EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of October 01, 1996, between DI INDUSTRIES,
INC., a Texas corporation (the "Company"), and XXXXXXX X. XXXXXX (the
"Executive").
The Company desires to employ the Executive and the Executive desires to
accept employment with the Company, on the terms and conditions of this
Agreement.
Accordingly, the parties agree as follows:
1. EMPLOYMENT, DUTIES AND ACCEPTANCE.
1.1 EMPLOYMENT BY THE COMPANY; DUTIES. The Company hereby agrees to
employ the Executive for a term commencing on October 1, 1996, and expiring
at the end of the day on September 30, 1997 (such date, or later date to
which this Agreement is extended in accordance with the terms hereof, the
"Termination Date"), unless earlier terminated as provided in Article 4 or
unless extended as provided herein (the "Term"). The Term shall
automatically be extended on the Termination Date and each anniversary
thereof for successive one-year periods unless either party notifies the
other on or before the date 90 days prior to the Termination Date that he
or it desires to terminate the Agreement. During the Term, the Executive
shall initially serve in the capacity of Sr. Vice President - Domestic
Operations of the Company and shall also serve in those offices and
directorships of subsidiary corporations or entities of the Company to
which he may from time to time be appointed or elected. During the Term,
the Executive shall devote all reasonable efforts and all of his business
time and services to the Company, subject to the direction of the Board.
The Executive shall not engage in any other business activities except for
passive investments in corporations or partnerships not engaged in the oil
or gas drilling or well serving business.
1.2 ACCEPTANCE OF EMPLOYMENT BY THE EXECUTIVE. The Executive hereby
accepts such employment and shall render the services and perform the
duties described above.
2. COMPENSATION AND OTHER BENEFITS.
2.1 ANNUAL SALARY. The Company shall pay to the Executive an annual
salary at a rate of not less than one hundred forty thousand dollars
($140,000) per year (the "Annual Salary"), subject to increase at the sole
discretion of the Board of Directors of the Company (the "Board"). The
Annual Salary shall be payable in accordance with the payroll policies of
the Company as from time to time in effect, but in no event less frequently
than once each month, less such deductions as shall be required to be
withheld by applicable law and regulations.
2.2 BONUSES. The Executive may receive, at the sole discretion of he
Board, an incentive bonus with respect to the fiscal years ending during
the term hereof (the "Incentive Bonus"), provided that an Incentive Bonus,
payable in respect of a fiscal year, shall not exceed one-half of the
Annual Salary for such fiscal year.
2.3 GRANT OF OPTION. The Company agrees to grant the Executive,
pursuant to the terms of its existing stock option plan or new or amended
stock option plans, options to acquire four hundred thousand (400,000)
shares of the Company's common stock, at an exercise price equal to $1.50
per share. The Company agrees to use all reasonable efforts, consistent
with the foregoing, to ensure that a portion of such stock options meets
all requirements for treatment as Incentive Stock Options under the
Internal Revenue Code of 1986, as amended, and that such stock option plan
meets the requirements of Rule 16b-3, promulgated under Section
16 of the Securities Exchange Act of 1934, as amended. Any such stock
options shall vest in five equal increments over a four-year period and
shall expire ten years after the date of grant. One fifth of the ISOs and
one-fifth of the NSOs shall vest on December 31, 1996, and on the first,
second, third and fourth anniversary of the date of grant.
2.4 VACATION POLICY. The Executive shall be entitled to a paid
vacation of three weeks during each year of the Term.
2.5 PARTICIPATION IN EMPLOYEE BENEFIT PLANS. The Company agrees to
permit the Executive during the Term, if and to the extent eligible, to
participate in any group life, hospitalization or disability insurance
plan, health program, pension plan, similar benefit plan or other so-called
"fringe benefits" of the Company (collectively, "Benefits") which may be
available to other senior executives of the Company on terms no less
favorable to the Executive than the terms offered to such other executives.
The Company agrees to use its best efforts to obtain immediate coverage for
the Executive upon the commencement of the Term under its existing or newly
adopted medical expense and hospitalization plan for employees without
premium surcharge and without exclusions for disclosed preexisting
conditions. The Executive shall cooperate with the Company in applying for
such coverage, including submitting to a physical exam and providing all
relevant health and personal data.
