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EXHIBIT 10.7
FIRST AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is
made by and between MARINE DRILLING COMPANIES, INC. ("Company") and T. XXXXX
X'XXXXX ("Executive").
W I T N E S S E T H:
WHEREAS, Company is desirous of employing Executive in an executive
capacity on the terms and conditions, and for the consideration, hereinafter set
forth and Executive is desirous of being employed by Company on such terms and
conditions and for such consideration;
WHEREAS, the Company and Executive previously entered into an
Employment Agreement dated January 12, 1998, and they desire to amend and
restate that Employment Agreement.
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein, Company and Executive agree as
follows:
ARTICLE 1: EMPLOYMENT, DUTIES AND REPRESENTATIONS
1.1 EMPLOYMENT; EFFECTIVE DATE. Company agrees to employ Executive and
Executive agrees to be employed by Company, beginning as of the Effective Date
(as hereinafter defined) and continuing for the period of time set forth in
Article 2 of this Agreement, subject to the terms and conditions of this
Agreement. For purposes of this Agreement, the "Effective Date" shall be January
12, 1998, and the "Commencement Date" shall be January 16, 1998.
1.2 POSITION. From and after the Effective Date, Company shall employ
Executive in the position of Senior Vice President and Chief Financial Officer
of Company, or in such other positions as the parties mutually may agree.
1.3 DUTIES AND SERVICES. Executive agrees to serve in the position
referred to in paragraph 1.2 and to perform diligently and to the best of his
abilities the duties and services appertaining to such office, as well as such
additional duties and services appropriate to such office which the parties may
mutually agree upon from time to time. Executive's employment shall also be
subject to the policies maintained and established by Company, time that are
applicable to employees generally, as the same may be amended from time to time.
1.4 OTHER INTERESTS. Executive agrees, during the period of his
employment by Company from and after the Commencement Date, to devote his
primary business time, energy and best efforts to the business and affairs of
Company and its affiliates and not to engage, directly or indirectly, in any
other business or businesses, whether or not similar to that of Company, except
with the consent of the Board of Directors of Company (the "Board of
Directors"). The foregoing notwithstanding, the parties recognize and agree that
Executive may engage in passive personal investments and other business
activities that do not conflict with the business and affairs of Company or
interfere with Executive's performance of his duties hereunder. Executive
represents
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to Company that the execution, delivery and performance of this Agreement by
Executive will not violate or conflict with any non-competition or similar
agreement to which Executive is subject.
1.5 DUTY OF LOYALTY. Executive acknowledges and agrees that Executive
owes a fiduciary duty of loyalty, fidelity and allegiance to act at all times in
the best interests of Company and to do no act which would injure the business,
interests, or reputation of Company or any of its subsidiaries or affiliates. In
keeping with these duties, Executive shall make full disclosure to Company of
all business opportunities pertaining to Company's business and shall not
appropriate for Executive's own benefit business opportunities concerning the
subject matter of the fiduciary relationship.
1.6 REPRESENTATIONS. Executive represents and warrants to Company that
neither the execution of this Agreement by Executive nor the performance by
Executive of his obligations under this Agreement will result in a violation or
breach of, or constitute a default under, the provisions of any contract,
agreement, or other instrument to which Executive is a party.
ARTICLE 2: TERM AND TERMINATION OF EMPLOYMENT
2.1 TERM. Unless sooner terminated pursuant to other provisions hereof,
Company agrees to employ Executive for the period beginning on the Effective
Date and ending on the second anniversary of the Commencement Date (the "Initial
Term"). Said term of employment shall be extended automatically for an
additional successive one-year period as of the last day of the Initial Term and
as of the last day of each such successive one-year period of time thereafter
that this Agreement is in effect; provided, however, that if, prior to ninety
days before the last day of the Initial Term or any such successive one-year
term of employment, either party shall give written notice to the other that no
such automatic extension shall occur, then Executive's employment shall
terminate on the last day of the Initial Term or the one-year term of
employment, as applicable, during which such notice is given.
