EXHIBIT IX
DI INDUSTRIES, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is entered into this 29th
day of August, 1996, by and between DI Industries, Inc., a Texas corporation
(the "Company") and Xxxxxx X. Xxxxxxx, an individual (the "Optionee").
RECITALS
WHEREAS, Optionee currently serves as a non-employee director of the
Company;
WHEREAS, the Company desires to grant to Optionee non-qualified options
to purchase shares of the Company's common stock for services rendered and to be
rendered as a member of the Company's board or directors;
WHEREAS, the undersigned parties desire to formalize such agreement
regarding the grant of stock options to Optionee as provided herein.
NOW, THEREFORE, in consideration of the premises, material covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
1. GRANT. As of the date hereof (the "Grant Date"), the Company hereby
grants to Optionee a non-qualified stock option (the "Option") to purchase a
total of 75,000 shares (the "Shares") of the Company's common stock, par value
$0.10 per share (the "Common Stock"), at an exercise price of $1.625 per share,
subject to the terms and conditions provided herein.
2. TERM OF OPTION. This Option may be exercised at any time during the
period commencing on the Grant Date and expiring 10 years thereafter (the
"Option Period") provided, that this Option may be exercised during such term
only in accordance with the terms and conditions of this Agreement, subject
specifically to Sections 3 and 7 of this Agreement.
3. EXERCISE OF OPTION. This Option shall be exercisable during the
Option Period, subject to the provisions, as follows:
(a) Right of Exercise. This Option is exercisable at any time during
the Option Period, in whole or in part; provided, however, that this Option may
only be exercisable to acquire whole shares of Common Stock.
(b) Method of Exercise. This Option is exercisable by delivery of
this Agreement and a written notice to the attention of the Secretary of the
Company, no fewer than five business days before the proposed effective date of
exercise, signed by Optionee, specifying
the number of Shares to be acquired on, and the effective date of, such
exercise. Optionee may withdraw notice of exercise of this Option at any time
before close of business on the business day preceding the proposed exercise
date, and in this instance, the Company will return this Agreement to the
Optionee.
(c) Method of Payment. Payment of the exercise price for the Shares
purchased under this Option shall be delivered, in person or by certified mail
to the attention of the Secretary of the Company, on the effective date of
exercise either (i) in cash, or by certified check, bank cashier's check,
payable to the order of the Company or by wire transfer to an account designated
in writing by the Company to the Optionee, or (ii) subject to the approval of
the board of directors of the Company, (A) in shares of Common Stock owned by
the Optionee and valued at their fair market value on the effective date of
exercise, as determined by such board in its sole discretion, (B) through a
cashless exercise, in which the Optionee shall exchange a number of the options
subject to such a cashless exercise for that number of shares of Common Stock
determined by multiplying the number of shares into which such exchanged option
is exercisable by a fraction, the numerator of which is the fair market value of
a share of Common Stock on the exercise date, as determined by such board in its
sole discretion, minus the exercise price for such option, and the denominator
of which is such fair market value of a share of Common Stock on the exercise
date, or (C) in any combination of the payment methods described in (i) or
(ii)(A) or (B), above. If payment is made in shares of Common Stock such shares
must be delivered to the Secretary, duly endorsed in blank or accompanied by
stock powers duly executed in blank, and any other documents that the Secretary
may require.
4. RESTRICTIONS ON EXERCISE. This Option may not be exercised if the
issuance of such Shares or the method of payment of the consideration for such
Shares would constitute a violation of any applicable federal or state
securities or other laws or regulations, including any rule under Part 207 of
Title 12 of the Code of Federal Regulations ("Regulation G") as promulgated by
the Federal Reserve Board, or any rules or regulations of any stock exchange on
which the Common Stock may be listed.
5. NON-TRANSFERABILITY OF OPTION. During the lifetime of the Optionee,
this Option may only be exercised by the Optionee. This Option is not assignable
or transferable, in whole or in part, other than by will or by the laws of
descent and distribution.
