Exhibit 10.7


 


EMPLOYMENT
AND NON-COMPETITION AGREEMENT


 


BETWEEN


 


VANTAGE
INTERNATIONAL PAYROLL COMPANY PTE. LTD.


 


AND


 


MICHEL
R.C. DERBYSHIRE


 


 


DATED
JUNE 12, 2008


 

















 


TABLE
OF CONTENTS


 


	
   

  	
   

  	
   

  	
  Page

  
	
  1.

  	
  EMPLOYMENT TERM AND DUTIES

  	
   

  
	
   

  	
  1.1

  	
  Term of Employment

  	
  1

  
	
   

  	
  1.2

  	
  Duties as Employee of the Company

  	
  1

  
	
   

  	
  1.3

  	
  Place of Performance

  	
  2

  
	
   

  	
  1.4

  	
  Fiduciary Duty

  	
  2

  
	
   

  	
  1.5

  	
  Compliance

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  COMPENSATION AND RELATED MATTERS

  	
   

  
	
   

  	
  2.1

  	
  Base Salary

  	
  2

  
	
   

  	
  2.2

  	
  Bonus Payments

  	
  2

  
	
   

  	
  2.3

  	
  Expenses

  	
  2

  
	
   

  	
  2.4

  	
  Automobiles

  	
  2

  
	
   

  	
  2.5

  	
  Business, Travel and Entertainment Expenses

  	
  2

  
	
   

  	
  2.6

  	
  Vacation

  	
  3

  
	
   

  	
  2.7

  	
  Welfare, Pension and Incentive Benefit Plans

  	
  3

  
	
   

  	
  2.8

  	
  Dues

  	
  3

  
	
   

  	
  2.9

  	
  Other Benefits

  	
  3

  
	
   

  	
  2.10

  	
  Perquisites

  	
  3

  
	
   

  	
  2.11

  	
  Proration

  	
  4

  
	
   

  	
  2.12

  	
  Signing Bonus

  	
  4

  
	
   

  	
  2.13

  	
  Additional Payments

  	
  4

  
	
   

  	
   

  	
  (a)

  	
   

  	
  Excise Tax; Gross-Up Payment

  	
  4

  
	
   

  	
   

  	
  (b)

  	
   

  	
  Accounting Firm Determinations

  	
  4

  
	
   

  	
   

  	
  (c)

  	
   

  	
  Notification of Claims

  	
  5

  
	
   

  	
   

  	
  (d)

  	
   

  	
  Refund

  	
  6

  
	
   

  	
   

  	
  (e)

  	
   

  	
  Insurance

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  TERMINATION

  	
   

  
	
   

  	
  3.1

  	
  Definitions

  	
  6

  
	
   

  	
   

  	
  3.1.2

  	
   

  	
  Notice to Cure

  	
  7

  
	
   

  	
  3.2

  	
  Termination Date

  	
  9

  
	
   

  	
  3.3

  	
  Constructive Termination Without Cause

  	
  9

  
	
   

  	
  3.4

  	
  Termination Without Cause or Termination For Good Reason or
  Constructive Termination Without Cause: Benefits

  	
  9

  
	
   

  	
  3.5

  	
  Base Salary

  	
  9

  
	
   

  	
  3.6

  	
  Stock Awards

  	
  9

  
	
   

  	
  3.7

  	
  Other Benefits

  	
  9

  
	
   

  	
  3.8

  	
  Expenses

  	
  10

  
	
   

  	
  3.9

  	
  Mitigation

  	
  10

  
	
   

  	
  3.10

  	
  Maximum Payments

  	
  10

  
	
   

  	
  3.11

  	
  Net After-Tax Benefit

  	
  10

  
	
   

  	
  3.12

  	
  Termination In Event of Death: Benefits

  	
  10

  
	
   

  	
  3.13

  	
  Termination In Event of Disability: Benefits

  	
  11

  
									



 


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  3.14

  	
  Voluntary Termination by Employee and Termination for Cause: Benefits

  	
  11

  
	
   

  	
  3.15

  	
  Termination Procedure

  	
  11

  
	
   

  	
   

  	
  A.

  	
   

  	
  Notice of Termination

  	
  11

  
	
   

  	
   

  	
  B.

  	
   

  	
  Date of Termination

  	
  11

  
	
   

  	
   

  	
  C.

  	
   

  	
  Mitigation

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  DIRECTOR POSITIONS

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  NON-COMPETITION, NON-SOLICITATION, AND
  CONFIDENTIALITY

  	
   

  
	
   

  	
  5.1

  	
  Non-Competition During Employment

  	
  12

  
	
   

  	
  5.2

  	
  Conflicts of Interest

  	
  12

  
	
   

  	
  5.3

  	
  Non-Competition After Termination

  	
  12

  
	
   

  	
  5.4

  	
  Non-Solicitation of Customers

  	
  13

  
	
   

  	
  5.5

  	
  Non-Solicitation of Employees

  	
  13

  
	
   

  	
  5.6

  	
  Confidential Information

  	
  13

  
	
   

  	
  5.7

  	
  Original Material

  	
  13

  
	
   

  	
  5.8

  	
  Return of Documents, Equipment, Etc.

  	
  14

  
	
   

  	
  5.9

  	
  Reaffirm Obligations

  	
  14

  
	
   

  	
  5.10

  	
  Prior Disclosure

  	
  14

  
	
   

  	
  5.11

  	
  Confidential Information of Prior Companies

  	
  14

  
	
   

  	
  5.12

  	
  Rights Upon Breach

  	
  14

  
	
   

  	
   

  	
  (a)

  	
   

  	
  Specific Performance

  	
  14

  
	
   

  	
   

  	
  (b)

  	
   

  	
  Accounting

  	
  15

  
	
   

  	
  5.13

  	
  Remedies For Violation of Non-Competition or Confidentiality
  Provisions

  	
  15

  
	
   

  	
  5.14

  	
  Severability of Covenants

  	
  16

  
	
   

  	
  5.15

  	
  Court Review

  	
  16

  
	
   

  	
  5.16

  	
  Enforceability in Jurisdictions

  	
  16

  
	
   

  	
  5.17

  	
  Extension of Post-Employment Restrictions

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  INDEMNIFICATION

  	
   

  
	
   

  	
  6.1

  	
  General

  	
  16

  
	
   

  	
  6.2

  	
  Expenses

  	
  16

  
	
   

  	
  6.3

  	
  Enforcement

  	
  17

  
	
   

  	
  6.4

  	
  Partial Indemnification

  	
  17

  
	
   

  	
  6.5

  	
  Advances of Expenses

  	
  17

  
	
   

  	
  6.6

  	
  Notice of Claim

  	
  17

  
	
   

  	
  6.7

  	
  Defense of Claim

  	
  17

  
	
   

  	
  6.8

  	
  Non-exclusivity

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  LEGAL FEES AND EXPENSES

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  BREACH

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  RIGHT TO ENTER AGREEMENT

  	
  18

  



 


ii

















 


	
  10.

  	
  COMPLIANCE WITH SECTION 409A

  	
   

  
	
   

  	
  10.2

  	
  Certain Definitions

  	
  18

  
	
   

  	
  10.3

  	
  Delay in Payments

  	
  19

  
	
   

  	
  10.4

  	
  Reformation

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  ENFORCEABILITY

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  SURVIVABILITY

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  ASSIGNMENT

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  BINDING AGREEMENT

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  NOTICES

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  WAIVER

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  SEVERABILITY

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
  ARBITRATION

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
  ENTIRE AGREEMENT

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
  SECTION HEADINGS

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  21.

  	
  MODIFICATION OF AGREEMENT

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  22.

  	
  UNDERSTANDING OF AGREEMENT

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  23.

