Document:

Exhibit 10.4

 

KIM B.
CLARKE

AMENDED
AND RESTATED EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED
EMPLOYMENT AGREEMENT (as from time to time amended in accordance with the
provisions hereof, this “Agreement”),
is entered into THIS 31st day of December, 2007, by and between KIM
B. CLARKE, whose address is 10103 Pine Forest, Houston, Texas 77042 (the “Executive”), KEY
ENERGY SERVICES, INC., a Maryland corporation with executive offices at 1301
McKinney Street, Suite 1800, Houston, Texas 77010 (the “Parent”) and KEY ENERGY SHARED
SERVICES, LLC, a Delaware limited liability company (the “Company”).

 

WHEREAS, the Executive
and the Parent are parties to the Restated Employment Agreement dated as of January 1,
2007 (the “Original Employment
Agreement”); and

 

WHEREAS, the parties desire to amend and restate the
Original Employment Agreement in order to provide for compliance with the
provisions of Internal Revenue Code Section 409A concerning the payment of
potential future benefits to the Executive; including enhanced benefits to the
Executive in the event of her termination in connection with a Change in
Control of the Parent, pursuant to the terms of Section 5; and

 

WHEREAS, the parties
desire to amend and restate the Original Employment Agreement in order to
provide market benefits and to establish consistency among the executives of
the Company in the event of a termination in connection with a notice of
non-renewal of the Agreement; and

 

WHEREAS, pursuant to the
terms of Section 22 hereof, the Parent desires to assign the Original
Employment Agreement to the Company and Company desires to accept such
assignment and to assume the obligations of the Parent under the Original
Employment Agreement, as amended by this Agreement; and

 

WHEREAS, pursuant to the
terms of Section 22 and subject to the terms thereof, the Executive hereby
consents to such assignment; and

 

WHEREAS, the
Executive is willing to serve as the Company’s Vice President- Human Resources,
and the Parent’s Senior Vice President, Chief People Officer, pursuant to the
terms and conditions set forth herein;

 

NOW, THEREFORE, in
consideration of the premises and mutual covenants and agreements herein
contained, the parties agree as follows:

 

1.                                       Employment; Term.

 

(a)                                  The
Company hereby employs the Executive, and the Executive hereby accepts
employment by the Company, as the Company’s Vice President-Human Resources, and
the Parent’s Senior Vice President, Chief People Officer.  The Executive shall have the
responsibilities, duties and authority commensurate with her positions,
including without

 

 

limitation the general supervision and management of
the Company’s Human resources objectives, policies and programs and such other
responsibilities, duties, functions and authority as the Chief Executive
Officer or, in certain circumstances, the Board shall from time to time
designate that do not effect a material decrease in the responsibilities,
importance, scope or dignity of the Executive’s position with the Company
compared with those of such position as of the Commencement Date, subject,
however, to the supervision of the Chief Executive Officer. The Executive will
report to the Chief Executive Officer. Executive will, if appointed or elected, serve as an
officer or director of the Company, the Parent, subsidiaries or affiliates
(collectively, the “Key Companies”) and perform
all duties incident to such offices.

 

(b)                                 Executive
shall hold such positions with the Company and Parent hereunder until the close
of business on January 1, 2010, unless sooner terminated in accordance
with Section 5, and at the close of business on each anniversary of such
date, commencing with January 1, 2010, the term of the Executive’s
employment hereunder shall be automatically extended for twelve (12) months
(unless sooner terminated in accordance with Section 5 hereof) unless
either the Executive or the Company shall have given written notice (in each
case, a “Non-Renewal
Notice”) to the other that such automatic extension shall not
occur, which Non-Renewal Notice shall have been given no later than ninety (90)
days next preceding the relevant Anniversary Date. (The entire period of
employment of Executive, until termination in accordance herewith, is referred
to hereby as the “Employment
Period”).

 

(c)                                  The
Executive will devote her full time and her best efforts to the business and
affairs of the Company and its Parent and subsidiaries; provided, however, that
nothing contained in this Section 1 shall be deemed to prevent or limit
the Executive’s right to: (i) make investments in the securities of any
publicly-owned corporation; or (ii) make any other investments with
respect to which she is not obligated or required to, and to which she does not
in fact, devote managerial efforts that interfere with her fulfillment of her
duties hereunder; or (iii) to serve on boards of directors and to serve in
such other positions with non-profit and for-profit organizations as to which
the Board may from time to time consent, which consent shall not be
unreasonably withheld or delayed. Reference is made to Section 7 hereof,
which contains limitations on some of the above activities.

 

(d)                                 The
principal location at which the Executive will substantially perform her duties
will be the Company’s Houston, Texas offices, or as otherwise agreed between
the Chief Executive Officer and Executive. 
If any agreed change in location would increase the Executive’s one-way
commuting distance between her then-current principal residence and the offices
to which she is assigned by 20 miles or more, the Company will pay to the
Executive, and/or will reimburse the Executive for each of the following
expenses and costs incurred in connection with the Executive’s relocation and
will pay to the Executive the bonus specified in clause (vii) below: (i) the
excess, if any, of (A) the Executive’s aggregate tax basis in her primary
residence at the time of its sale over (B) the proceeds realized by the
Executive from such sale net of ordinary and reasonable fees and expenses
incurred in connection with such sale (other than such fees and expenses
described in clause (ii) of this sentence), (ii) ordinary and
reasonable realtor fees and closing costs incurred in connection with the sale
of the Executive’s primary residence, (iii) ordinary and reasonable
closing costs incurred in connection with the purchase of the Executive’s new
primary residence in the vicinity of the new location at which the Executive is
to render her services hereunder, (iv) ordinary and reasonable costs
incurred to

 

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pack, transport, unpack, and insure the Executive’s
household furnishings and effects to her new primary residence, (v) ordinary
and reasonable fees for connecting utilities in her new primary residence, (vi) ordinary
and reasonable costs for trips to look for a new residence as well as up to
thirty (30) days of temporary housing, and (vii) a cash bonus calculated
to pay all of the federal, state and local income and payroll taxes which the
Executive will incur, if any, as a result of (A) the Company’s
reimbursement of the preceding expenses and (B) the amount of such bonus
(that is, a “gross-up” bonus).  Each of
the expenses or other items reimbursable under this Section 1(d) shall
be reimbursed in a separate payment.  It
shall be a condition precedent to any payment pursuant to this Section 1(d) that
Executive has been continuously employed by the Company through the date on
which such payment is made.

 

2.                                       Salary; Bonuses; Expenses.

 

(a)                                  During
the Employment Period, the Company will pay base compensation to the Executive
at the annual rate of Two Hundred Sixty-Two Thousand Dollars ($262,000.00) 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. The Company
will review the Base Salary on a yearly basis following the end of each fiscal
year of the Company to determine if an increase is advisable, and the Base
Salary may be increased (but not decreased) at the discretion of the Chief Executive
Officer and the Compensation Committee (the “Compensation Committee”) of the Board,
taking into account, among other factors, the Executive’s performance and the
performance of the Company.

 

(b)                                 The
Executive shall be eligible to participate in all of the Company’s cash
performance compensation plans (collectively, the “Performance Cash Compensation Plans”) for the Company’s
executives providing for the payment of cash bonuses or other cash incentives
payable upon the achievement of goals set forth in the Company’s strategic plan
as developed by the Compensation Committee after consultation with the Chief
Executive Officer and the Executive, payable in accordance with the provisions
thereof.  The performance goals for the
Performance Cash Compensation Plans will be based on objective criteria
specified in good faith in advance by the Compensation Committee after
consultation with the Chief Executive Officer and the Executive. The Executive
shall also receive such bonuses other than pursuant to the Performance Cash
Compensation Plans in such amounts and at such times as the Compensation
Committee, after consultation with the Chief Executive Officer, in its
discretion determines are appropriate to recognize extraordinary performance by
the Executive.  The Executive’s target
bonus for each fiscal year will be one hundred percent (100%) of Base Salary.

 

(c)                                  The
Executive shall be reimbursed by the Company for reasonable travel, lodging,
meal, entertainment and other expenses incurred by her in connection with
performing her services hereunder in accordance with the Company’s
reimbursement policies from time to time in effect.

 

3.                                             Equity-Based Incentives.  The Executive shall be eligible to participate
in awards of stock options, restricted stock, stock appreciation rights,
deferred stock and other equity-based incentives (collectively, “Equity-Based Incentives”), at
the discretion of the Board or the Compensation Committee.  Any performance goals for the grant of such
Equity-Based Incentives will be based on objective criteria mutually negotiated
and agreed upon in good faith

 

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in advance by the Board or the Compensation Committee after
consultation with the Executive and the Chief Executive Officer.

 

4.                                       Benefit Plans; Vacations.

 

In connection with the Executive’s employment
hereunder, she shall be entitled during the Employment Period (and thereafter
to the extent provided in Section 5(f) hereof) to the following
additional benefits:

 

(a)                                  At
the Company’s expense, such fringe benefits as the Company may provide from
time to time for its senior management, but in any case, at least the benefits
described on Exhibit A hereto.

