Exhibit 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (this
Agreement
) is entered into as of the date set forth
on the signature page hereto (the
Effective Date
) by and between Weatherford
International Ltd., a Swiss joint-stock corporation registered in Switzerland, Canton of Zug (the
Company
), and the individual signing as Executive on the signature page hereto (the
Executive
).
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company has previously determined that it is in the
best interests of the Company and its shareholders to retain the Executive and to induce the
employment of the Executive for the long-term benefit of the Company; and
WHEREAS, the Company desires to continue to employ the Executive on the terms set forth below
to provide services to the Company and its Affiliated companies, and the Executive is willing to
accept such continued employment and provide such services on the terms set forth in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the parties hereto do hereby agree that:
1.
Certain Definitions
.
(a)
Affiliate
shall have the meaning set forth in Rule 12b-2 promulgated
under Section 12 of the Exchange Act.
(b)
Annual Bonus
shall mean the Executives annual bonus under the
then-current annual incentive plan of the Company and any of its Affiliated companies.
(c)
Annual Bonus Amount
shall mean the sum of (i) the amount of the Annual
Bonus, if any, paid or provided in any form (whether in cash, securities or any combination
thereof) by the Company or any of its Affiliated companies to or for the benefit of the Executive
for services rendered or labor performed during a fiscal year of the Company and (ii) the amount of
the discretionary bonus or other bonus paid outside of the Companys annual incentive plan, if any,
paid or provided in any form (whether in cash, securities or any combination thereof) by the
Company or any of its Affiliated companies to or for the benefit of the Executive (it being
understood that if multiple bonuses are paid for any given year, or if a bonus is made in multiple
installments for a year, all such bonuses or installments shall be aggregated as a single payment
for that year in determining the Annual Bonus Amount). The Executives Annual Bonus Amount shall be
determined by including any portion thereof that the Executive could have received in cash or
securities in lieu of (i) any elective deferrals made by the Executive pursuant to all nonqualified
deferred compensation plans or (ii) elective contributions made on the Executives behalf by the
Company pursuant to a qualified cash or deferred arrangement (as defined in section 401(k) of the
Code) or pursuant to a plan maintained under section 125 of the Code.
(d)
Applicable Multiple
shall mean the number identified as such on the
signature page hereto.
(e)
Beneficial Owner
shall have the meaning set forth in Rule 13d-3 under
the Exchange Act.
(f)
Board
shall mean the Board of Directors of the Company.
(g)
Cause
shall mean:
(i) the willful and continued failure of the Executive to substantially perform the
Executives duties with the Company (other than any such failure resulting from incapacity due to
physical or mental illness or anticipated failure after the issuance of a Notice of Termination for
Good Reason by the Executive pursuant to
Section 4(d
)), after a written demand for
substantial performance is delivered to the Executive by the Board which specifically identifies
the manner in which the Executive has not substantially performed the Executives duties; or
(ii) the Executive willfully engaging in illegal conduct or gross misconduct which
is materially and demonstrably injurious to the Company.
No act, or failure to act, on the part of the Executive shall be considered
willful
unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable
belief that the Executives action or omission was in the best interests of the Company. Any act,
or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or
upon the instructions of the Chief Executive Officer or of a more senior officer of the Company or
based upon the advice of counsel for the Company (which may be in-house counsel of the Company or
other counsel employed or engaged by the Company or its Subsidiaries) shall be conclusively
presumed to be done, or omitted to be done, by the Executive in good faith and in the best
interests of the Company. The cessation of employment of the Executive shall not be deemed to be
for Cause unless and until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership
of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is
provided to the Executive, and the Executive is given an opportunity, together with counsel, to be
heard before the Board), finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.
(h)
Change of Control
shall be deemed to have occurred if any event set
forth in any one of the following paragraphs shall have occurred:
(i) any Person is or becomes the Beneficial Owner, directly or indirectly, of twenty
percent (20%) or more of either (A) the then outstanding registered shares of the Company (the
Outstanding Company Registered Shares
) or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the election of
directors (the
Outstanding Company Voting Securities
), excluding any Person who becomes
such a Beneficial Owner in connection with a transaction that complies with clauses (A), (B) and
(C) of paragraph (iii) below;
(ii) individuals, who, as of the date hereof, constitute the Board (the
Incumbent Board
) cease for any reason to constitute at least two-thirds (2/3) of the
Board;
provided
,
however
, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the Companys shareholders, was approved
by a vote of at least two-thirds (2/3) of the Incumbent Board shall be considered as though such
individual was a member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or any other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;
(iii) the consummation of a reorganization, merger, amalgamation, consolidation,
scheme of arrangement, exchange offer or similar transaction of the Company or any of its
Subsidiaries or the sale, transfer or other disposition of all or substantially all of the
Companys Assets (any of which a
Corporate Transaction
), unless, following such Corporate
Transaction or series of related Corporate
2
Transactions, as the case may be, (A) all of the
individuals and Entities who were the Beneficial Owners, respectively, of the Outstanding Company
Registered Shares and Outstanding Company Voting Securities immediately prior to such Corporate
Transaction beneficially own, directly or indirectly, more than sixty-six and two-thirds percent
(66-2/3%) of, respectively, the Outstanding Company Registered Shares and the combined voting power
of the Outstanding Company Voting Securities entitled to vote generally in the election of
directors (or other governing body), as the case may be, of the Entity resulting from such
Corporate Transaction (including, without limitation, an Entity which as a result of such
transaction owns the Company or all or substantially all of the Companys Assets either directly or
through one (1) or more subsidiaries or Entities) in substantially the same proportions as their
ownership, immediately prior to such Corporate Transaction, of the Outstanding Company Registered
Shares and the Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding
any Entity resulting from such Corporate Transaction or any employee benefit plan (or related
trust) of the Company or such Entity resulting from such Corporate Transaction) beneficially owns,
directly or indirectly, twenty percent (20%) or more of, respectively, the then outstanding shares
of common stock of the Entity resulting from such Corporate Transaction or the combined voting
power of the then outstanding voting securities of such Entity except to the extent that such
ownership existed prior to the Corporate Transaction and (C) at least two-thirds (2/3) of the
members of the board of directors (or other governing body) of the Entity resulting from such
Corporate Transaction were members of the Incumbent Board at the time of the approval of such
Corporate Transaction; or
(iv) approval or adoption by the Board or the shareholders of the Company of a plan
or proposal which could result directly or indirectly in the liquidation, transfer, sale or other
disposal of all or substantially all of the Companys Assets or the dissolution of the Company.
(i)
Code
shall mean the Internal Revenue Code of 1986, as amended.
(j)
Company
shall mean Weatherford International Ltd., a Swiss joint-stock
corporation registered in Switzerland, Canton of Zug, or any successor to Weatherford International
Ltd., including but not limited to any Entity into which Weatherford International Ltd. is merged,
consolidated or amalgamated, or any Entity otherwise resulting from a Corporate Transaction.
(k)
Companys Assets
shall mean the assets (of any kind) owned by the
Company, including, without limitation, the securities of the Companys Subsidiaries and any of the
assets owned by the Companys Subsidiaries.
(l)
Disability
shall mean the absence of the Executive from performance of
the Executives duties with the Company on a substantial basis for one hundred twenty (120)
calendar days as a result of incapacity due to mental or physical illness.
(m)
Employment Period
shall mean the period commencing on the Effective
Date and ending on the third anniversary of the Effective Date;
provided
,
however
,
that commencing on the date one year after the Effective Date, and on each annual anniversary of
such date (such date and each annual anniversary thereof shall be hereinafter referred to as the
Renewal Date
), unless previously terminated, the Employment Period shall be automatically
extended so as to terminate three (3) years after such Renewal Date, unless at least sixty (60)
days prior to the Renewal Date the Company shall give notice to the Executive that the Employment
Period shall not be so extended.
(n)
Entity
shall mean any corporation, partnership, association,
joint-stock company, limited liability company, trust, unincorporated organization or other
business entity.
3
(o)
ERP
shall mean the Weatherford International Ltd. Nonqualified
Executive Retirement Plan, as amended and restated effective December 31, 2008, as it may be
amended from time to time.
(p)
Exchange Act
shall mean the U.S. Securities Exchange Act of 1934, as
amended from time to time.
(q)
Good Reason
shall mean the occurrence of any of the following:
(i) the assignment to the Executive of any position, authority, duties or
responsibilities inconsistent with the Executives position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated by
Section
3(a)
, or any other action by the Company or any Subsidiary which results in a diminution in
such position, authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
(ii) any failure by the Company or any Subsidiary to comply with any of the
provisions of this Agreement (including, without limitation, its obligations under
Section
3(a)
), other than an isolated, insubstantial and inadvertent failure not occurring in bad faith
and which is remedied by the Company, or a Subsidiary, as appropriate, promptly after receipt of
notice thereof given by the Executive;
(iii) any failure by the Company or any Subsidiary to continue to provide the
Executive with benefits currently enjoyed by the Executive under any of the Companys or any
Subsidiarys compensation, bonus, retirement, pension, savings, life insurance, medical, health and
accident, or disability plans, or the taking of any other action by the Company which would
directly or indirectly reduce any of such benefits or deprive the Executive of any fringe benefits
or perquisites currently enjoyed by the Executive;
(iv) the Companys requiring the Executive to be based at any office or location
other than as provided in
Section 3(a)(i)
or the Companys requiring the Executive to
travel to a substantially greater extent than required immediately prior to the date hereof;
(v) any purported termination by the Company of the Executives employment
(including, without limitation, any secondment of the Executive without the Executives prior
express agreement in writing);
(vi) any failure by the Company to comply with and satisfy
Section 12(c
); or
(vii) the giving of notice to the Executive that the Employment Period shall not be
extended.
In the event of a Change of Control or other Corporate Transaction in which the Companys
registered shares may cease to be publicly traded, following the Change of Control or the
consummation of such other Corporate Transaction, Good Reason shall be deemed to exist upon the
occurrence of any of the events listed in clauses (i) through (vii) above and also in the event
Executive is assigned to any position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities that are (A) not at or with the
publicly-traded ultimate parent company of the successor to the Company
or the corporation or other Entity surviving or resulting from such Corporate Transaction or
(B) inconsistent with the Executives position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by
Section 3(a)
.
4
For purposes of this Agreement, any good faith determination of Good Reason made by the
Executive shall be conclusive.
(r)
IRS
shall mean the U.S. Internal Revenue Service.
(s)
Person
shall have the meaning given in Section 3(a)(9) of the Exchange
Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not
include (i) the Company or any of its Subsidiaries, (ii) a trustee or other fiduciary holding
securities under a Benefit Plan of the Company or any of its Affiliated companies, (iii) an
underwriter temporarily holding securities pursuant to an offering by the Company of such
securities, or (iv) a corporation or other Entity owned, directly or indirectly, by the
shareholders of the Company in the same proportions as their ownership of registered shares of the
Company.
(t)
Section 409A
means Section 409A of the Code and the final Department
of Treasury regulations issued thereunder.
(u)
Section 409A Amounts
means those amounts that are deferred
compensation subject to Section 409A.
(v)
Separation From Service
shall have the meaning ascribed to such term
in Section 409A.
(w)
Specified Employee
shall have the meaning ascribed to such term in
Section 409A.
(x)
SERP
shall mean the Weatherford International, Inc. Supplemental
Executive Retirement Plan effective January 1, 2010, as it may be amended from time to time.
