Exhibit 10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (this Agreement) is entered into as of
December 31, 2008, by and between Weatherford International Ltd., a Bermuda exempted company (the
Company), and Jessica Abarca (the Executive).
W I T N E S S E T H:
WHEREAS, the Board 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;
WHEREAS, the Company desires 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
employment and provide such services on the terms set forth in this Agreement;
WHEREAS, the Company and the Executive previously entered into an employment agreement (the
Employment Agreement) dated and effective as of October 27, 2006 (the Effective Date);
WHEREAS, the Company and the Executive desire to amend and restate the Employment Agreement as
set forth in this Agreement to comply with Section 409A of the Internal Revenue Code of 1986, as
amended and the final Department of Treasury regulations issued thereunder; and
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the parties hereto do hereby agree that effective as of December 31, 2008 the
Employment Agreement is hereby amended and restated to provide as follows:
1. Certain Definitions.
(a) Affiliate shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of
the Exchange Act.
(b) Beneficial Owner shall have the meaning set forth in Rule 13d-3 under the Exchange Act
(c) Board shall mean the Board of Directors of the Company.
(d) 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(c)), 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 willful engaging by the Executive 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 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 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 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.
(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:
(i) any Person is or becomes the Beneficial Owner, directly or indirectly, of twenty percent
(20%) 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 (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; or
(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
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Companys Assets (any of which 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 this Agreement, 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 sixty-six
and two-thirds percent (66-2/3%) 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 (1) 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, 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 of Directors 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) Company shall mean Weatherford International Ltd. 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.
(g) 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.
(h) 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.
(i) 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
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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.
(j) Entity shall mean means any corporation, partnership, association, joint-stock company,
limited liability company, trust, unincorporated organization or other business entity.
(k) Exchange Act shall mean the Securities Exchange Act of 1934, as amended from time to
time.
(l) Good Reason shall mean the occurrence of any of the following:
(i) the assignment to the Executive of any position, authority, duties or responsibilities
that are not materially consistent with the Executives position (including status, offices and
titles), authority, duties or responsibilities as contemplated by Section 3(a) of this Agreement,
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 any action not taken in
bad faith and which is remedied by the Company 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)) or any other
agreements between the Executive and the Company or any Subsidiary, other than any failure not
occurring in bad faith and which is remedied by the Company, or a Subsidiary, as appropriate, 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 or previously 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) hereof 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;
(vi) any failure by the Company to comply with and satisfy Section 9(b) of this Agreement;
(vii) failure of the Company (including any successor) to agree, execute and enter into a new
employment agreement and a new executive retirement plan with the Executive
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prior to the termination or expiration of this Agreement, with such employment agreement and
executive retirement plan having the same terms and conditions as existed in agreements and plans
between the Company and the Executive prior to December 30, 2008, and incorporating such terms and
conditions that are more favorable to the Executive from all agreements and retirement plans
existing on January 1, 2009; or
(viii) in connection with, as a result of, or following a Change of Control, 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
common 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).
For purposes of this Agreement, any good faith determination of Good Reason made by the
Executive shall be conclusive.
(m) 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, (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.
(n) Section 409A means Section 409A of the Internal Revenue Code of 1986, as amended and the
final Department of Treasury regulations issued thereunder.
(o) Section 409A Amounts means those amounts that are deferred compensation subject to
Section 409A.
(p) Separation From Service shall have the meaning ascribed to such term in Section 409A.
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 may be seconded to the employment of Weatherford U.S., L.P. (or such other affiliated
entity) (the Seconded Affiliate Company), but without prejudice to the Companys obligations or
the Executives rights under this Agreement. The Executive shall carry out his/her duties as if
they were duties to be performed on behalf of
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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.
3. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the Executives position (including status, offices,
titles, authority, duties and responsibilities) shall be Vice President Accounting and Chief
Accounting Officer of the Company and (B) the Executives services shall be performed at the
Companys executive office in Houston, Texas or other locations less than thirty-five (35) miles
from such location.
(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
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officers under the Companys executive officer annual incentive program. Each such Annual
Bonus shall be paid no later than 2-1/2 months after 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. As
used in this Agreement, the term affiliated companies shall include any company controlled by,
controlling or under common control with the Company.
(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 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) a
monthly car allowance 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.
Notwithstanding the foregoing, effective December 31, 2008, no amounts shall be payable under this
Section 3(b)(v) to the extent that such amounts are Section 409A Amounts.
(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. Notwithstanding the foregoing, effective December 31,
2008, no amounts shall be payable under this Section 3(b)(vi) to the extent that such amounts are
Section 409A Amounts.
(vii) Vacation. During the Employment Period, the Executive shall be entitled to at least
three (3) 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.
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(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.
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 10(b) of this Agreement 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 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 10(b) of this Agreement 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 10(b) of the Agreement. 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 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;
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(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
and arrangements (collectively, Benefit Plans) in which the Executive is a participant as of the
Date of Termination. Accrued Obligation means the sum of (1) the Executives Annual Base Salary
through the Date of Termination for periods through but not following his Separation From Service
and (2) 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 to the Executive (or Executives heirs, beneficiaries or
representatives as applicable) in a lump sum in cash within thirty (30) days after the Date of
Termination the Accrued Obligation; and
(ii) The Company shall pay or cause the Executive to be paid the Benefit Obligation at the
times specified in and in accordance with the terms of the applicable Benefit Plans.
(c) Cause. If the Executives employment is terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to the Executive, other than the
obligation to pay to the Executive (x) the Accrued Obligation and (y) the Benefit Obligation in
accordance with the terms of the applicable Benefit Plans.
(d) Termination by Executive Other Than for Good Reason. If the Executive voluntarily
terminates his employment during the Employment Period for any reason other than for Good Reason,
the Executives employment shall terminate without further obligations to the Executive, other than
for payment of the Accrued Obligation and the Benefit Obligation and the rights provided in Section
6. In such case, 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.
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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 contract
or agreement with the Company or any of its affiliated companies. Except as otherwise 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 of the 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 at or subsequent to the Date of Termination shall be payable in accordance
with such plan, policy, practice or program or contract or agreement.
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,
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.
8. 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 8 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
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9. 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) 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 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.
10. Miscellaneous.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
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If to the Executive:
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Jessica Abarca
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515 Post Oak Boulevard
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Houston, Texas 77027
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If to the Company:
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Weatherford International Ltd.
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515 Post Oak Boulevard
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Houston, Texas 77027
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Attention: General Counsel
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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 parties
relating to the subject matter hereof, including, without limitation, the Prior Agreements.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the
authorization from its Board of Directors, the Company has caused these presents to be executed in
its name and on its behalf, all as of the day and year first above written.
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/s/ Jessica Abarca
Jessica Abarca
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WEATHERFORD INTERNATIONAL LTD.
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By:
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/s/ Bernard J. Duroc-Danner
Bernard J. Duroc-Danner
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Chairman, President & Chief Executive Officer
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AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (this Agreement) is entered into as of
December 31, 2008, by and between Weatherford International Ltd., a Bermuda exempted company (the
Company), and Andrew P. Becnel (the Executive).
W I T N E S S E T H:
WHEREAS, the Board 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;
WHEREAS, the Company desires 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
employment and provide such services on the terms set forth in this Agreement;
WHEREAS, the Company and the Executive previously entered into an employment agreement (the
Employment Agreement) dated and effective as of October 27, 2006 (the Effective Date);
WHEREAS, the Company and the Executive desire to amend and restate the Employment Agreement as
set forth in this Agreement to comply with Section 409A of the Internal Revenue Code of 1986, as
amended and the final Department of Treasury regulations issued thereunder; and
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the parties hereto do hereby agree that effective as of December 31, 2008 the
Employment Agreement is hereby amended and restated to provide as follows:
1. Certain Definitions.
(a) Affiliate shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of
the Exchange Act.
(b) Beneficial Owner shall have the meaning set forth in Rule 13d-3 under the Exchange Act
(c) Board shall mean the Board of Directors of the Company.
(d) 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(c)), after a written demand for substantial
performance is delivered to the Executive by the Board which specifically
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identifies the manner in which the Executive has not substantially performed the Executives
duties, or
(ii) the willful engaging by the Executive 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 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 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 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.
(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:
(i) any Person is or becomes the Beneficial Owner, directly or indirectly, of twenty percent
(20%) 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 (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; or
(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
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Companys Assets (any of which 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 this Agreement, 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 sixty-six
and two-thirds percent (66-2/3%) 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 (1) 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, 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 of Directors 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) Company shall mean Weatherford International Ltd. 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.
(g) 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.
(h) 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.
(i) 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
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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.
(j) Entity shall mean means any corporation, partnership, association, joint-stock company,
limited liability company, trust, unincorporated organization or other business entity.
(k) Exchange Act shall mean the Securities Exchange Act of 1934, as amended from time to
time.
(l) 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) of this
Agreement, 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)) or any other
agreements between the Executive and the Company or any Subsidiary, 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 or previously 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) hereof 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 9(b) of this Agreement;
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(vii) failure of the Company (including any successor) to agree, execute and enter into a new
employment agreement and a new executive retirement plan with the Executive prior to the
termination or expiration of this Agreement, with such employment agreement and executive
retirement plan having the same terms and conditions as existed in agreements and plans between the
Company and the Executive prior to December 30, 2008, and incorporating such terms and conditions
that are more favorable to the Executive from all agreements and retirement plans existing on
January 1, 2009; or
(viii) in connection with, as a result of, or following a Change of Control, 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
common 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).
For purposes of this Agreement, any good faith determination of Good Reason made by the
Executive shall be conclusive.
(m) 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, (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.
(n) Section 409A means Section 409A of the Internal Revenue Code of 1986, as amended and the
final Department of Treasury regulations issued thereunder.
(o) Section 409A Amounts means those amounts that are deferred compensation subject to
Section 409A.
(p) Separation From Service shall have the meaning ascribed to such term in Section 409A.
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/her prior express agreement, may be seconded to the employment of
Weatherford U.S., L.P. (or such other affiliated entity as
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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/her 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/her sole discretion, to revoke his/her agreement to
be seconded to the employment of any Seconded Affiliate Company at any time.
3. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the Executives position (including status, offices,
titles, reporting requirements, authority, duties and responsibilities) shall be Senior Vice
President and Chief Financial Officer of the Company, (B) the Executives services shall be
performed at the Companys executive office in Houston, Texas or other locations less than
thirty-five (35) miles from such location and (C) the Executive will report directly to the
Companys Chief Executive Officer.
(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
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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 executive officer annual incentive program. Each such Annual Bonus shall be paid no
later than 2-1/2 months after 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. As
used in this Agreement, the term affiliated companies shall include any company controlled by,
controlling or under common control with the Company.
(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 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. Notwithstanding the foregoing, effective December 31,
2008, no amounts shall be payable under this Section 3(b)(v) to the extent that such amounts are
Section 409A Amounts.
(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
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affiliated companies in effect for the Executive on the date hereof. Notwithstanding the
foregoing, effective December 31, 2008, no amounts shall be payable under this Section 3(b)(vi) to
the extent that such amounts are Section 409A Amounts.
(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.
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 10(b) of this Agreement 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 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 10(b) of this Agreement 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 10(b) of the Agreement. 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 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,
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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
and arrangements (collectively, Benefit Plans) in which the Executive is a participant as of the
Date of Termination. Accrued Obligation means the sum of (1) the Executives Annual Base Salary
through the Date of Termination for periods through but not following his Separation From Service
and (2) 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 to the Executive (or Executives heirs, beneficiaries or
representatives as applicable) in a lump sum in cash within thirty (30) days after the Date of
Termination the Accrued Obligation; and
(ii) The Company shall pay or cause the Executive to be paid the Benefit Obligation at the
times specified in and in accordance with the terms of the applicable Benefit Plans.
(c) Cause. If the Executives employment is terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to the Executive, other than the
obligation to pay to the Executive (x) the Accrued Obligation and (y) the Benefit Obligation in
accordance with the terms of the applicable Benefit Plans.
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(d) Termination by Executive Other Than for Good Reason. If the Executive voluntarily
terminates his employment during the Employment Period for any reason other than for Good Reason,
the Executives employment shall terminate without further obligations to the Executive, other than
for payment of the Accrued Obligation and the Benefit Obligation and the rights provided in Section
6. In such case, 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.
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 contract
or agreement with the Company or any of its affiliated companies. Except as otherwise 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 of the 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 at or subsequent to the Date of Termination shall be payable in accordance
with such plan, policy, practice or program or contract or agreement.
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,
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.
8. 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
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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 8
constitute a basis for deferring or withholding any amounts otherwise payable to the Executive
under this Agreement.
9. 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) 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 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.
10. Miscellaneous.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
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If to the Executive:
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Andrew P. Becnel
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515 Post Oak Boulevard
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Houston, Texas 77027
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If to the Company:
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Weatherford International Ltd.
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515 Post Oak Boulevard
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Houston, Texas 77027
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Attention: General Counsel
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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 parties
relating to the subject matter hereof, including, without limitation, the Prior Agreements.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the
authorization from its Board of Directors, the Company has caused these presents to be executed in
its name and on its behalf, all as of the day and year first above written.
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/s/ Andrew P. Becnel
Andrew P. Becnel
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WEATHERFORD INTERNATIONAL LTD.
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By:
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/s/ Bernard J. Duroc-Danner
Bernard J. Duroc-Danner
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Chairman, President & Chief Executive Officer
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AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (this Agreement) is entered into as of
December 31, 2008, by and between Weatherford International Ltd., a Bermuda exempted company (the
Company), and M. David Colley (the Executive).
W I T N E S S E T H:
WHEREAS, the Board 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;
WHEREAS, the Company desires 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
employment and provide such services on the terms set forth in this Agreement;
WHEREAS, the Company and the Executive previously entered into an employment agreement (the
Employment Agreement) dated and effective as of August 1, 2003 (the Effective Date);
WHEREAS, the Company and the Executive desire to amend and restate the Employment Agreement as
set forth in this Agreement to comply with Section 409A of the Internal Revenue Code of 1986, as
amended and the final Department of Treasury regulations issued thereunder; and
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the parties hereto do hereby agree that effective as of December 31, 2008 the
Employment Agreement is hereby amended and restated to provide as follows:
1. Certain Definitions.
(a) Affiliate shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of
the Exchange Act.
(b) Beneficial Owner shall have the meaning set forth in Rule 13d-3 under the Exchange Act
(c) Board shall mean the Board of Directors of the Company.
(d) 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(c)), after a written demand for substantial
performance is delivered to the Executive by the Board which specifically
- 1 -
identifies the manner in which the Executive has not substantially performed the Executives
duties, or
(ii) the willful engaging by the Executive 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 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 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 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.
(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:
(i) any Person is or becomes the Beneficial Owner, directly or indirectly, of twenty percent
(20%) 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 (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; or
(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
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Companys Assets (any of which 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 this Agreement, 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 sixty-six
and two-thirds percent (66-2/3%) 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 (1) 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, 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 of Directors 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) Company shall mean Weatherford International Ltd. 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.
(g) 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.
(h) 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.
(i) 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
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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.
(j) Entity shall mean means any corporation, partnership, association, joint-stock company,
limited liability company, trust, unincorporated organization or other business entity.
(k) Exchange Act shall mean the Securities Exchange Act of 1934, as amended from time to
time.
(l) Good Reason shall mean the occurrence of any of the following:
(i) the assignment to the Executive of any position, authority, duties or responsibilities
that are not materially consistent with the Executives position (including status, offices and
titles), authority, duties or responsibilities as contemplated by Section 3(a) of this Agreement,
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 any action not taken in
bad faith and which is remedied by the Company 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)) or any other
agreements between the Executive and the Company or any Subsidiary, other than any failure not
occurring in bad faith and which is remedied by the Company, or a Subsidiary, as appropriate, 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 or previously 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) hereof 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;
(vi) any failure by the Company to comply with and satisfy Section 9(b) of this Agreement;
(vii) failure of the Company (including any successor) to agree, execute and enter into a new
employment agreement and a new executive retirement plan with the Executive
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prior to the termination or expiration of this Agreement, with such employment agreement and
executive retirement plan having the same terms and conditions as existed in agreements and plans
between the Company and the Executive prior to December 30, 2008, and incorporating such terms and
conditions that are more favorable to the Executive from all agreements and retirement plans
existing on January 1, 2009; or
(viii) in connection with, as a result of, or following a Change of Control, 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
common 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).
For purposes of this Agreement, any good faith determination of Good Reason made by the
Executive shall be conclusive.
(m) 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, (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.
(n) Section 409A means Section 409A of the Internal Revenue Code of 1986, as amended and the
final Department of Treasury regulations issued thereunder.
(o) Section 409A Amounts means those amounts that are deferred compensation subject to
Section 409A.
(p) Separation From Service shall have the meaning ascribed to such term in Section 409A.
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 may be seconded to the employment of Weatherford U.S., L.P. (or such other affiliated
entity) (the Seconded Affiliate Company), but without prejudice to the Companys obligations or
the Executives rights under this Agreement. The Executive shall carry out his/her duties as if
they were duties to be performed on behalf of
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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.
3. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the Executives position (including status, offices,
titles, authority, duties and responsibilities) shall be Vice President Artificial Lift Systems
of the Company and (B) the Executives services shall be performed at the Companys executive
office in Houston, Texas or other locations less than thirty-five (35) miles from such location.
(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
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officers under the Companys executive officer annual incentive program. Each such Annual
Bonus shall be paid no later than 2-1/2 months after 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. As
used in this Agreement, the term affiliated companies shall include any company controlled by,
controlling or under common control with the Company.
(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 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) a
monthly car allowance 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.
Notwithstanding the foregoing, effective December 31, 2008, no amounts shall be payable under this
Section 3(b)(v) to the extent that such amounts are Section 409A Amounts.
(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. Notwithstanding the foregoing, effective December 31,
2008, no amounts shall be payable under this Section 3(b)(vi) to the extent that such amounts are
Section 409A Amounts.
(vii) Vacation. During the Employment Period, the Executive shall be entitled to at least
three (3) 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.
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(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.
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 10(b) of this Agreement 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 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 10(b) of this Agreement 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 10(b) of the Agreement. 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 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;
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(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
and arrangements (collectively, Benefit Plans) in which the Executive is a participant as of the
Date of Termination. Accrued Obligation means the sum of (1) the Executives Annual Base Salary
through the Date of Termination for periods through but not following his Separation From Service
and (2) 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 to the Executive (or Executives heirs, beneficiaries or
representatives as applicable) in a lump sum in cash within thirty (30) days after the Date of
Termination the Accrued Obligation; and
(ii) The Company shall pay or cause the Executive to be paid the Benefit Obligation at the
times specified in and in accordance with the terms of the applicable Benefit Plans.
(c) Cause. If the Executives employment is terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to the Executive, other than the
obligation to pay to the Executive (x) the Accrued Obligation and (y) the Benefit Obligation in
accordance with the terms of the applicable Benefit Plans.
(d) Termination by Executive Other Than for Good Reason. If the Executive voluntarily
terminates his employment during the Employment Period for any reason other than for Good Reason,
the Executives employment shall terminate without further obligations to the Executive, other than
for payment of the Accrued Obligation and the Benefit Obligation and the rights provided in Section
6. In such case, 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.
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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 contract
or agreement with the Company or any of its affiliated companies. Except as otherwise 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 of the 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 at or subsequent to the Date of Termination shall be payable in accordance
with such plan, policy, practice or program or contract or agreement.
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,
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.
8. 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 8 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
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9. 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) 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 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.
10. Miscellaneous.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
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If to the Executive:
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M. David Colley
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515 Post Oak Boulevard
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Houston, Texas 77027
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If to the Company:
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Weatherford International Ltd.
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515 Post Oak Boulevard
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Houston, Texas 77027
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Attention: General Counsel
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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 parties
relating to the subject matter hereof, including, without limitation, the Prior Agreements.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the
authorization from its Board of Directors, the Company has caused these presents to be executed in
its name and on its behalf, all as of the day and year first above written.
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/s/ M. David Colley
M. David Colley
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WEATHERFORD INTERNATIONAL LTD.
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By:
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/s/ Bernard J. Duroc-Danner
Bernard J. Duroc-Danner
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Chairman, President & Chief Executive Officer
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AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (this Agreement) is entered into as of
December 31, 2008, by and between Weatherford International Ltd., a Bermuda exempted company (the
Company), and Bernard J. Duroc-Danner (the Executive).
W I T N E S S E T H:
WHEREAS, the Board 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;
WHEREAS, the Company desires 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
employment and provide such services on the terms set forth in this Agreement;
WHEREAS, the Company and the Executive previously entered into an employment agreement (the
Employment Agreement) dated and effective as of August 1, 2003 (the Effective Date);
WHEREAS, the Company and the Executive desire to amend and restate the Employment Agreement as
set forth in this Agreement to comply with Section 409A of the Internal Revenue Code of 1986, as
amended and the final Department of Treasury regulations issued thereunder; and
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the parties hereto do hereby agree that effective as of December 31, 2008 the
Employment Agreement is hereby amended and restated to provide as follows:
1. Certain Definitions.
(a) Affiliate shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of
the Exchange Act.
(b) Beneficial Owner shall have the meaning set forth in Rule 13d-3 under the Exchange Act
(c) Board shall mean the Board of Directors of the Company.
(d) 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(c)), after a written demand for substantial
performance is delivered to the Executive by the Board which specifically
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identifies the manner in which the Executive has not substantially performed the Executives
duties, or
(ii) the willful engaging by the Executive 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 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 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 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.
(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:
(i) any Person is or becomes the Beneficial Owner, directly or indirectly, of twenty percent
(20%) 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 (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; or
(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
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Companys Assets (any of which 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 this Agreement, 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 sixty-six
and two-thirds percent (66-2/3%) 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 (1) 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, 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 of Directors 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) Company shall mean Weatherford International Ltd. 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.
(g) 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.
(h) 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.
(i) 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
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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.
(j) Entity shall mean means any corporation, partnership, association, joint-stock company,
limited liability company, trust, unincorporated organization or other business entity.
(k) Exchange Act shall mean the Securities Exchange Act of 1934, as amended from time to
time.
(l) 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) of this
Agreement, 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)) or any other
agreements between the Executive and the Company or any Subsidiary, 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 or previously 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) hereof 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 9(b) of this Agreement;
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(vii) failure of the Company (including any successor) to agree, execute and enter into a new
employment agreement and a new executive retirement plan with the Executive prior to the
termination or expiration of this Agreement, with such employment agreement and executive
retirement plan having the same terms and conditions as existed in agreements and plans between the
Company and the Executive prior to December 30, 2008, and incorporating such terms and conditions
that are more favorable to the Executive from all agreements and retirement plans existing on
January 1, 2009; or
(viii) in connection with, as a result of, or following a Change of Control, 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
common 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).
For purposes of this Agreement, any good faith determination of Good Reason made by the
Executive shall be conclusive.
(m) 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, (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.
(n) Section 409A means Section 409A of the Internal Revenue Code of 1986, as amended and the
final Department of Treasury regulations issued thereunder.
(o) Section 409A Amounts means those amounts that are deferred compensation subject to
Section 409A.
(p) Separation From Service shall have the meaning ascribed to such term in Section 409A.
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/her prior express agreement, may be seconded to the employment of
Weatherford U.S., L.P. (or such other affiliated entity as
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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/her 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/her sole discretion, to revoke his/her agreement to
be seconded to the employment of any Seconded Affiliate Company at any time.
3. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the Executives position (including status, offices,
titles, reporting requirements, authority, duties and responsibilities) shall be Chairman of the
Board, President and Chief Executive Officer of the Company and (B) the Executives services shall
be performed at the Companys executive office in Houston, Texas or other locations less than
thirty-five (35) miles from such location.
(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
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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 executive officer annual incentive program. Each such Annual Bonus shall be paid no
later than 2-1/2 months after 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. As
used in this Agreement, the term affiliated companies shall include any company controlled by,
controlling or under common control with the Company.
(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 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. Notwithstanding the foregoing, effective December 31,
2008, no amounts shall be payable under this Section 3(b)(v) to the extent that such amounts are
Section 409A Amounts.
(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. Notwithstanding the
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foregoing, effective December 31, 2008, no amounts shall be payable under this Section
3(b)(vi) to the extent that such amounts are Section 409A Amounts.
(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.
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 10(b) of this Agreement 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 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 10(b) of this Agreement 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 10(b) of the Agreement. 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 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.
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(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
and arrangements (collectively, Benefit Plans) in which the Executive is a participant as of the
Date of Termination. Accrued Obligation means the sum of (1) the Executives Annual Base Salary
through the Date of Termination for periods through but not following his Separation From Service
and (2) 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 to the Executive (or Executives heirs, beneficiaries or
representatives as applicable) in a lump sum in cash within thirty (30) days after the Date of
Termination the Accrued Obligation; and
(ii) The Company shall pay or cause the Executive to be paid the Benefit Obligation at the
times specified in and in accordance with the terms of the applicable Benefit Plans.
(c) Cause. If the Executives employment is terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to the Executive, other than the
obligation to pay to the Executive (x) the Accrued Obligation and (y) the Benefit Obligation in
accordance with the terms of the applicable Benefit Plans.
(d) Termination by Executive Other Than for Good Reason. If the Executive voluntarily
terminates his employment during the Employment Period for any reason other than for Good Reason,
the Executives employment shall terminate without further obligations to the Executive, other than
for payment of the Accrued Obligation and the Benefit Obligation and the
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rights provided in Section 6. In such case, 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.
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 contract
or agreement with the Company or any of its affiliated companies. Except as otherwise 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 of the 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 at or subsequent to the Date of Termination shall be payable in accordance
with such plan, policy, practice or program or contract or agreement.
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,
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.
8. 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 8 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
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9. 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) 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 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.
10. Miscellaneous.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
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If to the Executive:
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Bernard J. Duroc-Danner
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515 Post Oak Boulevard
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Houston, Texas 77027
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If to the Company:
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Weatherford International Ltd.
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515 Post Oak Boulevard
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Houston, Texas 77027
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Attention: General Counsel
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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 parties
relating to the subject matter hereof, including, without limitation, the Prior Agreements.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the
authorization from its Board of Directors, the Company has caused these presents to be executed in
its name and on its behalf, all as of the day and year first above written.
