Document:

Exhibit 10.1

 

CONSULTING AGREEMENT SECOND AMENDED ADDENDUM

 

 

This
Consulting Agreement Second Amended Addendum is entered into effective as of December 18,
2004, and is a supplement to, and modification of, that certain Consulting
Agreement (the “Original Agreement”) by and between F.Y.I. Incorporated (n/k/a SOURCECORP, Incorporated) (the “Company”) and David
Lowenstein (“Consultant”), dated as of January 1, 2000.

 

1.             Fee Modification. 
Effective December 18, 2004, in addition to the fees contemplated
by Section 2 of the Original Agreement, Consultant’s hourly rate of
$140.00 shall be increased to $180.00 per hour for services Consultant performs
at the request of, and on behalf of, the Company, subject to the aggregate
compensation limitation under the Original Agreement of $250,000 for any
calendar year.  The proviso of
Section 1 (which relates to activities not subject to an hourly rate) of
that certain Consulting Agreement Addendum dated as of March 6, 2003 shall
remain in effect.

 

2.             Governing Laws.  This Second
Amended Addendum shall in all respect be construed according to the laws of the
State of Texas.

 

3.             Counterparts.  This Second
Amended Addendum may be executed simultaneously in two (2) or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.

 

4.             Effect of Second Amended
Addendum.  Except as specifically amended by this Second
Amended Addendum, all provisions of the Original Agreement (as amended by the
Consulting Agreement Amended Addendum entered into effective as of October 1,
2004) remain in full force and effect in accordance with their express terms.

 

IN
WITNESS WHEREOF, the parties hereto have executed this Second Amended Addendum
as of the day and year first above written.

 

	
  SOURCECORP, Incorporated

  	
  CONSULTANT

  
	
  (f/k/a
  F.Y.I. Incorporated)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Thomas C. Walker

  	
   

  	
  /s/ David Lowenstein

  	
   

  
	
   

  	
  Thomas
  C. Walker

  	
  David
  Lowenstein

  
	
   

  	
  Chairman
  and Chief Development OfficerExhibit 10.2

 

Non-Employee Directors
Compensation Summary

 

Effective May 23,
2005, the Executive Committee approved and the Board of Directors ratified a
modification to the Non-Employee Director fees to include an annual cash retainer,
an increase in the amount paid for attending Audit Committee meetings and a
decrease in the amount paid for attending meetings via teleconference.  The revised Non-Employee Director fee schedule is listed below.

 

	
  Annual Retainer

  	
   

  	
  $25,000 per year beginning 2005

  
	
   

  	
   

  	
   

  
	
  Board Meeting Fees

  	
   

  	
  $2,500 for Board meetings

  
	
   

  	
   

  	
   

  
	
  Committee Meeting Fees

  	
   

  	
  $2,000 for Audit Committee meetings

  $1,250 for committee meetings other than the Audit Committee

  
	
   

  	
   

  	
   

  
	
  Scheduled Board/Committee Conference Calls

  	
   

  	
  $500 per meeting

  
	
   

  	
   

  	
   

  
	
  Annual Equity Grants

  	
   

  	
  RSA’s valued at $40,000 at time of grant (based on
  10 trading day average) vesting 20%/30%/50% annually on terms consistent with
  prior years and subject to terms of the Company’s 2002 Long Term Incentive
  PlanExhibit 10.1

 

PIONEER DRILLING SERVICES, LTD.

 

ANNUAL INCENTIVE COMPENSATION PLAN

 

1.             Objectives.  The Pioneer Drilling Services, Ltd. Annual Incentive
Compensation Plan (the “Plan”) is designed to reward selected executive
officers, managers and certain other key employees of Pioneer Drilling Services,
Ltd., a Texas limited partnership (the “Partnership”) and its Affiliates (as
defined below) for making significant contributions to the success of Pioneer
Drilling Company, a Texas corporation (the “Company”) and its subsidiaries
(including the Partnership).

 

2.             Definitions.  As used herein, the terms set forth below
shall have the following respective meanings:

 

“Affiliate” means, with respect to any Person, any
other Person that directly or indirectly through one or more intermediaries
controls, is controlled by or is under common control with the Person in
question.  As used herein, the term “control”
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.

