Document:

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                                                                   EXHIBIT 10.10

                              EMPLOYMENT AGREEMENT

         This EMPLOYMENT AGREEMENT (the "Agreement") effective as of June 1,
1999 by and between American Eco Corporation, an Ontario, Canada corporation
whose principal executive offices are in Houston, Texas (the "Company"), and
Matthew D. Hill (the "Executive").

                                 R E C I T A L S

         Executive will serve as Senior Vice President - Chief Operating
Officer.

         The Chief Executive Officer of the Company has determined that it is in
the best interests of the Company to retain the Executive"s services and to
reinforce and encourage the continued attention and dedication of members of the
Company's management, including the Executive, to their assigned duties without
distraction in potentially disturbing circumstances arising from the possibility
of a change in control of the Company or the assertion of claims and actions
against employees.

         Both the Company and the Executive recognize the increased risk of
litigation and other claims being asserted against officers and directors of
companies in today"s environment.

         The Bylaws of the Company require the Company to indemnify its
directors and officers to the full extent permitted by law.

         Costs, limits in coverage and availability of directors" and officers"
liability insurance policies and developments in the application, amendment and
enforcement of statutory and bylaw indemnification provisions generally have
raised questions concerning the adequacy and reliability of the protection
afforded to directors and officers and have increased the difficulty of
attracting and retaining qualified persons to serve as directors and officers.

         In recognition of the Executive"s need for substantial protection
against personal liability to enhance and induce the Executive"s continued
service to the Company in an effective manner and the Executive"s reliance on
the Bylaws, and in part to provide the Executive with specific contractual
assurance that the protection promised by the Bylaws will be available to the
Executive (regardless of, among other things, any amendment to or revocation of
the Bylaws or any change in the composition of the Company's Board of Directors
or acquisition transaction relating to the Company), the Company wishes to
provide in this Agreement for the continuing employment of the Executive and the
indemnification of, and the advancing of expenses to, the Executive to the full
extent (whether partial or complete) permitted by law and as set forth in this
Agreement, and, to the extent insurance is maintained, for the coverage of the
Executive under the Company's directors" and officers" liability insurance
policies.

         The Company wishes to assure itself of the services of the Executive
for the period provided in this Agreement and the Executive wishes to serve in
the employ of the Company on the terms and conditions hereinafter provided.

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                                A G R E E M E N T

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:

                                    ARTICLE I

                                   EMPLOYMENT

         1.1 Employment. The Company hereby employs the Executive and the
Executive hereby accepts employment by the Company for the period and upon the
terms and conditions contained in this Agreement.

         1.2 Office and Duties.

                  (a) Position. The Executive shall serve the Company as Senior
         Vice President - Chief Operating Officer with authority, duties and
         responsibilities not less than the Executive has on the date of this
         Agreement, with his actions at all times subject to the direction of
         the Chief Executive Officer.

                  (b) Commitment. Throughout the term of this Agreement, the
         Executive shall devote substantially all of his time, energy, skill and
         best efforts to the performance of his duties hereunder in a manner
         that will faithfully and diligently further the business and interests
         of the Company. Subject to the foregoing, the Executive may serve, or
         continue to serve, on the boards of directors of, and hold any other
         offices or positions in, companies or organizations that are disclosed
         to the Board of Directors and that will not materially affect the
         performance of the Executive"s duties pursuant to this Agreement.

         1.3 Term. The term of this Agreement shall commence on June 1, 1999 and
shall end on the third anniversary of the date on which the Chief Executive
Officer notifies the Executive that the Chief Executive Officer has determined
to discontinue the automatic daily extension of this Agreement (the period of
time between the commencement and the end of this Agreement is referred to
herein as the "Term").

         1.4 Compensation.

                  (a) Base Salary. The Company shall pay the Executive as
         compensation an aggregate salary ("Base Salary") of $200,000 per year
         during the Term, or such greater amount as shall be approved by the
         Compensation Committee of the Company's Board of Directors. The
         Compensation Committee shall review the Executive"s Base Salary at
         least annually. The Base Salary for each year shall be paid by the
         Company in accordance with the regular payroll practices of the
         Company.

                  (b) Annual Bonus. Each year during the Term, the Executive
         shall be eligible to participate in an annual bonus pool equal to 5% of
         the Company's net income, which shall mean the consolidated net income
         of the Company for its fiscal year, calculated in

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         accordance with generally accepted accounting principles as applied by
         the Company's auditors during their annual audit. The Company shall pay
         the Executive such bonus (the "Annual Bonus") no later than 90 days
         following the end of the Company's fiscal year. The amount of the
         Annual Bonus to which the Executive may be entitled shall be determined
         in advance by the Compensation Committee, but shall not exceed 100% of
         1.4(a).

                  (c) Stock Options. The Executive shall be eligible to receive
         grants of stock options pursuant to the Company's Employee Stock Option
         Plan, as amended May 7, 1997, and as amended hereafter, in amounts (if
         any) and on terms and conditions to be determined by the Compensation
         Committee of the Company's Board of Directors.

                  (d) Life Insurance. During the Term and subject to the
         Executive"s qualification under normal life insurance underwriting
         standards as of the date hereof and at any policy renewal date, the
         Company shall provide, at the Company's expense, a term life insurance
         policy on the life of the Executive in a face amount equal to
         $2,000,000. The proceeds from such policy shall be payable as follows:
         50% to the Company and 50% to the Executive"s estate.

                  (e) Disability Insurance. During the Term and subject to the
         Executive"s qualification under normal disability insurance
         underwriting standards as of the date hereof and at any policy renewal
         date, the Company shall provide, at the Company's expense, a disability
         insurance policy that will pay the Executive, pursuant to the terms of
         such policy, an annual disability benefit of $200,000 until the
         Executive reaches the age of 65.

                  (f) Fringe Benefits and Perquisites. During the Term, the
         Executive shall be entitled to participate in or receive benefits under
         any plan or arrangement made available by the Company to its senior
         executive officers, including but not limited to any hospitalization,
         medical, dental or pension plan, subject to and on a basis consistent
         with the terms, conditions and overall administration of such plans and
         arrangements. Nothing paid to the Executive under any plan or
         arrangement made available to the Executive shall be deemed to be in
         lieu of compensation hereunder.

                  (g) Automobile Allowance. During the Term, the Executive shall
         be provided a car or paid a car allowance of $750.00 per month. This
         amount shall be paid on the first day of each month, and the Company
         shall also reimburse the Executive for all actual expenses associated
         with operating and maintaining the Executive"s vehicle. The Executive
         shall submit receipts or other evidence of such expenditures, and the
         Company shall pay these amounts to the Executive within 30 days of
         receipt of such documentation.

                  (h) Payment and Reimbursement of Expenses. During the Term,
         the Company shall pay or reimburse the Executive for all reasonable
         travel and other expenses incurred by the Executive in performing his
         obligations under this Agreement in accordance with the policies and
         procedures of the Company for its senior executive officers, provided
         that the Executive properly accounts therefor in accordance with the
         regular policies of the Company.

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                  (i) Vacations. During the Term and in accordance with the
         regular policies of the Company, the Executive shall be entitled to the
         number of paid vacation days in each calendar year determined by the
         Company from time to time for its senior executive officers, but not
         less than four weeks in any calendar year (prorated in any calendar
         year in which the Executive is employed hereunder for less than the
         entire year in accordance with the number of days in such calendar year
         during which the Executive is so employed).

                  (j) Benefits Not in Lieu of Compensation. No benefit or
         perquisite provided to the Executive shall be deemed to be in lieu of
         Base Salary, Annual Bonus, or other compensation.

         1.5 Termination.

                  (a) Disability. The Company may terminate this Agreement for
         Disability. "Disability" shall exist if because of ill health or
         physical or mental disability, and notwithstanding reasonable
         accommodations made by the Company, the Executive shall have been
         unable, unwilling or shall have failed to perform his duties under this
         Agreement, as determined in good faith by the Compensation Committee of
         the Company's Board of Directors, for a period of 180 consecutive days,
         or if, in any 12-month period, the Executive shall have been unable or
         unwilling or shall have failed to perform his duties for a period of
         270 days, irrespective of whether or not such days are consecutive.

                  (b) Cause. The Company may terminate the Executive"s
         employment for Cause. Termination for "Cause" shall mean termination
         because of the Executive"s (i) willful gross misconduct that causes
         material economic harm to the Company or that brings substantial
         discredit to the Company's reputation, (ii) final, nonappealable
         conviction of a felony involving moral turpitude, or (iii) material
         breach of any provision of this Agreement. Items (i) and (iii) of this
         subsection shall not constitute Cause unless the Company notifies the
         Executive thereof in writing, specifying in reasonable detail the basis
         therefor and stating that it is grounds for Cause, and unless the
         Executive fails to cure such matter within 60 days after such notice is
         sent or given under this Agreement. The Executive shall be permitted to
         respond and to defend himself before the Board of Directors or any
         appropriate committee thereof within a reasonable time after written
         notification of any proposed termination for Cause under item (i) or
         (iii) of this subsection.

                  (c) Without Cause. During the Term, the Company may terminate
         the Executive"s employment Without Cause, subject to the provisions of
         subsection 1.6(d) (Termination Without Cause or for Company Breach).
         Termination "Without Cause" shall mean termination of the Executive"s
         employment by the Company other than termination for Cause or for
         Disability.

