EXHIBIT 10.17
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is
entered into as of November 13, 2001 (the "Effective Date"), by and between GREY
WOLF, INC., a Texas corporation (the "Company"), and XXXXXX X. XXXXXXXX (the
"Executive").
The Company and the Executive desire to amend and restate the existing
Employment Agreement dated as of September 3, 1996, by and between the Company
and the Executive as previously amended on August 26, 1998 and November 10, 1998
on the terms and conditions of this Agreement.
Accordingly, the parties agree as follows:
1. Employment, Duties and Acceptance.
1.1 Employment by the Company and Duties. The Company hereby agrees
to employ the Executive for a term commencing on the Effective Date and expiring
at the end of the day on December 31, 2004 (such date, or later date to which
this Agreement is extended in accordance with the terms hereof, the "Termination
Date"), unless earlier terminated as provided in Section 4 or unless extended as
provided herein (the "Term"). The Term shall be automatically extended for one
additional year on each anniversary of December 31, 2001 during the Term (each
anniversary being referred to as an "Anniversary") unless either party notifies
the other on or before the date ninety (90) days prior to such Anniversary that
he or it desires to terminate the Agreement (the "Termination Notice"), in which
event the Termination Date shall be the third anniversary of the date of the
Termination Notice. During the Term, the Executive shall serve in the capacity
of President and Chief Executive Officer of the Company, and shall also serve in
those offices and directorships of subsidiary corporations or entities of the
Company to which he may from time to time be appointed or elected. During the
Term, the Executive shall devote all reasonable efforts and all of his business
time and services to the Company, subject to the direction of the Board of
Directors of the Company (the "Board"). Notwithstanding the foregoing, the
Company acknowledges that the Executive has farming and ranching interests,
holds working and royalty interests, owns an interest in a family corporation
which may engage in oil and gas servicing business and may own working, carried
or royalty interests in oil and gas xxxxx, none of which are or will be in
competition with Company Business (as hereinafter defined) and that the
Executive may devote a portion of his business time to these personal activities
without breaching his obligations to the Company under this Agreement.
1.2 Acceptance of Employment by the Executive. The Executive hereby
accepts such employment and shall render the services and perform the duties
described above.
2. Compensation and Other Benefits.
2.1 Annual Salary. The Company shall pay to the Executive an annual
salary at a rate of not less than Four Hundred Twenty-Five Thousand Dollars
($425,000.00) per year
(the "Annual Salary"), subject to increase at the sole discretion of the Board.
The Annual Salary shall be payable in accordance with the payroll policies of
the Company as from time to time in effect, but in no event less frequently than
once each month, less such deductions as shall be required to be withheld by
applicable law and regulations.
2.2 Bonuses. The Executive shall receive, at the sole discretion of
the Board, an incentive bonus with respect to the fiscal years ending during the
term hereof (the "Incentive Bonus").
2.3 Vacation Policy. The Executive shall be entitled to four (4)
weeks of paid vacation during each year of the Term until Executive has been
employed by the Company for twenty (20) years when the Executive shall be
entitled to five (5) weeks paid vacation during each year of the Term.
2.4 Participation in Employee Benefit Plans. The Company agrees to
permit the Executive during the Term to participate in any group life,
hospitalization or disability insurance plan, health program, pension plan,
similar benefit plan or other so called "fringe benefits" of the Company
(collectively, "Benefits") which may be available to other executives of the
Company on terms no less favorable to the Executive than the terms offered to
such other executives. The Executive shall cooperate with the Company in
applying for such coverage, including submitting to a physical exam and
providing all relevant health and personal data.
2.5 General Business Expenses. The Company shall pay or reimburse
the Executive for all expenses reasonably and necessarily incurred by the
Executive during the Term in the performance of the Executive's services under
this Agreement. Such payment shall be made upon presentation of such
documentation as the Company customarily requires of its senior executive
employees prior to making such payments or reimbursements.
