Document:

exv10w1

 

Exhibit 10.1

FOURTH EMPLOYMENT AGREEMENT: KEITH A. KLOPFENSTEIN

This Fourth Employment Agreement (“Agreement”) is made and entered into on or about June 1, 2006
(the “Effective Date”). This Agreement is by and between T-3 Management Services, L.P., a Delaware
limited partnership, and Keith A. Klopfenstein, a resident of Texas (“Employee”).

RECITALS

	A.	 	Effective as of May 27, 2004, Employee commenced his employment with Employer pursuant to an
Employment Agreement between Employee and T-3 Energy Services, Inc. (“T-3”) (the “Original
Employment Agreement”).
	 
	B.	 	Effective as of May 26, 2004, Employee continued his employment with Employer pursuant to a
new Employment Agreement.
	 
	C.	 	Effective as of March 23, 2005, Employee continued his employment with Employer pursuant to a
Third Employment Agreement.
	 
	D.	 	The parties desire that Employee continue his employment with Employer, but subject to the
terms and conditions hereinafter set forth in this Agreement.

TERMS AND CONDITIONS

	1.	 	[reserved for future use]
	 
	2.	 	Term.
	 
	 	 	The parties agree to extend their employment relationship under the terms and conditions
hereinafter set forth effective as of the Effective Date and continuing through and
including May 31, 2008 (the “Term of Employment”). Notwithstanding the foregoing,
Employee’s employment hereunder may be sooner terminated as hereinafter provided, and if so
terminated, the Term of Employment shall expire as of the effective date of such termination
and all references herein to the “Term of Employment” shall mean the original term as so
shortened, except as otherwise expressly provided herein.
	 
	 	 	In the event that Employee continues to provide services as an employee to T-3, Employer, or
any company owned or controlled by T-3 (collectively, the “Companies”) after the conclusion
of the Term of Employment, this Agreement shall terminate, subject to the survival
provisions set forth in §10.2 below, and Employee shall be an “employee at will” from that
time forth subject to the terms and conditions of employment specified by Employer for all
of its employees at will.

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	3.	 	Duties and Reporting Relationship.

	 	(a)	 	Employee agrees to serve Employer in such capacities with Employer or with any
other of the Companies as may be requested by the chief executive officer of Employer
or any other officer of Employer so authorized by the chief executive officer
(collectively, the “President”).
	 
	 	(b)	 	During the Term of Employment, Employee shall devote his full time and
exclusive attention to and shall use his best efforts to advance the business and
welfare of the Companies. During the Term of Employment, Employee will not engage in
any other employment activities for any direct or indirect remuneration without the
prior written consent of President.

	4.	 	Confidential Information and Covenant Not to Compete.

	 	4.1	 	Confidential Information.
	 
	 	 	 	“Confidential Information” as used in this Agreement means all
proprietary or confidential information furnished on or after the
Effective Date regarding the business and affairs of any of the
Companies, whether of a technical, operational, economic, or other
nature, and including any trade secrets (including customer lists,
identities, contacts, pricing information, know-how, formulas,
patterns, inventions, engineering records or data, interpretive or
analytical information or data, drilling logs, operating agreements
and related records, records of research, proposals, manuals,
compilations, programs, devices, methods, techniques, processes,
budgets or other financial information, and any other records or
information that derive independent economic value, actual or
potential, from not being generally known to, and not being readily
ascertained by proper means by persons other than the holders,
licensees, or other authorized holders thereof who can obtain economic
value from its disclosure or use).
	 
	 	 	 	In consideration of Employer’s commitment to provide Employee with
additional confidential information and the other benefits received by
Employee under this Agreement which he otherwise would not have had
but for his entry into this Agreement, Employee hereby agrees that
during the Term of Employment and thereafter he will not, without the
written consent of Employer, disclose to any person, enterprise,
entity or association or otherwise use or exploit for himself or
others any Confidential Information.
	 
