Exhibit 10.2


D. BRYAN NORWOOD


EMPLOYMENT AGREEMENT


 


                KEY ENERGY
SHARED SERVICES, L.L.C. (the “Company”), a Delaware limited
liability company with its principal offices at 1301 McKinney Street, Suite
1800, Houston, Texas 77010, and D. BRYAN NORWOOD enter into this Employment
Agreement (this “Agreement”) effective August 14, 2007 (the “Commencement Date”)
in order to outline the terms and conditions of Executive’s employment
relationship with the Company.  Any prior
written or oral agreements are superseded by this Agreement, unless
specifically stated herein, and Executive and the Company hereby agree as
follows:


 


1.             Employment; Term.  The Company agrees to employ Executive, and
Executive accepts employment with the Company from the Commencement Date and
continuing through the Employment Period (as defined below) of this
Agreement.  Executive agrees to devote
his full time and best efforts to serve as the Vice President, Treasury for Key
Energy Services, Inc. (“Key Energy”), having those duties and title specified
from time to time by the Chief Executive Officer, Senior Officers or the Board
of Directors (the “Board”) of Key Energy. 
Executive’s duties will include, but not be limited to, responsibility
for the oversight and management of Key Energy’s Treasury programs.  Executive’s employment will continue until
the close of business on August 1, 2009, (the “Initial Term”) unless earlier
terminated in accordance with this Agreement, and subject to automatic one-year
extension periods unless either Executive or the Company gives written notice
to the other, no later than thirty (30) days prior to the relevant August 1
that such automatic extension shall not occur (“Notice”).  This Initial Term, together with any
extensions, until termination of this Agreement is referred to herein as the “Employment
Period.”  Executive will, if elected,
serve as an officer and/or director of the Company, its parent, subsidiaries or
affiliates (collectively, the “Key Companies”) and perform all duties incident
to such offices.


2.             Salary;
Bonus; Expenses.  During
the Employment Period, the Company will pay a salary to Executive at the annual
rate of not less than One Hundred Fifty Six Thousand Dollars ($156,000.00) 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.  Senior
management of the Company will review his compensation from time to time as it
deems appropriate and may, in its sole discretion, increase the Base Salary if
it deems such an increase advisable.  In
addition, for each fiscal year of the Company, Executive shall be eligible to
participate in incentive plans in effect from time to time for the Key
Companies’ executives, key employees and other persons involved in the business
of the Company and its affiliates and in the Key Company’s stock-based
incentive plans outstanding from time to time. 
Under the Company’s annual incentive bonus plan, Executive shall be
eligible to earn a discretionary cash bonus, in an amount up to 50% of his Base
Salary, the amount of such bonus to be determined by the senior management of
the Company or the Board (or a committee thereof) in their sole discretion,
based upon the level of achievement of certain goals mutually established by
Executive and the senior management of the Company (subject to Board
approval).  Such bonus shall be paid to
Executive no later than the March 15 of the year following the year to which it
applies, as a “short-term deferral” under Treas. Reg. 1.409A-1(b)(4). Executive’s
principal place of employment shall be Houston, Texas; however, Executive shall
be required to travel as 


 


 

















 


necessary for his
employment duties assigned.  Executive
will be reimbursed by the Company for reasonable travel, lodging, meals and
other expenses incurred by Executive in connection with performing his services
hereunder in accordance with the Key Companies’ policies from time to time in
effect.


 


3.             Vacations; Benefits.  Executive will be entitled during the
Employment Period to (i) not less than 15 vacation days per calendar year
(prorated for any partial year of service), with no carryover to subsequent
years, and (ii) participation in such other fringe benefits, including, without
limitation, personal time off, group medical and dental, life, accident and
disability insurance, retirement plans and supplemental and excess retirement
benefits as the Company may provide from time to time for its employees
generally.


 


4.             Termination and Severance.  Executive’s employment may be terminated by
the Company for Cause, other than for Cause, due to his death or Disability, or
upon Notice, or it may be terminated by Executive for any reason at any
time.  Executive agrees that he has fully
negotiated this section of his Agreement with the Company to provide for
sufficient severance pay, as appropriate, upon termination.  Executive agrees that the terms of this
agreement are exclusive and that he will not seek additional or further
benefits upon termination.


