EXHIBIT 10.15
Employment and Change in Control
Agreement
R&B Falcon Corporation
August 25, 1999
Contents
Section 1. Term of Employment 1
Section 2. Position and Responsibilities 2
Section 3. Standard of Care 2
Section 4. Compensation 3
Section 5. Expenses 5
Section 6. Employment Terminations 5
Section 7. Change in Control 10
Section 8. Confidentiality and Noncompetition 13
Section 9. Indemnification 14
Section 10. Outplacement Assistance 14
Section 11. Assignment 14
Section 12. Dispute Resolution and Notice 15
Section 13. Miscellaneous 15
Section 14. Governing Law 16
R&B Falcon Corporation
Employment and Change in Control Agreement
This EMPLOYMENT AND CHANGE IN CONTROL AGREEMENT ("Agreement")
is made, entered into, and is effective as of this 25th day of
August, 1999 (hereinafter referred to as the "Effective Date"),
by and between R&B Falcon Corporation (hereinafter referred to as
the "Company"), a Delaware corporation having its principal
offices at Houston, Texas, and Xxx Xxxxxxx (hereinafter referred
to as the "Executive").
WHEREAS, the Executive is presently employed by the Company
in the capacity of Senior Vice President - Operations,
International and Deepwater Division; and
WHEREAS, the Executive previously entered into an employment
agreement with the Company dated as of August 20, 1998 and it is
now in the best interest of the Company and the Executive to
enter into this new Agreement; and
WHEREAS, the Executive possesses considerable experience and
an intimate knowledge of the business and affairs of the Company,
its policies, methods, personnel, and operations; and
WHEREAS, the Company recognizes that the Executive's
contribution has been substantial and meritorious and, as such,
the Executive has demonstrated unique qualifications to act in an
executive capacity for the Company; and
WHEREAS, the Company is desirous of assuring the continued
employment of the Executive in the above stated capacity, and
Executive is desirous of having such assurance.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements of the parties set forth in this
Agreement, and of other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, agree as follows:
Section 1. Term of Employment
The Company hereby agrees to employ the Executive and the
Executive hereby agrees to continue to serve the Company, in
accordance with the terms and conditions set forth herein, for an
initial period of three (3) years, commencing as of the Effective
Date of this Agreement, as indicated above; subject, however, to
earlier termination as expressly provided in Section 6 herein.
The initial three (3) year Employment Term (as defined below)
of this Agreement shall be extended automatically for one (1)
additional month beginning with the first day of the twenty-third
(23rd) month of the initial three (3) year term, and on the first
day of each month thereafter the Employment Term of this
Agreement automatically shall be extended one additional month;
provided, however, either party may give the other party written
notice that, beginning with the first of the month that is at
ninety (90) days after the date of the notice, the Employment
Term shall cease to be extended with respect to any termination
of the Executive's employment other than a termination occurring
during the Window Period (as defined in Section 6.7 herein).
In the event such notice of intent not to renew is properly
delivered by either party, then the Employment Term of this
Agreement, along with all corresponding rights, duties, and
covenants with respect thereto, shall automatically expire ninety
(90) days following the end of the later of the initial three-
year Employment Term or, if applicable, the extended Employment
Term then in effect; provided, however, that notwithstanding the
termination of the Employment Term (i) the provisions contained
in Section 8 herein shall survive such expiration and (ii) the
provisions and protections of this Agreement concerning a Change
in Control of the Company (as defined in Section 7 herein),
including, without limitation, a Change in Control that occurs
after the termination of the Employment Term, shall continue
without interruption or change.
This Agreement provides (x) for the employment of the
Executive for an initial fixed term, which may be extended, (such
term, as it may be extended, is referred to herein as the
"Employment Term"), and (y) separately, whether or not the
Employment Term has expired before a Change in Control of the
Company occurs, for Change in Control employment protection for
the Executive for as long as the Executive remains an employee of
the Company (or any parent or subsidiary), and also with respect
to certain terminations of the Executive's employment occurring
during the Window Period prior to a Change in Control.
Further, notwithstanding anything in this Agreement to the
contrary, termination of this Agreement shall not alter or impair
any rights or benefits of the Executive (or the Executive's
beneficiaries) that have arisen (contingently or otherwise) under
this Agreement on or prior to such termination.
Section 2. Position and Responsibilities
During the term of this Agreement, the Executive agrees to
serve as the Senior Vice President - Operations, International
and Deepwater Division of the Company. In his capacity as the
Senior Vice President - Operations, International and Deepwater
Division of the Company, the Executive shall report directly to
the President and Chief Operating Officer, and shall maintain the
level of duties and responsibilities as in effect as of the
Effective Date, as set forth on Appendix A, or such higher level
of duties and responsibilities as he may be assigned during the
term of this Agreement. The Executive shall have the same status,
privileges, and responsibilities normally inherent in such
capacities in corporations of similar size and character.
Section 3. Standard of Care
During the term of this Agreement, the Executive agrees to
devote substantially his full time, attention, and energies to
the Company's business and shall not be engaged in any other
business activity, whether or not such business activity is
pursued for gain, profit, or other pecuniary advantage; provided,
however, subject to the restrictions of Section 8, the Executive
may serve as a director of other companies so long as such
service is not injurious to the Company, may continue the conduct
of the business activities listed on Appendix B (to the extent
conducted before the Effective Date), and may engage in the
conduct of such other business activities that are substantially
similar in nature and scope to those listed on Appendix B,
provided that such other business activities do not materially
interfere with the Executive's duties and obligations under this
Agreement. The Executive covenants, warrants, and represents that
he shall:
(a) Devote his full and best efforts to the fulfillment of
his employment obligations; and
(b) Act in the same manner as a competent executive in a
comparable company.