  	
  GOVERNING LAW

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  24.

  	
  WITHHOLDING

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  25.

  	
  JURISDICTION AND VENUE

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  26.

  	
  NO PRESUMPTION AGAINST INTEREST

  	
  22

  



 


iii

















 


EMPLOYMENT
AND NON-COMPETITION AGREEMENT


 


This Employment and Non-Competition Agreement
(“Agreement”)
is entered into as of the 12th day of
June, 2008 (the “Effective
Date”), between Vantage International Payroll Company Pte. Ltd.,
a Singapore company (“Company”),
and Michel R.C. Derbyshire (“Employee” or “Executive”).


 


RECITALS:


 


WHEREAS, Executive is to be employed as an
integral part of its management who participates in the decision-making process
relative to short and long-term planning and policy for the Company, will serve
on the Company’s Executive Management Committee;


 


WHEREAS, the Company desires to obtain
assurances from the Executive that he will devote his best efforts to the
Company and will not enter into competition with the Company, solicit its
customers, or solicit employees of the Company after termination of his employment;


 


WHEREAS, Executive will serve as a key
employee with special and unique talents and skills of peculiar benefit and
importance to the Company; and


 


WHEREAS, Executive is desirous of committing
himself to serve on the terms herein provided; and


 


NOW, THEREFORE, in consideration of the
foregoing and of the respective covenants and agreements set forth below, the
Parties agree as follows:


 


1.                                        EMPLOYMENT
TERM AND DUTIES


 


1.1         
Term of Employment.  Effective
as of the Effective Date, the Company hereby agrees to employ Executive as its
Vice President - Marketing, and Executive hereby agrees to accept such
employment, on the terms and conditions set forth herein, for the period
commencing on the Effective Date and expiring as of June 12, 2010 (the “Basic Term”)
(unless sooner terminated as hereinafter set forth). The Basic Term shall be
automatically extended for successive terms of one (1) year commencing on
each Anniversary of the Effective Date thereafter (each such date being a “Renewal Date”), so as
to terminate one (1) year from such Renewal Date, unless and until at
least ninety (90) days prior to a Renewal Date either party hereto gives
written notice to the other that the Term should not be further extended after
the next Renewal Date (a “Notice
of Non-Renewal”), in which event the Termination Date shall not
be less than one (1) year following receipt of the Notice of Non-Renewal.


 


1.2         
Duties as Employee of the Company.  Executive
shall, subject to the supervision of the Chief Executive Officer and Board,
have general management and control of Marketing in the ordinary course of its
business with all such powers with respect to such management and control as
may be reasonably incident to such responsibilities.  Executive shall
devote his normal and regular business time, attention and skill to diligently
attending to the business of the Company during the Basic Term. During the
Basic Term, Executive shall not directly or indirectly render any services of a
business, commercial, or professional nature to any other person, firm,
corporation, or organization, whether for compensation or otherwise, without
the prior written consent of the Chairman of the Board.  Notwithstanding
the foregoing, it shall not be a violation of the Agreement for Executive to (i) serve
on corporate, civic or charitable boards or committees, (ii) deliver
lectures, fulfill speaking engagements or teach at educational institutions,
and (iii) manage personal investments so long as such activities do not
materially interfere or 


 


1

















 


conflict with the performance of his duties to the Company
hereunder.  The conduct of such activity shall not be deemed to materially
interfere or conflict with Executive’s performance of his duties until
Executive has been notified in writing thereof and given a reasonable period in
which to cure the same.


 


1.3         
Place of Performance.  During
the Employment Period, the Company shall maintain its executive offices in
Houston, Texas, but the Executive shall be located in other locations, as
agreed between Executive and the Company.  During the Employment Period,
the Company shall provide the Executive with an office and staff and other such
facilities and services as shall be suitable to Executive’s position and
adequate for the performance of Executive’s duties hereunder.


 


1.4         
Fiduciary Duty.  Executive
acknowledges and agrees that he owes a fiduciary duty to the Company, and
further agrees to make full disclosure to the Company of all business
opportunities pertaining to the Company’s business and shall not act for his
own benefit concerning the subject matter of his fiduciary relationship.


 


1.5         
Compliance.  Executive
agrees that he will not take any action which he knows would not comply with
United States law as applicable to Executive’s employment, including, but
without limitation to the Foreign Corrupt Practices Act.


 


2.                                     
COMPENSATION AND RELATED MATTERS


 


2.1         
Base Salary.  Executive
shall receive a base salary (the “Base Salary”) paid by the Company at the
annual rate of Two Hundred Seventy Five Thousand ($275,000.00) U.S., payable
not less frequently than in substantially equal monthly installments, with the
opportunity to increases, from time to time thereafter which are in accordance
with the Company’s regular executive compensation practices.


 


2.2         
Bonus Payments.  For
each full fiscal year of the Company that begins and ends during the Employment
Period, and for the portion of the fiscal year of the Company that begins in
2008 (“Fiscal Year 2008”),
the Executive shall be eligible to earn an annual cash bonus in such amount as
shall be determined by the Compensation Committee of the Board (the “Compensation Committee”)
(the “Annual Bonus”)
based on the achievement by the Company of performance goals established by the
Compensation Committee for each such fiscal year (or portion of Fiscal Year
2008).  The Compensation Committee shall establish objective criteria to
be used to determine the extent to which performance goals have been
satisfied.  For purposes of this Agreement, net earnings per share is
defined as the Company’s consolidated net earnings per share as reported in the
Company’s Annual Report on Form 10-K.  The Executive’s annual
bonus potential target shall not be less than seventy percent (70%) of Base
Salary.


 


2.3         
Expenses.  During
the Basic Term, Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by him in accordance with the policies and
procedures established by the Compensation Committee for the Company’s senior
executive officers in performing services hereunder, provided that Executive
properly accounts for such expenses in accordance with the Company’s policies
and procedures.


 


2.4         
Automobiles.  The
Company shall provide the Executive with an automobile provided by the Company,
or, in the alternative, an automobile allowance consistent with the practices
of the Company.


 


2.5         
Business, Travel and Entertainment
Expenses.  The Company shall promptly reimburse the
Executive for all business, travel and entertainment expenses consistent with
the Executive’s titles and the practices of the Company.


 


2

















 


2.6         
Vacation.  The
Executive shall be entitled to six (6) weeks of vacation per year.
Vacation not taken during the applicable fiscal year (but not in excess of two (2) weeks)
shall be carried over to the next following fiscal year.


 


2.7         
Welfare, Pension and Incentive Benefit
Plans.  During the Employment Period, the Executive
(and his eligible spouse and dependents) shall be entitled to participate in
all the welfare benefit plans and programs maintained by the Company from
time-to-time for the benefit of its senior executives including, without
limitation, all medical, hospitalization, dental, disability, accidental death
and dismemberment and travel accident insurance plans and programs. In
addition, during the Employment Period, the Executive shall be eligible to
participate in all pension, retirement, savings and other employee benefit
plans and programs maintained from time-to-time by the Company for the benefit
of its senior executives, other than any annual cash incentive plan.


 


2.8         
Dues.  During the
Employment Period, the Company shall pay or promptly reimburse the Executive
for annual dues for membership in professional organizations relevant to
Executive’s job responsibilities.


