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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR FISCAL YEAR ENDED SEPTEMBER 30, 1996
COMMISSION FILE NUMBER 0-6352
ATWOOD OCEANICS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 74-1611874
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
15835 PARK TEN PLACE DRIVE 77084
HOUSTON, TEXAS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
281-492-2929
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $1 PAR VALUE
(TITLE OF CLASS)
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 15 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filings
requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation in S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definite proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrants as of November 30, 1996 is $283,300,000.
The number of shares outstanding of the issuer's class of Common Stock, as of
November 30, 1996: 6,704,938 shares of Common Stock, $1 par value.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Annual Report to Shareholders for the fiscal year ended September 30, 1996 -
Referenced in Parts I, II and IV of this report.
(2) Proxy Statement for Annual Meeting of Shareholders to be held February 13,
1997 - Referenced in Part III of this report.
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PART I
ITEM 1. BUSINESS
Atwood Oceanics, Inc. (which together with its subsidiaries is identified
as the "Company" or "Registrant", unless the context requires otherwise), a
corporation organized in 1968 under the laws of the State of Texas, is engaged
in contract drilling of exploratory and development oil and gas wells in
offshore areas and related support, management and consulting services. The
Company currently owns (i) three "third-generation" semisubmersibles, one
"second-generation" semisubmersible,one jack-up, one "second-generation"
semisubmersible tender-assist rig, one submersible, and one modular,
self-contained platform rig, and (ii) a fifty percent interest in a new
generation platform rig. The Company also provides labor, supervisory and
consulting services to two operator owned platform rigs in Australia.
In recent times, activity in the contract drilling industry has
significantly improved, especially for mobile drilling rigs that can operate in
deep water. For the last three years, the Company has maintained 99 percent
utilization of its drilling equipment, resulting in three consecutive years of
improved profitability.
To date, most of the Company's drilling operations have been conducted
outside United States waters. Approximately 92 to 93 percent of the Company's
contract revenues were derived from foreign operations in each of the last three
fiscal years. The Company is currently involved in active operations in the
territorial waters of Australia, Malaysia, Equatorial Guinea, United States and
the Malaysia/Thailand Joint Development Area. At the present time, the
submersible "RICHMOND" is the Company's only drilling vessel located in United
States waters; however, the "ATWOOD HUNTER", a "third-generation"
semisubmersible, will be relocated to the United States Gulf of Mexico in
mid-1997. For information relating to the revenues, profitability and
identifiable assets attributable to specific geographic areas of operations, see
Note 11 of Notes to Consolidated Financial Statements contained in the Company's
Annual Report to Shareholders for fiscal year 1996, incorporated by reference
herein.
OFFSHORE DRILLING EQUIPMENT
The Company's diversified fleet of owned or operated drilling rigs
currently consists of four semisubmersibles, one jack-up, one semisubmersible
tender assist vessel, one submersible, and four modular, self-contained platform
rigs. Each type of drilling rig is designed for different purposes and
applications, for operations in different water depths, bottom conditions,
environments and geographical areas, and for different drilling and operating
requirements. The following descriptions of the various types of drilling rigs
owned or operated by the Company illustrate the diversified range of application
of the rig fleet.
Each semisubmersible drilling unit has two hulls, the lower of which is
capable of being flooded. Drilling equipment is mounted on the main hull. After
the drilling unit is towed to location, the lower hull is flooded, lowering the
entire drilling unit to its operating draft, and the drilling unit is anchored
in place. On completion of operations, the lower hull is deballasted, raising
the entire drilling unit to its towing draft. This type of drilling unit is
designed to operate in greater water depths than a jack-up and in more severe
sea conditions than a drillship. Semisubmersible units are generally more
expensive to operate than jack-up rigs and, compared to a drillship, are often
limited in the amount of supplies that can be stored on board.
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The semisubmersible tender assist vessel operates like a semisubmersible
except that its drilling equipment is temporarily installed on permanently
constructed offshore support platforms. The semisubmersible vessel provides crew
accommodations, storage facilities and other support for the drilling
operations.
A jack-up drilling unit contains all of the drilling equipment on a single
hull designed to be towed to the well site. Once on location, legs are lowered
to the sea floor and the unit is raised out of the water by jacking up on these
legs. On completion of the well, the unit is jacked down, and towed to the next
location. A jack-up drilling unit can operate in more severe sea and weather
conditions than a drillship and is less expensive to operate than a
semisubmersible. However, because it must rest on the sea floor, a jack-up
cannot operate in as deep water as other units.
The submersible drilling unit owned by the Company has two hulls, the
lower being a mat which is capable of being flooded. Drilling equipment and crew
accommodations are located on the main hull. After the drilling unit is towed to
location, the lower hull is flooded, lowering the entire unit to its operating
draft at which it rests on the sea floor. On completion of operations, the lower
hull is deballasted, raising the entire unit to its towing draft. This type of
drilling unit is designed to operate in shallow water depths ranging from 9 to
70 feet and can operate in moderately severe sea conditions. Although drilling
units of this type are less expensive to operate, like the jack-up rig, they
cannot operate in as deep water as other units.
A modular platform rig is similar to a land rig in its basic components.
Modular platform rigs are temporarily installed on permanently constructed
offshore support platforms in order to perform the drilling operations. After
the drilling phase is completed, the modular rig is broken down into convenient
packages and moved by work boats. A platform rig usually stays at a location for
several months, if not years, since several wells are typically drilled from a
support platform.
DRILLING CONTRACTS
The contracts under which the Company operates its vessels are obtained
either through individual negotiations with the customer or by submitting
proposals in competition with other contractors and vary in their terms and
conditions. The initial term of contracts for the Company's owned and/or
operated vessels has ranged from the length of time necessary to drill one well
to several months and is generally subject to early termination in the event of
a total loss of the drilling vessel, excessive equipment breakdown or failure to
meet minimum performance criteria. It is not unusual for contracts to contain
renewal provisions at the option of the customer. As a result of improved market
conditions, contracts with a term of one year or longer are now being awarded.
However, there is no guarantee that the current trend of awarding long-term
contracts will continue.
The rate of compensation specified in each contract depends on the nature
of the operation to be performed, the duration of the work, equipment and
services provided, the areas involved, market conditions and other variables.
Generally, contracts for drilling, management and support services specify a
basic rate of compensation computed on a dayrate basis. Such agreements
generally provide for a reduced dayrate payable when operations are interrupted
by equipment failure and subsequent repairs, field moves, adverse weather
conditions or other factors beyond the control of the Company. Some contracts
also provide for revision of the specified dayrates in the event of material
changes in certain items of cost. Any period during which a vessel is not
earning a full operating dayrate because of the above conditions or because the
vessel is idle and not on contract will have an adverse effect on operating
profit. An over-supply of drilling rigs in any market area can adversely affect
the Company's ability to employ its drilling vessels. In fiscal 1996, the
Company maintained 100 percent utilization of its drilling equipment placed in
service. Based upon current contract commitments, the Company should maintain a
high level of equipment utilization in fiscal 1997; however, there is no
guarantee that the Company will not experience some equipment idle time in
fiscal 1997.
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For long moves of drilling equipment, the Company attempts to obtain
either a lump sum or a dayrate as mobilization compensation for expenses
incurred during the period in transit. A surplus of certain types of units,
either worldwide or in particular operating areas, can result in the Company's
acceptance of a contract which provides only partial or no recovery of
relocation costs. As a result of improved market conditions, in recent times,
the Company has received full recovery of relocation costs; however, there is no
guarantee that this trend will continue.
Operation of the Company's drilling equipment is subject to the offshore
drilling requirements of petroleum exploration companies and agencies of foreign
governments. These requirements are, in turn, subject to fluctuations in
government policies, world demand and prices for petroleum products, proved
reserves in relation to such demand and the extent to which such demand can be
met from onshore sources.
The Company also contracts to provide various types of services to third
party owners of drilling rigs. These contracts are normally for a stated term or
until termination of operations or stages of operation at a particular facility
or location. The services may include, as in the case of contracts entered into
by the Company in connection with operations offshore Australia, the supply of
personnel and rig design, fabrication, installation and operation. The contracts
normally provide for reimbursement to the Company for all out-of-pocket
expenses, plus a service or management fee for all of the services performed. In
most instances, the amount charged for the services may be adjusted if there are
changes in conditions, scope or costs of operations. The Company generally
obtains insurance or a contractual indemnity from the owner for liabilities
which could be incurred in operations.
OPERATIONAL RISKS AND INSURANCE
The Company's operations are subject to the usual hazards associated with
the drilling of oil and gas wells, such as blowouts, explosions and fires. In
addition, the Company's vessels are subject to those perils peculiar to marine
operations, such as capsizing, grounding, collision and damage from severe
weather conditions. Any of these risks could result in damage or destruction of
drilling rigs and oil and gas wells, personal injury and property damage, and
suspension of operations or environmental damage through oil spillage or
extensive, uncontrolled fires. Although the Company believes that it is
adequately insured against normal and foreseeable risks in its operations in
accordance with industry standards, such insurance may not be adequate to
protect the Company against liability from all consequences of well disasters,
marine perils, extensive fire damage or damage to the environment. To date, the
Company has not experienced difficulty in obtaining insurance coverage, although
no assurance can be given as to the future availability of such insurance or
cost thereof. The occurrence of a significant event against which the Company is
not fully insured could have a material adverse effect on the Company's
financial position.
ENVIRONMENTAL PROTECTION
Under the Federal Water Pollution Control Act, as amended by the Oil
Pollution Act of 1990, operators of vessels in navigable United States waters
and certain offshore areas are liable to the United States government for the
costs of removing oil and certain other pollutants for which they may be held
responsible, subject to certain limitations, and must establish financial
responsibility to cover such liability. The Company has taken all steps
necessary to comply with this law, and has received a Certificate of Financial
Responsibility (Water Pollution) from the U.S. Coast Guard. The Company's
operations in United States waters are also subject to various other
environmental regulations regarding pollution and control thereof, and the
Company has taken steps to ensure compliance therewith.
CUSTOMERS
During fiscal year 1996, the Company performed operations for 10
customers. Because of the relatively limited number of customers for which the
Company can operate at any given time, sales to each of 3 different customers
amounted to 10% or more of the Company's fiscal 1996 revenues. Esso Australia
Limited/Esso Production Malaysia, Inc., Carigali-Triton Operating Company Sdn
Bhd. and Mobil Equatorial Guinea Inc. accounted for 32%, 14% and 11%,
respectively, of fiscal year 1996 revenues. The Company's business operations
are subject to the risks associated with a business having a limited number of
customers for its products or services, and a decrease in the drilling programs
of these customers in the areas where they employ the Company may adversely
affect the Company's revenues.
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COMPETITION
The Company competes with numerous other drilling contractors, most of
which are substantially larger than the Company and possess appreciably greater
financial and other resources. Although recent business combinations among
drilling companies have resulted in a decrease in the total number of
competitors, the drilling industry remains competitive, with no one drilling
contractor being dominant. Thus, there continues to be competition in securing
available drilling contracts.
Price competition is generally the most important factor in the drilling
industry, but the technical capability of specialized drilling equipment and
personnel at the time and place required by customers is also important. Other
competitive factors include work force experience, rig suitability, efficiency,
condition of equipment, reputation and customer relations. The Company believes
that it competes favorably with respect to these factors. If demand for drilling
rigs increases in the future, rig availability may also become a competitive
factor. Competition usually occurs on a regional basis and, although drilling
rigs are mobile and can be moved from one region to another in response to
increased demand, an oversupply of rigs in any region may result. Demand for
drilling equipment is also dependent on the exploration and development programs
of oil and gas companies, which are in turn influenced by the financial
condition of such companies, by general economic conditions, by prices of oil
and gas, and from time to time by political considerations and policies.
FOREIGN OPERATIONS
The operations of the Company are conducted primarily in foreign waters
and are subject to certain political, economic and other uncertainties not
encountered by purely domestic drilling contractors, including risks of
expropriation, nationalization, foreign exchange restrictions, foreign taxation,
changing conditions and foreign and domestic monetary policies. Generally, the
Company purchases insurance to protect against some or all loss due to events of
political risk such as nationalization, expropriation, war, confiscation and
deprivation. Occasionally, customers will indemnify the Company against such
losses. Moreover, offshore drilling activity is affected by government
regulations and policies limiting the withdrawal of offshore oil and gas,
regulations affecting production, regulations restricting the importation of
foreign petroleum, environmental regulations and regulations which may limit
operations in offshore areas by foreign companies and/or personnel. See Note 11
to Consolidated Financial Statements contained in the Company's Annual Report to
Shareholders for fiscal year 1996, incorporated herein by reference, for a
summary of contract revenues, operating income and identifiable assets by
geographic region.
EMPLOYEES
The Company currently employs approximately 650 persons in its domestic
and worldwide operations. In connection with its foreign drilling operations,
the Company has often been required by the host country to hire substantial
portions of its work force in that country, and in some cases, these employees
may be represented by foreign unions. To date, the Company has experienced
little difficulty in complying with such requirements, and the Company's
drilling operations have not been significantly interrupted by strikes or work
stoppages.
ITEM 2. PROPERTIES
Information regarding the location and general character of the Company's
principal assets may be found in the schedule with the caption heading "Offshore
Drilling Operations" in the Company's Annual Report to Shareholders for fiscal
year 1996, which is incorporated by reference herein.
Effective December 31, 1994, the Company acquired the remaining 50 percent
interest in the ATWOOD FALCON, ATWOOD HUNTER and ATWOOD EAGLE (third-generation
semisubmersibles), resulting in the Company's sole ownership of these units. In
fiscal year 1994, the Company also increased its rig fleet with the addition of
the ATWOOD SOUTHERN CROSS, a
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semisubmersible built in 1976. During fiscal year 1995, construction of RIG-200
(a new generation platform rig of which the Company has 50 percent ownership)
was completed. For more information concerning these events, see Note 4 to
Consolidated Financial Statements contained in the Company's Annual Report to
Shareholders for fiscal year 1996, incorporated by reference herein.
ITEM 3. LEGAL PROCEEDINGS
The Company is not currently involved in any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
During the fourth quarter of fiscal 1996, no matters were submitted to a
vote of shareholders through the solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER
MATTERS
As of September 30, 1996, there were over 400 beneficial owners of the
Company's common stock.
The Company did not pay cash dividends in fiscal years 1995 or 1996 and
the Company does not anticipate paying cash dividends in the foreseeable future
because of the capital intensive nature of its business. To enable the company
to maintain its high competitive profile in the industry, cash reserves will be
utilized, at the appropriate time, to upgrade existing equipment or to acquire
additional equipment.
Market information concerning the Company's common stock may be found
under the caption heading "Stock Price Information" in the Company's Annual
Report to Shareholders for fiscal 1996, which is incorporated by reference
herein.
ITEM 6. SELECTED FINANCIAL DATA
Information required by this item may be found under the caption "Five
Year Financial Review" in the Company's Annual Report to Shareholders for fiscal
1996, which is incorporated by reference herein.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Information required by this item may be found in the Company's Annual
Report to Shareholders for fiscal 1996, which is incorporated by reference
herein.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this item may be found in the Company's Annual
Report to Shareholders for fiscal 1996, which is incorporated by reference
herein.
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ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no changes in or disagreements with the Company's
accountants on accounting and financial disclosure.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
This information is incorporated by reference from the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
February 13, 1997, to be filed with the Securities and Exchange Commission (the
Commission) not later than 120 days after the end of the fiscal year covered by
this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
This information is incorporated by reference from the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
February 13, 1997, to be filed with the Commission not later than 120 days after
the end of the fiscal year covered by this Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This information is incorporated by reference from the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
February 13, 1997, to be filed with the Commission not later than 120 days after
the end of the fiscal year covered by this Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is incorporated by reference from the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
February 13, 1997, to be filed with the Commission not later than 120 days after
the end of the fiscal year covered by this Form 10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, AND REPORTS ON FORM 8-K
(a) FINANCIAL STATEMENTS AND EXHIBITS
1. FINANCIAL STATEMENTS
The following financial statements, together with the report of Arthur
Andersen LLP dated November 15, 1996 appearing in the Company's Annual Report to
Shareholders, are incorporated by reference herein:
Consolidated Balance Sheets dated September 30, 1996 and 1995
Consolidated Statements of Operations for each of the three years in
the period ended September 30, 1996
Consolidated Statements of Cash Flows for each of the three years in
the period ended September 30, 1996
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Consolidated Statements of Changes in Shareholders' Equity for each of
the three years in the period ended September 30, 1996
Report of Independent Public Accountants
Notes to Consolidated Financial Statements
2. EXHIBITS
See the "EXHIBIT INDEX" for a listing of all of the Exhibits filed as part
of this report.
3. EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
Atwood Oceanics, Inc. 1981 Incentive Stock Option Plan - See Exhibit 10.1
hereof.
Atwood Oceanics, Inc. 1990 Stock Option Plan - See Exhibit 10.2 hereof.
Atwood Oceanics, Inc. Retention Plan for Certain Salaried Employees dated
effective as of May 8, 1996 - See Exhibit 10.8 hereof.
Executive Agreement dated as of May 8, 1996 between the Company and John
R. Irwin - See Exhibit 10.9.1.
Executive Agreement dated as of May 8, 1996 between the Company and James
M. Holland - See Exhibit 10.9.2.
Executive Agreement dated as of May 8, 1996 between the Company and Glen
P. Kelley - See Exhibit 10.9.3.
Executive Agreement dated as of May 8, 1996 between the Company and Larry
P. Till - See Exhibit 10.9.4.
(b) REPORTS ON FORM 8-K
During the last quarter of fiscal 1996, the Company filed with the
Securities and Exchange Commission a report on Form 8-K dated June 24, 1996
concerning the award of a firm two year plus option contract from British-
Borneo Petroleum, Inc. for use of the ATWOOD HUNTER.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
ATWOOD OCEANICS, INC.
/s/ JOHN R. IRWIN /s/ JAMES M. HOLLAND
JOHN R. IRWIN, President JAMES M. HOLLAND,
(Principal Executive Officer) Senior Vice President
(Principal Financial and
Accounting Officer)
Date: 5 December 1996 Date: 5 December 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities on the dates indicated.
/s/ ROBERT W. BURGESS /s/ GEORGE S. DOTSON
ROBERT W. BURGESS, GEORGE S. DOTSON,
Director Director
Date: 5 December 1996 Date: 5 December 1996
/s/ HANS HELMERICH /s/ WILLIAM J. MORRISSEY
HANS HELMERICH, WILLIAM J. MORRISSEY,
Director Director
Date: 5 December 1996 Date: 5 December 1996
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EXHIBIT INDEX
3.1.1 Restated Articles of Incorporation dated January 1972
(Incorporated herein by reference to Exhibit 3.1.1 of the
Company's Form 10-K for the year ended September 30, 1993).
3.1.2 Articles of Amendment dated March 1975 (Incorporated herein
by reference to Exhibit 3.1.2 of the Company's Form 10-K for
the year ended September 30, 1993).
3.1.3 Articles of Amendment dated March 1992 (Incorporated herein
by reference to Exhibit 3.1.3 of the Company's Form 10-K for
the year ended September 30, 1993).
3.2 Bylaws, as amended (Incorporated herein by reference to
Exhibit 3.2 of the Company's Form 10-K for the year ended
September 30, 1993).
10.1 Atwood Oceanics, Inc. 1981 Incentive Stock Option Plan
(Incorporated herein by reference to Exhibit 10.1 of the
Company's Form 10-K for the year ended September 30, 1993).
10.2 Atwood Oceanics, Inc. 1990 Stock Option Plan (Incorporated
herein by reference to Exhibit 10.2 of the Company's Form
10-K for the year ended September 30, 1993).
10.3 Joint Venture Letter Agreement dated November 4, 1994
between the Company and Helmerich & Payne, Inc.
(Incorporated herein by reference to Exhibit 10.3 of the
Company's Form 10-K for the year ended September 30, 1994).
10.4.1 Second Amended and Restated Master Loan Restructuring
Agreement dated as of March 31, 1995 between Atwood Deep
Seas, Ltd.; Texas Commerce Bank, National Association; CoMac
Partners and Chemical Bank (Incorporated herein by reference
to Exhibit 10.4.1 of the Company's Form 10-K for the year
ended September 30, 1995).
10.4.2 First Amendment to Second Amended and Restated Master Loan
Restructuring Agreement dated as of November 28, 1995
between Atwood Deep Seas, Ltd.; Texas Commerce Bank,
National Association; CoMac Partners and Chemical Bank
(Incorporated herein by reference to Exhibit 10.4.2 of the
Company's Form 10-K for the year ended September 30, 1995).
10.5 Asset Purchase Agreement dated February 14, 1995, effective
as of December 31, 1994 between Atwood Falcon I, Ltd. and
Atwood Oceanics Pacific Limited (Incorporated herein by
reference to Exhibit 10.5 of the Company's Form 10-K for the
year ended September 30, 1995).
10.6 Purchase and Sale Agreement dated February 14, 1995,
effective as of December 31, 1994 among Philadelphia
Investment Corporation of Delaware, Philadelphia Falcon
Drilling Corporation, Philadelphia Drilling Company, Atwood
Oceanics Drilling Company, the Company, Atwood Falcon Co.,
Atwood Hunter Co., Eagle Oceanics, Inc., Atwood Falcon I,
Ltd. and Atwood Deep Seas, Ltd. (Incorporated herein by
reference to Exhibit 10.6 of the Company's Form 10-K for the
year ended September 30, 1994).
10.7 Drilling Contract dated June 20, 1996 between the Company
and British-Borneo Petroleum, Inc. for use of the ATWOOD
HUNTER (Incorporated herein by reference to the Company's
Form 8-K dated June 24, 1996).
*10.8 Atwood Oceanics, Inc. Retention Plan for Certain Salaried
Employees dated effective as of May 8, 1996
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*10.9.1 Executive Agreement dated as of May 8, 1996, between the
Company and John R. Irwin
*10.9.2 Executive Agreement dated as of May 8, 1996 between the
Company and James M. Holland
*10.9.3 Executive Agreement dated as of May 8, 1996 between the
Company and Glen P. Kelley
*10.9.4 Executive Agreement dated as of May 8, 1996 between the
Company and Larry P. Till
*13.1 Annual Report to Shareholders
*21.1 List of Subsidiaries
*23.1 Consent of Independent Public Accountants
*27.1 Financial Data Schedule
*Filed herewith
EXHIBIT 10.8
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ATWOOD OCEANICS, INC.
RETENTION PLAN
FOR CERTAIN SALARIED EMPLOYEES
-----------------------------------
Effective as of May 8, 1996
This Plan will terminate automatically
as of December 31, 1996 if there is no "Effective Date"
(as defined in Plan Section 1.4) on or before that date.
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ATWOOD OCEANICS, INC.
RETENTION PLAN
FOR CERTAIN SALARIED EMPLOYEES
Atwood Oceanics, Inc., a Texas corporation (the "COMPANY"), hereby adopts
this Retention Plan for Certain Salaried Employees (the "PLAN"), effective as of
the 8 day of May, 1996.