This Section 3 shall not be construed as preventing the
Executive from investing assets in such form or manner as will
not require his services in the daily operations of the affairs
of the companies in which such investments are made.
Section 4. Compensation
As remuneration for all services to be rendered by the
Executive during the term of this Agreement, and as consideration
for complying with the covenants herein, the Company shall pay
and provide to the Executive the following:
4.1Base Salary. The Company shall pay the Executive a Base
Salary in an amount which shall be established from time to time
by the Board of Directors of the Company or the Board's designee;
provided, however, that the Executive's Base Salary may be
decreased by the Board (other than during a Window Period) as
part of a program that is applicable equally (as a percentage of
base salary) to all executives of the Company and is determined
by the Board to be necessary and appropriate in light of the
Company's then financial condition. Base Salary shall be paid to
the Executive in equal semi-monthly installments throughout the
year, consistent with the normal payroll practices of the
Company.
The annual Base Salary shall be reviewed at least annually
following the Effective Date of this Agreement, while this
Agreement is in force, to ascertain whether, in the judgment of
the Board or the Board's designee, such Base Salary should be
increased, based primarily on the performance of the Executive
during the year and on the then current rate of inflation. If so
increased, the Base Salary as stated above shall, likewise, be
increased for all purposes of this Agreement.
4.2Annual Bonus. The Company shall provide the Executive with
the opportunity to earn an annual bonus, at a level which is
commensurate with the opportunity typically offered to executives
having the same or similar duties and responsibilities as the
Executive at companies similar in size and character to the
Company. The Executive shall be notified in writing by the
Company prior to the beginning of each fiscal year as to what the
Executive's target bonus will be for such fiscal year.
Nothing in this section shall be construed as obligating the
Company to refrain from changing and/or amending any annual
incentive plan so long as such changes are similarly applicable
to all executives generally.
4.3Long-Term Incentives. The Company shall provide the
Executive the opportunity to earn long-term incentive awards, at
a level which is commensurate with the opportunity typically
offered to executives having the same or similar duties and
responsibilities as the Executive at companies similar in size
and in character to the Company.
Nothing in this section shall be construed as obligating the
Company to refrain from changing, and/or amending any long-term
incentive plan, so long as such changes are similarly applicable
to all executives generally.
4.4Retirement Benefits. The Company shall provide to the
Executive participation in all Company qualified defined benefit
and defined contribution retirement plans, subject to the
eligibility and participation requirements of such plans. In
addition, the Company shall provide to the Executive
participation in all other nonqualified retirement and welfare
programs typically offered by companies similar in size and
character to the Company to executives having the same or similar
duties and responsibilities including any supplemental retirement
plans.
Nothing in this section shall be construed as obligating the
Company to refrain from changing, and/or amending the
nonqualified programs, so long as such changes are similarly
applicable to all executives generally.
4.5Supplemental Life Insurance. The Company, at its cost,
shall provide the Executive with supplemental life insurance in
the face amount of $100,000 per child for each child under age
21(twenty-one) years old.
4.6Employee Benefits. During the term of this Agreement, and
as otherwise provided within the provisions of each of the
respective plans, the Company shall provide to the Executive all
benefits to which other executives and employees of the Company
are entitled to receive, as commensurate with the Executive's
position. Such benefits shall include, but not be limited to,
group term life insurance, comprehensive health and major medical
insurance, dental insurance, vision insurance, and short-term and
long-term disability.
The Executive shall be entitled to paid vacation in
accordance with the standard written policy of the Company with
regard to vacations of employees.
The Executive shall likewise participate in any additional
benefit as may be established during the term of this Agreement,
by standard written policy of the Company.
4.7Perquisites. The Company shall provide to the Executive,
at the Company's cost, all perquisites to which other executives
of the Company are entitled to receive and such other perquisites
which are suitable to the character of Executive's position with
the Company and adequate for the performance of his duties
hereunder.
4.8Right to Change Plans. By reason of Sections 4.5 and 4.6
herein, the Company shall not be obligated to institute,
maintain, or refrain from changing, amending, or discontinuing
any benefit plan, program, or perquisite, so long as such changes
are similarly applicable to executive employees generally.
4.9Physical Exams. The Executive shall be entitled to an
annual physical exam paid for by the Company.
Section 5. Expenses
The Company shall pay, or reimburse the Executive, for all
ordinary and necessary expenses, in a reasonable amount, which
the Executive incurs in performing his duties under this
Agreement including, but not limited to, travel, entertainment,
professional dues and subscriptions, and all dues, fees, and
expenses associated with membership in various professional,
business, social, and civic clubs, associations and societies of
which the Executive's participation is in the best interest of
the Company.
Section 6. Employment Terminations
6.1Termination Due to Retirement. In the event the
Executive's employment is terminated during the Employment Term
or Window Period by reason of retirement, the Executive's
benefits shall be determined in accordance with the Company's
qualified retirement, supplemental retirement, survivor's
benefits, insurance, and other applicable programs of the Company
then in effect.
