compensation contingent upon Key's achievement of goals to be set forth in a
strategic plan to be developed by the Executive Committee. Base compensation
will be reviewed annually and may be increased (but not decreased) by the Board
of Directors in its discretion. Pursuant to the agreement, upon and subject to
completion by Key of a significant merger or other major corporate transaction
in fiscal 1996 or 1997, Mr. John will also receive a bonus of $250,000 payable
in four equal installments, commencing on the date of completion of the merger
or other transaction and thereafter at equal intervals determined so that the
final installment is paid on January 1, 1998. Payments made after July 1, 1995
will bear interest at 6%. The determination of when a merger is "significant" or
other corporate transaction "major", so as to entitle Mr. John to the bonus,
will be made by the Board of Directors. The Board has determined that the Merger
is a significant merger and, accordingly, Mr. John will be entitled to a bonus
as described above. The agreement also provides for the grant of options to Mr.
John described above under "1995 Stock Option Plan." If during the term of the
agreement Mr. John is terminated by Key for any reason other than cause, or if
he terminates his employment for a good reason or following a change of control,
he will receive severance compensation equal to three times his base
compensation in effect at the time of termination, payable in 36 equal monthly
installments, provided, however, that if termination results from a change of
control, severance compensation will be payable in a lump sum on the date of
termination. Mr. John is also subject to restrictions on competition during the
term of the agreement and, with certain exceptions, the severance period. Mr.
John has waived his rights with respect to a change of control resulting from
the Merger with WellTech.
Key has also entered into employment agreements as of July 1, 1995 with
Messrs. Laidley and Evatt. Mr. Laidley's agreement provides that he will serve
as President of Yale E Key for a three year term commencing July 1, 1995 and
thereafter for successive one year terms unless terminated 30 days prior to the
commencement of an extension term, receive base compensation of $192,000 per
year, participate in an incentive compensation plan providing for cash bonuses
up to 50% of base compensation, and receive stock options under 1995 Stock
Option Plan. Mr. Evatt's agreement provides that he will serve as Key's Chief
Accounting Officer and Treasurer for a term identical to the term in Mr.
Laidley's agreement, receive base compensation of $105,000 per year, participate
in an incentive compensation plan, providing for cash bonuses up to 30% of base
compensation, and receive stock options under 1995 Plan.
In connection with the acquisition of Odessa Exploration, Key entered
into a three year employment agreement with D. Kirk Edwards. The agreement
provides for an annual salary of $125,000 and a bonus contingent upon Key's
attainment of certain earnings criteria from certain wells. The amount of such
bonus for fiscal 1995 and fiscal 1994 is reflected in the compensation table
Effective February 1, 1995, Max Emmert III retired as a Director and
Vice President of Key and as President and Chief Executive Officer of Yale E.
Key. During the three year period commencing February 1, 1995, Mr. Emmert will
receive $112,500 per year, reimbursement of reasonable automobile expenses and
health and life insurance and will serve as a consultant and Chairman of the
Board of Directors of Yale E. Key. Mr. Emmert has also agreed that for a five
year period, commencing February 1, 1995, he will not directly or indirectly
compete with Key or its subsidiaries.
Effective as of and subject to consummation of the Merger, Key and each
of Messrs. Hill and Huseman have agreed to enter into employment agreements. The
employment agreements are expected to be for three years and to provide for base
compensation of $180,000 per year, participation in an incentive compensation
plan providing for cash bonuses up to 50% of base compensation and participation
in Key's 1995 Stock Option Plan. Mr. Hill will serve as President and Chief
Executive Officer of the Key subsidiary which will operate WellTech's NorthEast
operations subsequent to the Merger, and Mr. Huseman will serve as President and
Chief Executive Officer of the Key subsidiary which will operate WellTech's
Mid-Continent operations subsequent to the Merger.