2.6 GENERAL BUSINESS EXPENSES. The Company shall pay or reimburse the
Executive for all expenses reasonably and necessarily incurred by the
Executive during the Term in the performance of the Executive's services
under this Agreement. Such payment shall be made upon presentation of such
documentation as the Company customarily requires of its senior executive
employees prior to making such payments or reimbursements.
2.7 COMPANY CAR, CELLULAR TELEPHONE. The Company shall provide an
automobile, of the Executive's choice, to be used by the Executive during
the Term hereof or until his employment hereunder is terminated. The
purchase price of the automobile shall not exceed $35,000 unless increased
by the Board. If requested by the Executive, the Company will replace the
automobile with a new automobile no less frequently than every three years
during the Term hereof. The Company shall, at its expense, pay any and all
expenses associated with the operation of such company car, including but
not limited to, collision and liability insurance, maintenance and repair
costs, replacement parts, tires, fuel and oil. The Executive may use the
automobile for personal purposes and, to the extent of the value of such
personal usage, the value thereof shall be deemed to be additional
compensation.
The Company shall also furnish the Executive with a cellular telephone
of his choice and the Company shall pay all charges in connection with the
use thereof, other than charges for calls not related to Executive's duties
hereunder.
3. NON-COMPETITION.
3.1 COVENANTS AGAINST COMPETITION. The Executive acknowledges that (i)
the Company is currently engaged in the business of owning, managing and
operating onshore drilling and workover rigs for its own account or for
others which are contracted or hired for the purpose of drilling and/or
workover of oil or natural gas xxxxx and from time to time acquiring
working or carried interests in oil and gas xxxxx in connection with, or
incident to, such drilling or workover activities (the "Company Business");
(ii) his work for the Company will give him access to trade secrets of and
confidential information concerning the Company; and (iii) the agreements
and covenants contained in this Agreement are essential to protect the
business and goodwill of the Company. Accordingly, the Executive covenants
and agrees as follows:
-2-
3.1.1 NON-COMPETE. The Executive shall not during the Restricted
Period (as defined below) in the United States or any other place
where the Company and its affiliates conduct operations related to the
Company Business, directly or indirectly (except in the Executive's
capacity as an officer of the Company), (i) engage or participate in
the Company Business; (ii) enter the employ of, or render any other
services to, any person engaged in the Company Business except as
permitted hereunder; or (iii) become interested in any such person in
any capacity, including, without limitation, as an individual,
partner, shareholder, lender, officer, director, principal, agent or
trustee except as permitted hereunder; PROVIDED, HOWEVER, that the
Executive may own, directly or indirectly, solely as an investment,
securities of any person traded on any national securities exchange or
listed on the National Association of Securities Dealers Automated
Quotation System if the Executive is not a controlling person of, or a
member of a group which controls, such person and the Executive does
not, directly or indirectly, own 1% or more of any class of equity
securities, or securities convertible into or exercisable or
exchangeable for 1% or more of any class of equity securities, of such
person. As used herein, the "Restricted Period" shall mean a period
commencing on the date hereof and terminating upon the first to occur
of (a) the date on which the Company terminates or is deemed to
terminate the Executive's employment without Cause, (b) the date the
Executive terminates or is deemed to terminate his employment pursuant
to Section 4.6 hereof, or (c) the date of termination of this
Agreement; PROVIDED, HOWEVER, that if the Company shall have
terminated the Executive's employment for Cause and such Cause in fact
exists or if the Executive shall have terminated his employment with
the Company in breach of the terms of this Agreement, the Restricted
Period shall end twelve months following the termination of the
Executive's employment hereunder.
3.1.2 CONFIDENTIAL INFORMATION; PERSONAL RELATIONSHIPS. The
Executive acknowledges that the Company has a legitimate and
continuing proprietary interest in the protection of its confidential
information and that it has invested substantial sums and will
continue to invest substantial sums to develop, maintain and protect
confidential information. The Executive agrees that, during and after
the Restricted Period, the Executive shall keep secret and retain in
strictest confidence, and shall not use for the benefit of himself or
others all confidential matters directly relating to the Company
Business including, without limitation, financial information, trade
secrets, customer lists, details of client or consultant contracts,
pricing policies, operational methods, marketing plans or strategies,
product development techniques or plans, business acquisition plans,
new personnel acquisition plans, technical processes, designs and
design projects, inventions and research projects of the Company, its
affiliates, or any other entity which may hereafter become an
affiliate thereof, learned by the Executive heretofore or hereafter
unless otherwise in the public domain other than as a result of
disclosure by the Executive or unless independently obtained from
third parties not under disclosure restrictions in favor of the
Company.