 

(b)                                 The
Executive shall be entitled to no less than the number of vacation days in each
fiscal year determined in accordance with the Company’s vacation policy as in
effect from time to time, but not less than twenty (20) business days in any
fiscal year (prorated in any fiscal year during which she is employed hereunder
for less than the entire year in accordance with the number of days in such
fiscal year in which she is so employed) and subject to the Company’s policies
on carryovers. The Executive shall also be entitled to all paid holidays and
personal days given by the Company to its senior management.

 

(c)                                  Nothing
herein contained shall preclude the Executive, to the extent she is otherwise
eligible, from participation in all group insurance programs or other fringe
benefit plans which the Company may from time to time in its sole and absolute
discretion make available generally to its personnel, or for personnel
similarly situated, but the Company shall not be required to establish or
maintain any such program or plan except as may be otherwise expressly provided
herein.

 

5.                                       Termination, Change in Control and Reassignment of
Duties.

 

(a)                                  Termination
by the Company. The Company shall have the right to terminate the Executive’s
employment under this Agreement and the Employment Period for Cause (as defined
below) at any time without obligation to make any further payments to the
Executive hereunder except the compensation described in Section 5(g) hereof.
Except as otherwise provided in Section 5(b) hereof, which Section shall
apply in the event the Executive becomes unable to perform her obligations
hereunder by reason of Disability (as defined below), the Company shall have
the right to terminate the Executive’s employment hereunder and the Employment
Period for any reason other than for Cause (including, without limitation, by
giving the Executive a Non-Renewal Notice pursuant to Section 1(b) hereof)
only upon at least ninety (90) days prior written notice to her (provided that,
in the event the Company gives the Executive a Non-Renewal Notice pursuant to Section 1(b) hereof,
only the 90-day notice period therein provided shall be required). In the event
the Company terminates the Executive’s employment hereunder for any reason
other than for Disability or Cause (including, without limitation, by giving
the Executive a Non-Renewal Notice pursuant to Section 1(b) hereof),
then for the purpose of effecting a transition during the ninety (90) day
notice period of the Executive’s management functions from the Executive to
another person or persons, during such period the Company may reassign the
Executive’s duties hereunder to another person or other

 

4

 

persons. Such reassignment shall not reduce the
Company’s obligations hereunder to make salary, bonus and other payments to the
Executive and to provide other benefits to her during the remainder of her
employment and, if applicable, following the termination of employment.  Notwithstanding a notice of termination that
does not, when made, specify Cause, the Company may, during the 90 day notice
period (the “Cause
Review Period”), convert the termination to a Cause termination,
subject to the procedural safeguards specified in the next paragraph.

 

As used in this Agreement, the term “Cause” shall
mean (i) the failure by the Executive to substantially perform the major
functions of her position in a satisfactory manner (other than (A) any
such failure resulting from her incapacity due to physical or mental illness or
physical injury or (B) any such actual or anticipated failure after the
issuance of a notice of termination by the Executive for Good Reason (as
defined below)), after a written demand for substantial performance is
delivered by the Company to the Executive that specifically identifies the
manner in which the Company believes the Executive has not substantially
performed her duties; or (ii) the engaging by the Executive in misconduct
that is, or is reasonably likely to be, materially injurious to the Company,
monetarily or otherwise; or (iii) the Executive’s conviction or plea of
guilty or no contest to a felony (or to a felony charge reduced to
misdemeanor), or, with respect to her employment, to any misdemeanor (other
than a traffic violation) or, with respect to her employment, knowing violation
of any federal or state securities or tax laws; or (iv) willful violation
of the Key Energy Services, Inc. Amended and Restated Policy Regarding
Acquisition, Ownership and Disposition of Company Securities or the Code of
Business Conduct, as same may be amended from time to time.  Notwithstanding the foregoing, the Executive’s
employment shall not be deemed to have been terminated for Cause unless (A) reasonable
notice shall have been given to her setting forth in detail the reasons for the
Company’s intention to terminate for Cause, and if such termination is pursuant
to clause (i) or (ii) above and any damage to the Company is curable,
only if Executive has been provided a period of ten (10) business days
from receipt of such notice to cease the actions or inactions and otherwise
cure such damage, and she has not done so (provided that only one such period
needs to be provided in any period of three (3) consecutive months); (B) an
opportunity shall have been provided for the Executive to be heard before the
Board; and (C) if such termination is pursuant to clause (i) or (ii) above,
delivery shall have been made to the Executive of a notice of termination from
the Board finding that in the good faith opinion of a majority of the Board
(excluding the Executive, if applicable) she was guilty of conduct set forth in
clause (i) or (ii) above.

 

(b)           Termination
upon Disability and Temporary Reassignment of Duties Due to Disability;
Termination upon Death

 

(i)                                     If
the Executive becomes totally and permanently disabled during the Employment
Period so that she is unable to perform her obligations hereunder by reasons
involving physical or mental illness or physical injury for an aggregate of
ninety (90) days (whether or not consecutive) during any period of twelve (12)
consecutive months during the Employment Period (“Disability”), then the Executive’s
employment hereunder and the Employment Period may be terminated by the Company
within sixty (60) days after the expiration of such ninety (90) day period
(whether or not consisting of consecutive days), such termination to be
effective ten (10) days after written notice to the Executive. In the
event the Company shall give a notice of termination under this Section 5(b) (i),
then the Company may reassign the Executive’s duties hereunder to another
person or other persons. Such reassignment

 

5

 

shall not reduce the Company’s obligations hereunder
to make salary, bonus and other payments to the Executive and to provide other
benefits to him, during the remainder of her employment and, if applicable,
following the termination of employment.

 

(ii)                                  During
any period that the Executive is totally disabled such that she is unable to
perform her obligations hereunder by reason involving physical or mental
illness or physical injury, as determined by a physician chosen by the Company
and reasonably acceptable to the Executive (or her legal representative), the
Company may reassign the Executive’s duties hereunder to another person or
other persons, provided if the Executive shall again be able to perform her
obligations hereunder prior to the Company’s termination of the Executive’s
employment hereunder and the Employment Period in accordance with the terms of
this Agreement, all such duties shall again be the Executive’s duties. The cost
of any examination by such physician shall be borne by the Company.
Notwithstanding the foregoing, if the Executive has been unable to perform her
obligations hereunder by reasons involving physical or mental illness or
physical injury for an aggregate of ninety (90) days (whether or not
consecutive) during any period of twelve (12) consecutive months during the
Employment Period, then a determination by a physician of disability will not
be required prior to any such reassignment. Any such reassignment shall not be
a termination of employment and in no event shall such reassignment reduce the
Company’s obligation to make salary, bonus and other payments to the Executive
and to provide other benefits to her under this Agreement during her employment
or, if applicable, following a termination of employment.

 

(iii)                               The Executive’s
employment hereunder and the Employment Period shall automatically terminate
immediately upon the death of the Executive.

 

(c)           Termination
by Executive. The Executive’s employment hereunder and the Employment
Period may be terminated by the Executive by giving written notice to the
Company as follows: (i) at any time for any reason other than Good Reason
(including, without limitation, by giving the Company a Non-Renewal Notice pursuant
to Section 1(b) hereof) by notice of at least ninety (90) days
(provided that, in the event the Executive gives the Company a Non-Renewal
Notice pursuant to Section 1(b) hereof, only the 90-day notice period
therein provided shall be required); or (ii) at any time for Good Reason,
provided that the Executive can only give a notice of resignation for Good
Reason in connection with a “Change in Control” of the Parent (as defined in Exhibit B)
beginning on the ninetieth (90th) day after the closing of the transaction or
the event constituting a Change in Control. 
In the event of a termination by the Executive of her employment, the
Company may reassign the Executive’s duties hereunder to another person or
other persons.

 

As used herein, “Good
Reason” shall mean the continued existence from the date of the notice from the
Executive referred to below until after the expiration of the Cure Period of
any one or more of only the following circumstances or conditions:

 

(i)                                     A
material diminution in the Executive’s Base Compensation, authority, duties or
responsibilities,

 

6

 

(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
the Company),

 

(iii)                               A
material diminution in the budget over which the Executive retains authority,

 

(iv)                              A
material change in the geographic location at which the Executive must perform
the services required by this Agreement, provided, however, that no change in
such geographic location will be considered material if Executive has received
any reimbursement pursuant to Section 1(d) of this Agreement in
connection with such relocation; or

 

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

 

The existence of
any circumstance or condition shall not constitute Good Reason unless (i) the
Executive provided notice to the Company of the existence of the
circumstance or conditions within 90 days of the initial existence of such
circumstance or condition, and (ii) the circumstance or condition
continued to exist after the last day of the Cure Period.  For purposes of this Section 5(c), the
term “Cure Period” means the period of 30 consecutive days beginning on the
date notice was given by the Executive of the existence of the circumstance or
condition alleged to be Good Reason.

 

(d)           Severance
Compensation.

 

(i)                                     Termination
by Executive for Good Reason or By the Company for Non Renewal or Other than
for Cause. In the event the Executive’s employment hereunder is terminated (A) by
the Executive for Good Reason or (B) by the Company other than for Cause,
for Disability, or upon Notice of Non-Renewal, the Executive shall be entitled,
in addition to the other compensation and benefits herein provided for, to
severance compensation in an aggregate amount equal to two (2) times her
Base Salary at the rate in effect on the termination date, (but no less than
the annual Base Salary specified in Section 2(a)) payable in twenty-four
(24) substantially equal monthly installments commencing at the end of the
calendar month in which the termination date occurs.  Each monthly installment payment required
under this Section 5(d)(i) shall be payable on or about the first day
of the month to which it relates, and the right to any series of separate
installment payments under this Section 5(d)(i) shall at all times be
a right to a series of separate payments under Treasury Reg.
1.409A-2(b)(2)(iii).