 


2.9         
Other Benefits.  Executive
shall be entitled to participate in or receive benefits under any compensatory
employee benefit plan or other arrangement made available by the Company now or
in the future to its senior executive officers and key management employees,
subject to and on a basis consistent with the terms, conditions, and overall
administration of such plan or arrangement. Nothing paid to Executive under any
plan or arrangement presently in effect or made available in the future shall
be deemed to be in lieu of the Base Salary payable to Executive pursuant to Section 2.1 of
this Agreement.  The Company shall not make any changes in any employee
benefit plans or other arrangements in effect on the date hereof or
subsequently in effect in which Executive currently or in the future
participates (including, without limitation, each pension and retirement plan,
supplemental pension and retirement plan, savings and profit sharing plan,
stock or unit ownership plan, stock or unit purchase plan, stock or unit option
plan, life insurance plan, medical insurance plan, disability plan, dental
plan, health and accident plan, or any other similar plan or arrangement) that
would adversely affect Executive’s rights or benefits thereunder, unless such
change occurs pursuant to a program applicable to substantially all executives
of the Company and does not result in a proportionately greater reduction in
the rights of or benefits to Executive as compared with any other executive of
the Company.  The Company shall recommend that Executive receive an
annual award of restricted stock and/or stock options in Vantage Drilling
Company in the amount of approximately Seven Hundred Thousand Dollars
($700,000) based on market studies of industry executives, but Executive
recognizes and agrees that future years could vary significantly as market
conditions and industry compensation trends change.


 


2.10       
Perquisites.  Executive
shall be entitled to receive the perquisites and fringe benefits appertaining
to an executive officer of the Company, in accordance with any practice
established by the Compensation Committee.  In addition to the other
benefits provided in this Agreement, Executive and his family shall be entitled
to receive medical insurance as that may be provided under the Company’s group
program, as such group program may be changed from time-to-time in the future,
and Executive shall be entitled to continue to be covered by such group program
or, if not permitted under the terms of the group program, then the Company
shall provide Executive with a medical insurance policy providing substantially
similar benefits as to the group program, for the period ending on the date of
the later to die of Executive or, if Executive is married on the date of his death,
Executive’s spouse.  Executive shall be entitled to receive the medical
benefits defined herein at no cost to the Executive.  However, Executive’s
rights pursuant to this subsection shall be void if Executive is terminated for
Cause or if Executive voluntarily terminates his employment.


 


3

















 


2.11       
Proration.  Any
payments or benefits payable to Executive hereunder in respect of any calendar
year during which Executive is employed by the Company for less than the entire
year, unless otherwise provided in the applicable plan or arrangement, shall be
prorated in accordance with the number of days in such calendar year during
which he is so employed.


 


2.12       
Signing Bonus.  Executive
acknowledges receipt of a signing bonus in the amount of Twenty Thousand
Dollars ($20,000.00) which was paid prior to the Effective Date upon
commencement of his duties as Chief Operating Officer.


 


2.13       
Additional Payments.


 


(a)          
Excise Tax; Gross-Up Payment.  Anything
in this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for benefit of
the Executive (whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise, but determined without regard to
any additional payments required under this Section (a “Payment”) would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the “Code”), or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then
the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in
an amount such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.


 


(b)          
Accounting Firm Determinations.  All
determinations required to be made under this Section 2.12, including whether and
when Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by a reputable accounting firm selected by the Company (the “Accounting Firm”),
which shall provide detailed supporting calculations both to the Company and
the Executive within fifteen (15) business days after the receipt of notice
from the Executive that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting a Change of
Control of the Company, the Executive shall appoint another reputable
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Company.  Any
Gross-Up Payment, as determined pursuant to this Section, shall be paid by the
Company to the Executive within five (5) days after the receipt of the
Accounting Firm’s determination.  If the Accounting Firm determines that
no Excise Tax is payable by the Executive, it shall furnish the Executive with
a written opinion that failure to report the Excise Tax on the Executive’s
applicable federal income tax return would not result in the imposition of a
negligence or similar penalty. Any determination by the Accounting Firm shall
be binding upon the Company and the Executive.  As a result of the
uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments that will not have been made by the Company should have been
made (an “Underpayment”),
consistent with the calculations required to be made hereunder.  In the
event that the Company exhausts its remedies pursuant to this Section and
the Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm 


 


4

















 


shall
determine the amount of the Underpayment and any applicable penalty that has
occurred and the amount of any such Underpayment and any applicable penalty
shall be promptly paid by the Company to or for the benefit of the Executive.


 


(c)          
Notification of Claims.  The
Executive shall notify the Company in writing of any claims by the Internal
Revenue Service that, if successful, would require the payment by the Company
of the Gross-Up Payment.  Such notification shall be given as soon as
practicable but no later than thirty (30) days after the Executive actually
receives notice in writing of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be
paid.  The Executive shall not pay such claim prior to the expiration of
the thirty (30) day period following the date on which the Executive gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due).  If the Company
notifies the Executive in writing prior to the expiration of such period that
it desires to contest such claim, the Executive shall:


 


1.            
give the Company any information reasonably requested by the Company relating
to such claim;


 


2.            
take such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company;


 


3.            
cooperate with the Company in good faith in order to effectively contest such
claim; and


 


4.            
permit the Company to participate in any proceedings relating to such claim;


 


provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, for any Excise Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of
costs and expenses.  Without limitation on the foregoing provisions
of this Section, the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect to
such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Executive
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company’s control of the
contest shall be limited to issues with respect to which a Gross-Up 


 


5

















 


Payment would
be payable hereunder and the Executive shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.


 


(d)          
Refund.  If,
after the receipt by the Executive of an amount advanced by the Company
pursuant to this Section, the Executive becomes entitled to receive any refund
with respect to such claim, the Executive shall (subject to the Company’s
complying with the requirements of this Section) promptly pay to the Company
the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto).  If, after the receipt by the Executive
of an amount advanced by the Company pursuant to this Section, a determination
is made that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of thirty (30)
days after such determination, then such advance shall be forgiven and shall
not be required to be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required to be paid.


 


(e)          
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 completing, 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.


 


3.                                     
TERMINATION


 


3.1         
Definitions.


 


	
  A.

  	
   

  	
     “Cause” shall mean:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
   

  	
  Material dishonesty which is not the result of an
  inadvertent or innocent mistake of Executive 

  
	
  with respect to the Company or any of its
  subsidiaries;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
   

  	
  Willful misfeasance or nonfeasance of duty by Executive intended to
  injure or having the effect 

  
	
  of injuring in some material fashion the reputation, business, or
  business relationships of the Company or any of its subsidiaries or any of
  their respective officers, directors, or employees;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)

  	
   

  	
  Material violation by Executive of any material term of this
  Agreement;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iv)

  	
   

  	
  Conviction of Executive of any felony, any crime involving moral
  turpitude or any crime other 

  
	
  than a vehicular offense which could reflect in some material fashion
  unfavorably upon the Company or any of its subsidiaries; or

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (v)

  	
   

  	
  Violation of Sections
  1.3 or 1.4
  above.

  



 


6
















 


3.1.2       Notice to Cure.  Executive
may not be terminated for Cause unless and until there has been delivered to
Executive written notice from the Board supplying the particulars of Executive’s
acts or omissions that the Board believes constitute Cause, a reasonable period
of time (not less than 30 days) has been given to Executive after such notice
to either cure the same or to meet with the Board, with his attorney if so
desired by Executive, and following which the Board by action of not less than two-thirds
of its members furnishes to Executive a written resolution specifying in detail
its findings that Executive has been terminated for Cause as of the date set
forth in the notice to Executive.


 


3.1.3       For
purposes of this Agreement, no act or failure to act by the Executive shall be
considered “willful” if such act is done by the Executive in the good faith
belief that such act is or was to be beneficial to the Company or one or more
of its businesses, or such failure to act is due to the Executive’s good faith
belief that such action would be materially harmful to the Company or one of
its businesses.  Cause shall not exist unless and until the Company has
delivered to the Executive a copy of a resolution duly adopted by a majority of
the Board (excluding the Executive for purposes of determining such majority)
at a meeting of the Board called and held for such purpose after reasonable
(but in no event less than thirty days’) notice to the Executive and an
opportunity for the Executive, together with his counsel, to be heard before
the Board, finding that in the good faith opinion of the Board that “Cause”
exists, and specifying the particulars thereof in detail.  This Section shall
not prevent the Executive from challenging in an arbitration proceeding the
Board’s determination that Cause exists or that the Executive has failed to
cure any act (or failure to act) that purportedly formed the basis for the
Board’s determination.


