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Exhibit 10.4 EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT
AGREEMENT (this " Agreement ") is entered into as
of the 15th day of December, 2008 (the " Effective
Date ") by and between HERCULES OFFSHORE, INC., a Delaware
corporation (the " Company "), and JAMES W. NOE (the
" Executive ").
WHEREAS, the Company desires to
employ the Executive, and the Executive is willing to accept such
employment, all upon the terms and conditions set forth herein;
WHEREAS, the Board of Directors of
the Company (the " Board "), upon the recommendation
of the Compensation Committee of the Board (the "
Compensation Committee " ), has determined that it is
advisable and in the best interests of the Company and its
stockholders to assure that the Company will have the continued
dedication of the Executive, and to provide the Executive with
compensation and benefits arrangements which are competitive with
those of executives of other similarly situated corporations;
WHEREAS, the Board also believes it
is imperative to diminish the inevitable distraction of the
Executive by virtue of the personal uncertainties and risks created
by a pending or threatened Change of Control (hereinafter defined)
and to encourage the Executive’s full attention and
dedication to the Company currently and in the event of any
threatened or pending Change of Control;
NOW, THEREFORE, in consideration of
the premises, the terms and provisions set forth herein, the mutual
benefits to be gained by the performance thereof and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Certain Definitions.
(a) " Affiliate "
shall have the meaning ascribed to such term under Rule 12b-2
under the Exchange Act. (b) The
" Employment Period " shall mean the period
commencing on the Effective Date and ending on the Date of
Termination, as determined pursuant to Section 5(e).
(c) "Exchange
Act" means the Securities Exchange Act of 1934.
(d) The term
"group" is used as it is defined for purposes of the
Exchange Act. (e)
"Person" means an individual, entity or group.
(f)
"Section 409A" means Section 409A of the
Internal Revenue Code of 1986, as amended, and the regulations and
guidance promulgated thereunder.
(g) "Subsidiary "
shall mean (i) in the case of a corporation, any corporation
of which the Company directly or indirectly owns shares
representing 50% or more of the combined voting power of the shares
of all classes or series of capital stock of such corporation that
have the right
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to vote generally on matters submitted to a vote of the
stockholders of such corporation and (ii) in the case of a
partnership or other business entity not organized as a
corporation, any such business entity of which the Company directly
or indirectly owns 50% or more of the voting, capital or profits
interests (whether in the form of partnership interests, membership
interests or otherwise). 2.
Change of Control . For the purpose of this Agreement, a "
Change of Control " shall mean a change of control of
a nature that would be required to be reported in response to Item
6(e) of Schedule 14A or Item 5.01 of Form 8-K promulgated
under the Exchange Act, as in effect on the date of this Agreement,
or if neither item remains in effect, any regulations issued by the
Securities and Exchange Commission pursuant to the Exchange Act
that serve similar purposes, in each case whether or not the
Company is then subject to such reporting requirement; provided,
that, without limitation, such a change of control shall be deemed
to have occurred if: (i) any
"person" (as defined in Sections 13(d) and 14(d) of the Exchange
Act) is or becomes the " beneficial owner " (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company (not including in the amount of the
securities beneficially owned by such person any such securities
acquired directly from the Company or its Affiliates) representing
20% or more of the combined voting power of the Company’s
then outstanding voting securities; provided, however, that for
purposes of this Agreement the term " person " shall not
include (A) the Company or any of its Subsidiaries, (B) a
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any of its Subsidiaries, (C) an
underwriter temporarily holding securities pursuant to an offering
of such securities, or (D) an entity owned, directly or
indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company; and
provided, further, however, that for purposes of this paragraph
(i), there shall be excluded any person who becomes such a
beneficial owner in connection with an Excluded Transaction (as
defined in paragraph (iii) below);
(ii) the following individuals
cease for any reason to constitute a majority of the number of
directors of the Company then serving: individuals who, on the date
hereof, constitute the Board and any new director (other than a
director whose initial assumption of office is in connection with
an actual or threatened election contest including but not limited
to a consent solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board or
nomination for election by the Company’s stockholders was
approved or recommended by a vote of at least two-thirds (2/3) of
the directors then still in office and voting on the matter who
were either directors on the date hereof or whose appointment,
election or nomination for election was previously so approved;
(iii) there is consummated a
merger or consolidation of the Company with any other entity, other
than a merger or consolidation which would result in the holders of
the voting securities of the Company outstanding immediately prior
thereto continuing to hold voting securities representing (either
by remaining outstanding or by being converted into voting
securities of the surviving corporation or any parent thereof) at
least 50% of the combined voting power of the voting securities of
the entity surviving the merger or consolidation (or the parent of
such surviving entity) immediately after such merger or
consolidation (an " Excluded Transaction "); or
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(iv) the stockholders of the
Company approve a plan of complete liquidation of the Company, or
there is consummated the sale or other disposition of all or
substantially all of the assets of the Company and its Subsidiaries
taken as a whole (other than to the Company or one or more
Subsidiaries of the Company).
3. Employment Agreement
. The Company hereby agrees to continue the Executive in its
employ, and Executive agrees to remain in the employ of the Company
in accordance with the terms and conditions of this Agreement, for
the Employment Period. 4.