 

(ii)                                  Termination
following Disability. In the event the Executive’s employment should be
terminated by the Company as a result of Disability in accordance with Section 5(b) hereof,
then the Executive shall be entitled, in addition to the other compensation and
benefits herein provided for, to severance compensation in an aggregate amount
equal to one (1) times her Base Salary at the rate in effect on the
termination date, payable in twelve (12) substantially equal monthly
installments commencing at the end of the calendar month in which

 

7

 

the termination date occurs, reduced by the amount of
any employer-provided disability insurance proceeds actually paid to the
Executive or for her benefit during such time period.

 

(iii)                               Change in Control.
If the Executive’s employment is terminated within one (1) year following
a Change in Control of the Parent that is a “change in control event” as
defined in Treas. Reg. §1.409A-3(i)(5) and the Executive is entitled to
severance compensation pursuant to Section 5(d)(i) or 5(d)(ii) hereof
as a result of such termination, the severance compensation otherwise payable
to the Executive (A) shall be increased by an amount (the “Enhanced
Severance Amount”) sufficient, when added to the amount payable under Section 5(d)(i) or
5(d)(ii) hereof,  to cause the total
amount payable as the result of such termination to equal three (3) times
the Base Salary then in effect plus three (3) times the Executive’s annual
target cash bonus as provided in Section 2 (b) above and (B) the
Enhanced Severance Amount shall be payable in one lump sum on the effective
date of such termination.  In the event
severance compensation becomes payable in a lump sum pursuant to this Section 5(d)(iii),
and if the Executive’s employment is or has been terminated for Disability,
such lump sum shall be reduced by a good faith estimate of the aggregate amount
of any disability insurance proceeds which will be actually paid to the
Executive or for her benefit (but only those proceeds from disability insurance
provided by the Company to the Executive pursuant to Section 4(a) hereof)
during the remaining period over which such severance would otherwise have been
paid.

 

(iv)                              Termination
for Death. In the event of the Executive’s death during the Employment
Period, the Executive’s estate shall not be entitled to any severance
compensation.

 

(v)                                 Termination
by Executive other than for Good Reason or by Company for Cause. In the
event of the Executive’s termination by resignation under Section 5(c)(i) (i.e.,
other than for Good Reason) or by the Company for Cause, the Executive shall
not be entitled to any severance under Section 5(d) or otherwise, any
continued benefits under Section 5(f) (other than as required by
statute), or any accrued compensation under Section 5(g)(iii) (for
prior year bonuses, to the extent specified in that clause).  Under the foregoing situations, the treatment
of equity incentives shall be as specified in Section 5(e)(ii), and the
Executive shall receive the accrued compensation described in Section 5(g).

 

(vi)                              Release.  Executive agrees that except in the case of a
termination resulting from Executive’s death, all payments under Section 5
(d), (e), (f), and (g)(iii) and Section 6 are conditioned on the
Executive’s prior execution and non-revocation of a full release of the Company
and its officers, employees, affiliates and agreements for all claims relating
to her employment, compensation, and termination and such other matters as the
Company reasonably requests on termination, in a form provided by the Company,
which execution shall not occur earlier than the day after termination of the
Executive’s employment and not later than 60 days following delivery by the
Company to the Executive of the form for such release; provided, however,
that if no form for such release is delivered to the Executive within seven (7) days
of the termination of Executive’s employment, this Agreement shall be applied
without regard to this Section 5(d)(vi); and provided further, however,  that any Release previously executed under this Section 5(d)(vi) will
be null and void if the Company reaches a determination of Cause within the
Cause Review Period.  If any amount is
payable under this Section 5 because of a separation from service that is
not an “involuntary separation from service” as defined in Treas. Reg. §
1.409A-1(n)(1) or a separation from service which, pursuant

 

8

 

to Treas. Reg. § 1.409A-1(n)(2) is entitled to
treatment as an “involuntary separation from service” as so defined, and if a
form of release is delivered by the Company to the Executive within seven (7) days
of such separation from service, then any other provision of this Agreement to
the contrary notwithstanding, any such amount shall not be payable until the
sixtieth day after the date of such separation from service.

 

(vii)                           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).

 

(e)           Effect
of Termination or Change in Control upon Equity-Based Incentives.

 

(i)                                     In
the event the Executive’s employment hereunder is terminated by the Company for
any reason other than for Cause or Disability (including, without limitation,
by giving the Executive a Non-Renewal Notice pursuant to Section 1(b) hereof),
or in the event the Executive should terminate her employment for Good Reason,
then any Equity-Based Incentives held by the Executive which have not vested
prior to the effective date of such termination shall immediately vest and
shall remain exercisable until the earlier to occur of (x) the first
anniversary of the effective date of such termination and (y) the final
stated expiration date of the Equity-Based Incentive. In addition, in the event
of such a termination, any Equity-Based Incentives held by the Executive which
have vested prior to the effective date of such termination shall remain
exercisable until the earlier to occur of (x) the first anniversary of the
effective date of such termination and (y) the final stated expiration
date of the Equity-Based Incentive.

 

(ii)                                  In
the event the Executive’s employment hereunder is terminated by the Company for
Cause or is terminated by the Executive other than for Good Reason (including,
without limitation, by giving the Company a Non-Renewal Notice pursuant to Section 1(b) hereof),
then effective upon the date such termination is effective, any Equity-Based
Incentives which have not vested prior to the effective date of such
termination shall be forfeited. Any Equity-Based Incentives held by the
Executive entitling the Executive to retain or purchase securities of the
Company which have vested prior to the effective date of such termination shall
remain subject to the terms and provisions of the plan and/or the agreement
under which they were awarded.

 

(iii)                               In the event of the
Executive’s death while employed by the Company or in the event that the
Executive’s employment should terminate as a result of Disability, then any
Equity-Based Incentives held by the Executive which have not vested prior to
the effective date of such termination shall immediately vest and shall also
remain exercisable until the earlier to occur of (x) the first anniversary
of the death of the Executive or the effective date of such termination and (y) the
final stated expiration date of the Equity-Based Incentives. In addition, in
the event of such death or such a termination, any Equity-Based Incentives held
by the Executive

 

9

 

which have vested prior to the effective date of such
death or termination shall remain exercisable until the earlier to occur of (x) the
first anniversary of the effective date of such death or termination and (y) the
final stated expiration date of the Equity-Based Incentives.

 

(iv)                              In
the event of a conflict between the preceding terms and provisions of this Section 5(e) and
any other terms and provisions governing any Equity-Based Incentives held (now
or in the future) by the Executive (including without limitation the terms and
provisions contained in the agreements and/or plans pursuant to which such
Equity-Based Incentives were (or will in the future be) granted), the preceding
terms and provisions of this Section 5(e) shall control; provided,
however, that, if an Equity-Based Incentive does not by its terms
require any exercise, no requirement of exercise shall be implied from the
preceding terms and provisions of this Section 5(e).

 

(v)                                 Anything
to the contrary in this Agreement notwithstanding, the final stated expiration
date of an Equity Based Incentive shall not be extended beyond the tenth
anniversary of the date on which such Equity-Based Incentive was granted.

 

(f)            Continuation
of Benefits.

 

(i)                                     Subject
to Section 5(f)(ii) hereof, in the event that Executive’s employment
hereunder is terminated by the Executive for Good Reason or by the Company for
Disability or other than for Cause (including, without limitation, by giving
the Executive a Non-Renewal Notice pursuant to Section 1(b) hereof)
and not as a result of the death of the Executive, the Executive shall continue
to be entitled, at the Company’s expense, to the post-employment benefits under
Section 4, if any, that such benefits provide under their terms for a
period of time following the termination date ending on the first to occur of (I) the
second anniversary of the termination date, (II) the last date of
eligibility under the applicable benefits or (III) the date on which the
Executive commences full-time employment with another employer.  The Company will pay the premiums for COBRA
health coverage for Executive and her covered family members for the period
COBRA provides. At such time as the Company is no longer required to provide
the Executive with life and/or disability insurance, as the case may be, the
Executive shall be entitled, at the Executive’s expense, to convert such life
and disability insurance, as the case may be, into individually owned policies,
except if and to the extent such conversion is not available from the provider
of such insurance.

 

(ii)                                  In
the event the Executive’s employment hereunder is terminated by the Company
within one (1) year of a Change in Control (other than a termination
because of the Executive’s death) or is terminated by the Company other than
for Cause in anticipation of a Change in Control, the Company shall pay to the
Executive, in lieu of providing the benefits contemplated by Section 5(f)(i) above,
an amount in cash equal to the aggregate reasonable expenses that the Company
would incur if it were to provide such benefits for a period of time following
the termination date ending on the second anniversary of the termination date,
which amount shall be paid in one lump sum on the date of such termination.

 

(iii)                               In the event the
Executive’s employment hereunder is terminated by reason of death, the
Executive’s spouse and her dependents shall be entitled at the Company’s
expense to continued health coverage under COBRA under the Company’s group
medical and

 

10

 

dental plans applicable to executives (with the
Company’s payment of premiums lasting for a period of twenty-four months or
such shorter period as COBRA provides because of replacement coverage).