2.2 COMPANY'S RIGHT TO TERMINATE. Notwithstanding the provisions of
paragraph 2.1, Company shall have the right to terminate Executive's employment
under this Agreement at any time for any of the following reasons:
(i) upon Executive's death;
(ii) upon Executive's becoming disabled so as to
entitle him to benefits under Company's long-term disability
plan;
(iii) for cause, which for purposes of this Agreement
shall mean Executive (A) has engaged in gross negligence or
willful misconduct in the performance of the duties required
of him hereunder, (B) has been convicted of a felony or has
been convicted without further right of appeal of a
misdemeanor involving moral turpitude, (C) has willfully
refused without proper legal reason to perform the duties and
responsibilities required of him hereunder, (D) has materially
breached any material corporate policy or code of conduct
established by Company, or (E) Executive violates the Foreign
Corrupt Practices Act or any other applicable United States
law as proscribed by paragraph 4.1, or (F) has willfully
engaged in conduct
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that he knows or should know is materially injurious to
Company or any of its subsidiaries or affiliates;
(iv) for Executive's material breach of any material
provision of this Agreement which, if correctable, remains
uncorrected for 30 days following written notice to Executive
by Company of such breach; or
(v) for any other reason whatsoever, with or without
cause, in the sole discretion of the Board of Directors.
2.3 EXECUTIVE'S RIGHT TO TERMINATE. Notwithstanding the provisions of
paragraph 2.1, Executive shall have the right to terminate his employment under
this Agreement at any time for any of the following reasons:
(i) (A) a material breach by Company of any material
provision of this Agreement, including without limitation the
assignment to Executive of duties materially inconsistent with
duties of the Senior Vice President and Chief Financial
Officer of Company, which, if correctable, remains uncorrected
for 30 days following written notice of such breach by
Executive to Company or (B) a change within the prior thirty
days of the location of Executive's principal place of
employment by Company by more than fifty miles from the
location of the Company's principal executive office as of the
date hereof; or
(ii) for any other reason whatsoever, in the sole
discretion of Executive.
2.4 NOTICE OF TERMINATION. If Company or Executive desires to terminate
Executive's employment hereunder at any time prior to expiration of the term of
employment as provided in paragraph 2.1, it or he shall do so by giving written
notice to the other party that it or he has elected to terminate Executive's
employment hereunder and stating the effective date and reason for such
termination, provided that no such action shall alter or amend any other
provisions hereof or rights arising hereunder, including, without limitation,
the provisions of Articles 5 and 6 hereof.
ARTICLE 3: COMPENSATION AND BENEFITS
3.1 BASE SALARY. During the period of this Agreement, Executive shall
receive a minimum annual base salary commencing from and after the Commencement
Date equal to the greater of (i) $210,000 or (ii) such amount as the parties
mutually may agree upon from time to time. Executive's annual base salary shall
be paid in equal installments in accordance with the Company's standard policy
regarding payment of compensation to executives but no less frequently than
monthly.
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3.2 BONUSES. From the Effective Date until January 1, 1999, Executive
shall receive such bonuses, if any, as Company shall determine in its sole
discretion; provided, however, that Executive shall receive a sign-on bonus of
$75,000 on the Commencement Date of this Agreement. From January 1, 1999 and
thereafter during the period of this Agreement, Executive shall receive such
bonuses, if any, as Company shall determine in its sole discretion based on
bonus plans which may be in effect from time to time. Executive's bonus target
under the Company's bonus plan in effect at the date of execution of this First
Amended and Restated Agreement is 50% of annual base salary. This percentage and
the terms of the bonus plan are subject to change at the sole discretion of the
Company; however any changes will be consistent with similarly situated
employees and reflect competitive market practices.
3.3 INITIAL STOCK OPTION. On the Effective Date of this Agreement (the
"Date of Grant"), Company shall grant to Executive an option (the "Initial
Option") to purchase 175,000 shares of Company's common stock ("Stock") pursuant
to The Marine Drilling 1992 Long Term Incentive Plan, as amended (the "Plan").
The purchase price for each share of Stock subject to the Initial Option shall
be $18.125 per share. Subject to the terms of the Plan and the agreement to be
executed by Company and Executive evidencing the Initial Option, the Initial
Option shall (i) have a term of 10 years (which term shall begin on the Date of
Grant), (ii) vest and become exercisable with respect to (A) 25 % of the shares
covered thereby on the first anniversary of the Date of Grant, (B) an additional
25 % of the shares covered thereby on the second anniversary of the Date of
Grant, (C) an additional 25% of the shares covered thereby on the third
anniversary of the Date of Grant, and (D) an additional 25% of the shares
covered thereby on the fourth anniversary of the Date of Grant, and (iii) become
vested and fully exercisable by Executive upon the occurrence of a "Change in
Control" (as such term is defined in the Plan) while Executive is employed by
Company.
