Interim Operations Agreement

Exhibit 10.11


INTERIM OPERATIONS AGREEMENT


by and between


KEY ENERGY GROUP, INC.


and


WELLTECH, INC.


November 18, 1995


TABLE OF CONTENTS


ARTICLE I Interim Management of Operations.........................1


Section 1.1 Employment as Interim Manager.......................1
Section 1.2 Occupancy of Business Premises......................2
Section 1.3 Management of Employees.............................3
Section 1.4 Possession of Equipment Used in the Business .......3
Section 1.5 Performance of Contracts ...........................3
Section 1.6 Trade name. etc.....................................4
Section 1.7 Transition Accounting ..............................4
Section 1.8 Access to WellTech Funds............................4
Section 1.9 Operating Authority.................................4
Section 1.10 Appointment and Powers of the WellTech
nterim Committee................................4


ARTICLE II REPRESENTATIONS AND WARRANTIES OF WELLTECH................5


Section 2.1 Incorporation by Reference..........................5


ARTICLE III REPRESENTATIONS AND WARRANTIES OF KEY....................5


Section 3.1 Incorporation by Reference..........................5


ARTICLE IV OTHER AGREEMENTS..........................................5


Section 4.1 Transition of Operations............................5
Section 4.2 Certain Records.....................................5
Section 4.3 Insurance...........................................6
Section 4.4 WellTech Indemnity..................................6
Section 4.5 Key Indemnity.......................................6


ARTICLE V MANAGEMENT FEE.............................................7


Section 5.1 Payment of Management Fee...........................7


ARTICLE VI TERMINATION...............................................7


Section 6.1 Termination.........................................7
Section 6.2 Accomplishment of Termination.......................7
Section 6.3 Consequence of Termination..........................7


ARTICLE VII MISCELLANEOUS............................................8


Section 7.1 Expenses............................................8
Section 7.2 Parties in Interest.................................8
Section 7.3 Entire Agreement; Amendments........................8
Section 7.4 Headings............................................8
Section 7.5 Notices.............................................8
Section 7.6 Law Governing.......................................9
Section 7.7 Counterparts........................................9
Section 7.8 Severability........................................9
Section 7.9 Construction.......................................10


INTERIM OPERATIONS AGREEMENT


This INTERIM OPERATIONS AGREEMENT (the "Agreement") is made and entered into this 18th day of November, 1995, by and between Key Energy Group, Inc., a Maryland corporation ("Key") and WellTech, Inc., a Delaware corporation ("WellTech").


WITNESSETH:


WHEREAS, upon the terms and subject to the conditions of the Agreement and Plan of Merger by and between Key and WellTech of even date (the "Merger Agreement"), WellTech and Key have agreed to carry out a business combination transaction pursuant to which WellTech will merge with and into Key (the "Merger");


WHEREAS, the Board of Directors of each of WellTech and Key (i) has unanimously determined that the Merger is advisable and fair to, and in the best interests of, it and its respective stockholders and has approved and adopted the Merger Agreement as a plan of reorganization within the provisions of Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code"), (ii) has approved the Merger Agreement, the Merger and the other transactions contemplated thereby or by any Collateral Document executed or required to be executed in connection therewith (collectively the "Transactions"), and (iii) has recommended approval and adoption of the Merger Agreement, the Merger and the Transactions by its respective stockholders; and


WHEREAS, pending consummation of the Merger, WellTech desires to engage the services of Key to manage and oversee the operations of WellTech and Key desires to provide such management and oversight services to WellTech; and


WHEREAS, capitalized terms used in this Agreement without definition shall have the meanings given to such terms in the Merger Agreement.


NOW THEREFORE, in consideration of the premises and the mutual representations, warranties and covenants contained herein, and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, Key and WellTech, intending to be legally bound, do hereby covenant and agree as follows:


ARTICLE I


INTERIM MANAGEMENT OF OPERATIONS


Section 1.1 Employment as Interim Manager. (a) Effective as of the date hereof, WellTech agrees to employ Key, and Key agrees to accept employment with WellTech, as interim manager of WellTech's business, property and operations on the terms and conditions set forth in this Agreement. It is the intent of the parties that Key shall, subject to the limitations set forth


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herein, manage and oversee all aspects of WellTech's business, property and operations and shall have the specific rights and responsibilities set forth in this Article I.


