED, HOWEVER,
that if the Executive and the Board shall have failed to agree on such
appraiser within ten (10) business days after the Board has given such
notice, the Executive shall appoint one such appraiser, the Board shall
appoint one such appraiser, the two appraisers shall appoint a third such
appraiser and such third appraiser shall make the determination of the
Option Value and the Lease Value. No more than ten (10) business days
after the date of such determination, the Company shall pay the Building
Amount to the Executive. The Company shall pay all costs and expenses of
each appraiser appointed pursuant to this Section 5(h)(ii).
(iii) In the event the Executive's employment is terminated pursuant
to Section 5(b)(vii) hereof or is terminated by the Company in
anticipation of a Change in Control for any reason other than pursuant to
Section 5(b)(i) hereof, and the Company shall not have given to the
Executive the Building Retention Notice within one (1) month of the date
that the Executive's employment is terminated, the Company shall, upon
notice from
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the Executive given at any time after one (1) month but not more than
three (3) months after the effective date of such termination, to the
extent transferable, transfer and assign to the Executive as promptly as
practicable all of the Company's right, title and interest in and to each
of the Executive Office Lease and the Building Purchase Option. In the
event that the Executive gives such notice and the Executive Office Lease
cannot be so assigned, the Company shall, if permitted by the terms of the
Executive Office Lease, sublease to the Executive the space subject to the
Executive Office Lease on the same terms and conditions as the Executive
Office Lease or, if such a sublease is not possible, enter into another
arrangement, reasonably satisfactory to the Executive, that will give the
Executive the exclusive use of such space. In the event that the Building
Purchase Option cannot be so transferred and assigned, the Company shall
grant to the Executive the right, exercisable by the Executive at any time
when the Building Purchase Option is exercisable by the Company, to cause
the Company to exercise the Building Purchase Option and immediately
thereafter to transfer the New Executive Office Building to the Executive
upon payment by the Executive to the Company of the exercise price paid by
the Company to exercise the Building Purchase Option.
(iv) The Company shall not amend, waive, terminate, assign, transfer
or otherwise modify in any way its rights under the Building Purchase
Option or the Executive Office Lease without the prior written consent of
the Executive, such consent not to be unreasonably withheld, conditioned
or delayed.
(v) The Executive shall, after taking into account any taxes, be
kept whole with respect to the matters described in this Section 5(h).
Accordingly, to the extent the Executive incurs any taxes with respect to
any such matters, the Company shall pay the Executive, in connection
therewith, an amount which, after all taxes incurred by the Executive by
reason of such payments pursuant to this Section 5(h)(v), and after taking
into account any payments being made with respect to such matters or
payments pursuant to Section 5(i) hereof, shall equal the amount of the
taxes so incurred.
(i) CERTAIN TAX CONSEQUENCES.
(i) Whether or not the Executive becomes entitled to the payments
and benefits described in this Section 5, if any of the payments or
benefits received or to be received by the Executive in connection with a
change in ownership or control of the Company (a "STATUTORY CHANGE IN
CONTROL"), as defined in section 280G of the Code, or the Executive's
termination of employment (whether pursuant to the terms of this Agreement
or any other plan, arrangement or agreement with the Company, any person
whose actions result in a Statutory Change in Control or any person
affiliated with the Company or such person) (collectively, the "SEVERANCE
BENEFITS") will be subject to any excise tax (the "EXCISE Tax") imposed
under section 4999 of the Code, the Company shall pay to the Executive an
additional amount equal to the Excise Tax, plus any amount necessary to
"gross up" the Executive for additional taxes resulting from the payments
to the Executive by the Company under this Section 5(i)(i) (the "EXCISE
TAX PAYMENT").
