THIS EMPLOYMENT
AGREEMENT (the “ Agreement ”) is made and
entered into as of October 23, 2009 (the “ Effective
Date ”), by and between PARKER DRILLING COMPANY, a
Delaware corporation (the “ Company ”), and
ROBERT L. PARKER, JR. (“ Executive ”), an
employee of the Company. The Company and Executive may sometimes
hereafter be referred to singularly as a “ Party
” or collectively as the “ Parties .”
Defined terms shall have the meanings ascribed to them in
Appendix A of the Agreement.
WHEREAS, the
Company desires to secure the employment services of Executive
subject to the terms and conditions hereafter set forth;
and
WHEREAS,
Executive is willing to enter into the Agreement upon the terms and
conditions set forth;
NOW, THEREFORE,
in consideration of Executive’s employment with the Company,
and the mutual promises and agreements contained herein, the
Parties hereto agree as follows:
1.
Employment . During the Employment Period, the
Company shall employ Executive, and Executive shall serve as
Executive Chairman of the Board of the Company. Executive’s
principal place of employment shall be at the corporate offices of
the Company in Houston, Texas. Executive understands and agrees
that he may be required to travel from time to time for purposes of
the Company’s business.
2.
Compensation . Compensation shall be paid or provided
to Executive during the Employment Period as follows:
(a)
Base Salary . The Company shall pay to Executive a
base salary of $637,300 per year, payable in accordance with the
Company’s normal payroll schedule and procedures for its
executives. Executive’s Base Salary shall be subject to at
least annual review and may be increased (but not decreased without
Executive’s express written consent or unless any decrease
applies to Senior Officers). Nothing contained herein shall
preclude the payment of any other compensation to Executive at any
time.
(b)
Annual Bonus . Executive shall be eligible to
participate in an annual incentive plan. The annual incentive bonus
target shall be not less than 100% of Executive’s Base Salary
and shall be subject to review and may be increased (but not
decreased without Executive’s express written consent or
unless any decrease applies to Senior Officers). Any annual
incentive bonus shall be paid in a form in accordance with the
terms of the applicable bonus plan as in effect from time to time,
including any discretionary and performance provisions in such
plan, and in no event later than the end of the year following the
year for which the bonus was earned.
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(c)
Long-Term Incentives . Executive shall be eligible to
receive grants of long-term incentives, such as stock options,
stock appreciation rights, restricted stock, rights to acquire
stock or other securities of the Company or cash, all as
commensurate with his position, and to the extent permitted by and
in accordance with the terms of the Company’s long-term
incentive plan or plans as in effect from time to time.
3. Duties
and Responsibilities of Executive . During the Employment
Period, Executive shall devote his full business time and attention
to the Company’s business and shall promote its success and
shall perform the duties and responsibilities assigned to him by
the Reporting Authority from time to time to the best of his
ability and with reasonable diligence, with the primary duties and
responsibilities as of the date of this Agreement as set forth in
Section 1 of Appendix B of the Agreement. This
Section 3 shall not be construed as preventing
Executive from (a) serving on advisory committees or boards with
the written permission of the Reporting Authority, such permission
not to be unreasonably withheld or delayed; (b) engaging in
reasonable volunteer services for charitable, educational or civic
organizations; (c) managing his personal investments in a form
or manner that will not require Executive’s services in the
operation of the entities in which such investments are made; or
(d) serving in such capacities as set forth in
Section 2 of Appendix B of the Agreement. In any
event, no such activity shall conflict with Executive’s
loyalties and duties to the Company nor his ability to fulfill his
duties and responsibilities hereunder. Executive shall at all times
endeavor to in good faith comply with laws applicable to
Executive’s actions on behalf of the Company and its
Affiliates.
4. Term
of Employment . Executive’s initial term of
employment with the Company under the Agreement shall be for the
period from the Effective Date through December 31, 2010 (
the “Initial Term of Employment” ). Thereafter,
the Initial Term of Employment shall be automatically extended
repetitively for an additional one-year period commencing on
January 1, 2011, and each anniversary thereof, unless notice
is given by either the Company or Executive to the other Party at
least 105 days prior to the end of the Initial Term of Employment,
or any one-year extension thereof, as applicable, that the term of
employment will not be renewed. The Initial Term of Employment and
any extension of the Initial Term of Employment hereunder shall
each be referred to herein as a “ Term of Employment
.” The Term of Employment shall automatically end in the
event of the death or Disability of Executive. The Company and
Executive shall each have the right to give Notice of Termination
(pursuant to Section 8 ) at will, with or without
cause, at any time, subject however to the terms and conditions of
the Agreement regarding the rights and duties of the Parties upon
termination of employment. The period from the Effective Date
through the earlier of the date of Executive’s termination of
employment for whatever reason or the end of the Term of Employment
shall be referred to herein as the “ Employment Period
.”