Upon the effective date of such termination, the Company will pay
the Executive a pro rata portion of his Highest Annual Bonus (as
defined below in Section 7.1) and the Executive will be
immediately vested in all long-term incentive awards. Further,
upon the effective date of the termination, the Company's
obligation to pay and provide to the Executive any future Base
Salary, annual bonus, and long-term incentive awards (as provided
in Sections 4.1, 4.2, and 4.3 herein, respectively) shall
immediately expire. However, the Executive shall receive all
rights and benefits that he is vested in pursuant to other plans
and programs of the Company, including, but not limited to, the
retirement benefits as described in Section 4.4 herein.
6.2Termination Due to Death. In the event of the death of the
Executive during the Employment Term or Window Period, or during
any period of Disability during which he is receiving
compensation pursuant to Section 6.3 herein, the Company shall
(i) pay to the Executive's surviving spouse, or other beneficiary
as so designated by the Executive during his lifetime, or to the
Executive's estate, as appropriate, a lump sum amount equal to
the sum of the Executive's (x) Base Salary otherwise payable for
the remaining Employment Term and (y) an amount equal to the sum
of the Highest Annual Bonus for each fiscal year ending during
the remaining Employment Term, plus for the fiscal year in which
the remaining Employment Term would expire, a prorata portion of
the Highest Annual Bonus for such partial fiscal year, (ii) vest
all long-term incentive awards of the Executive, and (iii)
continue, at the Company's cost, all health and welfare benefits
for the Executive's spouse and dependents for the remaining term
of this Agreement.
Further, the Company shall pay and provide all other benefits
to which the Executive has a vested right at the time, according
to the provisions of the governing plan or program. The Company
thereafter shall have no further obligations under this
Agreement.
6.3Suspension Due to Disability. In the event that the
Executive becomes disabled during the Employment Term or Window
Period and is, therefore, unable to perform his duties herein for
a period of more than one hundred-eighty (180) calendar days in
the aggregate during any period of twelve (12) consecutive
months, or in the event of the Board's reasonable expectation
that the Executive's Disability will exist for more than a period
of one hundred-eighty (180) calendar days, the Company shall have
the right to suspend the Executive's active employment as
provided in this Agreement and place him on Disability. However,
the Board shall deliver written notice to the Executive of the
Company's intent to suspend for Disability at least thirty (30)
calendar days prior to the effective date of such suspension.
A suspension for Disability shall become effective upon the
end of the thirty (30) day notice period. Upon such effective
date, the Company will pay the Executive any Base Salary through
the effective date of the suspension for Disability, a pro rata
portion of the Highest Annual Bonus for the fiscal year in which
such suspension occurs, and the Executive will be immediately
vested in all long-term incentive awards, provided however, that
if the Executive's Disability is due to alcohol or drug
dependence, he will vest ratably in any long-term incentive
awards. Further, upon the effective date of the suspension, the
Company's obligation to pay and provide to the Executive any
future Base Salary, annual bonus, and long-term incentive awards
(as provided in Sections 4.1, 4.2, and 4.3, respectively) shall
immediately be suspended. However, the Executive shall receive
all rights and benefits that he is vested in, pursuant to other
plans and programs of the Company, including, but not limited to,
short- and long-term disability benefits, and retirement benefits
as described in Section 4.4.
Under no circumstance will the Executive, if suspended due to
Disability, receive less than 60% of his Base Salary in effect at
the time of his suspension for Disability through age 65. The
Company agrees to make such payments to the Executive in the
event that the benefit is not available for any reason.
The term "Disability" shall mean, for all purposes of this
Agreement, the incapacity of the Executive, due to injury,
illness, disease, alcohol or drug dependency, or bodily or mental
infirmity, to engage in the performance of substantially all of
the usual duties of employment with the Company as contemplated
by Section 2 herein, such Disability to be determined by the
Board of Directors of the Company upon receipt and in reliance on
competent medical advice from one or more individuals, selected
by the Board, who are qualified to give such professional medical
advice.
If the Executive and the Company shall not be in agreement as
to whether the Executive has suffered a Disability for the
purposes of this Agreement, the matter shall be referred to a
panel of three medical doctors, one of which shall be selected by
the Executive, one of which shall be selected by the Company, and
one of which shall be selected by the two doctors as so selected,
and the decision of a majority of the panel with respect to the
question of whether the Executive has suffered a Disability shall
be binding upon the Executive and the Company. The expenses of
any such referral shall be borne by the Company. The Executive
may be required by the Company to submit to medical examination
at any time during the period of his employment hereunder, but
not more often than quarter-annually, to determine whether a
Disability exists for the purposes of this Agreement.
It is expressly understood that the Disability of the
Executive for a period of one hundred-eighty (180) calendar days
or less in the aggregate during any period of twelve (12)
consecutive months, in the absence of any reasonable expectation
that his Disability will exist for more than such a period of
time, shall not constitute a failure by him to perform his duties
hereunder and shall not be deemed a breach or default and the
Executive shall receive full compensation and benefits for any
such period of Disability or for any other temporary illness or
incapacity during the term of this Agreement. If the Executive
recovers from any Disability, his suspension shall terminate and
the Executive shall resume his duties with full compensation and
benefits.
