Document:

employmentagreement-kell

    1  EXECUTIVE EMPLOYMENT AGREEMENT  This Executive EMPLOYMENT AGREEMENT (“Agreement”) is entered into effective as of  December 18, 2020 (the “Effective Date”), by and between Independence Contract Drilling, Inc.,  a Delaware corporation (“Company”), and Scott A. Keller (“Executive”).   W I T N E S S E T H:  WHEREAS, the Company desires to employ, and Executive desires to be employed by  the Company and its subsidiaries and affiliates, as applicable, on the terms set forth in this  Agreement;  NOW, THEREFORE, in consideration of the mutual terms and agreements set forth  herein, the parties hereto agree as follows:    1. Employment.    The Company hereby agrees that the Company or an affiliated  company will continue the Executive in its employ, and the Executive hereby agrees to remain in  the employ of the Company or an affiliate subject to the terms and conditions of this Agreement,  during the Employment Term (as defined below).  2. Term.  The “Employment Term” shall mean the period commencing on the date  hereof (the "Effective Date") and ending on the third anniversary of the Effective Date; provided,  however, if neither party shall have provided written notice of termination at least one year prior  to the scheduled expiration of the then current term of this Agreement (each such date by which  such notice must be provided, a “Renewal Date”), the Employment Term shall automatically be  extended for one additional year so as to expire two years from such Renewal Date. Upon a  Change of Control the Employment Term shall be automatically extended to the third  anniversary of the Change of Control.  3. Position and Duties.    (a) During the Employment Term, (A) the Executive's position (including  status, offices, titles and reporting requirements, authority, duties and responsibilities) shall be  Senior Vice President – Business Development reporting to the Chief Executive Officer of the  Company and (B) the Executive's services shall be performed at the Company's executive offices  in Houston, Texas or other locations less than 50 miles from such location.  (b) During the Employment Term, and excluding any periods of vacation and  sick leave to which the Executive is entitled, the Executive agrees to devote the substantial  portion of his attention and time during normal business hours to the business and affairs of the  Company and, to the extent necessary to discharge the responsibilities assigned to the Executive  hereunder, to use the Executive's reasonable best efforts to perform faithfully and efficiently such  responsibilities.   During the Employment Term it shall not be a violation of this Agreement for  the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver  lectures, fulfill speaking engagements or teach at educational institutions and (C) manage  personal investments and business endeavors, so long as such activities do not significantly  interfere with the performance of the Executive's responsibilities as an employee of the Company  in accordance with this Agreement. It is understood and agreed that to the extent that any such  

 

 2  activities have been conducted by the Executive prior to the date hereof, the continued conduct  of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to  the date hereof shall not thereafter be deemed to interfere with the performance of the  Executive's responsibilities to the Company.  4. Compensation and Related Matters.  During the Employment Term, Executive  shall be entitled to the following compensation and benefits:  (a) Salary.  Until consummation of the transactions contemplated by the  Contribution Agreement, the Company shall pay to a total annual base salary of $225,000 (which  salary may be increased (but not decreased) by the Company in its discretion) (“Base Salary”),  payable in accordance with the normal payroll practices of the Company to be established as  soon as reasonably practicable after the closing of the transactions contemplated by the  Contribution Agreement.  During the Employment Term, the Base Salary shall be reviewed by  the Board of Directors of the Company (the “Board”) at least annually; provided, however, that a  salary increase shall not necessarily be awarded as a result of such review. Any increase in Base  Salary may not serve to limit or reduce any other obligation to the Executive under this  Agreement. Base Salary shall not be reduced after any such increase. The term Base Salary as  utilized in this Agreement shall refer to Base Salary as so increased.  (b) Bonus.  Executive shall be eligible for an annual bonus and other annual  incentive compensation (collectively, the "Annual Bonus") for each fiscal year of the Company  during the Employment Term, in accordance with the Company’s bonus plan for senior  executives of the Company.   The Annual Bonus shall be based upon a target amount of 60% of  Base Salary, based upon performance criteria established by the Board in its sole discretion, and  notwithstanding the foregoing, shall be payable in the sole discretion of the Board.  Each such  Annual Bonus shall be paid no later than March 15 of the year following the year for which the  Annual Bonus is earned, unless the Executive shall elect to defer the receipt of such Annual  Bonus pursuant to a Company-sponsored deferred compensation plan in effect or the bonus plan  provides for a different payment date.    (c) Expenses.  Executive shall be entitled to receive prompt reimbursement  for all reasonable and necessary expenses incurred by Executive in performing services  hereunder, including all travel and living expenses while away from home on business or at the  request of and in the service of the Company, provided that such expenses are incurred and  accounted for in accordance with the policies and procedures established by the Company.   Notwithstanding any provision of this Agreement to the contrary, the amount of expenses for  which Executive is eligible to receive reimbursement during any given taxable year of Executive  shall not affect the amount of expenses for which Executive is eligible to receive reimbursement  during any other taxable year of Executive.  Reimbursement of expenses under this Section 4(c)  shall be made within thirty (30) days following submission of a completed expense  reimbursement form (but in no event later than the last day of the calendar year following the  calendar year in which the expense was incurred).  The right to reimbursement pursuant to this  Section 4(c) is not subject to liquidation or exchange for another benefit.  (d) Benefits.  Executive shall be eligible to participate in or receive benefits  under any group health or other executive benefit plan or arrangement made available by the  

 

 3  Company to its senior executive officers, subject to and on a basis consistent with the terms,  conditions and overall administration of such plans and arrangements.  (e) Vacations.  Executive shall be entitled to a minimum of four weeks paid  vacation and holidays in accordance with the policies, programs and practices of the Company as  in effect from time to time.   (f) Restricted Stock and Options and other Equity Compensation.   The  Executive also shall participate in any annual or special equity compensation or long-term  compensation plans and programs made available to the senior executive officers of the  Company.  5. Termination.  Executive’s employment hereunder may be terminated during the  Employment Term under the following circumstances:  (a) Death.  Executive’s employment hereunder shall terminate upon  Executive’s death.  (b) Disability.  Executive’s status as an executive and employee of the  Company may be terminated for “Disability”, and Executive will be deemed “Disabled”, if  Executive shall have been unable to substantially perform Executive’s duties as an executive of  the Company or any subsidiary thereof as a result of sickness or injury, with or without  reasonable accommodation, and shall have remained unable to perform any such duties for a  period of more than 120-days in any 12-month period.  If the Company determines that  Executive has become Disabled, the Company shall notify Executive of its determination.   Executive may then request an accommodation from the Company to assist in his/her return to  work.  The Company will determine whether Executive’s request can be accommodated without  undue hardship no later than 30 days after Executive requests an accommodation. In the event  Executive’s request cannot be accommodated, the Company may, by notice given in the manner  provided in this Agreement, terminate the status of Executive as an executive and employee of  the Company.  Any such termination shall become effective 30 days after such notice of  termination is given, unless within such 30 day period, Executive becomes capable of rendering  services of the character contemplated hereby (and a physician chosen by the Company so  certifies in writing) and Executive in fact resumes such services.    (c) Cause.  The Company may terminate Executive’s employment with or  without Cause.  For purposes of this Agreement, “Cause” shall mean Executive’s:  (i) willful and continued failure to comply with the reasonable written  directives of the Company for a period of thirty (30) days after written notice from the  Company;    (ii) willful and persistent inattention to duties for a period of thirty (30)  days after written notice from the Company, or the commission of acts within  employment with the Company amounting to gross negligence or willful misconduct;  

 

 4  (iii) misappropriation of funds or property of the Company or  committing any fraud against the Company or against any other person or entity in the  course of employment with the Company;  (iv) misappropriation of any corporate opportunity, or otherwise  obtaining personal profit from any transaction which is adverse to the interests of the  Company or to the benefits of which the Company is entitled;  (v) conviction of a felony involving moral turpitude;   (vi) willful failure to comply in any material respect with the terms of  this Agreement and such non-compliance continues uncured after thirty (30) days after  written notice from the Company; or  (vii) chronic substance abuse, including abuse of alcohol, drugs or other  substances or use of illegal narcotics or substances, for which Executive fails to  undertake treatment immediately after requested by the Company or to complete such  treatment and which abuse continues or resumes after such treatment period, or  possession of illegal narcotics or substances on Company premises or while performing  Executive’s duties and responsibilities.  For purposes of this definition, no act, or failure to act, by Executive will be considered “willful”  if done, or omitted to be done, by Executive in good faith and in the reasonable belief that the act  or omission was in the best interest of the Company or required by applicable law.     Any termination during the Employment Term by the Company for Cause shall be  communicated by Notice of Termination to the other party hereto given in accordance with  Section 9 of this Agreement. For purposes of this Agreement, a "Notice of Termination" means  a written notice which (i) indicates the specific termination provision in this Agreement relied  upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances  claimed to provide a basis for termination of the Executive's employment under the provision so  indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt  of such notice, specifies the termination date (which date shall be not more than 30 days after the  giving of such notice). The failure by the Company to set forth in the Notice of Termination any  fact or circumstance which contributes to a showing of Cause shall not waive any right of the  Company from asserting such fact or circumstance in enforcing the Executive's or the Company's  rights hereunder.  “Date of Termination” shall mean the date that employment with the  Company and its affiliates is terminated in all respects for any reason.    (d) Good Reason.  Executive may terminate Executive’s employment without  Good Reason or for Good Reason.  For purposes of this Agreement, the term “Good Reason”  shall mean without the express written consent of Executive, the occurrence of any of the  following:  (i) any action or inaction that constitutes a material breach by the  Company of this Agreement and such action or inaction continues uncured after thirty  (30) days following written notice from the Executive;   

 

 5  (ii) the assignment to the Executive of any duties inconsistent in any  respect with the Executive's position (including status, offices, titles and reporting  requirements), authority, duties or responsibilities as contemplated by Section 3(a) of this  Agreement, or any other action by the Company which results in a diminution in such  position, authority, duties or responsibilities, excluding for this purpose an isolated,  insubstantial and inadvertent action not taken in bad faith and which is remedied by the  Company within 30 days of  receipt of written notice thereof given by the Executive;  (iii) any failure by the Company to comply with the provisions of  Section 4 of this Agreement, other than an isolated, insubstantial and inadvertent failure  not occurring in bad faith and which is remedied by the Company as soon as reasonable  possible, but no later than 30 days after receipt of written notice thereof given by the  Executive;  (iv) a change in the geographic location at which Executive must  perform services to a location more than fifty (50) miles from Houston, Texas or the  location at which Executive normally performs such services as of the Effective Date; or  (v) in the event a Change of Control (as defined in Section 6(b)(v)) has  occurred, the assignment to the Executive to any position (including status, offices, titles  and reporting requirements), authority, duties or responsibilities that are not (A) as a  senior executive officer with the ultimate parent company of the entity surviving or  resulting from such Change of Control and (B) substantially identical to the Executive's  position (including status, offices, titles and reporting requirements), authority, duties and  responsibilities as contemplated by this Agreement.  Notwithstanding anything herein to the contrary, the interim assignment of Executive’s position,  authority, duties, or responsibilities to any person while Executive is absent from his duties  during any of the 120 business days set forth under the definition of Disability shall not  constitute a Good Reason for Executive to terminate his employment with the Company.  In  addition, the Executive’s termination of employment shall not constitute Good Reason unless  Executive notifies the Company of the condition or event constituting Good Reason within  ninety days (90) days of the condition’s occurrence (unless unknown to Executive) and the  Company fails to cure the conditions, to the extent curable, specified in the notice within thirty  (30) days following such notification. Any termination during the Employment Term by the  Executive for Good Reason shall be communicated by Notice of Termination to the other party  hereto given in accordance with Section 9 of the Agreement.      6. Compensation Upon Termination.  In the event that Executive’s employment  under this Agreement terminates during the Employment Term for any reason, the Company will  pay to Executive (a) subject to Section 10 (Compliance with Section 409A of the Code), in a  single lump sum payment, in accordance with the normal payroll practices of the Company (or  such earlier date as may be required by applicable law), the aggregate amount of (i) any earned  but unpaid Base Salary and (ii) accrued but unpaid vacation pay through the Date of  Termination; (b) in accordance with Section 4(c) above, any unreimbursed business expenses  incurred prior to the Date of Termination that are reimbursable in accordance with Section 4(c)  above, and (c) such employee benefits, if any, as to which Executive may be entitled pursuant to  

