EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (as from time to time amended in accordance
with the provisions hereof, this "Agreement"), dated as of July 1, 1995, is made
by and between XXXXXXX X. XXXX, residing at 00 Xxxx Xxx Xxxxx, Xxxxxxx,
Xxxxxxxxxxxx 00000 (the "Executive") and KEY ENERGY GROUP, INC., a Maryland
corporation with its principal offices at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxx Xxxxxx 00000 (the "Company").
Recitals
A. The Company desires to employ the services of the Executive as President
and Chief Executive Officer of the Company for the period and upon the terms and
conditions hereinafter set forth.
B. The Executive desires to serve in such capacities for the period and
upon the terms and conditions hereinafter set forth.
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) The Company hereby agrees to employ the Executive, and the
Executive hereby accepts employment by the Company, as the Company's President
and Chief Executive Officer, such employment to commence as of July 1, 1995 (the
"Commencement Date"), and to continue until the close of business on June 30,
1998, subject to extension as provided in this Section 1(a), unless sooner
terminated in accordance herewith (the "Initial Employment Period"). On each
June 30, commencing with June 30, 1998, the term of the Executive's employment
hereunder shall be automatically extended for twelve (12) months unless either
he or the Company shall have given written notice to the other that such
automatic extension shall not occur, which notice shall have been given no later
than thirty (30) days prior to the relevant June 30th (the Initial Employment
Period, together with any extensions, until termination in accordance herewith,
is referred to herein as the "Employment Period").
(b) The Company also hereby agrees that the Executive shall serve as a
director on the Board of Directors of the Company (the "Board"), and as a
director and either the President or Chairman of the Board of Directors of each
Subsidiary (as defined in Section 17 hereof), and the Executive hereby accepts
such appointments.
(c) The Executive shall have the responsibilities, duties and authority
commensurate with his positions as the 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.
The Executive will have the authority to employ and/or terminate the employment
of any employee of the Company or any Subsidiary thereof as he deems necessary
and appropriate, provided, however, that any terminations of employment of
employees subject to an employment agreement providing for the payment of cash
severance shall only be made at such times such that the severance obligations
to which the Company becomes obligated as a result thereof do not, together with
any previously incurred severance obligations at the time remaining unsatisfied,
exceed the amount provided for in a severance budget to be established by the
Executive from time to time and approved by the Board. 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 best efforts to the
business and affairs of the Company; 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 or delayed.
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(e) The principal location at which the Executive will perform his duties
will be the Company's principal offices. The Company's principal offices may be
transferred by the Executive or by the Board, with the Executive's consent. In
the event of such a transfer, 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 principal
offices.
2. Salary; Bonuses; Expenses.
(a) During the Employment Period, the Company will pay a salary to the
Executive at the annual rate of Three Hundred Twenty-Five Thousand Dollars
($325,000) per year (the "Base Salary"), payable in substantially equal
installments in accordance with the Company's existing payroll practices, but no
less frequently than biweekly. The Company will review the Executive's Base
Salary on a yearly basis promptly following the end of each fiscal year of the
Company to determine if an increase is advisable, and the Base Salary may be
increased (but not decreased) at the discretion of the Board, taking into
account, among other factors, the Executive's performance and the performance of
the Company.
(b) The Executive shall receive, in recognition of and as compensation
for (i) the successful reorganization of the Company in fiscal year 1993 under
the leadership of the Executive, for which the Executive has not previously been
awarded any bonus; and (ii) the financial performance of the Company in fiscal
years 1993, 1994 and 1995, in each of which years the Company's actual results
of operations substantially exceeded projections, a cash bonus in the amount of
Two Hundred Fifty Thousand Dollars ($250,000), payable in four equal
installments of $62,500 each, payable on (A) the execution and delivery of this
Agreement, (B) January 1, 1996, (C) January 1, 1997, and (D) January 1, 1998;
provided, however, that installments payable subsequent to the date of this
Agreement shall bear interest at six percent (6%) per annum with interest to be
paid at the time such installment is payable.
