<PAGE>   1
                                                                   EXHIBIT 10.12

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into by and
between Dailey International Inc., a Delaware corporation ("EMPLOYER"), and John
Beard ("EMPLOYEE") on this 1st day of July, 1998.

                              W I T N E S S E T H :

         WHEREAS, Employer desires to employ Employee and Employee desires to be
employed by Employer upon the terms and conditions set forth herein;

         NOW THEREFORE, in consideration of the premises, mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:

                                    ARTICLE 1
                          TERM AND NATURE OF EMPLOYMENT

         1.1 TERM OF EMPLOYMENT. Subject to the terms and conditions of this
Agreement, Employer hereby employs Employee and Employee hereby accepts
employment with Employer for a term beginning on the date shown above through
and including June 30, 2000 (the "INITIAL TERM"), unless this Agreement and
Employee's employment hereunder are sooner terminated pursuant to Article 5.
Upon expiration of the Initial Term, this Agreement shall remain in full force
and effect in a series of automatic renewals in increments of one consecutive
year (each such year term a "RENEWAL TERM") until this Agreement and Employee's
employment hereunder are terminated in accordance with Article 5. The Initial
Term together with each Renewal Term shall hereinafter be referred to
collectively as the "EMPLOYMENT PERIOD."

         1.2 PRINCIPAL DUTIES. Employee's employment hereunder shall be in the
capacity of Director, Internal Audit. In such capacity, Employee shall perform
the duties for which he currently is responsible as an employee of Employer
and/or any duties set forth in any job description provided by Employer. In
addition, Employee shall perform other duties as may from time to time be
prescribed by Employer's more senior management. Employee shall perform his
duties hereunder in accordance with any lawful instructions, rules, regulations
or policies made or adopted by Employer's Board of Directors or more senior
management, including those applicable to Employer's employees generally. During
the Employment Period, Employee shall devote his full time, and best efforts and
skills to the business and interests of Employer during Employer's normal
working hours, do his utmost to further enhance and develop Employer's best
interests and welfare, and endeavor to improve his ability and knowledge of
Employer's business, particularly as it relates to his duties hereunder, in an
effort to increase the value of his services for the mutual benefit of the
parties hereto. At all times during the term of this Agreement, Employee shall
project a positive and professional image on behalf of Employer.

         1.3 ACCOUNTING AND FIDELITY BOND. Employee shall truthfully and
accurately make, maintain and preserve all records and reports that Employer may
from time to time request or require. Employee shall fully account for all
money, records, goods, wares and merchandise or other property belonging to
Employer 


Beard/Employment Agreement
Page 1


<PAGE>   2

or its "AFFILIATES" (as that term is defined in Rule 405 under the Securities
Act of 1933, as amended) of which he may have custody and will pay over and
deliver the same promptly whenever and however he may be directed to do so.
Employee also shall make available to Employer any and all information of which
he has knowledge that is relevant to Employer's business, and will make all
suggestions and recommendations which he feels will be of benefit to Employer.
Employee shall, upon Employer's written request, furnish all information and
take any other steps necessary to enable Employer to obtain a fidelity bond
conditioned on the rendering of a true account by Employee of all moneys, goods
or other property which may come into the custody, charge or possession of
Employee during the Employment Period. The surety company issuing the bond and
the amount of the bond must be acceptable to Employer in its sole discretion.
Employer shall pay all premiums on any such bond.

         1.4 EMPLOYEE DISHONESTY. If at any time Employee becomes aware or
believes that any other employee of the Employer is or appears to be (i)
removing or using the property or funds of Employer or its Affiliates for the
benefit of anyone other than Employer or its Affiliates, or (ii) providing
Confidential Information (as defined in Section 3.2) to any person not
authorized by Employer to receive such Confidential Information (any such
employee described in (i) or (ii) being referred to as a "DISHONEST EMPLOYEE"),
Employee shall immediately communicate his knowledge or belief as to such
matters to Employer's Board of Directors.

         1.5 ADDITIONAL DUTIES OF EMPLOYEE. The obligations of Employee
expressed in this Agreement shall be in addition to any obligations imposed upon
Employee as an employee or officer of Employer or its Affiliates by Employer's
Policies and Procedures, as amended, the law of the State of Texas applicable to
employees, the General Corporation Law of the State of Delaware applicable to
corporate officers, or federal law which limit the activities of an employee or
corporate officer to those which will not threaten, impair or usurp the
goodwill, trade secrets, intellectual property, business opportunities, and
business relations of his employer. Employee shall comply with the Securities
Act of 1933 and the Securities Exchange Act of 1934 to the extent such laws
apply.

         1.6 PLACE OF PERFORMANCE. Employee shall perform his duties hereunder
at the offices of Employer where the Employee is presently located, or at such
other place where Employer's offices subsequently may be located, or at any
other place as may be agreed in writing between Employer and Employee in order
to enable Employee to discharge his duties hereunder.

         1.7 EMPLOYEE REPRESENTATIONS. Employee represents and warrants that the
execution and performance of this Agreement will not breach any contract or
other obligation of Employee including, but not limited to, non-disclosure
obligations, confidentiality agreements, non-compete agreements or other
obligations of Employee and Employee knows of no circumstances which would
prevent his performance hereunder.

                                    ARTICLE 2
                                  COMPENSATION

         For and in consideration of the performance by Employee of the
services, terms, conditions, covenants and agreements contained in this
Agreement, Employer shall pay to Employee at the times, in the amounts and in
the manner herein provided, the following:


Beard/Employment Agreement
Page 2

<PAGE>   3

         2.1 BASE COMPENSATION. As the principal consideration for the services
to be performed by Employee hereunder during the Employment Period, Employee
shall be entitled to receive as base compensation from Employer a salary of not
less than Seven Thousand Five Hundred Dollars ($7,500) per month (the "BASE
SALARY"), which shall be prorated for any partial employment period and payable
in the manner and on the timetable in which Employer's payroll is customarily
handled, or at such more frequent intervals as Employer and Employee may
hereafter agree to from time to time. No overtime compensation shall be payable
under this Agreement. Employer's senior management shall review Employee's
performance at least annually and shall make any adjustments to Employee's
compensation which it deems, in its sole discretion, appropriate, provided that
at no time during the Employment Period shall Employee's compensation be
adjusted to an amount below the Base Salary. Employer shall be entitled to
withhold from all amounts of compensation payable under this Article 2 such
amounts on account of payroll taxes and similar matters as are required by any
applicable law, rule, or regulation of any appropriate governmental authority.
Such compensation shall continue to be paid during any period of physical or
mental incapacity unless and until Employee's employment is terminated as herein
provided.