5.
Benefits . Subject to the terms and conditions of the
Agreement, Executive shall be entitled to the following:
(a)
Ongoing Benefits . During the Employment Period,
Executive shall be entitled to the following:
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(1)
Reimbursement of Expenses . The Company shall pay or
reimburse Executive for all reasonable travel, entertainment and
other expenses paid or incurred by Executive in the performance of
his duties hereunder. The Company shall also provide Executive with
suitable office space, including staff support.
(2)
Other Employee Benefits . Executive shall be eligible
to participate in any pension, retirement, 401(k), and
profit-sharing, non-qualified deferred compensation and other group
retirement plans or programs of the Company, to the same extent as
available to Senior Officers under the terms of such plans or
programs. Executive shall also be entitled to participate in any
medical, dental, life, accident, disability and other group
insurance plans or programs of the Company, to the same extent as
available to Senior Officers under the terms of such plans or
programs. The Company shall maintain (i) $3,000,000 of
insurance on the life of Executive with proceeds payable to the
Designated Beneficiary and (ii) $3,000,000 of long-term
disability insurance with proceeds payable to Executive, (the
“ Disability Insurance ”). The premiums for the
foregoing life insurance shall be included by the Company in the
gross income of Executive. The premiums for the Disability
Insurance shall not be included by the Company in the gross income
of Executive. To the extent Executive receives long term disability
payments as a result of any long-term disability benefits otherwise
provided by the Company (excluding any salary continuation plan)
(“Other LTD Benefits”), and Executive receives the
$3,000,000 in proceeds under the Disability Insurance, Executive
shall repay to the Company all amounts received by Executive
pursuant to any Other LTD Benefits, less any taxes payable by
Executive on such amounts (calculated at the highest marginal tax
rate paid by Executive). Executive hereby consents to the Company
procuring insurance on his life and disability insurance, for this
purpose or otherwise, and agrees to take any action reasonably
necessary for such procurement, including physical
examination.
(3)
Paid Time Off . Executive shall be entitled to the
number of hours of paid time off each year that is accorded under
the Company’s paid time policy for other employees of the
Company of the same level, but not less than 200 hours of paid time
off annually.
(b)
Payments Upon Termination . Upon termination of
employment during the Term of Employment and without requirement of
execution of a Waiver and Release, Executive shall be entitled to
the following minimum payments, in addition to any other payments
or benefits he is entitled to receive under the terms of the
Agreement and any employee benefit plan or program;
(1) his
accrued but unpaid Base Salary through his Termination
Date;
(2) his
unpaid vacation pay for that year which has accrued through his
Termination Date; and
(3) business
expenses reimbursed in accordance with the Company’s normal
procedures.
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Any such salary
and accrued vacation pay shall be paid to Executive in a cash lump
sum within five business days following the Termination
Date.
6.
Severance Benefits Upon Certain Terminations Prior to a
Change in Control . Except in the event of termination of
Executive’s employment (i) due to Executive’s
death or Disability, (ii) due to Executive’s voluntary
resignation or termination, in either case without Good Reason,
other than his Retirement, (iii) by the Company for Cause, or
(iv) during the two-year period after a Change in Control
under the circumstances provided in Section 7 , and
subject to the Waiver and Release requirement described in
Section 6(d) and the forfeiture provision in
Section 16 , Executive’s right to compensation
and benefits for periods after the Termination Date shall be
determined in accordance with this Section 6 , as
follows:
(a)
Cash Payments . In the event that during the Term of
Employment, (i) Executive’s employment is terminated by
the Company for any reason other than Cause, or
(ii) Executive terminates his own employment hereunder
for Good Reason or his Retirement, then in either such event under
clause (i) or (ii), the following cash payments shall be
provided to Executive or, in the event of his death before
receiving such benefits, to his Designated Beneficiary following
his death:
(1) the
Company shall pay to Executive as additional compensation (the
“Additional Payment”), an amount which is equal to
“Total Cash” (defined below) multiplied by two (the
“Severance Multiplier”). “Total Cash” means
the greater of (x) or (y), where (x) equals the greater
of Executive’s Base Salary as in effect on the date Notice of
Termination is given or on the date immediately prior to his
Termination Date plus Executive’s current annual incentive
target bonus; and (y) equals the sum of Executive’s
highest Base Salary paid and highest annual incentive bonus earned
with respect to any of the five calendar years immediately
preceding the year containing the Termination Date. For clauses
(x) and (y) of this definition: (a) the calculation
of the annual bonus of Executive shall include a calendar year
during which Executive was employed by the Company and a
