EXHIBIT 10.264
===========================================================================
Employment and Change in Control
Agreement
R&B Falcon Corporation
August 25, 1999
===========================================================================
Contents
Section 1. Term of Employment 1
Section 2. Position and Responsibilities 2
Section 3. Standard of Care 2
Section 4. Compensation 3
Section 5. Expenses 5
Section 6. Employment Terminations 5
Section 7. Change in Control 10
Section 8. Confidentiality and Noncompetition 13
Section 9. Indemnification 14
Section 10. Outplacement Assistance 14
Section 11. Assignment 14
Section 12. Dispute Resolution and Notice 15
Section 13. Miscellaneous 15
Section 14. Governing Law 16
R&B Falcon Corporation
Employment and Change in Control Agreement
This EMPLOYMENT AND CHANGE IN CONTROL AGREEMENT ("Agreement") is made,
entered into, and is effective as of this 25th day of August, 1999
(hereinafter referred to as the "Effective Date"), by and between R&B
Falcon Corporation (hereinafter referred to as the "Company"), a Delaware
corporation having its principal offices at Houston, Texas, and Xxx X.
Xxxxx (hereinafter referred to as the "Executive").
WHEREAS, the Executive is presently employed by the Company in the
capacity of Executive Vice President and Chief Financial Officer; and
WHEREAS, the Executive previously entered into an employment agreement
with the Company dated as of March 25, 1998 and it is now in the best
interest of the Company and the Executive to enter into this new Agreement;
and
WHEREAS, the Executive possesses considerable experience and an
intimate knowledge of the business and affairs of the Company, its
policies, methods, personnel, and operations; and
WHEREAS, the Company recognizes that the Executive's contribution has
been substantial and meritorious and, as such, the Executive has
demonstrated unique qualifications to act in an executive capacity for the
Company; and
WHEREAS, the Company is desirous of assuring the continued employment
of the Executive in the above stated capacity, and Executive is desirous of
having such assurance.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, and of
other good and valuable consideration the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
agree as follows:
Section 1. Term of Employment
The Company hereby agrees to employ the Executive and the Executive
hereby agrees to continue to serve the Company, in accordance with the
terms and conditions set forth herein, for an initial period of three (3)
years, commencing as of the Effective Date of this Agreement, as indicated
above; subject, however, to earlier termination as expressly provided in
Section 6 herein.
The initial three (3) year Employment Term (as defined below) of this
Agreement shall be extended automatically for one (1) additional month
beginning with the first day of the twenty-third (23rd) month of the
initial three (3) year term, and on the first day of each month thereafter
the Employment Term of this Agreement automatically shall be extended one
additional month; provided, however, either party may give the other party
written notice that, beginning with the first of the month that is at
ninety (90) days after the date of the notice, the Employment Term shall
cease to be extended with respect to any termination of the Executive's
employment other than a termination occurring during the Window Period (as
defined in Section 6.7 herein).
In the event such notice of intent not to renew is properly delivered
by either party, then the Employment Term of this Agreement, along with all
corresponding rights, duties, and covenants with respect thereto, shall
automatically expire ninety (90) days following the end of the later of the
initial three-year Employment Term or, if applicable, the extended
Employment Term then in effect; provided, however, that notwithstanding the
termination of the Employment Term (i) the provisions contained in
Section 8 herein shall survive such expiration and (ii) the provisions and
protections of this Agreement concerning a Change in Control of the Company
(as defined in Section 7 herein), including, without limitation, a Change
in Control that occurs after the termination of the Employment Term, shall
continue without interruption or change.
This Agreement provides (x) for the employment of the Executive for an
initial fixed term, which may be extended, (such term, as it may be
extended, is referred to herein as the "Employment Term"), and (y)
separately, whether or not the Employment Term has expired before a Change
in Control of the Company occurs, for Change in Control employment
protection for the Executive for as long as the Executive remains an
employee of the Company (or any parent or subsidiary), and also with
respect to certain terminations of the Executive's employment occurring
during the Window Period prior to a Change in Control.
Further, notwithstanding anything in this Agreement to the contrary,
termination of this Agreement shall not alter or impair any rights or
benefits of the Executive (or the Executive's beneficiaries) that have
arisen (contingently or otherwise) under this Agreement on or prior to such
termination.
Section 2. Position and Responsibilities
During the term of this Agreement, the Executive agrees to serve as the
Executive Vice President and Chief Financial Officer of the Company. In his
capacity as the Executive Vice President and Chief Financial Officer of the
Company, the Executive shall report directly to the Chairman and Chief
Executive Officer, and shall maintain the level of duties and
responsibilities as in effect as of the Effective Date, as set forth on
Appendix A, or such higher level of duties and responsibilities as he may
be assigned during the term of this Agreement. The Executive shall have the
same status, privileges, and responsibilities normally inherent in such
capacities in corporations of similar size and character.
