SEPARATION AGREEMENT AND RELEASE
Exhibit 10.1
This Separation Agreement and Release (“Separation Agreement”) is entered into as of June 20, 2008,
by and between Xxxxxxx X. Xxxxxxx (“Executive” or “you”) and Hercules Offshore, Inc. (the
“Company”), and confirms the agreement that has been reached with you in connection with your
resignation from the Company.
1. Termination of Employment. You agree to resign from the Company and to cease to be
employed by the Company in any capacity and to resign from all executive positions you then hold
with the Company and its subsidiaries, in each case effective as of June 20, 2008 (the “Separation
Date”). You also agree to resign as a member of the Board of Directors of the Company (and as a
director of any of the Company’s subsidiaries) effective immediately. You further agree to execute
any additional documents necessary to effectuate the foregoing.
2. Separation Pay and Benefits. In consideration of your execution of this Separation
Agreement and your compliance with its terms and conditions, the Company agrees to pay or provide
you (subject to the terms and conditions set forth in this Separation Agreement) with the benefits
described in this paragraph 2 and to adhere to the nondisparagement restrictions set forth in
paragraph 4b below. The benefits below shall be in full satisfaction of the Company’s obligations
under the terms of the Executive Employment Agreement dated as of November 6, 2006, as amended (the
“Employment Agreement”), by and between you and the Company, and all applicable cash or equity
incentive compensation plans and agreements under which you have any rights or benefits, and in
consideration of your additional agreements in this Agreement. In addition, you acknowledge and
agree that, except as provided herein, you are no longer eligible to participate in and shall not
receive any further payments or benefits under any stock option, bonus, incentive compensation,
employment contract, or medical, dental, life insurance, retirement, perquisite and other
compensation or benefit agreements, plans or arrangements of the Company.
a. The Company shall continue to pay you at your current rate of base salary and benefits
through the Separation Date, in accordance with the Company’s payroll practices.
b. The Company shall pay you an aggregate of $2,058,878 (the “Separation Amount”), which you
acknowledge equals two times the sum of (i) your current annual base salary ($700,000) and (ii) the
bonus paid to you in respect of the Company’s 2007 fiscal year ($329,439). The Separation Amount
shall be paid to you on December 23, 2008. There shall be deducted from the payment of the
Separation Amount all applicable federal, state and local withholding taxes and other appropriate
deductions.
c. Beginning on the Separation Date and continuing until February 28, 2010 (the “Benefit
Continuation Period”), the Company shall provide you and your
dependents with continued coverage under the Company’s welfare benefit plans hereto at the
cost in effect at the Separation Date; provided that, to the extent you become eligible for medical
insurance from a subsequent employer, the Company’s medical insurance shall become secondary to
such subsequent employer’s medical insurance; and provided, further, however, that with respect to
health and medical benefits, to the extent such coverage cannot be extended or provided, the
Company will pay during the period described above the applicable premium under the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), associated with such benefits. In
addition, to the extent that health and medical benefits are provided to you through COBRA and the
Benefit Continuation Period extends beyond the period in which you are eligible for health and
welfare benefits under COBRA (generally eighteen months following the Separation Date), the Company
shall provide you with a lump sum amount equal to the then current cost of the employer-provided
health and medical benefits (other than group health plans) provided to you and your dependents, as
of the Separation Date, calculated for the period from the date on which you are no longer eligible
for health and medical benefits under COBRA until the expiration of the Benefit Continuation
Period. Such amount shall be paid to you on January 2, 2009.
d. The parties acknowledge and agree that you are party to Stock Option Agreements (the
“Option Agreements”) under which you have been granted stock options to purchase shares of common
stock of the Company (the “Options”) pursuant to the terms of the Hercules Offshore 2004 Long-Term
Incentive Plan (the “2004 LTIP”), as follows:
| Unvested | ||||||||
| Vested Options | Options as | Exercise | Remaining Vesting | |||||
| Grant Date | as of 6/20/2008 | of 6/20/2008 | Price | Dates (out of 4) | ||||
| 11/1/2005 | 285,000 | 95,000 | $20.00 | 11/1/2008 | ||||
| 2/12/2007 | 33,333 | 66,667 | $25.34 | 2/12/2009; 2/12/2010 |
||||
| 2/14/2008 | 0 | 110,000 | $25.64 | 2/14/2009; 2/14/2010; 2/14/2011 |
In accordance with, and subject to, the terms and conditions of the Option Agreements, all unvested
options as of June 20, 2008 will vest on the Separation Date and you shall be entitled to exercise
all vested Options held by you as of the Separation Date until the earlier to occur of the third
anniversary of the Separation Date or the original expiration date of the Options as set forth in
the 2004 LTIP or applicable Option Agreements.