3.4 LOAN GUARANTEE. At any time after the Effective Date of this
Agreement and for a term not to extend beyond March 3, 1998, Company agrees,
subject to terms and conditions to be mutually agreed upon by and between
Company and Executive, to guarantee a loan (the "Loan") obtained by Executive
from a commercial lending institution on commercially reasonable terms, not to
exceed the sum of (i) the amount necessary for Executive to purchase 300,000
shares of common stock of Grey Wolf, Inc. at $1.50 per share pursuant to
existing stock options (ii) the amount of any federal tax withholding thereon by
Grey Wolf, Inc. pursuant to such purchase by Executive and (iii) the cost of
derivatives described below. In addition, Company agrees to reimburse Executive
for the interest paid by Executive on the Loan through March 3, 1998. If Company
is required to pay any principal on the Loan as a result of its guarantee,
Executive shall reimburse Company for such amount within five days of Company's
request for such payment. The failure by Executive to pay such amounts shall be
deemed to be sufficient reason for, among other things, Company to terminate
Executive's employment pursuant to Section 2.2(iv) hereof. In addition,
Executive agrees to reimburse Company for its cost of acquiring derivatives that
protect against price decline in such shares of Grey Wolf, Inc. common stock to
below the principal amount of such Loan.
3.5 VACATION. During each year of his employment, Executive shall be
entitled to four weeks of paid vacation.
3.6 OTHER PERQUISITES. During his employment hereunder from and after
the Commencement Date, Executive shall be afforded the following benefits as
incidences of his employment:
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(i) CLUB EXPENSES - Company shall reimburse Executive
for monthly membership dues at a country club, but not for any
initiation fees with respect to such country club.
(ii) OTHER COMPANY BENEFITS - Executive and, to the
extent applicable, Executive's spouse, dependents and
beneficiaries, shall be allowed to participate in all
benefits, plans and programs, including improvements or
modifications of the same, which are now, or may hereafter be,
available to similarly-situated Company employees. Such
benefits, plans and programs may include, without limitation,
health insurance or health care plan, life insurance, 401(k)
plan, disability insurance, vacation and sick leave benefits,
and the like. Company shall not, however, by reason of this
paragraph be obligated to institute, maintain, or refrain from
changing, amending, or discontinuing, any such benefit plan or
program, so long as such changes are similarly applicable to
executive employees generally.
ARTICLE 4: UNITED STATES FOREIGN CORRUPT PRACTICES ACT AND OTHER LAWS
4.1 Executive shall at all times comply with United States laws
applicable to Executive's actions on behalf of Company, and/or any of its
subsidiaries or affiliates, including specifically, without limitation, the
United States Foreign Corrupt Practices Act, generally codified in 15 USC 78
(FCPA), as the FCPA may hereafter be amended, and/or its successor statutes. If
Executive pleads guilty to or nolo contendere or admits civil or criminal
liability under the FCPA or other applicable United States law, or if a court
finds that Executive has personal civil or criminal liability under the FCPA or
other applicable United States law, or if a court finds that Employee committed
an action resulting in Company or any of its subsidiaries or affiliates having
civil or criminal liability or responsibility under the FCPA or other applicable
United States law with knowledge of the activities giving rise to such liability
or knowledge of facts from which Executive should have reasonably inferred the
activities giving rise to liability had occurred or were likely to occur, such
action or finding shall constitute "cause" for termination under this Agreement
unless (i) such action or finding was based on the activities of others and
Executive had no personal involvement or knowledge of such activities, or (ii)
Company's Board of Directors determines that the actions found to be in
violation of the FCPA or other applicable United States law were taken in good
faith and in compliance with all applicable policies of Company.
ARTICLE 5: PROTECTION OF INFORMATION
5.1 DISCLOSURE TO EXECUTIVE. Company shall disclose to Executive, or
place Executive in a position to have access to or develop, trade secrets or
confidential information of Company or its affiliates; and/or shall entrust
Executive with business opportunities of Company or its affiliates; and/or shall
place Executive in a position to develop business good will on behalf of Company
or its affiliates.