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/s/ Bernard J. Duroc-Danner
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Bernard J. Duroc-Danner
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WEATHERFORD INTERNATIONAL LTD.
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By:
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/s/ Burt M. Martin
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Burt M. Martin
Senior Vice President
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AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (this Agreement) is entered into as of
December 31, 2008, by and between Weatherford International Ltd., a Bermuda exempted company (the
Company), and Stuart E. Ferguson (the Executive).
W I T N E S S E T H:
WHEREAS, the Board 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;
WHEREAS, the Company desires 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
employment and provide such services on the terms set forth in this Agreement;
WHEREAS, the Company and the Executive previously entered into an employment agreement (the
Employment Agreement) dated and effective as of August 1, 2003 (the Effective Date);
WHEREAS, the Company and the Executive desire to amend and restate the Employment Agreement as
set forth in this Agreement to comply with Section 409A of the Internal Revenue Code of 1986, as
amended and the final Department of Treasury regulations issued thereunder; and
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the parties hereto do hereby agree that effective as of December 31, 2008 the
Employment Agreement is hereby amended and restated to provide as follows:
1. Certain Definitions.
(a) Affiliate shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of
the Exchange Act.
(b) Beneficial Owner shall have the meaning set forth in Rule 13d-3 under the Exchange Act
(c) Board shall mean the Board of Directors of the Company.
(d) 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(c)), after a written demand for substantial
performance is delivered to the Executive by the Board which specifically
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identifies the manner in which the Executive has not substantially performed the Executives
duties, or
(ii) the willful engaging by the Executive 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 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 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 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.
(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:
(i) any Person is or becomes the Beneficial Owner, directly or indirectly, of twenty percent
(20%) 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 (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; or
(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
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Companys Assets (any of which 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 this Agreement, 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 sixty-six
and two-thirds percent (66-2/3%) 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 (1) 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, 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 of Directors 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) Company shall mean Weatherford International Ltd. 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.
(g) 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.
(h) 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.
(i) 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
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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.
(j) Entity shall mean means any corporation, partnership, association, joint-stock company,
limited liability company, trust, unincorporated organization or other business entity.
(k) Exchange Act shall mean the Securities Exchange Act of 1934, as amended from time to
time.
(l) 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) of this
Agreement, 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)) or any other
agreements between the Executive and the Company or any Subsidiary, 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 or previously 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) hereof 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 9(b) of this Agreement;
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(vii) failure of the Company (including any successor) to agree, execute and enter into a new
employment agreement and a new executive retirement plan with the Executive prior to the
termination or expiration of this Agreement, with such employment agreement and executive
retirement plan having the same terms and conditions as existed in agreements and plans between the
Company and the Executive prior to December 30, 2008, and incorporating such terms and conditions
that are more favorable to the Executive from all agreements and retirement plans existing on
January 1, 2009; or
(viii) in connection with, as a result of, or following a Change of Control, 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
common 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).
For purposes of this Agreement, any good faith determination of Good Reason made by the
Executive shall be conclusive.
(m) 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, (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.
(n) Section 409A means Section 409A of the Internal Revenue Code of 1986, as amended and the
final Department of Treasury regulations issued thereunder.
(o) Section 409A Amounts means those amounts that are deferred compensation subject to
Section 409A.
(p) Separation From Service shall have the meaning ascribed to such term in Section 409A.
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/her prior express agreement, may be seconded to the employment of
Weatherford U.S., L.P. (or such other affiliated entity as
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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/her 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/her sole discretion, to revoke his/her agreement to
be seconded to the employment of any Seconded Affiliate Company at any time.
3. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the Executives position (including status, offices,
titles, reporting requirements, authority, duties and responsibilities) shall be Senior Vice
President Reservoir & Production and Chief Technology Officer of the Company, (B) the
Executives services shall be performed at the Companys offices in Aberdeen, Scotland or other
locations agreed by the Executive and (C) the Executive will report directly to the Companys Chief
Executive Officer.
(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
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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 executive officer annual incentive program. Each such Annual Bonus shall be paid no
later than 2-1/2 months after 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. As
used in this Agreement, the term affiliated companies shall include any company controlled by,
controlling or under common control with the Company.
(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 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. Notwithstanding the foregoing, effective December 31,
2008, no amounts shall be payable under this Section 3(b)(v) to the extent that such amounts are
Section 409A Amounts.
(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
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affiliated companies in effect for the Executive on the date hereof. Notwithstanding the
foregoing, effective December 31, 2008, no amounts shall be payable under this Section 3(b)(vi) to
the extent that such amounts are Section 409A Amounts.
(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.
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 10(b) of this Agreement 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 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 10(b) of this Agreement 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 10(b) of the Agreement. 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 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,
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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
and arrangements (collectively, Benefit Plans) in which the Executive is a participant as of the
Date of Termination. Accrued Obligation means the sum of (1) the Executives Annual Base Salary
through the Date of Termination for periods through but not following his Separation From Service
and (2) 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 to the Executive (or Executives heirs, beneficiaries or
representatives as applicable) in a lump sum in cash within thirty (30) days after the Date of
Termination the Accrued Obligation; and
(ii) The Company shall pay or cause the Executive to be paid the Benefit Obligation at the
times specified in and in accordance with the terms of the applicable Benefit Plans.
(c) Cause. If the Executives employment is terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to the Executive, other than the
obligation to pay to the Executive (x) the Accrued Obligation and (y) the Benefit Obligation in
accordance with the terms of the applicable Benefit Plans.
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(d) Termination by Executive Other Than for Good Reason. If the Executive voluntarily
terminates his employment during the Employment Period for any reason other than for Good Reason,
the Executives employment shall terminate without further obligations to the Executive, other than
for payment of the Accrued Obligation and the Benefit Obligation and the rights provided in Section
6. In such case, 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.
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 contract
or agreement with the Company or any of its affiliated companies. Except as otherwise 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 of the 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 at or subsequent to the Date of Termination shall be payable in accordance
with such plan, policy, practice or program or contract or agreement.
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,
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.
8. 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
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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 8
constitute a basis for deferring or withholding any amounts otherwise payable to the Executive
under this Agreement.
9. 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) 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 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.
10. Miscellaneous.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
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If to the Executive:
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Stuart E. Ferguson
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515 Post Oak Boulevard
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Houston, Texas 77027
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If to the Company:
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Weatherford International Ltd.
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515 Post Oak Boulevard
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Houston, Texas 77027
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Attention: General Counsel
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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 parties
relating to the subject matter hereof, including, without limitation, the Prior Agreements.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the
authorization from its Board of Directors, the Company has caused these presents to be executed in
its name and on its behalf, all as of the day and year first above written.
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/s/ Stuart E. Ferguson
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Stuart E. Ferguson
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WEATHERFORD INTERNATIONAL LTD.
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By:
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/s/ Bernard J. Duroc-Danner
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Bernard J. Duroc-Danner
Chairman, President & Chief Executive Officer
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AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (this Agreement) is entered into as of
December 31, 2008, by and between Weatherford International Ltd., a Bermuda exempted company (the
Company), and Burt M. Martin (the Executive).
W I T N E S S E T H:
WHEREAS, the Board 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;
WHEREAS, the Company desires 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
employment and provide such services on the terms set forth in this Agreement;
WHEREAS, the Company and the Executive previously entered into an employment agreement (the
Employment Agreement) dated and effective as of August 1, 2003 (the Effective Date);
WHEREAS, the Company and the Executive desire to amend and restate the Employment Agreement as
set forth in this Agreement to comply with Section 409A of the Internal Revenue Code of 1986, as
amended and the final Department of Treasury regulations issued thereunder; and
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the parties hereto do hereby agree that effective as of December 31, 2008 the
Employment Agreement is hereby amended and restated to provide as follows:
1. Certain Definitions.
(a) Affiliate shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of
the Exchange Act.
(b) Beneficial Owner shall have the meaning set forth in Rule 13d-3 under the Exchange Act
(c) Board shall mean the Board of Directors of the Company.
(d) 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(c)), after a written demand for substantial
performance is delivered to the Executive by the Board which specifically
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identifies the manner in which the Executive has not substantially performed the Executives
duties, or
(ii) the willful engaging by the Executive 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 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 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 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.
(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:
(i) any Person is or becomes the Beneficial Owner, directly or indirectly, of twenty percent
(20%) 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 (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; or
(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
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Companys Assets (any of which 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 this Agreement, 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 sixty-six
and two-thirds percent (66-2/3%) 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 (1) 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, 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 of Directors 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) Company shall mean Weatherford International Ltd. 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.
(g) 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.
(h) 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.
(i) 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
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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.
(j) Entity shall mean means any corporation, partnership, association, joint-stock company,
limited liability company, trust, unincorporated organization or other business entity.
(k) Exchange Act shall mean the Securities Exchange Act of 1934, as amended from time to
time.
(l) 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) of this
Agreement, 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)) or any other
agreements between the Executive and the Company or any Subsidiary, 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 or previously 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) hereof 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 9(b) of this Agreement;
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(vii) failure of the Company (including any successor) to agree, execute and enter into a new
employment agreement and a new executive retirement plan with the Executive prior to the
termination or expiration of this Agreement, with such employment agreement and executive
retirement plan having the same terms and conditions as existed in agreements and plans between the
Company and the Executive prior to December 30, 2008, and incorporating such terms and conditions
that are more favorable to the Executive from all agreements and retirement plans existing on
January 1, 2009; or
(viii) in connection with, as a result of, or following a Change of Control, 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
common 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).
For purposes of this Agreement, any good faith determination of Good Reason made by the
Executive shall be conclusive.
(m) 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, (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.
(n) Section 409A means Section 409A of the Internal Revenue Code of 1986, as amended and the
final Department of Treasury regulations issued thereunder.
(o) Section 409A Amounts means those amounts that are deferred compensation subject to
Section 409A.
(p) Separation From Service shall have the meaning ascribed to such term in Section 409A.
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/her prior express agreement, may be seconded to the employment of
Weatherford U.S., L.P. (or such other affiliated entity as
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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/her 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/her sole discretion, to revoke his/her agreement to
be seconded to the employment of any Seconded Affiliate Company at any time.
3. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the Executives position (including status, offices,
titles, reporting requirements, authority, duties and responsibilities) shall be Senior Vice
President, General Counsel and Secretary of the Company, (B) the Executives services shall be
performed at the Companys executive office in Houston, Texas or other locations less than
thirty-five (35) miles from such location and (C) the Executive will report directly to the
Companys Chief Executive Officer.
(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
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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 executive officer annual incentive program. Each such Annual Bonus shall be paid no
later than 2-1/2 months after 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. As
used in this Agreement, the term affiliated companies shall include any company controlled by,
controlling or under common control with the Company.
(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 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. Notwithstanding the foregoing, effective December 31,
2008, no amounts shall be payable under this Section 3(b)(v) to the extent that such amounts are
Section 409A Amounts.
(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
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affiliated companies in effect for the Executive on the date hereof. Notwithstanding the
foregoing, effective December 31, 2008, no amounts shall be payable under this Section 3(b)(vi) to
the extent that such amounts are Section 409A Amounts.
(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.
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 10(b) of this Agreement 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 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 10(b) of this Agreement 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 10(b) of the Agreement. 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 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,
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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
and arrangements (collectively, Benefit Plans) in which the Executive is a participant as of the
Date of Termination. Accrued Obligation means the sum of (1) the Executives Annual Base Salary
through the Date of Termination for periods through but not following his Separation From Service
and (2) 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 to the Executive (or Executives heirs, beneficiaries or
representatives as applicable) in a lump sum in cash within thirty (30) days after the Date of
Termination the Accrued Obligation; and
(ii) The Company shall pay or cause the Executive to be paid the Benefit Obligation at the
times specified in and in accordance with the terms of the applicable Benefit Plans.
(c) Cause. If the Executives employment is terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to the Executive, other than the
obligation to pay to the Executive (x) the Accrued Obligation and (y) the Benefit Obligation in
accordance with the terms of the applicable Benefit Plans.
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(d) Termination by Executive Other Than for Good Reason. If the Executive voluntarily
terminates his employment during the Employment Period for any reason other than for Good Reason,
the Executives employment shall terminate without further obligations to the Executive, other than
for payment of the Accrued Obligation and the Benefit Obligation and the rights provided in Section
6. In such case, 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.
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 contract
or agreement with the Company or any of its affiliated companies. Except as otherwise 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 of the 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 at or subsequent to the Date of Termination shall be payable in accordance
with such plan, policy, practice or program or contract or agreement.
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,
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.
8. 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
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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 8
constitute a basis for deferring or withholding any amounts otherwise payable to the Executive
under this Agreement.
9. 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) 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 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.
10. Miscellaneous.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
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If to the Executive:
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Burt M. Martin
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515 Post Oak Boulevard
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Houston, Texas 77027
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If to the Company:
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Weatherford International Ltd.
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515 Post Oak Boulevard
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Houston, Texas 77027
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Attention: General Counsel
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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 parties
relating to the subject matter hereof, including, without limitation, the Prior Agreements.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the
authorization from its Board of Directors, the Company has caused these presents to be executed in
its name and on its behalf, all as of the day and year first above written.
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/s/ Burt M. Martin
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Burt M. Martin
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WEATHERFORD INTERNATIONAL LTD.
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By:
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/s/ Bernard J. Duroc-Danner
Bernard J. Duroc-Danner
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Chairman, President & Chief Executive Officer
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AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (this Agreement) is entered into as of
December 31, 2008, by and between Weatherford International Ltd., a Bermuda exempted company (the
Company), and Keith R. Morley (the Executive).
W I T N
E S S E T H:
WHEREAS, the Board 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;
WHEREAS, the Company desires 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
employment and provide such services on the terms set forth in this Agreement;
WHEREAS, the Company and the Executive previously entered into an employment agreement (the
Employment Agreement) dated and effective as of June 11, 2007 (the Effective Date);
WHEREAS, the Company and the Executive desire to amend and restate the Employment Agreement as
set forth in this Agreement to comply with Section 409A of the Internal Revenue Code of 1986, as
amended and the final Department of Treasury regulations issued thereunder; and
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the parties hereto do hereby agree that effective as of December 31, 2008 the
Employment Agreement is hereby amended and restated to provide as follows:
1. Certain Definitions.
(a) Affiliate shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of
the Exchange Act.
(b) Beneficial Owner shall have the meaning set forth in Rule 13d-3 under the Exchange Act
(c) Board shall mean the Board of Directors of the Company.
(d) 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(c)), after a written demand for substantial
performance is delivered to the Executive by the Board which specifically
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identifies the manner in which the Executive has not substantially performed the Executives
duties, or
(ii) the willful engaging by the Executive 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 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 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 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.
(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:
(i) any Person is or becomes the Beneficial Owner, directly or indirectly, of twenty percent
(20%) 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 (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; or
(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
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Companys Assets (any of which 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 this Agreement, 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 sixty-six
and two-thirds percent (66-2/3%) 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 (1) 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, 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 of Directors 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) Company shall mean Weatherford International Ltd. 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.
(g) 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.
(h) 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.
(i) 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
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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.
(j) Entity shall mean means any corporation, partnership, association, joint-stock company,
limited liability company, trust, unincorporated organization or other business entity.
(k) Exchange Act shall mean the Securities Exchange Act of 1934, as amended from time to
time.
(l) 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) of this
Agreement, 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)) or any other
agreements between the Executive and the Company or any Subsidiary, 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 or previously 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) hereof 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 9(b) of this Agreement;
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(vii) failure of the Company (including any successor) to agree, execute and enter into a new
employment agreement and a new executive retirement plan with the Executive prior to the
termination or expiration of this Agreement, with such employment agreement and executive
retirement plan having the same terms and conditions as existed in agreements and plans between the
Company and the Executive prior to December 30, 2008, and incorporating such terms and conditions
that are more favorable to the Executive from all agreements and retirement plans existing on
January 1, 2009; or
(viii) in connection with, as a result of, or following a Change of Control, 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
common 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).
For purposes of this Agreement, any good faith determination of Good Reason made by the
Executive shall be conclusive.
(m) 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, (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.
(n) Section 409A means Section 409A of the Internal Revenue Code of 1986, as amended and the
final Department of Treasury regulations issued thereunder.
(o) Section 409A Amounts means those amounts that are deferred compensation subject to
Section 409A.
(p) Separation From Service shall have the meaning ascribed to such term in Section 409A.
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/her prior express agreement, may be seconded to the employment of
Weatherford U.S., L.P. (or such other affiliated entity as
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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/her 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/her sole discretion, to revoke his/her agreement to
be seconded to the employment of any Seconded Affiliate Company at any time.
3. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the Executives position (including status, offices,
titles, reporting requirements, authority, duties and responsibilities) shall be Senior Vice
President Well Construction & Operations Support of the Company, (B) the Executives services
shall be performed at the Companys executive office in Dubai, Houston, Texas or other locations
agreed by Executive and (C) the Executive will report directly to the Companys Chief Executive
Officer.
(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
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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 executive officer annual incentive program. Each such Annual Bonus shall be paid no
later than 2-1/2 months after 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. As
used in this Agreement, the term affiliated companies shall include any company controlled by,
controlling or under common control with the Company.
(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 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. Notwithstanding the foregoing, effective December 31,
2008, no amounts shall be payable under this Section 3(b)(v) to the extent that such amounts are
Section 409A Amounts.
(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
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affiliated companies in effect for the Executive on the date hereof. Notwithstanding the
foregoing, effective December 31, 2008, no amounts shall be payable under this Section 3(b)(vi) to
the extent that such amounts are Section 409A Amounts.
(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.
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 10(b) of this Agreement 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 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 10(b) of this Agreement 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 10(b) of the Agreement. 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 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,
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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
and arrangements (collectively, Benefit Plans) in which the Executive is a participant as of the
Date of Termination. Accrued Obligation means the sum of (1) the Executives Annual Base Salary
through the Date of Termination for periods through but not following his Separation From Service
and (2) 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 to the Executive (or Executives heirs, beneficiaries or
representatives as applicable) in a lump sum in cash within thirty (30) days after the Date of
Termination the Accrued Obligation; and
(ii) The Company shall pay or cause the Executive to be paid the Benefit Obligation at the
times specified in and in accordance with the terms of the applicable Benefit Plans.
(c) Cause. If the Executives employment is terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to the Executive, other than the
obligation to pay to the Executive (x) the Accrued Obligation and (y) the Benefit Obligation in
accordance with the terms of the applicable Benefit Plans.
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(d) Termination by Executive Other Than for Good Reason. If the Executive voluntarily
terminates his employment during the Employment Period for any reason other than for Good Reason,
the Executives employment shall terminate without further obligations to the Executive, other than
for payment of the Accrued Obligation and the Benefit Obligation and the rights provided in Section
6. In such case, 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.
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 contract
or agreement with the Company or any of its affiliated companies. Except as otherwise 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 of the 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 at or subsequent to the Date of Termination shall be payable in accordance
with such plan, policy, practice or program or contract or agreement.
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,
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.
8. 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
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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 8
constitute a basis for deferring or withholding any amounts otherwise payable to the Executive
under this Agreement.
9. 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) 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 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.
10. Miscellaneous.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
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If to the Executive:
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Keith R. Morley
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515 Post Oak Boulevard
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Houston, Texas 77027
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If to the Company:
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Weatherford International Ltd.
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515 Post Oak Boulevard
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Houston, Texas 77027
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Attention: General Counsel
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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 parties
relating to the subject matter hereof, including, without limitation, the Prior Agreements.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the
authorization from its Board of Directors, the Company has caused these presents to be executed in
its name and on its behalf, all as of the day and year first above written.
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/s/ Keith R. Morley
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Keith R. Morley
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WEATHERFORD INTERNATIONAL LTD.
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By:
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/s/ Bernard J. Duroc-Danner
Bernard J. Duroc-Danner
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Chairman, President & Chief Executive Officer
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Exhibit 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement (this Agreement) is entered into as of January 1, 2009 (the
Effective Date), by and between Weatherford International, Inc., a Delaware corporation (the
Company), and Jessica Abarca (the Executive).
W I T N
E S S E T H:
WHEREAS, the Company has determined that it is in the interest of the Company and the
shareholders of Weatherford International Ltd. for the Company to commit to provide certain
severance benefits to the Executive in the event of his termination of employment under certain
conditions;
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the parties hereto do hereby agree:
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 Base Salary shall have the meaning specified in the Employment Agreement.
(c) Annual Bonus shall mean the Executives annual bonus under the annual incentive plan of
the Company and any of its Affiliates.
(d) Annual Bonus Amount shall mean the sum of (a) 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 Affiliates to or for the benefit of the Executive for services rendered or
labor performed during a fiscal year of the Company and (b) 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
Affiliates to or for the benefit of the Employee (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.
(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 Parent.
(g) Cause shall mean:
(i) the willful and continued failure of the Executive to substantially perform the
Executives duties with the Parent or 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) of the Employment
Agreement), 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 willful engaging by the Executive in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Parent or 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 Parent or 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 Parent (which may be the General Counsel or
other counsel employed by the Parent 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 Parent
or 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 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 common shares of the Parent (the Outstanding
Parent Common Shares) or (B) the combined voting power of the then outstanding voting securities
of the Parent entitled to vote generally in the election of directors (the Outstanding Parent
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 Parents 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; or
(iii) the consummation of a reorganization, merger, amalgamation, consolidation, scheme of
arrangement, exchange offer or similar transaction of the Parent or any of its subsidiaries or the
sale, transfer or other disposition of all or substantially all of the Parents Assets (any of
which 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 this Agreement, 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 Parent
Common Shares and Outstanding Parent 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 then outstanding
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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 Parent or all or substantially all of the Parents
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 Parent Common Shares and the Outstanding Parent 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 Parent 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 of Directors or the shareholders of the Parent 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 Parents Assets or the dissolution of the Parent.
(i) Disability shall mean the absence of the Executive from performance of the Executives
duties with the Parent on a substantial basis for one hundred twenty (120) calendar days as a
result of incapacity due to mental or physical illness.
(j) Employment Agreement shall mean the Executives employment agreement with the Parent, as
it may be amended from time to time.
(k) Employment Period shall have the meaning specified in the Employment Agreement.
(l) Entity shall mean means any corporation, partnership, association, joint-stock company,
limited liability company, trust, unincorporated organization or other business entity.
(m) ERP shall mean the Weatherford International Ltd. Nonqualified Executive Retirement
Plan, as it may be amended from time to time.
(n) Exchange Act shall mean the Securities Exchange Act of 1934, as amended from time to
time.
(o) Good Reason shall mean the occurrence of any of the following:
(i) the assignment to the Executive of any position, authority, duties or responsibilities
that are not materially consistent with the Executives position (including status, offices and
titles), authority, duties or responsibilities as contemplated by Section 3(a) of the Employment
Agreement, or any other action by the Parent or the Company which results in a diminution in such
position, authority, duties or responsibilities, excluding for this purpose any not taken in bad
faith and which is remedied by the Parent or the Company after receipt of notice thereof given by
the Executive;
(ii) any failure by the Parent or the Company to comply with any of the provisions of this
Agreement or the Employment Agreement (including, without limitation, its obligations under Section
3(a) of the Employment Agreement), other than any failure not occurring in bad faith and which is
remedied by the Parent or the Company after receipt of notice thereof given by the Executive;
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(iii) any failure by the Parent or the Company to continue to provide the Executive with
benefits currently enjoyed by the Executive under any of the Parents and 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 Parent or 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 Parents or the Companys requiring the Executive to be based at any office or
location other than as provided in Section 3(a)(i) of the Employment Agreement or the Parents or
the Companys requiring the Executive to travel on business to a substantially greater extent than
required immediately prior to the date hereof;
(v) any purported termination by the Parent or 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 Parent to comply with and satisfy Section 10(b) of the Employment
Agreement;
(vii) failure by the Parent (including any successor) to agree, execute and enter into a new
employment agreement and a new executive retirement plan with the Executive prior to the
termination or expiration of this Agreement, with such employment agreement and executive
retirement plan having the same terms and conditions as existed in agreements and plans between the
Parent or the Company and the Executive prior to December 30, 2008, and incorporating such terms
and conditions that are more favorable to the Executive from all agreements and retirement plans
existing on January 1, 2009; or
(viii) in connection with, as a result of or following a Change of Control, 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 Parents
common 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 Parent 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) of the Employment Agreement.
For purposes of this Agreement, any good faith determination of Good Reason made by the
Executive shall be conclusive.
(p) IRS shall mean the Internal Revenue Service.
(q) Parent shall mean Weatherford International Ltd. 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.
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(r) Parents Assets shall mean the assets (of any kind) owned by the Parent, including,
without limitation, the securities of the Parents Subsidiaries and any of the assets owned by the
Parents Subsidiaries.
(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
Parent or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Parent or any of its Affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering by the Parent of such securities, or (iv) a corporation
or other entity owned, directly or indirectly, by the shareholders of the Parent in the same
proportions as their ownership of common shares of the Parent.
(t) Section 409A shall mean section 409A of the Internal Revenue Code of 1986, as amended
and the final Department of Treasury regulations issued thereunder.
(u) Separation From Service shall have the meaning ascribed to such term in Section 409A.
(v) Specified Employee shall have the meaning ascribed to such term in Section 409A.
(w) SRP shall mean the Weatherford International, Inc. Supplemental Retirement Plan, as it
may be amended from time to time.
(x) Subsidiary shall mean any majority-owned subsidiary of the Parent or any majority-owned
subsidiary thereof, or any other Entity in which the Parent owns, directly or indirectly, a
significant financial interest provided that the Chief Executive Officer of the Parent designates
such Entity to be a Subsidiary for the purposes of this Agreement.
(y) Term of the Agreement shall mean the period commencing on January 1, 2009 and ending on
December 31, 2009.
2.
Termination of Employment.
(a) Death or Disability. The Executives employment shall terminate automatically upon the
Executives death during the Employment Period. If the Parent 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 the Employment Agreement of its intention to terminate the
Executives employment. In such event, the Executives employment with the Parent shall terminate
effective thirty (30) days after receipt of such notice by the Executive (the Disability Effective
Date), provided 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
the Employment Agreement 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 Parent 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.
