Document:

exv10w1

Exhibit 10.1

February 5, 2009

Via Hand Delivery

Mr. William M. Austin

5020 Tangle Lane

Houston, Texas 77056

     RE: Resignation of William M. Austin

Dear Bill:

     It is my understanding that you intend to resign from your employment with Key Energy Shared
Services, LLC (the “Company”) for other than Good Reason, effective February 6, 2009. The purpose
of this correspondence is to address some of the matters related to your resignation. As you know,
your Amended and Restated Employment Agreement dated December 31, 2007 (the “Agreement”), along
with any Equity Incentive Agreements, govern the terms and conditions related to your resignation.

     The Agreement contains certain restrictions on your ability to directly or indirectly
participate or engage in any “Competitive Business” in the “Competitive Market Area”, as those
terms are defined in the Agreement, for a period of twelve months following your resignation
(“Non-Compete Period”). Based on the Company’s understanding of the position you intend to assume
following your resignation, the Company is willing to waive a portion of the Non-Compete, such that
you may serve in an interim managerial capacity with or be engaged to provide restructuring advice
for any Competitive Business in the Competitive Market Area during the Non-Compete Period. For
purposes of the Non-Compete and limited waiver herein, interim shall mean less than 120 days. Other
than the foregoing waiver, the terms of Section 7 of the Agreement (Limitation on Competition)
remain in full force and effect. This includes, without limitation, the prohibition against
soliciting the service of or hiring any employee of the Key Companies (defined in the Agreement)
for your own benefit or for the benefit of any entity other than the Key Companies, or inducing any
such employee to leave employment with the Key Companies. Finally, pursuant to Section 8 of the
Agreement (Confidential Information), in no event shall you disclose, communicate or divulge, or
use for the benefit of yourself or any third party, any of the Company’s Confidential Information,
as that term is defined in the Agreement.

     Please also note that that you are entitled to any unpaid portion of your base salary through
the effective date of resignation, accrued but unused vacation, expense reimbursements which have
been incurred but not paid, and any “Gross-Up” payment due under the terms of Section 6 of the
Agreement. Because you are terminating your employment for other than Good Reason, the Agreement
provides that you are not entitled to any prior fiscal year bonus that has been earned, but not yet
paid. However, in addition to the consideration provided for in the Agreement and other
consideration provided for herein, the Company is willing to pay you the bonus that you would
otherwise have been paid for the second half of the fiscal year ended December 31, 2008. You shall
receive the bonus, in such amount as determined by the Company, no later than March 15, 2009.

 

 

     In exchange for the consideration provided for herein, to which you agree you are not
otherwise entitled, and pursuant to the terms of the Agreement, you must execute a full release of
the Company and its officers, employees, and affiliates for all claims relating to your employment,
compensation, and termination. Such release will be provided to you on the date of your
resignation and you will have twenty-one days to consider such release.

     Although the Agreement provides that you must give at least ninety days written notice to the
Company of your intention to terminate your employment for other than Good Reason, the Company
agrees to waive this requirement in exchange for your return promise to provide continued support
to the Company from the time of your resignation through the filing of the Company’s Annual Report
on Form 10-K for the year ended December 31, 2008.

     Effective on the date of your resignation from employment, you will resign from all positions
as an officer of Key Energy Services, Inc. and any of its subsidiaries. Please find enclosed the
requisite notices to the Board of Directors of Key Energy Services, Inc. to effectuate your
resignation from such positions.

     Finally, please note that as a former officer of the Company, you will continue to have
certain obligations under the federal securities laws as an “insider”. Specifically, our Insider
Trading Policy, Supplemental Insider Trading Policy and Regulation FD Policy continue to apply to
your transactions involving the Company’s securities. In addition, you will be subject to both
continued SEC reporting requirements and Section 16(b) “short-swing” profit liability for a period
of up to six months after your departure from the Company. As you recall, you have had a
transaction that would qualify as a matching transaction within 6 months prior to your departure.
During the next six months, you should consult with me prior to engaging in any transactions that
involve the Company’s securities. Additionally, enclosed for your signature is a “no filings due”
certification, which is normally included in the annual Director and Officer Questionnaire and
basically states that you have timely filed all required beneficial ownership reports (other than
late reports that we already know of) and that an annual Form 5 filing is not required for you for
fiscal year 2008. Please sign and return this certification in the enclosed envelope.

