PRIDE INTERNATIONAL, INC. AMENDED AND RESTATED EMPLOYMENT/ NON- COMPETITION/CONFIDENTIALITY AGREEMENT RODNEY W. EADS
Exhibit 10.2
PRIDE INTERNATIONAL, INC.
AMENDED AND RESTATED EMPLOYMENT/
NON-COMPETITION/CONFIDENTIALITY AGREEMENT
NON-COMPETITION/CONFIDENTIALITY AGREEMENT
XXXXXX X. XXXX
AMENDED AND RESTATED EMPLOYMENT/
NON-COMPETITION/CONFIDENTIALITY AGREEMENT
NON-COMPETITION/CONFIDENTIALITY AGREEMENT
DATE:
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The date of execution set forth below. | |
COMPANY/EMPLOYER:
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Pride International, Inc., | |
a Delaware corporation | ||
0000 Xxx Xxxxxx, Xxxxx 0000 | ||
Xxxxxxx, Xxxxx 00000 | ||
EMPLOYEE:
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Xxxxxx X. Xxxx |
This Amended and Restated Employment/Non-Competition/Confidentiality Agreement by and between
Pride International, Inc. (the “Company” and as further defined below) and Xxxxxx X. Xxxx
(“Employee”) (together the “Parties”), effective as of the date set forth in Section 2.08 below
(the “Agreement”), is made on the terms as herein provided.
WHEREAS, the Parties previously entered into an employment agreement effective as of September
18, 2006 (the “Prior Agreement”) and wish to hereby supersede the Prior Agreement and amend and
restate the rights and obligations of the Parties with regard to Employee’s employment with the
Company in this Agreement; and
I. | PRIOR AGREEMENTS/CONTRACTS | |
As of the Effective Date, the Prior Agreement is hereby amended, modified and superseded by this Agreement insofar as future employment, compensation, non-competition, confidentiality, accrual of payments or any form of compensation or benefits from the Company are concerned. This Agreement does not release or relieve the Company from its liability or obligation with respect to any compensation, payments or benefits already accrued to Employee for service prior to the Effective Date, nor to any vesting of benefits or other rights which are attributable to length of employment, seniority or other such matters. This Agreement does not relieve Employee of any prior non-competition or confidentiality obligations and agreements and the same are hereby modified and amended as to future matters and future confidentiality even as to matters accruing prior to the Effective Date hereof. |
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II. | DEFINITION OF TERMS | |
Words used in the Agreement in the singular shall include the plural and in the plural the singular, and the gender of words used shall be construed to include whichever may be appropriate under any particular circumstances of the masculine, feminine or neuter genders. |
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a. | there occurs a change in control of the Company of the nature that would be required to be reported in response to item 6(e) of Schedule 14A of Regulation 14A or Item 5.01 of Form 8-K promulgated under the Securities Exchange Act of 1934 as in effect on the date of the Agreement, or if neither item remains in effect, any regulations issued by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934 which serve similar purposes; | ||
b. | any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes a beneficial owner, directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the total voting power of the Company’s then outstanding securities; | ||
c. | individuals who, as of the date hereof, constitute the members of the Board of Directors of the Company (the “Incumbent Directors”) cease for any reason other than due to death or disability to constitute at least a majority of the members of the Board of Directors of the Company (the “Board”), provided that any director who was nominated for election or was elected with the approval of at least a majority of the members of the Board who are at the time Incumbent Directors shall be considered an Incumbent Director unless such individual’s initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board; | ||
d. | the Company shall have merged into or consolidated with another corporation, or merged another corporation into the Company, on a basis whereby less than fifty percent (50%) of the total voting power of the surviving corporation is represented by shares held by former stockholders of the Company prior to such merger or consolidation; | ||
e. | the Company shall have sold, transferred or exchanged all, or substantially all, of its assets to another corporation or other entity or person; or | ||
f. | a Merger Protection Change in Control (as hereinafter defined) shall have occurred. |
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a. | Employee’s resignation or retirement is requested by the Company other than for Cause; | ||
b. | A significant and material diminution in Employee’s duties and responsibilities and which diminution would degrade, embarrass or otherwise make it unreasonable for Employee to remain in the employment of the Company; | ||
c. | Any (i) reduction in Employee’s total base salary, or (ii) reduction in Employee’s bonus target award level specified in Section 3.04(b), or (iii) material reduction in Employee’s benefits other than equity or long-term incentive awards or actual bonus award payouts, in all cases from the levels then in effect immediately prior to such reduction, unless such a reduction under (i), (ii) or (iii) is generally applicable to all similarly situated executives of the Company; | ||
d. | The material breach by the Company of any other provision of the Agreement; | ||
e. | Any requirement of the Company that Employee relocate more than 75 miles from downtown Houston, Texas; or | ||
f. | Notice by the Company of non-renewal of the Agreement contrary to the wishes of Employee, if such non-renewal would be effective prior to the expiration of the Employment Period during which Employee attains age 65. |
Notwithstanding any provision to the contrary, in order for Employee’s resignation to be deemed a Constructive Termination, (A) Employee must provide a written notice to the Company that Employee intends to terminate his employment with the Company within 60 days following the occurrence of the event that Employee claims constitutes a Constructive Termination; (B) the written notice must describe the event constituting the Constructive Termination in reasonable detail and (C) within 30 days after receiving such notice from Employee, the Company must fail to reinstate Employee to the position he was in, or otherwise cure the circumstances giving rise to the Constructive Termination. |