e. The Company also agrees that, notwithstanding the terms of the Restricted Stock Agreements
between you and the Company, dated February 12, 2007 and February 14, 2008, as of the Separation
Date all restrictions shall lapse with respect to the 20,000 shares of restricted stock originally
granted to you pursuant to the terms of the Restricted Stock Agreement dated February 12, 2007 (the
“Vested Shares”). You
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acknowledge and agree, however, that in accordance with the terms of the
Restricted Stock Agreement between you and the Company, dated February 12, 2007 and February 14,
2008, as of the Separation Date you shall have no further rights with respect to the 49,000 shares of restricted stock granted under the Restricted Stock
Agreement dated February 14, 2008.
3. Accrued Benefits. You will be paid for any accrued but unused vacation days, and
for unreimbursed business expenses (in accordance with usual Company policies and practices, and in
no event later than the calendar year following the year in which the expenses are incurred), to
the extent not theretofore paid. In addition, following the Separation Date, you will be entitled
to receive vested amounts payable to you under the Company’s 401(k) plan and other retirement and
deferred compensation plans in accordance with the terms of such plans and applicable law. Except
as specifically set forth herein, your participation in all Company plans shall remain subject to
the terms and conditions of such plans as in effect from time to time and you agree that such terms
and conditions are binding on you and the Company.
4. Return of Company Property. You agree that, on or before the Separation Date, you
will have returned to the Company any physical or personal property that is the property of the
Company, its subsidiaries and its affiliates that you have in your possession, custody or control,
including without limitation all Company files, memoranda, records and other documents in whatever
form, and all copies thereof, and all Company badges, keys and credit cards.
5. Nondisparagement.
a. You agree that you will not, with intent to damage, disparage or encourage or induce others
to disparage any of the Company, its subsidiaries and affiliates, together with all of their
respective past and present directors and officers, as well as their respective past and present
managers, officers, shareholders, partners, employees, agents, attorneys, servants and customers
and each of their predecessors, successors and assigns (collectively, the “Company Entities and
Persons”).
b. The Company agrees that neither the Company formally nor any director or officer, with
intent to damage you, will disparage you or encourage or induce others to disparage you.
c. For the purposes of this Separation Agreement, the term “disparage” includes, without
limitation, comments or statements adversely affecting in any manner (i) the conduct of the
business of the Company Entities and Persons or of your business or (ii) the business reputation of
the Company Entities and Persons or of you. Nothing in this Separation Agreement is intended to,
or shall, prevent either party from providing truthful testimony in response to a valid subpoena,
court order, regulatory request or other judicial, administrative or legal process or otherwise as
required by law.
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6. Cooperation.
a. The parties agree that they will reasonably cooperate with each other, and their respective
counsel, in connection with any investigation, inquiry, administrative proceeding or litigation
relating to any matter in which you were involved or of which you have knowledge as a result of
your service with the Company by providing truthful information, provided that in your case, such
cooperation does not unreasonably interfere with your then current professional and personal
commitments. The Company agrees to promptly reimburse you for reasonable out-of-pocket expenses
reasonably incurred by you in connection with your cooperation pursuant to this paragraph.
b. You agree that, in the event you are subpoenaed or otherwise required by any person or
entity (including, but not limited to, any government agency) to give testimony or produce
documents (in a deposition, court proceeding or otherwise) which in any way relates to your
employment by the Company, you will, to the extent not legally prohibited from doing so, give
prompt notice of such request to the General Counsel of the Company so that the Company may contest
the right of the requesting person or entity to such disclosure before making such disclosure.
Nothing in this provision shall require you to violate your obligation to comply with valid legal
process.
c. You agree to provide, upon request, the Company with any information regarding discussions
you have held with third parties regarding potential transactions with the Company, and to
cooperate with the Company with respect to any disclosure requirements the Company may have with
respect thereto.
d. You agree to cooperate with the Company in connection with its filings with the Securities
and Exchange Commission.
7. Restrictive Covenants.
a. You acknowledge and agree that you continue to be bound by the covenants set forth in
Sections 10, 11 (subject to paragraph 7b below), 12 and 13 of the Employment Agreement, and such
provisions shall survive the termination of the Employment Agreement.
b. Notwithstanding the foregoing, the Company hereby agrees that the restrictions set forth in
subsections (a) and (c) of Section 11 of the Employment Agreement shall terminate and be of no
further force and effect from and after the Effective Date.