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(d) Notice of Termination. Any termination during the Employment Period shall be communicated
by Notice of Termination to the other party hereto given in accordance with Section 11(b) of this
Agreement. For purposes of this Agreement, a Notice of Termination means a written notice which
(i) indicates the specific termination provision in this Agreement or the Employment 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 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 or the Parent 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.
3.
Obligations of the Company Upon Termination.
(a) Death, Disability, Good Reason or Other than For Cause. If, during the Employment Period
and prior to the expiration of the Term of the Agreement, the Executives employment is terminated
by reason of the Executives death or Disability, by the Parent or the Company for any reason other
than for Cause or by the Executive for Good Reason:
(i) The Company shall pay to the Executive (or Executives heirs, beneficiaries or
representatives as applicable), at the times specified in clause (x), the following amounts:
(A) 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;
(B) an amount equal to the product of (x) the higher of (I) the highest Annual Bonus Amount
for the preceding five (5) calendar years and (II) 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 (y) 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);
(C) an amount equal to two 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;
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(D) an amount equal to two 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 the ERP and the SRP) using the
amounts specified in clauses (i) and (ii) of Section 3(a)(i)(C), 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
(E) the total value of all fringe benefits received by the Executive on an annualized basis
multiplied by two (2).
(ii) For a period of two (2) years 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) of the Employment Agreement 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 eligibility. If any of the dental, accident, health insurance or other
benefits specified in this Section 3(a)(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
3(a)(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 3(a)(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 3(a)(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 3(a)(ii) during the first six
months following the date of the Executives Separation From Service shall be accumulated and paid
to the Executive on the date that is six months following the date of his Separation From Service.
All reimbursements by the Company under this Section 3(a)(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.
(iii) All benefits and amounts under the Companys deferred compensation plan and all other
benefit plans (except as specifically provided for in Section 4(b) below), not already vested shall
become immediately one hundred percent (100%) vested as of the Date of Termination. All options to
acquire common shares of the Parent, all restricted common shares of the Parent, and all share
appreciation rights the value of which is determined by reference to or based upon the value of
common shares of the Parent, 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
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or based upon the value of common shares of the Parent 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 (x) 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 (x) below, the Company shall pay the Executive a lump sum
in cash equal to the Executives annual car allowance multiplied by two (2).
(vii) To the extent not already paid or provided, the Company shall timely pay or provide to
the Executive any other amounts or benefits required to be paid or provided or which the Executive
is eligible to receive under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (collectively, the Other Benefits).
(viii) If the Executives employment is terminated by reason of the Executives death, the
Other Benefits (as defined in this Section) 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.
(ix) If the Executives employment is terminated by reason of the Executives Disability, the
Other Benefits (as defined in this Section) 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.
(x) The Company shall pay or provide to the Executive the amounts or benefits specified in
Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E), and Sections 3(a)(v) and
3(a)(vi) 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 months
following the date of his Separation From Service if he is a Specified Employee.
(xi) If the Executive is a Specified Employee, on the date that is six months following the
Executives Separation From Service, the Company shall pay to the Executive, in addition to the
amounts reflected in clause (x), an amount equal to the interest that would be earned on the
amounts specified in Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E) and, to
the extent subject to a mandatory six-month delay in payment, all amounts payable under the ERP and
the SRP, for the
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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 per annum (the Interest
Amount).
(xii) Notwithstanding any other provision of this Agreement to the contrary, the amount of the
payment under each of Sections 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E) shall not exceed
the amount that would have been paid to the Executive had his Date of Termination occurred on
December 31, 2008.
(b) Cause. If the Executives employment is terminated for Cause during the Employment Period
and prior to the expiration of the Term of the Agreement, this Agreement shall terminate without
further obligations to the Executive, other than the obligation to pay to the Executive (x) his
Annual Base Salary through the Date of Termination for periods following his Separation From
Service on the date that is 30 days following the date of the Employees Separation From Service if
he is not a Specified Employee or on the date that is six months following the date of his
Separation From Service if he is a Specified Employee, and (y) Other Benefits, to the extent
theretofore unpaid.
(c) Termination by Executive Other Than for Good Reason. If the Executive voluntarily
terminates his employment during the Employment Period and prior to the expiration of the Term of
the Agreement for any reason other than for Good Reason, the Executives employment shall terminate
without further obligations to the Executive, other than (x) the obligation to pay to the Executive
his Annual Base Salary through the Date of Termination for periods following his Separation From
Service, (y) Other Benefits and (z) the rights provided in Section 4. The Company shall pay to the
Executive the amount specified in clause (x) on the date that is 30 days following the date of the
Employees Separation From Service if he is not a Specified Employee or on the date that is six
months following the date of his Separation From Service if he is a Specified Employee.
4.
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 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 SRP, 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 SRP benefits payable shall only be those that are payable, if any, under the
terms of the ERP or SRP as of the Date of Termination.
- 9 -
5.
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 3(a)(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 the Employment 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 or the Employment Agreement). The legal
fees or expenses that are subject to reimbursement pursuant to this Section 5(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 5(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 5(c) is
not subject to liquidation or exchange for another benefit. Any amount to which the Executive is
entitled to reimbursement under this Section 5(c) during the first six months following the date of
the Executives Separation From Service shall be accumulated and paid to the Executive on the date
that is six months following the date of his Separation From Service. All reimbursements by the
Company under this Section 5(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.
6.
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 Parent, the Company or any of their 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 6) (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
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
- 10 -
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 6(a) during the first six months
following the date of the Executives Separation From Service shall be accumulated and paid to the
Executive on the date that is six months following the date of his Separation From Service. All
reimbursements by the Company under this Section 6(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.
(b) Subject to the provisions of Section 6(c), all determinations required to be made under
this Section 6, 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 6, 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 6(a), and in no event later than the payment deadline
specified in Section 6(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), consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 6(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 6(a), and in no event
later than the payment deadline specified in Section 6(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 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,
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(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 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 6(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 10 days prior to the date that
the Executive is 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 6(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 6(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 6(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 6(c)(iv) during the first six months following the date of the Employees Separation
From Service shall be accumulated and paid to the Executive on the date that is six months
following the date of his Separation From Service. All reimbursements by the Company under this
Section 6(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.
(d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to
Section 6(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 6(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 6(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.
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(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.
7.
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.
8.
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 Employee, the Company shall
owe the Employee interest on the delayed payment at the applicable Federal rate provided for in
section 7872(f)(2)(A) of the Code if the Employee (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. Any such interest payments shall become
due and payable effective as of the applicable payment date(s) specified in Section 3 with respect
to the delinquent payment(s) due under Section 3.
9.
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 Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E),
the estimated amount of the Gross-Up Payment to be made under Section 6 and the Interest Amount.
The cash amounts specified in Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and
3(a)(i)(E), the Gross-Up Payment and the Interest Amount shall be paid from the Rabbi Trust on the
dates specified in Sections 3 and 6 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.
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10.
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 Parent,
Company or any subsidiary or Affiliate of the Company), to all or substantially all of the
Companys or Parents business and/or the Parents Assets or the 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 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.
11.
Miscellaneous.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
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If to the Executive:
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Jessica Abarca
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515 Post Oak Boulevard
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Houston, Texas 77027
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If to the Company:
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Weatherford International, Inc.
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515 Post Oak Boulevard
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Houston, Texas 77027
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Attention: General Counsel
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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.
- 14 -
(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 parties
relating to the subject matter hereof, including, without limitation, the Prior Agreements.
(g) Notwithstanding any other provision of this Agreement, no benefits or payments hereunder
shall be provided or paid following December 31, 2010.
- 15 -
IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the
authorization from its Board of Directors, the Company has caused these presents to be executed in
its name and on its behalf, all as of the day and year first above written.
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/s/ Jessica Abarca
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Jessica Abarca
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WEATHERFORD INTERNATIONAL, INC.
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By:
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/s/ Bernard J. Duroc-Danner
Bernard J. Duroc-Danner
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President
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EMPLOYMENT AGREEMENT
This Employment Agreement (this Agreement) is entered into as of January 1, 2009 (the
Effective Date), by and between Weatherford International, Inc., a Delaware corporation (the
Company), and Andrew P. Becnel (the Executive).
W I T N
E S S E T H:
WHEREAS, the Company has determined that it is in the interest of the Company and the
shareholders of Weatherford International Ltd. for the Company to commit to provide certain
severance benefits to the Executive in the event of his termination of employment under certain
conditions;
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the parties hereto do hereby agree:
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 Base Salary shall have the meaning specified in the Employment Agreement.
(c) Annual Bonus shall mean the Executives annual bonus under the annual incentive plan of
the Company and any of its Affiliates.
(d) Annual Bonus Amount shall mean the sum of (a) 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 Affiliates to or for the benefit of the Executive for services rendered or
labor performed during a fiscal year of the Company and (b) 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
Affiliates to or for the benefit of the Employee (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.
(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 Parent.
(g) Cause shall mean:
(i) the willful and continued failure of the Executive to substantially perform the
Executives duties with the Parent or 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) of the Employment
Agreement), after a written
- 1 -
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 willful engaging by the Executive in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Parent or 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 Parent or 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 Parent (which may be the General Counsel or
other counsel employed by the Parent 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 Parent
or 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 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 common shares of the Parent (the Outstanding
Parent Common Shares) or (B) the combined voting power of the then outstanding voting securities
of the Parent entitled to vote generally in the election of directors (the Outstanding Parent
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 Parents 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; or
(iii) the consummation of a reorganization, merger, amalgamation, consolidation, scheme of
arrangement, exchange offer or similar transaction of the Parent or any of its subsidiaries or the
sale, transfer or other disposition of all or substantially all of the Parents Assets (any of
which 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 this Agreement, 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 Parent
Common Shares and Outstanding Parent 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 then outstanding
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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 Parent or all or substantially all of the Parents
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 Parent Common Shares and the Outstanding Parent 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 Parent 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 of Directors or the shareholders of the Parent 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 Parents Assets or the dissolution of the Parent.
(i) Disability shall mean the absence of the Executive from performance of the Executives
duties with the Parent on a substantial basis for one hundred twenty (120) calendar days as a
result of incapacity due to mental or physical illness.
(j) Employment Agreement shall mean the Executives employment agreement with the Parent, as
it may be amended from time to time.
(k) Employment Period shall have the meaning specified in the Employment Agreement.
(l) Entity shall mean means any corporation, partnership, association, joint-stock company,
limited liability company, trust, unincorporated organization or other business entity.
(m) ERP shall mean the Weatherford International Ltd. Nonqualified Executive Retirement
Plan, as it may be amended from time to time.
(n) Exchange Act shall mean the Securities Exchange Act of 1934, as amended from time to
time.
(o) 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) of the
Employment Agreement, or any other action by the Parent or the Company which results in a
diminution in such position, authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the
Parent or the Company promptly after receipt of notice thereof given by the Executive;
(ii) any failure by the Parent or the Company to comply with any of the provisions of this
Agreement or the Employment Agreement (including, without limitation, its obligations under Section
3(a) of the Employment Agreement), other than an isolated, insubstantial and inadvertent failure
- 3 -
not occurring in bad faith and which is remedied by the Parent or the Company promptly after
receipt of notice thereof given by the Executive;
(iii) any failure by the Parent or the Company to continue to provide the Executive with
benefits currently enjoyed by the Executive under any of the Parents and 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 Parent or 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 Parents or the Companys requiring the Executive to be based at any office or
location other than as provided in Section 3(a)(i) of the Employment Agreement or the Parents or
the Companys requiring the Executive to travel on business to a substantially greater extent than
required immediately prior to the date hereof;
(v) any purported termination by the Parent or 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 Parent to comply with and satisfy Section 10(b) of the Employment
Agreement;
(vii) failure by the Parent (including any successor) to agree, execute and enter into a new
employment agreement and a new executive retirement plan with the Executive prior to the
termination or expiration of this Agreement, with such employment agreement and executive
retirement plan having the same terms and conditions as existed in agreements and plans between the
Parent or the Company and the Executive prior to December 30, 2008, and incorporating such terms
and conditions that are more favorable to the Executive from all agreements and retirement plans
existing on January 1, 2009; or
(viii) in connection with, as a result of or following a Change of Control, 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 Parents
common 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 Parent 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) of the Employment Agreement.
For purposes of this Agreement, any good faith determination of Good Reason made by the
Executive shall be conclusive.
(p) IRS shall mean the Internal Revenue Service.
(q) Parent shall mean Weatherford International Ltd. 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.
- 4 -
(r) Parents Assets shall mean the assets (of any kind) owned by the Parent, including,
without limitation, the securities of the Parents Subsidiaries and any of the assets owned by the
Parents Subsidiaries.
(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
Parent or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Parent or any of its Affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering by the Parent of such securities, or (iv) a corporation
or other entity owned, directly or indirectly, by the shareholders of the Parent in the same
proportions as their ownership of common shares of the Parent.
(t) Section 409A shall mean section 409A of the Internal Revenue Code of 1986, as amended
and the final Department of Treasury regulations issued thereunder.
(u) Separation From Service shall have the meaning ascribed to such term in Section 409A.
(v) Specified Employee shall have the meaning ascribed to such term in Section 409A.
(w) SRP shall mean the Weatherford International, Inc. Supplemental Retirement Plan, as it
may be amended from time to time.
(x) Subsidiary shall mean any majority-owned subsidiary of the Parent or any majority-owned
subsidiary thereof, or any other Entity in which the Parent owns, directly or indirectly, a
significant financial interest provided that the Chief Executive Officer of the Parent designates
such Entity to be a Subsidiary for the purposes of this Agreement.
(y) Term of the Agreement shall mean the period commencing on January 1, 2009 and ending on
December 31, 2009.
2.
Termination of Employment.
(a) Death or Disability. The Executives employment shall terminate automatically upon the
Executives death during the Employment Period. If the Parent 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 the Employment Agreement of its intention to terminate the
Executives employment. In such event, the Executives employment with the Parent shall terminate
effective thirty (30) days after receipt of such notice by the Executive (the Disability Effective
Date), provided 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
the Employment Agreement 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 Parent 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.
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(d) Notice of Termination. Any termination during the Employment Period shall be communicated
by Notice of Termination to the other party hereto given in accordance with Section 11(b) of this
Agreement. For purposes of this Agreement, a Notice of Termination means a written notice which
(i) indicates the specific termination provision in this Agreement or the Employment 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 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 or the Parent 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.
3.
Obligations of the Company Upon Termination.
(a) Death, Disability, Good Reason or Other than For Cause. If, during the Employment Period
and prior to the expiration of the Term of the Agreement, the Executives employment is terminated
by reason of the Executives death or Disability, by the Parent or the Company for any reason other
than for Cause or by the Executive for Good Reason:
(i) The Company shall pay to the Executive (or Executives heirs, beneficiaries or
representatives as applicable), at the times specified in clause (x), the following amounts:
(A) 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;
(B) an amount equal to the product of (x) the higher of (I) the highest Annual Bonus Amount
for the preceding five (5) calendar years and (II) 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 (y) 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);
(C) an amount equal to three 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;
- 6 -
(D) an amount equal to three 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 the ERP and the SRP) using the
amounts specified in clauses (i) and (ii) of Section 3(a)(i)(C), 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
(E) the total value of all fringe benefits received by the Executive on an annualized basis
multiplied by three (3).
(ii) For a period of three (3) years 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) of the Employment Agreement 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 eligibility. If any of the dental, accident, health insurance or other
benefits specified in this Section 3(a)(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
3(a)(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 3(a)(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 3(a)(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 3(a)(ii) during the first six
months following the date of the Executives Separation From Service shall be accumulated and paid
to the Executive on the date that is six months following the date of his Separation From Service.
All reimbursements by the Company under this Section 3(a)(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.
(iii) All benefits and amounts under the Companys deferred compensation plan and all other
benefit plans (except as specifically provided for in Section 4(b) below), not already vested shall
become immediately one hundred percent (100%) vested as of the Date of Termination. All options to
acquire common shares of the Parent, all restricted common shares of the Parent, and all share
appreciation rights the value of which is determined by reference to or based upon the value of
common shares of the Parent, 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
- 7 -
or based upon the value of common shares of the Parent 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 (x) 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 (x) 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 three (3).
(vii) To the extent not already paid or provided, the Company shall timely pay or provide to
the Executive any other amounts or benefits required to be paid or provided or which the Executive
is eligible to receive under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (collectively, the Other Benefits).
(viii) If the Executives employment is terminated by reason of the Executives death, the
Other Benefits (as defined in this Section) 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.
(ix) If the Executives employment is terminated by reason of the Executives Disability, the
Other Benefits (as defined in this Section) 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.
(x) The Company shall pay or provide to the Executive the amounts or benefits specified in
Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E), and Sections 3(a)(v) and
3(a)(vi) 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 months
following the date of his Separation From Service if he is a Specified Employee.
(xi) If the Executive is a Specified Employee, on the date that is six months following the
Executives Separation From Service, the Company shall pay to the Executive, in addition to the
- 8 -
amounts reflected in clause (x), an amount equal to the interest that would be earned on the
amounts specified in Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E) and, to
the extent subject to a mandatory six-month delay in payment, all amounts payable under the ERP and
the SRP, 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 per annum (the
Interest Amount).
(xii) Notwithstanding any other provision of this Agreement to the contrary, the amount of the
payment under each of Sections 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E) shall not exceed
the amount that would have been paid to the Executive had his Date of Termination occurred on
December 31, 2008.
(b) Cause. If the Executives employment is terminated for Cause during the Employment Period
and prior to the expiration of the Term of the Agreement, this Agreement shall terminate without
further obligations to the Executive, other than the obligation to pay to the Executive (x) his
Annual Base Salary through the Date of Termination for periods following his Separation From
Service on the date that is 30 days following the date of the Employees Separation From Service if
he is not a Specified Employee or on the date that is six months following the date of his
Separation From Service if he is a Specified Employee, and (y) Other Benefits, to the extent
theretofore unpaid.
(c) Termination by Executive Other Than for Good Reason. If the Executive voluntarily
terminates his employment during the Employment Period and prior to the expiration of the Term of
the Agreement for any reason other than for Good Reason, the Executives employment shall terminate
without further obligations to the Executive, other than (x) the obligation to pay to the Executive
his Annual Base Salary through the Date of Termination for periods following his Separation From
Service, (y) Other Benefits and (z) the rights provided in Section 4. The Company shall pay to the
Executive the amount specified in clause (x) on the date that is 30 days following the date of the
Employees Separation From Service if he is not a Specified Employee or on the date that is six
months following the date of his Separation From Service if he is a Specified Employee.
4.
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 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 SRP, 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 SRP benefits payable shall only be those that are payable, if any, under the
terms of the ERP or SRP as of the Date of Termination.
- 9 -
5.
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 3(a)(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 the Employment 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 or the Employment Agreement). The legal
fees or expenses that are subject to reimbursement pursuant to this Section 5(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 5(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 5(c) is
not subject to liquidation or exchange for another benefit. Any amount to which the Executive is
entitled to reimbursement under this Section 5(c) during the first six months following the date of
the Executives Separation From Service shall be accumulated and paid to the Executive on the date
that is six months following the date of his Separation From Service. All reimbursements by the
Company under this Section 5(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.
6.
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 Parent, the Company or any of their 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 6) (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
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
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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 6(a) during the first six months
following the date of the Executives Separation From Service shall be accumulated and paid to the
Executive on the date that is six months following the date of his Separation From Service. All
reimbursements by the Company under this Section 6(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.
(b) Subject to the provisions of Section 6(c), all determinations required to be made under
this Section 6, 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 6, 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 6(a), and in no event later than the payment deadline
specified in Section 6(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), consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 6(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 6(a), and in no event
later than the payment deadline specified in Section 6(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 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,
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(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 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 6(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 10 days prior to the date that
the Executive is 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 6(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 6(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 6(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 6(c)(iv) during the first six months following the date of the Employees Separation
From Service shall be accumulated and paid to the Executive on the date that is six months
following the date of his Separation From Service. All reimbursements by the Company under this
Section 6(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.
(d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to
Section 6(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 6(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 6(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.
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(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.
7.
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.
8.
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 Employee, the Company shall
owe the Employee interest on the delayed payment at the applicable Federal rate provided for in
section 7872(f)(2)(A) of the Code if the Employee (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. Any such interest payments shall become
due and payable effective as of the applicable payment date(s) specified in Section 3 with respect
to the delinquent payment(s) due under Section 3.
9.
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 Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E),
the estimated amount of the Gross-Up Payment to be made under Section 6 and the Interest Amount.
The cash amounts specified in Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and
3(a)(i)(E), the Gross-Up Payment and the Interest Amount shall be paid from the Rabbi Trust on the
dates specified in Sections 3 and 6 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.
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10.
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 Parent,
Company or any subsidiary or Affiliate of the Company), to all or substantially all of the
Companys or Parents business and/or the Parents Assets or the 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 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.
11.
Miscellaneous.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
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If to the Executive:
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Andrew P. Becnel
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515 Post Oak Boulevard
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Houston, Texas 77027
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If to the Company:
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Weatherford International, Inc.
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515 Post Oak Boulevard
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Houston, Texas 77027
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Attention: General Counsel
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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.
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(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 parties
relating to the subject matter hereof, including, without limitation, the Prior Agreements.
(g) Notwithstanding any other provision of this Agreement, no benefits or payments hereunder
shall be provided or paid following December 31, 2010.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the
authorization from its Board of Directors, the Company has caused these presents to be executed in
its name and on its behalf, all as of the day and year first above written.
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/s/ Andrew P. Becnel
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Andrew P. Becnel
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WEATHERFORD INTERNATIONAL, INC.
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By:
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/s/ Bernard J. Duroc-Danner
Bernard J. Duroc-Danner
President
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EMPLOYMENT AGREEMENT
This Employment Agreement (this Agreement) is entered into as of January 1, 2009 (the
Effective Date), by and between Weatherford International, Inc., a Delaware corporation (the
Company), and M. David Colley (the Executive).
W I T N E S S E T H:
WHEREAS, the Company has determined that it is in the interest of the Company and the
shareholders of Weatherford International Ltd. for the Company to commit to provide certain
severance benefits to the Executive in the event of his termination of employment under certain
conditions;
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the parties hereto do hereby agree:
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 Base Salary shall have the meaning specified in the Employment Agreement.
(c) Annual Bonus shall mean the Executives annual bonus under the annual incentive plan of
the Company and any of its Affiliates.
(d) Annual Bonus Amount shall mean the sum of (a) 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 Affiliates to or for the benefit of the Executive for services rendered or
labor performed during a fiscal year of the Company and (b) 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
Affiliates to or for the benefit of the Employee (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.
(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 Parent.
(g) Cause shall mean:
(i) the willful and continued failure of the Executive to substantially perform the
Executives duties with the Parent or 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) of the Employment
Agreement), after a written
- 1 -
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 willful engaging by the Executive in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Parent or 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 Parent or 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 Parent (which may be the General Counsel or
other counsel employed by the Parent 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 Parent
or 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 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 common shares of the Parent (the Outstanding
Parent Common Shares) or (B) the combined voting power of the then outstanding voting securities
of the Parent entitled to vote generally in the election of directors (the Outstanding Parent
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 Parents 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; or
(iii) the consummation of a reorganization, merger, amalgamation, consolidation, scheme of
arrangement, exchange offer or similar transaction of the Parent or any of its subsidiaries or the
sale, transfer or other disposition of all or substantially all of the Parents Assets (any of
which 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 this Agreement, 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 Parent
Common Shares and Outstanding Parent 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 then outstanding
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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 Parent or all or substantially all of the Parents
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 Parent Common Shares and the Outstanding Parent 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 Parent 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 of Directors or the shareholders of the Parent 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 Parents Assets or the dissolution of the Parent.
(i) Disability shall mean the absence of the Executive from performance of the Executives
duties with the Parent on a substantial basis for one hundred twenty (120) calendar days as a
result of incapacity due to mental or physical illness.
(j) Employment Agreement shall mean the Executives employment agreement with the Parent, as
it may be amended from time to time.
(k) Employment Period shall have the meaning specified in the Employment Agreement.
(l) Entity shall mean means any corporation, partnership, association, joint-stock company,
limited liability company, trust, unincorporated organization or other business entity.
(m) ERP shall mean the Weatherford International Ltd. Nonqualified Executive Retirement
Plan, as it may be amended from time to time.
(n) Exchange Act shall mean the Securities Exchange Act of 1934, as amended from time to
time.
(o) Good Reason shall mean the occurrence of any of the following:
(i) the assignment to the Executive of any position, authority, duties or responsibilities
that are not materially consistent with the Executives position (including status, offices and
titles), authority, duties or responsibilities as contemplated by Section 3(a) of the Employment
Agreement, or any other action by the Parent or the Company which results in a diminution in such
position, authority, duties or responsibilities, excluding for this purpose any not taken in bad
faith and which is remedied by the Parent or the Company after receipt of notice thereof given by
the Executive;
(ii) any failure by the Parent or the Company to comply with any of the provisions of this
Agreement or the Employment Agreement (including, without limitation, its obligations under Section
3(a) of the Employment Agreement), other than any failure
not occurring in bad faith and which is
remedied by the Parent or the Company after receipt of notice thereof given by the Executive;
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(iii) any failure by the Parent or the Company to continue to provide the Executive with
benefits currently enjoyed by the Executive under any of the Parents and 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 Parent or 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 Parents or the Companys requiring the Executive to be based at any office or
location other than as provided in Section 3(a)(i) of the Employment Agreement or the Parents or
the Companys requiring the Executive to travel on business to a substantially greater extent than
required immediately prior to the date hereof;
(v) any purported termination by the Parent or 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 Parent to comply with and satisfy Section 10(b) of the Employment
Agreement;
(vii) failure by the Parent (including any successor) to agree, execute and enter into a new
employment agreement and a new executive retirement plan with the Executive prior to the
termination or expiration of this Agreement, with such employment agreement and executive
retirement plan having the same terms and conditions as existed in agreements and plans between the
Parent or the Company and the Executive prior to December 30, 2008, and incorporating such terms
and conditions that are more favorable to the Executive from all agreements and retirement plans
existing on January 1, 2009; or
(viii) in connection with, as a result of or following a Change of Control, 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 Parents
common 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 Parent 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) of the Employment Agreement.