INTRODUCTION
The purpose of this Plan is to secure the interests of the Company's
shareholders in the event of a change of control of the Company. In such an
event, this Plan would provide an enhanced severance payment and other benefits
to encourage certain valued employees to remain employed with the Company during
that period of financial uncertainty preceding and following the change of
control. If such an event does not occur on or before December 31, 1996, this
Plan will terminate automatically, unless otherwise renewed by the Company's
Board of Directors.
ARTICLE I
DEFINITIONS
Terms defined above and initially capitalized shall have the respective
meanings so ascribed. When used in this Plan and initially capitalized, the
following words and phrases shall have the following respective meanings unless
the context clearly requires otherwise:
1.1 "BASE SALARY" as to any Covered Employee for any period, shall mean
the greater of such individual's base salary as of the Termination of Employment
or as of the date immediately preceding the Effective Date, which is paid to
such individual by the Company during employment for such period, before
reduction because of an election between benefits or cash provided under a plan
of the Company maintained pursuant to Section 125 or 401(k) of the Internal
Revenue Code of 1986, as amended, and before reduction for any other amounts
contributed by the Company on such individual's behalf to any other
employee-benefit plan.
1.2 "COMPANY" shall mean Atwood Oceanics, Inc., a Texas corporation, or
any entity that is a successor to it in ownership of substantially all its
assets and their affiliates.
1.3 "COVERED EMPLOYEE" shall mean an employee described in Article II of
the Plan.
1.4 "EFFECTIVE DATE" shall mean the date on or before December 31, 1996,
on which any of the following is effective:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT")) (a
"PERSON") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act)
<PAGE>
of twenty percent (20%) or more of either (i) the then
outstanding shares of common stock of the Company or (ii) the
combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors; provided, however, that the following
acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Company; (ii) any acquisition by
the Company; (iii) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company; or
(b) The Company shall sell substantially all of its assets to
another corporation which is not a wholly owned subsidiary; or
(c) Individuals who, as of the date hereof, constitute the Board
(the "INCUMBENT BOARD") cease for any reason to constitute at
least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with
respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or
on behalf of a Person other than the Board.
1.5 "EMPLOYMENT YEAR" shall mean a period which commences on the first
date of employment or any anniversary of such date and ends one year from such
date.
1.6 "GOOD CAUSE" shall mean a material violation of a Company policy or
procedure applicable to employees in the same or similar job position, the
willful disregard or failure to follow the reasonable instructions of a
superior, the taking of any action, or the failure to take any action, which
results in a damage or detriment to the Company, or the conviction of an
employee of a felony involving moral turpitude.
1.7 "HEALTH AND LIFE BENEFITS" shall mean as to any employee, the
group-health and life-insurance benefits sponsored by the Company for its
full-time employees and provided to or elected by such individual as of the date
immediately preceding the Effective Date.
1.8 "OTHER SEVERANCE" shall have the meaning set forth in Section 2.2 of
the Plan.
1.9 "SEVERANCE PAY" shall mean the sum payable to a Covered Employee upon
Termination of Employment as set forth in Section 3.1 of the Plan.
1.10 "TERMINATION OF EMPLOYMENT" shall mean a termination of employment
with the Company at the option of the Company for any reason, except a
termination of employment for Good Cause shall not mean a Termination of
Employment.
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1.11 "YEARS OF CONTINUOUS SERVICE" shall mean, as to any employee, all
full or partial years during which he was employed on a full-time basis by
Company or any of its subsidiaries or affiliates.
ARTICLE II.
COVERED EMPLOYEES
2.1 WHO IS A COVERED EMPLOYEE. Any employee of the Company who upon the
occurrence of an Effective Date, shall be listed in Schedule 3.1 hereto and who
has a Termination of Employment during the term of this Plan shall be a Covered
Employee and eligible to receive the benefits described in this Plan.
2.2 EXCLUSIONS. Any employee who otherwise is a Covered Employee but who,
pursuant to a separate agreement signed on behalf of the Company, receives
severance or other salary continuation benefits upon a Termination of Employment
(other than payments or benefits under the Company's Executive Life Insurance
Plan) shall not be a Covered Employee under this Plan. This Plan shall be in
lieu of any plan, program, policy or practice of or contract or agreement with
the Company relating to severance of employment ("OTHER SEVERANCE") and any and
all benefits of payments arising out of or relating to Other Severance shall be
fully offset against any benefits or payments due and owing hereunder.
ARTICLE III
SEVERANCE PAY AND OTHER BENEFITS
3.1 AMOUNT OF SEVERANCE PAY. The Company shall pay Severance Pay to a
Covered Employee upon a Termination of Employment in an amount equal to the
greater of (a) or (b):
(a) such individual's weekly Base Salary multiplied by such
individual's Years of Continuous Service; or
(b) a payment, depending upon the category of employee as
identified in Schedule 3.1 hereto, as follows:
CATEGORY OF EMPLOYEE PAYMENT
-------------------- ----------
Houston Management A: (i) Less than 4 Years of Continuous
Service - 6 months' Base Salary;
or
(ii) 4 Years but less than 8 Years of
Continuous Service - 12 months'
Base Salary; or
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(iii) 8 or greater Years of
Continuous Service - 18 months'
Base Salary
Houston Management B,
Houston Technical,
Rig Management and
Other Administration: (i) Less than 4 Years of Continuous
Service - 1 month Base Salary;
or
(ii) 4 Years but less than 8 Years of
Continuous Service - 4 months'
Base Salary; or
(iii) 8 Years but less than 12 Years
of Continuous Service - 8
months' Base Salary; or
(iv) 12 or greater Years of
Continuous Service - 12 months'
Base Salary
Houston Accounting A,
Houston Accounting B and
Houston Staff: (i) Less than 4 Years of Continuous
Service - 1 month Base Salary;
or
(ii) 4 Years but less than 8 Years of
Continuous Service - 3 months'
Base Salary; or
(iii) 8 or greater Years of
Continuous Service - 6 months'
Base Salary
3.2 HEALTH AND LIFE BENEFITS. Upon a Termination of Employment, a Covered
Individual's Health and Life Benefits shall be treated as follows:
(a) Upon a Termination of Employment, the Company will notify each
Covered Employee of the right to elect to continue any
Company-provided health or disability benefits, all in
accordance with and subject to the provisions of the
Consolidated Omnibus Budget Reconciliation Act
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("COBRA"). The Company shall charge the maximum allowable
premium in connection with any COBRA benefits so provided.
Other than the benefits provided under COBRA, the Company
shall have no further obligation to provide health or
disability insurance benefits to any Covered Individual
following a Termination of Employment.
(b) Upon written request by a Covered Individual within five (5)
days of a Termination of Employment, the Company shall assign
any life, salary continuation or travel insurance plans or
policies to such Covered Individual which by their terms are
so assignable, and such Covered Individual will thenceforth
become responsible for the payment of any premiums required to
maintain said plans or policies from and after the date of
Termination of Employment; otherwise, the Company will cease
to continue such life insurance plans or policies on behalf of
any Covered Employee effective as of the date of Termination
of Employment.
3.3 PAYMENT FOR UNUSED VACATION. Upon a Termination of Employment, the
Company will pay a Covered Employee an amount equal to such individual's weekly
Base Salary multiplied by each full and partial week of vacation, which was
accrued but unused during the Employment Year in which occurred such
individual's Termination of Employment. For purposes of determining payment
under this Section 3.3, a full week of vacation consists of five (5) vacation
days.
ARTICLE IV
DISTRIBUTION OF CASH PAYMENTS
The Company shall pay a Covered Employee the amount to which he or she is
entitled under (as applicable) Plan Section 3.1 (relating to Severance Pay) and
Plan Section 3.3 (relating to Payment for Unused Vacation) in one lump sum
within a reasonable time, but in no event greater than ten (10) business days,
after such covered Individual's Termination of Employment.
ARTICLE V
ADMINISTRATION OF PLAN
5.1 IN GENERAL. The Plan shall be administered by the Company, which shall
be the named fiduciary under the Plan. The Company may delegate any of its
administrative duties, including without limitation duties with respect to the
processing, review, investigation, approval, and payment of benefits under in
the Plan, to a named administrator or administrators.
5.2 REGULATIONS. The Company shall promulgate any rules and regulations that
it deems necessary to carry out the purposes of the Plan, or to interpret the
terms and conditions of the Plan; provided that no rule, regulation, or
interpretation shall be contrary to the provisions of the Plan. The rules,
regulations, and interpretations made by the Company shall, subject only to the
claims procedure outlined in Section 5.3 hereof, be final and binding on any
employee or former employee of the Company, or any successor in interest of
either.
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5.3 CLAIMS PROCEDURE. The Company shall determine the rights of any employee
or former employee of the Company to any benefits hereunder. Any employee or
former employee of the Company who believes that he is entitled to receive any
benefits other than as initially determined by the Company, may file a claim in
writing with the Company's President. The Company shall no later than ninety
(90) days after the receipt of a claim either allow or deny the claim in
writing.
A denial of a claim, wholly or partially, shall be written in a manner
calculated to be understood by the claimant and shall include:
(a) the specific reason or reasons for the denial;
(b) specific reference to pertinent Plan provisions on which the
denial is based;
(c) a description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation of why such material or information is necessary;
and
(d) an explanation of the claim-review procedure.
A claimant whose claim is denied (or his duly authorized representative),
may within 30 days after receipt of denial of his claim:
(a) request a review upon written application to the Company's
personnel administrator;
(b) review pertinent documents; and
(c) submit issues and comments in writing.
The Company shall notify the claimant of its decision on review within sixty
(60) days after receipt of a request for review. Notice of the decision on
review shall be in writing.
5.4 REVOCABILITY OF COMPANY ACTION. Any action taken by the Company with
respect to the rights under the Plan of any employee or former employee shall be
revocable by the Company as to payments or distributions not yet made to such
person, and acceptance of any benefits under the Plan constitutes acceptance of
and agreement to any appropriate adjustments made by the Company in future
payments or distributions to such person to offset any excess of underpayment
previously made to him with respect to any benefits.
ARTICLE VI
AMENDMENT OR TERMINATION OF PLAN
6.1 RIGHT TO AMEND OR TERMINATE. The Company reserves the right at any time
prior to the Effective Date, and without prior or other approval of any employee
or former employee, to change, modify, amend, or terminate the Plan. All such
changes, modifications, or amendments may be retroactive to any date up to and
including the original effective date of the Plan, and shall be retroactive to
that date unless other provision is specifically made; provided that no such
change, modification, or amendment shall adversely affect any benefit under the
Plan previously paid or provided to a Covered Employee (or his or her successor
in interest).
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6.2 AUTOMATIC TERMINATION. This Plan shall terminate automatically as of
December 31, 1996, or such other extended termination date duly adopted in
accordance with the provisions of Section 5.1 above, if there is no Effective
Date on or before that date. Termination pursuant to this Plan Section 6.2 shall
occur without any action on the part of the Company and shall be effective
without prior notice to or approval of any employee or former employee of the
Company.
ARTICLE VII
METHOD OF FUNDING
The Company shall pay benefits under the Plan from current operating funds.
No property of the Company is or shall be, by reason of this Plan, held in trust
for any employee of the Company, nor shall any person have any interest in or
any lien or prior claim upon any property of the Company by reason of the Plan
or the Company's obligations to make payments hereunder.
ARTICLE VIII
LEGAL FEES AND EXPENSES; ENFORCEMENT
It is the intent of the Company that no Covered Employee be required to
incur the expenses associated with the enforcement of his rights under this Plan
by litigation or other legal action because the cost and expense thereof would
substantially detract from the benefits intended to be extended to a Covered
Employee hereunder. Accordingly, if it should appear to a Covered Employee that
the Company has failed to comply with any of its obligations under this Plan or
in the event that the Company or any other person takes any action inconsistent
with the terms of this Plan to declare this Plan void or unenforceable, or
institutes any litigation designed to deny, or to recover from, the Covered
Employee the benefits intended to be provided to such Covered Employee
hereunder, the Company irrevocably authorizes such Covered Employee from time to
time to retain counsel of his choice, at the expense of the Company as
thereafter provided, to represent such Covered Employee in connection with the
initiation or defense of any litigation or other legal action, whether by or
against the Company or any director, officer, stockholder, or other person
affiliated with the Company in any jurisdiction. Notwithstanding any existing
prior attorney-client relationship between the Company and such counsel, the
Company irrevocably consents to such Covered employee's entering into an
attorney-client relationship with such counsel, and in that connection the
Company and such Covered Employee agree that a confidential relationship shall
exist between such Covered Employee and such counsel. The Company shall pay and
be solely responsible for any and all attorneys' and related fees and expenses
incurred by such Covered Employee as a result of the Company's failure to
perform under this Plan or any provision thereof; or as a result of the Company
or any person contesting the validity or enforceability of this Plan or any
provision thereof.
ARTICLE IX
MISCELLANEOUS
9.1 LIMITATION ON RIGHTS. Participation in the Plan shall not give
any employee the right to be retained in the service of the Company or any
rights to any benefits whatsoever,
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except to the extent specifically set forth herein. Unless otherwise agreed in
writing, employment with the Company is "at will."
9.2 HEADINGS. Headings of Articles and Sections in this instrument
are for convenience only, and do not constitute any part of the Plan.
9.3 GENDER AND NUMBER. Unless the context clearly indicates
otherwise, the masculine gender when used in the Plan shall include the
feminine, and the singular number shall include the plural and the plural number
the singular.
EXECUTED as of the date first set forth above.
ATWOOD OCEANICS, INC.
By:/s/ JOHN R. IRWIN
Name: John R. Irwin
Title:President
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EXHIBIT 10.9.1
EXECUTIVE AGREEMENT
THIS EXECUTIVE AGREEMENT (the "AGREEMENT") is entered into as of the 8
day of May, 1996 by and between ATWOOD OCEANICS, INC., a Texas corporation (the
"COMPANY"), and JOHN R. IRWIN (the "EXECUTIVE").
W I T N E S S E T H:
WHEREAS, it is in the best interests of the Company and its shareholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined in Section 2 below) of the Company; and
WHEREAS, it is imperative to diminish the inevitable distraction of the
Executive by virtue of the personal uncertainties and risks created by a pending
or threatened Change of Control and to encourage the Executive's full attention
and dedication to the Company currently and in the event of any threatened or
pending Change of Control; and
WHEREAS, it is imperative to provide the Executive with compensation and
benefits arrangements upon a Change of Control which ensure that the
compensation and benefits expectations of the Executive will be satisfied and
which are competitive with those of other corporations.
NOW, THEREFORE, in order to accomplish these objectives, and in
consideration of the mutual covenants and agreements set forth herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:
1. CERTAIN DEFINITIONS. The following terms shall have the indicated
meanings:
(a) The "CHANGE OF CONTROL DATE" shall mean the first date during
the Change of Control Period (as defined in Section 1(b)) on which a Change of
Control occurs. Notwithstanding anything in this Agreement to the contrary, if a
Change of Control occurs and if the Executive's employment with the Company is
terminated prior to the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of employment (i)
was at the request of a third party who has taken steps reasonably calculated to
effect the Change of Control or (ii) otherwise arose in connection with or
anticipation of the Change of Control, then for all purposes of this Agreement
the "CHANGE OF CONTROL DATE" shall mean the date immediately prior to the date
of such termination of employment.
(b) The "CHANGE OF CONTROL PERIOD" shall mean the period commencing
on the date hereof and ending on December 31, 1996.
2. CHANGE OF CONTROL. For the purposes of this Agreement, a "CHANGE OF
CONTROL" shall mean the occurrence of any one or more of the following:
<PAGE>
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT")) (a "PERSON") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent
(20%) or more of either (i) the then outstanding shares of common stock of the
Company or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors; provided, however, that the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly from the Company;
(ii) any acquisition by the Company; (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; or
(b) The Company shall sell substantially all of its assets to
another corporation which is not a wholly owned subsidiary; or
(c) Individuals who, as of the date hereof, constitute the Board
(the "INCUMBENT BOARD") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board.
3. POST-CHANGE OF CONTROL EMPLOYMENT PERIOD. The Company hereby agrees to
continue the Executive in its employ, and the Executive hereby agrees to remain
in the employ of the Company, in accordance with the terms and provisions of
this Agreement, for the period commencing on the Change of Control Date and
ending on the expiration of two years and six months thereafter (the
"POST-CHANGE OF CONTROL EMPLOYMENT PERIOD").
4. TERMS OF EMPLOYMENT. The following terms shall govern the Executive's
employment during the Post-Change of Control Employment Period:
(a) POSITION AND DUTIES.
(i) During the Post-Change of Control Employment Period, the
Executive shall be employed in a bona fide executive position with
corresponding authority, duties and responsibilities, and the Executive's
services shall be performed at the location where the Executive was
employed immediately preceding the Change of Control Date or any office
which is the headquarters of the Company and is within the Greater Houston
Statistical Metropolitan Area.
(ii) During the Post-Change of Control Employment Period, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and time
during normal business hours to
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the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use
the Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Post- Change of Control
Employment Period, it shall not be a violation of this Agreement for the
Executive to serve on corporate, civic or charitable boards or committees,
deliver lectures, fulfill speaking engagements, teach at educational
institutions, and manage personal investments, so long as such activities
do not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the
Change of Control Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to
the Change of Control Date shall not thereafter be deemed to interfere
with the performance of the Executive's responsibilities to the Company.
(b) COMPENSATION. During the Post-Change of Control Employment
Period, and prior to the termination of the Executive's employment as described
in Section 5 hereof, the Executive shall be entitled to the following items of
compensation:
(i) BASE SALARY. During the Post-Change of Control Employment
Period, the Executive shall receive an annual base salary ("ANNUAL BASE
SALARY"), which shall be paid in equal installments on a semi-monthly
basis, at least equal to twelve times the highest monthly base salary paid
or payable to the Executive by the Company and its affiliated companies in
respect of the twelve-month period immediately preceding the month in
which the Change of Control Date occurs. Any discretionary increase in
Annual Base Salary during the Post-Change of Control Employment Period
shall not serve to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be reduced after any
such increase, and the term "ANNUAL BASE SALARY" as utilized in this
Agreement shall refer to Annual Base Salary as so increased. As used in
this Agreement, the term "AFFILIATED COMPANIES" shall include any company
controlled by, controlling or under common control with the Company.
(ii) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the
Post-Change of Control Employment Period, the Executive shall be entitled
to participate in all incentive, savings and retirement plans, practices,
policies and programs applicable generally to other peer executives of the
Company and its affiliated companies, including without limitation, the
Atwood Oceanics, Inc. 1981 Incentive Stock Option Plan, as may be amended
from time to time (the "1981 INCENTIVE STOCK OPTION PLAN"), the Atwood
Oceanics, Inc. 1990 Stock Option Plan, as may be amended from time to time
(the "1990 STOCK OPTION PLAN"), the Atwood Oceanics, Inc. 401(k) Savings
Plan, as amended and as may be further amended from time to time (the
"401(K) PLAN"),and subject to Section 7 hereof, the Atwood Oceanics, Inc.
Retention Plan for Certain Salaried Employees, as may be amended from time
to time (the "RETENTION PLAN"), but in no event shall such plans,
practices, policies and programs provide the Executive with incentive
opportunities (measured with respect to both regular and special incentive
opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit
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opportunities, in each case, less favorable, in the aggregate, than the
most favorable of those provided by the Company and its affiliated
companies for the Executive under such plans, practices, policies and
programs as in effect at any time during the 90-day period immediately
preceding the Change of Control Date or, if more favorable to the
Executive, those provided generally at any time after the Change of
Control Date to other peer executives of the Company and its affiliated
companies.
(iii) WELFARE BENEFIT PLANS. During the Post-Change of Control
Employment Period, the Executive and/or the Executive's family, as the
case may be, shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and programs
provided by the Company and its affiliated companies (including, without
limitation, medical, supplemental health, prescription, dental,
disability, salary continuance, employee life, group life, accidental
death and travel accident insurance plans and programs) to the extent
applicable generally to other peer executives of the Company and its
affiliated companies, but in no event shall such plans, practices,
policies and programs provide the Executive with benefits which are less
favorable, in the aggregate, than the most favorable of such plans,
practices, policies and programs in effect for the Executive at any time
during the 90-day period immediately preceding the Change of Control Date
or, if more favorable to the Executive, those provided generally at any
time after the Change of Control Date to other peer executives of the
Company and its affiliated companies.
(iv) EXECUTIVE LIFE INSURANCE PLAN. During the Post-Change of
Control Employment Period, the Company shall continue to maintain the
Atwood Oceanics, Inc. Executive Life Insurance Plan, with its associated
Salary Continuation Agreement, as may be amended from time to time, or pay
to the Executive a lump sum representing the value of all benefits under
such plan.
(v) INDEMNIFICATION ARRANGEMENTS. During the Post-Change of
Control Employment Period, those certain Indemnification Agreements
entered into between the Company and certain of its Executives shall
remain in full force and effect and the Executive shall remain entitled to
all of the benefits and protections afforded thereby.
(vi) EXPENSES. During the Post-Change of Control Employment
Period, the Executive shall be entitled to receive prompt reimbursement
for all reasonable employment expenses incurred by the Executive in
accordance with the most favorable policies, practices and procedures of
the Company and its affiliated companies in effect for the Executive at
any time during the 90-day period immediately preceding the Change of
Control Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
(vii) VACATION. During the Post-Change of Control Employment
Period, the Executive shall be entitled to paid vacation in accordance
with the most favorable plans, policies, programs and practices of the
Company and its affiliated
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companies as in effect for the Executive at any time during the 90-day
period immediately preceding the Change of Control Date or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
5. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. The Executive's employment shall terminate
automatically upon the Executive's death during the Post-Change of Control
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Post-Change of Control Employment
Period (pursuant to the definition of Disability set forth below), it may give
to the Executive written notice in accordance with Section 13(b) hereof of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "DISABILITY CHANGE OF
CONTROL DATE"), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "DISABILITY" shall mean the absence of
the Executive from the Executive's duties with the Company on a full-time basis
for 180 consecutive days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive's
legal representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate
the Executive's employment during the Post-Change of Control Employment Period
for Cause. For purposes of this Agreement, "CAUSE" shall mean (i) a material
breach by the Executive of the Executive's obligations under Section 4(a) (other
than as a result of incapacity due to physical or mental illness) which is
demonstrably willful and deliberate on the Executive's part, which is committed
in bad faith or without reasonable belief that such breach is in the best
interests of the Company and which is not remedied in a reasonable period of
time after receipt of written notice from the Company specifying such breach, or
(ii) the conviction of the Executive of a felony involving moral turpitude.
(c) VOLUNTARY TERMINATION BY EXECUTIVE FOR GOOD REASON. The
Executive's employment may be terminated during the Post-Change of Control
Employment Period by the Executive for Good Reason. For purposes of this
Agreement, "GOOD REASON" shall mean:
(i) the assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including status, offices,
titles and reporting requirements), authority, duties or responsibilities
as contemplated by Section 4(a) or any other action by the Company which
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial
and inadvertent action not taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
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(ii) any failure by the Company to comply with any of the
provisions of Section 4(b), other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by
the Company promptly after receipt of notice thereof given by the
Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than that described in Section 4(a)(i) hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 12(c) hereof, provided that such successor has received at least
ten days, prior written notice from the Company or the Executive of the
requirements of Section 12(c) hereof.
