<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
------------------------
FORM 10-Q
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
FOR THE TRANSITION PERIOD FROM _________________ TO ________________
COMMISSION FILE NUMBER: 0-18309
------------------------
MARINE DRILLING COMPANIES, INC.
(Exact name of registrant as specified in its charter)
TEXAS 74-2558926
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
ONE SUGAR CREEK CENTER BLVD., SUITE 600, SUGAR LAND, TEXAS 77478-3556
(Address of principal executive offices and zip code)
(281) 243-3000
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and formal fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 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
filing requirements for the past 90 days. Yes [X]. No [ ].
NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AT OCTOBER 31, 1999 -- 57,183,158
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MARINE DRILLING COMPANIES, INC.
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Index to Financial Statements
Independent Auditors' Review Report..................................................... 1
Consolidated Balance Sheets -
September 30, 1999 (unaudited) and December 31, 1998.................................... 2
Consolidated Statements of Operations (unaudited) -
Three and Nine Months Ended September 30, 1999 and 1998................................. 3
Consolidated Statements of Cash Flows (unaudited) -
Nine Months Ended September 30, 1999 and 1998........................................... 4
Notes to Consolidated Financial Statements.............................................. 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................................................. 9
Item 3. Quantitative and Qualitative Disclosures about Market Risk.................................... 16
PART II - OTHER INFORMATION
Item 1. Legal Proceedings............................................................................. 17
Item 6. Exhibits and Reports on Form 8-K.............................................................. 17
SIGNATURES............................................................................................... 19
</TABLE>
<PAGE> 3
INDEPENDENT AUDITORS' REVIEW REPORT
The Board of Directors and Shareholders
Marine Drilling Companies, Inc.:
We have reviewed the accompanying consolidated balance sheet of Marine
Drilling Companies, Inc. and subsidiaries as of September 30, 1999, the related
consolidated statements of operations for the three-month and nine-month periods
ended September 30, 1999 and 1998, and the related consolidated statements of
cash flows for the nine-month periods ended September 30, 1999 and 1998. These
consolidated financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the consolidated financial statements referred to above
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Marine Drilling Companies,
Inc. and subsidiaries as of December 31, 1998, and the related consolidated
statements of operations, shareholders' equity and cash flows for the year then
ended (not presented herein); and in our report dated January 26, 1999, we
expressed an unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying consolidated balance
sheet as of December 31, 1998 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
KPMG LLP
Houston, Texas
October 26, 1999
1
<PAGE> 4
MARINE DRILLING COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
1999 1998
------------ ------------
(Unaudited)
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 8,322 $ 12,576
Accounts receivable - trade and other, net 20,811 23,176
Prepaid expenses and other 2,802 3,290
Inventory 407 579
------------ ------------
Total current assets 32,342 39,621
Property and equipment 698,086 500,510
Less accumulated depreciation 87,649 68,881
------------ ------------
Property and equipment, net 610,437 431,629
Other 3,380 4,434
------------ ------------
$ 646,159 $ 475,684
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 19,986 $ 8,927
Accrued expenses 11,625 20,667
Current tax liability -- 2,558
Employer's liability claims, current 474 770
------------ ------------
Total current liabilities 32,085 32,922
Long-term debt 175,000 50,000
Other non-current liabilities 4,713 2,046
Deferred income taxes 24,775 29,128
Shareholders' equity:
Common stock, par value $.01. Authorized 200,000,000 shares;
issued and outstanding 57,146,049 and 52,365,537 shares,
as of September 30, 1999 and December 31, 1998, respectively 571 524
Common stock restricted (1,196) (1,596)
Additional paid-in capital 262,769 206,603
Retained earnings from January 1, 1993 147,442 156,057
------------ ------------
Total shareholders' equity 409,586 361,588
------------ ------------
Commitments and contingencies -- --
------------ ------------
$ 646,159 $ 475,684
============ ============
</TABLE>
See notes to consolidated financial statements and
accompanying auditors' review report.
2
<PAGE> 5
MARINE DRILLING COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ ------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $ 35,263 $ 63,452 $ 70,593 $ 185,057
Costs and Expenses:
Contract drilling 19,801 28,595 53,095 77,801
Depreciation and amortization 9,622 5,341 19,113 15,508
General and administrative 2,314 3,317 9,211 9,207
---------- ---------- ---------- ----------
31,737 37,253 81,419 102,516
---------- ---------- ---------- ----------
Operating income (loss) 3,526 26,199 (10,826) 82,541
---------- ---------- ---------- ----------
Other Income (Expense):
Interest expense (2,144) (104) (2,565) (343)
Interest income 378 379 803 1,467
Other income 323 335 282 812
---------- ---------- ---------- ----------
(1,443) 610 (1,480) 1,936
---------- ---------- ---------- ----------
Income (loss) before income taxes 2,083 26,809 (12,306) 84,477
Income tax expense (benefit) (813) 9,884 (3,691) 30,685
---------- ---------- ---------- ----------
Net income (loss) $ 2,896 $ 16,925 $ (8,615) $ 53,792
========== ========== ========== ==========
Earnings (loss) per share:
Basic $ 0.05 $ 0.32 $ (0.16) $ 1.03
Diluted $ 0.05 $ 0.32 $ (0.16) $ 1.02
Average common shares outstanding:
Basic 57,133 52,289 54,633 52,173
Diluted 57,708 52,623 54,633 52,728
</TABLE>
See notes to consolidated financial statements and
accompanying auditors' review report.
3
<PAGE> 6
MARINE DRILLING COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------
1999 1998
---------- ----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income (loss) $ (8,615) $ 53,792
Adjustments to reconcile net income to net cash provided
by operating activities:
Deferred income taxes (4,353) 8,651
Tax benefits related to common stock issued pursuant to
long-term incentive plan 48 1,904
Depreciation and amortization 19,113 15,508
Changes in operating assets and liabilities:
Receivables 2,365 10,505
Other current assets 660 1,997
Payables, accrued expenses, current taxes and
employer's liability claims 1,830 26,447
Other 2,462 (1,918)
---------- ----------
Net cash provided by operating activities 13,510 116,886
---------- ----------
Cash Flows From Investing Activities:
Purchase of equipment (197,986) (116,537)
Proceeds from disposition of equipment 428 1,099
Acquisition of remaining minority interest in consolidated subsidiary -- (2,319)
---------- ----------
Net cash used in investing activities (197,558) (117,757)
---------- ----------
Cash Flows From Financing Activities:
Proceeds from long-term debt 125,000 --
Proceeds from sale of common stock 54,417 --
Proceeds from exercise of stock options 377 751
---------- ----------
Net cash provided by financing activities 179,794 751
---------- ----------
Net decrease in cash and cash equivalents (4,254) (120)
Cash and cash equivalents at beginning of period 12,576 20,619
========== ==========
Cash and cash equivalents at end of period $ 8,322 $ 20,499
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 5,254 $ 275
Income taxes paid 3,171 18,496
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Issuance of 11,350 and 75,400 shares in 1999 and 1998 respectively, of
restricted common stock $ 145 $ 1,162
Forfeitures of 5,450 and 4,850 shares in 1999 and 1998 respectively, of
restricted common stock (58) (89)
</TABLE>
See notes to consolidated financial statements and
accompanying auditors' review report.
4
<PAGE> 7
MARINE DRILLING COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) INTERIM FINANCIAL INFORMATION
The consolidated interim financial statements of Marine Drilling
Companies, Inc. (the "Company" or the "Registrant") presented herein have been
prepared without audit pursuant to the rules and regulations of the Securities
and Exchange Commission. Accordingly, certain information and notes required by
generally accepted accounting principles for complete financial statements have
been condensed or omitted. In the opinion of management, these statements
include all adjustments (all of which consist of normal recurring adjustments
except as otherwise noted herein) necessary to present fairly the Company's
financial position and results of operations for the interim periods presented.
The financial data for the nine months ended September 30, 1999 included herein
has been subjected to a limited review by KPMG LLP, the Registrants' independent
auditors, whose report is included herein. These statements should be read in
conjunction with the audited financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1998.
The results of operations for the nine months ended September 30, 1999 are not
necessarily indicative of the results of operations that may be expected for the
year.
(2) EARNINGS PER SHARE
The Company's basic earnings (loss) per share, which is based upon the
weighted average common shares outstanding - without the dilutive effects of
common stock equivalents (options, warrants, etc.), for the quarters ended
September 30, 1999 and 1998 is $0.05 and $0.32, respectively. Common stock
equivalents with a weighted average of 575,000 and 334,000 are reflected in the
calculation of diluted earnings per share for the quarters ended September 30,
1999 and 1998, respectively. For the nine months ended September 30, 1998 common
stock equivalents with a weighted average of 555,000 are reflected in the
calculation of diluted earnings per share. There were 2,713,500 stock options
outstanding that were not included in the computation of diluted earnings per
share for the nine months ended September 30, 1999. For the quarters ended
September 30, 1999 and 1998 and for the nine months ended September 30, 1998,
respectively, there were 842,000, 974,000 and 690,000 stock options outstanding
which were not included in the computation of diluted earnings per share because
the exercise price of these options was greater than the average market price of
the common shares. No adjustment to net income was made in calculating diluted
earnings per share for the three and nine month periods ended September 30, 1999
and 1998.
(3) CREDIT FACILITY
On August 12, 1998, the Company entered into a credit agreement (the
"Credit Facility") with a consortium of domestic and international banks
providing financing up to $200 million to be used for rig acquisitions and
upgrades. The Credit Facility is a five-year revolver and is secured by
substantially all of the Company's assets, including its rig fleet. The Company
and its subsidiaries are required to comply with various covenants and
restrictions, including, but not limited to, the maintenance of financial ratios
and the restriction on payments of dividends. Interest accrues at a rate of (i)
London Interbank Offered Rate ("LIBOR") plus a margin determined pursuant to a
debt to EBITDA calculation or (ii) prime if a Base Rate Loan. As of September
30, 1999, $175 million was outstanding under the Credit Facility.
As of June 30, 1999, the Company was unable to satisfy the positive
working capital and ratio of indebtedness to EBITDA financial covenants in the
Credit Facility. The ratio of indebtedness to EBITDA covenant requires that the
ratio of indebtedness to EBITDA for the twelve-month period ending on any given
date, be no greater than 3.0 to 1.0. On September 21, 1999, the Company reached
an agreement with its banks to amend its $200 million credit facility. In
addition, the Company received a waiver from its banks for the covenant defaults
that occurred on and were continuing since August 16, 1999. The significant
elements of the amendment include (i) an increase in the maximum permitted ratio
of debt to EBITDA to 4 to 1 compared to the original 3 to 1, (ii) a modification
to the definition of EBITDA to give pro forma effect to newly acquired assets or
long-term contracts, and (iii) a change to the definition of working capital to
include any available commitments under the Credit Facility for purposes of
satisfying the positive working capital requirement. Also, the margin over LIBOR
that the Company pays under the Credit Facility was increased from a range of 75
to 125 basis points to 100 to 250 basis points.
5
<PAGE> 8
MARINE DRILLING COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
During the nine months ended September 30, 1999, the Company incurred
$6.2 million of interest expense, including amortization of deferred financing
costs related to the Credit Facility. Interest expense for the construction and
refurbishment of qualifying assets is capitalized. Accordingly, $3.6 million of
interest expense was capitalized during the nine months ended September 30,
1999. There was no capitalized interest expense for the first nine months of
1998.
(4) COMMITMENTS AND CONTINGENCIES
India Lawsuit -- Jagson International Limited ("Jagson"), an Indian
entity, has brought suit against Marine Drilling Companies, Inc. and one of its
subsidiaries, Marine 300 Series, Inc. The plaintiff has alleged that the Company
agreed to charter two jack-up rigs to the plaintiff during 1992 and that it
breached the agreement by failing to charter the rigs resulting in damages in
excess of $14.5 million. In August 1995, Jagson filed a suit against the Company
in New Delhi, India that was subsequently withdrawn and filed a second suit in
New Delhi against the Company in October 1995 that was dismissed by the court.
In May 1996, Jagson filed a third suit against the Company in Bombay, India for
the same claim and attempted to attach the MARINE 201, located in India at the
time, to the claim. In March 1998, the court dismissed the motion for
attachment. Although the third suit is still on file with the court, the MARINE
201 is no longer in India and there have been no further proceedings in the
lawsuit. The Company disputes the existence of the agreement and intends to
vigorously defend the suit. The Company does not believe this dispute will have
a material adverse effect on its results of operations or financial condition.
Shipyard Contract Dispute -- In December 1997, the company entered into
an agreement whereby HAM Marine, Inc., now Friede Goldman International, Inc.
("FGI") would complete construction of the MARINE 700 semi-submersible drilling
rig in their shipyard in Pascagoula, Mississippi for $87 million. As a result
of, among other things, delays and cost overruns, the Company incurred $122
million ($87 million contract plus $35 million in change orders) for completion
of the construction of the MARINE 700.
FGI has asserted an $18.2 million claim for additional costs allegedly
incurred by FGI as a result of alleged changes in scope of work associated with
construction of the MARINE 700. The Company believes that it is not obligated
under its contract with FGI to pay any costs over and above the $122 million
invoiced by FGI. Additionally, the Company has asserted a $3.8 million claim
against FGI and has offset the $3.8 million against the $122 million invoiced by
FGI. The $3.8 million claim consists of $3.5 million for worked performed by the
Company that the Company believes was contractually the responsibility of FGI
plus $0.3 million for late delivery damages. Neither party has yet to institute
any formal proceeding concerning these claims.
Other Legal Proceedings -- The Company is involved in various other
claims and legal actions arising in the ordinary course of business. In the
opinion of management, the ultimate disposition of these matters will not have a
material adverse effect on the Company's consolidated financial position,
results of operations or liquidity.
Charter Agreement -- In July 1997, the Company entered into a Charter
Agreement with Shanghai Bureau of Marine Geological Survey ("SBMGS") to charter
the KANTAN 3 (referred to as the MARINE 510), a semi-submersible rig, for a
period of five years. The MARINE 510 is a 600-foot water depth rig based upon
the Pacesetter design and was built in China in 1984. The Charter Agreement
began in mid-May 1998. The Charter Agreement and related agreements required the
Company to pay approximately $26,000 per day during the first year, $23,000 per
day during the second year and $24,500 per day for the last three years of the
charter for each day that the MARINE 510 is working. The rig did not work from
November 1998 until July 21, 1999, when the Company terminated the Charter
Agreement for the MARINE 510. The termination agreement provides that if market
conditions improve and the rig becomes available to work outside of Chinese
waters, the Company and SBMGS anticipate entering into another Charter Agreement
upon mutually agreeable terms or upon the same terms as the original Charter
Agreement.
Marketing Agreement for NANHAI VI -- In August 1998, the Company
entered into an agreement effective through October 1, 1999, with China's
Southern Drilling Company to market and manage the 1500-foot water depth rated
semi-submersible NANHAI VI. The Company recently extended the agreement for an
additional six months through March 31, 2000. The NANHAI VI is a self-propelled,
semi-submersible drilling rig, which was built in
6
<PAGE> 9
MARINE DRILLING COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1982 and modified and refurbished in 1995. The rig is technically and
economically suitable to be upgraded to 4,000-foot water depth capability.
Estimated total lead time required to secure the equipment needed for the
upgrade, complete the project and move the rig to first drilling location is one
year. Pursuant to the marketing agreement, if the rig is required to be
upgraded, the cost of the upgrade will be funded by the owner. The Company is
actively marketing the rig, which will be made available by Southern Drilling
Company upon consummation of a mutually agreeable drilling contract.
(5) SEGMENT REPORTING
For segment reporting purposes the Company defines its segments as
shallow water drilling (jack-up rigs) and deepwater drilling
(semi-submersibles). Operating income consists of revenues less the related
operating costs and expenses, including depreciation and allocated operation
support, excluding interest and unallocated corporate expenses. Identifiable
assets by operating segment include assets directly identified with those
operations.
The following table sets forth consolidated financial information with
respect to the Company and its subsidiaries by operating segment (in thousands):
<TABLE>
<CAPTION>
JACK-UP SEMI CORPORATE &
OPERATIONS OPERATIONS OTHER TOTAL
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
THREE MONTHS ENDED:
SEPTEMBER 30, 1999
Revenues $ 14,825 $ 20,438 $ -- $ 35,263
Operating Income (Loss) (3,549) 10,216 (3,141) 3,526
Identifiable Assets 147,682 477,533 20,944 646,159
Capital Expenditures 994 30,270 852 32,116
Depreciation & Amortization 3,980 4,815 827 9,622
SEPTEMBER 30, 1998
Revenues $ 49,249 $ 14,203 $ -- $ 63,452
Operating Income (Loss) 25,566 4,777 (4,144) 26,199
Identifiable Assets 155,206 231,022 39,537 425,765
Capital Expenditures 1,166 48,254 765 50,185
Depreciation & Amortization 3,532 982 827 5,341
NINE MONTHS ENDED:
SEPTEMBER 30, 1999
Revenues $ 50,124 $ 20,469 $ -- $ 70,593
Operating Income (Loss) (7,720) 8,538 (11,644) (10,826)
Identifiable Assets 147,682 477,533 20,944 646,159
Capital Expenditures 1,931 194,711 1,344 197,986
Depreciation & Amortization 11,863 4,817 2,433 19,113
SEPTEMBER 30, 1998
Revenues $ 155,766 $ 29,291 $ -- $ 185,057
Operating Income (Loss) 83,179 10,711 (11,349) 82,541
Identifiable Assets 155,206 231,022 39,537 425,765
Capital Expenditures 3,788 107,848 4,901 116,537
Depreciation & Amortization 10,420 2,946 2,142 15,508
</TABLE>
7
<PAGE> 10
MARINE DRILLING COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Company also provides services in both domestic and foreign
locations. The following table sets forth financial information with respect to
the Company and its subsidiaries by geographic area (in thousands):
<TABLE>
<CAPTION>
AS OF AND FOR THE THREE MONTHS AS OF AND FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
--------------------------------- ---------------------------------
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenues:
United States $ 21,387 $ 41,708 $ 56,686 $ 132,212
Australia 13,876 -- 13,876 --
India -- 1,346 -- 3,985
Southeast Asia -- 20,398 31 48,860
Long-Lived Assets:
United States 365,254 227,425 365,254 227,425
Australia 172,261 -- 172,261 --
India -- 12,548 -- 12,548
Southeast Asia 39,916 121,914 39,916 121,914
Other Foreign 33,006 -- 33,006 --
</TABLE>
The Company negotiates drilling contracts with a number of customers
for varying terms, and management believes it is not dependent upon any single
customer. For the nine months ending September 30, 1999 and 1998, sales to
customers that represented 10% or more of consolidated drilling revenues were as
follows (in thousands):
<TABLE>
<CAPTION>
1999 1998
--------------------------------- ---------------------------------
% OF TOTAL % OF TOTAL
REVENUE REVENUE REVENUE REVENUE
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Customer A - Jack-up Operations $ 19,690 28% $ 39,663 21%
Customer B - Semi Operations 13,733 20% -- --
Customer C - Jack-up Operations $ -- -- 18,571 10%
</TABLE>
As is typical in the industry, the Company does business with a
relatively small number of customers at any given time. The loss of any one of
such customers could, at least on a short-term basis, have a material adverse
effect on the Company's profitability.
8
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INDUSTRY OVERVIEW
Demand for the Company's offshore drilling services is primarily driven
by the worldwide expenditures for oil and gas drilling which is closely linked
to the underlying economics of oil and gas exploration, development and
production. The economics of oil and gas business activities is impacted by
current and projected oil and gas prices. Since the early 1980's, oil and gas
prices have been volatile and somewhat unpredictable, which has caused
significant fluctuations in oil and gas drilling expenditures. Many factors
influence oil and gas prices, including world economic conditions, worldwide oil
and gas production and the activities of the Organization of Petroleum Exporting
Countries ("OPEC").
The rates that the industry can charge for drilling services is a
function of not only demand for services but the supply of drilling rigs
available in the market to provide service. During the early 1980's when oil and
gas prices were high and significant demand for drilling services existed, the
industry built a significant number of offshore drilling rigs. In the mid-1980's
when oil and gas prices declined significantly and the corresponding demand for
drilling services declined, the supply of drilling rigs was significantly
greater than the industry needed. This resulted in an imbalance of supply and
demand causing low utilization with dayrates declining to virtually cash
operating costs.
During 1996 and early 1997, oil and gas prices rose to a level that
stimulated significant oil and gas drilling activity resulting in improved
utilization and dayrates for the drilling industry. However, oil and gas prices
declined significantly beginning in October 1997, and reached multi-year lows in
various markets in early 1999. As a result of oil price declines in 1998 and
early 1999, oil and gas companies have made significant cutbacks in their
drilling programs. This has reduced industry-wide rig utilization including the
U.S. Gulf of Mexico, where the Company operates most of its rigs, which has not
only sharply reduced dayrates, but also shortened the average length of drilling
contracts. Recently oil and gas prices have improved and stabilized, resulting
in recent increases in rig utilization and dayrates in the Gulf of Mexico
jack-up market. The international markets have generally not improved as much.
The following table sets forth current rig utilization rates and
average utilization rates for the nine months ended September 30, 1999 and 1998,
according to Offshore Data Services:
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
AS OF -------------------------------
OCTOBER 26, 1999 1999 1998
------------------ ------------- -------------
<S> <C> <C> <C>
Gulf of Mexico jack-up rigs 74% 63% 85%
Gulf of Mexico semi-submersible rigs 63% 62% 80%
Worldwide jack-up rigs 67% 65% 85%
Worldwide semi-submersible rigs 61% 65% 79%
</TABLE>
As of October 26, 1999, twelve of the Company's 15 jack-up rigs were
working, all located in the Gulf of Mexico and the Company's three international
jack-up rigs were not working. The MARINE 500 semi-submersible rig began
operating in July 1999 in Western Australia under a long-term drilling contract
that expires December 31, 2001. In early August 1999, the MARINE 700 began
working under a five-year contract in the deep-water U.S. Gulf of Mexico.
CONTRACTS AND CUSTOMERS
The Company obtains most of its drilling contracts through competitive
bidding against other contractors in response to oil and gas companies'
solicitations of bids. The Company's current drilling contracts, both foreign
and domestic, provide for payment in U.S. dollars.
9
<PAGE> 12
The Company provides drilling services to a customer base that includes
independent and major foreign and domestic oil and gas companies. As is typical
in the industry, the Company does business with a relatively small number of
customers at any given time. During the first nine months of 1999, the Company
performed services for approximately 30 different customers. For the period
ended September 30, 1999, Applied Drilling Technology, Inc., a subsidiary of
Global Marine Inc., accounted for approximately 28% of the Company's total
consolidated revenues and Western Australian Petroleum Pty., Ltd. accounted for
approximately 20% of revenues. The loss of any one of the Company's customers
could, at least on a short-term basis, have a material adverse effect on the
Company's profitability. See Note 5 of Notes to Consolidated Financial
Statements for further information regarding the Company's major customers.
MARINE 700 Drilling Contract. In January 1998, the Company signed a
long-term drilling contract with Esso Exploration Inc. ("Esso"), an affiliate of
Exxon Corporation, for the MARINE 700. The contract had an initial term of three
years and gave Esso the option to extend the contract to a five-year term. In
June 1998, Esso exercised the option to extend the contract to five years, with
a normal operating dayrate of $165,410 per day. In addition to the normal
operating dayrate, the Company will be entitled to obtain approximately $4,300
per day cost recovery for certain construction and equipment changes requested
by Esso during the construction process. The dayrates are also subject to
adjustments for changes in indexed operating cost elements, changes in costs
arising from moving the rig outside the U.S. Gulf of Mexico, or changes in
personnel requirements. The Esso contract was expected to generate aggregate
dayrate revenues of approximately $302 million at full utilization, not
including the additional construction cost recoveries. The contract also
entitles Esso to elect up to five additional one-year extensions of the primary
term at mutually agreeable dayrates. Under the terms of the contract the rig was
to be delivered to Esso by July 15, 1999.
On July 23, 1999, the Company signed an amendment to the MARINE 700
drilling contract with Esso providing an extension of the delivery deadline and
a reduction in the initial dayrate. The reduced initial dayrate is $130,000 per
day (not including approximately $4,300 per day for recovery of the cost of Esso
change orders) and is subject to an annual adjustment to the dayrate based on
market conditions for comparable rigs (but not below $130,000 per day) in years
2 through 5, such that total revenue from the contract could range from $237
million to $302 million depending on drilling market conditions. On August 5,
1999, the rig was accepted by Esso and began operating under the parties'
amended five-year drilling contract.
MARINE 500 Drilling Contract. In July 1997, the Company entered into a
drilling contract with a drilling consortium led by West Australian Petroleum
Pty., Ltd. ("WAPET") for the MARINE 500. The consortium consists of WAPET,
Indonesia Petroleum, Ltd. ("INPEX") and Mobil Exploration and Producing
Australia ("MEPA"). Certain other oil companies have an option to participate in
the consortium. The contract required the Company, prior to delivery of the rig,
to upgrade the rig to work in water depths up to 5,000 feet with 15,000 psi
drilling equipment, as described below. The contract was originally scheduled
for a three-year term beginning in January 1999. However, the rig was delayed in
arriving to the shipyard for the upgrade work as a result of work extensions for
its previous customer. The rig was not delivered until July 5, 1999. This delay,
however, did not extend the term of the contract, so the contract will still
expire on December 31, 2001. During the term of this contract, the MARINE 500
will work predominately in Western Australia, although the contract entitles the
consortium members to use the rig in Southeast Asia, the Pacific Rim, and New
Zealand.
The consortium drilling contract is a master agreement that
contemplates separate drilling contracts with the individual consortium members
at a base dayrate of $127,500, which is adjusted for each contract based on
operating costs in the area in which the rig is to be used. Two of the
consortium members, WAPET and INPEX, have committed drilling contracts under the
consortium agreement and have agreed under the consortium agreement to be liable
for the contract minimum payments to the Company for the initial contract term
ending December 31, 2001. The optional consortium members have made no
commitments under the agreement, and are not liable for any payments under the
consortium contract until they commit to a drilling contract. The INPEX drilling
contract is a two-well contract with up to three option wells to be drilled at
an operating dayrate of $150,000 per day. The WAPET drilling contract provides
for a dayrate of $168,600 for an unspecified number of wells. When the rig
departed the shipyard in Singapore on July 5, 1999, the Company, in accordance
with the consortium drilling contract, received a fee of $6,000,000. This
$6,000,000 fee has been deferred and is being amortized over the term of the
drilling contract. The contract provides that the consortium can terminate the
contract at any time after January 1, 2001 in exchange for a termination payment
of $95,890 for each day remaining in the term of the
10
<PAGE> 13
contract, subject to offset if the rig is otherwise employed. In addition,
either party can terminate the WAPET drilling contract after 20 days of certain
force majeure events and in the event of certain breaches.
MARINE 510 Charter. In July 1997, the Company entered into a Charter
Agreement with Shanghai Bureau of Marine Geological Survey ("SBMGS") to charter
the KANTAN 3 (referred to as the MARINE 510), a semi-submersible rig, for a
period of five years. The MARINE 510 is a 600-foot water depth rig based upon
the Pacesetter design and was built in China in 1984. The Charter Agreement
began in mid-May 1998. The Charter Agreement and related agreements required the
Company to pay approximately $26,000 per day during the first year, $23,000 per
day during the second year and $24,500 per day for the last three years of the
charter for each day that the MARINE 510 is working. The rig did not work from
November 1998 until July 21, 1999, when the Company terminated the Charter
Agreement for the MARINE 510. The termination agreement provides that if market
conditions improve and the rig becomes available to work outside of Chinese
waters, the Company and SBMGS anticipate entering into another Charter Agreement
upon mutually agreeable terms or upon the same terms as the original Charter
Agreement.
Marketing Agreement for NANHAI VI. In August 1998, the Company entered
into an agreement effective through October 1, 1999, with China's Southern
Drilling Company to market the 1500-foot water depth rated semi-submersible
NANHAI VI. The Company recently extended the agreement for an additional six
months through March 31, 2000. The NANHAI VI is a self-propelled,
semi-submersible drilling rig, which was built in 1982 and modified and
refurbished in 1995. The rig is technically and economically suitable to be
upgraded to 4,000-foot water depth capability. Estimated total lead time
required to secure the equipment needed for the upgrade, complete the project
and move the rig to first drilling location is one year. Pursuant to the
marketing agreement, if the rig is required to be upgraded, the cost of the
upgrade will be funded by the owner. Under the agreement, the Company is to
receive $3,000 per day in management fees while the rig is operating and 50% of
all rig-level profits after management fees and amortization over a 36-month
period of the costs of any upgrades to the vessel. The Company is actively
marketing the rig, which will be made available by Southern Drilling Company
upon consummation of a mutually agreeable drilling contract.
RESULTS OF OPERATIONS
The number of rigs the Company has available for service and the
utilization rates and dayrates of the Company's active rigs are the most
significant factors affecting the Company's level of revenues. Operating costs
include all direct costs and expenditures associated with operating the
Company's rigs. These costs include rig labor, repair, maintenance and supply
expenditures, insurance costs, mobilization costs and other costs related to
operations. Operating expenses do not necessarily fluctuate in proportion to
changes in operating revenues due to the cost of maintaining personnel on board
the rigs and equipment maintenance when the rigs are idle. Labor costs increase
primarily due to higher salary levels, rig staffing requirements and inflation.
Equipment maintenance expenses fluctuate depending upon the type of activity the
rig is performing and the age and condition of the equipment. Inflation is
another contributing factor in the fluctuation of operating expenses.
The changes in operating income are more directly affected by revenue
factors than expense factors since changes in dayrates directly impact revenues
but not expenses. Utilization rate changes have a significant impact on
revenues, but in the short-term do not impact expenses. Over a long period
significant changes in utilization may cause the Company to adjust the level of
its actively marketed rig fleet and labor force to match anticipated levels of
demand, thus changing the level of operating expenses. General and
administrative expenses do not vary significantly unless the Company materially
expands or contracts its asset base. Depreciation, which is affected by the
Company's level of capital expenditures and depreciation practices is another
major determinant of operating income, and is not affected by changes in
dayrates or utilization.
11
<PAGE> 14
The following table sets forth the average rig utilization rates,
operating days, average day rates, revenues and operating expenses of the
Company by operating segments for the periods indicated (dollars in thousands
except per day data):
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- -------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Jack-ups:
Operating days 918 1,202 2,564 3,704
Utilization (1) 69% 93% 63% 98%
Average revenue per day $ 16,149 $ 40,973 $ 19,549 $ 42,053
Revenue 14,825 49,249 50,124 155,766
Contract drilling expense 14,394 20,151 45,981 62,167
Depreciation 3,980 3,532 11,863 10,420
Operating income (loss) (3,549) 25,566 (7,720) 83,179
Semi-submersibles:
Operating days 144 184 144 405
Utilization (1) 87% 100% 42% 100%
Average revenue per day $ 141,930 $ 77,190 $ 142,146 $ 72,323
Revenue 20,438 14,203 20,469 29,291
Contract drilling expense 5,407 8,444 7,114 15,634
Depreciation 4,815 982 4,817 2,946
Operating income 10,216 4,777 8,538 10,711
Total Company:
Operating days 1,062 1,386 2,708 4,109
Utilization (1) 71% 94% 62% 98%
Average revenue per day $ 33,204 $ 45,781 $ 26,068 $ 45,037
Revenue 35,263 63,452 70,593 185,057
Contract drilling expense 19,801 28,595 53,095 77,801
Depreciation and amortization 9,622 5,341 19,113 15,508
General and administrative expense 2,314 3,317 9,211 9,207
Operating income (loss) 3,526 26,199 (10,826) 82,541
</TABLE>
(1) Based on the number of actively marketed rigs. Excluding rigs under
construction or in the process of substantial upgrading, the Company had no
non-marketed rigs during the third quarter of 1999 and 1998, respectively.
For the nine months ended September 30, 1999 and 1998 the Company had no
non-marketed rigs and an average of 0.1 non-marketed rigs, respectively.
Revenues. The Company's drilling revenues decreased $28,189,000 or 44%,
and $114,464,000 or 62% during the three and nine month periods ended September
30, 1999, respectively, as compared to corresponding periods in 1998. The
decrease in revenues for the three and nine month periods ended September 30,
1999 was primarily due to decreased average daily revenue and rig utilization.
Average daily revenue and rig utilization declined to $33,204 and 71% for the
quarter ended September 30, 1999 as compared to $45,781 and 94% for the same
period in 1998. For the nine months ended September 30, 1999 the average daily
revenue and rig utilization decreased to $26,068 and 62% from average daily
revenue of $45,037 and rig utilization of 98% for the same period in 1998.
Contract Drilling Expenses. Contract drilling expenses for the three
and nine months ended September 30, 1999 decreased $8,794,000 or 31%, and
$24,706,000 or 32% compared to the same periods in 1998. The decrease was
primarily a result of lower repairs and maintenance expense and labor costs, due
to low utilization rates.
12
<PAGE> 15
Depreciation and Amortization. Depreciation and amortization expense
for the three and nine months ended September 30, 1999 increased $4,281,000 and
$3,605,000, respectively, compared to the same periods in 1998. The increase was
due to depreciation associated with expenditures for the following: (i) the
acquisition of the Marine 306 in December 1998, (ii) the upgrade of the Marine
500 which was placed back in service in July 1999 offset by the Marine 500 not
being depreciated while in the shipyard from October 13, 1998 to July 5, 1999
and (iii) the completion of the Marine 700 which was placed in service in early
August 1999.
General and Administrative. General and administrative expenses for the
quarter ended September 30, 1999, compared to 1998 third quarter, decreased
$1,003,000 or 30% primarily due to the reversal of bonuses previously accrued
during the first and second quarters of 1999. For the nine months ended
September 30, 1999, general and administrative costs increased $4,000, compared
to the same period during 1998. This increase was attributed to non-recurring
severance costs and professional service fees incurred in 1999 offset by the
bonus accrual reversal in the third quarter of 1999.
Interest Expense. Interest expense for the nine months ended September
30, 1999 was $2,565,000 compared to $343,000 for the same period in 1998. The
increase was primarily the result of increased borrowings under the Amended
Credit Facility, net of capitalized interest.
Interest Income. Interest income decreased $664,000 or 45% for the nine
months ended September 30, 1999 from the comparable prior-year period. The
decrease was related primarily to decreased cash balances as a result of
expenditures related to the Company's two major construction and upgrade
projects.
Income Taxes. Income tax expense decreased for the three and nine month
periods ended September 30, 1999 as compared to the same period in 1998,
primarily due to a decrease in the Company's pretax income. The tax benefit for
the quarter ended September 30, 1999 includes the effect of an adjustment
necessary to reflect a 30% estimated effective tax benefit rate for the nine
months ended September 30, 1999. The Company's tax benefit has continued to
increase as foreign sourced income and foreign income taxes have decreased.
FINANCIAL CONDITION -- LIQUIDITY AND CAPITAL RESOURCES
Liquidity. At September 30, 1999, the Company had working capital of
$257,000 as compared to working capital of $6,699,000 at December 31, 1998.
Net cash provided by operating activities for the nine months ended
September 30, 1999 decreased by $103,376,000 to $13,510,000 compared to
$116,886,000 for the same period in the prior year. The decrease is primarily
attributable to the decreased dayrates and rig operating activity. Cash used in
investing activities increased $79,801,000 during the first nine months of 1999
to $197,558,000 from $117,757,000 during the same period in 1998 due primarily
to capital expenditures related to the completion of the MARINE 700 and upgrade
of the MARINE 500. Net cash provided by financing activities during the nine
months ended September 30, 1999 consisted primarily of $125,000,000 in proceeds
from long-term debt borrowings and $54,417,000 in net proceeds from the sale of
4,600,000 shares of common stock in May 1999.
On August 12, 1998, the Company entered into a credit agreement (the
"Credit Facility") with a consortium of domestic and international banks
providing financing up to $200,000,000 to be used for rig acquisitions and
upgrades. The Credit Facility is a five-year revolver and is secured by
substantially all of the Company's assets, including its rig fleet. The Company
and its subsidiaries are required to comply with various covenants and
restrictions, including, but not limited to, the maintenance of financial ratios
and the restriction on payments of dividends. Interest accrues at a rate of (i)
London Interbank Offered Rate ("LIBOR") plus a margin determined pursuant to a
debt to EBITDA calculation or (ii) prime if a Base Rate Loan. As of September
30, 1999, $175,000,000 was outstanding under the Credit Facility.
As of June 30, 1999, the Company was unable to satisfy the positive
working capital and ratio of indebtedness to EBITDA financial covenants in the
Credit Facility. The ratio of indebtedness to EBITDA covenant requires that the
ratio of indebtedness to EBITDA for the twelve-month period ending on any given
date, be no greater than 3.0 to 1.0. On September 21, 1999, the Company reached
an agreement with its banks to amend its $200 million credit facility. In
addition, the Company received a waiver from its banks for the covenant defaults
13
<PAGE> 16
that occurred on and were continuing since August 16, 1999. The significant
elements of the amendment include (i) an increase in the maximum permitted ratio
of debt to EBITDA to 4 to 1 compared to the original 3 to 1, (ii) a modification
to the definition of EBITDA to give pro forma effect to newly acquired assets or
long-term contracts, and (iii) a change to the definition of working capital to
include any available commitments under the Credit Facility for purposes of
satisfying the positive working capital requirement. Also, the margin over LIBOR
that the Company pays under the Credit Facility was increased from a range of 75
to 125 basis points to 100 to 250 basis points.