 

“Award” means an incentive compensation award granted
to a Participant (as defined below) under the Plan pursuant to any applicable
terms, conditions and limitations as the Committee (as defined below) may
establish in order to fulfill the objectives of the Plan.

 

“Award Agreement” means a written agreement between
the Partnership and a Participant which (i) sets forth the terms, conditions
and limitations applicable to an Award and (ii) sets forth the Participant’s assigned
eligibility level.

 

“Base Salary” means the base salary actually received
by a Participant during a Plan Year.

 

“Board” means the board of directors of the Company.

 

“Code” means the Internal Revenue Code of 1986, as
amended.

 

“Committee” means the Compensation Committee of the
Board or such other committee of the Board or of the board of directors of the
General Partner as is designated by either the Board or the board of directors
of the General Partner to administer the Plan.

 

“Company” has the meaning set forth in Section 1.

 

“Disability” means the absence of a Participant from
the Participant’s duties with the Partnership or any of its Affiliates on a
full-time basis for at least 90 consecutive days as a result of incapacity due
to mental or physical illness or 

 

 

injury which is determined by the Committee in its
sole discretion to be permanent.

 

“Employee” means any employee of the Partnership or
any of its Affiliates (whether or not he is also a director thereof), who is
compensated for employment of the Partnership or any Affiliate by a regular
salary.

 

“Exchange Act” means the Securities Exchange Act of
1934, as amended.

 

“Fiscal Year” means April 1 through March 31.

 

“General Partner” means PDC Mgmt. Co., a Texas
corporation and the general partner of the Partnership.

 

“Normal Retirement Age” means age 65.

 

“Participant” means an Employee who is (i) approved by
the Committee to participate in the Plan and (ii) enters into an Award Agreement
with the Partnership.

 

“Partnership” has the meaning set forth in Section 1.

 

“Performance Goals” means (i) the annual performance
objectives of the Partnership, an Affiliate or one or more business units of
the Partnership or any Affiliate and (ii) any individual performance
objectives, in either or both cases, established for the purpose of determining
the level of Awards, if any, earned during a Plan Year.

 

“Person” has the meaning given in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof.

 

“Plan” has the meaning set forth in Section 1.

 

“Plan Year” means the applicable Fiscal Year.

 

3.             Designation of Participants.  Employees eligible to participate in the Plan
are select executive officers, managers and certain other key Employees whose
decisions contribute directly to the success of the Company.  For each Plan Year, the Company’s Chief
Executive Officer shall select those eligible Employees to be recommended for
participation in the Plan, subject to approval by the Committee and the
execution of Award Agreements under the Plan. 
The Committee shall, in its sole discretion, assign Participants to an
eligibility level under the Plan.  Employees
who are selected for participation after the commencement of a Plan Year shall
be eligible to participate in the Plan on a pro rata basis for such Plan Year,
based on the number of days such Employee participates in the Plan relative to
the total number of days in the Plan Year. 
No Employee shall at any time
have the right (i) to be selected as a Participant in the Plan for any Plan
Year, (ii) if so selected, to be entitled automatically to an Award, or (ii) if
selected as a Participant in one Plan Year, to be selected as a Participant in
any subsequent Plan Year.

 

2

 

4.             Plan Administration.  The Plan shall be administered by the
Committee, which shall have full and exclusive power to interpret the Plan and
to adopt such rules, regulations, guidelines and procedures for carrying out the
Plan as it may deem necessary or appropriate in its sole discretion.  The Committee shall determine all terms and
conditions of the Awards.  The Committee may delegate to the Company’s
Chief Executive Officer all aspects of managing and administering the Plan to
the extent permitted by applicable law, provided that the decisions and duties
delegated do not directly affect the Awards of the Chief Executive Officer or
any other executive officer of the Company.