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III. | EMPLOYMENT |
a. | During the Employment Period, Employee agrees that he will at all times faithfully, industriously and to the best of his ability, experience and talents, perform all of the duties that may be required of and from him pursuant to the express and implicit terms hereof, to the reasonable satisfaction of the Company. | ||
b. | During the Employment Period, Employee shall devote his normal and regular business time, attention and skill to the business and interests of the Company, and the Company shall be entitled to all of the benefits, profits or other issue arising from or incident to all work, services and advice of Employee performed for the Company. Such employment shall be considered “full time” employment. Employee shall also have the right to devote such incidental and immaterial amounts of his time which are not required for the full and faithful performance of his duties hereunder to any outside activities and businesses which are not being engaged in by the Company and which shall not otherwise interfere with the performance of his duties hereunder. Notwithstanding the foregoing, it shall not be a violation of the Agreement for Employee to (i) serve on corporate, civic or charitable boards or committees, (ii) deliver lectures, fulfill speaking engagements or teach at educational institutions and (iii) manage personal investments, so long as such activities do not significantly interfere with the performance of Employee’s responsibilities hereunder. Employee shall have the right to make investments in any business provided such investment does not result in a violation of Article V of the Agreement. |
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c. | Employee acknowledges and agrees that, in connection with his employment relationship with the Company, Employee owes a fiduciary duty to the Company. In keeping with these duties, Employee shall make full disclosure to the Company of all business opportunities pertaining to the Company’s business and shall not appropriate for Employee’s own benefit business opportunities concerning the subject matter of the fiduciary relationship. | ||
d. | During and after the Employment Period, Employee agrees not to make any disparaging comments about the Company, any affiliates, or any current or former officer, director or employee of the Company or any affiliate or to take any action (or assist any person in taking any other action), in each case, that is materially adverse to the interests of the Company or any affiliate or inconsistent with fostering the goodwill of the Company and its affiliates; provided, however, that nothing in the Agreement shall apply to or restrict in any way the communication of information by Employee to any state or federal law enforcement agency or require notice to the Company thereof, and Employee will not be in breach of the covenant contained above solely by reason of his testimony which is compelled by process of law. During and after the Employment Period, the Company and its affiliates, officers and directors agree to refrain from any disparaging comments about Employee; provided, however, that nothing in the Agreement shall apply to or restrict in any way the communication of information by the Company and its affiliates, officers and directors to any state or federal law enforcement agency or require notice to Employee thereof, and the Company and its affiliates, officers and directors will not be in breach of the covenant contained above solely by reason of testimony which is compelled by process of law. Nothing in this Section, express or implied, is intended to or shall confer upon any person other than Employee, the Company or any subsidiary or affiliate of the Company any right benefit or remedy of any nature whatsoever under or by reason of this Agreement. | ||
e. | During the Employment Period, Employee shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by Employee in accordance with the most favorable policies, practices and procedures of the Company as in effect from time to time. Such reimbursement shall be made subject to the terms and conditions of the Company’s policy on the earlier of (i) the date specified in the Company’s policy or (ii) to the extent the reimbursement is taxable and subject to Section 409A (as defined in Section 6.04), no later than December 31 of the calendar year next following the calendar year in which the expense was incurred. | ||
f. | During the Employment Period, the Company shall furnish Employee with office space, secretarial assistance and such other facilities and services as shall be suitable to Employee’s position and adequate for the performance of Employee’s duties hereunder. |
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a. | The Company shall pay or cause to be paid to Employee an annual base salary of not less than the amount in effect as of the Effective Date, with the opportunity for increases, from time to time thereafter, which are in accordance with the Company’s regular executive compensation practices (such salary, as in effect from time to time, the “Annual Base Salary”). The Board will review the Annual Base Salary at least annually. The Annual Base Salary may be reduced only if the Annual Base Salary of the Chief Executive Officer of the Company is reduced by a proportionate percentage. | ||
b. | Employee will be eligible to participate on a reasonable basis, subject to the Company’s discretion as to the level of actual awards, in annual bonus, stock option, equity and incentive compensation plans which provide opportunities to receive compensation in addition to his Annual Base Salary. Employee will be eligible to participate in the Company’s annual bonus incentive plan at a target award level of not less than 75% of Annual Base Salary. Employee will be entitled to participate in employee welfare and qualified plans (including, but not limited to, medical, life, health, accident and disability insurance and disability benefits) and to receive perquisites which are offered by the Company in its exclusive discretion. The Company agrees that during and after the term of this Agreement, the provisions of any equity award between Employee and the Company, whether outstanding at the Effective Date or subsequently awarded, shall be deemed modified by the express provisions of this Agreement pertaining to equity awards including, but not limited to, for purposes of determining whether a stock option award is forfeited due to “serious misconduct,” serious misconduct shall be determined in accordance with the standards and definition of “Cause” as defined herein. |