 


(a)                                  Termination for Cause, or
by Executive without Good Reason.  In the
event Executive’s employment hereunder is terminated (i) by the Company for
Cause or (ii) by Executive for any reason other than Good Reason following a
Change in Control, as described below, the Company shall have no further
obligations to Executive except that accrued but unpaid salary through
Executive’s termination date and any expense reimbursements owed Executive
through the date of termination. As used in this Agreement, the term “Cause”
shall mean (i) the willful and continued failure by Executive to substantially
perform Executive’s duties hereunder (other than any such willful or continued
failure resulting from Executive’s incapacity due to physical or mental illness
or physical injury), (ii) repeated substandard work performance or repeated
unreliability that has not been cured to the Company’s satisfaction after
notice of the same as has been provided to Executive; (iii) serious workplace
misconduct, (iv) Executive’s engagement in misconduct that Executive knows or
should know is injurious to any of the Key Companies, monetarily or otherwise,
including injurious to the reputation of such Company (v) Executive’s
conviction of a felony by a court of competent jurisdiction, (vi) fraud or
other material dishonesty against any of the Key Companies, (vii) the breach of
any of the provisions hereof, or (viii) the violation by Executive of any of
the Key Companies’ policies, rules or regulations from time to time in effect,
including without limitation, the Code of Business Conduct, securities trading
policy or anti-trust policy.


 


(b)                                 Involuntary Termination
Because of Death or Disability, and Involuntary Termination other than for
Cause.  In the event Executive’s employment
hereunder is involuntarily terminated (i) by Executive’s death or (ii) by the
Company other than for Cause (including because of Disability (defined below))
or (ii) as a result of the Company’s providing Notice to Executive that
automatic 


 


 


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extension
of the Employment Period shall not occur, if the Executive is ready and willing
to continue employment with the Company, Executive will be entitled to a lump
sum payment equal to Executive’s annual base salary, less applicable deductions
and withholdings, on the 30th day following Executive’s termination.  In the event Executive’s employment is
terminated by the Company as a result of Executive’s Disability, then the
severance compensation referred to above shall be reduced by the amount of any
disability insurance proceeds actually paid to Executive or for Executive’s
benefit during the said time period.  As
used in this Agreement, the term “Disability” means Executive’s inability, with
or without reasonable accommodation, to perform Executive’s obligations and
duties hereunder by reason of physical or mental illness or injury for a period
of 120 days.


 


(c)                                  Involuntary Termination
following a Change of Control.  If,
within one year following a Change of Control of Key Energy, as that term is
defined in Exhibit A, attached hereto, Executive’s employment is terminated
involuntarily (i) by the Company other than for Cause (including because of
Executive’s Disability as defined above) or (ii) automatically as a result of
the Company’s providing Notice to Executive that automatic extension of the
Employment Period shall not occur (if the Executive is ready and willing to
continue employment with the Company), or (iii) Executive resigns with Good
Reason, as that term is defined below, then in addition to any payment to which
Executive may be entitled under Section 4(b), Executive also will be entitled
to continued coverage for Executive and his dependents under the Company’s
medical and dental benefit plans for 12 months at a cost to Executive equal to
the cost of such coverage prior to his termination; provided, however, that
such continued coverage shall immediately end upon obtainment of new employment
and coverage under a similar welfare benefit plan (with the  obligation to promptly report such new
coverage to the Company).  The period of
subsidized coverage shall be applied against the period of continued coverage
that would otherwise be required to be provided under applicable law.


 


“Good
Reason” shall mean the occurrence of one or more of any of the following:


 


(i)            A material diminution in the Executive’s base
compensation, authority, duties or responsibilities from those in effect
immediately prior to the date a Change in Control occurs;


(ii)           A material diminution in the authority, duties or responsibilities
of a supervisor to whom the Executive reports (including a requirement that the
Executive report to another individual rather than to the Board of Directors of
Company) from those in effect immediately prior to the date a Change in Control
occurs;


(iii)          A material diminution in the budget over which the
Executive retains authority from that which he or she had authority over
immediately prior to the date a Change in Control occurs;


 


 


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(iv)          A material change in the geographic location at which the
Executive must perform services from the location at which the executive was
required to perform services immediately prior to the date a Change in Control
occurs; or


(v)           Any other action or inaction by the Company
that constitutes a material breach of this Agreement.