participant in a bonus or incentive cash compensation plan even if
Executive did not earn any bonus or incentive cash compensation for
that calendar year and (b) the “target bonus” for
Executive for the calendar year of the Company in which the
Termination Date occurs shall be the amount identified in
Section 2(b) as the “target”, subject to
adjustment as provided in Section 2(b) ; the Additional
Payment shall be paid to Executive in a cash lump sum payment on
the 60th day following the Termination Date, but only if the Waiver
and Release has been timely executed and returned and the
revocation period has expired;
(2) a
portion of his annual incentive bonus equal to the annual incentive
bonus as provided in Section 2(b) based on actual
performance, multiplied by a fraction, the numerator of which
equals the number of days from the commencement of the year in
which such termination occurs through the Termination Date, and the
denominator of which equals 365; any such annual incentive bonus
shall be paid in a cash lump sum on the normal bonus payment date
for other Company executives whose employment has continued, and in
no event later than the end of the year following the
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year in which
the Termination Date occurs, but only if the Waiver and Release has
been timely executed and returned and the revocation period has
expired;
(3) if
his Termination Date occurs after the end of the Company’s
fiscal year and prior to the payment of his annual incentive bonus
for such year, the same annual incentive bonus to which he would
have been entitled had his employment continued through the normal
bonus payment date, if any; such annual incentive bonus shall be
paid in a cash lump sum on the normal bonus payment date for Senior
Officers whose employment has continued, and in no event later than
the end of the year in which the Termination Date occurs, but only
if the Waiver and Release has been timely executed and returned and
the revocation period has expired; and
(4) his
Base Salary for the period commencing on the day after his
Termination Date and ending on the last day of the month in which
the Termination Date occurs; any such amount shall be paid to
Executive in a cash lump sum payment on the 60th day following the
Termination Date, but only if the Waiver and Release has been
timely executed and returned and the revocation period has
expired.
(b)
Health and Dental Coverage.
(1) The
Company shall provide to Executive and his covered dependents, if
any, coverage as in effect for Executive on the date immediately
prior to the Termination Date under the Company’s group
health plan and group dental plan for a period of 24 months
following the Termination Date; provided, however, Executive and
his covered dependents, if any, shall not be required to pay any
portion of the premium cost to retain such coverages except that
the cost of such coverages will be imputed as income and reported
as wages to Executive in the event that Company maintains a
self-funded group health plan and/or group dental plan and such
Company-provided coverage would otherwise be discriminatory within
the meaning of Code Section 105(h). In all other respects
shall be treated the same as other participants under the terms of
such plans.
(2) Thereafter,
Executive and his covered dependents, if any, shall be entitled to
elect continuation coverage under such plans pursuant to COBRA and
the Company’s procedures for COBRA administration (“
COBRA Coverage ”). In the event that COBRA coverage is
elected, (i) the COBRA time period shall not be reduced by the
post-termination continuation coverage provided pursuant to
Section 6(b)(1) and (ii) Executive (and his
covered dependents, if any) must pay the full COBRA premium rates
as effective during the COBRA Coverage period. (In the event
Executive does not satisfy the Waiver and Release requirement, he
and his covered dependents, if any, shall be entitled to only COBRA
Coverage after his Termination Date.)
(3) In
the event of any change to the group health plan or group dental
plan following the Termination Date, Executive shall be treated
consistently with Senior Officers of the Company (or its successor)
with respect to the terms and conditions of coverage and other
substantive provisions of the plan; provided, however, no
participant contributions shall be required from Executive (and his
covered dependents, if any)
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unless COBRA
Coverage is in effect. Notwithstanding the foregoing provisions of
this Section 6(b)(3), the coverage of Executive (and
his dependents, if any) under such health and/or dental plans
maintained by the Company shall terminate in the event that
Executive becomes employed by another for-profit employer which
maintains a group health plan or plans for its employees providing
group health coverage or group dental coverage, as applicable;
provided, however, any COBRA Coverage shall not be terminated
unless and until permitted under COBRA. For purposes of the
preceding sentence, (i) the coverage of Executive (and his
dependents, if any) under the health and/or dental plans maintained
by the Company shall not terminate until Executive becomes eligible
to participate in such group health and group dental coverage of
another for-profit employer and (ii) personal coverage
obtained by Executive other than through employment or coverage
available by reason of Executive’s performance of services as
an independent contractor shall not be considered.