(ii) For purposes of determining whether any of the Severance
Benefits will be subject to the Excise Tax and the amount of such Excise
Tax:
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(A) all of the Severance Benefits shall be treated as "parachute
payments" within the meaning of Code section 280G(b)(2) if the
aggregate present value (determined as provided in Code Section
280G(d)(4)) of such Severance Benefits equals or exceeds three
times the Executive's "Base Amount" (within the meaning of Code
Section 280G(b)(3)), and all "excess parachute payments" within
the meaning of Code section 280G(b)(1) shall be treated as
subject to the Excise Tax, unless, in the opinion of Ropes &
Xxxx or other tax counsel selected by Ropes & Xxxx and
reasonably acceptable to the Executive or in the event Ropes &
Xxxx is unable or unwilling to make such selection, by other tax
counsel selected by the Company and reasonably acceptable to the
Executive, such other payments or benefits (in whole or in part)
do not constitute parachute payments, including by reason of
Code section 280G(b)(4)(A), or such excess parachute payments
(in whole or in part) represent reasonable compensation for
services actually rendered, within the meaning of Code section
280G(b)(4)(B), in excess of the "Base Amount" as defined in Code
section 280G(b)(3) allocable to such reasonable compensation, or
are otherwise not subject to the Excise Tax; and
(B) the value of any non-cash benefits or any deferred payment or
benefit shall be determined by a certified public accountant
selected by Ropes & Xxxx and reasonably acceptable to the
Executive, or in the event that Ropes & Xxxx is unable or
unwilling to make such selection, such selection shall be made
by such other certified public accountant as is selected by the
Company and is reasonably acceptable to the Executive, in
accordance with the principles of Code section 280G(d)(3) and
(4).
(iii) In the event that the Excise Tax is subsequently determined to
be less than the amount taken into account hereunder, the Executive shall
repay to the Company, at the time that the amount of such reduction in
Excise Tax is finally determined (the "REDUCED EXCISE TAX"), the
difference of the Excise Tax Payment and the Reduced Excise Tax, plus an
additional amount representing the difference between (A) the amount paid
by the Company to the Executive to "gross up" the Executive for taxes on
payments made by the Company to the Executive in respect of the Excise Tax
and (B) the amount which should have been paid to the Executive by the
Company to "gross up" the Executive for taxes on payments made by the
Company to the Executive in respect of the Reduced Excise Tax. In the
event that the Excise Tax is subsequently determined to exceed the amount
taken into account hereunder (including by reason of any payment the
existence or amount of which could not be determined at the time of the
Excise Tax Payment), the Company shall make an additional Excise Tax
payment in respect of such excess (plus any interest or penalties payable
by the Executive with respect to such excess) at the time that the amount
of such excess if finally determined, plus any additional taxes resulting
from the payment to the Executive by the Company for such excess and the
interest and penalties thereon. The Executive and the Company shall each
reasonably cooperate with the other in connection with any administrative
or judicial proceedings concerning the existence or amount of liability
for Excise Tax with respect to the Severance Benefits.
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(iv) As used herein, any reference to "Ropes & Xxxx" shall include
any successor firm thereto.
6. CONFIDENTIAL INFORMATION; NON-SOLICITATION; NON-COMPETITION.
(a) The Executive shall hold in a fiduciary capacity for the benefit of
the Company all secret or confidential information, knowledge or data relating
to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated companies and
that shall not have been or now or hereafter have become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). During the Employment Period and for a period of five years
thereafter, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process or as may be
reasonably determined by the Executive to the extent necessary to enforce his
rights hereunder or otherwise against the Company, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it.
(b) The Executive shall not, at any time during the Employment Period and
for a period of three years thereafter (i) engage or become economically
interested as an owner (other than as an owner of less than 5% of the stock of a
publicly owned company), stockholder, lender, provider (directly or indirectly,
including, without limitation, by a gift of funds) of financing, partner,
director, officer, employee, consultant or otherwise in any business that is
competitive with any business conducted by the Company or any of its affiliated
companies during the Employment Period or on the date of termination as
applicable or (ii) recruit, solicit for employment, hire or engage any employee
of the Company or any person who was an employee of the Company within two (2)
years prior to the date of termination. The Executive acknowledges that these
provisions (I) have been specifically bargained for by the Company and are
supported by separate and specific consideration provided to him by the Company
and (II) are necessary for the Company's protection and are not unreasonable,
since he would be able to obtain employment with companies whose businesses are
not competitive with those of the Company and its affiliated companies and would
be able to recruit and hire personnel other than employees of the Company. The
duration and the scope of these restrictions on the Executive's activities are
divisible, so that if any provision of this paragraph is held or deemed to be
invalid, that provision shall be automatically modified to the extent necessary
to make it valid.