(y)
Subsidiary
shall mean any majority-owned subsidiary of the Company or
any majority-owned subsidiary thereof, or any other Entity in which the Company owns, directly or
indirectly, a significant financial interest provided that the Chief Executive Officer of the
Company designates such Entity to be a Subsidiary for the purposes of this Agreement.
2.
Employment Period
. The Company hereby agrees that the Company will continue
the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Company
subject to the terms and conditions of this Agreement during the Employment Period. During the
Employment Period, the Executive, with his prior express agreement, may be seconded to the
employment of Weatherford U.S., L.P. (or such other Affiliated company as specifically agreed by
the Executive) (the
Seconded Affiliate Company
), but without prejudice to the Companys
obligations or the Executives rights under this Agreement. The Executive shall carry out his
duties as if they were duties to be performed on behalf of the Company. Each Seconded Affiliate
Company shall be subject to all of the obligations and agreements of the Company under this
Agreement and the Company shall be responsible for actions and inactions of the Seconded Affiliate
Company. Any breach or failure to abide by the terms and conditions of this Agreement by a
Seconded Affiliate Company shall be deemed to constitute a breach or failure to abide by the
Company. The Executive has the right, in his sole discretion, to revoke his agreement to be
seconded to the employment of any Seconded Affiliate Company at any time.
3.
Terms of Employment
.
(a) Position and Duties.
5
(i) During the Employment Period, (A) the Executives position with the Company
(including status, offices, titles, reporting requirements, authority, duties and responsibilities)
shall be as identified on the signature page hereto
,
(B) the Executives services shall be
performed at the Companys office identified on the signature page hereto (or other locations less
than thirty-five (35) miles from such location); and (C) the Executive will report directly to the
position identified on the signature page hereto
.
(ii) During the Employment Period, and excluding any periods of vacation and sick
leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and
time during normal business hours to the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to the Executive hereunder, to use the
Executives reasonable best efforts to perform faithfully and efficiently such responsibilities.
During the Employment Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill
speaking engagements or teach at educational institutions and (C) manage personal investments, so
long as such activities in clause (A), (B), and (C) together do not significantly interfere with
the performance of the Executives responsibilities as an employee of the Company in accordance
with this Agreement. It is expressly understood and agreed that to the extent that such activities
have been conducted by the Executive prior to the date hereof, the continued conduct of such
activities (or the conduct of activities similar in nature and scope thereto) subsequent to the
date hereof shall not thereafter be deemed to interfere with the performance of the Executives
responsibilities to the Company.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Executive shall receive an
annual base salary equal to the current base salary being received by the Executive (
Annual
Base Salary
), which shall be paid at a monthly rate. During the Employment Period, the Annual
Base Salary shall be reviewed no more than twelve (12) months after the last salary increase
awarded to the Executive prior to the date hereof and thereafter at least annually;
provided
,
however
, that a salary increase shall not necessarily be awarded as a
result of such review. Any increase in Annual Base Salary may not serve to limit or reduce any
other obligation to the Executive under this Agreement. Annual Base Salary shall not be reduced
after any such increase. The term Annual Base Salary as utilized in this Agreement shall refer
to Annual Base Salary as so increased.
(ii) Annual Bonus. The Executive shall be eligible for an Annual Bonus for each
fiscal year ending during the Employment Period on the same basis as other executive officers under
the Companys then-current executive officer annual incentive program. Each such Annual Bonus
shall be paid no later than two and a half (2
1
/
2
) months after the end of the fiscal year for which
the Annual Bonus is awarded.
(iii) Incentive, Savings and Retirement Plans. During the Employment Period, the
Executive shall be entitled to participate in all incentive, savings and retirement plans,
practices, policies and programs applicable generally to all executive officers of the Company and
its Affiliated companies, but in no event shall such plans, practices, policies and programs
provide the Executive with incentive opportunities (measured with respect to both regular and
special incentive opportunities, to the extent, if any, that such distinction is applicable),
savings opportunities and retirement benefit opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided by the Company and its Affiliated companies
for the Executive under such plans, practices, policies and programs as in effect on the date
hereof.
(iv) Welfare Benefit Plans. During the Employment Period, the Executive and/or the
Executives family, as the case may be, shall be eligible to participate in and shall receive all
benefits
6
under welfare benefit and retirement plans, practices, policies and programs provided by
the Company and its Affiliated companies (including, without limitation, medical, prescription,
dental, disability, salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to all executive officers
of the Company and its Affiliated companies, but in no event shall such plans, practices, policies
and programs provide the Executive with benefits which are less favorable, in the aggregate, than
the most favorable of those provided by the Company and its Affiliated companies for the Executive
under than such plans, practices, policies and programs of the Company and its Affiliated companies
in effect for the Executive on the date hereof.
(v) Fringe Benefits. During the Employment Period, the Executive shall be entitled
to (A) at Executives option, a monthly car allowance or use of an automobile, and (B) such other
fringe benefits (including, without limitation, payment of club dues, financial planning services,
cellular telephone, mobile email, annual physical examinations, payment of professional fees and
professional taxes and payment of related expenses, as appropriate) in accordance with the most
favorable plans, practices, programs and policies of the Company and its Affiliated companies in
effect for the Executive on the date hereof.
(vi) Expenses. During the Employment Period, the Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance
with the most favorable policies, practices and procedures of the Company and its Affiliated
companies in effect for the Executive on the date hereof.
(vii) Vacation. During the Employment Period, the Executive shall be entitled to at
least four (4) weeks paid vacation or such greater amount of paid vacation as may be applicable to
the executive officers of the Company and its Affiliated companies.
(viii) Deferred Compensation Plan. During the Employment Period, the Executive
shall be entitled to continue to participate in any deferred compensation or similar plans in which
executive officers of the Company and its Affiliated companies participate.
(c) Termination of Prior Agreements. The Executive acknowledges and agrees that
this Agreement is being executed in replacement of any and all employment agreements existing
between the Executive and the Company (including, without limitation, any agreement entered into
with Weatherford International Ltd., an exempted company incorporated with limited liability under
the laws of Bermuda, that was assumed by the Company), Weatherford International, Inc., a Delaware
corporation, or their Affiliated companies (the
Prior Agreements
). As a result, the
Executive and the Company agree that the Prior Agreements are hereby terminated and of no further
force and effect (other than provisions in the Prior Agreements expressly intended to survive
pursuant to their terms).
Specifically, the Executive agrees that any requirement in any Prior
Agreement that the Company or any Affiliated company enter into an employment or other agreement
with the Executive (or provide any benefits, including under retirement plans) meeting any minimum
standards by a certain date is satisfied by the execution and delivery of this Agreement (subject
to Section
13(g)
).
4.
Termination of Employment
.
(a) Death or Disability. The Executives employment shall terminate automatically
upon the Executives death during the Employment Period. If the Company determines in good faith
that the Disability of the Executive has occurred during the Employment Period, it may provide the
Executive with written notice in accordance with
Section 13(b)
of its intention to terminate the
Executives employment. In such event, the Executives employment with the Company shall terminate
effective thirty (30) days after receipt of such notice by the Executive (the Disability Effective
Date), provided
7
that within the thirty (30)-day period after such receipt, the Executive shall not
have returned to full-time performance of the Executives duties. In addition, if a physician
selected by the Executive determines that the Disability of the Executive has occurred, the
Executive (or his representative) may provide the Company with written notice in accordance with
Section 13(b) of the Executives intention to terminate his employment. In such event, the
Disability Effective Date shall be thirty (30) days after receipt of such notice by the Company.
(b) Cause. The Company may terminate the Executives employment during the
Employment Period for Cause.
(c) Good Reason. The Executives employment may be terminated by the Executive at
any time during the Employment Period for Good Reason.
(d) Notice of Termination. Any termination during the Employment Period by the
Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with
Section 13(b)
. For purposes
of this Agreement, a
Notice of Termination
means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to provide a basis for termination
of the Executives employment under the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies the termination date
(which date, in the case of a notice by the Company, shall be not more than thirty (30) days after
the giving of such notice). The failure by the Executive or the Company to set forth in the Notice
of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause
shall not waive any right of the Executive or the Company, respectively, from asserting such fact
or circumstance in enforcing the Executives or the Companys rights hereunder.
(e) Date of Termination.
Date of Termination
shall mean:
(i) if the Executives employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be;
(ii) if the Executives employment is terminated by the Company other than for
Cause, the Date of Termination shall be the date on which the Executive receives notice of such
termination; and
(iii) if the Executives employment is terminated by reason of death or Disability,
the Date of Termination shall be the date of death of the Executive or the Disability Effective
Date, as the case may be.
5.
Obligations of the Company Upon Termination
.
(a) Benefit Obligation and Accrued Obligation Defined. For purposes of this
Agreement,
Benefit Obligation
shall mean all benefits to which the Executive (or his
designated beneficiary or legal representative, as applicable) is entitled or vested (or becomes
entitled or vested as a result of termination) under the terms of all employee benefit and
compensation plans, agreements, arrangements, programs, policies, practices, contracts or agreement
of the Company and its Affiliated companies (collectively,
Benefit Plans
) in which the Executive is a participant as of the Date of Termination
and to the extent not theretofore paid or provided.
Accrued Obligation
means the sum of
(i) the Executives Annual Base Salary through the Date of Termination for periods through but not
following his Separation From
8
Service and (ii) any accrued vacation pay earned by the Executive, in
each case, to the extent not theretofore paid.
(b) Death, Disability, Good Reason or Other than For Cause. If, during the
Employment Period, the Executives employment is terminated by reason of the Executives death or
Disability, by the Company for any reason other than for Cause or by the Executive for Good Reason:
(i) The Company shall pay (or cause to be paid) to the Executive (or Executives
heirs, beneficiaries or representatives as applicable), (A) in a lump sum in cash (I) the Accrued
Obligation within thirty (30) days after the Date of Termination and (II) the Benefit Obligation at
the times specified in and in accordance with the terms of the applicable Benefit Plans, and (B) at
the times specified in clause (ix), the following amounts:
(I) an amount equal to the Executives Annual Base Salary through the Date of Termination for
periods following his Separation From Service to the extent not theretofore paid;
(II) an amount equal to the product of (i) the higher of (x) the highest Annual Bonus Amount
for the preceding five (5) calendar years and (y) the Annual Bonus Amount that would be payable in
respect of the current fiscal year (and annualized for any fiscal year consisting of less than
twelve (12) months) (such higher amount being referred to as the
Highest Annual Bonus
)
and (ii) a fraction, the numerator of which is the number of days in the current fiscal year
through the Date of Termination, and the denominator of which is three hundred sixty-five (365);
(III) an amount equal to the Applicable Multiple times the sum of (i) the highest Annual Base
Salary received by the Executive in the last five (5) years ended prior to the Termination Date and
(ii) the Highest Annual Bonus;
(IV) an amount equal to the Applicable Multiple times the sum of (i) the total of the employer
basic and matching contributions credited to the Executive under the Companys 401(k) Savings Plan
(the
401(k) Plan
) during the twelve (12)-month period immediately preceding the month of
the Executives Date of Termination, and (ii) the amount that would have been credited and
contributed to the Executive and his accounts under all other deferred compensation plans
(excluding amounts payable under the ERP and the SERP, if any) using the amounts specified in
clauses (i) and (ii) of
Section 5(b)(i)(III
), such total amount to be grossed up so that
the amount the Executive actually receives after payment of any federal or state taxes payable
thereon equals the amount first described above; and
(V) an amount equal to the total value of all fringe benefits received by the Executive on an
annualized basis multiplied by the Applicable Multiple.