For purposes of this Agreement, any good faith determination of Good Reason made by the
Executive shall be conclusive.
(p) IRS shall mean the Internal Revenue Service.
(q) Parent shall mean Weatherford International Ltd. 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.
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(r) Parents Assets shall mean the assets (of any kind) owned by the Parent, including,
without limitation, the securities of the Parents Subsidiaries and any of the assets owned by the
Parents Subsidiaries.
(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
Parent or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Parent or any of its Affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering by the Parent of such securities, or (iv) a corporation
or other entity owned, directly or indirectly, by the shareholders of the Parent in the same
proportions as their ownership of common shares of the Parent.
(t) Section 409A shall mean section 409A of the Internal Revenue Code of 1986, as amended
and the final Department of Treasury regulations issued thereunder.
(u) Separation From Service shall have the meaning ascribed to such term in Section 409A.
(v) Specified Employee shall have the meaning ascribed to such term in Section 409A.
(w) SRP shall mean the Weatherford International, Inc. Supplemental Retirement Plan, as it
may be amended from time to time.
(x) Subsidiary shall mean any majority-owned subsidiary of the Parent or any majority-owned
subsidiary thereof, or any other Entity in which the Parent owns, directly or indirectly, a
significant financial interest provided that the Chief Executive Officer of the Parent designates
such Entity to be a Subsidiary for the purposes of this Agreement.
(y) Term of the Agreement shall mean the period commencing on January 1, 2009 and ending on
December 31, 2009.
2.
Termination of Employment.
(a) Death or Disability. The Executives employment shall terminate automatically upon the
Executives death during the Employment Period. If the Parent 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 the Employment Agreement of its intention to terminate the
Executives employment. In such event, the Executives employment with the Parent shall terminate
effective thirty (30) days after receipt of such notice by the Executive (the Disability Effective
Date), provided 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
the Employment Agreement 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 Parent 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.
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(d) Notice of Termination. Any termination during the Employment Period shall be communicated
by Notice of Termination to the other party hereto given in accordance with Section 11(b) of this
Agreement. For purposes of this Agreement, a Notice of Termination means a written notice which
(i) indicates the specific termination provision in this Agreement or the Employment 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 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 or the Parent 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.
3.
Obligations of the Company Upon Termination.
(a) Death, Disability, Good Reason or Other than For Cause. If, during the Employment Period
and prior to the expiration of the Term of the Agreement, the Executives employment is terminated
by reason of the Executives death or Disability, by the Parent or the Company for any reason other
than for Cause or by the Executive for Good Reason:
(i) The Company shall pay to the Executive (or Executives heirs, beneficiaries or
representatives as applicable), at the times specified in clause (x), the following amounts:
(A) 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;
(B) an amount equal to the product of (x) the higher of (I) the highest Annual Bonus Amount
for the preceding five (5) calendar years and (II) 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 (y) 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);
(C) an amount equal to two 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;
- 6 -
(D) an amount equal to two 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 the ERP and the SRP) using the
amounts specified in clauses (i) and (ii) of Section 3(a)(i)(C), 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
(E) the total value of all fringe benefits received by the Executive on an annualized basis
multiplied by two (2).
(ii) For a period of two (2) years 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) of the Employment Agreement 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 eligibility. If any of the dental, accident, health insurance or other
benefits specified in this Section 3(a)(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
3(a)(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 3(a)(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 3(a)(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 3(a)(ii) during the first six
months following the date of the Executives Separation From Service shall be accumulated and paid
to the Executive on the date that is six months following the date of his Separation From Service.
All reimbursements by the Company under this Section 3(a)(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.
(iii) All benefits and amounts under the Companys deferred compensation plan and all other
benefit plans (except as specifically provided for in Section 4(b) below), not already vested shall
become immediately one hundred percent (100%) vested as of the Date of Termination. All options to
acquire common shares of the Parent, all restricted common shares of the Parent, and all share
appreciation rights the value of which is determined by reference to or based upon the value of
common shares of the Parent, 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
- 7 -
or based upon the value of common shares of the Parent 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 (x) 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 (x) below, the Company shall pay the Executive a lump sum
in cash equal to the Executives annual car allowance multiplied by two (2).
(vii) To the extent not already paid or provided, the Company shall timely pay or provide to
the Executive any other amounts or benefits required to be paid or provided or which the Executive
is eligible to receive under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (collectively, the Other Benefits).
(viii) If the Executives employment is terminated by reason of the Executives death, the
Other Benefits (as defined in this Section) 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.
(ix) If the Executives employment is terminated by reason of the Executives Disability, the
Other Benefits (as defined in this Section) 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.
(x) The Company shall pay or provide to the Executive the amounts or benefits specified in
Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E), and Sections 3(a)(v) and
3(a)(vi) 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 months
following the date of his Separation From Service if he is a Specified Employee.
(xi) If the Executive is a Specified Employee, on the date that is six months following the
Executives Separation From Service, the Company shall pay to the Executive, in addition to the
amounts reflected in clause (x), an amount equal to the interest that would be earned on the
amounts specified in Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E) and, to
the extent subject to a mandatory six-month delay in payment, all amounts payable under the ERP and
the SRP, for the
- 8 -
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 per annum (the Interest
Amount).
(xii) Notwithstanding any other provision of this Agreement to the contrary, the amount of the
payment under each of Sections 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E) shall not exceed
the amount that would have been paid to the Executive had his Date of Termination occurred on
December 31, 2008.
(b) Cause. If the Executives employment is terminated for Cause during the Employment Period
and prior to the expiration of the Term of the Agreement, this Agreement shall terminate without
further obligations to the Executive, other than the obligation to pay to the Executive (x) his
Annual Base Salary through the Date of Termination for periods following his Separation From
Service on the date that is 30 days following the date of the Employees Separation From Service if
he is not a Specified Employee or on the date that is six months following the date of his
Separation From Service if he is a Specified Employee, and (y) Other Benefits, to the extent
theretofore unpaid.
(c) Termination by Executive Other Than for Good Reason. If the Executive voluntarily
terminates his employment during the Employment Period and prior to the expiration of the Term of
the Agreement for any reason other than for Good Reason, the Executives employment shall terminate
without further obligations to the Executive, other than (x) the obligation to pay to the Executive
his Annual Base Salary through the Date of Termination for periods following his Separation From
Service, (y) Other Benefits and (z) the rights provided in Section 4. The Company shall pay to the
Executive the amount specified in clause (x) on the date that is 30 days following the date of the
Employees Separation From Service if he is not a Specified Employee or on the date that is six
months following the date of his Separation From Service if he is a Specified Employee.
4.
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 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 SRP, 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 SRP benefits payable shall only be those that are payable, if any, under the
terms of the ERP or SRP as of the Date of Termination.
- 9 -
5.
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 3(a)(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 the Employment 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 or the Employment Agreement). The legal
fees or expenses that are subject to reimbursement pursuant to this Section 5(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 5(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 5(c) is
not subject to liquidation or exchange for another benefit. Any amount to which the Executive is
entitled to reimbursement under this Section 5(c) during the first six months following the date of
the Executives Separation From Service shall be accumulated and paid to the Executive on the date
that is six months following the date of his Separation From Service. All reimbursements by the
Company under this Section 5(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.
6.
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 Parent, the Company or any of their 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 6) (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
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
- 10 -
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 6(a) during the first six months
following the date of the Executives Separation From Service shall be accumulated and paid to the
Executive on the date that is six months following the date of his Separation From Service. All
reimbursements by the Company under this Section 6(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.
(b) Subject to the provisions of Section 6(c), all determinations required to be made under
this Section 6, 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 6, 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 6(a), and in no event later than the payment deadline
specified in Section 6(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), consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 6(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 6(a), and in no event
later than the payment deadline specified in Section 6(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 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,
- 11 -
(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 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 6(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 10 days prior to the date that
the Executive is 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 6(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 6(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 6(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 6(c)(iv) during the first six months following the date of the Employees Separation
From Service shall be accumulated and paid to the Executive on the date that is six months
following the date of his Separation From Service. All reimbursements by the Company under this
Section 6(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.
(d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to
Section 6(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 6(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 6(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.
- 12 -
(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.
7.
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.
8.
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 Employee, the Company shall
owe the Employee interest on the delayed payment at the applicable Federal rate provided for in
section 7872(f)(2)(A) of the Code if the Employee (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. Any such interest payments shall become
due and payable effective as of the applicable payment date(s) specified in Section 3 with respect
to the delinquent payment(s) due under Section 3.
9.
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 Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E),
the estimated amount of the Gross-Up Payment to be made under Section 6 and the Interest Amount.
The cash amounts specified in Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and
3(a)(i)(E), the Gross-Up Payment and the Interest Amount shall be paid from the Rabbi Trust on the
dates specified in Sections 3 and 6 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.
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10.
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 Parent,
Company or any subsidiary or Affiliate of the Company), to all or substantially all of the
Companys or Parents business and/or the Parents Assets or the 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 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.
11.
Miscellaneous.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
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If to the Executive:
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M. David Colley
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515 Post Oak Boulevard
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Houston, Texas 77027
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If to the Company:
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Weatherford International, Inc.
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515 Post Oak Boulevard
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Houston, Texas 77027
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Attention: General Counsel
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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.
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(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 parties
relating to the subject matter hereof, including, without limitation, the Prior Agreements.
(g) Notwithstanding any other provision of this Agreement, no benefits or payments hereunder
shall be provided or paid following December 31, 2010.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the
authorization from its Board of Directors, the Company has caused these presents to be executed in
its name and on its behalf, all as of the day and year first above written.
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/s/ M. David Colley
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M. David Colley
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WEATHERFORD INTERNATIONAL, INC.
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By:
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/s/ Bernard J. Duroc-Danner
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Bernard J. Duroc-Danner President
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EMPLOYMENT AGREEMENT
This Employment Agreement (this Agreement) is entered into as of January 1, 2009 (the
Effective Date), by and between Weatherford International, Inc., a Delaware corporation (the
Company), and Bernard J. Duroc-Danner (the Executive).
W I T N E S S E T H:
WHEREAS, the Company has determined that it is in the interest of the Company and the
shareholders of Weatherford International Ltd. for the Company to commit to provide certain
severance benefits to the Executive in the event of his termination of employment under certain
conditions;
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the parties hereto do hereby agree:
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 Base Salary shall have the meaning specified in the Employment Agreement.
(c) Annual Bonus shall mean the Executives annual bonus under the annual incentive plan of
the Company and any of its Affiliates.
(d) Annual Bonus Amount shall mean the sum of (a) 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 Affiliates to or for the benefit of the Executive for services rendered or
labor performed during a fiscal year of the Company and (b) 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
Affiliates to or for the benefit of the Employee (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.
(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 Parent.
(g) Cause shall mean:
(i) the willful and continued failure of the Executive to substantially perform the
Executives duties with the Parent or 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) of the Employment
Agreement), after a written
- 1 -
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 willful engaging by the Executive in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Parent or 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 Parent or 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 Parent (which may be the General Counsel or
other counsel employed by the Parent 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 Parent
or 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 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 common shares of the Parent (the Outstanding
Parent Common Shares) or (B) the combined voting power of the then outstanding voting securities
of the Parent entitled to vote generally in the election of directors (the Outstanding Parent
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 Parents 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; or
(iii) the consummation of a reorganization, merger, amalgamation, consolidation, scheme of
arrangement, exchange offer or similar transaction of the Parent or any of its subsidiaries or the
sale, transfer or other disposition of all or substantially all of the Parents Assets (any of
which 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 this Agreement, 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 Parent
Common Shares and Outstanding Parent 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 then outstanding
- 2 -
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 Parent or all or substantially all of the Parents
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 Parent Common Shares and the Outstanding Parent 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 Parent 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 of Directors or the shareholders of the Parent 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 Parents Assets or the dissolution of the Parent.
(i) Disability shall mean the absence of the Executive from performance of the Executives
duties with the Parent on a substantial basis for one hundred twenty (120) calendar days as a
result of incapacity due to mental or physical illness.
(j) Employment Agreement shall mean the Executives employment agreement with the Parent, as
it may be amended from time to time.
(k) Employment Period shall have the meaning specified in the Employment Agreement.
(l) Entity shall mean means any corporation, partnership, association, joint-stock company,
limited liability company, trust, unincorporated organization or other business entity.
(m) ERP shall mean the Weatherford International Ltd. Nonqualified Executive Retirement
Plan, as it may be amended from time to time.
(n) Exchange Act shall mean the Securities Exchange Act of 1934, as amended from time to
time.
(o) 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) of the
Employment Agreement, or any other action by the Parent or the Company which results in a
diminution in such position, authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the
Parent or the Company promptly after receipt of notice thereof given by the Executive;
(ii) any failure by the Parent or the Company to comply with any of the provisions of this
Agreement or the Employment Agreement (including, without limitation, its obligations under Section
3(a) of the Employment Agreement), other than an isolated, insubstantial and inadvertent failure
- 3 -
not occurring in bad faith and which is remedied by the Parent or the Company promptly after
receipt of notice thereof given by the Executive;
(iii) any failure by the Parent or the Company to continue to provide the Executive with
benefits currently enjoyed by the Executive under any of the Parents and 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 Parent or 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 Parents or the Companys requiring the Executive to be based at any office or
location other than as provided in Section 3(a)(i) of the Employment Agreement or the Parents or
the Companys requiring the Executive to travel on business to a substantially greater extent than
required immediately prior to the date hereof;
(v) any purported termination by the Parent or 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 Parent to comply with and satisfy Section 10(b) of the Employment
Agreement;
(vii) failure by the Parent (including any successor) to agree, execute and enter into a new
employment agreement and a new executive retirement plan with the Executive prior to the
termination or expiration of this Agreement, with such employment agreement and executive
retirement plan having the same terms and conditions as existed in agreements and plans between the
Parent or the Company and the Executive prior to December 30, 2008, and incorporating such terms
and conditions that are more favorable to the Executive from all agreements and retirement plans
existing on January 1, 2009; or
(viii) in connection with, as a result of or following a Change of Control, 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 Parents
common 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 Parent 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) of the Employment Agreement.
For purposes of this Agreement, any good faith determination of Good Reason made by the
Executive shall be conclusive.
(p) IRS shall mean the Internal Revenue Service.
(q) Parent shall mean Weatherford International Ltd. 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.
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(r) Parents Assets shall mean the assets (of any kind) owned by the Parent, including,
without limitation, the securities of the Parents Subsidiaries and any of the assets owned by the
Parents Subsidiaries.
(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
Parent or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Parent or any of its Affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering by the Parent of such securities, or (iv) a corporation
or other entity owned, directly or indirectly, by the shareholders of the Parent in the same
proportions as their ownership of common shares of the Parent.
(t) Section 409A shall mean section 409A of the Internal Revenue Code of 1986, as amended
and the final Department of Treasury regulations issued thereunder.
(u) Separation From Service shall have the meaning ascribed to such term in Section 409A.
(v) Specified Employee shall have the meaning ascribed to such term in Section 409A.
(w) SRP shall mean the Weatherford International, Inc. Supplemental Retirement Plan, as it
may be amended from time to time.
(x) Subsidiary shall mean any majority-owned subsidiary of the Parent or any majority-owned
subsidiary thereof, or any other Entity in which the Parent owns, directly or indirectly, a
significant financial interest provided that the Chief Executive Officer of the Parent designates
such Entity to be a Subsidiary for the purposes of this Agreement.
(y) Term of the Agreement shall mean the period commencing on January 1, 2009 and ending on
December 31, 2009.
2.
Termination of Employment.
(a) Death or Disability. The Executives employment shall terminate automatically upon the
Executives death during the Employment Period. If the Parent 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 the Employment Agreement of its intention to terminate the
Executives employment. In such event, the Executives employment with the Parent shall terminate
effective thirty (30) days after receipt of such notice by the Executive (the Disability Effective
Date), provided 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
the Employment Agreement 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 Parent 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.
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(d) Notice of Termination. Any termination during the Employment Period shall be communicated
by Notice of Termination to the other party hereto given in accordance with Section 11(b) of this
Agreement. For purposes of this Agreement, a Notice of Termination means a written notice which
(i) indicates the specific termination provision in this Agreement or the Employment 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 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 or the Parent 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.
3.
Obligations of the Company Upon Termination.
(a) Death, Disability, Good Reason or Other than For Cause. If, during the Employment Period
and prior to the expiration of the Term of the Agreement, the Executives employment is terminated
by reason of the Executives death or Disability, by the Parent or the Company for any reason other
than for Cause or by the Executive for Good Reason:
(i) The Company shall pay to the Executive (or Executives heirs, beneficiaries or
representatives as applicable), at the times specified in clause (x), the following amounts:
(A) 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;
(B) an amount equal to the product of (x) the higher of (I) the highest Annual Bonus Amount
for the preceding five (5) calendar years and (II) 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 (y) 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);
(C) an amount equal to three 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;
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(D) an amount equal to three 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 the ERP and the SRP) using the
amounts specified in clauses (i) and (ii) of Section 3(a)(i)(C), 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
(E) the total value of all fringe benefits received by the Executive on an annualized basis
multiplied by three (3).
(ii) For a period of three (3) years 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) of the Employment Agreement 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 eligibility. If any of the dental, accident, health insurance or other
benefits specified in this Section 3(a)(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
3(a)(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 3(a)(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 3(a)(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 3(a)(ii) during the first six
months following the date of the Executives Separation From Service shall be accumulated and paid
to the Executive on the date that is six months following the date of his Separation From Service.
All reimbursements by the Company under this Section 3(a)(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.
(iii) All benefits and amounts under the Companys deferred compensation plan and all other
benefit plans (except as specifically provided for in Section 4(b) below), not already vested shall
become immediately one hundred percent (100%) vested as of the Date of Termination. All options to
acquire common shares of the Parent, all restricted common shares of the Parent, and all share
appreciation rights the value of which is determined by reference to or based upon the value of
common shares of the Parent, 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
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or based upon the value of common shares of the Parent 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 (x) 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 (x) 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 three (3).
(vii) To the extent not already paid or provided, the Company shall timely pay or provide to
the Executive any other amounts or benefits required to be paid or provided or which the Executive
is eligible to receive under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (collectively, the Other Benefits).
(viii) If the Executives employment is terminated by reason of the Executives death, the
Other Benefits (as defined in this Section) 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.
(ix) If the Executives employment is terminated by reason of the Executives Disability, the
Other Benefits (as defined in this Section) 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.
(x) The Company shall pay or provide to the Executive the amounts or benefits specified in
Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E), and Sections 3(a)(v) and
3(a)(vi) 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 months
following the date of his Separation From Service if he is a Specified Employee.
(xi) If the Executive is a Specified Employee, on the date that is six months following the
Executives Separation From Service, the Company shall pay to the Executive, in addition to the
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amounts reflected in clause (x), an amount equal to the interest that would be earned on the
amounts specified in Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E) and, to
the extent subject to a mandatory six-month delay in payment, all amounts payable under the ERP and
the SRP, 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 per annum (the
Interest Amount).
(xii) Notwithstanding any other provision of this Agreement to the contrary, the amount of the
payment under each of Sections 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E) shall not exceed
the amount that would have been paid to the Executive had his Date of Termination occurred on
December 31, 2008.
(b) Cause. If the Executives employment is terminated for Cause during the Employment Period
and prior to the expiration of the Term of the Agreement, this Agreement shall terminate without
further obligations to the Executive, other than the obligation to pay to the Executive (x) his
Annual Base Salary through the Date of Termination for periods following his Separation From
Service on the date that is 30 days following the date of the Employees Separation From Service if
he is not a Specified Employee or on the date that is six months following the date of his
Separation From Service if he is a Specified Employee, and (y) Other Benefits, to the extent
theretofore unpaid.
(c) Termination by Executive Other Than for Good Reason. If the Executive voluntarily
terminates his employment during the Employment Period and prior to the expiration of the Term of
the Agreement for any reason other than for Good Reason, the Executives employment shall terminate
without further obligations to the Executive, other than (x) the obligation to pay to the Executive
his Annual Base Salary through the Date of Termination for periods following his Separation From
Service, (y) Other Benefits and (z) the rights provided in Section 4. The Company shall pay to the
Executive the amount specified in clause (x) on the date that is 30 days following the date of the
Employees Separation From Service if he is not a Specified Employee or on the date that is six
months following the date of his Separation From Service if he is a Specified Employee.
4.
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 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 SRP, 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 SRP benefits payable shall only be those that are payable, if any, under the
terms of the ERP or SRP as of the Date of Termination.
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5.
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 3(a)(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 the Employment 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 or the Employment Agreement). The legal
fees or expenses that are subject to reimbursement pursuant to this Section 5(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 5(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 5(c) is
not subject to liquidation or exchange for another benefit. Any amount to which the Executive is
entitled to reimbursement under this Section 5(c) during the first six months following the date of
the Executives Separation From Service shall be accumulated and paid to the Executive on the date
that is six months following the date of his Separation From Service. All reimbursements by the
Company under this Section 5(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.
6.
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 Parent, the Company or any of their 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 6) (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
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
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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 6(a) during the first six months
following the date of the Executives Separation From Service shall be accumulated and paid to the
Executive on the date that is six months following the date of his Separation From Service. All
reimbursements by the Company under this Section 6(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.
(b) Subject to the provisions of Section 6(c), all determinations required to be made under
this Section 6, 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 6, 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 6(a), and in no event later than the payment deadline
specified in Section 6(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), consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 6(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 6(a), and in no event
later than the payment deadline specified in Section 6(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 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,
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(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 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 6(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 10 days prior to the date that
the Executive is 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 6(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 6(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 6(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 6(c)(iv) during the first six months following the date of the Employees Separation
From Service shall be accumulated and paid to the Executive on the date that is six months
following the date of his Separation From Service. All reimbursements by the Company under this
Section 6(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.
(d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to
Section 6(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 6(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 6(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.
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(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.
7.
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.
8.
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 Employee, the Company shall
owe the Employee interest on the delayed payment at the applicable Federal rate provided for in
section 7872(f)(2)(A) of the Code if the Employee (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. Any such interest payments shall become
due and payable effective as of the applicable payment date(s) specified in Section 3 with respect
to the delinquent payment(s) due under Section 3.
9.
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 Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E),
the estimated amount of the Gross-Up Payment to be made under Section 6 and the Interest Amount.
The cash amounts specified in Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and
3(a)(i)(E), the Gross-Up Payment and the Interest Amount shall be paid from the Rabbi Trust on the
dates specified in Sections 3 and 6 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.
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10.
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 Parent,
Company or any subsidiary or Affiliate of the Company), to all or substantially all of the
Companys or Parents business and/or the Parents Assets or the 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 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.
11.
Miscellaneous.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
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If to the Executive:
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Bernard J. Duroc-Danner
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515 Post Oak Boulevard
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Houston, Texas 77027
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If to the Company:
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Weatherford International, Inc.
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515 Post Oak Boulevard
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Houston, Texas 77027
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Attention: General Counsel
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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.
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(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 parties
relating to the subject matter hereof, including, without limitation, the Prior Agreements.
(g) Notwithstanding any other provision of this Agreement, no benefits or payments hereunder
shall be provided or paid following December 31, 2010.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the
authorization from its Board of Directors, the Company has caused these presents to be executed in
its name and on its behalf, all as of the day and year first above written.
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/s/ Bernard J. Duroc-Danner
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Bernard J. Duroc-Danner
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WEATHERFORD INTERNATIONAL, INC.
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By:
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/s/ Burt M. Martin
Burt M. Martin
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Senior Vice President
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EMPLOYMENT AGREEMENT
This Employment Agreement (this Agreement) is entered into as of January 1, 2009 (the
Effective Date), by and between Weatherford International, Inc., a Delaware corporation (the
Company), and Stuart E. Ferguson (the Executive).
W I T N E S S E T H:
WHEREAS, the Company has determined that it is in the interest of the Company and the
shareholders of Weatherford International Ltd. for the Company to commit to provide certain
severance benefits to the Executive in the event of his termination of employment under certain
conditions;
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the parties hereto do hereby agree:
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 Base Salary shall have the meaning specified in the Employment Agreement.
(c) Annual Bonus shall mean the Executives annual bonus under the annual incentive plan of
the Company and any of its Affiliates.
(d) Annual Bonus Amount shall mean the sum of (a) 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 Affiliates to or for the benefit of the Executive for services rendered or
labor performed during a fiscal year of the Company and (b) 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
Affiliates to or for the benefit of the Employee (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.
(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 Parent.
(g) Cause shall mean:
(i) the willful and continued failure of the Executive to substantially perform the
Executives duties with the Parent or 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) of the Employment
Agreement), after a written
- 1 -
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 willful engaging by the Executive in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Parent or 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 Parent or 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 Parent (which may be the General Counsel or
other counsel employed by the Parent 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 Parent
or 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 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 common shares of the Parent (the Outstanding
Parent Common Shares) or (B) the combined voting power of the then outstanding voting securities
of the Parent entitled to vote generally in the election of directors (the Outstanding Parent
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 Parents 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; or
(iii) the consummation of a reorganization, merger, amalgamation, consolidation, scheme of
arrangement, exchange offer or similar transaction of the Parent or any of its subsidiaries or the
sale, transfer or other disposition of all or substantially all of the Parents Assets (any of
which 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 this Agreement, 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 Parent
Common Shares and Outstanding Parent 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 then outstanding
- 2 -
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 Parent or all or substantially all of the Parents
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 Parent Common Shares and the Outstanding Parent 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 Parent 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 of Directors or the shareholders of the Parent 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 Parents Assets or the dissolution of the Parent.
(i) Disability shall mean the absence of the Executive from performance of the Executives
duties with the Parent on a substantial basis for one hundred twenty (120) calendar days as a
result of incapacity due to mental or physical illness.
(j) Employment Agreement shall mean the Executives employment agreement with the Parent, as
it may be amended from time to time.
(k) Employment Period shall have the meaning specified in the Employment Agreement.
(l) Entity shall mean means any corporation, partnership, association, joint-stock company,
limited liability company, trust, unincorporated organization or other business entity.
(m) ERP shall mean the Weatherford International Ltd. Nonqualified Executive Retirement
Plan, as it may be amended from time to time.