 

5.             Awards.  For each Plan Year, the Committee shall
approve performance measures for the Plan and, with respect to each eligibility
level, the applicable “threshold,” “target” and “above expectation” performance
levels for each performance measure.  The
Committee shall, in its discretion, define and establish for each Plan Year, the
applicable Performance Goals for each Participant, and shall assign to each
Performance Goal an appropriate percentage of the potential Award on the basis
of the degree of impact the Company has and, if appropriate, the degree of
impact to the Company the Participant’s decisions and actions have, with
respect to such Performance Goal.  Each
Participant may have an individual performance objectives component and may be
evaluated on specific individual objective(s) or on an overall management
assessment of their contribution to the organization.  Performance Goals relating to the attainment
of individual performance objectives shall be established by the Committee upon
the recommendation of the Company’s Chief Executive Officer (in conjunction
with other executive officers of the Company); provided,
however, that the Committee is responsible for establishing
individual performance objectives for the Chief Executive Officer and the other
executive officers of the Company.

 

An Award will be paid only if the Performance Goal(s)
set forth in an Award Agreement have been achieved during the course of the
relevant Plan Year (or such shorter period as may be determined by the
Committee).  The amount of the Award will
be determined by reference to the formula contained in the relevant Award
Agreement, which will describe and set forth the Performance Goal(s) applicable
to each Participant and the percentage of the potential Award to be paid with
respect to such Performance Goal(s), depending upon (i) what predetermined level
of the Performance Goal(s) is achieved and (ii) what eligibility level the
Participant is assigned under the Plan.  Notwithstanding
the foregoing, the Committee retains ultimate discretion, based on any factors
it deems relevant, to increase or reduce the amount of, or cancel payment of,
any Award otherwise payable based on the applicable Performance Goal(s) for the
Plan Year.  The amount of an Award shall
be expressed as a percentage of Base Salary.

 

6.             Payment of Awards.  Subject to the provisions of Section 7, payment
of an Award will be made to the Participant following the conclusion of a Plan
Year upon the conditions that (a) the Performance Goals specified in the
relevant Award Agreement have been achieved and (b) the Committee has reviewed
and approved the Award and (c) the Committee has not exercised its discretion
to increase or reduce the amount of, or cancel payment of, the Award.  Payment shall be
made in the form of a lump-sum cash payment as soon as practicable following
the close of the Plan Year, but not later than two and one-half months after
the end of the Plan Year.

 

3

 

7.             Forfeiture of Award.  Except as may be provided in any other agreement
between the Participant and the Partnership, if, prior to the date the Award is
paid, a Participant’s employment is terminated for any reason other than death,
Disability or the attainment of Normal Retirement Age, such Participant will automatically
forfeit any interest in the Award as of the termination date.  Except as may be provided in any other
agreement between the Participant and the Partnership, if a Participant’s employment
is terminated by reason of death, Disability or the attainment of Normal
Retirement Age, then the Committee will decide, at the recommendation of
management, and in its sole and absolute discretion, whether such Participant
will receive a prorated Award for such Plan Year or will forfeit any interest
in the Award.  If applicable, such a
prorated Award will be paid only if the Committee certifies that the relevant Performance
Goals have been achieved.  If during the course of a Plan Year the
Participant takes a position with the Partnership or any Affiliate which is
materially different from the position which he or she occupied at the
commencement of such Plan Year, and the Committee determines that such new
position does not involve comparable or greater executive responsibilities than
were enjoyed by such Participant at the beginning of such Plan Year, then the
relevant Award Agreement will automatically be terminated. The Committee will
decide, in its sole and absolute discretion, whether the Participant will
receive a prorated Award for such Plan Year or will forfeit any interest in any
Award for such Plan Year. If applicable, such a prorated Award will only be
paid if the Committee determines that the relevant performance goals have been
achieved.

 

8.             Tax Withholding.  The
Partnership shall deduct applicable taxes with respect to the payment of any
Award.

 

9.             Non-Assignability.  Unless otherwise determined by the Committee,
no Award or any other benefit under the Plan shall be assignable or otherwise
transferable.  Any attempted assignment
of an Award or any other benefit under the Plan in violation of this Section 9
shall be null and void.

 

10.           Exculpation.  No
member of the Committee, and no Company officer to whom the Committee has
delegated authority according to the Plan, shall be liable for anything done or
omitted to be done by him or her, by any member of the Committee or by any
officer of the Company or the Partnership in connection with the performance of
any duties under the Plan, except for his own willful misconduct or as
expressly provided by statute.