(ii) For a period of equal to one year multiplied by the Applicable Multiple from
the Executives Date of Termination, or such longer period as may be provided by the terms of the
appropriate plan, program, practice or policy, the Company shall continue benefits to the Executive
and the Executives family equal to those which would have been provided to them in accordance with
the plans, programs, practices and policies described in
Section 3(b)(iv
) if the
Executives employment had not been terminated;
provided
,
however
, that with
respect to any of such plans, programs, practices or policies requiring an employee contribution,
the Executive (or Executives heirs or beneficiaries as applicable) shall continue to pay the
monthly employee contribution for same, and provided further, that if the Executive becomes re-employed by another employer and is eligible to receive medical or
other welfare benefits under another employer provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such other plan during such applicable
period of
9
eligibility. If any of the dental, accident, health insurance or other benefits specified
in this
Section 5(b)(ii
) are taxable to the Executive and are not exempt from Section 409A,
the following provisions shall apply to the reimbursement or provision of such benefits. The
Executive shall be eligible for reimbursement for covered welfare expenses, or for the provision of
such benefits on an in-kind basis, during the period commencing on Executives Date of Termination
and ending on the third anniversary of such date. The amount of such welfare benefit expenses
eligible for reimbursement or the in-kind benefits provided under this
Section 5(b)(ii
),
during the Executives taxable year will not affect the expenses eligible for reimbursement, or the
benefits to be provided, in any other taxable year (with the exception of applicable lifetime
maximums applicable to medical expenses or medical benefits described in Section 105(b) of the
Code). The Executives right to reimbursement or direct provision of benefits under this
Section 5(b)(ii
) is not subject to liquidation or exchange for another benefit. To the
extent that the benefits provided to the Executive pursuant to this
Section 5(b)(ii
) are
taxable to the Executive and are not otherwise exempt from Section 409A, any reimbursement amounts
to which the Executive would otherwise be entitled under this
Section 5(b)(ii
) during the
first six (6) months following the date of the Executives Separation From Service shall be
accumulated and paid to the Executive on the date that is six (6) months following the date of his
Separation From Service. All reimbursements by the Company under this
Section 5(b)(ii
)
shall be paid no later than the earlier of (i) the time periods described above and (ii) the last
day of the Executives taxable year following the taxable year in which the expense was incurred by
the Executive.
(iii) All benefits and amounts under the Companys deferred compensation plan and
all other Benefit Plans (except as specifically provided for in
Section 6(b
)), not already
vested shall become immediately one hundred percent (100%) vested as of the Date of Termination.
All options to acquire registered shares of the Company, all restricted registered shares of the
Company, all restricted stock units, and all share appreciation rights the value of which is
determined by reference to or based upon the value of registered shares of the Company, held by the
Executive under any plan of the Company or its Affiliated companies shall become immediately
vested, exercisable and nonforfeitable. The effect, if any, of a Change of Control on any other
equity incentives and other awards the value of which is determined by reference to or based upon
the value of registered shares of the Company shall be determined in accordance with the terms of
the applicable award agreement.
(iv) The Company shall, at its sole expense as incurred, provide the Executive with
reasonable outplacement services from a provider selected by the Executive in his sole discretion.
The Company shall directly pay the provider the fees for such outplacement services. The period
during which such outplacement services shall be provided to the Executive at the expense of the
Company shall not extend beyond the last day of the second taxable year of the Executive following
the taxable year of the Executive during which he incurs a Separation From Service.
(v) At the time specified in clause (ix) below, ownership of all country club
memberships, luncheon clubs and other memberships which the Company was providing for the
Executives or his familys use prior to the time that the Notice of Termination is given shall be
transferred and assigned to the Executive at no cost to the Executive (other than ordinary income
taxes owed), the cost of transfer, if any, to be borne by the Company.
(vi) At the time specified in clause (ix) below, the Company shall either transfer
to the Executive ownership and title to the Executives company car at no cost (other than ordinary
income taxes owed by the Executive) to the Executive or, if the Executive receives a monthly car
allowance in lieu of a Company car, pay the Executive a lump sum in cash equal to the Executives annual
car allowance multiplied by the Applicable Multiple
.
10
(vii) If the Executives employment is terminated by reason of the Executives
death, the Benefit Obligation shall also include, without limitation, and the Executives estate
and/or beneficiaries shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and its Affiliated companies to the estates and beneficiaries of
the executive officers of the Company and such Affiliated companies under such plans, programs,
practices and policies relating to death benefits, if any, in effect on the date hereof or, if more
favorable, those in effect on the date of the Executives death.
(viii) If the Executives employment is terminated by reason of the Executives
Disability, the Benefit Obligation shall also include, without limitation, and the Executive shall
be entitled after the Disability Effective Date to receive, disability and other benefits at least
equal to the most favorable benefits generally provided by the Company and its Affiliated companies
to the Executives disabled peer executive officers and/or their families in accordance with such
plans, programs, practices and policies relating to disability, if any, in effect generally on the
date hereof or, if more favorable, those in effect at the time of the Disability.
(ix) The Company shall pay or provide to the Executive the amounts or benefits
specified in
Section 5(b)(i)
and
Sections 5(b)(v
) and
5(b)(vi
) thirty (30)
days following the date of the Executives Separation From Service if he is not a Specified
Employee on the date of his Separation From Service or on the date that is six (6) months following
the date of his Separation From Service if he is a Specified Employee.
(x) If the Executive is a Specified Employee, on the date that is six (6) months
following the Executives Separation From Service, the Company shall pay to the Executive, in
addition to the amounts reflected in clause (ix), an amount equal to the interest that would be
earned on the amounts specified in
Section 5(b)(i)
and, to the extent subject to a
mandatory six-month delay in payment, all amounts payable under the ERP and the SERP, if any, for
the period commencing on the date of the Executives Separation From Service until the date of
payment of such amounts, calculated using an interest rate of five percent (5%) per annum (the
Interest Amount
).
(c) Cause. If the Executives employment is terminated for Cause during and prior
to the expiration of the Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than the obligation to pay to the Executive (i) (A) the Accrued
Obligation and (B) the Benefit Obligation in accordance with the terms of the applicable Benefit
Plans, and (ii) his Annual Base Salary through the Date of Termination for periods following his
Separation From Service on the date that is thirty (30) days following the date of the Executives
Separation From Service if he is not a Specified Employee or on the date that is six (6) months
following the date of his Separation From Service if he is a Specified Employee.
(d) Termination by Executive Other Than for Good Reason. If the Executive
voluntarily terminates his employment during and prior to the expiration of the Employment Period
for any reason other than for Good Reason, the Executives employment shall terminate without
further obligations to the Executive, other than the obligation to pay to the Executive (i) the
Accrued Obligation, (ii) the Benefit Obligation, (iii) his Annual Base Salary through the Date of
Termination for periods following his Separation From Service, and (iv) the rights provided in
Section 6
. The Accrued Obligation shall be paid to the Executive in a lump sum in cash
within thirty (30) days after the Date of Termination and the Benefit Obligation shall be paid in
accordance with the terms of the applicable Benefit Plans. The Company shall pay to the Executive the amount specified in clause (iii) on the
date that is thirty (30) days following the date of the Executives Separation From Service if he is not a
Specified Employee or on the
11
date that is six (6) months following the date of his Separation From
Service if he is a Specified Employee.
6.
Other Rights
.
(a) Except as provided herein, nothing in this Agreement shall prevent or limit the
Executives continuing or future participation in any plan, program, policy or practice provided by
the Company or any of its Affiliated companies and for which the Executive may qualify, nor shall
anything herein limit or otherwise affect such rights as the Executive may have under any plan,
contract or agreement with the Company or any of its Affiliated companies. Except as otherwise
expressly provided herein, amounts which are vested benefits, which vest according to the terms of
this Agreement or which the Executive is otherwise entitled to receive under any Benefit Plans or
any other plan, policy, practice or program of or any contract or agreement with the Company or any
of its Affiliated companies prior to, at or subsequent to the Date of Termination shall be payable
in accordance with such plan, policy, practice, program, contract or agreement. If any severance
payments are required to be paid to the Executive in conjunction with severance of employment under
federal, state or local law, the severance payments paid to the Executive under this Agreement will
be deemed to be in satisfaction of any such statutorily required benefit obligations to the extent
that doing so would not result in an acceleration of payment of nonqualified deferred compensation
that is prohibited under Section 409A.
(b) Solely with respect to the ERP and the SERP, if the Executives employment is
terminated for any reason whatsoever, with or without Cause, and no Change of Control has occurred
or is pending, any ERP or SERP benefits payable shall only be those that are payable, if any, under
the terms of the ERP or SERP as of the Date of Termination.
7.
Full Settlement
.
(a) No Rights of Offset. The Companys obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may
have against the Executive or others.
(b) No Mitigation Required. The Company agrees that, if the Executives employment
with the Company terminates, the Executive is not required to seek other employment or to attempt
in any way to reduce any amounts payable to the Executive by the Company pursuant to this
Agreement. Further, except as specified in
Section 5(b)(ii
), the amount of any payment or
benefit provided for in this Agreement shall not be reduced by any compensation earned by the
Executive as the result of employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by the Executive to the Company, or otherwise.
(c) Legal Fees. The Company agrees to pay promptly as incurred, to the full extent
permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result
of any contest (regardless of the outcome thereof) by the Company or the Executive of the validity
or enforceability of, or liability under, any provision of this Agreement or any guarantee of
performance thereto (including as a result of any contest by the Executive about the amount of any
payment pursuant to this Agreement). The legal fees or expenses that are subject to reimbursement
pursuant to this
Section 7(c
) shall not be limited as a result of when the fees or expenses
are incurred. The amount of legal fees or expenses that is eligible for reimbursement pursuant to
this
Section 7(c
) during a given taxable year of the Executive shall not affect the amount
of expenses eligible for reimbursement in any other taxable year of
the Executive. The right to reimbursement pursuant to this
Section 7(c
) is not subject
to liquidation or exchange for another benefit. Any amount to which the Executive is entitled to
reimbursement under this
12
Section 7(c
) during the first six (6) months following the date of
the Executives Separation From Service shall be accumulated and paid to the Executive on the date
that is six (6) months following the date of his Separation From Service. All reimbursements by the
Company under this
Section 7(c
) shall be paid no later than the earlier of (i) the time
periods described above and (ii) the last day of the Executives taxable year next following the
taxable year in which the expense was incurred by the Executive.
8.
Certain Additional Payments by the Company
.