For purposes of this Section 5(c), any good faith determination of "GOOD
REASON" made by the Executive shall be conclusive.
(d) NOTICE OF TERMINATION. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 13(b).
For purposes of this Agreement, a "NOTICE OF TERMINATION" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than 15 days after
the giving of such notice). The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which contributes to
a showing of Good Reason or Cause shall not waive any right of the Executive or
the Company hereunder or preclude the Executive or the Company from asserting
such fact or circumstance in enforcing the Executive's or the Company's rights
hereunder.
(e) DATE OF TERMINATION. "DATE OF TERMINATION" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination, and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Change of Control Date, as
the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) TERMINATION FOR GOOD REASON OR OTHER THAN FOR CAUSE, DEATH OR
DISABILITY. If, during the Post-Change of Control Employment Period, the Company
shall
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terminate the Executive's employment other than for Cause or Disability or
the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the aggregate of the
following amounts:
A. the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore paid,
(2) any compensation previously deferred by the Executive (together
with any accrued interest or earnings thereon) and (3) any accrued
vacation pay, in each case to the extent not theretofore paid (the
sum of the amounts described in clauses (1), (2), and (3) shall be
hereinafter referred to as the "ACCRUED OBLIGATIONS"); and
B. the amount (such amount shall be hereinafter referred
to as the "SEVERANCE AMOUNT") equal to the Executive's Annual Base
Salary, calculated from the Date of Termination through the
remainder of the Post-Change of Control Employment Period; PROVIDED,
HOWEVER, that such amount shall be reduced by the present value
(determined as provided in Section 280G(d)(4) of the Internal
Revenue Code of 1986, as amended (the "CODE")) of any other amount
of severance relating to salary or bonus continuation, if any, to be
received by the Executive upon termination of employment of the
Executive under any severance plan, policy or arrangement of the
Company; and
(ii) any or all Stock Options awarded to the Executive under
any plan not previously exercisable and vested shall become fully
exercisable and vested; and
(iii) for the remainder of the Post-Change of Control
Employment Period, or such longer period as any plan, program, practice or
policy may provide, the Company shall continue benefits to the Executive
and/or the Executive's family at least equal to those which would have
been provided to them in accordance with the plans, programs, practices
and policies described in Section 4(b)(iv) if the Executive's employment
had not been terminated in accordance with the most favorable plans,
practices, programs or policies of the Company and its affiliated
companies as in effect and applicable generally to other peer executives
and their families during the 90-day period immediately preceding the
Change of Control Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies and their families;
PROVIDED, HOWEVER, that if the Executive becomes reemployed with another
employer and is eligible to receive medical or other welfare benefits
under another employer-provided plan, the medical and other welfare
benefits described herein shall be secondary to those provided under such
other plan during such applicable period of eligibility; and
(iv) subject to the provisions of Section 7, to the extent not
theretofore paid or provided, the Company shall timely pay or provide to
the Executive and/or the Executive's family any other amounts or benefits
required to be paid or provided or which
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the Executive and/or the Executive's family is eligible to receive
pursuant to this Agreement and under any plan, program, policy or practice
of or contract or agreement with the Company and its affiliated companies
as in effect and applicable generally to other peer executives and their
families during the 90-day period immediately preceding the Change of
Control Date or, if more favorable to the Executive, as in effect
generally thereafter with respect to other peer executives of the Company
and its affiliated companies and their families (such other amounts and
benefits shall be hereinafter referred to as the "OTHER BENEFITS").
(b) DEATH. If the Executive's employment is terminated by reason of
the Executive's death during the Post-Change of Control Employment Period, this
Agreement shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for (i) payment of Accrued
Obligations (which shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination) and
(ii) the timely payment or provision of any and all Other Benefits, which under
their terms are available in the event of death.
(c) DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Post-Change of Control
Employment Period, this Agreement shall terminate without further obligations to
the Executive, other than for (i) payment of Accrued Obligations (which shall be
paid to the Executive in a lump sum in cash within 30 days of the Date of
Termination) and (ii) the timely payment or provision of any and all Other
Benefits, which under their terms are available in the event of a Disability.
(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's employment
shall be terminated for Cause during the Post-Change of Control Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive Annual Base Salary
through the Date of Termination plus the amount of any compensation previously
deferred by the Executive, in each case to the extent theretofore unpaid. If the
Executive terminates employment during the Post-Change of Control Employment
Period, excluding a termination for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. In such case,
all Accrued Obligations shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination.
7. WAIVER OF RIGHTS UNDER RETENTION PLAN AND FOR OTHER SEVERANCE. The
Executive hereby agrees any and all benefits or payments arising out of or
relating to the Retention Plan, if any, or any plan, program, policy or practice
of or contract or agreement with the Company and its affiliated companies
relating to the severance of employment ("OTHER SEVERANCE"), shall be fully
offset against any benefits or payments due and owing hereunder.
8. NON-EXCLUSIVITY OF RIGHTS. At any time prior to a Change of Control,
and except as provided in Sections 6(a)(ii), 6(b) and 6(c), nothing in this
Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided after such
Change of Control by the Company, its affiliated companies, or any successor
thereof,
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and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
9. FULL SETTLEMENT; RESOLUTION OF DISPUTES.
(a) The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and, except as provided in Section
6(a)(ii), such amounts shall not be reduced whether or not the Executive obtains
other employment. The Company agrees to pay promptly as incurred, to the full
extent permitted by law, all legal fees and expenses which the Executive may
reasonably incur as a result of any contest (regardless of the outcome thereof)
by the Company, the Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the amount
of any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Code.
(b) If there shall be any dispute between the Company and the
Executive (i) in the event of any termination of the Executive's employment by
the Company, whether such termination was for Cause, or (ii) in the event of any
termination of employment by the Executive, whether Good Reason existed, then,
unless and until there is a final, nonappealable judgment by a court of
competent jurisdiction declaring that such termination was for Cause or that the
determination by the Executive of the existence of Good Reason was not made in
good faith, as the case may be, the Company shall pay all amounts, and provide
all benefits, to the Executive and/or the Executive's family or other
beneficiaries, as the case may be, that the Company would be required to pay or
provide pursuant to Section 6(a) as though such termination were by the Company
without Cause or by the Executive with Good Reason; PROVIDED, HOWEVER, that the
Company shall not be required to pay any disputed amounts pursuant to this
paragraph except upon receipt of an undertaking by or on behalf of the Executive
and/or the Executive's family or other beneficiaries, as the case may be, to
repay all such amounts to which the Executive is ultimately adjudged by such
court not to be entitled.
10. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Notwithstanding anything in this Agreement to the contrary, in
the event it shall be determined that any payment or distribution by the Company
to or for the benefit of the Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this
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Agreement or otherwise, but determined without regard to any additional payments
required under this Section 10) (a "PAYMENT") would be subject to the excise tax
imposed by Section 4999 of 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.
(b) Subject to the provisions of Section 10(c), all determinations
required to be made under this Section 10, including whether and when a 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 the Company's
independent certified public accountants (the "ACCOUNTING FIRM") which shall
provide detailed supporting calculations both to the Company and the Executive
within 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 the 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 10, shall be paid by the Company to the Executive within five 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 10(c) 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.
(c) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive
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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 10(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute and
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 sue 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.
(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 10(c) hereof, 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 10(c) 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
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an amount advanced by the Company pursuant to Section 10(c) hereof, 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 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.
11. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 11 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
12. SUCCESSORS AND ASSIGNS.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "COMPANY" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
13. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas, without reference to principles of conflict
of laws. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
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(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive: John R. Irwin
c/o Atwood Oceanics, Inc.
15835 Park Ten Place Drive
Houston, Texas 77084
If to the Company: Atwood Oceanics, Inc.
15835 Park Ten Place Drive
Houston, Texas 77084
Attention: Chairman of the Board of Directors
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 5(c)(i)-(v) hereof, shall not be
deemed to be a waiver of such provision or right or any other provision or right
of this Agreement.
(f) The Executive and the Company acknowledge that, except as
specifically provided herein or as may otherwise be provided under any other
written agreement between the Executive and the Company, the employment of the
Executive by the Company is "at will" and, prior to the Change of Control Date,
may be terminated by either the Executive or the Company at any time, for any
reason. Moreover, if prior to the Change of Control Date the Executive's
employment with the Company terminates, then the Executive shall have no further
rights under this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
Executive:
/s/ JOHN R. IRWIN
JOHN R. IRWIN
Company:
ATWOOD OCEANICS, INC.
By: /s/ W. H. HELMERICH, III
Name: W. H. Helmerich, III
Title:Acting Chairman
EXHIBIT 10.9.2
EXECUTIVE AGREEMENT
THIS EXECUTIVE AGREEMENT (the "AGREEMENT") is entered into as of the 8
day of May, 1996 by and between ATWOOD OCEANICS, INC., a Texas corporation (the
"COMPANY"), and JAMES M. HOLLAND (the "EXECUTIVE").
W I T N E S S E T H:
WHEREAS, it is in the best interests of the Company and its shareholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined in Section 2 below) of the Company; and
WHEREAS, it is imperative to diminish the inevitable distraction of the
Executive by virtue of the personal uncertainties and risks created by a pending
or threatened Change of Control and to encourage the Executive's full attention
and dedication to the Company currently and in the event of any threatened or
pending Change of Control; and
WHEREAS, it is imperative to provide the Executive with compensation and
benefits arrangements upon a Change of Control which ensure that the
compensation and benefits expectations of the Executive will be satisfied and
which are competitive with those of other corporations.
NOW, THEREFORE, in order to accomplish these objectives, and in
consideration of the mutual covenants and agreements set forth herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:
1. CERTAIN DEFINITIONS. The following terms shall have the indicated
meanings:
(a) The "CHANGE OF CONTROL DATE" shall mean the first date during
the Change of Control Period (as defined in Section 1(b)) on which a Change of
Control occurs. Notwithstanding anything in this Agreement to the contrary, if a
Change of Control occurs and if the Executive's employment with the Company is
terminated prior to the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of employment (i)
was at the request of a third party who has taken steps reasonably calculated to
effect the Change of Control or (ii) otherwise arose in connection with or
anticipation of the Change of Control, then for all purposes of this Agreement
the "CHANGE OF CONTROL DATE" shall mean the date immediately prior to the date
of such termination of employment.
(b) The "CHANGE OF CONTROL PERIOD" shall mean the period commencing
on the date hereof and ending on December 31, 1996.
2. CHANGE OF CONTROL. For the purposes of this Agreement, a "CHANGE OF
CONTROL" shall mean the occurrence of any one or more of the following:
<PAGE>
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT")) (a "PERSON") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent
(20%) or more of either (i) the then outstanding shares of common stock of the
Company or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors; provided, however, that the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly from the Company;
(ii) any acquisition by the Company; (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; or
(b) The Company shall sell substantially all of its assets to
another corporation which is not a wholly owned subsidiary; or
(c) Individuals who, as of the date hereof, constitute the Board
(the "INCUMBENT BOARD") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board.
3. POST-CHANGE OF CONTROL EMPLOYMENT PERIOD. The Company hereby agrees to
continue the Executive in its employ, and the Executive hereby agrees to remain
in the employ of the Company, in accordance with the terms and provisions of
this Agreement, for the period commencing on the Change of Control Date and
ending on the expiration of two years and six months thereafter (the
"POST-CHANGE OF CONTROL EMPLOYMENT PERIOD").
4. TERMS OF EMPLOYMENT. The following terms shall govern the Executive's
employment during the Post-Change of Control Employment Period:
(a) POSITION AND DUTIES.
(i) During the Post-Change of Control Employment Period, the
Executive shall be employed in a bona fide executive position with
corresponding authority, duties and responsibilities, and the Executive's
services shall be performed at the location where the Executive was
employed immediately preceding the Change of Control Date or any office
which is the headquarters of the Company and is within the Greater Houston
Statistical Metropolitan Area.
(ii) During the Post-Change of Control Employment Period, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and time
during normal business hours
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to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use
the Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Post- Change of Control
Employment Period, it shall not be a violation of this Agreement for the
Executive to serve on corporate, civic or charitable boards or committees,
deliver lectures, fulfill speaking engagements, teach at educational
institutions, and manage personal investments, so long as such activities
do not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the
Change of Control Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to
the Change of Control Date shall not thereafter be deemed to interfere
with the performance of the Executive's responsibilities to the Company.
(b) COMPENSATION. During the Post-Change of Control Employment
Period, and prior to the termination of the Executive's employment as described
in Section 5 hereof, the Executive shall be entitled to the following items of
compensation:
(i) BASE SALARY. During the Post-Change of Control Employment
Period, the Executive shall receive an annual base salary ("ANNUAL BASE
SALARY"), which shall be paid in equal installments on a semi-monthly
basis, at least equal to twelve times the highest monthly base salary paid
or payable to the Executive by the Company and its affiliated companies in
respect of the twelve-month period immediately preceding the month in
which the Change of Control Date occurs. Any discretionary increase in
Annual Base Salary during the Post-Change of Control Employment Period
shall not serve to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be reduced after any
such increase, and the term "ANNUAL BASE SALARY" as utilized in this
Agreement shall refer to Annual Base Salary as so increased. As used in
this Agreement, the term "AFFILIATED COMPANIES" shall include any company
controlled by, controlling or under common control with the Company.
(ii) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the
Post-Change of Control Employment Period, the Executive shall be entitled
to participate in all incentive, savings and retirement plans, practices,
policies and programs applicable generally to other peer executives of the
Company and its affiliated companies, including without limitation, the
Atwood Oceanics, Inc. 1981 Incentive Stock Option Plan, as may be amended
from time to time (the "1981 INCENTIVE STOCK OPTION PLAN"), the Atwood
Oceanics, Inc. 1990 Stock Option Plan, as may be amended from time to time
(the "1990 STOCK OPTION PLAN"), the Atwood Oceanics, Inc. 401(k) Savings
Plan, as amended and as may be further amended from time to time (the
"401(K) PLAN"),and subject to Section 7 hereof, the Atwood Oceanics, Inc.
Retention Plan for Certain Salaried Employees, as may be amended from time
to time (the "RETENTION PLAN"), but in no event shall such plans,
practices, policies and programs provide the Executive with incentive
opportunities (measured with respect to both regular and special incentive
opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit
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opportunities, in each case, less favorable, in the aggregate, than the
most favorable of those provided by the Company and its affiliated
companies for the Executive under such plans, practices, policies and
programs as in effect at any time during the 90-day period immediately
preceding the Change of Control Date or, if more favorable to the
Executive, those provided generally at any time after the Change of
Control Date to other peer executives of the Company and its affiliated
companies.
(iii) WELFARE BENEFIT PLANS. During the Post-Change of Control
Employment Period, the Executive and/or the Executive's family, as the
case may be, shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and programs
provided by the Company and its affiliated companies (including, without
limitation, medical, supplemental health, prescription, dental,
disability, salary continuance, employee life, group life, accidental
death and travel accident insurance plans and programs) to the extent
applicable generally to other peer executives of the Company and its
affiliated companies, but in no event shall such plans, practices,
policies and programs provide the Executive with benefits which are less
favorable, in the aggregate, than the most favorable of such plans,
practices, policies and programs in effect for the Executive at any time
during the 90-day period immediately preceding the Change of Control Date
or, if more favorable to the Executive, those provided generally at any
time after the Change of Control Date to other peer executives of the
Company and its affiliated companies.
(iv) EXECUTIVE LIFE INSURANCE PLAN. During the Post-Change of
Control Employment Period, the Company shall continue to maintain the
Atwood Oceanics, Inc. Executive Life Insurance Plan, with its associated
Salary Continuation Agreement, as may be amended from time to time, or pay
to the Executive a lump sum representing the value of all benefits under
such plan.
(v) INDEMNIFICATION ARRANGEMENTS. During the Post-Change of
Control Employment Period, those certain Indemnification Agreements
entered into between the Company and certain of its Executives shall
remain in full force and effect and the Executive shall remain entitled to
all of the benefits and protections afforded thereby.
(vi) EXPENSES. During the Post-Change of Control Employment
Period, the Executive shall be entitled to receive prompt reimbursement
for all reasonable employment expenses incurred by the Executive in
accordance with the most favorable policies, practices and procedures of
the Company and its affiliated companies in effect for the Executive at
any time during the 90-day period immediately preceding the Change of
Control Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
(vii) VACATION. During the Post-Change of Control Employment
Period, the Executive shall be entitled to paid vacation in
accordance with the most favorable plans, policies, programs and
practices of the Company and its affiliated
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companies as in effect for the Executive at any time during the
90-day period immediately preceding the Change of Control Date or,
if more favorable to the Executive, as in effect generally at any
time thereafter with respect to other peer executives of the Company
and its affiliated companies.
5. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. The Executive's employment shall terminate
automatically upon the Executive's death during the Post-Change of Control
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Post-Change of Control Employment
Period (pursuant to the definition of Disability set forth below), it may give
to the Executive written notice in accordance with Section 13(b) hereof of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "DISABILITY CHANGE OF
CONTROL DATE"), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "DISABILITY" shall mean the absence of
the Executive from the Executive's duties with the Company on a full-time basis
for 180 consecutive days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive's
legal representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate
the Executive's employment during the Post-Change of Control Employment Period
for Cause. For purposes of this Agreement, "CAUSE" shall mean (i) a material
breach by the Executive of the Executive's obligations under Section 4(a) (other
than as a result of incapacity due to physical or mental illness) which is
demonstrably willful and deliberate on the Executive's part, which is committed
in bad faith or without reasonable belief that such breach is in the best
interests of the Company and which is not remedied in a reasonable period of
time after receipt of written notice from the Company specifying such breach, or
(ii) the conviction of the Executive of a felony involving moral turpitude.
(c) VOLUNTARY TERMINATION BY EXECUTIVE FOR GOOD REASON. The
Executive's employment may be terminated during the Post-Change of Control
Employment Period by the Executive for Good Reason. For purposes of this
Agreement, "GOOD REASON" shall mean:
(i) the assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including status, offices,
titles and reporting requirements), authority, duties or responsibilities
as contemplated by Section 4(a) or any other action by the Company which
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial
and inadvertent action not taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
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(ii) any failure by the Company to comply with any of the
provisions of Section 4(b), other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by
the Company promptly after receipt of notice thereof given by the
Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than that described in Section 4(a)(i) hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 12(c) hereof, provided that such successor has received at least
ten days, prior written notice from the Company or the Executive of the
requirements of Section 12(c) hereof.
For purposes of this Section 5(c), any good faith determination of "GOOD
REASON" made by the Executive shall be conclusive.
(d) NOTICE OF TERMINATION. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 13(b).
For purposes of this Agreement, a "NOTICE OF TERMINATION" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than 15 days after
the giving of such notice). The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which contributes to
a showing of Good Reason or Cause shall not waive any right of the Executive or
the Company hereunder or preclude the Executive or the Company from asserting
such fact or circumstance in enforcing the Executive's or the Company's rights
hereunder.
(e) DATE OF TERMINATION. "DATE OF TERMINATION" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination, and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Change of Control Date, as
the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) TERMINATION FOR GOOD REASON OR OTHER THAN FOR CAUSE, DEATH OR
DISABILITY. If, during the Post-Change of Control Employment Period, the Company
shall
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terminate the Executive's employment other than for Cause or Disability or
the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the aggregate of the
following amounts:
A. the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore paid,
(2) any compensation previously deferred by the Executive (together
with any accrued interest or earnings thereon) and (3) any accrued
vacation pay, in each case to the extent not theretofore paid (the
sum of the amounts described in clauses (1), (2), and (3) shall be
hereinafter referred to as the "ACCRUED OBLIGATIONS"); and
B. the amount (such amount shall be hereinafter referred
to as the "SEVERANCE AMOUNT") equal to the Executive's Annual Base
Salary, calculated from the Date of Termination through the
remainder of the Post-Change of Control Employment Period; PROVIDED,
HOWEVER, that such amount shall be reduced by the present value
(determined as provided in Section 280G(d)(4) of the Internal
Revenue Code of 1986, as amended (the "CODE")) of any other amount
of severance relating to salary or bonus continuation, if any, to be
received by the Executive upon termination of employment of the
Executive under any severance plan, policy or arrangement of the
Company; and
(ii) any or all Stock Options awarded to the Executive under
any plan not previously exercisable and vested shall become fully
exercisable and vested; and
(iii) for the remainder of the Post-Change of Control
Employment Period, or such longer period as any plan, program, practice or
policy may provide, the Company shall continue benefits to the Executive
and/or the Executive's family at least equal to those which would have
been provided to them in accordance with the plans, programs, practices
and policies described in Section 4(b)(iv) if the Executive's employment
had not been terminated in accordance with the most favorable plans,
practices, programs or policies of the Company and its affiliated
companies as in effect and applicable generally to other peer executives
and their families during the 90-day period immediately preceding the
Change of Control Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies and their families;
PROVIDED, HOWEVER, that if the Executive becomes reemployed with another
employer and is eligible to receive medical or other welfare benefits
under another employer-provided plan, the medical and other welfare
benefits described herein shall be secondary to those provided under such
other plan during such applicable period of eligibility; and
(iv) subject to the provisions of Section 7, to the extent not
theretofore paid or provided, the Company shall timely pay or provide to
the Executive and/or the Executive's family any other amounts or benefits
required to be paid or provided or which
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the Executive and/or the Executive's family is eligible to receive
pursuant to this Agreement and under any plan, program, policy or practice
of or contract or agreement with the Company and its affiliated companies
as in effect and applicable generally to other peer executives and their
families during the 90-day period immediately preceding the Change of
Control Date or, if more favorable to the Executive, as in effect
generally thereafter with respect to other peer executives of the Company
and its affiliated companies and their families (such other amounts and
benefits shall be hereinafter referred to as the "OTHER BENEFITS").
(b) DEATH. If the Executive's employment is terminated by reason of
the Executive's death during the Post-Change of Control Employment Period, this
Agreement shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for (i) payment of Accrued
Obligations (which shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination) and
(ii) the timely payment or provision of any and all Other Benefits, which under
their terms are available in the event of death.
(c) DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Post-Change of Control
Employment Period, this Agreement shall terminate without further obligations to
the Executive, other than for (i) payment of Accrued Obligations (which shall be
paid to the Executive in a lump sum in cash within 30 days of the Date of
Termination) and (ii) the timely payment or provision of any and all Other
Benefits, which under their terms are available in the event of a Disability.
(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's employment
shall be terminated for Cause during the Post-Change of Control Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive Annual Base Salary
through the Date of Termination plus the amount of any compensation previously
deferred by the Executive, in each case to the extent theretofore unpaid. If the
Executive terminates employment during the Post-Change of Control Employment
Period, excluding a termination for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. In such case,
all Accrued Obligations shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination.
