EXHIBIT 10.4
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ATWOOD OCEANICS, INC.
RETENTION PLAN
FOR CERTAIN SALARIED EMPLOYEES
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EFFECTIVE AS OF DECEMBER 5, 2002
THIS PLAN WILL TERMINATE AUTOMATICALLY
AS OF DECEMBER 31, 2003 IF THERE IS NO "EFFECTIVE DATE"
(AS DEFINED IN PLAN SECTION 1.5) ON OR BEFORE THAT DATE.
ATWOOD OCEANICS, INC.
RETENTION PLAN
FOR CERTAIN SALARIED EMPLOYEES
Atwood Oceanics, Inc., a Texas corporation (the "Company"), hereby adopts
this Retention Plan for Certain Salaried Employees (the "Plan"), effective as of
the 5th day of December, 2002.
INTRODUCTION
The purpose of this Plan is to secure the interests of the Company's
shareholders in the event of a change of control of the Company. In such an
event, this Plan would provide an enhanced severance payment and other benefits
to encourage certain valued employees to remain employed with the Company during
that period of financial uncertainty preceding and following the change of
control. If such an event does not occur on or before December 31, 2003, this
Plan will terminate automatically, unless otherwise renewed by the Company's
Board of Directors.
ARTICLE I
DEFINITIONS
Terms defined above and initially capitalized shall have the respective
meanings so ascribed. When used in this Plan and initially capitalized, the
following words and phrases shall have the following respective meanings unless
the context clearly requires otherwise:
1.1 "BASE SALARY" as to any Covered Employee for any period, shall mean
the greater of the sum of such individual's monthly base salary and Bonus as of
the Termination of Employment or as of the date immediately preceding the
Effective Date, which is paid to such individual by the Company during
employment for such period, before reduction because of an election between
benefits or cash provided under a plan of the Company maintained pursuant to
Section 125 or 401(k) of the Internal Revenue Code of 1986, as amended, and
before reduction for any other amounts contributed by the Company on such
individual's behalf to any other employee-benefit plan.
1.2 "BONUS" as to Covered Employee for any period, shall mean the average
of bonus payments, if any, made over the preceding three years, including any
year for which a bonus has been awarded but not paid, divided by twelve. If the
Covered Employee has not been an employee of the Company for at least three
years, then Bonus shall be calculated over the period for which the employee has
been employed with the Company.
1.3 "COMPANY" shall mean Atwood Oceanics, Inc., a Texas corporation, or
any entity that is a successor to it in ownership of substantially all its
assets and their affiliates.
1.4 "COVERED EMPLOYEE" shall mean an employee described in Article II of
the Plan.
1.5 "EFFECTIVE DATE" shall mean the date on or before December 31, 2003,
on which any of the following is effective:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a
"Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of twenty percent (20%)
or more of either (i) the then outstanding shares of common stock
of the Company or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors; provided, however, that
the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the Company; (ii) any
acquisition by the Company; (iii) any acquisition by any employee
benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; or
(b) The Company shall sell substantially all of its assets to another
corporation which is not a wholly owned subsidiary; or
(c) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board.
1.6 "EMPLOYMENT YEAR" shall mean a period which commences on the first
date of employment or any anniversary of such date and ends one year from such
date.
1.7 "GOOD CAUSE" shall mean a material violation of a Company policy or
procedure applicable to employees in the same or similar job position, the
willful disregard or failure to follow the reasonable instructions of a
superior, the taking of any action, or the failure to take any action, which
results in a damage or detriment to the Company, or the conviction of an
employee of a felony involving moral turpitude.
1.8 "HEALTH AND LIFE BENEFITS" shall mean as to any employee, the
group-health and life-insurance benefits sponsored by the Company for its
full-time employees and provided to or elected by such individual as of the date
immediately preceding the Effective Date.
1.9 "OTHER SEVERANCE" shall have the meaning set forth in Section 2.2 of
the Plan.
1.10 "SEVERANCE PAY" shall mean the sum payable to a Covered Employee upon
Termination of Employment as set forth in Section 3.1 of the Plan.
1.11 "TERM" shall mean the period commending on the Effective Date and
ending one year after that date.
1.12 "TERMINATION OF EMPLOYMENT" shall mean a termination of employment
with the Company at the option of the Company for any reason, except a
termination of employment for Good Cause shall not mean a Termination of
Employment.
1.13 "YEARS OF CONTINUOUS SERVICE" shall mean, as to any employee, all full
or partial years during which he was employed on a full-time basis by Company or
any of its subsidiaries or affiliates.
ARTICLE II
COVERED EMPLOYEES
2.1 WHO IS A COVERED EMPLOYEE. Any employee of the Company or its direct
and indirect subsidiaries who upon the occurrence of an Effective Date, shall be
listed in Schedule 3.1 hereto, which Schedule 3.1 shall be amended from time to
time by the Company, and who has a Termination of Employment during the Term
shall be a Covered Employee and eligible to receive the benefits described in
this Plan.