(a) Anything in this Agreement to the contrary notwithstanding, if it shall be
determined that any payment or distribution by the Company or any of its Affiliated companies to or
for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement, any other plan, agreement or contract or otherwise, but determined
without regard to any additional payments required under this
Section 8
) (a
Payment
) would be subject to any additional tax or excise tax imposed by Sections 409A,
457A or 4999 of the Code (and any successor provisions or sections to Sections 409A, 457A and 4999)
or any interest or penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter collectively referred to
as the
Excise Tax
), then the Executive shall be entitled to promptly receive from the
Company an additional payment (a
Gross-Up Payment
) in an amount such that after payment
by the Executive of all taxes (including any interest or penalties imposed with respect to such
taxes), including without limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Any Gross Up Payment
shall be made by the Company at least ten (10) days prior to the date that the Executive is
required to remit to the relevant taxing authority any federal, state and local taxes imposed upon
the Executive, including the amount of additional taxes imposed upon the Executive due to the
Companys payment of the initial taxes on such amounts. Notwithstanding any provision of this
Agreement to the contrary, any amounts to which the Executive would otherwise be entitled under
this
Section 8(a
) during the first six (6) months following the date of the Executives
Separation From Service shall be accumulated and paid to the Executive on the date that is six (6)
months following the date of his Separation From Service. All reimbursements by the Company under
this
Section 8(a
) be paid no later than the earlier of (i) the time periods described above
and (ii) the last day of the Executives taxable year next following the taxable year in which the
expense was incurred by the Executive.
(b) Subject to the provisions of
Section 8(c
), all determinations required
to be made under this
Section 8
, including whether and when a Gross-Up Payment is required
and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such
determination shall be made by PricewaterhouseCoopers or, as provided below, such other certified
public accounting firm as may be designated by the Executive (the
Accounting Firm
) which
shall provide detailed supporting calculations both to the Company and the Executive within fifteen
(15) business days after the receipt of notice from the Executive that there has been a Payment, or
such earlier time as is requested by the Company. In the event that the Accounting Firm is serving
as accountant or auditor for the individual, Entity or group effecting the Change of Control, the
Executive shall appoint another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the Accounting Firm
hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this
Section 8
, shall be paid by the Company to
the Executive within five (5) days after the receipt of the Accounting Firms determination. Any
determination by the Accounting Firm, absent manifest error, shall be binding upon the Company and
the Executive, subject to the last sentence of
Section 8(a
), and in no event later than the
payment deadline specified in
Section 8(a
). As a result of the uncertainty in the
application of section 4999 of the
Code at the time of the initial determination by the Accounting Firm hereunder, it is possible
that Gross-Up Payments which will not have been made by the Company should have been made
(
Underpayment
),
13
consistent with the calculations required to be made hereunder. In the
event that the Company exhausts its remedies pursuant to
Section 8(c
) and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by
the Company to or for the benefit of the Executive, subject to the last sentence of
Section
8(a
), and in no event later than the payment deadline specified in
Section 8(a
).
(c) The Executive shall notify the Company in writing of any claim by the IRS that,
if successful, would require the payment by the Company of the Gross-Up Payment (or an additional
Gross-Up Payment) in the event the IRS seeks higher payment. Such notification shall be given as
soon as practicable, but no later than ten (10) business days after the Executive is informed in
writing of such claim, and shall apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. The Executive shall not pay such claim prior to the
expiration of the thirty (30)-day period following the date on which he gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the Company relating to
such claim;
(ii) take such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including without limitation, accepting legal
representation with respect to such claim by an attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order to effectively contest such
claim; and
(iv) permit the Company to participate in any proceedings relating to such claims;
provided
,
however
, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred at any time during the period that
ends ten (10) years following the lifetime of the Executive in connection with such proceedings and
shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the foregoing provisions of
this
Section 8(c
), the Company shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of such claim and may,
at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to
determination before any administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine;
provided
,
however
, that if
the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance
the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance or with respect to
any imputed income with respect to such advance; and further provided that any extension of the
statute of limitations relating to payment of taxes for the taxable year of the Executive with
respect to which such contested amount is claimed to be due is limited solely to such contested
amount. The Company shall not direct the Executive to pay such a claim and sue for a refund if, due
to the prohibitions of section 402 of the Sarbanes-Oxley Act of 2002, the
Company may not advance to the Executive the amount necessary to pay such claim. All such
costs and expenses shall be made by the Company at least ten (10) days prior to the date that the
Executive is
14
required to pay or incur such costs and expenses. The costs and expenses that are
subject to be paid by the Company pursuant to this
Section 8(c)
shall not be limited as a
result of when the costs or expenses are incurred. The amounts of costs or expenses that are
eligible for payment pursuant to this
Section 8(c)(iv)
during a given taxable year of the
Executive shall not affect the amount of costs or expenses eligible for payment in any other
taxable year of the Executive. The right to payment of costs and expenses pursuant to this
Section 8(c)(iv)
is not subject to liquidation or exchange for another benefit.
Notwithstanding any provision of this Agreement to the contrary, any amounts to which the Executive
would otherwise be entitled under this
Section 8(c)(iv)
during the first six (6) months
following the date of the Executives Separation From Service shall be accumulated and paid to the
Executive on the date that is six (6) months following the date of his Separation From Service. All
reimbursements by the Company under this
Section 8(c)(iv)
shall be paid no later than the
earlier of (i) the time periods described above and (ii) the last day of the Executives taxable
year next following the taxable year in which the expense was incurred by the Executive.
(d) If, after the receipt by the Executive of an amount advanced by the Company
pursuant to
Section 8(c)
, the Executive becomes entitled to receive any refund with respect
to such claim, the Executive shall (subject to the Companys complying with the requirements of
Section 8(c)
) promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to
Section 8(c)
, a determination is
made that the Executive shall not be entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of thirty (30) days after such determination, then such advance shall not
be required to be repaid.
(e) Any provision in this Agreement or any other plan or agreement to the contrary
notwithstanding, if the Company is required to pay a Gross-Up Payment pursuant to the provisions of
this Agreement and pursuant to the provisions of another plan or agreement, then the Company shall
pay the total of the amounts determined pursuant to this Agreement and the provisions of such other
plan or agreement.
9.
Confidential Information
. The Executive shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential information, knowledge or data relating
to the Company or any of its Affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executives employment by the Company or any of its
Affiliated companies, provided that it shall not apply to information which is or shall become
public knowledge (other than by acts by the Executive or representatives of the Executive in
violation of this Agreement), information that is developed by the Executive independently of such
information, or knowledge or data or information that is disclosed to the Executive by a third
party under no obligation of confidentiality to the Company. After termination of the Executives
employment with the Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those designated by it. In no
event shall an asserted violation of the provision of this
Section 9
constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under this Agreement.
10.
Disputed Payments And Failures To Pay
. If the Company fails to make a payment
under this Agreement in whole or in part as of the payment date specified in this Agreement, either
intentionally or unintentionally, other than with the consent of the Executive, the Company shall
owe the Executive interest on the delayed payment at the applicable Federal rate provided for in
section 7872(f)(2)(A) of the Code if the Executive (i) accepts the portion (if any) of the payment
that the Company is willing to make
(unless such acceptance will result in a relinquishment of the claim to all or part of the
remaining amount) and (ii) makes prompt and reasonable good faith efforts to collect the remaining
portion of the payment.
15
Any such interest payments shall become due and payable effective as of the
applicable payment date(s) specified in
Section 5
with respect to the delinquent payment(s)
due under
Section 5
.
11.
Funding.
The Executive shall have no right, title, or interest whatsoever in
or to any assets of the Company or any investments which the Company may make to aid it in meeting
its obligations under this Agreement. The Executives right to receive payments under this
Agreement shall be no greater than the right of an unsecured general creditor of the Company.
Immediately prior to a Change in Control, the Company shall create an irrevocable grantor trust
(the
Rabbi Trust
) which shall be subject to the claims of creditors of the Company. In
the event that the Executive is a Specified Employee at the time he incurs a Separation From
Service or at the time the Company determines that it is reasonably likely that the Executive will
incur a Separation From Service in connection with a Change in Control, then immediately upon the
Executives Separation From Service or, if earlier, the date on which the Company makes a
determination that the Executive is reasonably likely to incur a Separation From Services in
connection with a Change in Control, the Company shall transfer to the Rabbi Trust cash sufficient
(on an undiscounted basis) to pay the cash amounts specified in
Section 5(b)(i)
, the
estimated amount of the Gross-Up Payment to be made under
Section 6
and the Interest
Amount. The cash amounts specified in
Section 5(b)(i)
, the Gross-Up Payment and the
Interest Amount shall be paid from the Rabbi Trust on the dates specified in
Sections 5
and
8
herein, provided that the Company shall remain liable to pay any all amounts which for
any reason are not paid from the Rabbi Trust. The trustee of the Rabbi Trust shall be a bank or
trust company selected by the Company and approved by the Executive (in his sole discretion) prior
to the Change in Control.
12.
Successors
.
(a) This Agreement is personal to the Executive and shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Executives personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and legatees.
(b) This Agreement shall inure to the benefit of and be binding upon the Company and
its successors and assigns.
(c) In addition to any obligations imposed by law upon any successor to the Company,
the Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation, amalgamation, scheme of arrangement, exchange offer, operation of law or otherwise
(including any purchase, merger, amalgamation, Corporate Transaction or other transaction involving
the Company or any Subsidiary or Affiliate of the Company)), to all or substantially all of the
Companys business and/or Companys Assets to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to perform it if no
such succession had taken place. Failure of the Company to obtain such assumption and agreement at
or prior to the effectiveness of any such succession shall be a breach of this Agreement and shall
entitle the Executive to compensation from the Company in the same amount and on the same terms as
the Executive would be entitled to hereunder if the Executive were to terminate the Executives
employment for Good Reason after a Change of Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement,
Company
shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as provided above.
16
13.
Miscellaneous
.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE DOMICILE OF THE EXECUTIVE, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS. The captions
of this Agreement are not part of the provisions hereof and shall have no force or effect. All
words used in this Agreement will be construed to be of such gender or number as the circumstances
require. This Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed: if to the Executive, to the address set forth on the
signature page hereto; and, if to the Company, to: Weatherford International Ltd., Rue
Jean-François Bartholoni 4, 1204 Geneva, Switzerland, Attention: Vice President Legal; or to
such other address as either party shall have furnished to the other in writing in accordance
herewith. Notices and communications shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable under this Agreement such
Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
(e) The Executives or the Companys failure to insist upon strict compliance with
any provision of this Agreement or the failure to assert any right to the Executive or the Company
may have hereunder, including without limitation, the right of the Executive to terminate
employment for Good Reason shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement.
(f) This Agreement constitutes the entire agreement and understanding between the
parties relating to the subject matter hereof and supersedes all prior agreements between the
Company, any of its Affiliates and the Executive relating to the subject matter hereof, including,
without limitation, the Prior Agreements. In the event of any conflict between this Agreement and
any other contract, plan, arrangement or understanding between the Executive and the Company (or
any Affiliate of the Company), this Agreement shall control.
(g) By entering into this Agreement, it is the Companys intent to fulfill its
obligation to the Executive to agree, execute and enter into an agreement with the Executive prior
to the termination or expiration of the Executives current employment agreements with the Company
and Weatherford International, Inc., a Delaware corporation, having the same terms and conditions
as existed in such agreements prior to December 30, 2008, and incorporating such terms and
conditions that are more favorable to the Executive from all agreements existing on January 1,
2009, and the Executive is entering into this Agreement in reliance thereon. In furtherance of the
foregoing, during the 90-day period from the Effective Date either party may propose, and the other
party shall agree to, any reasonable amendments to this Agreement for the purpose of clarifying or
revising any provision(s) herein as may be appropriate to implement the intent expressed in this
clause (g). Failure or refusal of the Company to enter into any reasonable amendment proposed
under this clause (g) by the end of such 90-day period (or, if later, within 10 days
following the Companys receipt of written notice requesting such reasonable amendment)
shall constitute Good Reason.