 


B.           
A “Chance of Control” shall
be deemed to have occurred if:


 


(i)           
A reverse merger involving the Company or the Parent in which the Company or
the Parent, as the case may be, is the surviving corporation but the shares of
common stock of the Company or the Parent (the “Common Stock”) outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise, and the shareholders of
the Parent immediately prior to the completion of such transaction hold,
directly or indirectly, less than fifty percent (50%) of the beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act, or comparable successor rules) of the surviving entity or, if more than
one entity survives the transaction, the controlling entity; or


 


(ii)          
Any “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934) other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Securities Exchange Act of
1934), directly or indirectly, of 50% or more of the Company’s then outstanding
voting common stock; or


 


(iii)         
At any time during the period of three (3) consecutive years (not
including any period prior to the date hereof), individuals who at the
beginning of such period constituted the Board (and any new director whose
election by the Board or whose nomination for election by the Company’s
shareholders were approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the beginning of such period
or whose election or 


 


7

















 


nomination for election was
previously so approved) cease for any reason to constitute a majority thereof;
or


 


(iv)         
The shareholders of the Company approve a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation (a) in
which a majority of the directors of the surviving entity were directors of the
Company prior to such consolidation or merger, and (b) which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being changed
into voting securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the surviving entity outstanding
immediately after such merger or consolidation; or


 


(v)          
The shareholders approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially
all of the Company’s assets.


 


C.           
A “Disability” shall
mean the absence of Executive from Executive’s duties with the Company on a
full-time basis for 180 consecutive days, or 180 days in a 365-day period, as a
result of incapacity due to mental or physical illness which results in the
Executive being unable to perform the essential functions of his position, with
or without reasonable accommodation.


 


D.           
A “Good Reason” shall
mean any of the following (without Executive’s express written consent):


 


(i)           
Following a Change of Control, a material alteration in the nature or status of
Executive’s title, duties or responsibilities, or the assignment of duties or
responsibilities inconsistent with Executive’s status, title, duties and
responsibilities;


 


(ii)          
A failure by the Company to continue in effect any employee benefit plan in
which Executive was participating, or the taking of any action by the Company
that would adversely affect Executive’s participation in, or materially reduce
Executive’s benefits under, any such employee benefit plan, unless such failure
or such taking of any action adversely affects the senior members of corporate
management of the Company generally to the same extent;


 


(iii)         
Any material breach by the Company of any provision of this Agreement;


 


(iv)         
Any failure by the Company to obtain the assumption and performance of
this Agreement by any successor (by merger, consolidation, or otherwise) or
assign of the Company; or


 


(v)          
The Company provides written notice of non-renewal to the Executive.


 


However,
Good Reason shall exist with respect to an above specified matter only if such
matter is not corrected by the Company within thirty (30) days of its receipt
of written notice of 


 


8

















 


such matter from Executive,
and in no event shall a termination by Executive occurring more than ninety
(90) days following the date of the event described above be a termination for
Good reason due to such event.


 


3.2         
Termination Date.  “Termination Date”
shall mean the date Executive is terminated for any reason pursuant to this
Agreement.


 


3.3         
Constructive Termination Without Cause.  “Constructive Termination Without
Cause” shall mean: 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 written consent of the Executive: (i) a reduction in the
Executive’s fixed salary; (ii) 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; (iii) the notification by the Company of the
Company’s intention not to observe or perform one or more of the obligations of
the Company under this Agreement; or (iv) the failure by the Company to
indemnify, pay or reimburse the Executive at the time and under the
circumstances required by this Agreement.  Any such termination pursuant
to this Section shall be made by the Executive providing written notice to
the Company specifying the event relied upon for such termination and given
within sixty (60) days after such event.  Any constructive termination
pursuant to this Section shall be effective sixty (60) days after the date
the Executive has given the Company such written notice setting forth the
grounds for such termination with specificity; provided, however, that the
Executive shall not be entitled to terminate this Agreement in respect of any
of the grounds set forth above if within sixty (60) days after such notice the
action constituting such ground for termination has been cured and is no longer
continuing.


 


3.4         
Termination Without Cause or Termination
For Good Reason or Constructive Termination Without Cause: Benefits.


 


3.5         
Base Salary and Annual Bonus.  For
a period of twelve (12) months after the Termination Date, Base Salary and
Annual Bonus (as such terms are defined herein) at the rate, and payable
quarterly unless such termination is by the Company without Cause, in which
even such amount of Base Salary and Annual Bonus shall be paid in a lump sum
within ten (10) days of the Termination Event.


 


3.6         
Stock Awards.  If
there is a Change of Control or if there is a Termination Event, any stock or
stock option award issued pursuant to the 2007 Long Term Incentive Compensation
Plan (“Stock Awards”)
which Executive has received under this Agreement shall vest immediately and,
if there is a Termination Event, all such Stock Awards shall be exercisable
from the date of such Termination Event for the remainder of their term.


 


3.7         
Other Benefits.  To
the extent not theretofore paid or provided, the Company shall timely pay or
provide to Executive any other amounts or benefits required to be paid or
provided or which Executive is eligible to receive under any plan, program,
policy or practice, or contract or agreement of the Company and its affiliated
companies for the period of time equal to the remainder of the Basic Term (such
other amounts and benefits shall be hereinafter referred to as the “Other Benefits”).  Without
limiting the preceding sentence and without limiting any other provision of
this Agreement, through the remaining Basic Term, but under no condition less
than one (1) year, the Company, at its sole expense, shall continue to
provide (through its own plan and/or individual policies) Executive (and
Executive’s dependents) with health benefits no less favorable than the group
health plan benefits provided during such period to any senior executive
officer of the Company or any affiliated company (to the extent any 


 


9

















 


such
coverage or benefits are taxable to Executive by reason of being provided under
a self-insured health plan of the Company or an affiliate, the Company shall
make Executive “whole” for the same on an after-tax basis).  In any event,
the Other Benefits provided for pursuant to this Section shall be
secondary to any benefits and coverage Executive (or his dependents) receive
from another employer.


 


3.8         
Expenses.  All
accrued compensation and unreimbursed expenses through the Termination
Date.  Such amounts shall be paid to Executive in a lump sum in cash
within thirty (30) days after the Termination Date; and


 


3.9         
Mitigation.  Executive
shall be free to accept other employment during such period, subject to the
limitation as set forth in Section 5
of this Agreement and there shall be no offset of any employment compensation
earned by Executive in such other employment during such period against
payments due Executive under this Section 3, and there shall be no offset
in any compensation received from such other employment against the Base Salary
set forth above.


 


3.10       
Maximum Payments.  It
is the objective of this Agreement to maximize the Executive’s Net After-Tax
Benefit (as defined herein) if payments or benefits provided under this Section are
subject to excise tax under Section 4999 of the Code.  Therefore, in
the event it is determined that any payment or benefit by the Company to or for
the benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Section or otherwise,
including, by example and not by way of limitation, acceleration by the Company
or otherwise of the date of vesting or payment or rate of payment under any
plan, program or arrangement of the Company, would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties with
respect to such excise tax (such excise tax, together with any such interest
and penalties, are hereinafter collectively referred to as the “Excise Tax”), the Company
shall first make a calculation under which such payments or benefits provided
to the Executive under this Agreement are reduced to the extent necessary so
that no portion thereof shall be subject to the excise tax imposed by Section 4999
of the Code (the “4999
Limit”).  The Company shall then compare (x) the
Executive’s Net After-Tax Benefit assuming application of  the 4999 Limit with (y) the Executive’s
Net After-Tax Benefit without the application of the 4999 Limit and the
Executive shall be entitled to the greater of (x) or (y).