 

(g)                                 Accrued
Compensation. In the event of any termination of the Executive’s employment
for any reason, the Executive (or her estate) shall be paid (i) any unpaid
portion of her Base Salary through the effective termination date, (ii) for
any accrued but unused vacation (payable in an amount equal to the Base Salary
divided by 255 and multiplied by the number of accrued but unused vacation
days), (iii) any prior fiscal year bonus earned, but not paid (unless
Executive resigns without Good Reason or is terminated for Cause), (iv) any
amounts for expense reimbursement and similar items which have been properly
incurred in accordance with the provisions hereof prior to termination and have
not yet been paid, including without limitation any sums due under Sections
2(c), 2(d), and 4(c) hereof, and (v) any Gross-Up Payment which may
become due under the terms of Section 6 hereof. Such amounts shall be paid
within ten (10) days of the termination date.

 

(h)                                 Director/Officer
Resignations. If the Executive’s employment hereunder shall be terminated
by her or by the Company in accordance with the terms set forth herein, then
effective upon the date such termination is effective, she will be deemed to
have resigned from all positions as an officer and director of the Company, the
Parent, and of any of its Subsidiaries, except as the parties may otherwise
agree.

 

6.             Certain Tax Consequences.

 

(a)                                  Tax
Consequences under Section 280G.

 

(i)                                     Whether
or not the Executive becomes entitled to the payments and benefits described in
this Section 6, if any of the payments or benefits received or to be
received by the Executive in connection with a change in ownership or control
of the Parent, as defined in section 280G of the Code (a “Statutory Change in Control”),
or the Executive’s termination of employment (whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with the Company,
any person whose actions result in a Statutory Change in Control or any person
affiliated with the Company or such person) (collectively, the “Severance Benefits “)
will be subject to any excise tax (the “Excise Tax”) imposed under section 4999 of
the Code after giving effect to Section 6(a)(iii)(B), the Company shall
pay to the Executive an additional amount equal to the Excise Tax, plus any
amount necessary to “gross up” the Executive for additional taxes resulting
from the payments to the Executive by the Company under this Section 6(a) (the
“Excise Tax Payment”).
Each Excise Tax Payment shall be made not less than five (5) business days
prior to the due date for payment of the Excise Tax.

 

(ii)                                  Notwithstanding
the foregoing, if it shall be determined that the Executive would be entitled
to an Excise Tax Payment, but that if the Severance Benefits could be reduced
by an amount necessary such that the receipt of the Company Payments would not
give rise to any Excise Tax (the “Reduced Benefits”) and the Reduced Benefits would not be less than ninety
percent (90%) of the Severance Benefits before such reduction, then no Excise
Tax Payment shall be made to the Executive and the Severance Benefits, in the
aggregate, shall be reduced to the Reduced Benefits.  To determine the Reduced Benefits, payments
shall be reduced

 

11

 

in the following order (1) acceleration of
vesting of any stock options for which the exercise price exceeds the then fair
market value, (2) any cash severance based on a multiple of Base Salary or
Bonus, (3) any other cash amounts payable to the Executive, (4) any
benefits valued as parachute payments; and (5) acceleration of vesting of
any equity not covered by (1) above, unless the Executive elects another
method of reduction by written notice to the Company prior to the change of
ownership or effective control.

 

(iii)          For
purposes of determining whether any of the Severance Benefits will be subject
to the Excise Tax and the amount of such Excise Tax:

 

(A)      all of the Severance
Benefits shall be treated as “parachute payments” within the meaning of Code
section 280G(b)(2) if the aggregate present value (determined as provided
in Code Section 280G(d)(4)) of such Severance Benefits equals or exceeds
three times the Executive’s “Base Amount” (within the meaning of Code Section 280G(b)(3)),
and all “excess parachute payments” within the meaning of Code section 280G(b)(1) shall
be treated as subject to the Excise Tax, unless the Executive receives a
written opinion from a nationally recognized law or accounting firm (“280G Advisers”)
selected by the Compensation Committee or the Board, and reasonably acceptable
to the Executive, that such other payments or benefits (in whole or in part) do
not constitute parachute payments, including by reason of Code section
280G(b)(4)(A), or such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered, within the
meaning of Code section 280G(b)(4)(B), in excess of the “Base Amount” as
defined in Code section 280G(b)(3) allocable to such reasonable
compensation, or are otherwise not subject to the Excise Tax; and

 

(B)        the value of any non-cash
benefits or any deferred payment or benefit shall be determined by a certified
public accountant or appraisal company of recognized national standing forming
part of or selected by 280G Adviser and reasonably acceptable to the Executive,
in accordance with the principles of Code section 280G(d)(3) and (4).

 

(iv)          In the
event that the Excise Tax is subsequently determined to be less than the amount
taken into account hereunder, the Executive shall repay to the Company, at the
time that the amount of such reduction in Excise Tax is finally determined (the
“Reduced Excise Tax”),
an amount (the “Gross-Up
Repayment”) equal to the sum of (A) the difference of the
Excise Tax Payment and the Reduced Excise Tax plus
(B) an amount representing the difference between (1) the amount paid
by the Company to the Executive to “gross up” the Executive for taxes on
payments made by the Company to the Executive in respect of the Excise Tax and (2) the
amount which should have been paid to the Executive by the Company to “gross up”
the Executive for taxes on payments made by the Company to the Executive in
respect of the Reduced Excise Tax; provided,
however, that in no event shall
the Gross-Up Repayment exceed the actual aggregate cash refunds of, or cash
reductions in, taxes paid by the Executive by virtue of paying the Gross-Up
Repayment; and provided, further, that if such refunds or reductions are
realized from time to time, the Executive shall make a repayment to the Company
at the time of each such realization equal to the excess of the Gross-Up
Repayment due after giving effect to such realization over the Gross-Up
Repayment due immediately prior to giving effect to such realization. The Executive
shall (1) take such actions with respect to taxes and tax returns as the
Company may from time to time request in order to obtain such refunds and
reductions, including, without limitation, by taking positions on tax returns
and filing amended tax returns,

 

12

 

(2) provide the Company with copies of all tax
returns filed by the Executive which reflect such refunds or reductions or are
otherwise requested by the Company in order to determine the Executive’s
compliance with the immediately preceding clause (1), (3) permit the
Company to participate in any proceedings relating to such refunds and
reductions and (4) take all such other actions as may be reasonably
requested by the Company from time to time in connection with the realization
of such refunds or reductions, including, without limitation, borrowing money
from the Company (on terms and conditions reasonably satisfactory to the
Executive and the Company, including, without limitation, having the Company
make the Executive whole, on an after-tax basis, for any interest costs) so
that the payments made from time to time by the Executive to the Company
hereunder maximize (to the extent reasonably possible) such refunds and
reductions, the aggregate amount of such payments by the Executive not to
exceed the Gross-Up Repayment (computed without regard to the provisos to the
first sentence of this Section 6(a)(iv)); provided,
however, that the Company shall
bear and directly pay, or shall promptly reimburse the Executive for, all costs
and expenses (including any additional penalties and interest) incurred by the
Executive in connection with any actions taken or omitted by the Executive in
accordance with instructions from the Company pursuant to this sentence, and
shall indemnify and hold the Executive harmless, on an after-tax basis, for any
Excise Tax or income tax (including any additional penalties and interest)
imposed as a result of the Company’s payment of such costs and expenses. In the
event that the Excise Tax is subsequently determined to exceed the amount taken
into account hereunder (including by reason of any payment the existence or
amount of which could not be determined at the time of the Excise Tax Payment),
the Company shall make an additional Excise Tax Payment in respect of such
excess (together with any interest or penalties payable by the Executive with
respect to such excess) at the time that the amount of such excess if finally
determined, plus any additional taxes resulting from the payment to the
Executive by the Company for such excess and the interest and penalties
thereon. The Executive and the Company shall each reasonably cooperate with the
other in connection with any administrative or judicial proceedings concerning
the existence or amount of liability for Excise Tax with respect to the
Severance Benefits.

 

(v)                                 The
Executive shall give the Company written notice of any determination by the
Executive, or any claim by any taxing authority, that she owes Excise Tax on
any Severance Benefit. Such notice shall be given as soon as practicable but no
later than ten (10) business days after the Executive makes such
determination or is informed of such claim, and shall, to the extent Executive
has or may reasonably obtain such information, apprise the Company of the
amount of such Excise 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 Excise 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 amount of the Excise
Tax, the Company and the Executive shall consult with each other and their
respective tax advisors regarding the amount and payment of any Excise Tax. In
the event there is a contest with any taxing authority regarding the amount of
the Excise 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
(x) the Excise Tax Payment (including any interest and penalties with
respect thereto) and (y) the Company’s payment of the Executive’s costs
and expenses hereunder.

 

13

 

(b)           Tax
Consequences Under Section 409A

 

(i)                                     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”), and a 20%
additional tax is owed under Section 409A, 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.

 

(ii)                                  The
payments required by this Section 6(b) will be made 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 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 taxable year
next following the taxable year in which the Executive remitted the taxes due
as the result of the application of Section 409A(a)(1)(B) to the
Included Amount.

