SEPARATION AGREEMENT AND RELEASE
Exhibit 10.1
SEPARATION AGREEMENT AND RELEASE
THIS SEPARATION AGREEMENT AND RELEASE (this “Agreement”) is made by and between Xxxxxx
Drilling Company, a Delaware corporation (“Xxxxxx Drilling” or the “Company”) and Xxxxxx X. Xxxxxx
(“Executive”) and shall become effective on the eighth day following its execution by Executive and
return to Xxxxxx Drilling, provided Executive has not revoked his consent to this Agreement
pursuant to paragraph 18(c) (“Effective Date”). Xxxxxx Drilling and Executive are sometimes
referred to collectively as the “Parties” or individually as a “Party”.
PURPOSE
Xxxxxx Drilling and Executive have reached a mutual agreement that Executive’s employment with
the Company will terminate on March 27, 2009 (the “Termination Date”) pursuant to the terms of this
Agreement.
TERMS
To achieve a final and amicable resolution of the employment relationship in all its aspects
and in consideration of the mutual covenants and promises herein contained and other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties
agree as follows:
1. Termination of Employment Agreement. Except as otherwise provided herein or in the
Consulting Agreement executed by the Parties as of March 28, 2009 (the “Consulting Agreement”),
this Agreement replaces and terminates that certain Employment Agreement entered into as of July 1,
2003, as amended by the First Amendment to Employment Agreement dated October 26, 2005 and further
amended by the Amendment to Employment Agreement effective as of December 31, 2008 (sometimes
collectively referred to as the “Employment Agreement”) and will constitute the entire agreement
between the Parties.
2. Minimum Payments. On the fifth business day after the Effective Date, Xxxxxx Drilling
shall pay to Executive in a lump sum the amount of $39,509.62, which represents Executive’s unpaid
salary and vacation pay as provided for in Section 6(a)(1) and 6(a)(3) of the Employment Agreement.
Executive acknowledges that no payment is required under Section 6(a)(2) of the Employment
Agreement.
3. Severance Payments. On the first regularly scheduled Xxxxxx Drilling payroll date that
commences more than six months after the Termination Date or, if later, Executive’s “separation
from service” as defined in Section 409A of the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations and other guidance thereunder (“Section 409A”), Xxxxxx Drilling shall pay to
Executive in lump sum the amount of Seven Hundred Eight Thousand Seventy-Five United States Dollars
($708,075), representing the “Additional Payment” required by Section 6(b)(1) of the Employment
Agreement.
4. Vesting of Restricted Stock. Executive is the recipient of 161,362 shares of Xxxxxx
Drilling common stock (“Grant Shares”), which shares are listed on Appendix A to this Agreement,
granted under certain award agreements (the “Restricted Stock Award Agreements”) pursuant to the
terms of the Xxxxxx Drilling Company 2005 Long-Term Incentive Plan effective as of March 18, 2005.
The terms of the Restricted Stock Award Agreements provide that Executive’s rights to the Grant
Shares shall terminate upon termination of Executive’s employment with the Company. Under the
terms of the Xxxxxx Drilling Company 2005 Long-Term Incentive Plan (“2005 LTIP”) and the Restricted
Stock Award Agreements issued pursuant to the 2005 Plan, Executive’s rights to such Grant Shares
shall continue and such Grant Shares shall continue to vest under the terms of the respective
Restricted Stock Award Agreement during the term of Executive’s Employment (as defined in
the 2005 LTIP) as a consultant. In addition, at any time during the term of the Consulting
Agreement, the Compensation Committee of the Board of Directors may, in its sole discretion,
authorize the proper officers of the Company to amend the terms of any Restricted Stock Award
Agreement to accelerate the vesting schedule related to some or all of the Grant Shares. In the
event the Compensation Committee determines to approve the amendment of the terms of any Restricted
Stock Award Agreement to accelerate the vesting schedule associated with any Grant Shares, the
Company shall given written notice to the Executive of such amendment and such Grant Shares shall
become fully vested and transferable to Executive free of any and all restrictions. Any Grant
Share which remains subject to a vesting schedule at the end of the term of the Consulting
Agreement shall be forfeited by Executive.