         2.2 BONUSES, BENEFITS AND REIMBURSEMENTS. In addition to the Base
Salary described above, Employer shall provide Employee with the following
during the Employment Period:

                  (a) any bonus if, when and based upon or subject to such terms
         and conditions as Employer's Board of Directors or more senior
         management, in its sole and absolute discretion, may determine;

                  (b) participation in any present or future disability,
         medical, health, dental, insurance, pension, profit-sharing, thrift,
         retirement, investment, and stock appreciation plans, and any other
         benefit, bonus or compensation plans on the same terms generally
         available to all of Employer's employees generally or its operating
         officers in particular;

                  (c) payment or reimbursement, as the case may be, of
         reasonable business expenses (within limits that may be established by
         Employer's Board of Directors) incurred in connection with the
         performance of his duties hereunder, such expense payment or
         reimbursement being subject to, and made in accordance with Employer's
         policies and procedures on employee expense payment or reimbursement in
         effect from time to time; and

                  (d) a monthly automobile allowance in accordance with
         Employer's policies and procedures as amended from time to time.

         2.3 VACATION. During the Employment Period, Employee shall accrue paid
vacation time in such amounts and at such times as determined by Employer's
vacation policy as adopted by Employer's Board of Directors, in its sole
discretion. If such vacation time is not taken by Employee during the term of
this Agreement for good cause, Employer shall pay the amount of Base Salary
equal to the vacation time not taken as compensation payable in lieu thereof.


                                    ARTICLE 3
                    CONFIDENTIAL INFORMATION; PROPERTY RIGHTS

         3.1 NON-DISCLOSURE OBLIGATION OF EMPLOYEE. For purposes of this Article
3, all references to Employer shall mean and include its Affiliates (as defined
in Section 1.3). Employee hereby acknowledges, 


Beard/Employment Agreement
Page 3

<PAGE>   4

understands and agrees that whether developed by Employee or others employed by
or in any way associated with Employee or Employer, all Confidential
Information, as defined in Section 3.2, is the exclusive and confidential
property of Employer and shall be at all times regarded, treated and protected
as such in accordance with this Agreement. Employee acknowledges that all such
Confidential Information is in the nature of a trade secret. Failure to mark any
writing confidential shall not affect the confidential nature of such writing or
the information contained therein.

         3.2 DEFINITION OF CONFIDENTIAL INFORMATION. "CONFIDENTIAL INFORMATION"
shall mean information, whether or not originated by Employee, which is used in
Employer's business and (1) is proprietary to, about or created by Employer; (2)
gives Employer some competitive business advantage or the opportunity of
obtaining such advantage, or the disclosure of which could be detrimental to the
interests of Employer; (3) is designated as Confidential Information by
Employer, known by the Employee to be considered confidential by Employer, or
from all the relevant circumstances considered confidential by Employer, or from
all the relevant circumstances should reasonably be assumed by Employee to be
confidential and proprietary to Employer; or (4) is not generally known by
non-Employer personnel. Such Confidential Information includes, but is not
limited to, the following types of information and other information of a
similar nature (whether or not reduced to writing or designated as
confidential):

                  (a)      Work product resulting from or related to work or
                           projects performed or to be performed for Employer or
                           for clients of Employer, including but not limited to
                           data bases, draft and other non-public written
                           documents, the interim and final lines of inquiry,
                           hypotheses, research and conclusions related thereto
                           and the methods, processes, procedures, analyses,
                           techniques and audits used in connection therewith;

                  (b)      Computer software of any type or form in any stage of
                           actual or anticipated research and development,
                           including but not limited to programs and program
                           modules, routines and subroutines, processes,
                           algorithms, design concepts, design specifications
                           (design notes, annotations, documentation,
                           flowcharts, coding sheets, and the like), source
                           codes, object codes and load modules, programming,
                           program patches and system designs;

                  (c)      Information relating to Employer's proprietary rights
                           prior to any public disclosure thereof, including but
                           not limited to the nature of the proprietary rights,
                           production data, technical and engineering data, test
                           data and test results, the status and details of
                           research and development of products and services,
                           and information regarding acquiring, protecting,
                           enforcing and licensing proprietary rights
                           (including, without limitation, patents, copyrights
                           and trade secrets);

                  (d)      Internal Employer personnel and financial
                           information, vendor names and other vendor
                           information (including vendor characteristics,
                           services and agreements), purchasing and internal
                           cost information, internal service and operational
                           manuals, and the manner and methods of conducting
                           Employer's business;

                  (e)      Marketing and development plans, price and cost data,
                           price and fee amounts, pricing and billing policies,
                           quoting procedures, marketing techniques and methods
                           of obtaining business, forecasts and forecast
                           assumptions and volumes, and future plans and
                           potential strategies of Employer which have been or
                           are being discussed;


Beard/Employment Agreement
Page 4

<PAGE>   5

                  (f)      Names of customers and their representatives,
                           contracts and their contents and parties, customer
                           services, and the type, quantity, specifications and
                           contents of products and services purchased, leased,
                           licensed or received by customers of Employer;

                  (g)      Information provided to Employer by any actual or
                           potential customer, government agency, or other third
                           party (including businesses, consultants and other
                           entities and individuals); and

                  (h)      Contracts with, or developed by Employer for use
                           with, agents of Employer, including, without
                           limitation, the terms and conditions thereof.