2.6 Company Car and Cellular Telephone. The Company shall provide an
automobile, of the Executive's choice, to be used by the Executive during the
Term hereof or until his employment hereunder is terminated. The purchase price
of the automobile shall not exceed $55,000 (the "Auto Allowance"); provided,
however the Auto Allowance shall be increased effective January 1, 2003 and on
January 1 of each year thereafter during the Term by a percentage equal to the
percentage increase in the Consumer Price Index (Urban-Houston Metropolitan
Area) for the previous calendar year. If requested by the Executive, the Company
will replace the automobile with a new automobile no less frequently than every
three (3) years during the Term hereof. The Company shall, at its expense, pay
any and all expenses associated with the operation of such company car,
including, but not limited to, collision and liability insurance, maintenance
and repair costs, replacement parts, tires, fuel and oil. The Executive may use
the automobile for personal purposes and the value of any such personal use
shall be deemed to be additional compensation. The Company shall also furnish
the Executive with a cellular telephone of his choice and the Company shall pay
all charges in connection with the use thereof, other than charges for calls not
related to the Executive's duties hereunder.
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2.7 Certain Additional Payments by the Company.
2.7.1 Excise Tax; Gross-Up Payment. Anything in this Agreement
to the contrary notwithstanding, in the event it shall be determined that any
payment or distribution by the Company to or for benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional
payments required under this Section 2.7) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") or any interest or penalties are incurred by the Executive
with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the "Excise
Tax"), then the Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by the Executive of all
taxes (including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
2.7.2 Accounting Firm Determinations. Subject to the
provisions of Section 2.7.3, all determinations required to be made under this
Section 2.7, including whether and when Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be utilized in arriving
at such determination, shall be made by KPMG, LLP (the "Accounting Firm") which
shall provide detailed supporting calculations both to the Company and the
Executive within fifteen (15) business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is requested by
the Company. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting a Change of Control, the
Executive shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 2.7, shall be paid by the Company to the
Executive within five (5) days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall furnish the Executive with a written opinion that
failure to report the Excise Tax on the Executive's applicable federal income
tax return would not result in the imposition of a negligence or similar
penalty. Any determination by the Accounting Firm shall be binding upon the
Company and the Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 2.7.3 and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.
2.7.3 Notification of Claims. The Executive shall notify the
Company in writing of any claims by the Internal Revenue Service that, if
successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as
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practicable but no later than thirty (30) days after the Executive actually
receives notice in writing of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid.
The Executive shall not pay such claim prior to the expiration of the thirty
(30) day period following the date on which he gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest such claim,
the Executive shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim;
(ii) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the 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 such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 2.7.3, the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and xxx for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
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2.7.4 If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 2.7.3, the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of Section 2.7.3)
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 2.7.3, a determination is made that the Executive shall not be entitled
to any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to the
expiration of thirty (30) days after such determination, then such advance shall
be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.
2.8 Continuing Medical and Dental Benefits. If Executive's
employment with the Company is terminated for any reason other than Cause (as
defined in Section 4.2 hereof), the Company shall provide medical and dental
insurance coverage ("Medical and Dental Benefits") to Executive and his spouse
from the date of Executive's termination of employment with the Company until
the later of the death of Executive or his spouse. The Company shall pay all
premiums associated with such Medical and Dental Benefits. The Medical and
Dental Benefits provided by the Company under this Section 2.8 shall be without
exclusions for disclosed preexisting conditions and shall provide coverage and
benefits (including, but not limited to, choice of doctor or dentist, covered
procedures, deductible, and co-payment provisions) at a level that in all
respects is not less than the medical and dental coverage available to the
Executive under the Company's group health plan as of the Effective Date. The
Medical and Dental Benefits provided to the Executive and, if applicable, to the
Executive's spouse shall be provided by the Company in a manner such that the
Executive will not be taxable on any reimbursements to or on behalf of the
Executive and, if applicable, to or on behalf of the Executive's spouse. In
addition, such Medical and Dental Benefits shall be provided at no cost to the
Executive; provided, however, that if the Company reasonably determines, based
on the advice of its legal counsel, that the Executive must be taxed on the
Company's actual cost of providing such Medical and Dental Benefits to the
Executive (the "Coverage Cost") to avoid the Executive being taxed on the
reimbursements relating to such coverage, the Company and the Executive agree
that the Company will deliver timely to the Executive appropriate tax
information returns to cause the Executive to include the Coverage Cost in the
Executive's income.