During 1997, the improvement in the offshore drilling market allowed
the Company to place some of its offshore rigs under longer-term contracts. In
July 1997, the Company entered into a contract for the MARINE 500 that expires
on December 31, 2001 and is expected to produce total revenues of approximately
$148,000,000 beginning July 1999.
In January 1998, the Company obtained a three-year contract with an
option to extend to a five-year term for the MARINE 700. In June 1998 the
customer exercised the option and extended the contract to five years. The
contract provided for aggregate dayrate revenues of approximately $302,000,000
over its five-year term. On July 23, 1999, the Company signed an amendment to
the MARINE 700 drilling contract with Esso providing an extension of the
delivery deadline and a reduction in the initial dayrate. The reduced initial
dayrate is $130,000 per day (not including approximately $4,300 per day for
recovery of the cost of Esso change orders) and is subject to an annual
adjustment to the dayrate based on market conditions for comparable rigs (but
not below $130,000 per day) in years 2 through 5, such that total revenue from
the contract could range from $237,000,000 to $302,000,000 depending on drilling
market conditions.
Capital Resources. During the first nine months of 1999 the Company
expended $197,986,000 in capital expenditures consisting primarily of
disbursements for (i) the completion of the MARINE 700, (ii) the upgrade of the
MARINE 500, and to a lessor extent (iii) the purchase of other rig machinery.
Capital expenditures for the fourth quarter of 1999 are expected to be $3 to $5
million.
The Company will continue to pursue acquisitions of additional drilling
rigs and related equipment and/or businesses. Future acquisitions, if any, would
likely be funded from the Company's working capital, the Credit Facility, or
through the issuance of debt and/or equity securities. The Company cannot
predict whether it will be successful in acquiring additional rigs, and
obtaining financing therefore, on acceptable terms. In addition, it is currently
anticipated that the Company will continue the upgrading of rigs to enhance
their capability to obtain longer-term contracts. The timing and actual amounts
expended by the Company in connection with its plans to upgrade and refurbish
selected rigs, as well as the type of rig modification comprising each program,
is subject to the discretion of the Company and will depend on the Company's
view of market conditions, the Company's cash flow, whether other acquisitions
are made, and other factors.
The Company anticipates that its available funds, together with cash
generated from operations and amounts that may be borrowed under the Credit
Facility and other potential funding sources, such as increased credit
facilities and private or public debt or equity offerings, will be sufficient to
fund its required capital expenditures, working capital and debt service
requirements for the foreseeable future. Future cash flows and the availability
of other funding sources, however, are subject to a number of uncertainties,
especially the condition of the oil and gas industry. Accordingly, there can be
no assurance that these resources will be sufficient to fund the Company's cash
requirements.
YEAR 2000 ISSUE
In 1998 the Company began to evaluate and address potential problems
associated with the year 2000 and the processing of date sensitive information
by its computers and other systems. The Company utilizes third party software in
all of its computer applications. The Company has upgraded both the accounting
and payroll software to current versions that enable the computer systems to
function properly with respect to dates in year 2000 and thereafter. All
non-information technology office systems including the telephone system have
been verified to be year 2000 compliant.
14
<PAGE> 17
Rig-based electronic equipment on 14 of the 17 rigs in the Company's
fleet has either been verified to be year 2000 compliant or certified by the
manufacturer as such. The evaluation of the three remaining rigs will be
completed during the fourth quarter of 1999. Additionally, the risk of a
disruption in drilling services due to problems associated with year 2000 issues
is further minimized by redundant systems and/or manual operation of certain
systems.
Key vendors and suppliers have been contacted to ensure that they have
a year 2000 compliance plan in an effort to minimize the Company's exposure to
their potential year 2000 problems. Additionally, to further minimize the
Company's exposure, critical spare parts and drilling supplies are stored at the
Company's warehouse and storage facility in Rosharon, Texas and/or can be
obtained from alternative vendors.
Currently the Company has spent approximately $107,000 to ensure year
2000 compliance, including hardware and software expenditures. The company does
not anticipate year 2000 compliance related expenditures to exceed $150,000.
This estimate does not include internal labor costs for the Company's
information technology personnel who spend a portion of their time working on
year 2000 compliance issues. Based upon the system upgrades and year 2000
compliance work to date, the Company believes that the year 2000 will not pose
any significant operational problems for the Company that could have a material
adverse affect on the Company. However, there can be no assurances that the
Company or its key vendors and suppliers will not encounter any year 2000
related problems that could result in a disruption of normal business activities
and operations.
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board issued Statement
of Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which establishes standards for accounting for and
disclosure of derivative instruments and hedging activities. SFAS No. 133, as
amended by SFAS No. 137, is effective for fiscal years beginning after June 15,
2000. The Company does not expect SFAS No. 133 to have a material effect on its
reported results.
FORWARD-LOOKING STATEMENTS
This Form 10-Q, particularly the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations",
contains certain 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, that are not historical facts concerning,
among other things, market conditions, the demand for offshore drilling
services, future acquisitions and fleet expansion, future financings, future rig
contracts, future capital expenditures including rig construction, upgrades and
refurbishments, and future results of operations. Actual results may differ
materially from those included in the forward-looking statements, and no
assurance can be given that the Company's expectations will be realized or
achieved. Important factors and risks that could cause actual results to differ
materially from those referred to in the forward-looking statements include (i)
a prolonged period of low oil or gas prices; (ii) the inadequacy of insurance
and indemnification to protect the Company against liability from all
consequences of well disasters, fire damage or environmental damage; (iii) the
inability of the Company to obtain insurance at reasonable rates; (iv) a
decrease in the demand for offshore drilling rigs especially in the U.S. Gulf of
Mexico; (v) the risks attendant with operations in foreign countries including
actions that may be taken by foreign countries and actions that may be taken by
the United States against foreign countries; (vi) the failure of the Company to
successfully compete with the Company's competitors that are larger and have a
greater diversity of rigs and greater financial resources than the Company;
(vii) a decrease in rig utilization resulting from reactivation of currently
inactive non-marketed rigs or new construction of rigs; (viii) the continuation
of market and other conditions similar to those in which the Company incurred
net losses for the six months ended June 30, 1999; (ix) the loss of key
management personnel or the inability of the Company to attract and retain
sufficient qualified personnel to operate its rigs; (x) the re-negotiation or
cancellation of the long-term contracts for the MARINE 700 or the MARINE 500,
whether as a result of rig performance or because of some other reason; (xi) the
adoption of additional laws or regulations that limit or reduce drilling
opportunities or that increase the cost of drilling or increase the potential
liability of the Company; (xii) the occurrence of risks attendant to contract
drilling operations including blowouts, cratering, fires and explosions,
capsizing, grounding or collision involving rigs while in operation,
mobilization or otherwise or damage to rigs from weather, sea conditions or
unsound location; (xiii) adverse uninsured litigation results; and (xiv) adverse
tax consequences with respect to operations. These
15
<PAGE> 18
forward-looking statements speak only as of the date of this Report. The Company
expressly disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statement contained herein to
reflect any change in the Company's expectations with regard thereto or any
change in events, conditions or circumstances on which any statement is based.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk. The Company is subject to market risk exposure
related to changes in interest rates on its Credit Facility. Interest on
borrowings under the Credit Facility is at a pre-agreed upon percentage point
spread from either the prime interest rate or LIBOR. The Company may, at its
option, fix the interest rate for certain borrowings based on a spread over
LIBOR for 30 days to 6 months, with longer periods requiring bank approval. On
May 28, 1999, the Company elected to lock in $100 million of outstanding debt at
a fixed LIBOR rate of 5.5% plus a margin for one year. On June 29, 1999, the
Company then locked in $30 million of outstanding debt at a fixed LIBOR rate of
5.5% plus a margin for six months. The margin on these borrowings can range from
1.0% to 2.5% determined pursuant to a quarterly debt to EBITDA calculation. The
current margin ratio for these borrowings is 1.75%. At September 30, 1999, the
Company had $175 million outstanding under its Credit Facility. On the remaining
$45 million balance an immediate change of one percent in the interest rate
would cause a change in interest expense of approximately $0.5 million on an
annual basis. The Company's objective in fixing the interest rate on these
borrowings was to protect itself against rising interest rates.
Foreign Currency Exchange Rate Risk. The Company conducts business in
several foreign countries. Predominately all of its foreign operations are
denominated in U.S. dollars. The Company structures its drilling contracts in
U.S. dollars to mitigate its exposure to fluctuations in foreign currencies.
Other than some limited trade payables the Company does not currently have
financial instruments that are sensitive to foreign currency exchange rates.
16
<PAGE> 19
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Jagson International Limited ("Jagson"), an Indian entity, has brought
suit against Marine Drilling Companies, Inc. and one of its subsidiaries, Marine
300 Series, Inc. The plaintiff has alleged that the Company agreed to charter
two jack-up rigs to the plaintiff during 1992 and that the Company breached the
agreement by failing to charter the rigs resulting in damages in excess of
$14,500,000. In August 1995, Jagson filed a suit against the Company in New
Delhi, India that was subsequently withdrawn and filed a second suit in New
Delhi against the Company in October 1995 that was dismissed by the court. In
May 1996, Jagson filed a third suit against the Company in Bombay, India for the
same claim and attempted to attach the MARINE 201, located in India at the time,
to the claim. In March 1998, the court dismissed the motion for attachment.
Although the third suit is still on file with the court, the MARINE 201 is no
longer in India and there have been no further proceedings in the lawsuit. The
Company disputes the existence of the agreement and intends to vigorously defend
the suit. The Company does not believe this dispute will have a material adverse
effect on its results of operations or financial condition.
Various other claims have been filed against the Company and its
subsidiaries in the ordinary course of business, particularly claims alleging
personal injuries. Management believes that the Company has adequate insurance
coverage and has established adequate reserves for any liabilities that may
reasonably be expected to result from these claims. In the opinion of
management, no pending claims, actions or proceedings against the Company or its
subsidiaries are expected to have a material adverse effect on its financial
position or results of operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibits No. Description
----------- -----------
10.1 First Amended and Restated Employment Agreement between
Marine Drilling Companies, Inc. and Jan Rask dated
September 1, 1999.
10.2 First Amended and Restated Severance Agreement between
Marine Drilling Companies, Inc. and George H. Gentry, III
dated September 1, 1999.
10.3 First Amended and Restated Severance Agreement between
Marine Drilling Companies, Inc. and H. Larry Adkins dated
September 1, 1999.
10.4 Severance Agreement between Marine Drilling Companies,
Inc. and O. Peter Blom dated September 1, 1999.
10.5 First Amended and Restated Employment Agreement between
Marine Drilling Companies, Inc. and Bobby E. Benton dated
September 1, 1999.
10.7 First Amended and Restated Employment Agreement between
Marine Drilling Companies, Inc. and T. Scott O'Keefe dated
September 1, 1999.
10.9 First Amended and Restated Severance Agreement between
Marine Drilling Companies, Inc. and Vincent G. Bounds
dated September 1, 1999.
10.10 First Amended and Restated Severance Agreement between
Marine Drilling Companies, Inc. and Dale W. Wilhelm, dated
September 1, 1999.
10.11 Amendment No. 1 and Waiver Agreement dated September 21,
1999 among Marine Drilling Companies and ABN AMRO Bank
N.V., Christiania Bank Og Kreditkasse, Credit Agricole
Indosuez, Bankers Trust Company, Skandinaviska Enskilda
Banken AB (Publ.), Bank Austria, Bank of Nova Scotia,
Banque Nationale Paris, Natexis Banque BFCE, and
Nederlandse Scheepshypotheekbank N.V.
15 Letter regarding unaudited interim financial information
17
<PAGE> 20
27 Financial Data Schedule. (Exhibit 27 is being submitted as
an exhibit only in the electronic format of this Quarterly
Report on Form 10-Q being submitted to the U.S. Securities
and Exchange Commission.)
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the third quarter of 1999.
18
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
MARINE DRILLING COMPANIES, INC.
(Registrant)
Date: November 15, 1999 By /s/ T. Scott O'Keefe
-------------------------------------
T. Scott O'Keefe
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: November 15, 1999 By /s/ Dale W. Wilhelm
-------------------------------------
Dale W. Wilhelm
Vice President and Controller
(Principal Accounting Officer)
19
<PAGE> 22
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
10.1 First Amended and Restated Employment Agreement between
Marine Drilling Companies, Inc. and Jan Rask dated
September 1, 1999.
10.2 First Amended and Restated Severance Agreement between
Marine Drilling Companies, Inc. and George H. Gentry, III
dated September 1, 1999.
10.3 First Amended and Restated Severance Agreement between
Marine Drilling Companies, Inc. and H. Larry Adkins dated
September 1, 1999.
10.4 Severance Agreement between Marine Drilling Companies,
Inc. and O. Peter Blom dated September 1, 1999.
10.5 First Amended and Restated Employment Agreement between
Marine Drilling Companies, Inc. and Bobby E. Benton dated
September 1, 1999.
10.7 First Amended and Restated Employment Agreement between
Marine Drilling Companies, Inc. and T. Scott O'Keefe dated
September 1, 1999.
10.9 First Amended and Restated Severance Agreement between
Marine Drilling Companies, Inc. and Vincent G. Bounds
dated September 1, 1999.
10.10 First Amended and Restated Severance Agreement between
Marine Drilling Companies, Inc. and Dale W. Wilhelm, dated
September 1, 1999.
10.11 Amendment No. 1 and Waiver Agreement dated September 21,
1999 among Marine Drilling Companies and ABN AMRO Bank
N.V., Christiania Bank Og Kreditkasse, Credit Agricole
Indosuez, Bankers Trust Company, Skandinaviska Enskilda
Banken AB (Publ.), Bank Austria, Bank of Nova Scotia,
Banque Nationale Paris, Natexis Banque BFCE, and
Nederlandse Scheepshypotheekbank N.V.
15 Letter regarding unaudited interim financial information
27 Financial Data Schedule. (Exhibit 27 is being submitted as
an exhibit only in the electronic format of this Quarterly
Report on Form 10-Q being submitted to the U.S. Securities
and Exchange Commission.)
</TABLE>
<PAGE> 1
EXHIBIT 10.1
FIRST AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement")is
made by and between MARINE DRILLING COMPANIES, INC. ("Company") and JAN RASK
("Executive").
W I T N E S S E T H:
WHEREAS, Company is desirous of employing Executive in an executive
capacity on the terms and conditions, and for the consideration, hereinafter set
forth and Executive is desirous of being employed by Company on such terms and
conditions and for such consideration;
WHEREAS, the Company and Executive previously entered into an
Employment Agreement dated June 18, 1996, and they desire to amend and restate
that Employment Agreement.
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein, Company and Executive agree as
follows:
ARTICLE 1: EMPLOYMENT AND DUTIES
1.1 EMPLOYMENT; EFFECTIVE DATE. Company agrees to employ Executive and
Executive agrees to be employed by Company, beginning as of the Effective Date
(as hereinafter defined) and continuing for the period of time set forth in
Article 2 of this Agreement, subject to the terms and conditions of this
Agreement. For purposes of this Agreement, the "Effective Date" shall be the day
immediately succeeding the date on which Executive delivers to the Company
evidence, reasonably satisfactory to the Company, that Executive has received
all authorizations and approvals from the Immigration and Naturalization Service
and other governmental agencies necessary for Executive to be employed and
compensated by Company. Executive agrees to use all reasonable efforts to obtain
as soon as practicable all such authorizations and approvals and to deliver
evidence thereof to the Company; provided, however, that if the Company does not
receive such evidence prior to September 15, 1996, then notwithstanding anything
to the contrary herein, this Employment Agreement shall terminate on such date
and Company and Executive shall have no duties, obligations or rights hereunder
whatsoever.
1.2 POSITION. From and after the Effective Date, Company shall employ
Executive in the position of President and Chief Executive Officer of Company,
or in such other positions as the parties mutually may agree.
1.3 DUTIES AND SERVICES. Executive agrees to serve in the position
referred to in paragraph 1.2 and to perform diligently and to the best of his
abilities the duties and services appertaining to such office, as well as such
additional duties and services appropriate to such office which the parties
mutually may agree upon from time to time. Executive's employment shall also be
subject to the policies maintained and established by Company, as the same may
be amended from time to time.
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1.4 OTHER INTERESTS. Executive agrees, during the period of his
employment by Company, to devote his primary business time, energy and best
efforts to the business and affairs of Company and its affiliates and not to
engage, directly or indirectly, in any other business or businesses, whether or
not similar to that of Company, except with the consent of the Board of
Directors of Company (the "Board of Directors"). The foregoing notwithstanding,
the parties recognize and agree that Executive may engage in passive personal
investments and other business activities that do not conflict with the business
and affairs of Company or interfere with Executive's performance of his duties
hereunder. Executive represents to Company that the execution, delivery and
performance of this Agreement by Executive will not violate or conflict with any
non-competition or similar agreement to which Executive is subject.
1.5 DUTY OF LOYALTY. Executive acknowledges and agrees that Executive
owes a fiduciary duty of loyalty, fidelity and allegiance to act at all times in
the best interests of Company and to do no act which would injure the business,
interests, or reputation of Company or any of its subsidiaries or affiliates. In
keeping with these duties, Executive shall make full disclosure to Company of
all business opportunities pertaining to Company's business and shall not
appropriate for Executive's own benefit business opportunities concerning the
subject matter of the fiduciary relationship.
ARTICLE 2: TERM AND TERMINATION OF EMPLOYMENT
2.1 TERM. Unless sooner terminated pursuant to other provisions hereof,
Company agrees to employ Executive for the period beginning on the Effective
Date and ending on the second anniversary of the Effective Date (the "Initial
Term"). Said term of employment shall be extended automatically for an
additional successive one-year period as of the last day of the Initial Term and
as of the last day of each such successive one-year period of time thereafter
that this Agreement is in effect; provided, however, that if, prior to ninety
days before the last day of the Initial Term or any such successive one-year
term of employment, either party shall give written notice to the other that no
such automatic extension shall occur, then Executive's employment shall
terminate on the last day of the Initial Term or the one-year term of
employment, as applicable, during which such notice is given.
2.2 COMPANY'S RIGHT TO TERMINATE. Notwithstanding the provisions of
paragraph 2.1, Company shall have the right to terminate Executive's employment
under this Agreement at any time for any of the following reasons:
(i) upon Executive's death;
(ii) upon Executive's becoming disabled so as to
entitle him to benefits under Company's
long-term disability plan;
(iii) for cause, which for purposes of this Agreement
shall mean Executive (A) has engaged in gross
negligence or willful misconduct in the
performance of the duties required of him
hereunder, (B) has been convicted of a felony or
a misdemeanor involving moral turpitude, (C) has
willfully refused without proper
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<PAGE> 3
legal reason to perform the duties and responsibilities
required of him hereunder, (D) has materially breached any
material corporate policy or code of conduct established by
Company, (E) Executive violates the Foreign Corrupt Practices
Act or any other applicable United States law as proscribed by
paragraph 4.1, or (F) has willfully engaged in conduct that he
knows or should know is materially injurious to Company or any
of its subsidiaries or affiliates;
(iv) for Executive's material breach of any material
provision of this Agreement which, if correctable, remains
uncorrected for 30 days following written notice to Executive
by Company of such breach; or
(v) for any other reason whatsoever, with or without
cause, in the sole discretion of the Board of Directors.
2.3 EXECUTIVE'S RIGHT TO TERMINATE. Notwithstanding the provisions of
paragraph 2.1, Executive shall have the right to terminate his employment under
this Agreement at any time for any of the following reasons:
(i) (A) a material breach by Company of any material
provision of this Agreement which, if correctable, remains
uncorrected for 30 days following written notice of such
breach by Executive to Company or (B) a change within the
prior thirty days of the location of Executive's principal
place of employment by Company by more than fifty miles from
the location of the Company's principal executive office as of
the date hereof; or
(ii) for any other reason whatsoever, in the sole
discretion of Executive.
2.4 NOTICE OF TERMINATION. If Company or Executive desires to terminate
Executive's employment hereunder at any time prior to expiration of the term of
employment as provided in paragraph 2.1, it or he shall do so by giving written
notice to the other party that it or he has elected to terminate Executive's
employment hereunder and stating the effective date and reason for such
termination, provided that no such action shall alter or amend any other
provisions hereof or rights arising hereunder, including, without limitation,
the provisions of Articles 5 and 6 hereof.
ARTICLE 3: COMPENSATION AND BENEFITS
3.1 BASE SALARY. From the Effective Date of this Agreement until
January 1, 1998, Executive shall receive an annual base salary equal to
$300,000. Thereafter, Executive shall receive a minimum annual base salary equal
to the greater of (i) $350,000 or (ii) such amount as the parties mutually may
agree upon from time to time. Executive's annual base salary shall be paid in
equal installments in accordance with the Company's standard policy regarding
payment of compensation to executives but no less frequently than monthly.
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<PAGE> 4
3.2 BONUSES. From the Effective Date until January 1, 1999, Executive
shall receive such bonuses, if any, as Company shall determine in its sole
discretion; provided, however, that it is not anticipated that such annual bonus
will in any event exceed 50% of Executive's base salary for that year. From
January 1, 1999 and thereafter during the period of this Agreement, Executive
shall receive such bonuses, if any, as Company shall determine in its sole
discretion based on bonus plans which may be in effect from time to time.
Executive's bonus target under the Company's bonus plan in effect at the date of
execution of this First Amended and Restated Agreement is 65% of annual base
salary. This percentage and the terms of the bonus plan are subject to change at
the sole discretion of the Company; however any changes will be consistent with
similarly situated employees and reflect competitive market practices.
3.3 VACATION. During each year of his employment, Executive shall be
entitled to five weeks of vacation.
3.4 OTHER PERQUISITES. During his employment hereunder, Executive
shall be afforded the following benefits as incidences of his employment:
(i) CLUB EXPENSES - Company shall reimburse Executive
up to $5,000 per year for membership fees, dues, and
assessments for luncheon, athletic, or other club memberships
for Executive.
(ii) COMMUNICATION EXPENSES - Company shall reimburse
Executive up to $ 5,000.00 per year for expenses related to a
mobile telephone, home telephone, and facsimile machine.
(iii) OTHER COMPANY BENEFITS - Executive and, to the
extent applicable, Executive's spouse, dependents and
beneficiaries, shall be allowed to participate in all
benefits, plans and programs, including improvements or
modifications of the same, which are now, or may hereafter be,
available to similarly-situated Company employees. Such
benefits, plans and programs may include, without limitation,
health insurance or health care plan, life insurance,
disability insurance, vacation and sick leave benefits, and
the like. Company shall not, however, by reason of this
paragraph be obligated to institute, maintain, or refrain from
changing, amending, or discontinuing, any such benefit plan or
program, so long as such changes are similarly applicable to
executive employees generally.
ARTICLE 4: UNITED STATES FOREIGN CORRUPT PRACTICES ACT AND OTHER LAWS
4.1 Executive shall at all times comply with United States laws
applicable to Executive's actions on behalf of Company, and/or any of its
subsidiaries or affiliates, including specifically, without limitation, the
United States Foreign Corrupt Practices Act, generally codified in 15 USC 78
(FCPA), as the FCPA may hereafter be amended, and/or its successor statutes. If
Executive pleads guilty to or nolo contendere or admits civil or criminal
liability under the FCPA or other applicable United States law, or if a court
finds that Executive has personal civil or criminal liability under the FCPA or
other applicable United States law, or if a court finds that Employee committed
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<PAGE> 5
an action resulting in Company or any of its subsidiaries or affiliates having
civil or criminal liability or responsibility under the FCPA or other applicable
United States law with knowledge of the activities giving rise to such liability
or knowledge of facts from which Executive should have reasonably inferred the
activities giving rise to liability had occurred or were likely to occur, such
action or finding shall constitute "cause" for termination under this Agreement
unless (i) such action or finding was based on the activities of others and
Executive had no personal involvement or knowledge of such activities, or (ii)
Company's Board of Directors determines that the actions found to be in
violation of the FCPA or other applicable United States law were taken in good
faith and in compliance with all applicable policies of Company.
ARTICLE 5: PROTECTION OF INFORMATION
5.1 DISCLOSURE TO EXECUTIVE. Company shall disclose to Executive, or
place Executive in a position to have access to or develop, trade secrets or
confidential information of Company or its affiliates; and/or shall entrust
Executive with business opportunities of Company or its affiliates; and/or shall
place Executive in a position to develop business good will on behalf of Company
or its affiliates.
5.2 DISCLOSURE TO AND PROPERTY OF COMPANY. All information, ideas,
concepts, improvements, discoveries, and inventions, whether patentable or not,
which are conceived, made, developed, or acquired by Executive, individually or
in conjunction with others, during Executive's employment by Company (whether
during business hours or otherwise and whether on Company's premises or
otherwise) which relate to Company's business, products, or services (including,
without limitation, all such information relating to corporate opportunities,
research, financial and sales data, pricing terms, evaluations, opinions,
interpretations, acquisitions prospects, the identity of customers or their
requirements, the identity of key contacts within the customer's organizations
or within the organization of acquisition prospects, or marketing and
merchandising techniques, prospective names, and marks) shall be disclosed to
Company and are and shall be the sole and exclusive property of Company.
Moreover, all documents, drawings, memoranda, notes, records, files,
correspondence, manuals, models, specifications, computer programs, E-mail,
voice mail, electronic databases, maps, and all other writings or materials of
any type embodying any of such information, ideas, concepts, improvements,
discoveries, and inventions are and shall be the sole and exclusive property of
Company. Upon termination of Executive's employment by Company, for any reason,
Executive promptly shall deliver the same, and all copies thereof, to Company.
5.3 NO UNAUTHORIZED USE OR DISCLOSURE. Executive will not, at any time
during or after Executive's employment by Company, make any unauthorized
disclosure of any confidential business information or trade secrets of Company
or its affiliates, or make any use thereof, except in the carrying out of
Executive's employment responsibilities hereunder. Affiliates of the Company
shall be third party beneficiaries of Executive's obligations under this
paragraph. As a result of Executive's employment by Company, Executive may also
from time to time have access to, or knowledge of, confidential business
information or trade secrets of third parties, such as customers, suppliers,
partners, joint venturers, and the like, of Company and its affiliates.
Executive also agrees to preserve and protect the confidentiality of such third
party confidential information and trade secrets to the same extent, and on the
same basis, as Company's confidential business information and trade secrets.
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<PAGE> 6
5.4 OWNERSHIP BY COMPANY. If, during Executive's employment by company,
Executive creates any work of authorship fixed in any tangible medium of
expression which is the subject matter of copyright (such as videotapes, written
presentations, or acquisitions, computer programs, E-mail, voice mail,
electronic databases, drawings, maps, architectural renditions, models, manuals,
brochures, or the like) relating to Company's business, products, or services,
whether such work is created solely by Executive or jointly with others (whether
during business hours or otherwise and whether on Company's premises or
otherwise), Company shall be deemed the author of such work if the work is
prepared by Executive in the scope of Executive's employment; or, if the work is
not prepared by Executive within the scope of Executive's employment but is
specially ordered by Company as a contribution to a collective work, as a part
of a motion picture or other audiovisual work, as a translation, as a
supplementary work, as a compilation, or as an instructional text, then the work
shall be considered to be work made for hire and Company shall be the author of
the work. If such work is neither prepared by Executive within the scope of
Executive's employment nor a work specially ordered that is deemed to be a work
made for hire, then Executive hereby agrees to assign, and by these presents
does assign, to Company all of Executive's worldwide right, title, and interest
in and to such work and all rights of copyright therein.
5.5 ASSISTANCE BY EXECUTIVE. Both during the period of Executive's
employment by Company and thereafter, Executive shall assist Company and its
nominee, at any time, in the protection of Company's worldwide right, title, and
interest in and to information, ideas, concepts, improvements, discoveries, and
inventions, and its copyrighted works, including without limitation, the
execution of all formal assignment documents requested by Company or its nominee
and the execution of all lawful oaths and applications for patents and
registration of copyright in the United States and foreign countries.
5.6 REMEDIES. Executive acknowledges that money damages would not be
sufficient remedy for any breach of this Article by Executive, and Company shall
be entitled to enforce the provisions of this Article by terminating payments
then owing to Executive under this Agreement and/or to specific performance and
injunctive relief as remedies for such breach or any threatened breach. Such
remedies shall not be deemed the exclusive remedies for a breach of this
Article, but shall be in addition to all remedies available at law or in equity
to Company, including the recovery of damages from Executive and his agents
involved in such breach and remedies available to Company pursuant to other
agreements with Executive.
ARTICLE 6: NON-SOLICITATION OBLIGATIONS
6.1 IN GENERAL. As part of the consideration for the compensation and
benefits to be paid to Executive hereunder; to protect the trade secrets and
confidential information of Company and its affiliates that have been and will
in the future be disclosed or entrusted to Executive and other employees of the
Company and its affiliates, the business good will of Company and its affiliates
that has been and will in the future be developed by Executive or other
employees of the Company or its affiliates, or the business opportunities that
have been and will in the future be disclosed or entrusted to Executive and
other employees by Company and its affiliates; and as an additional incentive
for Company to enter into this Agreement, Company and Executive agree to the
non-solicitation obligations hereunder. If Executive's employment hereunder
shall be terminated by
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<PAGE> 7
Executive prior to the expiration of the term provided in paragraph 2.1 for any
reason not described in paragraph 2.3(i) (including by Executive exercising his
right not to extend the term by giving notice pursuant to Section 2.1), then,
subject to the last sentence of this paragraph 6.1, Executive shall not,
directly or indirectly for Executive or for others, in any geographic area or
market where Company or any of its affiliates are conducting any business as of
the date of such termination of the employment relationship or have during the
previous twelve months conducted such business induce any employee of Company or
any of its subsidiaries or affiliates to terminate his or her employment with
Company or such subsidiaries or affiliates, or hire or assist in the hiring of
any such employee by any person, association, or entity not affiliated with
Company. These non-solicitation obligations shall extend until the later of (i)
the expiration of the term of this Agreement (or any extended term) provided in
paragraph 2.1 and (ii) the one year anniversary of the termination of
Executive's employment hereunder.
6.2 ENFORCEMENT AND REMEDIES. Executive understands that the
restrictions set forth in paragraph 6.1 may limit Executive's ability to engage
in the solicitation of the Company and its subsidiaries and affiliates, but
acknowledges that Executive will receive sufficiently high remuneration and
other benefits under this Agreement to justify such restriction. Executive
acknowledges that money damages would not be sufficient remedy for any breach of
this Article by Executive, and Company shall be entitled to enforce the
provisions of this Article be terminating any payments then owing to Executive
under this Agreement and/or to specific performance and injunctive relief as
remedies for such breach or any threatened breach. Such remedies shall not be
deemed the exclusive remedies for a breach of this Article, but shall be in
addition to all remedies available at law or in equity to Company, including
without limitation, the recovery of damages from Executive and Executive's
agents involved in such breach and remedies available to Company pursuant to
other agreements with Executive.
6.3 REFORMATION. It is expressly understood and agreed that Company and
Executive consider the restrictions contained in this Article to be reasonable
and necessary to protect the proprietary information of Company. Nevertheless,
if any of the aforesaid restrictions are found by a court having jurisdiction to
be unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by such courts so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced.
ARTICLE 7: STATEMENTS CONCERNING COMPANY
7.1 IN GENERAL. Executive shall refrain, both during the employment
relationship and after the employment relationship terminates, from publishing
any oral or written statements about Company, any of its affiliates, or any of
such entities' officers, employees, agents or representatives that are
slanderous, libelous, or defamatory; or that disclose private or confidential
information about Company, any of its affiliates, or any of such entities'
business affairs, officers, employees, agents, or representatives; or that
constitute an intrusion into the seclusion or private lives of Company, any of
its affiliates, or any of such entities' officers, employees, agents, or
representatives; or that give rise to unreasonable publicity about the private
lives of Company, any of its affiliates, or any of such entities' officers,
employees, agents, or representatives; or that place Company, any of its
affiliates, or any of such entities' officers, employees, agents, or
representatives in a false light before the
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public; or that constitute a misappropriation of the name or likeness of
Company, any of its affiliates, or any of such entities' officers, employees,
agents, or representatives. A violation or threatened violation of this
prohibition may be enjoined by the courts. The rights afforded Company and its
affiliates under this provision are in addition to any and all rights and
remedies otherwise afforded by law.
ARTICLE 8: EFFECT OF TERMINATION ON COMPENSATION
8.1 BY EXPIRATION. If Executive's employment hereunder shall terminate
upon expiration of the term provided in paragraph 2.1 hereof, then all
compensation and all benefits to Executive hereunder shall terminate
contemporaneously with termination of his employment; provided, however, that if
Company shall be the party that gave written notice of such termination, then
Company shall, within 10 days after the last day of Executive's employment with
Company, pay Executive a lump sum cash payment in an amount equal to 100% of
Executive's annual base salary as in effect pursuant to paragraph 3.1
immediately prior to such termination; and provided further that Company shall
pay Executive his pro rata bonus target earned through the date of termination.
If Executive's employment shall terminate as described under this paragraph
within two years following a Change in Control, as defined in paragraph 8.4,
Executive's severance payment shall be as set forth under paragraph 8.4 and
Executive shall have no entitlement to any additional payment under this
paragraph.
8.2 BY COMPANY. If Executive's employment hereunder shall be terminated
by Company prior to expiration of the term provided in paragraph 2.1, then, upon
such termination, regardless of the reason therefor, all compensation and
benefits to Executive hereunder shall terminate contemporaneously with the
termination of such employment; provided, however, that if such termination
shall be for any reason other than those encompassed by paragraphs 2.2(i), (ii),
(iii), or (iv), the Company shall, within 10 days after the last day of
Executive's employment with Company, pay Executive a lump sum cash payment in an
amount equal to the Termination Payment; and provided further that Company shall
pay Executive his pro rata bonus target earned through the date of termination.
For purposes of this Agreement, the term "Termination Payment" shall mean, in
addition to any such pro rata bonus, an amount equal to the greater of (i) 100%
of Executive's annual base salary as in effect pursuant to paragraph 3.1
immediately prior to Executive's termination of employment with Company or (ii)
the aggregate base salary that would have been paid to Executive (determined
based upon the base salary in effect pursuant to paragraph 3.1 immediately prior
to Executive's termination of employment with Company) for the period beginning
on the date of such termination and ending on the last day of the employment
term provided in paragraph 2.1 during which occurs the date of such termination.
If Executive's employment shall terminate as described under this paragraph
within two years following a Change in Control, as defined in paragraph 8.4,
Executive's severance payment shall be as set forth under paragraph 8.4 and
Executive shall have no entitlement to any additional payment under this
paragraph.
8.3 BY EXECUTIVE. If Executive's employment hereunder shall be
terminated by Executive prior to expiration of the term provided in paragraph
2.1 (except if Executive terminates his employment by retiring on or after the
date he reaches age sixty-five), then, upon such termination, regardless of the
reason therefor, all compensation and benefits to Executive hereunder
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shall terminate contemporaneously with the termination of such employment;
provided, however, that if such termination shall be pursuant to paragraph
2.3(i), the Company shall, within 10 days after the last day of Executive's
employment with Company, pay Executive a lump sum cash payment in an amount
equal to the Termination Payment. If Executive's employment shall terminate as
described under this paragraph within two years following a Change in Control,
as defined in paragraph 8.4, Executive's severance payment shall be as set forth
under paragraph 8.4 and Executive shall have no entitlement to any additional
payment under this paragraph. In the event Executive terminates his employment
by retiring on or after the date he reaches age sixty-five, Executive shall not
be entitled to any severance payment under this Agreement.
8.4 CHANGE IN CONTROL. For purposes of this paragraph, the term "Change
in Control" shall have the same meaning as assigned to such term in The Marine
Drilling 1992 Long Term Incentive Plan. If, within two years following the
occurrence of a Change in Control, Executive's employment with Company shall
terminate under circumstances that would entitle him to a severance payment
pursuant to paragraph 8.1, 8.2, or 8.3 or if Executive's employee benefits are
changed to a level that is materially inconsistent with the employee benefits
afforded by the Company to employees with comparable duties, then, in lieu of
(and not in addition to) any such severance payment, Company shall, within 10
days after the last day of Executive's employment with Company, pay Executive a
lump sum cash payment equal to 300% of the sum of (i) Executive's annual base
salary plus (ii) bonus target as in effect pursuant to paragraph 3.1 immediately
prior to such termination of employment. Further, in the year in which a Change
in Control occurs, in addition to the payment described in the preceding
sentence, Company shall pay Executive the pro rata portion of his bonus target
for that year as shall have been earned up through the date that is immediately
prior to the date on which the Change in Control occurred.