5. Executive’s Stock Options. Executive has been awarded 25,000 stock options (“Stock
Options”), which stock options are listed on Appendix A to this Agreement, pursuant to
the Xxxxxx Drilling Company 1997 Stock Plan, as amended. The terms of the Stock Option
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Award
Agreement entered into by the Company and Executive as of July 15, 2003 provide that Executive’s
rights to the Option Shares are exercisable only during the time Executive remains an employee,
director or consultant of the Company. Executive’s rights to such Option Shares shall continue
during the term of the Consulting Agreement. In addition, at any time during the term of the
Consulting Agreement, the Compensation Committee of the Board of Directors may, in its sole
discretion, by written notice from the Company to Executive, extend the exercise period related to
some or all of the Option Shares for any period from and after the expiration of the term of the
Consulting Agreement up to and including July 15, 2010. In the event the Compensation Committee
determines to extend the exercise period associated with any Option Shares, such Option Shares may
be exercised at any time up to the later of: (i) the expiration of the term of the Consulting
Agreement or (ii) the extended period approved by the Compensation Committee, if any, up to and
including July 15, 2010.
6. Group Health Coverage. Xxxxxx Drilling shall maintain Executive’s group health plan and
group dental plan coverage for a period of eighteen (18) months following the Termination Date, at
substantially the same level of coverages as existed on the Termination Date; provided, however,
Executive and his covered dependents, if any, shall not be required to pay any portion of the
premium cost to retain such coverages but in all other respects shall be treated the same as other
participants under the terms of such plans. Following the expiration of the 18-month period,
Executive shall be entitled to elect additional continuation coverage under such plans pursuant to
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) and the Company’s
procedures for COBRA administration, or otherwise. In the event that such additional COBRA
coverage is elected, (i) the COBRA time period shall not be reduced by the post-termination
continuation coverage provided pursuant to the foregoing provisions of this paragraph and (ii)
Executive (and his covered dependents, if any) must pay the full COBRA premium rates as effective
during such coverage period. In the event of any change to the group health plan or group dental
plan following the Termination Date, Executive and his spouse and dependents, as applicable, shall
be treated consistently with the then-current senior officers of Xxxxxx Drilling (or its successor)
with respect to the terms and conditions of coverage and other substantive provisions of the plan;
provided, however, no participant contributions
shall be required from them unless the additional COBRA coverage period is in effect.
Executive and his spouse hereby agree to acquire and maintain any and all coverage that either
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or
both of them are entitled to at any time during their lives under the Medicare program or any
similar program of the United States Government or any agency thereof (hereinafter referred to as
“Medicare”). The coverage described in the immediately preceding sentence includes, without
limitation, parts A and B of Medicare and any additional parts of Medicare. Executive and his
spouse further agree to pay any required premiums for Medicare coverage from their personal funds.
Notwithstanding the foregoing provisions, the coverage of Executive (and his dependents, if any)
under such medical and/or dental plans maintained by Xxxxxx Drilling shall terminate in the event
that Executive becomes employed by another for-profit employer which maintains a group health plan
or plans for its employees providing group medical coverage and group dental coverage; provided,
however, any additional COBRA coverage shall not be terminated unless and until permitted under
COBRA.
7. Withholdings; Right of Offset. Xxxxxx Drilling may withhold and deduct from any benefits
and payments made or to be made pursuant to this Agreement (a) all Federal, state, local and other
taxes as may be required pursuant to any law or governmental regulation or ruling, and (b) all
other normal deductions made with respect to Xxxxxx Drilling’s employees generally, to the extent
permissible under Section 409A.
8. Indemnity Rights. This Agreement shall not impair in any way the rights of Executive or
the obligations of Xxxxxx Drilling under the terms of that certain Indemnification Agreement
between Xxxxxx Drilling and the Executive dated April 6, 2004, and by its execution of this
Agreement Xxxxxx Drilling expressly re-affirms all the rights of Executive and obligations of
Xxxxxx Drilling under the terms of said Indemnification Agreement. Further, Executive will be
given reasonable access to all Xxxxxx Drilling records that are deemed necessary or helpful to
Executive or his counsel on any matter to which the Indemnification Agreement applies subject to
execution by Executive of a Confidentiality Agreement with terms and conditions reasonably
acceptable to Xxxxxx Drilling related to such records.
9. Miscellaneous Matters. Executive shall be allowed to retain the iPhone provided by Xxxxxx
Drilling without cost to Executive, but Executive shall assume and pay all usage, repair or
replacement charges associated with the cellular phone from and after the termination of the
Consulting Agreement. Executive shall also be allowed to retain the laptop computer provided
by Xxxxxx Drilling without cost to Executive; provided, however, Xxxxxx
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Drilling retains the right
to remove any information related to Xxxxxx Drilling which exists on the laptop from and after the
termination of the Consulting Agreement.