 

12.           Finality of Determinations.  Any
determination by the Committee in
carrying out or administering the Plan shall be final and binding for all
purposes and upon all interested persons and their heirs, successors and
personal representatives.

 

13.           Amendment, Suspension or Termination.  Upon authorization by the Board or the board
of directors of the General Partner, the Partnership may amend or suspend the
Plan at any time for the purpose of meeting or addressing any changes in legal
requirements or terminate the Plan at any time, except that no amendment,
suspension or termination shall be made that would impair the rights of any
Participant as to an earned Award for any Plan Year which is completed as of
the date of the amendment without the consent of such Participant. Notwithstanding
the foregoing, nothing herein shall be construed to prohibit the exercise of
the Committee’s discretion in accordance with Section 5 herein.

 

4

 

14.           No Employment Guaranteed.  No provision of the Plan or any Award
Agreement hereunder shall confer any right upon any Employee to continued employment
with the Partnership or any of its Affiliates.

 

15.           Governing Law.  The Plan and all determinations made and
actions taken pursuant hereto shall be governed by and construed in accordance
with the laws of the State of Texas, without reference to any conflicts of law
principles thereof that would require the application of the laws of another
jurisdiction.

 

16.           Code Section
409A.  The Partnership intends that the Plan comply
in form and operation with the provisions of Section 409A of the Code and
related regulations and Treasury pronouncements (“Section 409A”) to the extent
applicable.  Notwithstanding anything in
the Plan to the contrary, if any Plan provision or payment made under the Plan
would result in the imposition of an excise tax under Section 409A, the Partnership
shall use its best efforts to reform such provision or payment in a manner the Partnership
determines is appropriate to comply with Section 409A, and no action taken with
the express purpose of complying with Section 409A shall be deemed to adversely
affect the rights of any Participant under the Plan.

 

5

 

IN
WITNESS WHEREOF, the Partnership has executed the Plan this 5th day of August,
2005, but effective as of April 1, 2005.

 

 

	
   

  	
   

  	
  PIONEER
  DRILLING SERVICES, LTD.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  PDC MGMT.
  CO,

  
	
   

  	
   

  	
   

  	
   

  	
  its
  general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   /s/ William D. Hibbetts

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  William D. Hibbetts

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Senior
  Vice President, Chief

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Financial
  Officer & Secretary

  

 

6

 

PERFORMANCE
MEASURES

 

Fiscal
Year 2006

 

The following performance
measures will be used for Fiscal Year 2006 and are defined as follows:

 

•                  Pioneer Drilling EPS: Net earnings of
the Company and its consolidated subsidiaries divided by the Company’s average
fully diluted common shares outstanding during the fiscal year.

 

•                  Pioneer Drilling EBITDA: Income before
interest, taxes, depreciation and amortization of the Company and its
consolidated subsidiaries.

 

•                  Pioneer Drilling EBITDA Return on
Capital Employed: Pioneer Drilling EBITDA divided by the sum of (1) average
shareholder’s equity of the Company and its consolidated subsidiaries and (2)
average long-term debt (less current installments) of the Company and its
consolidated subsidiaries for the fiscal year.

 

•                  Division Gross Margin/Day: Gross margin
for the year divided by the total revenue days for the year for the applicable
Division of the Company and its subsidiaries. 
Gross margin is revenue less all direct costs and allocated yard and
Division general and administrative costs. 
This measure may be expressed as an absolute goal or percentage
improvement over the prior year.

 

•                  Division SRM/Day: Total supply,
repair and maintenance costs of the Company and its consolidated subsidiaries for
the year divided by the total rig days of the Company and its consolidated
subsidiaries for the year.

 

•                  Recordable Incident Rate: For the
applicable business unit (i.e., Division,
Corporate) the number of recordable incidents per 200,000 hours worked for the
year.  In the event of a fatality
accident, the safety component of the incentive award is eliminated for the
applicable Division and Corporate participants.

 

•                  Personal Objectives: For each Participant,
specific individual goals or objectives may be established during the Plan Year,
and evaluated by management at the end of the year.

 

7

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