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c. | Employee will receive paid vacation days each year to the same extent as provided to executives with comparable duties, in accordance with Company policy and practices. | ||
d. | The Company shall pay or cause to be paid to Employee a monthly automobile allowance in an amount not less than $750.00. |
a. | An amount equal to two (2) full years of his base salary, which base salary is here defined as the greater of (i) twelve (12) times the gross monthly salary in effect for Employee immediately preceding his date of Termination or (ii) the highest annual base salary paid to Employee during any of the three (3) years immediately preceding his date of Termination. Upon payment of this amount, there shall be deducted only such minimum amounts as may be required by law to be withheld for taxes and other applicable deductions. | ||
b. | The Company shall provide to Employee for a period of two (2) full years following the date of his Termination, health care, life, accident and disability insurance which are not less than the highest benefits furnished to Employee during the term of the Agreement at a cost to Employee as if he had remained a full time employee. If Section 6.04a. applies to the provision of any of the insurance described in this Section 3.05b., then Employee shall pay the cost of such insurance premiums in the amount and for the period of time proscribed by the application of Section 6.04a., subject to reimbursement by the Company as described therein | ||
c. | An amount equal to the sum of (i) two (2) times the Target Bonus, plus (ii) if Employee experiences a Termination on or after January 1st, but before the date on which awards are paid, if any, pursuant to achievement of performance goals set under the Company’s annual bonus incentive plan for the year immediately preceding the year in which Employee’s Termination occurs, an amount, subject to the Company’s discretion as set forth under the Company’s annual bonus incentive plan and paid at the same time the Company pays bonuses to similarly situated employees under such plan, equal to the amount Employee would have earned if Employee had remained employed with the Company until the date such awards would otherwise have been paid, plus (iii) a pro-rata portion of the award for the year in which Termination occurs, if any, earned by the achievement of performance goals set under the Company’s annual bonus incentive plan and paid at the same time the Company pays bonuses to similarly situated employees under such plan; provided, however, that if Employee has timely deferred his applicable award under a Company plan, such payment due Employee under this subparagraph shall be paid in accordance with the terms of the deferral. |
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d. | The “Compensation and Benefits” Section hereof shall be applicable in determining the payments and benefits due Employee under this Section and if Termination occurs after a reduction in all or part of Employee’s total compensation or benefits, the lump sum severance allowance and other compensation and benefits payable to him pursuant to this Section shall be based upon his compensation and benefits before the reduction. | ||
e. | All life, health, hospitalization, medical and accident benefits available to Employee’s spouse and dependents shall continue for the same term as Employee’s benefits. If Employee dies after Termination, any such benefits will continue for a term of two (2) years (or three (3) years if Article IV applies) after the date of death of Employee. If Section 6.04a. applies to the provision of any of the insurance coverage described in this Section 3.05e., then Employee shall pay the cost of such insurance premiums in the amount and for the period of time proscribed by the application of Section 6.04a. and subject to reimbursement by the Company described therein. | ||
f. | The Company’s obligation under this Section to pay or provide health care, life, accident and disability insurance to Employee, Employee’s spouse and Employee’s dependents shall be reduced when and to the extent any such benefits are paid or provided to Employee by another employer; provided, however, that Employee shall have all rights, if any, afforded to retirees to convert group life insurance coverage to the individual life insurance coverage as, to the extent of, and whenever his group life insurance coverage under this Section is reduced or expires. Apart from this subparagraph, Employee shall have and be subject to no obligation to mitigate. | ||
g. | The Company shall deduct applicable withholding taxes in performing its obligations under this Section. |
A sample form of Release is attached as Exhibit A. Employee acknowledges that the Company retains the right to modify the required form of the Release as the Company deems necessary in order to effectuate a full and complete release of claims against the Company, its affiliates, officers and directors. Notwithstanding any provision herein to the contrary, if Employee has not delivered to the Company an executed Release on or before the fiftieth (50th) day after the date of Termination, Employee shall forfeit all of the payments and benefits described in this Section 3.05, other than the benefit, if any, described in Section 3.05c.(ii), subject to Employee’s rights under Section 6.01b.; provided, however, that Employee shall not forfeit such amounts if the Company has not delivered to Employee the required form of Release on or before the 25th day following the date of Termination. |