 

 6  the terms governing such benefits, payable in accordance with the terms of the applicable plan or  other arrangement governing such benefits (collectively, the “Accrued Obligations”).  Payment  of the Accrued Obligations shall be the only compensation paid to Executive under this  Agreement in the event of termination of employment due to death or Disability.  (a) For Cause or Without Good Reason.  If Executive’s employment is  terminated by the Company for Cause or by Executive without Good Reason, the Company shall  pay Executive the Accrued Obligations, and the Company shall have no further obligations to  Executive under this Agreement.  (b) Without Cause or For Good Reason Not in Contemplation of a Change of  Control.  If Executive’s employment is terminated by the Company without Cause (other than  for Disability) or by Executive for Good Reason, and in each case not “in connection with a  Change of Control” (as defined in Section 6(b)(v)), in addition to payment of the Accrued  Obligations, Executive shall be entitled to the following additional benefits (collectively, the  “Other Benefits”):  (i) Executive shall be entitled to receive a single lump sum payment  of the following, which amount shall be paid at the time provided in Section 6(d):  A. Any earned but unpaid Annual Bonus related to the  calendar year prior to the calendar year in which the Date of Termination occurs  plus;  B. the product of (x)  the target Annual Bonus for the fiscal  year during which termination of employment occurs, and (y) a fraction, the  numerator of which is the number of days in the current fiscal year through the  Date of Termination, and the denominator of which is 365.  C. An amount equal to the Severance Multiple (as defined in  Section 6(b)(vi) multiplied by the sum of (1) Executive’s Base Salary (at the rate  in effect as of the Date of Termination) and the target Annual Bonus for the fiscal  year during which termination of employment occurs.  (ii) All benefits under the Company's equity or long-term incentive  compensation plan, including all stock options and restricted stock held by the Executive,  not already vested, shall be 100% vested.  (iii) For a period of 12 months from the Executive's Date of  Termination the Company shall continue to provide to Executive and/or Executive's  dependents the same level of medical and dental benefits equal to those which would  have been provided to them in accordance with the plans, programs, practices and  policies described in Section 4(d) of this Agreement if the Executive's employment had  not been terminated and shall reimburse Executive for the premiums Executive pays for  such medical and dental benefits for up to 12 months following the Date of Termination  as provided in Section 6(f), and provided further, that if the Executive becomes re- employed by another employer and is eligible to receive medical or dental benefits under  another employer provided plan, the medical or dental benefits described herein shall be  

 

 7  secondary to those provided under such other plan during such applicable period of  eligibility.  (iv) A termination shall be deemed to be “in connection with a Change  of Control” if such termination occurs during the period beginning on the date that is (1)  twelve (12) months prior to a Change of Control occurring and (2) ending on the second  anniversary of the date of consummation of the Change of Control.  (v) “Change of Control” shall mean:   A. The acquisition by any individual, entity or group (within  the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of  1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership  (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50  percent or more of either (A) the then outstanding shares of common stock or  membership interests of the Company (the "Outstanding Company Common  Stock") or (B) the combined voting power of the then outstanding voting  securities of the Company entitled to vote generally in the election of directors or  managers (the "Outstanding Company Voting Securities"); provided, however,  that for purposes of this subsection A, the following acquisitions shall not  constitute a Change of Control:  (1) any acquisition directly from the Company or  any acquisition by the Company; or (2) any acquisition by any employee benefit  plan (or related trust) sponsored or maintained by the Company or any  corporation controlled by the Company; or (3) any acquisition by any corporation  pursuant to a transaction that complies with clauses (1), (2) and (3) of subsection  C of this definition; or  B.  Individuals, who, as of the date hereof or at the time of  consummation of the transactions contemplated by the Contribution Agreement,  constitute the Board (the "Incumbent Board") cease for any reason to constitute  at least a majority of the Board; provided, however, (1) that any individual  becoming a director subsequent to the date hereof whose election by the  Company's stockholders or members was approved by a vote of the stockholders  or members described in Section 3 of the Registration Rights Agreement attached  as Exhibit F to the Contribution Agreement shall be considered as though such  individual was a member of the Incumbent Board, and (2) that any individual  becoming a director subsequent to the date hereof whose election, or nomination  for election by the Company's stockholders or members, was approved by a vote  of at least a majority of the directors then comprising the Incumbent Board shall  be considered as though such individual was a member of the Incumbent Board,  but excluding, for purpose of this Section 6(b)(v)(B)(2), any such individual  whose initial assumption of office occurs as a result of an actual or threatened  election contest with respect to the election or removal of directors or other actual  or threatened solicitation of proxies or consents by or on behalf of a Person other  than the Board; or  

 

 8  C. Consummation of a reorganization, merger or consolidation  or sale or other disposition of all or substantially all of the assets of the Company  (a "Corporate Transaction") in each case, unless, following such Corporate  Transaction, (1) all or substantially all of the individuals and entities who were the  beneficial owners, respectively, of the Outstanding Company Common Stock and  Outstanding Company Voting Securities immediately prior to such Corporate  Transaction beneficially own, directly or indirectly, more than 60 percent of,  respectively, the then outstanding shares of common stock and the combined  voting power of the then outstanding voting securities entitled to vote generally in  the election of directors, as the case may be, of the corporation resulting from  such Corporate Transaction (including, without limitation, a corporation that as a  result of such transaction owns the Company or all or substantially all of the  Company's assets either directly or through one or more subsidiaries) in  substantially the same proportions as their ownership, immediately prior to such  Corporate Transaction, of the Outstanding Company Common Stock and the  Outstanding Company Voting Securities, as the case may be, (2) no Person  (excluding any corporation resulting from such Corporate Transaction or any  employee benefit plan (or related trust) of the Company or such corporation  resulting from such Corporate Transaction) beneficially owns, directly or  indirectly, 20 percent or more of, respectively, the then outstanding shares of  common stock of the corporation resulting from such Corporate Transaction or  the combined voting power of the then outstanding voting securities of such  corporation except to the extent that such ownership existed prior to the Corporate  Transaction and (3) at least a majority of the members of the board of directors of  the corporation resulting from such Corporate Transaction were members of the  Incumbent Board at the time of the execution of the initial agreement, or of the  action of the Board, providing for such Corporate Transaction; or  D. Approval by the stockholders of the Company of a  complete liquidation or dissolution of the Company.  E. Notwithstanding anything contained herein to the contrary,  neither the consummation of the transactions contemplated by the Contribution  Agreement, the sale of any securities in connection with an IPO Event nor the  election of directors pursuant to a vote described in Section 3 of the Registration  Rights Agreement attached as Exhibit F to the Contribution Agreement shall be  deemed to cause or result in a Change of Control under this Agreement.  (vi) “Severance Multiple”, for purposes of calculating the Other  Benefits due under this Section 6(b), shall be one (1) times, and for purposes of  calculating the Other Benefits due under Section 6(c) shall be one (1) times.   (c) Without Cause or For Good Reason in Contemplation of a Change of  Control. If Executive’s employment is terminated by the Company without Cause or by  Executive for Good Reason, and in each case “in connection with a Change of Control”, in  addition to the payment of the Accrued Obligations, Company shall pay to Executive the Other  Benefits.   

 

 9  (d) Release of Claims.  Notwithstanding any other provisions of this  Agreement to the contrary, in consideration for receiving the severance benefits described in  Section 6(b) or (c), Executive hereby agrees to execute (and not revoke) a release in substantially  the form attached hereto as Appendix A (the “Release”).  If Executive is not a “specified  employee” within the meaning of Section 409A of the Internal Revenue Code of 1986, as  amended (the “Code”) and Final Department of Treasury Regulations issued thereunder  (collectively, “Section 409A”) at the time of termination of Executive’s employment (“Specified  Employee”), and Executive has timely signed and delivered to the Company, by the deadline  established by the Company, the Release, which has become irrevocable by the time set forth  below, the Company shall pay Executive the lump sum cash severance benefits described in  Section 6(b) or (c) on the date that is sixty (60) days following the date of Executive’s  “separation from service” within the meaning of Section 409A (“Separation From Service”).  In  the event that Executive is a Specified Employee and Executive has timely signed and delivered  to the Company, by the deadline established by the Company, the Release, which has become  irrevocable by the time set forth below, the Company shall pay the Executive the lump sum cash  severance benefits described in Section 6(b) or (c) on the date that is six (6) months following  the date of the Executive’s Separation From Service.  Whether the Executive is or is not a  Specified Employee, the Executive will not be paid the lump sum cash severance benefits  described in Section 6(b) or (c) or entitled to the benefits described in Section 6(b)(ii) or (iii)  (except for Executive’s rights under section 4980B of the Code and the Consolidated Omnibus  Budget Reconciliation Act of 1985, as amended (“COBRA”)) and Executive shall forfeit any  right to such payments and benefits, unless (i) Executive has signed and delivered to the  Company the Release and (ii) the period for revoking the Release shall have expired (in the case  of both clauses (i) and (ii)) prior to the date that is 60 days following the date of Executive’s  Separation From Service.  If Executive fails to properly execute and deliver such release (or  revokes the Release), Executive agrees that Executive shall not be entitled to receive the  severance benefits described in Section 6(b) or (c) or entitled to the benefits described in  Section 6(b)(ii) or (iii) (other than COBRA benefits).  For purposes of this Agreement, a Release  shall be considered to have been executed by Executive if it is signed by Executive’s legal  representative, in the case of Executive’s Disability or on behalf of Executive’s estate in the case  of Executive’s death.   (e) Termination of Offices and Directorships.  Upon termination of  Executive’s employment for any reason, unless otherwise specified in a written agreement  between Executive and the Company, Executive shall be deemed to have resigned from all  offices, directorships, and other employment positions then held with the Company or its  affiliates, if any, and shall take all actions reasonably requested by the Company to effectuate the  foregoing.  (f) Reimbursement of Premiums.  During the period that the Company is  required to continue coverage in the Company’s group medical plan and the Company’s group  dental plan (collectively, the “Group Plan”) as provided in Section 6(b)(iii) and Executive  continues and pays the premium for such coverage to continue Executive’s and any qualifying  dependent’s Group Plan coverage (“Coverage”) the Company will reimburse Executive the  amount of the cost of the Coverage for up to 18 months Executive maintains such Coverage.   Any reimbursements by the Company to Executive required under this Section 6(f) shall be  made on the last day of each month Executive pays the amount required for such Coverage, for  

 