8. Company Covenants. The Company acknowledges and agrees that it shall continue to
be bound by the provisions of Section 9 of the Employment Agreement and such provision shall
survive the termination of the Employment Agreement. Notwithstanding the above, you and the
Company hereby acknowledge that the payments made and the benefits provided pursuant to this
Separation Agreement are not being paid
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or provided on account of or in connection with a change in
ownership or control of the Company.
9. Waiver.
a. You agree that, in consideration of the benefits to be provided to you under this
Separation Agreement, YOU HEREBY WAIVE, RELEASE AND FOREVER DISCHARGE ANY AND ALL KNOWN AND
UNKNOWN, SUSPECTED AND UNSUSPECTED, CLAIMS AND RIGHTS WHICH YOU EVER HAD, NOW HAVE OR MAY HAVE
AGAINST THE COMPANY AND ANY OF ITS SUBSIDIARIES OR AFFILIATED COMPANIES, AND THEIR RESPECTIVE
SUCCESSORS AND ASSIGNS, CURRENT AND FORMER OFFICERS, AGENTS, BOARD OF DIRECTORS MEMBERS,
REPRESENTATIVES AND EMPLOYEES, VARIOUS BENEFITS COMMITTEES, AND THEIR RESPECTIVE SUCCESSORS AND
ASSIGNS, HEIRS, EXECUTORS AND PERSONAL AND LEGAL REPRESENTATIVES, BASED ON ANY ACT, EVENT OR
OMISSION OCCURRING BEFORE YOU EXECUTE THIS SEPARATION AGREEMENT, ARISING OUT OF, DURING OR RELATING
TO YOUR EMPLOYMENT OR SERVICES WITH THE COMPANY OR THE TERMINATION OF SUCH EMPLOYMENT OR SERVICES,
EXCEPT AS PROVIDED BELOW (“CLAIMS”). This waiver and release includes, but is not limited to, any
claims which could be asserted now or in the future, under: common law, including, but not limited
to, breach of express or implied duties, wrongful termination, defamation, or violation of public
policy; any policies, practices, or procedures of the Company; any federal or state statutes or
regulations including, but not limited to, Title VII of the Civil Rights Act of 1964, as amended,
42 U.S.C. §2000e et seq., the Civil Rights Act of 1866 and 1871, the Americans With Xxxxxxxxxxxx
Xxx, 00 X.X.X. §00000 et seq., the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C.
§1001 et seq. (excluding those rights relating exclusively to employee pension benefits as governed
by ERISA), the Family and Medical Xxxxx Xxx, §0000 et. seq., the Texas Labor Code, Chapters 21 and
22, each as amended, any comparable state laws, any contract of employment, express or implied; any
provision of the United States or of a state; any provision of any other law, common or statutory,
of the United States, or any applicable state. Notwithstanding the foregoing, nothing contained in
this paragraph 8a shall (i) impair any rights or potential claims that you may have under the
federal Age Discrimination in Employment Act of 1967 (the “ADEA”) subject to paragraph 8c; (ii) be
construed to prohibit Executive from bringing appropriate proceedings to enforce this Separation
Agreement; (iii) effect any rights of indemnification, or to be held harmless, or any coverage
under directors and officers liability insurance or rights or claims of contribution that you have
or (iv) any rights as a shareholder of the Company.
b. The Company has advised you to consult with an attorney of your choosing prior to signing
this Separation Agreement. You represent that you understand and agree that you have the right and
have been given the opportunity to review this Separation Agreement and the ADEA Release attached
hereto, with an attorney. You further represent that you understand and agree that the Company is
under no obligation
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to offer this Separation Agreement, and that you are under no obligation to
consent to the waiver.
c. You represent that neither you nor your heirs, agents, representatives or attorneys have
filed or caused to be filed any lawsuit, complaint, or
charge with respect to any Claim that you are releasing in this Separation Agreement. You
represent that you have not brought or filed, and to the extent permitted by law will not bring or
file, any claim, charge, or action with respect to any Claim against the Company Entities and
Persons, or any of them, and, except as prohibited by law, agree not to seek any recovery arising
out of, based upon, or relating to matters released hereunder.
d. In accordance with the ADEA release contained in Exhibit A hereto (the “ADEA Release”), you
shall have twenty-one (21) days from the date of this Agreement to consider the ADEA Release and
once you have signed the ADEA Release, you shall have seven (7) additional days from the date of
execution to revoke your consent to the ADEA Release. Any such revocation shall be made in writing
so as to be received by the Company prior to the eighth (8th) day following your
execution of the ADEA Release. If no such revocation occurs, the ADEA Release shall become
effective on the eighth (8th) day following your execution of the ADEA Release (the
“Effective Date”). Notwithstanding anything in this Agreement to the contrary, in the event that
you fail to sign the ADEA Release within 21 days or you revoke your ADEA Release thereafter as
provided above, this Separation Agreement shall remain in full force and effect but the Company
shall have no obligation to provide the benefits in paragraphs 2b, 2e or 5b above.