(c) The Executive and the Company agree that the covenants set forth in
Section 6(b) hereof are reasonable covenants under the circumstances, and
further agree that if in the opinion of any court of competent jurisdiction such
restraint is not reasonable in any respect, such court shall have the right,
power and authority to excise or modify such provision or provisions of this
covenant as to the court shall appear not reasonable and to enforce the
remainder of the covenant as so amended. The Executive agrees that any breach of
the covenants contained in this Section 6 would irreparably injure the Company.
Accordingly, the Executive agrees that the Company may, in addition to pursuing
any other remedies it may have in law or in equity, withhold payment of any
amounts due hereunder and obtain an injunction against Executive from any court
having jurisdiction over the matter restraining any further violation of this
Agreement by the Executive.
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7. ENFORCEABILITY. If any provision of this Agreement shall be deemed invalid or
unenforceable as written, this Agreement shall be construed, to the greatest
extent possible, or modified, to the extent allowable by law, in a manner which
shall render it valid and enforceable and any limitation on the scope or
duration of any such provision necessary to make it valid and enforceable shall
be deemed to be a part thereof. No invalidity or unenforceability of any
provision contained herein shall affect any other portion of this Agreement
unless the provision deemed to be so invalid or unenforceable is a material
element of this Agreement, taken as a whole.
8. LEGAL EXPENSES. The Company shall pay the Executive's reasonable fees for
legal and tax advice and other related expenses associated with the negotiation
and completion of this Agreement. The Company shall also pay the Executive's
reasonable fees for legal and other related expenses associated with any
disputes arising hereunder or under the stock option agreements referred to
herein if a court of competent jurisdiction shall render a final judgement in
favor of the Executive on the issues in such dispute, from which there is no
further right of appeal. If it shall be determined in such judicial adjudication
that the Executive is successful on some of the issues in such dispute, but not
all, then the Executive shall be entitled to receive a portion of such legal
fees and other expenses as shall be appropriately prorated.
9. NOTICES. All notices which the Company is required or permitted to give to
the Executive shall be given by registered or certified mail or overnight
courier, with a receipt obtained, addressed to the Executive at the address
referred to above, or at such other place as the Executive may from time to time
designate in writing, or by personal delivery, and to counsel for the Executive
as may be requested in writing by the Executive from time to time. All notices
which the Executive is required or permitted to give to the Company shall be
given by registered or certified mail or overnight courier, with a receipt
obtained, addressed to the Company at the address set forth above, or at such
other address as the Company may from time to time designate in writing, or by
personal delivery, and to counsel for the Company as may be requested in writing
by the Company. A notice will be deemed given upon the mailing thereof or
delivery to an overnight courier for delivery the next business day, except for
a notice of a change of address, which will not be effective until receipt.
10. WAIVERS. No waiver by either party of any breach or nonperformance of any
provision or obligation of this Agreement shall be deemed to be a waiver of any
preceding or succeeding breach of the same or any other provision of this
Agreement.
11. HEADINGS; OTHER LANGUAGE. The headings contained in this Agreement are for
reference purposes only and shall in no way affect the meaning or interpretation
of this Agreement. In this Agreement, as the context may require, the singular
includes the plural and the singular, the masculine gender includes both male
and female reference, the word "or" is used in the inclusive sense and the words
"including," "includes," and "included" shall not be limiting.
12. COUNTERPARTS. This Agreement may be executed in duplicate counterparts, each
of which shall be deemed to be an original and all of which, taken together,
shall constitute one agreement.