17
(h) If the Executive accepts in writing an international assignment to Geneva,
Switzerland, then (i) the office referenced in
Section 3(a)(i)(B)
of this Agreement shall
be the Companys executive office in Geneva, Switzerland, and (ii) the provisions of this Agreement
will be applied, to the fullest extent possible, in accordance with the employment laws of
Switzerland, and nothing herein is intended to reduce or diminish the protections afforded by such
laws.
(Remainder of page intentionally left blank)
18
IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to
the authorization from the Board or relevant committee thereof, the Company has caused these
presents to be executed in its name and on its behalf, all as of the day and year set forth below.
Date: December
, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
[Executive]
|
Applicable Multiple:
[two (2) / three (3)]
|
|
|
|
|
|
|
|
|
|
|
|
Position:
|
|
|
Weatherford International Ltd.
,
|
|
|
|
a Swiss joint-stock corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reporting to:
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bernard J. Duroc-Danner
|
|
|
|
|
|
Title: Chairman and CEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Solely for purposes of acknowledging the Prior Agreements being
|
Primary office location:
|
|
|
superseded by this Agreement and the termination of the Prior
|
|
|
|
Agreements:
|
|
|
|
|
|
|
|
|
|
Weatherford International Ltd.
,
|
|
|
|
|
|
|
|
|
|
a Bermuda exempted company
|
Address for notices to Executive:
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
Name: Bernard J. Duroc-Danner
|
|
|
|
|
|
|
|
|
|
|
|
Title: Chairman and CEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weatherford International, Inc.
,
a Delaware corporation
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
Name: Bernard J. Duroc-Danner
|
|
|
|
|
|
Title: Chairman and CEO
|
19
Exhibit 10.2
WEATHERFORD INTERNATIONAL LTD.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(Effective January 1, 2010)
1.
Establishment and Purpose of Plan
. Weatherford International Ltd. establishes the
Weatherford International Ltd. Supplemental Executive Retirement Plan (the Plan) effective as of
January 1, 2010, in recognition of the valuable services heretofore performed for it by Eligible
Employees and to encourage their continued employment.
2.
Definition of Terms
. The following words and phrases when used herein, unless the
context clearly requires otherwise, shall have the following respective meanings:
(a)
Beneficiary
:
The person or persons who may become entitled to a benefit
hereunder in the case of a Participants death in accordance with the Designation of Beneficiary
Form last received by the Company or Subsidiary from the Participant prior to his or her death.
(b)
Board
:
The Board of Directors of the Company.
(c)
Cause
:
Shall mean:
(i) the willful and continued failure of the Participant to substantially perform the
Participants duties with the Company or a Subsidiary (other than any such failure resulting from
incapacity due to physical or mental illness or anticipated failure after the issuance of a notice
of termination for Good Reason by the Participant), after a written demand for substantial
performance is delivered to the Participant by the Board which specifically identifies the manner
in which the Participant has not substantially performed the Participants duties, or
(ii) the willful engaging by the Participant in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Company or a Subsidiary.
No act, or failure to act, on the part of the Participant shall be considered willful
unless it is done, or omitted to be done, by the Participant in bad faith or without reasonable
belief that the Participants action or omission was in the best interests of the Company or a
Subsidiary. Any act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the CEO or of a more senior officer of the Company
or based upon the advice of counsel for the Company (which may be the General Counsel or other
counsel employed by the Company or its subsidiaries) shall be conclusively presumed to be done, or
omitted to be done, by the Participant in good faith and in the best interests of the Company or a
Subsidiary. The termination of employment of the Participant shall not be deemed to be for Cause
unless and until there shall have been delivered to the Participant a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters of the entire membership of the
Board at a meeting of the Board called and held for such purpose (after reasonable notice is
provided to the Participant, and the Participant is given an opportunity, together with counsel, to
be heard before the Board), finding that, in the good faith opinion of the Board, the Participant
is guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the
particulars thereof in detail.
(d)
CEO
:
The Chief Executive Officer of the Company.
(e)
Change of Control
:
Shall be deemed to have occurred if any event set forth
in any one of the following paragraphs shall have occurred or is pending:
(i) any Person is or becomes the Beneficial Owner (as defined in Rule 13d-3 under the U.S.
Securities Exchange Act of 1934, as amended from time to time (Exchange Act)), directly or
indirectly, of 20 percent or more of either (A) the then outstanding common shares of the Company
(the Outstanding Company Common Shares) or (B) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of directors (the
Outstanding Company Voting Securities), excluding any Person who becomes such a Beneficial Owner
in connection with a transaction that complies with clauses (A), (B) and (C) of paragraph (iii)
below;
(ii) individuals, who, as of the date hereof, constitute the Board (the Incumbent Board)
cease for any reason to constitute at least two-thirds of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or nomination for
election by the Companys shareholders, was approved by a vote of at least two-thirds of the
Incumbent Board shall be considered as though such individual was a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election or removal of
directors or any other actual or threatened solicitation of proxies or consents by or on behalf of
a Person other than the Board; or
(iii) the consummation of a Corporate Transaction, unless, following such Corporate
Transaction or series of related Corporate Transactions, as the case may be, (A) all of the
individuals and entities (which, for purposes of the Plan, shall include, without limitation, any
corporation, partnership, association, joint-stock company, limited liability company, trust,
unincorporated organization or other business entity) who were the beneficial owners, respectively,
of the Outstanding Company Common Shares and Outstanding Company Voting Securities immediately
prior to such Corporate Transaction beneficially own, directly or indirectly, more than 66 2/3
percent of, respectively, the then outstanding common shares and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of directors (or
other governing body), as the case may be, of the entity resulting from such Corporate Transaction
(including, without limitation, an entity which as a result of such transaction owns the Company or
all or substantially all of the Companys Assets either directly or through one or more
subsidiaries or entities) in substantially the same proportions as their ownership, immediately
prior to such Corporate Transaction, of the Outstanding Company Common Shares and the Outstanding
Company Voting Securities, as the case may be, (B) no Person (excluding any entity resulting from
such Corporate Transaction or any employee benefit plan (or related trust) of the Company or such
entity resulting from such Corporate Transaction) beneficially owns, directly or indirectly, 20
percent or more of, respectively, the then outstanding shares of common stock of the entity
resulting from such Corporate Transaction or the combined voting power of the then outstanding
voting securities of such entity except to the extent that such ownership existed prior to the
Corporate Transaction and (C) at least two-thirds of the members of the board of directors or other
governing body of the entity resulting from such Corporate Transaction were members of the
Incumbent Board at the time of the approval of such Corporate Transaction; or
(iv) approval or adoption by the Board or the shareholders of the Company of a plan or
proposal which could result directly or indirectly in the liquidation, transfer, sale or other
disposal of all or substantially all of the Companys Assets or the dissolution of the Company.
(f)
Code
:
The U.S. Internal Revenue Code of 1986, as amended.
(g)
Company
:
Weatherford International Ltd., a Swiss joint-stock corporation
registered in Switzerland, canton of Zug, and its Successors (as defined in Section 19).
2
(h)
Companys Assets
:
Assets (of any kind) owned by the Company, including, without
limitation, any securities of the Companys Subsidiaries and any of the assets owned by the
Companys Subsidiaries.
(i)
Compensation
:
The Participants highest annual base salary paid for personal
services rendered to the Company or a Subsidiary in the last five-year period ending on the
applicable date, and shall specifically exclude all incentive compensation or bonuses paid or
payable to such Participant. However, for purposes of the Plan, for any Eligible Employee who was
also a participant in the ERP before February 6, 2008, Compensation shall mean the sum of (i) the
Participants highest annual base salary paid for personal services rendered to the Company or a
Subsidiary in the last five-year period ending on the applicable date and increased for any amounts
that the Eligible Employee could have received in cash in lieu of deferrals made pursuant to a cash
or deferred arrangement or a cafeteria plan described in Section 125 of the Code, plus (ii) the
target bonus amount potentially payable to a Participant under the Companys management incentive
plan for such year or, if greater, the highest bonus (whether in cash or securities of the Company)
earned by or paid or granted to the Participant during any one of the last five calendar years
ended prior to the applicable date.
(j)
Corporate Transaction
:
A reorganization, merger, amalgamation, scheme of
arrangement, exchange offer, consolidation or similar transaction of the Company or any of its
subsidiaries or the sale, transfer or other disposition of all or substantially all of the
Companys Assets.
(k)
Disability
:
The absence of the Participant from performance of the participants
duties with the Company on a substantial basis for 120 calendar days as a result of incapacity due
to mental or physical illness.
(l)
Early Retirement Date
:
The first day of the month coinciding with or next
following the date on which the Participant retires from employment by the Company or a Subsidiary
on or after attainment of age 55 and having at least 10 Years of Service.
(m)
Effective Date
:
January 1, 2010.
(n)
Eligible Employee
:
An individual who (i) is a member of a select group of
management of the Company or a Subsidiary and (ii) is selected for participation in the Plan by the
CEO.
(o)
Entity
means any corporation, partnership, association, joint-stock company,
limited liability company, trust, unincorporated organization or other business entity.
(p)
ERISA
means the U.S. Employee Retirement Income Security Act of 1974, as amended.
(q)
ERP
means the Weatherford International Ltd. Nonqualified Executive Retirement
Plan, as amended and restated effective December 31, 2008.
(r)
Good Reason
:
The occurrence of any of the following:
(i) the assignment to the Participant of any position, authority, duties or responsibilities
inconsistent with the Participants position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by any employment agreement
between the Company or any Subsidiary and the Participant or as in effect prior to the assignment,
or any other action by the Company or a Subsidiary which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not
3
taken in bad faith and which is remedied by the Company or a Subsidiary
promptly after receipt of notice thereof given by the Participant;
(ii) any failure by the Company or a Subsidiary to comply with any of the provisions of the
Plan (including, without limitation, its obligations under any employment agreements between the
Company or any Subsidiary and the Participant), other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the Company or a Subsidiary
promptly after receipt of notice thereof given by the Participant;
(iii) any failure by the Company or any Subsidiary to continue to provide the Participant with
benefits currently enjoyed by the Participant under any of the Companys compensation, bonus,
retirement, pension, savings, life insurance, medical, health and accident, or disability plans, or
the taking of any other action by the Company or a Subsidiary which would directly or indirectly
reduce any of such benefits or deprive the Participant of any fringe benefits or perquisites
currently enjoyed by the Participant;
(iv) the Companys or a Subsidiarys requiring the Participant to be based at any office or
location other than as provided in by any employment agreement between the Company or a Subsidiary
and the Participant or the Companys or a Subsidiarys requiring the Participant to travel to a
substantially greater extent than required immediately prior to the date hereof;
(v) any purported termination by the Company or a Subsidiary of the Participants employment
(including, without limitation, any secondment of the Participant to a Subsidiary without the
Participants prior express agreement in writing or as otherwise permitted under an employment
agreement);
(vi) any failure by the Company to comply with and satisfy Section 17 of the Plan; or
(vii) in connection with, as a result of or following a Change of Control, the giving of
notice to the Participant that his or her employment agreement with the Company or any Subsidiary
shall not be extended or renewed.