[Signature page follows.]

 

 

     Please sign below where indicated to acknowledge your agreement with the foregoing, and return
one copy of this letter to me. I wish you well in all of your future endeavors. It has been a
pleasure working with you. I appreciate all the support and advice that you have given me during
your tenure at the Company.

	 	 	 	 	 
	 	Regards,

 	 
	 	/s/ KIMBERLY R. FRYE / JAMIE FISHMAN
 	 
	 	Kimberly R. Frye 	 
	 	 	 
	 

Agreed to, Accepted and Acknowledged

as of the date first written above:

/s/ WILLIAM M. AUSTIN 

William M. Austin

	 	 	 
	Enclosures:

	 	“No Filings Due” Certificate

Return Envelope

Memo to Board of Directors re: Resignationexv10w2

Exhibit 10.2

SEPARATION AND RELEASE AGREEMENT

     This Separation and Release Agreement (“Agreement”) is entered into as of the 11 day of
February, 2009, by and between William M. Austin (“Executive”) and Key Energy Shared Services, LLC
and Key Energy Services, Inc. (collectively referred to as the “Company”).

     WHEREAS, Executive and the Company entered into an Amended and Restated Employment Agreement
effective December 31, 2007 (“Employment Agreement”);

     WHEREAS, on December 31, 2007 and contemporaneous with the execution of the Employment
Agreement, Key Energy Services, Inc. executed and delivered to Executive a Guaranty in favor of
Executive (“Guaranty”), as an inducement to Executive to enter into the Employment Agreement;

     WHEREAS, Executive has provided notice to the Company of his decision to terminate his
employment with the Company other than for Good Reason, as that term is defined in the Employment
Agreement, effective February 6, 2009 (“Separation Date”);

     WHEREAS, the Company has accepted Executive’s decision to terminate his employment with the
Company other than for Good Reason, on the Separation Date; and

     WHEREAS, concurrent with Executive’s termination of employment with the Company, Executive has
also resigned his positions as President of Key Energy Shared Services, LLC and Senior Vice
President and Chief Financial Officer of Key Energy Services, Inc.

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

     1. TERMINATION OF EMPLOYMENT RELATIONSHIP: Executive acknowledges that his employment
with the Company will end on the Separation Date based on his decision to terminate his employment
other than for Good Reason, as defined in the Employment Agreement. Any benefits to which
Executive is entitled under the Employment Agreement, the Guaranty, the 1997 Incentive Plan, the
2006 Phantom Share Plan, and the 2007 Incentive Plan will be determined and paid or granted to
Executive based on the terms of the Employment Agreement, the Guaranty and any respective Equity
Incentive Agreements and respective Incentive Plans.

     2. SEPARATION BENEFITS: The Company will provide Executive with the following
consideration (collectively referred to as “Separation Benefits”):

     A. The Company agrees to waive a portion of Section 7(a) of the Employment Agreement, such
that Executive may serve in an interim (defined as less than 120 days) managerial capacity with or
be engaged to provide restructuring advice for any “Competitive Business” in the “Competitive
Market Area”, as those terms are

Executive’s Initials WA

 

 

defined in the Employment Agreement, during the twelve months following the Separation Date;
and

     B. No later than March 15, 2009, the Company will pay Executive the target bonus, as described
in Section 2(b) of the Employment Agreement, for the second half of fiscal year ended December 31,
2008, in such amount to be determined by the Company.