 


3.11       
Net After-Tax Benefit.  “Net After-Tax Benefit”
shall mean the sum of (i) all payments and benefits which the Executive
receives or is then entitled to receive from the Company, less (ii) the
amount of federal income taxes payable with respect to the payments and
benefits described in (i) above calculated at the maximum marginal income
tax rate for each year in which such payments and benefits shall be paid to the
Executive (based upon the rate for such year as set forth in the Code at the
time of the first payment of the foregoing), less (iii) the amount of
excise taxes imposed with respect to the payments and benefits described in (i) above
by Section 4999 of the Code.  The determination of whether a payment
or benefit constitutes an excess parachute payment shall be made by tax counsel
selected by the Company and reasonably acceptable to the Executive. The costs
of obtaining this determination shall be borne by the Company.


 


3.12       
Termination In Event of Death: Benefits.  If
Executive’s employment is terminated by reason of Executive’s death during the
Basic Term, this Agreement shall terminate, except as provided herein, without
further obligation to Executive’s legal representatives under this Agreement,
other than for payment of all accrued compensation, unreimbursed expenses, the
timely payment or provision of Other Benefits through the date of death, one (1) year’s
Base Salary, and such cash or stock bonus as Executive would otherwise have
been awarded in year if Executive’s death had not occurred.  Such amounts
shall be paid to Executive’s estate or beneficiary, as applicable, in a lump
sum in cash within ninety (90) days after the date of death.  With respect
to the provision of Other Benefits, the term Other 


 


10

















 


Benefits
as used in this Section shall include, without limitation, and Executive’s
estate and/or beneficiaries shall be entitled to receive, benefits at least
equal to the most favorable benefits provided by the Company to the estates and
beneficiaries of other executive level employees of the Company under such
plans, programs, practices, and policies relating to death benefits, if any, as
in effect with respect to other executives and their beneficiaries at any time
during the 120-day period immediately preceding the date of death. 
Additionally, all Stock Awards shall be vested immediately and shall be
exercisable for the greater of one year after the date of such vesting or the
remaining term of such option.


 


3.13       
Termination In Event of
Disability: Benefits.  If Executive’s employment
is terminated by reason of Executive’s Disability during the Basic Term, this
Agreement shall continue in full force for a period of one (1) year following
such Disability and if such Disability occurs on or after January 1 of any
year Executive shall be entitled to the same cash or stock bonus in such year
that Executive would have been awarded if such Disability had not occurred. In
addition, all outstanding Stock Awards shall vest immediately upon such
termination due to Disability.


 


3.14       
Voluntary Termination by Employee and
Termination for Cause: Benefits. Executive may terminate his
employment with the Company without Good Reason by giving written notice of his
intent and stating an effective Termination Date at least ninety (90) days
after the date of such notice; provided, however, that the Company may
accelerate such effective date by paying Executive through the proposed
Termination Date and also vesting awards that would have vested but for this
acceleration of the proposed Termination Date and also vesting awards that
would have vested but for this acceleration of the proposed Termination
Date.  Upon such a termination by Executive, except as provided in Section 5, or
upon termination for Cause by the Company, this Agreement shall terminate and
the Company shall pay to Executive all accrued compensation, unreimbursed
expenses and the Other Benefits through the Termination Date.  Such amounts
shall be paid to Executive in a lump sum in cash within thirty (30) days after
the date of termination.  In addition, all unvested stock options
shall terminate and all vested options will terminate one hundred twenty (120)
days after the Termination Date.


 


3.15       
Termination Procedure.


 


A.           
Notice of Termination.  Any
termination of the Executive’s employment by the Company or by the Executive
during the Employment Period (other than pursuant to Section 3.5)
shall be communicated by written Notice of Termination to the other party. For
purposes of this Agreement, a “Notice of Termination” shall mean a notice indicating
the specific termination provision in this Agreement relied upon and setting
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under that provision.


 


B.           
Date of Termination.  “Date of Termination”
shall mean (i) if the Executive’s employment is terminated by his death,
the date of his death, (ii) if the Executive’s employment is terminated
pursuant to Section 3.13,
thirty (30) days after the date of receipt of the Notice of Termination
(provided that the Executive does not return to the substantial performance of
his duties on a full-time basis during such thirty (30) day period), and (iii) if
the Executive’s employment is terminated for any other reason, the date on
which a Notice of Termination is given or any later date (within thirty (30)
days after the giving of such notice) set forth in such Notice of Termination.


 


C.           
Mitigation.  The
Executive shall not be required to mitigate damages with respect to the
termination of his employment under this Agreement by seeking other employment
or otherwise, and there shall be no offset against amounts due the Executive
under this Agreement 


 


11

















 


on account of subsequent
employment except as specifically provided in this Agreement. Additionally,
amounts owed to the Executive under this Agreement shall not be offset by any
claims the Company may have against the Executive, and the Company’s obligation
to make the payments provided for in this Agreement, and otherwise to perform
its obligations hereunder, shall not be affected by any other circumstances,
including, without limitation, any counterclaim, recoupment, defense or other
right which the Company may have against the Executive or others.


 


4.                                     
DIRECTOR POSITIONS


 


Executive agrees that upon termination of employment, for any reason,
at the request of the Chairman of the Board, he will immediately tender his
resignation from any and all Board positions held with the Company and/or any
of its subsidiaries and affiliates. If Executive remains as a director, at the
election of the Board, after such termination, Executive shall be compensated
as an outside director.


 


5.                                     
NON-COMPETITION, NON-SOLICITATION, AND CONFIDENTIALITY


 


The Company shall provide Executive with its trade secrets, goodwill,
and confidential information of Company and contact with the Company’s
customers and potential customers.  Executive also recognizes and agrees
that the benefit of not being employed at-will, is provided in consideration
for, among other things, the agreements contained in this Section, as well as
the Stock Awards granted to Executive pursuant to this Agreement. 
Executive agrees that the business of the Company is highly competitive and
that the trade secrets, goodwill, and confidential information of the Company
is of primary importance to the success of the Company.  In consideration
of all of the foregoing, and in recognition of these conditions, and
specifically for being provided trade secrets, goodwill, and confidential information,
Executive agrees as follows:


 


5.1         
Non-Competition During Employment.  Executive
agrees during the Basic Term he will not compete with the Company by engaging
in the conception, design, development, production, marketing, or servicing of
any product or service that is substantially similar to the products or
services which the Company provides, and that he will not work for, in any
capacity, assist, or became affiliated with as an owner, partner, etc., either
directly or indirectly, any individual or business which offer or performs
services, or offers or provides products substantially similar to the services
and products provided by Company.


 


5.2         
Conflicts of Interest.  Executive
agrees that during the Basic Term, he will not engage, either directly or
indirectly, in any activity (a “Conflict of Interest”) which might adversely affect the
Company or its affiliates, including ownership of a material interest in any
supplier, contractor, distributor, subcontractor, customer or other entity with
which the Company does business or accepting any material payment, service,
loan, gift, trip, entertainment, or other favor from a supplier, contractor,
distributor, subcontractor, customer or other entity with which the Company
does business, and that Executive will promptly inform the Chairman of the
Company as to each offer received by Executive to engage in any such activity.
Executive further agrees to disclose to the Company any other facts of which
Executive becomes aware which might in Executive’s good faith judgment
reasonably be expected to involve or give rise to a Conflict of Interest or
potential Conflict of Interest.