 

(iii)                               It shall be a condition
precedent to the Company’s obligations under this Section 6(b) that
the Executive (a) has given the Company written notice of any
determination by the Executive, or any claim by any taxing authority, that she
owes Additional Tax as the result of the inclusion of the Included Amount; (b) that
such notice was given as soon as practicable but no later than ten (10) business
days after the Executive makes such determination or is informed of such claim;
(c) that such notice shall, 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 it shall be a further condition precedent to
the Company’s obligations hereunder that the 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.

 

14

 

7.                                       Limitation on Competition.

 

The
Executive acknowledges that she has immediate and continuing access to the
financial and other confidential information of the Company.  As an agreement ancillary to the receipt of
such information and the other undertakings in this Agreement, the Executive
covenants as follows:

 

During
the Employment Period, and for such period thereafter (A) as the Executive
is entitled to receive severance compensation under this Agreement, or (B) in
the event payment of Enhanced Severance compensation is paid, for a period of
three (3) years following the end of the Employment Period, or (C) in
the event the Executive’s employment is terminated by the Company for Cause or
the Executive terminates her employment for any reason other than Good Reason
(including, without limitation, by giving the Company a Non-Renewal Notice
pursuant to Section 1(b) hereof), for a period of twelve months
following the Employment Period:

 

(a)                                  the
Executive shall not, directly or indirectly, without the Company’s prior
written consent, participate or engage in, whether as a director, officer,
employee, advisor, consultant, investor, lender, stockholder, partner, joint
venturer, owner or in any other capacity, any Competitive Business (as defined
below) conducted in any Competitive Market Area (as defined below); provided,
however, that the Executive shall not be deemed to be participating or engaging
in any such business solely by virtue of her 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)                                 the
Executive shall not, without the Company’s prior written consent, (i) solicit
(other than by way of generalized employment advertising undertaken in the
ordinary course of business) the service of or employ any employee of the Key
Companies for the Executive’s own benefit or for the benefit of any person or
entity other than the Key Companies, (ii) induce any such employee to
leave employment with the Key Companies, or (iii) employ or cause any
other person or entity other than the Key Companies to employ any former
employee of the Key Companies whose termination of employment with the Key
Companies occurred less than six (6) months prior to such employment by
the Executive or such other person or entity; and

 

(c)                                  the
Executive shall not, without the Company’s prior written consent, (i) induce
or attempt to induce any customer, supplier or contractor of the Company to
terminate or breach any agreement or arrangement with the Key Companies or
otherwise to cease doing business with the Key Companies, or (ii) induce
or attempt to induce any customer, supplier or contractor of the Key Companies
(including any prospective customer, supplier or contractor which the Key
Companies is actively pursuing prior to the Executive’s termination of
employment), not to enter into any agreement or arrangement with the Key
Companies or not to do business with the Key Companies.

 

As
used herein, the term “Competitive
Business” shall mean any business: (1) that is competitive
with any business (A) which was conducted by the Company or any of its
affiliated companies on the date of termination of Executive’s employment
hereunder or (B)

 

15

 

which, on the date of such termination or during the
twelve months immediately preceding such termination, the Company or any of its
affiliated companies was actively investigating with a view to conducting or
was actively pursuing a plan to conduct; and (2) from which the Company
and such affiliated companies derive (or reasonably expect to derive) annual
revenues of not less than $1,000,000. As used herein, the term “Competitive Market Area”
shall mean any geographic market area (1) if the Company or any of its
affiliated companies conducted business in such geographic market area during
the Employment Period or on the date of termination of Executive’s employment
hereunder, or (2) if, on the date of such termination or during the twelve
months immediately preceding such termination, the Company or any of its
affiliated companies was actively investigating with a view to conducting
business in such geographic market area or was actively pursuing a plan to
conduct business in such geographic market area.

 

The
Executive agrees and acknowledges that a portion of the consideration to be
paid by the Company to the Executive pursuant to this Agreement is in
consideration of the covenants under this Section 7 and that such
consideration is fair and adequate, even though the Executive will not receive
any severance compensation in the event she terminates her employment with the
Company other than for Good Reason or the Company terminates her employment for
Cause. The Executive acknowledges and agrees that any breach or anticipatory
breach by her of any of the provisions of this Section 6 would cause the
Company irreparable injury not compensable by monetary damages alone and that,
accordingly, in any such event, the Company shall be entitled to injunctions,
both preliminary and permanent, enjoining or restraining such breach or
anticipatory breach without the necessity of showing irreparable injury (and
the Executive hereby consents to the issuance thereof without bond by a court
of competent jurisdiction).

 

8.                                       Confidential Information.

 

The Executive
acknowledges that during the course of her employment with the Company he will
have access to trade secrets, confidential and proprietary information and
know-how of the Key Companies (“Confidential Information”).  Except in the ordinary course of properly
performing her duties for the Company, the Executive shall not at any time,
without the Company’s prior written consent while employed or after termination
of her employment, disclose, communicate or divulge, or use for the benefit of
herself or of any third party, any of the Confidential Information of the
Company. In the event the Executive learns during her employment with the Company
any trade secrets, confidential or proprietary information or know-how of any
customer, supplier or contractor of the Key Companies, the Executive shall
maintain the confidence of such information.

 

9.                                       Return of Materials.

 

Upon
termination of the Executive’s employment for any reason, the Executive shall
promptly deliver to the Company or, with the Company’s consent, destroy all
documents and other materials in the Executive’s possession or custody (whether
prepared by the Executive or others) that the Executive obtained from the Key
Companies or a customer, supplier or contractor of the Key Companies during the
Employment Period and which relate to the past, present or anticipated business
and affairs of the Key Companies, including without limitation, any
Confidential Information.

 

16

 

10.                                 Enforceability.

 

If any
provision of this Agreement shall be deemed invalid or unenforceable as
written, this Agreement shall be construed, to the greatest extent possible, or
modified, to the extent allowable by law, in a manner which shall render it
valid and enforceable and any limitation on the scope or duration of any such
provision necessary to make it valid and enforceable shall be deemed to be a
part thereof. No invalidity or unenforceability of any provision contained
herein shall affect any other portion of this Agreement unless the provision
deemed to be so invalid or unenforceable is a material element of this
Agreement, taken as a whole.

 

11.                                 Legal Expenses.

 

The
Company shall pay the Executive’s reasonable fees for legal and other related
expenses associated with any disputes arising hereunder or under any other
agreements, arrangements or understandings regarding Executive’s employment
with the Company (including, without limitation, all agreements, arrangements
and understandings regarding bonuses, Equity-Based Incentives, employee
benefits or other compensation issues) if either a court of competent
jurisdiction or an arbitrator shall render a final judgment or an arbitrator’s
final decision in favor of the Executive on the issues in such dispute, from
which there is no further right of appeal. If it shall be determined in such
judicial adjudication or arbitration that the Executive is successful on some
of the issues in such dispute, but not all, then the Executive shall be
entitled to receive a portion of such legal fees and other expenses as shall be
appropriately prorated.  For purposes of this Section 11,
the phrase “reasonable fees for legal and other related expenses” shall mean
only the reasonable fees incurred by the Executive for legal and other related
expenses, to the extent and only to the extent to which either (a) the
reimbursement or payment of such fees and expenses by the Company does not constitute
“compensation” within the meaning of that word where it appears in the phrase “a
legally binding right during a taxable year to compensation” in the first
sentence of Treas. Reg. § 1.409A-1(b)(1); or (b) the reimbursement or
payment of such fees and expenses by the Company is a settlement or award
resolving bona fide legal claims based on wrongful termination, employment
discrimination, the Fair Labor Standards Act, or worker’s compensation
statutes, including claims under applicable Federal, state, local, or foreign
laws, or for reimbursements or payments of reasonable attorneys fees or other
reasonable expenses incurred by a service provider related to such bona fide
legal claims described in Treas. Reg. § 1.409A-1(b)(10).

 

12.                                 Notices.

 

All
notices which the Company is required or permitted to give to the Executive
shall be given by registered or certified mail or overnight courier, with a
receipt obtained, addressed to the Executive at her primary residence, or at
such other place as the Executive may from time to time designate in writing,
or by personal delivery to the Executive, or by facsimile to the Executive with
oral confirmation of her receipt and with a copy immediately sent to the
Executive by first class U.S. Mail, and to counsel for the Executive as may be
requested in writing by the Executive from time to time. All notices which the
Executive is required or permitted to give to the Company shall be given by
registered or certified mail or overnight courier, with a receipt obtained, addressed
to the Company at the address set forth above, or at such other address as the
Company may from time to time designate in writing, or by personal

 

17

 

delivery to the Chief Executive Officer of the Company,
or by facsimile to the Chief Executive Officer with oral confirmation of her
receipt and with a copy immediately sent to the Chief Executive Officer by
first class U.S. Mail, and to counsel for the Company as may be requested in
writing by the Company. A notice will be deemed given upon personal delivery,
the mailing thereof or delivery to an overnight courier for delivery the next
business day, or the oral confirmation of receipt by facsimile, except for a
notice of change of address, which will not be effective until receipt, and
except as otherwise provided in Section 5(a) hereof.

 

13.                                 Waivers.

 

No waiver by either party of any breach or
nonperformance of any provision or obligation of this Agreement shall be deemed
to be a waiver of any preceding or succeeding breach of the same or any other
provision of this Agreement. Any waiver of any provision of this Agreement must
be in writing and signed by the party granting the waiver.