         3.3 EXCLUSIONS FROM CONFIDENTIAL INFORMATION. "CONFIDENTIAL
INFORMATION" shall not include information publicly known other than as a result
of a disclosure by Employee in breach of Section 3.1, and the general skills and
experience gained during Employee's work with Employer which Employee could
reasonably have been expected to acquire in similar work with another company.
The phrase "PUBLICLY KNOWN" shall mean readily accessible to the public in a
written publication, shall not include information which is only available by a
substantial searching of the published literature or information the substance
of which must be pieced together from a number of different publications and
sources. The burden of proving that information or skills and experience are not
Confidential Information shall be on the party asserting such exclusion.

         3.4 COVENANTS OF EMPLOYEE. As a consequence of Employee's acquisition
or anticipated acquisition of Confidential Information, Employee will occupy a
position of trust and confidence with respect to Employer's affairs and
business. In view of the foregoing and of the consideration to be provided to
Employee, Employee agrees that it is reasonable and necessary that Employee make
the following covenants:

         (a)      At any time during or after the termination of the Employment
                  Period, Employee will not disclose Confidential Information to
                  any person or entity, either inside or outside of Employer,
                  other than as necessary in carrying out duties on behalf of
                  Employer, without obtaining Employer's prior written consent
                  (unless such disclosure is compelled pursuant to court order
                  or subpoena, and at which time Employee gives notice of such
                  proceedings to Employer), and Employee will take all
                  reasonable precautions to prevent inadvertent disclosure of
                  such Confidential Information. This prohibition against
                  Employee's disclosure of Confidential Information includes,
                  but is not limited to, disclosing the fact that any similarity
                  exists between the Confidential Information and information
                  independently developed by another person or entity, and
                  Employee understands that such similarity does not excuse
                  Employee from abiding by his covenants or other obligations
                  under this Agreement.

         (b)      At any time during or after the termination of the Employment
                  Period, Employee will not use, copy or transfer Confidential
                  Information other than as necessary in carrying out his duties
                  on behalf of Employer, without first obtaining Employer's
                  prior written consent, and will take all reasonable
                  precautions to prevent inadvertent use, copying or transfer of
                  such 


Beard/Employment Agreement
Page 5
<PAGE>   6

                  Confidential Information. This prohibition against Employee's
                  use, copying, or transfer of Confidential Information
                  includes, but is not limited to, selling, licensing or
                  otherwise exploiting, directly or indirectly, any products or
                  services (including data bases, written documents and software
                  in any form) which embody or are derived from Confidential
                  Information, or exercising judgment in performing analyses
                  based upon knowledge of Confidential Information.

         3.5 RETURN OF CONFIDENTIAL MATERIAL. Employee shall turn over to
Employer all originals and copies of materials containing Confidential
Information in the Employee's possession, custody, or control upon request or
upon termination of the Employee's employment with Employer. Employee agrees to
attend a termination interview with the Executive Compensation Committee of
Employer's Board of Directors to confirm turnover of such materials and to
discuss any questions the undersigned may have about his continuing obligations
under this Agreement.

         3.6 INVENTIONS. Any and all inventions, products, discoveries,
improvements, copyrightable works, trademarks, service marks, ideas, processes,
formulae, methods, designs, techniques or trade secrets (collectively
hereinafter referred to as "INVENTIONS") made, developed, conceived or resulting
from work performed by Employee (alone or in conjunction with others, during
regular hours of work or otherwise) while he is employed by Employer and which
may be directly or indirectly useful in, or related to, the business of Employer
(including, without limitation, research and development activities of
Employer), or which are made using any equipment, facilities, Confidential
Information, materials, labor, money, time or other resources of Employer, shall
be promptly disclosed by Employee to Employer's Board of Directors, shall be
deemed Confidential Information for purposes of this Agreement, and shall be
Employer's exclusive property. Employee shall, upon Employer's request, execute
any documents and perform all such acts and things which are necessary or
advisable in the opinion of Employer to cause issuance of patents to, or
otherwise obtain recorded protection of right to intellectual property for,
Employer with respect to Inventions that are to be Employer's exclusive property
under this Section 3.6, or to transfer to and vest in Employer full and
exclusive right, title and interest in and to such Inventions; provided,
however, that the expense of securing any such protection of right to Inventions
shall be borne by Employer. In addition, Employee shall, at Employer's expense,
assist Employer in any proper manner in enforcing any Inventions which are to be
or become Employer's exclusive property hereunder against infringement by
others. Employee shall keep confidential and will hold for Employer's sole use
and benefit any Invention that is to be Employer's exclusive property under this
Section 3.6 for which full recorded protection of right has not been or cannot
be obtained.

                                    ARTICLE 4
                    COVENANT NOT TO COMPETE; NON-INTERFERENCE

         4.1 PROHIBITED EMPLOYEE ACTIVITIES. Employee agrees that except in the
ordinary course of his employment hereunder during the Employment Period,
Employee shall not during the Employment Period and for a period of six (6)
months thereafter (all references to Employer shall mean and include its
Affiliates as defined in Section 1.3):

                  (a)      directly or indirectly, engage or invest in, own,
                           manage, operate, control or participate in the
                           ownership, management, operation or control of, be
                           employed by, associated or in any manner connected
                           with, or render services or advice to, any Competing
                           Business (as defined below) provided, however, that
                           the Employee may 


Beard/Employment Agreement
Page 6
<PAGE>   7

                           invest in the securities of any enterprise (but
                           without otherwise participating in the activities of
                           such enterprise) if such securities are listed on any
                           national or regional securities exchange or have been
                           registered under Section 12(g) of the Securities
                           Exchange Act of 1934;

                  (b)      directly or indirectly, either as principal, agent,
                           independent contractor, consultant, director,
                           officer, employee, employer, advisor (whether paid or
                           unpaid), stockholder, partner or in any other
                           individual or representative capacity whatsoever,
                           either for his own benefit or for the benefit of any
                           other person or entity, solicit, divert or take away,
                           any customers or clients of Employer; or

                  (c)      directly or indirectly, either as principal, agent,
                           independent contractor, consultant, director,
                           officer, employee, employer, advisor (whether paid or
                           unpaid), stockholder, partner or in any other
                           individual or representative capacity whatsoever,
                           either for his own benefit or for the benefit of any
                           other person or entity, either (i) hire, attempt to
                           hire, contact or solicit with respect to hiring any
                           employee of Employer, (ii) induce or otherwise
                           counsel, advise or encourage any employee of Employer
                           to leave the employment of Employer, or (iii) induce
                           any distributor, representative or agent of Employer
                           to terminate or modify its relationship with
                           Employer.