6.4Voluntary Termination by the Executive. The Executive may
terminate this Agreement at any time by giving the Board of
Directors of the Company written notice of intent to terminate,
delivered at least thirty (30) calendar days prior to the
effective date of such termination (such period not to include
vacation). The termination automatically shall become effective
upon the expiration of the thirty (30) day notice period.
Upon the effective date of such termination, the Company
shall pay to the Executive his full Base Salary, at the rate then
in effect as provided in Section 4.1 herein, through the
effective date of termination, plus all other benefits, including
long-term incentive awards, to which the Executive has a vested
right to at that time including, but not limited to, accrued
vacation pay. The Company also shall provide to the Executive the
vested retirement benefits described in Section 4.4 herein. With
the exception of the covenants contained in Section 8 herein
(which shall survive such termination), the Company and the
Executive thereafter shall have no further obligations under this
Agreement.
6.5Involuntary Termination by the Company Without Cause. At
all times during the Employment Term and outside the Window
Period, the Board may terminate the Executive's employment, as
provided under this Agreement, at any time for reasons other than
a suspension for Disability or a termination for Cause, by
notifying the Executive in writing of the Company's intent to
terminate, at least thirty (30) calendar days prior the effective
date of such termination.
Upon the effective date of such termination, following the
expiration of the thirty (30) day notice period, the Company
shall (i) pay the Executive a lump sum amount equal to the sum of
(x) the Executive's Base Salary otherwise payable for the
remaining Employment Term and (y) an amount equal to the sum of
the Highest Annual Bonus for each fiscal year ending during the
remaining Employment Term plus for the fiscal year in which the
remaining Employment Term would expire, a prorata portion of the
Highest Annual Bonus for such partial fiscal year, (ii) vest all
long-term incentive awards of the Executive, and (iii) continue,
at the Company's cost, all health and welfare benefits for the
Executive's spouse and dependents for the remaining Employment
Term.
Further, the Company shall pay the Executive all other
benefits to which the Executive has a vested right at the time,
according to the provisions of the governing plan or program. The
Company will also provide outplacement services or will reimburse
the Executive for the cost of such services as described in
Section 10 herein. The Company and the Executive thereafter shall
have no further obligations under this Agreement.
If the Executive's employment is terminated during the Window
Period by the Board for reasons other than a suspension for
Disability or a termination for Cause, the Executive shall be
entitled to receive the benefits provided in Section 7.1 herein
in lieu of the benefits set forth in this Section 6.5.
6.6 Termination For Cause. Nothing in this Agreement shall be
construed to prevent the Board from terminating the Executive's
employment under this Agreement for "Cause."
"Cause" means the Executive's:
(a) deliberate act of proven fraud having a
material adverse impact on the business or
consolidated financial condition or results of
operations of the Company and its subsidiaries;
(b) deliberate and continuing failure to
comply with applicable laws and regulations having a
material adverse impact on the business or
consolidated financial condition or results of
operations of the Company and its subsidiaries; or
(c) conviction of a criminal offense
constituting a felony.
For purposes of this Section 6.6, no act or omission by
the Executive shall be considered "willful" unless it is done or
omitted in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the
Company. Any act or failure to act based upon (i) authority given
pursuant to a resolution duly adopted by the Board, or (ii)
advice of counsel for the Company, shall be conclusively presumed
to be done or omitted to be done by the Executive in good faith
and in the best interests of the Company. For purposes of
subsections (a) and (b) above, the Executive shall not be deemed
to be terminated for Cause unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by
the affirmative vote of not less than the entire membership to
the Board at a meeting called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive
is given an opportunity, together with counsel, to be heard
before the Board) finding that in the good faith opinion of the
Board (x) the Executive is guilty of the conduct described in
subsection (a) or (b) above, (y) the Executive has been provided
a 30-day period in which to "cure" such specified violation
following a detailed written notice from the Board of the
Executive's violation of subsection (a) or (b) above and (z) the
Executive has failed to "cure" such violation, specifying the
particulars thereof in detail. The Executive, if a member of the
Board, will be not be counted for purposes of such a vote.
In the event this Agreement is terminated by the Board for
Cause, the Company shall pay the Executive his Base Salary
through the effective date of the employment termination and the
Executive shall immediately thereafter forfeit all rights and
benefits (other than vested benefits) he would otherwise have
been entitled to receive under this Agreement. The Executive will
lose any right to supplemental retirement benefits provided by
the Company. The Company and the Executive thereafter shall have
no further obligations under this Agreement.
During the Window Period, as described herein, if any
litigation arises out of a termination for Cause, to the extent
permitted by law, the Company shall pay all legal fees, costs of
litigation, prejudgment interest and other expenses incurred in
good faith by the Executive.
6.7Termination for Good Reason. At any time during the
Employment Term or Window Period, the Executive may terminate
this Agreement for Good Reason (as defined below) by giving the
Board of Directors of the Company thirty (30) calendar days
written notice of intent to terminate, which notice sets forth in
reasonable detail the facts and circumstances claimed to provide
a basis for such termination.
Upon the expiration of the thirty (30) day notice period, the
Good Reason termination shall become effective, and the Company
shall pay, in a lump sum, and provide to the Executive the
benefits set forth in this Section 6.7 (or, in the event of
termination for Good Reason during the Window Period, the
benefits set forth in Section 7.1 herein).