In the event of a Change of Control or other Corporate Transaction in which the Companys
common shares cease to be publicly traded, following such Change of Control or other Corporate
Transaction Good Reason shall be deemed to exist upon the occurrence of any of the events listed
in clauses (i) (vii) above and also in the event Participant is assigned to any position
(including status, offices, titles and reporting requirements), authority, duties or
responsibilities that are (A) not at or with the publicly-traded ultimate parent
company of the Successor to the Company or the corporation or other entity surviving or
resulting from such Corporate Transaction or (B) inconsistent with the Participants position
(including status, offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by any employment agreement between the Company and the
Participant or as in effect prior to the assignment.
For purposes of the Plan, any good faith determination of Good Reason made by the
Participant shall be conclusive.
(s)
Normal Retirement Date
:
The first day of the month coinciding with or next
following the date on which the Participant retires from employment by the Company or a Subsidiary
on or after attainment of age 62 having at least 10 Years of Service.
4
(t)
Participant
:
An Eligible Employee who elects to participate in the Plan in
accordance with Section 3.
(u)
Participation Agreement
:
A written notice filed by an Eligible Employee with the
Company in substantially the form attached hereto as Exhibit A, electing to participate in the Plan
and agreeing to the terms of the Plan.
(v)
Person
:
shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i)
the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any of its Affiliates (as defined in Rule 12b-2
promulgated under Section 12 of the Exchange Act), (iii) an underwriter temporarily holding
securities pursuant to an offering by the Company of such securities, or (iv) a corporation or
other entity owned, directly or indirectly, by the shareholders of the Company in the same
proportions as their ownership of common shares of the Company.
(w)
Plan
:
The Weatherford International Ltd. Supplemental Executive Retirement Plan
set forth in this document as it may be amended from time to time.
(x)
Plan Assumptions
: The Plan assumptions established by the Company used to
calculate some benefits provided under the Plan, as set forth on Exhibit B attached hereto.
(y)
Section 409A
:
Section 409A of the Code and the final Department of Treasury
Regulations issued thereunder.
(z)
Separation From Service
:
shall have the meaning ascribed to that term in Section
409A.
(aa)
Specified Employee
:
shall have the meaning ascribed to that term in Section
409A.
(bb)
SRP
means the means the Weatherford International Inc. Supplemental Retirement
Plan, which expired under its original terms on December 31, 2009.
(cc)
Subsidiary
:
Any majority-owned subsidiary of the Company or any majority-owned
subsidiary thereof, or any other Entity in which the Company owns, directly or indirectly, a
significant financial interest provided that the CEO designates such Entity to be a Subsidiary
for the purposes of the Plan.
(dd)
Year of Service
:
Each 12-month period during continuous employment with the
Company or a Subsidiary as a common-law employee beginning on an Eligible Employees date of hire
and each anniversary thereof. Any period of less than 12 months during such continuous employment
that begins on the anniversary of an Eligible Employees date of hire and ends on his or her date
of retirement or termination of employment shall also be credited as one full Year of Service. All
periods of employment by the Company or a Subsidiary shall be taken into account and neither the
transfer of an Eligible Employee from employment by the Company to employment by a Subsidiary nor
the transfer of an Eligible Employee from employment by a Subsidiary to Employment by the Company
shall be deemed to be a termination of employment by the Eligible Employee. Moreover, the
employment of an Eligible Employee shall not be deemed to have been terminated because of his
absence from active employment on account of temporary illness or authorized vacation, or during
temporary leaves of absence from active employment granted by the Company or a Subsidiary for
reasons of professional
5
advancement, education, health, or government service, or during military
leave for any period if the Eligible Employee returns to active employment within 90 days after the
termination of his military leave, or during any period required to be treated as a leave of
absence by virtue of (i) any enforceable employment or other agreement or (ii) any applicable law,
such as the U.S. federal Family and Medical Leave Act of 1993.
3.
Participation; Years of Service; Years of Age
.
(a) An Eligible Employee may irrevocably elect to participate in the Plan by filing a
Participation Agreement with the Company within 30 days after the individual becomes an Eligible
Employee. An Eligible Employee who does not file a Participation Agreement with the Company during
the applicable 30-day period may not subsequently elect to participate in the Plan. For avoidance
of doubt, Participants are not entitled to any SRP benefits in any form.
(b) For purposes of determining a Participants Years of Service under the Plan,
(i) the CEO may, in his sole discretion, credit a Participant (excluding himself) with
additional Years of Service at any time for any or all purposes under the Plan. Such credits will
be effective on written notice from the CEO delivered to the Participant and are in addition to the
credits provided in (b)(ii), (c), (d) and (e) below, if applicable; and
(ii) upon termination of employment for any reason (except for termination by the Company for
Cause), each Participant shall be credited with an additional number of Years of Service and years
of age as set forth in the Plan Assumptions, in addition to the credits provided in (b)(i) above
and (c), (d) and (e) below, if applicable .
(c) When determining the benefits payable to a Participant, if a Participants actual age
(before adding any additional years) is 55 or older, then no additional years of age will be
credited to such Participant. If, however, a Participants actual age is 54 or less, then the
Participant will be credited with additional years of age under the terms of the Plan, provided
that when the Participants actual age reaches 55 years, then no additional years of age will be
credited to the Participant.
(d) Upon a Change of Control, each Participant shall be automatically credited with an
additional five Years of Service and additional five years of age, in addition to the credits
provided in (b) and (c) above and (e) below, if applicable.
(e) If a Participants employment with the Parent, the Company or any Subsidiary is terminated
for any reason other than for Cause after a Change of Control, the Participant shall be credited
with an additional five Years of Service and additional five years of age, in addition to the
credits provided in (b), (c) and (d) above, if applicable.
4.
Retirement Benefit.
(a) The Company agrees that, on a Participants Early Retirement Date or Normal
Retirement Date, the Company shall pay as a retirement benefit (Retirement Benefit) to the
Participant an amount, no less than zero, that is equal to (A) minus (B) where (A) represents the
lump sum equivalent of a monthly benefit for a period of 36 years equal to one-twelfth of the
product of (i) the annual benefit percentage, as set forth in the Participation Agreement (Annual
Benefit Percentage), multiplied by (ii) the Participants Compensation in effect as of his or her
Early Retirement Date or Normal Retirement Date, as applicable, and multiplied by (iii) the
Participants Years of Service, up to a maximum amount equal to such Compensation multiplied by the
maximum benefit percentage set forth in the Participation
6
Agreement (Maximum Benefit Percentage)
and (B) represents the amount of the Participants Retirement Benefit or Termination Benefit, as
applicable, paid or to be paid under the ERP. Such lump sum equivalent shall be determined on the
basis of Plan Assumptions.
(b) The Company shall pay the Retirement Benefit to the Participant within 15 days after the
date of the Participants Separation From Service; provided, however, that if the Participant is a
Specified Employee, the Participants Retirement Benefit shall be paid on the date that is six
months following the date of the Participants Separation From Service.
5.
Termination Benefit.
(a) If a Participants employment with the Company or any Subsidiary is terminated before
the Participants Early Retirement Date for any reason (including death or Disability) and the
Participant has completed 10 Years of Service as of the date of termination, the Company shall pay
as a termination benefit (Termination Benefit) to the Participant (or Beneficiary, as applicable)
an amount, no less than zero, that is equal to (A) minus (B) where (A) represents the lump sum
equivalent of a monthly benefit for a period of 36 years equal to one-twelfth of the product of (i)
the Annual Benefit Percentage, multiplied by (ii) the Participants Compensation in effect as of
his or her date of termination, and multiplied by (iii) the Participants Years of Service, up to a
maximum amount equal to such Compensation multiplied by the Maximum Benefit Percentage and (B)
represents the amount of the Participants Termination Benefit, Disability Benefit or Death
Benefit, paid or to be paid under the ERP. Such lump sum equivalent shall be determined on the
basis of Plan Assumptions.
(b) The Company shall pay the Termination Benefit to the Participant within 15 days after the
date of the Participants Separation From Service; provided, however, that if the Participant is a
Specified Employee the Participants Termination Benefit shall be paid on the date that is six
months following the date of the Participants Separation From Service.
6.
Non-Vested Participant
. In the event of termination of a Participants employment
with the Company or a Subsidiary for any reason prior to completion of 10 Years of Service and
prior to a Change of Control, other than termination of employment due to Disability or death or
for Cause, the Participant shall not be eligible to receive any benefits under the Plan; provided,
however, that if a Participant has at least seven Years of Service at the date of termination
(excluding any additional Years of Service granted under Section 3(b)), other than a termination
for Cause or voluntary termination by the Participant for any reason other than
for Good Reason, Disability, death or Retirement, then the
Participant will be credited with an additional three Years of Service and three years of age
and will be eligible for the benefits provided under Section 5. If, after a Change of Control, a
Participants employment with the Company or a Subsidiary is terminated for any reason, other than
for Cause, prior to completion of 10 Years of Service, the Participant shall be eligible to receive
benefits under the Plan.
7.
Gross-up for Certain Taxes
. All amounts payable (whether currently or in the
future) by the Company to a Participant or his or her Beneficiaries under this Plan and the ERP
shall be grossed-up in accordance with the provisions of Exhibit C hereto. These provisions do not
apply to any ordinary income tax or social security tax of any jurisdiction otherwise attributable
to benefits payable under the Plan.
8.
Medical Coverage
. For each Participant who is eligible to receive or receives
benefits under the Plan or the ERP, beginning as of the first day following a Participants date of
termination of employment, each Participant and his or her spouse and their dependent children (up
to age 25) shall be provided by the Company with health and medical (including optical and dental)
insurance for the remainder of the Participants and his or her spouses individual lives that is
equivalent to the most
7
beneficial health and medical insurance that Participant was eligible to
receive during his or her employment with the Company or a Subsidiary (which shall be no less
beneficial than the insurance provided to the CEO). The Company shall be responsible and obligated
to maintain such health and medical insurance and shall pay all premiums for such insurance,
provided, however, that (i) the Participant shall continue to pay the normal monthly employee
contribution for the insurance, subject to a maximum annual aggregate Participant contribution of
$2,000 (or other currency equivalent), and (ii) these health and medical benefits shall, to the
extent permitted by law, be secondary to any benefits provided under U.S. Medicare and to any other
health and medical benefits that the Participant receives from any other employer provided plan.
Each Participant as of the Effective Date, has a fully nonforfeitable interest in the benefits
specified in this Section 8, without any requirement that future services be performed after the
Effective Date. To the extent that the accident or health insurance benefits specified in this
Section 8 are not provided through an arrangement that is fully insured by a third party the
following provisions shall apply to the reimbursement of such benefits. The amount of accident and
health insurance expenses eligible for reimbursement during Participants taxable year will not
affect the expenses eligible for reimbursement in any other taxable year (with the exception of
applicable lifetime maximums specified in the plans). The Participants right to reimbursement is
not subject to liquidation or exchange for another benefit. To the extent that the benefits
provided to the Participant pursuant to this Section 8 are taxable to the Participant and not
otherwise exempt from Section 409A, any amounts to which the Participant would otherwise be
entitled under this Section 8 during the first six months following the date of the Participants
Separation From Service shall be accumulated and paid to the Participant on the date that is six
months following the date of his Separation From Service.
9.
Payor of Benefits
.
(a) Benefits payable under the Plan with respect to a Participant shall be the joint and
several obligation of the Company and each Subsidiary that employed the Participant during any
period of his or her participation in the Plan, however, the Company shall have the primary
obligation of making any and all benefit payments under the Plan. If, for any reason the Company
is unable to make any payments, then all Subsidiaries that employed the Participant during any
period of his or her participation in the Plan shall have the obligation to make all of such
benefit payments. Adoption and maintenance of the Plan by the Company and any Subsidiary shall
not, for that reason, create a joint
venture or partnership relationship between or among such entities for purposes of payment of
benefits under the Plan or for any other purpose.