"COMPETING BUSINESS" shall mean any individual, business, firm, company,
partnership joint venture, organization, or other entity whose products or
services compete, in whole or in part, at any time during the Employment Period
with the products or services of Employer or its Affiliates in any domestic or
international market area.

         4.2 ESSENTIAL NATURE OF ARTICLE 4. It is acknowledged, understood and
agreed by and between the parties hereto that the covenants made by Employee in
Section 4.1 are an essential part of the Employer's consideration for entering
into this Agreement and that, but for the agreement of the Employee to comply
with such covenants, Employer would not have entered into this Agreement.

         4.3 NECESSITY AND REASONABLENESS OF ARTICLE 4. Employee hereby
specifically acknowledges and agrees that:

                  (a)      Employer has expended and will continue to expend
                           substantial time, money and effort in developing (i)
                           its business in which the designs, plans, manuals and
                           specifications are valuable trade secrets, and (ii) a
                           valuable list of customers and agents, and
                           information about their technical problems and needs,
                           purchasing habits, idiosyncracies and internal
                           purchasing procedures;

                  (b)      Employee will, in the course of his Employment, be
                           personally entrusted with and exposed to the trade
                           secrets of Employer;

                  (c)      Employer, during the term of this Agreement and after
                           its termination, will be engaged in its highly
                           competitive business in which many firms, including
                           Employer, compete;


Beard/Employment Agreement
Page 7
<PAGE>   8

                  (d)      A substantial portion of Employer's business is
                           conducted outside the United States;

                  (e)      Employer, pursuant to acquiring certain patents,
                           technology and associated trade secrets and know-how,
                           will further develop its worldwide business;

                  (f)      Employee could, after having access to Employer's
                           financial records, contracts, patents, technology and
                           associated trade secrets and know-how, perform his
                           obligations under this Agreement, and after receiving
                           further training by and experience with Employer, and
                           after reviewing Employer's trade secrets, become a
                           competitor;

                  (g)      Employer will suffer great loss and irreparable harm
                           if Employee terminates his employment and enters
                           directly or indirectly, into competition with
                           Employer;

                  (h)      the temporal and other restrictions contained in this
                           Article 4 are in all respects reasonable and
                           necessary to protect the business goodwill, trade
                           secrets, prospects and other business interests of
                           Employer;

                  (i)      the enforcement of this Agreement in general, and of
                           this Article 4 in particular, will not work an undue
                           or unfair hardship on Employee or otherwise be
                           oppressive to him, it being specifically acknowledged
                           and agreed by Employee that he has activities and
                           other business interests and opportunities which will
                           provide him adequate means of support if the
                           provisions of this Article 4 are enforced after
                           termination of his employment with Employer; and

                  (j)      the enforcement of this Agreement in general, and of
                           this Article 4 in particular, will neither deprive
                           the public of needed goods or services nor otherwise
                           be injurious to the public.

         4.4 JUDICIAL MODIFICATION. Employee agrees that if a court of competent
jurisdiction determines that the length of time or any other restriction, or
portion thereof, set forth in this Article 4 is overly restrictive and
unenforceable, the court may reduce or modify such restrictions to those which
it deems reasonable and enforceable under the circumstances, and as so reduced
or modified, the parties hereto agree that the restrictions of this Article 4
shall remain in full force and effect. Employee further agrees that if a court
of competent jurisdiction determines that any provision of this Article 4 is
invalid or against public policy, the remaining provisions of this Article 4 and
the remainder of this Agreement shall not be affected thereby, and shall remain
in full force and effect.

         4.5 SURVIVAL OF COVENANTS. The covenants and agreements of Employee set
forth in this Article 4 are of a continuing nature and shall survive the
expiration, termination or cancellation of the remainder of this Agreement
regardless of the reason for such therefor and shall survive the termination, if
any, of the Employee's employment.


Beard/Employment Agreement
Page 8
<PAGE>   9

                                    ARTICLE 5
                                   TERMINATION

         5.1      EMPLOYER TERMINATION

                  (a)      Notwithstanding any other provision of this
                           Agreement, at any time during the Employment Period,
                           including, without limitation, the Initial Term, this
                           Agreement and Employee's employment hereunder shall
                           terminate upon his death, and Employer shall have the
                           right, in its sole and absolute discretion, to
                           terminate this Agreement and Employee's employment
                           hereunder at any time by giving him written notice of
                           such termination (i) for "Cause" (as defined below),
                           (ii) if Employee shall fail to qualify for the
                           fidelity bond described in Section 1.3 within sixty
                           (60) days from the date of the Employer's written
                           request thereunder, or (iii) if Employee shall suffer
                           a Disability (as defined below).

                  (b)      "CAUSE" shall mean any of the following events:

                           (1)      Employee's conviction or the entry of a plea
                                    of guilty or nolo contendere or equivalent
                                    plea in a court of competent jurisdiction of
                                    any crime or offense involving moral
                                    turpitude or any felony;

                           (2)      Employee's commission of an act of fraud
                                    upon Employer or any of its Affiliates;

                           (3)      Employee's willful misappropriation of funds
                                    or property of Employer or any of its
                                    Affiliates;

                           (4)      Employee's engagement, without prior
                                    approval by resolution of Employer's Board
                                    of Directors or more senior management, in
                                    any conflict of interest with Employer or
                                    any of its Affiliates, or which would
                                    otherwise result in a loss to Employer's
                                    business or financial condition;

                           (5)      Employee's failure or refusal to perform his
                                    duties under Article 1 of this Agreement;

                           (6)      Habitual abuse use of alcohol; or

                           (7)      Employee's testing positive for the use of
                                    illegal drugs.