10. Enforcement. If any provision of this Separation Agreement is held by a court of
competent jurisdiction to be illegal, void or unenforceable, such provision shall have no effect;
however, the remaining provisions shall be enforced to the maximum extent possible. Further, if a
court should determine that any portion of this Separation Agreement is overbroad or unreasonable,
such provision shall be given effect to the maximum extent possible by narrowing or enforcing in
part that aspect of the provision found overbroad or unreasonable. Additionally, the parties agree
that in the event of any breach of the terms of paragraphs 4, 5, 6 and 7 the other party may seek
injunctive and other equitable relief. In addition, you agree that your willful and knowing
failure to return Company property that relates to the maintenance of security of the Company
Entities and Persons or the maintenance of Proprietary Information shall entitle the Company to
such injunctive and other equitable relief.
11. No Admission. This Separation Agreement is not intended, and shall not be
construed, as an admission that either you or the Company Entities and Persons have violated any
federal, state or local law (statutory or decisional), ordinance or regulation, breached any
contract or committed any wrong whatsoever.
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12. Successor. This Separation Agreement is binding upon, and shall inure to the
benefit of, the parties and their respective heirs, executors, administrators, successors and
assigns.
13. Choice of Law. This Separation Agreement shall be construed and enforced in
accordance with the laws of the State of Texas without regard to the principles of conflicts of
law.
14. Entire Agreement. You acknowledge that this Separation Agreement constitutes the
complete understanding between the Company and you, and, supersedes any and all agreements,
understandings, and discussions, whether written or oral, between you and any of the Company
Entities and Persons, including your Employment Agreement, which shall terminate on the Separation
Date, except for the provisions of Sections 9, 10, 11, 12 and 13 of the Employment Agreement which
shall survive such termination. No other promises or agreements shall be binding on the Company
unless in writing and signed by both the Company and you after the date of this Separation
Agreement.
15. Effective Date. You may accept this Separation Agreement by signing it and
returning it to Xxxx X. Xxxxxxxx, Chairman, c/o Xxxxx X. Xxx, Hercules Offshore, Inc., 0 Xxxxxxxx
Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000. The effective date of this Separation Agreement shall be
the date it is signed by both parties, provided that the provisions of paragraphs 2b, 2e and 5b
shall not become effective until the Effective Date, as defined in paragraph 9d. In the event you
do not accept this Separation Agreement as set forth above, this Separation Agreement, including
but not limited to the obligation of the Company to provide the payments and other benefits
described herein, shall be deemed automatically null and void.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, this Agreement is executed as of the date first written above.
Signature:
|
/s/ Xxxxxxx X. Xxxxxxx | Date: | June 22, 2008 | |||||
| Xxxxxxx X. Xxxxxxx | ||||||||
| HERCULES OFFSHORE, INC. | ||||||||
By:
|
/s/ Xxxx X. Xxxxxxxx | Date: | June 20, 2008 | |||||
| Title: Xxxx X. Xxxxxxxx, Chairman of the Board | ||||||||
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SCHEDULE I
List of Welfare Benefit Plans1
The Hercules Offshore, Inc. Medical, Dental, Vision and Prescription Drug Benefits Plan
The Hercules Offshore, Inc. Life Insurance Plan
The Hercules Offshore, Inc. Accidental Death & Dismemberment Plan
The Hercules Offshore, Inc. Short Term Disability Plan
The Hercules Offshore, Inc. Long Term Disability Plan
The Hercules Offshore, Inc. Welfare Benefit Plan
The Hercules Offshore, Inc. 401(k) Plan
The Hercules Offshore, Inc. Deferred Compensation Plan