	 	 	 	Notwithstanding the foregoing, Employee may utilize Confidential
Information to the extent required by his performance of assigned
duties for Employer or any other of the Companies or which:

	 	(a)	 	was known to Employee or the public prior to disclosure to
Employee in the course of his employment by Employer;

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	 	(b)	 	becomes generally known to the public through no fault of
Employee or others owing duties of trust or confidentiality to Employee,
	 
	 	(c)	 	is lawfully obtained by Employee from another source not under
obligation to Employer or any of the Companies regarding disclosure of such
information or technology, or
	 
	 	(d)	 	is developed after the Term of Employment and independently by
Employee or his agents without access to or reliance on any Confidential
Information.

	 	4.2	 	Return of Confidential Information.
	 
	 	 	 	Upon termination of his employment, Employee will deliver to Employer
all tangible displays and repositories of Confidential Information
including without limitation trade secrets and other materials or
records or writings of any other type (including any copies thereof)
made, used or obtained by Employee in connection with his employment
by Employer. Employee agrees that all inventions, improvements in any
of the Companies’ methods of conducting their businesses or
innovations (in each case, including, by way of expansion and not
limitation, policies, procedures, products, improvements, software,
ideas and discoveries, whether or not patentable or copyrightable)
conceived or made by him during any time of his employment by Employer
prior to or subsequent to the execution of this Agreement belong to
Employer or any other of the Companies, as applicable, and to the
extent Employee participated in the creation of any of the foregoing
he did so on a work for hire basis. Upon termination of his
Employment, Employee shall promptly disclose such inventions,
improvements or innovations to the President or his/her designee and
perform all actions reasonably requested by the President or his/her
designee to establish and confirm such ownership by Employer or any
other of the Companies and to protect the intellectual property rights
of Employer and the Companies contained therein or represented
thereby.
	 
	 	4.3	 	Covenant Not to Compete.
	 
	 	 	 	Employee hereby agrees that:

	 	4.3.1.	 	So long as Employee remains employed by Employer and until the later of (i)
the first anniversary of the date of the termination of Employee’s employment,
whether by Employee’s resignation or by Employer’s termination of the
relationship, and (ii) such time as Employee is no longer receiving any
payments from Employer pursuant to this Agreement (and as a condition to
Employee receiving any such payments) (collectively, the “Non-Compete Period”),
Employee shall not within the states of Texas and Louisiana (i) perform any
duties similar in nature to the duties performed by Employee for any of the
Companies for any competitor of any of the Companies, whether as an employee,
officer, principal, member, advisor,

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	 	 	 	agent, partner, director, stockholder, owner, or consultation of such
competitor, and (ii) compete against any acquisition or development of any
line of business, property, or project on which the Companies are then
involved or which has been worked on or evaluated by Employee as part of his
services for Employer during the preceding 12 months and which are still
being worked with or evaluated by any of the Companies.

	 	 	 	With respect to the preceding paragraph, Employee shall not be deemed to be
an owner of a competitor of any of the Companies where Employee’s ownership
interest is less than 1% of the outstanding stock or membership units of a
company whose securities are listed on a national exchange or quoted on the
NASDAQ National Market System.
	 
	 	4.3.2.	 	During the Term of Employment and during the Non-Compete Period, and as a
condition to Employee receiving any payments from Employer pursuant to this
Agreement to which Employee otherwise would not have been entitled after
Employee is no longer employed by Employer, Employee shall not:

	 	(a)	 	solicit or employ any person for employment by
Employee or Employee’s employer if such person is (i) employed by any
of the Companies at that time, or (ii) who has left the employment of
any of the Companies for 60 days or less, for any employment position
or investment opportunity where such position or opportunity would
either interfere with or compete against the activities or businesses
of any of the Companies;
	 
	 	(b)	 	otherwise induce any person to discontinue his
or her employment with any of the Companies;
	 
	 	(c)	 	request any present or future customer or
supplier of any of the Companies to curtail or cancel its business with
any such Companies; or
	 
	 	(d)	 	unless otherwise required by law, disclose to
any person, firm or corporation any details of organization or business
affairs of any of the Companies, any names of past or present customers
of the Companies, or any other non-public information concerning the
Companies.