6. ISSUANCE OF CERTIFICATE. As soon as reasonably practicable after the
exercise of this Option in accordance with Section 3, the Company shall issue to
the Optionee a certificate representing the Shares acquired, together with
delivery of a new stock option agreement to the extent any Options remain after
such exercise. Each certificate representing Shares shall bear conspicuous
legends worded substantially as follows, in addition to any other legends
required by law:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR UNDER ANY APPLICABLE
STATE SECURITIES LAWS, AND THEY CANNOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE HYPOTHECATED EXCEPT IN ACCORDANCE WITH
THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE LAWS OR UPON
DELIVERY
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TO THIS CORPORATION OF AN OPINION OF LEGAL COUNSEL SATISFACTORY TO THE
CORPORATION THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
THE CORPORATION IS AUTHORIZED TO ISSUE SHARES OF MORE THAN ONE CLASS OF
STOCK OR MORE THAN ONE SERIES OF A CLASS. THE CORPORATION WILL FURNISH A
STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OR STOCK
OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OR
SUCH PREFERENCES AND/OR RIGHTS, WITHOUT CHARGE, TO THE HOLDER OF THIS
CERTIFICATE UPON RECEIPT BY THE CORPORATION AT ITS PRINCIPAL PLACE OF
BUSINESS OR REGISTERED OFFICE OF A WRITTEN REQUEST FROM THE HOLDER
REQUESTING SUCH COPY.
THE ARTICLES OF INCORPORATION OF THIS CORPORATION DENY PREEMPTIVE RIGHTS
TO ITS SHAREHOLDERS. A FULL STATEMENT OF SUCH LIMITATION IS SET FORTH IN
THE ARTICLES OF INCORPORATION ON FILE IN THE XXXXXX XX XXX XXXXXXXXX XX
XXXXX XX XXX XXXXX XX XXXXX. THE CORPORATION WILL FURNISH A COPY OF SUCH
STATEMENT TO THE HOLDER OF THIS CERTIFICATE WITHOUT CHARGE ON REQUEST TO
THE CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE.
7. SECURITIES LAW REQUIREMENTS. The Optionee agrees and understands that
the Shares may be restricted securities as defined in Rule 144 promulgated under
the Securities Act of 1933, as amended (the "Securities Act"), and may not be
sold, assigned or transferred, unless the sale, assignment or transfer of such
shares is registered under the Securities Act and applicable blue sky laws, as
now in effect or hereafter amended, or there is furnished an opinion of counsel
in form and substance satisfactory to the Company from counsel acceptable to the
Company that such registrations are not required.
8. NO RIGHTS AS SHAREHOLDER. The Optionee shall not have any rights as a
shareholder with respect to any of the Shares until the date of issuance by the
Company to the Optionee of a stock certificate representing such Shares pursuant
to Section 6 hereof. Except as otherwise provided in Section 9 hereof, the
Optionee shall not be entitled to any dividends, cash or otherwise, or any
adjustment of the Shares for such dividends, if the record date therefor is
prior to the date of issuance of such stock certificate.
9. CORPORATE PROCEEDINGS OF THE COMPANY.
(a) The existence of the Option shall not affect in any way the right
or power of the Company or its officers, directors and shareholders, as
the case may be, to (i) make or authorize any adjustments,
recapitalizations, reorganizations or other changes in the capital
structure or business of the Company, (ii) participate in any merger or
consolidation of the Company, (iii) issue any Common Stock, bonds,
debentures, preferred or prior preference stock or any other securities
affecting the Common Stock or the rights of holders thereof, (iv)
dissolve or liquidate the Company, (v) sell or transfer all or any part
of the assets or business of the Company, or (vi) perform any other
corporate act or proceedings, whether of a similar character or
otherwise.
(b) If the Company merges into or with or consolidates with (such
events collectively referred herein as a "Merger") any corporation or
corporations or entity or
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entities and is not the surviving corporation, then the surviving
corporation may assume the Option or substitute a new option of the
surviving corporation for the Option; provided, however, that the excess
of the aggregate fair market value of the securities subject to the
Option immediately after such assumption, or the new option immediately
after such substitution, over the aggregate exercise price of such
shares must be, based upon a good faith determination by the Board of
Directors of the Company, not less than the excess of the aggregate fair
market value of the Common Stock subject to the Option immediately
before such substitution or assumption over the aggregate exercise price
of such Common Stock.
