Key Energy Services, Inc.
Xxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx
As of January 4, 1999
Xxxxxxx X. XxXxxxx
0000 Xxxx Xxxxxxxxx
Xxxxx, Xxxxx 00000
EMPLOYMENT AGREEMENT
(this "Agreement")
Dear Xxxx:
Key Energy Services, Inc., a Maryland corporation formerly known as Key Energy
Group, Inc. (the ACompany@), with its principal offices at the address set forth
above, and you, an individual with your address set forth above, agree as
follows:
1. Employment; Term. The Company agrees to employ you, and you agree to devote
your full time and best efforts to serve as a Vice President - Eastern
Operations of the Company. Your employment will commence effective as of
January 4, 1999 (the ACommencement Date@) and continue until the close of
business on January 3, 2002, subject to extension as provided in this
Section 1(a), unless sooner terminated in accordance with this Agreement
(the AInitial Employment Period@). On each January 4, commencing with
January 4, 2000, the term of your employment will be automatically extended
for a period of twelve (12) months unless either you or the Company gives
written notice to the other, no later than thirty (30) days prior to the
relevant January 4, 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 AEmployment Period.@
3
2. Salary; Bonus; Expenses. During the Employment Period, the Company will pay
a salary to you at the annual rate of not less than One Hundred Sixty
Thousand Dollars ($160,000) per year (the ABase Salary@), payable in
substantially equal installments in accordance with the Company=s existing
payroll practices, but no less frequently than monthly. For each fiscal
year of the Company commencing after June 30, 1998, you shall be eligible
to participate in an incentive plan for the Company=s executives, key
employees and other persons involved in the business of the Company and its
subsidiaries (the AIncentive Plan@) and in the Company=s stock-based
incentive plans outstanding from time to time. Under the Incentive Plan,
you shall be eligible to earn a cash bonus, payable within ninety (90) days
after each fiscal year end, of up to fifty percent (50%) of your Base
Salary, such amount to be determined by the Board based upon the level of
achievement of certain goals to be mutually established by you and the
President of the Company (subject to Board approval). 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. You will be entitled to a vehicle allowance of $700 per month (plus
reimbursement for fuel and excess mileage in accordance with the Company=s
expense reimbursement policies from time to time in effect).
3. Benefit Plans; Vacations. You will be entitled during the Employment Period
to not less than 15 vacation days and such other fringe benefits,
including, without limitation, group medical and dental, life, executive
life, accident and disability insurance, retirement plans and supplemental
and excess retirement benefits as the Company may provide from time to time
for its senior management.
4. Severance. In the event you are terminated (i) by the Company other
than for Cause (defined below) or (ii) automatically as a result of
the Company=s providing notice to you that automatic extension of the
Employment Period shall not occur, you will be entitled to receive
severance compensation at your Base Salary at the monthly rate in
effect on the termination date, payable monthly in arrears, during
that period of time after the termination date equal to the Severance
Period (defined below); provided, however, that (A) in the event your
employment should be terminated by the Company other than for Cause
within six months following a Change of Control (defined below) or in
anticipation of a Change of Control, the severance compensation
referred to above shall be paid in one lump sum on the date of such
termination, and (B) in the event your employment should be terminated
by the Company as a result of your disability, then the severance
compensation referred to above shall be reduced by the amount of any
disability insurance proceeds actually paid to you or for your benefit
during the Severance Period. As used in this Agreement, the term
ACause@ shall mean 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 the willful
engaging by you in misconduct which is materially injurious to the
Company, monetarily or otherwise, or your conviction of a felony by a
court of competent jurisdiction. As used in this Agreement, the term
AChange of Control@ shall have that meaning set forth in the Key
Energy Group, Inc. 1997 Incentive Plan. As used in this Agreement, the
term ASeverance Period@ shall mean a period of time equal to either
(i) 12 months or (ii) the number of months that has passed from the
Commencement Date through the date of termination rounded up to the
next whole month, whichever period of time is shorter.
5. Period. The compensation pursuant to Section 4 hereof), you shall not,
directly or indirectly, without the prior written consent of the
Company, participate or engage in, whether as a director, officer,
employee, advisor, consultant, stockholder, partner, joint venturer,
owner or in any other capacity, any business engaged in the business
of furnishing oilfield services (a ACompeting Enterprise@); provided,
however, that you shall not be deemed to be participating or engaging
in any such business solely by virtue of your ownership of not more
than five percent of any class of stock or other securities which is
publicly traded on a national securities exchange or in a recognized
over-the-counter market; and, for that same period of time, you shall
not, directly or indirectly, solicit, raid, entice or otherwise induce
any employee of the Company or any of its subsidiaries to be employed
by a Competing Enterprise. You hereby agree and acknowledge that a
portion of the consideration to be paid by the Company to you pursuant
to this Agreement is consideration for your covenants under this
Section 5 and such consideration is fair and adequate whether or not
you receive any severance compensation pursuant to Section 4 hereof.
6. Termination of Prior Agreements. Effective as of the Commencement
Date, all prior agreements and understandings between you and the
Company regarding your employment relationship with the Company,
whether oral or written (including that certain Employment Agreement
dated as of January 4, 1999 that may or may not have been executed by
you and the former Chief Operating Officer of the Company), are hereby
terminated and of no further force or effect.
If this Agreement correctly sets forth your understanding of the agreement
between the Company and you, please indicate your agreement hereto by signing
this Agreement in the space for that purpose below.
KEY ENERGY SERVICES, INC.
By:
Xxxxxxx X. Xxxx
President and Chief Executive Officer
ACCEPTED AND AGREED:
Xxxxxxx X. XxXxxxx
Date: May 11, 1999 (but to be effective as of January 4, 1999)