                  (d) Company Breach. The Executive may terminate his employment
         hereunder for Company Breach. For purposes of this Agreement "Company
         Breach" shall mean:

                           (i) without his express written consent, any material
                           reduction in the authority, duties and
                           responsibilities that the Executive has on the date
                           of this

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                           Agreement, or the assignment to the Executive of any
                           duties inconsistent with his positions, duties,
                           responsibilities and status with the Company, or a
                           change in his reporting responsibilities, titles or
                           offices, or any removal of the Executive from or any
                           failure to re-elect the Executive to any of such
                           positions, except in connection with the termination
                           of his employment for Cause, Disability or retirement
                           or as a result of his death or by the Executive other
                           than for Company Breach or Change in Control;

                           (ii) a reduction in the Executive"s Base Salary as in
                           effect on the date of this Agreement or as the same
                           may be increased from time to time;

                           (iii) a relocation of the Company's principal
                           executive offices to any county other than Harris
                           County or any county contiguous thereto or the
                           Company's requiring the Executive to be based
                           anywhere other than Harris County or any county
                           contiguous thereto, except for required travel on the
                           Company's business to an extent substantially
                           consistent with his present business travel
                           obligations, or, in the event the Executive consents
                           to any relocation, the failure by the Company (a) to
                           retain a real estate broker, at the Company's
                           expense, and otherwise assist the Executive in
                           selling the Executive"s principal residence in Harris
                           County, (b) to pay (or reimburse the Executive) for
                           all reasonable moving expenses incurred by him
                           relating to a change of his principal residence in
                           connection with such relocation and (c) to indemnify
                           the Executive against any loss (defined as the
                           difference between the actual sale price of such
                           residence and the higher of (1) his aggregate
                           investment in such residence or (2) the fair market
                           value of such residence as determined by a real
                           estate appraiser designated by the Executive and
                           reasonably satisfactory to the Company) realized on
                           the sale of the Executive's principal residence in
                           connection with any such change of residence;

                           (iv) the failure by the Company to continue in effect
                           any benefit or compensation plan (including but not
                           limited to any stock option plan, pension plan, life
                           insurance plan, health and accident plan or
                           disability plan) in which the Executive is
                           participating (or plans providing substantially
                           similar benefits), the taking of any action by the
                           Company which would adversely affect the Executive's
                           participation in or materially reduce his benefits
                           under any of such plans or deprive him of any
                           material fringe benefit enjoyed by him, or the
                           failure by the Company to provide the Executive with
                           the number of paid vacation days to which he is then
                           entitled on the basis of years of service with the
                           Company in accordance with the Company's normal
                           vacation policy in effect on the date hereof;

                           (v) any failure of the Company to obtain the
                           assumption of, or the agreement to perform, this
                           Agreement by any successor as contemplated in Section
                           4.13 (Binding Effect, Etc.) hereof; or

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                           (vi) any material breach of this Agreement by the
                           Company;

         provided, however, that a material breach of this Agreement by the
         Company shall not constitute Company Breach unless the Executive
         notifies the Company in writing of the breach, specifying in reasonable
         detail the nature of the breach and stating that such breach is grounds
         for Company Breach, and unless the Company fails to cure such breach
         within 60 days after such notice is sent or given under this Agreement.

                  (e) Change in Control. The Executive may terminate his
         employment hereunder within 12 months of a Change in Control (defined
         below):

                           (i) "Change in Control" shall mean any of the
                           following:

                                    (1) any consolidation or merger of the
                           Company in which the Company is not the continuing or
                           surviving corporation or pursuant to which shares of
                           the Company's common stock would be converted into
                           cash, securities or other property, other than a
                           merger of the Company in which the holders of the
                           Company's common stock immediately prior to the
                           merger have the same proportionate ownership of
                           common stock of the surviving corporation immediately
                           after the merger;

                                    (2) any sale, lease, exchange or other
                           transfer (in one transaction or a series of related
                           transactions) of all or substantially all of the
                           assets of the Company;

                                    (3) any approval by the stockholders of the
                           Company of any plan or proposal for the liquidation
                           or dissolution of the Company;

                                    (4) the cessation of control (by virtue of
                           their not constituting a majority of directors) of
                           the Company's Board of Directors by the individuals
                           (the "Continuing Directors") who (x) at the date of
                           this Agreement were directors or (y) become directors
                           after the date of this Agreement and whose election
                           or nomination for election by the Company's
                           stockholders was approved by a vote of at least
                           two-thirds of the directors then in office who were
                           directors at the date of this Agreement or whose
                           election or nomination for election was previously so
                           approved); or

                                    (5) the acquisition of beneficial ownership
                           (within the meaning of Rule 13d-3 under the
                           Securities Exchange Act of 1934, as amended) of an
                           aggregate of 15% of the voting power of the Company's
                           outstanding voting securities by any person or group
                           (as such term is used in Rule 13d-5 under such Act)
                           who beneficially owned less than 10% of the voting
                           power of the Company's outstanding voting securities
                           on the date hereof, or the acquisition of beneficial
                           ownership of an additional 5% of the voting power of
                           the Company's

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                           outstanding voting securities by any person or group
                           who beneficially owned at least 10% of the voting
                           power of the Company's outstanding voting securities
                           on the date hereof; provided, however, that
                           notwithstanding the foregoing, an acquisition shall
                           not constitute a Change in Control hereunder if the
                           acquiror is (w) the Executive, (x) a trustee or other
                           fiduciary holding securities under an employee
                           benefit plan of the Company and acting in such
                           capacity, (y) a corporation owned, directly or
                           indirectly, by the stockholders of the Company in
                           substantially the same proportions as their ownership
                           of voting securities of the Company or (z) any other
                           person whose acquisition of shares of voting
                           securities is approved in advance by a majority of
                           the Continuing Directors;

                                    (6) subject to applicable law, in a Chapter
                           11 bankruptcy proceeding, the appointment of a
                           trustee or the conversion of a case involving the
                           Company to a case under Chapter 7.

                  (f) Without Good Reason. During the Term, the Executive may
         terminate his employment Without Good Reason. Termination "Without Good
         Reason" shall mean termination of the Executive"s employment by the
         Executive other than termination for Company Breach or as a result of a
         Change in Control.

                  (g) Explanation of Termination of Employment. Any party
         terminating this Agreement shall give prompt written notice ("Notice of
         Termination") to the other party hereto advising such other party of
         the termination of this Agreement. Within thirty (30) days after
         notification that the Agreement has been terminated, the terminating
         party shall deliver to the other party hereto a written explanation
         (the "Explanation of Termination of Employment"), which shall state in
         reasonable detail the basis for such termination and shall indicate
         whether termination is being made for Cause, Without Cause or for
         Disability (if the Company has terminated the Agreement) or for Company
         Breach, upon a Change in Control or Without Good Reason (if the
         Executive has terminated the Agreement).

                  (h) Date of Termination. "Date of Termination" shall mean the
         date on which Notice of Termination is sent or given under this
         Agreement.

         1.6 Compensation During Disability or Upon Termination.

                  (a) During Disability. During any period that the Executive
         fails to perform his duties hereunder because of Disability, he shall
         continue to receive his full Base Salary and benefits pursuant to
         Section 1.4 (Compensation) until the Date of Termination.

                  (b) Termination for Disability. If the Company shall terminate
         the Executive"s employment for Disability, then the Company shall have
         no further obligation to make any payment under this Agreement which
         has not already become payable, but has not yet been paid, except that
         the Company shall continue to provide the Executive with the benefits
         set forth in Section 1.6(f) (Employee Benefits) for the period
         described therein. The Company also shall make any additional payments
         necessary to provide the disability benefits set forth in Section
         1.4(e) (Disability Insurance) above.

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                  (c) Termination for Cause or Without Good Reason. If the
         Company shall terminate the Executive"s employment for Cause or if the
         Executive shall terminate his employment Without Good Reason, then the
         Company shall have no further obligation to make any payment under this
         Agreement which has not already become payable, but has not yet been
         paid, except as may otherwise be provided under the terms of any
         employee benefit programs in which the Executive is participating.

                  (d) Termination Without Cause or for Company Breach. If the
         Company shall terminate the Executive"s employment Without Cause or if
         the Executive shall terminate his employment for Company Breach, then
         the Company shall pay to the Executive, as severance pay in a lump sum
         no later than the 15th day following the Date of Termination, the
         following amounts:

                           (i) any payment of Base Salary (at the rate in effect
                  as of the Date of Termination) or Annual Bonus which has
                  already become payable, but has not yet been paid, through the
                  Date of Termination;

                           (ii) his Annual Bonus for the fiscal year in which
                  the Date of Termination occurs, as pro-rated through the Date
                  of Termination. If such Annual Bonus is dependent upon
                  financial results for the fiscal year that are unknown at the
                  Date of Termination, his Annual Bonus received for the past
                  fiscal year shall substitute as his Annual Bonus for the
                  fiscal year in which the Date of Termination occurs; and

                           (iii) in lieu of any further Base Salary and Annual
                  Bonus for periods subsequent to the Date of Termination, an
                  amount equal to the product of (A) the sum of the Executive"s
                  Base Salary at the rate in effect as of the Date of
                  Termination, multiplied by (B) the number two (2).

                  The Company shall also continue to provide the Executive with
         the employee benefits set for in Section 1.6(f) (Employee Benefits) for
         the period described therein.

                  If the Executive terminates his employment for Company Breach
         based upon a material reduction by the Company of the Executive"s Base
         Salary, then for purposes of this Section 1.6(d) (Termination Without
         Cause or for Company Breach), the Executive"s Base Salary as of the
         Date of Termination shall be deemed to be the Executive"s Base Salary
         immediately prior to the reduction that the Executive claims as grounds
         for Company Breach.