2.2 EXCLUSIONS. Any employee who otherwise is a Covered Employee but who,
pursuant to a separate agreement signed on behalf of the Company, receives
severance or other salary continuation benefits upon a Termination of Employment
(other than payments or benefits under the Company's Executive Life Insurance
Plan) shall not be a Covered Employee under this Plan. This Plan shall be in
lieu of any plan, program, policy or practice of or contract or agreement with
the Company relating to severance of employment ("Other Severance") and any
and all benefits of payments arising out of or relating to Other Severance shall
be fully offset against any benefits or payments due and owing hereunder.
ARTICLE III
SEVERANCE PAY AND OTHER BENEFITS
3.1 AMOUNT OF SEVERANCE PAY. The Company shall pay Severance Pay to a
Covered Employee upon a Termination of Employment in an amount equal to the
greater of (a) or (b):
(a) such individual's weekly Base Salary multiplied by such
individual's Years of Continuous Service; or
(b) a payment, depending upon the category of employee as identified
in Schedule 3.1 hereto, as follows:
CATEGORY OF EMPLOYEE PAYMENT
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Houston Management A: (i) Less than 4 Years of Continuous
Service - 6 months' Base Salary; or
(ii) 4 Years but less than 8 Years of
Continuous Service - 12 months' Base Salary;
or
(iii) 8 or greater Years of Continuous
Service - 18 months' Base Salary
Houston Management B,
Houston Technical,
Rig Management and
Other Administration: (i) Less than 4 Years of Continuous
Service - 1 month Base Salary; or
(ii) 4 Years but less than 8 Years of
Continuous Service - 4 months' Base Salary; or
(iii) 8 Years but less than 12 Years of
Continuous Service - 8 months' Base Salary; or
(iv) 12 or greater Years of Continuous Service - 12
months' Base Salary
Houston Accounting A, Houston
Accounting B and
Houston Staff: (i) Less than 4 Years of Continuous
Service - 1 month Base Salary; or
(ii) 4 Years but less than 8 Years of
Continuous Service - 3 months' Base Salary; or
(iii) 8 or greater Years of Continuous
Service - 6 months' Base Salary
3.2 HEALTH AND LIFE BENEFITS. Upon a Termination of Employment, a
Covered Individual's Health and Life Benefits shall be treated as follows:
(a) Upon a Termination of Employment, the Company will notify each
Covered Employee of the right to elect to continue any
Company-provided health or disability benefits, all in accordance
with and subject to the provisions of the Consolidated Omnibus
Budget Reconciliation Act ("COBRA"). The Company shall charge the
maximum allowable premium in connection with any COBRA benefits
so provided. Other than the benefits provided under COBRA, the
Company shall have no further obligation to provide health or
disability insurance benefits to any Covered Individual following
a Termination of Employment.
(b) Upon written request by a Covered Individual within five (5) days
of a Termination of Employment, the Company shall assign any
life, salary continuation or travel insurance plans or policies
to such Covered Individual which by their terms are so
assignable, and such Covered Individual will thenceforth become
responsible for the payment of any premiums required to maintain
said plans or policies from and after the date of Termination of
Employment; otherwise, the Company will cease to continue such
life insurance plans or policies on behalf of any Covered
Employee effective as of the date of Termination of Employment.
3.3 PAYMENT FOR UNUSED VACATION. Upon a Termination of Employment, the
Company will pay a Covered Employee an amount equal to such individual's weekly
Base Salary multiplied by each full and partial week of vacation, which was
accrued but unused during the Employment Year in which occurred such
individual's Termination of Employment. For purposes of determining payment
under this Section 3.3, a full week of vacation consists of five (5) vacation
days.
ARTICLE IV
DISTRIBUTION OF CASH PAYMENTS
The Company shall pay a Covered Employee the amount to which he or she is
entitled under (as applicable) Plan Section 3.1 (relating to Severance Pay) and
Plan Section 3.3 (relating to Payment for Unused Vacation) in one lump sum
within a reasonable time, but in no event greater than ten (10) business days,
after such Covered Employee's Termination of Employment.
ARTICLE V
ADMINISTRATION OF PLAN
5.1 IN GENERAL. The Plan shall be administered by the Company, which shall
be the named fiduciary under the Plan. The Company may delegate any of its
administrative duties, including without limitation duties with respect to the
processing, review, investigation, approval, and payment of benefits under in
the Plan, to a named administrator or administrators.
5.2 REGULATIONS. The Company shall promulgate any rules and regulations
that it deems necessary to carry out the purposes of the Plan, or to interpret
the terms and conditions of the Plan; provided that no rule, regulation, or
interpretation shall be contrary to the provisions of the Plan. The rules,
regulations, and interpretations made by the Company shall, subject only to the
claims procedure outlined in Section 5.3 hereof, be final and binding on any
employee or former employee of the Company, or any successor in interest of
either.
5.3 CLAIMS PROCEDURE. The Company shall determine the rights of any
employee or former employee of the Company to any benefits hereunder. Any
employee or former employee of the Company who believes that he is entitled to
receive any benefits other than as initially determined by the Company, may file
a claim in writing with the Company's President. The Company shall no later than
ninety (90) days after the receipt of a claim either allow or deny the claim in
writing.