Xxxxxx Drilling shall provide Executive with outplacement services for a period of six months
at an aggregate cost not to exceed $5,000.00.
10. Waiver of Reinstatement and Future Employment. Executive forever waives and relinquishes
any right or claim to reinstatement to active employment with Xxxxxx Drilling, its affiliates,
subsidiaries, divisions, and successors. Nothing contained herein shall prevent Executive from
applying for future employment with Xxxxxx Drilling, nor shall this Agreement be deemed as
precluding Executive from applying for future employment with third parties, including non-profit
organizations.
11. Global Release of Claims. Executive, on behalf of himself, his heirs, executors,
successors and assigns, irrevocably and unconditionally releases, waives, and forever discharges
Xxxxxx Drilling and each of Xxxxxx Drilling’s subsidiaries whether wholly owned or not and whether
direct or indirect and each of Xxxxxx Drilling and its subsidiaries predecessors, successors,
parents, joint ventures, holding companies, subsidiaries, divisions, affiliates, assigns,
partnerships, agents, directors, officers, employees, consultants, committees, employee benefit
committees, fiduciaries, representatives, attorneys, and all persons and entities acting by,
through, under or in concert or in any such capacity with any of them (the “Xxxxxx Releasees”) from
any and all claims, demands, actions, causes of action, costs, fees, attorneys’ fees, and all
liability whatsoever, whether known or unknown, fixed or contingent, which Executive has, had, or
may have against any of the Xxxxxx Releasees including, without limitation, the agreements he
executed with Xxxxxx Drilling and his acts or omissions that resulted in Executive’s separation
from employment with Xxxxxx Drilling, from the beginning of time and up to and including the date
of execution of this Agreement. This Agreement includes, without limitation, claims at law or
equity or sounding in contract (express or implied) or tort, claims arising under any federal,
state, or local laws of any jurisdiction that prohibit age, sex, race, national origin, color,
disability, religion, veteran, military status, sexual orientation, or any other form of
discrimination, harassment, or retaliation (including, without limitation, the Age Discrimination
in Employment Act, the Older Workers Benefit Protection Act, the Americans with Disabilities
Act, Title VII of the 1964 Civil Rights Act, the Civil Rights Act of 1991, 42 U.S.C. § 1981, the
Rehabilitation Act, the Family and Medical Leave Act, the Xxxxxxxx-Xxxxx Act, the Employee
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Polygraph Protection Act, the Financial Institutions Reform, Recovery and Enforcement Act (or any
other employment-related banking statute or regulation), the Uniformed Services Employment and
Reemployment Rights Act of 1994, the Texas Commission on Human Rights Act, any federal, state,
local or municipal whistleblower protection or anti-retaliation statute or ordinance, or any other
federal, state, local, or municipal laws of any jurisdiction), claims arising under the Employee
Retirement Income Security Act, or any other statutory or common law claims related to Executive’s
employment or separation from employment with Xxxxxx Drilling, the agreements he executed with
Xxxxxx Drilling, and his acts or omissions that resulted in Executive’s separation from employment
with Xxxxxx Drilling. Notwithstanding the foregoing, the provisions of this paragraph 11 shall not
apply to the Indemnification Agreement. Under this Agreement, Executive is excluded from the
definition of Xxxxxx Releasees.
12. Non-Disparagement. Executive agrees, for a period of two (2) years after the Effective
Date, not to, directly or indirectly, disclose, communicate, or publish any intentionally
disparaging, negative, harmful, or disapproving information, written communications, oral
communications, electronic or magnetic communications, writings, oral or written statements,
comments, opinions, facts, or remarks, of any kind or nature whatsoever (collectively, “Disparaging
Information”), concerning or related to any of the Xxxxxx Releasees. Executive understands and
acknowledges that this non-disparagement clause prevents him from disclosing, communicating, or
publishing, directly or indirectly, any Disparaging Information concerning or related to the Xxxxxx
Releasees. Further, Executive acknowledges that in executing this Agreement, he has knowingly,
voluntarily, and intelligently waived any free speech, free association, free press or First
Amendment to the United States Constitution (including, without limitation, any counterpart or
similar provision or right under the Texas Constitution or any other state constitution which may
be deemed to apply) rights to disclose, communicate, or publish Disparaging Information concerning
or related to the Xxxxxx Releasees. Executive also understands and agrees that he has had a
reasonable period of time to consider this non-disparagement clause, to review the
non-disparagement clause with his attorney, and to consent
to this clause and its terms knowingly and voluntarily. Executive further acknowledges that
this non-disparagement clause is a material term of this Agreement. If Executive breaches this
paragraph 12, Xxxxxx Drilling will not be limited to a damages remedy, but may seek all other
equitable and legal relief including, without limitation, a temporary restraining order, temporary
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injunctive relief, a permanent injunction, and its attorneys’ fees and costs, against him and any
other persons, individuals, corporations, businesses, groups, partnerships or other entities acting
by, through, under, or in concert with him. Nothing in this Agreement shall, however, be deemed to
prevent Executive from testifying fully and truthfully in response to a subpoena from any court or
from responding to investigative inquiry from any governmental agency or during interviews of audit
committee counsel related to or in anticipation of government investigations.