(c) For each annual period commencing July 1, 1995, the Executive shall
be eligible to participate in an incentive plan (the "Incentive 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 Executive and the Board (the
"Strategic Plan"), payable within ninety (90) days after the end of each fiscal
year. The performance goals for the Incentive Plan will be based on objective
criteria mutually
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negotiated and agreed upon in good faith in advance by the Executive and the
Board. For the period commencing on July 1, 1995 and thereafter during the
Employment Period, the Executive will be eligible to participate in the
Incentive Plan, which will permit him to earn an annual bonus of up to thirty
percent (30%) of his Base Salary provided goals set forth in the Incentive Plan
are achieved. The Executive's aggregate annual bonus determined in accordance
with this Section 2(c) is referred to herein as the "Annual Bonus."
(d) The Executive shall also receive such bonuses other than pursuant
to the Incentive Plan in such amounts and at such times as the Board in its
discretion determines are appropriate to recognize extraordinary performance by
the Executive or the Company, which would include without limitation the
acquisition or sale of a division or divisions of the Company or of a Subsidiary
or Subsidiaries, or of the Company.
(e) The Executive shall be reimbursed by the Company for reasonable
travel, lodging, meal and other expenses incurred by him in connection with
performing his services hereunder in accordance with the Company's policies from
time to time in effect. All air travel by the Executive may be in first class.
Any bonus mileage will be returned to the Company for the Company's use.
3. Stock Options. As performance-based incentive compensation to the
Executive in connection with his services to be rendered hereunder, the Company
agrees as follows:
(a) Subject to the approval by the stockholders of the Company of the
Company's 1995 Stock Option Plan (the "1995 Stock Option Plan"), the Company has
granted to the Executive:
(i) Options (the "350 Options") to acquire Three Hundred Fifty
Thousand (350,000) shares of the Common Stock of the Company at an exercise
price of $5.00 per share, which are fully vested as of the date of grant and
exercisable at any time prior to July 1, 2005. The 350 Options have been granted
pursuant to the Company's 1995 Stock Option Plan and pursuant to an agreement
substantially in the form attached hereto as Exhibit A.
(ii) Options (the "150 Options" and, together with the 350
Options, the "Options") to acquire One Hundred Fifty Thousand (150,000) shares
of the Common Stock of the Company at an exercise price of $5.00 per share, with
such options to vest on the first date occurring on or after July 1, 1996 but
prior to
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July 1, 1999 on which the fair market value (as defined in the form of agreement
attached hereto as Exhibit B) of the Common Stock of the Company shall equal at
least $9.50. The 150 Options shall be granted pursuant to the Company's 1995
Stock Option Plan and pursuant to an agreement substantially in the form
attached hereto as Exhibit B. The 150 Options shall also vest as set forth in
Section 5(e) upon the occurrence of certain events and will be subject to the
other terms set forth in Section 5(e).
The Executive understands that the Company has terminated the Stock
Grant Plan adopted by the Board on September 27, 1993 (the "1993 Stock Grant
Plan"), and the Executive consents to the termination of the 1993 Stock Grant
Plan and waives, releases and relinquishes any right he may have to receive any
Common Stock of the Company pursuant to such Plan.
(b) For each annual period commencing July 1, 1995, the Executive shall
be eligible to participate in a stock option plan for the Company's executives
providing for the granting of stock options under the 1995 Stock Option Plan.
The performance goals for the grant of such options will be based on objective
criteria mutually negotiated and agreed upon in good faith in advance by the
Executive and the Board. The Executive's aggregate annual bonus determined in
accordance with this Section 3(b) is referred to herein as the "Annual Stock
Option Grant."
(c) The Company agrees that it will use its best efforts to comply with
the requirements of Rule 16b-3 promulgated pursuant to the Securities Exchange
Act of 1934, as amended (the "1934 Act"), as such rule shall be in effect from
time to time, or with any successor provision to said rule("Rule 16b-3") such
that in the event the Executive shall become subject to Section 16 (or a
successor provision) of the 1934 Act with respect to shares of the Company's
capital stock, the Executive shall be afforded the benefits of Rule 16b-3 with
respect to such restricted stock or options, including without limitation
providing for the grant of restricted stock or options pursuant to stock plans
which comply with Rule 16b-3 and permit the terms of options contemplated by
this Agreement.
(d) 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 (referred to herein as "1934 Act Registration"), it shall use its
best efforts to cause to remain effective a registration statement on Form S-8
(or a successor form) within ninety (90) days of the date such 1934 Act
Registration-becomes effective, and to maintain the effectiveness of such
registration statement, such that any restricted stock or
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options (including but not limited to the Options) granted to the Executive and
the purchase of shares by the Executive upon the exercise of any such options
shall be registered under the Securities Act of 1933, as amended or any
successor provision, and so long as he is an affiliate of the Company or if he
shall have exercised any of such options in whole or in part prior to the
effectiveness of such registration statement, to provide for and maintain the
effectiveness of a corresponding resale prospectus on Form S-3 providing for the
resale by the Executive of the shares so granted or purchased.