 

14.                                 Headings; Other Language.

 

The
headings contained in this Agreement are for reference purposes only and shall
in no way affect the meaning or interpretation of this Agreement. In this
Agreement, as the context may require, the singular includes the plural and the
singular, the masculine gender includes both male and female reference, the
word “or”
is used in the inclusive sense and the words “including,” “includes,” and “included” shall not
be limiting.  As used herein, the term “Subsidiary” shall
mean any corporation or other entity the voting equity of which the Company or
another Subsidiary holds at least fifty percent.

 

15.                                 Withholding and Timing of Payments.

 

The
Executive acknowledges and agrees that any or all payments under this Agreement
may be subject to reduction for tax and other required withholdings.  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 taxable 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 payment 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 separation from service (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 taxable income under Section 409A
of the Internal Revenue Code.

 

16.                                 Counterparts.

 

This
Agreement may be executed in duplicate counterparts, each of which shall be
deemed to be an original and all of which, taken together, shall constitute one
agreement.

 

18

 

17.                                 Agreement Complete; Amendments.

 

This
Agreement, together with the Exhibits hereto, the agreements referred to
herein, and the instruments, agreements, plans, resolutions and other documents
pursuant to which any Equity-Based Incentives are held (now or in the future)
by the Executive, constitutes the entire agreement of the parties with respect
to the subject matter hereof and supersedes all prior agreements, written or
oral, with respect thereto.  This
Agreement may not be amended, supplemented, canceled or discharged except by a
written instrument executed by both of the parties hereto, provided, however,
that the immediately foregoing provision shall not prohibit the termination of
rights and obligations under this Agreement which termination is made in
accordance with the terms of this Agreement.

 

18.                                 Benefit of the Successors and Permitted Assigns of
the Respective Parties Hereto.

 

This
Agreement and the rights and obligations hereunder are personal to the Company
and the Executive and are not assignable or transferable to any other person,
firm or corporation without the consent of the other party, except as
contemplated hereby; provided, however, in the event of the sale, merger or
consolidation of the Company, whether or not the Company is the surviving or
resulting corporation, the transfer of all or substantially all of the assets
of the Company, or the voluntary or involuntary dissolution of the Company,
then the surviving or resulting corporation or the transferee or transferees of
the Company’s assets shall be bound by this Agreement and the Company shall
take all actions necessary to insure that such corporation, transferee or transferees
are bound by the provisions of this Agreement; and provided, further, this
Agreement shall inure to the benefit of the Executive’s estate, heirs,
executors, administrators, personal and legal representatives, distributees,
devisees, and legatees. Notwithstanding the foregoing provisions of this Section 18,
the Company shall not be required to take all actions necessary to insure that
a buyer, survivor, transferee or transferees of the Company’s assets (“Transferee”) are
bound by the provisions of this Agreement and such Transferee shall not be
bound by the obligations of the Company under this Agreement if the Company
shall have (a) paid to the Executive or made provision satisfactory to the
Executive for payment to her of all amounts which are or may become payable to
her hereunder in accordance with the terms hereof and (b) made provision
satisfactory to the Executive for the continuance of all benefits required to
be provided to her in accordance with the terms hereof, in each case as if the
Executive had been terminated without Cause in anticipation of a Change in
Control.

 

19.                                 Governing Law.

 

This Agreement
will be governed and construed in accordance with the laws of Texas applicable
to agreements made and to be performed entirely within such state, without
giving effect to any choice or conflicts of laws principles which would cause
the application of the domestic substantive laws of any other jurisdiction.

 

19

 

20.                                 Survival.

 

The
covenants, agreements, representations, warranties and provisions contained in
this Agreement that are intended to survive the termination of the Executive’s
employment hereunder and the termination of the Employment Period shall so
survive such termination.

 

21.                                 Interpretation.

 

The terms of this
Agreement shall be construed and administered in a manner calculated to avoid
the inclusion of any amount in Executive’s gross income under Code Section 409A, and any provisions regarding the timing of
payments shall have an effective date of August 1, 2005, as required by
Code Section 409A.

 

The
Company and the Executive each acknowledge and agree that this Agreement has
been reviewed and negotiated by such party and its or her counsel, who have
contributed to its revision, and the normal rule of construction, to the
effect that any ambiguities are resolved against the drafting party, shall not
be employed in the interpretation of it.

 

22.                                 Assignment and Assumption of Original Employment
Agreement; Consent to Assignment.

 

The Parent hereby assigns, transfers and conveys to
the Company, and the Company hereby accepts such assignment and assumes the
obligations of the Parent contained in the Original Employment Agreement, as
amended by this Agreement.  In order to
induce the Executive to consent to such assignment and assumption,
simultaneously with the execution and delivery of this Agreement, the Parent
has executed and delivered to the Executive the Guaranty dated the date of this
Agreement.  In consideration of the
execution and delivery of such Guaranty by the Parent, and of the terms and
provisions of this Agreement, the Executive hereby consents to such assignment
and assumption.

 

IN
WITNESS WHEREOF, the parties have executed this Agreement, this 31st
day of December, 2007.

 

 

	
   

  	
  THE PARENT:

  
	
   

  	
   

  
	
   

  	
  KEY ENERGY SERVICES,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Richard J. Alario

  	
   

  
	
   

  	
   

  	
  Richard J. Alario

  
	
   

  	
   

  	
  Chairman, President,
  and Chief Executive

  
	
   

  	
   

  	
  Officer

  

 

20

 

	
   

  	
  THE COMPANY:

  
	
   

  	
   

  
	
   

  	
  KEY ENERGY SHARED
  SERVICES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Newton W. Wilson
  III

  	
   

  
	
   

  	
   

  	
   

  	
  Newton W. Wilson III

  
	
   

  	
   

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ Kim B. Clarke

  	
   

  
	
   

  	
   

  	
  Kim B. Clarke

  
						

 

21

 

EXHIBIT A

 

Company
Paid Coverages

 

1.                                       Medical
and Dental Plan. Comprehensive medical and dental plans available to the
Company’s senior management, pursuant to which all medical and dental expenses
incurred by the Executive, her spouse and her children will be reimbursed by
the Company, through insurance or, in the absence of insurance, directly by the
Company, so that the Executive has no out-of-pocket cost with respect to such
expenses.

 

2.                                       Director
and Officer Liability Insurance.

 

3.                                       Voluntary
annual physicals at the Executive’s option while employed, with a report by the
examining physician, if requested, to the Board regarding the Executive’s
ability to perform job related functions.

 

22

 

EXHIBIT B

 

Definition
of “Change in Control” of the
Parent

 

The occurrence of any of
the following shall constitute a “Change in Control” of Key Energy Services, Inc.
(referred to herein in Exhibit B as the “Company”):

 

(a)                                  If
any person (as defined in Section 3(a)(9) of the Securities Exchange
Act of 1934, as from time to time in effect (the “Exchange Act”), or any successor
provision), other than the Company, becomes the beneficial owner directly or
indirectly of more than fifty percent (50%) of the outstanding Common Stock of
the Company, determined in accordance with Rule 13d-3 under the Exchange
Act (or any successor provision), or otherwise becomes entitled to vote more
than fifty percent (50%) of the voting power entitled to be cast at elections
for directors (“Voting
Power”) of the Company;

 

(b)                                 If
the Company is subject to the reporting requirements of Section 13 or 15(d) (or
any successor provision) of the Exchange Act, and any person (as defined in Section 3(a)(9) of
the Exchange Act, or any successor provision), other than the Company,
purchases shares pursuant to a tender offer or exchange offer to acquire Common
Stock of the Company (or securities convertible into or exchangeable for or
exercisable for Common Stock) for cash, securities or any other consideration,
if after consummation of the offer, the person in question is the beneficial
owner, directly or indirectly, of more than fifty percent (50%) of the
outstanding Common Stock of the Company, 
determined in accordance with Rule 13d-3 under the Exchange Act (or
any successor provision);

 

(c)                                  If
the stockholders or the Board approve any consolidation or merger of the
Company (i) in which the Company is not the continuing or surviving
corporation unless such merger is with a Subsidiary at least fifty percent
(50%) of the Voting Power of which is held by the Company or (ii) pursuant
to which the holders of the Company’s shares of Common Stock immediately prior
to such merger or consolidation would not be the holders immediately after such
merger or consolidation of at least a majority of the Voting Power of the
Company;

 

(d)                                 The
stockholders or the Board shall have approved any sale, lease, exchange or
other transfer (in one transaction or a series of transactions) of all or
substantially all of the assets of the Company;

 

(e)                                  Upon
the election of one or more new directors of the Company, a majority of the
directors holding office, including the newly elected directors, were not
nominated as candidates by a majority of the directors in office immediately
before such election

 

As used in this
definition of “Change in
Control,” “Common
Stock” means the Common Stock, or if changed, the capital stock
of the Company as it shall be constituted from time to time entitling the
holders thereof to share generally in the distribution of all assets available
for distribution to the Company’s stockholders after the distribution to any
holders of capital stock with preferential rights.

 

23Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Agreement is made,
entered into, and effective this 31st day of December, 2007 (the “Effective
Date”) between Green Bankshares, Inc. (
the “Company”) and R. Stan Puckett (“Puckett”).