7. WAIVER OF RIGHTS UNDER RETENTION PLAN AND FOR OTHER SEVERANCE. The
Executive hereby agrees any and all benefits or payments arising out of or
relating to the Retention Plan, if any, or any plan, program, policy or practice
of or contract or agreement with the Company and its affiliated companies
relating to the severance of employment ("OTHER SEVERANCE"), shall be fully
offset against any benefits or payments due and owing hereunder.
8. NON-EXCLUSIVITY OF RIGHTS. At any time prior to a Change of Control,
and except as provided in Sections 6(a)(ii), 6(b) and 6(c), nothing in this
Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided after such
Change of Control by the Company, its affiliated companies, or any successor
thereof,
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and for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract or
agreement with the Company or any of its affiliated companies. Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any plan, policy, practice or program of or any contract or agreement with the
Company or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice or
program or contract or agreement except as explicitly modified by this
Agreement.
9. FULL SETTLEMENT; RESOLUTION OF DISPUTES.
(a) The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and, except as provided in Section
6(a)(ii), such amounts shall not be reduced whether or not the Executive obtains
other employment. The Company agrees to pay promptly as incurred, to the full
extent permitted by law, all legal fees and expenses which the Executive may
reasonably incur as a result of any contest (regardless of the outcome thereof)
by the Company, the Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the amount
of any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Code.
(b) If there shall be any dispute between the Company and the
Executive (i) in the event of any termination of the Executive's employment by
the Company, whether such termination was for Cause, or (ii) in the event of any
termination of employment by the Executive, whether Good Reason existed, then,
unless and until there is a final, nonappealable judgment by a court of
competent jurisdiction declaring that such termination was for Cause or that the
determination by the Executive of the existence of Good Reason was not made in
good faith, as the case may be, the Company shall pay all amounts, and provide
all benefits, to the Executive and/or the Executive's family or other
beneficiaries, as the case may be, that the Company would be required to pay or
provide pursuant to Section 6(a) as though such termination were by the Company
without Cause or by the Executive with Good Reason; PROVIDED, HOWEVER, that the
Company shall not be required to pay any disputed amounts pursuant to this
paragraph except upon receipt of an undertaking by or on behalf of the Executive
and/or the Executive's family or other beneficiaries, as the case may be, to
repay all such amounts to which the Executive is ultimately adjudged by such
court not to be entitled.
10. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Notwithstanding anything in this Agreement to the contrary, in
the event it shall be determined that any payment or distribution by the Company
to or for the benefit of the Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this
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Agreement or otherwise, but determined without regard to any additional payments
required under this Section 10) (a "PAYMENT") would be subject to the excise tax
imposed by Section 4999 of 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.
(b) Subject to the provisions of Section 10(c), all determinations
required to be made under this Section 10, including whether and when a 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 the Company's
independent certified public accountants (the "ACCOUNTING FIRM") which shall
provide detailed supporting calculations both to the Company and the Executive
within 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 the 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 10, shall be paid by the Company to the Executive within five 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 10(c) 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.
(c) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive
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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 10(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute and
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 sue 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.
(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 10(c) hereof, 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 10(c) 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
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an amount advanced by the Company pursuant to Section 10(c) hereof, 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 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.
11. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 11 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
12. SUCCESSORS AND ASSIGNS.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "COMPANY" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
13. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas, without reference to principles of conflict
of laws. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
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(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive: James M. Holland
c/o Atwood Oceanics, Inc.
15835 Park Ten Place Drive
Houston, Texas 77084
If to the Company: Atwood Oceanics, Inc.
15835 Park Ten Place Drive
Houston, Texas 77084
Attention: Chairman of the Board of Directors
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 5(c)(i)-(v) hereof, shall not be
deemed to be a waiver of such provision or right or any other provision or right
of this Agreement.
(f) The Executive and the Company acknowledge that, except as
specifically provided herein or as may otherwise be provided under any other
written agreement between the Executive and the Company, the employment of the
Executive by the Company is "at will" and, prior to the Change of Control Date,
may be terminated by either the Executive or the Company at any time, for any
reason. Moreover, if prior to the Change of Control Date the Executive's
employment with the Company terminates, then the Executive shall have no further
rights under this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
Executive:
/s/ JAMES M. HOLLAND
JAMES M. HOLLAND
Company:
ATWOOD OCEANICS, INC.
By: /s/ W. H. HELMERICH, III
Name: W. H. Helmerich, III
Title: Acting Chairman
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EXHIBIT 10.9.3
EXECUTIVE AGREEMENT
THIS EXECUTIVE AGREEMENT (the "AGREEMENT") is entered into as of the 8
day of May, 1996 by and between ATWOOD OCEANICS, INC., a Texas corporation (the
"COMPANY"), and GLEN P. KELLEY (the "EXECUTIVE").
W I T N E S S E T H:
WHEREAS, it is in the best interests of the Company and its shareholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined in Section 2 below) of the Company; and
WHEREAS, it is imperative to diminish the inevitable distraction of the
Executive by virtue of the personal uncertainties and risks created by a pending
or threatened Change of Control and to encourage the Executive's full attention
and dedication to the Company currently and in the event of any threatened or
pending Change of Control; and
WHEREAS, it is imperative to provide the Executive with compensation and
benefits arrangements upon a Change of Control which ensure that the
compensation and benefits expectations of the Executive will be satisfied and
which are competitive with those of other corporations.
NOW, THEREFORE, in order to accomplish these objectives, and in
consideration of the mutual covenants and agreements set forth herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:
1. CERTAIN DEFINITIONS. The following terms shall have the indicated
meanings:
(a) The "CHANGE OF CONTROL DATE" shall mean the first date during
the Change of Control Period (as defined in Section 1(b)) on which a Change of
Control occurs. Notwithstanding anything in this Agreement to the contrary, if a
Change of Control occurs and if the Executive's employment with the Company is
terminated prior to the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of employment (i)
was at the request of a third party who has taken steps reasonably calculated to
effect the Change of Control or (ii) otherwise arose in connection with or
anticipation of the Change of Control, then for all purposes of this Agreement
the "CHANGE OF CONTROL DATE" shall mean the date immediately prior to the date
of such termination of employment.
(b) The "CHANGE OF CONTROL PERIOD" shall mean the period commencing
on the date hereof and ending on December 31, 1996.
2. CHANGE OF CONTROL. For the purposes of this Agreement, a "CHANGE OF
CONTROL" shall mean the occurrence of any one or more of the following:
<PAGE>
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT")) (a "PERSON") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent
(20%) or more of either (i) the then outstanding shares of common stock of the
Company or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors; provided, however, that the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly from the Company;
(ii) any acquisition by the Company; (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; or
(b) The Company shall sell substantially all of its assets to
another corporation which is not a wholly owned subsidiary; or
(c) Individuals who, as of the date hereof, constitute the Board
(the "INCUMBENT BOARD") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board.
3. POST-CHANGE OF CONTROL EMPLOYMENT PERIOD. The Company hereby agrees to
continue the Executive in its employ, and the Executive hereby agrees to remain
in the employ of the Company, in accordance with the terms and provisions of
this Agreement, for the period commencing on the Change of Control Date and
ending on the expiration of one year and six months thereafter (the "POST-CHANGE
OF CONTROL EMPLOYMENT PERIOD").
4. TERMS OF EMPLOYMENT. The following terms shall govern the Executive's
employment during the Post-Change of Control Employment Period:
(a) POSITION AND DUTIES.
(i) During the Post-Change of Control Employment Period, the
Executive shall be employed in a bona fide executive position with
corresponding authority, duties and responsibilities, and the Executive's
services shall be performed at the location where the Executive was
employed immediately preceding the Change of Control Date or any office
which is the headquarters of the Company and is within the Greater Houston
Statistical Metropolitan Area.
(ii) During the Post-Change of Control Employment Period, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and time
during normal business hours to
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the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use
the Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Post- Change of Control
Employment Period, it shall not be a violation of this Agreement for the
Executive to serve on corporate, civic or charitable boards or committees,
deliver lectures, fulfill speaking engagements, teach at educational
institutions, and manage personal investments, so long as such activities
do not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the
Change of Control Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to
the Change of Control Date shall not thereafter be deemed to interfere
with the performance of the Executive's responsibilities to the Company.
(b) COMPENSATION. During the Post-Change of Control Employment
Period, and prior to the termination of the Executive's employment as described
in Section 5 hereof, the Executive shall be entitled to the following items of
compensation:
(i) BASE SALARY. During the Post-Change of Control Employment
Period, the Executive shall receive an annual base salary ("ANNUAL BASE
SALARY"), which shall be paid in equal installments on a semi-monthly
basis, at least equal to twelve times the highest monthly base salary paid
or payable to the Executive by the Company and its affiliated companies in
respect of the twelve-month period immediately preceding the month in
which the Change of Control Date occurs. Any discretionary increase in
Annual Base Salary during the Post-Change of Control Employment Period
shall not serve to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be reduced after any
such increase, and the term "ANNUAL BASE SALARY" as utilized in this
Agreement shall refer to Annual Base Salary as so increased. As used in
this Agreement, the term "AFFILIATED COMPANIES" shall include any company
controlled by, controlling or under common control with the Company.
(ii) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the
Post-Change of Control Employment Period, the Executive shall be entitled
to participate in all incentive, savings and retirement plans, practices,
policies and programs applicable generally to other peer executives of the
Company and its affiliated companies, including without limitation, the
Atwood Oceanics, Inc. 1981 Incentive Stock Option Plan, as may be amended
from time to time (the "1981 INCENTIVE STOCK OPTION PLAN"), the Atwood
Oceanics, Inc. 1990 Stock Option Plan, as may be amended from time to time
(the "1990 STOCK OPTION PLAN"), the Atwood Oceanics, Inc. 401(k) Savings
Plan, as amended and as may be further amended from time to time (the
"401(K) PLAN"),and subject to Section 7 hereof, the Atwood Oceanics, Inc.
Retention Plan for Certain Salaried Employees, as may be amended from time
to time (the "RETENTION PLAN"), but in no event shall such plans,
practices, policies and programs provide the Executive with incentive
opportunities (measured with respect to both regular and special incentive
opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit
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opportunities, in each case, less favorable, in the aggregate, than the
most favorable of those provided by the Company and its affiliated
companies for the Executive under such plans, practices, policies and
programs as in effect at any time during the 90-day period immediately
preceding the Change of Control Date or, if more favorable to the
Executive, those provided generally at any time after the Change of
Control Date to other peer executives of the Company and its affiliated
companies.
(iii) WELFARE BENEFIT PLANS. During the Post-Change of Control
Employment Period, the Executive and/or the Executive's family, as the
case may be, shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and programs
provided by the Company and its affiliated companies (including, without
limitation, medical, supplemental health, prescription, dental,
disability, salary continuance, employee life, group life, accidental
death and travel accident insurance plans and programs) to the extent
applicable generally to other peer executives of the Company and its
affiliated companies, but in no event shall such plans, practices,
policies and programs provide the Executive with benefits which are less
favorable, in the aggregate, than the most favorable of such plans,
practices, policies and programs in effect for the Executive at any time
during the 90-day period immediately preceding the Change of Control Date
or, if more favorable to the Executive, those provided generally at any
time after the Change of Control Date to other peer executives of the
Company and its affiliated companies.
(iv) EXECUTIVE LIFE INSURANCE PLAN. During the Post-Change of
Control Employment Period, the Company shall continue to maintain the
Atwood Oceanics, Inc. Executive Life Insurance Plan, with its associated
Salary Continuation Agreement, as may be amended from time to time, or pay
to the Executive a lump sum representing the value of all benefits under
such plan.
(v) INDEMNIFICATION ARRANGEMENTS. During the Post-Change of
Control Employment Period, those certain Indemnification Agreements
entered into between the Company and certain of its Executives shall
remain in full force and effect and the Executive shall remain entitled to
all of the benefits and protections afforded thereby.
(vi) EXPENSES. During the Post-Change of Control Employment
Period, the Executive shall be entitled to receive prompt reimbursement
for all reasonable employment expenses incurred by the Executive in
accordance with the most favorable policies, practices and procedures of
the Company and its affiliated companies in effect for the Executive at
any time during the 90-day period immediately preceding the Change of
Control Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
(vii) VACATION. During the Post-Change of Control Employment
Period, the Executive shall be entitled to paid vacation in
accordance with the most favorable plans, policies, programs and
practices of the Company and its affiliated
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companies as in effect for the Executive at any time during the
90-day period immediately preceding the Change of Control Date or,
if more favorable to the Executive, as in effect generally at any
time thereafter with respect to other peer executives of the Company
and its affiliated companies.
5. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. The Executive's employment shall terminate
automatically upon the Executive's death during the Post-Change of Control
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Post-Change of Control Employment
Period (pursuant to the definition of Disability set forth below), it may give
to the Executive written notice in accordance with Section 13(b) hereof of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "DISABILITY CHANGE OF
CONTROL DATE"), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "DISABILITY" shall mean the absence of
the Executive from the Executive's duties with the Company on a full-time basis
for 180 consecutive days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive's
legal representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate
the Executive's employment during the Post-Change of Control Employment Period
for Cause. For purposes of this Agreement, "CAUSE" shall mean (i) a material
breach by the Executive of the Executive's obligations under Section 4(a) (other
than as a result of incapacity due to physical or mental illness) which is
demonstrably willful and deliberate on the Executive's part, which is committed
in bad faith or without reasonable belief that such breach is in the best
interests of the Company and which is not remedied in a reasonable period of
time after receipt of written notice from the Company specifying such breach, or
(ii) the conviction of the Executive of a felony involving moral turpitude.
(c) VOLUNTARY TERMINATION BY EXECUTIVE FOR GOOD REASON. The
Executive's employment may be terminated during the Post-Change of Control
Employment Period by the Executive for Good Reason. For purposes of this
Agreement, "GOOD REASON" shall mean:
(i) the assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including status, offices,
titles and reporting requirements), authority, duties or responsibilities
as contemplated by Section 4(a) or any other action by the Company which
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial
and inadvertent action not taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
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(ii) any failure by the Company to comply with any of the
provisions of Section 4(b), other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by
the Company promptly after receipt of notice thereof given by the
Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than that described in Section 4(a)(i) hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 12(c) hereof, provided that such successor has received at least
ten days, prior written notice from the Company or the Executive of the
requirements of Section 12(c) hereof.
For purposes of this Section 5(c), any good faith determination of "GOOD
REASON" made by the Executive shall be conclusive.
(d) NOTICE OF TERMINATION. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 13(b).
For purposes of this Agreement, a "NOTICE OF TERMINATION" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than 15 days after
the giving of such notice). The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which contributes to
a showing of Good Reason or Cause shall not waive any right of the Executive or
the Company hereunder or preclude the Executive or the Company from asserting
such fact or circumstance in enforcing the Executive's or the Company's rights
hereunder.
(e) DATE OF TERMINATION. "DATE OF TERMINATION" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination, and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Change of Control Date, as
the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) TERMINATION FOR GOOD REASON OR OTHER THAN FOR CAUSE, DEATH OR
DISABILITY. If, during the Post-Change of Control Employment Period, the Company
shall
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terminate the Executive's employment other than for Cause or Disability or the
Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the aggregate of the
following amounts:
A. the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore paid,
(2) any compensation previously deferred by the Executive (together
with any accrued interest or earnings thereon) and (3) any accrued
vacation pay, in each case to the extent not theretofore paid (the
sum of the amounts described in clauses (1), (2), and (3) shall be
hereinafter referred to as the "ACCRUED OBLIGATIONS"); and
B. the amount (such amount shall be hereinafter referred
to as the "SEVERANCE AMOUNT") equal to the Executive's Annual Base
Salary, calculated from the Date of Termination through the
remainder of the Post-Change of Control Employment Period; PROVIDED,
HOWEVER, that such amount shall be reduced by the present value
(determined as provided in Section 280G(d)(4) of the Internal
Revenue Code of 1986, as amended (the "CODE")) of any other amount
of severance relating to salary or bonus continuation, if any, to be
received by the Executive upon termination of employment of the
Executive under any severance plan, policy or arrangement of the
Company; and
(ii) any or all Stock Options awarded to the Executive under
any plan not previously exercisable and vested shall become fully
exercisable and vested; and
(iii) for the remainder of the Post-Change of Control
Employment Period, or such longer period as any plan, program, practice or
policy may provide, the Company shall continue benefits to the Executive
and/or the Executive's family at least equal to those which would have
been provided to them in accordance with the plans, programs, practices
and policies described in Section 4(b)(iv) if the Executive's employment
had not been terminated in accordance with the most favorable plans,
practices, programs or policies of the Company and its affiliated
companies as in effect and applicable generally to other peer executives
and their families during the 90-day period immediately preceding the
Change of Control Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies and their families;
PROVIDED, HOWEVER, that if the Executive becomes reemployed with another
employer and is eligible to receive medical or other welfare benefits
under another employer-provided plan, the medical and other welfare
benefits described herein shall be secondary to those provided under such
other plan during such applicable period of eligibility; and
(iv) subject to the provisions of Section 7, to the extent not
theretofore paid or provided, the Company shall timely pay or provide to
the Executive and/or the Executive's family any other amounts or benefits
required to be paid or provided
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or which the Executive and/or the Executive's family is eligible to
receive pursuant to this Agreement and under any plan, program, policy or
practice of or contract or agreement with the Company and its affiliated
companies as in effect and applicable generally to other peer executives
and their families during the 90-day period immediately preceding the
Change of Control Date or, if more favorable to the Executive, as in
effect generally thereafter with respect to other peer executives of the
Company and its affiliated companies and their families (such other
amounts and benefits shall be hereinafter referred to as the "OTHER
BENEFITS").
(b) DEATH. If the Executive's employment is terminated by reason of
the Executive's death during the Post-Change of Control Employment Period, this
Agreement shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for (i) payment of Accrued
Obligations (which shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination) and
(ii) the timely payment or provision of any and all Other Benefits, which under
their terms are available in the event of death.
(c) DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Post-Change of Control
Employment Period, this Agreement shall terminate without further obligations to
the Executive, other than for (i) payment of Accrued Obligations (which shall be
paid to the Executive in a lump sum in cash within 30 days of the Date of
Termination) and (ii) the timely payment or provision of any and all Other
Benefits, which under their terms are available in the event of a Disability.
(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's employment
shall be terminated for Cause during the Post-Change of Control Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive Annual Base Salary
through the Date of Termination plus the amount of any compensation previously
deferred by the Executive, in each case to the extent theretofore unpaid. If the
Executive terminates employment during the Post-Change of Control Employment
Period, excluding a termination for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. In such case,
all Accrued Obligations shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination.
7. WAIVER OF RIGHTS UNDER RETENTION PLAN AND FOR OTHER SEVERANCE. The
Executive hereby agrees any and all benefits or payments arising out of or
relating to the Retention Plan, if any, or any plan, program, policy or practice
of or contract or agreement with the Company and its affiliated companies
relating to the severance of employment ("OTHER SEVERANCE"), shall be fully
offset against any benefits or payments due and owing hereunder.
8. NON-EXCLUSIVITY OF RIGHTS. At any time prior to a Change of Control,
and except as provided in Sections 6(a)(ii), 6(b) and 6(c), nothing in this
Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided after such
Change of Control by the Company, its affiliated companies, or any successor
thereof,
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and for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract or
agreement with the Company or any of its affiliated companies. Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any plan, policy, practice or program of or any contract or agreement with the
Company or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice or
program or contract or agreement except as explicitly modified by this
Agreement.
9. FULL SETTLEMENT; RESOLUTION OF DISPUTES.
(a) The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and, except as provided in Section
6(a)(ii), such amounts shall not be reduced whether or not the Executive obtains
other employment. The Company agrees to pay promptly as incurred, to the full
extent permitted by law, all legal fees and expenses which the Executive may
reasonably incur as a result of any contest (regardless of the outcome thereof)
by the Company, the Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the amount
of any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Code.
(b) If there shall be any dispute between the Company and the
Executive (i) in the event of any termination of the Executive's employment by
the Company, whether such termination was for Cause, or (ii) in the event of any
termination of employment by the Executive, whether Good Reason existed, then,
unless and until there is a final, nonappealable judgment by a court of
competent jurisdiction declaring that such termination was for Cause or that the
determination by the Executive of the existence of Good Reason was not made in
good faith, as the case may be, the Company shall pay all amounts, and provide
all benefits, to the Executive and/or the Executive's family or other
beneficiaries, as the case may be, that the Company would be required to pay or
provide pursuant to Section 6(a) as though such termination were by the Company
without Cause or by the Executive with Good Reason; PROVIDED, HOWEVER, that the
Company shall not be required to pay any disputed amounts pursuant to this
paragraph except upon receipt of an undertaking by or on behalf of the Executive
and/or the Executive's family or other beneficiaries, as the case may be, to
repay all such amounts to which the Executive is ultimately adjudged by such
court not to be entitled.
10. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Notwithstanding anything in this Agreement to the contrary, in
the event it shall be determined that any payment or distribution by the Company
to or for the benefit of the Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this
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Agreement or otherwise, but determined without regard to any additional payments
required under this Section 10) (a "PAYMENT") would be subject to the excise tax
imposed by Section 4999 of 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.
(b) Subject to the provisions of Section 10(c), all determinations
required to be made under this Section 10, including whether and when a 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 the Company's
independent certified public accountants (the "ACCOUNTING FIRM") which shall
provide detailed supporting calculations both to the Company and the Executive
within 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 the 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 10, shall be paid by the Company to the Executive within five 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 10(c) 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.
(c) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive
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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 10(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute and
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 sue 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.
(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 10(c) hereof, 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 10(c) 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
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an amount advanced by the Company pursuant to Section 10(c) hereof, 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 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.
11. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 11 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
12. SUCCESSORS AND ASSIGNS.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "COMPANY" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
13. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas, without reference to principles of conflict
of laws. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
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(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive: Glen P. Kelley
c/o Atwood Oceanics, Inc.
15835 Park Ten Place Drive
Houston, Texas 77084
If to the Company: Atwood Oceanics, Inc.
15835 Park Ten Place Drive
Houston, Texas 77084
Attention: Chairman of the Board of Directors
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 5(c)(i)-(v) hereof, shall not be
deemed to be a waiver of such provision or right or any other provision or right
of this Agreement.
(f) The Executive and the Company acknowledge that, except as
specifically provided herein or as may otherwise be provided under any other
written agreement between the Executive and the Company, the employment of the
Executive by the Company is "at will" and, prior to the Change of Control Date,
may be terminated by either the Executive or the Company at any time, for any
reason. Moreover, if prior to the Change of Control Date the Executive's
employment with the Company terminates, then the Executive shall have no further
rights under this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
Executive:
/s/ GLEN P. KELLEY
GLEN P. KELLEY
Company:
ATWOOD OCEANICS, INC.