 10  up to the first 18 months of Coverage.  If Executive is a Specified Employee at the time of  termination and the benefits specified in this Section 6(f) are taxable to Executive and not  otherwise exempt from Section 409A then any amounts to which Executive would otherwise be  entitled under this Section 6(f) during the first six months following the date of Executive’s  Separation From Service shall be accumulated and paid to Executive on the date that is six  months following the date of Executive’s Separation From Service.  Except for any  reimbursements under the applicable Group Plan that are subject to a limitation on  reimbursements during a specified period, the amount of expenses eligible for reimbursement  under this Section 6(f), or in-kind benefits provided, during Executive’s taxable year shall not  affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other  taxable year of Executive.  Executive’s right to reimbursement or in-kind benefits pursuant to  this Section 6(f) shall not be subject to liquidation or exchange for another benefit.   7. Nondisclosure and Noncompetition.  (a) Certain Definitions. For purposes of this Agreement, the following terms  shall have the following meanings:  (i) “Confidential Information” means any information, knowledge or  data of any nature and in any form (including information that is electronically  transmitted or stored on any form of magnetic or electronic storage media) relating to the  past, current or prospective business or operations of the Company, that is not generally  known to persons engaged in a business similar to that conducted by the Company,  whether produced by the Company or any of its consultants, agents or independent  contractors or by Executive, and whether or not marked confidential.   Confidential  information does not include information that (1) at the time of disclosure is, or thereafter  becomes, generally available to the public, (2) prior to or at the time of disclosure was  already in the possession of Executive, (3) is obtained by Executive from a third party not  in violation of any contractual, legal or fiduciary obligation to the Company with respect  to that information or (3) is independently developed by Executive, but not including the  confidential information provided by the Company.  (ii) “Restricted Business” means any the oil and natural gas land  contract drilling business conducted in the United States of America.    (b) Nondisclosure of Confidential Information.  Executive shall hold in a  fiduciary capacity for the benefit of the Company all Confidential Information which shall have  been obtained by Executive during Executive’s employment (whether prior to or after the  Effective Date) and shall not use such Confidential Information other than within the scope of  Executive’s employment with and for the exclusive benefit of the Company.  At the end of the  Employment Term, Executive agrees (i) not to communicate, divulge or make available to any  person or entity (other than the Company) any such Confidential Information, except (A) upon  the prior written authorization of the Company, (B) as may be required by law or legal process,  (C) as reasonably necessary in connection with the enforcement of any right or remedy related to  this Agreement, or (D) unless no longer Confidential Information, and (ii) to deliver promptly to  the Company any Confidential Information in Executive’s possession, including any duplicates  thereof and any notes or other records Executive has prepared with respect thereto. In the event  

 

 11  that the provisions of any applicable law or the order of any court would require Executive to  disclose or otherwise make available any Confidential Information then Executive shall, to the  extent practicable, give the Company prior written notice of such required disclosure and an  opportunity to contest the requirement of such disclosure or apply for a protective order with  respect to such Confidential Information by appropriate proceedings.     (c) Limited Covenant Not to Compete & Non-Solicitation.  In consideration  of the provision of the Confidential Information during the term of this Agreement and the stock  options, restricted stock awards and other compensation  provided  herein, if Executive’s  employment is terminated hereunder, Executive agrees that during the period of time beginning  on the Date of Termination and ending on the twelve (12) month anniversary of the Date of  Termination:    (i) Executive shall not, directly or indirectly, for himself or others, be  employed by (as an employee or consultant), own, manage, operate, control or participate  in the ownership, management, operation or control of any business, whether in  corporate, proprietorship or partnership form or otherwise, that is engaged, directly or  indirectly, in the United States in the Restricted Business; provided, however, that the  restrictions contained herein shall not restrict the acquisition by Executive of less than  2% of the outstanding capital stock of any publicly traded company engaged in a  Restricted Business or Executive from being employed by an entity in which the majority  of such entity’s revenues on a consolidated basis determined in accordance with generally  accepted accounting principles are from activities and businesses that do not constitute a  Restricted Business so long as Executive is not employed by or involved in the conduct  or management of the Restricted Business within such entity; and  (ii) Executive shall not, directly or indirectly (A) solicit any individual,  who, at the time of time of such solicitation is an executive of the Company or its  affiliates, to leave such employment or hire, employ or otherwise engage any such  individual (other than employees of the Company or its affiliates who respond to general  advertisements for employment in newspapers or other periodicals of general circulation  (including trade journals)), or (B) cause, induce or encourage any material actual or  prospective client, customer, supplier, landlord, lessor or licensor of the Company or its  affiliates to terminate or modify any such actual or prospective contractual relationship  that exists on the Date of Termination.  (d) Injunctive Relief; Remedies.  The covenants and undertakings contained  in this Section 7 relate to matters which are of a special, unique and extraordinary character and a  violation of any of the terms of this Section 7 will cause irreparable injury to the Company, the  amount of which will be impossible to estimate or determine and which cannot be adequately  compensated.  Accordingly, the remedy at law for any breach of this Section 7 may be  inadequate.  Therefore, notwithstanding anything to the contrary, the Company will be entitled to  an injunction, restraining order or other equitable relief from any court of competent jurisdiction  in the event of any breach of any provision of this Section 7 without the necessity of proving  actual damages or posting any bond whatsoever.  The rights and remedies provided by this  Section 7 are cumulative and in addition to any other rights and remedies which the Company  may have hereunder or at law or in equity.  The parties hereto further agree that, if any court of  

 

 12  competent jurisdiction in a final nonappealable judgment determines that a time period, a  specified business limitation or any other relevant feature of this Section 7 is unreasonable,  arbitrary or against public policy, then a lesser time period, geographical area, business limitation  or other relevant feature which is determined by such court to be reasonable, not arbitrary and  not against public policy may be enforced against the applicable party.    (e) Governing Law of this Section 7; Consent to Jurisdiction. Any dispute  regarding the reasonableness of the covenants and agreements set forth in this Section 7, or the  territorial scope or duration thereof, or the remedies available to the Company upon any breach  of such covenants and agreements, shall be governed by and interpreted in accordance with the  laws of the state in which the prohibited competing activity or disclosure occurs, and, with  respect to each such dispute, the Company and Executive each hereby irrevocably consent to the  exclusive jurisdiction of the State of Texas for resolution of such dispute, and further agree that  service of process may be made upon Executive in any legal proceeding relating to this Section 7  by any means allowed under the laws of such state.   (f) Executive’s Understanding of this Section.  Executive hereby represents to  the Company that Executive has read and understands, and agrees to be bound by, the terms of  this Section 7. Executive acknowledges that the geographic scope and duration of the covenants  contained in Section 7(c) are the result of arm’s-length bargaining and are fair and reasonable in  light of (i) the importance of the functions performed by Executive and the length of time it  would take the Company to find and train a suitable replacement, (ii) the nature and wide  geographic scope of the operations of the Company, (iii) Executive’s level of control over and  contact with the Company’s business and operations in all jurisdictions where they are located,  and (iv) the fact that the Restricted Business is conducted throughout the geographic area where  competition is restricted by this Agreement. It is the desire and intent of the parties that the  provisions of this Agreement be enforced to the fullest extent permitted under applicable law,  whether now or hereafter in effect and therefore, to the extent permitted by applicable law, the  parties hereto waive any provision of applicable law that would render any provision of this  Section 7 invalid or unenforceable.  8. Certain Tax Matters.  (a) Notwithstanding any other provision of this Agreement to the contrary, if  any portion of the payments or benefits provided to or for the benefit of Executive under this  Agreement or which Executive otherwise receives or is entitled to receive from the Company or  any successor would be subject to the excise tax imposed by Section 4999 of the Code, or any  interest, penalties or additions to tax with respect to such excise tax (such excise tax, together  with any interest, penalties or additions to tax with respect to such excise tax, is herein  collectively referred to as the "Excise Tax"), all such payments and benefits being collectively  referred to herein as the "Total Payments", then, except as otherwise provided in Section 8(b),  the Total Payments shall be reduced (but not below zero) or eliminated (as further provided for  in Section 8(c)) to the extent the Independent Tax Advisor (as hereinafter defined) shall  reasonably determine is necessary so that no portion of the Total Payments shall be subject to the  Excise Tax.  

 

 13  (b) Notwithstanding the provisions of Section 8(a), if the Independent Tax  Advisor reasonably determines that Executive would receive, in the aggregate, a greater amount  of the Total Payments on an after-tax basis (after including and taking into account all applicable  federal, state, and local income, employment and other applicable taxes and the Excise Tax) if  the Total Payments were not reduced or eliminated pursuant to Section 8(a), then no such  reduction or elimination shall be made notwithstanding that all or any portion of the Total  Payments may be subject to the Excise Tax.  (c) For purposes of determining which of Section 8(a) and Section (b) shall be  given effect, the determination of which of the Total Payments shall be reduced or eliminated to  avoid the Excise Tax shall be made by the Independent Tax Advisor, provided that the  Independent Tax Advisor shall reduce or eliminate, as the case may be, the Total Payments in the  following order (and within the category described in each of the following Sections 8(c)(i)  through 8(c)(v), in reverse order beginning with the Total Payments which are to be paid farthest  in time except as otherwise provided in Section 8(c)(iii)):  (i) by first reducing or eliminating the portion of the Total Payments  otherwise due and which are not payable in cash (other than that portion of the Total  Payments subject to Sections 8(c)(iv) and 8(c)(v));  (ii) then by reducing or eliminating the portion of the Total Payments  otherwise due and which are payable in cash (other than that portion of the Total  Payments subject to Sections 8(c)(iii) and 8(e)(iv));  (iii) then by reducing or eliminating the portion of the Total Payments  otherwise due to or for the benefit of Executive pursuant to the terms of this Agreement  and which are payable in cash;  (iv) then by reducing or eliminating the portion of the Total Payments  otherwise due that represent equity-based compensation, such reduction or elimination to  be made in reverse chronological order with the most recent equity-based compensation  awards reduced first; and  (v) then by reducing or eliminating the portion of the Total Payments  otherwise due to or for the benefit of Executive pursuant to the terms of this Agreement  and which are not payable in cash.  (d) The Independent Tax Advisor shall provide its determinations, together  with detailed supporting calculations and documentation, to the Company and Executive for their  review no later than ten (10) days after the Date of Termination.  The determinations of the  Independent Tax Advisor under this Section 8 shall, after due consideration of the Company’s  and Executive’s comments with respect to such determinations and the interpretation and  application of this Section 8, be final and binding on all parties hereto absent manifest error.  The  Company and Executive shall furnish to the Independent Tax Advisor such information and  documents as the Independent Tax Advisor may reasonably request in order to make the  determinations required under this Section 8.  