(4) The
Company-provided coverage and the COBRA Coverage above shall be
provided in a manner that is intended to either comply with Code
Section 409A or satisfy an exception to Code
Section 409A, and therefore not be treated as an arrangement
providing for nonqualified deferred compensation that is subject to
taxation under Code Section 409A, as determined by the Company
in its discretion, including (1) providing such benefits on a
nontaxable basis to Executive, (2) providing for the
reimbursement of covered expenses incurred during the time period
during which Executive would be entitled to continuation coverage
under a group health plan of the Company in accordance with Code
Section 4980B ( i.e. , COBRA Coverage),
(3) providing that such benefits constitute the reimbursement
or provision of in-kind benefits payable at a specified time or
pursuant to a fixed schedule as permitted under Code
Section 409A and the authoritative guidance thereunder, and/or
(4) such other manner as determined by the Company in
compliance with Code Section 409A.
(c) No
Benefits . In the event that (i) Executive voluntarily
resigns or otherwise voluntarily terminates his own employment at
any time, in either case without Good Reason, (ii) his
employment is terminated by the Company for Cause, or
(iii) his employment is terminated due to his death or
disability, then the Company shall have no obligation to provide
any severance benefits under Section 6(a) or
Section 6(b)(1). In any such event, Executive and his
covered dependents, if any, shall be entitled to only COBRA
Coverage after his Termination Date.
(d) Waiver
and Release . Notwithstanding any provision of the
Agreement to the contrary, in order to receive the severance
benefits payable under any of Section 6(a) Section
6(b)(1) , or Section 7 , as applicable, Executive
must first execute an appropriate waiver and release agreement
(substantially in the form attached hereto as Appendix C) (the
“Waiver and Release”) whereby Executive agrees to
release and waive, in return for such severance benefits, any
claims that he may have against the Company including, without
limitation for unlawful discrimination (including, without
limitation, any claims for discrimination under any federal or
state statute or regulation); provided, however, such Waiver and
Release shall not release any claim or cause of action by or on
behalf of Executive for any payment or vested benefit that is due
under either the Agreement or any employee benefit plan or program
of the Company until fully paid prior to the receipt
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thereof.
Executive shall have 21 days after receipt of the Waiver and
Release to consider and timely execute and return it to the
Company. After return, Executive shall have an additional seven
days in which he can revoke the Waiver and Release; thereafter, the
Waiver and Release shall be irrevocable. The Company shall provide
the Waiver and Release to Executive no later than five days after
his Termination Date. If the Waiver and Release is not timely
executed and returned, or it is revoked within the seven-day
revocation period, no benefits shall be paid under any of
Section 6(a) , Section 6(b)(1) , or
Section 7 .
(e) No
Duplication . The severance payments provided under the
Agreement shall supersede and replace any severance payments under
any severance pay plan that the Company or any Affiliate maintains
for employees generally. Notwithstanding the preceding sentence, in
the event that a severance payment under the Agreement would
constitute a change in the form or timing of payment under Code
Section 409A of any severance benefit otherwise payable to
Executive under any other plan or other arrangement, then the
portion of the severance payment payable under the Agreement that
is equal to the amount payable under such other severance
arrangement shall be paid in the form, and at the time, applicable
under such other severance arrangement and, in such event, any
excess severance payment as determined under the Agreement shall be
paid in the time and form as specified in the Agreement.
7.
Severance Benefits Upon Certain Terminations Following a
Change in Control . Except in the event of termination of
Executive’s employment (i) due to Executive’s
death or Disability, (ii) due to Executive’s voluntary
resignation or termination, in either case without Good Reason
other than his Retirement, (iii) by the Company for Cause, or
(iv) prior to a Change in Control under the circumstances and
within the time limits provided in Section 6 , and
subject to the Waiver and Release requirement described in
Section 6(d) and the forfeiture provision in
Section 16 , Executive’s right to compensation
and benefits for periods after the Termination Date and after a
Change in Control shall be determined in accordance with this
Section 7 , as follows:
(a) The
provisions of this Section 7 shall not apply unless
(a) there shall have been a Change in Control during the Term
of Employment, and (b) Executive’s employment with the
Company shall have been terminated for any reason other than Cause
by the Company within two years after the date of such Change in
Control, or Executive shall have terminated his employment from the
Company for Good Reason or his Retirement within two years after
the date of such Change in Control.