8.5 CERTAIN ADDITIONAL PAYMENTS BY COMPANY. Notwithstanding anything to
the contrary in this Agreement, in the event that any payment or distribution by
Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a "Payment"), would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended, or any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest or penalties, are hereinafter collectively referred to as the
"Excise Tax"), Company shall pay to Executive an additional payment (a "Gross-up
Payment") in an amount such that after payment by Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax imposed on any Gross-up Payment, Executive retains an
amount of the Gross-up Payment equal to the Excise Tax imposed upon the
Payments. Company shall instruct its outside accountants to independently make
an initial determination as to whether a Gross-up Payment is required and the
amount of any such Gross-up Payment. Executive shall notify Company immediately
in writing of any claim by the Internal Revenue Service which, if successful,
would require Company to make a Gross-up Payment (or a Gross-up Payment in
excess of that, if any, initially determined by Company and Executive) within
five days of the receipt of such claim. Company shall notify Executive in
writing at least five days prior to the due date of any response required with
respect to such claim if it plans to contest the claim. If Company decides to
contest such claim, Executive shall cooperate fully with Company in such action;
provided, however, that Company shall bear and pay directly or indirectly all
costs and expenses (including additional interest and penalties) incurred in
connection with such action and shall indemnify and hold
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Executive harmless, on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as a result of
Company's action. If, as a result of Company's action with respect to a claim,
Executive receives a refund of any amount paid by Company with respect to such
claim, Executive shall promptly pay such refund to Company. If Company fails to
timely notify Executive whether it will contest such claim or Company determines
not to contest such claim, then, Company shall immediately pay to Executive the
portion of such claim, if any, which it has not previously paid to Executive.
8.6 BENEFITS. If Executive's employment with Company is terminated
under circumstances that would entitle him to a severance payment pursuant to
paragraph 8.1, 8.2, or 8.3, then Company will immediately cause Executive and
those of his dependents (including his spouse) who were covered under the
Company's medical and dental plans on the date prior to such termination to
continue to be covered under such plans, without any cost to Executive, for
twelve months from date of termination, subject to earlier termination as
provided in the last sentence of this paragraph. If Executive's employment with
Company is terminated under circumstances that would entitle him to severance
payment pursuant to paragraph 8.4, then Company will cause Executive and those
of his dependents (including his spouse) who were covered under the Company's
medical and dental benefit plans on the date prior to such termination to
continue to be covered under such plans for 36 months, subject to earlier
termination as provided in the last sentence of this paragraph. Any continuation
of medical and dental coverage under this paragraph shall terminate if and to
the extent Executive becomes eligible to receive medical and dental coverage
from a subsequent employer (and any such eligibility shall be promptly reported
to the Company by Executive) and if Executive (and/or his spouse) would have
been entitled to retiree medical and/or dental coverage under the Company's
plans had he voluntarily retired on the date of such Involuntary Termination,
then such coverages shall be continued as provided under such plans. Nothing
herein shall be deemed to adversely affect in any way the additional rights
after consideration of this extension, of Executive and his eligible dependents
to continuation coverages required pursuant to Part 6 of Title I of the Employee
Retirement Income Security Act of 1974, as amended, if, at the time such
continuation coverage is requested, Executive does not have alternative group
coverage available from an employer.
8.7 LIQUIDATED DAMAGES. In light of the difficulties in estimating the
damages for an early termination of this Agreement, Company and Executive hereby
agree that the payments, if any, to be received by Executive pursuant to this
Article 8 shall be received by Executive as liquidated damages.
8.8 INDEMNIFICATION. If Executive shall obtain any money award or
otherwise prevail with respect to any litigation brought by Executive or Company
to enforce or interpret any provision of this Agreement, Company, to the fullest
extent permitted by applicable law, hereby indemnifies Executive for his
reasonable attorney's fees and disbursements incurred in such litigation and
hereby agrees to pay in full all such fees and disbursements. To the extent that
any such reimbursement would be subject to the Excise Tax, then Executive shall
be entitled to receive Gross-up Payments in an amount such that after payment by
Executive of all taxes imposed on such Gross-up Payments, Executive retains an
amount equal to the Excise Tax imposed on the reimbursement.
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ARTICLE 9: MISCELLANEOUS
9.1 NOTICES. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
IF TO COMPANY TO: Marine Drilling Companies, Inc.
One Sugar Creek Center Blvd., Suite 600
Sugar Land, Texas 77478
Attention: Chairman of the Board
IF TO EMPLOYEE TO: Mr. Jan Rask
5 Wexford Court
Houston, Texas 77024
or to such other address as either party may furnish to the other in writing in
accordance herewith, except that notices or changes of address shall be
effective only upon receipt.
9.2 NO OBLIGATION TO MITIGATE. Executive shall not be required to
mitigate the amount of any payment or other benefit required to be paid to
Executive pursuant to this Agreement, whether by seeking other employment or
otherwise, nor shall the amount of any such payment or other benefit be reduced
on account of any compensation earned by Executive as a result of employment by
another person.
9.3 APPLICABLE LAW. This Agreement is entered into under, and its
validity interpretation and enforceability and shall be governed for all
purposes by, the laws of the State of Texas; provided, however, that no effect
shall be given to any choice or conflict of law provision or rule (whether in
the State of Texas or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Texas.
9.4 SOLE RIGHTS TO SEVERANCE. Executive shall not be entitled to
receive any other severance benefits which may be provided for in any other
plan, program, arrangement or practice of Company, except to the extent that
severance benefits are provided for in any specific employment agreement between
Executive and Company.
9.5 NO WAIVER. No failure by either party hereto at any time to give
notice of any breach by the other party of, or to require compliance with, any
condition or provision of this Agreement shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
9.6 SEVERABILITY. If a court of competent jurisdiction determines that
any provision of this Agreement is invalid or unenforceable, then the invalidity
or unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement, and all other
provisions shall remain in full force and effect.
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9.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
9.8 WITHHOLDING OF TAXES AND OTHER EMPLOYEE DEDUCTIONS. Company may
withhold from any benefits and payments made pursuant to this Agreement all
federal, state, city and other taxes as may be required pursuant to any law or
governmental regulation or ruling and all other normal employee deductions made
with respect to Company's employees generally.
9.9 HEADINGS. The paragraph headings have been inserted for purposes of
convenience and shall not be used for interpretive purposes.
9.10 GENDER AND PLURALS. Wherever the context so requires, the
masculine gender includes the feminine or neuter, and the singular number
includes the plural and conversely.
9.11 AFFILIATE. As used in this Agreement, the term "affiliate" shall
mean any entity which owns or controls, is owned or controlled by, or is under
common ownership or control with, Company.
9.12 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of Company and any successor of Company, by merger or otherwise. Except
as provided in the preceding sentence, this Agreement, and the rights and
obligations of the parties hereunder, are personal and neither this Agreement,
nor any right, benefit, or obligation of either party hereto, shall be subject
to voluntary or involuntary assignment, alienation or transfer, whether by
operation of law or otherwise, without the prior written consent of the other
party; provided, however, that Company may assign this Agreement to a
wholly-owned subsidiary of Company as long as Company fully and unconditionally
guarantees the performance of this Agreement.
9.13 TERM. This Agreement has a term co-extensive with the term of
employment provided in paragraph 2.1. Termination shall not affect any right or
obligation of any party which is accrued or vested prior to such termination.
Without limiting the scope of the preceding sentence, the provisions of Articles
5, 6, and 7 shall survive any termination of the employment relationship and/or
of this Agreement.
9.14 ENTIRE AGREEMENT. Except as provided in (i) the written benefit
plans and programs referenced in paragraph 3.4(iii) and (ii) any signed written
agreement contemporaneously or hereafter executed by Company and Executive, this
Agreement constitutes the entire agreement of the parties with regard to the
subject matter hereof, and contains all the covenants, promises,
representations, warranties and agreements between the parties with respect to
employment of Executive by Company. Without limiting the scope of the preceding
sentence, all prior understandings and agreements among the parties hereto
relating to the subject matter hereof are hereby null and void and of no further
force and effect. Any modification of this Agreement will be effective only if
it is in writing and signed by the party to be charged.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the 1st
day of September, 1999, to be effective as of the Effective Date.
MARINE DRILLING COMPANIES, INC.
By: /s/ ROBERT L. BARBANELL
-----------------------------------------
Name: Robert L. Barbanell
TITLE: CHAIRMAN OF THE BOARD
"COMPANY"
/s/ JAN RASK
--------------------------------------------
JAN RASK
"EXECUTIVE"
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EXHIBIT 10.2
FIRST AMENDED AND RESTATED SEVERANCE AGREEMENT
THIS FIRST AMENDED AND RESTATED SEVERANCE AGREEMENT between MARINE
DRILLING COMPANIES, INC., a Texas corporation (the "Company"), and GEORGE H.
GENTRY, III ("Executive"),
W I T N E S S E T H :
WHEREAS, the Company desires to attract and retain certain key employee
personnel and, accordingly, the Board of Directors of the Company (the "Board")
has approved the Company entering into a severance agreement with Executive in
order to encourage his continued service to the Company; and
WHEREAS, Executive is prepared to commit such services in return for
specific arrangements with respect to severance compensation and other benefits;
WHEREAS, Executive and the Company have previously entered into a
Severance Agreement on November 15, 1998, and they desire to amend and restate
that Severance Agreement;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the Company and Executive agree as follows:
1. DEFINITIONS.
(a) "ANNUAL COMPENSATION" shall mean an amount equal to the
greater of:
(i) Executive's annual base salary at the annual rate
in effect at the date of his Involuntary Termination; or
(ii) Executive's annual base salary at the annual
rate in effect immediately prior to a Change-in-Control if Executive's
employment shall be subject to a Change-in-Control Involuntary
Termination.
(b) "BONUS TARGET" shall mean an amount equal to the greater
of:
(i) Executive's annual bonus target at the annual
rate in effect at the date of his Involuntary Termination; or
(ii) Executive's annual bonus target at the annual
rate in effect immediately prior to a Change-in-Control if Executive's
employment shall be subject to a Change-in-Control Involuntary
Termination.
(c) "CHANGE-IN-CONTROL" shall have the meaning ascribed to
such term in Section 9(b) of The Marine Drilling 1992 Long-Term Incentive Plan
(the "Incentive Plan").
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(d) "CHANGE-IN-CONTROL INVOLUNTARY TERMINATION" shall mean any
termination of Executive's employment with the Company which:
(i) results from a resignation by Executive within 18
months after the date upon which a Change-in-Control occurs if such
resignation occurs within 30 days after Executive receives notice from
the Company that Executive will be subject to a Material Change in
Employment Terms; or
(ii) results from a termination by the Company within
18 months after the date upon which a Change-in-Control occurs;
provided, however, the term "CHANGE-IN-CONTROL INVOLUNTARY TERMINATION" shall
not include a Termination for Cause or any termination as a result of death,
Disability, or Retirement.
(e) "CHANGE-IN-CONTROL SEVERANCE AMOUNT" shall mean an amount
equal to 200% of the sum of (i) Executive's Annual Compensation plus (ii) his
Bonus Target.
(f) "COMPENSATION COMMITTEE" shall mean the Compensation
Committee of the Board.
(g) "DISABILITY" shall mean Executive's becoming disabled so
as to entitle him to benefits under the Company's long term disability plan.
(h) "INVOLUNTARY TERMINATION" shall mean any
Non-Change-in-Control Termination or any Change-in-Control Involuntary
Termination.
(i) "MATERIAL CHANGE IN COMPENSATION" shall mean any one or
more of the following:
(i) a reduction in Executive's annual base salary
from that provided to him immediately prior to the effective date of
this Agreement; or
(ii) a significant diminution in Executive's
eligibility to participate in bonus, stock option, incentive award and
other compensation plans under which Executive is participating
immediately prior to the effective date of this Agreement.
(j) "MATERIAL CHANGE IN EMPLOYMENT TERMS" shall mean any one
or more of the following:
(i) a material diminution in the nature or scope of
Executive's authorities, powers, functions or duties from those
applicable to him immediately prior to the date on which a
Change-in-Control occurs;
(ii) a reduction in Executive's annual base salary
from that provided to
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him immediately prior to the date on which a Change-in-Control occurs;
(iii) a significant diminution in Executive's
eligibility to participate in bonus, stock option, incentive award and
other compensation plans under which Executive is participating
immediately prior to the date on which a Change-in-Control occurs;
(iv) a change in the location of Executive's
principal place of employment by the Company by more than 50 miles from
the location where he was principally employed immediately prior to the
date on which a Change-in-Control occurs; or
(v) a change in Executive's employee benefits to a
level that is materially inconsistent with employee benefits afforded
by the Company to employees with comparable duties.
(k) "NON-CHANGE-IN-CONTROL INVOLUNTARY TERMINATION" shall mean
any termination of Executive's employment with the Company which:
(i) results from a resignation by Executive if but
only if such resignation occurs within 30 days after Executive receives
notice from the Company that (A) Executive's principal place of
employment will be moved by more than 50 miles from the location where
he was principally employed immediately prior to the date of such
notice or (B) Executive will be subject to a Material Change in
Compensation; or
(ii) results from a termination by the Company;
provided, however, the term "NON-CHANGE-IN-CONTROL INVOLUNTARY TERMINATION"
shall not include a Termination for Cause, a Change-in-Control Involuntary
Termination or any termination as a result of death, Disability, or Retirement.
(l) "NON-CHANGE-IN-CONTROL SEVERANCE AMOUNT" shall mean an
amount equal to Executive's Annual Compensation.
(m) "RETIREMENT" shall mean termination of Executive's
employment for any reason on or after the date Executive reaches age sixty-five.
(n) "TERMINATION FOR CAUSE" shall mean termination of
Executive's employment by the Company for any of the following reasons:
(i) Executive has engaged in gross negligence or
willful misconduct in the performance of the duties required of him;
(ii) Executive has been convicted of a felony or a
misdemeanor involving moral turpitude;
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(iii) Executive has willfully refused without proper
legal reason to perform the duties and responsibilities required of
him;
(iv) Executive has materially breached any material
corporate policy or code of conduct established by the Company;
(v) Executive has violated the Foreign Corrupt
Practices Act or and other United States law as proscribed by paragraph
2(b); or
(vi) Executive has willfully engaged in conduct that
he knows or should know is materially injurious to the Company or any
of its affiliates.
2. SERVICES.
(a) DUTIES. Executive agrees that he will render services to
the Company (as well as any subsidiary thereof or successor thereto) during the
period of his employment to the best of his ability and in a prudent and
businesslike manner and that he will devote substantially the same time, efforts
and dedication to his duties as heretofore devoted.
(b) UNITED STATES FOREIGN CORRUPT PRACTICES ACT. Executive
shall at all times comply with United States laws applicable to Executive's
actions on behalf of Company, and/or any of its subsidiaries or affiliates,
including specifically, without limitation, the United States Foreign Corrupt
Practices Act, generally codified in 15 USC 78 (FCPA), as the FCPA may hereafter
be amended, and/or its successor statutes. If Executive pleads guilty to or nolo
contendere or admits civil or criminal liability under the FCPA or other
applicable United States law, or if a court finds that Executive has personal
civil or criminal liability under the FCPA or other applicable United States
law, or if a court finds that Employee committed an action resulting in Company
or any of its subsidiaries or affiliates having civil or criminal liability or
responsibility under the FCPA or other applicable United States law with
knowledge of the activities giving rise to such liability or knowledge of facts
from which Executive should have reasonably inferred the activities giving rise
to liability had occurred or were likely to occur, such action or finding shall
constitute "cause" for termination under this Agreement unless (i) such action
or finding was based on the activities of others and Executive had no personal
involvement or knowledge of such activities, or (ii) Company's Board of
Directors determines that the actions found to be in violation of the FCPA or
other applicable United States law were taken in good faith and in compliance
with all applicable policies of Company.
3. PROTECTION OF INFORMATION
(a) DISCLOSURE TO EXECUTIVE. Company shall disclose to
Executive, or place Executive in a position to have access to or develop, trade
secrets or confidential information of Company or its affiliates; and/or shall
entrust Executive with business opportunities of Company or its affiliates;
and/or shall place Executive in a position to develop business good will on
behalf of Company or its affiliates.
(b) DISCLOSURE TO AND PROPERTY OF COMPANY. All information,
ideas,
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concepts, improvements, discoveries, and inventions, whether patentable or not,
which are conceived, made, developed, or acquired by Executive, individually or
in conjunction with others, during Executive's employment by Company (whether
during business hours or otherwise and whether on Company's premises or
otherwise) which relate to Company's business, products, or services (including,
without limitation, all such information relating to corporate opportunities,
research, financial and sales data, pricing terms, evaluations, opinions,
interpretations, acquisitions prospects, the identity of customers or their
requirements, the identity of key contacts within the customer's organizations
or within the organization of acquisition prospects, or marketing and
merchandising techniques, prospective names, and marks) shall be disclosed to
Company and are and shall be the sole and exclusive property of Company unless
and to the extent such information is generally known in Company's industry.
Moreover, all documents, drawings, memoranda, notes, records, files,
correspondence, manuals, models, specifications, computer programs, E-mail,
voice mail, electronic databases, maps, and all other writings or materials of
any type embodying any of such information, ideas, concepts, improvements,
discoveries, and inventions are and shall be the sole and exclusive property of
Company unless and to the extent such information is generally known in
Company's industry. Upon termination of Executive's employment by Company, for
any reason, Executive promptly shall deliver the same, and all copies thereof,
to Company unless and to the extent such information is generally known in
Company's industry.
(c) NO UNAUTHORIZED USE OR DISCLOSURE. Executive will not, at
any time during or after Executive's employment by Company, make any
unauthorized disclosure of any confidential business information or trade
secrets of Company or its affiliates, or make any use thereof, except in the
carrying out of Executive's employment responsibilities hereunder. Affiliates of
the Company shall be third party beneficiaries of Executive's obligations under
this paragraph. As a result of Executive's employment by Company, Executive may
also from time to time have access to, or knowledge of, confidential business
information or trade secrets of third parties, such as customers, suppliers,
partners, joint venturers, and the like, of Company and its affiliates.
Executive also agrees to preserve and protect the confidentiality of such third
party confidential information and trade secrets to the same extent, and on the
same basis, as Company's confidential business information and trade secrets,
unless and to the extent such information is generally known in Company's
industry.
(d) OWNERSHIP BY COMPANY. If, during Executive's employment by
company, Executive creates any work of authorship fixed in any tangible medium
of expression which is the subject matter of copyright (such as videotapes,
written presentations, or acquisitions, computer programs, E-mail, voice mail,
electronic databases, drawings, maps, architectural renditions, models, manuals,
brochures, or the like) relating to Company's business, products, or services,
whether such work is created solely by Executive or jointly with others (whether
during business hours or otherwise and whether on Company's premises or
otherwise), Company shall be deemed the author of such work if the work is
prepared by Executive in the scope of Executive's employment; or, if the work is
not prepared by Executive within the scope of Executive's employment but is
specially ordered by Company as a contribution to a collective work, as a part
of a motion picture or other audiovisual work, as a translation, as a
supplementary work, as a compilation, or as an instructional text, then the work
shall be considered to be work made for hire and Company shall be the author of
the work. If such work is neither prepared by
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Executive within the scope of Executive's employment nor a work specially
ordered that is deemed to be a work made for hire, then Executive hereby agrees
to assign, and by these presents does assign, to Company all of Executive's
worldwide right, title, and interest in and to such work and all rights of
copyright therein.
(e) ASSISTANCE BY EXECUTIVE. Both during the period of
Executive's employment by Company and thereafter, Executive shall assist Company
and its nominee, at any time, in the protection of Company's worldwide right,
title, and interest in and to information, ideas, concepts, improvements,
discoveries, and inventions, and its copyrighted works, including without
limitation, the execution of all formal assignment documents requested by
Company or its nominee and the execution of all lawful oaths and applications
for patents and registration of copyright in the United States and foreign
countries.
(f) REMEDIES. Executive acknowledges that money damages would
not be sufficient remedy for any breach of this Article by Executive, and
Company shall be entitled to enforce the provisions of this Article by specific
performance and injunctive relief as remedies for such breach or any threatened
breach. Such remedies shall not be deemed the exclusive remedies for a breach of
this Article, but shall be in addition to all remedies available at law or in
equity to Company, including the recovery of damages from Executive and his
agents involved in such breach and remedies available to Company pursuant to
other agreements with Executive.
4. NON-SOLICITATION OBLIGATIONS
(a) IN GENERAL. As part of the consideration for the benefits
to be paid to Executive hereunder; to protect the trade secrets and confidential
information of Company and its affiliates that have been and will in the future
be disclosed or entrusted to Executive and other employees of the Company and
its affiliates, the business good will of Company and its affiliates that has
been and will in the future be developed by Executive or other employees of the
Company or its affiliates, or the business opportunities that have been and will
in the future be disclosed or entrusted to Executive and other employees by
Company and its affiliates; and as an additional incentive for Company to enter
into this Agreement, Company and Executive agree to the non-solicitation
obligations hereunder. If Executive's employment hereunder shall be terminated
for any reason, then, subject to the last sentence of this paragraph 4(a),
Executive shall not, directly or indirectly for Executive or for others, in any
geographic area or market where Company or any of its affiliates are conducting
any business as of the date of such termination of the employment relationship
or have during the previous twelve months conducted such business, induce any
employee of Company or any of its subsidiaries or affiliates to terminate his or
her employment with Company or such subsidiaries or affiliates, or hire or
assist in the hiring of any such employee by any person, association, or entity
not affiliated with Company. These non-solicitation obligations shall extend
until the later of (i) the one year anniversary of Executive's termination that
is not the result of a Change-in-Control or the two year anniversary of
Executive's termination (in the case of an Involuntary Termination which is the
result of a Change-in-Control) or (ii) the one year anniversary of the
termination of Executive's employment (in the case of a termination for any
other reason).
(b) ENFORCEMENT AND REMEDIES. Executive understands that the
restrictions
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set forth in paragraph 4(a) may limit Executive's ability to engage in the
solicitation of employees of the Company and its subsidiaries and affiliates,
but acknowledges that Executive will receive sufficiently high remuneration and
other benefits under this Agreement to justify such restriction. Executive
acknowledges that money damages would not be sufficient remedy for any breach of
this Article by Executive, and Company shall be entitled to enforce the
provisions of this Article by specific performance and injunctive relief as
remedies for such breach or any threatened breach. Such remedies shall not be
deemed the exclusive remedies for a breach of this Article, but shall be in
addition to all remedies available at law or in equity to Company, including
without limitation, the recovery of damages from Executive and Executive's
agents involved in such breach and remedies available to Company pursuant to
other agreements with Executive.
(c) REFORMATION. It is expressly understood and agreed that
Company and Executive consider the restrictions contained in this paragraph 4 to
be reasonable and necessary to protect the proprietary information of Company.
Nevertheless, if any of the aforesaid restrictions are found by a court having
jurisdiction to be unreasonable, or overly broad as to geographic area or time,
or otherwise unenforceable, the parties intend for the restrictions therein set
forth to be modified by such courts so as to be reasonable and enforceable and,
as so modified by the court, to be fully enforced.
5. STATEMENTS CONCERNING COMPANY. Executive shall refrain, both during
the employment relationship and after the employment relationship terminates,
from publishing any oral or written statements about Company, any of its
affiliates, or any of such entities' officers, employees, agents or
representatives that are slanderous, libelous, or defamatory; or that disclose
private or confidential information about Company, any of its affiliates, or any
of such entities' business affairs, officers, employees, agents, or
representatives that Employee knows or should know is materially injurious to
Company or such affiliate; or that constitute an intrusion into the seclusion or
private lives of Company, any of its affiliates, or any of such entities'
officers, employees, agents, or representatives that Employee knows or should
know is materially injurious to Company or such affiliate; or that give rise to
unreasonable publicity about the private lives of Company, any of its
affiliates, or any of such entities' officers, employees, agents, or
representatives; or that place Company, any of its affiliates, or any of such
entities' officers, employees, agents, or representatives in a false light
before the public; or that constitute a misappropriation of the name or likeness
of Company, any of its affiliates, or any of such entities' officers, employees,
agents, or representatives. A violation or threatened violation of this
prohibition may be enjoined by the courts. The rights afforded Company and its
affiliates under this provision are in addition to any and all rights and
remedies otherwise afforded by law.
6. TERMINATION. Subject to the provisions of Paragraph 8(i) hereof, if
Executive's employment by the Company or any subsidiary thereof or successor
thereto shall be subject to an Involuntary Termination, then the Company will,
as additional compensation for services rendered to the Company (including its
subsidiaries), pay to Executive the following amounts (subject to any applicable
payroll or other taxes required to be withheld and any employee benefit
premiums) and take the following actions:
(a) If such Involuntary Termination is a Non-Change-in-Control
Involuntary
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Termination, pay Executive a lump sum cash payment in an amount equal to the
Non-Change-in-Control Severance Amount on or before the tenth day after the last
day of Executive's employment with the Company.
(b) If such Involuntary Termination is a Change-in-Control
Involuntary Termination, pay Executive a lump sum cash payment in an amount
equal to the Change-in-Control Severance Amount.
(c) In either a Change-in-Control Involuntary Termination or a
Non-Change-in-Control Involuntary Termination, pay Executive his pro rata Bonus
Target earned through the date of Involuntary Termination.
(d) Immediately cause Executive and those of his dependents
(including his spouse) who were covered under the Company's medical and dental
benefit plans on the day prior to Executive's Involuntary Termination to
continue to be covered under such plans, without any cost to Executive, for 12
months from the date of termination if the termination is a
Non-Change-in-Control Involuntary Termination or for 24 months from the date of
termination if the termination is a Change-in-Control Involuntary Termination;
provided, however, that (i) such coverage shall terminate if and to the extent
Executive becomes eligible to receive medical and dental coverage from a
subsequent employer (and any such eligibility shall be promptly reported to the
Company by Executive) and (ii) if Executive (and/or his spouse) would have been
entitled to retiree medical and/or dental coverage under the Company's plans had
he voluntarily retired on the date of such Involuntary Termination, then such
coverages shall be continued as provided under such plans. Nothing herein shall
be deemed to adversely affect in any way the additional rights after
consideration of this extension, of Executive and his eligible dependents to
continuation coverages required pursuant to Part 6 of Title I of the Employee
Retirement Income Security Act of 1974, as amended, if, at the time such
continuation coverage is requested, Executive does not have alternative group
coverage available from an employer.
(e) Immediately cause any and all outstanding options to
purchase common stock of the Company held by Executive, which options were
granted prior to December 31, 1995, to become immediately exercisable in full
and to remain exercisable during the period of three months following such
termination (or such greater period as the Committee (as such term is defined in
the Incentive Plan) may determine), or by Executive's estate (or the person who
acquires such options by will or the laws of descent and distribution or
otherwise by reason of the death of Executive) during a period of one year
following Executive's death if Executive dies during such three-month period (or
such greater period as the Committee may determine), but in no event shall any
such option be exercisable after the tenth anniversary of the grant of such
option.
7. CERTAIN ADDITIONAL PAYMENTS BY COMPANY. Notwithstanding anything to
the contrary in this Agreement, in the event that any payment or distribution by
Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a "Payment"), would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended, or any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest or penalties, are
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hereinafter collectively referred to as the "Excise Tax"), Company shall pay to
Executive an additional payment (a "Gross-up Payment") in an amount such that
after payment by Executive of all state and federal taxes (including any
interest or penalties imposed with respect to such taxes), including any Excise
Tax and any federal or state income taxes imposed on any Gross-up Payment,
Executive retains an amount of the Gross-up Payment equal to the Excise Tax
imposed upon the Payments. Company shall instruct its outside accountants to
independently make an initial determination as to whether a Gross-up Payment is
required and the amount of any such Gross-up Payment. Executive shall notify
Company immediately in writing of any claim by the Internal Revenue Service
which, if successful, would require Company to make a Gross-up Payment (or a
Gross-up Payment in excess of that, if any, initially determined by Company and
Executive) within five days of the receipt of such claim. Company shall notify
Executive in writing at least five days prior to the due date of any response
required with respect to such claim if it plans to contest the claim. If Company
decides to contest such claim, Executive shall cooperate fully with Company in
such action; provided, however, that Company shall bear and pay directly or
indirectly all costs and expenses (including additional interest and penalties)
incurred in connection with such action and shall indemnify and hold Executive
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of Company's
action. If, as a result of Company's action with respect to a claim, Executive
receives a refund of any amount paid by Company with respect to such claim,
Executive shall promptly pay such refund to Company. If Company fails to timely
notify Executive whether it will contest such claim or Company determines not to
contest such claim, then, Company shall immediately pay to Executive the portion
of such claim, if any, which it has not previously paid to Executive.
8. GENERAL.
(a) TERM. The effective date of this Agreement is November 15,
1998, and this Agreement shall have an initial term (the "Initial Term") of one
year beginning on such effective date. The term of this Agreement shall be
extended automatically for an additional successive one-year period as of the
last day of the Initial Term and as of the last day of each such successive
one-year period of time thereafter that this Agreement is in effect; provided,
however, that if, prior to 90 days before the last day of the Initial Term or
any such successive one-year term, the Compensation Committee (excluding any
member of the Compensation Committee who is covered by this Agreement or by a
similar agreement with the Company) shall give written notice to Executive that
no such automatic extension shall occur, then this Agreement shall terminate on
the last day of the Initial Term or such successive one-year term, as
applicable, during which such notice is given. Notwithstanding anything to the
contrary contained in this "sunset provision," it is agreed that if a
Change-in-Control occurs while this Agreement is in effect, then this Agreement
shall not be subject to termination under this "sunset provision," and shall
remain in force for a period of 12 months after such Change-in-Control, and if
within said 12 months the contingency factors occur which would entitle
Executive to the benefits as provided herein, this Agreement shall remain in
effect in accordance with its terms. If, within such 12 months after a
Change-in-Control, the contingency factors that would entitle Executive to said
benefits do not occur, thereupon this "sunset provision" shall again be
applicable with the 90-day time period for Compensation Committee action to
thereafter commence 90 days prior to
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the first anniversary of such Change-in-Control and 90 days prior to each
one-year anniversary date thereafter.
(b) INDEMNIFICATION. If Executive shall obtain any money
judgment or otherwise prevail with respect to any litigation brought by
Executive or the Company to enforce or interpret any provision contained herein,
the Company, to the fullest extent permitted by applicable law, hereby
indemnifies Executive for his reasonable attorneys' fees and disbursements
incurred in such litigation. To the extent that any such indemnification payment
would be subject to the Excise Tax (as defined in paragraph 7), then Executive
shall be entitled to receive Gross-up Payments in an amount such that after
payment by Executive of all taxes imposed on such Gross-up Payments, Executive
retains an amount equal to the Excise Tax imposed on the indemnification
payment.
(c) PAYMENT OBLIGATIONS ABSOLUTE. The Company's obligation to
pay (or cause one of its subsidiaries to pay) Executive the amounts and to make
the arrangements provided herein shall be absolute and unconditional and shall
not be affected by any circumstances, including, without limitation, any
set-off, counterclaim, recoupment, defense or other right which the Company
(including its subsidiaries) may have against him or anyone else. All amounts
payable by the Company (including its subsidiaries hereunder) shall be paid
without notice or demand. Executive shall not be obligated to seek other
employment in mitigation of the amounts payable or arrangements made under any
provision of this Agreement, and, except as provided in Paragraphs 6(d) hereof,
the obtaining of any such other employment shall in no event effect any
reduction of the Company's obligations to make (or cause to be made) the
payments and arrangements required to be made under this Agreement.
(d) SUCCESSORS. This Agreement shall be binding upon and inure
to the benefit of the Company and any successor of the Company, by merger or
otherwise. This Agreement shall also be binding upon and inure to the benefit of
Executive and his estate. If Executive shall die prior to full payment of
amounts due pursuant to this Agreement, such amounts shall be payable pursuant
to the terms of this Agreement to his estate.
(e) SEVERABILITY. Any provision in this Agreement which is
prohibited or unenforceable in any jurisdiction by reason of applicable law
shall, as to such jurisdiction, be ineffective only to the extent of such
prohibition or unenforceability without invalidating or affecting the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(f) NON-ALIENATION. Executive shall not have any right to
pledge, hypothecate, anticipate or assign this Agreement or the rights
hereunder, except by will or the laws of descent and distribution.
(g) NOTICES. Any notices or other communications provided for
in this Agreement must be in writing. In the case of Executive, such notices or
communications shall be effectively delivered if hand delivered to Executive at
his principal place of employment or if sent by registered or certified mail to
Executive at the last address he has filed with the Company. In the case of the
Company, such notices or communications shall be effectively delivered if sent
by registered or certified mail to the Company at its principal executive
offices.
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(h) CONTROLLING LAW. This Agreement is entered into under, and
its validity interpretation and enforceability and shall be governed for all
purposes by, the laws of the State of Texas; provided, however, that no effect
shall be given to any choice or conflict of law provision or rule (whether in
the State of Texas or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Texas.
(i) RELEASE. As a condition to the receipt of any benefit
under Paragraph 6 hereof, Executive shall first execute a release, in the form
established by the Company, releasing the Company, its shareholders, partners,
officers, directors, employees and agents from any and all claims and from any
and all causes of action of any kind or character, including but not limited to
all claims or causes of action arising out of Executive's employment with the
Company or the termination of such employment.
(j) FULL SETTLEMENT. If Executive is entitled to and receives
the benefits provided hereunder, performance of the obligations of the Company
hereunder will constitute full settlement of all claims that Executive might
otherwise assert against the Company on account of his termination of
employment. Executive hereby acknowledges that the Company has heretofore
rescinded and terminated the Company's Executive Severance Policy, as amended
from time to time, which policy was originally adopted on January 1, 1994, and
Executive hereby waives any and all rights Executive may have under such policy.
(k) UNFUNDED OBLIGATION. The obligation to pay amounts under
this Agreement is an unfunded obligation of the Company, and no such obligation
shall create a trust or be deemed to be secured by any pledge or encumbrance on
any property of the Company (including its subsidiaries).
(l) NOT A CONTRACT OF EMPLOYMENT. This Agreement shall not be
deemed to constitute a contract of employment, nor shall any provision hereof
affect (a) the right of the Company (or its subsidiaries) to discharge Executive
at will or (b) the terms and conditions of any other agreement between the
Company and Executive except as provided herein.
(m) NUMBER AND GENDER. Wherever appropriate herein, words used
in the singular shall include the plural and the plural shall include the
singular. The masculine gender where appearing herein shall be deemed to include
the feminine gender.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 1st day of September, 1999.
"EXECUTIVE"
/s/ GEORGE H. GENTRY, III
--------------------------------
GEORGE H. GENTRY, III
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"COMPANY"
MARINE DRILLING COMPANIES, INC.
BY: /s/ JAN RASK
-----------------------------
NAME: JAN RASK
TITLE: CHIEF EXECUTIVE OFFICER
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EXHIBIT 10.3
FIRST AMENDED AND RESTATED SEVERANCE AGREEMENT
THIS FIRST AMENDED AND RESTATED SEVERANCE AGREEMENT between MARINE
DRILLING COMPANIES, INC., a Texas corporation (the "Company"), and H. LARRY
ADKINS ("Executive"),
W I T N E S S E T H :
WHEREAS, the Company desires to attract and retain certain key employee
personnel and, accordingly, the Board of Directors of the Company (the "Board")
has approved the Company entering into a severance agreement with Executive in
order to encourage his continued service to the Company; and
WHEREAS, Executive is prepared to commit such services in return for
specific arrangements with respect to severance compensation and other benefits;
WHEREAS, Executive and the Company have previously entered into a
Severance Agreement on July 18, 1996, and they desire to amend and restate that
Severance Agreement;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the Company and Executive agree as follows:
1. DEFINITIONS.
(a) "ANNUAL COMPENSATION" shall mean an amount equal to the
greater of:
(i) Executive's annual base salary at the annual rate
in effect at the date of his Involuntary Termination; or
(ii) Executive's annual base salary at the annual
rate in effect immediately prior to a Change-in-Control if Executive's
employment shall be subject to a Change-in-Control Involuntary
Termination.
(b) "BONUS TARGET" shall mean an amount equal to the greater
of:
(i) Executive's annual bonus target at the annual
rate in effect at the date of his Involuntary Termination; or
(ii) Executive's annual bonus target at the annual
rate in effect immediately prior to a Change-in-Control if Executive's
employment shall be subject to a Change-in-Control Involuntary
Termination.
(c) "CHANGE-IN-CONTROL" shall have the meaning ascribed to
such term in Section 9(b) of The Marine Drilling 1992 Long-Term Incentive Plan
(the "Incentive Plan").
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(d) "CHANGE-IN-CONTROL INVOLUNTARY TERMINATION" shall mean any
termination of Executive's employment with the Company which:
(i) results from a resignation by Executive within 18
months after the date upon which a Change-in-Control occurs if such
resignation occurs within 30 days after Executive receives notice from
the Company that Executive will be subject to a Material Change in
Employment Terms; or
(ii) results from a termination by the Company within
18 months after the date upon which a Change-in-Control occurs;
provided, however, the term "CHANGE-IN-CONTROL INVOLUNTARY TERMINATION" shall
not include a Termination for Cause or any termination as a result of death,
Disability, or Retirement.