Good Reason shall only be
found to exist where (i) the Executive provided notice to Company of
the existence of one of the above conditions within 90 days of the initial
existence of such condition, (ii) the Company was provided 30 days
from the date of the Executive’s notice to remedy that condition (the “Cure
Period”), and (iii) the condition was not remedied by the
Company during the Cure Period.


 


(d)                               Special Rules Pertaining
to Termination.  For purposes of this Agreement, Executive’s
employment will not be considered to have terminated unless, as a result of a
termination, Executive has had a “separation from service” (as that term is
defined in Treas. Reg. § 1.409A-1(h)) with the “Key Energy Controlled Group.”  The term “Key Energy Controlled Group” means
the group of corporations and trades or businesses (whether or not
incorporated) composed of the Company and every entity or other person which
together with the Company constitutes a single “service recipient” (as that
term is defined in Treas. Reg. § 1.409A-1(g)) as the result of the application
of Treas. Reg. § 1.409A-1(h)(3).


5.             Confidential Information.  Executive agrees that during Executive’s
employment relationship with the Company, the Company has promised to provide,
has provided, and continues to provide its ever-changing trade secrets,
engineering data, proprietary data, intellectual property, customer data, or
other confidential information of the Key Companies (hereafter collectively
referred to as “Confidential Information”). The Company promises to provide
Executive with access to Confidential Information, in a greater quantity and/or
expanded nature than any such Confidential Information which may have already
been provided.  In exchange for the
Company’s promises listed above and all other consideration provided pursuant
to this Agreement, with regard to the Key Companies’ Confidential Information,
Executive agrees as follows:


 


(a)                                  Non-disclosure Obligation. 
During the Term and forever thereafter, Executive will not, without the
express written consent of the Chief Executive Officer, the President or the
General Counsel of Key Energy, directly or indirectly communicate or divulge
to, or make available to, or use for Executive’s own benefit or for the benefit
of, any competitor or any other person or entity, any Confidential Information,
except to the extent that disclosure is required (i) at the Company’s direction
or (ii) by a court or other governmental agency of competent jurisdiction.


 


(b)                                 Confidential Information
Defined.  Confidential Information includes, but is not
limited to, personnel information (including information relating to any and
all aspects of compensation of any and all employees of the Key Companies),
ideas, 


 


 


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discoveries, designs, inventions, improvements,
trade secrets, engineering data, proprietary data, intellectual property,
customer data, technology, know-how, manufacturing processes, design specifications,
writings and other works of authorship, computer programs, financial
information, accounting information, organizational structure, Key Companies’
expenditures, marketing plans, customer lists and data, business plans or
methods and the like, that relate in any manner to the actual or anticipated
business of the Key Companies, as well as any and all information regarding the
Key Companies other than information disclosed in public filings under the
Securities Exchange Act of 1934, as amended. 
Confidential Information shall not include information that is publicly
available, unless such information became publicly available by reason of a
breach of this Agreement by Executive.


 


(c)                                  Return of Confidential
Information.  Executive agrees that all Confidential
Information received by Executive during Executive’s employment with the
Company is, and shall be, the property of the Company exclusively.  Executive agrees to immediately return to the
Company (or, with the Company’s permission, destroy) all of the material
mentioned above, including memoranda or notes taken by Executive and all
tangible materials, including, without limitation, correspondence, drawings,
blueprints, letters, notebooks, reports, flow-charts, computer programs and
data proposals, at the request of the Company. 
No copies will be made by Executive, or retained by Executive, of any
such Confidential Information, whether or not developed by Executive.