Good Reason shall mean, without the Executive's express
written consent, the occurrence of any one or more of the
following:
(a) The assignment of the Executive to duties materially
inconsistent with the Executive's authorities, duties,
responsibilities, and status (including offices, titles,
and reporting relationships) as an officer of the
Company, or a reduction or alteration in the nature or
status of the Executive's authorities, duties, or
responsibilities from those in effect during the
immediately preceding fiscal year;
(b) The Company's requiring the Executive to be based at a
location which is at least fifty (50) miles further from
the Executive's current primary residence than is such
residence from the Company's current headquarters, except
for required travel on the Company's business to an
extent substantially consistent with the Executive's
business obligations as of the Effective Date;
(c) A reduction by the Company in the Executive's Base Salary
except as permitted in Section 4.1;
(d) A material reduction in the Executive's level of
participation in any of the Company's short- and/or long-
term incentive compensation plans, or employee benefit or
retirement plans, policies, practices, or arrangements in
which the Executive participates as of the Effective
Date; provided, however, that reductions in the levels of
participation in any such plans shall not be deemed to be
"Good Reason" if the Executive's reduced level of
participation in each such program remains substantially
consistent with the average level of participation of
other executives who have positions commensurate with the
Executive's position; or
(e) The failure of the Company to obtain a satisfactory
agreement from any successor to the Company to assume and
agree to perform this Agreement, as contemplated in
Section 11.1 herein.
Upon a termination of the Executive's employment for Good
Reason at any time during the Employment Term, other than during
the Window Period, with the "Window Period" being (x) the twelve
(12) full calendar month period prior to the effective date of a
Change in Control that occurs during the initial three (3) year
term of the Employment Term, (y) the six (6) full calendar month
period prior to the effective date of a Change in Control that
occurs after the initial three (3) year Employment Term, and (z)
the twenty-four (24) month period beginning on the effective date
of a Change in Control, the Executive shall be entitled to
receive the same payments and benefits as he is entitled to
receive following an involuntary termination of his employment by
the Company during the Employment Term without Cause, as
specified in Section 6.5 herein. Upon a termination of the
Executive's employment for Good Reason within the Window Period,
regardless of whether the Change in Control occurs during the
Employment Term, the Executive shall be entitled to receive the
payments and benefits set forth in Section 7.1 herein in lieu of
those set forth in this Section 6.7.
The Executive's right to terminate employment for Good Reason
shall not be affected by the Executive's incapacity due to
physical or mental illness; provided, however, the Executive may
not terminate for Good Reason during any period that the
Executive's employment is suspended due to Disability.
The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason herein.
Section 7. Change in Control
7.1Employment Terminations in Connection with a Change in
Control. In the event of a Qualifying Termination (as defined
below) within the Window Period, then in lieu of all other
benefits provided to the Executive under the provisions of this
Agreement, the Company shall pay to the Executive in a lump sum
amount, and provide him with the following severance benefits
(hereinafter referred to as the "Severance Benefits"):
(a) An amount equal to three (3) times the highest rate of
the Executive's annualized Base Salary rate in effect at
any time up to and including the effective date of
termination;
(b) An amount equal to three (3) times the "Highest Annual
Bonus", which shall mean the greater of (i) Executive's
highest annual bonus earned over the fiscal years,
beginning with the 1998 fiscal year, prior to the Change
in Control (with respect to the 1998 fiscal year, the
Executive received a bonus of $58,000) and (ii) the
Executive's targeted annual bonus for such fiscal year of
termination;
(c) An amount equal to the Executive's unpaid Base Salary and
accrued vacation pay through the effective date of
termination;
(d) An amount equal to the Executive's Highest Annual Bonus
multiplied by a fraction, the numerator of which is the
number of completed days in the then-existing fiscal year
through the effective date of termination, and the
denominator of which is three hundred sixty-five (365);
(e) A continuation of the welfare benefits of medical
insurance, dental insurance, and group term life
insurance for three (3) full years after the effective
date of termination. These benefits shall be provided to
the Executive at the same premium cost, and at the same
coverage level, as in effect as of the Executive's
effective date of termination. However, in the event the
premium cost and/or level of coverage shall change for
all employees of the Company, the cost and/or coverage
level, likewise, shall change for the Executive in a
corresponding manner.
The continuation of these welfare benefits shall be
discontinued prior to the end of the three (3) year
period in the event the Executive has available
substantially similar benefits from a subsequent
employer, as determined by the Company's Board of
Directors or the Board's designee.
Upon the termination of these welfare benefits, the
Executive shall be provided a COBRA continuation election
under the Company's group health plans;
(f) A lump-sum cash payment of the actuarial present value
equivalent (as determined pursuant to Section 417 of the
Internal Revenue Code) of the aggregate benefits accrued
by the Executive as of the effective date of termination
under the terms of any and all supplemental retirement
plans in which the Executive participates. For this
purpose, such benefits shall be calculated under the
assumption that the Executive's employment continued
following the effective date of termination for three (3)
full years (i.e., three (3) additional years of service
credits shall be added); provided, however, that for
purposes of determining "final average pay" under such
programs, the Executive's actual pay history as of the
effective date of termination shall be used;
(g) Reimbursement for outplacement services costs (as
provided in Section 10 herein); and
(h) Immediate vesting of all outstanding long-term incentive
awards.
For purposes of this Section 7, a Qualifying Termination
shall mean any termination of the Executive's employment other
than: (1) by the Company for Cause (as provided in Section 6.6
herein); (2) by reason of death or suspension for Disability (as
provided in Section 6.2 herein); or (3) by the Executive without
Good Reason (as provided in Section 6.7 herein).