Section 3. Standard of Care
During the term of this Agreement, the Executive agrees to devote
substantially his full time, attention, and energies to the Company's
business and shall not be engaged in any other business activity, whether
or not such business activity is pursued for gain, profit, or other
pecuniary advantage; provided, however, subject to the restrictions of
Section 8, the Executive may serve as a director of other companies so long
as such service is not injurious to the Company, may continue the conduct
of the business activities listed on Appendix B (to the extent conducted
before the Effective Date), and may engage in the conduct of such other
business activities that are substantially similar in nature and scope to
those listed on Appendix B, provided that such other business activities do
not materially interfere with the Executive's duties and obligations under
this Agreement. The Executive covenants, warrants, and represents that he
shall:
(a) Devote his full and best efforts to the fulfillment of his
employment obligations; and
(b) Act in the same manner as a competent executive in a comparable
company.
This Section 3 shall not be construed as preventing the Executive from
investing assets in such form or manner as will not require his services in
the daily operations of the affairs of the companies in which such
investments are made.
Section 4. Compensation
As remuneration for all services to be rendered by the Executive during
the term of this Agreement, and as consideration for complying with the
covenants herein, the Company shall pay and provide to the Executive the
following:
4.1 Base Salary. The Company shall pay the Executive a Base Salary in an
amount which shall be established from time to time by the Board of
Directors of the Company or the Board's designee; provided, however, that
the Executive's Base Salary may be decreased by the Board (other than
during a Window Period) as part of a program that is applicable equally (as
a percentage of base salary) to all executives of the Company and is
determined by the Board to be necessary and appropriate in light of the
Company's then financial condition. Base Salary shall be paid to the
Executive in equal semi-monthly installments throughout the year,
consistent with the normal payroll practices of the Company.
The annual Base Salary shall be reviewed at least annually following
the Effective Date of this Agreement, while this Agreement is in force, to
ascertain whether, in the judgment of the Board or the Board's designee,
such Base Salary should be increased, based primarily on the performance of
the Executive during the year and on the then current rate of inflation. If
so increased, the Base Salary as stated above shall, likewise, be increased
for all purposes of this Agreement.
4.2 Annual Bonus. The Company shall provide the Executive with the
opportunity to earn an annual bonus, at a level which is commensurate with
the opportunity typically offered to executives having the same or similar
duties and responsibilities as the Executive at companies similar in size
and character to the Company. The Executive shall be notified in writing
by the Company prior to the beginning of each fiscal year as to what the
Executive's target bonus will be for such fiscal year.
Nothing in this section shall be construed as obligating the Company to
refrain from changing and/or amending any annual incentive plan so long as
such changes are similarly applicable to all executives generally.
4.3 Long-Term Incentives. The Company shall provide the Executive the
opportunity to earn long-term incentive awards, at a level which is
commensurate with the opportunity typically offered to executives having
the same or similar duties and responsibilities as the Executive at
companies similar in size and in character to the Company.
Nothing in this section shall be construed as obligating the Company to
refrain from changing, and/or amending any long-term incentive plan, so
long as such changes are similarly applicable to all executives generally.
4.4 Retirement Benefits. The Company shall provide to the Executive
participation in all Company qualified defined benefit and defined
contribution retirement plans, subject to the eligibility and participation
requirements of such plans. In addition, the Company shall provide to the
Executive participation in all other nonqualified retirement and welfare
programs typically offered by companies similar in size and character to
the Company to executives having the same or similar duties and
responsibilities including any supplemental retirement plans.
Nothing in this section shall be construed as obligating the Company to
refrain from changing, and/or amending the nonqualified programs, so long
as such changes are similarly applicable to all executives generally.
4.5 Supplemental Life Insurance. The Company, at its cost, shall provide
the Executive with supplemental life insurance in the face amount of
$100,000 per child for each child under age 21(twenty-one) years old.
4.6 Employee Benefits. During the term of this Agreement, and as
otherwise provided within the provisions of each of the respective plans,
the Company shall provide to the Executive all benefits to which other
executives and employees of the Company are entitled to receive, as
commensurate with the Executive's position. Such benefits shall include,
but not be limited to, group term life insurance, comprehensive health and
major medical insurance, dental insurance, vision insurance, and short-term
and long-term disability.
The Executive shall be entitled to paid vacation in accordance with the
standard written policy of the Company with regard to vacations of
employees.
The Executive shall likewise participate in any additional benefit as
may be established during the term of this Agreement, by standard written
policy of the Company.
4.7 Perquisites. The Company shall provide to the Executive, at the
Company's cost, all perquisites to which other executives of the Company
are entitled to receive and such other perquisites which are suitable to
the character of Executive's position with the Company and adequate for the
performance of his duties hereunder.
4.8 Right to Change Plans. By reason of Sections 4.5 and 4.6 herein, the
Company shall not be obligated to institute, maintain, or refrain from
changing, amending, or discontinuing any benefit plan, program, or
perquisite, so long as such changes are similarly applicable to executive
employees generally.
4.9 Physical Exams. The Executive shall be entitled to an annual
physical exam paid for by the Company.