                  (c)      "DISABILITY" shall mean any mental or physical
                           illness, impairment or condition which, in the sole
                           opinion of Employer: (i) inhibits or impedes
                           Employee's ability to perform the services required
                           under this Agreement, and (ii) continues for a period
                           of not less than sixty (60) days.

         5.2 TERMINATION BY EITHER PARTY. Subject to the provisions of Section
5.3, Employer may at any time, for any reason, with or without Cause, terminate
this Agreement and Employee's employment hereunder. After expiration of the
Initial Term, Employee may terminate this Agreement and his employment hereunder
without regard to any reason for such termination. Each of Employer's and
Employee's option to terminate this Agreement pursuant to this Section 5.2 shall
be exercised by delivery of a written notice to Employee or Employer, as
applicable, specifying the effective date of such termination 


Beard/Employment Agreement
Page 9
<PAGE>   10

which in no event shall be sooner than expiration of thirty (30) calendar days
following delivery of such written notice, provided that the notice requirement
can be waived if Employer pays Employee his Base Salary for the thirty (30) day
notice period.

         5.3 EFFECT OF TERMINATION.

                  (a)      TERMINATION BY EMPLOYER WITHOUT CAUSE. If Employer
                           terminates this Agreement for any reason other than
                           pursuant to the terms of Section 5.1 and such
                           termination is not within one year of a Change in
                           Control (as defined in Section 5.3(b) below), then
                           Employer shall pay to Employee an amount equal to his
                           total Base Salary for the remainder of the Employment
                           Period, (2) continue Employee's participation in
                           Employer's medical, health, and dental plans, as
                           provided in Section 2.2(b) of this Agreement, for the
                           remainder of the Employment Period, subject to COBRA
                           required benefits thereafter, and (3) cause Employee
                           to be fully vested in any stock options and stock
                           grants held by Employee. Additionally, Employer may,
                           in its sole and absolute discretion, make such
                           payment in the manner and on the timetable specified
                           in Section 2.1, or in one lump sum on the effective
                           date of termination.

                  (b)      TERMINATION BY EMPLOYER WITHOUT CAUSE AFTER CHANGE IN
                           CONTROL. If Employer terminates this Agreement for
                           any reason other than pursuant to the terms of
                           Section 5.1 and such termination occurs within one
                           year of the occurrence of a Change in Control, then
                           Employer shall: (1) pay to Employee an amount equal
                           to 2.99 times (a) his annualized Base Salary in
                           effect upon the occurrence of the Change in Control
                           and 2.99 times (b) the greater of: (x) the bonus paid
                           to Employee for the year preceding the year in which
                           the Change in Control occurs or (y) a target bonus of
                           $20,000, (2) continue Employee's participation in
                           Employer's medical, health, and dental plans, as
                           provided in Section 2.2(b) of this Agreement, for the
                           remainder of the Employment Period, subject to COBRA
                           required benefits thereafter, and (3) cause Employee
                           to be fully vested in any stock options or stock
                           grants held by Employee. Employer shall make such
                           payments in one lump sum on the effective date of
                           termination. A "CHANGE IN CONTROL" shall be deemed to
                           have occurred at any time after the date of this
                           Agreement that (i) any person (other than those
                           persons who own more than 10% of the combined voting
                           power of the Employer's outstanding voting securities
                           on the date hereof) becomes the beneficial owner,
                           directly or indirectly, of 30% or more of the
                           combined voting power of the Employer's then
                           outstanding voting securities, or (ii) individuals
                           who at the beginning of any period of two consecutive
                           fiscal years constitute the Employer's Board of
                           Directors cease for any reason to constitute a
                           majority of such Board of Directors at any time
                           during such two-year period.

                  (c)      TERMINATION BY EMPLOYEE WITH GOOD CAUSE AFTER CHANGE
                           IN CONTROL. If Employer terminates this Agreement for
                           Good Cause (defined below) and such termination
                           occurs within one year of the occurrence of a Change
                           in Control, then Company shall: (1) pay to Employee
                           an amount equal to 2.99 times (a) his annualized Base
                           Salary in effect upon the occurrence of the Change in
                           Control and 2.99 times (b) the greater of: (x) the
                           bonus paid to Employee for the year preceding 


Beard/Employment Agreement
Page 10
<PAGE>   11

                           the year in which the Change in Control occurs or (y)
                           a target bonus of $20,000, (2) continue Employee's
                           participation in Employer's medical, health, and
                           dental plans, as provided in Section 2.2(b) of this
                           Agreement, for the remainder of the Employment
                           Period, subject to COBRA required benefits
                           thereafter, and (3) cause Employee to be fully vested
                           in any stock options or stock grants held by
                           Employee. "GOOD CAUSE" shall mean the occurrence of
                           any of the following events:

                                    (i) the assignment by Employer to the
                           Employee of duties that are materially inconsistent
                           with the Employee's position with Employer at the
                           time of such assignment, or the removal by Employer
                           from the Employee of a material portion of those
                           duties usually appertaining to the Employee's
                           position with Employer at the time of such removal;

                                    (ii) a material change by Employer, without
                           the Employee's prior written consent, in the
                           Employee's responsibilities to Employer, as such
                           responsibilities are ordinarily and customarily
                           required from time to time of a senior officer of a
                           corporation engaged in Employer's business;

                                    (iii) any removal of the Employee from, or
                           failure to reelect or to reappoint the Employee to,
                           the position stated in Section 1.2;

                                    (iv) Company's direction that the Employee
                           discontinue service (or not seek reelection or
                           reappointment) as a director, officer or member of
                           any corporation or association of which the Employee
                           is a director, officer, or member at the date of this
                           Agreement:

                                    (v) a reduction by Employer in the amount of
                           the Employee's salary in effect at the time of the
                           occurrence of a Change in Control or the failure of
                           Employer to pay such salary to the Employee at the
                           time and in the manner specified in this Agreement;