13. Cooperation. After his separation from employment from Xxxxxx Drilling, Executive agrees
to cooperate with Xxxxxx Drilling in connection with the defense or prosecution of any claims,
causes of action, investigations, hearings, proceedings, arbitrations or other tribunals now in
existence or which may be brought in the future against or on behalf of Xxxxxx Drilling that relate
to events or occurrences that transpired while he was employed with Xxxxxx Drilling. Executive’s
cooperation in connection with this paragraph 13 shall include, without limitation, making himself
reasonably available to meet with counsel to prepare for discovery or trial, to act as a witness on
behalf of Xxxxxx Drilling at convenient times, and to provide true and accurate testimony regarding
any such matters. If Executive is subpoenaed or contacted to cooperate in any manner by a
non-governmental party concerning any matter related to Xxxxxx Drilling, he shall immediately
notify Xxxxxx Drilling, through the notice procedures identified in this Agreement before
responding or cooperating. The Executive shall be entitled to reimbursement of all expenses
incurred in conjunction with his cooperation pursuant to this paragraph 13, including reasonable
attorneys fees, consistent with the terms of the Indemnification Agreement between Xxxxxx Drilling
and the Executive dated April 6, 2004. Any amount that Executive is entitled to be reimbursed under
this Section will be reimbursed to Executive as promptly as practicable and in any event not later
than the last day of the calendar year after the calendar year in which the expenses to be
reimbursed are incurred, and the amount of the expenses eligible for reimbursement during any
calendar year will not affect the amount of expenses eligible for reimbursement in any other
calendar year.
14. Confidentiality of Company Information. The Executive shall continue to abide by Xxxxxx
Drilling’s confidentiality policies, including those imposed on him by virtue of his consulting
relationship with Xxxxxx Drilling. The Executive will not at any time disclose to anyone,
including, without limitation, any person, firm, corporation, or other entity, or publish, or use
for any purpose, any Confidential Information, except as Xxxxxx Drilling directs and
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authorizes.
The Executive shall take all reasonable measures to protect the secrecy of and avoid disclosure and
unauthorized use of the “Confidential Information” and agrees to immediately notify Xxxxxx Drilling
in the event of any unauthorized use or disclosure of the Confidential Information. Confidential
Information includes, without limitation, all of Xxxxxx Drilling’s technical and business
information, which is of a confidential, trade secret or proprietary character; lists of customers;
identity of customers; identity of prospective customers; contract terms; bidding information and
strategies; pricing methods or information; photographs; internal policies, procedures,
communications and reports; computer software; computer software methods and documentation; graphic
designs; hardware; Xxxxxx Drilling’s methods of operation; the procedures, forms and techniques
used in servicing accounts; and other information or documents that Xxxxxx Drilling requires to be
maintained in confidence for Xxxxxx Drilling’s continued business success or any other information
defined as “secret and Confidential Information” in the Employment Agreement. Confidential
Information does not include any information that is readily available to the public or, upon
reasonable investigation, is readily ascertainable in the public domain.