5.2 DISCLOSURE TO AND PROPERTY OF COMPANY. All information, ideas,
concepts, improvements, discoveries, and inventions, whether patentable or not,
which are conceived, made, developed, or acquired by Executive, individually or
in conjunction with others, during Executive's
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employment by Company (whether during business hours or otherwise and whether on
Company's premises or otherwise) which relate to Company's business, products,
or services (including, without limitation, all such information relating to
corporate opportunities, research, financial and sales data, pricing terms,
evaluations, opinions, interpretations, acquisitions prospects, the identity of
customers or their requirements, the identity of key contacts within the
customer's organizations or within the organization of acquisition prospects, or
marketing and merchandising techniques, prospective names, and marks) shall be
disclosed to Company and are and shall be the sole and exclusive property of
Company unless and to the extent such information is generally known in
Company's industry. Moreover, all documents, drawings, memoranda, notes,
records, files, correspondence, manuals, models, specifications, computer
programs, E-mail, voice mail, electronic databases, maps, and all other writings
or materials of any type embodying any of such information, ideas, concepts,
improvements, discoveries, and inventions are and shall be the sole and
exclusive property of Company unless and to the extent such information is
generally known in Company's industry. Upon termination of Executive's
employment by Company, for any reason, Executive promptly shall deliver the
same, and all copies thereof, to Company unless and to the extent such
information is generally known in Company's industry.
5.3 NO UNAUTHORIZED USE OR DISCLOSURE. Executive will not, at any time
during or after Executive's employment by Company, make any unauthorized
disclosure of any confidential business information or trade secrets of Company
or its affiliates, or make any use thereof, except in the carrying out of
Executive's employment responsibilities hereunder. Affiliates of the Company
shall be third party beneficiaries of Executive's obligations under this
paragraph. As a result of Executive's employment by Company, Executive may also
from time to time have access to, or knowledge of, confidential business
information or trade secrets of third parties, such as customers, suppliers,
partners, joint venturers, and the like, of Company and its affiliates.
Executive also agrees to preserve and protect the confidentiality of such third
party confidential information and trade secrets to the same extent, and on the
same basis, as Company's confidential business information and trade secrets,
unless and to the extent such information is generally known in Company's
industry.
5.4 OWNERSHIP BY COMPANY. If, during Executive's employment by company,
Executive creates any work of authorship fixed in any tangible medium of
expression which is the subject matter of copyright (such as videotapes, written
presentations, or acquisitions, computer programs, E-mail, voice mail,
electronic databases, drawings, maps, architectural renditions, models, manuals,
brochures, or the like) relating to Company's business, products, or services,
whether such work is created solely by Executive or jointly with others (whether
during business hours or otherwise and whether on Company's premises or
otherwise), Company shall be deemed the author of such work if the work is
prepared by Executive in the scope of Executive's employment; or, if the work is
not prepared by Executive within the scope of Executive's employment but is
specially ordered by Company as a contribution to a collective work, as a part
of a motion picture or other audiovisual work, as a translation, as a
supplementary work, as a compilation, or as an instructional text, then the work
shall be considered to be work made for hire and Company shall be the author of
the work. If such work is neither prepared by Executive within the scope of
Executive's employment nor a work specially ordered that is deemed to be a work
made for hire, then Executive hereby agrees to assign, and by these presents
does assign, to Company all of Executive's worldwide right, title, and interest
in and to such work and all rights of copyright therein.
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5.5 ASSISTANCE BY EXECUTIVE. Both during the period of Executive's
employment by Company and thereafter, Executive shall assist Company and its
nominee, at any time, in the protection of Company's worldwide right, title, and
interest in and to information, ideas, concepts, improvements, discoveries, and
inventions, and its copyrighted works, including without limitation, the
execution of all formal assignment documents requested by Company or its nominee
and the execution of all lawful oaths and applications for patents and
registration of copyright in the United States and foreign countries.
5.6 REMEDIES. Executive acknowledges that money damages would not be
sufficient remedy for any breach of this Article by Executive, and Company shall
be entitled to enforce the provisions of this Article by specific performance
and injunctive relief as remedies for such breach or any threatened breach. Such
remedies shall not be deemed the exclusive remedies for a breach of this
Article, but shall be in addition to all remedies available at law or in equity
to Company, including the recovery of damages from Executive and his agents
involved in such breach and remedies available to Company pursuant to other
agreements with Executive.