(b) If the
Company terminates Executive’s employment with the Company
for any reason other than Cause, or if Executive terminates his
employment with the Company for Good Reason or his Retirement prior
to the second anniversary of a Change in Control, then
Executive’s severance benefits shall be determined in
accordance with the provisions of Section 6 , after
taking into account the modifications in this Section 7
, as follows:
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(1) the
Severance Multiplier for purposes of determining the amount of the
Additional Payment under Section 6(a)(1) shall be
three; such Additional Payment shall be paid to Executive in a lump
sum cash payment on the 60th day following the Termination Date,
but only if the Waiver and Release has been timely executed and
returned and the revocation period has expired;
(2) a
portion of his annual incentive bonus equal to the annual incentive
bonus as provided in Section 2(b) based on actual
performance, multiplied by a fraction, the numerator of which
equals the number of days from the commencement of the year in
which such termination occurs through the Termination Date, and the
denominator of which equals 365; any such annual incentive bonus
shall be paid in a cash lump sum on the normal bonus payment date
for other Company executives whose employment has continued, and in
no event later than the end of the year following the year in which
the Termination Date occurs, but only if the Waiver and Release has
been timely executed and returned and the revocation period has
expired;
(3) if
his Termination Date occurs after the end of the Company’s
fiscal year and prior to the payment of his annual incentive bonus
for such year, the same annual incentive bonus to which he would
have been entitled had his employment continued through the normal
bonus payment date, if any; such annual incentive bonus shall be
paid in a cash lump sum on the normal bonus payment date for other
Company executives whose employment has continued, and in no event
later than the end of the year in which the Termination Date
occurs, but only if the Waiver and Release has been timely executed
and returned and the revocation period has expired;
(4) his
Base Salary for the period commencing on the day after his
Termination Date and ending on the last day of the month in which
the Termination Date occurs; any such amount shall be paid to
Executive in a lump sum cash payment on the 60th day following the
Termination Date, but only if the Waiver and Release has been
timely executed and returned and the revocation period has
expired;
(5) group
health and dental benefits under Section 6(b)(1) shall
be provided for 36 months from the Termination Date, provided
Executive complies with the otherwise applicable requirements of
Section 6 (such benefits described in this
Section 7(b)(5) herein referred to as “
Continuation Coverage ”);
(6) the
Continuation Coverage shall be provided in a manner that is
intended to either comply with Code Section 409A or satisfy an
exception to Code Section 409A, and therefore not treated as
an arrangement providing for nonqualified deferred compensation
that is subject to taxation under Code Section 409A, as
determined by the Company in its discretion, including
(1) providing such benefits on a nontaxable basis to
Executive, (2) in the case of group health and dental
benefits, providing for the reimbursement of covered expenses
incurred during the time period during which Executive would be
entitled to continuation coverage under a group health plan of the
Company in accordance with Code Section 4980B ( i.e. ,
COBRA coverage), (3) providing that such benefits constitute
the reimbursement or provision of in-kind benefits payable at a
specified time or pursuant to a fixed schedule as permitted
under
8
Code
Section 409A and the authoritative guidance thereunder, and/or
(4) such other manner as determined by the Company in
compliance with Code Section 409A;
(7) In
determining whether Executive has Good Reason to terminate his
employment with the Company following a Change in Control, there
shall also be treated as events of Good Reason:
(A) the
events described in clause D of the definition of Good Reason
without regard to whether such changes apply to Senior Officers on
the same basis;
(B) the
taking of any action by the Company which would adversely affect
Executive’s participation in or materially reduce his
benefits under or deprive Executive of any material fringe benefit
enjoyed by him at the time of a Change in Control, or the failure
by the Company to provide Executive with the number of hours of
paid time off to which he was entitled in accordance with the
Company policies in effect at the time of a Change in
Control;
(C) any
loss of significant authority, power or control over that exercised
by Executive immediately prior to the Change in Control (including
a change in superior to whom Executive reports);
(D) if
the Company becomes a division, a wholly or majority-owned
subsidiary or other similar captive entity of another person or
entity or combination thereof ( i.e . of a
“parent”); and if Executive is not placed in the
identical or equivalent position within the parent person or
entity, then such occurrence will be deemed to be an assignment of
duties materially inconsistent with Executive’s position as
described above thereby constituting Good Reason; and
(E) any
failure by the Company to continue in effect any plan or
arrangement to receive securities of the Company (including any
plan or arrangement to receive and exercise stock options, stock
appreciation rights, restricted stock or grants thereof or to
acquire stock or other securities of the Company) in which
Executive is participating at th
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