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Nothing in this Section is intended, nor shall be deemed or interpreted, to be an amendment to any compensation, benefit or other plan of the Company. In the event of Employee’s Termination without a Change in Control, Employee is entitled only to the termination payments and benefits described in this Section 3.05 pursuant to this Agreement, without limiting rights, if any, under any other plan or arrangement. To the extent the Company’s performance under this Section includes the performance of the Company’s obligations to Employee under any other plan or under another agreement between the Company and Employee, the rights of Employee under such other plan or other agreement, which are discharged under the Agreement, are discharged, surrendered, or released pro tanto. | ||
IV. | CHANGE IN CONTROL |
a. | The salary and benefits specified in Section 3.05a. will be paid based upon a multiple of three (3) years (instead of two (2) years). | ||
b. | Life, health, accident and disability insurance specified in Section 3.05b. will be provided until (i) Employee becomes reemployed and receives similar benefits from a new employer or (ii) three (3) years after the date of the Change in Control Termination, whichever is earlier. | ||
c. | An amount equal to three (3) times the Maximum Bonus, instead of the benefits provided in Section 3.05c. hereof. |
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d. | If Employee experiences a Termination on or after January 1st, but before the date on which awards are paid, if any, pursuant to achievement of performance goals set under the Company’s annual bonus incentive plan for the year immediately preceding the year in which Employee’s Termination occurs, an amount, subject to the Company’s discretion as set forth under the Company’s annual bonus incentive plan and paid at the same time the Company pays bonuses to similarly situated employees under such plan, equal to the amount Employee would have earned if Employee had remained employed with the Company until the date such awards would otherwise have been paid. |
In the event of Employee’s Change in Control Termination or resignation under Section 4.03, Employee is entitled only to the termination payments and benefits described in this Section 4.02. | ||
The Parties agree that in the event of a Change in Control, no later than the date of, but prior to, the Change in Control, the Company shall deposit the amounts specified in Section 4.02a. and Section 4.02c. into an irrevocable grantor trust, established by the Company prior to the Change in Control with a duly authorized bank or corporation with trust powers (“Rabbi Trust”). The expenses of such Rabbi Trust shall be paid by the Company. Any amounts due to Employee under this Section 4.02 or Section 4.03 shall first be satisfied by the Rabbi Trust and the remaining obligations shall be satisfied by the Company at the same time and in the same manner described in Section 3.05. |
a. | Employee, therefore, agrees that in exchange for the Company providing and continuing to provide trade secrets and other confidential information, Employee agrees to the non-competition and confidentiality obligations and covenants outlined in this Article V and that absent his agreement to these obligations and covenants, the Company will not now provide and will not continue to provide him with trade secrets and other confidential information. |
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b. | In addition to the consideration described in Section 5.01a, the parties agree that (i) fifteen percent (15%) of Employee’s base salary and bonus, if any, paid and to be paid to Employee and (ii) one hundred percent (100%) of the payments and benefits, including Employee’s right to receive the same, under Sections 3.05 and 4.02, as applicable, shall constitute additional consideration for the non-competition and confidentiality agreements set forth herein. |
a. | work for, become an employee of, invest in, provide consulting services to or in any way engage in any business which (i) is primarily engaged in the drilling and workover of oil and gas xxxxx within the geographical area described in this Section 5.02 and (ii) actually competes with the Company; or | ||
b. | provide, sell, offer to sell, lease, offer to lease, or solicit any orders for any products or services which the Company provided and with regard to which Employee had direct or indirect supervision or control, within three (3) years preceding Employee’s termination of employment, to or from any person, firm or entity which was a Customer for such products or services of the Company during the three (3) years preceding such termination from whom the Company had solicited business during such three (3) years; or | ||
c. | actively solicit, aid, counsel or encourage any officer, director, employee or other individual to (i) leave his or her employment or position with the Company, (ii) compete with the business of the Company, or (iii) violate the terms of any employment, non-competition or similar agreement with the Company; or | ||
d. | directly or indirectly (i) influence the employment of, or engagement in any contract for services or work to be performed by, or (ii) otherwise use, utilize or benefit from the services of any officer, director, employee or any other individual holding a position with the Company within two (2) years after the date of termination of employment of Employee with the Company or within two (2) years after such officer, director, employee or individual terminated employment with the Company, whichever period expires earlier; provided however, Employee can seek written consent from the Company to hire an officer, director, employee or individual who has terminated employment with the Company, and Company consent will not be unreasonably withheld. |
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The geographical area within which the non-competition obligations and covenants of the Agreement shall apply is that territory within two hundred (200) miles of (i) any of the Company’s present offices, (ii) any of the Company’s present rig yards or rig operations and (iii) any additional location where the Company, as of the date of any action taken in violation of the non-competition obligations and covenants of the Agreement, has an office, a rig yard, a rig operation or definitive plans to locate an office, a rig operation or a rig yard or has recently conducted rig operations. Notwithstanding the foregoing, if the two hundred (200) mile radius extends into another country or its territorial waters and the Company is not then doing business in that other country, there will be no territorial limitations extending into such other country. | ||