                                    (vi) other than with respect to the annual
                           performance bonus specified in Section 2.2 or, as
                           made with the Employee's prior written consent, the
                           discontinuance (without comparable replacement) or
                           material reduction by Employer of the Employee's
                           participation in any bonus or other employee benefit
                           arrangement (including, without limitation, any
                           profit-sharing, thrift, life insurance, medical,
                           dental, hospitalization, stock option or retirement
                           plan or arrangement) in which the Employee is a
                           participant under the terms of this Agreement, as in
                           effect in the date hereof or as may be improved from
                           time to time hereafter;

                                    (vii) the moving by Employer of the
                           Employee's principal office space, related
                           facilities, or support personnel, from Employer's
                           principal operating offices, or Employer's requiring
                           the Employee to perform a majority of his duties
                           outside Employer's principal operating offices for a
                           period of more than 30 consecutive days;


Beard/Employment Agreement
Page 11
<PAGE>   12

                                    (viii) the relocation, without the
                           Employee's prior written consent, of Employer's
                           principal executive offices to a location outside the
                           county in which such offices are located at the time
                           of the signing of this Agreement;

                                    (ix) in the event Employer requires the
                           Employee to reside at a location more than 25 miles
                           from Employer's principal executive offices, except
                           for occasional travel in connection with Employer
                           business to an extent and in a manner which is
                           substantially consistent with the Employee's current
                           business travel obligations;

                                    (x) in the event the Employee consents to a
                           relocation of Employer's principal offices, the
                           failure of Employer to (A) pay or reimburse the
                           Employee on an after-tax basis for all reasonable
                           moving expenses incurred by the Employee in
                           connection with such relocation or (B) indemnify the
                           Employee on an after-tax basis against any loss
                           realized by the Employee on the sale of his principal
                           residence in connection with such relocation;

                                    (xi) the failure of Employer to continue to
                           provide the Employee with office space, related
                           facilities and support personnel (including, without
                           limitation, administrative and secretarial
                           assistance) that are commensurate with the Employee's
                           responsibilities to and position with Employer, and
                           no less than those prior to this Agreement;

                                    (xii) the failure by Employer to promptly
                           reimburse the Employee for the reasonable business
                           expenses incurred by the Employee in the performance
                           of his duties for Employer, in accordance with this
                           Agreement.

                  (d)      Subject to the provisions of Sections 4.5, 5.1 or
                           5.3, upon termination of this Agreement and
                           Employee's employment hereunder by either Employer or
                           Employee, Employee shall have no right to receive any
                           compensation or benefits for any period subsequent to
                           the effective date of such termination, or for any
                           period prior to such date which have not been earned
                           or vested as of such date except as may be provided
                           for in any employee benefit plan relating to such
                           benefits, including the Employer's 1996 Key Employee
                           Stock Plan and the Employer's 1997 Long-Term
                           Incentive Plan.

                  (e)      Employer's right of termination shall be in addition
                           to and shall not affect Employer's rights and
                           remedies under Articles 3 and 4, and Section 6.1 of
                           this Agreement, and such rights and remedies shall
                           survive termination of Employee's employment
                           hereunder.

                  (f)      For the purposes of this Agreement, Employee's years
                           of service shall include service with the Employer,
                           service with any predecessor entity in which all or
                           part of Employer's business was conduced, and service
                           with any Affiliate, as defined in Section 1.3.

         5.4 YEARS OF SERVICE. For purposes of this Article 5, any reference to
Employee's year(s) of service shall include (i) service with the Employer, (ii)
service with any Affiliate of Employer, and (iii) service with any predecessor
entity of Employer whether by merger, acquisition or operation of law.


Beard/Employment Agreement
Page 12
<PAGE>   13

         5.5 RESIGNATION FROM OFFICES. Any provision of this Agreement to the
contrary notwithstanding, Employee shall immediately resign from any offices
held with Employer or its Affiliates upon written request by the Employer. Any
resignation made pursuant to a written request by Employer under this Section
5.5 shall not affect Employee's rights under this Agreement for any compensation
or payment.

         5.6 RELEASE OF FOREIGN RIGHTS. If, during the course of Employee's
employment with Employer or its Affiliates, Employee may acquire any
compensation, retirement, severance or other similar rights or benefits under
the laws of a country other than the United States of America,
("Extraterritorial Rights") then the compensation and benefits of this Agreement
shall supersede and replace such Extraterritorial Rights to the extent permitted
by law. Furthermore, to the extent the Extraterritorial Rights may not be
superseded under the applicable law, any payments or benefits under applicable
law, any payments or benefits under this Agreement shall be reduced on a dollar
for dollar basis for any amounts paid Employee for any Extraterritorial Rights.
By entering into this Agreement Employee expressly acknowledges:

                  (a) Employee's domicile is the United States of America;

                  (b) Employee acknowledges that regardless of any services
         rendered in a jurisdiction outside the State of Texas the employment
         relationship with Employer and its Affiliates is to be governed solely
         by reference to the internal laws of the State of Texas, but not its
         law of conflicts;

                  (c) Employee expressly waives and releases any rights under
         the laws of any country other than the United States of America for any
         Extraterritorial Rights as heretofore defined; and

                  (d) Employee expressly acknowledges and agrees that the
         payments and benefits under this Agreement have been bargained for in
         lieu of any Extraterritorial Rights.

                                    ARTICLE 6
                                  MISCELLANEOUS

         6.1 INJUNCTIVE RELIEF. Because of the unique nature of the Confidential
Information, Employee acknowledges, understands and agrees that Employer will
suffer immediate and irreparable harm if Employee fails to comply with any of
his obligations under Articles 3 or 4 of this Agreement, and that monetary
damages will be inadequate to compensate Employer for such breach. Accordingly,
Employee agrees that Employer shall, in addition to any other remedies available
to it at law or in equity, be entitled to temporary, preliminary, and permanent
injunctive relief to enforce the terms of Articles 3 and 4 without the necessity
of proving inadequacy of legal remedies or irreparable harm.