	 	4.3.3	 	Employee understands that the provisions of §4.1, §4.2, and
this §4.3 may limit his ability to earn a livelihood in a business similar to
the business of Employer and the Companies but as an executive officer of
Employer, T-3 and certain other of the Companies, he nevertheless agrees and
hereby acknowledges that:

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	 	(a)	 	such provisions do not impose a greater
restraint than is necessary to protect the goodwill or other business
interests of the Companies;
	 
	 	(b)	 	such provisions contain reasonable limitations
as to time and scope of activity to be restrained; and
	 
	 	(c)	 	the consideration provided hereunder, including
without limitation any amounts or benefits contemplated to be provided
to Employee hereunder following Employee’s termination of employment
other than for cause or by Employee’s resignation, is sufficient to
compensate Employee for the restrictions contained in §4.1, §4.2, or
this §4.3 hereof.

	 	 	 	In consideration of the foregoing and in light of Employee’s education,
skills, and abilities, Employee agrees that he will not assert that, and it
should not be considered that, any provisions of §4.1, §4.2, or this §4.3
hereof otherwise are void, voidable, or unenforceable or should be voided or
held unenforceable.

	 	4.4.	 	Executive Nature of Employment.
	 
	 	 	 	Employee acknowledges and agrees that his duties with Employer are of
an executive nature and that he is a member of Employer’s management
group. Employee agrees that the remedy at law for any breach by him
of any of the covenants and agreements set forth in this §4 will be
inadequate and that in the event of any such breach, Employer may, in
addition to the other remedies which may be available to it at law,
obtain injunctive relief prohibiting Employee (together with all
those persons associated with him) from the breach of such covenants
and agreements.
	 
	 	4.5	 	Application to Other First Reserve Affiliates.
	 
	 	 	 	For purposes of this §4 and of §3 hereof, the terms “Companies” shall
not include or be construed as meaning any affiliates of First
Reserve Corporation other than T-3 and any entity owned or controlled
by T-3.
	 
	 	4.6.	 	Consideration.
	 
	 	 	 	Each of the covenants of this §4 are given by Employee as part of the
consideration for this Agreement and as an inducement to Employer to
enter into this Agreement and accept the obligations hereunder.

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	 	4.7.	 	Assignment of Intellectual Property Rights.
	 
	 	 	 	Employee agrees that all ideas, concepts, processes, discoveries,
devices, machines, tools, materials, designs, improvements,
inventions, computer software and other things of value (hereinafter
collectively referred to as “intangible rights”), whether patentable
or not, which are conceived, made, invented or suggested either by
him alone or in collaboration with others during the Term of
Employment and relating to the business of Employer, and whether or
not during regular working hours, shall be promptly disclosed in
writing to Employer and shall be the sole and exclusive property of
Employer or any of the Companies, as applicable. Employee hereby
assigns all of his right, title and interest in and to all such
intangible rights and to any other trade secrets developed by
Employee during his employment with Employer to Employer and its
successors or assigns. Employee further agrees to execute, from time
to time upon the request of Employer, such documentation as may be
required by Employer to confirm Employee’s intent to so assign and
transfer such rights and property, including such rights and property
which may not presently exist but which may exist at a later date
during the Term of Employment.
	 
	 	 	 	In the event that any of said intangible rights shall be deemed by
Employer to be patentable or otherwise registerable under any
Federal, state or foreign law, Employee further agrees that at the
expense of Employer, he will execute all documents and do all things
necessary, advisable or proper to obtain patents therefor or
registration thereof, and to vest in Employer or any of the
Companies, as applicable, full title thereto.

	5.	 	Compensation and Benefits.

	 	5.1.	 	Base Compensation.
	 
	 	 	 	During the Term of Employment, Employer shall pay Employee a salary
at the rate of $140,000 per annum payable in equal installments at
least as frequently as monthly and subject to payroll deductions as
may be necessary or customary in respect of Employer’s salaried
employees in general. Employee’s salary shall be subject to
adjustment under the Employer’s periodic compensation review
procedure which shall take into account factors such as job
responsibilities, performance, and cost of living considerations. In
no event shall such salary be adjusted to less than the initial
amount set forth above.
	 