ARTICLE 6: NON-SOLICITATION OBLIGATIONS
6.1 IN GENERAL. As part of the consideration for the compensation and
benefits to be paid to Executive hereunder; to protect the trade secrets and
confidential information of Company and its affiliates that have been and will
in the future be disclosed or entrusted to Executive and other employees of the
Company and its affiliates, the business good will of Company and its affiliates
that has been and will in the future be developed by Executive or other
employees of the Company or its affiliates, or the business opportunities that
have been and will in the future be disclosed or entrusted to Executive by
Company and its affiliates; and as an additional incentive for Company to enter
into this Agreement, Company and Executive agree to the non-solicitation
obligations hereunder. If Executive's employment hereunder shall be terminated
by Executive prior to the expiration of the term provided in paragraph 2.1 for
any reason not described in paragraph 2.3(i) (including by Executive exercising
his right not to extend the term by giving notice pursuant to Section 2.1),
then, subject to the last sentence of this paragraph 6.1, Executive shall not,
directly or indirectly for Executive or for others, in any geographic area or
market where Company or any of its affiliates are conducting any business as of
the date of such termination of the employment relationship or have during the
previous twelve months conducted such business induce any employee of Company or
any of its subsidiaries or affiliates to terminate his or her employment with
Company or such subsidiaries or affiliates, or hire or assist in the hiring of
any such employee by any person, association, or entity not affiliated with
Company. These non-solicitation obligations shall extend until the later of (i)
the expiration of the term of this Agreement (or any extended term) provided in
paragraph 2.1 and (ii) the one year anniversary of the termination of
Executive's employment hereunder.
6.2 ENFORCEMENT AND REMEDIES. Executive understands that the
restrictions set forth in paragraph 6.1 may limit Executive's ability to engage
in the solicitation of employees of the Company and its subsidiaries and
affiliates, but acknowledges that Executive will receive sufficiently high
remuneration and other benefits under this Agreement to justify such
restriction. Executive acknowledges that money damages would not be sufficient
remedy for any breach of this Article by Executive, and Company shall be
entitled to enforce the provisions of this Article by specific performance and
injunctive relief as remedies for such breach or any threatened breach. Such
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remedies shall not be deemed the exclusive remedies for a breach of this
Article, but shall be in addition to all remedies available at law or in equity
to Company, including without limitation, the recovery of damages from Executive
and Executive's agents involved in such breach and remedies available to Company
pursuant to other agreements with Executive.
6.3 REFORMATION. It is expressly understood and agreed that Company and
Executive consider the restrictions contained in this Article to be reasonable
and necessary to protect the proprietary information of Company. Nevertheless,
if any of the aforesaid restrictions are found by a court having jurisdiction to
be unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by such courts so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced.
ARTICLE 7: STATEMENTS CONCERNING COMPANY
7.1 IN GENERAL. Executive shall refrain, both during the employment
relationship and after the employment relationship terminates, from publishing
any oral or written statements about Company, any of its affiliates, or any of
such entities' officers, employees, agents or representatives that are
slanderous, libelous, or defamatory; or that disclose private or confidential
information about Company, any of its affiliates, or any of such entities'
business affairs, officers, employees, agents, or representatives that Employee
knows or should know is materially injurious to Company or such affiliate; or
that constitute an intrusion into the seclusion or private lives of Company, any
of its affiliates, or any of such entities' officers, employees, agents, or
representatives that Employee knows or should know is materially injurious to
Company or such affiliate; or that give rise to unreasonable publicity about the
private lives of Company, any of its affiliates, or any of such entities'
officers, employees, agents, or representatives; or that place Company, any of
its affiliates, or any of such entities' officers, employees, agents, or
representatives in a false light before the public; or that constitute a
misappropriation of the name or likeness of Company, any of its affiliates, or
any of such entities' officers, employees, agents, or representatives. A
violation or threatened violation of this prohibition may be enjoined by the
courts. The rights afforded Company and its affiliates under this provision are
in addition to any and all rights and remedies otherwise afforded by law.