3. Non-Competition, Confidentiality and Company Property.
3.1 Covenants Against Competition. The Executive acknowledges that
(i) the Company is currently engaged in the business of owning, managing and
operating onshore drilling and workover rigs for its own account or for others
which are contracted or hired for the purpose of drilling and/or workover of oil
or natural gas xxxxx (the "Company Business"); (ii) his work for the Company
will give him access to trade secrets of and confidential information concerning
the Company; and (iii) the agreements and covenants contained in this Agreement
are essential to protect the business and goodwill of the Company. Accordingly,
the Executive covenants and agrees as follows:
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3.1.1 Non-Compete. The Executive agrees that he shall not
during the Restricted Period (as hereinafter defined) within a two hundred (200)
mile radius of any office maintained by the Company within one year prior to the
end of the Term, including, without limitation, the office address specified
from time to time pursuant to Section 7.2 hereof and any field offices, directly
or indirectly (except in the Executive's capacity as an officer of the Company)
(i) engage or participate in the Company Business; or (ii) enter the employ of,
or render any other services to, any person engaged in the Company Business
except as permitted hereunder. In addition, the Executive agrees that he shall
not during the Restrictive Period (as hereinafter defined) become interested in
any such person in any capacity, including, without limitation, as an
individual, partner, shareholder, lender, officer, director, principal, agent or
trustee except as permitted hereunder; provided, however, that the Executive may
own, directly or indirectly, solely as an investment, securities of any person
traded on any national securities exchange or listed on the National Association
of Securities Dealers Automated Quotation System if the Executive is not a
controlling person of, or a member of a group which controls, such person and
the Executive does not, directly or indirectly, own five percent (5%) or more of
any class of equity securities, or securities convertible into or exercisable or
exchangeable for five percent (5%) or more of any class of equity securities, of
such person. As used herein, the "Restricted Period" shall mean a period
commencing on the date hereof and terminating upon the first to occur of (a) the
date on which the Company terminates or is deemed to terminate the Executive's
employment without Cause (as hereinafter defined), (b) the date the Executive
terminates or is deemed to terminate his employment pursuant to Section 4.6
hereof, or (c) the date of termination of this Agreement; provided, however,
that if the Company shall have terminated the Executive's employment for Cause
and such Cause in fact exists or if the Executive shall have terminated his
employment with the Company in breach of the terms of this Agreement, the
Restricted Period shall end one (1) year following the termination of the
Executive's employment hereunder.
3.1.2 Confidential Information. The Executive acknowledges
that the Company has a legitimate and continuing proprietary interest in the
protection of its confidential information and that it has invested substantial
sums and will continue to invest substantial sums to develop, maintain and
protect confidential information. The Company agrees to provide the Executive
access to confidential information in conjunction with the Executive's duties,
including, without limitation, information of a technical and business nature
regarding the Company's past, current or anticipated business that may encompass
financial information, financial figures, trade secrets, customer lists, details
of client or consultant contracts, pricing policies, operational methods,
marketing plans or strategies, product development techniques or plans, business
acquisition plans, Company employee information, organizational charts, new
personnel acquisition plans, technical processes, designs and design projects,
inventions and research projects, ideas, discoveries, inventions, improvements,
trade secrets, design specifications, writings and other works of authorship. In
exchange, as an independent covenant, the Executive agrees not to make any
unauthorized use, publication, or disclosure, during or subsequent to his
employment by the Company, of any Intellectual Property of a confidential or
trade secret nature, generated or acquired by him during the course of his
employment, except to the extent that the disclosure of Intellectual Property
Information is necessary to fulfill his responsibilities as an employee of the
Company. The Executive understands that confidential matters and trade secrets
include information not generally known by or available to the public about
or belonging to the Company, its divisions, subsidiaries, and related
Affiliates, or belonging
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to other companies to whom the Company, its divisions, subsidiaries,
and related affiliates, may have an obligation to maintain information in
confidence, and that authorization for public disclosure may only be obtained
through the Company's written consent.
3.1.3 Property of the Company. All memoranda, notes, lists,
records, engineering drawings, technical specifications and related documents
and other documents or papers (and all copies thereof) relating to the Company,
including such items stored in computer memories, microfiche or by any other
means, made or compiled by or on behalf of the Executive after the date hereof,
or made available to the Executive after the date hereof relating to the
Company, its affiliates or any entity which may hereafter become an affiliate
thereof, shall be the property of the Company, and shall be delivered to the
Company promptly upon the termination of the Executive's employment with the
Company or at any other time upon request; provided, however, that the
Executive's address books, diaries, chronological correspondence files and
rolodex files shall be deemed to be property of the Executive.