(e) "CHANGE-IN-CONTROL SEVERANCE AMOUNT" shall mean an amount
equal to 200% of the sum of (i) Executive's Annual Compensation plus (ii) his
Bonus Target.
(f) "COMPENSATION COMMITTEE" shall mean the Compensation
Committee of the Board.
(g) "DISABILITY" shall mean Executive's becoming disabled so
as to entitle him to benefits under the Company's long term disability plan.
(h) "INVOLUNTARY TERMINATION" shall mean any
Non-Change-in-Control Termination or any Change-in-Control Involuntary
Termination.
(i) "MATERIAL CHANGE IN COMPENSATION" shall mean any one or
more of the following:
(i) a reduction in Executive's annual base salary
from that provided to him immediately prior to the effective date of
this Agreement; or
(ii) a significant diminution in Executive's
eligibility to participate in bonus, stock option, incentive award and
other compensation plans under which Executive is participating
immediately prior to the effective date of this Agreement.
(j) "MATERIAL CHANGE IN EMPLOYMENT TERMS" shall mean any one
or more of the following:
(i) a material diminution in the nature or scope of
Executive's authorities, powers, functions or duties from those
applicable to him immediately prior to the date on which a
Change-in-Control occurs;
(ii) a reduction in Executive's annual base salary
from that provided to him immediately prior to the date on which a
Change-in-Control occurs;
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(iii) a significant diminution in Executive's
eligibility to participate in bonus, stock option, incentive award and
other compensation plans under which Executive is participating
immediately prior to the date on which a Change-in-Control occurs;
(iv) a change in the location of Executive's
principal place of employment by the Company by more than 50 miles from
the location where he was principally employed immediately prior to the
date on which a Change-in-Control occurs; or
(v) a change in Executive's employee benefits to a
level that is materially inconsistent with employee benefits afforded
by the Company to employees with comparable duties.
(k) "NON-CHANGE-IN-CONTROL INVOLUNTARY TERMINATION" shall mean
any termination of Executive's employment with the Company which:
(i) results from a resignation by Executive if but
only if such resignation occurs within 30 days after Executive receives
notice from the Company that (A) Executive's principal place of
employment will be moved by more than 50 miles from the location where
he was principally employed immediately prior to the date of such
notice or (B) Executive will be subject to a Material Change in
Compensation; or
(ii) results from a termination by the Company;
provided, however, the term "NON-CHANGE-IN-CONTROL INVOLUNTARY TERMINATION"
shall not include a Termination for Cause, a Change-in-Control Involuntary
Termination or any termination as a result of death, Disability, or Retirement.
(l) "NON-CHANGE-IN-CONTROL SEVERANCE AMOUNT" shall mean an
amount equal to Executive's Annual Compensation.
(m) "RETIREMENT" shall mean termination of Executive's
employment for any reason on or after the date Executive reaches age sixty-five.
(n) "TERMINATION FOR CAUSE" shall mean termination of
Executive's employment by the Company for any of the following reasons:
(i) Executive has engaged in gross negligence or
willful misconduct in the performance of the duties required of him;
(ii) Executive has been convicted of a felony or a
misdemeanor involving moral turpitude;
(iii) Executive has willfully refused without proper
legal reason to
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perform the duties and responsibilities required of him;
(iv) Executive has materially breached any material
corporate policy or code of conduct established by the Company;
(v) Executive has violated the Foreign Corrupt
Practices Act or and other United States law as proscribed by paragraph
2(b); or
(vi) Executive has willfully engaged in conduct that
he knows or should know is materially injurious to the Company or any
of its affiliates.
2. SERVICES.
(a) DUTIES. Executive agrees that he will render services to
the Company (as well as any subsidiary thereof or successor thereto) during the
period of his employment to the best of his ability and in a prudent and
businesslike manner and that he will devote substantially the same time, efforts
and dedication to his duties as heretofore devoted.
(b) UNITED STATES FOREIGN CORRUPT PRACTICES ACT. Executive
shall at all times comply with United States laws applicable to Executive's
actions on behalf of Company, and/or any of its subsidiaries or affiliates,
including specifically, without limitation, the United States Foreign Corrupt
Practices Act, generally codified in 15 USC 78 (FCPA), as the FCPA may hereafter
be amended, and/or its successor statutes. If Executive pleads guilty to or nolo
contendere or admits civil or criminal liability under the FCPA or other
applicable United States law, or if a court finds that Executive has personal
civil or criminal liability under the FCPA or other applicable United States
law, or if a court finds that Employee committed an action resulting in Company
or any of its subsidiaries or affiliates having civil or criminal liability or
responsibility under the FCPA or other applicable United States law with
knowledge of the activities giving rise to such liability or knowledge of facts
from which Executive should have reasonably inferred the activities giving rise
to liability had occurred or were likely to occur, such action or finding shall
constitute "cause" for termination under this Agreement unless (i) such action
or finding was based on the activities of others and Executive had no personal
involvement or knowledge of such activities, or (ii) Company's Board of
Directors determines that the actions found to be in violation of the FCPA or
other applicable United States law were taken in good faith and in compliance
with all applicable policies of Company.
3. PROTECTION OF INFORMATION
(a) DISCLOSURE TO EXECUTIVE. Company shall disclose to
Executive, or place Executive in a position to have access to or develop, trade
secrets or confidential information of Company or its affiliates; and/or shall
entrust Executive with business opportunities of Company or its affiliates;
and/or shall place Executive in a position to develop business good will on
behalf of Company or its affiliates.
(b) DISCLOSURE TO AND PROPERTY OF COMPANY. All information,
ideas, concepts, improvements, discoveries, and inventions, whether patentable
or not, which are
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conceived, made, developed, or acquired by Executive, individually or in
conjunction with others, during Executive's employment by Company (whether
during business hours or otherwise and whether on Company's premises or
otherwise) which relate to Company's business, products, or services (including,
without limitation, all such information relating to corporate opportunities,
research, financial and sales data, pricing terms, evaluations, opinions,
interpretations, acquisitions prospects, the identity of customers or their
requirements, the identity of key contacts within the customer's organizations
or within the organization of acquisition prospects, or marketing and
merchandising techniques, prospective names, and marks) shall be disclosed to
Company and are and shall be the sole and exclusive property of Company unless
and to the extent such information is generally known in Company's industry.
Moreover, all documents, drawings, memoranda, notes, records, files,
correspondence, manuals, models, specifications, computer programs, E-mail,
voice mail, electronic databases, maps, and all other writings or materials of
any type embodying any of such information, ideas, concepts, improvements,
discoveries, and inventions are and shall be the sole and exclusive property of
Company unless and to the extent such information is generally known in
Company's industry. Upon termination of Executive's employment by Company, for
any reason, Executive promptly shall deliver the same, and all copies thereof,
to Company unless and to the extent such information is generally known in
Company's industry.
(c) NO UNAUTHORIZED USE OR DISCLOSURE. Executive will not, at
any time during or after Executive's employment by Company, make any
unauthorized disclosure of any confidential business information or trade
secrets of Company or its affiliates, or make any use thereof, except in the
carrying out of Executive's employment responsibilities hereunder. Affiliates of
the Company shall be third party beneficiaries of Executive's obligations under
this paragraph. As a result of Executive's employment by Company, Executive may
also from time to time have access to, or knowledge of, confidential business
information or trade secrets of third parties, such as customers, suppliers,
partners, joint venturers, and the like, of Company and its affiliates.
Executive also agrees to preserve and protect the confidentiality of such third
party confidential information and trade secrets to the same extent, and on the
same basis, as Company's confidential business information and trade secrets,
unless and to the extent such information is generally known in Company's
industry.
(d) OWNERSHIP BY COMPANY. If, during Executive's employment by
company, Executive creates any work of authorship fixed in any tangible medium
of expression which is the subject matter of copyright (such as videotapes,
written presentations, or acquisitions, computer programs, E-mail, voice mail,
electronic databases, drawings, maps, architectural renditions, models, manuals,
brochures, or the like) relating to Company's business, products, or services,
whether such work is created solely by Executive or jointly with others (whether
during business hours or otherwise and whether on Company's premises or
otherwise), Company shall be deemed the author of such work if the work is
prepared by Executive in the scope of Executive's employment; or, if the work is
not prepared by Executive within the scope of Executive's employment but is
specially ordered by Company as a contribution to a collective work, as a part
of a motion picture or other audiovisual work, as a translation, as a
supplementary work, as a compilation, or as an instructional text, then the work
shall be considered to be work made for hire and Company shall be the author of
the work. If such work is neither prepared by Executive within the scope of
Executive's employment nor a work specially ordered that is
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deemed to be a work made for hire, then Executive hereby agrees to assign, and
by these presents does assign, to Company all of Executive's worldwide right,
title, and interest in and to such work and all rights of copyright therein.
(e) ASSISTANCE BY EXECUTIVE. Both during the period of
Executive's employment by Company and thereafter, Executive shall assist Company
and its nominee, at any time, in the protection of Company's worldwide right,
title, and interest in and to information, ideas, concepts, improvements,
discoveries, and inventions, and its copyrighted works, including without
limitation, the execution of all formal assignment documents requested by
Company or its nominee and the execution of all lawful oaths and applications
for patents and registration of copyright in the United States and foreign
countries.
(f) REMEDIES. Executive acknowledges that money damages would
not be sufficient remedy for any breach of this Article by Executive, and
Company shall be entitled to enforce the provisions of this Article by specific
performance and injunctive relief as remedies for such breach or any threatened
breach. Such remedies shall not be deemed the exclusive remedies for a breach of
this Article, but shall be in addition to all remedies available at law or in
equity to Company, including the recovery of damages from Executive and his
agents involved in such breach and remedies available to Company pursuant to
other agreements with Executive.
4. NON-SOLICITATION OBLIGATIONS
(a) IN GENERAL. As part of the consideration for the benefits
to be paid to Executive hereunder; to protect the trade secrets and confidential
information of Company and its affiliates that have been and will in the future
be disclosed or entrusted to Executive and other employees of the Company and
its affiliates, the business good will of Company and its affiliates that has
been and will in the future be developed by Executive or other employees of the
Company or its affiliates, or the business opportunities that have been and will
in the future be disclosed or entrusted to Executive and other employees by
Company and its affiliates; and as an additional incentive for Company to enter
into this Agreement, Company and Executive agree to the non-solicitation
obligations hereunder. If Executive's employment hereunder shall be terminated
for any reason, then, subject to the last sentence of this paragraph 4(a),
Executive shall not, directly or indirectly for Executive or for others, in any
geographic area or market where Company or any of its affiliates are conducting
any business as of the date of such termination of the employment relationship
or have during the previous twelve months conducted such business, induce any
employee of Company or any of its subsidiaries or affiliates to terminate his or
her employment with Company or such subsidiaries or affiliates, or hire or
assist in the hiring of any such employee by any person, association, or entity
not affiliated with Company. These non-solicitation obligations shall extend
until the later of (i) the one year anniversary of Executive's termination that
is not the result of a Change-in-Control or the two year anniversary of
Executive's termination (in the case of an Involuntary Termination which is the
result of a Change-in-Control) or (ii) the one year anniversary of the
termination of Executive's employment (in the case of a termination for any
other reason).
(b) ENFORCEMENT AND REMEDIES. Executive understands that the
restrictions set forth in paragraph 4(a) may limit Executive's ability to engage
in the solicitation of
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employees of the Company and its subsidiaries and affiliates, but acknowledges
that Executive will receive sufficiently high remuneration and other benefits
under this Agreement to justify such restriction. Executive acknowledges that
money damages would not be sufficient remedy for any breach of this Article by
Executive, and Company shall be entitled to enforce the provisions of this
Article by specific performance and injunctive relief as remedies for such
breach or any threatened breach. Such remedies shall not be deemed the exclusive
remedies for a breach of this Article, but shall be in addition to all remedies
available at law or in equity to Company, including without limitation, the
recovery of damages from Executive and Executive's agents involved in such
breach and remedies available to Company pursuant to other agreements with
Executive.
(c) REFORMATION. It is expressly understood and agreed that
Company and Executive consider the restrictions contained in this paragraph 4 to
be reasonable and necessary to protect the proprietary information of Company.
Nevertheless, if any of the aforesaid restrictions are found by a court having
jurisdiction to be unreasonable, or overly broad as to geographic area or time,
or otherwise unenforceable, the parties intend for the restrictions therein set
forth to be modified by such courts so as to be reasonable and enforceable and,
as so modified by the court, to be fully enforced.
5. STATEMENTS CONCERNING COMPANY. Executive shall refrain, both during
the employment relationship and after the employment relationship terminates,
from publishing any oral or written statements about Company, any of its
affiliates, or any of such entities' officers, employees, agents or
representatives that are slanderous, libelous, or defamatory; or that disclose
private or confidential information about Company, any of its affiliates, or any
of such entities' business affairs, officers, employees, agents, or
representatives that Employee knows or should know is materially injurious to
Company or such affiliate; or that constitute an intrusion into the seclusion or
private lives of Company, any of its affiliates, or any of such entities'
officers, employees, agents, or representatives that Employee knows or should
know is materially injurious to Company or such affiliate; or that give rise to
unreasonable publicity about the private lives of Company, any of its
affiliates, or any of such entities' officers, employees, agents, or
representatives; or that place Company, any of its affiliates, or any of such
entities' officers, employees, agents, or representatives in a false light
before the public; or that constitute a misappropriation of the name or likeness
of Company, any of its affiliates, or any of such entities' officers, employees,
agents, or representatives. A violation or threatened violation of this
prohibition may be enjoined by the courts. The rights afforded Company and its
affiliates under this provision are in addition to any and all rights and
remedies otherwise afforded by law.
6. TERMINATION. Subject to the provisions of Paragraph 8(i) hereof, if
Executive's employment by the Company or any subsidiary thereof or successor
thereto shall be subject to an Involuntary Termination, then the Company will,
as additional compensation for services rendered to the Company (including its
subsidiaries), pay to Executive the following amounts (subject to any applicable
payroll or other taxes required to be withheld and any employee benefit
premiums) and take the following actions:
(a) If such Involuntary Termination is a Non-Change-in-Control
Involuntary Termination, pay Executive a lump sum cash payment in an amount
equal to the Non-Change-in-
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Control Severance Amount on or before the tenth day after the last day of
Executive's employment with the Company.
(b) If such Involuntary Termination is a Change-in-Control
Involuntary Termination, pay Executive a lump sum cash payment in an amount
equal to the Change-in-Control Severance Amount.
(c) In either a Change-in-Control Involuntary Termination or a
Non-Change-in-Control Involuntary Termination, pay Executive his pro rata Bonus
Target earned through the date of Involuntary Termination.
(d) Immediately cause Executive and those of his dependents
(including his spouse) who were covered under the Company's medical and dental
benefit plans on the day prior to Executive's Involuntary Termination to
continue to be covered under such plans, without any cost to Executive, for 12
months from the date of termination if the termination is a
Non-Change-in-Control Involuntary Termination or for 24 months from the date of
termination if the termination is a Change-in-Control Involuntary Termination;
provided, however, that (i) such coverage shall terminate if and to the extent
Executive becomes eligible to receive medical and dental coverage from a
subsequent employer (and any such eligibility shall be promptly reported to the
Company by Executive) and (ii) if Executive (and/or his spouse) would have been
entitled to retiree medical and/or dental coverage under the Company's plans had
he voluntarily retired on the date of such Involuntary Termination, then such
coverages shall be continued as provided under such plans. Nothing herein shall
be deemed to adversely affect in any way the additional rights after
consideration of this extension, of Executive and his eligible dependents to
continuation coverages required pursuant to Part 6 of Title I of the Employee
Retirement Income Security Act of 1974, as amended, if, at the time such
continuation coverage is requested, Executive does not have alternative group
coverage available from an employer.
(e) Immediately cause any and all outstanding options to
purchase common stock of the Company held by Executive, which options were
granted prior to December 31, 1995, to become immediately exercisable in full
and to remain exercisable during the period of three months following such
termination (or such greater period as the Committee (as such term is defined in
the Incentive Plan) may determine), or by Executive's estate (or the person who
acquires such options by will or the laws of descent and distribution or
otherwise by reason of the death of Executive) during a period of one year
following Executive's death if Executive dies during such three-month period (or
such greater period as the Committee may determine), but in no event shall any
such option be exercisable after the tenth anniversary of the grant of such
option.
7. CERTAIN ADDITIONAL PAYMENTS BY COMPANY. Notwithstanding anything to
the contrary in this Agreement, in the event that any payment or distribution by
Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a "Payment"), would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended, or any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest or penalties, are hereinafter collectively referred to as the
"Excise Tax"), Company shall pay to Executive an
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additional payment (a "Gross-up Payment") in an amount such that after payment
by Executive of all state and federal taxes (including any interest or penalties
imposed with respect to such taxes), including any Excise Tax and any federal or
state income taxes imposed on any Gross-up Payment, Executive retains an amount
of the Gross-up Payment equal to the Excise Tax imposed upon the Payments.
Company shall instruct its outside accountants to independently make an initial
determination as to whether a Gross-up Payment is required and the amount of any
such Gross-up Payment. Executive shall notify Company immediately in writing of
any claim by the Internal Revenue Service which, if successful, would require
Company to make a Gross-up Payment (or a Gross-up Payment in excess of that, if
any, initially determined by Company and Executive) within five days of the
receipt of such claim. Company shall notify Executive in writing at least five
days prior to the due date of any response required with respect to such claim
if it plans to contest the claim. If Company decides to contest such claim,
Executive shall cooperate fully with Company in such action; provided, however,
that Company shall bear and pay directly or indirectly all costs and expenses
(including additional interest and penalties) incurred in connection with such
action and shall indemnify and hold Executive harmless, on an after-tax basis,
for any Excise Tax or income tax, including interest and penalties with respect
thereto, imposed as a result of Company's action. If, as a result of Company's
action with respect to a claim, Executive receives a refund of any amount paid
by Company with respect to such claim, Executive shall promptly pay such refund
to Company. If Company fails to timely notify Executive whether it will contest
such claim or Company determines not to contest such claim, then, Company shall
immediately pay to Executive the portion of such claim, if any, which it has not
previously paid to Executive.
8. GENERAL.
(a) TERM. The effective date of this Agreement is July 18,
1996 and this Agreement shall have an initial term (the "Initial Term") of one
year beginning on such effective date. The term of this Agreement shall be
extended automatically for an additional successive one-year period as of the
last day of the Initial Term and as of the last day of each such successive
one-year period of time thereafter that this Agreement is in effect; provided,
however, that if, prior to 90 days before the last day of the Initial Term or
any such successive one-year term, the Compensation Committee (excluding any
member of the Compensation Committee who is covered by this Agreement or by a
similar agreement with the Company) shall give written notice to Executive that
no such automatic extension shall occur, then this Agreement shall terminate on
the last day of the Initial Term or such successive one-year term, as
applicable, during which such notice is given. Notwithstanding anything to the
contrary contained in this "sunset provision," it is agreed that if a
Change-in-Control occurs while this Agreement is in effect, then this Agreement
shall not be subject to termination under this "sunset provision," and shall
remain in force for a period of 12 months after such Change-in-Control, and if
within said 12 months the contingency factors occur which would entitle
Executive to the benefits as provided herein, this Agreement shall remain in
effect in accordance with its terms. If, within such 12 months after a
Change-in-Control, the contingency factors that would entitle Executive to said
benefits do not occur, thereupon this "sunset provision" shall again be
applicable with the 90-day time period for Compensation Committee action to
thereafter commence 90 days prior to the first anniversary of such
Change-in-Control and 90 days prior to each one-year anniversary date
thereafter.
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(b) INDEMNIFICATION. If Executive shall obtain any money
judgment or otherwise prevail with respect to any litigation brought by
Executive or the Company to enforce or interpret any provision contained herein,
the Company, to the fullest extent permitted by applicable law, hereby
indemnifies Executive for his reasonable attorneys' fees and disbursements
incurred in such litigation. To the extent that any such indemnification payment
would be subject to the Excise Tax (as defined in paragraph 7), then Executive
shall be entitled to receive Gross-up Payments in an amount such that after
payment by Executive of all taxes imposed on such Gross-up Payments, Executive
retains an amount equal to the Excise Tax imposed on the indemnification
payment.
(c) PAYMENT OBLIGATIONS ABSOLUTE. The Company's obligation to
pay (or cause one of its subsidiaries to pay) Executive the amounts and to make
the arrangements provided herein shall be absolute and unconditional and shall
not be affected by any circumstances, including, without limitation, any
set-off, counterclaim, recoupment, defense or other right which the Company
(including its subsidiaries) may have against him or anyone else. All amounts
payable by the Company (including its subsidiaries hereunder) shall be paid
without notice or demand. Executive shall not be obligated to seek other
employment in mitigation of the amounts payable or arrangements made under any
provision of this Agreement, and, except as provided in Paragraphs 6(d) hereof,
the obtaining of any such other employment shall in no event effect any
reduction of the Company's obligations to make (or cause to be made) the
payments and arrangements required to be made under this Agreement.
(d) SUCCESSORS. This Agreement shall be binding upon and inure
to the benefit of the Company and any successor of the Company, by merger or
otherwise. This Agreement shall also be binding upon and inure to the benefit of
Executive and his estate. If Executive shall die prior to full payment of
amounts due pursuant to this Agreement, such amounts shall be payable pursuant
to the terms of this Agreement to his estate.
(e) SEVERABILITY. Any provision in this Agreement which is
prohibited or unenforceable in any jurisdiction by reason of applicable law
shall, as to such jurisdiction, be ineffective only to the extent of such
prohibition or unenforceability without invalidating or affecting the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(f) NON-ALIENATION. Executive shall not have any right to
pledge, hypothecate, anticipate or assign this Agreement or the rights
hereunder, except by will or the laws of descent and distribution.
(g) NOTICES. Any notices or other communications provided for
in this Agreement must be in writing. In the case of Executive, such notices or
communications shall be effectively delivered if hand delivered to Executive at
his principal place of employment or if sent by registered or certified mail to
Executive at the last address he has filed with the Company. In the case of the
Company, such notices or communications shall be effectively delivered if sent
by registered or certified mail to the Company at its principal executive
offices.
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(h) CONTROLLING LAW. This Agreement is entered into under, and
its validity interpretation and enforceability and shall be governed for all
purposes by, the laws of the State of Texas; provided, however, that no effect
shall be given to any choice or conflict of law provision or rule (whether in
the State of Texas or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Texas.
(i) RELEASE. As a condition to the receipt of any benefit
under Paragraph 6 hereof, Executive shall first execute a release, in the form
established by the Company, releasing the Company, its shareholders, partners,
officers, directors, employees and agents from any and all claims and from any
and all causes of action of any kind or character, including but not limited to
all claims or causes of action arising out of Executive's employment with the
Company or the termination of such employment.
(j) FULL SETTLEMENT. If Executive is entitled to and receives
the benefits provided hereunder, performance of the obligations of the Company
hereunder will constitute full settlement of all claims that Executive might
otherwise assert against the Company on account of his termination of
employment. Executive hereby acknowledges that the Company has heretofore
rescinded and terminated the Company's Executive Severance Policy, as amended
from time to time, which policy was originally adopted on January 1, 1994, and
Executive hereby waives any and all rights Executive may have under such policy.
(k) UNFUNDED OBLIGATION. The obligation to pay amounts under
this Agreement is an unfunded obligation of the Company, and no such obligation
shall create a trust or be deemed to be secured by any pledge or encumbrance on
any property of the Company (including its subsidiaries).
(l) NOT A CONTRACT OF EMPLOYMENT. This Agreement shall not be
deemed to constitute a contract of employment, nor shall any provision hereof
affect (a) the right of the Company (or its subsidiaries) to discharge Executive
at will or (b) the terms and conditions of any other agreement between the
Company and Executive except as provided herein.
(m) NUMBER AND GENDER. Wherever appropriate herein, words used
in the singular shall include the plural and the plural shall include the
singular. The masculine gender where appearing herein shall be deemed to include
the feminine gender.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 1st day of September, 1999.
"EXECUTIVE"
/s/ H. LARRY ADKINS
--------------------------------
H. LARRY ADKINS
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"COMPANY"
MARINE DRILLING COMPANIES, INC.
BY: /s/ JAN RASK
-----------------------------
NAME: JAN RASK
TITLE: CHIEF EXECUTIVE OFFICER
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EXHIBIT 10.4
SEVERANCE AGREEMENT
AGREEMENT between MARINE DRILLING COMPANIES, INC., a Texas corporation
(the "Company"), and O. PETER BLOM ("Executive"),
W I T N E S S E T H :
WHEREAS, the Company desires to attract and retain certain key employee
personnel and, accordingly, the Board of Directors of the Company (the "Board")
has approved the Company entering into a severance agreement with Executive in
order to encourage his continued service to the Company; and
WHEREAS, Executive is prepared to commit such services in return for
specific arrangements with respect to severance compensation and other benefits;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the Company and Executive agree as follows:
1. DEFINITIONS.
(a) "ANNUAL COMPENSATION" shall mean an amount equal to the
greater of:
(i) Executive's annual base salary at the annual rate
in effect at the date of his Involuntary Termination; or
(ii) Executive's annual base salary at the annual
rate in effect immediately prior to a Change-in-Control if Executive's
employment shall be subject to a Change-in-Control Involuntary
Termination.
(b) "BONUS TARGET" shall mean an amount equal to the greater
of:
(i) Executive's annual bonus target at the annual
rate in effect at the date of his Involuntary Termination; or
(ii) Executive's annual bonus target at the annual
rate in effect immediately prior to a Change-in-Control if Executive's
employment shall be subject to a Change-in-Control Involuntary
Termination.
(c) "CHANGE-IN-CONTROL" shall have the meaning ascribed to
such term in Section 9(b) of The Marine Drilling 1992 Long-Term Incentive Plan
(the "Incentive Plan").
(d) "CHANGE-IN-CONTROL INVOLUNTARY TERMINATION" shall mean any
termination of Executive's employment with the Company which:
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(i) results from a resignation by Executive within 18
months after the date upon which a Change-in-Control occurs if such
resignation occurs within 30 days after Executive receives notice from
the Company that Executive will be subject to a Material Change in
Employment Terms; or
(ii) results from a termination by the Company within
18 months after the date upon which a Change-in-Control occurs;
provided, however, the term "CHANGE-IN-CONTROL INVOLUNTARY TERMINATION" shall
not include a Termination for Cause or any termination as a result of death,
Disability, or Retirement.
(e) "CHANGE-IN-CONTROL SEVERANCE AMOUNT" shall mean an amount
equal to 200% of the sum of (i) Executive's Annual Compensation plus (ii) his
Bonus Target.
(f) "COMPENSATION COMMITTEE" shall mean the Compensation
Committee of the Board.
(g) "DISABILITY" shall mean Executive's becoming disabled so
as to entitle him to benefits under the Company's long term disability plan.
(h) "INVOLUNTARY TERMINATION" shall mean any
Non-Change-in-Control Termination or any Change-in-Control Involuntary
Termination.
(i) "MATERIAL CHANGE IN COMPENSATION" shall mean any one or
more of the following:
(i) a reduction in Executive's annual base salary
from that provided to him immediately prior to the effective date of
this Agreement; or
(ii) a significant diminution in Executive's
eligibility to participate in bonus, stock option, incentive award and
other compensation plans under which Executive is participating
immediately prior to the effective date of this Agreement.
(j) "MATERIAL CHANGE IN EMPLOYMENT TERMS" shall mean any one
or more of the following:
(i) a material diminution in the nature or scope of
Executive's authorities, powers, functions or duties from those
applicable to him immediately prior to the date on which a
Change-in-Control occurs;
(ii) a reduction in Executive's annual base salary
from that provided to him immediately prior to the date on which a
Change-in-Control occurs;
(iii) a significant diminution in Executive's
eligibility to participate in bonus, stock option, incentive award and
other compensation plans under which Executive is participating
immediately prior to the date on which a Change-in-Control occurs;
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(iv) a change in the location of Executive's
principal place of employment by the Company by more than 50 miles from
the location where he was principally employed immediately prior to the
date on which a Change-in-Control occurs; or
(v) a change in Executive's employee benefits to a
level that is materially inconsistent with employee benefits afforded
by the Company to employees with comparable duties.
(k) "NON-CHANGE-IN-CONTROL INVOLUNTARY TERMINATION" shall mean
any termination of Executive's employment with the Company which:
(i) results from a resignation by Executive if but
only if such resignation occurs within 30 days after Executive receives
notice from the Company that (A) Executive's principal place of
employment will be moved by more than 50 miles from the location where
he was principally employed immediately prior to the date of such
notice or (B) Executive will be subject to a Material Change in
Compensation; or
(ii) results from a termination by the Company;
provided, however, the term "NON-CHANGE-IN-CONTROL INVOLUNTARY TERMINATION"
shall not include a Termination for Cause, a Change-in-Control Involuntary
Termination or any termination as a result of death, Disability, or Retirement.
(l) "NON-CHANGE-IN-CONTROL SEVERANCE AMOUNT" shall mean an
amount equal to Executive's Annual Compensation.
(m) "RETIREMENT" shall mean termination of Executive's
employment for any reason on or after the date Executive reaches age sixty-five.
(n) "TERMINATION FOR CAUSE" shall mean termination of
Executive's employment by the Company for any of the following reasons:
(i) Executive has engaged in gross negligence or
willful misconduct in the performance of the duties required of him;
(ii) Executive has been convicted of a felony or a
misdemeanor involving moral turpitude;
(iii) Executive has willfully refused without proper
legal reason to perform the duties and responsibilities required of
him;
(iv) Executive has materially breached any material
corporate policy or code of conduct established by the Company;
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(v) Executive has violated the Foreign Corrupt
Practices Act or and other United States law as proscribed by paragraph
2(b); or
(vi) Executive has willfully engaged in conduct that
he knows or should know is materially injurious to the Company or any
of its affiliates.
2. SERVICES.
(a) DUTIES. Executive agrees that he will render services to
the Company (as well as any subsidiary thereof or successor thereto) during the
period of his employment to the best of his ability and in a prudent and
businesslike manner and that he will devote substantially the same time, efforts
and dedication to his duties as heretofore devoted.
(b) UNITED STATES FOREIGN CORRUPT PRACTICES ACT. Executive
shall at all times comply with United States laws applicable to Executive's
actions on behalf of Company, and/or any of its subsidiaries or affiliates,
including specifically, without limitation, the United States Foreign Corrupt
Practices Act, generally codified in 15 USC 78 (FCPA), as the FCPA may hereafter
be amended, and/or its successor statutes. If Executive pleads guilty to or nolo
contendere or admits civil or criminal liability under the FCPA or other
applicable United States law, or if a court finds that Executive has personal
civil or criminal liability under the FCPA or other applicable United States
law, or if a court finds that Employee committed an action resulting in Company
or any of its subsidiaries or affiliates having civil or criminal liability or
responsibility under the FCPA or other applicable United States law with
knowledge of the activities giving rise to such liability or knowledge of facts
from which Executive should have reasonably inferred the activities giving rise
to liability had occurred or were likely to occur, such action or finding shall
constitute "cause" for termination under this Agreement unless (i) such action
or finding was based on the activities of others and Executive had no personal
involvement or knowledge of such activities, or (ii) Company's Board of
Directors determines that the actions found to be in violation of the FCPA or
other applicable United States law were taken in good faith and in compliance
with all applicable policies of Company.
3. PROTECTION OF INFORMATION
(a) DISCLOSURE TO EXECUTIVE. Company shall disclose to
Executive, or place Executive in a position to have access to or develop, trade
secrets or confidential information of Company or its affiliates; and/or shall
entrust Executive with business opportunities of Company or its affiliates;
and/or shall place Executive in a position to develop business good will on
behalf of Company or its affiliates.
(b) DISCLOSURE TO AND PROPERTY OF COMPANY. All information,
ideas, concepts, improvements, discoveries, and inventions, whether patentable
or not, which are conceived, made, developed, or acquired by Executive,
individually or in conjunction with others, during Executive's employment by
Company (whether during business hours or otherwise and whether on Company's
premises or otherwise) which relate to Company's business, products, or services
(including, without limitation, all such information relating to
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corporate opportunities, research, financial and sales data, pricing terms,
evaluations, opinions, interpretations, acquisitions prospects, the identity of
customers or their requirements, the identity of key contacts within the
customer's organizations or within the organization of acquisition prospects, or
marketing and merchandising techniques, prospective names, and marks) shall be
disclosed to Company and are and shall be the sole and exclusive property of
Company unless and to the extent such information is generally known in
Company's industry. Moreover, all documents, drawings, memoranda, notes,
records, files, correspondence, manuals, models, specifications, computer
programs, E-mail, voice mail, electronic databases, maps, and all other writings
or materials of any type embodying any of such information, ideas, concepts,
improvements, discoveries, and inventions are and shall be the sole and
exclusive property of Company unless and to the extent such information is
generally known in Company's industry. Upon termination of Executive's
employment by Company, for any reason, Executive promptly shall deliver the
same, and all copies thereof, to Company unless and to the extent such
information is generally known in Company's industry.
(c) NO UNAUTHORIZED USE OR DISCLOSURE. Executive will not, at
any time during or after Executive's employment by Company, make any
unauthorized disclosure of any confidential business information or trade
secrets of Company or its affiliates, or make any use thereof, except in the
carrying out of Executive's employment responsibilities hereunder. Affiliates of
the Company shall be third party beneficiaries of Executive's obligations under
this paragraph. As a result of Executive's employment by Company, Executive may
also from time to time have access to, or knowledge of, confidential business
information or trade secrets of third parties, such as customers, suppliers,
partners, joint venturers, and the like, of Company and its affiliates.
Executive also agrees to preserve and protect the confidentiality of such third
party confidential information and trade secrets to the same extent, and on the
same basis, as Company's confidential business information and trade secrets,
unless and to the extent such information is generally known in Company's
industry.
(d) OWNERSHIP BY COMPANY. If, during Executive's employment by
company, Executive creates any work of authorship fixed in any tangible medium
of expression which is the subject matter of copyright (such as videotapes,
written presentations, or acquisitions, computer programs, E-mail, voice mail,
electronic databases, drawings, maps, architectural renditions, models, manuals,
brochures, or the like) relating to Company's business, products, or services,
whether such work is created solely by Executive or jointly with others (whether
during business hours or otherwise and whether on Company's premises or
otherwise), Company shall be deemed the author of such work if the work is
prepared by Executive in the scope of Executive's employment; or, if the work is
not prepared by Executive within the scope of Executive's employment but is
specially ordered by Company as a contribution to a collective work, as a part
of a motion picture or other audiovisual work, as a translation, as a
supplementary work, as a compilation, or as an instructional text, then the work
shall be considered to be work made for hire and Company shall be the author of
the work. If such work is neither prepared by Executive within the scope of
Executive's employment nor a work specially ordered that is deemed to be a work
made for hire, then Executive hereby agrees to assign, and by these presents
does assign, to Company all of Executive's worldwide right, title, and interest
in and to such work and all rights of copyright therein.
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(e) ASSISTANCE BY EXECUTIVE. Both during the period of
Executive's employment by Company and thereafter, Executive shall assist Company
and its nominee, at any time, in the protection of Company's worldwide right,
title, and interest in and to information, ideas, concepts, improvements,
discoveries, and inventions, and its copyrighted works, including without
limitation, the execution of all formal assignment documents requested by
Company or its nominee and the execution of all lawful oaths and applications
for patents and registration of copyright in the United States and foreign
countries.
(f) REMEDIES. Executive acknowledges that money damages would
not be sufficient remedy for any breach of this Article by Executive, and
Company shall be entitled to enforce the provisions of this Article by specific
performance and injunctive relief as remedies for such breach or any threatened
breach. Such remedies shall not be deemed the exclusive remedies for a breach of
this Article, but shall be in addition to all remedies available at law or in
equity to Company, including the recovery of damages from Executive and his
agents involved in such breach and remedies available to Company pursuant to
other agreements with Executive.
4. NON-SOLICITATION OBLIGATIONS
(a) IN GENERAL. As part of the consideration for the benefits
to be paid to Executive hereunder; to protect the trade secrets and confidential
information of Company and its affiliates that have been and will in the future
be disclosed or entrusted to Executive and other employees of the Company and
its affiliates, the business good will of Company and its affiliates that has
been and will in the future be developed by Executive or other employees of the
Company or its affiliates, or the business opportunities that have been and will
in the future be disclosed or entrusted to Executive and other employees by
Company and its affiliates; and as an additional incentive for Company to enter
into this Agreement, Company and Executive agree to the non-solicitation
obligations hereunder. If Executive's employment hereunder shall be terminated
for any reason, then, subject to the last sentence of this paragraph 4(a),
Executive shall not, directly or indirectly for Executive or for others, in any
geographic area or market where Company or any of its affiliates are conducting
any business as of the date of such termination of the employment relationship
or have during the previous twelve months conducted such business, induce any
employee of Company or any of its subsidiaries or affiliates to terminate his or
her employment with Company or such subsidiaries or affiliates, or hire or
assist in the hiring of any such employee by any person, association, or entity
not affiliated with Company. These non-solicitation obligations shall extend
until the later of (i) the one year anniversary of Executive's termination that
is not the result of a Change-in-Control or the two year anniversary of
Executive's termination (in the case of an Involuntary Termination which is the
result of a Change-in-Control) or (ii) the one year anniversary of the
termination of Executive's employment (in the case of a termination for any
other reason).