(c) In the event that the surviving corporation does not utilize the
provisions of (b) above, or in the event of a dissolution or liquidation
of the Company, the Company shall cause written notice of such Merger or
dissolution or liquidation (and the material terms and conditions
thereof) to be delivered to the Optionee at least ten (10) days prior to
the proposed effective date (the "Effective Date") of such event. The
Optionee shall be entitled to exercise the Option until the Effective
Date, or until the Expiration Date if earlier. To the extent that the
Merger or liquidation is consummated after the Effective Date, the
Option shall terminate and the Company shall have no further obligations
of any type hereunder. The provisions of this paragraph shall not apply
to any merger or reorganization, the principal purpose of which is to
change the jurisdiction of the domicile of the Company.
(d) If, while the Option is outstanding, the Company shall effect a
subdivision or consolidation of the shares of Common Stock or other
capital readjustment, the payment of a common stock dividend, or other
increase or reduction of the number of shares of Common Stock
outstanding, without receiving compensation therefor in money, services
or property, then (i) in the event of an increase in the number of
shares of Common Stock outstanding, the number of Shares shall be
proportionately increased, and the per share exercise price shall be
proportionately reduced, and (ii) in the event of a reduction in the
number of shares of Common Stock outstanding, the number of Shares shall
be proportionately reduced, and the per share exercise price shall be
proportionately increased. No fractional share of Common Stock shall be
issued upon any such exercised and the exercise price shall be
appropriately reduced on account of any fractional share not issued.
(e) The issuance by the Company of shares stock of any class of
securities convertible into shares of stock of any class, including
Common Stock, for cash, property, labor or services rendered, either
upon direct sale or upon the exercise of rights, options, or warrants to
subscribe therefor, or upon conversion of shares or obligations of the
Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect
to, the number of Shares or the exercise price thereof.
10. REGISTRATION RIGHTS. The Optionee shall have no registration
rights with respect to the Shares.
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11. TERMINATION. Except as otherwise provided in Section 9(c) hereof,
this Option, to the extent not previously exercised, shall terminate on the
earliest of the following to occur:
(a) on the last day of the three-month period commencing on the date
on which the Optionee ceases to be a member of the Company's board of
directors, for any reason other than death of the Optionee, during which
period the Optionee shall be entitled to exercise all or any portion of
this Option held by Optionee on the date of such cessation, to the
extent such Option was exercisable by Optionee on such date of such
cessation, and subject to the provisions of Section 3 hereof;
(b) on the last day of the one year period commencing on the date of
the Optionee's death while serving as a member of the Company's board of
directors, during which period the executor or administrator of the
Optionee's estate or the person or persons to whom the Optionee shall
have transferred all or any portion of this Option by will or the laws
of descent and distribution, shall be entitled to exercise all or any
portion of the respective Option, to the extent such Option would have
been exercisable by Optionee on the date of his or her death, and
subject to the provisions of Section 3 hereof; or
(c) ten years after the Grant Date.
12. TERM OF DIRECTORSHIP. This Option shall not grant to Optionee any
right to continue serving as a member of the Company's board of directors.
13. INDEPENDENT LEGAL AND TAX ADVICE. The Optionee has been advised and
been provided the opportunity to obtain independent legal and tax advice
regarding the grant and exercise of this Option and the disposition of any
Shares acquired thereby.
14. AMENDMENT. This Agreement may not be amended, modified or waived
except by a written instrument signed by the party against whom enforcement of
any such modification, amendment or waiver is sought.
15. GOVERNING LAW. This Agreement shall be governed by and shall be
construed and enforced in accordance with the laws of the State of Texas.
16. NOTICES. All notices, requests, demands or other communications
permitted to be given hereunder shall be in writing and shall be deemed property
given or made when personally delivered to an officer of the Company or to the
Optionee, as the case may be, or if mailed when deposited in the United States
mails by certified or registered mail, return receipt requests, postage prepaid
and addressed to the address set forth for each party on the signature page
hereto. Any party may change its address by giving notice in writing to the
other party stating the new address, and such change will be effective
immediately upon receipt of such notice.
17. COUNTERPARTS. This Agreement may be executed in two or more
counterparts by original or facsimile signature, each of which shall be deemed
an original and all of which together shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the Company and the Optionee have caused this
Agreement to be duly executed as of the date first above written.
DI INDUSTRIES, INC.
By: /s/ XXXX XXXX
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Xxxx Xxxx
Chairman of the Board
Address: DI Industries, Inc.
00000 Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: President
Telecopy: (000) 000-0000
OPTIONEE:
/s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
Falcon Drilling Company
0000 Xxxx Xxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
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