 

 14  (e) For purposes of this Section 8, “Independent Tax Advisor” shall mean a  lawyer with a nationally recognized law firm, a certified public accountant with a nationally  recognized accounting firm, or a compensation consultant with a nationally recognized actuarial  and benefits consulting firm, in each case with expertise in the area of executive compensation  tax law, who shall be selected by the Company and shall be acceptable to Executive (Executive’s  acceptance not to be unreasonably withheld), and all of whose fees and disbursements shall be  paid by the Company.  9. Notice.  All notices hereunder must be in writing and shall be deemed to have  been given when personally delivered to the designated individual, or (unless otherwise  specified) mailed or sent by (a) United States certified or registered mail, postage prepaid, return  receipt requested, (c) a nationally recognized overnight courier service with confirmation of  receipt or (d) facsimile transmission with confirmation of receipt.   All such notices must be addressed as follows or to such other address as to which any  party hereto may have notified the other in writing.   To the Company:  20475 Hwy 249, Suite 300  Houston, Texas  77070  Attn:  Chief Executive Officer    To Executive:    At Executive’s then current address shown in the Company’s records.  or to such other address as any party may have furnished to the others in writing in accordance  herewith, except that notices of change of address shall be effective only upon receipt.  10. Compliance with Section 409A of the Code.    (a) Notwithstanding anything to the contrary in this Agreement, no  compensation or benefits, including without limitation the severance payments and benefits  under Section 6 will be paid to Executive if Executive is a Specified Employee until the six- month anniversary of Executive’s Separation From Service to the extent that paying such  amounts at the time or times indicated in this Agreement would result in a prohibited distribution  under Section 409A(a)(2)(B)(i) of the Code.    (b) To the extent applicable, this Agreement shall be interpreted and applied  consistent and in accordance with Section 409A. The parties agree to act in good faith in  complying with the requirements of Section 409A.  For purposes of this Agreement, all  references to “termination”, “termination of employment”, Date of Termination and correlative  phrases shall mean a Separation From Service.  In the event additional regulations or other  guidance are issued under Section 409A or a court of competent jurisdiction provides additional  authority concerning the application of Section 409A with respect to the payments described in  this Agreement, then the parties agree to act in good faith to amend the provisions of this  

 

 15  Agreement to permit such payments to be made at the earliest time permitted under such  additional regulations, guidance or authority that as closely as practicable achieves the original  intent of this Agreement.  (c) To the extent permitted under Section 409A, any separate payment or  benefit under this Agreement or otherwise shall not be deemed “nonqualified deferred  compensation” subject to Section 409A to the extent provided in the exceptions in Treasury  Regulation §1.409A-1(b)(9) or any other applicable exception or provision of Section 409A.   (d) To the extent that any payments or reimbursements provided to Executive  under this Agreement are deemed to constitute compensation to which Treasury Regulation  §1.409A-3(i)(1)(iv) would apply, such amounts shall be paid or reimbursed to Executive  reasonably promptly, but not later than December 31 of the year following the year in which the  expense was incurred. The amounts of any such payments eligible for reimbursement in one year  shall not affect the payments or expenses that are eligible for payment or reimbursement in any  other taxable year, and Executive’s right to such payments or reimbursement shall not be subject  to liquidation or exchange for any other benefit.    11. Miscellaneous.    (a) Withholding.  All amounts payable under this Agreement will be subject  to reduction to reflect such federal, state, local or foreign taxes as will be required to be withheld  pursuant to any applicable law or regulation.  (b) Successors; Binding Agreement.  The terms and conditions of this  Agreement shall inure to the benefit of and be binding upon the parties hereto and their  respective successors and permitted assigns, including Executive’s estate and legal  representatives.  Neither this Agreement nor any rights, interests or obligations hereunder may be  assigned by any party hereto without the prior written consent of the other parties hereto;  provided that the Company may assign any rights, interests or obligations hereunder to any  successor (whether direct or indirect, by merger, purchase, consolidation or otherwise) to all or  substantially all of the business and/or assets of the Company.  The Company agrees to require  any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all  or substantially all of the business and/or assets of the Company to assume expressly and agree  to 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 had taken place.  As used in this Agreement,  “Company” shall mean the Company as hereinbefore defined any successor to its business  and/or assets as aforesaid which assume and agrees to perform this Agreement by operation of  law or otherwise.  (c) Waiver.  No provision of this Agreement may be modified, waived or  discharged unless such waiver, modification or discharge is agreed to in writing signed by  Executive and an authorized representative of the Company.  No waiver by either party hereto at  any time of any breach by the other party hereto of, or compliance with, any condition or  provision of this Agreement to be performed by such other party shall be deemed a waiver of  similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  No  agreements or representations, oral or otherwise express or implied, with respect to the subject  

 

 16  matter hereof have been made by either party which are not set forth expressly in this  Agreement.  (d) Validity.  The invalidity or unenforceability of any provision or provisions  of this Agreement shall not affect the validity or enforceability of any other provision of this  Agreement, which shall remain in full force and effect.  (e) Counterparts.  This Agreement may be executed in one or more  counterparts, each of which shall be deemed to be an original, but all of which together shall  constitute one and the same instrument.  (f) Entire Agreement.  This Agreement sets forth the entire agreement of the  parties hereto in respect of the subject matter contained herein and supersedes all prior  agreements, promises, covenants, arrangements, communications, representations or warranties,  whether oral or written, by any officer, Executive or representative of any party hereto, including  the Prior Agreement; and any prior agreement of the parties hereto in respect of the subject  matter contained herein is hereby terminated and canceled.  (g) Governing Law.  This Agreement has been made and entered into and  shall be governed by the internal laws of the State of Texas without regard to principles of  conflict of laws, except as expressly provided in Section 7(e) above with respect to the resolution  of disputes arising under, or the Company’s enforcement of, Section 7.  (h) Jurisdiction.  If any party commences a lawsuit or other proceeding related  to or arising from this Agreement, the parties hereto agree that the State District Court in  Houston, Harris County Texas shall have sole and exclusive jurisdiction over any such  proceeding.  The State District Court shall be the proper venue for any such lawsuit or judicial  proceeding and the parties hereto waive any objection to such venue.  The parties consent to and  agree to submit to the jurisdiction of the court specified herein and agree to accept service of  process to vest personal jurisdiction over them in the State District Court of Harris County  Texas.  (i) Severability.  The invalidity or unenforceability of any provision or  provisions of this Agreement will not affect the validity or enforceability of any other provision  of this Agreement, which will remain in full force and effect.  (j) Termination of Change of Control Agreement.  The parties hereto agree  that upon execution and delivery of this Employment Agreement by the parties hereto, the  Change of Control Agreement dated October 5, 2018 between Executive and Company is  terminated in its entirety with no obligations owed by either party thereunder.    [Signature page follows]    

 

    17  IN WITNESS WHEREOF, the parties have executed this Agreement on the date and  year first above written.     COMPANY:      INDEPENDENCE CONTRACT  DRILLING, INC.         Date:  12/18/20 _______________________ By:  /s/ Anthony Gallegos _______________   Name:   Anthony Gallegos   Title:  CEO       EXECUTIVE:    Date:12/18/20 ________________________ /s/ Scott A. Keller _____________________   Scott A. Keller 

 

    APPENDIX A    AGREEMENT AND RELEASE  This Agreement and Release (“Release”) is entered into between you, the undersigned  employee, and  Independence Contract Drilling, Inc. (the “Company”).  You have [__] days to  consider this Release, which you agree is a reasonable amount of time.  While you may sign this  Release prior to the expiration of this [___]-day period, you are not to sign it prior to the date of  your termination of employment with the Company.  1. Definitions.  a. “Released Parties” means the Company and its past, present and future  parents, subsidiaries, divisions, successors, predecessors, employee benefit plans and affiliated or  related companies, and also each of the foregoing entities’ past, present and future owners,  officers, directors, stockholders, investors, partners, managers, principals, members, committees,  administrators, sponsors, executors, trustees, fiduciaries, employees, agents, assigns,  representatives and attorneys, in their personal and representative capacities.  Each of the  Released Parties is an intended beneficiary of this Release.  b. “Claims” means all theories of recovery of whatever nature, whether  known or unknown, recognized by the law or equity of any jurisdiction.  It includes but is not  limited to any and all actions, causes of action, lawsuits, claims, complaints, petitions, charges,  demands, liabilities, indebtedness, losses, damages, rights and judgments in which you have had  or may have an interest.  It also includes but is not limited to any claim for wages, benefits or  other compensation.  It also includes but is not limited to claims asserted by you or on your  behalf by some other person, entity or government agency.  2. Consideration.  The Company agrees to pay you the consideration set forth in  sections 6 and 8 of the Amended and Executive Employment Agreement between you and the  Company dated as of [_________] (the “Employment Agreement”).  The Company will make  such payments to you at the times set forth in the Employment Agreement.  You acknowledge  that the payment that the Company will make to you in consideration for this Release is in  addition to anything else of value to which you are entitled and that the Company is not  otherwise obligated to make this payment to you.  3. Release of Claims.  a. You – on behalf of yourself and your heirs, executors, administrators,  legal representatives, successors, beneficiaries, and assigns – unconditionally release and forever  discharge the Released Parties from, and waive, any and all Claims that you have or may have  against any of the Released Parties arising from your employment with the Company, the  termination thereof, and any other acts or omissions occurring on or before the date you sign this  Release; provided, however, that this Agreement shall not operate to release any Claims that you  may have to payments or benefits under Section 6 of the Employment Agreement or any rights  you may have to indemnification under any indemnification agreement between you and the  

 

   A-2    Company or any of its affiliates, or the bylaws or any directors and officers liability insurance  policy of the Company or any of its affiliates (collectively, the “Unreleased Claims”).  b. The release set forth in Paragraph 3(a) includes, but is not limited to, any  and all Claims under (i) the common law (tort, contract or other) of any jurisdiction; (ii) the  Rehabilitation Act of 1973, the Age Discrimination in Employment Act, the Americans with  Disabilities Act, Title VII of the Civil Rights Act of 1964, and any other federal, state and local  statutes, ordinances, executive orders and regulations prohibiting discrimination or retaliation  upon the basis of age, race, sex, national original, religion, disability, or other unlawful factor;  (iii) the National Labor Relations Act; (iv) the Employee Retirement Income Security Act; (v)  the Family and Medical Leave Act; (vi) the Fair Labor Standards Act; (vii) the Equal Pay Act;  (viii) the Worker Adjustment and Retraining Notification Act; and (ix) any other federal, state or  local law.  c. In furtherance of this Release, you promise not to bring any Claims (other  than Unreleased Claims) against any of the Released Parties in or before any court or arbitral  authority.  4. Confidentiality.  You agree that you will not reveal, or cause to be revealed, this  Release or its terms to any third party (other than your attorney, tax advisor, or spouse), except as  required by law.  5. Acknowledgment.  You acknowledge that, by entering into this Release, the  Company does not admit to any wrongdoing in connection with your employment or  termination, and that this Release is intended as a compromise of any Claims you have or may  have against the Released Parties.  You further acknowledge that you have carefully read this  Release and understand its final and binding effect, have had a reasonable amount of time to  consider it, and are entering this Release voluntarily.  You acknowledge that the Company has  advised you in writing to seek the advice of legal counsel prior to executing this release, and that  you have had the opportunity to seek legal counsel of your choosing.  6. Applicable Law.  This Release shall be construed and interpreted pursuant to the  laws of Texas without regard to its choice of law rules.  7. Severability.  Each part, term, or provision of this Release is severable from the  others.  Notwithstanding any possible future finding by a duly constituted authority that a  particular part, term, or provision is invalid, void, or unenforceable, this Release has been made  with the clear intention that the validity and enforceability of the remaining parts, terms and  provisions shall not be affected thereby. If any part, term, or provision is so found invalid, void  or unenforceable, the applicability of any such part, term, or provision shall be modified to the  minimum extent necessary to make it or its application valid and enforceable.  8. Effective Date: You acknowledge that you have seven (7) days after  execution to revoke this Release, and that this Release shall not become final and binding until  the expiration of seven (7) days after execution.      

