Execution Copy
NON-COMPETE AGREEMENT
This AGREEMENT (the "Agreement"), dated as of October 20, 1998, by and among Key
Energy Group, Inc., a Maryland corporation ("Parent"), and Joseph B. Eustace
("Mr. Eustace").
WHEREAS, Mr. Eustace previously held the position of Vice President of East
Texas/Gulf Coast Region of Dawson Production Services, Inc., a Texas corporation
(the "Company");
WHEREAS, pursuant to an Agreement and Plan of Merger, dated as of August 11,
1998, by and among Parent, Midland Acquisition Corp., a New Jersey corporation
(the "Purchaser"), and the Company (the "Merger Agreement"), at the Effective
Time (as defined in the Merger Agreement) the Purchaser will be merged with and
into the Company (the "Merger"), and the Company will become a subsidiary of
Parent; and
WHEREAS, Mr. Eustace entering into this Agreement is a material inducement to
Parent and the Purchaser to enter into the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants,
representations, agreements, and promises set forth herein, and intending to be
legally bound, the parties agree as follows:
1. Covenant Not to Compete; No Solicitation. In addition to any limitation on
competition contained in any employment agreement that Mr. Eustace may enter
into with Parent, during that period of time (the "Term") beginning on the date
hereof and ending on October 19, 2001, other than pursuant to an employment
agreement with Parent, Mr. Eustace shall not, in the Continental United States,
directly or indirectly engage in the following businesses: (i) workover rig
services, including completion of new wells, maintenance and recompletion of
existing wells (including horizontal recompletions) and plugging and abandonment
of wells at the end of their useful lives; (ii) liquid services, including
vacuum truck services, frac tank rental and salt water injection; and/or (iii)
production services, including well test analysis, pipe testing, slickline
wireline services and fishing and rental tool services. Without limiting the
generality of the foregoing, Mr. Eustace shall not interfere with the business
or accounts of Parent and its subsidiaries and affiliates, including the making
of any statements or comments of a defamatory or disparaging nature to third
parties regarding Parent or its subsidiaries or affiliates or their respective
officers, directors, personnel, products or services. Mr. Eustace agrees that
during the Term, he will not hire or solicit to hire, directly or indirectly,
any employee of Parent or its subsidiaries or affiliates, or otherwise solicit,
directly or indirectly, any employee of Parent or its subsidiaries or affiliates
to leave the employ of Parent or its subsidiaries or affiliates.
2. Consideration. In exchange for Mr. Eustace's covenants contained in Section 1
hereof, Parent shall pay, or cause to be paid to, Mr. Eustace an annual amount
of $75,000, payable in equal monthly installments (subject to proration for any
partial period) on the last day of each month of the Term to an account
designated in writing by Mr. Eustace. The payor may make any tax withholding it
deems to be necessary under applicable tax laws. Mr. Eustace acknowledges that
the consideration described in this Section 2 is adequate, fair and reasonable.
3. Reasonableness of Covenant Not to Compete; Irreparable Injury. Mr. Eustace
acknowledges that this Agreement is being entered into in connection with the
consummation of the transactions contemplated by the Merger Agreement, that the
agreements contained herein are of a special and unique character, which gives
this Agreement a peculiar value to Parent, the loss of which may not be
reasonably or adequately compensated for by damages in an action at law, and
that a material breach or threatened breach by him of any of the provisions
contained in this Agreement will cause Parent irreparable injury. Mr. Eustace
therefore agrees that Parent shall be entitled, in addition to any other right
or remedy, to a temporary, preliminary and permanent injunction, without the
necessity of proving the inadequacy of monetary damages or the posting of any
bond or security, enjoining or restraining Mr. Eustace from any such violation
or threatened violations.