Section 5. Expenses
The Company shall pay, or reimburse the Executive, for all ordinary and
necessary expenses, in a reasonable amount, which the Executive incurs in
performing his duties under this Agreement including, but not limited to,
travel, entertainment, professional dues and subscriptions, and all dues,
fees, and expenses associated with membership in various professional,
business, social, and civic clubs, associations and societies of which the
Executive's participation is in the best interest of the Company.
Section 6. Employment Terminations
6.1 Termination Due to Retirement. In the event the Executive's
employment is terminated during the Employment Term or Window Period by
reason of retirement, the Executive's benefits shall be determined in
accordance with the Company's qualified retirement, supplemental
retirement, survivor's benefits, insurance, and other applicable programs
of the Company then in effect.
Upon the effective date of such termination, the Company will pay the
Executive a pro rata portion of his Highest Annual Bonus (as defined below
in Section 7.1) and the Executive will be immediately vested in all long-
term incentive awards. Further, upon the effective date of the termination,
the Company's obligation to pay and provide to the Executive any future
Base Salary, annual bonus, and long-term incentive awards (as provided in
Sections 4.1, 4.2, and 4.3 herein, respectively) shall immediately expire.
However, the Executive shall receive all rights and benefits that he is
vested in pursuant to other plans and programs of the Company, including,
but not limited to, the retirement benefits as described in Section 4.4
herein.
6.2 Termination Due to Death. In the event of the death of the Executive
during the Employment Term or Window Period, or during any period of
Disability during which he is receiving compensation pursuant to Section
6.3 herein, the Company shall (i) pay to the Executive's surviving spouse,
or other beneficiary as so designated by the Executive during his lifetime,
or to the Executive's estate, as appropriate, a lump sum amount equal to
the sum of the Executive's (x) Base Salary otherwise payable for the
remaining Employment Term and (y) an amount equal to the sum of the Highest
Annual Bonus for each fiscal year ending during the remaining Employment
Term, plus for the fiscal year in which the remaining Employment Term would
expire, a prorata portion of the Highest Annual Bonus for such partial
fiscal year, (ii) vest all long-term incentive awards of the Executive, and
(iii) continue, at the Company's cost, all health and welfare benefits for
the Executive's spouse and dependents for the remaining term of this
Agreement.
Further, the Company shall pay and provide all other benefits to which
the Executive has a vested right at the time, according to the provisions
of the governing plan or program. The Company thereafter shall have no
further obligations under this Agreement.
6.3 Suspension Due to Disability. In the event that the Executive
becomes disabled during the Employment Term or Window Period and is,
therefore, unable to perform his duties herein for a period of more than
one hundred-eighty (180) calendar days in the aggregate during any period
of twelve (12) consecutive months, or in the event of the Board's
reasonable expectation that the Executive's Disability will exist for more
than a period of one hundred-eighty (180) calendar days, the Company shall
have the right to suspend the Executive's active employment as provided in
this Agreement and place him on Disability. However, the Board shall
deliver written notice to the Executive of the Company's intent to suspend
for Disability at least thirty (30) calendar days prior to the effective
date of such suspension.
A suspension for Disability shall become effective upon the end of the
thirty (30) day notice period. Upon such effective date, the Company will
pay the Executive any Base Salary through the effective date of the
suspension for Disability, a pro rata portion of the Highest Annual Bonus
for the fiscal year in which such suspension occurs, and the Executive will
be immediately vested in all long-term incentive awards, provided however,
that if the Executive's Disability is due to alcohol or drug dependence, he
will vest ratably in any long-term incentive awards. Further, upon the
effective date of the suspension, the Company's obligation to pay and
provide to the Executive any future Base Salary, annual bonus, and long-
term incentive awards (as provided in Sections 4.1, 4.2, and 4.3,
respectively) shall immediately be suspended. However, the Executive shall
receive all rights and benefits that he is vested in, pursuant to other
plans and programs of the Company, including, but not limited to, short-
and long-term disability benefits, and retirement benefits as described in
Section 4.4.
Under no circumstance will the Executive, if suspended due to
Disability, receive less than 60% of his Base Salary in effect at the time
of his suspension for Disability through age 65. The Company agrees to make
such payments to the Executive in the event that the benefit is not
available for any reason.
The term "Disability" shall mean, for all purposes of this Agreement,
the incapacity of the Executive, due to injury, illness, disease, alcohol
or drug dependency, or bodily or mental infirmity, to engage in the
performance of substantially all of the usual duties of employment with the
Company as contemplated by Section 2 herein, such Disability to be
determined by the Board of Directors of the Company upon receipt and in
reliance on competent medical advice from one or more individuals, selected
by the Board, who are qualified to give such professional medical advice.
If the Executive and the Company shall not be in agreement as to
whether the Executive has suffered a Disability for the purposes of this
Agreement, the matter shall be referred to a panel of three medical
doctors, one of which shall be selected by the Executive, one of which
shall be selected by the Company, and one of which shall be selected by the
two doctors as so selected, and the decision of a majority of the panel
with respect to the question of whether the Executive has suffered a
Disability shall be binding upon the Executive and the Company. The
expenses of any such referral shall be borne by the Company. The Executive
may be required by the Company to submit to medical examination at any time
during the period of his employment hereunder, but not more often than
quarter-annually, to determine whether a Disability exists for the purposes
of this Agreement.