         6.2 ACTION BY AND CONSENT OF EMPLOYER. All rights and remedies of
Employer hereunder shall be exercised by management authorized by Employer's
Board of Directors.

         6.3 NOTICES. Any notice, instruction, authorization, request or demand
required hereunder shall be in writing, and shall be delivered either by
personal delivery, by telegram, telex, telecopy or similar facsimile means, by
certified or registered mail, return receipt requested, or by courier or
delivery service, 


Beard/Employment Agreement
Page 13
<PAGE>   14

addressed to the parties hereto at the principal offices of Employer at the
address indicated beneath its signature on the execution page of this Agreement,
and also to Employee at his home address indicated beneath his signature on the
execution page of this Agreement, or at such other address and number as a party
shall have previously designated by written notice given to the other party in
the manner hereinabove set forth. Notices shall be deemed given when received,
if sent by facsimile means (confirmation of such receipt by confirmed facsimile
transmission being deemed receipt of communications sent by facsimile means);
and when delivered and receipted for (or upon the date of attempted delivery
where delivery is refused), if hand-delivered, sent by express courier or
delivery service, or sent by certified or registered mail, return receipt
requested.

         6.4 AMENDMENT AND WAIVER. This Agreement may be amended, modified or
superseded only by written instrument executed by all parties hereto. Any waiver
of the terms, provisions, covenants, representations, warranties, or conditions
hereof shall be made only by a written instrument executed and delivered by the
party waiving compliance. Any waiver granted by Employer shall be effective only
if executed and delivered by a duly authorized executive officer of Employer
other than Employee. The failure of any party at any time or times to require
performance of any provisions hereof, shall in no manner affect the right to
enforce the same. No waiver by any party of any condition or provision, or the
breach of any term, provision, representation, or warranty contained in this
Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of any such condition or breach or a waiver of any
other condition or the breach of any other term, provision, covenant,
representation, or warranty.

         6.5 SUCCESSORS AND ASSIGNS. All of the terms, provisions, covenants,
representations, warranties, and conditions of this Agreement shall bind, be
enforceable by, and inure to the benefit of, the parties hereto, but this
Agreement and the rights and obligations hereunder shall not be assignable or
delegable by any party; provided, however, that this Agreement and all of
Employer's rights and obligations hereunder may be assigned or delegated by it,
in whole, but not in part, to, and shall be binding upon and inure to the
benefit of, any of its successors or assigns, but such assignment or delegation
by Employer shall not relieve it of any of its obligations hereunder.

         6.6 DEFINITIONS, GENDER AND CERTAIN REFERENCES. As used in this
Agreement, each parenthetically or quoted capitalized term in the introduction,
recitals and other Sections of this Agreement shall have the meaning so ascribed
to it. Whenever the context requires, the gender of all words used herein shall
include the masculine, feminine and neuter, and the number of all words shall
include the singular and plural. References to Articles or Sections shall be to
Articles or Sections of this Agreement unless otherwise specified. The headings
and captions used in this Agreement are solely for convenient reference and
shall not affect the meaning or interpretation of any article, section or
paragraph herein, or this Agreement. The terms "hereof," "herein" or "hereunder"
shall refer to this Agreement as a whole and not to any particular Section.

         6.7 GOVERNING LAW AND SEVERABILITY. This Agreement has been executed
and is performable in Montgomery County, Texas. The validity, interpretation,
construction, and performance of this Agreement shall be governed by the
internal law, and not the law of conflicts, of the State of Texas, except to the
extent that the General Corporation Law of the State of Delaware or federal law
is explicitly made applicable by Section 1.5. Each party hereto hereby
acknowledges and agrees that it has had the opportunity to consult with its own
legal counsel in connection with the negotiation of this Agreement, and that it
has bargaining power equal to that of the other party hereto in connection with
the negotiation, execution and 


Beard/Employment Agreement
Page 14
<PAGE>   15

delivery of this Agreement. Accordingly, the parties hereto agree that the rule
of contract construction that an agreement shall be construed against the
drafter shall have no application in the construction or interpretation of this
Agreement. The invalidity of any provision of this Agreement shall not affect
any other provision of this Agreement, which shall remain in full force and
effect, nor shall the invalidity of a portion of any provision of this Agreement
affect the balance of such provision.

         6.8 EXPENSES. Each party hereto shall pay all of its respective fees
and expenses of attorneys, accountants and other persons employed by it in
connection with the resolution of any dispute between the parties hereto arising
out of or relating to this Agreement.

         6.9 ENTIRE AGREEMENT. No agreements or representations, oral or
otherwise, express or implied, have been made by any party hereto with respect
to the subject matter hereof that are not set forth expressly in this Agreement.
This Agreement supersedes and cancels any prior agreement, arrangement or
understanding entered into between Employer and Employee relating to the subject
matter hereof.

         6.10 COUNTERPARTS. The parties may execute this Agreement in any number
of counterparts, each of which is an original, but all of which together
constitute one and the same instrument.

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




                                  EMPLOYER:

                                  DAILEY INTERNATIONAL INC.

                                  By:        /s/ JAMES F. FARR
                                             -----------------------------------
                                  Name:          James F. Farr
                                             -----------------------------------
                                  Title:         President
                                             -----------------------------------

                                  Address:        One Lawrence Center
                                                  P. O. Box 1863
                                                  2507 North Frazier
                                                  Conroe, Texas  77305



                                  EMPLOYEE:
                                             /s/ JOHN BEARD
                                  ---------------------------------------------
                                  John Beard

                                    Address:

                                  ---------------------------------------------

                                  ---------------------------------------------

                                  ---------------------------------------------



Beard/Employment Agreement
Page 15

<PAGE>   16


                             EMPLOYER ACKNOWLEDGMENT


STATE OF TEXAS                      ss.
                                    ss.
COUNTY OF MONTGOMERY                ss.

         Before me, the undersigned authority, on this date personally appeared
__________________, ____________, of Dailey International Inc., a Delaware
corporation, known to me to be the person whose name is subscribed to the
foregoing instrument, and acknowledged to me that he executed the same for the
purposes and consideration therein expressed, in the capacity stated, and as the
act and deed of said corporation.