 


5.3         
Non-Competition After Termination.  In
further consideration of the Company providing Employee confidential information,
executive agrees that Executive shall not, at any time during the period of one
(1) year after termination within the geographic area as defined by this Section 5 that
the Company has sold products or services or formulated a plan to sell products
or services into a 


 


12

















 


market
during the last twelve (12) months of Executive’s employ, engage in or
contribute Executive’s knowledge to any work which is competitive with or
similar to a product, process, apparatus, services, or development on which
Executive worked or with respect to which Executive had access to Confidential
Information while employed by the Company.  It is understood that the
geographical area set forth in this covenant is divisible so that if this
clause is invalid or unenforceable in an included geographic area, that area is
severable and the clause remains in effect for the remaining included
geographic areas in which the clause is valid. For purposes of this Section 5.3, the
geographic area shall apply to the territory or country where the Company
conducts operations.


 


5.4         
Non-Solicitation of Customers.  In
further consideration of the Company providing Employees confidential
information, Executive further agrees that for a period of one (1) year
after termination, he will not solicit or accept any business from any customer
or client or prospective customer or client with whom Executive dealt or
solicited while employed by Company during the last twelve (12) a months of his
employment.


 


5.5         
Non-Solicitation of Employees.  Executive
agrees that for the duration of the Basic Term, and for a period of one (1) year
after the termination of the Basic Term, he will not either directly or
indirectly, on his own behalf or on behalf of others, solicit, attempt to hire,
or hire any person employed by Company to work for Executive or for another
entity, firm, corporation, or individual.


 


5.6         
Confidential Information.  Executive
further agrees that he will not, except as the Company may otherwise consent or
direct in writing, reveal or disclose, sell, use, lecture upon, publish or
otherwise disclose to any third party any Confidential Information or
proprietary information of the Company, or authorize anyone else to do these
things at any time either during or subsequent to his employment with the
Company.  This Section shall continue in full force and effect after
termination of Executive’s employment and after the termination of this
Agreement.  Executive shall continue to be obligated under the
Confidential Information Section of this Agreement not to use or to
disclose Confidential Information of the Company so long as it shall not be
publicly available.  Executive’s obligations under this Section with
respect to any specific Confidential Information and proprietary information
shall cease when that specific portion of the Confidential Information and
proprietary information becomes publicly known, in its entirety and without
combining portions of such information obtained separately.  It is
understood that such Confidential Information and proprietary information of
the Company include matters that Executive conceives or develops, as well as
matters Executive learns from other employees of Company. Confidential Information
is defined to include information: (1) disclosed to or known by the
Executive as a consequence of or through his employment with the Company; (2) not
generally known outside the Company; and (3) which relates to any aspect
of the Company or its business, finances, operation plans, budgets, research,
or strategic development. “Confidential Information” includes, but is not
limited to the Company’s trade secrets, proprietary information, financial
documents, long range plans, customer lists, employer compensation, marketing
strategy, data bases, costing data, computer software developed by the Company,
investments made by the Company, and any information provided to the Company by
a third party under restrictions against disclosure or use by the Company or
others.


 


5.7         
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 information of a technical or business
nature such as ideas, discoveries, designs, inventions, improvements, trade
secrets, know-how, manufacturing processes, product formulae, design
specifications, writings and other works of authorship, computer programs,
financial figures, marketing plans, customer lists and data, business plans or
methods and the like, which relate in any manner to the actual or anticipated
business or the actual or anticipated areas of research and development 


 


13

















 


of
the Company and its divisions and affiliates, 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.  Either during the subsequent to the Executive’s
employment, upon the request and at the expense of the Company or its nominee,
and for no remuneration in addition to that due the Executive pursuant to the Executive’s
employment by the Company, but at no expense to the Executive, the Executive
agrees to execute, acknowledge, and deliver to the Company or its attorneys any
and all instruments which, in the judgment of the Company or its attorneys, may
be necessary or desirable to secure or maintain for the benefit of the Company
adequate patent, copyright, and other property rights in the United States and
foreign countries with respect to any such inventions, improvements, ideas,
concepts, or original works of authorship embraced within this Agreement.


 


5.8         
Return of Documents, Equipment, Etc.  All
writings, records, and other documents and things comprising, containing,
describing, discussing, explaining, or evidencing any Confidential Information,
and all equipment, components, parts, tools, and the like in Executive’s
custody or possession that have been obtained or prepared in the course of
Executive’s employment with the Company shall be the exclusive property of the
Company, shall not be copied and/or removed from the premises of the Company,
except in pursuit of the business of the Company, and shall be delivered to the
Company, without Executive retaining any copies, upon notification of the
termination of Executive’s employment or at any other time requested by the
Company. The Company shall have the right to retain, access, and inspect all
property of Executive of any kind in the office, work area, and on the premises
of the Company upon termination of Executive’s employment and at any time during
employment by the Company upon termination of Executive’s employment and at any
time during employment by the Company to ensure compliance with the terms of
this Agreement.


 


5.9         
Reaffirm Obligations.  Upon
termination of his employment with the Company, Executive, if requested by
Company, shall reaffirm in writing Executive’s recognition of the importance of
maintaining the confidentiality of the Company’s Confidential Information and
proprietary information, and reaffirm any other obligations set forth in this
Agreement.


 


5.10       
Prior Disclosure.  Executive
represents and warrants that he has not used or disclosed any Confidential
Information he may have obtained from Company prior to signing this Agreement,
in any way inconsistent with the provisions of this Agreement.


 


5.11       
Confidential Information of Prior
Companies.  Executive will not disclose or use during
the period of his employment with the Company any proprietary or Confidential
Information or Copyright Works which Executive may have acquired because of
employment with an employer other than the Company or acquired from any other
third party, whether such information is in Executive’s memory or embodied in a
writing or other physical form


 


5.12       
Rights Upon Breach.  If
the Executive breaches, any of the provisions contained in Section 5 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:


 


(a)          
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 of the 


 


14

















 


Restrictive Covenants would
cause irreparable injury to the Company and that money damages would not
provide an adequate remedy to the Company.


 


(b)          
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.


 


5.13       
Remedies For Violation of Non-Competition
or Confidentiality Provisions. Without limiting the right of the
Company to pursue all other legal and equitable rights available to it for
violation of any of the obligations and covenants made by Employee herein, it
is agreed that:


 


(a)          
the skills, experience and contacts of Employee are of a special, unique,
unusual and extraordinary character which give them a peculiar value;


 


(b)          
because of the business of the Company, the restrictions agreed to by Employee
as to time and area contained in the Agreement are reasonable; and


 


(c)          
the injury suffered by the Company by a violation of any obligation or covenant
in the Agreement resulting from loss of profits created by (i) the
competitive use of such skills, experience contacts and otherwise and/or (ii) the
use or communication of any information deemed confidential herein will be
difficult to calculate in damages in an action at law and cannot fully
compensate the Company for any violation of any obligation or covenant in the
Agreement, accordingly:


 


(i)           
the Company shall be entitled to injunctive relief to prevent violations thereof
and prevent Employee from rendering any services to any person, firm or entity
in breach of such obligation or covenant and to prevent Employee from divulging
any confidential information; and


 


(ii)          
compliance with the Agreement is a condition precedent to the Company’s
obligation to make payments of any nature to employee, subject to the other
provisions hereof.


 


(d)          
employee waives any objection to the enforceability of the restrictive
covenants and agrees to be estopped from denying the legality and
enforceability of these provisions.


 


15

















 


5.14       
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.


 


5.15       
Court Review.  If
any court determines that any of the Restrictive Covenants, or any part thereof
is unenforceable because of the duration or geographical scope of or scope of
activities restrained by, 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.