                  (e) Termination Upon a Change in Control. If the Executive
         terminates his employment after a Change in Control pursuant to Section
         1.5(e) (Change in Control), then the Company shall pay to the Executive
         as severance pay and as liquidated damages (because actual damages are
         difficult to ascertain), in a lump sum, in cash, within 15 days after
         termination, an amount equal to the amounts provided in Sections
         1.6(d)(i), (ii), and (iii) above. In addition, if the Executive is
         liable for the payment of any excise tax (the "Basic Excise Tax")
         because of Section 4999 of the Internal Revenue Code of 1986, as
         amended (the "Code"), or any successor or similar provision, with
         respect to any payments or benefits received or to be received from the
         Company or its affiliates, or any successor to the

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         Company or its affiliates, whether provided under this Agreement or
         otherwise, the Company shall pay the Executive an amount (the "Special
         Reimbursement") which, after payment by the Executive (or on the
         Executive"s behalf) of any federal, state and local taxes applicable
         thereto, including, without limitation, any further excise tax under
         such Section 4999 of the Code, on, with respect to or resulting from
         the Special Reimbursement, equal the net amount of the Basic Excise
         Tax. The determination of the amount of the payment described in this
         Section 1.6(e) shall be made by the Company's independent auditors.

                  (f) Employee Benefits. Unless the Company terminates the
         Executive"s employment for Cause or the Executive terminates his
         employment Without Good Reason, the Company shall maintain in full
         force and effect, for the continued benefit of the Executive and, if
         applicable, his wife and children, the employee benefits set forth in
         Sections 1.4(d) (Life Insurance) and 1.4(e) (Disability Insurance), and
         any hospitalization, medical and dental coverage included in Section
         1.4(f) (Fringe Benefits and Perquisites) above that he was entitled to
         receive immediately prior to the Date of Termination (subject to the
         general terms and conditions of the plans and programs under which he
         receives such benefits) for the balance of the Term or for the period
         provided for under the terms and conditions of such plans and programs,
         whichever is longer, with the full amount of any applicable premiums to
         be borne by the Company.

                  (g) No Mitigation. The Executive shall not be required to
         mitigate the amount of any payment provided for in this Section 1.6
         (Compensation During Disability or Upon Termination) by seeking other
         employment or otherwise.

         1.7 Death of Executive. If the Executive dies prior to the expiration
of this Agreement, the obligations under this Agreement shall automatically
terminate and all compensation to which the Executive is or would have been
entitled hereunder (including without limitation under Sections 1.4(a) (Base
Salary) and 1.4(b) (Annual Bonus)) shall terminate as of the end of the month in
which the Executive"s death occurs; provided, however, that (i) the Company
shall pay to the Executive"s estate, as soon as practicable, a prorated Annual
Bonus, if earned in accordance with the Company's annual bonus plan; (ii) for
the balance of the Term, the Executive"s wife and children shall be entitled to
continue participation in the Company's group hospitalization, medical and
dental plans (if any), with the full amount of any premium to be borne by the
Company; and (iii) the Executive"s named beneficiary or beneficiaries shall
receive the benefits payable pursuant to Section 1.4(d) (Life Insurance) hereof
and such reimbursement as may have been due to the Executive pursuant to Section
1.4(h) (Payment and Reimbursement of Expenses) hereof.

                                    ARTICLE 2

                       NON-COMPETITION AND CONFIDENTIALITY

         2.1 Non-Competition.

                  (a) Description of Proscribed Actions. Throughout the
         Executive"s employment during the term of this Agreement and, unless
         the Agreement terminates pursuant to Section 1.5(a) (Disability),
         Section 1.5(c) (Without Cause), Section 1.5(d) (Company Breach), or

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         Section 1.5(e) (Change in Control), for a period of two (2) years after
         the termination of the Executive"s employment, in consideration for the
         Company's obligations hereunder, including without limitation the
         Company's disclosure (pursuant to Section 2.2(b) (Obligation of The
         Company) below) of Confidential Information and the Company's agreement
         to indemnify the Executive (pursuant to Article 3 (Indemnification)
         hereof), the Executive shall not:

                           (i) directly or indirectly, engage or invest in, own,
                  manage, operate, control or participate in the ownership,
                  management, operation or control of, be employed by,
                  associated or in any manner connected with, or render services
                  or advice to, any Competing Business (as defined in Section
                  2.1(d) below); provided, however, that the Executive may
                  invest in the securities of any enterprise (but without
                  otherwise participating in the activities of such enterprise)
                  if (x) such securities are listed on any national or regional
                  securities exchange or have been registered under Section
                  12(g) of the Securities Exchange Act of 1934 and (y) the
                  Executive does not beneficially own (as defined Rule 13d-3
                  promulgated under the Securities Exchange Act of 1934) in
                  excess of 5% of the outstanding capital stock of such
                  enterprise;

                           (ii) directly or indirectly, either as principal,
                  agent, independent contractor, consultant, director, officer,
                  employee, employer, advisor (whether paid or unpaid),
                  stockholder, partner or in any other individual or
                  representative capacity whatsoever, either for his own benefit
                  or for the benefit of any other person or entity, solicit,
                  divert or take away any suppliers, customers or clients of the
                  Company or any of its Affiliates (as defined in Section 2.1(e)
                  below); or

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

                  (b) Judicial Modification. The Executive agrees that if a
         court of competent jurisdiction determines that the length of time or
         any other restriction, or portion thereof, set forth in this Section
         2.1 (Non-Competition) is overly restrictive and unenforceable, the
         court may reduce or modify such restrictions to those which it deems
         reasonable and enforceable under the circumstances, and as so reduced
         or modified, the parties hereto agree that the restrictions of this
         Section 2.1 (Non-Competition) shall remain in full force and effect.
         The Executive further agrees that if a court of competent jurisdiction
         determines that any provision of this Section 2.1 (Non-Competition) is
         invalid or against public policy, the remaining provisions of this
         Section 2.1 (Non-Competition) and the remainder of this Agreement shall
         not be affected thereby, and shall remain in full force and effect.

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                  (c) Nature of Restrictions. The Executive acknowledges that
         the business of the Company and its Affiliates is international in
         scope and that the Restrictions imposed by this Agreement are
         legitimate, reasonable and necessary to protect the Company's and its
         Affiliates" investment in their businesses and the goodwill thereof.
         The Executive acknowledges that the scope and duration of the
         restrictions contained herein are reasonable in light of the time that
         the Executive has been engaged in the business of the Company and its
         Affiliates, the Executive"s reputation in the markets for the Company's
         and its Affiliates" businesses and the Executive"s relationship with
         the suppliers, customers and clients of the Company and its Affiliates.
         The Executive further acknowledges that the restrictions contained
         herein are not burdensome to the Executive in light of the
         consideration paid therefor and the other opportunities that remain
         open to the Executive. Moreover, the Executive acknowledges that he has
         other means available to him for the pursuit of his livelihood.

                  (d) Competing Business. "Competing Business" shall mean any
         individual, business, firm, company, partnership, joint venture,
         organization, or other entity engaged in the industrial support
         services and specialty fabrication business in any domestic or
         international market area in which the Company or any of its Affiliates
         does business at any time during the Executive"s employment with the
         Company.

                  (e) Affiliate. When used with reference to the Company,
         "Affiliate" shall mean any person or entity that directly or indirectly
         through one or more intermediaries controls or is controlled by or is
         under common control with the Company.

         2.2 Confidentiality. For the purposes of this Section 2.2
(Confidentiality), the term "the Company" shall be construed also to include any
and all Affiliates of the Company.

                  (a) Confidential Information. "Confidential Information" shall
         mean information that is used in the Company's business and

                           (i) is proprietary to, about or created by the
                  Company;

                           (ii) gives the Company some competitive advantage,
                  the opportunity of obtaining such advantage or the disclosure
                  of which could be detrimental to the interests of the Company;

                           (iii) is not typically disclosed to non-employees by
                  the Company, or otherwise is treated as confidential by the
                  Company; or

                           (iv) is designated as Confidential Information by the
                  Company or from all the relevant circumstances should
                  reasonably be assumed by the Executive to be confidential to
                  the Company.

         Confidential Information shall not include information publicly known
         (other than as a result of a disclosure by the Executive). The phrase
         "publicly known" shall mean readily accessible

                                       11
<PAGE>   12

         to the public in a written publication and shall not include
         information that is only available by a substantial searching of the
         published literature or information the substance of which must be
         pieced together from a number of different publications and sources, or
         by focused searches of literature guided by Confidential Information.

                  (b) Obligation of The Company. During the Term, the Company
         shall provide access to, or furnish to, the Executive Confidential
         Information of the Company necessary to enable the Executive properly
         to perform his obligations under this Agreement.

                  (c) Non-Disclosure. The Executive acknowledges, understands
         and agrees that all Confidential Information, whether developed by the
         Company or others or whether developed by the Executive while carrying
         out the terms and provisions of this Agreement (or previously while
         serving as an officer of the Company), shall be the exclusive and
         confidential property of the Company and (i) shall not be disclosed to
         any person other than employees of the Company and professionals
         engaged on behalf of the Company, and other than disclosure in the
         scope of the Company's business in accordance with the Company's
         policies for disclosing information, (ii) shall be safeguarded and kept
         from unintentional disclosure and (iii) shall not be used for the
         Executive"s personal benefit. Subject to the terms of the preceding
         sentence, the Executive shall not use, copy or transfer Confidential
         Information other than as is necessary in carrying out his duties under
         this Agreement.