     Executive agrees that the consideration the Company has agreed to provide includes amounts in
addition to anything of value to which Executive is already entitled pursuant to his Employment
Agreement, the Guaranty, and any Equity Incentive Agreements. The Company will apply standard tax
and other applicable withholdings to payments made to Executive.

     3. RELEASE: For and in consideration of the Separation Benefits, on behalf of
Executive, his heirs, dependents, successors and assigns, Executive hereby irrevocably and
unconditionally RELEASES, WAIVES, AND FOREVER DISCHARGES the Company and its partners, parents,
subsidiaries, affiliates, and related companies and any predecessors thereto, and its and their
present and former agents, employees, officers, directors, owners, stockholders, attorneys,
insurers, plan fiduciaries, successors and assigns, whether in their individual or official
capacities (collectively, the “Key Parties”), from and against any and all claims, demands,
actions, causes of action, costs, fees, and all liability whatsoever, whether known or unknown,
fixed or contingent, which Executive has, had, or may have against the Key Parties, or any of them,
relating to or arising out of his employment or separation from employment with the Company, and
any other events or transactions involving the Company, up to and including the date of Executive’s
execution of this Agreement. This Agreement includes, but is not limited to (a) any statutory
claims under the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993,
the Civil Rights Acts of 1870, 1964 and 1991, 42 U.S.C. § 1981, the Age Discrimination in
Employment Act, the Older Workers’ Benefit Protection Act, Chapter 21 et. seq. of the Texas Labor
Code, the Employee Retirement Income Security Act, the Sarbanes Oxley Act, or arising from any
federal, state, or local statute, ordinance or regulation; (b) any common law, tort or contract
claims; (c) any claims for compensation, payments, reimbursements of expenses, issuance of options,
restricted stock, stock or other securities of the Company (or any exercise, issuance or sale of
such securities), severance, or benefits, other than as described herein, (d) any claims, matters,
or actions related in any way to Executive’s employment and separation with the Company; and (e)
any claims for fees, costs, and disbursements of any kind, including attorneys’ fees. Executive
represents and warrants that he has not filed or lodged, and has no outstanding claims, including
any lawsuits or administrative proceedings, against the Company. This Agreement does not apply to
any claims or rights that may arise after the date that Executive signs this Agreement, to vested
rights under Executive’s employee benefit plans as applicable, or to claims that the controlling
law clearly states may not be released by settlement. Nothing in this Agreement generally prevents
Executive from filing a charge or complaint with or from participating in an investigation or
proceeding conducted by the Equal Employment Opportunity Commission (EEOC), National Labor
Relations Board (NLRB), or any other federal, state, or local agency charged with the enforcement
of any employment laws. Despite

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this, by signing this Agreement, Executive is waiving his right to monetary recovery based on
claims asserted in such a charge or complaint.

     4. NON-ADMISSION: Executive understands and agrees that this Agreement shall not in
any way be construed as an admission by the Key Parties of any unlawful or wrongful acts whatsoever
against Executive or any other person, and the Key Parties specifically disclaim any liability to
or wrongful acts against Executive or any other person.

     5. CONFIDENTIALITY: Executive agrees to keep this Agreement, its terms, and the terms
of the Separation Benefits completely confidential; however, Executive may disclose the terms of
this Agreement and the Separation Benefits to his accountants, attorneys, or as otherwise required
by law. Executive also agrees not to disclose, communicate, or publish any disparaging information
of any kind about any of the Key Parties.