4. Benefit Plans; Vacations. In connection with the Executive's employment
hereunder, he shall be entitled during the Employment Term (and thereafter to
the extent provided in Section 5(f) hereof) to the following additional
benefits:
(a) At the Company's expense, 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 B
hereto.
(b) The Executive shall be entitled to no less than the number of
vacation days in each calendar year determined in accordance with the Company's
vacation policy as in effect from time to time, but not less than twenty (20)
days in any calendar year (prorated in any calendar year during which he is
employed hereunder for less than the entire year in accordance with the number
of days in such calendar year in which he is so employed). The Executive shall
also be entitled to all paid holidays and personal days given by the Company to
its executives.
(c) The Company shall lease an automobile for the Executive
substantially similar to the automobile currently leased for the executive and
shall pay all expenses, including but not limited to repair and maintenance,
incurred by the Executive in connection with the use of the automobile during
the Employment Term.
(d) The Company will pay the reasonable fees for personal 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 the reasonable expenses of a home
office for the Executive.
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(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, for the Executive to become and remain a
member of one private country club, golf club, tennis club or similar club or
association for business use selected by the Executive and approved by the
Board, which approval shall not be unreasonably withheld or delayed.
5. Termination, Change of Control and Reassignment of Duties.
(a) Termination By Company. The Company shall have the right to
terminate the Executive's employment under this Agreement for Cause (as defined
below) at any time without obligation to make any further payments to the
Executive hereunder. The Company shall have the right to terminate the
Executive's employment for any reason other than for Cause only upon at least
ninety (90) days prior written notice to him, except as otherwise provided in
Section 5(b), which Section shall apply in the event the Executive becomes
unable to perform his obligations hereunder by reason of Disability (as defined
below). In the event the Company terminates the Executive's employment hereunder
for any reason other than for Cause or Disability, 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 and following the termination of employment, including without
limitation the use of his office and secretarial services during the remainder
of his employment.
As used in this Agreement, the term "Cause" shall mean: (i) the willful
and continued failure by the Executive to substantially perform his duties
hereunder (other than (A) any such willful or continued failure resulting from
his incapacity
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due to physical or mental illness or physical injury or (B) any such actual or
anticipated failure after the issuance of a notice of termination by the
Executive for Good Reason (as defined below), after 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; or (ii) the willful engaging by the
Executive in misconduct which is materially injurious to the Company, monetarily
or otherwise; or (iii) the conviction of a felony by a court of competent
jurisdiction. For purposes of this paragraph, 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. Notwithstanding the foregoing,
the Executive's employment shall not be deemed to have been terminated for Cause
unless (A) reasonable notice shall have been given to him setting forth in
detail the reasons for the Company's intention to terminate for Cause, and if
such termination is pursuant to clause (i) or (ii) above and any damage to the
Company is curable, only if Executive has been provided a period of ten (10)
business days from receipt of such notice to cease the actions or inactions, and
he has not done so; (B) an opportunity shall have been provided for the
Executive, together with his counsel, to be heard before the Board; and (C) if
such termination is pursuant to clause (i) or (ii) above, 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 set forth in clause (i) or (ii) above, and
specifying the particulars thereof in detail.
(b) Termination upon Disability and Temporary Reassignment
of Duties Due to Disability.
(i) If the Executive becomes 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 ninety
(90) days during any period of twelve (12) consecutive months ("Disability"),
then the term of the Executive's employment hereunder may be terminated by the
Board within sixty (60) days after the expiration of said ninety (90) day period
(whether consecutive or in the aggregate, as the case may be), said termination
to be effective ten (10) days after written notice to the Executive. In the
event the Company shall give a notice of termination under this Section 5(b)(i),
then the Company may reassign the Executive's duties hereunder to another person
or
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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 and
following the termination of employment.
(ii) During any period that 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 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. Notwithstanding the foregoing, if the Executive has been unable
to perform his obligations hereunder by reasons involving physical or mental
illness or physical injury for a period of ninety (90) consecutive days or an
aggregate of ninety (90) days during any period of twelve (12) consecutive
months, then a determination by a physician of disability will not be required
prior to any such reassignment. 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 or, if
applicable, following a termination of employment.