         2.3 Injunctive Relief. Because of the Executive"s experience and
reputation in the industries in which the Company operates, and because of the
unique nature of the Confidential Information, the Executive acknowledges,
understands and agrees that the Company will suffer immediate and irreparable
harm if the Executive fails to comply with any of his obligations under Article
2 (Non-Competition and Confidentiality) of this Agreement, and that monetary
damages will be inadequate to compensate the Company for such breach.
Accordingly, the Executive agrees that the Company shall, in addition to any
other remedies available to it at law or in equity, be entitled to injunctive
relief to enforce the terms of Article 2 (Non-Competition and Confidentiality),
without the necessity of proving inadequacy of legal remedies or irreparable
harm.

                                    ARTICLE 3

                                 INDEMNIFICATION

         3.1 Basic Indemnification Arrangement.

                  (a) Claims Arising from the Executive"s Position with the
         Company. In addition to any separate agreements between the Executive
         and the Company relating to indemnification, the Company will indemnify
         and hold harmless the Executive, to the fullest extent permitted by
         applicable law, in respect of any liability, damage, cost or expense
         (including reasonable counsel fees) incurred in connection with the
         defense of any claim, action, suit or proceeding to which he is a
         party, or threat thereof, by reason of his being or having been an
         officer or director of the Company or any subsidiary or affiliate of
         the Company, or his serving or having served at the request of the
         Company as a director, officer, employee or agent of another
         corporation or of a partnership, joint venture, trust,

                                       12
<PAGE>   13

         business organization, enterprise or other entity, including service
         with respect to employee benefit plans. Without limiting the generality
         of the foregoing, the Company will pay the expenses (including
         reasonable counsel fees) of defending any such claim, action, suit or
         proceeding in advance of its final disposition.

                  (b) Contests of this Agreement. The Company agrees to pay
         promptly as incurred, to the full extent permitted by law, all legal
         fees and expenses which the Executive may reasonably incur as a result
         of any contest (regardless of the outcome thereof) by the Company, the
         Executive or others of the validity or enforceability of, or liability
         under any provision of this Agreement or any guarantee of performance
         thereof (including as a result of any contest by the Executive about
         the amount of any payment pursuant to this Agreement), plus in each
         case interest on any delayed payment at the applicable Federal rate
         provided for in Section 7872(f)(2)(A) of the Code.

                  (c) Liability Insurance. During the Term, the Company agrees
         to continue on the Executive"s behalf, directors and officers insurance
         or any other indemnity policy presently carried on behalf of the
         Executive, and further agrees to supplement any such existing policy to
         cover all actions taken by the Executive in connection with his
         employment by the Company.

                                    ARTICLE 4

                                  MISCELLANEOUS

         4.1 Period of Limitations. No legal action shall be brought and no
cause of action shall be asserted by or on behalf of the Company or any
Affiliate of the Company against the Executive, the Executive"s spouse, heirs,
executors or personal or legal representatives after the expiration of two years
from the date of accrual of such cause of action, and any claim or cause of
action of the Company or any Affiliate shall be extinguished and deemed released
unless asserted by the timely filing of a legal action within such two-year
period; provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action such shorter period shall
govern.

         4.2 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

         4.3 Indulgences, Etc. Neither the failure nor any delay on the part of
either party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any right, remedy, power or privilege, nor shall any
waiver of any right, remedy, power, or privilege with respect to any occurrence
be construed as a waiver of such right, remedy, power or privilege with respect
to any other occurrence.

         4.4 Executive"s Sole Remedy. The Executive"s sole remedy shall be
against the Company for any claim, liability or obligation of any nature
whatsoever arising out of or relating to this Agreement or an alleged breach of
this Agreement or for any other claim arising out of the

                                       13
<PAGE>   14

Executive"s employment by the Company, his service to the Company, any
indemnification obligation of the Company or the termination of the Executive"s
employment hereunder (collectively, "Executive Claims"). The Executive shall
have no claim or right of any nature whatsoever against any of the Company's
directors, former directors, officers, former officers, employees, former
employees, stockholders, former stockholders, agents, former agents or the
Independent Counsel in their individual capacities arising out of or relating to
any Executive Claim. The Executive hereby releases and covenants not to sue any
person other than the Company over any Executive Claim. The persons described in
this Section 4.4 (other than the Company and the Executive) shall be third-party
beneficiaries of this Agreement for purposes of enforcing the terms of this
Section 4.4 (Executive"s Sole Remedy) against the Executive.

         4.5 Notices. All notices, requests, demands and other communications
required or permitted under this Agreement and the transactions contemplated
herein shall be in writing and shall be deemed to have been duly given, made and
received when sent by telecopy (with a copy sent by mail) or when personally
delivered or one business day after it is sent by overnight service, addressed
as set forth below:

                  If to the Executive:

                           Matthew D. Hill
                           12402 Wealdstone
                           Tomball, Texas  77375

                  If to the Company:

                           American Eco Corporation
                           11011 Jones Road
                           Houston, Texas 77070
                           Attn: Chief Executive Officer

Any party may alter the address to which communications or copies are to be sent
by giving notice of such change of address in conformity with the provisions of
this subsection for the giving of notice, which shall be effective only upon
receipt.

         4.6 Provisions Separable. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.

         4.7 Entire Agreement. This Agreement contains the entire understanding
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior and contemporaneous agreements and understandings,
inducements or conditions, express or implied, oral or written, except as herein
contained, which shall be deemed terminated effective immediately. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof. This Agreement may not be
modified or amended other than by an agreement in writing.

                                       14
<PAGE>   15

         4.8 Headings; Index. The headings of paragraphs and Index of Defined
Terms herein are included solely for convenience of reference and shall not
control the meaning or interpretation of any of the provisions of this
Agreement.

         4.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without giving effect to
principles of conflict of laws.

         4.10 Dispute Resolution. Subject to the Company's right to seek
injunctive relief in court as provided in Section 2.3 (Injunctive Relief) of
this Agreement and the Executive"s right to such a judicial determination that
the Executive should be indemnified by the Company (as provided in Section
3.1(b) (Conditions) of this Agreement), any dispute, controversy or claim
arising out of or in relation to or connection with this Agreement, including
without limitation any dispute as to the construction, validity, interpretation,
enforceability or breach of this Agreement, shall be exclusively and finally
settled by arbitration, and any party may submit such dispute, controversy or
claim, including a claim for indemnification under this Section 4.10 (Dispute
Resolution), to arbitration.

                  (a) Arbitrators. The arbitration shall be heard and determined
         by one arbitrator, who shall be impartial and who shall be selected by
         mutual agreement of the parties; provided, however, that if the dispute
         involves more than $2,000,000, then the arbitration shall be heard and
         determined by three (3) arbitrators. If three (3) arbitrators are
         necessary as provided above, then (i) each side shall appoint an
         arbitrator of its choice within thirty (30) days of the submission of a
         notice of arbitration and (ii) the party-appointed arbitrators shall in
         turn appoint a presiding arbitrator of the tribunal within thirty (30)
         days following the appointment of the last party-appointed arbitrator.
         If (x) the parties cannot agree on the sole arbitrator, (y) one party
         refuses to appoint its party-appointed arbitrator within said thirty
         (30) day period or (z) the party-appointed arbitrators cannot reach
         agreement on a presiding arbitrator of the tribunal, then the
         appointing authority for the implementation of such procedure shall be
         the Senior United States District Judge for the Southern District of
         Texas, who shall appoint an independent arbitrator who does not have
         any financial interest in the dispute, controversy or claim. If the
         Senior United States District Judge for the Southern District of Texas
         refuses or fails to act as the appointing authority within ninety (90)
         days after being requested to do so, then the appointing authority
         shall be the Chief Executive Officer of the American Arbitration
         Association, who shall appoint an independent arbitrator who does not
         have any financial interest in the dispute, controversy or claim. All
         decisions and awards by the arbitration tribunal shall be made by
         majority vote.

                  (b) Proceedings. Unless otherwise expressly agreed in writing
         by the parties to the arbitration proceedings:

                           (i) The arbitration proceedings shall be held in
                  Houston, Texas, at a site chosen by mutual agreement of the
                  parties, or if the parties cannot reach agreement on a
                  location within thirty (30) days of the appointment of the
                  last arbitrator, then at a site chosen by the arbitrators;

                                       15
<PAGE>   16

                           (ii) The arbitrators shall be and remain at all times
                  wholly independent and impartial;

                           (iii) The arbitration proceedings shall be conducted
                  in accordance with the Commercial Arbitration Rules of the
                  American Arbitration Association, as amended from time to
                  time;

                           (iv) Any procedural issues not determined under the
                  arbitral rules selected pursuant to item (iii) above shall be
                  determined by the law of the place of arbitration, other than
                  those laws which would refer the matter to another
                  jurisdiction;

                           (v) The costs of the arbitration proceedings
                  (including attorneys" fees and costs) shall be borne in the
                  manner determined by the arbitrators;

                           (vi) The decision of the arbitrators shall be reduced
                  to writing; final and binding without the right of appeal; the
                  sole and exclusive remedy regarding any claims, counterclaims,
                  issues or accounting presented to the arbitrators; made and
                  promptly paid in United States dollars free of any deduction
                  or offset; and any costs or fees incident to enforcing the
                  award shall, to the maximum extent permitted by law, be
                  charged against the party resisting such enforcement;

                           (vii) The award shall include interest from the date
                  of any breach or violation of this Agreement, as determined by
                  the arbitral award, and from the date of the award until paid
                  in full, at 6% per annum; and

                           (viii) Judgment upon the award may be entered in any
                  court having jurisdiction over the person or the assets of the
                  party owing the judgment or application may be made to such
                  court for a judicial acceptance of the award and an order of
                  enforcement, as the case may be.