3.1.4 Original Material. The Executive agrees that any
inventions, discoveries, improvements, ideas, concepts or original works of
authorship relating directly to the Company Business, including without
limitation information of a technical or business nature such as ideas,
discoveries, designs, inventions, improvements, trade secrets, know-how,
manufacturing processes, product formulae, design specifications, writings and
other works of authorship, computer programs, financial figures, marketing
plans, customer lists and data, business plans or methods and the like, which
relate in any manner to the actual or anticipated business or the actual or
anticipated areas of research and development of the Company and its divisions,
subsidiaries, affiliates, or related entities, whether or not protectable by
patent or copyright, that have been originated, developed or reduced to practice
by the Executive alone or jointly with others during the Executive's employment
with the Company shall be the property of and belong exclusively to the Company.
The Executive shall promptly and fully disclose to the Company the origination
or development by the Executive of any such material and shall provide the
Company with any information that it may reasonably request about such material.
Either during the subsequent to the Executive's employment, upon the request and
at the expense of the Company or its nominee, and for no remuneration in
addition to that due the Executive pursuant to his employment by the Company,
but at no expense to him, the Executive agrees to execute, acknowledge, and
deliver to the Company or its attorneys any and all instruments which, in the
judgment of the Company or its attorneys, may be necessary or desirable to
secure or maintain for the benefit of the Company adequate patent, copyright,
and other property rights in the United States and foreign countries with
respect to any such inventions, improvements, ideas, concepts, or original works
of authorship embraced within this Agreement.
3.1.5 Employees of the Company and its Affiliates. The
Executive agrees to refrain during the Restricted Period from inducing or
attempting to influence any employee of the Company, its divisions, subsidiaries
and/or affiliated entities to terminate his employment.
3.1.6 Customers. The Executive also agrees to refrain during
the Restricted Period from diverting, taking, soliciting and/or accepting on his
own behalf or on the behalf of another person, firm, or company, the business of
any past or present customer of the Company, its divisions, subsidiaries and/or
other affiliated entities, or any identified prospective
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or potential customer of the Company, its divisions, subsidiaries and/or
affiliated entities, whose identity became known to the Executive through his
employment by the Company.
3.2 Rights and Remedies Upon Breach. If the Executive breaches, any
of the provisions contained in Section 3.1 of this Agreement (the "Restrictive
Covenants"), the Company shall have the following rights and remedies, each of
which rights and remedies shall be independent of the others and severally
enforceable, and each of which is in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or in equity:
3.2.1 Specific Performance. The right and remedy to have the
Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach of the Restrictive Covenants would
cause irreparable injury to the Company and that money damages would not provide
an adequate remedy to the Company.
3.2.2 Accounting. The right and remedy to require the
Executive to account for and pay over to the Company all compensation, profits,
monies, accruals, increments or other benefits derived or received by the
Executive as the result of any action constituting a breach of the Restrictive
Covenants.
3.3 Severability of Covenants. The Executive acknowledges and agrees
that the Restrictive Covenants are reasonable and valid in duration and
geographical scope and in all other respects. If any court determines that any
of the Restrictive Covenants, or any part thereof, is invalid or unenforceable,
the remainder of the Restrictive Covenants shall not thereby be affected and
shall be given full effect without regard to the invalid portions.
3.4 Court Review. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographical scope of, or scope of activities restrained by, such
provision, such court shall have the power to reduce the duration or scope of
such provision, as the case may be, and, in its reduced form, such provision
shall then be enforceable.
3.5 Enforceability in Jurisdictions. The Company and the Executive
intend to and hereby confer jurisdiction to enforce the Restrictive Covenants
upon the courts of any jurisdiction within the geographical scope of such
Restrictive Covenants. If the courts of any one or more of such jurisdictions
hold the Restrictive Covenants unenforceable by reason of the breadth of such
scope or otherwise, it is the intention of the Company that such determination
not bar or in any way affect the right of the Company to the relief provided
above in the courts of any other jurisdiction within the geographical scope of
such Restrictive Covenants, as to breaches of such Restrictive Covenants in such
other respective jurisdictions, such Restrictive Covenants as they relate to
each jurisdiction being, for this purpose, severable into diverse and
independent covenants.