3.1.3 PROPERTY OF THE COMPANY. All memoranda, notes, lists,
records, engineering drawings, technical specifications and related
documents and other documents or papers (and all copies thereof)
relating to the Company, including such items stored in computer
memories, microfiche or by any other means, made or compiled by or on
behalf of the Executive after the date hereof, or made available to
the Executive after the date hereof relating to the Company, its
affiliates or any entity which may hereafter become an affiliate
thereof, shall be the property of the Company, and shall be delivered
to the Company promptly upon the termination of the Executive's
employment with the Company or at any other time upon request;
PROVIDED, HOWEVER, that Executive's address books, diaries,
chronological correspondence files and rolodex files shall be deemed
to be property of the Executive.
3.1.4 ORIGINAL MATERIAL. The Executive agrees that any
inventions, discoveries, improvements, ideas, concepts or original
works of authorship relating directly to the Company Business,
including without limitation computer systems, programs and
manufacturing
-3-
techniques, whether or not protectable by patent or copyright, that
have been originated, developed or reduced to practice by the
Executive alone or jointly with others during the Executive's
employment with the Company shall be the property of and belong
exclusively to the Company. The Executive shall promptly and fully
disclose to the Company the origination or development by the
Executive of any such material and shall provide the Company with any
information that it may reasonably request about such material.
3.1.5 EMPLOYEES OF THE COMPANY AND ITS AFFILIATES. During the
Restricted Period, the Executive shall not, directly or indirectly,
hire or solicit, or cause others to hire or solicit, for employment by
any person other than the Company or any affiliate or successor
thereof, any employee of the Company and its affiliates or successors
or encourage any such employee to leave his employment.
3.1.6 CUSTOMERS OF THE COMPANY. During the Restricted Period, the
Executive shall not, except by reason of and in his capacity as an
officer of the Company, directly or indirectly, request or advise a
customer of the Company or its subsidiaries to curtail or cancel such
customer's business relationship with the Company.
3.2 RIGHTS AND REMEDIES UPON BREACH. If the Executive breaches, or
threatens to commit a breach of, any of the provisions contained in Section
3.1 of this Agreement (the "Restrictive Covenants"), the Company shall have
the following rights and remedies, each of which rights and remedies shall
be independent of the others and severally enforceable, and each of which
is in addition to, and not in lieu of, any other rights and remedies
available to the Company under law or in equity:
3.2.1 Specific Performance. The right and remedy to have the
Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach of
the Restrictive Covenants would cause irreparable injury to the
Company and that money damages would not provide an adequate remedy to
the Company.
3.2.2 ACCOUNTING. The right and remedy to require the Executive
to account for and pay over to the Company all compensation, profits
monies, accruals, increments or other benefits derived or received by
the Executive as the result of any action constituting a breach of the
Restrictive Covenants.
3.3 SEVERABILITY OF COVENANTS. The Executive acknowledges and agrees
that the Restrictive Covenants are reasonable and valid in duration and
geographical scope and in all other respects. If any court determines that
any of the Restrictive Covenants, or any part thereof, is invalid or
unenforceable, the remainder of the Restrictive Covenants shall not thereby
be affected and shall be given full effect without regard to the invalid
portions.
3.4 BLUE-PENCILLING. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographical scope of such provision, such court shall have the
power to reduce the duration or scope of such provision, as the case may
be, and, in its reduced form, such provision shall then be enforceable.