 


5.16       
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 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.


 


5.17       
Extension of Post-Employment Restrictions.  In
the event Executive breaches Section 5 above, the restrictive time periods
contained in those provisions will be extended by the period of time Executive
was in violation of such provisions.


 


6.                                     
INDEMNIFICATION


 


6.1         
General.  The
Company agrees that if the Executive is made a party or is threatened to be
made a party to any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a “Proceeding”), by reason of the fact that the
Executive is or was a trustee, director or officer of the Company, the Company,
or any predecessor to the Company (including any sole proprietorship owned by the
Executive) or any of their affiliates or is or was serving at the request of
the Company, the Company, any predecessor to the Company (including any sole
proprietorship owned by the Executive), or any of their affiliates as a
trustee, director, officer, member, employee or agent of another corporation or
a partnership, joint venture, limited liability company, trust or other
enterprise, including, without limitation, service with respect to employee
benefit plans, whether or not the basis of such Proceeding is alleged action in
an official capacity as a trustee, director, officer, member, employee or agent
while serving as a trustee, director, officer, member, employee or agent, the
Executive shall be indemnified and held harmless by the Company to the fullest
extent authorized by Texas or Delaware law, as the same exists or may hereafter
be amended, against all Expenses incurred or suffered by the Executive in
connection therewith, and such indemnification shall continue as to the
Executive even if the Executive has ceased to be an officer, director, trustee
or agent, or is no longer employed by the Company and shall inure to the
benefit of his heirs, executors and administrators.


 


6.2         
Expenses.  As
used in this Section, the term “Expenses” shall include, without limitation, damages,
losses, judgments, liabilities, fines, penalties, excise taxes, settlements,
and costs, attorneys’ fees, accountants’ fees, and disbursements and costs of
attachment or similar bonds, investigations, and any expenses of establishing a
right to indemnification under this Agreement.


 


16

















 


6.3         
Enforcement.  If
a claim or request under this Section 6 is not paid by the Company or on its
behalf, within thirty (30) days after a written claim or request has been
received by the Company, the Executive may at any time thereafter bring an
arbitration claim against the Company to recover the unpaid amount of the claim
or request and if successful in whole or in part, the Executive shall be
entitled to be paid also the expenses of prosecuting such suit.  All
obligations for indemnification hereunder shall be subject to, and paid in
accordance with, applicable Texas or Delaware law.


 


6.4         
Partial Indemnification.  If
the Executive is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of any Expenses, but not,
however, for the total amount thereof, the Company shall nevertheless indemnify
the Executive for the portion of such Expenses to which the Executive is
entitled.


 


6.5         
Advances of Expenses.  Expenses
incurred by the Executive in connection with any Proceeding shall be paid by
the Company in advance upon request of the Executive that the Company pay such
Expenses, but only in the event that the Executive shall have delivered in
writing to the Company (i) an undertaking to reimburse the Company for
Expenses with respect to which the Executive is not entitled to indemnification
and (ii) a statement of his good faith belief that the standard of conduct
necessary for indemnification by the Company has been met.


 


6.6         
Notice of Claim.  The
Executive shall give to the Company notice of any claim made against him for
which indemnification will or could be sought under this Agreement.  In
addition, the Executive shall give the Company such information and cooperation
as it may reasonably require and as shall be within the Executive’s power and
at such times and places as are convenient for the Executive.


 


6.7         
Defense of Claim.  With
respect to any Proceeding as to which the Executive notifies the Company of the
commencement thereof:


 


(a)          
The Company will be entitled to participate therein at its own expense.


 


(b)          
Except as otherwise provided below, to the extent that it may wish, the Company
will be entitled to assume the defense thereof, with counsel reasonably
satisfactory to the Executive, which in the Company’s sole discretion may be
regular counsel to the Company and may be counsel to other officers and
directors of the Company or any subsidiary.  The Executive also shall have
the right to employ his own counsel in such action, suit or proceeding if he
reasonably concludes that failure to do so would involve a conflict of interest
between the Company and the Executive, and under such circumstances the fees
and expenses of such counsel shall be at the expense of the Company.


 


(c)          
The Company shall not be liable to indemnify the Executive under this Agreement
for any amounts paid in settlement of any action or claim effected without its
written consent.  The Company shall not settle any action or claim in any
manner which would impose any penalty that would not be paid directly or
indirectly by the Company or limitation on the Executive without the Executive’s
written consent. Neither the Company nor the Executive will unreasonably
withhold or delay their consent to any proposed settlement.


 


6.8         
Non-exclusivity.  The
right to indemnification and the payment of expenses incurred in defending a
Proceeding in advance of its final disposition conferred in this Section 6 shall
not be exclusive of any other right which the Executive may have or hereafter
may acquire under any statute or certificate of incorporation or by-laws of the
Company or any subsidiary, agreement, vote of shareholders or disinterested
directors or trustees or otherwise.


 


17

















 


7.                                     
LEGAL FEES AND EXPENSES


 


If any contest or dispute shall arise between the Company and the
Executive regarding any provision of this Agreement, the Company shall
reimburse the Executive for all legal fees and expenses reasonably incurred by
the Executive in connection with such contest or dispute, but only if the
Executive prevails to a substantial extent with respect to the Executive’s
claims brought and pursued in connection with such contest or dispute. 
Such reimbursement shall be made as soon as practicable following the
resolution of such contest or dispute (whether or not appealed) to the extent
the Company receives reasonable written evidence of such fees and expenses. The
Company shall advance the Executive reasonable attorney’s fees during any
arbitration proceedings if brought by the Executive, up to but not to exceed
Three Hundred Thousand Dollars ($300,000.00).


 


8.                                     
BREACH


 


Executive agrees that any breach of restrictive covenants above cannot
be remedied solely by money damages, and that in addition to any other remedies
Company may have, Company is entitled to obtain injunctive relief against
Executive.  Nothing herein, however, shall be construed as limiting
Company’s right to pursue any other available remedy at law or in equity,
including recovery of damages and termination of this Agreement and/or any
payments that may be due pursuant to this Agreement.


 


9.                                     
RIGHT TO ENTER AGREEMENT


 


Executive represents and covenants to Company that he has full power
and authority to enter into this Agreement and that the execution of this
Agreement will not breach or constitute a default of any other agreement or
contract to which he is a party or by which he is bound.


 


10.                                   
COMPLIANCE WITH SECTION 409A


 


10.1       
It is the intention of the Company and the Executive that this Agreement not
result in unfavorable tax consequences to the Executive under Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”).  The
Company and the Executive acknowledge that Section 409A of the Code was
enacted pursuant to the American Jobs Creation Act of 2004, generally effective
with respect to amounts deferred after January 1, 2005, and only limited
guidance has been issued by the Internal Revenue Service with respect to the
application of Code Section 409A to certain arrangements, such as this
Agreement.  The Internal Revenue Service has indicated that it will
provide further guidance regarding interpretation and application of Section 409A
of the Code during 2005. The Company and the Executive acknowledge further that
the full effect of Section 409A of the Code on potential payments pursuant
to this Agreement cannot be fully determined at the time that the Company and
the Executive are entering into this Agreement. The Company and the Executive
agree to work together in good faith in an effort to comply with Section 409A
of the Code including, if necessary, amending the Agreement based on further
guidance issued by the Internal Revenue Service from time to time, provided
that the Company shall not be required to assume any increased economic burden.


 


10.2       
Certain Definitions.  As
used in this Agreement, the following terms have the following meanings unless
the context otherwise requires:


 


(a)          
“affiliate”
means any person controlled by or under common control with the Company but
shall not include any stockholder or director of the Company, as such.