4. Termination.
4.1 Termination Upon Death. If the Executive dies during the Term,
this Agreement shall terminate; provided, however, that in any such event, the
Company shall pay to the Executive's estate: (i) any portion of the Annual
Salary and any Incentive Bonus that shall have been earned by the Executive
prior to the termination but not yet paid; (ii) any Benefits that
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have vested in the Executive at the time of such termination as a result of his
participation in any of the Company's benefit plans; and (iii) any expenses with
respect to which the Executive is entitled to reimbursement pursuant to this
Agreement. In addition to the foregoing, if the Executive dies during the term,
his death shall be treated as a Termination Without Cause entitling his estate
to the severance payments described in Section 4.3.1(ii), below. Finally, the
Executive's right to indemnification, payment or reimbursement pursuant to
Section 6 of this Agreement shall not be affected by such termination and shall
continue in full force and effect, both with respect to proceedings that are
threatened, pending or completed at the date of such termination and with
respect to proceedings that are threatened, pending or completed after that
date.
4.2 Termination With Cause. The Company has the right, at any time
during the Term, subject to all of the provisions hereof, exercisable by serving
notice, effective on or after the date of service of such notice as specified
therein, to terminate the Executive's employment under this Agreement and
discharge the Executive with Cause. If such right is exercised, the Company's
obligation to the Executive shall be limited solely to the payment of unpaid
Annual Salary accrued, together with earned but unpaid Incentive Bonus, if any,
and Benefits vested up to the effective date specified in the Company's notice
of termination. As used in this Agreement, the term "Cause" shall mean and
include (i) chronic alcoholism or controlled substance abuse as determined by a
doctor mutually acceptable to the Company and the Executive; (ii) an act of
proven fraud or dishonesty on the part of the Executive with respect to the
Company or its subsidiaries; (iii) knowing and material failure by the Executive
to comply with material applicable laws and regulations relating to the business
of the Company or its subsidiaries; (iv) the Executive's material and continuing
failure to perform (as opposed to unsatisfactory performance) his duties
hereunder or a material breach by the Executive of this Agreement except, in
each case, where such failure or breach is caused by the illness or other
similar incapacity or disability of the Executive; or (v) conviction of a crime
involving moral turpitude or a felony. Prior to the effectiveness of termination
for Cause under subclause (i), (ii), (iii) or (iv) above, the Executive shall be
given thirty (30) days prior notice from the Board specifically identifying the
reasons which are alleged to constitute Cause for any termination hereunder and
an opportunity to be heard by the Board in the event the Executive disputes such
allegations.
4.3 Termination Without Cause. The Company has the right, at any
time during the Term, subject to all of the provisions hereof, exercisable by
serving notice, effective on or after the date of service of such notice as
specified therein, to terminate the Executive's employment under this Agreement
and discharge the Executive without Cause. If the Executive is terminated during
the Term without Cause (including any termination which is deemed to be a
constructive termination without Cause under Section 4.6 hereof), the Company's
obligation to the Executive shall be limited solely to the following:
4.3.1 Severance Payments. The Company shall pay the Executive,
in lump sum within thirty (30) days after the date of termination:
(i) the amounts otherwise payable to Executive upon his death
under Section 4.1 hereof; and
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(ii) an amount equal to: 1) in the event such termination
occurs within two (2) years after a Change of Control, an amount equal to
three and three quarters times (3.75x) the sum of: (a) the Annual Salary
of Executive in effect on the date of termination (or, if the Company has
reduced the Executive's Annual Salary in breach of this Agreement, the
Executive's Annual Salary immediately before such reduction) plus (b) a
bonus equal to one-hundred percent (100%) of such Annual Salary; or 2) in
the event such termination occurs at any time other than within two (2)
years after a Change of Control, an amount equal to the sum of: (a) three
times (3x) the Annual Salary of the Executive in effect on the date of
termination (or, if the Company has reduced the Executive's Annual Salary
in breach of this Agreement, the Executive's Annual Salary immediately
before such reduction) plus (b) a bonus equal to one-hundred percent
(100%) of such Annual Salary; and
4.3.2 Extension of Medical Benefits. The Company will continue
to provide the Executive and, if the Executive is married, the Executive's
spouse the Medical and Dental Benefits described in Section 2.8 hereof.