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ARTICLE 8: EFFECT OF TERMINATION ON COMPENSATION
8.1 BY EXPIRATION. If Executive's employment hereunder shall terminate
upon expiration of the term provided in paragraph 2.1 hereof, then all
compensation and all benefits (except stock options) to Executive hereunder
shall terminate contemporaneously with termination of his employment; provided,
however, that if Company shall be the party that gave written notice of such
termination, then Company shall, within 10 days after the last day of
Executive's employment with Company, pay Executive a lump sum cash payment in an
amount equal to 100% of Executive's annual base salary as in effect pursuant to
paragraph 3.1 immediately prior to such termination; and provided further that
Company shall pay Executive his pro rata bonus target earned through the date of
termination. If Executive's employment shall terminate as described under this
paragraph within two years following a Change in Control, as defined in
paragraph 8.4, Executive's severance payment shall be as set forth under
paragraph 8.4 and Executive shall have no entitlement to any additional payment
under this paragraph.
8.2 BY COMPANY. If Executive's employment hereunder shall be terminated
by Company prior to expiration of the term provided in paragraph 2.1, then, upon
such termination, regardless of the reason therefor, all compensation and
benefits to Executive hereunder shall terminate contemporaneously with the
termination of such employment; provided, however, that if such termination
shall be for any reason other than those encompassed by paragraphs 2.2(i), (ii),
(iii), or (iv), the Company shall, within 10 days after the last day of
Executive's employment with Company, pay Executive a lump sum cash payment in an
amount equal to the Termination Payment; and provided further that Company shall
pay Executive his pro rata bonus target earned through the date of termination.
For purposes of this Agreement, the term "Termination Payment" shall mean, in
addition to any such pro rata bonus, an amount equal to the greater of (i) 100%
of Executive's annual base salary as in effect pursuant to paragraph 3.1
immediately prior to Executive's termination of employment with Company or (ii)
the aggregate base salary that would have been paid to Executive (determined
based upon the base salary in effect pursuant to paragraph 3.1 immediately prior
to Executive's termination of employment with Company) for the period beginning
on the date of such termination and ending on the last day of the employment
term provided in paragraph 2.1 during which occurs the date of such termination.
If Executive's employment shall terminate as described under this paragraph
within two years following a Change in Control, as defined in paragraph 8.4,
Executive's severance payment shall be as set forth under paragraph 8.4 and
Executive shall have no entitlement to any additional payment under this
paragraph.
8.3 BY EXECUTIVE. If Executive's employment hereunder shall be
terminated by Executive prior to expiration of the term provided in paragraph
2.1 (except if Executive terminates his employment by retiring on or after the
date he reaches age sixty-five), then, upon such termination, regardless of the
reason therefor, all compensation and benefits to Executive hereunder shall
terminate contemporaneously with the termination of such employment; provided,
however, that if such termination shall be pursuant to paragraph 2.3(i), the
Company shall, within 10 days after the last day of Executive's employment with
Company, pay Executive a lump sum cash payment in an amount equal to the
Termination Payment. If Executive's employment shall terminate as described
under this paragraph within two years following a Change in Control, as defined
in paragraph 8.4, Executive's severance payment shall be as set forth under
paragraph 8.4 and Executive shall have no entitlement to any additional payment
under this paragraph. In the event Executive
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terminates his employment by retiring on or after the date he reaches age
sixty-five, Executive shall not be entitled to any severance payment under this
Agreement.
8.4 CHANGE IN CONTROL. For purposes of this paragraph, the term "Change
in Control" shall have the same meaning as assigned to such term in The Marine
Drilling 1992 Long Term Incentive Plan. If, within two years following the
occurrence of a Change in Control, Executive's employment with Company shall
terminate under circumstances that would entitle him to a severance payment
pursuant to paragraph 8.1, 8.2, or 8.3, or if Executive's employee benefits are
changed to a level that is materially inconsistent with the employee benefits
afforded by the Company to employees with comparable duties, then, in lieu of
(and not in addition to) any such severance payment, Company shall, within 10
days after the last day of Executive's employment with Company, pay Executive a
lump sum cash payment equal to 200% of the sum of (i) Executive's annual base
salary plus (ii) bonus target as in effect pursuant to paragraph 3.1 immediately
prior to such termination of employment. Further, in the year in which a Change
in Control occurs, in addition to the payment described in the preceding
sentence, Company shall pay Executive the pro rata portion of his bonus target
for that year as shall have been earned up through the date that is immediately
prior to the date on which the Change in Control occurred.