Given under my hand and seal this _____ day of _______________, 1998.

                                        ----------------------------
                                        Notary Public in and for
                                        The State of Texas

                                        My Commission Expires: 
                                                               ------------

                             EMPLOYEE ACKNOWLEDGMENT

STATE OF TEXAS                      ss.
                                    ss.
COUNTY OF MONTGOMERY                ss.

         Before me, the undersigned authority, on this date personally appeared
_________________, known to me to be the person whose name is subscribed to the
foregoing instrument, and acknowledged to me that he executed the same for the
purposes and consideration therein expressed.

Given under my hand and seal this ___ day of ____________, 1998.

                                        -------------------------------
                                        Notary Public in and for
                                        The State of Texas

                                        My Commission Expires:
                                                               ------------




Beard/Employment Agreement
Page 16
<PAGE>   17


                                FIRST AMENDMENT
                                     TO THE
                              EMPLOYMENT AGREEMENT
                                    BETWEEN
                           DAILEY INTERNATIONAL INC.
                                      AND
                                   JOHN BEARD



         THIS AGREEMENT entered into this 18th day of February, 1999, by and
between Dailey International Inc., a Delaware Corporation ("Company"), and John
Beard ("Employee"), but to be effective as of February 1, 1999.

         WHEREAS, Company and Employee are parties to that certain Employment
Agreement dated July 1, 1998.

         WHEREAS, the parties desire to amend the terms of the Agreement as set
forth herein;

         NOW THEREFORE, Company and Employee, in consideration of the premises
and mutual agreements herein contained, do hereby agree as follows;


         1.      The first sentence of Section 1.2 is amended as follows:

                 "PRINCIPAL DUTIES.  Employee's employment hereunder shall be
in the capacity of Interim Chief Financial Officer.


         2.      The first sentence of Section 2.1 is amended as follows:

                 "BASE COMPENSATION.  As the principal consideration for the
services to be performed by Employee hereunder during the Employment Period,
Employee shall be entitled to receive as base compensation from Employer a
salary of not less than Eleven Thousand Six Hundred Sixty-Six and 67/100
Dollars ($11,666.67) per month (the "Base Salary"), which shall be prorated for
any partial employment period and payable in the manner and on the timetable in
which Employer's payroll is customarily handled, or at such more frequent
intervals as Employers and Employee may hereafter agree to from time to time.
<PAGE>   18
         3.      Section 5.3(a) shall be deleted and replaced in its entirety
by the following subsection (a):

                 "(A)     TERMINATION BY EMPLOYER WITHOUT CAUSE.  If Employer
terminates this Agreement for any reason other than pursuant to the terms of
Section 5.1 and such termination is not within one year of a change of control
(as defined in Section 5.3(b) below), then Employer shall:

         (1)     pay to Employee an amount equal to his total Base Salary for
                 the greater of (i) the remainder of the Employment Period; or
                 (ii) twelve (12) months;

         (2)     continue Employee's participation in Employer's medical,
                 health and dental plans, as provided in Section 2.2(b) of this
                 Agreement, for the greater of (i) the remainder of the
                 Employment Period; or (ii) twelve (12) months, subject to
                 COBRA required benefits thereafter; and

         (3)     cause Employee to be fully vested in any stock options and
                 stock grants held by Employer.  Additionally, Employer may, in
                 its sole and absolute discretion, make such payment in the
                 manner and/or the timetable specified in Section 2.1 or in one
                 lump sum on the effective date of termination."

         4.      Employee and Company agree, ratify and confirm that the
Agreement, as amended hereby, remains in full force and effect, and constitutes
a valid, binding and enforceable agreement in all respects.

         5.      This First Amendment shall be effective the date first above
written.  To the extent that the terms of this First Amendment conflict with
terms of the Agreement, the terms of the First Amendment shall control.

         IN WITNESS HEREOF, the parties have executed this Agreement through
their duly authorized officers as of the date set forth on the first page
hereof.

                                        COMPANY:

                                        DAILEY INTERNATIONAL INC.

                                        By:       /s/ AL KITE    
                                           ------------------------------------
                                        Name:         Al Kite
                                        Title:        President and CEO
                                        Address:      One Lawrence Center
                                                      2507 North Frazier
                                                      P.O. Box 1863
                                                      Conroe, Texas  77305
<PAGE>   19
                                        EMPLOYEE:

                                              /s/ JOHN BEARD
                                        ---------------------------------------
                                        Name:     John Beard
                                                 -----------------------------
                                        Address:
                                                 ------------------------------ 



                             COMPANY ACKNOWLEDGMENT
                             ---------------------- 

STATE OF TEXAS            )
                          )
COUNTY OF MONTGOMERY      )

         Before me, the undersigned authority, on this date personally appeared
Al Kite, President and CEO, of Dailey International Inc., a Delaware
Corporation, known to me to be the person whose name is subscribed to the
foregoing instrument, and acknowledged to me that he executed the same for the
purposes and consideration therein expressed, in the capacity stated, and as
the act and deed of said corporation.

         Given under my hand and seal this ____ day of February, 1999.


                                        ---------------------------------------
                                        Notary Public in and for
                                        The State of Texas

                            EMPLOYEE ACKNOWLEDGMENT
                            ------------------------

STATE OF TEXAS            )
                          )
COUNTY OF MONTGOMERY      )

         BEFORE ME, THE UNDERSIGNED AUTHORITY, ON THIS DATE PERSONALLY APPEARED
JOHN BEARD, KNOWN TO ME TO BE THE PERSON WHOSE NAME IS SUBSCRIBED TO THE
FOREGOING INSTRUMENT, AND ACKNOWLEDGED TO ME THAT HE EXECUTED THE SAME FOR THE
PURPOSES AND CONSIDERATION THEREIN EXPRESSED.

         GIVEN UNDER MY HAND AND SEAL THIS ______ DAY OF FEBRUARY, 1999.


                                        ____________________________________
                                        NOTARY PUBLIC IN AND FOR
                                        THE STATE OF TEXAS