It is expressly understood that the Disability of the Executive for a
period of one hundred-eighty (180) calendar days or less in the aggregate
during any period of twelve (12) consecutive months, in the absence of any
reasonable expectation that his Disability will exist for more than such a
period of time, shall not constitute a failure by him to perform his duties
hereunder and shall not be deemed a breach or default and the Executive
shall receive full compensation and benefits for any such period of
Disability or for any other temporary illness or incapacity during the term
of this Agreement. If the Executive recovers from any Disability, his
suspension shall terminate and the Executive shall resume his duties with
full compensation and benefits.
6.4 Voluntary Termination by the Executive. The Executive may terminate
this Agreement at any time by giving the Board of Directors of the Company
written notice of intent to terminate, delivered at least thirty (30)
calendar days prior to the effective date of such termination (such period
not to include vacation). The termination automatically shall become
effective upon the expiration of the thirty (30) day notice period.
Upon the effective date of such termination, the Company shall pay to
the Executive his full Base Salary, at the rate then in effect as provided
in Section 4.1 herein, through the effective date of termination, plus all
other benefits, including long-term incentive awards, to which the
Executive has a vested right to at that time including, but not limited to,
accrued vacation pay. The Company also shall provide to the Executive the
vested retirement benefits described in Section 4.4 herein. With the
exception of the covenants contained in Section 8 herein (which shall
survive such termination), the Company and the Executive thereafter shall
have no further obligations under this Agreement.
6.5 Involuntary Termination by the Company Without Cause. At all times
during the Employment Term and outside the Window Period, the Board may
terminate the Executive's employment, as provided under this Agreement, at
any time for reasons other than a suspension for Disability or a
termination for Cause, by notifying the Executive in writing of the
Company's intent to terminate, at least thirty (30) calendar days prior the
effective date of such termination.
Upon the effective date of such termination, following the expiration
of the thirty (30) day notice period, the Company shall (i) pay the
Executive a lump sum amount equal to the sum of (x) the Executive's Base
Salary otherwise payable for the remaining Employment Term and (y) an
amount equal to the sum of the Highest Annual Bonus for each fiscal year
ending during the remaining Employment Term plus for the fiscal year in
which the remaining Employment Term would expire, a prorata portion of the
Highest Annual Bonus for such partial fiscal year, (ii) vest all long-term
incentive awards of the Executive, and (iii) continue, at the Company's
cost, all health and welfare benefits for the Executive's spouse and
dependents for the remaining Employment Term.
Further, the Company shall pay the Executive all other benefits to
which the Executive has a vested right at the time, according to the
provisions of the governing plan or program. The Company will also provide
outplacement services or will reimburse the Executive for the cost of such
services as described in Section 10 herein. The Company and the Executive
thereafter shall have no further obligations under this Agreement.
If the Executive's employment is terminated during the Window Period by
the Board for reasons other than a suspension for Disability or a
termination for Cause, the Executive shall be entitled to receive the
benefits provided in Section 7.1 herein in lieu of the benefits set forth
in this Section 6.5.
6.6 Termination For Cause. Nothing in this Agreement shall be construed
to prevent the Board from terminating the Executive's employment under this
Agreement for "Cause."
"Cause" means the Executive's:
(a) deliberate act of proven fraud having a material
adverse impact on the business or consolidated financial
condition or results of operations of the Company and its
subsidiaries;
(b) deliberate and continuing failure to comply with
applicable laws and regulations having a material adverse
impact on the business or consolidated financial condition or
results of operations of the Company and its subsidiaries; or
(c) conviction of a criminal offense constituting a felony.
For purposes of this Section 6.6, no act or omission by the
Executive shall be considered "willful" unless it is done or omitted in bad
faith or without reasonable belief that the Executive's action or omission
was in the best interests of the Company. Any act or failure to act based
upon (i) authority given pursuant to a resolution duly adopted by the
Board, or (ii) advice of counsel for the Company, shall be conclusively
presumed to be done or omitted to be done by the Executive in good faith
and in the best interests of the Company. For purposes of subsections (a)
and (b) above, the Executive shall not be deemed to be terminated for Cause
unless and until there shall have been delivered to the Executive a copy of
a resolution duly adopted by the affirmative vote of not less than the
entire membership to the Board at a meeting called and held for such
purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard
before the Board) finding that in the good faith opinion of the Board (x)
the Executive is guilty of the conduct described in subsection (a) or (b)
above, (y) the Executive has been provided a 30-day period in which to
"cure" such specified violation following a detailed written notice from
the Board of the Executive's violation of subsection (a) or (b) above and
(z) the Executive has failed to "cure" such violation, specifying the
particulars thereof in detail. The Executive, if a member of the Board,
will be not be counted for purposes of such a vote.