(c) Termination by Executive. The Executive's employment may be
terminated by him, by giving written notice, to the Company as follows: (i) at
any time by notice of at least thirty (30) days; (ii) at any time by notice for
a Good Reason, effective upon giving such notice; (iii) at any time, if his
health should become impaired, provided he has obtained a written statement from
a qualified doctor to such effect, effective upon giving such notice; or (iv) at
any time following but prior to the first anniversary of a Change of Control (as
defined below), effective upon giving such notice. In the event of a termination
by the Executive of his employment, the Company may reassign the Executive's
duties hereunder to another person or other persons.
As used herein, a "Good Reason" shall mean any of the following:
(A) Failure to be nominated by the Board for election
to the Board at any time such nominations are made, or
failure of the stockholders of the Company to elect the
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Executive to the Board, or failure of the Board to elect the Executive
as President and Chief Executive Officer of the Company, or failure to
be nominated by the Board of Directors of any Subsidiary for election
to such Board of Directors at any time such nominations are made, or
failure of the stockholders of any Subsidiary to elect the Executive to
the Board of Directors of such Subsidiary, or failure of the Board of
Directors of any Subsidiary to elect the Executive as President or
Chairman of the Subsidiary, or removal 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(a) 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 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(a), (II) such material change is not made in
accordance with Section 5(a) following a termination of Executive's
employment by the Company other than for Cause or Disability, (III)
such material change is not made in accordance with Section 5(b)
pertaining to disability, including without limitation the time period
restrictions applicable thereunder, and (IV) any notice of termination
hereunder shall be given by him within ninety (90) days of when he
becomes aware of such change; or
(C) Failure by the Company to comply with any provision of
Section 1, 2, 3, 4 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 any notice of
termination hereunder shall be given by the Executive within ninety
(90) days after the end of such fifteen (15) day period;
(D) Failure by the Company to obtain an assumption of
this Agreement by a successor in accordance with Section 14
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unless payment or provision for payment and provision for continuation
of benefits under this Agreement have been made in a manner permitted
by Section 5; and
(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 any notice of termination hereunder
shall be given by the Executive within thirty (30) days of receipt of
notice of such purported termination.
As used herein, a "Change of Control" means that any of the following
events has occurred:
(I) Any person (as defined in Section 3(a)(9) of the 1934 Act
(or any successor provision), other than the Company, is the beneficial
owner directly or indirectly of more than twenty-five percent (25%) of
the outstanding Common Stock of the Company, determined in accordance
with Rule 13d-3 under the 1934 Act (or any successor provision), or
otherwise becomes entitled to vote more than twenty-five percent (25%)
of the voting power entitled to be cast at elections for directors
("Voting Power") of the Company, or in any event such lower percentage
as may at any time be provided for in any similar provision for any
director or officer of the Company or of any Subsidiary approved by the
Board;
(II) If the Company is subject to the reporting requirements
of Section 13 or 15(d) (or any successor provision) of the 1934 Act,
any person (as defined in Section 3(a)(9) of the 1934 Act), other than
the Company, shall purchase shares pursuant to a tender offer or
exchange offer to acquire Common Stock of the Company (or securities
convertible into or exchangeable for or exercisable for Common Stock)
for cash, securities or any other consideration, provided that after
consummation of the offer, the person in question is the beneficial
owner, directly or indirectly, of more than twenty-five percent (25%)
of the outstanding Common Stock of the Company, determined in
accordance with Rule 13d-3 under the 1934 Act (or any successor
provision) or such lower percentage as may
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at any time be provided for in any similar provision for any
director or officer of the Company or of any Subsidiary
approved by the Board;
(III) The stockholders or the Board shall have approved any
consolidation or merger of the Company in which (1) the Company is not
the continuing or surviving corporation unless such merger is with a
Subsidiary at least eighty percent (80%) of the Voting Power of which
is held by the Company or (2) pursuant to which the holders of the
Company's shares of Common Stock immediately prior to such merger or
consolidation would not be the holders immediately after such merger or
consolidation of at least a majority of the Voting Power of the Company
or such lower percentage as may at any time be provided for in any
similar provision for any director or officer of the Company or of any
Subsidiary approved by the Board;
(IV) The stockholders or the Board shall have approved any
sale, lease, exchange or other transfer (in one transaction or a series
of transactions) of all or substantially all of the assets of the
Company; or
(V) Upon the election of one or more new directors of the
Company, a majority of the directors holding office, including the
newly elected directors, were not nominated as candidates by a majority
of the directors in office immediately before such election.