8.5 CERTAIN ADDITIONAL PAYMENTS BY COMPANY. Notwithstanding anything to
the contrary in this Agreement, in the event that any payment or distribution by
Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a "Payment"), would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended, or any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest or penalties, are hereinafter collectively referred to as the
"Excise Tax"), Company shall pay to Executive an additional payment (a "Gross-up
Payment") in an amount such that after payment by Executive of all state and
federal taxes (including any interest or penalties imposed with respect to such
taxes), including any Excise Tax and any federal or state income taxes imposed
on any Gross-up Payment, Executive retains an amount of the Gross-up Payment
equal to the Excise Tax imposed upon the Payments. Company shall instruct its
outside accountants to independently make an initial determination as to whether
a Gross-up Payment is required and the amount of any such Gross-up Payment.
Executive shall notify Company immediately in writing of any claim by the
Internal Revenue Service which, if successful, would require Company to make a
Gross-up Payment (or a Gross-up Payment in excess of that, if any, initially
determined by Company and Executive) within five days of the receipt of such
claim. Company shall notify Executive in writing at least five days prior to the
due date of any response required with respect to such claim if it plans to
contest the claim. If Company decides to contest such claim, Executive shall
cooperate fully with Company in such action; provided, however, that Company
shall bear and pay directly or indirectly all costs and expenses (including
additional interest and penalties) incurred in connection with such action and
shall indemnify and hold Executive harmless, on an after-tax basis, for any
Excise Tax or income tax, including interest and penalties with respect thereto,
imposed as a result of Company's action. If, as a result of Company's action
with respect to a claim, Executive receives a refund of any amount paid by
Company with respect to such claim, Executive shall promptly pay such refund to
Company. If Company fails to timely notify Executive whether it will contest
such claim or Company determines not to contest such claim, then, Company shall
immediately pay to Executive the portion of such claim, if any, which it has not
previously paid to Executive.
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8.6 BENEFITS. If Executive's employment with Company is terminated
under circumstances that would entitle him to a severance payment pursuant to
paragraph 8.1, 8.2, or 8.3, then Company will immediately cause Executive and
those of his dependents (including his spouse) who were covered under the
Company's medical and dental plans on the date prior to such termination to
continue to be covered under such plans, without any cost to Executive, for
twelve months from date of termination, subject to earlier termination as
provided in the last sentence of this paragraph. If Executive's employment with
Company is terminated under circumstances that would entitle him to severance
payment pursuant to paragraph 8.4, then Company will cause Executive and those
of his dependents (including his spouse) who were covered under the Company's
medical and dental benefit plans on the date prior to such termination to
continue to be covered under such plans for 24 months, subject to earlier
termination as provided in the last sentence of this paragraph. Any continuation
of medical and dental medical coverage under this paragraph shall terminate if
and to the extent Executive becomes eligible to receive medical and dental
coverage from a subsequent employer (and any such eligibility shall be promptly
reported to the Company by Executive) and if Executive (and/or his spouse) would
have been entitled to retiree medical and/or dental coverage under the Company's
plans had he voluntarily retired on the date of such Involuntary Termination,
then such coverages shall be continued as provided under such plans. Nothing
herein shall be deemed to adversely affect in any way the additional rights
after consideration of this extension, of Executive and his eligible dependents
to continuation coverages required pursuant to Part 6 of Title I of the Employee
Retirement Income Security Act of 1974, as amended, if, at the time such
continuation coverage is requested, Executive does not have alternative group
coverage available from an employer.
8.7 LIQUIDATED DAMAGES. In light of the difficulties in estimating the
damages for an early termination of this Agreement, Company and Executive hereby
agree that the payments, if any, to be received by Executive pursuant to this
Article 8 shall be received by Executive as liquidated damages.
8.8 INDEMNIFICATION. If Executive shall obtain any money award or
otherwise prevail with respect to any litigation brought by Executive or Company
to enforce or interpret any provision of this Agreement, Company, to the fullest
extent permitted by applicable law, hereby indemnifies Executive for his
reasonable attorney's fees and disbursements incurred in such litigation and
hereby agrees to pay in full all such fees and disbursements. To the extent that
any such reimbursement would be subject to the Excise Tax, then Executive shall
be entitled to receive Gross-up Payments in an amount such that after payment by
Executive of all taxes imposed on such Gross-up Payments, Executive retains an
amount equal to the Excise Tax imposed on the reimbursement.
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ARTICLE 9: MISCELLANEOUS
9.1 NOTICES. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
IF TO COMPANY TO: Marine Drilling Companies, Inc.