4.4 Termination by the Executive. Any termination of this Agreement
by the Executive during the Term, except such termination (i) as is deemed to be
a Constructive Termination Without Cause by the Company under Section 4.6 of
this Agreement or (ii) a voluntary resignation or retirement by Executive within
two (2) years after a Change of Control in which event the Company shall pay the
Executive the amounts described in Section 4.3.1 and 4.3.2, above, shall be
deemed to be a breach of the terms of this Agreement for the purposes of Section
3.1.1 hereof and shall entitle the Company to discontinue payment of all Annual
Salary, Incentive Bonus and Benefits (other than the Medical and Dental Benefits
described in Section 2.8 hereof) not earned and payable prior to the date of
such termination.
4.5 Termination upon Disability. If during the Term the Executive
becomes physically or mentally disabled, whether totally or partially, as
evidenced by the written statement of a competent physician licensed to practice
medicine in the United States who is mutually acceptable to the Company and the
Executive or his closest relative if he is not then able to make such a choice,
so that the Executive is unable substantially to perform his services hereunder
for (i) a period of four consecutive months, or (ii) for shorter periods
aggregating six months during any twelve (12) month period, the Company may at
any time after the last day of the four consecutive months of disability or the
day on which the shorter periods of disability equal an aggregate of six months,
by written notice to the Executive, terminate the Executive's employment
hereunder and discontinue payments of the Annual Salary, Incentive Bonus and
Benefits accruing from and after the date of such termination. In such event,
the Executive shall be entitled to the full compensation payable to him
hereunder for periods of disability shorter than the periods specified in
clauses (i) and (ii) of the previous sentence. In addition, if the Executive's
employment with the Company is terminated pursuant to this Section 4.5, such
termination shall be treated as a Termination Without Cause entitling Executive
to the severance payments described in Section 4.3 above. Finally, the
Executive's right to indemnification, payment or reimbursement pursuant to
Section 6 of this Agreement shall not be affected by such termination and shall
continue in full force and effect, both with respect to proceedings that are
threatened, pending or completed at the date of such termination and with
respect to proceedings that are threatened, pending or completed after that
date.
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4.6 Constructive Termination Without Cause. Notwithstanding any
other provision of this Agreement, the Executive's employment under this
Agreement may be terminated during the Term by the Executive, which shall be
deemed to be constructive termination by the Company without Cause, if one of
the following events shall occur without the consent of the Executive: (i) a
failure to elect or reelect or to appoint or reappoint the Executive to the
office of President and Chief Executive Officer of the Company or other material
change by the Company of the Executive's functions, duties or responsibilities
which change would reduce the ranking or level, dignity, responsibility,
importance or scope of the Executive's position with the Company from the
position and attributes thereof described in Section 1 above; (ii) the
assignment or reassignment by the Company of the Executive to a location not
within fifty (50) miles of the Company's current location; (iii) the
liquidation, dissolution, consolidation or merger of the Company, or transfer of
all or substantially all of its assets, other than a transaction in which a
successor corporation with a net worth substantially the same as or greater than
that of the Company assumes this Agreement and all obligations and undertakings
of the Company hereunder; (iv) a reduction in the Executive's fixed salary; (v)
a Change of Control as hereinafter defined; (vi) the failure of the Company to
continue to provide the Executive with office space, related facilities and
secretarial assistance that are commensurate with the Executive's
responsibilities to and position with the Company; (vii) the notification by the
Company of the Company's intention not to observe or perform one or more of the
obligations of the Company under this Agreement; (viii) the failure by the
Company to indemnify, pay or reimburse the Executive at the time and under the
circumstances required by Section 6 of this Agreement; (xi) the occurrence of
any other material breach of this Agreement by the Company or any of its
subsidiaries; or (x) the delivery of notice by the Company in accordance with
Section 1.1 hereof that it desires to terminate this Agreement. Any such
termination shall be made by written notice to the Company specifying the event
relied upon for such termination and given within sixty (60) days after such
event. Any constructive termination shall be effective sixty (60) days after the
date the Company has been given such written notice setting forth the grounds
for such termination with specificity; provided, however, that the Executive
shall not be entitled to terminate this Agreement in respect of any of the
grounds set forth above if within sixty (60) days after such notice the action
constituting such ground for termination has been cured and is no longer
continuing. A constructive termination by the Company without Cause shall
terminate the Restrictive Period hereunder.