(b) In order to meet its contingent obligations under the Plan, neither the Company nor any
Subsidiary shall be required to set aside any assets or otherwise create any type of fund in which
any Participant, or any person claiming under such Participant, has an interest other than that of
an unsecured general creditor of the Company or a Subsidiary, or which would provide any
Participant, or any person claiming under such Participant, with a legally enforceable right to
priority over any general creditor of the Company or a Subsidiary in the event of insolvency of the
Company or a Subsidiary. For all purposes of the Plan, the Company or a Subsidiary shall be
considered insolvent if it is unable to pay its debts as they mature or if it is subject to a
pending proceeding as a debtor under the U.S. Bankruptcy Code.
10.
Benefits Payable Only from General Corporate Assets; Unsecured General Creditor
Status of Participants
.
The payments to a Participant or his or her Beneficiary hereunder
shall be made from assets which shall continue, for all purposes to be a part of the general,
unrestricted assets of the Company; no person shall have any interest in any such assets by virtue
of the provisions of the Plan. The Companys obligation hereunder shall be an unfunded and
unsecured promise to pay money in the future. To the extent that any person acquires a right to
receive payments from the Company under the
8
provisions hereof, such right shall be no greater than
the right of any unsecured general creditor of the Company; no such person shall have nor acquire
any legal or equitable right, interest or claim in or to any property or assets of the Company.
11.
Full Settlement
.
(a) No Right of Offset
.
The Companys obligations to make payments under the Plan and to
otherwise perform its obligations under the Plan shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action that the Company may have against
a Participant or others.
(b) No Benefit Reduction. The amount of any payments or benefits provided for in the Plan
shall not be reduced by any compensation earned by the Participant as the result of employment by
another employer, by any other retirement or severance benefits, by offset against any amount
claimed to be owed by the Participant to the Company, or otherwise, except where such benefit
reduction is specifically required in connection with the reduction for benefits payable or paid to
the Participant under the ERP.
12.
Beneficiary Designation
. The Participant shall have the right, at any time,
to submit in the form approved by the Company a written designation of primary and secondary
Beneficiaries to whom payment under the Plan shall be made in the event of his or her death prior
to complete distribution of the benefits due and payable under the Plan. Each Beneficiary
designation shall become effective only when received by the Company. If no such designation has
been received by the Company from the Participant prior to his or her death, the Participant shall
be deemed to have designated as the Beneficiary (i) the Participants surviving spouse, or (ii) if
there is no surviving spouse, the Participants children, in equal shares
.
13.
No Trust Created
. Nothing contained in the Plan, and no action taken pursuant to
its provisions by either party hereto shall create, or be construed to create, a trust of any kind,
or a fiduciary relationship between the Company and any Participant, his or her Beneficiary or any
other person.
14.
No Contract of Employment
. Nothing contained herein shall be construed to be a
contract of employment for any term of years, nor as conferring upon a Participant the right to
continue to be employed by the Company or any Subsidiary in his or her present capacity, or in any
capacity. The Plan relates to the payment of deferred compensation for the Participants services,
payable after termination of his or her employment with the Company or any Subsidiary, and is not
intended to be an employment contract.
15.
Benefits Not Transferable
. Neither a Participant nor his or her Beneficiary shall
have any power or right to transfer, assign, anticipate, hypothecate or otherwise encumber any part
or all of the amounts payable hereunder. No such amounts shall be subject to seizure by any
creditor of any such Participant or Beneficiary, by a proceeding at law or in equity, nor shall
such amounts be transferable by operation of law in the event of bankruptcy, insolvency or death of
the Participant or his or her Beneficiary. Any such attempted assignment or transfer shall be
void.
16.
Administration
.
(a) Full power and authority to construe, interpret and administer the Plan shall be
vested in the CEO. This power and authority includes, but is not limited to, selecting Eligible
Employees to participate in the Plan, establishing rules and regulations for the administration of
the Plan, maintaining all records necessary for administration of the Plan, including, but not
limited to, Participation
9
Agreements and beneficiary designation forms, and making all other determinations, and taking
such actions, as may be necessary or advisable for the administration of the Plan. Decisions of
the CEO shall be final, conclusive and binding upon all parties. The CEO, in his sole discretion,
may delegate day-to-day administration of the Plan to an employee or employees of the Company or to
a third-party administrator. The CEO may also rely on counsel, independent accountants or other
consultants or advisors for advice and assistance in fulfilling its administrative duties under the
Plan.
(b) Certain persons may be offered the ability to participate in the Plan as an Eligible
Employee upon terms and conditions that differ from those in the Plan. The Participation Agreement
for any such Eligible Employee will be deemed to be an amendment to the Plan only for such Eligible
Employees who elect to participate in the Plan.
(c) It is intended that the Plan be considered an unfunded arrangement maintained primarily to
provide deferred compensation, for a select group of management or highly compensated employees,
for purposes of ERISA and the Code.
17.
Determination of Benefits
.
(a)
Claim
. A person who believes that he or she is being denied a benefit to which he
or she is entitled under the Plan (Claimant), or his or her duly authorized representative, may
file a written request for such benefit with the CEO of the Company, setting forth his or her
claim. The request must be addressed to the CEO of the Company at the Companys principal place of
business.
(b)
Claim Decision
. Upon receipt of a claim, the CEO shall advise the Claimant that a
reply will be forthcoming within a reasonable period of time, but ordinarily not later than 60 days
(45 days for Disability claims), and shall, in fact, deliver such reply within such period.
However, the CEO may extend the reply period for an additional 30 days for reasonable cause (an
additional 15 days, if necessary, for Disability claims). If the reply period will be extended,
the CEO shall advise the Claimant in writing during the initial 60-day period (45-day period for
Disability claims) indicating the special circumstances requiring an extension and the date by
which the CEO expects to render the benefit determination.
If the claim is denied in whole or in part, the CEO will render a written opinion, using
language calculated to be understood by the Claimant, setting forth (i) the specific reason or
reasons for the denial, (ii) the specific references to pertinent Plan provisions on which the
denial is based, (iii) a description of any additional material or information necessary for the
Claimant to perfect the claim and an explanation as to why such material or such information is
necessary, (iv) appropriate information as to the steps to be taken if the Claimant wishes to
submit the claim for review, including a statement of the Claimants right to bring a civil action,
including under Section 502(a) of ERISA
,
following an adverse benefit determination on
review, and (v) the time limits for requesting a review of the denial and for the actual review of
the denial. With respect to a Disability claim, if the CEO relied on a rule, guideline, protocol
or similar criterion in denying the claim, the notice will either include a copy or state that it
was relied on and will be provided upon request, without charge.
(c)
Request for Review
. Within 60 days (180 days for Disability claims) after the
receipt by the Claimant of the written opinion described above, the Claimant may request in writing
that the Board review the CEOs prior determination. Such request must be addressed to the Board
at the Companys then principal place of business. The Claimant or his or her duly authorized
representative may submit written comments, documents, records or other information relating to the
denied claim, which such information shall be considered in the review under this subsection
without regard to whether such information was submitted or considered in the initial benefit
determination.
10
The Claimant or his or her duly authorized representative shall be provided, upon request
and free of charge, reasonable access to, and copies of, all documents, records and other
information which (i) was relied upon by the CEO in making the initial claims decision, (ii) was
submitted, considered or generated in the course of the CEO making the initial claims decision,
without regard to whether such instrument was actually relied upon by the CEO in making the
decision, (iii) demonstrates compliance by the CEO with administrative processes and safeguards
designed to ensure and to verify that benefit claims determinations are made in accordance with
governing Plan documents and that, where appropriate, the Plan provisions have been applied
consistently with respect to similarly situated Claimants, or (iv) in the case of a Disability
claim, constitute a statement of policy or guidance concerning the denied benefit. With respect to
a Disability claim, (1) the Claimant may request that any medical or vocational experts who advised
the CEO regarding the claim be identified, and (2) if the claim was denied on the basis of a
medical judgment, the Board will consult a health care professional with appropriate training and
experience other than the health care professional who was consulted in connection with the denial
of the claim or his or her subordinates. If the Claimant does not request a review of the CEOs
determination within such 60-day period (180-day period for Disability claims), he or she shall be
barred and estopped from challenging such determination.
(d) Review of Decision. Within a reasonable period of time, ordinarily not later than 60 days
(45 days for Disability claims), after the Boards receipt of a request for review, it will review
the CEOs prior determination. If special circumstances require that the 60-day time period
(45-day time period for Disability claims) be extended, the Board will so notify the Claimant
within the initial 60-day period (45-day period for Disability claims) indicating the special
circumstances requiring an extension and the date by which the Board expects to render its decision
on review, which shall be as soon as possible but not later than 120 days (90 days for Disability
claims) after receipt of the request for review.
The Board has discretionary authority to determine a Claimants eligibility for benefits and
to interpret the terms of the Plan. Benefits under the Plan will be paid only if the Board decides
in its discretion that the Claimant is entitled to such benefits. The decision of the Board of
Directors shall be final and non-reviewable, unless found to be arbitrary and capricious by a court
of competent review. Such decision will be binding upon the Company and the Claimant.
If the Board makes an adverse benefit determination on review, the Board will render a written
opinion, using language calculated to be understood by the Claimant, setting forth (i) the specific
reason or reasons for the denial, (ii) the specific references to pertinent Plan provisions on
which the denial is based, (iii) a statement that the Claimant is entitled to receive, upon request
and free of charge, reasonable access to, and copies of, all documents, records and other
information which (A) was relied upon by the Board in making its decision, (B) was submitted,
considered or generated in the course of the Board making its decision, without regard to whether
such instrument was actually relied upon by the Board in making its decision, (C) demonstrates
compliance by the Board with administrative processes and safeguards designed to ensure and to
verify that benefit claims determinations are made in accordance with governing Plan documents, and
that, where appropriate, the Plan provisions have been applied consistently with respect to
similarly situated claimants, or (D) in the case of a Disability claim, constitute a statement of
policy or guidance concerning the denied benefit, and (iv) a statement of the Claimants right to
bring a civil action under Section 502(a) of ERISA following the adverse benefit determination on
such review. With respect to a Disability claim, if the Board relied on a rule, guideline,
protocol or similar criterion in denying the claim, the notice will either include a copy or state
that it was relied on and will be provided upon request, without charge.
11
18.
Amendment
. The Plan may be amended, altered, modified, or terminated at any time
by a written instrument signed by the Company or its Successors; provided, however, that no such
amendment, alteration, modification or termination may adversely affect the rights of any
Participant under the Plan. In addition, as provided for in Section 16, the terms and conditions
contained in a Participation Agreement for any particular Participant shall be deemed to be an
amendment to the Plan only for purposes of such Participant. In the event of a Change of Control,
the Plan cannot be amended, altered, modified or terminated thereafter without the prior written
consent of each Participant. Except for the application of Section 6 (which shall not be superceded
by the terms of any other agreement with the Participant), to the extent that any of the terms and
provisions of the Plan are contrary or contradictory to any terms and provisions of any employment
agreement between a Participant and the Company or a Subsidiary, and the terms and provisions of
such employment agreement are more beneficial to a Participant, then the terms and provisions of
the employment agreement shall control and shall be deemed to be substituted for and replace the
contrary terms and provisions of the Plan.