	 	5.2.	 	Vacations.
	 
	 	 	 	During the Term of Employment, Employee shall be entitled to vacation
of three weeks for the first year employed and the greater of (i)
three weeks for each year thereafter or (ii) the amount of time
provided under the vacation policy applicable to employees of
Employer generally, as amended from time to time.

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	 	5.3.	 	Medical Insurance and Other Benefits.
	 
	 	 	 	During the Term of Employment, Employer shall furnish Employee with
such medical, hospital, and life insurance as is furnished to
employees of Employer generally, as amended from time to time.
Employee also shall be entitled to participate in all other benefit
programs which are maintained by Employer and available to its
executive officers generally and under the same terms as available to
Employer’s executive officers generally. Employee acknowledges that
he shall have no vested rights under or in respect of his
participation in any such program except as expressly provided under
the terms thereof.

	6.	 	Expenses.
	 
	 	 	Employer will pay or reimburse Employee for the reasonable travel, entertainment, and other
expenses as he may reasonably incur during the Term of Employment in the performance of his
duties hereunder, but only to the extent that Employee shall furnish Employer with such
evidence that such expenses were incurred as Employer may from time to time reasonably
require or request in accordance with its policies.
	 
	7.	 	Death or Total Disability of Employee.
	 
	 	 	If Employee dies or becomes totally disabled during the Term of Employment, the Term of
Employment shall automatically terminate and Employer’s obligation to compensate Employee
under this Agreement shall in all respects cease, except that Employer shall pay Employee or
Employee’s estate within thirty days of such death or disability (or sooner if required by
law):

	 	(a)	 	an amount equal to the Base Compensation plus the vacation benefits accrued and
unpaid (“Accrued Compensation”) as of the time of death or disability.
	 
	 	(b)	 	Employee also shall be entitled to the other benefits provided for under §5.2
and §5.3 hereof which have accrued and have not been forfeited as of the time of death
or disability when and if provided to be paid pursuant to the terms of any applicable
Employer plans or programs (collectively, the “Accrued Benefits.”)

	 	 	For purposes of this Section, Employee shall reasonably be deemed “totally disabled” as of
the time the President shall find, on the basis of medical evidence satisfactory to the
President, that, as a result of a mental or physical condition, Employee is unable to
perform his normal duties of employment hereunder or is prevented from engaging in the same
level of performance as he engaged in prior to the onset of such condition, giving effect to
any reasonable accommodations which can be made by Employer, and that such disability is
likely to continue for a substantial period of time.
	 
	 	 	Employer’s obligation to make any payments under this Section which otherwise would not be
required by law absent the existence of this Agreement shall be conditioned upon Employee’s
adherence to the requirements of §4.

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	8.	 	Termination for Cause.
	 
	 	 	Employee’s employment may be terminated by Employer for “Good Cause”, as described below.
Upon such termination, Employer’s obligation to compensate Employee under this Agreement
shall in all respects cease, except that Employer shall pay Employee, within thirty days of
such termination (or sooner if required by law), any Accrued Compensation as of the time of
such termination and Employee shall be entitled to any Accrued Benefits as of the time of
such termination when and if provided to be paid by the applicable program or plan. “Good
Cause” includes, but is not limited to any one or more of the following occurrences:

	 	(a)	 	Employee’s breach of any of the covenants contained in this Agreement;
	 
	 	(b)	 	Employee’s conviction or entry of a plea of guilty or nolo contendere for any
crime involving moral turpitude or which is punishable by imprisonment in the
jurisdiction involved;
	 
	 	(c)	 	Employee’s commission of an act of fraud, whether prior or subsequent to the
date hereof, upon any of the Companies or any customer of any of the Companies;
	 
	 	(d)	 	Employee’s willful failure or refusal to perform his duties as required by this
Agreement, provided that, the termination of Employee’s employment pursuant to this
subparagraph (d) shall not constitute valid termination for Good Cause unless Employee
shall first have received written notice from the President stating with specificity
the nature of such failure or refusal in the performance of duties and affording
Employee at least fifteen days to correct the act or omission complained of;
	 
	 	(e)	 	gross negligence, theft of any property of any of the Companies, or the theft
of any property of any customers or suppliers, material violation by Employee of any
duty of loyalty to Employer, or any other material misconduct on the part of Employee;
or
	 
	 	(f)	 	material violation of any employee policy manual promulgated by Employer as in
effect at that time, including, without limitation, the receipt of any kick-back or
side payment from any customer, supplier or vendor.