3.5 ENFORCEABILITY IN JURISDICTIONS. The Company and the Executive
intend to and hereby confer jurisdiction to enforce the Restrictive
Covenants upon the courts of any jurisdiction within the geographical scope
of such Restrictive Covenants. If the courts of any one or more of such
jurisdictions hold the Restrictive Covenants unenforceable by reason of the
breadth of such scope or otherwise, it is the intention of the Company that
such determination not bar or in any way affect the right of the Company to
the relief provided above in the courts of any other jurisdiction within
the geographical scope of such Restrictive Covenants, as to breaches of
such
-4-
Restrictive Covenants in such other respective jurisdictions, such
Restrictive Covenants as they relate to each jurisdiction being, for this
purpose, severable into diverse and independent covenants.
4. TERMINATION.
4.1 TERMINATION UPON DEATH. If the Executive dies during the Term,
this Employment Agreement shall terminate, provided, however, that in any
such event, the Company shall pay to the Executive, or to his estate, any
portion of the Annual Salary that shall have been earned by the Executive
prior to the termination but not yet paid, any Benefits that have vested in
the Executive at the time of such termination as a result of his
participation in any of the Company's benefit plans shall be paid to the
Executive, or to his estate or designated beneficiary, in accordance with
the provisions of such plan; and the Company shall reimburse the Executive,
or his estate, for any expenses with respect to which the Executive is
entitled to reimbursement pursuant to Section 2.6 of this Agreement, and
the Executive's right to indemnification, payment or reimbursement pursuant
to Section 6 of this Agreement shall not be affected by such termination
and shall continue in full force and effect, both with respect to
proceedings that are threatened, pending or completed at the date of such
termination and with respect to proceedings that are threatened, pending or
completed after that date.
4.2 TERMINATION WITH CAUSE. The Company has the right, at any time
during the Term, subject to all of the provisions hereof, exercisable by
serving notice, effective on or after the date of service of such notice as
specified therein, to terminate the Executive's employment under this
Agreement and discharge the Executive's with Cause. If such right is
exercised, the Company's obligation to the Executive shall be limited
solely to the payment of unpaid Annual Salary accrued, together with unpaid
Incentive Bonus, if any, and Benefits vested up to the effective date
specified in the Company's notice of termination. As used in this Agreement
the term "Cause" shall mean and include (i) chronic alcoholism or
controlled substance abuse as determined by a doctor mutually acceptable to
the Company and the Executive, (ii) an act of proven fraud or dishonesty on
the part of the Executive with respect to the Company or its subsidiaries;
(iii) knowing and material failure by the Executive to comply with material
applicable laws and regulations relating to the business of the Company or
its subsidiaries; (iv) the Executive's material and continuing failure to
perform (as opposed to unsatisfactory performance) his duties hereunder or
a material breach by the Executive of this Agreement except, in each case,
where such failure or breach is caused by the illness or other similar
incapacity or disability of the Executive; or (v) conviction of a
misdemeanor involving moral turpitude or a felony. Prior to the
effectiveness of termination for Cause under subclause (i), (ii), (iii) or
(iv) above, the Executive shall be given 30 days' prior notice from the
Board specifically identifying the reasons which are alleged to constitute
cause for any termination hereunder and an opportunity to be heard by the
Board in the event Executive disputes such allegations.
4.3 TERMINATION WITHOUT Cause. The Company has the right, at any time
during the Term, subject to all of the provisions hereof, exercisable by
serving notice, effective on or after the date of service of such notice as
specified therein, to terminate the Executive's employment under this
Agreement and discharge the Executive without Cause. If the Executive is
terminated during the Term without Cause (including any termination which
is deemed to be a constructive termination without Cause under Section 4.6
hereof), the Company's obligation to the Executive shall be limited solely
to the payment, at the times and upon the terms provided for herein of the
greater of (i) the
-5-
Executive's Annual Salary and Incentive Bonus for the number of full months
remaining in the Term of this Agreement (assuming no automatic extension of
the Term) had the Executive not been so terminated and (ii) the Executive's
Annual Salary for a period of twelve months, in each case based on the
Annual Salary of the Executive in effect on the date of termination (or, if
the Company has reduced the Executive's Annual Salary in breach of this
Agreement the Executive's Annual Salary before such reduction) and, in the
case of clause (i), the average Incentive Bonus received by the Executive
for the immediately preceding two fiscal years, together with all unpaid
Incentive Bonus and Benefits awarded or accrued up to the date of
termination. If the Executive is terminated after he has received one
Incentive Bonus but before he has received two, the Incentive Bonus in
clause (i) shall be based on the amount of that one Incentive Bonus; if he
has not yet received an Incentive Bonus, it shall be based on the maximum
Incentive Bonus (I.E., one half of the Annual Salary). In the event of a
termination by the Company without Cause within 180 days after a Change of
Control (as hereinafter defined), including a constructive termination
without Cause pursuant to Section 4.6, the amounts due to the Executive
pursuant to this Section 4.3 shall be due and payable in one lump-sum
payment within 60 days after such termination. In all other cases, any
amounts due to the Executive pursuant to this Section 4.3 shall be due and
payable as and when they would have become due and payable absent such
termination.