 

RECITALS

EMPLOYMENT

 

	
  A.

  	
   

  	
  The Company is a Tennessee
  corporation and serves as the bank holding company for GreenBank.

  
	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Puckett is willing and desires
  to accept or continue employment on the terms, covenants, and conditions set
  forth below.

  

 

 

THEREFORE, in
consideration of the parties’ mutual covenants and promises, all of which the
parties acknowledge are sufficient to support this Agreement,  the Company and Puckett agree as follows:

 

1.                                       Employment. The Company employs Puckett and Puckett
accepts such employment with the Company, subject to the terms and conditions
of this Agreement. Puckett will be employed as Chairman and Chief Executive
Officer for the Company and will perform all duties and services incident to such position and such other duties and
services as delegated to Puckett by the Board of Directors. Puckett’s
employment shall be at-will and may be terminated by either party with or
without cause, subject to the terms and conditions of this Agreement.

 

2.                                       Term of Agreement. The initial term of this Agreement shall
commence on the Effective Date and continue through December 31, 2010,
subject, however, to prior termination and the survival of certain covenants as provided in this Agreement.
Additionally, on the expiration of the initial term or any subsequent
renewal term, this Agreement shall be automatically renewed and extended for successive periods of three (3) years
each, unless either party notifies the other of a termination at least
ninety (90) days prior to the end of the then current term.

 

3.                        Compensation
and Benefits.

 

	
  A.

  	
   

  	
  Salary. The Company will
  pay Puckett, and Puckett agrees to accept from the Company in payment for
  Puckett’s services under this Agreement, an initial salary of $278,250.00 per year, payable
  in accordance with the the Company’s normal payroll
  practices with such employment taxes and other customary withholdings as required with respect to compensation paid by
  a corporation to an employee. The salary set forth in this
  Section is subject to the discretion of the Board of Directors and may
  be modified from time to time by the Board of Directors, but shall not be
  reduced below the initial level specified in this Agreement.

  
	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Bonus. In addition to
  Puckett’s salary, Puckett will be eligible for an annual bonus to be paid
  at the discretion of the Board of Directors based on the Board of Directors’ assessment of various
  performance measures, including, but not limited to, the Company’s return on
  assets, return on equity, and net income. Puckett shall have the option to
  take all or a portion of the bonus in restricted stock. Any bonus paid under this Section shall be paid no
  later than March 15 of the year following the year in which the
  bonus is earned.

  
	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Director’s Fees. In addition to his compensation as Chief Executive Officer, Puckett shall also receive director’s
  fees for his service on the Company’s Board of Directors. Such fees and service on the Company’s Board of
  Directors will be subject to the discretion of the Board of Directors
  in accordance with its legal authority and the Company’s bylaws and other
  governing documents.

  
	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
  Life Insurance. The Company will
  provide Puckett with a tem life insurance policy with $500,000 worth of coverage, payable to a
  beneficiary designated by Puckett. The
  provision of life insurance pursuant to this Agreement is subject to
  Puckett’s insurability and the terms of the applicable life insurance
  policy

  

 

 

 

 

1

 

	
   

  	
   

  	
   

  
	
  E.

  	
   

  	
  Benefits. During his
  employment with the Company, Puckett shall have the right to participate in any and all employee benefit
  programs maintained by the Company for its employees, subject to the
  terms and conditions of such programs. Such employee
  benefit programs may include, without limitation, medical benefits, health insurance coverage, Executive Bonus Plan,
  incentive stock option plan, profit sharing plan, qualified salary
  deferral plan, educational benefits plan and/or pension plan. The Company may modify or terminate such programs from
  time to time.

  

 

 

4.                                       Expenses. The Company agrees
that it will reimburse Puckett in accordance with the terms of its policies and
procedures for any and all necessary, customary, and usual expenses incurred by Puckett in the course of his
employment with the Company.

 

5.                                       Vacation and
Holidays. Beginning January 1, 2008, Puckett shall be allowed
to take up to four (4) weeks
of paid vacation each calendar year. Unused vacation time may not be carried forward from year to year. Any Legal holidays on
which the the Company is closed shall not count as paid vacation time. Puckett
shall schedule his vacation such that he is absent from his duties for an
uninterrupted period of not less than one week each year.

 

6.                                       Puckett’s Devotion to
Business. Puckett shall devote his entire professional and business-related
time and energy to performing his duties faithfully under this Agreement and shall hold no other
paying job. Puckett agrees he will not engage in any other activity that has an
adverse
impact on the fulfillment of his obligations under this Agreement or that takes
any business
opportunity away from the Company.

 

7.                                       Option to Terminate Contract for
Permanent Disability of Puckett. Notwithstanding anything
in this Agreement to the contrary, the Company has the option to terminate this
Agreement in the event that, during
the term of this Agreement, Puckett becomes permanently disabled as the
term “permanently disabled” is defined in this section. The Company may
exercise such option by giving written notice to Puckett of its intention to
terminate this Agreement pursuant to this
section. After the Company gives such notice, this Agreement and the term of
this Agreement shall cease and come to an end on the last day of the
month in which the notice isdelivered with the same force and effect as if such
last day of the month were originally set forth as the Agreement’s termination date. For the purposes of this Agreement,
Puckett shall be deemed to be permanently disabled if, because of ill
health, physical or mental disability, or for other causes beyond his control,
he has failed to perform his duties under this Agreement for thirteen (13)
consecutive weeks, or if he has failed to perform his duties for a total period
of one hundred (100) days, either consecutive or not, during any twelve-month
period. Within ten (10) business days
of termination, the Company shall pay to Puckett a sum equal to one month of
his then current salary, plus an amount equal to the last annual bonus
paid to him should Puckett’s disability occur before any annual bonus is paid
under this Agreement. Nothing in this section, however, should be construed as
inconsistent with, or relieve any obligation that the Company may have under,
the Americans with Disabilities Act or similar state or local law.

 

8.                                       Termination.

 

A. Termination for Cause. The
Company shall have the right at any time to terminate Puckett’s employment
and this Agreement immediately for cause, which shall include any of the following reasons:

 

	
  (i)

  	
   

  	
  At the option of the
  Company, at any time after Puckett shall suffer a permanent disability as
  defined in Section 7 above, subject, however, to the terms of
  Section 7;

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  Upon the death of
  Puckett;

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  In
  the event that the Puckett breaches this Agreement in any material way and fails to cure such breach within
  ten (10) days of receiving written notice from the Company regarding
  such breach;

  
	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  In the event that
  Puckett fails to perform his duties in a manner that the Company requires so
  long as the Company has given Puckett written notice of his failure to
  perform his duties and provided him with at least thirty (30) days to improve
  performance to an acceptable level;

  

 

 

 

2

 

 

	
  (v)

  	
   

  	
  In the event that
  Puckett commits an act of gross negligence that causes harm to the Company;

  
	
   

  	
   

  	
   

  
	
  (vi)

  	
   

  	
  In the event that
  Puckett is convicted of, or pleads guilty (including a plea of nole contendere) to, a criminal act
  which is a felony or which is a misdemeanor involving moral turpitude;

  
	
   

  	
   

  	
   

  
	
  (vii)

  	
   

  	
  Excessive absenteeism;
  and

  
	
   

  	
   

  	
   

  
	
  (viii)

  	
   

  	
  Any misrepresentation
  or breach of the covenants and warranties contained in this agreement.

  

 

 

In the
event the Company terminates Puckett’s employment for cause in accordance with
this Agreement, the Company shall have no further obligations to pay Puckett
except his accrued and unpaid salary through the termination date. Puckett
shallnot be entitled to receive payment for
any accrued vacation time or any unpaid bonus, or any deferred compensation benefits in the event that the
Company terminates Puckett’s employment for cause in accordance with
this Agreement.

 

B.                  Termination Without Cause. The Company shall
have the right at any time to terminate Puckett’s employment
and this Agreement without cause during the term of this Agreement. Puckett
shall have the right to terminate his employment by giving the Company sixty (60) days prior written
notice. In the event Puckett terminates his employment by giving such prior
written notice, the Company shall have no further obligation to pay Puckett except
his accrued and unpaid salary through the
termination date and Puckett shall not be entitled to receive payment for
any accrued vacation time or any unpaid bonus. In the event the Company terminates Puckett’s employment without cause, the
Company shall have no further obligations
to pay Puckett except for a lump sum payment equal to one year of salary
plus an amount that is the average of the previous two years bonus. All payments under this section shall be made no
earlier than six (6) months following the date of termination.

 

9.                   Termination After
Change in Control. If within eighteen (18) months following a Change in Control,
as defined in this Agreement, the Company or its successor terminates Puckett’s
employment Without
Cause or if Puckett voluntarily resigns following a change in position, a reduction in title, or a significant reduction in
the duties which he is to perform for the Company or its successor, then
Company or its successor shall pay the Change in Control Benefit described in Section 9(B) below.

 

A.                                        Definition of Change in Control. The term Change in Control shall mean the
Effective Date of a change in the ownership
of the Company, a change in the effective control of the Company or a change in the ownership of a substantial
portion of the assets of the Company
as provided under Section 409A of the Internal Revenue Code of 1986, as amended from time to time, and any
Internal Revenue Service guidance and regulations issued in connection
with Section 409A of the Internal Revenue Code of 1986, as amended.