19.
Successors
. In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation, amalgamation, scheme of arrangement, exchange offer, operation of law or
otherwise (including any purchase, merger, amalgamation, Corporate Transaction or other transaction
involving the Company or any subsidiary or Affiliate of the Company), to all or substantially all
of the business and/or assets of the Company or its subsidiaries (a Successor) to expressly
assume and agree to perform the Plan in the same manner and to the same extent that the Company
would be required to perform it if no such succession had taken place. Failure of the Company to
obtain such assumption and agreement prior to the effectiveness of any such succession shall be a
breach of the Companys obligations under this Plan and shall entitle the Participant to immediate
compensation from the Company and the Successor as if the Participant had been terminated without
Cause following a Change of Control.
20.
Not a Security
. Nothing contained herein shall be construed to create a security.
The Plan relates to the payment of deferred compensation for each Participants services, payable
after termination of his or her employment with the Company, and is not intended to be, or to
create, a security.
21.
Notice
. Any notice, consent or demand required or permitted to be given under the
provisions of the Plan shall be in writing, and shall be signed by the party giving or making the
same. If such notice, consent or demand is mailed to a party hereto, it shall be sent by United
States or Swiss certified mail, postage prepaid, addressed to such partys last known address as
shown on the records of the Company. The date of such mailing shall be deemed the date of notice,
consent or demand. Either party may change the address to which notice is to be sent by giving
notice of the change of address in the manner aforesaid.
22.
Enforceability
. If any one or more of the provisions contained in the Plan shall
for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect the remaining provisions of the Plan, and the terms
of such provision shall be construed, amended or deleted (if necessary) so as to cure such
invalidity, illegality or unenforceability.
23.
Withholding
. In any case in which a benefit is payable under the terms of the
Plan, the Company shall be entitled to deduct there from a sum equal to any tax (including social
security) or duty of whatever nature for which the Company and/or the Participants employer or former employer
may be required to withhold in any country, canton, territory or state or province, including cases
where the Company must withhold taxes to comply with any related tax rulings or dispensations
obtained by the
12
Company and/or Subsidiary in consequence of payment of benefits under the Plan, as
reasonably determined by the Company.
24.
Governing Law
. Except to the extent preempted by the laws of the domicile of a
particular Participant, and then only with respect to that Participant, the Plan, and the rights
and obligations of the Company and the Participants hereunder, shall be governed by and construed
in accordance with the laws of the state of Texas (and applicable federal United States laws)
applicable to contracts made and performed entirely in Texas by residents of Texas.
13
IN WITNESS WHEREOF, the Plan, as amended and restated, is executed by a duly authorized
officer of the Company on December 31, 2009.
|
|
|
|
|
|
WEATHERFORD INTERNATIONAL LTD.
|
|
|
|
By:
|
/s/ BERNARD J. DUROC-DANNER
|
|
|
|
Bernard J. Duroc-Danner
|
|
|
|
Chairman, President & Chief Executive Officer
|
|
|
14
EXHIBIT A
Participation Agreement
Weatherford International Ltd.
Supplemental Executive Retirement Plan (the
Plan
)
[Date]
[Name and address of Eligible Employee]
In recognition of the valuable services you have performed for Weatherford and to encourage your
continued employment, you have been designated an Eligible Employee under the Plan. You may elect
to participate in the Plan by signing and returning this Participation Agreement within 30 days.
By signing and filing this Participation Agreement, you elect to participate in the Plan and agree
to be bound by the terms of the Plan and you understand, agree and acknowledge that:
|
1.
|
|
You have received and read a copy of the Plan and have had an opportunity to
review it with legal counsel of your choosing;
|
|
|
2.
|
|
This Participation Agreement is irrevocable;
|
|
|
3.
|
|
The Company does not represent that the Beneficiary Designation Form will be
legally recognized in any jurisdictions in which you may be or become resident; and
|
|
|
4.
|
|
For purposes of the Plan Assumptions, you are a Class [A/B] Participant.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bernard Duroc-Danner, Chief Executive Officer
|
|
|
|
|
|
I elect to participate in the Plan and acknowledge and agree to the foregoing.
|
|
|
|
|
|
|
|
|
|
|
Eligible Employees Signature
|
|
|
|
|
|
|
EXHIBIT B
Weatherford International Ltd.
Nonqualified Executive Retirement Plan
Plan Assumptions
All Participants
|
|
|
Present Value Discount Rate:
|
|
5.00% annual discount rate
|
|
|
|
Class A Participants (CEO and SVPs and other Participants elevated to Class A)
|
|
|
|
Additional Plan Years:
|
|
For purposes of and subject to Clause 3(b)(ii), three years of age and three Years of Service, plus any further credits pursuant to Clauses 3(b)(i), (c), (d) or (e)
|
|
|
|
Annual Benefit Percentage:
|
|
2.75%
|
|
|
|
Maximum Benefit Percentage:
|
|
60.00%
|
|
|
|
Inflation Rate Factor:
|
|
3% inflation rate, compounded annually
|
|
|
|
Class B Participants (VPs)
|
|
|
|
|
|
Additional Plan Years:
|
|
For purposes of and subject to Clause 3(b)(ii), two years of age and two Years of Service, plus any further credits pursuant to Clauses 3(b)(i), (c), (d) or (e)
|
|
|
|
Annual Benefit Percentage:
|
|
2.00%
|
|
|
|
Maximum Benefit Percentage:
|
|
40.00%
|
|
|
|
Inflation Rate Factor:
|
|
None
|
EXHIBIT C
A. Anything in the Plan to the contrary notwithstanding, if it shall be determined that any
payment or distribution by the Parent, the Company or any of their Subsidiaries to or for the
benefit of the Participant (whether paid or payable or distributed or distributable pursuant to the
terms of the Plan, the ERP or otherwise, but determined without regard to any additional payments
required under this Exhibit C) (a Payment) would be subject to any penalties, excise or other
taxes, including, but not limited to, any penalties, excise or other taxes imposed by sections
4999, 409A or 457A of the Code (and any successor provisions or sections to such sections), or any
interest or penalties are incurred by the Participant with respect to any such excise or other
taxes (such excise or other taxes, together with any such interest and penalties, are collectively
referred to as the Excise Tax), then the Participant shall be entitled to receive an additional
payment (a Gross-Up Payment) in an amount such that after payment by the Participant of all taxes
(including any interest or penalties imposed with respect to such taxes), including without
limitation, any income taxes (and any interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, the Participant retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments. For purposes of this Exhibit C, all
references to the Company shall be deemed to also include any Subsidiaries that have payment
obligations under the Plan.
B. Subject to the provisions of paragraph C, all determinations required to be made under this
Exhibit C, including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such determination shall be made
by PricewaterhouseCoopers or, as provided below, such other certified public accounting firm as may
be designated by the Participant (the Accounting Firm) which shall provide detailed supporting
calculations both to the Company and the Participant within 15 business days after the receipt of
notice from the Participant that there has been a Payment, or such earlier time as is requested by
the Company. In the event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change of Control, the Participant shall appoint another
nationally recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses
of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Exhibit C, shall be paid by the Company to the Participant within five days after
the receipt of the Accounting Firms determination. Any determination by the Accounting Firm shall
be binding upon the Company and the Participant. Notwithstanding any provision of this Agreement
to the contrary, any amounts to which the Participant would otherwise be entitled under this
Exhibit C during the first six months following the date of the Participants Separation From
Service shall be accumulated and paid to the Participant on the date that is six months following
the date of his Separation From Service. All amounts payable under this paragraph B shall be paid
no later than the earlier of (i) the time periods described above and (ii) the last day of the
Participants taxable year next following the Participants taxable year in which the Participant
remits the related taxes to the applicable taxing authorities. As a result of the uncertainty in
the application of Excise Taxes at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made by the Company
should have been made (Underpayment), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to paragraph C and the
Participant thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Participant, subject to the foregoing
sentence, and in no event later than the deadline specified in this paragraph B.
C. The Participant shall notify the Company in writing of any claim by the Internal Revenue
Service (the IRS) that, if successful, would require the payment by the Company of the
Gross-Up Payment (or an additional Gross-Up Payment) in the event the IRS seeks higher payment.
Such notification shall be given as soon as practicable, but no later than ten business days after
the Participant is informed in writing of such claim, and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. The Participant shall not
pay such claim prior to the expiration of the 30-day period following the date on which he gives
such notice to the Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Participant in writing prior to
the expiration of such period that it desires to contest such claim, the Participant shall:
|
(1)
|
|
give the Company any information reasonably requested by the Company relating to such
claim,
|
|
|
(2)
|
|
take such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including without limitation, accepting
legal representation with respect to such claim by an attorney reasonably selected by the
Company,
|
|
|
(3)
|
|
cooperate with the Company in good faith in order to effectively contest such claim, and
|
|
|
(4)
|
|
permit the Company to participate in any proceedings relating to such claims;
|
provided, however, that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such costs and shall indemnify and
hold the Participant harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such representation and payment
of costs and expenses. Without limitation on the foregoing provisions of this Exhibit C, the
Company shall control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its sole option, either
direct the Participant to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Participant agrees to prosecute such contest to determination before
any administrative tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company directs the
Participant to pay such claim and sue for a refund, the Company shall advance the amount of such
payment to the Participant, on an interest-free basis and shall indemnify and hold the Participant
harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect to any imputed income
with respect to such advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Participant with respect to which such
contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the
Companys control of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Participant shall be entitled to settle or contest, as
the case may be, any other issues raised by the IRS or any other taxing authority. The Company
shall not direct the Participant to pay such a claim and sue for a refund if, due to the
prohibitions of section 402 of the Sarbanes-Oxley Act of 2002, the Company may not advance to the
Participant the amount necessary to pay such claim. All costs and expenses described in this
paragraph C shall be paid by the Company at least ten days prior to the date that the Participant
is required to pay or incur such costs or expenses. The costs and expenses that are subject to be
paid pursuant to this paragraph C shall not be limited as a result of when the costs or expenses
are incurred. The amounts of costs or expenses that are eligible for payment pursuant to this
paragraph C during a given taxable year of the Participant shall not affect the amount of costs or
expenses eligible for payment in any other taxable year of the Participant. The right to payment
of costs and expenses pursuant to this
paragraph C is not subject to liquidation or exchange for another benefit. All tax amounts payable
by the Company under this paragraph C shall be paid no later than the earlier of (i) the time
periods described above and (ii) the last day of the Participants taxable year next following the
Participants taxable year in which the Participant remits the related taxes to the applicable
taxing authorities. Notwithstanding any provision of this Agreement to the contrary, any amounts
to which the Participant would otherwise be entitled under this paragraph C during the first six
months following the date of the Participants Separation From Service shall be accumulated and
paid to the Participant on the date that is six months following the date of his Separation From
Service.
D. If, after the receipt by the Participant of an amount advanced by the Company pursuant to
paragraph C, the Participant becomes entitled to receive any refund with respect to such claim, the
Participant shall (subject to the Companys complying with the requirements of paragraph C)
promptly pay to the Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Participant of an amount
advanced by the Company pursuant to paragraph C, a determination is made that the Participant shall
not be entitled to any refund with respect to such claim and the Company does not notify the
Participant in writing of its intent to contest such denial of refund prior to the expiration of 30
days after such determination, then such advance shall not be required to be repaid.