(n) Exchange Act shall mean the Securities Exchange Act of 1934, as amended from time to
time.
(o) 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) of the
Employment Agreement, or any other action by the Parent or the Company which results in a
diminution in such position, authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the
Parent or the Company promptly after receipt of notice thereof given by the Executive;
(ii) any failure by the Parent or the Company to comply with any of the provisions of this
Agreement or the Employment Agreement (including, without limitation, its obligations under Section
3(a) of the Employment Agreement), other than an isolated, insubstantial and inadvertent failure
- 3 -
not occurring in bad faith and which is remedied by the Parent or the Company promptly after
receipt of notice thereof given by the Executive;
(iii) any failure by the Parent or the Company to continue to provide the Executive with
benefits currently enjoyed by the Executive under any of the Parents and 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 Parent or 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 Parents or the Companys requiring the Executive to be based at any office or
location other than as provided in Section 3(a)(i) of the Employment Agreement or the Parents or
the Companys requiring the Executive to travel on business to a substantially greater extent than
required immediately prior to the date hereof;
(v) any purported termination by the Parent or 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 Parent to comply with and satisfy Section 10(b) of the Employment
Agreement;
(vii) failure by the Parent (including any successor) to agree, execute and enter into a new
employment agreement and a new executive retirement plan with the Executive prior to the
termination or expiration of this Agreement, with such employment agreement and executive
retirement plan having the same terms and conditions as existed in agreements and plans between the
Parent or the Company and the Executive prior to December 30, 2008, and incorporating such terms
and conditions that are more favorable to the Executive from all agreements and retirement plans
existing on January 1, 2009; or
(viii) in connection with, as a result of or following a Change of Control, 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 Parents
common 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 Parent 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) of the Employment Agreement.
For purposes of this Agreement, any good faith determination of Good Reason made by the
Executive shall be conclusive.
(p) IRS shall mean the Internal Revenue Service.
(q) Parent shall mean Weatherford International Ltd. 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.
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(r) Parents Assets shall mean the assets (of any kind) owned by the Parent, including,
without limitation, the securities of the Parents Subsidiaries and any of the assets owned by the
Parents Subsidiaries.
(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
Parent or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Parent or any of its Affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering by the Parent of such securities, or (iv) a corporation
or other entity owned, directly or indirectly, by the shareholders of the Parent in the same
proportions as their ownership of common shares of the Parent.
(t) Section 409A shall mean section 409A of the Internal Revenue Code of 1986, as amended
and the final Department of Treasury regulations issued thereunder.
(u) Separation From Service shall have the meaning ascribed to such term in Section 409A.
(v) Specified Employee shall have the meaning ascribed to such term in Section 409A.
(w) SRP shall mean the Weatherford International, Inc. Supplemental Retirement Plan, as it
may be amended from time to time.
(x) Subsidiary shall mean any majority-owned subsidiary of the Parent or any majority-owned
subsidiary thereof, or any other Entity in which the Parent owns, directly or indirectly, a
significant financial interest provided that the Chief Executive Officer of the Parent designates
such Entity to be a Subsidiary for the purposes of this Agreement.
(y) Term of the Agreement shall mean the period commencing on January 1, 2009 and ending on
December 31, 2009.
2.
Termination of Employment.
(a) Death or Disability. The Executives employment shall terminate automatically upon the
Executives death during the Employment Period. If the Parent 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 the Employment Agreement of its intention to terminate the
Executives employment. In such event, the Executives employment with the Parent shall terminate
effective thirty (30) days after receipt of such notice by the Executive (the Disability Effective
Date), provided 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
the Employment Agreement 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 Parent 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.
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(d) Notice of Termination. Any termination during the Employment Period shall be communicated
by Notice of Termination to the other party hereto given in accordance with Section 11(b) of this
Agreement. For purposes of this Agreement, a Notice of Termination means a written notice which
(i) indicates the specific termination provision in this Agreement or the Employment 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 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 or the Parent 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.
3.
Obligations of the Company Upon Termination.
(a) Death, Disability, Good Reason or Other than For Cause. If, during the Employment Period
and prior to the expiration of the Term of the Agreement, the Executives employment is terminated
by reason of the Executives death or Disability, by the Parent or the Company for any reason other
than for Cause or by the Executive for Good Reason:
(i) The Company shall pay to the Executive (or Executives heirs, beneficiaries or
representatives as applicable), at the times specified in clause (x), the following amounts:
(A) 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;
(B) an amount equal to the product of (x) the higher of (I) the highest Annual Bonus Amount
for the preceding five (5) calendar years and (II) 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 (y) 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);
(C) an amount equal to three 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;
- 6 -
(D) an amount equal to three 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 the ERP and the SRP) using the
amounts specified in clauses (i) and (ii) of Section 3(a)(i)(C), 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
(E) the total value of all fringe benefits received by the Executive on an annualized basis
multiplied by three (3).
(ii) For a period of three (3) years 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) of the Employment Agreement 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 eligibility. If any of the dental, accident, health insurance or other
benefits specified in this Section 3(a)(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
3(a)(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 3(a)(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 3(a)(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 3(a)(ii) during the first six
months following the date of the Executives Separation From Service shall be accumulated and paid
to the Executive on the date that is six months following the date of his Separation From Service.
All reimbursements by the Company under this Section 3(a)(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.
(iii) All benefits and amounts under the Companys deferred compensation plan and all other
benefit plans (except as specifically provided for in Section 4(b) below), not already vested shall
become immediately one hundred percent (100%) vested as of the Date of Termination. All options to
acquire common shares of the Parent, all restricted common shares of the Parent, and all share
appreciation rights the value of which is determined by reference to or based upon the value of
common shares of the Parent, 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
- 7 -
or based upon the value of common shares of the Parent 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 (x) 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 (x) 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 three (3).
(vii) To the extent not already paid or provided, the Company shall timely pay or provide to
the Executive any other amounts or benefits required to be paid or provided or which the Executive
is eligible to receive under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (collectively, the Other Benefits).
(viii) If the Executives employment is terminated by reason of the Executives death, the
Other Benefits (as defined in this Section) 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.
(ix) If the Executives employment is terminated by reason of the Executives Disability, the
Other Benefits (as defined in this Section) 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.
(x) The Company shall pay or provide to the Executive the amounts or benefits specified in
Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E), and Sections 3(a)(v) and
3(a)(vi) 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 months
following the date of his Separation From Service if he is a Specified Employee.
(xi) If the Executive is a Specified Employee, on the date that is six months following the
Executives Separation From Service, the Company shall pay to the Executive, in addition to the
- 8 -
amounts reflected in clause (x), an amount equal to the interest that would be earned on the
amounts specified in Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E) and, to
the extent subject to a mandatory six-month delay in payment, all amounts payable under the ERP and
the SRP, 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 per annum (the
Interest Amount).
(xii) Notwithstanding any other provision of this Agreement to the contrary, the amount of the
payment under each of Sections 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E) shall not exceed
the amount that would have been paid to the Executive had his Date of Termination occurred on
December 31, 2008.
(b) Cause. If the Executives employment is terminated for Cause during the Employment Period
and prior to the expiration of the Term of the Agreement, this Agreement shall terminate without
further obligations to the Executive, other than the obligation to pay to the Executive (x) his
Annual Base Salary through the Date of Termination for periods following his Separation From
Service on the date that is 30 days following the date of the Employees Separation From Service if
he is not a Specified Employee or on the date that is six months following the date of his
Separation From Service if he is a Specified Employee, and (y) Other Benefits, to the extent
theretofore unpaid.
(c) Termination by Executive Other Than for Good Reason. If the Executive voluntarily
terminates his employment during the Employment Period and prior to the expiration of the Term of
the Agreement for any reason other than for Good Reason, the Executives employment shall terminate
without further obligations to the Executive, other than (x) the obligation to pay to the Executive
his Annual Base Salary through the Date of Termination for periods following his Separation From
Service, (y) Other Benefits and (z) the rights provided in Section 4. The Company shall pay to the
Executive the amount specified in clause (x) on the date that is 30 days following the date of the
Employees Separation From Service if he is not a Specified Employee or on the date that is six
months following the date of his Separation From Service if he is a Specified Employee.
4.
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 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 SRP, 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 SRP benefits payable shall only be those that are payable, if any, under the
terms of the ERP or SRP as of the Date of Termination.
- 9 -
5.
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 3(a)(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 the Employment 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 or the Employment Agreement). The legal
fees or expenses that are subject to reimbursement pursuant to this Section 5(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 5(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 5(c) is
not subject to liquidation or exchange for another benefit. Any amount to which the Executive is
entitled to reimbursement under this Section 5(c) during the first six months following the date of
the Executives Separation From Service shall be accumulated and paid to the Executive on the date
that is six months following the date of his Separation From Service. All reimbursements by the
Company under this Section 5(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.
6.
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 Parent, the Company or any of their 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 6) (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
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
- 10 -
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 6(a) during the first six months
following the date of the Executives Separation From Service shall be accumulated and paid to the
Executive on the date that is six months following the date of his Separation From Service. All
reimbursements by the Company under this Section 6(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.
(b) Subject to the provisions of Section 6(c), all determinations required to be made under
this Section 6, 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 6, 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 6(a), and in no event later than the payment deadline
specified in Section 6(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), consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 6(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 6(a), and in no event
later than the payment deadline specified in Section 6(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 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,
- 11 -
(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 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 6(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 10 days prior to the date that
the Executive is 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 6(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 6(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 6(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 6(c)(iv) during the first six months following the date of the Employees Separation
From Service shall be accumulated and paid to the Executive on the date that is six months
following the date of his Separation From Service. All reimbursements by the Company under this
Section 6(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.
(d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to
Section 6(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 6(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 6(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.
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(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.
7.
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.
8.
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 Employee, the Company shall
owe the Employee interest on the delayed payment at the applicable Federal rate provided for in
section 7872(f)(2)(A) of the Code if the Employee (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. Any such interest payments shall become
due and payable effective as of the applicable payment date(s) specified in Section 3 with respect
to the delinquent payment(s) due under Section 3.
9.
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 Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E),
the estimated amount of the Gross-Up Payment to be made under Section 6 and the Interest Amount.
The cash amounts specified in Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and
3(a)(i)(E), the Gross-Up Payment and the Interest Amount shall be paid from the Rabbi Trust on the
dates specified in Sections 3 and 6 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.
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10.
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 Parent,
Company or any subsidiary or Affiliate of the Company), to all or substantially all of the
Companys or Parents business and/or the Parents Assets or the 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 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.
11.
Miscellaneous.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
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If to the Executive:
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Stuart E. Ferguson
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515 Post Oak Boulevard
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Houston, Texas 77027
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If to the Company:
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Weatherford International, Inc.
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515 Post Oak Boulevard
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Houston, Texas 77027
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Attention: General Counsel
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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.
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(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 parties
relating to the subject matter hereof, including, without limitation, the Prior Agreements.
(g) Notwithstanding any other provision of this Agreement, no benefits or payments hereunder
shall be provided or paid following December 31, 2010.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the
authorization from its Board of Directors, the Company has caused these presents to be executed in
its name and on its behalf, all as of the day and year first above written.
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/s/ Stuart E. Ferguson
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Stuart E. Ferguson
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WEATHERFORD INTERNATIONAL, INC.
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By:
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/s/ Bernard J. Duroc-Danner
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Bernard J. Duroc-Danner
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President
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EMPLOYMENT AGREEMENT
This Employment Agreement (this Agreement) is entered into as of January 1, 2009 (the
Effective Date), by and between Weatherford International, Inc., a Delaware corporation (the
Company), and Burt M. Martin (the Executive).
W I T N E S S E T H:
WHEREAS, the Company has determined that it is in the interest of the Company and the
shareholders of Weatherford International Ltd. for the Company to commit to provide certain
severance benefits to the Executive in the event of his termination of employment under certain
conditions;
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the parties hereto do hereby agree:
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 Base Salary shall have the meaning specified in the Employment Agreement.
(c) Annual Bonus shall mean the Executives annual bonus under the annual incentive plan of
the Company and any of its Affiliates.
(d) Annual Bonus Amount shall mean the sum of (a) 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 Affiliates to or for the benefit of the Executive for services rendered or
labor performed during a fiscal year of the Company and (b) 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
Affiliates to or for the benefit of the Employee (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.
(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 Parent.
(g) Cause shall mean:
(i) the willful and continued failure of the Executive to substantially perform the
Executives duties with the Parent or 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) of the Employment
Agreement), after a written
- 1 -
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 willful engaging by the Executive in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Parent or 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 Parent or 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 Parent (which may be the General Counsel or
other counsel employed by the Parent 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 Parent
or 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 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 common shares of the Parent (the Outstanding
Parent Common Shares) or (B) the combined voting power of the then outstanding voting securities
of the Parent entitled to vote generally in the election of directors (the Outstanding Parent
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 Parents 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; or
(iii) the consummation of a reorganization, merger, amalgamation, consolidation, scheme of
arrangement, exchange offer or similar transaction of the Parent or any of its subsidiaries or the
sale, transfer or other disposition of all or substantially all of the Parents Assets (any of
which 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 this Agreement, 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 Parent
Common Shares and Outstanding Parent 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 then outstanding
- 2 -
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 Parent or all or substantially all of the Parents
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 Parent Common Shares and the Outstanding Parent 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 Parent 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 of Directors or the shareholders of the Parent 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 Parents Assets or the dissolution of the Parent.
(i) Disability shall mean the absence of the Executive from performance of the Executives
duties with the Parent on a substantial basis for one hundred twenty (120) calendar days as a
result of incapacity due to mental or physical illness.
(j) Employment Agreement shall mean the Executives employment agreement with the Parent, as
it may be amended from time to time.
(k) Employment Period shall have the meaning specified in the Employment Agreement.
(l) Entity shall mean means any corporation, partnership, association, joint-stock company,
limited liability company, trust, unincorporated organization or other business entity.
(m) ERP shall mean the Weatherford International Ltd. Nonqualified Executive Retirement
Plan, as it may be amended from time to time.
(n) Exchange Act shall mean the Securities Exchange Act of 1934, as amended from time to
time.
(o) 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) of the
Employment Agreement, or any other action by the Parent or the Company which results in a
diminution in such position, authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the
Parent or the Company promptly after receipt of notice thereof given by the Executive;
(ii) any failure by the Parent or the Company to comply with any of the provisions of this
Agreement or the Employment Agreement (including, without limitation, its obligations under Section
3(a) of the Employment Agreement), other than an isolated, insubstantial and inadvertent failure
- 3 -
not occurring in bad faith and which is remedied by the Parent or the Company promptly after
receipt of notice thereof given by the Executive;
(iii) any failure by the Parent or the Company to continue to provide the Executive with
benefits currently enjoyed by the Executive under any of the Parents and 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 Parent or 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 Parents or the Companys requiring the Executive to be based at any office or
location other than as provided in Section 3(a)(i) of the Employment Agreement or the Parents or
the Companys requiring the Executive to travel on business to a substantially greater extent than
required immediately prior to the date hereof;
(v) any purported termination by the Parent or 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 Parent to comply with and satisfy Section 10(b) of the Employment
Agreement;
(vii) failure by the Parent (including any successor) to agree, execute and enter into a new
employment agreement and a new executive retirement plan with the Executive prior to the
termination or expiration of this Agreement, with such employment agreement and executive
retirement plan having the same terms and conditions as existed in agreements and plans between the
Parent or the Company and the Executive prior to December 30, 2008, and incorporating such terms
and conditions that are more favorable to the Executive from all agreements and retirement plans
existing on January 1, 2009; or
(viii) in connection with, as a result of or following a Change of Control, 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 Parents
common 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 Parent 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) of the Employment Agreement.
For purposes of this Agreement, any good faith determination of Good Reason made by the
Executive shall be conclusive.
(p) IRS shall mean the Internal Revenue Service.
(q) Parent shall mean Weatherford International Ltd. 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.
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(r) Parents Assets shall mean the assets (of any kind) owned by the Parent, including,
without limitation, the securities of the Parents Subsidiaries and any of the assets owned by the
Parents Subsidiaries.
(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
Parent or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Parent or any of its Affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering by the Parent of such securities, or (iv) a corporation
or other entity owned, directly or indirectly, by the shareholders of the Parent in the same
proportions as their ownership of common shares of the Parent.
(t) Section 409A shall mean section 409A of the Internal Revenue Code of 1986, as amended
and the final Department of Treasury regulations issued thereunder.
(u) Separation From Service shall have the meaning ascribed to such term in Section 409A.
(v) Specified Employee shall have the meaning ascribed to such term in Section 409A.
(w) SRP shall mean the Weatherford International, Inc. Supplemental Retirement Plan, as it
may be amended from time to time.
(x) Subsidiary shall mean any majority-owned subsidiary of the Parent or any majority-owned
subsidiary thereof, or any other Entity in which the Parent owns, directly or indirectly, a
significant financial interest provided that the Chief Executive Officer of the Parent designates
such Entity to be a Subsidiary for the purposes of this Agreement.
(y) Term of the Agreement shall mean the period commencing on January 1, 2009 and ending on
December 31, 2009.
2.
Termination of Employment.
(a) Death or Disability. The Executives employment shall terminate automatically upon the
Executives death during the Employment Period. If the Parent 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 the Employment Agreement of its intention to terminate the
Executives employment. In such event, the Executives employment with the Parent shall terminate
effective thirty (30) days after receipt of such notice by the Executive (the Disability Effective
Date), provided 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
the Employment Agreement 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 Parent 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.
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(d) Notice of Termination. Any termination during the Employment Period shall be communicated
by Notice of Termination to the other party hereto given in accordance with Section 11(b) of this
Agreement. For purposes of this Agreement, a Notice of Termination means a written notice which
(i) indicates the specific termination provision in this Agreement or the Employment 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 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 or the Parent 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.
3.
Obligations of the Company Upon Termination.
(a) Death, Disability, Good Reason or Other than For Cause. If, during the Employment Period
and prior to the expiration of the Term of the Agreement, the Executives employment is terminated
by reason of the Executives death or Disability, by the Parent or the Company for any reason other
than for Cause or by the Executive for Good Reason:
(i) The Company shall pay to the Executive (or Executives heirs, beneficiaries or
representatives as applicable), at the times specified in clause (x), the following amounts:
(A) 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;
(B) an amount equal to the product of (x) the higher of (I) the highest Annual Bonus Amount
for the preceding five (5) calendar years and (II) 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 (y) 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);
(C) an amount equal to three 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;
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(D) an amount equal to three 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 the ERP and the SRP) using the
amounts specified in clauses (i) and (ii) of Section 3(a)(i)(C), 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
(E) the total value of all fringe benefits received by the Executive on an annualized basis
multiplied by three (3).
(ii) For a period of three (3) years 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) of the Employment Agreement 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 eligibility. If any of the dental, accident, health insurance or other
benefits specified in this Section 3(a)(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
3(a)(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 3(a)(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 3(a)(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 3(a)(ii) during the first six
months following the date of the Executives Separation From Service shall be accumulated and paid
to the Executive on the date that is six months following the date of his Separation From Service.
All reimbursements by the Company under this Section 3(a)(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.
(iii) All benefits and amounts under the Companys deferred compensation plan and all other
benefit plans (except as specifically provided for in Section 4(b) below), not already vested shall
become immediately one hundred percent (100%) vested as of the Date of Termination. All options to
acquire common shares of the Parent, all restricted common shares of the Parent, and all share
appreciation rights the value of which is determined by reference to or based upon the value of
common shares of the Parent, 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
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or based upon the value of common shares of the Parent 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 (x) 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 (x) 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 three (3).
(vii) To the extent not already paid or provided, the Company shall timely pay or provide to
the Executive any other amounts or benefits required to be paid or provided or which the Executive
is eligible to receive under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (collectively, the Other Benefits).
(viii) If the Executives employment is terminated by reason of the Executives death, the
Other Benefits (as defined in this Section) 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.
(ix) If the Executives employment is terminated by reason of the Executives Disability, the
Other Benefits (as defined in this Section) 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.
(x) The Company shall pay or provide to the Executive the amounts or benefits specified in
Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E), and Sections 3(a)(v) and
3(a)(vi) 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 months
following the date of his Separation From Service if he is a Specified Employee.
(xi) If the Executive is a Specified Employee, on the date that is six months following the
Executives Separation From Service, the Company shall pay to the Executive, in addition to the
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amounts reflected in clause (x), an amount equal to the interest that would be earned on the
amounts specified in Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E) and, to
the extent subject to a mandatory six-month delay in payment, all amounts payable under the ERP and
the SRP, 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 per annum (the
Interest Amount).
(xii) Notwithstanding any other provision of this Agreement to the contrary, the amount of the
payment under each of Sections 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E) shall not exceed
the amount that would have been paid to the Executive had his Date of Termination occurred on
December 31, 2008.
(b) Cause. If the Executives employment is terminated for Cause during the Employment Period
and prior to the expiration of the Term of the Agreement, this Agreement shall terminate without
further obligations to the Executive, other than the obligation to pay to the Executive (x) his
Annual Base Salary through the Date of Termination for periods following his Separation From
Service on the date that is 30 days following the date of the Employees Separation From Service if
he is not a Specified Employee or on the date that is six months following the date of his
Separation From Service if he is a Specified Employee, and (y) Other Benefits, to the extent
theretofore unpaid.
(c) Termination by Executive Other Than for Good Reason. If the Executive voluntarily
terminates his employment during the Employment Period and prior to the expiration of the Term of
the Agreement for any reason other than for Good Reason, the Executives employment shall terminate
without further obligations to the Executive, other than (x) the obligation to pay to the Executive
his Annual Base Salary through the Date of Termination for periods following his Separation From
Service, (y) Other Benefits and (z) the rights provided in Section 4. The Company shall pay to the
Executive the amount specified in clause (x) on the date that is 30 days following the date of the
Employees Separation From Service if he is not a Specified Employee or on the date that is six
months following the date of his Separation From Service if he is a Specified Employee.
4.
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 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 SRP, 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 SRP benefits payable shall only be those that are payable, if any, under the
terms of the ERP or SRP as of the Date of Termination.
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5.
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 3(a)(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 the Employment 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 or the Employment Agreement). The legal
fees or expenses that are subject to reimbursement pursuant to this Section 5(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 5(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 5(c) is
not subject to liquidation or exchange for another benefit. Any amount to which the Executive is
entitled to reimbursement under this Section 5(c) during the first six months following the date of
the Executives Separation From Service shall be accumulated and paid to the Executive on the date
that is six months following the date of his Separation From Service. All reimbursements by the
Company under this Section 5(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.
6.
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 Parent, the Company or any of their 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 6) (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
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
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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 6(a) during the first six months
following the date of the Executives Separation From Service shall be accumulated and paid to the
Executive on the date that is six months following the date of his Separation From Service. All
reimbursements by the Company under this Section 6(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.
(b) Subject to the provisions of Section 6(c), all determinations required to be made under
this Section 6, 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 6, 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 6(a), and in no event later than the payment deadline
specified in Section 6(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), consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 6(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 6(a), and in no event
later than the payment deadline specified in Section 6(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 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,
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(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 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 6(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 10 days prior to the date that
the Executive is 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 6(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 6(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 6(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 6(c)(iv) during the first six months following the date of the Employees Separation
From Service shall be accumulated and paid to the Executive on the date that is six months
following the date of his Separation From Service. All reimbursements by the Company under this
Section 6(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.
(d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to
Section 6(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 6(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 6(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.
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(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.
7.
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.
8.
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 Employee, the Company shall
owe the Employee interest on the delayed payment at the applicable Federal rate provided for in
section 7872(f)(2)(A) of the Code if the Employee (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. Any such interest payments shall become
due and payable effective as of the applicable payment date(s) specified in Section 3 with respect
to the delinquent payment(s) due under Section 3.
9.
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 Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E),
the estimated amount of the Gross-Up Payment to be made under Section 6 and the Interest Amount.
The cash amounts specified in Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and
3(a)(i)(E), the Gross-Up Payment and the Interest Amount shall be paid from the Rabbi Trust on the
dates specified in Sections 3 and 6 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.
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10.
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 Parent,
Company or any subsidiary or Affiliate of the Company), to all or substantially all of the
Companys or Parents business and/or the Parents Assets or the 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 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.
11.
Miscellaneous.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
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If to the Executive:
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Burt M. Martin
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515 Post Oak Boulevard
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Houston, Texas 77027
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If to the Company:
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Weatherford International, Inc.
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515 Post Oak Boulevard
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Houston, Texas 77027
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Attention: General Counsel
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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.
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(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 parties
relating to the subject matter hereof, including, without limitation, the Prior Agreements.
(g) Notwithstanding any other provision of this Agreement, no benefits or payments hereunder
shall be provided or paid following December 31, 2010.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the
authorization from its Board of Directors, the Company has caused these presents to be executed in
its name and on its behalf, all as of the day and year first above written.
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/s/ Burt M. Martin
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Burt M. Martin
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WEATHERFORD INTERNATIONAL, INC.
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By:
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/s/ Bernard J. Duroc-Danner
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Bernard J. Duroc-Danner
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President
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EMPLOYMENT AGREEMENT
This Employment Agreement (this Agreement) is entered into as of January 1, 2009 (the
Effective Date), by and between Weatherford International, Inc., a Delaware corporation (the
Company), and Keith R. Morley (the Executive).
W I T N
E S S E T H:
WHEREAS, the Company has determined that it is in the interest of the Company and the
shareholders of Weatherford International Ltd. for the Company to commit to provide certain
severance benefits to the Executive in the event of his termination of employment under certain
conditions;
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the parties hereto do hereby agree:
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 Base Salary shall have the meaning specified in the Employment Agreement.
(c) Annual Bonus shall mean the Executives annual bonus under the annual incentive plan of
the Company and any of its Affiliates.
(d) Annual Bonus Amount shall mean the sum of (a) 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 Affiliates to or for the benefit of the Executive for services rendered or
labor performed during a fiscal year of the Company and (b) 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
Affiliates to or for the benefit of the Employee (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.
(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 Parent.