At any time during the period covered by this Section 5.02, the Employee may provide the Company with a written request, setting forth with particularity any proposed employment, business arrangement and/or other activities in which the Employee proposes to engage, and requesting that the Company state its position as to whether it considers the proposed activities a violation of the covenants set forth in this Section 5.02. The Company shall respond in writing to the request within a reasonable period of time after receipt. | ||
For the avoidance of doubt, the Company agrees that the Agreement does not impose any non-competition covenant with respect to termination of employment after expiration of the Agreement. |
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all information, whether written or otherwise, regarding the Company’s business, including, but not limited to, information regarding Customers, Customer lists, costs, prices, earnings, products, services, formulae, compositions, machines, equipment, apparatus, systems, manufacturing procedures, operations, potential acquisitions, new location plans, prospective and executed contracts and other business plans and arrangements, and sources of supply, is prima facie presumed to be important, material and confidential information of the Company for the purposes of the Agreement, except to the extent that such information may be otherwise lawfully and readily available to or known by the general public, in any case other than as a result of Employee’s breach of this covenant. Employee further agrees that he will, upon termination of his employment with the Company, return to the Company all books, records, lists and other written, electronic, typed or printed materials, whether furnished by the Company or prepared by Employee, which contain any information relating to the Company’s business, and Employee agrees that he will neither make nor retain any copies of such materials after termination of employment. Notwithstanding any of the foregoing, nothing in the Agreement shall prevent Employee from complying with applicable federal and/or state laws. Notwithstanding any of the foregoing, Employee will not be liable for any breach of these confidentiality provisions if Employee discloses any such information as required by any subpoena or other legal process or notice or in any disposition, judicial or administrative hearing, or trial or arbitration (though Employee shall, to the extent permitted, give the Company notice of any such subpoena, process, or notice and will cooperate with all reasonable requests of the Company to obtain a protective order regarding, or to narrow the scope of, the information required to be disclosed). |
5.04 | COMPANY REMEDIES FOR VIOLATION OF NON-COMPETITION OR CONFIDENTIALITY/PROTECTION OF INFORMATION PROVISIONS. Without limiting the right of the Company to pursue all other legal and equitable rights available to it for violation of any of the obligations and covenants made by Employee herein, it is expressly agreed that: |
a. | the terms and provisions of this Agreement are reasonable and constitute an otherwise enforceable agreement to which the provisions of this Article V are ancillary or a part of as contemplated by TEX. BUS. & COM. CODE XXX. Sections 15.50-15.52; | ||
b. | the consideration provided by the Company under this Agreement is not illusory; | ||
c. | the consideration given by the Company under this Agreement, including, without limitation, the provision and continued provision by the Company of trade secrets and other confidential information to Employee, gives rise to the Company’s interest in restraining and prohibiting Employee from engaging in the unfair competition prohibited by Section 5.02 and Employee’s promise not to engage in the unfair competition prohibited by Section 5.02 is designed to enforce Employee’s consideration (or return promises), including, without limitation, Employee’s promise to not use or disclose confidential information or trade secrets; and |
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d. | the injury suffered by the Company by a violation of any obligation or covenant in this Article V of the Agreement will be difficult to calculate in damages in an action at law and cannot fully compensate the Company for any violation of any obligation or covenant in this Article V of the Agreement, accordingly: |
(i) | the Company shall be entitled to injunctive relief without the posting of a bond or other security to prevent violations thereof and to prevent Employee from rendering any services to any person, firm or entity in breach of such obligation or covenant and to prevent Employee from divulging any confidential information; and | ||
(ii) | compliance with the Agreement is a condition precedent to the Company’s obligation to make payments of any nature to Employee, subject to the other provisions hereof. |
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VI. | GENERAL |
6.01 | INDEMNIFICATION. |
a. | If Employee shall obtain a final judgment in his favor with respect to any litigation brought by Employee or the Company to enforce or interpret any provision of the Agreement, the Company, to the fullest extent permitted by applicable law, hereby indemnifies Employee for his reasonable attorney’s fees and disbursements incurred in such litigation and hereby agrees to indemnify Employee in connection with such litigation (i) if Employee has experienced a termination of employment within two (2) years after a Change in Control, in full for all such fees and disbursements or (ii) up to a maximum of two hundred fifty thousand dollars ($250,000). Any reimbursement to Employee under this Section 6.01 shall be made no later than the end of the calendar year in which final judgment is obtained. Employee shall not be entitled to reimbursement under this Section 6.01 if he has executed a Release and the request for reimbursement relates to claims waived or released under the Release. | ||
b. | If a bona fide dispute regarding the right to, or amount of, benefits potentially payable to Employee pursuant to this Agreement, failure to timely execute a Release as described in Section 3.05 shall not cause the forfeiture of such benefits, pending a full or partial settlement of the matter between the Company and Employee or a final nonappealable judgment thereon. |