(b) Notwithstanding anything to the contrary in this Agreement:


(i) Prior to the execution of the New Credit Facility Documents by Key and WellTech, Key shall obtain the consent of the committee of WellTech's Board of Directors comprised of Kevin Collins and Phillip Marcum and charged with oversight of this Agreement (the "WellTech Interim Committee") prior to: (A) extending, terminating or entering into any material lease on behalf of WellTech; (B) hiring or terminating executive or other key employees of WellTech; (C) entering into or terminating material contracts on behalf of WellTech; (D) making, accepting or committing to make or accept any loan on behalf of WellTech; or (E) entering into any material transactions outside the ordinary course of WellTech's business;


(ii) Throughout the term of this Agreement: (A) Key shall consult regularly with the WellTech Interim Committee concerning the business, property and operations of WellTech and shall promptly furnish such oral and written reports to the WellTech Interim Committee as it may reasonably request; (B) Key shall take no action requiring approval of WellTech's Board of Directors under Applicable Law or WellTech's Organic Documents without first obtaining consent of the WellTech Interim Committee; and (C) Key shall obtain consent of the WellTech Interim Committee prior to (1) hiring or terminating executive or other key employees of WellTech; (2) making, accepting or committing to make or accept any loan on behalf of WellTech; or (3) entering into any material transactions outside the ordinary course of WellTech's business;


(c) WellTech and Key agree that (i) Key is an independent contractor and is not nor shall be deemed to be a partner, joint venturer or principal with respect to the ownership or operation of WellTech or its assets, and (ii) Key shall have no liability to and shall not by virtue of this Agreement be deemed to have assumed any liability to any creditors of or holders of claims against WellTech. Key agrees to act in good faith in the performance of its duties under this Agreement and to use such care in the management of WellTech's business, property and operations as a reasonably prudent company would use in the management of its own business and affairs. Key shall not be deemed to be in violation of this Agreement or otherwise responsible if it is prevented from performing any of its obligations hereunder for any reason beyond its control including, without limitation, strikes, lockouts, inadequacy or lack of WellTech's financial resources after taking into account amounts available to WellTech under the New Debt Facility, unavailability of supplies, Applicable Law or acts of God. Key shall have no liability for any actions or omissions in connection with WellTech's business, property and operations excepting only if such actions or omissions were taken in or resulted from bad faith or gross negligence by Key.


Section 1.2 Occupancy of Business Premises. On the date hereof, Key will assume the management of all real estate, buildings and premises owned, occupied or used by WellTech. Key and its agents and designees shall have


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unfettered access to all such real estate, buildings and premises and Key shall have the authority to take all actions which, in its reasonable business judgment, are necessary or appropriate with respect to such business premises, including, without limitation, extending, terminating or entering into new leases for leased premises and entering into or terminating contracts for sale or acquisition of owned premises.


Section 1.3 Management of Employees. During the term hereof, all employees of WellTech shall continue to be employees of WellTech, provided, however, that they shall be subject to Key's oversight and management. Executive and key employees shall report directly to Key. Key shall have the authority, as WellTech's interim manager, to oversee the hiring and firing of employees of WellTech and to extend offers of employment by Key to WellTech's employees, provided, however, that all such offers shall be contingent upon consummation of the Merger. During the term of this Agreement, all of WellTech's employees who have not been terminated by WellTech or, pursuant to this Agreement, by Key shall continue to be compensated by WellTech, shall retain the same benefits as heretofore provided by WellTech and compensation and benefits shall not be materially increased or decreased without the prior consent of Key and the WellTech Interim Committee. If the Merger is not consummated, Key agrees that for a period of three years after termination of the Merger Agreement, Key shall neither offer employment to, nor induce the termination of employment with WellTech by, the following WellTech employees: Kenneth C. Hill; Kenneth V. Huseman, W. Clarke Gormley, and Donald D. Temperton; provided, however, that if during such three year period any of the fo ...