         4.11 Survival. The covenants and agreements of the parties set forth in
Article 2 (Non-Competition and Confidentiality), Article 3 (Indemnification) and
Article 4 (Miscellaneous) are of a continuing nature and shall survive the
expiration, termination or cancellation of this Agreement, regardless of the
reason therefor.

         4.12 No Duplication of Payments; Subrogation. The Company shall not be
liable under this Agreement to make any payment in connection with any claim
made against the Executive to the extent the Executive has otherwise actually
received payment (under any insurance policy, Bylaw or otherwise) of the amounts
otherwise indemnifiable hereunder. In the event the Executive actually receives
payment (under any insurance policy, Bylaw or otherwise) of any amount with
respect to which the Company has already indemnified or subsequently indemnifies
the Executive, the Company shall be subrogated to the extent of such payment to
all of the rights of recovery of the Executive, who shall execute all papers
required and shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the Company
effectively to bring suit to enforce such rights.

                                       16
<PAGE>   17

         4.13 Binding Effect, Etc. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors, assigns (including any direct or indirect successor by
purchase, merger, consolidation or otherwise to all or substantially all of the
business or assets of the Company), spouses, heirs, and personal and legal
representatives. The Company shall require and cause any successor (whether
direct or indirect by purchase, merger, consolidation or otherwise) to all,
substantially all, or a substantial part, of the business or assets of the
Company, by written agreement in form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession had taken place. The indemnity provisions of this Agreement
shall continue in effect regardless of whether the Executive continues to serve
as an employee of the Company.

         4.14 Contribution. If the indemnity contained in this Agreement is
unavailable or insufficient to hold the Executive harmless in a Claim for an
Indemnifiable Event, then separate from and in addition to the indemnity
provided elsewhere herein, the Company shall contribute to Expenses, judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred
by or on behalf of the Executive in connection with such Claim in such
proportion as appropriately reflects the relative benefits received by, and
fault of, the Company on the one hand and the Executive on the other in the
acts, transactions or matters to which the Claim relates and other equitable
considerations.

         4.15 This Agreement supercedes and rescinds any existing employment
contracts now in effect between the Company and the Executive.

                                 * * * * * * * *

                                       17
<PAGE>   18

         IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its officer thereunto duly authorized, and Executive has signed this
Agreement, all as of the day and year first above written.

                                  AMERICAN ECO CORPORATION

                                  By:
                                     -----------------------------------
                                  Name:
                                       ---------------------------------
                                  Title:
                                        --------------------------------

                                  --------------------------------------
                                  Matthew D. Hill

                                       18
<PAGE>   19

                             INDEX OF DEFINED TERMS

<TABLE>
<CAPTION>
TERM                                                 SECTION
----                                                 -------
<S>                                                 <C>
Affiliate                                            2.1(e)
Agreement                                            Preamble
Annual Bonus                                         1.4(b)
Base Salary                                          1.4(a)
Cause                                                1.5(b)
Change in Control                                    1.5(e)
Company                                              Preamble
Company Breach                                       1.5(d)
Competing Business                                   2.1(d)
Confidential Information                             2.2(a)
Date of Termination                                  1.5(h)
Disability                                           1.5(a)
Executive                                            Preamble
Executive Claims                                     4.4
Explanation of Termination of Employment             1.5(g)
Notice of Termination                                1.5(g)
Term                                                 1.3
Without Cause                                        1.5(c)
Without Good Reason                                  1.5(f)
</TABLE>

                                       19<PAGE>   1

                                                                   EXHIBIT 10.32

                              EMPLOYMENT AGREEMENT

         EMPLOYMENT AGREEMENT, dated as of January 16, 1999, between GREY WOLF,
INC., Inc. a Texas corporation (the "Company"), and Edward S. Jacob, III (the
"Executive").

         The Company desires to employ the Executive and the Executive desires
to accept employment with the Company, on the terms and conditions of this
Agreement.

         Accordingly, the parties agree as follows:

         1. EMPLOYMENT, DUTIES AND ACCEPTANCE.

                  1.1      Employment by the Company; Duties. The Company hereby
                           agrees to employ the Executive for a term commencing
                           on January 16, 1999, and expiring at the end of the
                           day on January 15, 2000 (such date, or later date to
                           which this Agreement is extended in accordance with
                           the terms hereof, the "Termination Date"), unless
                           earlier terminated as provided in Article 4 or unless
                           extended as provided herein (the "Term"). The Term
                           shall automatically be extended on the Termination
                           Date and each anniversary thereof for successive
                           one-year periods unless either party notifies the
                           other on or before the date 90 days prior to the
                           Termination Date that he or it desires to terminate
                           the Agreement. During the Term, the Executive shall
                           initially serve in the capacity of Vice President
                           Marketing of the Company and shall also serve in
                           those offices and directorships of subsidiary
                           corporations or entities of the Company to which he
                           may from time to time be appointed or elected. During
                           the Term, the Executive shall devote all reasonable
                           efforts and all of his business time and services to
                           the Company, subject to the direction of the Board.
                           The Executive shall not engage in any other business
                           activities except for passive investments in
                           corporations or partnerships not engaged in the oil
                           or gas drilling or well servicing business.

                  1.2      Acceptance of Employment by the Executive. The
                           Executive hereby accepts such employment and shall
                           render the services and perform the duties described
                           above.

         2. COMPENSATION AND OTHER BENEFITS.

                  2.1      Annual Salary. The Company shall pay to the Executive
                           an annual salary at a rate of not less than $150,000
                           per year (the "Annual Salary"), subject to increase
                           at the sole discretion of the Board of Directors of
                           the Company (the "Board"). The Annual Salary shall

<PAGE>   2

                           be payable in accordance with the payroll policies of
                           the Company as from time to time in effect, but in no
                           event less frequently than once each month, less such
                           deductions as shall be required to be withheld by
                           applicable law and regulations.

                  2.2      Bonuses. The Executive may receive, at the sole
                           discretion of the Board, an incentive bonus with
                           respect to the fiscal years ending during the term
                           hereof (the "Incentive Bonus"), provided that an
                           Incentive Bonus, payable in respect of a fiscal year,
                           shall not exceed one-half of the Annual Salary for
                           such fiscal year.

                  2.3      Grant of Option. The Company agrees to grant the
                           Executive, pursuant to the terms of its existing
                           stock option plan or new or amended stock option
                           plans, options to acquire 100,000 shares of the
                           Company's common stock, at an exercise price equal
                           to the fair market value of such stock on the date of
                           grant. Any such stock options shall vest in five
                           equal increments over a five-year period commencing
                           on the date of grant, and shall expire ten years
                           after the date of grant. One fifth of the ISOs shall
                           vest on January 16, 2000, and on each subsequent
                           anniversary of the date of grant until the fifth
                           anniversary at which time the options shall be fully
                           vested.

                  2.4      Vacation Policy. The Executive shall be entitled to a
                           paid vacation of three weeks during each year of the
                           Term.

                  2.5      Participation in Employee Benefit Plans. The Company
                           agrees to permit the Executive during the Term, if
                           and to the extent eligible, to participate in any
                           group life, hospitalization or disability insurance
                           plan, health program, pension plan, similar benefit
                           plan or other so-called "fringe benefits" of the
                           Company (collectively, "Benefits") which may be
                           available to other senior executives of the Company
                           on terms no less favorable to the Executive than the
                           terms offered to such other executives. The Company
                           agrees to use its best efforts to obtain immediate
                           coverage for the Executive upon the commencement of
                           the Term under its existing or newly adopted medical
                           expense and hospitalization plan for employees
                           without premium surcharge and without exclusions for
                           disclosed preexisting conditions. The Executive shall
                           cooperate with the Company in applying for such
                           coverage, including submitting to a physical exam and
                           providing all relevant health and personal data.

                  2.6      General Business Expenses. The Company shall pay or
                           reimburse the Executive for all expenses reasonably
                           and necessarily incurred by the Executive during the
                           Term in the performance of the Executive's services
                           under this Agreement. Such payment shall be made upon

                                      -2-
<PAGE>   3

                           presentation of such documentation as the Company
                           customarily requires of its senior executive
                           employees prior to making such payments or
                           reimbursements.

                  2.7      Company Car, Cellular Telephone. The Company shall
                           provide an automobile, of the Executive's choice, to
                           be used by the Executive during the Term hereof or
                           until his employment hereunder is terminated. The
                           purchase price of the automobile shall not exceed
                           $35,000 unless increased by the Board. If requested
                           by the Executive, the Company will replace the
                           automobile with a new automobile no less frequently
                           than every three years during the Term hereof. The
                           Company shall, at its expense, pay any and all
                           expenses associated with the operation of such
                           company car, including but not limited to, collision
                           and liability insurance, maintenance and repair
                           costs, replacement parts, tires, fuel and oil. The
                           Executive may use the automobile for personal
                           purposes and, to the extent of the value of such
                           personal usage, the value thereof shall be deemed to
                           be additional compensation.

                  2.8      The Company shall also furnish the Executive with
                           a cellular telephone of his choice and the Company
                           shall pay all charges in connection with the use
                           thereof, other than charges for calls not related to
                           Executive's duties hereunder.