By: /s/ W. H. HELMERICH, III
Name: W. H. Helmerich, III
Title: Acting Chairman
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EXHIBIT 10.9.4
EXECUTIVE AGREEMENT
THIS EXECUTIVE AGREEMENT (the "AGREEMENT") is entered into as of the 8
day of May, 1996 by and between ATWOOD OCEANICS, INC., a Texas corporation (the
"COMPANY"), and LARRY P. TILL (the "EXECUTIVE").
W I T N E S S E T H:
WHEREAS, it is in the best interests of the Company and its shareholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined in Section 2 below) of the Company; and
WHEREAS, it is imperative to diminish the inevitable distraction of the
Executive by virtue of the personal uncertainties and risks created by a pending
or threatened Change of Control and to encourage the Executive's full attention
and dedication to the Company currently and in the event of any threatened or
pending Change of Control; and
WHEREAS, it is imperative to provide the Executive with compensation and
benefits arrangements upon a Change of Control which ensure that the
compensation and benefits expectations of the Executive will be satisfied and
which are competitive with those of other corporations.
NOW, THEREFORE, in order to accomplish these objectives, and in
consideration of the mutual covenants and agreements set forth herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:
1. CERTAIN DEFINITIONS. The following terms shall have the indicated
meanings:
(a) The "CHANGE OF CONTROL DATE" shall mean the first date during
the Change of Control Period (as defined in Section 1(b)) on which a Change of
Control occurs. Notwithstanding anything in this Agreement to the contrary, if a
Change of Control occurs and if the Executive's employment with the Company is
terminated prior to the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of employment (i)
was at the request of a third party who has taken steps reasonably calculated to
effect the Change of Control or (ii) otherwise arose in connection with or
anticipation of the Change of Control, then for all purposes of this Agreement
the "CHANGE OF CONTROL DATE" shall mean the date immediately prior to the date
of such termination of employment.
(b) The "CHANGE OF CONTROL PERIOD" shall mean the period commencing
on the date hereof and ending on December 31, 1996.
2. CHANGE OF CONTROL. For the purposes of this Agreement, a "CHANGE OF
CONTROL" shall mean the occurrence of any one or more of the following:
<PAGE>
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT")) (a "PERSON") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent
(20%) or more of either (i) the then outstanding shares of common stock of the
Company or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors; provided, however, that the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly from the Company;
(ii) any acquisition by the Company; (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; or
(b) The Company shall sell substantially all of its assets to
another corporation which is not a wholly owned subsidiary; or
(c) Individuals who, as of the date hereof, constitute the Board
(the "INCUMBENT BOARD") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board.
3. POST-CHANGE OF CONTROL EMPLOYMENT PERIOD. The Company hereby agrees to
continue the Executive in its employ, and the Executive hereby agrees to remain
in the employ of the Company, in accordance with the terms and provisions of
this Agreement, for the period commencing on the Change of Control Date and
ending on the expiration of one year thereafter (the "POST-CHANGE OF CONTROL
EMPLOYMENT PERIOD").
4. TERMS OF EMPLOYMENT. The following terms shall govern the Executive's
employment during the Post-Change of Control Employment Period:
(a) POSITION AND DUTIES.
(i) During the Post-Change of Control Employment Period, the
Executive shall be employed in a bona fide executive position with
corresponding authority, duties and responsibilities, and the Executive's
services shall be performed at the location where the Executive was
employed immediately preceding the Change of Control Date or any office
which is the headquarters of the Company and is within the Greater Houston
Statistical Metropolitan Area.
(ii) During the Post-Change of Control Employment Period, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and time
during normal business hours to
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the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use
the Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Post- Change of Control
Employment Period, it shall not be a violation of this Agreement for the
Executive to serve on corporate, civic or charitable boards or committees,
deliver lectures, fulfill speaking engagements, teach at educational
institutions, and manage personal investments, so long as such activities
do not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the
Change of Control Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to
the Change of Control Date shall not thereafter be deemed to interfere
with the performance of the Executive's responsibilities to the Company.
(b) COMPENSATION. During the Post-Change of Control Employment
Period, and prior to the termination of the Executive's employment as described
in Section 5 hereof, the Executive shall be entitled to the following items of
compensation:
(i) BASE SALARY. During the Post-Change of Control Employment
Period, the Executive shall receive an annual base salary ("ANNUAL BASE
SALARY"), which shall be paid in equal installments on a semi-monthly
basis, at least equal to twelve times the highest monthly base salary paid
or payable to the Executive by the Company and its affiliated companies in
respect of the twelve-month period immediately preceding the month in
which the Change of Control Date occurs. Any discretionary increase in
Annual Base Salary during the Post-Change of Control Employment Period
shall not serve to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be reduced after any
such increase, and the term "ANNUAL BASE SALARY" as utilized in this
Agreement shall refer to Annual Base Salary as so increased. As used in
this Agreement, the term "AFFILIATED COMPANIES" shall include any company
controlled by, controlling or under common control with the Company.
(ii) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the
Post-Change of Control Employment Period, the Executive shall be entitled
to participate in all incentive, savings and retirement plans, practices,
policies and programs applicable generally to other peer executives of the
Company and its affiliated companies, including without limitation, the
Atwood Oceanics, Inc. 1981 Incentive Stock Option Plan, as may be amended
from time to time (the "1981 INCENTIVE STOCK OPTION PLAN"), the Atwood
Oceanics, Inc. 1990 Stock Option Plan, as may be amended from time to time
(the "1990 STOCK OPTION PLAN"), the Atwood Oceanics, Inc. 401(k) Savings
Plan, as amended and as may be further amended from time to time (the
"401(K) PLAN"),and subject to Section 7 hereof, the Atwood Oceanics, Inc.
Retention Plan for Certain Salaried Employees, as may be amended from time
to time (the "RETENTION PLAN"), but in no event shall such plans,
practices, policies and programs provide the Executive with incentive
opportunities (measured with respect to both regular and special incentive
opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit
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opportunities, in each case, less favorable, in the aggregate, than the
most favorable of those provided by the Company and its affiliated
companies for the Executive under such plans, practices, policies and
programs as in effect at any time during the 90-day period immediately
preceding the Change of Control Date or, if more favorable to the
Executive, those provided generally at any time after the Change of
Control Date to other peer executives of the Company and its affiliated
companies.
(iii) WELFARE BENEFIT PLANS. During the Post-Change of Control
Employment Period, the Executive and/or the Executive's family, as the
case may be, shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and programs
provided by the Company and its affiliated companies (including, without
limitation, medical, supplemental health, prescription, dental,
disability, salary continuance, employee life, group life, accidental
death and travel accident insurance plans and programs) to the extent
applicable generally to other peer executives of the Company and its
affiliated companies, but in no event shall such plans, practices,
policies and programs provide the Executive with benefits which are less
favorable, in the aggregate, than the most favorable of such plans,
practices, policies and programs in effect for the Executive at any time
during the 90-day period immediately preceding the Change of Control Date
or, if more favorable to the Executive, those provided generally at any
time after the Change of Control Date to other peer executives of the
Company and its affiliated companies.
(iv) EXECUTIVE LIFE INSURANCE PLAN. During the Post-Change of
Control Employment Period, the Company shall continue to maintain the
Atwood Oceanics, Inc. Executive Life Insurance Plan, with its associated
Salary Continuation Agreement, as may be amended from time to time, or pay
to the Executive a lump sum representing the value of all benefits under
such plan.
(v) INDEMNIFICATION ARRANGEMENTS. During the Post-Change of
Control Employment Period, those certain Indemnification Agreements
entered into between the Company and certain of its Executives shall
remain in full force and effect and the Executive shall remain entitled to
all of the benefits and protections afforded thereby.
(vi) EXPENSES. During the Post-Change of Control Employment
Period, the Executive shall be entitled to receive prompt reimbursement
for all reasonable employment expenses incurred by the Executive in
accordance with the most favorable policies, practices and procedures of
the Company and its affiliated companies in effect for the Executive at
any time during the 90-day period immediately preceding the Change of
Control Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
(vii) VACATION. During the Post-Change of Control Employment
Period, the Executive shall be entitled to paid vacation in accordance
with the most favorable plans, policies, programs and practices of the
Company and its affiliated
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companies as in effect for the Executive at any time during the 90-day
period immediately preceding the Change of Control Date or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
5. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. The Executive's employment shall terminate
automatically upon the Executive's death during the Post-Change of Control
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Post-Change of Control Employment
Period (pursuant to the definition of Disability set forth below), it may give
to the Executive written notice in accordance with Section 13(b) hereof of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "DISABILITY CHANGE OF
CONTROL DATE"), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "DISABILITY" shall mean the absence of
the Executive from the Executive's duties with the Company on a full-time basis
for 180 consecutive days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive's
legal representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate
the Executive's employment during the Post-Change of Control Employment Period
for Cause. For purposes of this Agreement, "CAUSE" shall mean (i) a material
breach by the Executive of the Executive's obligations under Section 4(a) (other
than as a result of incapacity due to physical or mental illness) which is
demonstrably willful and deliberate on the Executive's part, which is committed
in bad faith or without reasonable belief that such breach is in the best
interests of the Company and which is not remedied in a reasonable period of
time after receipt of written notice from the Company specifying such breach, or
(ii) the conviction of the Executive of a felony involving moral turpitude.
(c) VOLUNTARY TERMINATION BY EXECUTIVE FOR GOOD REASON. The
Executive's employment may be terminated during the Post-Change of Control
Employment Period by the Executive for Good Reason. For purposes of this
Agreement, "GOOD REASON" shall mean:
(i) the assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including status, offices,
titles and reporting requirements), authority, duties or responsibilities
as contemplated by Section 4(a) or any other action by the Company which
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial
and inadvertent action not taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
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(ii) any failure by the Company to comply with any of the
provisions of Section 4(b), other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by
the Company promptly after receipt of notice thereof given by the
Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than that described in Section 4(a)(i) hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 12(c) hereof, provided that such successor has received at least
ten days, prior written notice from the Company or the Executive of the
requirements of Section 12(c) hereof.
For purposes of this Section 5(c), any good faith determination of "GOOD
REASON" made by the Executive shall be conclusive.
(d) NOTICE OF TERMINATION. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 13(b).
For purposes of this Agreement, a "NOTICE OF TERMINATION" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than 15 days after
the giving of such notice). The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which contributes to
a showing of Good Reason or Cause shall not waive any right of the Executive or
the Company hereunder or preclude the Executive or the Company from asserting
such fact or circumstance in enforcing the Executive's or the Company's rights
hereunder.
(e) DATE OF TERMINATION. "DATE OF TERMINATION" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination, and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Change of Control Date, as
the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) TERMINATION FOR GOOD REASON OR OTHER THAN FOR CAUSE, DEATH OR
DISABILITY. If, during the Post-Change of Control Employment Period, the Company
shall
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terminate the Executive's employment other than for Cause or Disability or
the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the aggregate of the
following amounts:
A. the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore paid,
(2) any compensation previously deferred by the Executive (together
with any accrued interest or earnings thereon) and (3) any accrued
vacation pay, in each case to the extent not theretofore paid (the
sum of the amounts described in clauses (1), (2), and (3) shall be
hereinafter referred to as the "ACCRUED OBLIGATIONS"); and
B. the amount (such amount shall be hereinafter referred
to as the "SEVERANCE AMOUNT") equal to the Executive's Annual Base
Salary, calculated from the Date of Termination through the
remainder of the Post-Change of Control Employment Period; PROVIDED,
HOWEVER, that such amount shall be reduced by the present value
(determined as provided in Section 280G(d)(4) of the Internal
Revenue Code of 1986, as amended (the "CODE")) of any other amount
of severance relating to salary or bonus continuation, if any, to be
received by the Executive upon termination of employment of the
Executive under any severance plan, policy or arrangement of the
Company; and
(ii) any or all Stock Options awarded to the Executive under
any plan not previously exercisable and vested shall become fully
exercisable and vested; and
(iii) for the remainder of the Post-Change of Control
Employment Period, or such longer period as any plan, program, practice or
policy may provide, the Company shall continue benefits to the Executive
and/or the Executive's family at least equal to those which would have
been provided to them in accordance with the plans, programs, practices
and policies described in Section 4(b)(iv) if the Executive's employment
had not been terminated in accordance with the most favorable plans,
practices, programs or policies of the Company and its affiliated
companies as in effect and applicable generally to other peer executives
and their families during the 90-day period immediately preceding the
Change of Control Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies and their families;
PROVIDED, HOWEVER, that if the Executive becomes reemployed with another
employer and is eligible to receive medical or other welfare benefits
under another employer-provided plan, the medical and other welfare
benefits described herein shall be secondary to those provided under such
other plan during such applicable period of eligibility; and
(iv) subject to the provisions of Section 7, to the extent not
theretofore paid or provided, the Company shall timely pay or provide to
the Executive and/or the Executive's family any other amounts or benefits
required to be paid or provided or which
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the Executive and/or the Executive's family is eligible to receive
pursuant to this Agreement and under any plan, program, policy or practice
of or contract or agreement with the Company and its affiliated companies
as in effect and applicable generally to other peer executives and their
families during the 90-day period immediately preceding the Change of
Control Date or, if more favorable to the Executive, as in effect
generally thereafter with respect to other peer executives of the Company
and its affiliated companies and their families (such other amounts and
benefits shall be hereinafter referred to as the "OTHER BENEFITS").
(b) DEATH. If the Executive's employment is terminated by reason of
the Executive's death during the Post-Change of Control Employment Period, this
Agreement shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for (i) payment of Accrued
Obligations (which shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination) and
(ii) the timely payment or provision of any and all Other Benefits, which under
their terms are available in the event of death.
(c) DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Post-Change of Control
Employment Period, this Agreement shall terminate without further obligations to
the Executive, other than for (i) payment of Accrued Obligations (which shall be
paid to the Executive in a lump sum in cash within 30 days of the Date of
Termination) and (ii) the timely payment or provision of any and all Other
Benefits, which under their terms are available in the event of a Disability.
(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's employment
shall be terminated for Cause during the Post-Change of Control Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive Annual Base Salary
through the Date of Termination plus the amount of any compensation previously
deferred by the Executive, in each case to the extent theretofore unpaid. If the
Executive terminates employment during the Post-Change of Control Employment
Period, excluding a termination for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. In such case,
all Accrued Obligations shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination.
7. WAIVER OF RIGHTS UNDER RETENTION PLAN AND FOR OTHER SEVERANCE. The
Executive hereby agrees any and all benefits or payments arising out of or
relating to the Retention Plan, if any, or any plan, program, policy or practice
of or contract or agreement with the Company and its affiliated companies
relating to the severance of employment ("OTHER SEVERANCE"), shall be fully
offset against any benefits or payments due and owing hereunder.
8. NON-EXCLUSIVITY OF RIGHTS. At any time prior to a Change of Control,
and except as provided in Sections 6(a)(ii), 6(b) and 6(c), nothing in this
Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided after such
Change of Control by the Company, its affiliated companies, or any successor
thereof,
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and for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract or
agreement with the Company or any of its affiliated companies. Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any plan, policy, practice or program of or any contract or agreement with the
Company or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice or
program or contract or agreement except as explicitly modified by this
Agreement.
9. FULL SETTLEMENT; RESOLUTION OF DISPUTES.
(a) The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and, except as provided in Section
6(a)(ii), such amounts shall not be reduced whether or not the Executive obtains
other employment. The Company agrees to pay promptly as incurred, to the full
extent permitted by law, all legal fees and expenses which the Executive may
reasonably incur as a result of any contest (regardless of the outcome thereof)
by the Company, the Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the amount
of any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Code.
(b) If there shall be any dispute between the Company and the
Executive (i) in the event of any termination of the Executive's employment by
the Company, whether such termination was for Cause, or (ii) in the event of any
termination of employment by the Executive, whether Good Reason existed, then,
unless and until there is a final, nonappealable judgment by a court of
competent jurisdiction declaring that such termination was for Cause or that the
determination by the Executive of the existence of Good Reason was not made in
good faith, as the case may be, the Company shall pay all amounts, and provide
all benefits, to the Executive and/or the Executive's family or other
beneficiaries, as the case may be, that the Company would be required to pay or
provide pursuant to Section 6(a) as though such termination were by the Company
without Cause or by the Executive with Good Reason; PROVIDED, HOWEVER, that the
Company shall not be required to pay any disputed amounts pursuant to this
paragraph except upon receipt of an undertaking by or on behalf of the Executive
and/or the Executive's family or other beneficiaries, as the case may be, to
repay all such amounts to which the Executive is ultimately adjudged by such
court not to be entitled.
10. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Notwithstanding anything in this Agreement to the contrary, in
the event it shall be determined that any payment or distribution by the Company
to or for the benefit of the Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this
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Agreement or otherwise, but determined without regard to any additional payments
required under this Section 10) (a "PAYMENT") would be subject to the excise tax
imposed by Section 4999 of 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.
(b) Subject to the provisions of Section 10(c), all determinations
required to be made under this Section 10, including whether and when a 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 the Company's
independent certified public accountants (the "ACCOUNTING FIRM") which shall
provide detailed supporting calculations both to the Company and the Executive
within 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 the 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 10, shall be paid by the Company to the Executive within five 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 10(c) 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.
(c) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive
-10-
<PAGE>
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 10(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute and
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 sue 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.
(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 10(c) hereof, 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 10(c) 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
-11-
<PAGE>
an amount advanced by the Company pursuant to Section 10(c) hereof, 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 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.
11. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 11 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
12. SUCCESSORS AND ASSIGNS.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "COMPANY" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
13. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas, without reference to principles of conflict
of laws. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
-12-
<PAGE>
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive: Larry P. Till
c/o Atwood Oceanics, Inc.
15835 Park Ten Place Drive
Houston, Texas 77084
If to the Company: Atwood Oceanics, Inc.
15835 Park Ten Place Drive
Houston, Texas 77084
Attention: Chairman of the Board of Directors
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 5(c)(i)-(v) hereof, shall not be
deemed to be a waiver of such provision or right or any other provision or right
of this Agreement.
(f) The Executive and the Company acknowledge that, except as
specifically provided herein or as may otherwise be provided under any other
written agreement between the Executive and the Company, the employment of the
Executive by the Company is "at will" and, prior to the Change of Control Date,
may be terminated by either the Executive or the Company at any time, for any
reason. Moreover, if prior to the Change of Control Date the Executive's
employment with the Company terminates, then the Executive shall have no further
rights under this Agreement.
-13-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
Executive:
/s/ LARRY P. TILL
LARRY P. TILL
Company:
ATWOOD OCEANICS, INC.
By: /s/ W. H. HELMERICH, III
Name: W. H. Helmerich, III
Title: Acting Chairman
-14-
PAGE 12
EXHIBIT 13.1
1996 ANNUAL REPORT TO SHAREHOLDERS
THE COMPANY
Atwood Oceanics, Inc. is engaged in the business of international offshore
drilling of exploratory and developmental oil and gas wells and related support,
management and consulting services. Presently, the Company owns and operates a
modern fleet of seven mobile offshore rigs and one modular platform rig, as well
as manages the operations of two operator-owned platform rigs in Northwest
Australia. The Company also owns a fifty percent interest in a new generation
platform rig operating in Australia. The Company supports its operations from
headquarters in Houston and affiliated offices in Australia, Malaysia, Indonesia
and Equatorial Guinea.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(In thousands)
- --------------------------------------------------------------------------------
FISCAL FISCAL
1996 1995
---- ----
FOR THE YEAR
REVENUES FROM CONTRACT DRILLING AND
MANAGEMENT .......................... $ 79,455 $ 72,231
NET INCOME ............................ 11,368 7,060
CAPITAL EXPENDITURES (including
investment in RIG-200 and
acquisition of interest in ATWOOD
HUNTER, ATWOOD FALCON AND ATWOOD
EAGLE in 1995) ...................... 9,526 25,692
RIG UTILIZATION ....................... 100% 99%
AT YEAR END
CASH AND SECURITIES HELD FOR INVESTMENT $ 40,492 $ 37,922
NET PROPERTY AND EQUIPMENT ............ 91,124 91,427
TOTAL ASSETS .......................... 159,309 152,853
TOTAL SHAREHOLDERS' EQUITY ............ 105,554 94,892
<PAGE>
Page 13
TO OUR SHAREHOLDERS AND EMPLOYEES
The Company's improving trend in financial performance continued in 1996. Net
income of $11.4 million represents the Company's third consecutive year of
increasing profitability and best financial performance since 1983. Contract
revenues increased 10 percent from $72.2 million in 1995 to $79.5 million in
1996 while earnings before depreciation, interest and taxes increased by 22
percent from 1995.
Improved financial results in 1996 reflect the effect of continuing high
equipment utilization coupled with significant rate increases on several of the
Company's rigs, primarily during the second half of 1996. Operating dayrates and
margins for the ATWOOD EAGLE ("EAGLE") and ATWOOD FALCON ("FALCON") increased
significantly under a new contract and contract extension, respectively. RIG 200
commenced on a holding rate in January 1996 and the RICHMOND maintained steady
quarterly dayrate increases during the year. The Company completed fiscal year
1996 with 100% utilization of its active fleet. Marketing of the ATWOOD SOUTHERN
CROSS ("SOUTHERN CROSS"), the Company's only inactive rig, continues with
increasing interest.
Market improvements for semisubmersibles have been sustained and the
international jack-up market is now evidencing similar improvements. If this
trend continues, the Company should have further opportunity for significant
improvement in its financial performance. Besides the ATWOOD HUNTER ("HUNTER"),
already committed for upgrade, and the SOUTHERN CROSS, the FALCON, EAGLE and
VICKSBURG are candidates for upgrades or dayrate increases following the
expiration of their current contract commitments. Additionally, the Company
continues to seek new opportunities to further expand our activities and enhance
our financial performance.
The HUNTER has a three-year firm contract in the Gulf of Mexico, which is
expected to commence in mid-1997, following mobilization from Singapore and
completion of upgrade. The FALCON, EAGLE, RIG 19 and RIG 200 should all remain
employed under their current contracts through fiscal year 1997, with the
RICHMOND and SEAHAWK presently having firm contract commitments until the third
or fourth quarter of fiscal year 1997. The VICKSBURG could also remain employed
under its current contract commitment through fiscal year 1997 unless the field
in which it is operating as a production unit becomes uneconomical and is
abandoned. Management contracts associated with GOODWYN 'A' and NORTH RANKIN 'A'
are expected to continue into 1997, and perhaps longer, if drilling operations
continue based on feasibility studies presently being undertaken.
We are pleased to report that all operations in which the Company was
involved completed fiscal year 1996 without a losttime accident. Active progress
was also made during the year in implementation of our improved, fleet-wide
management systems.
We extend our thanks to our employees and shareholders for their efforts,
contributions and support. Fiscal 1997 will present another opportunity for us
to continue building on the progress and momentum of the last few years, and to
continue striving to enhance the Company's value through increased profitability
and growth.