 

   A-2    [Signature page follows]    

 

       IN WITNESS WHEREOF, the parties have executed this Release on the date set forth  below.      EXECUTIVE:      ____________________________________ Date:  [_______________, 20___]  [name]        COMPANY:    INDEPENDENCE CONTRACT DRILLING, INC.      Date:  [_______________, 20___]        By: _________________________________  Name: ______________________________  Title: _______________________________employmentagreement-koke

    1  EXECUTIVE EMPLOYMENT AGREEMENT  This Executive EMPLOYMENT AGREEMENT (“Agreement”) is entered into effective as of  December 18, 2020, (the “Effective Date”) by and between Independence Contract Drilling, Inc.,  a Delaware corporation (“Company”), and Katherine Kokenes  (“Executive”).   W I T N E S S E T H:  WHEREAS, the Company desires to employ, and Executive desires to be employed by  the Company and its subsidiaries and affiliates, as applicable, on the terms set forth in this  Agreement;  NOW, THEREFORE, in consideration of the mutual terms and agreements set forth  herein, the parties hereto agree as follows:    1. Employment.    The Company hereby agrees that the Company or an affiliated  company will continue the Executive in its employ, and the Executive hereby agrees to remain in  the employ of the Company or an affiliate subject to the terms and conditions of this Agreement,  during the Employment Term (as defined below).  2. Term.  The “Employment Term” shall mean the period commencing on the date  hereof (the "Effective Date") and ending on the third anniversary of the Effective Date; provided,  however, if neither party shall have provided written notice of termination at least one year prior  to the scheduled expiration of the then current term of this Agreement (each such date by which  such notice must be provided, a “Renewal Date”), the Employment Term shall automatically be  extended for one additional year so as to expire two years from such Renewal Date. Upon a  Change of Control, the Employment Term shall be automatically extended to the third  anniversary of the Change of Control.  3. Position and Duties.    (a) During the Employment Term, (A) the Executive's position (including  status, offices, titles and reporting requirements, authority, duties and responsibilities) shall be  Vice President & Chief Accounting Officer reporting to the Executive Vice President and Chief  Financial Officer of the Company or Chief Executive Officer of the Company and (B) the  Executive's services shall be performed at the Company's executive offices in Houston, Texas or  other locations less than 50 miles from such location.  (b) During the Employment Term, and excluding any periods of vacation and  sick leave to which the Executive is entitled, the Executive agrees to devote the substantial  portion of his attention and time during normal business hours to the business and affairs of the  Company and, to the extent necessary to discharge the responsibilities assigned to the Executive  hereunder, to use the Executive's reasonable best efforts to perform faithfully and efficiently such  responsibilities.   During the Employment Term it shall not be a violation of this Agreement for  the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver  lectures, fulfill speaking engagements or teach at educational institutions and (C) manage  personal investments and business endeavors, so long as such activities do not significantly  interfere with the performance of the Executive's responsibilities as an employee of the Company  

 

 2  in accordance with this Agreement. It is understood and agreed that to the extent that any such  activities have been conducted by the Executive prior to the date hereof, the continued conduct  of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to  the date hereof shall not thereafter be deemed to interfere with the performance of the  Executive's responsibilities to the Company.  4. Compensation and Related Matters.  During the Employment Term, Executive  shall be entitled to the following compensation and benefits:  (a) Salary.  Until consummation of the transactions contemplated by the  Contribution Agreement, the Company shall pay to a total annual base salary of $195,000 (which  salary may be increased (but not decreased) by the Company in its discretion) (“Base Salary”),  payable in accordance with the normal payroll practices of the Company to be established as  soon as reasonably practicable after the closing of the transactions contemplated by the  Contribution Agreement.  During the Employment Term, the Base Salary shall be reviewed by  the Board of Directors of the Company (the “Board”) at least annually; provided, however, that a  salary increase shall not necessarily be awarded as a result of such review. Any increase in Base  Salary may not serve to limit or reduce any other obligation to the Executive under this  Agreement. Base Salary shall not be reduced after any such increase. The term Base Salary as  utilized in this Agreement shall refer to Base Salary as so increased.  (b) Bonus.  Executive shall be eligible for an annual bonus and other annual  incentive compensation (collectively, the "Annual Bonus") for each fiscal year of the Company  during the Employment Term, in accordance with the Company’s bonus plan for senior  executives of the Company.   The Annual Bonus shall be based upon a target amount of 50% of  Base Salary, based upon performance criteria established by the Board in its sole discretion, and  notwithstanding the foregoing, shall be payable in the sole discretion of the Board.  Each such  Annual Bonus shall be paid no later than March 15 of the year following the year for which the  Annual Bonus is earned, unless the Executive shall elect to defer the receipt of such Annual  Bonus pursuant to a Company-sponsored deferred compensation plan in effect or the bonus plan  provides for a different payment date.    (c) Expenses.  Executive shall be entitled to receive prompt reimbursement  for all reasonable and necessary expenses incurred by Executive in performing services  hereunder, including all travel and living expenses while away from home on business or at the  request of and in the service of the Company, provided that such expenses are incurred and  accounted for in accordance with the policies and procedures established by the Company.   Notwithstanding any provision of this Agreement to the contrary, the amount of expenses for  which Executive is eligible to receive reimbursement during any given taxable year of Executive  shall not affect the amount of expenses for which Executive is eligible to receive reimbursement  during any other taxable year of Executive.  Reimbursement of expenses under this Section 4(c)  shall be made within thirty (30) days following submission of a completed expense  reimbursement form (but in no event later than the last day of the calendar year following the  calendar year in which the expense was incurred).  The right to reimbursement pursuant to this  Section 4(c) is not subject to liquidation or exchange for another benefit.  

 

 3  (d) Benefits.  Executive shall be eligible to participate in or receive benefits  under any group health or other executive benefit plan or arrangement made available by the  Company to its senior executive officers, subject to and on a basis consistent with the terms,  conditions and overall administration of such plans and arrangements.  (e) Vacations.  Executive shall be entitled to a minimum of four weeks paid  vacation and holidays in accordance with the policies, programs and practices of the Company as  in effect from time to time.   (f) Restricted Stock and Options and other Equity Compensation.   The  Executive also shall participate in any annual or special equity compensation or long-term  compensation plans and programs made available to the senior executive officers of the  Company.  5. Termination.  Executive’s employment hereunder may be terminated during the  Employment Term under the following circumstances:  (a) Death.  Executive’s employment hereunder shall terminate upon  Executive’s death.  (b) Disability.  Executive’s status as an executive and employee of the  Company may be terminated for “Disability”, and Executive will be deemed “Disabled”, if  Executive shall have been unable to substantially perform Executive’s duties as an executive of  the Company or any subsidiary thereof as a result of sickness or injury, with or without  reasonable accommodation, and shall have remained unable to perform any such duties for a  period of more than 120-days in any 12-month period.  If the Company determines that  Executive has become Disabled, the Company shall notify Executive of its determination.   Executive may then request an accommodation from the Company to assist in his/her return to  work.  The Company will determine whether Executive’s request can be accommodated without  undue hardship no later than 30 days after Executive requests an accommodation. In the event  Executive’s request cannot be accommodated, the Company may, by notice given in the manner  provided in this Agreement, terminate the status of Executive as an executive and employee of  the Company.  Any such termination shall become effective 30 days after such notice of  termination is given, unless within such 30 day period, Executive becomes capable of rendering  services of the character contemplated hereby (and a physician chosen by the Company so  certifies in writing) and Executive in fact resumes such services.    (c) Cause.  The Company may terminate Executive’s employment with or  without Cause.  For purposes of this Agreement, “Cause” shall mean Executive’s:  (i) willful and continued failure to comply with the reasonable written  directives of the Company for a period of thirty (30) days after written notice from the  Company;    (ii) willful and persistent inattention to duties for a period of thirty (30)  days after written notice from the Company, or the commission of acts within  employment with the Company amounting to gross negligence or willful misconduct;  

 

 4  (iii) misappropriation of funds or property of the Company or  committing any fraud against the Company or against any other person or entity in the  course of employment with the Company;  (iv) misappropriation of any corporate opportunity, or otherwise  obtaining personal profit from any transaction which is adverse to the interests of the  Company or to the benefits of which the Company is entitled;  (v) conviction of a felony involving moral turpitude;   (vi) willful failure to comply in any material respect with the terms of  this Agreement and such non-compliance continues uncured after thirty (30) days after  written notice from the Company; or  (vii) chronic substance abuse, including abuse of alcohol, drugs or other  substances or use of illegal narcotics or substances, for which Executive fails to  undertake treatment immediately after requested by the Company or to complete such  treatment and which abuse continues or resumes after such treatment period, or  possession of illegal narcotics or substances on Company premises or while performing  Executive’s duties and responsibilities.  For purposes of this definition, no act, or failure to act, by Executive will be considered “willful”  if done, or omitted to be done, by Executive in good faith and in the reasonable belief that the act  or omission was in the best interest of the Company or required by applicable law.     Any termination during the Employment Term by the Company for Cause shall be  communicated by Notice of Termination to the other party hereto given in accordance with  Section 9 of this Agreement. For purposes of this Agreement, a "Notice of Termination" means  a written notice which (i) indicates the specific termination provision in this Agreement relied  upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances  claimed to provide a basis for termination of the Executive's employment under the provision so  indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt  of such notice, specifies the termination date (which date shall be not more than 30 days after the  giving of such notice). The failure by the Company to set forth in the Notice of Termination any  fact or circumstance which contributes to a showing of Cause shall not waive any right of the  Company from asserting such fact or circumstance in enforcing the Executive's or the Company's  rights hereunder.  “Date of Termination” shall mean the date that employment with the  Company and its affiliates is terminated in all respects for any reason.    (d) Good Reason.  Executive may terminate Executive’s employment without  Good Reason or for Good Reason.  For purposes of this Agreement, the term “Good Reason”  shall mean without the express written consent of Executive, the occurrence of any of the  following:  (i) any action or inaction that constitutes a material breach by the  Company of this Agreement and such action or inaction continues uncured after thirty  (30) days following written notice from the Executive;   

 

 5  (ii) the assignment to the Executive of any duties inconsistent in any  respect with the Executive's position (including status, offices, titles and reporting  requirements), authority, duties or responsibilities as contemplated by Section 3(a) of this  Agreement, or any other action by the Company which results in a diminution in such  position, authority, duties or responsibilities, excluding for this purpose an isolated,  insubstantial and inadvertent action not taken in bad faith and which is remedied by the  Company within 30 days of  receipt of written notice thereof given by the Executive;  (iii) any failure by the Company to comply with the provisions of  Section 4 of this Agreement, other than an isolated, insubstantial and inadvertent failure  not occurring in bad faith and which is remedied by the Company as soon as reasonable  possible, but no later than 30 days after receipt of written notice thereof given by the  Executive;  (iv) a change in the geographic location at which Executive must  perform services to a location more than fifty (50) miles from Houston, Texas or the  location at which Executive normally performs such services as of the Effective Date; or  (v) in the event a Change of Control (as defined in Section 6(b)(v)) has  occurred, the assignment to the Executive to any position (including status, offices, titles  and reporting requirements), authority, duties or responsibilities that are not (A) as a  senior executive officer with the ultimate parent company of the entity surviving or  resulting from such Change of Control and (B) substantially identical to the Executive's  position (including status, offices, titles and reporting requirements), authority, duties and  responsibilities as contemplated by this Agreement.  Notwithstanding anything herein to the contrary, the interim assignment of Executive’s position,  authority, duties, or responsibilities to any person while Executive is absent from his duties  during any of the 120 business days set forth under the definition of Disability shall not  constitute a Good Reason for Executive to terminate his employment with the Company.  In  addition, the Executive’s termination of employment shall not constitute Good Reason unless  Executive notifies the Company of the condition or event constituting Good Reason within  ninety days (90) days of the condition’s occurrence (unless unknown to Executive) and the  Company fails to cure the conditions, to the extent curable, specified in the notice within thirty  (30) days following such notification. Any termination during the Employment Term by the  Executive for Good Reason shall be communicated by Notice of Termination to the other party  hereto given in accordance with Section 9 of the Agreement.      6. Compensation Upon Termination.  In the event that Executive’s employment  under this Agreement terminates during the Employment Term for any reason, the Company will  pay to Executive (a) subject to Section 10 (Compliance with Section 409A of the Code), in a  single lump sum payment, in accordance with the normal payroll practices of the Company (or  such earlier date as may be required by applicable law), the aggregate amount of (i) any earned  but unpaid Base Salary and (ii) accrued but unpaid vacation pay through the Date of  Termination; (b) in accordance with Section 4(c) above, any unreimbursed business expenses  incurred prior to the Date of Termination that are reimbursable in accordance with Section 4(c)  above, and (c) such employee benefits, if any, as to which Executive may be entitled pursuant to  