         3. NON-COMPETITION.

                  3.1      Covenants Against Competition. The Executive
                           acknowledges that (i) the Company is currently
                           engaged in the business of owning, managing and
                           operating onshore drilling and workover rigs for its
                           own account or for others which are contracted or
                           hired for the purpose of drilling and/or workover of
                           oil or natural gas wells and from time to time
                           acquiring working or carried interests in oil and gas
                           wells in connection with, or incident to, such
                           drilling or workover activities (the "Company
                           Business"); (ii) his work for the Company will give
                           him access to trade secrets of and confidential
                           information concerning the Company; and (iii) the
                           agreements and covenants contained in this Agreement
                           are essential to protect the business and goodwill of
                           the Company. Accordingly, the Executive covenants and
                           agrees as follows:

                           3.1.1 Non-Compete. The Executive shall not during the
                           Restricted Period (as defined below) in the United
                           States or any other place where the Company and its
                           affiliates conduct operations related to the Company
                           Business, directly or indirectly (except in the
                           Executive's capacity as an officer of the Company),
                           (i) engage or participate in the Company Business;
                           (ii) enter the employ of, or render any other
                           services to, any person engaged in the Company
                           Business except as permitted hereunder; or (iii)
                           become interested in any such person in

                                      -3-
<PAGE>   4

                           any capacity, including, without limitation, as an
                           individual, partner, shareholder, lender, officer,
                           director, principal, agent or trustee except as
                           permitted hereunder; provided, however, that the
                           Executive may own, directly or indirectly, solely as
                           an investment, securities of any person traded on any
                           national securities exchange or listed on the
                           National Association of Securities Dealers Automated
                           Quotation System if the Executive is not a
                           controlling person of, or a member of a group which
                           controls, such person and the Executive does not,
                           directly or indirectly, own 1% or more of any class
                           of equity securities, or securities convertible into
                           or exercisable or exchangeable for 1% or more of any
                           class of equity securities, of such person. As used
                           herein, the "Restricted Period" shall mean a period
                           commencing on the date hereof and terminating upon
                           the first to occur of (a) the date on which the
                           Company terminates or is deemed to terminate the
                           Executive's employment without Cause, (b) the date
                           the Executive terminates or is deemed to terminate
                           his employment pursuant to Section 4.6 hereof, or (c)
                           the date of termination of this Agreement; provided,
                           however, that if the Company shall have terminated
                           the Executive's employment for Cause and such Cause
                           in fact exists or if the Executive shall have
                           terminated his employment with the Company in breach
                           of the terms of this Agreement, the Restricted Period
                           shall end twelve months following the termination of
                           the Executive's employment hereunder.

                           3.1.2 Confidential Information; Personal
                           Relationships. The Executive acknowledges that the
                           Company has a legitimate and continuing proprietary
                           interest in the protection of its confidential
                           information and that it has invested substantial sums
                           and will continue to invest substantial sums to
                           develop, maintain and protect confidential
                           information. The Executive agrees that, during and
                           after the Restricted Period, the Executive shall keep
                           secret and retain in strictest confidence, and shall
                           not use for the benefit of himself or others all
                           confidential matters directly relating to the Company
                           Business including, without limitation, financial
                           information, trade secrets, customer lists, details
                           of client or consultant contracts, pricing policies,
                           operational methods, marketing plans or strategies,
                           product development techniques or plans, business
                           acquisition plans, new personnel acquisition plans,
                           technical processes, designs and design projects,
                           inventions and research projects of the Company, its
                           affiliates, or any other entity which may hereafter
                           become an affiliate thereof, learned by the Executive
                           heretofore or hereafter unless otherwise in the
                           public domain other than as a result of disclosure by
                           the Executive or unless independently obtained from
                           third parties not under disclosure restrictions in
                           favor of the Company.

                                      -4-
<PAGE>   5

                           3.1.3 Property of the Company. All memoranda, notes,
                           lists, records, engineering drawings, technical
                           specifications and related documents and other
                           documents or papers (and all copies thereof) relating
                           to the Company, including such items stored in
                           computer memories, microfiche or by any other means,
                           made or compiled by or on behalf of the Executive
                           after the date hereof, or made available to the
                           Executive after the date hereof relating to the
                           Company, its affiliates or any entity which may
                           hereafter become an affiliate thereof, shall be the
                           property of the Company, and shall be delivered to
                           the Company promptly upon the termination of the
                           Executive's employment with the Company or at any
                           other time upon request; provided, however, that
                           Executive's address books, diaries, chronological
                           correspondence files and rolodex files shall be
                           deemed to be property of the Executive.

                           3.1.4 Original Material. The Executive agrees that
                           any inventions, discoveries, improvements, ideas,
                           concepts or original works of authorship relating
                           directly to the Company Business, including without
                           limitation computer systems, programs and
                           manufacturing techniques, whether or not protectable
                           by patent or copyright, that have been originated,
                           developed or reduced to practice by the Executive
                           alone or jointly with others during the Executive's
                           employment with the Company shall be the property of
                           and belong exclusively to the Company. The Executive
                           shall promptly and fully disclose to the Company the
                           origination or development by the Executive of any
                           such material and shall provide the Company with any
                           information that it may reasonably request about such
                           material.

                           3.1.5 Employees of the Company and its Affiliates.
                           During the Restricted Period, the Executive shall
                           not, directly or indirectly, hire or solicit, or
                           cause others to hire or solicit, for employment by
                           any person other than the Company or any affiliate or
                           successor thereof, any employee of the Company and
                           its affiliates or successors or encourage any such
                           employee to leave his employment.

                           3.1.6 Customers of the Company. During the Restricted
                           Period, the Executive shall not, except by reason of
                           and in his capacity as an officer of the Company,
                           directly or indirectly, request or advise a customer
                           of the Company or its subsidiaries to curtail or
                           cancel such customer's business relationship with the
                           Company.

               3.2  Rights and Remedies Upon Breach. If the Executive breaches,
                    or threatens to commit a breach of, any of the provisions
                    contained in Section 3.1 of this Agreement (the "Restrictive
                    Covenants"), the Company shall have the

                                      -5-
<PAGE>   6

                    following rights and remedies, each of which rights and
                    remedies shall be independent of the others and severally
                    enforceable, and each of which is in addition to, and not in
                    lieu of, any other rights and remedies available to the
                    Company under law or in equity:

                           3.2.1 Specific Performance. The right and remedy to
                           have the Restrictive Covenants specifically enforced
                           by any court of competent jurisdiction, it being
                           agreed that any breach or threatened breach of the
                           Restrictive Covenants would cause irreparable injury
                           to the Company and that money damages would not
                           provide an adequate remedy to the Company.

                           3.2.2 Accounting. The right and remedy to require the
                           Executive to account for and pay over to the Company
                           all compensation, profits, monies, accruals,
                           increments or other benefits derived or received by
                           the Executive as the result of any action
                           constituting a breach of the Restrictive Covenants.

                  3.3      Severability of Covenants. The Executive acknowledges
                           and agrees that the Restrictive Covenants are
                           reasonable and valid in duration and geographical
                           scope and in all other respects. If any court
                           determines that any of the Restrictive Covenants, or
                           any part thereof, is invalid or unenforceable, the
                           remainder of the Restrictive Covenants shall not
                           thereby be affected and shall be given full effect
                           without regard to the invalid portions.

                  3.4      Blue-Pencilling. If any court determines that any of
                           the Restrictive Covenants, or any part thereof, is
                           unenforceable because of the duration or geographical
                           scope of such provision, such court shall have the
                           power to reduce the duration or scope of such
                           provision, as the case may be, and, in its reduced
                           form, such provision shall then be enforceable.

                  3.5      Enforceability in Jurisdictions. The Company and the
                           Executive intend to and hereby confer jurisdiction to
                           enforce the Restrictive Covenants upon the courts of
                           any jurisdiction within the geographical scope of
                           such Restrictive Covenants. If the courts of any one
                           or more of such jurisdictions hold the Restrictive
                           Covenants unenforceable by reason of the breadth of
                           such scope or otherwise, it is the intention of the
                           Company that such determination not bar or in any way
                           affect the right of the Company to the relief
                           provided above in the courts of any other
                           jurisdiction within the geographical scope of such
                           Restrictive Covenants, as to breaches of such
                           Restrictive Covenants in such other respective
                           jurisdictions, such Restrictive Covenants as they
                           relate to each jurisdiction being, for this purpose,
                           severable into diverse and independent covenants.

                                      -6-
<PAGE>   7

         4. TERMINATION.

                  4.1      Termination Upon Death. If the Executive dies during
                           the Term, this Employment Agreement shall terminate,
                           provided, however, that in any such event, the
                           Company shall pay to the Executive, or to his estate,
                           any portion of the Annual Salary that shall have been
                           earned by the Executive prior to the termination but
                           not yet paid, any Benefits that have vested in the
                           Executive at the time of such termination as a result
                           of his participation in any of the Company's benefit
                           plans shall be paid to the Executive, or to his
                           estate or designated beneficiary, in accordance with
                           the provisions of such plan; and the Company shall
                           reimburse the Executive, or his estate, for any
                           expenses with respect to which the Executive is
                           entitled to reimbursement pursuant to Section 2.6 of
                           this Agreement, and the Executive's right to
                           indemnification, payment or reimbursement pursuant to
                           Section 6 of this Agreement shall not be affected by
                           such termination and shall continue in full force and
                           effect, both with respect to proceedings that are
                           threatened, pending or completed at the date of such
                           termination and with respect to proceedings that are
                           threatened, pending or completed after that date.