(g) Cause shall mean:
(i) the willful and continued failure of the Executive to substantially perform the
Executives duties with the Parent or 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) of the Employment
Agreement), after a written
- 1 -
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 willful engaging by the Executive in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Parent or 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 Parent or 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 Parent (which may be the General Counsel or
other counsel employed by the Parent 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 Parent
or 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 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 common shares of the Parent (the Outstanding
Parent Common Shares) or (B) the combined voting power of the then outstanding voting securities
of the Parent entitled to vote generally in the election of directors (the Outstanding Parent
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 Parents 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; or
(iii) the consummation of a reorganization, merger, amalgamation, consolidation, scheme of
arrangement, exchange offer or similar transaction of the Parent or any of its subsidiaries or the
sale, transfer or other disposition of all or substantially all of the Parents Assets (any of
which 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 this Agreement, 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 Parent
Common Shares and Outstanding Parent 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 then outstanding
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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 Parent or all or substantially all of the Parents
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 Parent Common Shares and the Outstanding Parent 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 Parent 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 of Directors or the shareholders of the Parent 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 Parents Assets or the dissolution of the Parent.
(i) Disability shall mean the absence of the Executive from performance of the Executives
duties with the Parent on a substantial basis for one hundred twenty (120) calendar days as a
result of incapacity due to mental or physical illness.
(j) Employment Agreement shall mean the Executives employment agreement with the Parent, as
it may be amended from time to time.
(k) Employment Period shall have the meaning specified in the Employment Agreement.
(l) Entity shall mean means any corporation, partnership, association, joint-stock company,
limited liability company, trust, unincorporated organization or other business entity.
(m) ERP shall mean the Weatherford International Ltd. Nonqualified Executive Retirement
Plan, as it may be amended from time to time.
(n) Exchange Act shall mean the Securities Exchange Act of 1934, as amended from time to
time.
(o) 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) of the
Employment Agreement, or any other action by the Parent or the Company which results in a
diminution in such position, authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the
Parent or the Company promptly after receipt of notice thereof given by the Executive;
(ii) any failure by the Parent or the Company to comply with any of the provisions of this
Agreement or the Employment Agreement (including, without limitation, its obligations under Section
3(a) of the Employment Agreement), other than an isolated, insubstantial and inadvertent failure
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not occurring in bad faith and which is remedied by the Parent or the Company promptly after
receipt of notice thereof given by the Executive;
(iii) any failure by the Parent or the Company to continue to provide the Executive with
benefits currently enjoyed by the Executive under any of the Parents and 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 Parent or 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 Parents or the Companys requiring the Executive to be based at any office or
location other than as provided in Section 3(a)(i) of the Employment Agreement or the Parents or
the Companys requiring the Executive to travel on business to a substantially greater extent than
required immediately prior to the date hereof;
(v) any purported termination by the Parent or 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 Parent to comply with and satisfy Section 10(b) of the Employment
Agreement;
(vii) failure by the Parent (including any successor) to agree, execute and enter into a new
employment agreement and a new executive retirement plan with the Executive prior to the
termination or expiration of this Agreement, with such employment agreement and executive
retirement plan having the same terms and conditions as existed in agreements and plans between the
Parent or the Company and the Executive prior to December 30, 2008, and incorporating such terms
and conditions that are more favorable to the Executive from all agreements and retirement plans
existing on January 1, 2009; or
(viii) in connection with, as a result of or following a Change of Control, 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 Parents
common 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 Parent 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) of the Employment Agreement.
For purposes of this Agreement, any good faith determination of Good Reason made by the
Executive shall be conclusive.
(p) IRS shall mean the Internal Revenue Service.
(q) Parent shall mean Weatherford International Ltd. 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.
- 4 -
(r) Parents Assets shall mean the assets (of any kind) owned by the Parent, including,
without limitation, the securities of the Parents Subsidiaries and any of the assets owned by the
Parents Subsidiaries.
(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
Parent or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Parent or any of its Affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering by the Parent of such securities, or (iv) a corporation
or other entity owned, directly or indirectly, by the shareholders of the Parent in the same
proportions as their ownership of common shares of the Parent.
(t) Section 409A shall mean section 409A of the Internal Revenue Code of 1986, as amended
and the final Department of Treasury regulations issued thereunder.
(u) Separation From Service shall have the meaning ascribed to such term in Section 409A.
(v) Specified Employee shall have the meaning ascribed to such term in Section 409A.
(w) SRP shall mean the Weatherford International, Inc. Supplemental Retirement Plan, as it
may be amended from time to time.
(x) Subsidiary shall mean any majority-owned subsidiary of the Parent or any majority-owned
subsidiary thereof, or any other Entity in which the Parent owns, directly or indirectly, a
significant financial interest provided that the Chief Executive Officer of the Parent designates
such Entity to be a Subsidiary for the purposes of this Agreement.
(y) Term of the Agreement shall mean the period commencing on January 1, 2009 and ending on
December 31, 2009.
2.
Termination of Employment.
(a) Death or Disability. The Executives employment shall terminate automatically upon the
Executives death during the Employment Period. If the Parent 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 the Employment Agreement of its intention to terminate the
Executives employment. In such event, the Executives employment with the Parent shall terminate
effective thirty (30) days after receipt of such notice by the Executive (the Disability Effective
Date), provided 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
the Employment Agreement 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 Parent 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.
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(d) Notice of Termination. Any termination during the Employment Period shall be communicated
by Notice of Termination to the other party hereto given in accordance with Section 11(b) of this
Agreement. For purposes of this Agreement, a Notice of Termination means a written notice which
(i) indicates the specific termination provision in this Agreement or the Employment 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 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 or the Parent 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.
3.
Obligations of the Company Upon Termination.
(a) Death, Disability, Good Reason or Other than For Cause. If, during the Employment Period
and prior to the expiration of the Term of the Agreement, the Executives employment is terminated
by reason of the Executives death or Disability, by the Parent or the Company for any reason other
than for Cause or by the Executive for Good Reason:
(i) The Company shall pay to the Executive (or Executives heirs, beneficiaries or
representatives as applicable), at the times specified in clause (x), the following amounts:
(A) 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;
(B) an amount equal to the product of (x) the higher of (I) the highest Annual Bonus Amount
for the preceding five (5) calendar years and (II) 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 (y) 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);
(C) an amount equal to three 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;
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(D) an amount equal to three 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 the ERP and the SRP) using the
amounts specified in clauses (i) and (ii) of Section 3(a)(i)(C), 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
(E) the total value of all fringe benefits received by the Executive on an annualized basis
multiplied by three (3).
(ii) For a period of three (3) years 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) of the Employment Agreement 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 eligibility. If any of the dental, accident, health insurance or other
benefits specified in this Section 3(a)(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
3(a)(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 3(a)(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 3(a)(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 3(a)(ii) during the first six
months following the date of the Executives Separation From Service shall be accumulated and paid
to the Executive on the date that is six months following the date of his Separation From Service.
All reimbursements by the Company under this Section 3(a)(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.
(iii) All benefits and amounts under the Companys deferred compensation plan and all other
benefit plans (except as specifically provided for in Section 4(b) below), not already vested shall
become immediately one hundred percent (100%) vested as of the Date of Termination. All options to
acquire common shares of the Parent, all restricted common shares of the Parent, and all share
appreciation rights the value of which is determined by reference to or based upon the value of
common shares of the Parent, 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
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or based upon the value of common shares of the Parent 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 (x) 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 (x) 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 three (3).
(vii) To the extent not already paid or provided, the Company shall timely pay or provide to
the Executive any other amounts or benefits required to be paid or provided or which the Executive
is eligible to receive under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (collectively, the Other Benefits).
(viii) If the Executives employment is terminated by reason of the Executives death, the
Other Benefits (as defined in this Section) 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.
(ix) If the Executives employment is terminated by reason of the Executives Disability, the
Other Benefits (as defined in this Section) 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.
(x) The Company shall pay or provide to the Executive the amounts or benefits specified in
Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E), and Sections 3(a)(v) and
3(a)(vi) 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 months
following the date of his Separation From Service if he is a Specified Employee.
(xi) If the Executive is a Specified Employee, on the date that is six months following the
Executives Separation From Service, the Company shall pay to the Executive, in addition to the
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amounts reflected in clause (x), an amount equal to the interest that would be earned on the
amounts specified in Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E) and, to
the extent subject to a mandatory six-month delay in payment, all amounts payable under the ERP and
the SRP, 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 per annum (the
Interest Amount).
(xii) Notwithstanding any other provision of this Agreement to the contrary, the amount of the
payment under each of Sections 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E) shall not exceed
the amount that would have been paid to the Executive had his Date of Termination occurred on
December 31, 2008.
(b) Cause. If the Executives employment is terminated for Cause during the Employment Period
and prior to the expiration of the Term of the Agreement, this Agreement shall terminate without
further obligations to the Executive, other than the obligation to pay to the Executive (x) his
Annual Base Salary through the Date of Termination for periods following his Separation From
Service on the date that is 30 days following the date of the Employees Separation From Service if
he is not a Specified Employee or on the date that is six months following the date of his
Separation From Service if he is a Specified Employee, and (y) Other Benefits, to the extent
theretofore unpaid.
(c) Termination by Executive Other Than for Good Reason. If the Executive voluntarily
terminates his employment during the Employment Period and prior to the expiration of the Term of
the Agreement for any reason other than for Good Reason, the Executives employment shall terminate
without further obligations to the Executive, other than (x) the obligation to pay to the Executive
his Annual Base Salary through the Date of Termination for periods following his Separation From
Service, (y) Other Benefits and (z) the rights provided in Section 4. The Company shall pay to the
Executive the amount specified in clause (x) on the date that is 30 days following the date of the
Employees Separation From Service if he is not a Specified Employee or on the date that is six
months following the date of his Separation From Service if he is a Specified Employee.
4.
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 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 SRP, 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 SRP benefits payable shall only be those that are payable, if any, under the
terms of the ERP or SRP as of the Date of Termination.
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5.
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 3(a)(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 the Employment 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 or the Employment Agreement). The legal
fees or expenses that are subject to reimbursement pursuant to this Section 5(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 5(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 5(c) is
not subject to liquidation or exchange for another benefit. Any amount to which the Executive is
entitled to reimbursement under this Section 5(c) during the first six months following the date of
the Executives Separation From Service shall be accumulated and paid to the Executive on the date
that is six months following the date of his Separation From Service. All reimbursements by the
Company under this Section 5(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.
6.
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 Parent, the Company or any of their 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 6) (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
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
- 10 -
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 6(a) during the first six months
following the date of the Executives Separation From Service shall be accumulated and paid to the
Executive on the date that is six months following the date of his Separation From Service. All
reimbursements by the Company under this Section 6(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.
(b) Subject to the provisions of Section 6(c), all determinations required to be made under
this Section 6, 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 6, 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 6(a), and in no event later than the payment deadline
specified in Section 6(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), consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 6(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 6(a), and in no event
later than the payment deadline specified in Section 6(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 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,
- 11 -
(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 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 6(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 10 days prior to the date that
the Executive is 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 6(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 6(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 6(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 6(c)(iv) during the first six months following the date of the Employees Separation
From Service shall be accumulated and paid to the Executive on the date that is six months
following the date of his Separation From Service. All reimbursements by the Company under this
Section 6(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.
(d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to
Section 6(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 6(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 6(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.
- 12 -
(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.
7.
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.
8.
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 Employee, the Company shall
owe the Employee interest on the delayed payment at the applicable Federal rate provided for in
section 7872(f)(2)(A) of the Code if the Employee (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. Any such interest payments shall become
due and payable effective as of the applicable payment date(s) specified in Section 3 with respect
to the delinquent payment(s) due under Section 3.
9.
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 Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and 3(a)(i)(E),
the estimated amount of the Gross-Up Payment to be made under Section 6 and the Interest Amount.
The cash amounts specified in Sections 3(a)(i)(A), 3(a)(i)(B), 3(a)(i)(C), 3(a)(i)(D) and
3(a)(i)(E), the Gross-Up Payment and the Interest Amount shall be paid from the Rabbi Trust on the
dates specified in Sections 3 and 6 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.
- 13 -
10.
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 Parent,
Company or any subsidiary or Affiliate of the Company), to all or substantially all of the
Companys or Parents business and/or the Parents Assets or the 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 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.
11.
Miscellaneous.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
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If to the Executive:
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Keith R. Morley
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515 Post Oak Boulevard
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Houston, Texas 77027
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If to the Company:
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Weatherford International, Inc.
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515 Post Oak Boulevard
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Houston, Texas 77027
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Attention: General Counsel
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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.
- 14 -
(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 parties
relating to the subject matter hereof, including, without limitation, the Prior Agreements.
(g) Notwithstanding any other provision of this Agreement, no benefits or payments hereunder
shall be provided or paid following December 31, 2010.
- 15 -
IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the
authorization from its Board of Directors, the Company has caused these presents to be executed in
its name and on its behalf, all as of the day and year first above written.
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/s/ Keith R. Morley
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Keith R. Morley
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WEATHERFORD INTERNATIONAL, INC.
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By:
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/s/ Bernard J. Duroc-Danner
Bernard J. Duroc-Danner
President
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- 16 -
Exhibit 10.10
WEATHERFORD INTERNATIONAL LTD.
2006 OMNIBUS INCENTIVE PLAN
As Amended on December 31, 2008
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ARTICLE I ESTABLISHMENT, PURPOSE AND DURATION
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1.1
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Establishment
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1
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1.2
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Purpose of the Plan
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1
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1.3
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Duration of Plan
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1
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ARTICLE II DEFINITIONS
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2.1
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Affiliate
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1
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2.2
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Award
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1
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2.3
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Award Agreement
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2
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2.4
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Board
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2
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2.5
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Cash-Based Award
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2
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2.6
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Code
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2
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2.7
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Committee
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2
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2.8
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Company
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2
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2.9
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Corporate Change
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2
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2.10
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Director
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2
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2.11
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Disability
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2
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2.12
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Dividend Equivalent
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2
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2.13
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Employee
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3
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2.14
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Entity
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3
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2.15
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Exchange Act
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3
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2.16
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Fair Market Value
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3
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2.17
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Fiscal Year
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3
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2.18
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Holder
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3
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2.19
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ISO
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3
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2.20
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Minimum Statutory Tax Withholding Obligation
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3
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2.21
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NSO
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3
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2.22
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Option
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3
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2.23
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Option Price
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3
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2.24
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Other Share-Based Award
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3
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2.25
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Parent Corporation
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3
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2.26
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Performance Goals
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4
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2.27
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Performance Share Award
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4
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2.28
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Performance Unit Award
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4
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2.29
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Period of Restriction
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4
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2.30
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Plan
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4
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2.31
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Restricted Shares
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4
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2.32
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Restricted Share Award
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4
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2.33
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RSU
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4
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2.34
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RSU Award
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4
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i
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2.35
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SAR
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4
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2.36
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Section 409A
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4
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2.37
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Share or Shares
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4
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2.38
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Subsidiary Corporation
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4
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2.39
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Substantial Risk of Forfeiture
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5
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2.40
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Ten Percent Shareholder
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5
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2.41
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Termination of Employment
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5
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ARTICLE III ELIGIBILITY AND PARTICIPATION
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3.1
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Eligibility
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5
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3.2
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Participation
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5
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ARTICLE IV GENERAL PROVISIONS RELATING TO AWARDS
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4.1
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Authority to Grant Awards
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5
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4.2
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Dedicated Shares; Maximum Awards
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6
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4.3
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Non-Transferability
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6
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4.4
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Requirements of Law
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6
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4.5
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Changes in the Companys Capital Structure
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7
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4.6
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Election Under Section 83(b) of the Code
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9
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4.7
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Forfeiture for Cause
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10
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4.8
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Forfeiture Events
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10
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4.9
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Award Agreements
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10
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4.10
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Amendments of Award Agreements
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10
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4.11
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Rights as Shareholder
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11
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4.12
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Issuance of Shares
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11
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4.13
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Restrictions on Shares Received
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11
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4.14
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Compliance With Section 409A
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11
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ARTICLE V OPTIONS
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5.1
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Authority to Grant Options
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11
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5.2
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Type of Options Available
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11
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5.3
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Option Agreement
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11
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5.4
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Option Price
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11
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5.5
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Duration of Option
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12
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5.6
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Amount Exercisable
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12
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5.7
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Exercise of Option
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12
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5.8
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Notification of Disqualifying Disposition
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12
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5.9
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No Rights as Shareholder
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12
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5.10
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$100,000 Limitation on ISOs
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13
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ARTICLE VI SHARE APPRECIATION RIGHTS
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6.1
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Authority to Grant SAR Awards
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13
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6.2
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General Terms
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13
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6.3
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SAR Agreement
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13
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ii
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6.4
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Term of SAR
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13
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6.5
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Exercise of SAR
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13
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6.6
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Payment of SAR Amount
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13
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6.7
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Termination of Employment
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14
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ARTICLE VII RESTRICTED SHARE AWARDS
|
|
|
|
|
7.1
|
|
Restricted Share Awards
|
|
|
14
|
|
7.2
|
|
Restricted Share Award Agreement
|
|
|
14
|
|
7.3
|
|
Holders Rights as Shareholder
|
|
|
14
|
|
ARTICLE VIII RESTRICTED SHARE UNIT AWARDS
|
|
|
|
|
8.1
|
|
Authority to Grant RSU Awards
|
|
|
15
|
|
8.2
|
|
RSU Award
|
|
|
15
|
|
8.3
|
|
RSU Award Agreement
|
|
|
15
|
|
8.4
|
|
Dividend Equivalents
|
|
|
15
|
|
8.5
|
|
Form of Payment Under RSU Award
|
|
|
15
|
|
8.6
|
|
Time of Payment Under RSU Award
|
|
|
15
|
|
8.7
|
|
No Rights as a Shareholder
|
|
|
15
|
|
ARTICLE IX PERFORMANCE SHARE AWARDS AND PERFORMANCE UNIT AWARDS
|
|
|
|
|
9.1
|
|
Authority to Grant Performance Share Awards and Performance Unit Awards
|
|
|
16
|
|
9.2
|
|
Performance Goals
|
|
|
16
|
|
9.3
|
|
Time of Establishment of Performance Goals
|
|
|
17
|
|
9.4
|
|
Written Agreement
|
|
|
17
|
|
9.5
|
|
Form of Payment Under Performance Unit Award
|
|
|
17
|
|
9.6
|
|
Time of Payment Under Performance Unit Award
|
|
|
17
|
|
9.7
|
|
Holders Rights as Shareholder With Respect to Performance Awards
|
|
|
17
|
|
9.8
|
|
Increases Prohibited
|
|
|
17
|
|
9.9
|
|
Shareholder Approval
|
|
|
17
|
|
ARTICLE X OTHER SHARE-BASED AWARDS
|
|
|
|
|
10.1
|
|
Authority to Grant Other Share-Based Awards
|
|
|
18
|
|
10.2
|
|
Value of Other Share-Based Award
|
|
|
18
|
|
10.3
|
|
Payment of Other Share-Based Award
|
|
|
18
|
|
10.4
|
|
Termination of Employment
|
|
|
18
|
|
ARTICLE XI CASH-BASED AWARDS
|
|
|
|
|
11.1
|
|
Authority to Grant Cash-Based Awards
|
|
|
18
|
|
11.2
|
|
Value of Cash-Based Award
|
|
|
18
|
|
11.3
|
|
Payment of Cash-Based Award
|
|
|
18
|
|
11.4
|
|
Termination of Employment
|
|
|
18
|
|
ARTICLE XII SUBSTITUTION AWARDS
|
|
|
19
|
|
ARTICLE XIII ADMINISTRATION
|
|
|
|
|
13.1
|
|
Awards
|
|
|
19
|
|
iii
|
|
|
|
|
|
|
13.2
|
|
Authority of the Committee
|
|
|
19
|
|
13.3
|
|
Decisions Binding
|
|
|
20
|
|
13.4
|
|
No Liability
|
|
|
20
|
|
ARTICLE XIV AMENDMENT OR TERMINATION OF PLAN
|
|
|
|
|
14.1
|
|
Amendment, Modification, Suspension, and Termination
|
|
|
20
|
|
14.2
|
|
Awards Previously Granted
|
|
|
20
|
|
ARTICLE XV MISCELLANEOUS
|
|
|
|
|
15.1
|
|
Unfunded Plan/No Establishment of a Trust Fund
|
|
|
21
|
|
15.2
|
|
No Employment Obligation
|
|
|
21
|
|
15.3
|
|
Tax Withholding
|
|
|
21
|
|
15.4
|
|
Gender and Number
|
|
|
22
|
|
15.5
|
|
Severability
|
|
|
22
|
|
15.6
|
|
Headings
|
|
|
22
|
|
15.7
|
|
Other Compensation Plans
|
|
|
22
|
|
15.8
|
|
Other Awards
|
|
|
22
|
|
15.9
|
|
Successors
|
|
|
22
|
|
15.10
|
|
Law Limitations/Governmental Approvals
|
|
|
22
|
|
15.11
|
|
Delivery of Title
|
|
|
23
|
|
15.12
|
|
Inability to Obtain Authority
|
|
|
23
|
|
15.13
|
|
Fractional Shares
|
|
|
23
|
|
15.14
|
|
Investment Representations
|
|
|
23
|
|
15.15
|
|
Persons Residing Outside of the United States
|
|
|
23
|
|
15.16
|
|
Arbitration of Disputes
|
|
|
23
|
|
15.17
|
|
Governing Law
|
|
|
24
|
|
15.18
|
|
Compliance with Section 409A
|
|
|
24
|
|
iv
ARTICLE I
Establishment, Purpose and Duration
1.1
Establishment.
The Company hereby establishes an incentive compensation plan, to be
known as the Weatherford International Ltd. 2006 Omnibus Incentive Plan, as set forth in this
document. The Plan permits the grant of Options, SARs, Restricted Shares, RSUs, Performance Share
Awards, Performance Unit Awards, Cash-Based Awards and Other Share-Based Awards. The Plan shall
become effective on the later of (a) the date the Plan is approved by the Board and (b) the date
the Plan is approved by the shareholders of the Company (the
Effective Date
).
1.2
Purpose of the Plan.
The Plan is intended to advance the best interests of the Company,
its Affiliates and its shareholders by providing those persons who have substantial responsibility
for the management and growth of the Company and its Affiliates with additional performance
incentives and an opportunity to obtain or increase their proprietary interest in the Company,
thereby encouraging them to continue in their employment or affiliation with the Company or its
Affiliates.
1.3
Duration of Plan.
The Plan shall continue indefinitely until it is terminated pursuant
to Section 14.1. No ISOs may be granted under the Plan on or after the tenth anniversary of the
Effective Date. The applicable provisions of the Plan will continue in effect with respect to an
Award granted under the Plan for as long as such Award remains outstanding.
ARTICLE II
Definitions
The words and phrases defined in this Article shall have the meaning set out below throughout
the Plan, unless the context in which any such word or phrase appears reasonably requires a
broader, narrower or different meaning.
2.1
Affiliate
means any Entity that, directly or indirectly, controls, is controlled by, or
is under common control with, the Company. For purposes of the preceding sentence, control
(including, with correlative meanings, the terms controlled by and under common control with),
as used with respect to any Entity, shall mean the possession, directly or indirectly, of the power
(a) to vote more than fifty percent (50%) of the securities having ordinary voting power for the
election of directors (or other governing body) of the controlled Entity, or (ii) to direct or
cause the direction of the management and policies of the controlled Entity, whether through the
ownership of voting securities or by contract or otherwise.
2.2
Award
means, individually or collectively, a grant under the Plan of Options, SARs,
Restricted Shares, RSUs, Performance Share Awards, Performance Unit Awards, Other Share-Based
Awards and Cash-Based Awards, in each case subject to the terms and provisions of the Plan, the
consideration for which may be services rendered to the Company and/or its Affiliates.
1
2.3
Award Agreement
means an agreement that sets forth the terms and conditions applicable
to an Award granted under the Plan.
2.4
Board
means the board of directors of the Company.
2.5
Cash-Based Award
means an Award granted pursuant to Article XI.
2.6
Code
means the United States Internal Revenue Code of 1986, as amended from time to
time.
2.7
Committee
means a committee of at least two persons, who are members of the
Compensation Committee of the Board and are appointed by the Compensation Committee of the Board,
or, to the extent it chooses to operate as the Committee, the Compensation Committee of the Board.
Each member of the Committee in respect of his or her participation in any decision with respect to
an Award intended to satisfy the requirements of section 162(m) of the Code must satisfy the
requirements of outside director status within the meaning of section 162(m) of the Code;
provided, however, that the failure to satisfy such requirement shall not affect the validity of
the action of any committee otherwise duly authorized and acting in the matter. As to Awards,
grants or other transactions that are authorized by the Committee and that are intended to be
exempt under Rule 16b-3 under the Exchange Act, the requirements of Rule 16b-3(d)(1) under the
Exchange Act with respect to committee action must also be satisfied. For all purposes under the
Plan, the Chief Executive Officer of the Company shall be deemed to be the
Committee
with respect
to Awards granted by him pursuant to Section 4.1.
2.8
Company
means Weatherford International Ltd., a Bermuda exempted company, or any
successor or continuing Entity (by acquisition, reincorporation, merger, amalgamation,
consolidation or otherwise).
2.9
Corporate Change
shall have the meaning ascribed to that term in Section 4.5(c).
2.10
Director
means a director of the Company who is not an Employee.
2.11
Disability
means as determined by the Committee in its discretion exercised in good
faith, a physical or mental condition of the Holder that would entitle him to payment of disability
income payments under the Companys long-term disability insurance policy or plan for Employees as
then in effect; or in the event that the Holder is not covered, for whatever reason, under the
Companys long-term disability insurance policy or plan for Employees or in the event the Company
does not maintain such a long-term disability insurance policy, Disability means a permanent and
total disability as defined in section 22(e)(3) of the Code. A determination of Disability may be
made by a physician selected or approved by the Committee and, in this respect, the Holder shall
submit to an examination by such physician upon request by the Committee.
2.12
Dividend Equivalent
means a payment equivalent in amount to dividends paid to the
Companys shareholders.
2
2.13
Employee
means a person employed by the Company or any Affiliate as a common law
employee.
2.14
Entity
means any company, corporation, partnership, association, joint-stock company,
limited liability company, trust, unincorporated organization or any other entity or organization.