     6. ADVICE OF COUNSEL; REVOCATION PERIOD; OTHER INFORMATION: THIS AGREEMENT
SPECIFICALLY WAIVES ALL OF EXECUTIVE’S RIGHTS AND CLAIMS ARISING UNDER THE AGE DISCRIMINATION IN
EMPLOYMENT ACT OF 1967 (29 U.S.C. § 621 et seq.), AS AMENDED, AND THE OLDER WORKERS’ BENEFIT
PROTECTION ACT, AS AMENDED. In connection with this waiver, Executive understands and agrees that:
(i) he may take a period of twenty-one days within which to consider whether he will execute this
Agreement; (ii) If he signs this Agreement prior to the end of the twenty-one day time period, he
certifies that, in accordance with 29 CFR § 1625.22(e)(6), he knowingly and voluntarily decided to
sign the Agreement after considering it less than twenty-one days and his decision to do so was not
induced by the Key Parties through fraud, misrepresentation, or a threat to withdraw or alter the
offer prior to the expiration of the twenty-one day time period. Executive has not been asked by
the Key Parties to shorten his time-period for consideration of whether to sign this Agreement. If
Executive decides to sign this Agreement prior to the end of the twenty-one day time period, the
Key Parties will not provide different terms to Executive as a result of this decision. Executive
understands that if he waives some portion of the twenty-one day time period, the Key Parties may
expedite the processing of benefits provided to him in exchange for signing this Agreement; (iii)
Executive has carefully read and fully understands all of the provisions of this Agreement, and
declares that it is written in a manner that he understands and he knowingly and voluntarily (of
his own free will) entered into all of the terms set forth in this Agreement; (iv) This Agreement
constitutes a release and discharge of claims, among others, arising under the Age Discrimination
in Employment Act, including the Older Workers’ Benefit Protection Act, in exchange for
consideration that is in addition to anything of value to which Executive already is entitled; (v)
Executive knowingly and voluntarily intends to be legally bound by the terms of this Agreement;
(vi) Executive was advised and hereby is advised in writing to consult with an attorney of his
choice prior to executing this Agreement and has had ample time to consult with an attorney prior
to executing this Agreement; (vii) Executive relied solely and completely upon his own judgment or
the advice of his attorney in entering into this

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Agreement; (viii) Executive understands that he has a period of seven days to revoke his acceptance
of this Agreement, and that he may deliver notification of revocation by letter or facsimile
addressed to Ms. Jamie Fishman, Associate General Counsel, Key Energy Services, Inc., 1301 McKinney
Street, Suite 1800, Houston, Texas 77010. Executive understands that this Agreement will not
become effective and binding, and that none of the consideration described in Paragraph 2 above
will be provided to him until after the expiration of the revocation period; (ix) Although
Executive is releasing claims that he may have under the Older Workers’ Benefit Protection Act and
the Age Discrimination in Employment Act, he understands that he may challenge the knowing and
voluntary nature of this Agreement under the Older Workers’ Benefit Protection Act and the Age
Discrimination in Employment Act before a court, the EEOC, the NLRB, or any other federal, state,
or local agency charged with the enforcement of any employment laws. Executive understands,
however, that if he pursues a claim against the Key Parties under the Older Workers’ Benefit
Protection Act and/or the Age Discrimination in Employment Act, a court has the discretion to
determine whether the Key Parties are entitled to restitution, recoupment, or set off (hereinafter
“reduction”) against a monetary award obtained by Executive in the court proceeding. A reduction
never can exceed the amount Executive recovers, or the consideration he received for signing this
Agreement, whichever is less. Executive also recognizes that the Key Parties may be entitled to
recover costs and attorneys’ fees incurred by them as specifically authorized under applicable law;
(x) Executive is, through this Agreement, releasing the Key Parties from any and all claims he may
have against them relating to his employment and separation, including claims arising under the Age
Discrimination in Employment Act of 1967 (29 U.S.C. § 621, et. seq.). Executive’s initials below,
following the present paragraph of this Agreement, evidence his understanding and voluntary waiver
of all claims against the Key Parties, including but not limited to those pursuant to the Age
Discrimination in Employment Act, the Texas Labor Code, and the Older Workers’ Benefit Protection
Act. Initials: WA

     7. SUPPORT WITH FORM 10-K: Executive agrees to provide continued support to the
Company, as the Company deems reasonably necessary, from the Separation Date through the filing of
the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