7.2Definition of "Change in Control." A Change in Control of
the Company shall be deemed to have occurred as of the first day
any one or more of the following conditions shall have been
satisfied:
(a) Any individual, corporation (other than the Company),
partnership, trust, association, pool, syndicate, or any
other entity or any group of persons acting in concert
becomes the beneficial owner, as that concept is defined
in Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, of
securities of the Company possessing twenty-five percent
(25%) or more of the voting power for the election of
directors of the Company;
(b) There shall be consummated any consolidation, merger, or
other business combination involving the Company or the
securities of the Company in which holders of voting
securities of the Company immediately prior to such
consummation own, as a group, immediately after such
consummation, voting securities of the Company (or, if
the Company does not survive such transaction, voting
securities of the corporation surviving such transaction)
having less than sixty percent (60%) of the total voting
power in an election of directors of the Company (or such
other surviving corporation);
(c) During any period of two (2) consecutive years,
individuals who at the beginning of such period
constitute the directors of the Company cease for any
reason to constitute at least a majority thereof unless
the election, or the nomination for election by the
Company's shareholders, of each new director of the
Company was approved by a vote of at least two-thirds
(2/3) of the directors of the Company then still in
office who were directors of the Company at the beginning
of any such period; or
(d) There shall be consummated 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 (on a consolidated basis) to a party which
is not controlled by or under common control with the
Company.
7.3 Excise Tax Equalization Payment. In the event that the
Executive becomes entitled to Severance Benefits or any
other payment or benefit under this Agreement, or under
any other agreement with or plan of the Company (in the
aggregate, the "Total Payments"), if any of the Total
Payments will be subject to the tax (the "Excise Tax")
imposed by Section 4999 of the Code (or any similar tax
that may hereafter be imposed), the Company shall pay to
the Executive in cash an additional amount (the "Gross-Up
Payment") such that the net amount retained by the
Executive after deduction of any Excise Tax upon the
Total Payments and any federal, state and local income
tax and Excise Tax upon the Gross-Up Payment provided for
by this Section 7.3 (including FICA and FUTA), shall be
equal to the Total Payments. Such payment shall be made
by the Company to the Executive as soon as practical
following the effective date of termination, but in no
event beyond thirty (30) days from such date.
7.4Tax Computation. For purposes of determining whether any
of the Total Payments will be subject to the Excise Tax and
the amounts of such Excise Tax:
(a) Any other payments or benefits received or to be received
by the Executive in connection with a Change in Control
of the Company or the Executive's termination of
employment (whether pursuant to the terms of this Plan or
any other plan, arrangement, or agreement with the
Company, or with any person (which shall have the meaning
set forth in Section 3(a)(9) of the Securities Exchange
Act of 1934, including a "group" as defined in
Section 13(d) therein) whose actions result in a Change
in Control of the Company or any person affiliated with
the Company or such persons) shall be treated as
"parachute payments" within the meaning of
Section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of Section 280G(b)(1) shall
be treated as subject to the Excise Tax, unless in the
opinion of tax counsel as supported by the Company's
independent auditors and acceptable to the Executive,
such other payments or benefits (in whole or in part) do
not constitute parachute payments, or unless such excess
parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered
within the meaning of Section 280G(b)(4) of the Code in
excess of the base amount within the meaning of
Section 280G(b)(3) of the Code, or are otherwise not
subject to the Excise Tax;
(b) The amount of the Total Payments which shall be treated
as subject to the Excise Tax shall be equal to the lesser
of: (i) the total amount of the Total Payments; or (ii)
the amount of excess parachute payments within the
meaning of Section 280G(b)(1) (after applying clause (a)
above); and
(c) The value of any noncash benefits or any deferred payment
or benefit shall be determined by the Company's
independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up
Payment, the Executive shall be deemed to pay federal income
taxes at the highest marginal rate of Federal income taxation in
the calendar year in which the Gross-Up Payment is to be made,
and state and local income taxes at the highest marginal rate of
taxation in the state and locality of the Executive's residence
on the effective date of termination, net of the maximum
reduction in federal income taxes which could be obtained from
deduction of such state and local taxes.
7.5Subsequent Recalculation. In the event the Internal
Revenue Service adjusts the computation of the Company under
Section 7.4 herein so that the Executive did not receive the
greatest net benefit, the Company shall reimburse the Executive
for the full amount necessary to make the Executive whole, plus a
market rate of interest, as determined by the Committee.
7.6Payment of Legal Fees. To the extent permitted by law, the
Company shall pay all legal fees, costs of litigation,
prejudgment interest, and other expenses incurred in good faith
by the Executive as a result of the Company's refusal to provide
the severance benefits under this Section 7 to which the
Executive becomes entitled under this Agreement, or as a result
of the Company's contesting the validity, enforceability, or
interpretation of this Agreement, or as a result of any conflict
(including conflicts related to the calculation of parachute
payments) between the parties pertaining to this Agreement.
Section 8. Confidentiality and Noncompetition
8.1Confidentiality. During the term of this Agreement and
thereafter in perpetuity, the Executive will not directly or
indirectly disclose to any third party not a member of the
Company Group, its or their legal counsel or independent
accountants, Confidential Information and Trade Secrets of the
Company and its subsidiaries and affiliates (collectively, the
"Company Group"), except as to any of the Confidential
Information or Trade Secrets which shall be or become in the
public domain other than by breach by the Executive of his
obligations set out in this Section 8.1 or shall be required to
be disclosed by applicable laws or regulations, any judicial or
administrative authority or stock exchange rule or regulation.