2.15
Exchange Act
means the United States Securities Exchange Act of 1934, as amended from
time to time.
2.16
Fair Market Value
of the Shares as of any particular date means (1) if the Shares are
traded on a stock exchange, the closing sale price of the Shares on that date as reported on the
principal securities exchange on which the Shares are traded, or (2) if the Shares are traded in
the over-the-counter market, the average between the high bid and low asked price on that date as
reported in such over-the-counter market; provided that (a) if the Shares are not so traded, (b) if
no closing price or bid and asked prices for the Shares were so reported on that date or (c) if, in
the discretion of the Committee, another means of determining the fair market value of a Share at
such date shall be necessary or advisable, the Committee may provide for another means for
determining such fair market value.
2.17
Fiscal Year
means the Companys fiscal year.
2.18
Holder
means a person who has been granted an Award or any person who is entitled to
receive Shares or cash under an Award.
2.19
ISO
means an Option that is intended to be an incentive stock option that satisfies
the requirements of section 422 of the Code.
2.20
Minimum Statutory Tax Withholding Obligation
means, with respect to an Award, the
amount the Company or an Affiliate is required to withhold for federal, state and local taxes based
upon the applicable minimum statutory withholding rates required by the relevant tax authorities.
2.21
NSO
means an Option that is intended to be a nonqualified stock option that does not
satisfy the requirements of section 422 of the Code.
2.22
Option
means an option to purchase Shares granted pursuant to Article V.
2.23
Option Price
shall have the meaning ascribed to that term in Section 5.4.
2.24
Other Share-Based Award
means an equity-based or equity-related Award not otherwise
described by the terms and provisions of the Plan that is granted pursuant to Article X.
2.25
Parent Corporation
means any corporation (other than the Company) in an unbroken chain
of corporations ending with the Company if, at the time of the action or transaction, each of the
corporations other than the Company owns stock or shares possessing 50 percent or more
3
of the total combined voting power of all classes of stock or shares in one of the other
corporations in the chain.
2.26
Performance Goals
means one or more of the criteria described in Section 9.2 on which
the performance goals applicable to an Award are based.
2.27
Performance Share Award
means an Award designated as a performance share award granted
to a Holder pursuant to Article IX.
2.28
Performance Unit Award
means an Award designated as a performance unit award granted to
a Holder pursuant to Article IX.
2.29
Period of Restriction
means the period during which Restricted Shares are subject to a
substantial risk of forfeiture (or absolute right of the Company to repurchase), whether based on
the passage of time, the achievement of performance goals, or upon the occurrence of other events
as determined by the Committee, in its discretion.
2.30
Plan
means the Weatherford International Ltd. 2006 Omnibus Incentive Plan, as set forth
in this document as it may be amended from time to time.
2.31
Restricted Shares
means restricted Shares issued or granted under the Plan pursuant to
Article VII.
2.32
Restricted Share Award
means an authorization by the Committee to issue or transfer
Restricted Shares to a Holder.
2.33
RSU
means a restricted share unit credited to a Holders ledger account maintained by
the Company pursuant to Article VIII.
2.34
RSU Award
means an Award granted pursuant to Article VIII.
2.35
SAR
means a share appreciation right granted under the Plan pursuant to Article VI.
2.36
Section 409A
means section 409A of the Code and Department of Treasury rules and
regulations issued thereunder.
2.37
Share or Shares
means a common share or shares, par value U.S.$1.00 per share, of the
Company, or, in the event that the Shares are later changed into or exchanged for a different class
of shares or securities of the Company or another Entity, that other share or security. Shares may
be represented by a certificate or by book or electronic entry.
2.38
Subsidiary Corporation
means any company or corporation (other than the Company) in an
unbroken chain of companies or corporations beginning with the Company if, at the time of the
action or transaction, each of the companies or corporations other than the last company or
corporation in an unbroken chain owns stock or shares possessing 50 percent or more of the total
4
combined voting power of all classes of stock or shares in one of the other companies or
corporations in the chain.
2.39
Substantial Risk of Forfeiture
shall have the meaning ascribed to that term in section
409A of the Code and Department of Treasury guidance issued thereunder.
2.40
Ten Percent Shareholder
means an individual who, at the time the Option is granted,
owns more than ten percent of the total combined voting power of all classes of shares or series of
shares of the Company or of any Parent Corporation or Subsidiary Corporation. An individual shall
be considered as owning the shares owned, directly or indirectly, by or for his brothers and
sisters (whether by the whole or half blood), spouse, ancestors and lineal descendants; and shares
owned, directly or indirectly, by or for a company, corporation, partnership, estate or trust,
shall be considered as being owned proportionately by or for its shareholders, partners or
beneficiaries.
2.41
Termination of Employment
means, in the case of an Award other than an ISO, the
termination of the Award recipients employment relationship with the Company and all Affiliates.
Termination of Employment
means, in the case of an ISO, the termination of the Optionees
employment relationship with all of the Company, any Parent Corporation, any Subsidiary Corporation
and any parent or subsidiary corporation (within the meaning of section 422(a)(2) of the Code) of
any such corporation that issues or assumes an ISO in a transaction to which section 424(a) of the
Code applies.
ARTICLE III
Eligibility and Participation
3.1
Eligibility.
Except as otherwise specified in this Section 3.1, the persons who are
eligible to receive Awards under the Plan are Employees and Directors. Awards other than ISOs,
Performance Share Awards, or Performance Units Awards may also be granted to a person who is
expected to become an Employee within six months. In no event will an ISO be granted to any person
other than a key Employee.
3.2
Participation.
Subject to the terms and provisions of the Plan, the Committee may, from
time to time, select the persons to whom Awards shall be granted and shall determine the nature and
amount of each Award.
ARTICLE IV
General Provisions Relating to Awards
4.1
Authority to Grant Awards.
The Committee may grant Awards to those eligible persons as
the Committee shall from time to time determine, under the terms and conditions of the Plan.
Subject only to any applicable limitations set out in the Plan, the number of Shares or other value
to be covered by any Award to be granted under the Plan shall be as determined by the Committee in
its sole discretion. The Chief Executive Officer of the Company is authorized
5
to grant Awards, with respect to no more than 500,000 Shares per Fiscal Year, to eligible
persons who are not officers of the Company subject to the provisions of Section 16 of the Exchange
Act and as inducements to hire prospective Employees who will not be officers of the Company
subject to the provisions of Section 16 of the Exchange Act.
4.2
Dedicated Shares; Maximum Awards.
The aggregate number of Shares with respect to which
Awards may be granted under the Plan is 10 million. The aggregate number of Shares with respect to
which Options may be granted under the Plan is 10 million. The maximum number of Shares with
respect to which Options may be granted to an Employee or Director during a Fiscal Year is one
million. The maximum number of shares with respect to which SARs may be granted to an Employee
during a Fiscal Year is one million. Each of the foregoing numerical limits stated in this Section
4.2 shall be subject to adjustment in accordance with the provisions of Section 4.5. The number of
Shares stated in this Section 4.2 shall also be increased by such number of Shares as become
subject to substitute Awards granted pursuant to Article XII;
provided, however,
that such increase
shall be conditioned upon the approval of the shareholders of the Company to the extent shareholder
approval is required by law or applicable stock exchange rules. If Shares are not issued or
withheld from payment of an Award to satisfy tax obligations with respect to the Award, such Shares
will count against the aggregate number of Shares with respect to which Awards may be granted under
the Plan. If Shares are tendered in payment of an Option Price of an Option, such Shares will not
be added to the aggregate number of Shares with respect to which Awards may be granted under the
Plan. To the extent that any outstanding Award is forfeited or cancelled for any reason or is
settled in cash in lieu of Shares, the Shares allocable to such portion of the Award may again be
subject to an Award granted under the Plan. When a SAR is settled in Shares, the number of Shares
subject to the SAR under the SAR Award Agreement will be counted against the aggregate number of
Shares with respect to which Awards may be granted under the Plan as one Share for every Share
subject to the SAR, regardless of the number of Shares used to settle the SAR upon exercise.
4.3
Non-Transferability.
Except as specified in the applicable Award Agreements or in
domestic relations court orders, an Award shall not be transferable by the Holder other than by
will or under the laws of descent and distribution, and shall be exercisable, during the Holders
lifetime, only by him or her. Any attempted assignment of an Award in violation of this Section 4.3
shall be null and void. In the discretion of the Committee, any attempt to transfer an Award other
than under the terms of the Plan and the applicable Award Agreement may terminate the Award. No ISO
granted under the Plan may be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution. Further, all ISOs
granted to an Employee under the Plan shall be exercisable during his or her lifetime only by the
Employee, and after that time, by the Employees heirs or estate.
4.4
Requirements of Law.
The Company shall not be required to sell or issue any Shares under
any Award if issuing those Shares would constitute or result in a violation by the Holder or the
Company of any provision of any law, statute or regulation of any governmental authority.
Specifically, in connection with any applicable statute or regulation relating to the registration
of securities, upon exercise of any Option or pursuant to any other Award, the Company shall not be
required to issue any Shares unless the Committee has received evidence satisfactory to it to the
effect that the Holder will not transfer the Shares except in accordance with applicable law,
6
including receipt of an opinion of counsel satisfactory to the Company to the effect that any
proposed transfer complies with applicable law. The determination by the Committee on this matter
shall be final, binding and conclusive. The Company may, but shall in no event be obligated to,
register any Shares covered by the Plan pursuant to applicable securities laws of any country or
any political subdivision. In the event the Shares issuable upon exercise of an Option or pursuant
to any other Award are not registered, the Company may imprint on the certificate evidencing the
Shares any legend that counsel for the Company considers necessary or advisable to comply with
applicable law, or, should the Shares be represented by book or electronic entry, rather than a
certificate, the Company may take such steps to restrict transfer of the Shares as counsel for the
Company considers necessary or advisable to comply with applicable law. The Company shall not be
obligated to take any other affirmative action in order to cause or enable the exercise of an
Option or any other Award, or the issuance of Shares pursuant thereto, to comply with any law or
regulation of any governmental authority.
4.5
Changes in the Companys Capital Structure.
(a) The existence of outstanding Awards shall not affect in any way the right or power of the
Company or its shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Companys capital structure or its business, any
acquisition, merger, amalgamation or consolidation of the Company, any issue of bonds, debentures
or shares, including preferred or prior preference shares ahead of or affecting the Shares or Share
rights, the winding up, dissolution or liquidation of the Company, any sale or transfer of all or
any part of its assets or business or any other corporate act or proceeding, whether of a similar
character or otherwise.
(b) If the Company shall effect a subdivision or consolidation of Shares or other capital
readjustment, the payment of a Share dividend or bonus issue, or other increase or reduction of the
number of Shares issued and outstanding, without receiving compensation therefor in money, services
or property, then (1) the number, class or series and price per Share subject to outstanding
Options or other Awards under the Plan shall be appropriately adjusted in such a manner as to
entitle a Holder to receive upon exercise of an Option or other Award, for the same aggregate cash
consideration, the equivalent total number and class or series of Shares the Holder would have
received had the Holder exercised his or her Option or other Award in full immediately prior to the
event requiring the adjustment, and (2) the number and class or series of Shares then reserved to
be issued under the Plan shall be adjusted by substituting for the total number and class or series
of Shares then reserved, that number and class or series of Shares that would have been received by
the owner of an equal number of issued and outstanding Shares of each class or series of Shares as
the result of the event requiring the adjustment.
(c) If while unexercised Options or other Awards remain outstanding under the Plan (1) the
Company shall not be the surviving Entity in any acquisition, merger, amalgamation, consolidation,
reorganization or other similar transaction (or survives only as a subsidiary of an Entity), (2)
the Company sells, leases or exchanges or agrees to sell, lease or exchange all or substantially
all of its assets to any other person or Entity (other than an Entity wholly-owned by the Company),
(3) the Company is to be wound up or dissolved or (4) the Company is a party to any other corporate
transaction (as defined under section 424(a) of the Code and applicable
7
Department of Treasury regulations) that is not described in clauses (1), (2) or (3) of this
sentence (each such event is referred to herein as a
Corporate Change
), then, except as otherwise
provided in an Award Agreement or another agreement between the Holder and the Company, or as a
result of the Committees effectuation of one or more of the alternatives described below, there
shall be no acceleration of the time at which any Award then outstanding may be exercised, and no
later than ten days after any approval by the shareholders of the Company of such Corporate Change,
the Committee, acting in its sole and absolute discretion without the consent or approval of any
Holder, subject to applicable law, shall act to effect one or more of the following alternatives,
which may vary among individual Holders and which may vary among Awards held by any individual
Holder (provided that, with respect to a reincorporation, merger or amalgamation in which Holders
of the Companys common shares will receive one common share of the successor or continuing Entity
for each common share of the Company, none of such alternatives shall apply and, without Committee
action, each Award shall automatically convert into a similar award of the successor or continuing
Entity exercisable for the same number of common shares of the successor as the Award was
exercisable for common Shares of the Company):
(1) accelerate the time at which some or all of the Awards then outstanding may be
exercised so that such Awards may be exercised in full for a limited period of time on or before
a specified date fixed by the Committee, after which specified date all such Awards that remain
unexercised and all rights of Holders thereunder shall terminate;
(2) require the mandatory surrender to the Company by all or selected Holders of some or
all of the then outstanding Awards held by such Holders (irrespective of whether such Awards are
then exercisable under the provisions of the Plan or the applicable Award Agreement evidencing
such Award) as of a date specified by the Committee, in which event the Committee shall
thereupon cancel such Award and the Company shall pay to each such Holder an amount of cash per
share equal to the excess, if any, of the per share price offered to shareholders of the Company
in connection with such Corporate Change over the exercise prices
under such Award for such shares;
(3) with respect to all or selected Holders, have some or all of their then outstanding
Awards (whether vested or unvested) assumed or have a new award of a similar nature substituted
for some or all of their then outstanding Awards under the Plan (whether vested or unvested) by
an Entity which is a party to the transaction resulting in such Corporate Change and which is
then employing such Holder or which is affiliated or associated with such Holder in the same or
a substantially similar manner as the Company prior to the Corporate Change, or a parent or
subsidiary of such Entity, provided that (A) such assumption or substitution is on a basis where
the excess of the aggregate fair market value of the Shares subject to the Award immediately
after the assumption or substitution over the aggregate exercise price of such Shares are equal
to the excess of the aggregate fair market value of all Shares subject to the Award immediately
before such assumption or substitution over the aggregate exercise price of such Shares, and (B)
the assumed rights under such existing Award or the substituted rights under such new Award, as
the case may be, will have the same terms and conditions as the rights under the existing Award
assumed or substituted for, as the case may be;
8
(4) provide that the number and class or series of Shares covered by an Award (whether
vested or unvested) theretofore granted shall be adjusted so that such Award when exercised
shall thereafter cover the number and class or series of Shares or other securities or property
(including, without limitation, cash) to which the Holder would have been entitled pursuant to
the terms of the agreement or plan relating to such Corporate Change if, immediately prior to
such Corporate Change, the Holder had been the holder of record of the number of Shares then
covered by such Award; or
(5) make such adjustments to Awards then outstanding as the Committee deems appropriate to
reflect such Corporate Change (provided, however, that the Committee may determine in its sole
and absolute discretion that no such adjustment is necessary).
In effecting one or more of the alternatives set out in paragraphs (3), (4) or (5) immediately
above, and except as otherwise may be provided in an Award Agreement, the Committee, in its sole
and absolute discretion and without the consent or approval of any Holder, subject to applicable
law, may accelerate the time at which some or all Awards then outstanding may be exercised.
(d) In the event of changes in the issued and outstanding Shares by reason of
recapitalizations, reorganizations, mergers, amalgamations, consolidations, combinations,
subdivisions, exchanges or other relevant changes in capitalization occurring after the date of
the grant of any Award and not otherwise provided for by this Section 4.5, any outstanding Award
and any Award Agreement evidencing such Award shall be subject to adjustment by the Committee in
its sole and absolute discretion as to the number and price of Shares or other consideration
subject to such Award. In the event of any such change in the issued and outstanding Shares, the
aggregate number of Shares available under the Plan may be appropriately adjusted by the
Committee, whose determination shall be conclusive.
(e) After (i) the acquisition of the Company by an Entity, (ii) the merger of one or more
Entities into the Company or (iii) a consolidation or amalgamation of the Company and one or
more Entities in which the Company shall be the surviving Entity, each Holder shall be entitled
to have his Restricted Shares appropriately adjusted based on the manner in which the Shares
were adjusted under the terms of the agreement of acquisition, merger, amalgamation or
consolidation.
(f) The issuance by the Company of shares of any class or series, or securities convertible
into, or exchangeable for, shares of any class or series, for cash or property, or for labor or
services either upon direct sale or upon the exercise of rights or warrants to subscribe for
them, or upon conversion or exchange of shares or obligations of the Company convertible into,
or exchangeable for, shares or other securities, shall not affect, and no adjustment by reason
of such issuance shall be made with respect to, the number, class or series, or price of Shares
then subject to outstanding Options or other Awards.
4.6
Election Under
Section 83(b)
of the Code.
No Holder shall exercise the election
permitted under section 83(b) of the Code with respect to any Award without the written approval of
the Chief Financial Officer or General Counsel of the Company. Any Holder who
9
makes an election under section 83(b) of the Code with respect to any Award without the
written approval of the Chief Financial Officer or General Counsel of the Company may, in the
discretion of the Committee, forfeit any or all Awards granted to him or her under the Plan
(including by way of an absolute right of the Company to purchase or obligate the transfer of any
issued Shares or rights to subscribe therefore for such consideration, if any, as the Committee may
determine in its sole discretion).
4.7
Forfeiture for Cause.
Notwithstanding any other provision of the Plan or an Award
Agreement, if the Committee finds by a majority vote that a Holder, before or after his Termination
of Employment (a) committed fraud, embezzlement, theft, felony or an act of dishonesty in the
course of his employment by the Company or an Affiliate which conduct damaged the Company or an
Affiliate or (b) disclosed trade secrets of the Company or an Affiliate, then as of the date the
Committee makes its finding, any Awards awarded to the Holder that have not been exercised by the
Holder (including all Awards that have not yet vested) will be forfeited to the Company (including
by way of an absolute right of the Company to purchase or obligate the transfer of any issued
Shares or rights to subscribe therefore for such consideration, if any, as the Committee may
determine in its sole discretion). The findings and decision of the Committee with respect to such
matter, including those regarding the acts of the Holder and the damage done to the Company, will
be final for all purposes. No decision of the Committee, however, will affect the finality of the
discharge of the individual by the Company or an Affiliate.
4.8
Forfeiture Events.
The Committee may specify in an Award Agreement that the Holders
rights, payments, and benefits with respect to an Award shall be subject to reduction,
cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition
to any otherwise applicable vesting or performance conditions of an Award. Such events may include,
but shall not be limited to, Termination of Employment for cause, termination of the Holders
provision of services to the Company or its Affiliates, violation of material policies of the
Company and its Affiliates, breach of noncompetition, confidentiality, or other restrictive
covenants that may apply to the Holder, or other conduct by the Holder that is detrimental to the
business or reputation of the Company and its Affiliates.
4.9
Award Agreements.
Each Award shall be embodied in a written agreement that shall be
subject to the terms and conditions of the Plan. The Award Agreement shall be signed by an
executive officer of the Company, other than the Holder, on behalf of the Company, and may be
signed by the Holder to the extent required by the Committee. The Award Agreement may specify the
effect of a change in control on the Award. The Award Agreement may contain any other provisions
that the Committee in its discretion shall deem advisable which are not inconsistent with the terms
and provisions of the Plan.
4.10
Amendments of Award Agreements.
The terms of any outstanding Award under the Plan may
be amended from time to time by the Committee in its discretion in any manner that it deems
appropriate and that is consistent with the terms of the Plan. However, no such amendment shall
adversely affect in a material manner any right of a Holder without his or her written consent.
Except as specified in Section 4.5(b), the Committee may not directly or
10
indirectly lower the exercise price of a previously granted Option or the grant price of a
previously granted SAR.
4.11
Rights as Shareholder.
A Holder shall not have any rights as a shareholder with respect
to Shares covered by an Option, a SAR, an RSU, a Performance Share Unit, or an Other Share-Based
Award until the date, if any, such Shares are issued by the Company; and, except as otherwise
provided in Section 4.5, no adjustment for dividends, or otherwise, shall be made if the record
date therefor is prior to the date of issuance of such Shares.
4.12
Issuance of Shares.
Shares, when issued, may be represented by a certificate or by book
or electronic entry.
4.13
Restrictions on Shares Received.
Subject to applicable law, the Committee may impose
such conditions and/or restrictions on any Shares issued pursuant to an Award as it may deem
advisable or desirable. These restrictions may include, but shall not be limited to, a requirement
that the Holder hold the Shares for a specified period of time.
4.14
Compliance With Section 409A.
Awards shall be designed and operated in such a manner
that they are either exempt from the application of, or comply with, the requirements of Section
409A.
ARTICLE V
Options
5.1
Authority to Grant Options.
Subject to the terms and provisions of the Plan, the
Committee, at any time, and from time to time, may grant Options under the Plan to eligible persons
in such number and upon such terms as the Committee shall determine.
5.2
Type of Options Available.
Options granted under the Plan may be NSOs or ISOs.
5.3
Option Agreement.
Each Option grant under the Plan shall be evidenced by an Award
Agreement that shall specify (a) whether the Option is intended to be an ISO or an NSO, (b) the
Option Price, (c) the duration of the Option, (d) the number of Shares to which the Option
pertains, (e) the exercise restrictions applicable to the Option and (f) such other provisions as
the Committee shall determine that are not inconsistent with the terms and provisions of the Plan.
Notwithstanding the designation of an Option as an ISO in the applicable Option Agreement, to the
extent the limitations of Section 5.10 of the Plan are exceeded with respect to the Option, the
portion of the Option in excess of the limitation shall be treated as a NSO.
5.4
Option Price.
The price at which Shares may be purchased under an Option (the
Option
Price
) shall not be less than 100 percent (100%) of the Fair Market Value of the Shares on the
date the Option is granted. However, in the case of a Ten Percent Shareholder, the Option Price for
an ISO shall not be less than 110 percent (110%) of the Fair Market Value of the Shares on the date
the ISO is granted. Subject to the limitations set forth in the preceding
11
sentences of this Section 5.4, the Committee shall determine the Option Price for each grant
of an Option under the Plan.
5.5
Duration of Option.
An Option shall not be exercisable after the earlier of (i) the
general term of the Option specified in the applicable Award Agreement (which shall not exceed ten
years) or (ii) the period of time specified in the applicable Award Agreement that follows the
Holders Termination of Employment or severance of affiliation relationship with the Company.
Unless the applicable Award Agreement specifies a shorter term, in the case of an ISO granted to a
Ten Percent Shareholder, the Option shall expire on the fifth anniversary of the date the Option is
granted.
5.6
Amount Exercisable.
Each Option may be exercised at the time, in the manner and subject
to the conditions the Committee specifies in the Award Agreement in its sole discretion.
5.7
Exercise of Option.
(a)
General Method of Exercise.
Subject to the terms and provisions of the Plan and the
applicable Award Agreement, Options may be exercised in whole or in part from time to time by the
delivery of written notice in the manner designated by the Committee stating (1) that the Holder
wishes to exercise such Option on the date such notice is so delivered, (2) the number of Shares
with respect to which the Option is to be exercised and (3) the address to which any certificate
representing such Shares should be mailed. Except in the case of exercise by a third party broker
as provided below, in order for the notice to be effective the notice must be accompanied by
payment of the Option Price by any combination of the following: (a) cash, certified check, bank
draft or postal or express money order for an amount equal to the Option Price under the Option,
(b) an election to make a cashless exercise through a registered broker-dealer (if approved in
advance by the Committee or an executive officer of the Company) or (c) any other form of payment
which is acceptable to the Committee.
(b)
Exercise Through Third-Party Broker.
The Committee may permit a Holder to elect to pay
the Option Price and any applicable tax withholding resulting from such exercise by authorizing a
third-party broker to sell all or a portion of the Shares acquired upon exercise of the Option and
remit to the Company a sufficient portion of the sale proceeds to pay the Option Price and any
applicable tax withholding resulting from such exercise.
5.8
Notification of Disqualifying Disposition.
If any Optionee shall make any disposition of
Shares issued pursuant to the exercise of an ISO under the circumstances described in section
421(b) of the Code (relating to certain disqualifying dispositions), such Optionee shall notify the
Company of such disposition within ten (10) days thereof.
5.9
No Rights as Shareholder.
An Optionee shall not have any rights as a shareholder with
respect to Shares covered by an Option until the date such Shares are issued by the Company; and,
except as otherwise provided in Section 4.5, no adjustment for dividends, or otherwise, shall be
made if the record date therefor is prior to the date of issuance of such shares.
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5.10 $100,000 Limitation on ISOs.
To the extent that the aggregate Fair Market Value of
Shares with respect to which ISOs first become exercisable by a Holder in any calendar year exceeds
$100,000, taking into account both Shares subject to ISOs under the Plan and Shares subject to ISOs
under all other plans of the Company, such Options shall be treated as NSOs. For this purpose, the
Fair Market Value of the Shares subject to Options shall be determined as of the date the Options
were awarded. In reducing the number of Options treated as ISOs to meet the $100,000 limit, the
most recently granted Options shall be reduced first. To the extent a reduction of simultaneously
granted Options is necessary to meet the $100,000 limit, the Committee may, in the manner and to
the extent permitted by law, designate which Shares are to be treated as shares acquired pursuant
to the exercise of an ISO.
ARTICLE VI
Share Appreciation Rights
6.1
Authority to Grant SAR Awards.
Subject to the terms and provisions of the Plan, the
Committee, at any time, and from time to time, may grant SARs under the Plan to eligible persons in
such number and upon such terms as the Committee shall determine. Subject to the terms and
conditions of the Plan, the Committee shall have complete discretion in determining the number of
SARs granted to each Holder and, consistent with the provisions of the Plan, in determining the
terms and conditions pertaining to such SARs.
6.2
General Terms.