As used in this definition of Change of Control, "Common
Stock" means the Common Stock, or if changed, the capital stock of the Company
as it shall be constituted from time to time entitling the holders thereof to
share generally in the distribution of all assets available for distribution to
the Company's stockholders after the distribution to any holders of capital
stock with preferential rights.
(d) Severance Compensation.
(i) Termination for Good Reason or Other than for Cause. In
the event the Executive's employment hereunder is terminated (A) by the
Executive or by the Company (or its successors) following a Change of Control,
or (B) by the Executive for a Good Reason or (C) by the Company other than for
Cause (including without limitation in the event the Company elects at any time
not to automatically extend the Executive's employment hereunder pursuant to the
second sentence of Section 1(a) hereof), the Executive shall be entitled, in
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addition to the other compensation and benefits herein provided for, to
severance compensation in an aggregate amount equal to the product of (I) three
(3) times (II) his Base Salary at the rate in effect on the termination date,
payable in thirty-six (36) substantially equal monthly installments commencing
at the end of the calendar month in which the termination date occurs; provided,
however, that if the Executive's employment is terminated following a Change of
Control or is terminated by the Company other than for Cause in anticipation of
a Change of Control, such severance compensation shall be paid in one lump sum
on the date of such termination.
(ii) Termination Following Disability. In the event the
Executive's employment should be terminated by the Company as a result of
Disability in accordance with Section 5(b) hereof, then the Executive shall be
entitled, in addition to the other compensation and benefits herein provided
for, to severance compensation in an aggregate amount equal to the product of
(A) three (3) times (B) his Base Salary at the rate in effect on the termination
date, payable in thirty-six (36) substantially equal monthly installments
commencing at the end of the calendar month in which the termination date
occurs, reduced by the amount of any disability insurance proceeds actually paid
to the Executive or for his benefit during the said time period.
(e) Effect of Termination or Change of Control upon Equity
Compensation.
(i) In the event the Executive's employment hereunder is
terminated by the Company for any reason other than for Cause (including without
limitation an election by the Company not to automatically extend the
Executive's employment hereunder pursuant to the second sentence of Section 1(a)
hereof), or in the event the Executive should terminate his employment for Good
Reason, then unless the provisions of Section 5(e)(iv) hereof shall apply, any
restricted stock or unexpired options (including without limitation the Options)
held by the Executive entitling the Executive 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, vest and/or be
exercisable for an exercise period of at least twelve (12) months following such
termination date or such longer period as set forth in the pertinent option
agreement.
(ii) In the event the Executive's employment hereunder is
terminated by the Company for Cause, then effective upon the date such
termination is effective, any restricted stock or options (including without
limitation the 150 Options) not
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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 the Executive's death while employed or
in the event the Executive's employment should terminate as a result of
Disability, then, unless the provisions of Section 5(e)(iv) hereof shall apply,
any restricted stock or unexpired options (including without limitation the
Options) held by the Executive entitling the Executive 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, vest
and/or be exercisable for an exercise period of at least twelve (12) months
following such termination date or such longer period as set forth in the
pertinent option agreement.
(iv) In the event of a Change of Control while the Executive
is employed, then as of the date immediately prior to the date such Change of
Control shall occur, any restricted stock or options (including without
limitation the Options) held by the Executive entitling the Executive to
purchase securities of the Company, which restricted stock or options are
subject to vesting, shall, notwithstanding any contrary provision in the
agreement or plan pursuant to which such restricted stock or options were
granted, become fully vested and any such options shall become exercisable as of
such date and shall remain exercisable during the respective terms of such
options, unless his employment shall sooner terminate. In the event of any
termination of his employment following the date an option becomes fully
exercisable in accordance with the terms of this Section 5(e)(iv), then the
applicable exercise period shall be at least twelve (12) months following the
date of termination or such longer period as set forth in the pertinent option
agreement.