(b) ENFORCEMENT AND REMEDIES. Executive understands that the
restrictions set forth in paragraph 4(a) may limit Executive's ability to engage
in the solicitation of employees of the Company and its subsidiaries and
affiliates, but acknowledges that Executive will receive sufficiently high
remuneration and other benefits under this Agreement to justify such
restriction. Executive acknowledges that money damages would not be sufficient
remedy for any breach of this Article by Executive, and Company shall be
entitled to enforce the
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provisions of this Article by specific performance and injunctive relief as
remedies for such breach or any threatened breach. Such remedies shall not be
deemed the exclusive remedies for a breach of this Article, but shall be in
addition to all remedies available at law or in equity to Company, including
without limitation, the recovery of damages from Executive and Executive's
agents involved in such breach and remedies available to Company pursuant to
other agreements with Executive.
(c) REFORMATION. It is expressly understood and agreed that
Company and Executive consider the restrictions contained in this paragraph 4 to
be reasonable and necessary to protect the proprietary information of Company.
Nevertheless, if any of the aforesaid restrictions are found by a court having
jurisdiction to be unreasonable, or overly broad as to geographic area or time,
or otherwise unenforceable, the parties intend for the restrictions therein set
forth to be modified by such courts so as to be reasonable and enforceable and,
as so modified by the court, to be fully enforced.
5. STATEMENTS CONCERNING COMPANY. Executive shall refrain, both during
the employment relationship and after the employment relationship terminates,
from publishing any oral or written statements about Company, any of its
affiliates, or any of such entities' officers, employees, agents or
representatives that are slanderous, libelous, or defamatory; or that disclose
private or confidential information about Company, any of its affiliates, or any
of such entities' business affairs, officers, employees, agents, or
representatives that Employee knows or should know is materially injurious to
Company or such affiliate; or that constitute an intrusion into the seclusion or
private lives of Company, any of its affiliates, or any of such entities'
officers, employees, agents, or representatives that Employee knows or should
know is materially injurious to Company or such affiliate; or that give rise to
unreasonable publicity about the private lives of Company, any of its
affiliates, or any of such entities' officers, employees, agents, or
representatives; or that place Company, any of its affiliates, or any of such
entities' officers, employees, agents, or representatives in a false light
before the public; or that constitute a misappropriation of the name or likeness
of Company, any of its affiliates, or any of such entities' officers, employees,
agents, or representatives. A violation or threatened violation of this
prohibition may be enjoined by the courts. The rights afforded Company and its
affiliates under this provision are in addition to any and all rights and
remedies otherwise afforded by law.
6. TERMINATION. Subject to the provisions of Paragraph 8(i) hereof, if
Executive's employment by the Company or any subsidiary thereof or successor
thereto shall be subject to an Involuntary Termination, then the Company will,
as additional compensation for services rendered to the Company (including its
subsidiaries), pay to Executive the following amounts (subject to any applicable
payroll or other taxes required to be withheld and any employee benefit
premiums) and take the following actions:
(a) If such Involuntary Termination is a Non-Change-in-Control
Involuntary Termination, pay Executive a lump sum cash payment in an amount
equal to the Non-Change-in-Control Severance Amount on or before the tenth day
after the last day of Executive's employment with the Company.
(b) If such Involuntary Termination is a Change-in-Control
Involuntary
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Termination, pay Executive a lump sum cash payment in an amount equal to the
Change-in-Control Severance Amount.
(c) In either a Change-in-Control Involuntary Termination or a
Non-Change-in-Control Involuntary Termination, pay Executive his pro rata Bonus
Target earned through the date of Involuntary Termination.
(d) Immediately cause Executive and those of his dependents
(including his spouse) who were covered under the Company's medical and dental
benefit plans on the day prior to Executive's Involuntary Termination to
continue to be covered under such plans, without any cost to Executive, for 12
months from the date of termination if the termination is a
Non-Change-in-Control Involuntary Termination or for 24 months from the date of
termination if the termination is a Change-in-Control Involuntary Termination;
provided, however, that (i) such coverage shall terminate if and to the extent
Executive becomes eligible to receive medical and dental coverage from a
subsequent employer (and any such eligibility shall be promptly reported to the
Company by Executive) and (ii) if Executive (and/or his spouse) would have been
entitled to retiree medical and/or dental coverage under the Company's plans had
he voluntarily retired on the date of such Involuntary Termination, then such
coverages shall be continued as provided under such plans. Nothing herein shall
be deemed to adversely affect in any way the additional rights after
consideration of this extension, of Executive and his eligible dependents to
continuation coverages required pursuant to Part 6 of Title I of the Employee
Retirement Income Security Act of 1974, as amended, if, at the time such
continuation coverage is requested, Executive does not have alternative group
coverage available from an employer.
(e) Immediately cause any and all outstanding options to
purchase common stock of the Company held by Executive, which options were
granted prior to December 31, 1995, to become immediately exercisable in full
and to remain exercisable during the period of three months following such
termination (or such greater period as the Committee (as such term is defined in
the Incentive Plan) may determine), or by Executive's estate (or the person who
acquires such options by will or the laws of descent and distribution or
otherwise by reason of the death of Executive) during a period of one year
following Executive's death if Executive dies during such three-month period (or
such greater period as the Committee may determine), but in no event shall any
such option be exercisable after the tenth anniversary of the grant of such
option.
7. CERTAIN ADDITIONAL PAYMENTS BY COMPANY. Notwithstanding anything to
the contrary in this Agreement, in the event that any payment or distribution by
Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a "Payment"), would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended, or any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest or penalties, are hereinafter collectively referred to as the
"Excise Tax"), Company shall pay to Executive an additional payment (a "Gross-up
Payment") in an amount such that after payment by Executive of all state and
federal taxes (including any interest or penalties imposed with respect to such
taxes), including any Excise Tax and any federal or state income taxes imposed
on any Gross-up Payment, Executive retains an amount of the Gross-up Payment
equal to the Excise Tax imposed
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upon the Payments. Company shall instruct its outside accountants to
independently make an initial determination as to whether a Gross-up Payment is
required and the amount of any such Gross-up Payment. Executive shall notify
Company immediately in writing of any claim by the Internal Revenue Service
which, if successful, would require Company to make a Gross-up Payment (or a
Gross-up Payment in excess of that, if any, initially determined by Company and
Executive) within five days of the receipt of such claim. Company shall notify
Executive in writing at least five days prior to the due date of any response
required with respect to such claim if it plans to contest the claim. If Company
decides to contest such claim, Executive shall cooperate fully with Company in
such action; provided, however, that Company shall bear and pay directly or
indirectly all costs and expenses (including additional interest and penalties)
incurred in connection with such action and shall indemnify and hold Executive
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of Company's
action. If, as a result of Company's action with respect to a claim, Executive
receives a refund of any amount paid by Company with respect to such claim,
Executive shall promptly pay such refund to Company. If Company fails to timely
notify Executive whether it will contest such claim or Company determines not to
contest such claim, then, Company shall immediately pay to Executive the portion
of such claim, if any, which it has not previously paid to Executive.
8. GENERAL.
(a) TERM. The effective date of this Agreement is September 1,
1999 and this Agreement shall have an initial term (the "Initial Term") of one
year beginning on such effective date. The term of this Agreement shall be
extended automatically for an additional successive one-year period as of the
last day of the Initial Term and as of the last day of each such successive
one-year period of time thereafter that this Agreement is in effect; provided,
however, that if, prior to 90 days before the last day of the Initial Term or
any such successive one-year term, the Compensation Committee (excluding any
member of the Compensation Committee who is covered by this Agreement or by a
similar agreement with the Company) shall give written notice to Executive that
no such automatic extension shall occur, then this Agreement shall terminate on
the last day of the Initial Term or such successive one-year term, as
applicable, during which such notice is given. Notwithstanding anything to the
contrary contained in this "sunset provision," it is agreed that if a
Change-in-Control occurs while this Agreement is in effect, then this Agreement
shall not be subject to termination under this "sunset provision," and shall
remain in force for a period of 12 months after such Change-in-Control, and if
within said 12 months the contingency factors occur which would entitle
Executive to the benefits as provided herein, this Agreement shall remain in
effect in accordance with its terms. If, within such 12 months after a
Change-in-Control, the contingency factors that would entitle Executive to said
benefits do not occur, thereupon this "sunset provision" shall again be
applicable with the 90-day time period for Compensation Committee action to
thereafter commence 90 days prior to the first anniversary of such
Change-in-Control and 90 days prior to each one-year anniversary date
thereafter.
(b) INDEMNIFICATION. If Executive shall obtain any money
judgment or otherwise prevail with respect to any litigation brought by
Executive or the Company to enforce or interpret any provision contained herein,
the Company, to the fullest extent permitted by
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applicable law, hereby indemnifies Executive for his reasonable attorneys' fees
and disbursements incurred in such litigation. To the extent that any such
indemnification payment would be subject to the Excise Tax (as defined in
paragraph 7), then Executive shall be entitled to receive Gross-up Payments in
an amount such that after payment by Executive of all taxes imposed on such
Gross-up Payments, Executive retains an amount equal to the Excise Tax imposed
on the indemnification payment.
(c) PAYMENT OBLIGATIONS ABSOLUTE. The Company's obligation to
pay (or cause one of its subsidiaries to pay) Executive the amounts and to make
the arrangements provided herein shall be absolute and unconditional and shall
not be affected by any circumstances, including, without limitation, any
set-off, counterclaim, recoupment, defense or other right which the Company
(including its subsidiaries) may have against him or anyone else. All amounts
payable by the Company (including its subsidiaries hereunder) shall be paid
without notice or demand. Executive shall not be obligated to seek other
employment in mitigation of the amounts payable or arrangements made under any
provision of this Agreement, and, except as provided in Paragraphs 6(d) hereof,
the obtaining of any such other employment shall in no event effect any
reduction of the Company's obligations to make (or cause to be made) the
payments and arrangements required to be made under this Agreement.
(d) SUCCESSORS. This Agreement shall be binding upon and inure
to the benefit of the Company and any successor of the Company, by merger or
otherwise. This Agreement shall also be binding upon and inure to the benefit of
Executive and his estate. If Executive shall die prior to full payment of
amounts due pursuant to this Agreement, such amounts shall be payable pursuant
to the terms of this Agreement to his estate.
(e) SEVERABILITY. Any provision in this Agreement which is
prohibited or unenforceable in any jurisdiction by reason of applicable law
shall, as to such jurisdiction, be ineffective only to the extent of such
prohibition or unenforceability without invalidating or affecting the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(f) NON-ALIENATION. Executive shall not have any right to
pledge, hypothecate, anticipate or assign this Agreement or the rights
hereunder, except by will or the laws of descent and distribution.
(g) NOTICES. Any notices or other communications provided for
in this Agreement must be in writing. In the case of Executive, such notices or
communications shall be effectively delivered if hand delivered to Executive at
his principal place of employment or if sent by registered or certified mail to
Executive at the last address he has filed with the Company. In the case of the
Company, such notices or communications shall be effectively delivered if sent
by registered or certified mail to the Company at its principal executive
offices.
(h) CONTROLLING LAW. This Agreement is entered into under, and
its validity interpretation and enforceability and shall be governed for all
purposes by, the laws of the State of Texas; provided, however, that no effect
shall be given to any choice or conflict of law provision or rule (whether in
the State of Texas or any other jurisdiction) that would cause the
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application of the laws of any jurisdiction other than the State of Texas.
(i) RELEASE. As a condition to the receipt of any benefit
under Paragraph 6 hereof, Executive shall first execute a release, in the form
established by the Company, releasing the Company, its shareholders, partners,
officers, directors, employees and agents from any and all claims and from any
and all causes of action of any kind or character, including but not limited to
all claims or causes of action arising out of Executive's employment with the
Company or the termination of such employment.
(j) FULL SETTLEMENT. If Executive is entitled to and receives
the benefits provided hereunder, performance of the obligations of the Company
hereunder will constitute full settlement of all claims that Executive might
otherwise assert against the Company on account of his termination of
employment. Executive hereby acknowledges that the Company has heretofore
rescinded and terminated the Company's Executive Severance Policy, as amended
from time to time, which policy was originally adopted on January 1, 1994, and
Executive hereby waives any and all rights Executive may have under such policy.
(k) UNFUNDED OBLIGATION. The obligation to pay amounts under
this Agreement is an unfunded obligation of the Company, and no such obligation
shall create a trust or be deemed to be secured by any pledge or encumbrance on
any property of the Company (including its subsidiaries).
(l) NOT A CONTRACT OF EMPLOYMENT. This Agreement shall not be
deemed to constitute a contract of employment, nor shall any provision hereof
affect (a) the right of the Company (or its subsidiaries) to discharge Executive
at will or (b) the terms and conditions of any other agreement between the
Company and Executive except as provided herein.
(m) NUMBER AND GENDER. Wherever appropriate herein, words used
in the singular shall include the plural and the plural shall include the
singular. The masculine gender where appearing herein shall be deemed to include
the feminine gender.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 1st day of September, 1999.
"EXECUTIVE"
/s/ O. PETER BLOM
--------------------------------
O. PETER BLOM
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"COMPANY"
MARINE DRILLING COMPANIES, INC.
BY: /s/ JAN RASK
-----------------------------
NAME: JAN RASK
TITLE: CHIEF EXECUTIVE OFFICER
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EXHIBIT 10.5
FIRST AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is
made by and between MARINE DRILLING COMPANIES, INC. ("Company") and BOBBY E.
BENTON ("Executive").
W I T N E S S E T H:
WHEREAS, Company is desirous of employing Executive in an executive
capacity on the terms and conditions, and for the consideration, hereinafter set
forth and Executive is desirous of being employed by Company on such terms and
conditions and for such consideration;
WHEREAS, the Company and Executive previously entered into an
Employment Agreement dated June 11, 1999, and they desire to amend and restate
that Employment Agreement.
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein, Company and Executive agree as
follows:
ARTICLE 1: EMPLOYMENT, DUTIES AND REPRESENTATIONS
1.1 EMPLOYMENT; EFFECTIVE DATE. Company agrees to employ Executive and
Executive agrees to be employed by Company, beginning as of the Effective Date
(as hereinafter defined) and continuing for the period of time set forth in
Article 2 of this Agreement, subject to the terms and conditions of this
Agreement. For purposes of this Agreement, the "Effective Date" shall be June
11, 1999 and the "Commencement Date" shall be June 15, 1999.
1.2 POSITION. From and after the Effective Date, Company shall employ
Executive in the position of Vice President of Marketing and Sales of Company,
or in such other positions as the parties mutually may agree.
1.3 DUTIES AND SERVICES. Executive agrees to serve in the position
referred to in paragraph 1.2 and to perform diligently and to the best of his
abilities the duties and services appertaining to such office, as well as such
additional duties and services appropriate to such office which the parties may
mutually agree upon from time to time. Executive's employment shall also be
subject to the policies maintained and established by Company that are
applicable to employees generally, as the same may be amended from time to time.
1.4 OTHER INTERESTS. Executive agrees, during the period of his
employment by Company from and after the Commencement Date, to devote his
primary business time, energy and best efforts to the business and affairs of
Company and its affiliates and not to engage, directly or indirectly, in any
other business or businesses, whether or not similar to that of Company, except
with the consent of the CEO and the Board of Directors of Company (the "Board of
Directors"). The foregoing notwithstanding, the parties recognize and agree that
Executive may engage in passive personal investments and other business
activities that do not conflict with the business and affairs of Company or
interfere with Executive's performance of his duties hereunder. Executive
represents
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to Company that the execution, delivery and performance of this Agreement by
Executive will not violate or conflict with any non-competition or similar
agreement to which Executive is subject.
1.5 DUTY OF LOYALTY. Executive acknowledges and agrees that Executive
owes a fiduciary duty of loyalty, fidelity and allegiance to act at all times in
the best interests of Company and to do no act which would injure the business,
interests, or reputation of Company or any of its subsidiaries or affiliates. In
keeping with these duties, Executive shall make full disclosure to Company of
all business opportunities pertaining to Company's business and shall not
appropriate for Executive's own benefit business opportunities concerning the
subject matter of the fiduciary relationship.
1.6 REPRESENTATIONS. Executive represents and warrants to Company that
neither the execution of this Agreement by Executive nor the performance by
Executive of his obligations under this Agreement will result in a violation or
breach of, or constitute a default under, the provisions of any contract,
agreement, or other instrument to which Executive is a party.
ARTICLE 2: TERM AND TERMINATION OF EMPLOYMENT
2.1 TERM. Unless sooner terminated pursuant to other provisions hereof,
Company agrees to employ Executive for the period beginning on the Effective
Date and ending on the second anniversary of the Commencement Date (the "Initial
Term"). Said term of employment shall be extended automatically for an
additional successive one-year period as of the last day of the Initial Term and
as of the last day of each such successive one-year period of time thereafter
that this Agreement is in effect; provided, however, that if, prior to ninety
days before the last day of the Initial Term or any such successive one-year
term of employment, either party shall give written notice to the other that no
such automatic extension shall occur, then Executive's employment shall
terminate on the last day of the Initial Term or the one-year term of
employment, as applicable, during which such notice is given.
2.2 COMPANY'S RIGHT TO TERMINATE. Notwithstanding the provisions of
paragraph 2.1, Company shall have the right to terminate Executive's employment
under this Agreement at any time for any of the following reasons:
(i) upon Executive's death;
(ii) upon Executive's becoming disabled so as to
entitle him to benefits under Company's long-term disability
plan;
(iii) for cause, which for purposes of this Agreement
shall mean Executive (A) has engaged in gross negligence or
willful misconduct in the performance of the duties required
of him hereunder, (B) has been convicted of a felony or has
been convicted without further right of appeal of a
misdemeanor involving moral turpitude, (C) has willfully
refused without proper legal reason to perform the duties and
responsibilities required of him hereunder, (D) has materially
breached any material corporate policy or code of conduct
established by Company, (E) Executive violates the Foreign
Corrupt Practices Act or any other applicable United States
law as proscribed by paragraph 4.1, or (F) has willfully
engaged in conduct that he knows
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or should know is materially injurious to Company or any of
its subsidiaries or affiliates.
(iv) for Executive's material breach of any material
provision of this Agreement which, if correctable, remains
uncorrected for 30 days following written notice to Executive
by Company of such breach; or
(v) for any other reason whatsoever, with or without
cause, in the sole discretion of the Board of Directors.
2.3 EXECUTIVE'S RIGHT TO TERMINATE. Notwithstanding the provisions of
paragraph 2.1, Executive shall have the right to terminate his employment under
this Agreement at any time for any of the following reasons:
(i) (A) a material breach by Company of any material
provision of this Agreement, including without limitation the
assignment to Executive of duties materially inconsistent with
duties of the Vice President of Marketing and Sales of
Company, which, if correctable, remains uncorrected for 30
days following written notice of such breach by Executive to
Company or (B) a change within the prior thirty days of the
location of Executive's principal place of employment by
Company by more than fifty miles from the location of the
Company's principal executive office as of the date hereof; or
(ii) for any other reason whatsoever, in the sole
discretion of Executive.
2.4 NOTICE OF TERMINATION. If Company or Executive desires to terminate
Executive's employment hereunder at any time prior to expiration of the term of
employment as provided in paragraph 2.1, it or he shall do so by giving written
notice to the other party that it or he has elected to terminate Executive's
employment hereunder and stating the effective date and reason for such
termination, provided that no such action shall alter or amend any other
provisions hereof or rights arising hereunder, including, without limitation,
the provisions of Articles 5 and 6 hereof.
ARTICLE 3: COMPENSATION AND BENEFITS
3.1 BASE SALARY. During the period of this Agreement, Executive shall
receive a minimum annual base salary commencing from and after the Effective
Date equal to the greater of (i) $200,000 or (ii) such amount as the parties
mutually may agree upon from time to time. Executive's annual base salary shall
be paid in equal installments in accordance with the Company's standard policy
regarding payment of compensation to executives but no less frequently than
monthly.
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3.2 BONUSES. Executive shall receive such bonuses, if any, as Company
shall determine in its sole discretion based on bonus plans which may be in
effect from time to time. Executive' bonus target under the Company's current
bonus plan is 50% of annual base salary. This percentage and the terms of the
bonus plan are subject to change at the sole discretion of the Company; however
any changes will be consistent with similarly situated employees and reflect
competitive market practices.
3.3 INITIAL STOCK OPTION AND RESTRICTED STOCK GRANT. On the Effective
Date of this Agreement (the "Date of Grant"), Company shall grant to Executive
an option (the "Initial Stock Option") to purchase 150,000 shares of Company's
common stock ("Stock") and 10,000 shares of Company's restricted stock pursuant
to The Marine Drilling 1992 Long Term Incentive Plan, as amended (the "Plan").
Subject to the terms of the Plan and the agreement to be executed by Company and
Executive evidencing the Initial Stock Option grant, the Initial Stock Option
grant shall (i) have a term of 10 years (which term shall begin on the Date of
Grant), (ii) vest and become exercisable with respect to (A) 20% of the shares
covered thereby on the first anniversary of the Date of Grant, (B) an additional
20% of the shares covered thereby on the second anniversary of the Date of
Grant, (C) an additional 20% of the shares covered thereby on the third
anniversary of the Date of Grant, (D) an additional 20% of the shares covered
thereby on the fourth anniversary of the Date of Grant, and (E) an additional
20% of the shares covered thereby on the fifth anniversary of the Date of Grant
and (iii) become vested and fully exercisable by Executive upon the occurrence
of a "Change in Control" (as such term is defined in the Plan) while Executive
is employed by Company. Further, and subject to the terms and restrictions of
the Plan and to the agreement to be executed by Company and the Executive
evidencing the restricted stock grant, the restricted stock grant shall vest in
accordance to the following (i) (A) 25% of the shares covered thereby on the
first anniversary of the Date of Grant, (B) an additional 25% of the shares
covered thereby on the second anniversary of the Date of Grant, (C) an
additional 25% of the shares covered thereby on the third anniversary of the
Date of Grant, and (D) an additional 25% of the shares covered thereby on the
fourth anniversary of the Date of Grant and (ii) become fully vested by
Executive upon the occurrence of a "Change in Control".
3.4 VACATION. During each year of his employment, Executive shall be
entitled to four weeks of paid vacation.
ARTICLE 4: UNITED STATES FOREIGN CORRUPT PRACTICES ACT AND OTHER LAWS
4.1 Executive shall at all times comply with United States laws
applicable to Executive's actions on behalf of Company, and/or any of its
subsidiaries or affiliates, including specifically, without limitation, the
United States Foreign Corrupt Practices Act, generally codified in 15 USC 78
(FCPA), as the FCPA may hereafter be amended, and/or its successor statutes. If
Executive pleads guilty to or nolo contendere or admits civil or criminal
liability under the FCPA or other applicable United States law, or if a court
finds that Executive has personal civil or criminal liability under the FCPA or
other applicable United States law, or if a court finds that Employee committed
an action resulting in Company or any of its subsidiaries or affiliates having
civil or criminal liability or responsibility under the FCPA or other applicable
United States law with knowledge of the activities giving rise to such liability
or knowledge of facts from which Executive should have reasonably inferred the
activities giving rise to liability had occurred or were likely to occur, such
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action or finding shall constitute "cause" for termination under this Agreement
unless (i) such action or finding was based on the activities of others and
Executive had no personal involvement or knowledge of such activities, or (ii)
Company's Board of Directors determines that the actions found to be in
violation of the FCPA or other applicable United States law were taken in good
faith and in compliance with all applicable policies of Company.
ARTICLE 5: PROTECTION OF INFORMATION
5.1 DISCLOSURE TO EXECUTIVE. Company shall disclose to Executive, or
place Executive in a position to have access to or develop, trade secrets or
confidential information of Company or its affiliates; and/or shall entrust
Executive with business opportunities of Company or its affiliates; and/or shall
place Executive in a position to develop business good will on behalf of Company
or its affiliates.
5.2 DISCLOSURE TO AND PROPERTY OF COMPANY. All information, ideas,
concepts, improvements, discoveries, and inventions, whether patentable or not,
which are conceived, made, developed, or acquired by Executive, individually or
in conjunction with others, during Executive's employment by Company (whether
during business hours or otherwise and whether on Company's premises or
otherwise) which relate to Company's business, products, or services (including,
without limitation, all such information relating to corporate opportunities,
research, financial and sales data, pricing terms, evaluations, opinions,
interpretations, acquisitions prospects, the identity of customers or their
requirements, the identity of key contacts within the customer's organizations
or within the organization of acquisition prospects, or marketing and
merchandising techniques, prospective names, and marks) shall be disclosed to
Company and are and shall be the sole and exclusive property of Company unless
and to the extent such information is generally known in Company's industry.
Moreover, all documents, drawings, memoranda, notes, records, files,
correspondence, manuals, models, specifications, computer programs, E-mail,
voice mail, electronic databases, maps, and all other writings or materials of
any type embodying any of such information, ideas, concepts, improvements,
discoveries, and inventions are and shall be the sole and exclusive property of
Company unless and to the extent such information is generally known in
Company's industry. Upon termination of Executive's employment by Company, for
any reason, Executive promptly shall deliver the same, and all copies thereof,
to Company unless and to the extent such information is generally known in
Company's industry.
5.3 NO UNAUTHORIZED USE OR DISCLOSURE. Executive will not, at any time
during or after Executive's employment by Company, make any unauthorized
disclosure of any confidential business information or trade secrets of Company
or its affiliates, or make any use thereof, except in the carrying out of
Executive's employment responsibilities hereunder. Affiliates of the Company
shall be third party beneficiaries of Executive's obligations under this
paragraph. As a result of Executive's employment by Company, Executive may also
from time to time have access to, or knowledge of, confidential business
information or trade secrets of third parties, such as customers, suppliers,
partners, joint venturers, and the like, of Company and its affiliates.
Executive also agrees to preserve and protect the confidentiality of such third
party confidential information and trade secrets to the same extent, and on the
same basis, as Company's confidential business information and trade secrets,
unless and to the extent such information is generally known in Company's
industry.
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5.4 OWNERSHIP BY COMPANY. If, during Executive's employment by company,
Executive creates any work of authorship fixed in any tangible medium of
expression which is the subject matter of copyright (such as videotapes, written
presentations, or acquisitions, computer programs, E-mail, voice mail,
electronic databases, drawings, maps, architectural renditions, models, manuals,
brochures, or the like) relating to Company's business, products, or services,
whether such work is created solely by Executive or jointly with others (whether
during business hours or otherwise and whether on Company's premises or
otherwise), Company shall be deemed the author of such work if the work is
prepared by Executive in the scope of Executive's employment; or, if the work is
not prepared by Executive within the scope of Executive's employment but is
specially ordered by Company as a contribution to a collective work, as a part
of a motion picture or other audiovisual work, as a translation, as a
supplementary work, as a compilation, or as an instructional text, then the work
shall be considered to be work made for hire and Company shall be the author of
the work. If such work is neither prepared by Executive within the scope of
Executive's employment nor a work specially ordered that is deemed to be a work
made for hire, then Executive hereby agrees to assign, and by these presents
does assign, to Company all of Executive's worldwide right, title, and interest
in and to such work and all rights of copyright therein.
5.5 ASSISTANCE BY EXECUTIVE. Both during the period of Executive's
employment by Company and thereafter, Executive shall assist Company and its
nominee, at any time, in the protection of Company's worldwide right, title, and
interest in and to information, ideas, concepts, improvements, discoveries, and
inventions, and its copyrighted works, including without limitation, the
execution of all formal assignment documents requested by Company or its nominee
and the execution of all lawful oaths and applications for patents and
registration of copyright in the United States and foreign countries.
5.6 REMEDIES. Executive acknowledges that money damages would not be
sufficient remedy for any breach of this Article by Executive, and Company shall
be entitled to enforce the provisions of this Article by specific performance
and injunctive relief as remedies for such breach or any threatened breach. Such
remedies shall not be deemed the exclusive remedies for a breach of this
Article, but shall be in addition to all remedies available at law or in equity
to Company, including the recovery of damages from Executive and his agents
involved in such breach and remedies available to Company pursuant to other
agreements with Executive.
ARTICLE 6: NONSOLICITATION OBLIGATIONS
6.1 IN GENERAL. As part of the consideration for the compensation and
benefits to be paid to Executive hereunder; to protect the trade secrets and
confidential information of Company and its affiliates that have been and will
in the future be disclosed or entrusted to Executive and other employees of the
Company and its affiliates, the business good will of Company and its affiliates
that has been and will in the future be developed by Executive or other
employees of the Company or its affiliates, or the business opportunities that
have been and will in the future be disclosed or entrusted to Executive and
other employees by Company and its affiliates; and as an additional incentive
for Company to enter into this Agreement, Company and Executive agree to the
non-solicitation obligations hereunder. If Executive's employment hereunder
shall be terminated by Executive prior to the expiration of the term provided in
paragraph 2.1 for any reason not described in paragraph 2.3(i) (including by
Executive exercising his right not to extend the term by giving notice pursuant
to Section 2.1), then, subject to the last sentence of this paragraph 6.1,
Executive
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shall not, directly or indirectly for Executive or for others, in any geographic
area or market where Company or any of its affiliates are conducting any
business as of the date of such termination of the employment relationship or
have during the previous twelve months conducted such business, induce any
employee of Company or any of its subsidiaries or affiliates to terminate his or
her employment with Company or such subsidiaries or affiliates, or hire or
assist in the hiring of any such employee by any person, association, or entity
not affiliated with Company. These non-solicitation obligations shall extend
until the later of (i) the expiration of the term of the Agreement (or any
extended term) provided in paragraph 2.1 and (ii) the one year anniversary of
the termination of Executive`s employment hereunder.
6.2 ENFORCEMENT AND REMEDIES. Executive understands that the
restrictions set forth in paragraph 6.1 may limit Executive's ability to engage
in the solicitation of employees of the Company and its subsidiaries and
affiliates, but acknowledges that Executive will receive sufficiently high
remuneration and other benefits under this Agreement to justify such
restriction. Executive acknowledges that money damages would not be sufficient
remedy for any breach of this Article by Executive, and Company shall be
entitled to enforce the provisions of this Article by specific performance and
injunctive relief as remedies for such breach or any threatened breach. Such
remedies shall not be deemed the exclusive remedies for a breach of this
Article, but shall be in addition to all remedies available at law or in equity
to Company, including without limitation, the recovery of damages from Executive
and Executive's agents involved in such breach and remedies available to Company
pursuant to other agreements with Executive.
6.3 REFORMATION. It is expressly understood and agreed that Company and
Executive consider the restrictions contained in this Article to be reasonable
and necessary to protect the proprietary information of Company. Nevertheless,
if any of the aforesaid restrictions are found by a court having jurisdiction to
be unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by such courts so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced.
ARTICLE 7: STATEMENTS CONCERNING COMPANY
7.1 IN GENERAL. Executive shall refrain, both during the employment
relationship and after the employment relationship terminates, from publishing
any oral or written statements about Company, any of its affiliates, or any of
such entities' officers, employees, agents or representatives that are
slanderous, libelous, or defamatory; or that disclose private or confidential
information about Company, any of its affiliates, or any of such entities'
business affairs, officers, employees, agents, or representatives that Employee
knows or should know is materially injurious to Company or such affiliate; or
that constitute an intrusion into the seclusion or private lives of Company, any
of its affiliates, or any of such entities' officers, employees, agents, or
representatives that Employee knows or should know is materially injurious to
Company or such affiliate; or that give rise to unreasonable publicity about the
private lives of Company, any of its affiliates, or any of such entities'
officers, employees, agents, or representatives; or that place Company, any of
its affiliates, or any of such entities' officers, employees, agents, or
representatives in a false light before the public; or that constitute a
misappropriation of the name or likeness of Company, any of its affiliates, or
any of such entities' officers, employees, agents, or representatives. A
violation or threatened violation of this prohibition may be enjoined by the
courts. The rights afforded Company and its
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affiliates under this provision are in addition to any and all rights and
remedies otherwise afforded by law.
ARTICLE 8: EFFECT OF TERMINATION ON COMPENSATION AND BENEFITS
8.1 BY EXPIRATION. If Executive's employment hereunder shall terminate
upon expiration of the term provided in paragraph 2.1 hereof, then all
compensation and all benefits to Executive hereunder shall terminate
contemporaneously with termination of his employment; provided, however, that if
Company shall be the party that gave written notice of such termination, then
Company shall, within 10 days after the last day of Executive's employment with
Company, pay Executive a lump sum cash payment in an amount equal to 100% of
Executive's annual base salary as in effect pursuant to paragraph 3.1
immediately prior to such termination; and provided further that Company shall
pay Executive his pro rata bonus target earned through the date of termination.
If Executive's employment shall terminate as described under this paragraph
within two years following a Change in Control, as defined in paragraph 8.4,
Executive's severance payment shall be as set forth under paragraph 8.4 and
Executive shall have no entitlement to any additional payment under this
paragraph.
8.2 BY COMPANY. If Executive's employment hereunder shall be terminated
by Company prior to expiration of the term provided in paragraph 2.1, then, upon
such termination, regardless of the reason therefor, all compensation and
benefits to Executive hereunder shall terminate contemporaneously with the
termination of such employment; provided, however, that if such termination
shall be for any reason other than those encompassed by paragraphs 2.2(i), (ii),
(iii), or (iv), the Company shall, within 10 days after the last day of
Executive's employment with Company, pay Executive a lump sum cash payment in an
amount equal to the Termination Payment; and provided further that Company shall
pay Executive his pro rata bonus target earned through the date of termination.
For purposes of this Agreement, the term "Termination Payment" shall mean, in
addition to any such pro rata bonus, an amount equal to the greater of (i) 100%
of Executive's annual base salary as in effect pursuant to paragraph 3.1
immediately prior to Executive's termination of employment with Company or (ii)
the aggregate base salary that would have been paid to Executive (determined
based upon the base salary in effect pursuant to paragraph 3.1 immediately prior
to Executive's termination of employment with Company) for the period beginning
on the date of such termination and ending on the last day of the employment
term provided in paragraph 2.1 during which occurs the date of such termination.
If Executive's employment shall terminate as described under this paragraph
within two years following a Change in Control, as defined in paragraph 8.4,
Executive's severance payment shall be as set forth under paragraph 8.4 and
Executive shall have no entitlement to any additional payment under this
paragraph.
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8.3 BY EXECUTIVE. If Executive's employment hereunder shall be
terminated by Executive prior to expiration of the term provided in paragraph
2.1 (except if Executive terminates his employment by retiring on or after he
reaches age sixty-five), then, upon such termination, regardless of the reason
therefor, all compensation and benefits to Executive hereunder shall terminate
contemporaneously with the termination of such employment; provided, however,
that if such termination shall be pursuant to paragraph 2.3(i), the Company
shall, within 10 days after the last day of Executive's employment with Company,
pay Executive a lump sum cash payment in an amount equal to the Termination
Payment. If Executive's employment shall terminate as described under this
paragraph within two years following a Change in Control, as defined in
paragraph 8.4, Executive's severance payment shall be as set forth under
paragraph 8.4 and Executive shall have no entitlement to any additional payment
under this paragraph. In the event Executive terminates his employment by
retiring on or after the date he reaches age sixty-five, Executive shall not be
entitled to any severance payment under this Agreement.
8.4 CHANGE IN CONTROL. For purposes of this paragraph, the term "Change
in Control" shall have the same meaning as assigned to such term in The Marine
Drilling 1992 Long Term Incentive Plan. If, within two years following the
occurrence of a Change in Control, Executive's employment with Company shall
terminate under circumstances that would entitle him to a severance payment
pursuant to paragraph 8.1, 8.2, or 8.3 or if Executive's employee benefits are
changed to a level that is materially inconsistent with the employee benefits
afforded by the Company to employees with comparable duties, then, in lieu of
(and not in addition to) any such severance payment, Company shall, within 10
days after the last day of Executive's employment with Company, pay Executive a
lump sum cash payment equal to 200% of the sum of (i) Executive's annual base
salary plus (ii) bonus target as in effect pursuant to paragraph 3.1 immediately
prior to such termination of employment. Further, in the year in which a change
in control occurs, in addition to the payment described in the preceding
sentence, Company shall pay Executive the pro rata portion of his bonus target
for that year as shall have been earned up through the date that is immediately
prior to the date on which the Change in Control occurred.
8.5 CERTAIN ADDITIONAL PAYMENTS BY COMPANY. Notwithstanding anything to
the contrary in this Agreement, in the event that any payment or distribution by
Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a "Payment"), would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended, or any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest or penalties, are hereinafter collectively referred to as the
"Excise Tax"), Company shall pay to Executive an additional payment (a "Gross-up
Payment") in an amount such that after payment by Executive of all state and
federal taxes (including any interest or penalties imposed with respect to such
taxes), including any Excise Tax and any federal or state income taxes imposed
on any Gross-up Payment, Executive retains an amount of the Gross-up Payment
equal to the Excise Tax imposed upon the Payments. Company shall instruct its
outside accountants to independently make an initial determination as to whether
a Gross-up Payment is required and the amount of any such Gross-up Payment.