4.7 Change of Control. For the purposes hereof, a "Change of
Control" of the Company shall be deemed to have occurred if (i) any "Person" (as
such term is used in Sections 13(d) and 14(d) of the Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Act, directly or
indirectly, of securities of the Company representing thirty-five percent (35%)
or more of the combined voting power of the Company's then outstanding
securities; (ii) there occurs a proxy contest or a consent solicitation, or the
Company is a party to a merger, consolidation, sale of assets, plan of
liquidation or other reorganization, as a consequence of which members of the
Board in office immediately prior to such transaction or event constitute less
than a majority of the Board thereafter; or (iii) during any period of two
consecutive years, other than as a result of an event described in clause (ii)
of this Section 4.7, individuals who at the beginning of such period constituted
the Board (including for this purpose any new director whose election or
nomination for election by the Company's stockholders was approved by a vote of
at least a majority of the directors then still in office who were directors at
the beginning of such period) cease for any reason to constitute at least a
majority of the Board.
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5. Insurance. The Company may, from time to time, apply for and take out,
in its own name and at its own expense, naming itself or one or more of its
affiliates as the designated beneficiary (which it may change from time to
time), policies for life, health, accident, disability or other insurance upon
the Executive in any amount or amounts that it may deem necessary or appropriate
to protect its interest. The Executive agrees to aid the Company in procuring
such insurance by submitting to medical examinations and by completing,
executing and delivering such applications and other instruments in writing as
may reasonably be required by an insurance company or companies to which any
application or applications for insurance may be made by or for the Company.
6. Indemnification.
6.1 The Company shall, to the maximum extent not prohibited by law,
indemnify the Executive if he is made, or threatened to be made, a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Company to procure a judgment in its favor (collectively, a
"Proceeding"), by reason of the fact that the Executive is or was a director or
officer of the Company, or is or was serving in any capacity at the request of
the Company for any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against judgments, fines, penalties,
excise taxes, amounts paid in settlement and costs, charges and expenses
(including attorneys' fees and disbursements) paid or incurred in connection
with any such Proceeding.
6.2 The Company shall, from time to time, reimburse or advance to
the Executive the funds necessary for payment of expenses, including attorneys'
fees and disbursements, incurred in connection with any Proceeding in advance of
the final disposition of such Proceeding; provided, however, that, if required
by the Texas Business Corporation Act, such expenses incurred by or on behalf of
the Executive may be paid in advance of the final disposition of a Proceeding
only upon receipt by the Company of an undertaking, by or on behalf of the
Executive, to repay any such amount so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right of
appeal that the Executive is not entitled to be indemnified for such expenses.
6.3 The right to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 6 shall not be deemed
exclusive of any other rights which the Executive may now or hereafter have
under any law, by law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office.
6.4 The right to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 6 shall continue as
to the Executive after he has ceased to be a director, officer or employee of
the Company and shall inure to the benefit of the heirs, executors and
administrators of the Executive's estate.
6.5 The Company shall purchase and maintain director and officer
liability insurance on such terms and providing such coverage as the Board
determines is appropriate, and
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the Executive shall be covered by such insurance on the same basis as the other
directors and executive officers of the Company.
6.6 The right to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 6 shall be
enforceable by the Executive in any court of competent jurisdiction. The burden
of proving that such indemnification or reimbursement or advancement of expenses
is not appropriate shall be on the Company. Neither the failure of the Company
(including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that such indemnification or reimbursement or advancement of expenses is
proper in the circumstances nor an actual determination by the Company
(including its board of directors, independent legal counsel, or its
stockholders) that the Executive is not entitled to such indemnification or
reimbursement or advancement of expenses shall constitute a defense to the
action or create a presumption that the Executive is not so entitled. The
Executive shall also be indemnified for any expenses incurred in connection with
successfully establishing his right to such indemnification or reimbursement or
advancement of expenses, in whole or in part, in any such proceeding.
6.7 If the Executive serves (i) another corporation of which a
majority of the shares entitled to vote in the election of its directors is held
by the Company, or (ii) any employee benefit plan of the Company or any
corporation referred to in clause (i), in any capacity, then he shall be deemed
to be doing so at the request of the Company.