4.4 TERMINATION BY THE EXECUTIVE. Any termination of this Agreement by
the Executive during the Term, except such termination as is deemed to be a
constructive termination without Cause by the Company under Section 4.6 of
this Agreement, shall be deemed to be a breach of the terms of this
Agreement for the purposes of Section 3.1.1 hereof and shall entitle the
Company to discontinue payment of all Annual Salary, Incentive Bonuses and
Benefits accruing from and after the date of such termination.
4.5 TERMINATION UPON DISABILITY. If during the Term the Executive
becomes physically or mentally disabled, whether totally or partially, as
evidenced by the written statement of a competent physician licensed to
practice medicine in the United States ' who is mutually acceptable to the
Company and the Executive or his closest relative if he is not then able to
make such a choice, so that the Executive is unable substantially to
perform his services hereunder for (i) a period of four consecutive months,
or (ii) for shorter periods aggregating six months during any twelve-month
period, the Company may at any time after the last day of the four
consecutive months of disability or the day on which the shorter periods of
disability equal an aggregate of six months, by written notice to the
Executive, terminate the Executive's employment hereunder and discontinue
payments of the Annual Salary, Incentive Bonuses and Benefits accruing from
and after the date of such termination. The Executive shall be entitled to
the full compensation payable to him hereunder for periods of disability
shorter than the periods specified in clauses (i) and (ii) of the previous
sentence.
4.6 CONSTRUCTIVE TERMINATION WITHOUT CAUSE. Notwithstanding any other
provision of this Agreement, the Executive's employment under this
Agreement may be terminated during the Term by the Executive, which shall
be deemed to be constructive termination by the Company without Cause, if
one of the following events shall occur without the consent of the
Executive: (i) a failure to elect or reelect or to appoint or reappoint the
Executive to the office of Sr. Vice President - Domestic Operations of the
Company or other material change by the Company of the Executive's
functions, duties or responsibilities which change would reduce the ranking
or level, dignity, responsibility, importance or scope of the Executive's
position with the Company from the position and attributes thereof
described in Section 1 above; (ii) the assignment or reassignment by the
Company of the Executive to another place of employment more than 50 miles
from the Executive's principal place of residence in the Houston, Texas,
metropolitan area; (iii) the liquidation, dissolution, consolidation or
merger of the Company, or transfer of all or substantially all of its
assets, other than a transaction in which a successor corporation with a
net worth at least equal to that of the Company assumes this Agreement and
all obligations and undertakings of the Company hereunder; (iv) a reduction
in the Executive's fixed salary; (v) a Change of Control as hereinafter
defined; (vi) the failure of the Company to continue to provide the
Executive with office space, related facilities and secretarial assistance
that are commensurate with the Executive's responsibilities to and position
with the Company; (vii) the notification by the Company of the Company's
intention not to observe or perform one or more of the obligations of
-6-
the Company under this Agreement; (viii) the failure by the Company to
indemnify, pay or reimburse the Executive at the time and under the
circumstances required by Section 6 of this Agreement; (ix) the occurrence
of any other material breach of this Agreement by the Company or any of its
subsidiaries; or (x) the delivery of notice by the Company in accordance
with Section 1.1 hereof that it desires to terminate the Agreement, but
only if such notice is given before the Term has been automatically
extended three times. Any such termination shall be made by written notice
to the Company, specifying the event relied upon for such termination and
given within 60 days after such event. Any constructive termination shall
be effective 60 days after the date the Company has been given such written
notice setting forth the grounds for such termination with specificity;
PROVIDED, HOWEVER, that Executive shall not be entitled to terminate this
Agreement in respect of any of the grounds set forth above if within 60
days after such notice the action constituting such ground for termination
is no longer continuing. A constructive termination by the Company without
Cause shall terminate the Restrictive Period hereunder.