Executive shall notify Company immediately in writing of any claim by the
Internal Revenue Service which, if successful, would require Company to make a
Gross-up Payment (or a Gross-up Payment in excess of that, if any, initially
determined by Company and Executive) within five days of the receipt of such
claim. Company shall notify Executive in writing at least five days prior to the
due date of any response required with respect to such claim if it plans to
contest the claim. If Company decides to
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contest such claim, Executive shall cooperate fully with Company in such action;
provided, however, that Company shall bear and pay directly or indirectly all
costs and expenses (including additional interest and penalties) incurred in
connection with such action and shall indemnify and hold Executive harmless, on
an after-tax basis, for any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of Company's action. If, as
a result of Company's action with respect to a claim, Executive receives a
refund of any amount paid by Company with respect to such claim, Executive shall
promptly pay such refund to Company. If Company fails to timely notify Executive
whether it will contest such claim or Company determines not to contest such
claim, then, Company shall immediately pay to Executive the portion of such
claim, if any, which it has not previously paid to Executive.
8.6 BENEFITS. If Executive's employment with Company is terminated
under circumstances that would entitle him to a severance payment pursuant to
paragraph 8.1, 8.2, or 8.3, then Company will immediately cause Executive and
those of his dependents (including his spouse) who were covered under the
Company's medical and dental plans on the date prior to such termination to
continue to be covered under such plans, without any cost to Executive, for
twelve months from date of termination, subject to earlier termination as
provided in the last sentence of this paragraph. If Executive's employment with
Company is terminated under circumstances that would entitle him to severance
payment pursuant to paragraph 8.4, then Company will cause Executive and those
of his dependents (including his spouse) who were covered under the Company's
medical and dental benefit plans on the date prior to such termination to
continue to be covered under such plans for 24 months, subject to earlier
termination as provided in the last sentence of this paragraph. Any continuation
of medical and dental medical coverage under this paragraph shall terminate if
and to the extent Executive becomes eligible to receive medical and dental
coverage from a subsequent employer (and any such eligibility shall be promptly
reported to the Company by Executive) and if Executive (and/or his spouse) would
have been entitled to retiree medical and/or dental coverage under the Company's
plans had he voluntarily retired on the date of such Involuntary Termination,
then such coverages shall be continued as provided under such plans. Nothing
herein shall be deemed to adversely affect in any way the additional rights
after consideration of this extension, of Executive and his eligible dependents
to continuation coverages required pursuant to Part 6 of Title I of the Employee
Retirement Income Security Act of 1974, as amended, if, at the time such
continuation coverage is requested, Executive does not have alternative group
coverage available from an employer.
8.7 LIQUIDATED DAMAGES. In light of the difficulties in estimating the
damages for an early termination of this Agreement, Company and Executive hereby
agree that the payments, if any, to be received by Executive pursuant to this
Article 8 shall be received by Executive as liquidated damages.
8.8 INDEMNIFICATION. If Executive shall obtain any money award or
otherwise prevail with respect to any litigation brought by Executive or Company
to enforce or interpret any provision of this Agreement, Company, to the fullest
extent permitted by applicable law, hereby indemnifies Executive for his
reasonable attorney's fees and disbursements incurred in such litigation and
hereby agrees to pay in full all such fees and disbursements. To the extent that
any such reimbursement would be subject to the Excise Tax, then Executive shall
be entitled to receive Gross-up Payments in an amount such that after payment by
Executive of all taxes imposed on such Gross-up Payments, Executive retains an
amount equal to the Excise Tax imposed on the reimbursement.
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ARTICLE 9: MISCELLANEOUS
9.1 NOTICES. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
IF TO COMPANY TO: Marine Drilling Companies, Inc.
One Sugar Creek Center Blvd.,Suite 600
Sugar Land, Texas 77478
Attention: Chief Executive Officer
IF TO EMPLOYEE TO: Mr. Bobby E. Benton
306 Captain's Walk
Houston, Texas 77079
or to such other address as either party may furnish to the other in writing in
accordance herewith, except that notices or changes of address shall be
effective only upon receipt.
9.2 NO OBLIGATION TO MITIGATE. Executive shall not be required to
mitigate the amount of any payment or other benefit required to be paid to
Executive pursuant to this Agreement, whether by seeking other employment or
otherwise, nor shall the amount of any such payment or other benefit be reduced
on account of any compensation earned by Executive as a result of employment by
another person.
9.3 APPLICABLE LAW. This Agreement is entered into under, and its
validity interpretation and enforceability and shall be governed for all
purposes by, the laws of the State of Texas; provided, however, that no effect
shall be given to any choice or conflict of law provision or rule (whether in
the State of Texas or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Texas.
9.4 SOLE RIGHTS TO SEVERANCE. Executive shall not be entitled to
receive any other severance benefits which may be provided for in any other
plan, program, arrangement or practice of Company, except to the extent that
severance benefits are provided for in any specific employment agreement between
Executive and Company.
9.5 NO WAIVER. No failure by either party hereto at any time to give
notice of any breach by the other party of, or to require compliance with, any
condition or provision of this Agreement shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
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9.6 SEVERABILITY. If a court of competent jurisdiction determines that
any provision of this Agreement is invalid or unenforceable, then the invalidity
or unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement, and all other
provisions shall remain in full force and effect.
9.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
9.8 WITHHOLDING OF TAXES AND OTHER EMPLOYEE DEDUCTIONS. Company may
withhold from any benefits and payments made pursuant to this Agreement all
federal, state, city and other taxes as may be required pursuant to any law or
governmental regulation or ruling and all other normal employee deductions made
with respect to Company's employees generally.
9.9 HEADINGS. The paragraph headings have been inserted for purposes of
convenience and shall not be used for interpretive purposes.
9.10 GENDER AND PLURALS. Wherever the context so requires, the
masculine gender includes the feminine or neuter, and the singular number
includes the plural and conversely.
9.11 AFFILIATE. As used in this Agreement, the term "affiliate" shall
mean any entity which owns or controls, is owned or controlled by, or is under
common ownership or control with, Company.
9.12 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of Company and any successor of Company, by merger or otherwise. Except
as provided in the preceding sentence, this Agreement, and the rights and
obligations of the parties hereunder, are personal and neither this Agreement,
nor any right, benefit, or obligation of either party hereto, shall be subject
to voluntary or involuntary assignment, alienation or transfer, whether by
operation of law or otherwise, without the prior written consent of the other
party; provided, however, that Company may assign this Agreement to a
wholly-owned subsidiary of Company as long as Company fully and unconditionally
guarantees the performance of this Agreement.
9.13 TERM. This Agreement has a term co-extensive with the term of
employment provided in paragraph 2.1. Termination shall not affect any right or
obligation of any party which is accrued or vested prior to such termination.
Without limiting the scope of the preceding sentence, the provisions of Articles
5, 6, and 7 shall survive any termination of the employment relationship and/or
of this Agreement.
9.14 ENTIRE AGREEMENT. Except as provided in (i) the Company's written
benefit plans and programs and (ii) any signed written agreement
contemporaneously or hereafter executed by Company and Executive, this Agreement
constitutes the entire agreement of the parties with regard to the subject
matter hereof, and contains all the covenants, promises, representations,
warranties and agreements between the parties with respect to employment of
Executive by Company. Without limiting the scope of the preceding sentence, all
prior understandings and agreements among the parties hereto relating to the
subject matter hereof are hereby null and void and of no further force
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and effect. Any modification of this Agreement will be effective only if it is
in writing and signed by the party to be charged.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the 1st
day of September, 1999 to be effective as of the Effective Date.
MARINE DRILLING COMPANIES, INC.
BY: /s/ JAN RASK
--------------------------------
NAME: JAN RASK
TITLE: CHIEF EXECUTIVE OFFICER
"COMPANY"
/s/ BOBBY E. BENTON
-----------------------------------
BOBBY E. BENTON
"EXECUTIVE"
13
<PAGE> 1
EXHIBIT 10.7
FIRST AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is
made by and between MARINE DRILLING COMPANIES, INC. ("Company") and T. SCOTT
O'KEEFE ("Executive").
W I T N E S S E T H:
WHEREAS, Company is desirous of employing Executive in an executive
capacity on the terms and conditions, and for the consideration, hereinafter set
forth and Executive is desirous of being employed by Company on such terms and
conditions and for such consideration;
WHEREAS, the Company and Executive previously entered into an
Employment Agreement dated January 12, 1998, and they desire to amend and
restate that Employment Agreement.
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein, Company and Executive agree as
follows:
ARTICLE 1: EMPLOYMENT, DUTIES AND REPRESENTATIONS
1.1 EMPLOYMENT; EFFECTIVE DATE. Company agrees to employ Executive and
Executive agrees to be employed by Company, beginning as of the Effective Date
(as hereinafter defined) and continuing for the period of time set forth in
Article 2 of this Agreement, subject to the terms and conditions of this
Agreement. For purposes of this Agreement, the "Effective Date" shall be January
12, 1998, and the "Commencement Date" shall be January 16, 1998.
1.2 POSITION. From and after the Effective Date, Company shall employ
Executive in the position of Senior Vice President and Chief Financial Officer
of Company, or in such other positions as the parties mutually may agree.
1.3 DUTIES AND SERVICES. Executive agrees to serve in the position
referred to in paragraph 1.2 and to perform diligently and to the best of his
abilities the duties and services appertaining to such office, as well as such
additional duties and services appropriate to such office which the parties may
mutually agree upon from time to time. Executive's employment shall also be
subject to the policies maintained and established by Company, time that are
applicable to employees generally, as the same may be amended from time to time.
1.4 OTHER INTERESTS. Executive agrees, during the period of his
employment by Company from and after the Commencement Date, to devote his
primary business time, energy and best efforts to the business and affairs of
Company and its affiliates and not to engage, directly or indirectly, in any
other business or businesses, whether or not similar to that of Company, except
with the consent of the Board of Directors of Company (the "Board of
Directors"). The foregoing notwithstanding, the parties recognize and agree that
Executive may engage in passive personal investments and other business
activities that do not conflict with the business and affairs of Company or
interfere with Executive's performance of his duties hereunder. Executive
represents
<PAGE> 2
to Company that the execution, delivery and performance of this Agreement by
Executive will not violate or conflict with any non-competition or similar
agreement to which Executive is subject.
1.5 DUTY OF LOYALTY. Executive acknowledges and agrees that Executive
owes a fiduciary duty of loyalty, fidelity and allegiance to act at all times in
the best interests of Company and to do no act which would injure the business,
interests, or reputation of Company or any of its subsidiaries or affiliates. In
keeping with these duties, Executive shall make full disclosure to Company of
all business opportunities pertaining to Company's business and shall not
appropriate for Executive's own benefit business opportunities concerning the
subject matter of the fiduciary relationship.
1.6 REPRESENTATIONS. Executive represents and warrants to Company that
neither the execution of this Agreement by Executive nor the performance by
Executive of his obligations under this Agreement will result in a violation or
breach of, or constitute a default under, the provisions of any contract,
agreement, or other instrument to which Executive is a party.
ARTICLE 2: TERM AND TERMINATION OF EMPLOYMENT
2.1 TERM. Unless sooner terminated pursuant to other provisions hereof,
Company agrees to employ Executive for the period beginning on the Effective
Date and ending on the second anniversary of the Commencement Date (the "Initial
Term"). Said term of employment shall be extended automatically for an
additional successive one-year period as of the last day of the Initial Term and
as of the last day of each such successive one-year period of time thereafter
that this Agreement is in effect; provided, however, that if, prior to ninety
days before the last day of the Initial Term or any such successive one-year
term of employment, either party shall give written notice to the other that no
such automatic extension shall occur, then Executive's employment shall
terminate on the last day of the Initial Term or the one-year term of
employment, as applicable, during which such notice is given.
2.2 COMPANY'S RIGHT TO TERMINATE. Notwithstanding the provisions of
paragraph 2.1, Company shall have the right to terminate Executive's employment
under this Agreement at any time for any of the following reasons:
(i) upon Executive's death;
(ii) upon Executive's becoming disabled so as to
entitle him to benefits under Company's long-term disability
plan;
(iii) for cause, which for purposes of this Agreement
shall mean Executive (A) has engaged in gross negligence or
willful misconduct in the performance of the duties required
of him hereunder, (B) has been convicted of a felony or has
been convicted without further right of appeal of a
misdemeanor involving moral turpitude, (C) has willfully
refused without proper legal reason to perform the duties and
responsibilities required of him hereunder, (D) has materially
breached any material corporate policy or code of conduct
established by Company, or (E) Executive violates the Foreign
Corrupt Practices Act or any other applicable United States
law as proscribed by paragraph 4.1, or (F) has willfully
engaged in conduct
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that he knows or should know is materially injurious to
Company or any of its subsidiaries or affiliates;
(iv) for Executive's material breach of any material
provision of this Agreement which, if correctable, remains
uncorrected for 30 days following written notice to Executive
by Company of such breach; or
(v) for any other reason whatsoever, with or without
cause, in the sole discretion of the Board of Directors.
2.3 EXECUTIVE'S RIGHT TO TERMINATE. Notwithstanding the provisions of
paragraph 2.1, Executive shall have the right to terminate his employment under
this Agreement at any time for any of the following reasons:
(i) (A) a material breach by Company of any material
provision of this Agreement, including without limitation the
assignment to Executive of duties materially inconsistent with
duties of the Senior Vice President and Chief Financial
Officer of Company, which, if correctable, remains uncorrected
for 30 days following written notice of such breach by
Executive to Company or (B) a change within the prior thirty
days of the location of Executive's principal place of
employment by Company by more than fifty miles from the
location of the Company's principal executive office as of the
date hereof; or
(ii) for any other reason whatsoever, in the sole
discretion of Executive.
2.4 NOTICE OF TERMINATION. If Company or Executive desires to terminate
Executive's employment hereunder at any time prior to expiration of the term of
employment as provided in paragraph 2.1, it or he shall do so by giving written
notice to the other party that it or he has elected to terminate Executive's
employment hereunder and stating the effective date and reason for such
termination, provided that no such action shall alter or amend any other
provisions hereof or rights arising hereunder, including, without limitation,
the provisions of Articles 5 and 6 hereof.
ARTICLE 3: COMPENSATION AND BENEFITS
3.1 BASE SALARY. During the period of this Agreement, Executive shall
receive a minimum annual base salary commencing from and after the Commencement
Date equal to the greater of (i) $210,000 or (ii) such amount as the parties
mutually may agree upon from time to time. Executive's annual base salary shall
be paid in equal installments in accordance with the Company's standard policy
regarding payment of compensation to executives but no less frequently than
monthly.
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3.2 BONUSES. From the Effective Date until January 1, 1999, Executive
shall receive such bonuses, if any, as Company shall determine in its sole
discretion; provided, however, that Executive shall receive a sign-on bonus of
$75,000 on the Commencement Date of this Agreement. From January 1, 1999 and
thereafter during the period of this Agreement, Executive shall receive such
bonuses, if any, as Company shall determine in its sole discretion based on
bonus plans which may be in effect from time to time. Executive's bonus target
under the Company's bonus plan in effect at the date of execution of this First
Amended and Restated Agreement is 50% of annual base salary. This percentage and
the terms of the bonus plan are subject to change at the sole discretion of the
Company; however any changes will be consistent with similarly situated
employees and reflect competitive market practices.
3.3 INITIAL STOCK OPTION. On the Effective Date of this Agreement (the
"Date of Grant"), Company shall grant to Executive an option (the "Initial
Option") to purchase 175,000 shares of Company's common stock ("Stock") pursuant
to The Marine Drilling 1992 Long Term Incentive Plan, as amended (the "Plan").
The purchase price for each share of Stock subject to the Initial Option shall
be $18.125 per share. Subject to the terms of the Plan and the agreement to be
executed by Company and Executive evidencing the Initial Option, the Initial
Option shall (i) have a term of 10 years (which term shall begin on the Date of
Grant), (ii) vest and become exercisable with respect to (A) 25 % of the shares
covered thereby on the first anniversary of the Date of Grant, (B) an additional
25 % of the shares covered thereby on the second anniversary of the Date of
Grant, (C) an additional 25% of the shares covered thereby on the third
anniversary of the Date of Grant, and (D) an additional 25% of the shares
covered thereby on the fourth anniversary of the Date of Grant, and (iii) become
vested and fully exercisable by Executive upon the occurrence of a "Change in
Control" (as such term is defined in the Plan) while Executive is employed by
Company.
3.4 LOAN GUARANTEE. At any time after the Effective Date of this
Agreement and for a term not to extend beyond March 3, 1998, Company agrees,
subject to terms and conditions to be mutually agreed upon by and between
Company and Executive, to guarantee a loan (the "Loan") obtained by Executive
from a commercial lending institution on commercially reasonable terms, not to
exceed the sum of (i) the amount necessary for Executive to purchase 300,000
shares of common stock of Grey Wolf, Inc. at $1.50 per share pursuant to
existing stock options (ii) the amount of any federal tax withholding thereon by
Grey Wolf, Inc. pursuant to such purchase by Executive and (iii) the cost of
derivatives described below. In addition, Company agrees to reimburse Executive
for the interest paid by Executive on the Loan through March 3, 1998. If Company
is required to pay any principal on the Loan as a result of its guarantee,
Executive shall reimburse Company for such amount within five days of Company's
request for such payment. The failure by Executive to pay such amounts shall be
deemed to be sufficient reason for, among other things, Company to terminate
Executive's employment pursuant to Section 2.2(iv) hereof. In addition,
Executive agrees to reimburse Company for its cost of acquiring derivatives that
protect against price decline in such shares of Grey Wolf, Inc. common stock to
below the principal amount of such Loan.
3.5 VACATION. During each year of his employment, Executive shall be
entitled to four weeks of paid vacation.
3.6 OTHER PERQUISITES. During his employment hereunder from and after
the Commencement Date, Executive shall be afforded the following benefits as
incidences of his employment:
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(i) CLUB EXPENSES - Company shall reimburse Executive
for monthly membership dues at a country club, but not for any
initiation fees with respect to such country club.
(ii) OTHER COMPANY BENEFITS - Executive and, to the
extent applicable, Executive's spouse, dependents and
beneficiaries, shall be allowed to participate in all
benefits, plans and programs, including improvements or
modifications of the same, which are now, or may hereafter be,
available to similarly-situated Company employees. Such
benefits, plans and programs may include, without limitation,
health insurance or health care plan, life insurance, 401(k)
plan, disability insurance, vacation and sick leave benefits,
and the like. Company shall not, however, by reason of this
paragraph be obligated to institute, maintain, or refrain from
changing, amending, or discontinuing, any such benefit plan or
program, so long as such changes are similarly applicable to
executive employees generally.
ARTICLE 4: UNITED STATES FOREIGN CORRUPT PRACTICES ACT AND OTHER LAWS
4.1 Executive shall at all times comply with United States laws
applicable to Executive's actions on behalf of Company, and/or any of its
subsidiaries or affiliates, including specifically, without limitation, the
United States Foreign Corrupt Practices Act, generally codified in 15 USC 78
(FCPA), as the FCPA may hereafter be amended, and/or its successor statutes. If
Executive pleads guilty to or nolo contendere or admits civil or criminal
liability under the FCPA or other applicable United States law, or if a court
finds that Executive has personal civil or criminal liability under the FCPA or
other applicable United States law, or if a court finds that Employee committed
an action resulting in Company or any of its subsidiaries or affiliates having
civil or criminal liability or responsibility under the FCPA or other applicable
United States law with knowledge of the activities giving rise to such liability
or knowledge of facts from which Executive should have reasonably inferred the
activities giving rise to liability had occurred or were likely to occur, such
action or finding shall constitute "cause" for termination under this Agreement
unless (i) such action or finding was based on the activities of others and
Executive had no personal involvement or knowledge of such activities, or (ii)
Company's Board of Directors determines that the actions found to be in
violation of the FCPA or other applicable United States law were taken in good
faith and in compliance with all applicable policies of Company.
ARTICLE 5: PROTECTION OF INFORMATION
5.1 DISCLOSURE TO EXECUTIVE. Company shall disclose to Executive, or
place Executive in a position to have access to or develop, trade secrets or
confidential information of Company or its affiliates; and/or shall entrust
Executive with business opportunities of Company or its affiliates; and/or shall
place Executive in a position to develop business good will on behalf of Company
or its affiliates.
5.2 DISCLOSURE TO AND PROPERTY OF COMPANY. All information, ideas,
concepts, improvements, discoveries, and inventions, whether patentable or not,
which are conceived, made, developed, or acquired by Executive, individually or
in conjunction with others, during Executive's
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employment by Company (whether during business hours or otherwise and whether on
Company's premises or otherwise) which relate to Company's business, products,
or services (including, without limitation, all such information relating to
corporate opportunities, research, financial and sales data, pricing terms,
evaluations, opinions, interpretations, acquisitions prospects, the identity of
customers or their requirements, the identity of key contacts within the
customer's organizations or within the organization of acquisition prospects, or
marketing and merchandising techniques, prospective names, and marks) shall be
disclosed to Company and are and shall be the sole and exclusive property of
Company unless and to the extent such information is generally known in
Company's industry. Moreover, all documents, drawings, memoranda, notes,
records, files, correspondence, manuals, models, specifications, computer
programs, E-mail, voice mail, electronic databases, maps, and all other writings
or materials of any type embodying any of such information, ideas, concepts,
improvements, discoveries, and inventions are and shall be the sole and
exclusive property of Company unless and to the extent such information is
generally known in Company's industry. Upon termination of Executive's
employment by Company, for any reason, Executive promptly shall deliver the
same, and all copies thereof, to Company unless and to the extent such
information is generally known in Company's industry.
5.3 NO UNAUTHORIZED USE OR DISCLOSURE. Executive will not, at any time
during or after Executive's employment by Company, make any unauthorized
disclosure of any confidential business information or trade secrets of Company
or its affiliates, or make any use thereof, except in the carrying out of
Executive's employment responsibilities hereunder. Affiliates of the Company
shall be third party beneficiaries of Executive's obligations under this
paragraph. As a result of Executive's employment by Company, Executive may also
from time to time have access to, or knowledge of, confidential business
information or trade secrets of third parties, such as customers, suppliers,
partners, joint venturers, and the like, of Company and its affiliates.
Executive also agrees to preserve and protect the confidentiality of such third
party confidential information and trade secrets to the same extent, and on the
same basis, as Company's confidential business information and trade secrets,
unless and to the extent such information is generally known in Company's
industry.
5.4 OWNERSHIP BY COMPANY. If, during Executive's employment by company,
Executive creates any work of authorship fixed in any tangible medium of
expression which is the subject matter of copyright (such as videotapes, written
presentations, or acquisitions, computer programs, E-mail, voice mail,
electronic databases, drawings, maps, architectural renditions, models, manuals,
brochures, or the like) relating to Company's business, products, or services,
whether such work is created solely by Executive or jointly with others (whether
during business hours or otherwise and whether on Company's premises or
otherwise), Company shall be deemed the author of such work if the work is
prepared by Executive in the scope of Executive's employment; or, if the work is
not prepared by Executive within the scope of Executive's employment but is
specially ordered by Company as a contribution to a collective work, as a part
of a motion picture or other audiovisual work, as a translation, as a
supplementary work, as a compilation, or as an instructional text, then the work
shall be considered to be work made for hire and Company shall be the author of
the work. If such work is neither prepared by Executive within the scope of
Executive's employment nor a work specially ordered that is deemed to be a work
made for hire, then Executive hereby agrees to assign, and by these presents
does assign, to Company all of Executive's worldwide right, title, and interest
in and to such work and all rights of copyright therein.
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5.5 ASSISTANCE BY EXECUTIVE. Both during the period of Executive's
employment by Company and thereafter, Executive shall assist Company and its
nominee, at any time, in the protection of Company's worldwide right, title, and
interest in and to information, ideas, concepts, improvements, discoveries, and
inventions, and its copyrighted works, including without limitation, the
execution of all formal assignment documents requested by Company or its nominee
and the execution of all lawful oaths and applications for patents and
registration of copyright in the United States and foreign countries.
5.6 REMEDIES. Executive acknowledges that money damages would not be
sufficient remedy for any breach of this Article by Executive, and Company shall
be entitled to enforce the provisions of this Article by specific performance
and injunctive relief as remedies for such breach or any threatened breach. Such
remedies shall not be deemed the exclusive remedies for a breach of this
Article, but shall be in addition to all remedies available at law or in equity
to Company, including the recovery of damages from Executive and his agents
involved in such breach and remedies available to Company pursuant to other
agreements with Executive.
ARTICLE 6: NON-SOLICITATION OBLIGATIONS
6.1 IN GENERAL. As part of the consideration for the compensation and
benefits to be paid to Executive hereunder; to protect the trade secrets and
confidential information of Company and its affiliates that have been and will
in the future be disclosed or entrusted to Executive and other employees of the
Company and its affiliates, the business good will of Company and its affiliates
that has been and will in the future be developed by Executive or other
employees of the Company or its affiliates, or the business opportunities that
have been and will in the future be disclosed or entrusted to Executive by
Company and its affiliates; and as an additional incentive for Company to enter
into this Agreement, Company and Executive agree to the non-solicitation
obligations hereunder. If Executive's employment hereunder shall be terminated
by Executive prior to the expiration of the term provided in paragraph 2.1 for
any reason not described in paragraph 2.3(i) (including by Executive exercising
his right not to extend the term by giving notice pursuant to Section 2.1),
then, subject to the last sentence of this paragraph 6.1, Executive shall not,
directly or indirectly for Executive or for others, in any geographic area or
market where Company or any of its affiliates are conducting any business as of
the date of such termination of the employment relationship or have during the
previous twelve months conducted such business induce any employee of Company or
any of its subsidiaries or affiliates to terminate his or her employment with
Company or such subsidiaries or affiliates, or hire or assist in the hiring of
any such employee by any person, association, or entity not affiliated with
Company. These non-solicitation obligations shall extend until the later of (i)
the expiration of the term of this Agreement (or any extended term) provided in
paragraph 2.1 and (ii) the one year anniversary of the termination of
Executive's employment hereunder.
6.2 ENFORCEMENT AND REMEDIES. Executive understands that the
restrictions set forth in paragraph 6.1 may limit Executive's ability to engage
in the solicitation of employees of the Company and its subsidiaries and
affiliates, but acknowledges that Executive will receive sufficiently high
remuneration and other benefits under this Agreement to justify such
restriction. Executive acknowledges that money damages would not be sufficient
remedy for any breach of this Article by Executive, and Company shall be
entitled to enforce the provisions of this Article by specific performance and
injunctive relief as remedies for such breach or any threatened breach. Such
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remedies shall not be deemed the exclusive remedies for a breach of this
Article, but shall be in addition to all remedies available at law or in equity
to Company, including without limitation, the recovery of damages from Executive
and Executive's agents involved in such breach and remedies available to Company
pursuant to other agreements with Executive.
6.3 REFORMATION. It is expressly understood and agreed that Company and
Executive consider the restrictions contained in this Article to be reasonable
and necessary to protect the proprietary information of Company. Nevertheless,
if any of the aforesaid restrictions are found by a court having jurisdiction to
be unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by such courts so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced.
ARTICLE 7: STATEMENTS CONCERNING COMPANY
7.1 IN GENERAL. Executive shall refrain, both during the employment
relationship and after the employment relationship terminates, from publishing
any oral or written statements about Company, any of its affiliates, or any of
such entities' officers, employees, agents or representatives that are
slanderous, libelous, or defamatory; or that disclose private or confidential
information about Company, any of its affiliates, or any of such entities'
business affairs, officers, employees, agents, or representatives that Employee
knows or should know is materially injurious to Company or such affiliate; or
that constitute an intrusion into the seclusion or private lives of Company, any
of its affiliates, or any of such entities' officers, employees, agents, or
representatives that Employee knows or should know is materially injurious to
Company or such affiliate; or that give rise to unreasonable publicity about the
private lives of Company, any of its affiliates, or any of such entities'
officers, employees, agents, or representatives; or that place Company, any of
its affiliates, or any of such entities' officers, employees, agents, or
representatives in a false light before the public; or that constitute a
misappropriation of the name or likeness of Company, any of its affiliates, or
any of such entities' officers, employees, agents, or representatives. A
violation or threatened violation of this prohibition may be enjoined by the
courts. The rights afforded Company and its affiliates under this provision are
in addition to any and all rights and remedies otherwise afforded by law.
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ARTICLE 8: EFFECT OF TERMINATION ON COMPENSATION
8.1 BY EXPIRATION. If Executive's employment hereunder shall terminate
upon expiration of the term provided in paragraph 2.1 hereof, then all
compensation and all benefits (except stock options) to Executive hereunder
shall terminate contemporaneously with termination of his employment; provided,
however, that if Company shall be the party that gave written notice of such
termination, then Company shall, within 10 days after the last day of
Executive's employment with Company, pay Executive a lump sum cash payment in an
amount equal to 100% of Executive's annual base salary as in effect pursuant to
paragraph 3.1 immediately prior to such termination; and provided further that
Company shall pay Executive his pro rata bonus target earned through the date of
termination. If Executive's employment shall terminate as described under this
paragraph within two years following a Change in Control, as defined in
paragraph 8.4, Executive's severance payment shall be as set forth under
paragraph 8.4 and Executive shall have no entitlement to any additional payment
under this paragraph.
8.2 BY COMPANY. If Executive's employment hereunder shall be terminated
by Company prior to expiration of the term provided in paragraph 2.1, then, upon
such termination, regardless of the reason therefor, all compensation and
benefits to Executive hereunder shall terminate contemporaneously with the
termination of such employment; provided, however, that if such termination
shall be for any reason other than those encompassed by paragraphs 2.2(i), (ii),
(iii), or (iv), the Company shall, within 10 days after the last day of
Executive's employment with Company, pay Executive a lump sum cash payment in an
amount equal to the Termination Payment; and provided further that Company shall
pay Executive his pro rata bonus target earned through the date of termination.
For purposes of this Agreement, the term "Termination Payment" shall mean, in
addition to any such pro rata bonus, an amount equal to the greater of (i) 100%
of Executive's annual base salary as in effect pursuant to paragraph 3.1
immediately prior to Executive's termination of employment with Company or (ii)
the aggregate base salary that would have been paid to Executive (determined
based upon the base salary in effect pursuant to paragraph 3.1 immediately prior
to Executive's termination of employment with Company) for the period beginning
on the date of such termination and ending on the last day of the employment
term provided in paragraph 2.1 during which occurs the date of such termination.
If Executive's employment shall terminate as described under this paragraph
within two years following a Change in Control, as defined in paragraph 8.4,
Executive's severance payment shall be as set forth under paragraph 8.4 and
Executive shall have no entitlement to any additional payment under this
paragraph.
8.3 BY EXECUTIVE. If Executive's employment hereunder shall be
terminated by Executive prior to expiration of the term provided in paragraph
2.1 (except if Executive terminates his employment by retiring on or after the
date he reaches age sixty-five), then, upon such termination, regardless of the
reason therefor, all compensation and benefits to Executive hereunder shall
terminate contemporaneously with the termination of such employment; provided,
however, that if such termination shall be pursuant to paragraph 2.3(i), the
Company shall, within 10 days after the last day of Executive's employment with
Company, pay Executive a lump sum cash payment in an amount equal to the
Termination Payment. If Executive's employment shall terminate as described
under this paragraph within two years following a Change in Control, as defined
in paragraph 8.4, Executive's severance payment shall be as set forth under
paragraph 8.4 and Executive shall have no entitlement to any additional payment
under this paragraph. In the event Executive
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terminates his employment by retiring on or after the date he reaches age
sixty-five, Executive shall not be entitled to any severance payment under this
Agreement.
8.4 CHANGE IN CONTROL. For purposes of this paragraph, the term "Change
in Control" shall have the same meaning as assigned to such term in The Marine
Drilling 1992 Long Term Incentive Plan. If, within two years following the
occurrence of a Change in Control, Executive's employment with Company shall
terminate under circumstances that would entitle him to a severance payment
pursuant to paragraph 8.1, 8.2, or 8.3, or if Executive's employee benefits are
changed to a level that is materially inconsistent with the employee benefits
afforded by the Company to employees with comparable duties, then, in lieu of
(and not in addition to) any such severance payment, Company shall, within 10
days after the last day of Executive's employment with Company, pay Executive a
lump sum cash payment equal to 200% of the sum of (i) Executive's annual base
salary plus (ii) bonus target as in effect pursuant to paragraph 3.1 immediately
prior to such termination of employment. Further, in the year in which a Change
in Control occurs, in addition to the payment described in the preceding
sentence, Company shall pay Executive the pro rata portion of his bonus target
for that year as shall have been earned up through the date that is immediately
prior to the date on which the Change in Control occurred.
8.5 CERTAIN ADDITIONAL PAYMENTS BY COMPANY. Notwithstanding anything to
the contrary in this Agreement, in the event that any payment or distribution by
Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a "Payment"), would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended, or any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest or penalties, are hereinafter collectively referred to as the
"Excise Tax"), Company shall pay to Executive an additional payment (a "Gross-up
Payment") in an amount such that after payment by Executive of all state and
federal taxes (including any interest or penalties imposed with respect to such
taxes), including any Excise Tax and any federal or state income taxes imposed
on any Gross-up Payment, Executive retains an amount of the Gross-up Payment
equal to the Excise Tax imposed upon the Payments. Company shall instruct its
outside accountants to independently make an initial determination as to whether
a Gross-up Payment is required and the amount of any such Gross-up Payment.
Executive shall notify Company immediately in writing of any claim by the
Internal Revenue Service which, if successful, would require Company to make a
Gross-up Payment (or a Gross-up Payment in excess of that, if any, initially
determined by Company and Executive) within five days of the receipt of such
claim. Company shall notify Executive in writing at least five days prior to the
due date of any response required with respect to such claim if it plans to
contest the claim. If Company decides to contest such claim, Executive shall
cooperate fully with Company in such action; provided, however, that Company
shall bear and pay directly or indirectly all costs and expenses (including
additional interest and penalties) incurred in connection with such action and
shall indemnify and hold Executive harmless, on an after-tax basis, for any
Excise Tax or income tax, including interest and penalties with respect thereto,
imposed as a result of Company's action. If, as a result of Company's action
with respect to a claim, Executive receives a refund of any amount paid by
Company with respect to such claim, Executive shall promptly pay such refund to
Company. If Company fails to timely notify Executive whether it will contest
such claim or Company determines not to contest such claim, then, Company shall
immediately pay to Executive the portion of such claim, if any, which it has not
previously paid to Executive.
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8.6 BENEFITS. If Executive's employment with Company is terminated
under circumstances that would entitle him to a severance payment pursuant to
paragraph 8.1, 8.2, or 8.3, then Company will immediately cause Executive and
those of his dependents (including his spouse) who were covered under the
Company's medical and dental plans on the date prior to such termination to
continue to be covered under such plans, without any cost to Executive, for
twelve months from date of termination, subject to earlier termination as
provided in the last sentence of this paragraph. If Executive's employment with
Company is terminated under circumstances that would entitle him to severance
payment pursuant to paragraph 8.4, then Company will cause Executive and those
of his dependents (including his spouse) who were covered under the Company's
medical and dental benefit plans on the date prior to such termination to
continue to be covered under such plans for 24 months, subject to earlier
termination as provided in the last sentence of this paragraph. Any continuation
of medical and dental medical coverage under this paragraph shall terminate if
and to the extent Executive becomes eligible to receive medical and dental
coverage from a subsequent employer (and any such eligibility shall be promptly
reported to the Company by Executive) and if Executive (and/or his spouse) would
have been entitled to retiree medical and/or dental coverage under the Company's
plans had he voluntarily retired on the date of such Involuntary Termination,
then such coverages shall be continued as provided under such plans. Nothing
herein shall be deemed to adversely affect in any way the additional rights
after consideration of this extension, of Executive and his eligible dependents
to continuation coverages required pursuant to Part 6 of Title I of the Employee
Retirement Income Security Act of 1974, as amended, if, at the time such
continuation coverage is requested, Executive does not have alternative group
coverage available from an employer.
8.7 LIQUIDATED DAMAGES. In light of the difficulties in estimating the
damages for an early termination of this Agreement, Company and Executive hereby
agree that the payments, if any, to be received by Executive pursuant to this
Article 8 shall be received by Executive as liquidated damages.
8.8 INDEMNIFICATION. If Executive shall obtain any money award or
otherwise prevail with respect to any litigation brought by Executive or Company
to enforce or interpret any provision of this Agreement, Company, to the fullest
extent permitted by applicable law, hereby indemnifies Executive for his
reasonable attorney's fees and disbursements incurred in such litigation and
hereby agrees to pay in full all such fees and disbursements. To the extent that
any such reimbursement would be subject to the Excise Tax, then Executive shall
be entitled to receive Gross-up Payments in an amount such that after payment by
Executive of all taxes imposed on such Gross-up Payments, Executive retains an
amount equal to the Excise Tax imposed on the reimbursement.
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ARTICLE 9: MISCELLANEOUS
9.1 NOTICES. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
IF TO COMPANY TO: Marine Drilling Companies, Inc.