/s/ JOHN R. IRWIN
John R. Irwin
<PAGE>
Page 14
Atwood Oceanics, Inc. and Subsidiaries
FIVE YEAR FINANCIAL REVIEW
<TABLE>
<CAPTION>
At or For the Years Ended September 30,
- ---------------------------------------------------------------------------------------------------------
(In thousands, except per share
amounts, fleet data and ratios) 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Operating revenues ................ $ 79,455 $ 72,231 $ 65,975 $ 51,775 $ 44,772
Drilling costs and general
and administrative expenses ..... (56,653) (55,311) (48,652) (41,797) (40,144)
--------- --------- --------- --------- ---------
OPERATING MARGIN .................. 22,802 16,920 17,323 9,978 4,628
Depreciation ...................... (9,742) (11,134) (13,618) (13,045) (15,398)
--------- --------- --------- --------- ---------
OPERATING INCOME (LOSS) ........... 13,060 5,786 3,705 (3,067) (10,770)
Other income (expense) ............ 2,783 2,238 (73) (597) (431)
Minority interest in loss of
Partnerships .................... -- 908 3,303 4,821 4,862
Write-down of drilling vessels
and other assets ................ -- -- -- -- (17,000)
Tax benefit (provision) ........... (4,475) (1,872) (726) (2,948) 2,402
--------- --------- --------- --------- ---------
NET INCOME (LOSS) ................. $ 11,368 $ 7,060 $ 6,209 $ (1,791) $ (20,937)
========= ========= ========= ========= =========
PER SHARE DATA:
Net earnings (loss) ............... $ 1.71 $ 1.07 $ .94 $ (.27) $ (3.18)
Weighted average shares outstanding 6,664 6,591 6,582 6,582 6,582
FLEET DATA:
Number of rigs owned or managed,
at end of period ................ 11 10 9 10 9
Utilization rate (in-service rigs). 100% 99% 99% 88% 75%
BALANCE SHEETS DATA:
Cash and securities held for
investment ...................... $ 40,492 $ 37,922 $ 41,047 $ 35,044 $ 33,877
Working capital ................... 26,151 13,761 25,171 14,703 12,236
Net property and equipment ........ 91,124 91,427 82,845 90,150 98,033
Total assets ...................... 159,309 152,853 153,460 149,853 165,942
Total long-term debt .............. 34,473 39,319 53,294 58,409 63,016
Shareholders' equity .............. 105,554 94,892 85,959 79,750 81,541
Ratio of current assets to
current liabilities ............. 2.45 1.67 2.89 2.24 1.68
</TABLE>
(The Company has not paid any cash dividends on its common stock.)
<PAGE>
Page 15
OFFSHORE DRILLING OPERATIONS
<TABLE>
<CAPTION>
MAXIMUM
PERCENTAGE OF YEAR WATER CONTRACT STATUS AT
NAME OF RIG TYPE OF RIG 1996 REVENUES BUILT DEPTH LOCATION CUSTOMER NOVEMBER 15, 1996
- ----------- ----------- ------------- ----- ----- -------- -------- -----------------
DRILLING RIGS WHOLLY OR PARTIALLY OWNED
<S> <C> <C> <C> <C> <C> <C> <C>
ATWOOD FALCON THIRD-GENERATION 14% 1983 2,500 FT MALAYSIA/ CARIGALI- Drilling the seventh of thirteen firm
SEMISUBMERSIBLE THAILAND TRITON wells (estimated completion November
JOINT OPERATING 1997).
DEVELOPMENT COMPANY
AREA SDN BHD
ATWOOD HUNTER THIRD-GENERATION 14% 1981 1,500 FT. MALAYSIA OCCIDENTAL Drilling one firm well (estimated
SEMISUBMERSIBLE PETROLEUM completion December 1996).
(MALAYSIA)
LTD.
UNITED BRITISH- Upon completion of current well, the
STATES GULF BORNEO rig will be moved to a shipyard in
OF MEXICO PETROLEUM Singapore to commence upgrade to
INC. operate in up to 3,500 feet of water
in the Gulf of Mexico. The upgrade
and mobilization is estimated to take
approximately six months with
estimated commencement of drilling
operations in July or August 1997
under a firm three year contract.
ATWOOD EAGLE THIRD-GENERATION 20% 1982 2,500 FT. EQUATORIAL MOBIL Under contract until May 1997 with two
SEMISUBMERSIBLE GUINEA EQUATORIAL six-months options.
GUINEA INC.
SEAHAWK SECOND-GENERATION 14% 1974/1992 N/A MALAYSIA ESSO Term contract (estimated completion
SEMISUBMERSIBLE PRODUCTION September 1997).
TENDER ASSIST MALAYSIA, INC.
VICKSBURG JACK-UP 6% 1976 300 FT. AUSTRALIA WESTERN Under contract until January 1998,
MINING subject to early termination under
CORPORATION certain limited circumstances.
LIMITED
RIG-19 MODULAR PLATFORM 10% 1988 N/A AUSTRALIA ESSO Term contract (preparing to move to a
AUSTRALIA new platform with estimated drilling
LIMITED work of between 12 and 18 months).
RICHMOND SUBMERSIBLE 8% 1982 75 FT. UNITED STATES SHELL Term Contract (estimated completion
OFFSHORE, December 1996).
INC.
UNITED STATES CHEVRON Upon completion of current well, the
U.S.A., rig will commence drilling under a
INC. contract for three firm wells, plus
three option wells (estimated term six
months).
ATWOOD SECOND-GENERATION 0% 1976 1,500 FT. AUSTRALIA (NOT PLACED Idle while the Company pursues future
SOUTHERN CROSS SEMISUBMERSIBLE IN SERVICE) contract opportunities.
</TABLE>
<PAGE>
Page 16
<TABLE>
<CAPTION>
MAXIMUM
PERCENTAGE OF YEAR WATER CONTRACT STATUS AT
NAME OF RIG TYPE OF RIG 1996 REVENUES BUILT DEPTH LOCATION CUSTOMER NOVEMBER 15, 1996
- ----------- ----------- ------------- ----- ----- -------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
RIG-200 MODULAR 3% 1995 N/A AUSTRALIA ESSO Drilling operations in Australia
PLATFORM AUSTRALIA expected to commence in January 1997
LIMITED under a two year firm contract with
options.
====================================================================================================================================
MANAGEMENT/LABOR CONTRACTS
GOODWYN 'A' MODULAR PLATFORM 10% N/A N/A AUSTRALIA WOODSIDE Term contract (estimated completion
OFFSHORE May 1997).
PETROLEUM
PTY. LTD.
("WOODSIDE")
NORTH RANKIN 'A' MODULAR PLATFORM 1% N/A N/A AUSTRALIA WOODSIDE Term contract (estimated completion
May 1997).
====================================================================================================================================
</TABLE>
<PAGE>
PAGE 17
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Annual Report to Shareholders and the Form 10-K for the fiscal year
ended September 30, 1996 includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. All statements other
than statements of historical facts included in this report and the related Form
10-K regarding the Company's financial position, business strategy, budgets and
plans and objectives of management for future operations are forward-looking
statements. Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, it can give no assurance that
such expectations will prove to have been correct. Important factors that could
cause actual results to differ materially from the Company's expectations
("Cautionary Statements") are disclosed in "Liquidity and Capital Resources" and
elsewhere in this report and the related Form 10-K. All subsequent written and
oral forward-looking statements attributable to the Company, or persons acting
on its behalf, are expressly qualified in their entirety by the Cautionary
Statements.
OUTLOOK
The current worldwide fleet utilization for mobile offshore drilling units is
approximately 93 percent compared to approximately 86 percent a year ago.
Activity in the offshore contract drilling industry is strong in virtually all
worldwide market areas, especially for mobile rigs that can operate in deeper
water. The improved market trends are particularly evident in the escalation of
dayrates seen in 1996 and in the increase in equipment upgrade projects.
The Company's active fleet utilization was 100 percent for fiscal 1996 and
was in excess of 99 percent for each of the past three fiscal years. During the
second half of fiscal 1996, the Company realized higher dayrates on the ATWOOD
FALCON, ATWOOD HUNTER, ATWOOD EAGLE and the RICHMOND. The Company also entered
into a contract to operate the ATWOOD HUNTER in deep water in the Gulf of
Mexico, commencing in mid-1997, at a significant increase in dayrate and
operating margins. Based upon firm contract commitments for its active fleet,
the Company should maintain a high level of equipment utilization during fiscal
1997.
RESULTS OF OPERATIONS
FISCAL YEAR 1996 VERSUS FISCAL YEAR 1995
Contract revenues in fiscal 1996 increased 10 percent to $79.5 million from
$72.2 million. This increase was primarily attributable to commencement of
contract revenues from Rig-200 in addition to general dayrate increases on the
fleet. An analysis of contract revenues by rig for fiscal years 1996 and 1995 is
as follows:
CONTRACT REVENUES
-------------------------------------
(In millions)
FISCAL FISCAL
1996 1995 VARIANCE
----- ----- -----
ATWOOD FALCON ...................... $11.5 $10.9 $ 0.6
ATWOOD HUNTER ...................... 11.3 10.2 1.1
ATWOOD EAGLE ....................... 15.6 15.1 0.5
RIG-200 ............................ 2.2 0.0 2.2
SEAHAWK ............................ 11.0 10.8 0.2
VICKSBURG .......................... 5.0 4.9 0.1
RIG-19 ............................. 8.2 7.1 1.1
RICHMOND ........................... 6.2 5.0 1.2
GOODWYN 'A' ........................ 7.6 7.3 0.3
NORTH RANKIN 'A' ................... 0.9 0.9 0.0
----- ----- -----
$79.5 $72.2 $ 7.3
===== ===== =====
<PAGE>
Page 18
The increase in revenues for the ATWOOD FALCON was due to an increase of
approximately 60 percent in the contract dayrate during the fourth quarter of
fiscal 1996. The increase in revenues for the ATWOOD HUNTER was also due to
higher dayrates in fiscal 1996 compared to fiscal 1995. During April and May
1996, the ATWOOD EAGLE was relocated from the territorial waters of Australia to
the territorial waters of Equitorial Guinea with an approximate 25 percent
increase in contract dayrate. The Company received dayrate revenues from RIG-200
during the period January 1996 through September 1996 while awaiting
instructions for shipment to Australia. The rig was delivered to Australia in
November 1996 and continues to earn a holding dayrate pending the anticipated
commencement of drilling operations in January 1997. Relatively long-term,
stable contracts for the SEAHAWK, VICKSBURG and RIG-19 continue to provide
consistency to these operations. The $1.1 million increase in RIG-19 revenues
was due to an increase in the dayrates during fiscal 1996. As a result of
improved market conditions, the RICHMOND, located in the United States Gulf of
Mexico, also experienced an increase in dayrate revenues during fiscal 1996.
In contrast to a 10 percent increase in contract revenues, contract drilling
and management costs increased only one percent in fiscal 1996 compared to
fiscal 1995. An analysis of contract drilling and management costs by rig is as
follows:
CONTRACT DRILLING AND
MANAGEMENT COSTS
-------------------------------------
(In millions)
FISCAL FISCAL
1996 1995 VARIANCE
----- ----- --------
ATWOOD FALCON .................. $ 6.9 $ 6.4 $ 0.5
ATWOOD HUNTER .................. 7.2 7.2 0.0
ATWOOD EAGLE ................... 9.1 12.7 (3.6)
RIG-200 ........................ 0.3 0.0 0.3
SEAHAWK ........................ 6.5 5.9 0.6
VICKSBURG ...................... 3.1 3.0 0.1
RIG-19 ......................... 6.4 5.1 1.3
RICHMOND ....................... 4.8 4.1 0.7
GOODWYN 'A' .................... 5.9 5.2 0.7
NORTH RANKIN 'A' ............... 0.6 0.6 0.0
OTHER .......................... 0.7 0.6 0.1
----- ----- -----
$51.5 $50.8 $ 0.7
===== ===== =====
The increases in operating costs for the ATWOOD FALCON, SEAHAWK and RICHMOND
were due to increases in general maintenance and payroll related costs. The
reduction in the ATWOOD EAGLE's costs was attributable to the rig being
relocated from Australia to Equitorial Guinea where operating costs are lower,
primarily due to reductions in local labor costs, and to the rig incurring costs
in fiscal 1995 associated with certain required surveys and repairs that were
not required in fiscal 1996. The increase in operating costs of RIG-19 was
primarily due to higher payroll related costs as a result of certain labor
union awards in Australia. The increase in operating costs of the GOODWYN 'A'
was also attributable to higher labor costs in Australia.
<PAGE>
Page 19
An analysis of depreciation expense by rig is as follows:
DEPRECIATION EXPENSE
------------------------
(In millions)
FISCAL FISCAL
1996 1995
----- -----
ATWOOD FALCON .......................... $ 2.6 $ 3.1
ATWOOD HUNTER .......................... 1.6 1.8
ATWOOD EAGLE ........................... 2.0 2.2
SEAHAWK ................................ 2.2 2.3
VICKSBURG .............................. 0.0 0.0
RIG-19 ................................. 0.6 1.2
RICHMOND ............................... 0.4 0.3
OTHER .................................. 0.3 0.2
----- -----
$ 9.7 $11.1
===== =====
General and administrative expenses increased 14 percent in fiscal 1996
compared to fiscal 1995. This increase was attributable to increases in payroll
related costs and professional fees. Investment income in fiscal years 1996 and
1995 of $2.5 million and $2.8 million, respectively, virtually offset interest
expense for both years. In fiscal 1996, the Company sold its remaining 32,000
shares of Mobil Corporation common stock at a realized gain of $2.8 million.
Foreign tax expense increased from $1.6 million in fiscal 1995 to $2.6 million
in fiscal 1996 and domestic taxes increased from $300,000 in fiscal 1995 to $1.9
million in fiscal 1996, which account for the increase in the provision for
income taxes.
FISCAL YEAR 1995 VERSUS FISCAL YEAR 1994
Contract revenues in fiscal 1995 increased 9 percent to $72.2 million from
$66.0 million. This increase was primarily attributable to increases in revenues
from the ATWOOD EAGLE and GOODWYN 'A' of $3.1 million and $5.1 million,
respectively, offset somewhat by a $1.7 million decrease in revenues from NORTH
RANKIN 'A'. An analysis of contract revenues by rig for fiscal years 1995 and
1994 is as follows:
CONTRACT REVENUES
-------------------------------------
(In millions)
FISCAL FISCAL
1995 1994 VARIANCE
----- ----- --------
ATWOOD FALCON .................. $10.9 $11.1 $(0.2)
ATWOOD HUNTER .................. 10.2 10.2 0.0
ATWOOD EAGLE ................... 15.1 12.0 3.1
SEAHAWK ........................ 10.8 10.9 (0.1)
VICKSBURG ...................... 4.9 4.4 0.5
RIG-19 ......................... 7.1 6.9 0.2
RICHMOND ....................... 5.0 5.5 (0.5)
GOODWYN 'A' .................... 7.3 2.2 5.1
NORTH RANKIN 'A' ............... 0.9 2.6 (1.7)
OTHER .......................... 0.0 0.2 (0.2)
----- ----- -----
$72.2 $66.0 $ 6.2
===== ===== =====
The ATWOOD FALCON started fiscal year 1995 working in Korea; however, in the
second quarter of the year, the rig was relocated to China, and during the last
quarter, it was relocated to the Malaysia\Thailand Joint Development Area. The
reduced revenues during the relocation periods account for the small decrease in
revenues with respect to the ATWOOD FALCON. The ATWOOD HUNTER has worked
continuously in Malaysia for the same customer since April 1993. During the
first quarter of fiscal year 1994, the ATWOOD EAGLE was relocated from Malaysia
to the Australia/Indonesia Zone of Cooperation, where the rig worked
continuously until it was moved in the middle of September 1995 to sheltered
water to undergo certain planned surveys and repairs. Even with four more days
of idle time in fiscal 1995, revenues for the ATWOOD EAGLE
<PAGE>
Page 20
were higher due to the rig working at a higher dayrate level in fiscal 1995
compared to fiscal 1994. Relatively long-term, stable contracts for the SEAHAWK,
VICKSBURG and RIG-19 continued to provide consistency to these operations during
fiscal 1995. The $500,000 increase in VICKSBURG revenues was due to an increase
in the dayrate commencing in February 1995. In August 1995, the RICHMOND was
moved to sheltered water to undergo certain planned surveys and repairs. This
required downtime accounted for the RICHMOND's decrease in revenues. During
fiscal 1994, the Company received a standby fee related to GOODWYN 'A' while
awaiting commencement of drilling operations, which occurred during the first
quarter of fiscal 1995. The Company receives substantially higher revenues from
GOODWYN 'A' during drilling operations, resulting in an increase of revenues in
fiscal 1995 over fiscal 1994. The reduction in revenues from NORTH RANKIN 'A'
was due to the Company providing less labor services to this operation in fiscal
1995.
Contract drilling and management costs increased 15 percent from $44.3
million in fiscal 1994 to $50.8 million in fiscal 1995. This increase was
primarily attributable to increased costs on the ATWOOD EAGLE and GOODWYN 'A'.
An analysis of contract drilling and management costs by rig is as follows:
CONTRACT DRILLING AND
MANAGEMENT COSTS
------------------------------------
(In millions)
FISCAL FISCAL
1995 1994 VARIANCE
----- ----- -----
ATWOOD FALCON ................... $ 6.4 $ 7.0 $(0.6)
ATWOOD HUNTER ................... 7.2 7.0 0.2
ATWOOD EAGLE .................... 12.7 9.9 2.8
SEAHAWK ......................... 5.9 6.1 (0.2)
VICKSBURG ....................... 3.0 2.2 0.8
RIG-19 .......................... 5.1 4.6 0.5
RICHMOND ........................ 4.1 3.6 0.5
GOODWYN 'A' ..................... 5.2 1.5 3.7
NORTH RANKIN 'A' ................ 0.6 1.8 (1.2)
OTHER ........................... 0.6 0.6 0.0
----- ----- -----
$50.8 $44.3 $ 6.5
===== ===== =====
The reduction in ATWOOD FALCON costs in fiscal 1995 was due to the rig
working a portion of fiscal 1994 in Australia where costs are significantly
higher than in most countries of Southeast Asia. The ATWOOD HUNTER's costs have
been relatively unchanged due to its stable contract status. Cost increases for
the ATWOOD EAGLE were attributed to the rig working the entire year in the
Australia/Indonesia Zone of Cooperation where costs are higher than in Malaysia
and to costs incurred in performing certain required surveys and repairs during
the last two weeks of September 1995. In fiscal 1994, the VICKSBURG and RIG-19
received some personnel tax refunds which accounted for the increase in costs as
no such refunds were received in fiscal 1995. Like the ATWOOD EAGLE, the
RICHMOND had to undergo certain surveys and repairs in August 1995 which
accounted for its operating cost increases. The increase in GOODWYN 'A'
operating costs related directly to the commencement of drilling operations.
Even though the Company does not own this facility, the Company does provide
personnel and other operating support services. The decline in NORTH RANKIN 'A'
costs was due to a reduction in personnel services provided to this operation.
The Company acquired the remaining 50 percent interest in the ATWOOD
FALCON, ATWOOD HUNTER and ATWOOD EAGLE on the basis that these facilities are
"state-of-the-art" drilling rigs and will remain long-term productive assets.
Effective January 1, 1995, management increased its estimated depreciable lives
on these rigs by an additional five years. The effect of the change in
depreciable lives was $2.7 million
<PAGE>
Page 21
reduction in depreciation for the last nine months of fiscal 1995 compared to
fiscal 1994 and a corresponding increase in net income in fiscal year 1995 of
approximately $1.8 million or $.27 per share. An analysis of depreciation
expense by rig is as follows:
DEPRECIATION EXPENSE
------------------------
(In millions)
FISCAL FISCAL
1995 1994
----- -----
ATWOOD FALCON ........................ $ 3.1 $ 4.5
ATWOOD HUNTER ........................ 1.8 2.5
ATWOOD EAGLE ......................... 2.2 2.9
SEAHAWK .............................. 2.3 2.2
VICKSBURG............................. 0.0 0.0
RIG-19 ............................... 1.2 1.2
RICHMOND ............................. 0.3 0.0
OTHER ................................ 0.2 0.3
----- -----
$11.1 $13.6
===== =====
At the time the Company acquired the remaining interest in the ATWOOD FALCON,
ATWOOD HUNTER and ATWOOD EAGLE, effective as of December 31, 1994, these rigs
were incurring net losses, 50 percent of which were allocated to the limited
partner. As a result of this acquisition, for the last nine months of fiscal
year 1995, there was no accounting for a minority interest.
In fiscal 1995, the Company sold 33,000 shares of Mobil Corporation common
stock at a realized gain of $2.4 million. Investment income in fiscal years 1995
and 1994 of $2.8 million virtually offset interest expense for both years.
Foreign tax expense increased from approximately $500,000 in fiscal 1994 to $1.6
million in fiscal 1995, which accounted for substantially all of the increase in
the provision for income taxes.
LIQUIDITY AND CAPITAL RESOURCES
During fiscal 1996, operating cash flows (before changes in working capital
and other assets and liabilities) increased 36 percent from $14.9 million in
fiscal 1995 to $20.3 million, while working capital increased from $13.8 million
in fiscal 1995 to $26.2 million. These increases were due to improved operating
results. During fiscal 1996, the Company utilized internal funds to invest
approximately $3 million in completing the construction of RIG-200, to purchase
approximately $7 million in capital equipment for the ATWOOD HUNTER, ATWOOD
SOUTHERN CROSS and other rigs, to repay approximately $6 million of bank debt
and to reduce accounts payable by approximately $4 million. The Company ended
fiscal 1996 with $40.5 million in cash and securities compared to $37.9 million
at September 30, 1995.
In June 1996, the Company was awarded a contract for the ATWOOD HUNTER to
work on a firm two-year plus a one-year option Gulf of Mexico deep water
drilling program commencing in mid-1997. The option for the third year has
subsequently been exercised. The rig will be enhanced to drill in 3,500 feet of
water, and the Company will upgrade equipment and relocate the rig from
Southeast Asia to the United States Gulf of Mexico in mid-1997 at an aggregate
cost of approximately $42 to $45 million. The contract provides for a $10
million mobilization fee which will offset a portion of the Company's costs.
The ATWOOD FALCON and ATWOOD EAGLE, with current contracts that could expire
in November 1997, are also candidates for upgrade opportunities following
completion of their current drilling programs. The Company will pursue
profitable rig upgrade contract opportunities for both of these rigs which could
require upgrade investments of approximately $50 million per rig to achieve up
to 3,500 feet water depth drilling capability. Any substantial upgrade project
could take from six to seven months to complete.
The ATWOOD SOUTHERN CROSS, which was purchased by the Company in 1993,
remains idle in Australia as the Company continues to pursue a future contract
opportunity. The Company believes approximately $25 million will be required to
mobilize, refurbish and upgrade the rig to achieve 2,000 feet water
<PAGE>
Page 22
depth drilling capability. The Company has made commitments to purchase
approximately $5 million of long-lead time equipment for such an upgrade. The
Company continues to actively market this rig and is optimistic that a
profitable contract opportunity will be identified for the rig.