a. | Except as provided in Section 6.02b., if it is determined that any amount or payment in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code, or if not so defined therein, under such similar provision of the Code) paid or provided to or on behalf of Employee would be subject to the excise tax imposed by Section 4999 of the Code (“Excise Tax”), then the amount of “parachute payments” (as defined in Section 280G of the Code) payable or required to be provided to Employee shall be automatically reduced (a “Reduction”) to the minimum extent necessary to avoid imposition of such Excise Tax. The parachute payments reduced shall be those that provide Employee the best economic benefit and to the extent any parachute payments are economically equivalent with each other, each shall be reduced pro rata. |
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b. | Notwithstanding any provision herein to the contrary, if a Reduction under Section 6.02a. would result in the amount of parachute payments being reduced by ten percent (10%) or more of the aggregate parachute payments, then no Reduction shall apply and Employee shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that, after payment (whether through withholding at the source or otherwise) by Employee of all federal, state or local taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto), employment taxes and Excise Tax imposed upon the Gross-Up Payment, Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed. For purposes of determining the amount of the Gross-Up Payment, Employee shall be deemed to pay federal income tax 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 Employee’s residence on the date the Gross-Up Payment is otherwise paid, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. If the Excise Tax is subsequently determined to be less than the amount taken into account hereunder in calculating the Gross-Up Payment, Employee shall repay to the Company, within five (5) business days following the time that the amount of such reduction in the Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction. If the Excise Tax is determined to exceed the amount taken into account hereunder in calculating the Gross-Up Payment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess within five (5) business days following the time that the amount of such excess is finally determined. Employee and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the parachute payments. |
c. | All determinations required to be made under this Section 6.02 shall be made by the accounting firm that was the Company’s independent auditor prior to the Change in Control or any other third party acceptable to Employee and the Company (the “Accounting Firm”). The Accounting Firm shall provide detailed supporting calculations both to the Company and Employee. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Absent manifest error, any determination by the Accounting Firm shall be binding upon the Company and Employee. The Gross-Up Payment to Employee, if any, shall be made as soon as practicable after the date of the “parachute payment” to which such Gross-Up Payment relates and no later than December 31st of the year following the year during which Employee remits the related Excise Tax. |
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d. | Employee will cooperate with the Company to minimize the tax consequences to Employee and to the Company so long as the actions proposed to be taken by the Company do not cause any additional tax consequences to Employee and do not prolong or delay the time that payments are to be made, or reduce the amount of payments to be made, unless Employee consents in writing to any delay or deferment of payment. | ||
Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than 10 business days after Employee is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. Employee shall not pay such claim prior to the expiration of the 30 day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies Employee in writing prior to the expiration of such period that it desires to contest such claim, Employee shall: | |||
1. give the Company any information reasonably requested by the Company relating to such claim; | |||
2. take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company; | |||
3. cooperate with the Company in good faith in order to effectively contest such claim; and | |||
4. permit the Company to participate in any proceedings relating to such claim; |
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provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Employee harmless, on an after tax basis, for any Excise Tax, employment tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation of the foregoing provisions of this Section 6.02, the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Employee to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and Employee agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs Employee to pay such claim and xxx for a refund, the Company shall advance to Employee the amount of such payment as an additional payment (the “Supplemental Payment”) (subject to possible repayment as provided in the next paragraph) as soon as practicable but no later than the date that any payment of taxes with respect to such claim is due. Notwithstanding the foregoing, if, due to the prohibitions of section 402 of the Xxxxxxxx-Xxxxx Act of 2002 or any applicable law, the Company may not advance the Supplemental Payment to Employee, the Company shall instead reimburse the Supplemental Payment to Employee, as soon as practicable and as permitted by applicable law but no later than 30 days after Employee makes such payment. The Company shall indemnify and hold Employee harmless, on an after tax basis, from any Excise Tax, employment tax or income tax (including interest or penalties with respect thereto) imposed with respect to the Supplemental Payment or with respect to any imputed income with respect thereto; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross Up Payment or Supplemental Payment would be payable hereunder and Employee shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. |