                  4.2      Termination With Cause. The Company has the right, at
                           any time during the Term, subject to all of the
                           provisions hereof, exercisable by serving notice,
                           effective on or after the date of service of such
                           notice as specified therein, to terminate the
                           Executive's employment under this Agreement and
                           discharge the Executive with Cause. If such right is
                           exercised, the Company's obligation to the Executive
                           shall be limited solely to the payment of unpaid
                           Annual Salary accrued, together with unpaid Incentive
                           Bonus, if any, and Benefits vested up to the
                           effective date specified in the Company's notice of
                           termination. As used in this Agreement, the term
                           "Cause" shall mean and include (i) chronic alcoholism
                           or controlled substance abuse as determined by a
                           doctor mutually acceptable to the Company and the
                           Executive, (ii) an act of proven fraud or dishonesty
                           on the part of the Executive with respect to the
                           Company or its subsidiaries; (iii) knowing and
                           material failure by the Executive to comply with
                           material applicable laws and regulations relating to
                           the business of the Company or its subsidiaries; (iv)
                           the Executive's material and continuing failure to
                           perform (as opposed to unsatisfactory performance)
                           his duties hereunder or a material breach by the
                           Executive of this Agreement except, in each case,
                           where such failure or breach is caused by the illness
                           or other similar incapacity or disability of the
                           Executive; or (v) conviction of a misdemeanor
                           involving moral turpitude or a felony. Prior to the
                           effectiveness of termination for Cause under
                           subclause (i), (ii), (iii) or (iv) above, the

                                      -7-
<PAGE>   8

                           Executive shall be given 30 days' prior notice from
                           the Board specifically identifying the reasons which
                           are alleged to constitute cause for any termination
                           hereunder and an opportunity to be heard by the Board
                           in the event Executive disputes such allegations.

                  4.3      Termination Without Cause. The Company has the right,
                           at any time during the Term, subject to all of the
                           provisions hereof, exercisable by serving notice,
                           effective on or after the date of service of such
                           notice as specified therein, to terminate the
                           Executive's employment under this Agreement and
                           discharge the Executive without Cause. If the
                           Executive is terminated during the Term without Cause
                           (including any termination which is deemed to be a
                           constructive termination without Cause under Section
                           4.6 hereof), the Company's obligation to the
                           Executive shall be limited solely to the payment, at
                           the times and upon the terms provided for herein, of
                           the greater of (i) the Executive's Annual Salary and
                           Incentive Bonus for the number of full months
                           remaining in the Term of this Agreement (assuming no
                           automatic extension of the Term) had the Executive
                           not been so terminated and (ii) the Executive's
                           Annual Salary for a period of twelve months, in each
                           case based on the Annual Salary of the Executive in
                           effect on the date of termination (or, if the Company
                           has reduced the Executive's Annual Salary in breach
                           of this Agreement, the Executive's Annual Salary
                           before such reduction) and, in the case of clause
                           (i), the average Incentive Bonus received by the
                           Executive for the immediately preceding two fiscal
                           years, together with all unpaid Incentive Bonus and
                           Benefits awarded or accrued up to the date of
                           termination. If the Executive is terminated after he
                           has received one Incentive Bonus but before he has
                           received two, the Incentive Bonus in clause (i) shall
                           be based on the amount of that one Incentive Bonus;
                           if he has not yet received an Incentive Bonus, it
                           shall be based on the maximum Incentive Bonus (i.e.,
                           one half of the Annual Salary). In the event of a
                           termination by the Company without Cause within 180
                           days after a Change of Control (as hereinafter
                           defined), including a constructive termination
                           without Cause pursuant to Section 4.6, the amounts
                           due to the Executive pursuant to this Section 4.3
                           shall be due and payable in one lump-sum payment
                           within 60 days after such termination. In all other
                           cases, any amounts due to the Executive pursuant to
                           this Section 4.3 shall be due and payable as and when
                           they would have become due and payable absent such
                           termination.

                  4.4      Termination by the Executive. Any termination of this
                           Agreement by the Executive during the Term, except
                           such termination as is deemed to be a constructive
                           termination without Cause by the Company under
                           Section 4.6 of this Agreement, shall be deemed to be
                           a breach of the

                                      -8-
<PAGE>   9

                           terms of this Agreement for the purposes of Section
                           3.1.1 hereof and shall entitle the Company to
                           discontinue payment of all Annual Salary, Incentive
                           Bonuses and Benefits accruing from and after the date
                           of such termination.

                  4.5      Termination upon Disability. If during the Term the
                           Executive becomes physically or mentally disabled,
                           whether totally or partially, as evidenced by the
                           written statement of a competent physician licensed
                           to practice medicine in the United States who is
                           mutually acceptable to the Company and the Executive
                           or his closest relative if he is not then able to
                           make such a choice, so that the Executive is unable
                           substantially to perform his services hereunder for
                           (i) a period of four consecutive months, or (ii) for
                           shorter periods aggregating six months during any
                           twelve-month period, the Company may at any time
                           after the last day of the four consecutive months of
                           disability or the day on which the shorter periods of
                           disability equal an aggregate of six months, by
                           written notice to the Executive, terminate the
                           Executive's employment hereunder and discontinue
                           payments of the Annual Salary, Incentive Bonuses and
                           Benefits accruing from and after the date of such
                           termination. The Executive shall be entitled to the
                           full compensation payable to him hereunder for
                           periods of disability shorter than the periods
                           specified in clauses (i) and (ii) of the previous
                           sentence.

                  4.6      Constructive Termination Without Cause.
                           Notwithstanding any other provision of this
                           Agreement, the Executive's employment under this
                           Agreement may be terminated during the Term by the
                           Executive, which shall be deemed to be constructive
                           termination by the Company without Cause, if one of
                           the following events shall occur without the consent
                           of the Executive: (i) a failure to elect or reelect
                           or to appoint or reappoint the Executive to the
                           office of Vice President of Marketing of the Company
                           or other material change by the Company of the
                           Executive's functions, duties or responsibilities
                           which change would reduce the ranking or level,
                           dignity, responsibility, importance or scope of the
                           Executive's position with the Company from the
                           position and attributes thereof described in Section
                           1 above; (ii) the assignment or reassignment by the
                           Company of the Executive to another place of
                           employment more than 50 miles from the Executive's
                           principal place of residence in the Houston, Texas,
                           metropolitan area; (iii) the liquidation,
                           dissolution, consolidation or merger of the Company,
                           or transfer of all or substantially all of its
                           assets, other than a transaction in which a successor
                           corporation with a net worth at least equal to that
                           of the Company assumes this Agreement and all
                           obligations and undertakings of the Company
                           hereunder; (iv) a reduction in the Executive's fixed
                           salary; (v) a Change of Control as hereinafter
                           defined; (vi) the failure of the Company to continue
                           to provide the Executive with office space, related
                           facilities and secretarial assistance that are
                           commensurate with

                                      -9-
<PAGE>   10

                           the Executive's responsibilities to and position with
                           the Company; (vii) the notification by the Company of
                           the Company's intention not to observe or perform one
                           or more of the obligations of the Company under this
                           Agreement; (viii) the failure by the Company to
                           indemnify, pay or reimburse the Executive at the time
                           and under the circumstances required by Section 6 of
                           this Agreement; (ix) the occurrence of any other
                           material breach of this Agreement by the Company or
                           any of its subsidiaries; or (x) the delivery of
                           notice by the Company in accordance with Section 1.1
                           hereof that it desires to terminate the Agreement,
                           but only if such notice is given before the Term has
                           been automatically extended three times. Any such
                           termination shall be made by written notice to the
                           Company, specifying the event relied upon for such
                           termination and given within 60 days after such
                           event. Any constructive termination shall be
                           effective 60 days after the date the Company has been
                           given such written notice setting forth the grounds
                           for such termination with specificity; provided,
                           however, that Executive shall not be entitled to
                           terminate this Agreement in respect of any of the
                           grounds set forth above if within 60 days after such
                           notice the action constituting such ground for
                           termination is no longer continuing. A constructive
                           termination by the Company without Cause shall
                           terminate the Restrictive Period hereunder.

                  4.7      For the purposes hereof, a "Change of Control of the
                           Company" shall be deemed to have occurred if after
                           the effective date (i) any "person" (as such term is
                           used in Sections 13(d) and 14(d) of the Act) is or
                           becomes the "beneficial owner" (as defined in Rule
                           13d-3 under the Securities Exchange Act of 1934 (the
                           "Act")), directly or indirectly, of securities of the
                           Company representing 50% or more of the combined
                           voting power of the Company's then outstanding
                           securities without the prior approval of at least a
                           majority of the members of the Board in office
                           immediately prior to such person attaining such
                           percentage interest; (ii) there occurs a proxy
                           contest or a consent solicitation, or the Company is
                           a party to a merger, consolidation, sale of assets,
                           plan of liquidation or other reorganization not
                           approved by at least a majority of the members of the
                           Board in office, as a consequence of which members of
                           the Board in office immediately prior to such
                           transaction or event constitute less than a majority
                           of the Board thereafter; or (iii) during any period
                           of two consecutive years, other than as a result of
                           an event described in clause (ii) of this Section
                           4.7, individuals who at the beginning of such period
                           constituted the Board (including for this purpose any
                           new director whose election or nomination for
                           election by the Company's stockholders was approved
                           by a vote of at least a majority of the directors
                           then still in office who were directors at the
                           beginning of such period) cease for any reason to
                           constitute at least a majority of the Board.