(f) Continuation of Benefits, etc. (i) Subject to the Section 5(f)(ii)
hereof, in the event the Executive's employment hereunder is terminated by the
Executive for a Good Reason or by the Company other than for Cause (including
without limitation in the event the Company elects not to automatically extend
the Executive's employment hereunder pursuant to the second sentence of Section
1(a) hereof):
(A) The Executive 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
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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
termination date or (II) the date on which the Executive commences
full-time employment by another 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 immediately preceding the
applicable termination date. 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 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 is entitled to receive benefits under this
Section 5(f). At such time as the Company is no longer required to
provide the Executive with life and/or disability insurance, as the
case may be, the Executive shall be entitled at the Executive's expense
to convert such life and disability insurance, as the case may be,
except if and to the extent such conversion 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 the Executive commences full-time employment by
another employer or becomes self-employed on a full-time basis, to
office space located within ten (10) miles of the principal offices of
the Company and secretarial services 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
following a Change of Control or is terminated by the Company other than for
Cause in anticipation of a Change of
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Control, the Company shall pay to the Executive, in lieu of providing the
benefits contemplated by Section 5(f)(i) above, 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 on the date of such termination.
(g) Accrued Compensation. In the event of any termination of the
Executive's employment for any reason, the Executive (or his estate) shall be
paid such portion of his Base Salary and bonuses as 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 termination date.
The amount due to the Executive (or his estate) under this Section 5(g) in
payment of any bonus, including without limitation the Annual Bonus and/or
Annual Stock Option Grant, shall be a proportionate amount of the bonus that
would next be payable to him and would otherwise have been due to the Executive
if such termination had not occurred and such bonus 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.
(h) Resignation. If the Executive's employment hereunder shall be
terminated by him or by the Company in accordance with the terms set forth
herein, then effective upon the date such termination is effective, he will be
deemed 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.
6. Limitation on Competition. During the Employment Period, and for such period
thereafter as the Executive is entitled to receive severance compensation under
this Agreement, in the event of termination of the Executive's employment
hereunder for any reason other than (a) following a Change of Control, or (b) by
the Executive for a Good Reason or (c) by the Company other than for Cause
(including without limitation in the event the Company elects at any time not to
automatically extend the Executive's employment hereunder pursuant to the second
sentence of Section 1(a) hereof), (i) the Executive shall not, directly or
indirectly, without the prior written consent of the Board,
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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
or the drilling, production or sale of natural gas or crude oil (a "Competing
Enterprise"), provided, however, that the Executive shall not be deemed to be
participating or engaging in any such business solely by virtue of his 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 (ii) the Executive 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. 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 either 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 or arbitration 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
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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,
and except as otherwise provided in Section 5(a).
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.
13. Agreement Complete; Amendments. This Agreement, together with the
Indemnification Agreement, the stock option agreements referred to herein and
the 1995 Stock Option Plan, 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. This Agreement may not be amended, supplemented,
cancelled 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
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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 15, 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 Maryland applicable to agreements made and to be
performed entirely within such state, without giving effect to the conflicts of
laws principles thereof.
16. Survival. The provisions of Xxxxxxxx 0, 0(x), (x), (x), (x) and (h), 6, 7
and 8 hereof, and any restricted stock or stock option agreement entered into
pursuant to Section 3 hereof or during the Executive's employment hereunder
shall survive the termination of the Executive's employment as continuing and
separate agreements between the parties.
17. 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.
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18. 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
KEY ENERGY GROUP, INC.
By:/s/ Xxxxxx Xxxxxxxxx
Name: Xxxxxx Xxxxxxxxx
Title: Chairman Compensation Committee
Co-Chairman of Board of Directors
/s/ Xxxxxxx X. Xxxx
XXXXXXX X. XXXX
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SCHEDULE B
Company Paid Coverages
1. Life Insurance
$1,500,000 without a physical exam, payable to
beneficiary designated by the Executive.
$1,000,000, payable to the Company.
2. Business Travel Accident Insurance
Death and dismemberment benefits up to $500,000 with
twenty-four hour business and pleasure travel
coverage.
3. Long Term Disability Insurance
Salary continuation benefit for total disability.
Benefit commences with ninetieth day of disability
and continues to a maximum of age sixty-five. Annual
maximum benefit shall be 60% of base salary and bonus
compensation.
4. Medical and Dental Plan
Comprehensive medical and dental plans subject to
annual deductible not to exceed $1,000 and providing
for an annual physical.
5. Director and Officer Liability Insurance
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