 


6.             Intellectual Property; Assignment of Work Product.  Executive shall assign and does hereby
assign to the Company, the entire right, title and interest (including, but not
limited to, rights to prepare derivative works, adaptations and modifications)
for the entire world in and to all work performed, writings, formulas, designs,
models, drawings, recordings, photographs, design inventions and other
inventions whether or not patentable, patents, copyrights, trade secrets, any
other intellectual property rights, products, technology, and other proprietary
rights made, conceived or reduced to practice or authorized by the Company,
either solely or jointly with others pursuant to or in connection with services
rendered under this Agreement or with use of information, materials or
facilities of the Key Companies received or used by Executive during the
Term.  Executive agrees to sign, execute
and acknowledge or cause to be signed, executed and acknowledged without cost,
but at the expense of the Company, any and all documents and to perform such
acts as may be necessary, useful or convenient for the purpose of securing to
the Company, or its nominees, patent, trademark or copyright protection
throughout the world upon all such writings, formulas, designs, models,
drawings, recordings, photographs, and inventions, whether or not patentable, patents,
copyrights, trade secrets, any other intellectual property rights, products,
technology, and other proprietary rights, title to which the Company may
acquire in accordance with the provisions of this clause.  Executive shall not contest the validity of
any invention, any copyright, any trademark, or any mask work registration
owned by or vesting in the Company or any of its affiliates under this
Agreement.


 


 


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7.             Limitation on Competition.


 


(a)                                  Current and Future
Non-Compete Promises.  In exchange for the Company’s promises in
Section 5 above, and all other consideration provided pursuant to this
Agreement, and in order to enforce his agreement not to disclose Confidential
Information, Executive agrees that he will not, whether or not Executive has
received severance pay, during the Employment Period, and for an additional
period of twelve (12) months (the “Non-Compete Period”) directly or indirectly,
without the prior written consent of the Company, participate or engage in,
whether as a director, officer, employee, advisor, lender, consultant,
stockholder, partner, joint venturer, owner or in any other capacity, any
business engaged in the business of furnishing oilfield services (including,
without limitation, fluid hauling and disposal services, trucking services,
frac tank rentals, fishing and rental tools, pressure pumping services,
contract drilling, workover, completion and well maintenance, construction and
field consulting) in any state or country in which Key operates, including
those states and countries, and those types of businesses, in which Executive
knew, at the time of his termination, that the Key Companies had plans to
engage (collectively, the “Market Area”); provided, however, that Executive
shall not be deemed to be participating or engaging in any such business solely
by virtue of Executive’s 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.


 


(b)                                 Non-Solicitation of
Business.  Executive will not, during the Non-Compete
Period, directly or indirectly, without the prior written consent of the
Company, call on, service or solicit competing business from customers or
prospective customers of the Key Companies in the Market Area if, within the
twelve (12) months before Executive’s termination of employment, Executive has
or made contact with the customer, or had access to information and files about
the customer.


 


(c)                                  Non-Solicitation of
Employees.  Executive will not, during the Non-Compete
Period, directly or indirectly, without the prior written consent of the
Company, call on, solicit or induce any employee of the Key Companies with whom
Executive had contact, knowledge, or association in the course of employment
with the Company to terminate employment from his or her employment, and will
not assist any other person or entity in such activities.


 


(d)                                 Reasonableness. 
Executive acknowledges that he derives significant value from the
Company’s agreement to provide him with Confidential Information to enable him
to optimize the performance of his duties to the Company.  Executive further acknowledges that
fulfillment of the obligations contained in this Agreement, including, but not
limited to, Executive’s obligations to not disclose or to use the Key Companies’
Confidential Information other than for the Key Companies’ exclusive benefit
and not to compete or solicit contained in subsections (a) and (b) above, are
necessary to protect the Key Companies’ Confidential Information and,
consequently, to preserve the value and goodwill of the Key Companies.  Executive acknowledges the time, geographic
and scope limitations of the


 


 


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obligations
are reasonable, especially in light of the Key Companies’ desire to protect its
Confidential Information, and that Executive will not be precluded from gainful
employment if Executive is obligated not to compete with the Key Companies
during the period and within the Market Area as described above.