     8. COOPERATION: Executive agrees to fully and reasonably cooperate with the Company
with respect to any and all business issues, claims, internal investigations, inquiries and/or
investigations by the Government or by a regulator, administrative charges, and litigation related
to the Company or its business interests. This would include, but not be limited to, responding to
questions, providing information, attending meetings, depositions, administrative proceedings, and
court hearings, and assisting the Company, its counsel and any expert witnesses. Executive agrees
not to communicate with any party, its legal counsel, or others adverse to the Company in any
pending or threatened claims or litigation except with the prior consent of the Company. Should
Executive receive notice of a subpoena or other attempt to communicate with or obtain information
from Executive in any way relating to the Company or its business interests, Executive agrees to
notify the General Counsel of the Company and to provide

Executive’s Initials WA

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a copy of any such subpoena or request within two (2) calendar days of receipt of such notice.
Nothing in the Agreement restricts the ability of Executive to appropriately respond to a subpoena
or other request from the Government or regulators.

     9. INDEMNIFICATION BY COMPANY: Subject to the limitations of this Paragraph 9, the
Company shall continue to satisfy in full any currently existing or hereafter arising
indemnification obligations to Executive (whether arising by law, the Company’s organizational
documents or pursuant to separate indemnification agreements with the Company). Executive is
deemed to be an “insured person” under the Company’s existing Directors and Officers (“D&O”)
liability insurance for his period of service to the Company prior to the Separation Date.
Executive’s right to indemnification and insurance coverage as described in this Paragraph 9 is
conditioned upon his meeting the applicable standards of conduct and otherwise meeting the
qualifications for indemnification or coverage, as the case may be, under the terms provided in
such arrangements.

     10. APPLICABLE LAW: This Agreement shall, in all respects, be interpreted, enforced,
and governed under the laws of the State of Texas, in the federal or state courts in Harris County.
The Company and Executive agree that the language of this Agreement shall, in all cases, be
construed as a whole, according to its fair meaning, and not strictly for, or against, either of
the parties.

     11. MISCELLANEOUS:

     A. The parties agree that this Agreement shall be binding on the parties hereto and their
legal representatives, successors and assigns.

     B. Executive acknowledges that the Company and its affiliates are not obligated to offer
employment or reemployment to him at any future time.

     C. Executive agrees to pay any taxes found to be owed from payments made pursuant to this
Agreement and to hold the Company harmless and indemnify the Company from any claims, assessments,
demands, penalties and interest found to be owed as a result of any payment made pursuant to this
Agreement.

     D. Except as otherwise noted in Paragraph 2 of this Agreement, nothing in this Agreement is
intended to alter or change Executive’s prospective obligations as set forth in his Employment
Agreement including, but not limited to, Sections 7 (Limitation on Competition), 8 (Confidential
Information), and 9 (Return of Materials) of the Employment Agreement.

     E. Executive agrees to return all of the Company’s Confidential Information, as defined in his
Employment Agreement, and any other items of any nature relating to the Key Parties including, but
not limited to, laptops, computer hardware or software, files, papers, memoranda, correspondence,
drawings, blueprints, letters, notebooks, reports, flow charts, computer programs and data
proposals, customer lists, financial data,

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tape recordings, and pictures. Executive further agrees that he is not retaining copies of any
Confidential Information or any items listed in this paragraph.

     Executive represents that in executing this Agreement, he does not rely, and has not relied,
on any representation by any of the Key Parties, except as expressly contained in this Agreement.
As evidenced by his signature below, Executive certifies that he has read the above Agreement, and
he hereby fully agrees to its terms and conditions.

	 	 	 	 	 
	/s/ WILLIAM M. AUSTIN

	 	2/11/09
	 

	 	 
	William M. Austin

	 	Date
	 
	
AGREED ON BEHALF OF KEY ENERGY SERVICES, INC. AND KEY ENERGY SHARED SERVICES, LLC

	 	 	 	 	 	 
	By:

	 	/s/ RICHARD J. ALARIO
	 	2/17/09
	 

	 	 
	 	 
	 

	 	Richard J. Alario
	 	Date

6

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