                                      -10-
<PAGE>   11

                  5.       INSURANCE.

                           The Company may, from time to time, apply for and
                           take out, in its own name and at its own expense,
                           naming itself or one or more of its affiliates as the
                           designated beneficiary (which it may change from time
                           to time), policies for life, health, accident,
                           disability or other insurance upon the Executive in
                           any amount or amounts that it may deem necessary or
                           appropriate to protect its interest. The Executive
                           agrees to aid the Company in procuring such insurance
                           by submitting to medical examinations and by filling
                           out, executing and delivering such applications and
                           other instruments in writing as may reasonably be
                           required by an insurance company or companies to
                           which any application or applications for insurance
                           may be made by or for the Company.

                  6.       INDEMNIFICATION.

                           6.1      The Company shall, to the extent not
                                    prohibited by law, indemnify the Executive
                                    if he is made, or threatened to be made, a
                                    party to any threatened, pending or
                                    completed action, suit or proceeding,
                                    whether civil, criminal, administrative or
                                    investigative, including an action by or in
                                    the right of the Company to procure a
                                    judgment in its favor (hereinafter a
                                    "Proceeding"), by reason of the fact that
                                    the Executive is or was a director or
                                    officer of the Company, or is or was serving
                                    in any capacity at the request of the
                                    Company for any other corporation,
                                    partnership, joint venture, trust, employee
                                    benefit plan or other enterprise, against
                                    judgments, fines, penalties, excise taxes,
                                    amounts paid in settlement and costs,
                                    charges and expenses (including attorneys'
                                    fees and disbursements) paid or incurred in
                                    connection with any such Proceeding.

                                    6.2 The Company shall, from time to time,
                                    reimburse or advance to the executive the
                                    funds necessary for payment of expenses,
                                    including attorneys' fees and disbursements,
                                    incurred in connection with any Proceeding
                                    in advance of the final disposition of such
                                    Proceeding; provided, however, that, if
                                    required by the Texas Business Corporation
                                    Act, such expenses incurred by or on behalf
                                    of the Executive may be paid in advance of
                                    the final disposition of a Proceeding only
                                    upon receipt by the Company of an
                                    undertaking, by or on behalf of the
                                    Executive, to repay any such amount so
                                    advanced if it shall ultimately be
                                    determined by final judicial decision from
                                    which there is no further right of appeal
                                    that the Executive is not entitled to be
                                    indemnified for such expenses.

                           6.3      The right to indemnification and
                                    reimbursement or advancement of expenses
                                    provided by, or granted pursuant to, this
                                    Article 6 shall not be

                                      -11-
<PAGE>   12

                                    deemed exclusive of any other rights which
                                    the Executive may now or hereafter have
                                    under any law, by-law, agreement, vote of
                                    stockholders or disinterested directors or
                                    otherwise, both as to action in his official
                                    capacity and as to action in another
                                    capacity while holding such office.

                           6.4      The right to indemnification and
                                    reimbursement or advancement of expenses
                                    provided by, or granted pursuant to, this
                                    Article 6 shall continue as to the Executive
                                    after he has ceased to be a director or
                                    officer and shall inure to the benefit of
                                    the heirs, executors and administrators of
                                    the Executive.

                           6.5      The Company shall purchase and maintain
                                    director and officer liability insurance on
                                    such terms and providing such coverage as
                                    the Board determines is appropriate, and the
                                    Executive shall be covered by such insurance
                                    on the same basis as the other directors and
                                    executive officers of the Company.

                           6.6      The right to indemnification and
                                    reimbursement or advancement of expenses
                                    provided by, or granted pursuant to, this
                                    Article 6 shall be enforceable by the
                                    Executive in any court of competent
                                    jurisdiction. The burden of proving that
                                    such indemnification or reimbursement or
                                    advancement of expenses is not appropriate
                                    shall be on the Company. Neither the failure
                                    of the Company (including its board of
                                    directors, independent legal counsel, or its
                                    stockholders) to have made a determination
                                    prior to the commencement of such action
                                    that such indemnification or reimbursement
                                    or advancement of expenses is proper in the
                                    circumstances nor an actual determination by
                                    the Company (including its board of
                                    directors, independent legal counsel, or its
                                    stockholders) that the Executive is not
                                    entitled to such indemnification or
                                    reimbursement or advancement of expenses
                                    shall constitute a defense to the action or
                                    create a presumption that the Executive is
                                    not so entitled. The Executive shall also be
                                    indemnified for any expenses incurred in
                                    connection with successfully establishing
                                    his right to such indemnification or
                                    reimbursement or advancement of expenses, in
                                    whole or in part, in any such proceeding.

                           6.7      If the Executive serves (1) another
                                    corporation of which a majority of the
                                    shares entitled to vote in the election of
                                    its directors is held by the Company, or (2)
                                    any employee benefit plan of the Company or
                                    any corporation referred to in clause (1),
                                    in any capacity, then he shall be deemed to
                                    be doing so at the request of the Company.

                           6.8      The right to indemnification or
                                    reimbursement or advancement of expenses
                                    shall be interpreted on the basis of the
                                    applicable law in effect at the time of the
                                    occurrence of the event or events giving
                                    rise to the applicable Proceeding.

                                      -12-
<PAGE>   13

         7. OTHER PROVISIONS.

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

                                    (i)      "affiliate" with respect to the
                                             Company means any other person
                                             controlled by or under common
                                             control with the Company but shall
                                             not include any stockholder or
                                             director of the Company, as such.

                                    (ii)     "person" means any individual,
                                             corporation, partnership, firm,
                                             joint Company, association,
                                             joint-stock company, trust,
                                             unincorporated organization,
                                             governmental or regulatory body or
                                             other entity.

                                    (iii)    "subsidiary" means any corporation
                                             50% or more of the voting
                                             securities of which are owned
                                             directly or indirectly by the
                                             Company.

                           7.2      Notices. Any notice or other communication
                                    required or permitted hereunder shall be in
                                    writing and shall be delivered personally,
                                    telegraphed, telexed, sent by facsimile
                                    transmission or sent by certified,
                                    registered or express mail, postage prepaid.
                                    Any such notice shall be deemed given when
                                    so delivered personally, telegraphed,
                                    telexed or sent by facsimile transmission
                                    or, if mailed, on the date of actual receipt
                                    thereof, as follows:

                           (i)      if to the Company, to:
                                    Grey Wolf, Inc.
                                    10370 Richmond Avenue, Suite 600
                                    Houston, Texas 77042

                                    with a copy to:
                                    Garderer Wynn Sewell & Riggs L.L.P.
                                    333 Clay Avenue, Suite 800
                                    Houston, Texas  77002-4086
                                    Attention:  Frank Putman, Esq.

                                      -13-
<PAGE>   14

                           (ii)     if to the Executive, to:

Any party may change its address for notice hereunder by notice to the other
party hereto.

                           7.3      Entire Agreement. This Agreement contains
                                    the entire agreement between the parties
                                    with respect to the subject matter hereof
                                    and supersedes all prior agreements, written
                                    or oral, with respect thereto.

                           7.4      Waivers and Amendments. This Agreement may
                                    be amended, superseded, canceled, renewed or
                                    extended, and the terms and conditions
                                    hereof may be waived, only by a written
                                    instrument signed by the parties or, in the
                                    case of a waiver, by the party waiving
                                    compliance. No delay on the part of any
                                    party in exercising any right, power or
                                    privilege hereunder shall operate as a
                                    waiver thereof. Nor shall any waiver on the
                                    part of any party of any such right, power
                                    or privilege hereunder, nor any single or
                                    partial exercise of any right, power or
                                    privilege hereunder, preclude any other or
                                    further exercise thereof or the exercise of
                                    any other right, power or privilege
                                    hereunder.

                           7.5      Governing Law. This Agreement shall be
                                    governed by and construed in accordance with
                                    the laws of the State of Texas (without
                                    giving effect to the choice of law
                                    provisions thereof) where the employment of
                                    the Executive shall be deemed, in part, to
                                    be performed and enforcement of this
                                    Agreement or any action taken or held with
                                    respect to this Agreement shall be taken in
                                    the courts of appropriate jurisdiction in
                                    Houston, Texas.

                           7.6      Assignment. This Agreement, and any rights
                                    and obligations hereunder, may not be
                                    assigned by the Executive and may be
                                    assigned by the Company (subject to Section
                                    4.6 (iii) hereof) only to a successor by
                                    merger or purchasers of substantially all of
                                    the assets of the Company.

                           7.7      Counterparts. This Agreement may be executed
                                    in separate counterparts, each of which when
                                    so executed and delivered shall be deemed an
                                    original, but all of which together shall
                                    constitute one and the same instrument.

                           7.8      Headings. The headings in this Agreement are
                                    for reference purposes only and shall not in
                                    any way affect the meaning or interpretation
                                    of this Agreement.

                                      -14-
<PAGE>   15

                           7.9      No Presumption Against Interest. This
                                    Agreement has been negotiated. drafted,
                                    edited and reviewed by the respective
                                    parties, and therefore, no provision arising
                                    directly or indirectly herefrom shall be
                                    construed against any party as being drafted
                                    by said party.

                           7.10     Validity Contest. The Company shall promptly
                                    pay any and all legal fees and expenses
                                    incurred by the Executive from time to time
                                    as a direct result of the Company's
                                    contesting the due execution, authorization,
                                    validity or enforceability of this
                                    Agreement.

                           7.11     Binding Agreement. This Agreement shall
                                    inure to the benefit of and be binding upon
                                    the Company and its respective successors
                                    and assigns and the Executive and his legal
                                    representatives.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

                                            GREY WOLF, INC.

                                            By    /s/ T. P. RICHARDS
                                               ---------------------------------
                                               Name:  T. P. Richards
                                               Title: President and CEO

                                            EXECUTIVE

                                               /s/ EDWARD S. JACOB III
                                               ---------------------------------

                                      -15-

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