	 	 	Notwithstanding the foregoing, termination of Employee’s employment by resignation shall be
deemed a termination for Good Cause and shall be effective as of the effective date of such
resignation, but acceptance of such resignation by Employer shall not be deemed a waiver of
any right of Employer or the Companies under this Agreement.

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	9.	 	Change of Control.

	(a)	 	A “Change of Control” shall mean the closing of a transaction or series of transactions in
which either:

	 	(i)	 	more than 50% of the voting power of Employer or T-3, or
	 
	 	(ii)	 	substantially all of the assets of Employer or T-3

	 	 	are transferred to a party that was not a significant stockholder, member, or partner in any
of the Companies prior to such transaction or series of transactions.
	 
	(b)	 	If within 18 months after a Change of Control of Employer or T-3:

	 	(i)	 	Employee has experienced a material diminution in job title or responsibility
or has been transferred by Employer to any place other than the Houston, Texas
metropolitan area (unless such diminution or transfer is the result of events which
would otherwise entitle Employer to terminate Employee for Good Cause), and
	 
	 	(ii)	 	Employee resigned from Employer within 60 days of such event,

	 	 	then Employee’s resignation under such circumstances shall be deemed a termination other
than for Good Cause and have the effect set forth in §10 below, except that Employee’s
severance compensation under §10(a)(iii) shall be one year.
	 
	10.	 	Other Termination.

	 	(a)	 	Employer may terminate Employee’s employment at any time for any reason other
than those referred to above as for Good Cause or for no reason at all, and Employer’s
obligation to compensate Employee under this Agreement shall in all respects cease upon
such termination, except that

	 	(i)	 	Employer shall pay Employee, within 30 days of such termination
(or sooner if required by law), any Accrued Compensation as of the time of such
termination;
	 
	 	(ii)	 	Employee shall be entitled to any Accrued Benefits as of the
time of such termination when and if provided to be paid by the applicable
program or plan;
	 
	 	(iii)	 	Employer shall continue to pay Employee the Base Compensation
under §5.1 for the period equal to the lesser of (i) one year or (ii) the
remaining Term of Employment immediately prior to termination. Payments for
Base Compensation shall continue to be made in the same manner as paid prior to
termination.

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	 	(iv)	 	Employer shall make for Employee’s benefit all premium payments
for health care insurance for which Employee and Employee’s family may be
entitled under the federal Consolidated Omnibus Budget Reconciliation Act of
1986, as amended, so long as Employee receives payments pursuant to clause
(iii) above.

	 	(b)	 	Employee may waive the provisions of §10(a) above and elect to receive
compensation pursuant to the stated termination policy of the Company in effect as of
the earlier of the date Employer gives written notice of termination to Employee or
Employee is terminated pursuant to this §10.
	 
	 	(c)	 	Except as may be required by applicable law, Employee shall not be entitled to
any other compensation or benefits whatsoever if Employee’s employment is terminated
pursuant to this §10.
	 
	 	(d)	 	An involuntary transfer of Employee’s business office location from the Houston
vicinity shall be deemed a termination other than for Good Cause.
	 
	 	(e)	 	Notwithstanding the foregoing, Employer’s obligation to make any payments under
this Section which otherwise would not be required by law absent the existence of this
Agreement shall be conditioned upon Employee’s adherence to the requirements of §4.

