Yale E. Key, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
As of July 1, 1995
Mr. C. Xxx Xxxxxxx
c/o Yale E. Key, inc.
, Texas
EMPLOYMENT AGREEMENT
Dear Xx. Xxxxxxx:
Yale E. Key, Inc., a Texas corporation (the "Company"), with its principal
offices at the address set forth above, and you, an individual residing at your
address set forth above, agree as
follows:
1. Employment; Term. (a) The Company agrees to employ you, and you accept
employment by the Company, as President of the Company. Your employment will
commence as of July 1, 1995 (the "Commencement Date") and 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 with this Letter (the
"Initial Employment Period"). On each June 30, commencing with June 30, 1998,
the term of your employment will be automatically extended for twelve (12)
months unless either you or the Company gives written notice to the other, no
later than thirty (30) days prior to the relevant June 30th, that such automatic
extension shall not occur. The Initial Employment Period, together with any
extensions, until termination in accordance herewith is referred to herein as
the "Employment Period".
(b) You will have the usual duties of a President and will be responsible,
subject to the Chairman of the Board and the Board of Directors of the Company
(the "Board"), for participating in the management and direction of the
Company's business and operations. You will, if elected, serve as a director of
the Company and as an officer and/or director of one or more of Key Energy
Group, Inc. and its subsidiaries and perform all duties incident to such offices
and such specific other tasks as may from time to time be assigned to you by the
Chairman of the Board or the Board or by the President of Key
Energy Group, Inc. During the Employment Period, you will devote your full
time and best efforts to the business and affairs of the Company and Key Energy
Group, Inc. and its subsidiaries.
2. Salary; Bonuses; Expenses.
(a) During the Employment Period, the Company will pay a salary to you at
the annual rate of One Hundred Ninety-Two Thousand Dollars ($192,000) per year
(the "Base Salary"), payable in substantially equal installments in accordance
with the Company's existing payroll practices, but no less frequently than
monthly.
(b) For each fiscal year of the Company commencing after June 30, 1995, you
will be eligible to participate in an incentive plan for key employees and other
persons involved in the business of Key Energy Group, Inc. and its subsidiaries
(the "Incentive Plan") providing for the payment of cash bonuses of up to fifty
percent (50%) of your Base Salary and, subject to the approval by the
stockholders of Key Energy Group, Inc., in the 1995 Stock Option Plan of Key
Energy Group, Inc. (the "1995 Stock Option Plan").
(c) You will be reimbursed by the Company for reasonable travel, lodging,
meal and other expenses incurred by you in connection with performing your
services hereunder in accordance with the Company's policies from time to time
in effect.
3. Stock Options. (a) As performance-based incentive compensation to you in
connection with your services hereunder, there shall be granted to you, subject
to the approval by the stockholders of Key Energy Group, Inc. of the 1995 Stock
Option Plan, options (the "Options") to acquire One Hundred Twenty Five Thousand
(125,000) shares of the Common Stock, par value $.10 per share, of Key Energy
Group, Inc. (the "Common Stock") at an exercise price of $5.00 per share, with
such options to be granted pursuant to, and subject to the terms and provisions
(including vesting provisions) of, the 1995 Stock Option Plan and an agreement
substantially in the form attached hereto as Exhibit A.
(b) Key Energy Group, Inc. has terminated the 1993 Stock Grant Plan adopted
by Key Energy Group, Inc. on September 27, 1993 (the "1993 Stock Grant Plan"),
and you hereby consent to the termination of the 1993 Stock Grant Plan and
waive, release and relinquish any right you may have to receive any Common Stock
pursuant to such Plan.
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4. Benefit Plans; Vacations. You will be entitled during the Employment
Period (and thereafter to the extent provided in Section 5(d) below) to such
fringe benefits, including without limitation group medical and dental, life,
executive life, accident and disability insurance, retirement plans and
supplemental and excess retirement benefits and a Company-leased automobile and
payment of expenses associated therewith, as the Company may provide from time
to time for its senior management; not less than twenty (20) vacation days.
5. Termination; Change of Control; etc.
(a) Termination by Company. The Company shall have the right to terminate
your employment under this Letter for Cause at any time without obligation to
make any further payments to you hereunder. The Company shall have the right to
terminate your employment for any reason other than for Cause, subject only to
the Company's obligations under Section 5(d) below. As used in this Letter, the
term "Cause" shall mean (i) the willful and continued failure by you to
substantially perform your duties hereunder (other than any such willful or
continued failure resulting from your incapacity due to physical or mental
illness or physical injury), or (ii) the willful engaging by you in misconduct
which is materially injurious to the Company, monetarily or otherwise, or (iii)
your conviction of a felony by a court of competent jurisdiction.
(b) Termination upon Disability. If you become totally and permanently
disabled during the Employment Period so that you are unable to perform your
obligations hereunder by reasons involving physical or mental illness or
physical injury ("Disability"), then the term of your employment hereunder may
be terminated by the Company.
(c) Termination by Executive. You may terminate your employment by giving
written notice to the Company at any time by written notice of at least thirty
(30) days.
(d) Severance Compensation. In the event your employment hereunder is
terminated following a change of control of the Company or by you because of a
material breach by the Company of its obligations under this Letter or by the
Company other than for Cause, you will be entitled to severance compensation at
your Base Salary at the monthly rate in effect on the termination date, payable
in arrears, during the period expiring eighteen (18) months after the
termination date, commencing at the end of the calendar month in which the
termination date occurs; provided, however, that in the event your employment
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should be terminated by the Company as a result of Disability in accordance
with Section 5(b) above, then the severance compensation to which you are
entitled shall be reduced by the amount of any disability insurance proceeds
actually paid to you or for your benefit during the said time period.
6. Limitation on Competition. During the Employment Period, and for such
period thereafter as you are entitled to receive severance compensation under
this Agreement or, if not entitled to receive severance compensation, for a
period of one year after your termination, (a) you shall not, directly or
indirectly, without the prior written consent of the Company, participate or
engage in, whether as a director, officer, employee, advisor, consultant,
stockholder, partner, joint venturer, owner or in any other capacity, any
business engaged in the business of furnishing oilfield services or the
drilling, production or sale of natural gas or crude oil (a "Competing
Enterprise"), provided, however, that you shall not be deemed to be
participating or engaging in any such business solely by virtue of your
ownership of not more than five percent of any class of stock or other
securities which is publicly traded on a national securities exchange or in a
recognized over-the-counter market; and (b) you shall not, directly or
indirectly, solicit, raid, entice or otherwise induce any employee of the
Company or of Key Energy Group, Inc. or any of its subsidiaries to be employed
by a Competing Enterprise.
If this Letter correctly sets forth your understanding of the agreement
between the Company and you, please indicate your agreement hereto by signing
this Letter in the space for that purpose below.
YALE E. KEY
By:/s/ Xxxxxxx X. Xxxx
Name: Xxxxxxx X. Xxxx
Title: President
ACCEPTED AND AGREED:
/s/ C. Xxx Xxxxxxx
C. Xxx Xxxxxxx
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