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13. AGREEMENT COMPLETE; AMENDMENTS. This Agreement, together with the stock
option agreements pertaining to the stock options referred to herein, is the
entire agreement of the parties with respect to the subject matter hereof and
supersedes all prior agreements, written or oral, with respect thereto,
including without limitation the 1999 Employment Agreement. Without limiting the
generality of the immediately preceding sentence, the Executive and the Company
agree that the Second Amended and Restated Employment Agreement dated as of
August 23, 2001 between the parties hereto is hereby rescinded and replaced with
this Agreement. This Agreement may not be amended, supplemented, canceled or
discharged except by a written instrument executed by both of the parties
hereto; PROVIDED, HOWEVER, that the immediately foregoing provision shall not
prohibit the termination of rights and obligations under this Agreement which
termination is made in accordance with the terms of this Agreement.
14. BENEFIT AND BINDING NATURE/NONASSIGNABILITY. This Agreement shall be binding
upon and inure to the benefit of the successors and permitted assigns of the
respective parties hereto. This Agreement and the rights and obligations
hereunder are personal to the Company and the Executive and are not assignable
or transferable to any other person, firm or corporation without the consent of
the other party, except as contemplated hereby; PROVIDED, HOWEVER, in the event
of the merger or consolidation of the Company, whether or not the Company is the
surviving or resulting corporation, the transfer of all or substantially all of
the assets of the Company, or the voluntary or involuntary dissolution of the
Company, then the surviving or resulting corporation or the transferee or
transferees of the Company's assets shall be bound by this Agreement and the
Company shall take all actions necessary to insure that such corporation,
transferee or transferees are bound by the provisions of this Agreement; and
PROVIDED, FURTHER, this Agreement shall inure to the benefit of the Executive's
estate, heirs, executors, administrators, personal and legal representatives,
distributees, devisees, and legatees. Notwithstanding the foregoing provisions
of this Section 14, the Company shall not be required to take all actions
necessary to insure that a transferee or transferees of the Company's assets are
bound by the provisions of this Agreement and such transferee or transferees of
the Company's shall not be bound by the obligations of the Company under this
Agreement if the Company shall have (a) paid to the Executive or made provision
satisfactory to the Executive for payment to him of all amounts which are or may
become payable to him hereunder in accordance with the terms hereof and (b) made
provision satisfactory to the Executive for the continuance of all benefits
required to be provided to him in accordance with the terms hereof.
15. GOVERNING LAW. This Agreement will be governed and construed in accordance
with the law of Pennsylvania applicable to agreements made and to be performed
entirely within such state, without giving effect to the conflicts of laws
principles thereof.
16. SUBSIDIARIES. As used herein, the term "Subsidiaries" shall mean all
corporations a majority of the capital stock of which entitling the holder
thereof to vote is owned by the Company or a Subsidiary.
17. INTERPRETATION. The Company and the Executive each acknowledge and agree
that this Agreement has been reviewed and negotiated by such party and its or
his counsel, who have contributed to its revision, and the normal rule of
construction, to the effect that any ambiguities are resolved against the
drafting party, shall not be employed in the interpretation of it.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
KEY ENERGY SERVICES, INC.
By_________________________
TITLE:
___________________________
XXXXXXX X. XXXX
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SCHEDULE A
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COMPANY PAID COVERAGES
1. Life Insurance
$20,000,000 payable to beneficiaries designated by the Executive.
2. Business Travel Accident Insurance
Death and dismemberment benefits up to $10,000,000 with twenty-four
hour business and pleasure travel coverage.
3. Medical and Dental Coverage
Comprehensive medical and dental coverage, including an annual
physical, pursuant to which all medical and dental expenses incurred
by the Executive, his spouse and his children will be reimbursed by
Company-provided insurance, or in the absence of insurance coverage,
directly by the Company.
4. Director and Officer Liability Insurance
Minimum coverage of at least $50 million.
-B-1-