 

 6  the terms governing such benefits, payable in accordance with the terms of the applicable plan or  other arrangement governing such benefits (collectively, the “Accrued Obligations”).  Payment  of the Accrued Obligations shall be the only compensation paid to Executive under this  Agreement in the event of termination of employment due to death or Disability.  (a) For Cause or Without Good Reason.  If Executive’s employment is  terminated by the Company for Cause or by Executive without Good Reason, the Company shall  pay Executive the Accrued Obligations, and the Company shall have no further obligations to  Executive under this Agreement.  (b) Without Cause or For Good Reason Not in Contemplation of a Change of  Control.  If Executive’s employment is terminated by the Company without Cause (other than  for Disability) or by Executive for Good Reason, and in each case not “in connection with a  Change of Control” (as defined in Section 6(b)(v)), in addition to payment of the Accrued  Obligations, Executive shall be entitled to the following additional benefits (collectively, the  “Other Benefits”):  (i) Executive shall be entitled to receive a single lump sum payment  of the following, which amount shall be paid at the time provided in Section 6(d):  A. Any earned but unpaid Annual Bonus related to the  calendar year prior to the calendar year in which the Date of Termination occurs  plus;  B. the product of (x)  the target Annual Bonus for the fiscal  year during which termination of employment occurs, and (y) a fraction, the  numerator of which is the number of days in the current fiscal year through the  Date of Termination, and the denominator of which is 365.  C. An amount equal to the Severance Multiple (as defined in  Section 6(b)(vi) multiplied by the sum of (1) Executive’s Base Salary (at the rate  in effect as of the Date of Termination) and the target Annual Bonus for the fiscal  year during which termination of employment occurs.  (ii) All benefits under the Company's equity or long-term incentive  compensation plan, including all stock options and restricted stock held by the Executive,  not already vested, shall be 100% vested.  (iii) For a period of 12 months from the Executive's Date of  Termination the Company shall continue to provide to Executive and/or Executive's  dependents the same level of medical and dental benefits equal to those which would  have been provided to them in accordance with the plans, programs, practices and  policies described in Section 4(d) of this Agreement if the Executive's employment had  not been terminated and shall reimburse Executive for the premiums Executive pays for  such medical and dental benefits for up to 12 months following the Date of Termination  as provided in Section 6(f), and provided further, that if the Executive becomes re- employed by another employer and is eligible to receive medical or dental benefits under  another employer provided plan, the medical or dental benefits described herein shall be  

 

 7  secondary to those provided under such other plan during such applicable period of  eligibility.  (iv) A termination shall be deemed to be “in connection with a Change  of Control” if such termination occurs during the period beginning on the date that is (1)  twelve (12) months prior to a Change of Control occurring and (2) ending on the second  anniversary of the date of consummation of the Change of Control.  (v) “Change of Control” shall mean:   A. The acquisition by any individual, entity or group (within  the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of  1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership  (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50  percent or more of either (A) the then outstanding shares of common stock or  membership interests of the Company (the "Outstanding Company Common  Stock") or (B) the combined voting power of the then outstanding voting  securities of the Company entitled to vote generally in the election of directors or  managers (the "Outstanding Company Voting Securities"); provided, however,  that for purposes of this subsection A, the following acquisitions shall not  constitute a Change of Control:  (1) any acquisition directly from the Company or  any acquisition by the Company; or (2) any acquisition by any employee benefit  plan (or related trust) sponsored or maintained by the Company or any  corporation controlled by the Company; or (3) any acquisition by any corporation  pursuant to a transaction that complies with clauses (1), (2) and (3) of subsection  C of this definition; or  B.  Individuals, who, as of the date hereof or at the time of  consummation of the transactions contemplated by the Contribution Agreement,  constitute the Board (the "Incumbent Board") cease for any reason to constitute  at least a majority of the Board; provided, however, (1) that any individual  becoming a director subsequent to the date hereof whose election by the  Company's stockholders or members was approved by a vote of the stockholders  or members described in Section 3 of the Registration Rights Agreement attached  as Exhibit F to the Contribution Agreement shall be considered as though such  individual was a member of the Incumbent Board, and (2) that any individual  becoming a director subsequent to the date hereof whose election, or nomination  for election by the Company's stockholders or members, was approved by a vote  of at least a majority of the directors then comprising the Incumbent Board shall  be considered as though such individual was a member of the Incumbent Board,  but excluding, for purpose of this Section 6(b)(v)(B)(2), any such individual  whose initial assumption of office occurs as a result of an actual or threatened  election contest with respect to the election or removal of directors or other actual  or threatened solicitation of proxies or consents by or on behalf of a Person other  than the Board; or  

 

 8  C. Consummation of a reorganization, merger or consolidation  or sale or other disposition of all or substantially all of the assets of the Company  (a "Corporate Transaction") in each case, unless, following such Corporate  Transaction, (1) all or substantially all of the individuals and entities who were the  beneficial owners, respectively, of the Outstanding Company Common Stock and  Outstanding Company Voting Securities immediately prior to such Corporate  Transaction beneficially own, directly or indirectly, more than 60 percent of,  respectively, the then outstanding shares of common stock and the combined  voting power of the then outstanding voting securities entitled to vote generally in  the election of directors, as the case may be, of the corporation resulting from  such Corporate Transaction (including, without limitation, a corporation that as a  result of such transaction owns the Company or all or substantially all of the  Company's assets either directly or through one or more subsidiaries) in  substantially the same proportions as their ownership, immediately prior to such  Corporate Transaction, of the Outstanding Company Common Stock and the  Outstanding Company Voting Securities, as the case may be, (2) no Person  (excluding any corporation resulting from such Corporate Transaction or any  employee benefit plan (or related trust) of the Company or such corporation  resulting from such Corporate Transaction) beneficially owns, directly or  indirectly, 20 percent or more of, respectively, the then outstanding shares of  common stock of the corporation resulting from such Corporate Transaction or  the combined voting power of the then outstanding voting securities of such  corporation except to the extent that such ownership existed prior to the Corporate  Transaction and (3) at least a majority of the members of the board of directors of  the corporation resulting from such Corporate Transaction were members of the  Incumbent Board at the time of the execution of the initial agreement, or of the  action of the Board, providing for such Corporate Transaction; or  D. Approval by the stockholders of the Company of a  complete liquidation or dissolution of the Company.  E. Notwithstanding anything contained herein to the contrary,  neither the consummation of the transactions contemplated by the Contribution  Agreement, the sale of any securities in connection with an IPO Event nor the  election of directors pursuant to a vote described in Section 3 of the Registration  Rights Agreement attached as Exhibit F to the Contribution Agreement shall be  deemed to cause or result in a Change of Control under this Agreement.  (vi) “Severance Multiple”, for purposes of calculating the Other  Benefits due under this Section 6(b), shall be one (1) times, and for purposes of  calculating the Other Benefits due under Section 6(c) shall be one (1) times.   (c) Without Cause or For Good Reason in Contemplation of a Change of  Control. If Executive’s employment is terminated by the Company without Cause or by  Executive for Good Reason, and in each case “in connection with a Change of Control”, in  addition to the payment of the Accrued Obligations, Company shall pay to Executive the Other  Benefits.   

 

 9  (d) Release of Claims.  Notwithstanding any other provisions of this  Agreement to the contrary, in consideration for receiving the severance benefits described in  Section 6(b) or (c), Executive hereby agrees to execute (and not revoke) a release in substantially  the form attached hereto as Appendix A (the “Release”).  If Executive is not a “specified  employee” within the meaning of Section 409A of the Internal Revenue Code of 1986, as  amended (the “Code”) and Final Department of Treasury Regulations issued thereunder  (collectively, “Section 409A”) at the time of termination of Executive’s employment (“Specified  Employee”), and Executive has timely signed and delivered to the Company, by the deadline  established by the Company, the Release, which has become irrevocable by the time set forth  below, the Company shall pay Executive the lump sum cash severance benefits described in  Section 6(b) or (c) on the date that is sixty (60) days following the date of Executive’s  “separation from service” within the meaning of Section 409A (“Separation From Service”).  In  the event that Executive is a Specified Employee and Executive has timely signed and delivered  to the Company, by the deadline established by the Company, the Release, which has become  irrevocable by the time set forth below, the Company shall pay the Executive the lump sum cash  severance benefits described in Section 6(b) or (c) on the date that is six (6) months following  the date of the Executive’s Separation From Service.  Whether the Executive is or is not a  Specified Employee, the Executive will not be paid the lump sum cash severance benefits  described in Section 6(b) or (c) or entitled to the benefits described in Section 6(b)(ii) or (iii)  (except for Executive’s rights under section 4980B of the Code and the Consolidated Omnibus  Budget Reconciliation Act of 1985, as amended (“COBRA”)) and Executive shall forfeit any  right to such payments and benefits, unless (i) Executive has signed and delivered to the  Company the Release and (ii) the period for revoking the Release shall have expired (in the case  of both clauses (i) and (ii)) prior to the date that is 60 days following the date of Executive’s  Separation From Service.  If Executive fails to properly execute and deliver such release (or  revokes the Release), Executive agrees that Executive shall not be entitled to receive the  severance benefits described in Section 6(b) or (c) or entitled to the benefits described in  Section 6(b)(ii) or (iii) (other than COBRA benefits).  For purposes of this Agreement, a Release  shall be considered to have been executed by Executive if it is signed by Executive’s legal  representative, in the case of Executive’s Disability or on behalf of Executive’s estate in the case  of Executive’s death.   (e) Termination of Offices and Directorships.  Upon termination of  Executive’s employment for any reason, unless otherwise specified in a written agreement  between Executive and the Company, Executive shall be deemed to have resigned from all  offices, directorships, and other employment positions then held with the Company or its  affiliates, if any, and shall take all actions reasonably requested by the Company to effectuate the  foregoing.  (f) Reimbursement of Premiums.  During the period that the Company is  required to continue coverage in the Company’s group medical plan and the Company’s group  dental plan (collectively, the “Group Plan”) as provided in Section 6(b)(iii) and Executive  continues and pays the premium for such coverage to continue Executive’s and any qualifying  dependent’s Group Plan coverage (“Coverage”) the Company will reimburse Executive the  amount of the cost of the Coverage for up to 18 months Executive maintains such Coverage.   Any reimbursements by the Company to Executive required under this Section 6(f) shall be  made on the last day of each month Executive pays the amount required for such Coverage, for  

 