If, after the receipt by Employee of an amount provided by the Company pursuant to the foregoing provisions of this Section 6.02, Employee becomes entitled to receive any refund with respect to such claim, Employee shall (subject to the Company complying with the requirements of this Section 6.02) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). |
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a. | With respect to life insurance coverage, Employee shall pay the full cost of such coverage and the Company shall reimburse to Employee the amount of the cost of the coverage that is excess of the then active employee cost for such coverage. With respect to any group health plan, for the period of time during which Employee would be entitled (or would, but for this Agreement, be entitled) to continuation coverage under a group health plan of the Company under Section 4980B of the Code if Employee elected such coverage and paid the applicable premiums (generally, 18 months), Employee shall pay the then active employee cost of the benefits as determined under the then current practices of the Company on a monthly basis, and thereafter, Employee shall pay the full cost of the benefits as determined under the then current practices of the Company on a monthly basis, provided that the Company shall reimburse Employee the excess of costs, if any, above the then active employee cost for such benefits. Any reimbursements by the Company to Employee required under this paragraph shall be made on a regular, periodic basis within thirty (30) days after such reimbursable amounts are incurred by Employee; provided that, before such reimbursement, Employee has submitted or the Company possesses the applicable and appropriate evidence of such expense(s). Any reimbursements provided during one taxable year of Employee shall not affect the expenses eligible for reimbursement in any other taxable year of Employee (with the exception of applicable lifetime maximums applicable to medical expenses or medical benefits described in Section 105(b) of the Code) and the right to reimbursement under this paragraph shall not be subject to liquidation or exchange for another benefit or payment. |
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b. | Notwithstanding anything herein to the contrary, if Employee is a “specified employee,” as such term is defined in Section 409A, at the time of his termination of employment, any payments, reimbursements or benefits payable as a result of Employee’s Termination or Change in Control Termination shall not be payable before the earlier of (i) the date that is six months after Employee’s Termination or Change in Control Termination, as applicable, (ii) the date of Employee’s death, or (iii) the date that otherwise complies with the requirements of Section 409A. Any payments or reimbursements that otherwise would have been paid following Employee’s Termination and that are subject to this delay of payment under Section 409A shall, during such delay period, be accumulated and paid in a lump sum at the earliest date which complies with the requirements of Section 409A. In the case of a Change in Control Termination, such amounts shall be accumulated in the grantor trust as provided in Section 4.02 and paid in a lump sum as provided in Section 4.02, at the earliest date which complies with the requirements of Section 409A. |
c. | Employee and the Company agree that no revision of the Agreement intended to comply with the terms of Section 409A and to avoid imposition of the applicable tax thereunder shall be deemed to adversely affect Employee’s rights or benefits in the Agreement. | ||
d. | The Parties agree to cooperate to the fullest extent in pursuit of any available corrective relief, as provided under the terms of Internal Revenue Service Notice 2008-113 or any corresponding subsequent guidance, from the Section 409A additional income tax and premium interest tax.. |
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EXECUTED in multiple originals and/or counterparts as of the date set forth below.
/s/ Xxxxxx X. Xxxx | ||||||
Xxxxxx X. Xxxx | ||||||
Date: | 12/31/08 | |||||
ATTEST: | PRIDE INTERNATIONAL, INC. | |||||||
/s/
W. Xxxxxxx Xxxxxx
|
By: | /s/ Xxxxx X. Xxxxxxx | ||||||
W. Xxxxxxx Xxxxxx
|
Xxxxx X. Xxxxxxx | |||||||
Senior Vice President — Legal, Information
|
President and Chief Executive Officer | |||||||
Strategy and General Counsel |
||||||||
Date: | December 31, 2008 |
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EXHIBIT A
Waiver And Release
Pursuant to the terms of my Employment Agreement with Pride International, Inc. effective
December 31, 2008, and in exchange for the payment of $ which is the cash amount
payable pursuant to [Section ] of the Agreement and benefits as provided in [Section ]
of the Agreement, as applicable (the “Separation Benefits”), I hereby waive all claims against and
release (i) Pride International, Inc. and its directors, officers, employees, agents, insurers,
predecessors, successors and assigns (collectively referred to as the “Company”), (ii) all of the
affiliates (including all parent companies and all wholly or partially owned subsidiaries) of the
Company and their directors, officers, employees, agents, insurers, predecessors, successors and
assigns (collectively referred to as the “Affiliates”), and (iii) the Company’s and its Affiliates’
employee benefit plans and the fiduciaries and agents of said plans (collectively referred to as
the “Benefit Plans”) from any and all claims, demands, actions, liabilities and damages arising out
of or relating in any way to my employment with or separation from employment with the Company and
its Affiliates other than amounts due pursuant to [Section ] of the Agreement, rights under
[Section ] of the Agreement and rights and benefits I am entitled to under the Benefit Plans.
(The Company, its Affiliates and the Benefit Plans are sometimes hereinafter collectively referred
to as the “Released Parties.”)
I understand that signing this Waiver and Release is an important legal act. I acknowledge
that I have been advised in writing to consult an attorney before signing this Waiver and Release.
I understand that, in order to be eligible for the Separation Benefits, I must sign (and return to
the Company) this Waiver and Release before I will receive the Separation Benefits. I acknowledge
that I have been given at least [___] days to consider whether to accept the Separation Benefits and
whether to execute this Waiver and Release.