One Sugar Creek Center Blvd., Suite 600
Sugar Land, Texas 77478
Attention: Chief Executive Officer
IF TO EMPLOYEE TO: Mr. T. Scott O'Keefe
14350 Carolcrest
Houston, Texas 77079
or to such other address as either party may furnish to the other in writing in
accordance herewith, except that notices or changes of address shall be
effective only upon receipt.
9.2 NO OBLIGATION TO MITIGATE. Executive shall not be required to
mitigate the amount of any payment or other benefit required to be paid to
Executive pursuant to this Agreement, whether by seeking other employment or
otherwise, nor shall the amount of any such payment or other benefit be reduced
on account of any compensation earned by Executive as a result of employment by
another person.
9.3 APPLICABLE LAW. This Agreement is entered into under, and its
validity interpretation and enforceability and shall be governed for all
purposes by, the laws of the State of Texas; provided, however, that no effect
shall be given to any choice or conflict of law provision or rule (whether in
the State of Texas or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Texas.
9.4 SOLE RIGHTS TO SEVERANCE. Executive shall not be entitled to
receive any other severance benefits which may be provided for in any other
plan, program, arrangement or practice of Company, except to the extent that
severance benefits are provided for in any specific employment agreement between
Executive and Company.
9.5 NO WAIVER. No failure by either party hereto at any time to give
notice of any breach by the other party of, or to require compliance with, any
condition or provision of this Agreement shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
9.6 SEVERABILITY. If a court of competent jurisdiction determines that
any provision of this Agreement is invalid or unenforceable, then the invalidity
or unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement, and all other
provisions shall remain in full force and effect.
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9.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
9.8 WITHHOLDING OF TAXES AND OTHER EMPLOYEE DEDUCTIONS. Company may
withhold from any benefits and payments made pursuant to this Agreement all
federal, state, city and other taxes as may be required pursuant to any law or
governmental regulation or ruling and all other normal employee deductions made
with respect to Company's employees generally.
9.9 HEADINGS. The paragraph headings have been inserted for purposes of
convenience and shall not be used for interpretive purposes.
9.10 GENDER AND PLURALS. Wherever the context so requires, the
masculine gender includes the feminine or neuter, and the singular number
includes the plural and conversely.
9.11 AFFILIATE. As used in this Agreement, the term "affiliate" shall
mean any entity which owns or controls, is owned or controlled by, or is under
common ownership or control with, Company.
9.12 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of Company and any successor of Company, by merger or otherwise. Except
as provided in the preceding sentence, this Agreement, and the rights and
obligations of the parties hereunder, are personal and neither this Agreement,
nor any right, benefit, or obligation of either party hereto, shall be subject
to voluntary or involuntary assignment, alienation or transfer, whether by
operation of law or otherwise, without the prior written consent of the other
party; provided, however, that Company may assign this Agreement to a
wholly-owned subsidiary of Company as long as Company fully and unconditionally
guarantees the performance of this Agreement.
9.13 TERM. This Agreement has a term co-extensive with the term of
employment provided in paragraph 2.1. Termination shall not affect any right or
obligation of any party which is accrued or vested prior to such termination.
Without limiting the scope of the preceding sentence, the provisions of Articles
5, 6, and 7 shall survive any termination of the employment relationship and/or
of this Agreement.
9.14 ENTIRE AGREEMENT. Except as provided in (i) the written benefit
plans and programs referenced in paragraph 3.6(ii) and (ii) any signed written
agreement contemporaneously or hereafter executed by Company and Executive, this
Agreement constitutes the entire agreement of the parties with regard to the
subject matter hereof, and contains all the covenants, promises,
representations, warranties and agreements between the parties with respect to
employment of Executive by Company. Without limiting the scope of the preceding
sentence, all prior understandings and agreements among the parties hereto
relating to the subject matter hereof are hereby null and void and of no further
force and effect. Any modification of this Agreement will be effective only if
it is in writing and signed by the party to be charged.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the 1st
day of September, 1999 to be effective as of the Effective Date.
MARINE DRILLING COMPANIES, INC.
BY: /s/ JAN RASK
-----------------------------------
NAME: JAN RASK
TITLE: CHIEF EXECUTIVE OFFICER
"COMPANY"
/s/ T. SCOTT O'KEEFE
---------------------------------
T. SCOTT O'KEEFE
"EXECUTIVE"
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EXHIBIT 10.9
FIRST AMENDED AND RESTATED SEVERANCE AGREEMENT
THIS FIRST AMENDED AND RESTATED SEVERANCE AGREEMENT between MARINE
DRILLING COMPANIES, INC., a Texas corporation (the "Company"), and VINCENT G.
BOUNDS ("Executive"),
W I T N E S S E T H :
WHEREAS, the Company desires to attract and retain certain key employee
personnel and, accordingly, the Board of Directors of the Company (the "Board")
has approved the Company entering into a severance agreement with Executive in
order to encourage his continued service to the Company; and
WHEREAS, Executive is prepared to commit such services in return for
specific arrangements with respect to severance compensation and other benefits;
WHEREAS, Executive and the Company have previously entered into a
Severance Agreement on April 8, 1998, and they desire to amend and restate that
Severance Agreement;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the Company and Executive agree as follows:
1. DEFINITIONS.
(a) "ANNUAL COMPENSATION" shall mean an amount equal to the
greater of:
(i) Executive's annual base salary at the annual rate
in effect at the date of his Involuntary Termination; or
(ii) Executive's annual base salary at the annual
rate in effect immediately prior to a Change-in-Control if Executive's
employment shall be subject to a Change-in-Control Involuntary
Termination.
(b) "BONUS TARGET" shall mean an amount equal to the greater
of:
(i) Executive's annual bonus target at the annual
rate in effect at the date of his Involuntary Termination; or
(ii) Executive's annual bonus target at the annual
rate in effect immediately prior to a Change-in-Control if Executive's
employment shall be subject to a Change-in-Control Involuntary
Termination.
(c) "CHANGE-IN-CONTROL" shall have the meaning ascribed to
such term in Section 9(b) of The Marine Drilling 1992 Long-Term Incentive Plan
(the "Incentive Plan").
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(d) "CHANGE-IN-CONTROL INVOLUNTARY TERMINATION" shall mean any
termination of Executive's employment with the Company which:
(i) results from a resignation by Executive within 18
months after the date upon which a Change-in-Control occurs if such
resignation occurs within 30 days after Executive receives notice from
the Company that Executive will be subject to a Material Change in
Employment Terms; or
(ii) results from a termination by the Company within
18 months after the date upon which a Change-in-Control occurs;
provided, however, the term "CHANGE-IN-CONTROL INVOLUNTARY TERMINATION" shall
not include a Termination for Cause or any termination as a result of death,
Disability, or Retirement.
(e) "CHANGE-IN-CONTROL SEVERANCE AMOUNT" shall mean an amount
equal to 200% of the sum of (i) Executive's Annual Compensation plus (ii) his
Bonus Target.
(f) "COMPENSATION COMMITTEE" shall mean the Compensation
Committee of the Board.
(g) "DISABILITY" shall mean Executive's becoming disabled so
as to entitle him to benefits under the Company's long term disability plan.
(h) "INVOLUNTARY TERMINATION" shall mean any
Non-Change-in-Control Termination or any Change-in-Control Involuntary
Termination.
(i) "MATERIAL CHANGE IN COMPENSATION" shall mean any one or
more of the following:
(i) a reduction in Executive's annual base salary
from that provided to him immediately prior to the effective date of
this Agreement; or
(ii) a significant diminution in Executive's
eligibility to participate in bonus, stock option, incentive award and
other compensation plans under which Executive is participating
immediately prior to the effective date of this Agreement.
(j) "MATERIAL CHANGE IN EMPLOYMENT TERMS" shall mean any one
or more of the following:
(i) a material diminution in the nature or scope of
Executive's authorities, powers, functions or duties from those
applicable to him immediately prior to the date on which a
Change-in-Control occurs;
(ii) a reduction in Executive's annual base salary
from that provided to him immediately prior to the date on which a
Change-in-Control occurs;
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(iii) a significant diminution in Executive's
eligibility to participate in bonus, stock option, incentive award and
other compensation plans under which Executive is participating
immediately prior to the date on which a Change-in-Control occurs;
(iv) a change in the location of Executive's
principal place of employment by the Company by more than 50 miles from
the location where he was principally employed immediately prior to the
date on which a Change-in-Control occurs; or
(v) a change in Executive's employee benefits to a
level that is materially inconsistent with employee benefits afforded
by the Company to employees with comparable duties.
(k) "NON-CHANGE-IN-CONTROL INVOLUNTARY TERMINATION" shall mean
any termination of Executive's employment with the Company which:
(i) results from a resignation by Executive if but
only if such resignation occurs within 30 days after Executive receives
notice from the Company that (A) Executive's principal place of
employment will be moved by more than 50 miles from the location where
he was principally employed immediately prior to the date of such
notice or (B) Executive will be subject to a Material Change in
Compensation; or
(ii) results from a termination by the Company;
provided, however, the term "NON-CHANGE-IN-CONTROL INVOLUNTARY TERMINATION"
shall not include a Termination for Cause, a Change-in-Control Involuntary
Termination or any termination as a result of death, Disability, or Retirement.
(l) "NON-CHANGE-IN-CONTROL SEVERANCE AMOUNT" shall mean an
amount equal to Executive's Annual Compensation.
(m) "RETIREMENT" shall mean termination of Executive's
employment for any reason on or after the date Executive reaches age sixty-five.
(n) "TERMINATION FOR CAUSE" shall mean termination of
Executive's employment by the Company for any of the following reasons:
(i) Executive has engaged in gross negligence or
willful misconduct in the performance of the duties required of him;
(ii) Executive has been convicted of a felony or a
misdemeanor involving moral turpitude;
(iii) Executive has willfully refused without proper
legal reason to
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perform the duties and responsibilities required of him;
(iv) Executive has materially breached any material
corporate policy or code of conduct established by the Company;
(v) Executive has violated the Foreign Corrupt
Practices Act or and other United States law as proscribed by paragraph
2(b); or
(vi) Executive has willfully engaged in conduct that
he knows or should know is materially injurious to the Company or any
of its affiliates.
2. SERVICES.
(a) DUTIES. Executive agrees that he will render services to
the Company (as well as any subsidiary thereof or successor thereto) during the
period of his employment to the best of his ability and in a prudent and
businesslike manner and that he will devote substantially the same time, efforts
and dedication to his duties as heretofore devoted.
(b) UNITED STATES FOREIGN CORRUPT PRACTICES ACT. Executive
shall at all times comply with United States laws applicable to Executive's
actions on behalf of Company, and/or any of its subsidiaries or affiliates,
including specifically, without limitation, the United States Foreign Corrupt
Practices Act, generally codified in 15 USC 78 (FCPA), as the FCPA may hereafter
be amended, and/or its successor statutes. If Executive pleads guilty to or nolo
contendere or admits civil or criminal liability under the FCPA or other
applicable United States law, or if a court finds that Executive has personal
civil or criminal liability under the FCPA or other applicable United States
law, or if a court finds that Employee committed an action resulting in Company
or any of its subsidiaries or affiliates having civil or criminal liability or
responsibility under the FCPA or other applicable United States law with
knowledge of the activities giving rise to such liability or knowledge of facts
from which Executive should have reasonably inferred the activities giving rise
to liability had occurred or were likely to occur, such action or finding shall
constitute "cause" for termination under this Agreement unless (i) such action
or finding was based on the activities of others and Executive had no personal
involvement or knowledge of such activities, or (ii) Company's Board of
Directors determines that the actions found to be in violation of the FCPA or
other applicable United States law were taken in good faith and in compliance
with all applicable policies of Company.
3. PROTECTION OF INFORMATION
(a) DISCLOSURE TO EXECUTIVE. Company shall disclose to
Executive, or place Executive in a position to have access to or develop, trade
secrets or confidential information of Company or its affiliates; and/or shall
entrust Executive with business opportunities of Company or its affiliates;
and/or shall place Executive in a position to develop business good will on
behalf of Company or its affiliates.
(b) DISCLOSURE TO AND PROPERTY OF COMPANY. All information,
ideas, concepts, improvements, discoveries, and inventions, whether patentable
or not, which are
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conceived, made, developed, or acquired by Executive, individually or in
conjunction with others, during Executive's employment by Company (whether
during business hours or otherwise and whether on Company's premises or
otherwise) which relate to Company's business, products, or services (including,
without limitation, all such information relating to corporate opportunities,
research, financial and sales data, pricing terms, evaluations, opinions,
interpretations, acquisitions prospects, the identity of customers or their
requirements, the identity of key contacts within the customer's organizations
or within the organization of acquisition prospects, or marketing and
merchandising techniques, prospective names, and marks) shall be disclosed to
Company and are and shall be the sole and exclusive property of Company unless
and to the extent such information is generally known in Company's industry.
Moreover, all documents, drawings, memoranda, notes, records, files,
correspondence, manuals, models, specifications, computer programs, E-mail,
voice mail, electronic databases, maps, and all other writings or materials of
any type embodying any of such information, ideas, concepts, improvements,
discoveries, and inventions are and shall be the sole and exclusive property of
Company unless and to the extent such information is generally known in
Company's industry. Upon termination of Executive's employment by Company, for
any reason, Executive promptly shall deliver the same, and all copies thereof,
to Company unless and to the extent such information is generally known in
Company's industry.
(c) NO UNAUTHORIZED USE OR DISCLOSURE. Executive will not, at
any time during or after Executive's employment by Company, make any
unauthorized disclosure of any confidential business information or trade
secrets of Company or its affiliates, or make any use thereof, except in the
carrying out of Executive's employment responsibilities hereunder. Affiliates of
the Company shall be third party beneficiaries of Executive's obligations under
this paragraph. As a result of Executive's employment by Company, Executive may
also from time to time have access to, or knowledge of, confidential business
information or trade secrets of third parties, such as customers, suppliers,
partners, joint venturers, and the like, of Company and its affiliates.
Executive also agrees to preserve and protect the confidentiality of such third
party confidential information and trade secrets to the same extent, and on the
same basis, as Company's confidential business information and trade secrets,
unless and to the extent such information is generally known in Company's
industry.
(d) OWNERSHIP BY COMPANY. If, during Executive's employment by
company, Executive creates any work of authorship fixed in any tangible medium
of expression which is the subject matter of copyright (such as videotapes,
written presentations, or acquisitions, computer programs, E-mail, voice mail,
electronic databases, drawings, maps, architectural renditions, models, manuals,
brochures, or the like) relating to Company's business, products, or services,
whether such work is created solely by Executive or jointly with others (whether
during business hours or otherwise and whether on Company's premises or
otherwise), Company shall be deemed the author of such work if the work is
prepared by Executive in the scope of Executive's employment; or, if the work is
not prepared by Executive within the scope of Executive's employment but is
specially ordered by Company as a contribution to a collective work, as a part
of a motion picture or other audiovisual work, as a translation, as a
supplementary work, as a compilation, or as an instructional text, then the work
shall be considered to be work made for hire and Company shall be the author of
the work. If such work is neither prepared by Executive within the scope of
Executive's employment nor a work specially ordered that is
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deemed to be a work made for hire, then Executive hereby agrees to assign, and
by these presents does assign, to Company all of Executive's worldwide right,
title, and interest in and to such work and all rights of copyright therein.
(e) ASSISTANCE BY EXECUTIVE. Both during the period of
Executive's employment by Company and thereafter, Executive shall assist Company
and its nominee, at any time, in the protection of Company's worldwide right,
title, and interest in and to information, ideas, concepts, improvements,
discoveries, and inventions, and its copyrighted works, including without
limitation, the execution of all formal assignment documents requested by
Company or its nominee and the execution of all lawful oaths and applications
for patents and registration of copyright in the United States and foreign
countries.
(f) REMEDIES. Executive acknowledges that money damages would
not be sufficient remedy for any breach of this Article by Executive, and
Company shall be entitled to enforce the provisions of this Article by specific
performance and injunctive relief as remedies for such breach or any threatened
breach. Such remedies shall not be deemed the exclusive remedies for a breach of
this Article, but shall be in addition to all remedies available at law or in
equity to Company, including the recovery of damages from Executive and his
agents involved in such breach and remedies available to Company pursuant to
other agreements with Executive.
4. NON-SOLICITATION OBLIGATIONS
(a) IN GENERAL. As part of the consideration for the benefits
to be paid to Executive hereunder; to protect the trade secrets and confidential
information of Company and its affiliates that have been and will in the future
be disclosed or entrusted to Executive and other employees of the Company and
its affiliates, the business good will of Company and its affiliates that has
been and will in the future be developed by Executive or other employees of the
Company or its affiliates, or the business opportunities that have been and will
in the future be disclosed or entrusted to Executive and other employees by
Company and its affiliates; and as an additional incentive for Company to enter
into this Agreement, Company and Executive agree to the non-solicitation
obligations hereunder. If Executive's employment hereunder shall be terminated
for any reason, then, subject to the last sentence of this paragraph 4(a),
Executive shall not, directly or indirectly for Executive or for others, in any
geographic area or market where Company or any of its affiliates are conducting
any business as of the date of such termination of the employment relationship
or have during the previous twelve months conducted such business, induce any
employee of Company or any of its subsidiaries or affiliates to terminate his or
her employment with Company or such subsidiaries or affiliates, or hire or
assist in the hiring of any such employee by any person, association, or entity
not affiliated with Company. These non-solicitation obligations shall extend
until the later of (i) the one year anniversary of Executive's termination that
is not the result of a Change-in-Control or the two year anniversary of
Executive's termination (in the case of an Involuntary Termination which is the
result of a Change-in-Control) or (ii) the one year anniversary of the
termination of Executive's employment (in the case of a termination for any
other reason).
(b) ENFORCEMENT AND REMEDIES. Executive understands that the
restrictions set forth in paragraph 4(a) may limit Executive's ability to engage
in the solicitation of
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employees of the Company and its subsidiaries and affiliates, but acknowledges
that Executive will receive sufficiently high remuneration and other benefits
under this Agreement to justify such restriction. Executive acknowledges that
money damages would not be sufficient remedy for any breach of this Article by
Executive, and Company shall be entitled to enforce the provisions of this
Article by specific performance and injunctive relief as remedies for such
breach or any threatened breach. Such remedies shall not be deemed the exclusive
remedies for a breach of this Article, but shall be in addition to all remedies
available at law or in equity to Company, including without limitation, the
recovery of damages from Executive and Executive's agents involved in such
breach and remedies available to Company pursuant to other agreements with
Executive.
(c) REFORMATION. It is expressly understood and agreed that
Company and Executive consider the restrictions contained in this paragraph 4 to
be reasonable and necessary to protect the proprietary information of Company.
Nevertheless, if any of the aforesaid restrictions are found by a court having
jurisdiction to be unreasonable, or overly broad as to geographic area or time,
or otherwise unenforceable, the parties intend for the restrictions therein set
forth to be modified by such courts so as to be reasonable and enforceable and,
as so modified by the court, to be fully enforced.
5. STATEMENTS CONCERNING COMPANY. Executive shall refrain, both during
the employment relationship and after the employment relationship terminates,
from publishing any oral or written statements about Company, any of its
affiliates, or any of such entities' officers, employees, agents or
representatives that are slanderous, libelous, or defamatory; or that disclose
private or confidential information about Company, any of its affiliates, or any
of such entities' business affairs, officers, employees, agents, or
representatives that Employee knows or should know is materially injurious to
Company or such affiliate; or that constitute an intrusion into the seclusion or
private lives of Company, any of its affiliates, or any of such entities'
officers, employees, agents, or representatives that Employee knows or should
know is materially injurious to Company or such affiliate; or that give rise to
unreasonable publicity about the private lives of Company, any of its
affiliates, or any of such entities' officers, employees, agents, or
representatives; or that place Company, any of its affiliates, or any of such
entities' officers, employees, agents, or representatives in a false light
before the public; or that constitute a misappropriation of the name or likeness
of Company, any of its affiliates, or any of such entities' officers, employees,
agents, or representatives. A violation or threatened violation of this
prohibition may be enjoined by the courts. The rights afforded Company and its
affiliates under this provision are in addition to any and all rights and
remedies otherwise afforded by law.
6. TERMINATION. Subject to the provisions of Paragraph 8(i) hereof, if
Executive's employment by the Company or any subsidiary thereof or successor
thereto shall be subject to an Involuntary Termination, then the Company will,
as additional compensation for services rendered to the Company (including its
subsidiaries), pay to Executive the following amounts (subject to any applicable
payroll or other taxes required to be withheld and any employee benefit
premiums) and take the following actions:
(a) If such Involuntary Termination is a Non-Change-in-Control
Involuntary Termination, pay Executive a lump sum cash payment in an amount
equal to the Non-Change-in-
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Control Severance Amount on or before the tenth day after the last day of
Executive's employment with the Company.
(b) If such Involuntary Termination is a Change-in-Control
Involuntary Termination, pay Executive a lump sum cash payment in an amount
equal to the Change-in-Control Severance Amount.
(c) In either a Change-in-Control Involuntary Termination or a
Non-Change-in-Control Involuntary Termination, pay Executive his pro rata Bonus
Target earned through the date of Involuntary Termination.
(d) Immediately cause Executive and those of his dependents
(including his spouse) who were covered under the Company's medical and dental
benefit plans on the day prior to Executive's Involuntary Termination to
continue to be covered under such plans, without any cost to Executive, for 12
months from the date of termination if the termination is a
Non-Change-in-Control Involuntary Termination or for 24 months from the date of
termination if the termination is a Change-in-Control Involuntary Termination;
provided, however, that (i) such coverage shall terminate if and to the extent
Executive becomes eligible to receive medical and dental coverage from a
subsequent employer (and any such eligibility shall be promptly reported to the
Company by Executive) and (ii) if Executive (and/or his spouse) would have been
entitled to retiree medical and/or dental coverage under the Company's plans had
he voluntarily retired on the date of such Involuntary Termination, then such
coverages shall be continued as provided under such plans. Nothing herein shall
be deemed to adversely affect in any way the additional rights after
consideration of this extension, of Executive and his eligible dependents to
continuation coverages required pursuant to Part 6 of Title I of the Employee
Retirement Income Security Act of 1974, as amended, if, at the time such
continuation coverage is requested, Executive does not have alternative group
coverage available from an employer.
(e) Immediately cause any and all outstanding options to
purchase common stock of the Company held by Executive, which options were
granted prior to December 31, 1995, to become immediately exercisable in full
and to remain exercisable during the period of three months following such
termination (or such greater period as the Committee (as such term is defined in
the Incentive Plan) may determine), or by Executive's estate (or the person who
acquires such options by will or the laws of descent and distribution or
otherwise by reason of the death of Executive) during a period of one year
following Executive's death if Executive dies during such three-month period (or
such greater period as the Committee may determine), but in no event shall any
such option be exercisable after the tenth anniversary of the grant of such
option.
7. CERTAIN ADDITIONAL PAYMENTS BY COMPANY. Notwithstanding anything to
the contrary in this Agreement, in the event that any payment or distribution by
Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a "Payment"), would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended, or any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest or penalties, are hereinafter collectively referred to as the
"Excise Tax"), Company shall pay to Executive an
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additional payment (a "Gross-up Payment") in an amount such that after payment
by Executive of all state and federal taxes (including any interest or penalties
imposed with respect to such taxes), including any Excise Tax and any federal or
state income taxes imposed on any Gross-up Payment, Executive retains an amount
of the Gross-up Payment equal to the Excise Tax imposed upon the Payments.
Company shall instruct its outside accountants to independently make an initial
determination as to whether a Gross-up Payment is required and the amount of any
such Gross-up Payment. Executive shall notify Company immediately in writing of
any claim by the Internal Revenue Service which, if successful, would require
Company to make a Gross-up Payment (or a Gross-up Payment in excess of that, if
any, initially determined by Company and Executive) within five days of the
receipt of such claim. Company shall notify Executive in writing at least five
days prior to the due date of any response required with respect to such claim
if it plans to contest the claim. If Company decides to contest such claim,
Executive shall cooperate fully with Company in such action; provided, however,
that Company shall bear and pay directly or indirectly all costs and expenses
(including additional interest and penalties) incurred in connection with such
action and shall indemnify and hold Executive harmless, on an after-tax basis,
for any Excise Tax or income tax, including interest and penalties with respect
thereto, imposed as a result of Company's action. If, as a result of Company's
action with respect to a claim, Executive receives a refund of any amount paid
by Company with respect to such claim, Executive shall promptly pay such refund
to Company. If Company fails to timely notify Executive whether it will contest
such claim or Company determines not to contest such claim, then, Company shall
immediately pay to Executive the portion of such claim, if any, which it has not
previously paid to Executive.
8. GENERAL.
(a) TERM. The effective date of this Agreement is April 8,
1998, and this Agreement shall have an initial term (the "Initial Term") of one
year beginning on such effective date. The term of this Agreement shall be
extended automatically for an additional successive one-year period as of the
last day of the Initial Term and as of the last day of each such successive
one-year period of time thereafter that this Agreement is in effect; provided,
however, that if, prior to 90 days before the last day of the Initial Term or
any such successive one-year term, the Compensation Committee (excluding any
member of the Compensation Committee who is covered by this Agreement or by a
similar agreement with the Company) shall give written notice to Executive that
no such automatic extension shall occur, then this Agreement shall terminate on
the last day of the Initial Term or such successive one-year term, as
applicable, during which such notice is given. Notwithstanding anything to the
contrary contained in this "sunset provision," it is agreed that if a
Change-in-Control occurs while this Agreement is in effect, then this Agreement
shall not be subject to termination under this "sunset provision," and shall
remain in force for a period of 12 months after such Change-in-Control, and if
within said 12 months the contingency factors occur which would entitle
Executive to the benefits as provided herein, this Agreement shall remain in
effect in accordance with its terms. If, within such 12 months after a
Change-in-Control, the contingency factors that would entitle Executive to said
benefits do not occur, thereupon this "sunset provision" shall again be
applicable with the 90-day time period for Compensation Committee action to
thereafter commence 90 days prior to the first anniversary of such
Change-in-Control and 90 days prior to each one-year anniversary date
thereafter.
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(b) INDEMNIFICATION. If Executive shall obtain any money
judgment or otherwise prevail with respect to any litigation brought by
Executive or the Company to enforce or interpret any provision contained herein,
the Company, to the fullest extent permitted by applicable law, hereby
indemnifies Executive for his reasonable attorneys' fees and disbursements
incurred in such litigation. To the extent that any such indemnification payment
would be subject to the Excise Tax (as defined in paragraph 7), then Executive
shall be entitled to receive Gross-up Payments in an amount such that after
payment by Executive of all taxes imposed on such Gross-up Payments, Executive
retains an amount equal to the Excise Tax imposed on the indemnification
payment.
(c) PAYMENT OBLIGATIONS ABSOLUTE. The Company's obligation to
pay (or cause one of its subsidiaries to pay) Executive the amounts and to make
the arrangements provided herein shall be absolute and unconditional and shall
not be affected by any circumstances, including, without limitation, any
set-off, counterclaim, recoupment, defense or other right which the Company
(including its subsidiaries) may have against him or anyone else. All amounts
payable by the Company (including its subsidiaries hereunder) shall be paid
without notice or demand. Executive shall not be obligated to seek other
employment in mitigation of the amounts payable or arrangements made under any
provision of this Agreement, and, except as provided in Paragraphs 6(d) hereof,
the obtaining of any such other employment shall in no event effect any
reduction of the Company's obligations to make (or cause to be made) the
payments and arrangements required to be made under this Agreement.
(d) SUCCESSORS. This Agreement shall be binding upon and inure
to the benefit of the Company and any successor of the Company, by merger or
otherwise. This Agreement shall also be binding upon and inure to the benefit of
Executive and his estate. If Executive shall die prior to full payment of
amounts due pursuant to this Agreement, such amounts shall be payable pursuant
to the terms of this Agreement to his estate.
(e) SEVERABILITY. Any provision in this Agreement which is
prohibited or unenforceable in any jurisdiction by reason of applicable law
shall, as to such jurisdiction, be ineffective only to the extent of such
prohibition or unenforceability without invalidating or affecting the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(f) NON-ALIENATION. Executive shall not have any right to
pledge, hypothecate, anticipate or assign this Agreement or the rights
hereunder, except by will or the laws of descent and distribution.
(g) NOTICES. Any notices or other communications provided for
in this Agreement must be in writing. In the case of Executive, such notices or
communications shall be effectively delivered if hand delivered to Executive at
his principal place of employment or if sent by registered or certified mail to
Executive at the last address he has filed with the Company. In the case of the
Company, such notices or communications shall be effectively delivered if sent
by registered or certified mail to the Company at its principal executive
offices.
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(h) CONTROLLING LAW. This Agreement is entered into under, and
its validity interpretation and enforceability and shall be governed for all
purposes by, the laws of the State of Texas; provided, however, that no effect
shall be given to any choice or conflict of law provision or rule (whether in
the State of Texas or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Texas.
(i) RELEASE. As a condition to the receipt of any benefit
under Paragraph 6 hereof, Executive shall first execute a release, in the form
established by the Company, releasing the Company, its shareholders, partners,
officers, directors, employees and agents from any and all claims and from any
and all causes of action of any kind or character, including but not limited to
all claims or causes of action arising out of Executive's employment with the
Company or the termination of such employment.
(j) FULL SETTLEMENT. If Executive is entitled to and receives
the benefits provided hereunder, performance of the obligations of the Company
hereunder will constitute full settlement of all claims that Executive might
otherwise assert against the Company on account of his termination of
employment. Executive hereby acknowledges that the Company has heretofore
rescinded and terminated the Company's Executive Severance Policy, as amended
from time to time, which policy was originally adopted on January 1, 1994, and
Executive hereby waives any and all rights Executive may have under such policy.
(k) UNFUNDED OBLIGATION. The obligation to pay amounts under
this Agreement is an unfunded obligation of the Company, and no such obligation
shall create a trust or be deemed to be secured by any pledge or encumbrance on
any property of the Company (including its subsidiaries).
(l) NOT A CONTRACT OF EMPLOYMENT. This Agreement shall not be
deemed to constitute a contract of employment, nor shall any provision hereof
affect (a) the right of the Company (or its subsidiaries) to discharge Executive
at will or (b) the terms and conditions of any other agreement between the
Company and Executive except as provided herein.
(m) NUMBER AND GENDER. Wherever appropriate herein, words used
in the singular shall include the plural and the plural shall include the
singular. The masculine gender where appearing herein shall be deemed to include
the feminine gender.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 1st day of September, 1999.
"EXECUTIVE"
/s/ VINCENT G. BOUNDS
---------------------------------
VINCENT G. BOUNDS
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"COMPANY"
MARINE DRILLING COMPANIES, INC.
BY: /s/ JAN RASK
------------------------------
NAME: JAN RASK
TITLE: CHIEF EXECUTIVE OFFICER
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EXHIBIT 10.10
FIRST AMENDED AND RESTATED SEVERANCE AGREEMENT
THIS FIRST AMENDED AND RESTATED SEVERANCE AGREEMENT between MARINE
DRILLING COMPANIES, INC., a Texas corporation (the "Company"), and DALE W.
WILHELM ("Executive"),
W I T N E S S E T H :
WHEREAS, the Company desires to attract and retain certain key employee
personnel and, accordingly, the Board of Directors of the Company (the "Board")
has approved the Company entering into a severance agreement with Executive in
order to encourage his continued service to the Company; and
WHEREAS, Executive is prepared to commit such services in return for
specific arrangements with respect to severance compensation and other benefits;
WHEREAS, Executive and the Company have previously entered into a
Severance Agreement on May 1, 1998 and they desire to amend and restate that
Severance Agreement;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the Company and Executive agree as follows:
1. DEFINITIONS.
(a) "ANNUAL COMPENSATION" shall mean an amount equal to the
greater of:
(i) Executive's annual base salary at the annual rate
in effect at the date of his Involuntary Termination; or
(ii) Executive's annual base salary at the annual
rate in effect immediately prior to a Change-in-Control if Executive's
employment shall be subject to a Change-in-Control Involuntary
Termination.
(b) "BONUS TARGET" shall mean an amount equal to the greater
of:
(i) Executive's annual bonus target at the annual
rate in effect at the date of his Involuntary Termination; or
(ii) Executive's annual bonus target at the annual
rate in effect immediately prior to a Change-in-Control if Executive's
employment shall be subject to a Change-in-Control Involuntary
Termination.
(c) "CHANGE-IN-CONTROL" shall have the meaning ascribed to
such term in Section 9(b) of The Marine Drilling 1992 Long-Term Incentive Plan
(the "Incentive Plan").
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(d) "CHANGE-IN-CONTROL INVOLUNTARY TERMINATION" shall mean any
termination of Executive's employment with the Company which:
(i) results from a resignation by Executive within 18
months after the date upon which a Change-in-Control occurs if such
resignation occurs within 30 days after Executive receives notice from
the Company that Executive will be subject to a Material Change in
Employment Terms; or
(ii) results from a termination by the Company within
18 months after the date upon which a Change-in-Control occurs;
provided, however, the term "CHANGE-IN-CONTROL INVOLUNTARY TERMINATION" shall
not include a Termination for Cause or any termination as a result of death,
Disability, or Retirement.
(e) "CHANGE-IN-CONTROL SEVERANCE AMOUNT" shall mean an amount
equal to 150% of the sum of (i) Executive's Annual Compensation plus (ii) his
Bonus Target.
(f) "COMPENSATION COMMITTEE" shall mean the Compensation
Committee of the Board.
(g) "DISABILITY" shall mean Executive's becoming disabled so
as to entitle him to benefits under the Company's long term disability plan.
(h) "INVOLUNTARY TERMINATION" shall mean any
Non-Change-in-Control Termination or any Change-in-Control Involuntary
Termination.
(i) "MATERIAL CHANGE IN COMPENSATION" shall mean any one or
more of the following:
(i) a reduction in Executive's annual base salary
from that provided to him immediately prior to the effective date of
this Agreement; or
(ii) a significant diminution in Executive's
eligibility to participate in bonus, stock option, incentive award and
other compensation plans under which Executive is participating
immediately prior to the effective date of this Agreement.
(j) "MATERIAL CHANGE IN EMPLOYMENT TERMS" shall mean any one
or more of the following:
(i) a material diminution in the nature or scope of
Executive's authorities, powers, functions or duties from those
applicable to him immediately prior to the date on which a
Change-in-Control occurs;
(ii) a reduction in Executive's annual base salary
from that provided to him immediately prior to the date on which a
Change-in-Control occurs;
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(iii) a significant diminution in Executive's
eligibility to participate in bonus, stock option, incentive award and
other compensation plans under which Executive is participating
immediately prior to the date on which a Change-in-Control occurs;
(iv) a change in the location of Executive's
principal place of employment by the Company by more than 50 miles from
the location where he was principally employed immediately prior to the
date on which a Change-in-Control occurs; or
(v) a change in Executive's employee benefits to a
level that is materially inconsistent with employee benefits afforded
by the Company to employees with comparable duties.
(k) "NON-CHANGE-IN-CONTROL INVOLUNTARY TERMINATION" shall mean
any termination of Executive's employment with the Company which:
(i) results from a resignation by Executive if but
only if such resignation occurs within 30 days after Executive receives
notice from the Company that (A) Executive's principal place of
employment will be moved by more than 50 miles from the location where
he was principally employed immediately prior to the date of such
notice or (B) Executive will be subject to a Material Change in
Compensation; or
(ii) results from a termination by the Company;
provided, however, the term "NON-CHANGE-IN-CONTROL INVOLUNTARY TERMINATION"
shall not include a Termination for Cause, a Change-in-Control Involuntary
Termination or any termination as a result of death, Disability, or Retirement.
(l) "NON-CHANGE-IN-CONTROL SEVERANCE AMOUNT" shall mean an
amount equal to Executive's Annual Compensation.
(m) "RETIREMENT" shall mean termination of Executive's
employment for any reason on or after the date Executive reaches age sixty-five.
(n) "TERMINATION FOR CAUSE" shall mean termination of
Executive's employment by the Company for any of the following reasons:
(i) Executive has engaged in gross negligence or
willful misconduct in the performance of the duties required of him;
(ii) Executive has been convicted of a felony or a
misdemeanor involving moral turpitude;
(iii) Executive has willfully refused without proper
legal reason to
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perform the duties and responsibilities required of him;
(iv) Executive has materially breached any material
corporate policy or code of conduct established by the Company;
(v) Executive has violated the Foreign Corrupt
Practices Act or and other United States law as proscribed by paragraph
2(b); or
(vi) Executive has willfully engaged in conduct that
he knows or should know is materially injurious to the Company or any
of its affiliates.
2. SERVICES.
(a) DUTIES. Executive agrees that he will render services to
the Company (as well as any subsidiary thereof or successor thereto) during the
period of his employment to the best of his ability and in a prudent and
businesslike manner and that he will devote substantially the same time, efforts
and dedication to his duties as heretofore devoted.