| 1 | Section 4(b)(iv) of the Employment Agreement provides that the Executive and/or his dependents shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies to the extent applicable generally to similarly situated executives of the Company. |
EXHIBIT A
WAIVER OF RIGHTS UNDER THE
AGE DISCRIMINATION AND EMPLOYMENT ACT
AGE DISCRIMINATION AND EMPLOYMENT ACT
1. XXXXXXX X. XXXXXXX (“EXECUTIVE” OR “YOU”) KNOWINGLY AND VOLUNTARILY, ON BEHALF OF
YOURSELF AND YOUR AGENTS, ATTORNEYS, SUCCESSORS, ASSIGNS, HEIRS AND EXECUTORS, RELEASES AND
FOREVER DISCHARGES HERCULES OFFSHORE, INC. (THE “COMPANY”) AND ALL OF ITS SUBSIDIARIES AND
AFFILIATES, TOGETHER WITH ALL OF THEIR RESPECTIVE PAST AND PRESENT DIRECTORS, MANAGERS,
OFFICERS, SHAREHOLDERS, PARTNERS, EMPLOYEES, AGENTS, ATTORNEYS AND SERVANTS,
REPRESENTATIVES, ADMINISTRATORS AND FIDUCIARIES (EXCEPT THAT IN THE CASE OF AGENTS,
REPRESENTATIVES, ADMINISTRATORS, ATTORNEYS AND FIDUCIARIES, ONLY TO THE EXTENT IN ANY WAY
RELATED TO THEIR EMPLOYMENT WITH, OR THE BUSINESS AFFAIRS OF THE COMPANY) AND EACH OF THEIR
PREDECESSORS, SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE “RELEASEES”) FROM ANY AND ALL
CLAIMS, CHARGES, COMPLAINTS, PROMISES, AGREEMENTS, CONTROVERSIES, LIENS, DEMANDS, CAUSES OF
ACTION, OBLIGATIONS, SUITS, DISPUTES, JUDGMENTS, DEBTS, BONDS, BILLS, COVENANTS, CONTRACTS,
VARIANCES, TRESPASSES, EXECUTIONS, DAMAGES AND LIABILITIES OF ANY NATURE WHATSOEVER
RELATING IN ANY WAY TO YOUR RIGHTS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967,
AS AMENDED (THE “ADEA”), WHETHER KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, WHICH AGAINST
YOU OR YOUR EXECUTORS, ADMINISTRATORS, SUCCESSORS OR ASSIGNS EVER HAD, NOW HAVE, OR MAY
HEREAFTER CLAIM TO HAVE AGAINST THE RELEASEES IN LAW OR EQUITY, BY REASON OF ANY MATTER,
CAUSE OR THING WHATSOEVER ARISING ON OR BEFORE THE DATE THIS ADEA RELEASE IS EXECUTED BY
YOU, AND WHETHER OR NOT PREVIOUSLY ASSERTED BEFORE ANY STATE OR FEDERAL COURT OR BEFORE ANY
STATE OR FEDERAL AGENCY OR GOVERNMENTAL ENTITY (THE “ADEA RELEASE”). This ADEA Release
includes, without limitation, any rights or claims relating in any way to your employment
relationship with the Company or any of the Releasees, or the termination thereof, arising
under the ADEA, including compensatory damages, punitive damages, attorney’s fees, costs,
expenses, and any other type of damage or relief. You represent that you have not
commenced or joined in any claim, charge, action or proceeding whatsoever against the
Company or any of the Releasees arising out of or relating to any of the matters set forth
in this ADEA Release. You further agree that you shall not be entitled to any personal
recovery in any claim, charge, action or proceeding whatsoever against the Company or any
of the Releasees for any of the matters set forth in this ADEA Release.
A-1
2. The Company has advised you to consult with an attorney of your choosing prior to
signing this ADEA Release. You represent that you understand and agree that you have the
right and have been given the opportunity to review this ADEA Release with an attorney.
You further represent that you understand and agree that the Company is under no obligation
to offer you this ADEA Release, and that you are under no obligation to consent to the ADEA
Release, and that you have entered into this ADEA Release freely and voluntarily.
3. You shall have twenty-one (21) days to consider this ADEA Release, and once you have
signed this ADEA Release, you shall have seven (7) additional days from the date of
execution to revoke your consent to this ADEA Release. Any such revocation shall be made
in writing so as to be received by the Company prior to the eighth (8th) day
following your execution of this ADEA Release. If no such revocation occurs, this ADEA
Release shall become effective on the eighth (8th) day following your execution
of this ADEA Release (the “Effective Date”). In the event that you revoke your consent,
this ADEA Release shall be null and void
IN WITNESS WHEREOF, the Executive has executed this ADEA Release as of the date set forth
below.
Xxxxxxx X. Xxxxxxx
Date
A-2