In exchange for the payment to me of the Separation Benefits, (1) I agree not to xxx in any
local, state and/or federal court regarding or relating in any way to my employment with or
separation from employment with the Company and its Affiliates, and (2) I knowingly and voluntarily
waive all claims and release the Released Parties from any and all claims, demands, actions,
liabilities, and damages, whether known or unknown, arising out of or relating in any way to my
employment with or separation from employment with the Company and its Affiliates, except to the
extent that my rights are vested under the terms of any employee benefit plans sponsored by the
Company and its Affiliates and except with respect to such rights or claims as may arise after the
date this Waiver and Release is executed. This Waiver and Release includes, but is not limited to,
claims and causes of action under: Title VII of the Civil Rights Act of 1964, as amended; the Age
Discrimination in Employment Act of 1967, as amended, including the Older Workers Benefit
Protection Act of 1990; the Civil Rights Act of 1866, as amended; the Civil Rights Act of 1991; the
Americans with Disabilities Act of 1990; the Workers Adjustment and Retraining Notification Act of
1988; the Pregnancy Discrimination Act of 1978; the Employee Retirement Income Security Act of
1974, as amended; the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended; the
Family and Medical Leave Act of 1993; the Fair Labor Standards Act; the Occupational Safety and
Health Act; the Texas Labor Code §21.001 et. seq.; the Texas Labor Code; claims in connection with
workers’ compensation, retaliation or “whistle blower” statutes; and/or contract, tort, defamation,
slander, wrongful termination or any other state or federal regulatory, statutory or common law.
Further, I expressly represent that no promise or agreement which is not expressed in this Waiver
and Release has been made to me in executing this Waiver and Release, and that I am relying on my
own judgment in executing this Waiver and Release, and that I am not relying on any statement or
representation of the Company or its Affiliates or any of their agents. I agree that this Waiver
and Release is valid, fair, adequate and reasonable, is with my full knowledge and consent, was not
procured through fraud, duress or mistake and has not had the effect of misleading, misinforming or
failing to inform me. I acknowledge and agree that the Company will withhold minimum amount of any
taxes required by federal or state law from the Separation Benefits otherwise payable to me.
Notwithstanding the foregoing, I do not release and expressly retain (a) all rights to
indemnity, contribution, and a defense, and directors and officers and other liability coverage
that I may have under any statute, the bylaws of the Company or by other agreement; and (b) the
right to any, unpaid reasonable business expenses and any accrued benefits payable under any
Company welfare plan or tax-qualified plan or other Benefit Plans. For the avoidance of doubt, the
term “Benefit Plans” includes the Company’s Supplemental Executive Retirement Plan and any
outstanding stock option awards under an equity incentive plan.
I acknowledge that payment of the Separation Benefits is not an admission by any one or more
of the Released Parties that they engaged in any wrongful or unlawful act or that they violated any
federal or state law or regulation. I acknowledge that neither the Company nor its Affiliates have
promised me continued employment or represented to me that I will be rehired in the future. I
acknowledge that my employer and I contemplate an unequivocal, complete and final dissolution of my
employment relationship. I acknowledge that this Waiver and Release does not create any right on
my part to be rehired by the Company or its Affiliates, and I hereby waive any right to future
employment by the Company or its Affiliates.
I understand that for a period of 7 calendar days following the date that I sign this Waiver
and Release, I may revoke my acceptance of this Waiver and Release, provided that my written
statement of revocation is received on or before that seventh day by [Name and/or Title],
[address], facsimile number: , in which case the Waiver and Release will not become
effective. If I timely revoke my acceptance of this Waiver and Release, the Company shall have no
obligation to provide the Separation Benefits to me. I understand that failure to revoke my
acceptance of the offer within 7 calendar days from the date I sign this Waiver and Release will
result in this Waiver and Release being permanent and irrevocable.
Should any of the provisions set forth in this Waiver and Release be determined to be invalid
by a court, agency or other tribunal of competent jurisdiction, it is agreed that such
determination shall not affect the enforceability of other provisions of this Waiver and Release.
I acknowledge that this Waiver and Release sets forth the entire understanding and agreement
between me and the Company and its Affiliates concerning the subject matter of this Waiver and
Release and supersede any prior or contemporaneous oral and/or written agreements or
representations, if any, between me and the Company or its Affiliates.
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I acknowledge that I have read this Waiver and Release, have had an opportunity to ask
questions and have it explained to me and that I understand that this Waiver and Release will have
the effect of knowingly and voluntarily waiving any action I might pursue, including breach of
contract, personal injury, retaliation, discrimination on the basis of race, age, sex, national
origin, or disability and any other claims arising prior to the date of this Waiver and Release.
By execution of this document, I do not waive or release or otherwise relinquish any legal rights I
may have which are attributable to or arise out of acts, omissions, or events of the Company or its
Affiliates which occur after the date of the execution of this Waiver and Release.
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