 


(e)                                  Injunctive
Relief.  Executive and the Company acknowledge and
agree that breach of any of the promises made by Executive in this
Section 7, without the prior written consent of the Company, would cause
irreparable injury to the Company or its subsidiary or affiliate, which could
not sufficiently be remedied by monetary damages; and, therefore, that the
Company shall be entitled to obtain such equitable relief as declaratory judgments;
temporary, preliminary and permanent injunctions, without the posting of any
bond; and order of specific performance to enforce those covenants or to
prohibit any act or omission that constitutes a breach thereof, in any judicial
jurisdiction in which Executive is attempting to breach such covenants,
applying the local law to such dispute. 
If a party must bring suit to enforce this Agreement or to defend any
such action, the prevailing party shall be entitled to recover its attorneys’
fees and costs related thereto.  If, in
any judicial proceeding, the provisions of subsection (a) or (b) above are
deemed to exceed the time, geographic or scope limitations permitted by
applicable law, then such provisions shall be reformed to the maximum time,
geographic or scope limitations, as the case may be, then permitted by such
law.  In the event that a court refuses
to enforce any of such separate covenants (or any part thereof), then such
unenforceable covenant (or such part) shall be eliminated from this Agreement
to the extent necessary to permit the remaining separate covenants (or portions
thereof) to be enforced.


 


(f)                                    Extension of
Non-Competition Period. 
If Executive is found to have breached any promise made in this Section
of this Agreement, the Non-Compete Period specified above of this Agreement
will be extended by the period of time for which Executive was in breach.


 


8.             Withholding and Certain Tax Matters.  Executive
acknowledges and agrees that any or all payments under this Agreement may be
subject to reduction for tax and other required withholdings.


(a)                                  Interpretation
of Agreement.  To the full
extent possible, the terms of this Agreement shall be construed and administered so that
no amount is includable in Executive’s gross income under Code Sec. 409A.


 


(b)                                Payment Schedule.  Notwithstanding any provision of this Agreement,
if the payment of any amount under this Agreement would cause an amount to be
included in Executive’s gross income under Section 409A of the Internal Revenue
Code because the timing of such payment is not delayed as provided in Section
409A(a) (2) (B) of the Internal Revenue Code, then any such payments that
Executive would otherwise be entitled to during the first six months following
the date of Executive’s separation from service shall be accumulated and paid
on the date that is six months after the date of Executive’s termination of
employment


 


 


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(or
if such payment date does not fall on a business day of the Company, the next following
business day of the Company), or such earlier date upon which such amount can
be paid without causing any amount to be included in the Executive’s gross
income under Section 409A of the Internal Revenue Code.


 


(c)
                               Tax
Gross-up Payment.


 


                                                In the event
that any amount arising from this Agreement is includable in Executive’s gross
income for a taxable year of the Executive under Section 409A of the Internal
Revenue Code as the result of the terms of this Agreement and/or the
administration of those terms (“the Included Amount”), then the Company shall
pay to the Executive an amount equal to the 20% additional tax imposed under
Section 409A on the Included Amount, together with any underpayment penalties
and interest (the “Additional Tax”) resulting from the inclusion of the
additional amount.  The Company also will
pay the Executive an additional amount necessary to “gross up” the Executive
for additional income taxes on the Additional Tax payment, on the earlier of
(a) the thirtieth day following the date on which it is finally determined by a
court or administrative agency that the Included Amount was includible in
Executive’s gross income as the result of the application of Section
409A(a)(1)(B) to the Included Amount; or (b) the last day of the Executive’s
next taxable year.


 


                                                To receive a
Gross-up Payment, Executive must give the Company written notice of any
determination by the Executive, or any claim by any taxing authority, that he
owes Additional Tax as the result of the inclusion of the Included Amount as
soon as practicable but no later than ten (10) business days after the
Executive makes such determination or is informed of such claim,  The notice must, to the extent Executive has
or may reasonably obtain such information, apprise the Company of the amount of
such Additional Tax and the date on which it is required to be paid. If the
Company gives the Executive written notice at least thirty (30) days prior to
the due date for payment of such Additional Tax, or within ten (10) business
days of having received the foregoing notice from the Executive (whichever is
later), that it disagrees with or wishes to contest the inclusion of the
Included Amount and/or the amount of the Additional Tax, the Company and the
Executive shall consult with each other and their respective tax advisors
regarding the amount and payment of any Additional Tax, and Executive will take
all reasonable steps requested by the Company to contest the inclusion of the
Included Amount and/or the amount of the Additional Tax resulting from such
inclusion, provided that in the event there is a contest with any taxing
authority regarding the inclusion and/or the amount of the Additional Tax, the
Company shall bear and pay directly all costs and expenses (including
additional interest, penalties and legal fees) incurred in connection with any
such contest, and shall indemnify and hold the Executive harmless, on an
after-tax basis, to the extent not otherwise paid hereunder, on the Additional
Tax (including any interest and penalties with respect thereto) and the Company’s
payment of the Executive’s costs and expenses hereunder.