(b) UNITED STATES FOREIGN CORRUPT PRACTICES ACT. Executive
shall at all times comply with United States laws applicable to Executive's
actions on behalf of Company, and/or any of its subsidiaries or affiliates,
including specifically, without limitation, the United States Foreign Corrupt
Practices Act, generally codified in 15 USC 78 (FCPA), as the FCPA may hereafter
be amended, and/or its successor statutes. If Executive pleads guilty to or nolo
contendere or admits civil or criminal liability under the FCPA or other
applicable United States law, or if a court finds that Executive has personal
civil or criminal liability under the FCPA or other applicable United States
law, or if a court finds that Employee committed an action resulting in Company
or any of its subsidiaries or affiliates having civil or criminal liability or
responsibility under the FCPA or other applicable United States law with
knowledge of the activities giving rise to such liability or knowledge of facts
from which Executive should have reasonably inferred the activities giving rise
to liability had occurred or were likely to occur, such action or finding shall
constitute "cause" for termination under this Agreement unless (i) such action
or finding was based on the activities of others and Executive had no personal
involvement or knowledge of such activities, or (ii) Company's Board of
Directors determines that the actions found to be in violation of the FCPA or
other applicable United States law were taken in good faith and in compliance
with all applicable policies of Company.
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3. PROTECTION OF INFORMATION
(a) DISCLOSURE TO EXECUTIVE. Company shall disclose to
Executive, or place Executive in a position to have access to or develop, trade
secrets or confidential information of Company or its affiliates; and/or shall
entrust Executive with business opportunities of Company or its affiliates;
and/or shall place Executive in a position to develop business good will on
behalf of Company or its affiliates.
(b) DISCLOSURE TO AND PROPERTY OF COMPANY. All information,
ideas, concepts, improvements, discoveries, and inventions, whether patentable
or not, which are conceived, made, developed, or acquired by Executive,
individually or in conjunction with others, during Executive's employment by
Company (whether during business hours or otherwise and whether on Company's
premises or otherwise) which relate to Company's business, products, or services
(including, without limitation, all such information relating to corporate
opportunities, research, financial and sales data, pricing terms, evaluations,
opinions, interpretations, acquisitions prospects, the identity of customers or
their requirements, the identity of key contacts within the customer's
organizations or within the organization of acquisition prospects, or marketing
and merchandising techniques, prospective names, and marks) shall be disclosed
to Company and are and shall be the sole and exclusive property of Company
unless and to the extent such information is generally known in Company's
industry. Moreover, all documents, drawings, memoranda, notes, records, files,
correspondence, manuals, models, specifications, computer programs, E-mail,
voice mail, electronic databases, maps, and all other writings or materials of
any type embodying any of such information, ideas, concepts, improvements,
discoveries, and inventions are and shall be the sole and exclusive property of
Company unless and to the extent such information is generally known in
Company's industry. Upon termination of Executive's employment by Company, for
any reason, Executive promptly shall deliver the same, and all copies thereof,
to Company unless and to the extent such information is generally known in
Company's industry.
(c) NO UNAUTHORIZED USE OR DISCLOSURE. Executive will not, at
any time during or after Executive's employment by Company, make any
unauthorized disclosure of any confidential business information or trade
secrets of Company or its affiliates, or make any use thereof, except in the
carrying out of Executive's employment responsibilities hereunder. Affiliates of
the Company shall be third party beneficiaries of Executive's obligations under
this paragraph. As a result of Executive's employment by Company, Executive may
also from time to time have access to, or knowledge of, confidential business
information or trade secrets of third parties, such as customers, suppliers,
partners, joint venturers, and the like, of Company and its affiliates.
Executive also agrees to preserve and protect the confidentiality of such third
party confidential information and trade secrets to the same extent, and on the
same basis, as Company's confidential business information and trade secrets,
unless and to the extent such information is generally known in Company's
industry.
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(d) OWNERSHIP BY COMPANY. If, during Executive's employment by
company, Executive creates any work of authorship fixed in any tangible medium
of expression which is the subject matter of copyright (such as videotapes,
written presentations, or acquisitions, computer programs, E-mail, voice mail,
electronic databases, drawings, maps, architectural renditions, models, manuals,
brochures, or the like) relating to Company's business, products, or services,
whether such work is created solely by Executive or jointly with others (whether
during business hours or otherwise and whether on Company's premises or
otherwise), Company shall be deemed the author of such work if the work is
prepared by Executive in the scope of Executive's employment; or, if the work is
not prepared by Executive within the scope of Executive's employment but is
specially ordered by Company as a contribution to a collective work, as a part
of a motion picture or other audiovisual work, as a translation, as a
supplementary work, as a compilation, or as an instructional text, then the work
shall be considered to be work made for hire and Company shall be the author of
the work. If such work is neither prepared by Executive within the scope of
Executive's employment nor a work specially ordered that is deemed to be a work
made for hire, then Executive hereby agrees to assign, and by these presents
does assign, to Company all of Executive's worldwide right, title, and interest
in and to such work and all rights of copyright therein.
(e) ASSISTANCE BY EXECUTIVE. Both during the period of
Executive's employment by Company and thereafter, Executive shall assist Company
and its nominee, at any time, in the protection of Company's worldwide right,
title, and interest in and to information, ideas, concepts, improvements,
discoveries, and inventions, and its copyrighted works, including without
limitation, the execution of all formal assignment documents requested by
Company or its nominee and the execution of all lawful oaths and applications
for patents and registration of copyright in the United States and foreign
countries.
(f) REMEDIES. Executive acknowledges that money damages would
not be sufficient remedy for any breach of this Article by Executive, and
Company shall be entitled to enforce the provisions of this Article by specific
performance and injunctive relief as remedies for such breach or any threatened
breach. Such remedies shall not be deemed the exclusive remedies for a breach of
this Article, but shall be in addition to all remedies available at law or in
equity to Company, including the recovery of damages from Executive and his
agents involved in such breach and remedies available to Company pursuant to
other agreements with Executive.
4. NON-SOLICITATION OBLIGATIONS
(a) IN GENERAL. As part of the consideration for the benefits
to be paid to Executive hereunder; to protect the trade secrets and confidential
information of Company and its affiliates that have been and will in the future
be disclosed or entrusted to Executive and other employees of the Company and
its affiliates, the business good will of Company and its affiliates that has
been and will in the future be developed by Executive or other employees of the
Company or its affiliates, or the business opportunities that have been and will
in the future be disclosed or entrusted to Executive and other employees by
Company and its affiliates; and as an additional incentive for Company to enter
into this Agreement, Company and Executive agree to the non-solicitation
obligations hereunder. If Executive's employment hereunder shall be terminated
for any reason, then, subject to the last sentence of this paragraph 4(a),
Executive
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<PAGE> 7
shall not, directly or indirectly for Executive or for others, in any geographic
area or market where Company or any of its affiliates are conducting any
business as of the date of such termination of the employment relationship or
have during the previous twelve months conducted such business, induce any
employee of Company or any of its subsidiaries or affiliates to terminate his or
her employment with Company or such subsidiaries or affiliates, or hire or
assist in the hiring of any such employee by any person, association, or entity
not affiliated with Company. These non-solicitation obligations shall extend
until the later of (i) the one year anniversary of Executive's termination that
is the result of a Change-in-Control or (ii) the one year anniversary of the
termination of Executive's employment (in the case of a termination for any
other reason).
(b) ENFORCEMENT AND REMEDIES. Executive understands that the
restrictions set forth in paragraph 4(a) may limit Executive's ability to engage
in the solicitation of employees of the Company and its subsidiaries and
affiliates, but acknowledges that Executive will receive sufficiently high
remuneration and other benefits under this Agreement to justify such
restriction. Executive acknowledges that money damages would not be sufficient
remedy for any breach of this Article by Executive, and Company shall be
entitled to enforce the provisions of this Article by specific performance and
injunctive relief as remedies for such breach or any threatened breach. Such
remedies shall not be deemed the exclusive remedies for a breach of this
Article, but shall be in addition to all remedies available at law or in equity
to Company, including without limitation, the recovery of damages from Executive
and Executive's agents involved in such breach and remedies available to Company
pursuant to other agreements with Executive.
(c) REFORMATION. It is expressly understood and agreed that
Company and Executive consider the restrictions contained in this paragraph 4 to
be reasonable and necessary to protect the proprietary information of Company.
Nevertheless, if any of the aforesaid restrictions are found by a court having
jurisdiction to be unreasonable, or overly broad as to geographic area or time,
or otherwise unenforceable, the parties intend for the restrictions therein set
forth to be modified by such courts so as to be reasonable and enforceable and,
as so modified by the court, to be fully enforced.
5. STATEMENTS CONCERNING COMPANY. Executive shall refrain, both during
the employment relationship and after the employment relationship terminates,
from publishing any oral or written statements about Company, any of its
affiliates, or any of such entities' officers, employees, agents or
representatives that are slanderous, libelous, or defamatory; or that disclose
private or confidential information about Company, any of its affiliates, or any
of such entities' business affairs, officers, employees, agents, or
representatives that Employee knows or should know is materially injurious to
Company or such affiliate; or that constitute an intrusion into the seclusion or
private lives of Company, any of its affiliates, or any of such entities'
officers, employees, agents, or representatives that Employee knows or should
know is materially injurious to Company or such affiliate; or that give rise to
unreasonable publicity about the private lives of Company, any of its
affiliates, or any of such
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<PAGE> 8
entities' officers, employees, agents, or representatives; or that place
Company, any of its affiliates, or any of such entities' officers, employees,
agents, or representatives in a false light before the public; or that
constitute a misappropriation of the name or likeness of Company, any of its
affiliates, or any of such entities' officers, employees, agents, or
representatives. A violation or threatened violation of this prohibition may be
enjoined by the courts. The rights afforded Company and its affiliates under
this provision are in addition to any and all rights and remedies otherwise
afforded by law.
6. TERMINATION. Subject to the provisions of Paragraph 8(i) hereof, if
Executive's employment by the Company or any subsidiary thereof or successor
thereto shall be subject to an Involuntary Termination, then the Company will,
as additional compensation for services rendered to the Company (including its
subsidiaries), pay to Executive the following amounts (subject to any applicable
payroll or other taxes required to be withheld and any employee benefit
premiums) and take the following actions:
(a) If such Involuntary Termination is a Non-Change-in-Control
Involuntary Termination, pay Executive a lump sum cash payment in an amount
equal to the Non-Change-in-Control Severance Amount on or before the tenth day
after the last day of Executive's employment with the Company.
(b) If such Involuntary Termination is a Change-in-Control
Involuntary Termination, pay Executive a lump sum cash payment in an amount
equal to the Change-in-Control Severance Amount.
(c) In either a Change-in-Control Involuntary Termination or a
Non-Change-in-Control Involuntary Termination, pay Executive his pro rata Bonus
Target earned through the date of Involuntary Termination.
(d) Immediately cause Executive and those of his dependents
(including his spouse) who were covered under the Company's medical and dental
benefit plans on the day prior to Executive's Involuntary Termination to
continue to be covered under such plans, without any cost to Executive, for 12
months from the date of termination; provided, however, that (i) such coverage
shall terminate if and to the extent Executive becomes eligible to receive
medical and dental coverage from a subsequent employer (and any such eligibility
shall be promptly reported to the Company by Executive) and (ii) if Executive
(and/or his spouse) would have been entitled to retiree medical and/or dental
coverage under the Company's plans had he voluntarily retired on the date of
such Involuntary Termination, then such coverages shall be continued as provided
under such plans. Nothing herein shall be deemed to adversely affect in any way
the additional rights after consideration of this extension, of Executive and
his eligible dependents to continuation coverages required pursuant to Part 6 of
Title I of the Employee Retirement Income Security Act of 1974, as amended, if,
at the time such continuation coverage is requested, Executive does not have
alternative group coverage available from an employer.
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<PAGE> 9
(e) Immediately cause any and all outstanding options to
purchase common stock of the Company held by Executive, which options were
granted prior to December 31, 1995, to become immediately exercisable in full
and to remain exercisable during the period of three months following such
termination (or such greater period as the Committee (as such term is defined in
the Incentive Plan) may determine), or by Executive's estate (or the person who
acquires such options by will or the laws of descent and distribution or
otherwise by reason of the death of Executive) during a period of one year
following Executive's death if Executive dies during such three-month period (or
such greater period as the Committee may determine), but in no event shall any
such option be exercisable after the tenth anniversary of the grant of such
option.
7. PARACHUTE PAYMENT LIMITATION. Notwithstanding anything to the
contrary in this Agreement, the amount of any benefits provided by this
Agreement shall be reduced or eliminated to the extent necessary so that no
payment made under this Agreement will subject Executive to an excise tax, as a
result of the Golden Parachute payment provisions contained in Sections 280G and
4999 of the Internal Revenue Code of 1986, as amended (ignoring, for purposes of
such excise tax calculation, payments under other agreements which will be made
after the payment to be made pursuant to this Agreement and which are subject to
a provision similar to this paragraph). Notwithstanding the foregoing, if
payments which are not made as a result of the preceding sentence ("Cutback
Payment"), when combined with payments under other agreements sponsored by the
Company which have not been paid as a result of a provision similar to this
paragraph ("Prior Cutback Payments"), would, if paid, result in Executive being
in a better net after-tax position (taking into account any applicable excise
tax under Section 4999 of the Internal Revenue Code of 1986, as amended, and any
income tax applicable to payments made under this Agreement or under such other
agreements) than he would have been had such reduction or elimination not been
made pursuant to the preceding sentence and provisions similar to this paragraph
in other agreements, then the Cutback Payment shall then be paid notwithstanding
the preceding sentence and all Prior Cutback Payments shall also then be paid
notwithstanding any provisions similar to this paragraph applicable to such
Prior Cutback Payments. Prior to the date any payment is to be made to Executive
pursuant to this Agreement (without regard to this paragraph), the Company shall
provide Executive with its calculations relevant to this paragraph and such
supporting materials as are reasonably necessary for Executive to evaluate the
Company's calculations. If Executive objects to the Company's calculations, the
Company shall pay Executive such portion of the Cutback Payment and Prior
Cutback Payments (in each case, up to 100% thereof) as Executive determines is
necessary to comply with the intent of this paragraph.
8. GENERAL.
(a) TERM. The effective date of this Agreement is May 1, 1998,
and this Agreement shall have an initial term (the "Initial Term") of one year
beginning on such effective date. The term of this Agreement shall be extended
automatically for an additional successive one-year period as of the last day of
the Initial Term and as of the last day of each such successive one-year period
of time thereafter that this Agreement is in effect; provided, however, that if,
prior to 90 days before the last day of the Initial Term or any such successive
one-year term, the Compensation Committee (excluding any member of the
Compensation Committee
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<PAGE> 10
who is covered by this Agreement or by a similar agreement with the Company)
shall give written notice to Executive that no such automatic extension shall
occur, then this Agreement shall terminate on the last day of the Initial Term
or such successive one-year term, as applicable, during which such notice is
given. Notwithstanding anything to the contrary contained in this "sunset
provision," it is agreed that if a Change-in-Control occurs while this Agreement
is in effect, then this Agreement shall not be subject to termination under this
"sunset provision," and shall remain in force for a period of 12 months after
such Change-in-Control, and if within said 12 months the contingency factors
occur which would entitle Executive to the benefits as provided herein, this
Agreement shall remain in effect in accordance with its terms. If, within such
12 months after a Change-in-Control, the contingency factors that would entitle
Executive to said benefits do not occur, thereupon this "sunset provision" shall
again be applicable with the 90-day time period for Compensation Committee
action to thereafter commence 90 days prior to the first anniversary of such
Change-in-Control and 90 days prior to each one-year anniversary date
thereafter.
(b) INDEMNIFICATION. If Executive shall obtain any money
judgment or otherwise prevail with respect to any litigation brought by
Executive or the Company to enforce or interpret any provision contained herein,
the Company, to the fullest extent permitted by applicable law, hereby
indemnifies Executive for his reasonable attorneys' fees and disbursements
incurred in such litigation.
(c) PAYMENT OBLIGATIONS ABSOLUTE. The Company's obligation to
pay (or cause one of its subsidiaries to pay) Executive the amounts and to make
the arrangements provided herein shall be absolute and unconditional and shall
not be affected by any circumstances, including, without limitation, any
set-off, counterclaim, recoupment, defense or other right which the Company
(including its subsidiaries) may have against him or anyone else. All amounts
payable by the Company (including its subsidiaries hereunder) shall be paid
without notice or demand. Executive shall not be obligated to seek other
employment in mitigation of the amounts payable or arrangements made under any
provision of this Agreement, and, except as provided in Paragraphs 6(d) hereof,
the obtaining of any such other employment shall in no event effect any
reduction of the Company's obligations to make (or cause to be made) the
payments and arrangements required to be made under this Agreement.
(d) SUCCESSORS. This Agreement shall be binding upon and inure
to the benefit of the Company and any successor of the Company, by merger or
otherwise. This Agreement shall also be binding upon and inure to the benefit of
Executive and his estate. If Executive shall die prior to full payment of
amounts due pursuant to this Agreement, such amounts shall be payable pursuant
to the terms of this Agreement to his estate.
(e) SEVERABILITY. Any provision in this Agreement which is
prohibited or unenforceable in any jurisdiction by reason of applicable law
shall, as to such jurisdiction, be ineffective only to the extent of such
prohibition or unenforceability without invalidating or affecting the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(f) NON-ALIENATION. Executive shall not have any right to
pledge,
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<PAGE> 11
hypothecate, anticipate or assign this Agreement or the rights hereunder, except
by will or the laws of descent and distribution.
(g) NOTICES. Any notices or other communications provided for
in this Agreement must be in writing. In the case of Executive, such notices or
communications shall be effectively delivered if hand delivered to Executive at
his principal place of employment or if sent by registered or certified mail to
Executive at the last address he has filed with the Company. In the case of the
Company, such notices or communications shall be effectively delivered if sent
by registered or certified mail to the Company at its principal executive
offices.
(h) CONTROLLING LAW. This Agreement is entered into under, and
its validity interpretation and enforceability and shall be governed for all
purposes by, the laws of the State of Texas; provided, however, that no effect
shall be given to any choice or conflict of law provision or rule (whether in
the State of Texas or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Texas.
(i) RELEASE. As a condition to the receipt of any benefit
under Paragraph 6 hereof, Executive shall first execute a release, in the form
established by the Company, releasing the Company, its shareholders, partners,
officers, directors, employees and agents from any and all claims and from any
and all causes of action of any kind or character, including but not limited to
all claims or causes of action arising out of Executive's employment with the
Company or the termination of such employment.
(j) FULL SETTLEMENT. If Executive is entitled to and receives
the benefits provided hereunder, performance of the obligations of the Company
hereunder will constitute full settlement of all claims that Executive might
otherwise assert against the Company on account of his termination of
employment. Executive hereby acknowledges that the Company has heretofore
rescinded and terminated the Company's Executive Severance Policy, as amended
from time to time, which policy was originally adopted on January 1, 1994, and
Executive hereby waives any and all rights Executive may have under such policy.
(k) UNFUNDED OBLIGATION. The obligation to pay amounts under
this Agreement is an unfunded obligation of the Company, and no such obligation
shall create a trust or be deemed to be secured by any pledge or encumbrance on
any property of the Company (including its subsidiaries).
(l) NOT A CONTRACT OF EMPLOYMENT. This Agreement shall not be
deemed to constitute a contract of employment, nor shall any provision hereof
affect (a) the right of the Company (or its subsidiaries) to discharge Executive
at will or (b) the terms and conditions of any other agreement between the
Company and Executive except as provided herein.
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(m) NUMBER AND GENDER. Wherever appropriate herein, words used
in the singular shall include the plural and the plural shall include the
singular. The masculine gender where appearing herein shall be deemed to include
the feminine gender.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 1st day of September, 1999.
"EXECUTIVE"
/s/ DALE W. WILHELM
--------------------------------
DALE W. WILHELM
"COMPANY"
MARINE DRILLING COMPANIES, INC.
BY: /s/ JAN RASK
-----------------------------
NAME: JAN RASK
TITLE: CHIEF EXECUTIVE OFFICER
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<PAGE> 1
EXHIBIT 10.11
AMENDMENT NO. 1 AND WAIVER AGREEMENT
This Amendment No. 1 and Waiver Agreement dated as of September 21,
1999 ("Agreement") is among Marine Drilling Companies, Inc., a Texas corporation
("Borrower"), the banks party to the Amended and Restated Credit Agreement
described below ("Banks"), ABN AMRO Bank N.V., as administrative agent for the
Banks and as issuing bank (in such capacities, the "Administrative Agent" and
"Issuing Bank"), and Christiania Bank og Kreditkasse, New York Branch, as
syndication agent for the Banks ("Syndication Agent").
INTRODUCTION
A. The Borrower, the Administrative Agent, the Issuing Bank, the
Syndication Agent and the Banks are parties to the Amended and Restated Credit
Agreement dated as of August 12, 1998 ("Credit Agreement").
B. The Borrower, the Administrative Agent, the Syndication Agent and
the Banks wish to, subject to the terms and conditions of this Agreement, (1)
acknowledge the existence of certain Defaults and Events of Default (each as
defined in the Credit Agreement), (2) provide for a waiver of such existing
Defaults and Events of Default, and (3) make certain amendments to the Credit
Agreement.
Therefore, the Borrower, the Administrative Agent, the Issuing Bank,
the Syndication Agent and the Banks hereby agree as follows:
Section 1. Definitions; References. Unless otherwise defined in this
Agreement, terms used in this Agreement which are defined in the Credit
Agreement shall have the meanings assigned to such terms in the Credit
Agreement.
Section 2. Amendments.
(a) Section 1.01. Section 1.01 is amended by adding the following new
definitions:
"Annualized" means, with respect to the Projected EBITDA attributable
to any New Rig for any period, the product of (a) such Projected EBITDA
attributable to such New Rig multiplied by (b) fraction, the numerator
of which is 365 and the denominator of which is the number of days
during such 365-day period that such New Rig was either owned by such
Person or, if such New Rig is subject to a Long-Term Contract, in
operation under the terms of such contract during such period.
"EBITDA Adjustment" means, during any period, the resulting difference
of (a) the Projected EBITDA attributable to any New Rigs minus (b) the
EBITDA attributable to such New Rigs during such period.
<PAGE> 2
"Long-Term Contract" means, with respect to any Mortgaged Rig, a
contract for the charter or other use of such Mortgaged Rig and (a)
which has an original term of twelve months or longer, (b) no
conditions exist or events have occurred which could, with the giving
of notice or passage of time or both, result in a default or event of
default under such contract or otherwise result in the termination or
cancellation of such contract, (c) is in full force and effect, and
performance under such contract has occurred for a period of at least
30 consecutive days and without any other breach or default during such
30 day period, and (d) the contract counterparty of which is acceptable
to the Administrative Agent (which acceptance shall not be unreasonably
withheld).
"New Rig" means, with respect to any Person as of any date, a Mortgaged
Rig that either (a) has been newly-acquired by such Person on a date
that is less than one year prior to such date or (b) is, as of such
date, subject to a Long-Term Contract.
"Projected EBITDA" means, for any period, (a) with respect to any New
Rig that is the subject of a Long-Term Contract, the EBITDA
attributable to such New Rig from such Long-Term Contract during such
period, which amount shall be Annualized for such period and (b) with
respect to all other New Rigs, the EBITDA attributable to such New Rigs
during such period, which amount shall be Annualized for such period.
"Total EBITDA" means, for any Person during any twelve-month period,
the sum of (a) the EBITDA of such Person for such period plus (b) the
EBITDA Adjustment for such Person during such period.
(b) Section 1.01. Section 1.01 is also amended by deleting the first
sentence of the definition of "Margin Ratio" and replacing it with the
following:
"Margin Ratio" means, as of any date, the ratio of (a) Consolidated
Indebtedness as of such date to (b) Total EBITDA for the twelve month
period ending on such date.
(c) Section 2.08. Clause (a)(ii) of Section 2.08 is amended by deleting
such section in its entirety and replacing it with the following:
(a)(ii) Eurodollar Rate Loans. If such Loan is a Eurodollar Rate Loan,
a rate per annum equal at all times during the Interest Period
for such Loan to the lesser of (A) the Highest Lawful Rate and
(B) the sum of the Eurodollar Rate for such Interest Period
plus the Applicable Margin in effect for each day of such
Interest Period for Eurodollar Rate Loans (as such Applicable
Margin changes from time to time), and unpaid accrued interest
on such Loans shall be due and payable the last day of such
Interest Period and, in the case of an Interest Period longer
than three months, on the date occurring every three months
after the first day of such Interest Period, and on the date
such Eurodollar Rate Loan shall be paid in full or Converted.
Clause (c) of Section 2.08 is amended by: (i) replacing .75% in subclause (i)
with 1.00%; (ii) replacing the .875% in subclause (ii) with 1.25%; (iii)
replacing 1.00% in subclause (iii) with 1.50%;
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(iv) replacing 1.125% in subclause (iv) with 1.75%; (v) deleting the word "and"
after the semi-colon in subclause (iv); (vi) deleting subclause (v); and (vii)
adding the following new clauses (v), (vi) and (vii):
(v) if the Margin Ratio as of the date of determination is
equal to or greater than 2.5 to 1.0 but less than 3.0 to 1.0,
then such rate per annum shall be 2.0%;
(vi) if the Margin Ratio as of the date of determination is
equal to or greater than 3.0 to 1.0 but less than 3.5 to 1.0,
then such rate per annum shall be 2.25%; and
(vii) if the Margin Ratio as of the date of determination is
equal to or greater than 3.5 to 1.0, then such rate per annum
shall be 2.50%.
The Applicable Margin for all Eurodollar Rate Loans shall be increased
to 1.75% per annum from the effective date of this Agreement until the next
regularly scheduled calculation of the Margin Ratio provided for in the Margin
Ratio Certificate.
(d) Section 2.11. Clause (a) of Section 2.11 is hereby amended by
deleting clauses (i), (ii) and (iii) and replacing them with the following:
(i) if the Margin Ratio as of the date of determination
is less than 1.5 to 1.0 then such rate per annum
shall be .25%;
(ii) if the Margin Ratio as of the date of determination
is equal to or greater than 1.5 to 1.0 but less than
2.0 to 1.0, then such rate per annum shall be .30%;
(iii) if the Margin Ratio as of the date of determination
is equal to or greater than 2.0 to 1.0 but less than
2.50 to 1.0, then such rate per annum shall be .35%;
(iv) if the Margin Ratio as of the date of determination
is equal to or greater than 2.50 to 1.0 but less than
3.0 to 1.0, then such rate per annum shall be .40%;
(v) if the Margin Ratio as of the date of determination
is equal or greater than 3.0 to 1.0 but less than
3.50 to 1.0, then such rate per annum shall be .45%;
and
(vi) if the Margin Ratio as of the date of determination
is equal or greater than 3.5 to 1.0, then such rate
per annum shall be .50%.
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The rate per annum specified in this Section 2.11 shall be .35% per
annum from the effective date of this Agreement until the next regularly
scheduled determination of the Margin Ratio provided for in the Margin Ratio
Certificate.
(e) Section 6.04. Section 6.04 is amended by deleting the word "EBITDA"
contained in such Section and replacing it with the phrase "Total EBITDA".
(f) Section 6.06. Section 6.06 is deleted in its entirety and replaced
with the following new Section 6.06:
Section 6.06 Working Capital. The Borrower will not permit the
sum of (a) its Consolidated Current Assets, plus (b) the sum of the
Available Commitments of each of the Banks, minus (c) its Consolidated
Current Liabilities, to be less than $1.00, measured on the last day of
any calendar quarter.
(g) Section 6.16. Section 6.16 of the Credit Agreement is deleted in
its entirety and replaced with the following new Section 6.16:
Section 6.16 Maximum Consolidated Indebtedness to Total
EBITDA. The Borrower will not permit, as of any date of determination,
the ratio of Consolidated Indebtedness as of such date to Total EBITDA
for the twelve-month period ending on such date to be greater than 4.0
to 1.0.
Section 3. Waiver. The Borrower hereby acknowledges the existence of
the following Defaults and Events of Default (collectively, the "Existing
Defaults"): (a) the failure of the Borrower to comply with the requirements of
Sections 6.06 and 6.16 of the Credit Agreement for the period ending June 30,
1999 and (b) the breach of the representations and warranties set forth in the
Borrowing Request dated August 12, 1999 delivered to the Bank Group pursuant to
Section 3.02 of the Credit Agreement. The Banks hereby agree, subject to the
terms and conditions of this Agreement, to waive the Existing Defaults effective
as of the date of this Agreement.
Section 4. Representations and Warranties. The Borrower represents and
warrants to the Administrative Agent, the Syndication Agent and the Banks that:
(a) As of the effectiveness of this Agreement, the representations and
warranties set forth in the Credit Agreement and in the other Loan Documents are
true and correct in all material respects as of the date of this Agreement
(unless such representation or warranty is specifically limited to an earlier
date);
(b) (i) The execution, delivery and performance of this Agreement are
within the corporate power and authority of the Borrower and have been duly
authorized by appropriate proceedings and (ii) this Agreement constitutes a
legal, valid, and binding obligation of the Borrower enforceable in accordance
with its terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the rights of creditors
generally and general principles of equity; and
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(c) All of the Liens created pursuant to the Security Documents are
valid and subsisting and constitute valid and enforceable security interests in,
and Liens on, all of the Collateral subject thereto and subject to no other
Liens (other than Excepted Liens).
Section 5. Effectiveness. This Agreement shall become effective and the
Credit Agreement shall be amended as provided in this Agreement upon the
occurrence of the following conditions precedent on or before September 23,
1999:
(a) The Borrower, the Administrative Agent, the Issuing Bank, the
Syndication Agent and the Majority Banks shall have delivered duly and validly
executed originals of this Agreement to the Administrative Agent;
(b) the representations and warranties in this Agreement shall be true
and correct in all material respects (unless such representation or warranty is
specifically limited to an earlier date);
(c) each of the Guarantors shall have delivered a reaffirmation of its
Guaranty Agreement in substantially the form of Exhibit A attached hereto;
(d) each of the Borrower and the Guarantors shall have delivered a
certificate of its Secretary or Assistant Secretary certifying that its
certificate of incorporation, bylaws, resolutions and incumbency as certified in
connection with the Credit Agreement are still in force and have not been
amended except as provided in such certificate and otherwise in form and
substance satisfactory to the Administrative Agent;
(e) the Administrative Agent, the Issuing Bank, the Syndication Agent
and the Banks shall have received duly executed original opinions issued by
Vinson & Elkins L.L.P., outside counsel to the Borrower and the Guarantors, in
form and substance satisfactory to the Administrative Agent and its counsel;
(f) the Borrower and the Guarantors shall have delivered such other
documents, certificates and opinions as the Administrative Agent may reasonably
request; and
(g) the Borrower shall have paid (i) to each Bank which signed this
Agreement on or before September 21, 1999, an amendment fee in an amount equal
to .15% multiplied by such Bank's Commitment, (ii) to the Administrative Agent,
all fees and expenses separately agreed to be paid in connection with this
Agreement and the amendments evidenced hereby, and (iii) to each member of the
Bank Group, all costs and expenses required to be paid pursuant to Section 9.04
which have been invoiced on or prior to the date of this Agreement.
Section 6. Effect on Loan Documents.
(a) Except as amended herein, the Credit Agreement and the Loan
Documents shall remain in full force and effect as originally executed. Except
as specifically set forth herein, nothing herein shall act as a waiver of any of
the Administrative Agent's or Banks' rights under the Loan
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Documents, as amended, including the waiver of any Default or Event of Default,
however denominated.
(b) This Agreement is a Loan Document for the purposes of the
provisions of the other Loan Documents. Without limiting the foregoing, any
breach of representations, warranties, and covenants under this Agreement may be
a Default or Event of Default under the Credit Agreement.
Section 7. Choice of Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York.
Section 8. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original.
-6-
<PAGE> 7
EXECUTED AND EFFECTIVE as of the 21st day of September, 1999.
MARINE DRILLING COMPANIES, INC.
By: /s/ T. SCOTT O'KEEFE
---------------------------------
Name: T. Scott O'Keefe
----------------------------
Title: Senior Vice President
---------------------------
ABN AMRO BANK N.V., as Administrative Agent,
as Issuing Bank, and as a Bank
By: /s/ STUART MURRAY
---------------------------------
Name: Stuart Murray
----------------------------
Title: Vice President
---------------------------
By: /s/ M.A. TRIBOLET
---------------------------------
Name: M.A. Tribolet
----------------------------
Title: Senior Vice President
---------------------------
CHRISTIANIA BANK OG KREDITKASSE,
NEW YORK BRANCH, as Syndication Agent
By: /s/ HANS CHR. KJELSRUD
---------------------------------
Name: Hans CHR. Kjelsrud
----------------------------
Title: Senior Vice President
---------------------------
By: /s/ MARTIN LUNDER
---------------------------------
Name: Martin Lunder
----------------------------
Title: Senior Vice President
---------------------------
<PAGE> 8
BANKERS TRUST COMPANY
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
CHRISTIANIA BANK OG KREDITKASSE,
NEW YORK BRANCH
By: /s/ HANS CHR. KJELSRUD
-----------------------------------
Name: Hans CHR. Kjelsrud
------------------------------
Title: Senior Vice President
-----------------------------
By: /s/ MARTIN LUNDER
-----------------------------------
Name: Martin Lunder
------------------------------
Title: Senior Vice President
-----------------------------
SKANDINAVISKA ENSKILDA BANKEN
AB (PUBL.)
By: /s/ BJARTE BOE
-----------------------------------
Name: Bjarte Boe
------------------------------
Title: Managing Director
-----------------------------
By: /s/ PER FROLICH
-----------------------------------
Name: Per Frolich
------------------------------
Title: Head of Administration
-----------------------------
CREDIT AGRICOLE INDOSUEZ
By: /s/ JONAS LUNSTAD
-----------------------------------
Name: Jonas Lunstad
------------------------------
Title: Account Manager
-----------------------------
By: /s/ BJORN HUNDEVADT GULBRANDSEN
-----------------------------------
Name: Bjorn Hundevadt Gulbrandsen
------------------------------
Title: Managing Director
-----------------------------
<PAGE> 9
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. ASHBY
-----------------------------------------
Name: F.C.H. Ashby
------------------------------------
Title: Senior Manager Loan Operations
-----------------------------------
BANQUE NATIONALE DE PARIS
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC.
By: /s/ AMY RICK
-----------------------------------------
Name: Amy Rick
------------------------------------
Title: Vice President
-----------------------------------
By: /s/ CHRISTINE A. RENARD
-----------------------------------------
Name: Christine A. Renard
------------------------------------
Title: Vice President
-----------------------------------
NATEXIS BANQUE BFCE
By: /s/ TIMOTHY L. POLVADO
-----------------------------------------
Name: Timothy L. Polvado
------------------------------------
Title: Vice President and Group Manager
-----------------------------------
By: /s/ N. ERIC DITGES
-----------------------------------------
Name: N. Eric Ditges
------------------------------------
Title: Vice President
-----------------------------------
NEDSHIP BANK N.V. (FORMERLY KNOWN AS
NEDERLANDSE SCHEEPSHYPOTHEEKBANK N.V.)
By: /s/ JOHN S. OSBORNE, JR.
-----------------------------------------
Name: John S. Osborne, Jr.
------------------------------------
Title: Attorney-In-Fact
-----------------------------------
<PAGE> 1
EXHIBIT 15
LETTER REGARDING UNAUDITED INTERIM FINANCIAL INFORMATION
The Board of Directors and Shareholders
Marine Drilling Companies, Inc.:
<TABLE>
<S> <C>
Re: Registration Statement No. 33-56920 on Form S-8 dated January 11, 1993
No. 33-61901 on Form S-8 dated August 17, 1995
No. 333-6997 on Form S-3 dated June 27, 1996, as amended
No. 333-6995 on Form S-4 dated June 27, 1996, as amended
No. 333-56379 on Form S-3 dated June 9, 1998
</TABLE>
With respect to the subject registration statements, we acknowledge our
awareness of the use therein of our report dated October 26, 1999, related to
our review of interim financial information. Pursuant to Rule 436(c) under the
Securities Act of 1933, such report is not considered part of a registration
statement prepared or certified by an accountant within the meanings of Sections
7 and 11 of the Act.
KPMG LLP
Houston, Texas
October 26, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-END> SEP-30-1999 SEP-30-1998
<CASH> 8,322 20,499
<SECURITIES> 0 0
<RECEIVABLES> 20,811 36,175
<ALLOWANCES> 0 0
<INVENTORY> 407 1,000
<CURRENT-ASSETS> 32,342 59,725
<PP&E> 698,086 426,292
<DEPRECIATION> 87,649 64,405
<TOTAL-ASSETS> 646,159 425,765
<CURRENT-LIABILITIES> 32,085 43,469
<BONDS> 0 0
0 0
0 0
<COMMON> 571 523
<OTHER-SE> 409,015 353,403
<TOTAL-LIABILITY-AND-EQUITY> 646,159 425,765
<SALES> 70,593 185,057
<TOTAL-REVENUES> 70,593 185,057
<CGS> 53,095 77,801
<TOTAL-COSTS> 53,095 77,801
<OTHER-EXPENSES> 19,113 15,508
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 2,565 343
<INCOME-PRETAX> (12,306) 84,477
<INCOME-TAX> (3,691) 30,685
<INCOME-CONTINUING> (8,615) 53,792
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (8,615) 53,792
<EPS-BASIC> (0.16) 1.03
<EPS-DILUTED> (0.16) 1.02
</TABLE>