15. Agreement to Return Company Property/Documents. Executive understands and agrees that his
last day of active work at any Xxxxxx Drilling office or on any Xxxxxx Drilling owned or leased
property will be at the end of the term of the Consulting Agreement. The Executive will not take
with him, copy, alter, destroy, or delete any files, documents, electronically stored information,
or other materials whether or not embodying or recording any Confidential Information, including
copies, without obtaining in advance the written consent of an authorized Xxxxxx Drilling
representative. The Executive will promptly return to Xxxxxx Drilling all Confidential Information,
documents, files, electronically stored information, records and tapes (written or electronically
stored) regarding Xxxxxx Drilling that are in his possession or control, and he will not use or
disclose such materials in any way or in any format, including
written information in any form, information stored by electronic means, and any and all
copies of these materials. Upon or before the execution of this Agreement, Executive will return to
Xxxxxx Drilling all Xxxxxx Drilling property except the property described in paragraph 9 above,
including, without limitation, company automobiles, keys, equipment, computer(s) and computer
equipment, devices, cellular phones, other telephonic equipment, Xxxxxx Drilling credit cards,
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data, lists, information, correspondence, notes, memos, reports, or other writings prepared by
Xxxxxx Drilling or himself on behalf of Xxxxxx Drilling.
16. Knowing and Voluntary Agreement. The Executive understands it is his choice whether or
not to enter into this Agreement and that his decision to do so is voluntary and is made knowingly.
The Executive acknowledges that he has been advised by Xxxxxx Drilling to seek legal counsel to
review this Agreement.
17. Resignation as Officer and Employee. The Executive hereby resigns all positions as an
officer and employee of Xxxxxx Drilling, including but not limited to, Vice President, General
Counsel and Corporate Secretary, effective as of the Effective Date. Likewise, Executive hereby
resigns all positions as an employee, director, representative or agent of all Xxxxxx Drilling
subsidiaries, whether direct or indirect, and Xxxxxx Drilling affiliates effective as of the
Effective Date.
18. Executive and Company Acknowledgment. Executive acknowledges that among other rights
which he is waiving by entering into this Agreement is the right to bring an action pursuant to the
Age Discrimination in Employment Act (“ADEA”) and similar state statutes. The following
admonitions and rights have been negotiated by the parties in order to insure full compliance with
the requirements of the ADEA for a valid waiver of claim:
a) Executive and the Company have been advised to discuss the terms of this Agreement with an
attorney before signing.
b) Executive has been extended a period of 21 days within which to consider this Agreement.
c) For a period of seven (7) days following Executive’s execution of the Agreement, Executive
may revoke the Agreement by notifying Xxxxxx Drilling, in writing, of his desire to do so. After
the seven (7) day period has elapsed, this Agreement shall become effective and enforceable.
19. Dispute Resolution. If any dispute arises out of or is related to this Agreement, the
Company and Executive hereby agree to resolve such dispute pursuant to the provisions of paragraph
14 of the Consulting Agreement.
20. No Admission of Liability. This Agreement and compliance with this Agreement shall not be
construed as an admission by Xxxxxx Drilling or Executive of any
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liability whatsoever, or as an
admission by Xxxxxx Drilling of any violation of the rights of Executive or any other person, or
any violation of any order, law, statute, duty or contract.
21. Governing Law. This Agreement will be interpreted and enforced in accordance with the
laws of the State of Texas.
22. Entirety and Integration. Upon the execution hereof by all the parties, this Agreement
shall constitute a single, integrated contract expressing the entire agreement of the parties
relative to the subject matter hereof and supersedes all prior negotiations, understandings and/or
agreements, if any, of the parties. No covenants, agreements, representations, or warranties of
any kind whatsoever have been made by any party hereto, except as specifically set forth in this
Agreement.
23. Authorization. Each person signing this Agreement as a party or on behalf of a party
represents that he or she is duly authorized to sign this Agreement on such party’s behalf, and is
executing this Agreement voluntarily, knowingly, and without any duress or coercion.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.
| XXXXXX DRILLING COMPANY | EXECUTIVE | |||||||
By: |
||||||||
| Its: | XXXXXX X. XXXXXX | |||||||
| Date: | Date:
|
|||||||
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Appendix A
Unvested Restricted Stock Grants
| Date of Agreement | Number of Grant Shares | Vesting Date | ||||||||
1. |
April 6, 2006 | 9667 | April 6, 2009 | |||||||
2. |
March 20, 2008 | 9471 | March 19, 2010 | |||||||
3. |
[March 9, 2009 | 70962 | March 9, 2010] | |||||||
4. |
[March 9, 2009 | 70962 | March 9, 2011] | |||||||
Total |
161,062 | |||||||||
Outstanding Stock Options
| Date of Agreement | Number of Remaining Options | Strike Price | Expiration Date | |||
| July 15, 2003 | 25,000 | $2.61 | July 15, 2010 |