 


18

















 


(b)          
“person”
means any individual, corporation, partnership, limited liability company,
firm, joint company, association, joint-stock company, trust, unincorporated
organization, governmental or regulatory body or other entity.


 


10.3       
Delay in Payments.  Notwithstanding
anything to the contrary in this Agreement, (i) if upon the date of
Executive’s termination of employment with the Company, Executive is a “specified
employee” within the meaning of Section 409A of the Internal Revenue Code
of 1986, as amended, or any regulations or Treasury guidance promulgated
thereunder (the “Code”)
and the deferral of any amounts otherwise payable under this Agreement as a
result of Executive’s termination of employment is necessary in order to
prevent any accelerated or additional tax to Executive under Code Section 409A,
then the Company will defer the payment of any such amounts hereunder until the
date that is six months following the date of Executive’s termination of
employment with the Company, at which time any such delayed amounts will be
paid to Executive in a single lump sum, with interest from the date otherwise
payable at the prime rate as published in The Wall Street Journal on the date
of Executive’s termination of employment with the Company, and (ii) if any
other payments of money or other benefits due to Executive hereunder could
cause the application of an accelerated or additional tax under Code Section 409A,
such payments or other benefits shall be deferred if deferral will make such
payment or other benefits compliant under Code Section 409A.


 


10.4       
Reformation.  If
any provision of this Agreement would cause Executive to occur any additional
tax under Code Section 409A, the parties will in good faith attempt to
reform the provision in a manner that maintains, to the extent possible, the
original intent of the applicable provision without violating the provision of
Code Section 409A.


 


11.                              
ENFORCEABILITY


 


The agreements contained in the restrictive covenant provisions of this
Agreement are independent of the other agreements contained herein. 
Accordingly, failure of the Company to comply with any of its obligations
outside of such Sections do not excuse Executive from complying with the
agreements contained herein.


 


12.                              
SURVIVABILITY


 


The agreements contained in Sections 5 shall survive the termination of
this Agreement for any reason.


 


13.                              
ASSIGNMENT


 


This Agreement cannot be assigned by Executive. The Company may assign
this Agreement only to a successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially Al of the business
and assets of the Company provided such successor expressly agrees in writing
reasonably satisfactory to Executive to assume and perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession and assignment had taken place.  Failure
of the Company to obtain such written agreement prior to the effectiveness of
any such succession shall be a material breach of this Agreement.


 


14.                              
BINDING AGREEMENT


 


Executive understands that his obligations under this Agreement are
binding upon Executive’s heirs, successors, personal representatives, and legal
representatives.


 


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15.                              
NOTICES


 


All notices pursuant to this Agreement shall be in writing and sent
certified mail, return receipt requested, addressed as set forth below, or by
delivering the same in person to such party, or by transmission by facsimile to
the number set forth below.  Notice deposited in the manner described
hereinabove, shall be effective upon deposit.  Notice given in any
other manner shall be effective only if and when received:


 


If to Executive:


 


	
   

  	
   

  	
  Michel
  R.C. Derbyshire

  
	
   

  	
   

  	
  1 Jalan Kilang Timor,

  
	
   

  	
   

  	
  #07-01 Pacific Tech Centre,

  
	
   

  	
   

  	
  Singapore 159303

  



 


If to Company:


 


	
   

  	
   

  	
  Vantage
  International Payroll Company Pte. Ltd.

  
	
   

  	
   

  	
  c/o
  Vantage Drilling Company

  
	
   

  	
   

  	
  777
  Post Oak Blvd., Suite 610

  
	
   

  	
   

  	
  Houston,
  Texas 77056

  



 


16.                              
WAIVER


 


No waiver by either party to this Agreement of any right to enforce any
term or condition of this Agreement, or of any breach hereof shall be deemed a
waiver of such right in the future or of any other right or remedy available
under this Agreement.  The Executive’s or the Company’s failure to insist
upon strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the Company may
have hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 3.2 hereof, shall not be
deemed to be a waiver of such provision or right or any other provision or
right of this Agreement.


 


17.                              
SEVERABILITY


 


If any provision of this Agreement is determined to be void invalid,
unenforceable, or against public policy, such provisions shall be deemed
severable from the Agreement, and the remaining provisions of the Agreement
will remain unaffected and in full force and effect.  The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.


 


18.                              
ARBITRATION


 


In the event any dispute arises out of Executive’s employment with or
by the Company, or separation/termination therefrom, whether as an employee,
which cannot be resolved by the Parties to this Agreement, such dispute shall
be submitted to final and binding arbitration.  The arbitration shall be
conducted in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association (“AAA”).  If the
Parties cannot agree on an arbitrator, a list of seven 


 


20

















 


(7) arbitrators
will be requested from AAA, and the arbitrator will be selected using alternate
strikes with Executive striking firm. The cost of the arbitration will be borne
solely by the Company.  Arbitration of such disputes is mandatory and in
lieu of any and all civil causes of action and lawsuits either party may have
against the other arising out of Executive’s employment with Company, or
separation therefrom.  Such arbitration shall be held in Houston,
Texas.  This provision shall not, however, preclude the Company from
obtaining injunctive relief in any court of competent jurisdiction to enforce Section 5 of
this Agreement.


 


19.                              
ENTIRE AGREEMENT


 


The terms and provisions contained herein shall constitute the entire
agreement between the parties with respect to Executive’s employment with
Company during the time period covered by this Agreement. This Agreement
replaces and supersedes any and all existing Agreements entered into between
Executive and the Company relating generally to the same subject matter, if
any, except the offer of employment to Executive, dated October 31, 2007,
and shall be binding upon Executive’s heirs, executors, administrators, or
other legal representatives or assigns.


 


20.                              
SECTION HEADINGS


 


The section headings in this Employment Agreement are for convenience
of reference only, and they form no part of this Agreement and shall not affect
its interpretation.


 


21.                              
MODIFICATION OF AGREEMENT


 


This Agreement may not be changed or modified or released or discharged
or abandoned or otherwise terminated, in whole or in part, except by an
instrument in writing signed by the Executive and an officer or other
authorized executive of Company.


 


22.                              
UNDERSTANDING OF AGREEMENT


 


Executive represents and warrants that he has read and understood each
and every provision of this Agreement, and Executive understands that he has
the right to obtain advice from legal counsel of choice, if necessary and
desired, in order to interpret any and all provisions of this Agreement, and
that Executive has freely and voluntarily entered into this Agreement.


 


23.                              
GOVERNING LAW


 


This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas.


 


24.                              
WITHHOLDING


 


All payments hereunder shall be subject to any required withholding of
Federal, state and local taxes pursuant to any applicable law or regulation,
except as provided in any tax equalization program or policy adopted by the
Company for expatriate employees.


 


25.                              
JURISDICTION AND VENUE


 


With respect to any litigation regarding this Agreement, Executive
agrees to venue in the state or federal courts in Harris County, Texas and
agrees to waive and does hereby waive any defenses and/or 


 


21

















 


arguments
based upon improper venue and/or lack of personal jurisdiction.  By
entering into this Agreement, Executive agrees to personal jurisdiction in the
state and federal courts in Harris County, Texas.


 


26.                              
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.


 


IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.


 


	
  EXECUTIVE

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Michel R.C. Derbyshire

  	
   

  
	
  MICHEL R.C. DERBYSHIRE

  	
   

  
	
   

  	
   

  
	
  VANTAGE
  INTERNATIONAL PAYROLL COMPANY PTE. LTD.

  
	
   

  	
   

  
	
  By:

  	
  /s/ Paul A. Bragg

  	
   

  
	
  Name:

  	
  Paul A. Bragg

  	
   

  
	
  Title:

  	
   Chief Executive Officer

  	
   

  
					



 


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