EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the Agreement), is made and entered into as of January 5, 2006 (the Effective Date), by and between Smith International, Inc. (hereafter Company) and Richard Werner (hereafter Executive). The Company and Executive may sometimes hereafter be referred to singularly as a Party or collectively as the Parties.
W I T N E S S E T H:
WHEREAS, the Company desires to continue to secure the employment services of Executive subject to the terms and conditions hereafter set forth; and
WHEREAS, the Executive is willing to enter into this Agreement upon the terms and conditions hereafter set forth;
NOW, THEREFORE, in consideration of Executives employment with the Company, and the premises and mutual covenants contained herein, the Parties hereto agree as follows:
1. Employment. During the Employment Period (as defined in Section 4 hereof), the Company shall employ Executive, and Executive shall serve as, staff Vice President of the Company. Executives principal place of employment shall be at the main offices of the Company in the Houston, Texas metropolitan area.
2. Compensation. The Company shall pay to Executive during the Employment Period a base salary of $150,000.00 per year, as may be adjusted (the Base Salary). The Base Salary shall be payable in accordance with the Companys normal payroll schedule and procedures for its executives. Nothing contained herein shall preclude the payment of any other compensation to Executive.
3. Duties and Responsibilities of Executive. During the Employment Period, Executive shall devote his services to the business of the Company and perform the duties and responsibilities assigned to him by the Chief Executive Officer of the Company, to the best of his ability and with reasonable diligence. This Section 3 shall not be construed as preventing Executive from (a) engaging in reasonable volunteer services for charitable, educational or civic organizations, or (b) investing his assets in such a manner that will not require a material amount of his time or services in the operations of the businesses in which such investments are made; provided, however, no such other activity shall conflict with Executives loyalties and duties to the Company. Executive shall at all times use his best efforts to, in good faith, comply with United States laws applicable to Executives actions on behalf of the Company and its Affiliates (as defined in Section 6(d)). Executive understands and agrees that he may be required to travel from time to time for purposes of the Companys business.
4. Term of Employment. Executives initial term of employment with the Company under this Agreement shall be for the period of one year commencing upon the termination of the Executives existing Employment Agreement, January 1, 2007 through December 31, 2007 (the Initial Term of Employment). Thereafter, the Employment Period hereunder may be extended on a month-to-month basis or for such other period as mutually agreed by the Parties. The Initial Term of Employment, and any extension of employment hereunder, shall each be referred to herein as a "Term of Employment. The period from the Effective Date through the date of Executives termination of employment for whatever reason shall be referred to herein as the Employment Period.
Executive may terminate his employment with the Company and all Affiliates at any time by providing 30 days Notice of Termination to the CEO pursuant to Section 7. Company may terminate the employment of Executive with the Company and all Affiliates at any time by providing 30 days Notice of Termination to Executive pursuant to Section 7; provided, however, no advance Notice of Termination shall be required if Executive is being terminated for Cause (as defined in Section 6(c)). If the Executive is terminated by the Company without Cause prior to December 31, 2007, the Executive will be eligible to receive the Benefits described in termination benefits described in Section 6 as if he terminated on December 31, 2007. In addition, the Stock Options and Performance Restricted Stock Units allocated to him would continue to vest through December 31, 2007 and the Executive will have the right to exercise all vested shares as of December 31, 2007.
5. Benefits. Subject to the terms and conditions of this Agreement, during the Employment Period, Executive shall be entitled to the following:
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