	11.	 	Release and Satisfaction.

	 	11.1.	 	Unless precluded by applicable law, with respect to Employee, his heirs,
executors, legal representatives, successors and assigns, each payment by Employer of
the amounts and benefits provided under §7, §8, §9, or §10 hereof shall release,
relinquish and forever discharge each of the Companies and their respective directors,
officers, employees, shareholders, and agents of and from any and all claims, damages,
losses, costs, expenses, liabilities or obligations, whether known or unknown which
relate to facts or events occurring prior to each payment under §7, §8, §9, or §10
(other than any such claims, damages, losses, costs, expenses, liabilities or
obligations arising prior to the termination of Employee’s employment and (i) covered
by any written indemnification arrangement of Employer with respect to Employee, (ii)
arising under any written employee benefit plan or arrangement, whether or not
tax-qualified, covering Employee, or (iii) constituting a statutory right that is not
waivable by a party to this Agreement), which Employee has incurred or suffered or may
incur or suffer as a result of Employee’s employment by Employer or the termination of
such employment.

	 	11.2.	 	Any termination of Employee’s employment and any expiration of the Term of
Employment shall not affect the continuing operation and effect of §4 or this §11, both
of which shall survive and continue in full force and effect with respect to each of
the parties and their respective heirs, executors, personal representatives, 

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	 	 	 	successors
or permitted assigns. Nothing in this §11 shall be deemed to operate or
shall operate as a release, settlement or discharge of any liability of Employee to
Employer or others from any act or omission by Employee enumerated in §8 hereof as a
possible basis for termination of Employee’s employment for Good Cause.

	12.	 	Miscellaneous.

	 	12.1.	 	Insurance for Key Individuals Employed by Employer.
	 
	 	 	 	Employee recognizes and acknowledges that any of the Companies may
(but shall not be obligated to) seek and purchase one or more
policies providing life insurance coverage for key individuals
employed by Employer, including Employee. The proceeds of the
insurance would be payable to the purchaser or its designee.
Employee hereby consents to Employer’s or its Affiliate’s seeking
and purchasing such insurance and will provide such information,
undergo such medical examinations, execute such documents, and
otherwise take any and all actions necessary or desirable in order
for Employer or its affiliates to seek, purchase and maintain in
full force and effect such policy or policies.
	 
	 	12.2.	 	Severability.
	 
	 	 	 	If any of the provisions of this Agreement shall otherwise
contravene or be invalid under the laws of any state or other
jurisdiction where it is applicable but for such contravention or
invalidity, such contravention or invalidity shall not invalidate
all of the provisions of this Agreement, but rather this Agreement
shall be reformed and construed, insofar as the laws of that state
or jurisdiction are concerned, as not containing the provision or
provisions, but only to the extent that they are contravening or are
invalid under the laws of that state or jurisdiction, and the rights
and obligations created hereby shall be reformed and construed and
enforced accordingly.
	 
	 	 	 	Specifically with regard to §4.3, if a court determines that the
restrictions placed upon Employee in that provision are too broad or
otherwise unreasonable under applicable law, including with respect
to time or geographic area, the court is hereby requested and
authorized by the parties to revise such restriction to include the
maximum restrictions allowable under the applicable law.
	 
	 	12.3.	 	Modification and Waiver of Breach.
	 
	 	 	 	Except as may be otherwise provided in §12.2, no waiver or
modification of this Agreement shall be binding unless it is in
writing and signed by the parties. No waiver of a breach hereof
shall be deemed to constitute a waiver of a future breach, whether
of a similar or dissimilar nature.

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	 	12.4.	 	Assignment
	 
	 	 	 	The rights and obligations of Employer under this Agreement may,
without the consent of Employee, be assigned by Employer, in its
sole discretion, to any subsidiary, venture or Affiliate of Employer
or T-3, provided that Employee continues to have executive level
responsibilities and will not be required to relocate.
	 
	 	12.5.	 	Notices.
	 
	 	 	 	Except as otherwise required by law, any notice, consent, request,
instruction, approval and other communication provided for herein
(other than routine correspondence in the ordinary course of
business) shall be in writing and shall be deemed validly given,
made or served

	 	(a)	 	on the date on which it is delivered personally with receipt
acknowledged,
	 
	 	(b)	 	five business days after it shall have been sent by registered
or certified mail (receipt requested and postage prepaid),
	 
	 	(c)	 	one business day after it is sent by overnight courier (charges
prepaid), or
	 
	 	(d)	 	on the same business day when sent before 5:00 p.m.,
recipient’s time, and on the next business day when sent after 5:00 p.m.,
recipient’s time, by telephone facsimile transmission, provided that the sender
receives electronic confirmation that the document has been received by the
recipient.