4.7 For the purposes hereof, a "Change of Control of the Company"
shall be deemed; to have occurred if after the effective date (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Act) is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934 (the "Act")), directly or indirectly, of
securities of the Company representing 50% or more of the combined voting
power of the Company's then outstanding securities without the prior
approval of at least a majority of the members of the Board in office
immediately prior to such person attaining such percentage interest; (ii)
there occurs a proxy contest or a consent solicitation, or the Company is a
party to a merger, consolidation, sale of assets, plan of liquidation or
other reorganization not approved by at least a majority of the members of
the Board in office, as a consequence of which members of the Board in
office immediately prior to such transaction or event constitute less than
a majority of the Board thereafter; or (iii) during any period of two
consecutive years, other than as a result of an event described in clause
(ii) of this Section 4.7, individuals who at the beginning of such period
constituted the Board (including for this purpose any new director whose
election or nomination for election by the Company's stockholders was
approved by a vote of at least a majority of the directors then still in
office who were directors at the beginning of such period) cease for any
reason to constitute at least a majority of the Board.
5. INSURANCE. The Company may, from time to time, apply for and take out,
in its own name and at its own expense, naming itself or one or more of its
affiliates as the designated beneficiary (which it may change from time to
time), policies for life, health, accident, disability or other insurance upon
the Executive in any amount or amounts that it may deem necessary or appropriate
to protect its interest. The Executive agrees to aid the Company in procuring
such insurance by submitting to medical examinations and by filling out,
executing and delivering such applications and other instruments in writing as
may reasonably be required by an insurance company or companies to which any
application or applications for insurance may be made by or for the Company.
6. INDEMNIFICATION.
6.1 The Company shall, to the extent not prohibited by law, indemnify
the Executive if he is made, or threatened to be made, a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal administrative or investigative, including an action by or in the
right of the Company to procure a judgment in its favor (hereinafter a
"Proceeding"), by reason of the fact that the Executive is or was a
director or officer of the Company, or is or was serving in any capacity at
the request of the Company for any other
-7-
corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, against judgments, fines, penalties, excise taxes,
amounts paid in settlement and costs, charges and expenses (including
attorneys' fees and disbursements) paid or incurred in connection with any
such Proceeding.
6.2 The Company shall, from time to time, reimburse or advance to the
Executive the funds necessary for payment of expenses, including attorneys'
fees and disbursements, incurred in connection with any Proceeding in
advance of the final disposition of such Proceeding; PROVIDED HOWEVER,
that, if required by the Texas Business Corporation Act such expenses
incurred by or on behalf of the Executive may be paid in advance of the
final disposition of a Proceeding only upon receipt by the Company of an
undertaking, by or on behalf of the Executive, to repay any such amount so
advanced if it shall ultimately be determined by final judicial decision
from which there is no further right of appeal that the Executive is not
entitled to be indemnified for such expenses.
6.3 The right to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Article 6 shall not be
deemed exclusive of any other rights which the Executive may now or
hereafter have under any law, by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
6.4 The right to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Article 6 shall continue
as to the Executive after he has ceased to be a director or officer and
shall inure to the benefit of the heirs, executors and administrators of
the Executive.
6.5 The Company shall purchase and maintain director and officer
liability insurance on such terms and providing such coverage as the Board
determines is appropriate, and the Executive shall be covered by such
assurance on the same basis as the other directors and executive officers
of the Company.
6.6 The right to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Article 6 shall be
enforceable by the Executive in any court of competent jurisdiction. The
burden of proving that such indemnification or reimbursement or advancement
of expenses is not appropriate shall be on the Company. Neither the failure
of the Company (including its board of directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that such indemnification or reimbursement or
advancement of expenses is proper in the circumstances nor an actual
determination by the Company (including its board of directors, independent
legal counsel, or its stockholders) that the Executive is not entitled to
such indemnification or reimbursement or advancement of expenses shall
constitute a defense to the action or create a presumption that the
Executive is not so entitled. The Executive shall also be indemnified for
any expenses incurred in connection with successfully establishing his
right to such indemnification or reimbursement or advancement of expenses,
in whole or in part, in any such proceeding.