A denial of a claim, wholly or partially, shall be written in a manner
calculated to be understood by the claimant and shall include:
(a) the specific reason or reasons for the denial;
(b) specific reference to pertinent Plan provisions on which the
denial is based;
(c) a description of any additional material or information necessary
for the claimant to perfect the claim and an explanation of why
such material or information is necessary; and
(d) an explanation of the claim-review procedure.
A claimant whose claim is denied (or his duly authorized representative),
may within 30 days after receipt of denial of his claim:
(a) request a review upon written application to the Company's
personnel administrator;
(b) review pertinent documents; and
(c) submit issues and comments in writing.
The Company shall notify the claimant of its decision on review within
sixty (60) days after receipt of a request for review. Notice of the decision on
review shall be in writing.
5.4 REVOCABILITY OF COMPANY ACTION. Any action taken by the Company with
respect to the rights under the Plan of any employee or former employee shall be
revocable by the Company as to payments or distributions not yet made to such
person, and acceptance of any benefits under the Plan constitutes acceptance of
and agreement to any appropriate adjustments made by the Company in future
payments or distributions to such person to offset any excess of underpayment
previously made to him with respect to any benefits.
ARTICLE VI
AMENDMENT OR TERMINATION OF PLAN
6.1 RIGHT TO AMEND OR TERMINATE. The Company reserves the right at any
time prior to the Effective Date, and without prior or other approval of any
employee or former employee, to change, modify, amend, or terminate the Plan.
All such changes, modifications, or amendments may be retroactive to any date up
to and including the original effective date of the Plan, and shall be
retroactive to that date unless other provision is specifically made; provided
that no such change, modification, or amendment shall adversely affect any
benefit under the Plan previously paid or provided to a Covered Employee (or his
or her successor in interest).
6.2 AUTOMATIC TERMINATION. This Plan shall terminate automatically as of
December 31, 2003, or such other extended termination date duly adopted in
accordance with the provisions of Section 5.1 above, if there is
no Effective Date on or before that date. Termination pursuant to this Plan
Section 6.2 shall occur without any action on the part of the Company and shall
be effective without prior notice to or approval of any employee or former
employee of the Company.
ARTICLE VII
METHOD OF FUNDING
The Company shall pay benefits under the Plan from current operating funds.
No property of the Company is or shall be, by reason of this Plan, held in trust
for any employee of the Company, nor shall any person have any interest in or
any lien or prior claim upon any property of the Company by reason of the Plan
or the Company's obligations to make payments hereunder.
ARTICLE VIII
LEGAL FEES AND EXPENSES; ENFORCEMENT
It is the intent of the Company that no Covered Employee be required to
incur the expenses associated with the enforcement of his rights under this Plan
by litigation or other legal action because the cost and expense thereof would
substantially detract from the benefits intended to be extended to a Covered
Employee hereunder. Accordingly, if it should appear to a Covered Employee that
the Company has failed to comply with any of its obligations under this Plan or
in the event that the Company or any other person takes any action inconsistent
with the terms of this Plan to declare this Plan void or unenforceable, or
institutes any litigation designed to deny, or to recover from, the Covered
Employee the benefits intended to be provided to such Covered Employee
hereunder, the Company irrevocably authorizes such Covered Employee from time to
time to retain counsel of his choice, at the expense of the Company as
thereafter provided, to represent such Covered Employee in connection with the
initiation or defense of any litigation or other legal action, whether by or
against the Company or any director, officer, stockholder, or other person
affiliated with the Company in any jurisdiction. Notwithstanding any existing
prior attorney-client relationship between the Company and such counsel, the
Company irrevocably consents to such Covered employee's entering into an
attorney-client relationship with such counsel, and in that connection the
Company and such Covered Employee agree that a confidential relationship shall
exist between such Covered Employee and such counsel. The Company shall pay and
be solely responsible for any and all attorneys' and related fees and expenses
incurred by such Covered Employee as a result of the Company's failure to
perform under this Plan or any provision thereof; or as a result of the Company
or any person contesting the validity or enforceability of this Plan or any
provision thereof.
ARTICLE IX
MISCELLANEOUS
9.1 LIMITATION ON RIGHTS. Participation in the Plan shall not give any
employee the right to be retained in the service of the Company or any rights to
any benefits whatsoever, except to the extent specifically set forth herein.
Unless otherwise agreed in writing, employment with the Company is "at will."
9.2 HEADINGS. Headings of Articles and Sections in this instrument are for
convenience only, and do not constitute any part of the Plan.
9.3 GENDER AND NUMBER. Unless the context clearly indicates otherwise, the
masculine gender when used in the Plan shall include the feminine, and the
singular number shall include the plural and the plural number the singular.
EXECUTED as of the date first set forth above.
ATWOOD OCEANICS, INC.
By: /s/ John R. Irwin
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Name: John R. Irwin
Title: President & Chief Executive Officer