	 	 	 	Notices to Employer shall be addressed as follows:

T-3 Management Services, L.P.

c/o T-3 Energy Services, Inc.

13111 Northwest Freeway, Suite 500

Houston, Texas 77040

Attention:      President

Fax:               713-996-4123

	 	 	 	Notices to Employee shall be addresses as follows:

	 	 	 	To the current residential address or fax number of Employee, as indicated
in the Human Resources Department files kept by Employer or its designee.

	 	 	 	Either party shall also be entitled to from time to time provide any other address
for notices to be received under this Agreement.

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	 	12.6.	 	Counterparts.
	 
	 	 	 	This Agreement may be executed in several counterparts and all such executed
counterparts shall constitute a single agreement, binding on all parties and their
successors and permitted assigns, notwithstanding that not all parties may be
signatories to the original or to the same counterpart. Each counterpart signature
page so executed may be attached to another counterpart of this Agreement and such
counterparts, when so attached, shall constitute a single agreement. Delivery of an
executed counterpart of a signature page of this Agreement by telephonic facsimile
transmission shall be as effective as delivery of a manually executed original
counterpart of this Agreement.
	 
	 	12.7.	 	Construction of Agreement.
	 
	 	 	 	This Agreement shall be construed in accordance with, and governed by, the laws of
the State of Texas without regard to any principles of conflicts of law which would
require the application of the law of another jurisdiction.
	 
	 	12.8.	 	Merger; Complete Agreement.
	 
	 	 	 	This Agreement contains the entire agreement between the parties
with respect to the transactions contemplated by this Agreement and
supersedes all previous oral and written and all contemporaneous
oral negotiations or commitments and other understandings. In
particular, and without limitation of the foregoing, any prior
employment agreement (including the Original Employment Agreement)
between Employee and Employer is hereby terminated and superseded in
its entirety by this Agreement.
	 
	 	12.9.	 	Non-Transferability of Employee’s Interest.
	 
	 	 	 	None of the rights of Employee to receive any form of compensation payable pursuant
to this Agreement shall be assignable or otherwise transferable except through a
testamentary disposition or by the laws of descent and distribution upon the death
of Employee. Any other attempted assignment, transfer, conveyance, or other
disposition of any interest in the rights of Employee to receive any form of
compensation to be made by Employer pursuant to this Agreement shall be void.
	 
	 	12.10.	 	Legal Fees.
	 
	 	 	 	If any legal action, arbitration or other proceeding is brought for
the enforcement of this Agreement, or because of any alleged
dispute, breach, default or misrepresentation in connection with
this Agreement, the successful or prevailing party shall be
entitled to recover such reasonable attorneys’ fees and other costs
it incurred in that action or proceeding, in addition to any other
relief to which it may be entitled.

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	 	12.11.	 	Submission to Jurisdiction.
	 
	 	 	 	Each party irrevocably consents that any legal action or proceeding
against it or any of its property with respect to this agreement or
any other agreement executed in connection herewith may be brought
in any court in Texas, any federal court of the United States of
America located in Texas, or both, and by the execution and
delivery of this Agreement each party accepts with regard to any
such action or proceeding for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the
aforesaid courts.

The parties have executed this Agreement effective as of the date first set forth above with the
intent to be legally bound by this Agreement.

	 	 	 	 	 	 	 	 	 	 	 
	EMPLOYER	 	 	 	EMPLOYEE	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	T-3 Management Services, L.P.	 	 	 	/s/ Keith A. Klopfenstein	 	 
	 

	 	 	 	 	 	 	 	 

Keith A. Klopfenstein
	 	 
	By:	 	T-3 Management Holdings, Inc.	 	 	 	 	 	 
	 	 	general partner	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Gus D. Halas
 

	 	 	 	 	 	 
	 

	 	Name:
	 	Gus D. Halas	 	 	 	 	 	 
	 

	 	Title:
	 	President	 	 	 	 	 	 

-14-exv10w1

 

Exhibit 10.1

AMENDMENT TO EMPLOYMENT AGREEMENT

          THIS AMENDMENT TO EMPLOYMENT AGREEMENT (“Amendment”) is entered into this 31st day of May
2006, between Jeffrey Lubell, an individual (“Executive”) on the one hand, and True Religion
Apparel, Inc., a Delaware corporation located at 1525 Rio Vista Avenue, Los Angeles, CA 90023 (the
“Company”), on the other hand.