6.7 If the Executive serves (1) another corporation of which a
majority of the shares entitled to vote in the election of its directors is
held by the Company, or (2) any employee benefit plan of the Company or any
corporation referred to in clause (1), in any capacity, then he shall be
deemed to be doing so at the request of the Company.
6.8 The right to indemnification or reimbursement or advancement of
expenses shall be interpreted on the basis of the applicable law in effect
at the time of the occurrence of the event or events giving rise to the
applicable Proceeding.
-8-
7. OTHER PROVISIONS.
7.1 CERTAIN DEFINITIONS. As used in this Agreement the following terms
have the following meanings unless the context otherwise requires:
(i) "affiliate" with respect to the company means any other
person controlled by or under common control with the Company but
shall not include any stockholder or director of the Company, as such.
(ii) "person" means any individual, corporation, partnership,
joint Company, association, joint-stock company, trust, unincorporated
organization, governmental or regulatory body or other entity.
(iii) "subsidiary" means any corporation 50% or more of the
voting securities of which are owned directly or indirectly by the
Company.
7.2 NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered
personally,.telegraphed, telexed, sent by facsimile transmission or sent by
certified, registered or express mail, postage prepaid. Any such notice
shall be deemed given when so delivered personally, telegraphed, telexed or
sent by facsimile transmission or, if mailed, on the date of actual receipt
thereof, as follows:
(i) if to the Company, to:
DI Industries, Inc.
000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention:
with a copy to:
Xxxxxx & Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
Attention: Xxxxxxx X. Xxxxxxx, Esq.
(ii) if to the Executive, to:
Xxxxxxx X. Xxxxxx
00000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Any party may change its address for notice hereunder by notice to the
other party hereto.
7.3 ENTIRE AGREEMENT This Agreement contains the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
agreements, written or oral, with respect thereto.
-9-
7.4 WAIVERS and Amendments. This Agreement may be amended, superseded,
canceled, renewed or extended, and the terms and conditions hereof may be
waived, only by a written instrument signed by the parties or, in the case of a
waiver, by the party waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof. Nor shall any waiver on the part of any party of any such right, power
or privilege hereunder, nor any single or partial exercise of any right, power
or privilege hereunder, preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder.
7.5 GOVERNING Law. This Agreement shall be governed by. and construed in
accordance with the laws of the State of Texas (without giving effect to the
choice of law provisions thereof where the employment of the Executive shall be
deemed, in part to be performed and enforcement of this Agreement or any action
taken or held with respect to this Agreement shall be taken in the courts of
appropriate jurisdiction in Houston, Texas.
7.6 ASSIGNMENT This. Agreement and any rights and' obligations hereunder,
may not be assigned by the Executive and may be assigned by the Company (subject
to Section 4.6 (iii) hereof) only to a successor by merger or purchasers of
substantially all of the assets of the Company.
7.7 COUNTERPARTS. This Agreement may be executed in separate counterparts, each
'of which when so executed and delivered shall be deemed an original, but all of
which together shall constitute one and the same instrument.
7.8 HEADINGS. The headings in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
7.9 NO PRESUMPTION AGAINST Interest. This Agreement has been negotiated
drafted, edited and reviewed by the respective parties, and therefore, no
provision arising directly or indirectly herefrom shall be construed against any
party as being drafted by said party.
7.10 VALIDITY CONTEST. The Company shall promptly pay any and all legal
fees and expenses incurred by the Executive from time to time as a direct result
of the Company's contesting the due execution, authorization, validity or
enforceability of this Agreement.
7.11 BINDING AGREEMENT. This Agreement shall inure to the benefit of and be
binding upon the Company and its respective successors and assigns and the
Executive and his legal representatives.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
above written.
DI INDUSTRIES, INC.
By /s/ X. X. XXXXXXXX
Name: X. X. Xxxxxxxx
Title: President and CEO
Executive
EXECUTIVE
/s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
-10-