The VICKSBURG, a 300 foot jack-up currently working in production mode in
Australia, is also a candidate for upgrade. Depending on market conditions and
potential customer requirements, the Company's options upon completion of the
current contract (which could extend to January 1998) range from returning this
rig to drilling mode at costs of approximately $1 to $3 million or undertaking a
substantial upgrade at costs of approximately $10 to $30 million. The Company
currently estimates that expenditures of approximately $30 million would enable
the rig to be upgraded to provide for cantilevering for extended reach drilling,
increasing leg lengths, adding a top drive and providing other enhanced drilling
capabilities. The Company will evaluate the various utilization alternatives for
the VICKSBURG during fiscal 1997 in light of market conditions and contract
opportunities.
At September 30, 1996, the Company continued to have approximately $22.6
million invested in United States treasury bonds with maturities in the years
2000 and 2001. The Company's portfolio of accounts receivable is comprised of
major international corporate entities with stable payment experiences. The
Company continues to experience no difficulties in receivable collections.
At September 30, 1996, long-term notes payable consisted of $32.2 million
payable to a bank group which is secured by preferred mortgages on the ATWOOD
HUNTER and the ATWOOD EAGLE and an unsecured $2.3 million note payable in three
remaining annual $750,000 installments. The Company has a $10 million short-term
line of credit with a bank that is secured by the pledge of a portion of the
Company's United States treasury bonds, with no outstanding borrowings under
this line of credit at September 30, 1996. The Company also has a $3 million
unsecured short-term line of credit with a bank to support the issuance of
standby letters of guarantee, with approximately $1 million in commitments under
this facility at September 30, 1996.
In the past three years, the Company's capital requirements have been funded
primarily from cash on hand and from operating cash flow. As the planned and
possible rig upgrade opportunities are pursued, the Company expects to seek
additional funding. A substantial portion of the planned ATWOOD HUNTER upgrade
could be funded through cash on hand, operating cash flow and the Company's
existing $10 million line of credit. The Company would expect to finance
additional upgrade expenditures through a combination of operating cash flow,
equity or debt financing offerings or a sale of investment securities. The
Company continues to periodically review and adjust its planned capital
expenditures in light of current market conditions.
<PAGE>
Page 23
Atwood Oceanics, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
September 30,
- --------------------------------------------------------------------------------
(In thousands) 1996 1995
- --------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 17,565 $ 11,984
Accounts receivable 16,687 13,425
Inventories of materials and supplies,
at lower of average cost or market 5,454 4,904
Deferred tax assets 1,510 1,200
Prepaid expenses 2,954 2,753
-------- --------
Total Current Assets 44,170 34,266
-------- --------
SECURITIES HELD FOR INVESTMENT:
Held-to-maturity, at amortized cost 22,576 22,422
Available-for-sale, at fair value 351 3,516
-------- --------
22,927 25,938
-------- --------
PROPERTY AND EQUIPMENT, at cost:
Drilling vessels, equipment and
drill pipe 191,801 183,171
Other 4,810 4,569
-------- --------
196,611 187,740
Less - accumulated depreciation 105,487 96,313
-------- --------
Net Property and Equipment 91,124 91,427
-------- --------
DEFERRED COSTS AND OTHER ASSETS 1,088 1,222
-------- --------
$159,309 $152,853
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Page 24
Atwood Oceanics, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
September 30,
- --------------------------------------------------------------------------------
(In thousands, except share data) 1996 1995
- --------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Estimated current maturities of
long-term notes payable $ 7,933 $ 3,750
Short-term note payable --- 1,500
Accounts payable 2,615 6,260
Accrued liabilities 7,471 8,995
-------- --------
Total Current Liabilities 18,019 20,505
-------- --------
LONG-TERM NOTES PAYABLE,
net of estimated current maturities 26,540 35,569
-------- --------
DEFERRED CREDITS:
Income taxes 2,289 1,334
Other 6,907 553
-------- --------
9,196 1,887
-------- --------
SHAREHOLDERS' EQUITY:
Preferred stock, no par value;
1,000,000 shares authorized,
none outstanding --- ---
Common stock, $1 par value;
10,000,000 shares authorized with
6,691,000 and 6,629,000 issued and
outstanding in 1996 and 1995,
respectively 6,691 6,629
Paid-in capital 55,470 54,771
Net unrealized holding gain (loss)
on available-for-sale securities (139) 1,328
Retained earnings 43,532 32,164
-------- --------
Total Shareholders' Equity 105,554 94,892
-------- --------
$159,309 $152,853
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Page 25
Atwood Oceanics, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
For Years Ended September 30,
- ----------------------------------------------------------------------------
(In thousands, except per share amounts) 1996 1995 1994
- ----------------------------------------------------------------------------
REVENUES:
Contract drilling $78,555 $70,715 $63,640
Contract management 900 1,516 2,335
------- ------- --------
79,455 72,231 65,975
------- ------- --------
COSTS AND EXPENSES:
Contract drilling 50,912 50,241 42,799
Contract management 628 585 1,529
Depreciation 9,742 11,134 13,618
General and administrative 5,113 4,485 4,324
------- ------- --------
66,395 66,445 62,270
------- ------- --------
OPERATING INCOME 13,060 5,786 3,705
------- ------- --------
OTHER INCOME (EXPENSE):
Interest expense (2,522) (2,936) (2,892)
Investment income 2,510 2,804 2,819
Realized gain on sale of
securities 2,795 2,370 ---
------- ------- --------
2,783 2,238 (73)
------- ------- ---------
INCOME BEFORE MINORITY INTEREST
AND INCOME TAXES 15,843 8,024 3,632
MINORITY INTEREST IN LOSS OF
PARTNERSHIPS --- 908 3,303
------- ------- --------
INCOME BEFORE INCOME TAXES 15,843 8,932 6,935
PROVISION FOR INCOME TAXES 4,475 1,872 726
------- ------- --------
NET INCOME $11,368 $ 7,060 $ 6,209
======= ======= ========
EARNINGS PER COMMON SHARE $ 1.71 $ 1.07 $ .94
======== ======== =========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 6,664 6,591 6,582
======= ======= ======
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Page 26
Atwood Oceanics, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For Years Ended September 30,
- ----------------------------------------------------------------------------------------------
(In thousands) 1996 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income ................................................ $ 11,368 $ 7,060 $ 6,209
-------- -------- --------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation ........................................... 9,742 11,134 13,618
Amortization of deferred items ......................... 604 429 531
Deferred federal income tax provision (benefit) ........ 1,400 (400) (150)
Gain on sale of securities ............................. (2,795) (2,370) --
Gain on sale of equity in Indian joint venture ......... -- -- (201)
Minority interest in loss of partnerships .............. -- (908) (3,303)
Changes in assets and liabilities:
Decrease (increase) in accounts receivable ............. (3,412) 490 (3,147)
Increase (decrease) in accounts payable ................ (3,645) 2,532 670
Increase (decrease) in accrued liabilities ............. (1,524) 2,422 731
Prepayment of mobilization fees ........................ 3,000 -- --
Other .................................................. 2,216 (1,192) (358)
-------- -------- --------
5,586 12,137 8,391
-------- -------- --------
Net Cash Provided by Operating Activities ......... 16,954 19,197 14,600
-------- -------- --------
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from sale of securities ....................... 3,738 3,343 --
Capital expenditures ................................... (6,660) (4,545) (6,412)
Investment in Rig-200 .................................. (2,866) (7,872) (310)
Acquisition of interest in partnerships ................ -- (13,275) --
Proceeds from sale of equity in Indian joint venture ... -- -- 1,300
Payments received on notes receivable .................. -- 202 404
-------- -------- --------
Net Cash Used by Investing Activities ............. (5,788) (22,147) (5,018)
-------- -------- --------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from exercises of stock options ............... 761 545 --
Principal payments on long-term notes .................. (4,846) (3,130) (3,000)
Net payments to limited partner ........................ -- (100) (550)
Proceeds (repayment) of short-term note payable ........ (1,500) 1,500 --
-------- -------- --------
Net Cash Used by Financing Activities ............. (5,585) (1,185) (3,550)
-------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ........ 5,581 (4,135) 6,032
CASH AND CASH EQUIVALENTS, at beginning of period ........... 11,984 16,119 10,087
-------- -------- --------
CASH AND CASH EQUIVALENTS, at end of period ................. $ 17,565 $ 11,984 $ 16,119
======== ======== ========
Supplemental disclosure of cash flow information:
Cash paid during the year for domestic and
foreign income taxes ................................... $ 2,660 $ 1,558 $ 1,657
======== ======== ========
Cash paid during the year for interest ................. $ 2,478 $ 2,552 $ 2,380
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Page 27
Atwood Oceanics, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Unrealized
Common Stock Paid-in Holding Retained
(In thousands) Shares Amount Capital Gain (Loss) Earnings
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
September 30, 1993 .................... 6,582 $6,582 $54,273 $ -- $18,895
Net income ........................ -- -- -- -- 6,209
----- ------ ------- ------- -------
September 30, 1994 .................... 6,582 6,582 54,273 -- 25,104
Unrealized holding gain ........... -- -- -- 1,328 --
Exercises of employee stock
options ....................... 47 47 498 -- --
Net income ........................ -- -- -- -- 7,060
----- ------ ------- ------- -------
September 30, 1995 .................... 6,629 6,629 54,771 1,328 32,164
Unrealized holding gain at
September 30, 1995 realized
upon sale of securities in 1996 -- -- -- (1,482) --
Decrease in unrealized holding loss -- -- -- 15 --
Exercises of employee stock
options ....................... 62 62 699 -- --
Net income ........................ -- -- -- -- 11,368
----- ------ ------- ------- -------
September 30, 1996 .................... 6,691 $6,691 $55,470 $ (139) $43,532
===== ====== ======= ======= =======
</TABLE>
- ----------------------
Preferred stock, no par value, of 1,000,000 shares was authorized in 1975 and no
shares have been issued.
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Page 28
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Board of Directors of Atwood Oceanics, Inc.:
We have audited the accompanying consolidated balance sheets of Atwood
Oceanics, Inc. (a Texas corporation) and subsidiaries as of September 30, 1996
and 1995, and the related consolidated statements of operations, cash flows and
changes in shareholders' equity for each of the three years in the period ended
September 30, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Atwood Oceanics, Inc. and
subsidiaries as of September 30, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
September 30, 1996, in conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Houston, Texas
November 15, 1996
<PAGE>
Page 29
Atwood Oceanics, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF OPERATIONS
Atwood Oceanics, Inc. together with its wholly-owned subsidiaries
(collectively referred to herein as the "Company"), is engaged in the business
of international offshore drilling of exploratory and developmental oil and gas
wells and related support, management and consulting services. Presently, the
Company owns and operates a modern fleet of seven mobile offshore rigs and one
modular platform rig, as well as manages the operations of two operator-owned
platform rigs in Northwest Australia. The Company also owns a fifty percent
interest in a new generation platform rig. Currently, the Company is involved in
active operations in the territorial waters of Australia, Malaysia, Equatorial
Guinea, United States and the Malaysian/Thailand Joint Development Area.
Demand for drilling equipment is dependent on the exploration and development
programs of oil and gas companies, which is in turn influenced by the financial
conditions of such companies, by general economic conditions, by prices of oil
and gas, and from time to time, by political considerations and policies. The
Company's business operations are subject to the risks associated with a
business having a limited number of customers for which it can operate at any
given time. A decrease in the drilling programs of customers in the areas where
the Company is employed may adversely affect the Company's revenues. The
contracts under which the Company operates its drilling rigs are obtained either
through individual negotiations with the customer or by submitting proposals in
competition with the other drilling contractors and vary in their terms and
conditions. The Company competes with several other drilling contractors, most
of which are substantially larger than the Company and possess appreciably
greater financial and other resources. Price competition is generally the most
important factor in the drilling industry, but the technical capability of
specialized drilling equipment and personnel at the time and place required by
customers is also important. Other competitive factors include work force
experience, rig suitability, efficiency, condition of equipment, reputation and
customer relations. The Company believes that it competes favorably with respect
to these factors.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION -
The consolidated financial statements include the accounts of Atwood
Oceanics, Inc. ("AOI") and all of its wholly owned domestic and foreign
subsidiaries. The Company's 50 percent undivided interest in RIG-200 is
accounted for using the proportionate consolidation method (see Note 4). Prior
to December 31, 1994, AOI owned a 50 percent interest in two Texas limited
partnerships, Atwood Deep Seas, Ltd. ("Deep Seas") and Atwood Falcon I, Ltd.
("Falcon Ltd."), the accounts of which were included in the Company's
consolidated financial statements. The limited partner's interest in the net
assets and loss of the two partnerships was reflected in the Company's financial
statements as "minority interest in partnerships". (See Note 4 - "Acquisition of
Interest in ATWOOD HUNTER, ATWOOD EAGLE and ATWOOD FALCON"). All significant
intercompany accounts and transactions have been eliminated in consolidation.
FOREIGN EXCHANGE -
The U.S. dollar is the functional currency for all areas of operations of the
Company. Accordingly, monetary assets and liabilities denominated in foreign
currency are remeasured to U.S. dollars at the rate of exchange in effect at the
end of the year, items of income and expense are remeasured at average monthly
rates, and property and equipment and other nonmonetary amounts are remeasured
at historical rates. Gains and losses on foreign currency transactions and
remeasurements are included in drilling costs in the consolidated statements of
operations. The Company realized a foreign exchange gain of $240,000 in 1996,
with foreign exchange losses of $155,000 and $417,000 incurred in 1995 and 1994,
respectively.
<PAGE>
Page 30
DEPRECIATION, MAINTENANCE AND RETIREMENT POLICIES -
Depreciation is provided on the straight-line method over the following
estimated useful lives of the various classifications of assets:
Years
---------
Drilling vessels and related equipment 5-15
Drill pipe 3
Furniture and Other 3-10
Maintenance, repairs and minor replacements are charged against income as
incurred; major replacements and upgrades are capitalized and depreciated over
the remaining useful life of the asset as determined upon completion of the
work. The cost and related accumulated depreciation of assets sold, retired or
otherwise disposed are removed from the accounts at the time of disposition, and
any resulting gain or loss is reflected in the consolidated statements of
operations for the applicable period.
DEFERRED COSTS -
The Company defers the costs of moving a drilling rig to a new area and
amortizes such costs on a straight-line basis over the life of the applicable
drilling contract. There were no unamortized mobilization costs at September 30,
1996 or 1995.
The Company defers the cost of scheduled drydocking and the cost is charged
to expense over the period to the next scheduled drydocking (normally 30
months).
FEDERAL INCOME TAXES -
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109 "Accounting for Income Taxes".
Under SFAS No. 109, deferred income taxes are recorded to reflect the tax
consequences on future years of differences between the tax basis of assets and
liabilities and their financial reporting amounts at each year-end given the
provisions of enacted tax laws.
REVENUE RECOGNITION -
The Company accounts for drilling and management contract revenues using the
percentage of completion method of accounting, under which revenues are
recognized on a daily basis as earned. Mobilization revenues are first used to
cover the costs of mobilization with the excess revenues deferred and amortized
on a straight-line basis over the life of the applicable drilling contract. At
September 30, 1996, deferred revenues totaling $3 million were included in other
deferred credits on the accompanying consolidated balance sheet. There were no
deferred revenues at September 30, 1995.
CASH AND CASH EQUIVALENTS -
Cash and cash equivalents consist of cash in banks and certificates of
deposit which mature within three months of the date of purchase.
RECEIVABLES -
Based upon the Company's historical collection of accounts receivable, the
Company has not established an allowance for doubtful accounts.
<PAGE>
Page 31
INVESTMENTS -
Investments in held-to-maturity securities are stated at the amortized cost
at the balance sheet date. The Company has the ability and intent to hold such
securities to maturity. At September 30, 1996 and 1995, investments in
available-for-sale securities are carried at fair value with the unrealized
holding gain or loss, net of deferred tax, included in shareholders' equity.
EARNINGS PER COMMON SHARE -
Earnings per common share was computed by dividing net income by the weighted
average number of shares of common stock outstanding during each period. The
dilutive effect of stock options is immaterial.
STOCK-BASED COMPENSATION -
The Company accounts for employee stock-based compensation using the
intrinsic value method prescribed by Accounting Principles Board (APB) Opinion
No. 25, "Accounting for Stock Issued to Employees". Accordingly, the adoption of
SFAS No. 123, "Accounting for Stock-Based Compensation" in fiscal 1996 had no
effect on the Company's results of operations.
USE OF ESTIMATES -
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
RECLASSIFICATIONS -
Certain reclassifications have been made to fiscal 1995 and fiscal 1994
financial statements to conform to the fiscal 1996 classifications.
NOTE 3 - SECURITIES HELD FOR INVESTMENT
At the beginning of fiscal year 1995, the Company adopted SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities", which had an
immaterial effect on the consolidated balance sheet and had no effect on
reported earnings. All of the Company's investments in equity securities are
classified as "available-for-sale" and accordingly, are reflected in the
September 30, 1996 and 1995 Consolidated Balance Sheets at fair value, with the
aggregate unrealized gain or loss, net of related deferred tax liability or
asset, included in shareholders' equity. All of the Company's investment in
United States Treasury Bonds (which mature in 2000 and 2001) are classified as
"held-to-maturity" and accordingly, are reflected in the September 30, 1996 and
1995 Consolidated Balance Sheets at amortized cost.
During fiscal 1996 and fiscal 1995, 32,000 shares and 33,000 shares of Mobil
Corporation common stock were sold for $3.7 million and $3.3 million resulting
in realized gains, using average cost, of $2.8 million and $2.4 million,
respectively. An analysis of the Company's investment in marketable securities
at September 30, 1996 and 1995 is as follows (in thousands):
<PAGE>
Page 32
Amortized Unrealized
Cost Gain (Loss) Fair Value
--------- ----------- ----------
1996 -
Equity Securities $ 561 $ (210) $ 351
United States
Treasury Bonds 22,576 1,387 23,963
------- -------- -------
$23,137 $ 1,177 $24,314
======= ======== =======
1995 -
Equity Securities $ 1,504 $ 2,012 $ 3,516
United States
Treasury Bonds 22,422 2,204 24,626
------- -------- -------
$23,926 $ 4,216 $28,142
======= ======== =======
NOTE 4 - PROPERTY AND EQUIPMENT
RIG-200 -
In August 1994, Atwood Oceanics West Tuna Pty. Ltd. ("West Tuna"), an
Australian Company owned 50 percent by the Company and 50 percent by Helmerich &
Payne, Inc. ("H&P") (current owner of 24 percent of the Company's outstanding
common stock), was awarded a term contract for the design, construction and
operation of a new generation platform rig. The Company and H&P entered into a
joint venture agreement to construct, install and operate the new rig. RIG-200
was constructed in the United States during calendar year 1995; however, due to
project delays in Australia unrelated to the Company's and H&P's activities,
West Tuna was advised to delay shipment of the rig to Australia until September
1996. Under terms of the contract, a holding dayrate has been received since
January 1, 1996. In addition, West Tuna received a $6 million partial prepayment
of a $10 million mobilization fee originally due upon commencement of operations
in Australia. The Company's $3 million portion of this prepayment is reflected
in "Other Deferred Credits" in the September 30, 1996 Consolidated Balance
Sheet.
Since the Company has a 50 percent undivided ownership interest in RIG-200
and is actively involved in its operations, the Company accounts for its
investment in the rig on a proportionate consolidation method. Accordingly, the
Company's $11 million investment in RIG-200 at September 30, 1996, is reflected
in "Drilling Vessels, Equipment and Drill Pipe" in the Consolidated Balance
Sheet, with 50 percent of the rig's operating results for fiscal year 1996
reflected in the Company's Consolidated Statement of Operations.
ACQUISITION OF INTEREST IN ATWOOD HUNTER, ATWOOD EAGLE AND ATWOOD FALCON -
Effective as of December 31, 1994, the Company acquired the remaining 50
percent interest in the ATWOOD HUNTER, ATWOOD EAGLE and the ATWOOD FALCON, at an
aggregate purchase price of approximately $36 million. This purchase price
consisted of approximately $13 million cash and the issuance or assumption of
debt totaling approximately $23 million. Combined with the Company's previous 50
percent ownership, the Company became the sole owner of these semisubmersible
rigs. The transaction was accounted for using the purchase method of accounting.
When the Company acquired its initial interest in these rigs in fiscal 1990,
their estimated useful lives for depreciation purposes were ten years. The
Company acquired the remaining 50 percent interest in these rigs on the basis
that they will remain long-term productive assets; therefore, effective January
1995 management increased the estimated useful lives of these rigs by an
additional five years. The effect of the change in depreciable lives was a $2.7
<PAGE>
Page 33
million reduction in depreciation for the last nine months of fiscal 1995
compared to fiscal 1994 and a corresponding increase in net income of
$1.8 million or $.27 per share.
ATWOOD HUNTER -
In June 1996, the Company entered into a contract with British-Borneo
Petroleum Inc. for the use of the ATWOOD HUNTER on a firm two year plus a
one-year option Gulf of Mexico deep water drilling program commencing in mid-
1997. The option for the third year has subsequently been exercised. To enable
the ATWOOD HUNTER to perform this contract, the Company has committed to upgrade
equipment and relocate the rig from Southeast Asia to the United States Gulf of
Mexico at an aggregate cost of approximately $42 to $45 million. The contract
also requires the payment of a $10 million mobilization fee which will offset a
portion of the Company's costs.
ATWOOD SOUTHERN CROSS -
In October 1993, the Company purchased the ATWOOD SOUTHERN CROSS, a
second-generation semisubmersible which has been idle in Australia since the end
of 1992, for $1.5 million. The Company believes approximately $25 million will
be required to mobilize, refurbish and upgrade the rig to achieve 2,000 feet
water depth drilling capability. The Company has incurred approximately $1.8
million in capitalized costs to prepare the rig for various utilization
alternatives and has made commitments to purchase approximately $5 million of
long-lead time upgrade equipment for such an upgrade. The Company continues to
actively market the rig and remains optimistic that a profitable contract
opportunity will be identified for the rig.
ADOPTION OF FASB STATEMENT NO. 121 -
In fiscal 1995, the Company adopted SFAS No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of".
Since adoption, SFAS No. 121 has had no impact on the Company's financial
statements.
NOTE 5 - NOTES PAYABLE
LONG-TERM NOTES PAYABLE -
A summary of long-term notes payable is as follows (in thousands):
1996 1995
---- ----
Notes payable to bank group by Deep Seas,
bearing interest (market adjustable)
at approximately 7 percent per
annum at September 30, 1996 .......... $32,223 $36,319
Term note, bearing interest at 6
percent per annum .................... 2,250 3,000
------- -------
34,473 39,319
Less - estimated current maturities ..... 7,933 3,750
------- -------
$26,540 $35,569
======= =======
<PAGE>
Page 34
Required principal payments on the bank group debt are $750,000 per quarter
through December 31, 1997, with a final balloon payment of the remaining balance
payable in March 1998. The loan documents with the bank group require that
additional principal payments be made each quarter if quarterly cash flow
exceeds a defined level. Due to a significant improvement in Deep Seas'
operating results, Deep Seas made additional principal payments to the bank
group of approximately $1.1 million and $2.2 million in July 1996 and October
1996, respectively. The October 1996 payment is reflected in year-end estimated
current maturities. Estimated additional principal payments of approximately $2
million will be required based on the estimated excess cash flow of Deep Seas
during the first quarter of fiscal year 1997 (included in estimated current
maturities of long-term debt). The bank group's collateral for the long-term
notes consists principally of preferred mortgages on the ATWOOD HUNTER and
ATWOOD EAGLE. The loan documents also prohibit the cash payment of management
fees, profits and certain other cash disbursements by Deep Seas prior to the
time the notes are paid in full. There is also an annual limit on the amount of
capital expenditures that can be made by Deep Seas. In fiscal 1995, Deep Seas
obtained a waiver from the Bank Group with respect to expenditures which
exceeded the capital expenditures limit, and it is anticipated that a similar
waiver will be required in fiscal 1997 in connection with the upgrade of the
ATWOOD HUNTER (see Note 4).
