Key Energy Group, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
As of July 1, 1995
Xx. Xxxxx X. Xxxxx
c/o Key Energy Group, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
EMPLOYMENT AGREEMENT
Dear Xx. Xxxxx:
Key Energy Group, Inc., a Maryland 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 the Company's Chief Accounting Officer and
Treasurer. 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 Chief Accounting Officer and
Treasurer and will be responsible, subject to the President 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
Subsidiaries (as defined below) and perform all duties incident to such offices
and will perform such specific other tasks, consistent with your position as
Chief Accounting Officer and Treasurer, as may from time to time be
assigned to you by the President or the Board. Without limiting the
immediately preceding sentence, the Company will cause you to be appointed as
the Chief Accounting Officer, Treasurer and Secretary of Yale E. Key, Inc., a
wholly owned Subsidiary of the Company. During the Employment Period, you will
devote your full time and best efforts to the business and affairs of the
Company 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 Five Thousand Dollars ($105,000) 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 the Company and its subsidiaries (the
"Incentive Plan") providing for the payment of cash bonuses of up to thirty
percent (30%) of your Base Salary and, subject to the approval by the
stockholders of the Company, in the 1995 Stock Option Plan of the Company (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 the Company of the 1995 Stock Option
Plan, options (the "Options") to acquire Fifty Thousand (50,000) shares of the
Common Stock, par value $.10 per share, of the Company (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) The Company has terminated the 1993 Stock Grant Plan adopted by the
Company 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.
-2-
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 fifteen (15) 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 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 twelve (12)
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 should be terminated by the Company as a result
-3-
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 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.
KEY ENERGY GROUP, INC.
By: /s/ Xxxxxxx X. Xxxx
Name: Xxxxxxx X. Xxxx
Title: President
ACCEPTED AND AGREED:
/s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
-4-