 

B.                                          Change in Control
Benefit. The term Change in Control Benefit shall mean a lump sum
payment equal to 2.99 times Puckett’s annual base salary and bonus for the year immediately preceding
termination. The Change in Control Benefit payment shall be made no earlier
than six (6) months following the date of termination. The Change in Control Benefit shall be in lieu of any
payments under Section 8(B) above. If the Change in Control Benefit
would create an excise tax under the excess parachute rules of Section 4999
of the Internal Revenue Code, the
Company shall pay to Puckett the amount of such excise tax and all federal and state income or other taxes with
respect to any such additional amount (the “Gross-Up”). If Puckett incurs any
additional tax liability as a result of
any Gross-Up payments under this Section, the Company shall provide an additional
payment to Puckett to offset any such tax liability.

 

 

3

 

10.                                 Return of Property. Upon termination of employment for any
reason, Puckett shall promptly return the Company’s property, including, but
not limited to, all documents, financial records,
customer records, or business records of any type, including electronically
stored records, that are related in
any manner to the past, present, or anticipated business of the Company, and
any information of a confidential or proprietary nature.

 

11.                                 Dispute Resolution. Except as provided in this Section 11,
any dispute, controversy or claim arising
out of or in relation to or connection to this Agreement, including without limitation
any dispute as to the construction, validity, interpretation, enforceability or
breach of this Agreement, including a claim
for indemnification under Section 12, shall be resolved either as provided by applicable law, or, at the option of
either party, by impartial binding arbitration. In the event that either the Company or Puckett demands arbitration,
Puckett and the Company agree that such arbitration shall be the exclusive,
final and binding forum for the ultimate resolution of such claims, subject to any rights of appeal that
either party may have under the Federal Arbitration Act and/or under applicable state law dealing with the
review of arbitration decisions.

 

(a)                                       Arbitration. Arbitration shall be
heard and determined by one arbitrator, who shall be impartial and who shall
be selected by mutual agreement of the parties; provided, however, that if the dispute involves
more than $1,000,000, then the arbitration shall be heard and determined by
three (3) arbitrators. If three (3) arbitrators are necessary as provided above, then (i) each side shall
appoint an arbitrator of its choice within thirty (30) days of the submission of a notice of
arbitration and (ii) the party-appointed arbitrators shall in turn appoint
a presiding arbitrator of the tribunal within thirty (30) days following
the appointment of the last party-appointed arbitrator. If any party fails or
refuses to appoint an arbitrator, the arbitration shall proceed with one (1) arbitrator.

 

(b)                                      Demand for Arbitration. In the event that Puckett or the Company
initially elects to file suit in any court,
the other party will have 60 days from the date that it is formally served with a summons and a copy of the suit to notify
the party filing the suit of the non-filing
party’s demand for arbitration. In that case, the suit must be dismissed by
consent of the parties or by the court
on motion, and arbitration commenced with the arbitrators. In situations
where suit has not been filed, either Puckett or the Company may initiate arbitration by serving a written demand for
arbitration upon the other party. Such a demand must be served within twelve months of the events giving rise to
the dispute. Any claim that is not timely made will be deemed waived.

 

(c)                                       Proceedings. Unless otherwise
expressly agreed in writing by the parties to the arbitration proceedings:

 

	
  (i)

  	
   

  	
  The arbitration proceedings shall be held in the
  Knox County, Tennessee, area, and at a site chosen by mutual agreement of the
  parties. If the parties cannot reach
  agreement on a location within thirty (30) days of the appointment of the last
  arbitrator, then at a site chosen by the arbitrators;

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  The arbitrators shall be and
  remain at all times wholly independent and impartial;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  The arbitration proceedings shall be conducted in
  accordance with the Employment Arbitration
  Rules of the American Arbitration Association, as amended from
  time to time;

  
	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  Any procedural issues not determined under the
  arbitral rules selected pursuant to
  item (iii) above shall be determined by the law of the place of arbitration, other than those laws which would
  refer the matter to another jurisdiction;

  
	
   

  	
   

  	
   

  
	
  (v)

  	
   

  	
  The costs of the arbitration
  proceedings (including attorneys’ fees and costs) shall be borne in the manner determined by
  the arbitrators;

  

 

 

 

 

4

 

(vi)             The arbitrators may grant any remedy or relief that would
have been available
to the parties had the matter been heard in court;

 

(vii)           The decision of the arbitrators shall be reduced to
writing; final and binding
without the right of appeal; the sole and exclusive remedy regarding any
claims, counterclaims, issues or accounting presented to the arbitrators; made
and promptly paid in United States dollars
free of any deduction or offset; and any costs or fees incident to enforcing the award shall to the maximum extent
permitted by law, be charged against the party resisting such
enforcement;

 

(viii)         The award shall include interest from the date of any
breach or violation of
this Agreement, as determined by the arbitral award, and from the date of the
award until paid in full, at 6% per annum; and

 

(ix)                                Judgment upon the
award may be entered in any court having jurisdiction over the person or
the assets of the party owing the judgment or application may be made to such court for a judicial
acceptance of the award and an order of enforcement, as the case may be.

 

(d)               Acknowledgment of
Parties. The Company and Puckett understand and acknowledge that
this Agreement means that neither can pursue an action against the other in a court of law regarding any
employment dispute, except for claims involving workers’ compensation benefits
or unemployment benefits, and except as set forth elsewhere in this Agreement, in the event that either party notifies
the other of its demand for
arbitration under this Agreement. The Company and Puckett understand and agree
that this Section 11, concerning
arbitration, shall not include any controversies or claims related to any agreements or provisions (including
provisions in this Agreement) respecting confidentiality, proprietary
information, non-competition, non-solicitation, trade secrets, or breaches of fiduciary obligations by Puckett, which
shall not be subject to arbitration.

 

(e)                Consultation. Puckett has been
advised of his right to consult with an attorney prior to entering into this Agreement.

 

12.                                 Indemnification. Puckett shall be
indemnified and held harmless from any and all claims, damages and losses of whatsoever kind,
including without limitation court costs and reasonable attorneys fees through
appeal, resulting from any and all legal actions when he is either a party,
witness or a participant brought against the Company, its subsidiary companies,
Puckett, another employee or director of
the the Company, or any other third party when such action relates to or arises
from Puckett’s employment with the Company or this Agreement. Puckett
will also be protected through any indemnity,
insurance or other similar programs that cover the outside Board members
or other employees of the Company.

 

13.                                 Warranties and
Representations. To induce the Company to enter into this Agreement, Puckett warrants and
represents to the Company that he is not under any obligation, contractual or otherwise, that would
prohibit or contravene in any way his acceptance of employment or continued employment
with the Company and the performance of his obligations under this Agreement.

 

14.                                 Contract Terms To Be
Exclusive. This Agreement contains the sole and entire agreement between the parties and shall supersede
any and all other agreements between the parties with respect to the subject matter of this Agreement. The parties acknowledge
and agree that neither of them has
made any representation with respect to the subject matter of this Agreement or
any representations including the
execution and delivery of this Agreement except such representations as
are specifically set forth in this Agreement.

 

15.                                 Waiver or Modification Ineffective Unless
in Writing. No
waiver or modification of this Agreement or
of any covenant, condition, or limitation contained in this Agreement shall be valid
unless in writing and duly executed by the party to be charged with it, and
that no evidence of any waiver or modification shall be offered or received in
evidence in any proceeding or litigation
between the parties unless such waiver or modification is in writing and duly
executed. The parties agree that the provisions of this Section may
not be waived except as set forth in this Section.

 

 

5

 

16.               Choice of Law and
Venue. This Agreement shall be construed and interpreted in accordance with the laws of the State of
Tennessee, without applying the conflict of laws rules of such state. In
addition, the parties consent to the jurisdiction of the State of Tennessee for
any lawsuit arising under this Agreement.
The parties also agree that the venue for any lawsuit arising under this
Agreement shall be in Greene County, Tennessee.

 

17.                                 Waiver of Breach. Failure to insist
upon strict compliance with any of the terms, covenants, or conditions of this
Agreement, shall not be deemed a waiver of such terms, covenants, or
conditions, nor shall any waiver or relinquishment of such right or power hereunder at any time
or times be deemed a waiver or relinquishment of such right or power at any other time or times.

 

18.                                 Severability. The invalidity or
unenforceability of any provision of this Agreement shall in no way effect the validity or
enforceability of any other provision. Furthermore, to the extent this Agreement is inconsistent with federal or
state law, this Agreement shall be deemed amended to the extent
necessary to make it consistent and in compliance with such laws.

 

19.                                 Binding Effect or
Successors/Assignability. The Company reserves the right to assign this
Agreement to its successors and assigns. Puckett may not assign this Agreement.

 

20.               Free Will. The undersigned
parties have read and understood the foregoing provisions

and are entering this
Agreement on their own free will.

 

 

6

 

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

 

 

 

GREEN
BANKSHARES, INC.

 

 

 

	
  By:

  	
  /s/ Terry
  Leaonard

  	
   

  
	
  Title:

  	
  Chairman of
  Commensation Commttiee

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/R. Stan
  Puckett

  	
   

  
	
   

  	
  R. Stan Puckett

  	
   

  
	
   

  	
   

  	
   

  

 

 

 

 

7

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