Document:

exv10w23

Exhibit 10.23

TOMMY PIPES

RESTATED 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 TOMMY PIPES
enter into this Restated Employment Agreement (this “Agreement”) effective August 1, 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, including that certain
Employment Agreement dated January 1, 2004 are superseded by this Agreement, unless specifically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 Vice President, of Business Development 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 Business
Development 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 Two Hundred Forty Thousand Dollars ($240,000.00) 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 100% 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
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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 20 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))

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or
(ii) 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, Executive will be entitled to a
lump sum payment equal to two times 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;

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(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;

(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.

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	 	(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,
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

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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.

	 	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, during the Employment Period, and for
an additional period of 24 months if entitled to severance compensation, or twelve (12)
months if not entitled to receive severance compensation, (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,

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	 	 	 	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 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)	 	Prior Written Consent.  In the event that Executive desires to pursue potential
employment with an entity in the Market Area following his actual or proposed
termination of employment (whether as a director, officer, employee, advisor, lender,
consultant, stockholder, partner, joint venturer, owner or in any other professional
capacity), Executive may request a written legal opinion concerning whether such
opportunity is consistent with, and not violative of, the Non-Compete Promises
described in this Section by writing to the General Counsel.  Executive may also
request waiver of such obligations.  Depending upon the circumstances, the Company may,
in its sole discretion, elect to waive its right to enforcement of such obligations. 
The General Counsel will promptly advise Executive in writing whether the proposed
employment would violate the Non-Compete Promises, and whether the Company would
entertain a waiver of its rights under this Section. 
	 
	 	(f)	 	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. 

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	 	(g)	 	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, and those Sections of the Agreement
relating to timing of payments shall have an effective date of January 1, 2005.
	 
	 	(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 (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

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	 	 	 	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.

     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, including that certain Employment Agreement dated January 1,
2004.

     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.

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	 	KEY ENERGY SHARED SERVICES, L.L.C.

 	 
	 	By:  	/s/  WILLIAM AUSTIN
 	 
	 	 	     William Austin 	 
	 	 	     President 	 
	 

	 	 	 
	ACCEPTED AND AGREED:
	 	 
	 
	 	 
	      /s/ TOMMY PIPES
 

Tommy Pipes

	 	 
	Vice President, Business Development
	 	 

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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.exv10w24

Exhibit 10.24

JOHN CARNETT

EMPLOYMENT AGREEMENT

     KEY ENERGY SERVICES, INC. (the “Company”), a Delaware limited liability company with its
principal offices at 1301 McKinney Street, Suite 1800, Houston, Texas 77010, and JOHN CARNETT enter
into this Employment Agreement (this “Agreement”) effective August 1, 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 Company’s Group Vice President, Pressuring Pumping and President for Key Energy
Pressure Pumping Services, L.L.C. (“Key Energy PPS”) having those duties and titles specified from
time to time by the Company’s Chief Executive Officer, Senior Officers, or the Company’s Board of
Directors (the “Board”). Executive’s duties will include, but not be limited to, responsibility
for the oversight and management of Key Energy PPS. 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
subsidiaries or affiliates (collectively, the “Key Companies”) and perform all duties incident to
such offices.

     2. Salary; Bonus; Expenses. During the Employment Period, Key Energy PPS will pay a salary to
Executive at the annual rate of not less than One Hundred Ninety Seven Thousand Eight Hundred
Dollars ($197,800.00) 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 Company’s executives, key
employees and other persons involved in the business of the Company and its subsidiaries and in the
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 100% 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 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 Midland, 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 Company’s
policies from time to time in effect.

     3. Vacations; Benefits. Executive will be entitled during the Employment Period to (i) not
less than 20 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))

2

 

or
(ii) 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, Executive will be entitled to a
lump sum payment equal to two times 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;

3

 

(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;

(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.

4

 

	 	(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,
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

5

 

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.

	 	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

6

 

	 	 	 	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 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

7

 

	 	 	 	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 (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

8

 

	 	 	 	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.

     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 or other equity
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 his employment relationship with the Company.

     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 SERVICES, INC.

 	 
	 	By:  	/s/  WILLIAM AUSTIN
 	 
	 	 	          William Austin 	 
	 	 	      President 	 
	 

	 	 	 	 	 
	ACCEPTED AND AGREED:	 	 
	 
	 	 	 	 
	By:

	 	/s/ JOHN CARNETT
 

	 	 
	John Carnett	 	 
	Group Vice President, Pressuring Pumping	 	 

9

 

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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