4. Arbitration. Any dispute between the parties arising out of this Agreement,
including but not limited to any dispute regarding any aspect of this Agreement,
its formation, validity, interpretation, effect, performance or breach
("arbitrable dispute") shall be submitted to arbitration in the cities of
Houston or San Antonio, Texas, before an experienced arbitrator who is either
licensed to practice law in Texas, or is a retired judge. The parties agree to
make a good faith effort to select a mutually agreeable arbitrator. However, if
the parties are unable to reach agreement on an arbitrator, one will be selected
pursuant to the commercial rules of the American Arbitration Association or any
successor rules thereto. The arbitration shall be conducted in accordance with
the commercial rules of the American Arbitration Association or any successor
rules. The arbitrator in any arbitrable dispute shall not have authority to
modify or change this Agreement in any respect except to the extent set forth in
Section 5.6 hereof. The prevailing party in any such arbitration shall be
awarded its costs, expenses, and reasonable attorneys' fees incurred in
connection with the arbitration in an aggregate amount not to exceed $25,000.
Mr. Eustace and Parent shall each be responsible for payment of one-half of the
amount of any arbitrator's fee(s) payable prior to the existence of a prevailing
party, such amounts to be repaid to the prevailing party pursuant to the
previous sentence. The arbitrator's decision and/or award will be fully
enforceable and subject to an entry of judgment by any court of competent
jurisdiction.
5. Miscellaneous.
5.1 Successors and Assigns; Binding Agreement. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and assigns.
5.2 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without regard to conflict of law
rules thereof.
5.3 Waivers. The waiver by either party hereto of any right hereunder of any
failure to perform or breach by the other party hereto shall not be deemed a
waiver or any other right hereunder or of any other failure or breach by the
other party hereto, whether of the same or a similar nature or otherwise. No
waiver shall be deemed to have occurred unless set forth in a writing executed
by or on behalf of the waiving party. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
5.4 Notices. All notices and communications that are required or permitted to be
given hereunder shall be in writing and shall be deemed to have been duly given
when delivered personally or sent by overnight carrier service (such as Federal
Express) to the parties at the following addresses:
If to Parent, to:
Key Energy Group, Inc.
Two Tower Center, 20th Floor
East Brunswick, New Jersey 08816
Attention: General Counsel
If to Mr. Eustace, to:
Joseph B. Eustace
1305 281 South
Pleasanton, Texas 78064
or to such other address as may be specified in a written notice delivered
personally or sent by overnight courier given by one party to the other party
hereunder.
5.5 Severability. If for any reason any term or provision of this Agreement is
held to be invalid or unenforceable, all other valid terms and provisions hereof
shall remain in full force and effect, and all of the terms and provisions of
this Agreement shall be deemed to be severable in nature. If for any reason any
term or provision containing a restriction set forth herein is held to cover an
area or to be for a length of time which is unreasonable, or in any other way is
construed to be too broad or to any extent invalid, such term or provision shall
not be determined to be null, void and of no effect, but to the extent the same
is or would be valid or enforceable under applicable law, any court of competent
jurisdiction shall construe and interpret or reform this Agreement to provide
for a restriction having the maximum enforceable area, time period and other
provisions (not greater than those contained herein) as shall be valid and
enforceable under applicable law.
5.6 Amendment. This Agreement may not be amended or modified except by an
agreement in writing, signed by the parties hereto.
5.7 Entire Agreement. This Agreement, together with the Confidential Separation
and Release Agreement (including the Pre-existing Indemnification Provisions as
defined therein), the Employment Agreement of even dates herewith between Mr.
Eustace and the Parent, and the Certificate executed and delivered by Mr.
Eustace in connection with the payment of his stock options constitute the
entire agreement between the parties hereto, and supersedes all prior oral
and/or written understandings and/or agreements between the parties hereto.
5.8 Descriptive Headings. The parties hereto agree that the headings contained
herein are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.
5.9 Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original for all purposes but which, together, shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
and year first above written.
KEY ENERGY GROUP, INC.
By:
Name:
Title:
JOSEPH B. EUSTACE