RECITALS

          A. WHEREAS, Executive and Company entered into an Employment Contract (the “Agreement”), dated
January 4, 2006;

          B. WHEREAS, Executive and the Company have agreed to amend the Agreement as set forth in this
Amendment;

          C. WHEREAS, Section 9(a) of the Agreement provides that the Agreement may be amended only by a
written agreement signed by each party;

          NOW THEREFORE, Executive and the Company hereby agree as follows:

AGREEMENT BY AMENDMENT

          1. A new section 4(d), entitled “Timing of Payment” is added to the Agreement as set forth
below:

Timing of Payment. Notwithstanding anything to the contrary in this Agreement, to the
extent required to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”), if you are deemed to be a “specified employee” for purposes of Section 409A(a)(2)(B) of
the Code, you agree that any non-qualified deferred compensation payments due to you under this
Agreement in connection with a termination of your employment that would otherwise have been
payable at any time during the six-month period immediately following such termination of
employment shall not be paid prior to, and shall instead be payable in a lump sum as soon as
practicable following, the expiration of such six-month period. In light of the uncertainty
surrounding the application of Section 409A of the Code, TRA cannot make any guarantee as to the
treatment under Section 409A of the Code of any payments made or benefits provided under this
Agreement.

          2. Section 2(b)(ii) of the Agreement is amended in its entirety to read as set forth below:

In addition to the Base Salary, Executive shall be eligible to earn, for each fiscal year of TRA
ending during the Employment Period, an annual cash performance bonus (an “Annual Bonus”). For
2006, the amount and target performance goals for such Annual Bonus are set forth on Schedule A
attached hereto. The amount of Annual Bonus and target performance goals for future years during
the Term shall be determined by TRA’s compensation committee in its sole discretion. The Annual
Bonus shall be paid no later than March 15 of the fiscal year following the fiscal year for which
the Annual Bonus is to be paid.

 

 

          3. All other terms and conditions of the Agreement shall remain in full force and effect.

          4. This Amendment, along with the Agreement, contain all the terms and conditions agreed upon
by the parties hereto regarding the subject matter of this Amendment and the Agreement. Any prior
agreements, promises, negotiations, or representations, either oral or written, relating to the
subject matter of this Amendment or the Agreement not expressly set forth in this Amendment or the
Agreement are of no force or effect.

          5. Any waiver, alteration or modification of any of the terms of this Amendment shall be valid
only if made in writing and signed by the parties hereto. Each party hereto, from time to time,
may waive his/her or its rights hereunder without affecting a waiver with respect to any subsequent
occurrences or transactions under this Amendment.

     IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above
written.

EXECUTIVE ACKNOWLEDGES THAT HE HAS BEEN PROVIDED WITH SUFFICIENT TIME AND
OPPORTUNITY TO CONSIDER THIS AMENDMENT AND TIME TO CONSULT WITH COUNSEL PRIOR TO
ENTERING INTO THIS AMENDMENT. EACH PARTY ACKNOWLEDGES THAT HE AND/OR IT ENTERED INTO
THIS AMENDMENT FREELY, KNOWINGLY AND BASED ON THEIR OWN JUDGMENT AND NOT RELIANCE
UPON ANY REPRESENTATION OR PROMISES MADE BY ANY OTHER PARTY.

	 	 	 	 	 
	 	TRUE RELIGION APPAREL, INC.

 	 
	 	By:  	/s/
Michael F. Buckley	 
	 	 	Michael F. Buckley 	 
	 	 	President 	 
	 

	 	 	 	 	 
	 	EXECUTIVE

 	 
	 	  	/s/
Jeffery Lubell	 
	 	 	Jeffery Lubell

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