6.8 The right to indemnification or reimbursement or advancement of
expenses shall be interpreted on the basis of the applicable law in effect at
the time of the occurrence of the event or events giving rise to the applicable
Proceeding.
7. Other Provisions.
7.1 Certain Definitions. As used in this Agreement, the following
terms have the following meanings unless the context otherwise requires:
(i) "affiliate" with respect to the Company means any other
person controlled by or under common control with the Company but shall
not include any stockholder or director of the Company, as such.
(ii) "person" means any individual, corporation, partnership,
firm, joint Company, association, joint-stock company, trust,
unincorporated organization, governmental or regulatory body or other
entity.
(iii) "subsidiary" means any corporation 50% or more of the
voting securities of which are owned directly or indirectly by the
Company.
7.2 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage prepaid. Any such notice shall be deemed given when so
delivered personally, telegraphed, telexed or sent by facsimile transmission or,
if mailed, on the date of actual receipt thereof, as follows:
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(i) if to the Company, to:
Grey Wolf, Inc.
00000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
(ii) if to the Executive, to:
Xxxxxx X. Xxxxxxxx
0000 Xxxxxx Xxxxx
Xxxxx Xxxx, Xxxxx 00000
Any party may change its address for notice hereunder by notice to the other
party hereto.
7.3 Entire Agreement. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements, written or oral, with respect thereto, including, without
limitation, the Employment Agreement dated September 3, 1996, as previously
amended on August 26, 1998 and November 10, 1998 by and between the Company and
the Executive.
7.4 Waivers and Amendments. This Agreement may be amended,
superseded, canceled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by the parties or, in the
case of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof Nor shall any waiver on the part of any party of any such right,
power or privilege hereunder, nor any single or partial exercise of any right,
power or privilege hereunder, preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder.
7.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas (without giving effect to the
choice of law provisions thereof) where the employment of the Executive shall be
deemed, in part, to be performed and enforcement of this Agreement or any action
taken or held with respect to this Agreement shall be taken in the courts of
appropriate jurisdiction in Houston, Texas.
7.6 Assignment. This Agreement, and any rights and obligations
hereunder, may not be assigned by the Executive and may be assigned by the
Company (subject to Section 4.6 (iii) hereof) only to a successor by merger or
purchasers of substantially all of the assets of the Company.
7.7 Counterparts. This Agreement may be executed in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
7.8 Headings. The headings in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
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7.9 No Presumption Against Interest. This Agreement has been
negotiated, drafted, edited and reviewed by the respective parties, and
therefore, no provision arising directly or indirectly herefrom shall be
construed against any party as being drafted by said party.
7.10 Validity Contest. The Company shall promptly pay any and all
legal fees and expenses incurred by the Executive from time to time as a direct
result of the Company's contesting the due execution, authorization, validity or
enforceability of this Agreement. Executive shall have no obligation to mitigate
damages suffered as a result of termination of his employment with the Company.
The provisions of the Section 7.10 shall survive termination of this Agreement.
7.11 Dispute Resolution. If any dispute arises out of or relates to
this Agreement, or the breach thereof, Executive and the Company agree to
promptly negotiate in good faith to resolve such dispute. If the dispute cannot
be settled by the parties through negotiation, Executive and the Company agree
to try in good faith to settle the dispute by mediation under the Commercial
Mediation Rules of the American Arbitration Association before resorting to
arbitration, litigation or any other dispute resolution procedure. If the
parties are unable to settle the dispute by mediation as provided in the
preceding sentence, any claim, controversy or dispute arising out of or relating
to this Agreement, or the breach thereof, shall be settled by binding
arbitration before a panel of three arbitrators in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. The
arbitration shall be conducted in Houston, Xxxxxx County, Texas, or such other
location to which the parties mutually agree. The decision of the arbitrator(s)
shall be final and binding and judgment upon the award rendered may be entered
in any court having jurisdiction thereof.
7.12 Binding Agreement. This Agreement shall inure to the benefit of
and be binding upon the Company and its respective successors and assigns and
the Executive and his legal representatives.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EXECUTIVE
----------------------------------------
XXXXXX X. XXXXXXXX
COMPANY
GREY WOLF, INC.
----------------------------------------
XXXXXX X. XXXXXXX,
Chairman, Compensation Committee
Board of Directors
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