 


 


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9.             Governing
Law.  Any dispute
concerning Executive’s employment or this Agreement will be governed and construed
exclusively in accordance with the laws of Texas applicable to agreements made
and performed entirely within such state, without giving effect to any choice
or conflicts of laws principles, with venue of any dispute arising out of or
related to this Agreement or the employment relationship exclusively found in
Harris County, Texas.


10.           Consultation with Legal Counsel; Entire Agreement.  Executive acknowledges and agrees that
Executive has been provided a reasonable time to review this Agreement with
legal counsel and to consider the terms and provisions of this Agreement.  Both parties acknowledge and agree that they
are voluntarily entering into this Agreement, after consultation with their
legal counsel if so desired, and after full disclosure of all the facts and
circumstances surrounding the execution of this Agreement and its legal effect.
This Agreement (together with any stock option agreements pursuant to which
options were previously granted to Executive) contains the entire agreement between
Executive and the Company.  Effective as
of the Commencement Date, this Agreement supersedes any and all prior
agreements and understandings between Executive and the Company regarding any
and all aspects of his employment relationship with the Company and any of its
affiliates, whether written or oral.


 


11.           Successors and
Assigns.  This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the successors
and assigns of the parties hereto.


IN WITNESS WHEREOF, the parties have executed
this Agreement as of the day and year first above written.


	
   

  	
  KEY
  ENERGY SHARED SERVICES, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  William Austin

  
	
   

  	
                  William Austin

  
	
   

  	
                  President

  



 


 


 


	
  ACCEPTED
  AND AGREED:

  
	
   

  
	
   

  
	
  /s/
  D. Bryan Norwood

  
	
  D. Bryan Norwood

  
	
  Vice President, Treasurer

  



 


 


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EXHIBIT A


 


Definition of Change of Control
of Key Energy Services, Inc.


 


 


“Change of Control” shall mean:


 


(1)           a merger of Key Energy Services, Inc.
(“the Company”) with another entity, a consolidation involving the Company, or
the sale of all or substantially all of the assets of the Company to another
entity if, in any such case, the holders of equity securities of the Company
immediately prior to such transaction or event do not beneficially own
immediately after such transaction or event equity securities of the resulting
entity entitled to 50% or more of the votes then eligible to be case in the
election of directors generally (or comparable governing body) of the resulting
entity in substantially the same proportions that they owned the equity
securities of the Company immediately prior to such transaction or event;


(2)           the dissolution or liquidation of the
Company;


(3)           when any person or entity, including
a “group” as contemplated by Section 13(d)(3) of the Securities Exchange Act of
1934, acquires or gains ownership or control (including, without limitation,
power to vote) of more than 50% of the combined voting power of the outstanding
securities of the Company; or


(4)           as a result of or in connection with
a contested election of directors, the persons who were members of the Board
immediately before such election shall cease to constitute a majority of the
Board for purposes of the preceding sentence, (i) “resulting entity” in the
context of a transaction or event that is a merger, consolidation or sale of
all or substantially all assets shall mean the surviving entity (or acquiring
entity in the case of an asset sale) unless the surviving entity (or acquiring
entity in the case of an asset sale) is a subsidiary of another entity and the
holders of common stock of the Company receive capital stock of such other
entity in such transaction or event, in which even the resulting entity shall
be such other entity, and (ii) subsequent to the consummation of a merger or
consolidation that does not constitute a Change in Control, the term “Company”
shall refer to the resulting entity and the term “Board” shall refer to the
board of directors (or comparable governing body) of the resulting entity.


 


 


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