 10  up to the first 18 months of Coverage.  If Executive is a Specified Employee at the time of  termination and the benefits specified in this Section 6(f) are taxable to Executive and not  otherwise exempt from Section 409A then any amounts to which Executive would otherwise be  entitled under this Section 6(f) during the first six months following the date of Executive’s  Separation From Service shall be accumulated and paid to Executive on the date that is six  months following the date of Executive’s Separation From Service.  Except for any  reimbursements under the applicable Group Plan that are subject to a limitation on  reimbursements during a specified period, the amount of expenses eligible for reimbursement  under this Section 6(f), or in-kind benefits provided, during Executive’s taxable year shall not  affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other  taxable year of Executive.  Executive’s right to reimbursement or in-kind benefits pursuant to  this Section 6(f) shall not be subject to liquidation or exchange for another benefit.   7. Nondisclosure and Noncompetition.  (a) Certain Definitions. For purposes of this Agreement, the following terms  shall have the following meanings:  (i) “Confidential Information” means any information, knowledge or  data of any nature and in any form (including information that is electronically  transmitted or stored on any form of magnetic or electronic storage media) relating to the  past, current or prospective business or operations of the Company, that is not generally  known to persons engaged in a business similar to that conducted by the Company,  whether produced by the Company or any of its consultants, agents or independent  contractors or by Executive, and whether or not marked confidential.   Confidential  information does not include information that (1) at the time of disclosure is, or thereafter  becomes, generally available to the public, (2) prior to or at the time of disclosure was  already in the possession of Executive, (3) is obtained by Executive from a third party not  in violation of any contractual, legal or fiduciary obligation to the Company with respect  to that information or (3) is independently developed by Executive, but not including the  confidential information provided by the Company.  (ii) “Restricted Business” means any the oil and natural gas land  contract drilling business conducted in the United States of America.    (b) Nondisclosure of Confidential Information.  Executive shall hold in a  fiduciary capacity for the benefit of the Company all Confidential Information which shall have  been obtained by Executive during Executive’s employment (whether prior to or after the  Effective Date) and shall not use such Confidential Information other than within the scope of  Executive’s employment with and for the exclusive benefit of the Company.  At the end of the  Employment Term, Executive agrees (i) not to communicate, divulge or make available to any  person or entity (other than the Company) any such Confidential Information, except (A) upon  the prior written authorization of the Company, (B) as may be required by law or legal process,  (C) as reasonably necessary in connection with the enforcement of any right or remedy related to  this Agreement, or (D) unless no longer Confidential Information, and (ii) to deliver promptly to  the Company any Confidential Information in Executive’s possession, including any duplicates  thereof and any notes or other records Executive has prepared with respect thereto. In the event  

 

 11  that the provisions of any applicable law or the order of any court would require Executive to  disclose or otherwise make available any Confidential Information then Executive shall, to the  extent practicable, give the Company prior written notice of such required disclosure and an  opportunity to contest the requirement of such disclosure or apply for a protective order with  respect to such Confidential Information by appropriate proceedings.     (c) Limited Covenant Not to Compete & Non-Solicitation.  In consideration  of the provision of the Confidential Information during the term of this Agreement and the stock  options, restricted stock awards and other compensation  provided  herein, if Executive’s  employment is terminated hereunder, Executive agrees that during the period of time beginning  on the Date of Termination and ending on the twelve (12) month anniversary of the Date of  Termination:    (i) Executive shall not, directly or indirectly, for himself or others, be  employed by (as an employee or consultant), own, manage, operate, control or participate  in the ownership, management, operation or control of any business, whether in  corporate, proprietorship or partnership form or otherwise, that is engaged, directly or  indirectly, in the United States in the Restricted Business; provided, however, that the  restrictions contained herein shall not restrict the acquisition by Executive of less than  2% of the outstanding capital stock of any publicly traded company engaged in a  Restricted Business or Executive from being employed by an entity in which the majority  of such entity’s revenues on a consolidated basis determined in accordance with generally  accepted accounting principles are from activities and businesses that do not constitute a  Restricted Business so long as Executive is not employed by or involved in the conduct  or management of the Restricted Business within such entity; and  (ii) Executive shall not, directly or indirectly (A) solicit any individual,  who, at the time of time of such solicitation is an executive of the Company or its  affiliates, to leave such employment or hire, employ or otherwise engage any such  individual (other than employees of the Company or its affiliates who respond to general  advertisements for employment in newspapers or other periodicals of general circulation  (including trade journals)), or (B) cause, induce or encourage any material actual or  prospective client, customer, supplier, landlord, lessor or licensor of the Company or its  affiliates to terminate or modify any such actual or prospective contractual relationship  that exists on the Date of Termination.  (d) Injunctive Relief; Remedies.  The covenants and undertakings contained  in this Section 7 relate to matters which are of a special, unique and extraordinary character and a  violation of any of the terms of this Section 7 will cause irreparable injury to the Company, the  amount of which will be impossible to estimate or determine and which cannot be adequately  compensated.  Accordingly, the remedy at law for any breach of this Section 7 may be  inadequate.  Therefore, notwithstanding anything to the contrary, the Company will be entitled to  an injunction, restraining order or other equitable relief from any court of competent jurisdiction  in the event of any breach of any provision of this Section 7 without the necessity of proving  actual damages or posting any bond whatsoever.  The rights and remedies provided by this  Section 7 are cumulative and in addition to any other rights and remedies which the Company  may have hereunder or at law or in equity.  The parties hereto further agree that, if any court of  

 

 12  competent jurisdiction in a final nonappealable judgment determines that a time period, a  specified business limitation or any other relevant feature of this Section 7 is unreasonable,  arbitrary or against public policy, then a lesser time period, geographical area, business limitation  or other relevant feature which is determined by such court to be reasonable, not arbitrary and  not against public policy may be enforced against the applicable party.    (e) Governing Law of this Section 7; Consent to Jurisdiction. Any dispute  regarding the reasonableness of the covenants and agreements set forth in this Section 7, or the  territorial scope or duration thereof, or the remedies available to the Company upon any breach  of such covenants and agreements, shall be governed by and interpreted in accordance with the  laws of the state in which the prohibited competing activity or disclosure occurs, and, with  respect to each such dispute, the Company and Executive each hereby irrevocably consent to the  exclusive jurisdiction of the State of Texas for resolution of such dispute, and further agree that  service of process may be made upon Executive in any legal proceeding relating to this Section 7  by any means allowed under the laws of such state.   (f) Executive’s Understanding of this Section.  Executive hereby represents to  the Company that Executive has read and understands, and agrees to be bound by, the terms of  this Section 7. Executive acknowledges that the geographic scope and duration of the covenants  contained in Section 7(c) are the result of arm’s-length bargaining and are fair and reasonable in  light of (i) the importance of the functions performed by Executive and the length of time it  would take the Company to find and train a suitable replacement, (ii) the nature and wide  geographic scope of the operations of the Company, (iii) Executive’s level of control over and  contact with the Company’s business and operations in all jurisdictions where they are located,  and (iv) the fact that the Restricted Business is conducted throughout the geographic area where  competition is restricted by this Agreement. It is the desire and intent of the parties that the  provisions of this Agreement be enforced to the fullest extent permitted under applicable law,  whether now or hereafter in effect and therefore, to the extent permitted by applicable law, the  parties hereto waive any provision of applicable law that would render any provision of this  Section 7 invalid or unenforceable.  8. Certain Tax Matters.  (a) Notwithstanding any other provision of this Agreement to the contrary, if  any portion of the payments or benefits provided to or for the benefit of Executive under this  Agreement or which Executive otherwise receives or is entitled to receive from the Company or  any successor would be subject to the excise tax imposed by Section 4999 of the Code, or any  interest, penalties or additions to tax with respect to such excise tax (such excise tax, together  with any interest, penalties or additions to tax with respect to such excise tax, is herein  collectively referred to as the "Excise Tax"), all such payments and benefits being collectively  referred to herein as the "Total Payments", then, except as otherwise provided in Section 8(b),  the Total Payments shall be reduced (but not below zero) or eliminated (as further provided for  in Section 8(c)) to the extent the Independent Tax Advisor (as hereinafter defined) shall  reasonably determine is necessary so that no portion of the Total Payments shall be subject to the  Excise Tax.  

 

 13  (b) Notwithstanding the provisions of Section 8(a), if the Independent Tax  Advisor reasonably determines that Executive would receive, in the aggregate, a greater amount  of the Total Payments on an after-tax basis (after including and taking into account all applicable  federal, state, and local income, employment and other applicable taxes and the Excise Tax) if  the Total Payments were not reduced or eliminated pursuant to Section 8(a), then no such  reduction or elimination shall be made notwithstanding that all or any portion of the Total  Payments may be subject to the Excise Tax.  (c) For purposes of determining which of Section 8(a) and Section (b) shall be  given effect, the determination of which of the Total Payments shall be reduced or eliminated to  avoid the Excise Tax shall be made by the Independent Tax Advisor, provided that the  Independent Tax Advisor shall reduce or eliminate, as the case may be, the Total Payments in the  following order (and within the category described in each of the following Sections 8(c)(i)  through 8(c)(v), in reverse order beginning with the Total Payments which are to be paid farthest  in time except as otherwise provided in Section 8(c)(iii)):  (i) by first reducing or eliminating the portion of the Total Payments  otherwise due and which are not payable in cash (other than that portion of the Total  Payments subject to Sections 8(c)(iv) and 8(c)(v));  (ii) then by reducing or eliminating the portion of the Total Payments  otherwise due and which are payable in cash (other than that portion of the Total  Payments subject to Sections 8(c)(iii) and 8(e)(iv));  (iii) then by reducing or eliminating the portion of the Total Payments  otherwise due to or for the benefit of Executive pursuant to the terms of this Agreement  and which are payable in cash;  (iv) then by reducing or eliminating the portion of the Total Payments  otherwise due that represent equity-based compensation, such reduction or elimination to  be made in reverse chronological order with the most recent equity-based compensation  awards reduced first; and  (v) then by reducing or eliminating the portion of the Total Payments  otherwise due to or for the benefit of Executive pursuant to the terms of this Agreement  and which are not payable in cash.  (d) The Independent Tax Advisor shall provide its determinations, together  with detailed supporting calculations and documentation, to the Company and Executive for their  review no later than ten (10) days after the Date of Termination.  The determinations of the  Independent Tax Advisor under this Section 8 shall, after due consideration of the Company’s  and Executive’s comments with respect to such determinations and the interpretation and  application of this Section 8, be final and binding on all parties hereto absent manifest error.  The  Company and Executive shall furnish to the Independent Tax Advisor such information and  documents as the Independent Tax Advisor may reasonably request in order to make the  determinations required under this Section 8.  