In the event this Agreement is terminated by the Board for Cause,
the Company shall pay the Executive his Base Salary through the effective
date of the employment termination and the Executive shall immediately
thereafter forfeit all rights and benefits (other than vested benefits) he
would otherwise have been entitled to receive under this Agreement. The
Executive will lose any right to supplemental retirement benefits provided
by the Company. The Company and the Executive thereafter shall have no
further obligations under this Agreement.
During the Window Period, as described herein, if any litigation
arises out of a termination for Cause, to the extent permitted by law, the
Company shall pay all legal fees, costs of litigation, prejudgment interest
and other expenses incurred in good faith by the Executive.
6.7 Termination for Good Reason. At any time during the Employment Term
or Window Period, the Executive may terminate this Agreement for Good
Reason (as defined below) by giving the Board of Directors of the Company
thirty (30) calendar days written notice of intent to terminate, which
notice sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for such termination.
Upon the expiration of the thirty (30) day notice period, the Good
Reason termination shall become effective, and the Company shall pay, in a
lump sum, and provide to the Executive the benefits set forth in this
Section 6.7 (or, in the event of termination for Good Reason during the
Window Period, the benefits set forth in Section 7.1 herein).
Good Reason shall mean, without the Executive's express written
consent, the occurrence of any one or more of the following:
(a) The assignment of the Executive to duties materially inconsistent
with the Executive's authorities, duties, responsibilities, and
status (including offices, titles, and reporting relationships) as
an officer of the Company, or a reduction or alteration in the
nature or status of the Executive's authorities, duties, or
responsibilities from those in effect during the immediately
preceding fiscal year;
(b) The Company's requiring the Executive to be based at a location
which is at least fifty (50) miles further from the Executive's
current primary residence than is such residence from the Company's
current headquarters, except for required travel on the Company's
business to an extent substantially consistent with the Executive's
business obligations as of the Effective Date;
(c) A reduction by the Company in the Executive's Base Salary except as
permitted in Section 4.1;
(d) A material reduction in the Executive's level of participation in
any of the Company's short- and/or long-term incentive compensation
plans, or employee benefit or retirement plans, policies,
practices, or arrangements in which the Executive participates as
of the Effective Date; provided, however, that reductions in the
levels of participation in any such plans shall not be deemed to be
"Good Reason" if the Executive's reduced level of participation in
each such program remains substantially consistent with the average
level of participation of other executives who have positions
commensurate with the Executive's position; or
(e) The failure of the Company to obtain a satisfactory agreement from
any successor to the Company to assume and agree to perform this
Agreement, as contemplated in Section 11.1 herein.
Upon a termination of the Executive's employment for Good Reason at any
time during the Employment Term, other than during the Window Period, with
the "Window Period" being (x) the twelve (12) full calendar month period
prior to the effective date of a Change in Control that occurs during the
initial three (3) year term of the Employment Term, (y) the six (6) full
calendar month period prior to the effective date of a Change in Control
that occurs after the initial three (3) year Employment Term, and (z) the
twenty-four (24) month period beginning on the effective date of a Change
in Control, the Executive shall be entitled to receive the same payments
and benefits as he is entitled to receive following an involuntary
termination of his employment by the Company during the Employment Term
without Cause, as specified in Section 6.5 herein. Upon a termination of
the Executive's employment for Good Reason within the Window Period,
regardless of whether the Change in Control occurs during the Employment
Term, the Executive shall be entitled to receive the payments and benefits
set forth in Section 7.1 herein in lieu of those set forth in this
Section 6.7.
The Executive's right to terminate employment for Good Reason shall not
be affected by the Executive's incapacity due to physical or mental
illness; provided, however, the Executive may not terminate for Good Reason
during any period that the Executive's employment is suspended due to
Disability.
The Executive's continued employment shall not constitute consent to,
or a waiver of rights with respect to, any circumstance constituting Good
Reason herein.
Section 7. Change in Control
7.1 Employment Terminations in Connection with a Change in Control. In
the event of a Qualifying Termination (as defined below) within the Window
Period, then in lieu of all other benefits provided to the Executive under
the provisions of this Agreement, the Company shall pay to the Executive in
a lump sum amount, and provide him with the following severance benefits
(hereinafter referred to as the "Severance Benefits"):
(a) An amount equal to three (3) times the highest rate of the
Executive's annualized Base Salary rate in effect at any time up to
and including the effective date of termination;
(b) An amount equal to three (3) times the "Highest Annual Bonus",
which shall mean the greater of (i) Executive's highest annual
bonus earned over the fiscal years, beginning with the 1998 fiscal
year, prior to the Change in Control (with respect to the 1998
fiscal year, the Executive received a bonus of $198,857) and (ii)
the Executive's targeted annual bonus for such fiscal year of
termination;
(c) An amount equal to the Executive's unpaid Base Salary and accrued
vacation pay through the effective date of termination;
(d) An amount equal to the Executive's Highest Annual Bonus multiplied
by a fraction, the numerator of which is the number of completed
days in the then-existing fiscal year through the effective date of
termination, and the denominator of which is three hundred
sixty-five (365);
(e) A continuation of the welfare benefits of medical insurance, dental
insurance, and group term life insurance for three (3) full years
after the effective date of termination. These benefits shall be
provided to the Executive at the same premium cost, and at the same
coverage level, as in effect as of the Executive's effective date
of termination. However, in the event the premium cost and/or level
of coverage shall change for all employees of the Company, the cost
and/or coverage level, likewise, shall change for the Executive in
a corresponding manner.