For the purposes of this Section 8.1 "Confidential Information"
shall mean: (i) internal policies and procedures, (ii) financial
information, (iii) marketing strategies, (iv) secret discoveries,
inventions, formulae, designs and know-how not constituting Trade
Secrets, and (v) other non-public information relating to the
Company Group's business, the disclosure of which would
materially adversely affect the Company Group's business or
financial condition. For the purposes of this Section 8.1 "Trade
Secrets" shall mean all secret discoveries, inventions, formulae,
designs, methods, processes and know-how entitled to protection
as trade secrets under the laws of the state of Texas.
8.2Noncompetition. In the event the Executive breaches his
obligations under Section 8.1 of this Agreement during the one
(1) year period following the Executive's termination of
employment, during the remainder of such one (1) year period (the
"Restricted Period") the Executive shall not engage in
Competition with the Company. For purposes of this Section 8.2,
"Competition" shall mean the Executive engaging in or otherwise
being a director, officer, employee, principal, agent,
stockholder, member, owner or partner of, or permitting his name
to be used in connection with the activities of any business or
organization in the international offshore contract drilling
industry in direct competition with the Company Group, but shall
not preclude the Executive becoming the registered or beneficial
owner of up to two percent (2%) of any class of capital stock of
any such corporation which is registered under the Securities
Exchange Act of 1934, as amended, provided the Executive does not
actively participate in the business of such corporation until
the end of the Restricted Period.
Section 9. Indemnification
The Company hereby covenants and agrees to indemnify and hold
harmless the Executive fully, completely, and absolutely against
and in respect to any and all actions, suits, proceedings,
claims, demands, judgments, costs, expenses (including attorney's
fees), losses, and damages resulting from the Executive's good
faith performance of his duties and obligations under the terms
of this Agreement.
Section 10. Outplacement Assistance
Following a termination of the Executive's employment as
described in Sections 6.5, 6.7, or 7.1 herein, the Executive
shall be reimbursed by the Company for the costs of all
outplacement services obtained by the Executive within the two
(2) year period after the effective date of termination;
provided, however, that the total reimbursement shall be limited
to an amount equal to fifteen percent (15%) of the Executive's
Base Salary as of the effective date of termination.
Section 11. Assignment
11.1. Assignment by Company. This Agreement may and shall be
assigned or transferred to, and shall be binding upon and shall
inure to the benefit of, any successor of the Company, and any
such successor shall be deemed substituted for all purposes of
the "Company" under the terms of this Agreement. As used in this
Agreement, the term "successor" shall mean any person, firm,
corporation, or business entity that at any time, causes a Change
in Control as described in Section 7.2. Notwithstanding such
assignment, the Company shall remain, with such successor,
jointly and severally liable for all its obligations hereunder.
Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement and shall immediately entitle the Executive to
compensation from the Company in the same amount and on the same
terms as the Executive would be entitled in the event of an
involuntary termination by the Company, as provided in
Section 7.1 herein. Notice of such agreement shall be provided to
the Executive within thirty (30) days after a Change in Control.
Except as herein provided, the Company may not otherwise
assign this Agreement.
11.2 Assignment by Executive. This Agreement shall inure to
the benefit of and be enforceable by the Executive's personal or
legal representatives, executors, and administrators, successors,
heirs, distributees, devisees, and legatees. If the Executive
should die while any amounts payable to the Executive hereunder
remain outstanding, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this
Agreement to the Executive's devisee, legatee, or other designee
or, in the absence of such designee, to the Executive's estate.
This Agreement is not otherwise assignable by the Executive.
Section 12. Dispute Resolution and Notice
12.1 Arbitration. Any dispute or controversy arising under or
in connection with this Agreement shall be settled by
arbitration, conducted before a panel of three (3) arbitrators
sitting in a location selected by the Executive within fifty (50)
miles from the location of his employment with the Company, in
accordance with the rules of the American Arbitration Association
then in effect.
Judgment may be entered on the award of the arbitrator in any
court having proper jurisdiction. All expenses of such
arbitration, including the fees and expenses of the counsel for
the Executive, shall be borne by the Company, exclusive of
Section 7.6.
12.2. Notice. Any notices, requests, demands, or other
communications provided for by this Agreement shall be sufficient
if in writing and if sent by registered or certified mail to the
Executive at the last address he has filed in writing with the
Company or, in the case of the Company, at its principal offices.
Section 13. Miscellaneous
13.1. Gender and Number. Except where otherwise indicated by
the context, any masculine term used herein also shall include
the feminine; the plural shall include the singular and the
singular shall include the plural.
13.2. Entire Agreement. This Agreement supersedes any prior
agreements or understandings, oral or written, between the
parties hereto or between the Executive and the Company, with
respect to the subject matter hereof and constitutes the entire
Agreement of the parties with respect thereto.
13.3. Modification. This Agreement shall not be varied,
altered, modified, canceled, changed, or in any way amended
except by mutual agreement of the parties in a written instrument
executed by the parties hereto or their legal representatives.