A portion of the purchase price of the limited partner's interest is the
ATWOOD HUNTER, ATWOOD FALCON and ATWOOD EAGLE (see Note 4) included the issuance
of a $3 million unsecured note payable in four annual $750,000 installments.
The estimated maturities of long-term debt are as follows (in thousands):
FISCAL YEAR AMOUNT
----------- --------
1997 $ 7,933
1998 25,790
1999 750
--------
$ 34,473
========
LINES OF CREDIT -
The Company has a $10 million short-term line of credit with a bank that is
secured by the pledge of a portion of the Company's United States treasury
bonds. This line of credit is used to satisfy short-term working capital
requirements. At September 30, 1996, there were no outstanding borrowings under
this line of credit. At September 30, 1995, $1.5 million bearing interest of 6
percent was borrowed under this line of credit.
The Company also has a $3 million unsecured short-term line of credit with a
bank to support issuance, when required, of standby letters of guarantee and the
Indian tax guarantee (see Note 6). At September 30, 1996, standby letters of
guarantee in the aggregate amount of approximately $1 million were outstanding
under this facility.
NOTE 6 - INCOME TAXES
Domestic and foreign income (loss) before income taxes and minority interest
for the three years ended September 30, 1996 are as follows (in thousands):
1996 1995 1994
--------- -------- ---------
Domestic income (loss) $ 17,508 $ 6,237 $ (2,869)
Foreign income (loss) (1,665) 1,787 6,501
---------- -------- ---------
$ 15,843 $ 8,024 $ 3,632
========= ======== =========
<PAGE>
Page 35
The provision (benefit) for domestic and foreign taxes on income consists of
the following (in thousands):
Fiscal Fiscal Fiscal
1996 1995 1994
------ ------- -----
Current domestic provision .......... $ 452 $ 700 $ 400
Deferred domestic provision (benefit) 1,400 (400) (150)
Current foreign provision ........... 2,623 1,572 476
------ ------- -----
$4,475 $ 1,872 $ 726
====== ======= =====
Effective October 1, 1993, the Company adopted SFAS No. 109, "Accounting for
Income Taxes". As of October 1, 1993, there was no cumulative effect of the
accounting change for income taxes reflected in the Company's statement of
operations. The components of the deferred income tax assets (liabilities) as of
September 30, 1996 and 1995 are summarized as follows (in thousands):
September 30,
----------------------
1996 1995
-------- --------
Deferred tax assets -
Net operating loss carryforwards ............ $ 2,950 $ 4,570
Investment tax credit carryforwards ......... 2,460 3,620
Book reserves ............................... 1,530 1,730
Difference in book and tax basis of equipment 2,980 5,590
-------- --------
9,920 15,510
-------- --------
Deferred tax liabilities -
Income recognized for tax in excess of book . 5,970 7,870
Deferred charges ............................ 450 430
Unrealized holding gain (loss) on
available-for-sale securities .......... (71) 684
-------- --------
6,349 8,984
-------- --------
Net deferred tax assets before
valuation allowance ..................... 3,571 6,526
Valuation allowances ........................... (4,350) (6,660)
-------- --------
Net deferred tax asset (liability) ....... $ (779) $ (134)
======== ========
Net current deferred tax assets ................ $ 1,510 $ 1,200
Net noncurrent deferred tax liabilities ........ (2,289) (1,334)
-------- --------
Net deferred tax asset (liability) ....... $ (779) $ (134)
======== ========
U.S. deferred taxes have not been provided on foreign earnings totaling
approximately $3.8 million which are permanently invested abroad. Foreign
tax credits totaling approximately $600,000 are available to reduce the
U.S. taxes on such amounts.
<PAGE>
Page 36
The differences between the statutory and the effective income tax rate are
as follows:
Fiscal Fiscal Fiscal
1996 1995 1994
---- ---- ----
Statutory income tax rate ...................... 34% 34% 34%
Increase (decrease) in tax rate resulting from -
Foreign tax rate differentials, net of Foreign
tax credit utilization................... 12 1 (18)
Book depreciation on partnerships'
assets with no tax basis ................ - - 19
Investment tax credits ..................... - - (14)
Change in valuation allowance .............. (15) (10) -
Financial income not subject to domestic
income taxes ............................ - (1) (2)
Other, net ................................. (3) (3) (9)
--- --- ---
Effective income tax rate ...................... 28% 21% 10%
=== === ===
The Company has United States net operating loss carryforwards totaling $8.7
million which expire in the fiscal years 2001 through 2003 and investment tax
credit carryforwards totaling $2.5 million which expire in the fiscal years 1997
through 2001. Due to various utilization limitations, management estimates that
a significant portion of these tax attributes will not be available to reduce
future tax obligations; accordingly, a $4.4 million valuation allowance is
recorded as of September 30, 1996
For several years, the Company has pursued legal action to collect certain
tax refund claims in India. As a result of favorable court decisions in India,
and upon the Company providing a letter of guarantee, the Company received a tax
refund in 1994 of $639,000 (net of taxes on interest and other related expense),
which is reflected in the balance sheet as other deferred credits, pending
ultimate resolution of the issue by the Indian High Court.
NOTE 7 - CAPITAL STOCK
The Company has a stock option plan ("Stock Plan") under which non-qualified
and incentive stock options may be granted to officers and key employees through
December 5, 2000. The maximum number of shares of common stock that may be
granted under the Stock Plan is 330,000. The Company also has options
outstanding to purchase 23,100 shares under an incentive stock option plan
("Incentive Plan") which expired for future grant purposes on November 17, 1991.
Under both plans, the exercise price of each option equals the market price of
the Company's stock on the date of grant, and all outstanding options have a
maximum term of 10 years. Under the Incentive Plan, options vest over a period
from the fifth to the tenth year from the date of grant and under the Stock
Plan, options vest over a period from the second to the fifth year from the date
of grant.
<PAGE>
Page 37
A summary of the status of the Company's plans as of September 30, 1996, 1995
and 1994, and changes during the years ended on those dates is presented below:
<TABLE>
<CAPTION>
1996 1995 1994
------------------------ ----------------------- ---------------------------
WEIGHTED- WEIGHTED- WEIGHTED-
NUMBER OF AVERAGE NUMBER OF AVERAGE NUMBER OF AVERAGE
OPTIONS EXERCISE PRICE OPTIONS EXERCISE PRICE OPTIONS EXERCISE PRICE
--------- -------------- --------- -------------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of
year 240,100 $12.29 254,500 $12.19 258,800 $12.44
Granted 75,500 34.49 32,000 13.13 44,000 13.38
Exercised (62,200) 12.23 (46,400) 11.75 --- ---
Forfeited --- --- --- --- (18,000) 12.79
Expired --- --- --- --- (30,300) 16.25
-------- -------- ---------
Outstanding at end of year 253,400 $18.92 240,100 $12.29 254,500 $12.19
======== ======== ========
Exercisable at end of year 82,338 $12.04 79,987 $12.12 58,300 $12.48
======== ======== ========
Available for grant at end of
year --- 75,500 107,500
======== ======== ========
Weighted-average fair value of
options granted during the
year $ 13.35
========
</TABLE>
The following table summarizes information about stock options outstanding at
September 30, 1996:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
---------------------------------------------- ---------------------------------
WEIGHTED-
NUMBER AVERAGE WEIGHTED- NUMBER
RANGE OF OUTSTANDING REMAINING AVERAGE EXERCISABLE WEIGHTED-AVERAGE
EXERCISE PRICES AT 9/30/96 CONTRACTUAL LIFE EXERCISE PRICE AT 9/30/96 EXERCISE PRICE
- --------------- ----------- ---------------- -------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
$9.75 to 12.25 69,125 4.8 years $ 10.81 36,402 $ 10.53
13.00 to 14.75 108,775 6.4 years 13.28 45,936 13.24
33.25 to 37.94 75,500 9.5 years 34.49 --- ---
-------- -------
9.75 to 37.94 253,400 6.9 years $ 18.92 82,338 $ 12.04
======== =======
</TABLE>
As permitted by SFAS No. 123, the Company applies APB Opinion No. 25 and
related Interpretations in accounting for its stock option plans. Accordingly,
no compensation cost has been recognized for its stock option plans. Had
compensation costs been determined based on the fair value at the grant dates
for awards made in fiscal 1996 consistent with the method of SFAS No. 123, the
Company's net income and earnings per share would have been reduced to the pro
forma amounts indicated below (in thousands, except for per share amounts):
Net Income As reported $11,368
Pro forma 11,291
Earnings per share As reported $ 1.71
Pro forma 1.69
<PAGE>
Page 38
The fair value of grants made in fiscal 1996 was estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted-average
assumptions used: risk-free interest rate of 5.8 percent, expected volatility of
33.7 percent, expected lives of 5 years and no dividend yield.
NOTE 8 - RETIREMENT PLAN
The Company has a contributory retirement plan (the "Plan") under which
qualified participants may make contributions of up to 5% of their compensation,
as defined (the basic contribution). The Company makes a contribution to the
Plan equal to twice the basic contribution. Company contributions vest 100
percent to each participant beginning with the fourth year of participation. If
a participant terminates employment before becoming fully vested, the unvested
portion is credited to the Company's account and can be used only to offset
Company contribution requirements. The Company used $58,000 of forfeitures in
fiscal 1996 and $112,000 of forfeitures in fiscal 1995 to reduce its cash
contribution requirements,which resulted in actual contributions of $738,000 in
fiscal 1996 and $637,000 in fiscal 1995. In fiscal 1994, the Company made cash
contributions of $702,000 and did not utilize any forfeitures to reduce its
contribution requirements. As of September 30, 1996, there remains approximately
$74,000 of contribution forfeitures which can be utilized to reduce future
Company cash contribution requirements.
NOTE 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values of cash and cash equivalents, accounts receivable,
accounts payable and accrued liabilities included in the accompanying
Consolidated Balance Sheets approximated fair value due to the short maturity of
these instruments. Since the $32.2 million note payable to the bank group has a
market adjustable interest rate and a short maturity, the carrying value of this
instrument approximates fair value. Although the $2.25 million term note has a
fixed 6 percent interest rate at September 30, 1996, it also approximates fair
value. The Company's only financial instruments at September 30, 1996 with a
fair value different from carrying value are marketable securities; the
difference of which is shown in Note 3.
NOTE 10 - CONCENTRATION OF MARKET AND CREDIT RISK
All of the Company's customers are in the oil and gas offshore exploration
and production industry. This industry concentration has the potential to impact
the Company's overall exposure to market and credit risks, either positively or
negatively, in that the Company's customers could be affected by similar changes
in economic, industry or other conditions. However, the Company believes that
the credit risk posed by this industry concentration is offset by the
creditworthiness of the Company's customer base. The Company's portfolio of
accounts receivable is comprised of major international corporate entities and
government organizations with stable payment experience. Historically, the
Company's uncollectible accounts receivable have been immaterial, and typically,
the Company does not require collateral for its receivables.
Drilling revenues for fiscal 1996 include $25.6 million, $11.5 million and
$8.4 million in revenues received from Esso Australia Limited/Esso Production
Malaysia, Inc., Carigali-Triton Operating Company Sdn. Bhd. and Mobil Equatorial
Guinea Inc., respectively. Drilling revenues for fiscal 1995 include $24.8
million, $16.0 million and $7.5 million in revenues from Esso Australia
Limited/Esso Production Malaysia, Inc., BHP Petroleum Pty. Ltd. and Woodside
Offshore Petroleum Pty. Ltd., respectively. Drilling revenues for fiscal 1994
included $24.8 million and $6.7 million in revenues received from Esso Australia
Limited/Esso Production Malaysia, Inc. and Western Mining Corporation Limited,
respectively.
NOTE 11 - OPERATIONS BY GEOGRAPHIC AREAS
The Company is engaged in offshore contract drilling. The contract drilling
operations consist of contracting Company owned or managed offshore drilling
equipment primarily to major oil and gas exploration companies. Operating income
(loss) is contract revenues less operating expenses. In computing operating
income (loss) for each geographic area, none of the following items were
considered: investment income or gains on sale of securities, general corporate
expenses, interest expense, minority interest in loss of partnerships and
domestic and foreign income taxes. Identifiable assets are those assets that are
used by the Company in operations in each geographic area. General corporate
assets are principally investments in marketable securities.
<PAGE>
Page 39
A summary of revenues, operating income and identifiable assets by geographic
areas is as follows (in thousands):
Fiscal Fiscal Fiscal
1996 1995 1994
-------- -------- ---------
CONTRACT REVENUES:
United States $ 6,208 $ 4,981 $ 5,483
Australia 31,043 35,314 31,192
Southeast Asia 33,774 31,936 28,935
Africa 8,430 --- ---
India/Middle East --- --- 365
-------- -------- ---------
$ 79,455 $ 72,231 $ 65,975
======== ======== =========
OPERATING INCOME
United States $ 42 $ (603) $ 1,160
Australia 8,018 6,562 6,013
Southeast Asia 6,316 4,318 902
Africa 3,831 --- ---
India/Middle East (34) (6) (46)
General corporate expense (5,113) (4,485) (4,324)
--------- --------- ----------
$ 13,060 $ 5,786 $ 3,705
======== ========= =========
IDENTIFIABLE ASSETS:
United States $ 31,071 $ 22,599 $ 19,132
Australia 19,365 42,143 39,182
Southeast Asia 64,163 62,166 63,024
Africa 21,780 --- ---
India/Middle East 3 7 9
General corporate 22,927 25,938 32,113
-------- -------- ---------
$159,309 $152,853 $ 153,460
======== ======== =========
<PAGE>
Page 40
NOTE 12 - QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly results for fiscal years 1996 and 1995 are as follows:
QUARTERS ENDED
------------------------------------------------
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
------------------------------------------------
(In thousands, except per share amounts)
1996
Revenues ................. $18,138 $19,086 $19,127 $23,104
Income before income taxes 1,308 2,281 3,638 8,616(a)
Net income ............... 662 1,331 2,379 6,996
Earnings per common share .10 .20 .36 1.05
1995
Revenues ................. $18,306 $18,314 $18,548 $17,063
Income before income taxes 1,933 2,132 3,912(b) 955
Net income ............... 1,743 1,287 3,191 839
Earnings per common share .26 .20 .48 .13
(a)The Company sold 32,000 shares of Mobil Corporation common stock which
resulted in a $2.8 million positive effect on fiscal 1996 fourth quarter
results.
(b)The Company sold 33,000 shares of Mobil Corporation common stock which
resulted in a $2.4 million positive effect on fiscal 1995 third quarter
results.
<PAGE>
Page 41
DIRECTORS
ROBERT W. BURGESS (3)
Senior Vice President
CIGNA Investment Division
CIGNA Companies
Bloomfield, Connecticut
GEORGE S. DOTSON (1, 2, 3)
Vice President
Helmerich & Payne, Inc.
President
Helmerich & Payne International
Drilling Co.
Tulsa, Oklahoma
W. H. HELMERICH, III
Chairman
Helmerich & Payne, Inc.
Tulsa, Oklahoma
HANS HELMERICH (1, 3)
President, Chief Executive Officer
Helmerich & Payne, Inc.
Tulsa, Oklahoma
JOHN R. IRWIN (1)
President, Chief Executive Officer
Atwood Oceanics, Inc.
Houston, Texas
WILLIAM J. MORRISSEY (2)
Bank Executive, Retired
Elkhorn, Wisconsin
(1) Executive Committee
(2) Audit Committee
(3) Compensation Committee
ANNUAL MEETING
The annual meeting of stockholders will be held on February 13, 1997 at the
Company's principal office: 15835 Park Ten Place Drive, Houston, Texas. A formal
notice of the meeting together with a proxy statement and form of proxy will be
mailed to stockholders about January 13, 1997.
<PAGE>
OFFICERS
JOHN R. IRWIN
President, Chief Executive Officer
JAMES M. HOLLAND
Senior Vice President and Secretary
GLEN P. KELLEY
Vice President - Contracts and Administration
LARRY P. TILL
Vice President - Operations
TRANSFER AGENT AND REGISTRAR
Liberty Bank & Trust of Oklahoma City, N.A.
P. O. Box 25848
100 N. Broadway, 7th Floor (73102)
Oklahoma City, OK 73125
FORM 10-K
A copy of the Company's Form 10-K as filed with the Securities and Exchange
Commission is available free on request by writing to:
Secretary, Atwood Oceanics, Inc.
P. O. Box 218350
Houston, Texas 77218
STOCK PRICE INFORMATION -
Atwood Oceanics, Inc. common stock is traded on The Nasdaq Stock Market
(NASDAQ) under the symbol "ATWD". No cash dividends on common stock were paid in
fiscal year 1995 or 1996, and none are anticipated in the foreseeable future. As
of September 30, 1996, there were over 400 beneficial owners of the common stock
of Atwood Oceanics, Inc. As of November 30, 1996, the closing sale price of the
common stock of Atwood Oceanics, Inc., as reported by NASDAQ, was $55.50 per
share. The following table sets forth the range of high and low sales prices per
share of common stock as reported by NASDAQ for the periods indicated.
1995 1996
------------------- -------------------
QUARTERS ENDED LOW HIGH LOW HIGH
December 31 11 3/4 14 1/4 16 1/2 27
March 31 10 3/8 14 3/8 24 1/2 37 3/4
June 30 13 5/8 16 1/2 36 45 1/4
September 30 15 1/4 22 3/4 40 50 1/2
<PAGE>
Page 43
APPENDIX
The following graphic and image information in the form of "Bar Charts" are
located in the Annual Report immediately following "Highlights".
BAR CHART - CONTRACT REVENUES ($ MILLIONS)
1992 1993 1994 1995 1996
- ---- ---- ---- ---- ----
$44.7 $51.8 $66.0 $72.2 $79.5
BAR CHART - EARNINGS, BEFORE DEPRECIATION, INTEREST AND TAXES ($ MILLIONS)
1992 1993 1994 1995 1996
- ---- ---- ---- ---- ----
$4.3 $9.3 $15.3 $20.8 $25.3
BAR CHART - OPERATING CASH FLOW ($ MILLIONS)
1992 1993 1994 1995 1996
- ---- ---- ---- ---- ----
$2.9 $8.1 $16.8 $14.9 $20.3
BAR CHART - NET INCOME (LOSS) ($ MILLIONS)
1992 1993 1994 1995 1996
- ---- ---- ---- ---- ----
$(20.9) $(1.8) $6.2 $7.1 $11.4
BAR CHART - CAPITAL EXPENDITURES ($ MILLIONS)
1992 1993 1994 1995 1996
- ---- ---- ---- ---- ----
$15.5 $5.3 $6.4 $25.7 $9.5
BAR CHART - CASH AND SECURITIES HELD FOR INVESTMENT ($ MILLIONS)
1992 1993 1994 1995 1996
- ---- ---- ---- ---- ----
$33.9 $35.0 $41.0 $38.1 $40.5
Page 44
EXHIBIT 21.1
SUBSIDIARY COMPANIES AND STATE OR
JURISDICTION OF INCORPORATION
All Oceans Drilling B.V. Netherlands 100%
Alpha Offshore Drilling Services Cayman Island B.W.I. 100%
Atwood Drilling Inc. Delaware 100%
Atwood Offshore Inc. Delaware 100%
Atwood Hunter Co. Delaware 100%
Atwood Oceanics Australia Pty. Ltd. Australia 100%
Atwood Oceanics Drilling Company Texas 100%
Atwood Oceanics Drilling Pty. Ltd. Australia 100%
Atwood Oceanics International, S.A. Panama 100%
Atwood Oceanics (M) Sdn. Bhd. Malaysia 100%
Atwood Oceanics (NZ) Limited New Zealand 100%
Atwood Oceanics Pacific Limited Cayman Island B.W.I. 100%
Atwood Oceanics Platforms Pty. Ltd. Australia 100%
Atwood Oceanics Service Pty. Ltd. Australia 100%
Atwood Oceanics West Tuna Pty. Ltd. Australia 50%
Aurora Offshore Services GmbH Germany 100%
Clearways Drilling (M) Sdn. Bhd. Malaysia 30%
Clearways Offshore Development Drilling Sdn. Bhd. Malaysia 30%
Deep Seas Drilling Pty. Ltd. Australia 100%
Drillquest (M) Sdn. Bhd. Malaysia 90%
Eagle Oceanics, Inc. Delaware 100%
Oceandrill (M) Sdn. Bhd. Malaysia 90%
PT Pentawood Offshore Drilling Indonesia 80%
Swiftdrill, Inc. Texas 100%
Swiftdrill Nigeria Limited Nigeria 60%
Page 45
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated November 15, 1996, incorporated by reference in this Form 10-K,
into the Company's previously filed Registration Statement Nos. 33-36921 and
33-52065 on Form S-8.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Houston, Texas
December 20, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS DESCRIBED IN ITEM 14 OF THE COMPANY'S ANNUAL REPORT ON FORM
10K FOR THE YEAR ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> SEP-30-1996 SEP-30-1995
<PERIOD-END> SEP-30-1996 SEP-30-1995
<CASH> 17,565 11,984
<SECURITIES> 22,927 25,938
<RECEIVABLES> 16,687 13,425
<ALLOWANCES> 0 0
<INVENTORY> 5,454 4,904
<CURRENT-ASSETS> 44,170 34,266
<PP&E> 196,611 187,740
<DEPRECIATION> 105,487 96,313
<TOTAL-ASSETS> 159,309 152,853
<CURRENT-LIABILITIES> 18,019 20,505
<BONDS> 26,540 35,569
6,691 6,629
0 0
<COMMON> 0 0
<OTHER-SE> 55,331 56,099
<TOTAL-LIABILITY-AND-EQUITY> 159,309 152,853
<SALES> 79,455 72,231
<TOTAL-REVENUES> 79,455 72,231
<CGS> 56,653 55,311
<TOTAL-COSTS> 66,375 66,445
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 2,522 2,936
<INCOME-PRETAX> 15,843 8,932
<INCOME-TAX> 4,475 1,872
<INCOME-CONTINUING> 11,368 7,060
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 11,368 7,060
<EPS-PRIMARY> 1.71 1.07
<EPS-DILUTED> 1.71 1.07
</TABLE>