The continuation of these welfare benefits shall be discontinued
prior to the end of the three (3) year period in the event the
Executive has available substantially similar benefits from a
subsequent employer, as determined by the Company's Board of
Directors or the Board's designee.
Upon the termination of these welfare benefits, the Executive shall
be provided a COBRA continuation election under the Company's group
health plans;
(f) A lump-sum cash payment of the actuarial present value equivalent
(as determined pursuant to Section 417 of the Internal Revenue
Code) of the aggregate benefits accrued by the Executive as of the
effective date of termination under the terms of any and all
supplemental retirement plans in which the Executive participates.
For this purpose, such benefits shall be calculated under the
assumption that the Executive's employment continued following the
effective date of termination for three (3) full years (i.e., three
(3) additional years of service credits shall be added); provided,
however, that for purposes of determining "final average pay" under
such programs, the Executive's actual pay history as of the
effective date of termination shall be used;
(g) Reimbursement for outplacement services costs (as provided in
Section 10 herein); and
(h) Immediate vesting of all outstanding long-term incentive awards.
For purposes of this Section 7, a Qualifying Termination shall mean any
termination of the Executive's employment other than: (1) by the Company
for Cause (as provided in Section 6.6 herein); (2) by reason of death or
suspension for Disability (as provided in Section 6.2 herein); or (3) by
the Executive without Good Reason (as provided in Section 6.7 herein).
7.2 Definition of "Change in Control." A Change in Control of the
Company shall be deemed to have occurred as of the first day any one or
more of the following conditions shall have been satisfied:
(a) Any individual, corporation (other than the Company), partnership,
trust, association, pool, syndicate, or any other entity or any
group of persons acting in concert becomes the beneficial owner, as
that concept is defined in Rule 13d-3 promulgated by the Securities
and Exchange Commission under the Securities Exchange Act of 1934,
of securities of the Company possessing twenty-five percent (25%)
or more of the voting power for the election of directors of the
Company;
(b) There shall be consummated any consolidation, merger, or other
business combination involving the Company or the securities of the
Company in which holders of voting securities of the Company
immediately prior to such consummation own, as a group, immediately
after such consummation, voting securities of the Company (or, if
the Company does not survive such transaction, voting securities of
the corporation surviving such transaction) having less than sixty
percent (60%) of the total voting power in an election of directors
of the Company (or such other surviving corporation);
(c) During any period of two (2) consecutive years, individuals who at
the beginning of such period constitute the directors of the
Company cease for any reason to constitute at least a majority
thereof unless the election, or the nomination for election by the
Company's shareholders, of each new director of the Company was
approved by a vote of at least two-thirds (2/3) of the directors of
the Company then still in office who were directors of the Company
at the beginning of any such period; or
(d) There shall be consummated any sale, lease, exchange, or other
transfer (in one transaction or a series of related transactions)
of all, or substantially all, of the assets of the Company (on a
consolidated basis) to a party which is not controlled by or under
common control with the Company.
7.3 Excise Tax Equalization Payment. In the event that the Executive
becomes entitled to Severance Benefits or any other payment or
benefit under this Agreement, or under any other agreement with or
plan of the Company (in the aggregate, the "Total Payments"), if
any of the Total Payments will be subject to the tax (the "Excise
Tax") imposed by Section 4999 of the Code (or any similar tax that
may hereafter be imposed), the Company shall pay to the Executive
in cash an additional amount (the "Gross-Up Payment") such that the
net amount retained by the Executive after deduction of any Excise
Tax upon the Total Payments and any federal, state and local income
tax and Excise Tax upon the Gross-Up Payment provided for by this
Section 7.3 (including FICA and FUTA), shall be equal to the Total
Payments. Such payment shall be made by the Company to the
Executive as soon as practical following the effective date of
termination, but in no event beyond thirty (30) days from such
date.
7.4 Tax Computation. For purposes of determining whether any of the
Total Payments will be subject to the Excise Tax and the amounts of
such Excise Tax:
(a) Any other payments or benefits received or to be received by the
Executive in connection with a Change in Control of the Company or
the Executive's termination of employment (whether pursuant to the
terms of this Plan or any other plan, arrangement, or agreement
with the Company, or with any person (which shall have the meaning
set forth in Section 3(a)(9) of the Securities Exchange Act of
1934, including a "group" as defined in Section 13(d) therein)
whose actions result in a Change in Control of the Company or any
person affiliated with the Company or such persons) shall be
treated as "parachute payments" within the meaning of
Section 280G(b)(2) of the Code, and all "excess parachute payments"
within the meaning of Section 280G(b)(1) shall be treated as
subject to the Excise Tax, unless in the opinion of tax counsel as
supported by the Company's independent auditors and acceptable to
the Executive, such other payments or benefits (in whole or in
part) do not constitute parachute payments, or unless such excess
parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of
Section 280G(b)(4) of the Code in excess of the base amount within
the meaning of Section 280G(b)(3) of the Code, or are otherwise not
subject to the Excise Tax;
(b) The amount of the Total Payments which shall be treated as subject
to the Excise Tax shall be equal to the lesser of: (i) the total
amount of the Total Payments; or (ii) the amount of excess
parachute payments within the meaning of Section 280G(b)(1) (after
applying clause (a) above); and
(c) The value of any noncash benefits or any deferred payment or
benefit shall be determined by the Company's independent auditors
in accordance with the principles of Sections 280G(d)(3) and (4) of
the Code.