One Xxxxx Xxxxx Xxxxxx Xxxx., Xxxxx 000
Xxxxx Xxxx, Xxxxx 00000
Attention: Chief Executive Officer
IF TO EMPLOYEE TO: Mr. T. Xxxxx X'Xxxxx
14350 Carolcrest
Xxxxxxx, Xxxxx 00000
or to such other address as either party may furnish to the other in writing in
accordance herewith, except that notices or changes of address shall be
effective only upon receipt.
9.2 NO OBLIGATION TO MITIGATE. Executive shall not be required to
mitigate the amount of any payment or other benefit required to be paid to
Executive pursuant to this Agreement, whether by seeking other employment or
otherwise, nor shall the amount of any such payment or other benefit be reduced
on account of any compensation earned by Executive as a result of employment by
another person.
9.3 APPLICABLE LAW. This Agreement is entered into under, and its
validity interpretation and enforceability and shall be governed for all
purposes by, the laws of the State of Texas; provided, however, that no effect
shall be given to any choice or conflict of law provision or rule (whether in
the State of Texas or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Texas.
9.4 SOLE RIGHTS TO SEVERANCE. Executive shall not be entitled to
receive any other severance benefits which may be provided for in any other
plan, program, arrangement or practice of Company, except to the extent that
severance benefits are provided for in any specific employment agreement between
Executive and Company.
9.5 NO WAIVER. No failure by either party hereto at any time to give
notice of any breach by the other party of, or to require compliance with, any
condition or provision of this Agreement shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
9.6 SEVERABILITY. If a court of competent jurisdiction determines that
any provision of this Agreement is invalid or unenforceable, then the invalidity
or unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement, and all other
provisions shall remain in full force and effect.
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9.7 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.
9.8 WITHHOLDING OF TAXES AND OTHER EMPLOYEE DEDUCTIONS. Company may
withhold from any benefits and payments made pursuant to this Agreement all
federal, state, city and other taxes as may be required pursuant to any law or
governmental regulation or ruling and all other normal employee deductions made
with respect to Company's employees generally.
9.9 HEADINGS. The paragraph headings have been inserted for purposes of
convenience and shall not be used for interpretive purposes.
9.10 GENDER AND PLURALS. Wherever the context so requires, the
masculine gender includes the feminine or neuter, and the singular number
includes the plural and conversely.
9.11 AFFILIATE. As used in this Agreement, the term "affiliate" shall
mean any entity which owns or controls, is owned or controlled by, or is under
common ownership or control with, Company.
9.12 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of Company and any successor of Company, by merger or otherwise. Except
as provided in the preceding sentence, this Agreement, and the rights and
obligations of the parties hereunder, are personal and neither this Agreement,
nor any right, benefit, or obligation of either party hereto, shall be subject
to voluntary or involuntary assignment, alienation or transfer, whether by
operation of law or otherwise, without the prior written consent of the other
party; provided, however, that Company may assign this Agreement to a
wholly-owned subsidiary of Company as long as Company fully and unconditionally
guarantees the performance of this Agreement.
9.13 TERM. This Agreement has a term co-extensive with the term of
employment provided in paragraph 2.1. Termination shall not affect any right or
obligation of any party which is accrued or vested prior to such termination.
Without limiting the scope of the preceding sentence, the provisions of Articles
5, 6, and 7 shall survive any termination of the employment relationship and/or
of this Agreement.
9.14 ENTIRE AGREEMENT. Except as provided in (i) the written benefit
plans and programs referenced in paragraph 3.6(ii) and (ii) any signed written
agreement contemporaneously or hereafter executed by Company and Executive, this
Agreement constitutes the entire agreement of the parties with regard to the
subject matter hereof, and contains all the covenants, promises,
representations, warranties and agreements between the parties with respect to
employment of Executive by Company. Without limiting the scope of the preceding
sentence, all prior understandings and agreements among the parties hereto
relating to the subject matter hereof are hereby null and void and of no further
force and effect. Any modification of this Agreement will be effective only if
it is in writing and signed by the party to be charged.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the 1st
day of September, 1999 to be effective as of the Effective Date.
MARINE DRILLING COMPANIES, INC.
BY: /s/ XXX XXXX
-----------------------------------
NAME: XXX XXXX
TITLE: CHIEF EXECUTIVE OFFICER
"COMPANY"
/s/ T. XXXXX X'XXXXX
---------------------------------
T. XXXXX X'XXXXX
"EXECUTIVE"
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