13.4. Severability. In the event that any provision or
portion of this Agreement shall be determined to be invalid or
unenforceable for any reason, the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full
force and effect.
13.5. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an
original, but all of which together will constitute one and the
same Agreement.
13.6. Tax Withholding. The Company may withhold from any
benefits payable under this Agreement all federal, state, city,
or other taxes as may be required pursuant to any law or govern-
mental regulation or ruling.
13.7. Beneficiaries. The Executive may designate one or more
persons or entities as the primary and/or contingent
beneficiaries of any amounts to be received under this Agreement.
Such designation must be in the form of a signed writing
acceptable to the Board or the Board's designee. The Executive
may make or change such designation at any time.
Section 14. Governing Law
To the extent not preempted by federal law, the provisions of
this Agreement shall be construed and enforced in accordance with
the laws of the state of Texas.
IN WITNESS WHEREOF, the Executive and the Company (pursuant
to a resolution adopted at a duly constituted meeting of its
Board of Directors) have executed this Agreement, as of the day
and year first above written.
Executive:
___________________________
ATTEST R&B Falcon Corporation:
___________________________
APPENDIX A
R&B Falcon Corporation
Job Description
Job Title: Senior Vice President - Operations, International
and Deepwater Division
Reports to: President/Chief Operating Officer
Department: Executive
Location: Houston
Basic Function
Responsible for controlling and directing the operating unit's
marketing program, drilling operations and related support
functions. Responsible for profit and loss for the operating
unit and for all capital building projects for the Company.
Control and evaluate all operations of the operating unit to
ensure efficient and profitable operations.
Responsibilities and Duties
Operational Performance & Management
1. Directs and coordinates division management in the areas of
rig operational performance and administration.
2. Ensures company and area policies are actively implemented
and goals achieved by area/region employees.
3. Establishes and maintains a working environment that will
motivate departmental personnel toward desired results and will
reward those individuals that attain significant goals.
4. Ensures each Division is properly staffed with qualified and
trained personnel. Manages by demonstrating leadership,
motivation, planning, feedback and delegation as appropriate.
5. Works closely with Vice Presidents and Regional Operations
Managers to resolve any operating problems to ensure the
fulfillment of the Company's contractual agreements.
6. Plan and control rig mobilization, demobilization, dry-
docking and other large-scale projects to minimize expense to
Company.
7. Monitors daily drilling reports, equipment purchases,
warehouse stock, accounts payable, accounts receivable, and the
preparation of monthly area general reports which summarizes all
action during period, both operational and financial.
Materials
1. Responsible for all materials management functions,
corporate-wide, including purchasing, contract services,
materials control and transportation.
2. Overseas the plans to effectively respond to supply/demand
conditions to meet material requirements. Directs plans to
optimize the management of equipment assets throughout the
Company.
Projects
1. Responsible for new project work including design
development with respect to schedule, budget, quality, safety,
and personnel issues.
2. Works closely with partners and vendors to resolve any
problems to ensure the fulfillment of the Company's contractual
agreements.
3. Ensures all company and area policies are maintained with
regards to personnel, safety, operations, and financial controls.
4. Monitors progress of all projects to ensure operational and
financial goals and budgets are met.
Health, Safety & Environmental
1. Provides support and direction for operating unit safety
programs to reduce accidents and incidents.
2. Investigates all incidents as per Company policy.
Personnel & Training
1. Select, organize and develop a staff capable of effectively
accomplishing objectives of the operating unit.
2. Coordinate with SHE & HR departments in setting standards
for employment, training, compensation and career planning of
regional employees.
3. Overall responsibility to budget for and ensure personnel
are trained in accordance with internal (including training
identified in performance appraisal) and external training
requirements.
Budgeting & Profitability
1. Responsible for development and administration of Operating
Budget and Project Budget.
2. Approves budgets for each regional and project unit prior to
submission to Houston for final approval.
3. Direct development and administration of operating budgets
for divisional and project operations. Supervises local
management in their preparation of Capital, Fixed and Contract
budgets.
4. Monitors results and dictates necessary corrective action to
rectify budget exceptions and variances to achieve planned
profitability.
Contracts & Further Business
1. Reviews market trends and makes market forecasts for
budgeting decisions.
2. Apprises President/COO of all marketing and operating
activities for the divisions and projects.
3. Coordinates with area rate petition preparation when indexes
or direct operating or project costs increase.
4. Assists with efforts in procuring future business by
visiting prospective and current clients, identifies client
drilling programs, assists in evaluating client needs, and
reports to marketing accordingly.
5. Liaisons with marketing personnel and clients when
negotiating new business.
Client Relations
1. Maintains frequent contact with customers in all Divisions
to ensure a positive relationship with R&B Falcon Drilling Co.
2. Fosters relationships with clients to keep abreast of
current developments and attitudes.
3. Acts on information to insure smooth operating conditions.
R&B Falcon Image
1. Maintains company's professional image by determining
operating policies in line with standard company ideals and
insuring their adherence.
Education
Four year degree required.
Experience
Ten or more years offshore drilling industry experience,
including experience as Area Manager, or other equivalent
qualifications as deemed appropriate by the President/COO.
Reporting
Reports to President and Chief Operating Officer
Supervision
The following Managers and Department heads are direct reports -
Regional Vice Presidents, Regional Operations Managers, all
Capital Project Managers, Vice President Materials, Manager Human
Resources Operations, and Director of Sales.