 

 14  (e) For purposes of this Section 8, “Independent Tax Advisor” shall mean a  lawyer with a nationally recognized law firm, a certified public accountant with a nationally  recognized accounting firm, or a compensation consultant with a nationally recognized actuarial  and benefits consulting firm, in each case with expertise in the area of executive compensation  tax law, who shall be selected by the Company and shall be acceptable to Executive (Executive’s  acceptance not to be unreasonably withheld), and all of whose fees and disbursements shall be  paid by the Company.  9. Notice.  All notices hereunder must be in writing and shall be deemed to have  been given when personally delivered to the designated individual, or (unless otherwise  specified) mailed or sent by (a) United States certified or registered mail, postage prepaid, return  receipt requested, (c) a nationally recognized overnight courier service with confirmation of  receipt or (d) facsimile transmission with confirmation of receipt.   All such notices must be addressed as follows or to such other address as to which any  party hereto may have notified the other in writing.   To the Company:  20475 Hwy 249, Suite 300  Houston, Texas  77070  Attn:  Chief Executive Officer    To Executive:    At Executive’s then current address shown in the Company’s records.  or to such other address as any party may have furnished to the others in writing in accordance  herewith, except that notices of change of address shall be effective only upon receipt.  10. Compliance with Section 409A of the Code.    (a) Notwithstanding anything to the contrary in this Agreement, no  compensation or benefits, including without limitation the severance payments and benefits  under Section 6 will be paid to Executive if Executive is a Specified Employee until the six- month anniversary of Executive’s Separation From Service to the extent that paying such  amounts at the time or times indicated in this Agreement would result in a prohibited distribution  under Section 409A(a)(2)(B)(i) of the Code.    (b) To the extent applicable, this Agreement shall be interpreted and applied  consistent and in accordance with Section 409A. The parties agree to act in good faith in  complying with the requirements of Section 409A.  For purposes of this Agreement, all  references to “termination”, “termination of employment”, Date of Termination and correlative  phrases shall mean a Separation From Service.  In the event additional regulations or other  guidance are issued under Section 409A or a court of competent jurisdiction provides additional  authority concerning the application of Section 409A with respect to the payments described in  this Agreement, then the parties agree to act in good faith to amend the provisions of this  

 

 15  Agreement to permit such payments to be made at the earliest time permitted under such  additional regulations, guidance or authority that as closely as practicable achieves the original  intent of this Agreement.  (c) To the extent permitted under Section 409A, any separate payment or  benefit under this Agreement or otherwise shall not be deemed “nonqualified deferred  compensation” subject to Section 409A to the extent provided in the exceptions in Treasury  Regulation §1.409A-1(b)(9) or any other applicable exception or provision of Section 409A.   (d) To the extent that any payments or reimbursements provided to Executive  under this Agreement are deemed to constitute compensation to which Treasury Regulation  §1.409A-3(i)(1)(iv) would apply, such amounts shall be paid or reimbursed to Executive  reasonably promptly, but not later than December 31 of the year following the year in which the  expense was incurred. The amounts of any such payments eligible for reimbursement in one year  shall not affect the payments or expenses that are eligible for payment or reimbursement in any  other taxable year, and Executive’s right to such payments or reimbursement shall not be subject  to liquidation or exchange for any other benefit.    11. Miscellaneous.    (a) Withholding.  All amounts payable under this Agreement will be subject  to reduction to reflect such federal, state, local or foreign taxes as will be required to be withheld  pursuant to any applicable law or regulation.  (b) Successors; Binding Agreement.  The terms and conditions of this  Agreement shall inure to the benefit of and be binding upon the parties hereto and their  respective successors and permitted assigns, including Executive’s estate and legal  representatives.  Neither this Agreement nor any rights, interests or obligations hereunder may be  assigned by any party hereto without the prior written consent of the other parties hereto;  provided that the Company may assign any rights, interests or obligations hereunder to any  successor (whether direct or indirect, by merger, purchase, consolidation or otherwise) to all or  substantially all of the business and/or assets of the Company.  The Company agrees to require  any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all  or substantially all of the business and/or assets of the Company to assume expressly and agree  to 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 had taken place.  As used in this Agreement,  “Company” shall mean the Company as hereinbefore defined any successor to its business  and/or assets as aforesaid which assume and agrees to perform this Agreement by operation of  law or otherwise.  (c) Waiver.  No provision of this Agreement may be modified, waived or  discharged unless such waiver, modification or discharge is agreed to in writing signed by  Executive and an authorized representative of the Company.  No waiver by either party hereto at  any time of any breach by the other party hereto of, or compliance with, any condition or  provision of this Agreement to be performed by such other party shall be deemed a waiver of  similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  No  agreements or representations, oral or otherwise express or implied, with respect to the subject  

 

 16  matter hereof have been made by either party which are not set forth expressly in this  Agreement.  (d) Validity.  The invalidity or unenforceability of any provision or provisions  of this Agreement shall not affect the validity or enforceability of any other provision of this  Agreement, which shall remain in full force and effect.  (e) Counterparts.  This Agreement may be executed in one or more  counterparts, each of which shall be deemed to be an original, but all of which together shall  constitute one and the same instrument.  (f) Entire Agreement.  This Agreement sets forth the entire agreement of the  parties hereto in respect of the subject matter contained herein and supersedes all prior  agreements, promises, covenants, arrangements, communications, representations or warranties,  whether oral or written, by any officer, Executive or representative of any party hereto, including  the Prior Agreement; and any prior agreement of the parties hereto in respect of the subject  matter contained herein is hereby terminated and canceled.  (g) Governing Law.  This Agreement has been made and entered into and  shall be governed by the internal laws of the State of Texas without regard to principles of  conflict of laws, except as expressly provided in Section 7(e) above with respect to the resolution  of disputes arising under, or the Company’s enforcement of, Section 7.  (h) Jurisdiction.  If any party commences a lawsuit or other proceeding related  to or arising from this Agreement, the parties hereto agree that the State District Court in  Houston, Harris County Texas shall have sole and exclusive jurisdiction over any such  proceeding.  The State District Court shall be the proper venue for any such lawsuit or judicial  proceeding and the parties hereto waive any objection to such venue.  The parties consent to and  agree to submit to the jurisdiction of the court specified herein and agree to accept service of  process to vest personal jurisdiction over them in the State District Court of Harris County  Texas.  (i) Severability.  The invalidity or unenforceability of any provision or  provisions of this Agreement will not affect the validity or enforceability of any other provision  of this Agreement, which will remain in full force and effect.  [Signature page follows]    

 

    17  IN WITNESS WHEREOF, the parties have executed this Agreement on the date and  year first above written.     COMPANY:      INDEPENDENCE CONTRACT  DRILLING, INC.         Date  12/18/20 ________________________ By:  /s/ Anthony Gallegos _______________   Name:   Anthony Gallegos   Title:  CEO       EXECUTIVE:    Date:  12/18/20 _______________________ /s/ Katherine Kokenes __________________   Katherine Kokenes 

 

    APPENDIX A    AGREEMENT AND RELEASE  This Agreement and Release (“Release”) is entered into between you, the undersigned  employee, and  Independence Contract Drilling, Inc. (the “Company”).  You have [__] days to  consider this Release, which you agree is a reasonable amount of time.  While you may sign this  Release prior to the expiration of this [___]-day period, you are not to sign it prior to the date of  your termination of employment with the Company.  1. Definitions.  a. “Released Parties” means the Company and its past, present and future  parents, subsidiaries, divisions, successors, predecessors, employee benefit plans and affiliated or  related companies, and also each of the foregoing entities’ past, present and future owners,  officers, directors, stockholders, investors, partners, managers, principals, members, committees,  administrators, sponsors, executors, trustees, fiduciaries, employees, agents, assigns,  representatives and attorneys, in their personal and representative capacities.  Each of the  Released Parties is an intended beneficiary of this Release.  b. “Claims” means all theories of recovery of whatever nature, whether  known or unknown, recognized by the law or equity of any jurisdiction.  It includes but is not  limited to any and all actions, causes of action, lawsuits, claims, complaints, petitions, charges,  demands, liabilities, indebtedness, losses, damages, rights and judgments in which you have had  or may have an interest.  It also includes but is not limited to any claim for wages, benefits or  other compensation.  It also includes but is not limited to claims asserted by you or on your  behalf by some other person, entity or government agency.  2. Consideration.  The Company agrees to pay you the consideration set forth in  sections 6 and 8 of the Amended and Executive Employment Agreement between you and the  Company dated as of [_________] (the “Employment Agreement”).  The Company will make  such payments to you at the times set forth in the Employment Agreement.  You acknowledge  that the payment that the Company will make to you in consideration for this Release is in  addition to anything else of value to which you are entitled and that the Company is not  otherwise obligated to make this payment to you.  3. Release of Claims.  a. You – on behalf of yourself and your heirs, executors, administrators,  legal representatives, successors, beneficiaries, and assigns – unconditionally release and forever  discharge the Released Parties from, and waive, any and all Claims that you have or may have  against any of the Released Parties arising from your employment with the Company, the  termination thereof, and any other acts or omissions occurring on or before the date you sign this  Release; provided, however, that this Agreement shall not operate to release any Claims that you  may have to payments or benefits under Section 6 of the Employment Agreement or any rights  you may have to indemnification under any indemnification agreement between you and the  

 

   A-2    Company or any of its affiliates, or the bylaws or any directors and officers liability insurance  policy of the Company or any of its affiliates (collectively, the “Unreleased Claims”).  b. The release set forth in Paragraph 3(a) includes, but is not limited to, any  and all Claims under (i) the common law (tort, contract or other) of any jurisdiction; (ii) the  Rehabilitation Act of 1973, the Age Discrimination in Employment Act, the Americans with  Disabilities Act, Title VII of the Civil Rights Act of 1964, and any other federal, state and local  statutes, ordinances, executive orders and regulations prohibiting discrimination or retaliation  upon the basis of age, race, sex, national original, religion, disability, or other unlawful factor;  (iii) the National Labor Relations Act; (iv) the Employee Retirement Income Security Act; (v)  the Family and Medical Leave Act; (vi) the Fair Labor Standards Act; (vii) the Equal Pay Act;  (viii) the Worker Adjustment and Retraining Notification Act; and (ix) any other federal, state or  local law.  c. In furtherance of this Release, you promise not to bring any Claims (other  than Unreleased Claims) against any of the Released Parties in or before any court or arbitral  authority.  4. Confidentiality.  You agree that you will not reveal, or cause to be revealed, this  Release or its terms to any third party (other than your attorney, tax advisor, or spouse), except as  required by law.  5. Acknowledgment.  You acknowledge that, by entering into this Release, the  Company does not admit to any wrongdoing in connection with your employment or  termination, and that this Release is intended as a compromise of any Claims you have or may  have against the Released Parties.  You further acknowledge that you have carefully read this  Release and understand its final and binding effect, have had a reasonable amount of time to  consider it, and are entering this Release voluntarily.  You acknowledge that the Company has  advised you in writing to seek the advice of legal counsel prior to executing this release, and that  you have had the opportunity to seek legal counsel of your choosing.  6. Applicable Law.  This Release shall be construed and interpreted pursuant to the  laws of Texas without regard to its choice of law rules.  7. Severability.  Each part, term, or provision of this Release is severable from the  others.  Notwithstanding any possible future finding by a duly constituted authority that a  particular part, term, or provision is invalid, void, or unenforceable, this Release has been made  with the clear intention that the validity and enforceability of the remaining parts, terms and  provisions shall not be affected thereby. If any part, term, or provision is so found invalid, void  or unenforceable, the applicability of any such part, term, or provision shall be modified to the  minimum extent necessary to make it or its application valid and enforceable.  8. Effective Date: You acknowledge that you have seven (7) days after  execution to revoke this Release, and that this Release shall not become final and binding until  the expiration of seven (7) days after execution.      

 

   A-2    [Signature page follows]    

 

       IN WITNESS WHEREOF, the parties have executed this Release on the date set forth  below.      EXECUTIVE:      ____________________________________ Date:  [_______________, 20___]  [name]        COMPANY:    INDEPENDENCE CONTRACT DRILLING, INC.      Date:  [_______________, 20___]        By: _________________________________  Name: ______________________________  Title: _______________________________

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