Subject to the terms and conditions of the Plan, a SAR granted under the
Plan shall confer on the recipient a right to receive, upon exercise thereof, an amount equal to
the excess of (a) the Fair Market Value of one Share on the date of exercise over (b) the grant
price of the SAR, which shall not be less than one hundred percent (100%) of the Fair Market Value
of one Share on the date of grant of the SAR.
6.3
SAR Agreement.
Each Award of SARs granted under the Plan shall be evidenced by an Award
Agreement that shall specify (a) the grant price of the SAR, (b) the term of the SAR, (c) the
vesting and termination provisions of the SAR and (d) such other provisions as the Committee shall
determine that are not inconsistent with the terms and provisions of the Plan. The Committee may
impose such additional conditions or restrictions on the exercise of any SAR as it may deem
appropriate.
6.4
Term of SAR.
The term of a SAR granted under the Plan shall be determined by the
Committee, in its sole discretion; provided that no SAR shall be exercisable on or after the tenth
anniversary date of its grant.
6.5
Exercise of SAR.
A SAR may be exercised upon whatever terms and conditions the
Committee, in its sole discretion, imposes.
6.6
Payment of SAR Amount.
Upon the exercise of a SAR, a Holder shall be entitled to receive
payment from the Company in an amount determined by multiplying the excess of the Fair Market Value
of a Share on the date of exercise over the grant price of the SAR by the number of Shares with
respect to which the SAR is exercised. At the discretion of the
13
Committee, the payment upon SAR exercise may be in cash, in Shares of equivalent value, in
some combination thereof or in any other manner approved by the Committee in its sole discretion.
The Committees determination regarding the form of SAR payout shall be set forth in the Award
Agreement pertaining to the grant of the SAR.
6.7
Termination of Employment.
Each Award Agreement shall set forth the extent to which the
Holder of a SAR shall have the right to exercise the SAR following the Holders Termination of
Employment. Such provisions shall be determined in the sole discretion of the Committee, may be
included in the Award Agreement entered into with the Holder, need not be uniform among all SARs
issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.
ARTICLE VII
Restricted Share Awards
7.1
Restricted Share Awards.
The Committee may make Awards of Restricted Shares to eligible
persons selected by it. The amount of, the vesting and the transferability restrictions applicable
to any Restricted Share Award shall be determined by the Committee in its sole discretion. If the
Committee imposes vesting or transferability restrictions on a Holders rights with respect to
Restricted Shares, the Committee may issue such instructions to the Companys share transfer agent
in connection therewith as it deems appropriate. The Committee may also cause any certificate for
Shares issued pursuant to a Restricted Share Award to be imprinted with any legend which counsel
for the Company considers advisable with respect to the restrictions or, should the Shares be
represented by book or electronic entry rather than a certificate, the Company may take such steps
to restrict transfer of the Shares as counsel for the Company considers necessary or advisable to
comply with applicable law.
7.2
Restricted Share Award Agreement.
Each Restricted Share Award shall be evidenced by an
Award Agreement that contains any vesting, transferability restrictions and other provisions as the
Committee may specify.
7.3
Holders Rights as Shareholder.
Subject to the terms and conditions of the Plan, each
recipient of a Restricted Share Award shall have all the rights of a shareholder with respect to
any issued Restricted Shares included in the Restricted Share Award during the Period of
Restriction established for the Restricted Share Award. Dividends paid with respect to Restricted
Shares in cash or property other than Shares or rights to acquire Shares or bonus issues shall be
paid to the recipient of the Restricted Share Award currently. Dividends paid in Shares or rights
to acquire Shares shall be added to and become a part of the Restricted Shares. During the Period
of Restriction, certificates representing the Restricted Shares shall be registered in the Holders
name and bear a restrictive legend to the effect that ownership of such Restricted Shares, and the
enjoyment of all rights appurtenant thereto, are subject to the restrictions, terms, and conditions
provided in the Plan and the applicable Award Agreement. Such certificates shall be deposited by
the recipient with the Secretary of the Company or such other officer of the Company as may be
designated by the Committee, together with all share transfer forms or other instruments of
assignment, each endorsed in blank, which will permit transfer to or purchase by the Company of
14
all or any portion of the Restricted Shares which shall be forfeited in accordance with the
Plan and the applicable Award Agreement.
ARTICLE VIII
Restricted Share Unit Awards
8.1
Authority to Grant RSU Awards.
Subject to the terms and provisions of the Plan, the
Committee, at any time, and from time to time, may grant RSU Awards under the Plan to eligible
persons in such amounts and upon such terms as the Committee shall determine. The amount of, the
vesting and the transferability restrictions applicable to any RSU Award shall be determined by the
Committee in its sole discretion. The Committee shall maintain a bookkeeping ledger account that
reflects the number of RSUs credited under the Plan for the benefit of a Holder.
8.2
RSU Award.
An RSU Award shall be similar in nature to a Restricted Share Award except
that no Shares are actually issued or transferred to the Holder until a later date specified in the
applicable Award Agreement. Each RSU shall have a value equal to the Fair Market Value of a Share.
8.3
RSU Award Agreement.
Each RSU Award shall be evidenced by an Award Agreement that
contains any Substantial Risk of Forfeiture, transferability restrictions, form and time of payment
provisions and other provisions not inconsistent with the Plan as the Committee may specify.
8.4
Dividend Equivalents.
An Award Agreement for an RSU Award may specify that the Holder
shall be entitled to the payment of Dividend Equivalents under the Award.
8.5
Form of Payment Under RSU Award.
Payment under an RSU Award shall be made in either cash
or Shares, or any combination thereof, as specified in the applicable Award Agreement.
8.6
Time of Payment Under RSU Award.
A Holders payment under an RSU Award shall be made at
such time as is specified in the applicable Award Agreement. The Award Agreement shall specify that
the payment will be made (1) by a date that is no later than the date that is two and one-half (2
1/2) months after the end of the Fiscal Year in which the RSU Award payment is no longer subject to
a Substantial Risk of Forfeiture or (2) at a time that is permissible under Section 409A.
8.7
No Rights as Shareholder.
Each recipient of a RSU Award shall have no rights of a
shareholder with respect to any Shares underlying such RSUs until such date as the underlying
Shares are issued.
15
ARTICLE IX
Performance Share Awards and Performance Unit Awards
9.1
Authority to Grant Performance Share Awards and Performance Unit Awards.
Subject to the
terms and provisions of the Plan, the Committee, at any time, and from time to time, may grant
Performance Share Awards and Performance Unit Awards under the Plan to eligible persons in such
amounts and upon such terms as the Committee shall determine. The amount of, the vesting and the
transferability restrictions applicable to any Performance Share Award or Performance Unit Award
shall be based upon the attainment of such Performance Goals as the Committee may determine. If the
Committee imposes vesting or transferability restrictions on a Holders rights with respect to
Performance Share or Performance Unit Awards, the Committee may issue such instructions to the
Companys share transfer agent in connection therewith as it deems appropriate. The Committee may
also cause any certificate for Shares issued pursuant to a Performance Shares or Performance Unit
Award to be imprinted with any legend which counsel for the Company considers advisable with
respect to the restrictions or, should the Shares be represented by book or electronic entry rather
than a certificate, the Company may take such steps to restrict transfer of the Shares as counsel
for the Company considers necessary or advisable to comply with applicable law.
9.2
Performance Goals.
A Performance Goal must be objective such that a third party having
knowledge of the relevant facts could determine whether the goal is met. Such a Performance Goal
may be based on one or more business criteria that apply to the Holder, one or more business units
of the Company, or the Company as a whole, with reference to one or more of the following: earnings
per share, total shareholder return, cash return on capitalization, increased revenue, revenue
ratios (per employee or per customer), net income, share price, market share, return on equity,
return on assets, return on capital, return on capital compared to cost of capital, return on
capital employed, return on invested capital, shareholder value, net cash flow, operating income,
earnings before interest and taxes, cash flow, cash flow from operations, cost reductions and cost
ratios. Goals may also be based on performance relative to a peer group of companies. Unless
otherwise stated, such a Performance Goal need not be based upon an increase or positive result
under a particular business criterion and could include, for example, maintaining the status quo or
limiting economic losses (measured, in each case, by reference to specific business criteria).
Performance Goals may be determined by including or excluding, in the Committees discretion, items
that are determined to be extraordinary, unusual in nature, infrequent in occurrence, related to
the disposal or acquisition of a segment of a business, or related to a change in accounting
principal, in each case, based on Opinion No. 30 of the Accounting Principles Board (APB Opinion
No. 30) or other applicable accounting rules, or consistent with Company accounting policies and
practices in effect on the date the Performance Goal is established. In interpreting Plan
provisions applicable to Performance Goals and Performance Shares or Performance Unit Awards, it is
intended that the Plan will conform with the standards of section 162(m) of the Code and Treasury
Regulations § 1.162-27(e)(2)(i), and the Committee in establishing such goals and interpreting the
Plan shall be guided by such provisions. Prior to the payment of any compensation based on the
achievement of Performance Goals, the Committee must certify in writing that applicable Performance
Goals and any of the material terms thereof were, in fact, satisfied. Subject to the foregoing
provisions, the terms,
16
conditions and limitations applicable to any Performance Shares or Performance Unit Awards
made pursuant to the Plan shall be determined by the Committee.
9.3
Time of Establishment of Performance Goals.
A Performance Goal for a particular
Performance Share Award or Performance Unit Award must be established by the Committee prior to the
earlier to occur of (a) 90 days after the commencement of the period of service to which the
Performance Goal relates or (b) the lapse of 25 percent of the period of service, and in any event
while the outcome is substantially uncertain.
9.4
Written Agreement.
Each Performance Share Award or Performance Unit Award shall be
evidenced by an Award Agreement that contains any vesting, transferability restrictions and other
provisions not inconsistent with the Plan as the Committee may specify.
9.5
Form of Payment Under Performance Unit Award.
Payment under a Performance Unit Award
shall be made in cash and/or Shares as specified in the Holders Award Agreement.
9.6
Time of Payment Under Performance Unit Award.
A Holders payment under a Performance
Unit Award shall be made at such time as is specified in the applicable Award Agreement. The Award
Agreement shall specify that the payment will be made (1) by a date that is no later than the date
that is two and one-half (2 1/2) months after the end of the calendar year in which the Performance
Unit Award payment is no longer subject to a Substantial Risk of Forfeiture or (2) at a time that
is permissible under Section 409A.
9.7
Holders Rights as Shareholder With Respect to Performance Awards.
Each Holder of a
Performance Share Award shall have all the rights of a shareholder with respect to the Shares
issued to the Holder pursuant to the Award during any period in which such issued Shares are
subject to forfeiture and restrictions on transfer, including without limitation, the right to vote
such Shares. Each Holder of a Performance Unit Award shall have no rights of a shareholder with
respect to any Shares underlying such Performance Unit Award until such date as the underlying
Shares are issued.
9.8
Increases Prohibited.
None of the Committee or the Board may increase the amount of
compensation payable under a Performance Shares or Performance Unit Award. If the time at which a
Performance Shares or Performance Unit Award will vest or be paid is accelerated for any reason,
the number of Shares subject to, or the amount payable under, the Performance Shares or Performance
Unit Award shall be reduced pursuant to Department of Treasury Regulation section
1.162-27(e)(2)(iii) to reasonably reflect the time value of money.
9.9
Shareholder Approval.
No issuances of Shares or payments of cash will be made pursuant
to this Article IX unless the shareholder approval requirements of Department of Treasury
Regulation section 1.162-27(e)(4) are satisfied.
17
ARTICLE X
Other Share-Based Awards
10.1
Authority to Grant Other Share-Based Awards.
The Committee may grant to eligible
persons other types of equity-based or equity-related Awards not otherwise described by the terms
and provisions of the Plan (including, subject to applicable law, the grant or offer for sale of
unrestricted Shares) in such amounts and subject to such terms and conditions, as the Committee
shall determine. Such Awards may involve the issue or transfer of Shares to Holders, or payment in
cash or otherwise of amounts based on the value of Shares and may include, without limitation,
Awards designed to comply with or take advantage of the applicable local laws of jurisdictions
other than the United States.
10.2
Value of Other Share-Based Award.
Each Other Share-Based Award shall be expressed in
terms of Shares or units based on Shares, as determined by the Committee.
10.3
Payment of Other Share-Based Award.
Payment, if any, with respect to an Other
Share-Based Award shall be made in accordance with the terms of the Award, in cash or Shares or any
combination thereof as the Committee determines.
10.4
Termination of Employment.
The Committee shall determine the extent to which a Holders
rights with respect to Other Share-Based Awards shall be affected by the Holders Termination of
Employment. Such provisions shall be determined in the sole discretion of the Committee and need
not be uniform among all Other Share-Based Awards issued pursuant to the Plan.
ARTICLE XI
Cash-Based Awards
11.1
Authority to Grant Cash-Based Awards.
Subject to the terms and provisions of the Plan,
the Committee, at any time, and from time to time, may grant Cash-Based Awards under the Plan to
eligible persons in such amounts and upon such terms as the Committee shall determine.
11.2
Value of Cash-Based Award.
Each Cash-Based Award shall specify a payment amount or
payment range as determined by the Committee.
11.3
Payment of Cash-Based Award.
Payment, if any, with respect to a Cash-Based Award shall
be made in accordance with the terms of the Award, in cash.
11.4
Termination of Employment.
The Committee shall determine the extent to which a Holders
rights with respect to Cash-Based Awards shall be affected by the Holders Termination of
Employment. Such provisions shall be determined in the sole discretion of the Committee and need
not be uniform among all Cash-Based Awards issued pursuant to the Plan.
18
ARTICLE XII
Substitution Awards
Awards may be granted under the Plan from time to time in substitution for share options and
other awards held by employees of other Entities who are about to become Employees, or whose
employer is about to become an Affiliate as the result of a merger, amalgamation or consolidation
of the Company with another Entity, or the acquisition by the Company of substantially all the
assets of another Entity, or the acquisition by the Company of at least fifty percent (50%) of the
issued and outstanding stock, shares or securities of another Entity as the result of which such
other Entity will become an Affiliate of the Company. The terms and conditions of the substitute
Awards so granted may vary from the terms and conditions set forth in the Plan to such extent as
the Committee at the time of grant may deem appropriate to conform, in whole or in part, to the
provisions of the Award in substitution for which they are granted.
ARTICLE XIII
Administration
13.1
Awards.
The Plan shall be administered by the Committee or, in the absence of the
Committee, the Plan shall be administered by the Board. The members of the Committee shall serve at
the discretion of the Board. The Committee shall have full power and authority to administer the
Plan and to take all actions that the Plan expressly contemplates or are necessary or appropriate
in connection with the administration of the Plan with respect to Awards granted under the Plan.
The Board shall administer the Plan with respect to the grant of Awards to Directors.
13.2
Authority of the Committee.
The Committee shall have full power to interpret and apply
the terms and provisions of the Plan and Awards made under the Plan, and to adopt such rules,
regulations and guidelines for implementing the Plan as the Committee may deem necessary or proper,
all of which powers shall be exercised in the best interests of the Company and in keeping with the
objectives of the Plan. A majority of the members of the Committee shall constitute a quorum for
the transaction of business, and the vote of a majority of those members present at any meeting
shall decide any question brought before that meeting. Any decision or determination reduced to
writing and signed by a majority of the members shall be as effective as if it had been made by a
majority vote at a meeting properly called and held. All questions of interpretation and
application of the Plan, or as to Awards granted under the Plan, shall be subject to the
determination, which shall be final and binding, of a majority of the whole Committee. No member of
the Committee shall be liable for any act or omission of any other member of the Committee or for
any act or omission on his own part, including but not limited to the exercise of any power or
discretion given to him under the Plan, except those resulting from his own gross negligence or
willful misconduct. In carrying out its authority under the Plan, the Committee shall have full and
final authority and discretion, including but not limited to the following rights, powers and
authorities to determine the persons to whom and the time or times at which Awards will be made;
determine the number and exercise price of Shares covered in
19
each Award subject to the terms and provisions of the Plan; determine the terms, provisions
and conditions of each Award, which need not be identical and need not match the default terms set
forth in the Plan; accelerate the time at which any outstanding Award will vest; prescribe, amend
and rescind rules and regulations relating to administration of the Plan; and make all other
determinations and take all other actions deemed necessary, appropriate or advisable for the proper
administration of the Plan.
The Committee may correct any defect or supply any omission or reconcile any inconsistency in
the Plan or in any Award to a Holder in the manner and to the extent the Committee deems necessary
or desirable to further the Plans objectives. Further, the Committee shall make all other
determinations that may be necessary or advisable for the administration of the Plan. As permitted
by law and the terms and provisions of the Plan, the Committee may delegate its authority as
identified in this Section 13.2. The Committee may employ attorneys, consultants, accountants,
agents, and other persons, any of whom may be an Employee, and the Committee, the Company, and its
officers and Board shall be entitled to rely upon the advice, opinions, or valuations of any such
persons.
13.3
Decisions Binding.
All determinations and decisions made by the Committee or the Board,
as the case may be, pursuant to the provisions of the Plan and all related orders and resolutions
of the Committee or the Board, as the case may be, shall be final, conclusive and binding on all
persons, including the Company, the Holders and the estates and beneficiaries of Holders.
13.4
No Liability.
Under no circumstances shall the Company, the Board or the Committee
incur liability for any indirect, incidental, consequential or special damages (including lost
profits) of any form incurred by any person, whether or not foreseeable and regardless of the form
of the act in which such a claim may be brought, with respect to the Plan or the Companys, the
Committees or the Boards roles in connection with the Plan.
ARTICLE XIV
Amendment or Termination of Plan
14.1
Amendment, Modification, Suspension, and Termination.
Subject to Section 14.2, the Board
may, at any time and from time to time, alter, amend, modify, suspend, or terminate the Plan and/or
any Award Agreement in whole or in part; provided, however, that, without the prior approval of the
Companys shareholders and except as provided in Section 4.5, the Board shall not directly or
indirectly lower the Option Price of a previously granted Option, and no amendment of the Plan
shall be made without shareholder approval if shareholder approval is required by applicable law or
stock exchange rules.
14.2
Awards Previously Granted.
Notwithstanding any other provision of the Plan to the
contrary, no termination, amendment, suspension, or modification of the Plan or an Award Agreement
shall adversely affect in any material way any Award previously granted under the Plan, without the
written consent of the Holder holding such Award.
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ARTICLE XV
Miscellaneous
15.1
Unfunded Plan/No Establishment of a Trust Fund.
Holders shall have no right, title, or
interest whatsoever in or to any investments that the Company or any of its Affiliates may make to
aid in meeting obligations under the Plan. Nothing contained in the Plan, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company and any Holder, beneficiary, legal representative, or
any other person. To the extent that any person acquires a right to receive payments from the
Company under the Plan, such right shall be no greater than the right of an unsecured general
creditor of the Company. All payments to be made hereunder shall be paid from the general funds of
the Company and no special or separate fund shall be established and no segregation of assets shall
be made to assure payment of such amounts, except as expressly set forth in the Plan. No property
shall be set aside nor shall a trust fund of any kind be established to secure the rights of any
Holder under the Plan. The Plan is not intended to be subject to the United States Employee
Retirement Income Security Act of 1974, as amended.
15.2
No Employment Obligation.
The granting of any Award shall not constitute an employment
contract, express or implied, nor impose upon the Company or any Affiliate any obligation to employ
or continue to employ, or utilize the services of, any Holder. The right of the Company or any
Affiliate to terminate the employment of any person shall not be diminished or affected by reason
of the fact that an Award has been granted to him, and nothing in the Plan or an Award Agreement
shall interfere with or limit in any way the right of the Company or its Affiliates to terminate
any Holders employment at any time or for any reason not prohibited by law.
15.3
Tax Withholding.
The Company or any Affiliate shall be entitled to deduct from other
compensation payable to each Holder any sums required by federal, state or local tax law to be
withheld with respect to the vesting or exercise of an Award or lapse of restrictions on an Award.
In the alternative, the Company may require the Holder (or other person validly exercising the
Award) to pay such sums for taxes directly to the Company or any Affiliate in cash or by check
within one day after the date of vesting, exercise or lapse of restrictions. In the discretion of
the Committee, and with the consent of the Holder, the Company may reduce the number of Shares
issued to the Holder upon such Holders exercise of an Option to satisfy the tax withholding
obligations of the Company or an Affiliate; provided that the Fair Market Value of the Shares not
issued shall not exceed the Companys or the Affiliates Minimum Statutory Tax Withholding
Obligation. The Committee may, in its discretion, permit a Holder to satisfy any Minimum Statutory
Tax Withholding Obligation arising upon the vesting of an Award by issuing to the Holder a reduced
number of Shares in the manner specified herein. If permitted by the Committee and acceptable to
the Holder, at the time of vesting of shares under the Award, the Company shall (a) calculate the
amount of the Companys or an Affiliates Minimum Statutory Tax Withholding Obligation on the
assumption that all such Shares vested under the Award are to be issued, (b) reduce the number of
such Shares actually issued so that the Fair Market Value of the Shares withheld from issuance on
the vesting date approximates the Companys or an Affiliates Minimum Statutory Tax Withholding
Obligation and (c) in lieu of the Shares withheld
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from issuance, remit cash to the United States Treasury and/or other applicable governmental
authorities, on behalf of the Holder, in the amount of the Minimum Statutory Tax Withholding
Obligation. The Company shall withhold from issuance only whole Shares to satisfy its Minimum
Statutory Tax Withholding Obligation. Where the Fair Market Value of the Shares withheld from
issuance does not equal the amount of the Minimum Statutory Tax Withholding Obligation, the Company
shall withhold from issuance Shares with a Fair Market Value slightly less than the amount of the
Minimum Statutory Tax Withholding Obligation and the Holder must satisfy the remaining minimum
withholding obligation in some other manner permitted under this Section 15.3. The Shares withheld
from issuance by the Company shall be authorized but unissued Shares and the Holders right, title
and interest in the rights to subscribe for such Shares shall terminate. The Company shall have no
obligation upon vesting or exercise of any Award or lapse of restrictions on an Award until the
Company or an Affiliate has received payment sufficient to cover the Minimum Statutory Tax
Withholding Obligation with respect to that vesting, exercise or lapse of restrictions. Neither the
Company nor any Affiliate shall be obligated to advise a Holder of the existence of the tax or the
amount which it will be required to withhold.
15.4
Gender and Number.
If the context requires, words of one gender when used in the Plan
shall include the other and words used in the singular or plural shall include the other.
15.5
Severability.
In the event any provision of the Plan shall be held illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and
the Plan shall be construed and enforced as if the illegal or invalid provision had not been
included.
15.6
Headings.
Headings of Articles and Sections are included for convenience of reference
only and do not constitute part of the Plan and shall not be used in construing the terms and
provisions of the Plan.
15.7
Other Compensation Plans.
The adoption of the Plan shall not affect any outstanding
options, restricted shares or restricted share units, nor shall the Plan preclude the Company from
establishing any other forms of incentive compensation arrangements for Employees or Directors.
15.8
Other Awards.
The grant of an Award shall not confer upon the Holder the right to
receive any future or other Awards under the Plan, whether or not Awards may be granted to
similarly situated Holders, or the right to receive future Awards upon the same terms or conditions
as previously granted.
15.9
Successors.
All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company or continuing company, whether
the existence of such successor is the result of a direct or indirect purchase, merger,
amalgamation, consolidation, or otherwise, of all or substantially all of the business and/or
assets of the Company.
15.10
Law Limitations/Governmental Approvals.
The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules, and regulations,
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and to such approvals by any governmental agencies or national securities exchanges as may be
required.
15.11
Delivery of Title.
The Company shall have no obligation to issue or deliver evidence
of title for Shares issued under the Plan prior to obtaining any approvals from governmental
agencies that the Company determines are necessary or advisable; and completion of any registration
or other qualification of the Shares under any applicable national or foreign law or ruling of any
governmental body that the Company determines to be necessary or advisable.
15.12
Inability to Obtain Authority.
The inability of the Company to obtain authority from
any regulatory body having jurisdiction, which authority is deemed by the Companys counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
15.13
Fractional Shares.
No fractional Shares shall be issued or acquired pursuant to the
Plan or any Award. If the application of any provision of the Plan or any Award Agreement would
yield a fractional Share, such fractional Share shall be rounded down to the next whole Share if it
is less than 0.5 and rounded up to the next whole Share if it is 0.5 or more.
15.14
Investment Representations.
The Committee may require any person receiving Shares
pursuant to an Award under the Plan to represent and warrant in writing that the person is
acquiring the Shares for investment and without any present intention to sell or distribute such
Shares.
15.15
Persons Residing Outside of the United States.
Notwithstanding any provision of the
Plan to the contrary, in order to comply with the laws in other countries in which the Company or
any of its Affiliates operates or has Employees, the Committee, in its sole discretion, shall have
the power and authority to determine which Affiliates shall be covered by the Plan; determine which
persons employed outside the United States are eligible to participate in the Plan; amend or vary
the terms and provisions of the Plan and the terms and conditions of any Award granted to persons
who reside outside the United States; establish subplans and modify exercise procedures and other
terms and procedures to the extent such actions may be necessary or advisable any subplans and
modifications to Plan terms and procedures established under this Section 15.15 by the Committee
shall be attached to the Plan document as Appendices; and take any action, before or after an Award
is made, that it deems advisable to obtain or comply with any necessary local government regulatory
exemptions or approvals. Notwithstanding the above, the Committee may not take any actions
hereunder, and no Awards shall be granted, that would violate the United States Securities Exchange
Act of 1934, as amended, the Code, any securities law or governing statute or any other applicable
law.
15.16
Arbitration of Disputes.
Any controversy arising out of or relating to the Plan or an
Award Agreement shall be resolved by arbitration conducted pursuant to the arbitration rules of the
American Arbitration Association. The arbitration shall be final and binding on the parties.
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15.17
Governing Law.
The provisions of the Plan and the rights of all persons claiming
thereunder shall be construed, administered and governed under the laws of the State of Texas.
15.18
Compliance with Section 409A.
The exercisability of an Option shall not be extended to
the extent that such extension would subject the Holder to additional taxes under Section 409A.
This Section 15.18 is effective for Options that become earned and vested on or after January 1,
2005.
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