For purposes of determining the amount of the Gross-Up Payment, the
Executive shall be deemed to pay federal income taxes at the highest
marginal rate of Federal income taxation in the calendar year in which the
Gross-Up Payment is to be made, and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the
Executive's residence on the effective date of termination, net of the
maximum reduction in federal income taxes which could be obtained from
deduction of such state and local taxes.
7.5 Subsequent Recalculation. In the event the Internal Revenue Service
adjusts the computation of the Company under Section 7.4 herein so that the
Executive did not receive the greatest net benefit, the Company shall
reimburse the Executive for the full amount necessary to make the Executive
whole, plus a market rate of interest, as determined by the Committee.
7.6 Payment of Legal Fees. To the extent permitted by law, the Company
shall pay all legal fees, costs of litigation, prejudgment interest, and
other expenses incurred in good faith by the Executive as a result of the
Company's refusal to provide the severance benefits under this Section 7 to
which the Executive becomes entitled under this Agreement, or as a result
of the Company's contesting the validity, enforceability, or interpretation
of this Agreement, or as a result of any conflict (including conflicts
related to the calculation of parachute payments) between the parties
pertaining to this Agreement.
Section 8. Confidentiality and Noncompetition
8.1 Confidentiality. During the term of this Agreement and thereafter in
perpetuity, the Executive will not directly or indirectly disclose to any
third party not a member of the Company Group, its or their legal counsel
or independent accountants, Confidential Information and Trade Secrets of
the Company and its subsidiaries and affiliates (collectively, the "Company
Group"), except as to any of the Confidential Information or Trade Secrets
which shall be or become in the public domain other than by breach by the
Executive of his obligations set out in this Section 8.1 or shall be
required to be disclosed by applicable laws or regulations, any judicial or
administrative authority or stock exchange rule or regulation. For the
purposes of this Section 8.1 "Confidential Information" shall mean: (i)
internal policies and procedures, (ii) financial information, (iii)
marketing strategies, (iv) secret discoveries, inventions, formulae,
designs and know-how not constituting Trade Secrets, and (v) other non-
public information relating to the Company Group's business, the disclosure
of which would materially adversely affect the Company Group's business or
financial condition. For the purposes of this Section 8.1 "Trade Secrets"
shall mean all secret discoveries, inventions, formulae, designs, methods,
processes and know-how entitled to protection as trade secrets under the
laws of the state of Texas.
8.2 Noncompetition. In the event the Executive breaches his obligations
under Section 8.1 of this Agreement during the one (1) year period
following the Executive's termination of employment, during the remainder
of such one (1) year period (the "Restricted Period") the Executive shall
not engage in Competition with the Company. For purposes of this Section
8.2, "Competition" shall mean the Executive engaging in or otherwise being
a director, officer, employee, principal, agent, stockholder, member, owner
or partner of, or permitting his name to be used in connection with the
activities of any business or organization in the international offshore
contract drilling industry in direct competition with the Company Group,
but shall not preclude the Executive becoming the registered or beneficial
owner of up to two percent (2%) of any class of capital stock of any such
corporation which is registered under the Securities Exchange Act of 1934,
as amended, provided the Executive does not actively participate in the
business of such corporation until the end of the Restricted Period.
Section 9. Indemnification
The Company hereby covenants and agrees to indemnify and hold harmless
the Executive fully, completely, and absolutely against and in respect to
any and all actions, suits, proceedings, claims, demands, judgments, costs,
expenses (including attorney's fees), losses, and damages resulting from
the Executive's good faith performance of his duties and obligations under
the terms of this Agreement.
Section 10. Outplacement Assistance
Following a termination of the Executive's employment as described in
Sections 6.5, 6.7, or 7.1 herein, the Executive shall be reimbursed by the
Company for the costs of all outplacement services obtained by the
Executive within the two (2) year period after the effective date of
termination; provided, however, that the total reimbursement shall be
limited to an amount equal to fifteen percent (15%) of the Executive's Base
Salary as of the effective date of termination.
Section 11. Assignment
11.1. Assignment by Company. This Agreement may and shall be assigned
or transferred to, and shall be binding upon and shall inure to the benefit
of, any successor of the Company, and any such successor shall be deemed
substituted for all purposes of the "Company" under the terms of this
Agreement. As used in this Agreement, the term "successor" shall mean any
person, firm, corporation, or business entity that at any time, causes a
Change in Control as described in Section 7.2. Notwithstanding such
assignment, the Company shall remain, with such successor, jointly and
severally liable for all its obligations hereunder.
Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement
and shall immediately entitle the Executive to compensation from the
Company in the same amount and on the same terms as the Executive would be
entitled in the event of an involuntary termination by the Company, as
provided in Section 7.1 herein. Notice of such agreement shall be provided
to the Executive within thirty (30) days after a Change in Control.
Except as herein provided, the Company may not otherwise assign this
Agreement.
11.2 Assignment by Executive. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, and administrators, successors, heirs,
distributees, devisees, and legatees. If the Executive should die while any
amounts payable to the Executive hereunder remain outstanding, all such
amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Executive's devisee, legatee, or other
designee or, in the absence of such designee, to the Executive's estate.
This Agreement is not otherwise assignable by the Executive.
Section 12. Dispute Resolution and Notice
12.1 Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled by arbitration, conducted
before a panel of three (3) arbitrators sitting in a location selected by
the Executive within fifty (50) miles from the location of his employment
with the Company, in accordance with the rules of the American Arbitration
Association then in effect.
Judgment may be entered on the award of the arbitrator in any court
having proper jurisdiction. All expenses of such arbitration, including the
fees and expenses of the counsel for the Executive, shall be borne by the
Company, exclusive of Section 7.6.
12.2. Notice. Any notices, requests, demands, or other communications
provided for by this Agreement shall be sufficient if in writing and if
sent by registered or certified mail to the Executive at the last address
he has filed in writing with the Company or, in the case of the Company, at
its principal offices.
Section 13. Miscellaneous
13.1. Gender and Number. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine;
the plural shall include the singular and the singular shall include the
plural.
13.2. Entire Agreement. This Agreement supersedes any prior agreements
or understandings, oral or written, between the parties hereto or between
the Executive and the Company, with respect to the subject matter hereof
and constitutes the entire Agreement of the parties with respect thereto.
13.3. Modification. This Agreement shall not be varied, altered,
modified, canceled, changed, or in any way amended except by mutual
agreement of the parties in a written instrument executed by the parties
hereto or their legal representatives.
13.4. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect.
13.5. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together will constitute one and the same Agreement.
13.6. Tax Withholding. The Company may withhold from any benefits
payable under this Agreement all federal, state, city, or other taxes as
may be required pursuant to any law or govern-mental regulation or ruling.
13.7. Beneficiaries. The Executive may designate one or more persons or
entities as the primary and/or contingent beneficiaries of any amounts to
be received under this Agreement. Such designation must be in the form of a
signed writing acceptable to the Board or the Board's designee. The
Executive may make or change such designation at any time.
Section 14. Governing Law
To the extent not preempted by federal law, the provisions of this
Agreement shall be construed and enforced in accordance with the laws of
the state of Texas.
IN WITNESS WHEREOF, the Executive and the Company (pursuant to a
resolution adopted at a duly constituted meeting of its Board of Directors)
have executed this Agreement, as of the day and year first above written.
Executive:
___________________________
ATTEST R&B Falcon Corporation:
____________________________ ___________________________
-------------------------------------------------------------------------
APPENDIX A
R&B Falcon Corporation
Job Description
Job Title: Executive Vice President and
Chief Financial Officer
Reports to: Chairman & Chief Executive Officer
Location: Houston
Basic Function
Responsible for planning and directing all corporate financial and
administrative functions including accounting, financial planning and
financial management and financings, assessment and reporting, budgeting,
cash and investment management, and human resources. Also has
responsibility for information systems, internal audit, and all of the
company's administrative functions. Primary contact for the Corporation
with lending institutions, investment bankers and the financial community.
Responsibilities and Duties
1. Oversees and exclusively directs finance, treasury, budgeting, audit,
tax, accounting, compensation and benefits, and long range forecasting for
the organization, including preparation of the Company's annual business
plan. Executives and managers directly responsible for these functions,
without exception, report directly to the EVP/CFO. Serves as the Company's
Principal Accounting Officer and Principal Financial Officer for SEC
reporting purposes.
2. Directs the controller in providing and directing procedures and
computer application systems necessary to maintain proper records and to
afford adequate accounting controls and services.
3. Directly responsible for all financing activities of the Corporation.
Directs the treasury department in activities such as custodian of funds,
securities, and assets of the organization.
4. Appraises the organization's financial position and issues periodic
reports on organization's financial stability, liquidity, and growth.
5. Directs and coordinates the establishment of budget programs.
6. Coordinates tax reporting programs. Assists with investor relations
activities.
7. Analyzes operational issues impacting functional groups and the whole
institution, and determines their financial impact.
8. Manages the compensation and benefits function in the corporation.
9. Establishes and maintains contacts with stockholders, financial
institutions, and the investment community.
Education
Four year degree and MBA.
Experience
Typically requires 10 - 15 years experience.
Supervision
Direct 7
Indirect 101
Total 108