Terms of Employment. (a)
Position and Duties .
(i) During the Employment
Period, the Executive’s position (including status, offices,
titles and reporting requirements), authority, duties and
responsibilities shall be (A) prior to a Change of Control, at
least commensurate in all material respects with the most
significant of those held, exercised and assigned at any time
during the 90-day period immediately preceding the Applicable Date,
and (B) upon and within 24 months after a Change of
Control, the Executive’s position shall be at least
commensurate in all material respects (disregarding any change or
changes that are in the aggregate de minimis ) with the most
significant of those held, exercised and assigned as of the date
immediately preceding the Applicable Date. During the Employment
Period, the Executive’s services shall be performed at the
location where the Executive’s services were performed
immediately preceding the Applicable Date or any office which is
the headquarters of the Company and is less than 50 miles from such
location. For purposes of this Agreement, " Applicable
Date " shall mean, at any time of determination, the latest
to have occurred of the Effective Date or, during the
24 months following a Change of Control, any date on which a
Change of Control has occurred.
(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 his
full attention and time during normal business hours to the
business and affairs of the Company. 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 or (C) manage personal
investments, in each such case, so long as such activities do not
significantly interfere with the performance of the
Executive’s responsibilities as an employee of the Company in
accordance with this Agreement; provided, however, the Executive
may not serve on the board of a publicly traded for profit
corporation or similar body of a publicly traded for profit
business organized in other than corporate form without the consent
of the Compensation Committee. It is expressly understood and
agreed that to the extent that any such activities have been
conducted by the Executive prior to the Applicable Date, the
continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Applicable
Date shall not thereafter be deemed to interfere with the
performance of the Executive’s responsibilities to the
Company. (b)
Compensation .
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(i) Base Salary .
During the Employment Period, the Executive shall receive an annual
base salary (" Annual Base Salary "), which shall be
paid on a monthly basis, at least equal to twelve times the highest
monthly base salary paid or payable to the Executive by the Company
and its Affiliates in respect of the twelve-month period
immediately preceding the month in which the Applicable Date
occurs; provided, further, that, after the Effective Date, in no
event shall the Annual Base Salary be less than $375,000. During
the Employment Period, the Annual Base Salary shall be reviewed at
least once in each fiscal year of the Company and may be increased
at any time and from time to time as shall be substantially
consistent with increases in base salary generally awarded in the
ordinary course of business to other executives of the Company and
its Affiliates. (ii) Annual
Bonus . In addition to Annual Base Salary, the Executive shall
be awarded for each fiscal year ending during the Employment
Period, a bonus of up to 120% of Annual Base Salary (target of 60%)
depending upon meeting goals agreed upon with the Board. Such
Annual Bonus amount may be pro-rated in respect of partial years.
During the Employment Period, the annual target bonus as a
percentage of Annual Base Salary may be increased, but not
decreased, from time to time by the Board.
(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 other executives of the Company and its Affiliates.
Such plans, practices, policies and programs shall 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, equal to such
plans, practices, policies and programs provided by the Company and
its Affiliates for similarly situated senior executives of the
Company and its Affiliates.
(iv) Welfare Benefit
Plans . During the Employment Period, the Executive and/or the
Executive’s dependents, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the
Company and its Affiliates (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 similarly
situated senior executives of the Company and its Affiliates. Such
plans, practices, policies and programs shall provide the Executive
with benefits which are equal, in the aggregate, to such plans,
practices, policies and programs provided by the Company and its
Affiliates for similarly situated senior executives of the Company
and its Affiliates. (v)
Expenses. During the Employment Period, the Executive shall
be entitled to receive prompt reimbursement for all reasonable and
documented expenses incurred by the Executive in accordance with
the policies, practices and procedures of the Company and its
Affiliates in effect for similarly situated senior executives of
the Company and its Affiliates. All reimbursable expenses shall be
appropriately documented in reasonable detail by the Executive upon
submission of any request for reimbursement and in a format and
manner consistent with the Company’s expense reporting
policy.
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(vi) Fringe Benefits
. During the Employment Period, the Executive shall be entitled to
fringe benefits in accordance with the plans, practices, programs
and policies of the Company and its Affiliates in effect for
similarly situated senior executives of the Company and its
Affiliates. (vii)
Vacation . During the Employment Period, the Executive shall
be entitled to five (5) weeks paid vacation per year, or such
greater amount as is afforded to similarly situated senior
executives of the Company and its Affiliates.
(viii) Equity Awards .
In addition to Annual Base Salary and annual bonus, the Executive
may be awarded an equity award at the discretion of the Company for
any fiscal year ending during the Employment Period.
5. Termination of
Employment. (a) Death or
Disability . The Executive’s employment shall terminate
automatically upon the Executive’s death during the
Employment Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment
Period (pursuant to the definition of Disability set forth below),
it may give to the Executive written notice in accordance with
Section 16(c) of this Agreement of its intention to terminate the
Executive’s employment. In such event, the Executive’s
employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "
Disability Effective Date "), provided that, within
the 30 days after such receipt, the Executive shall not have
returned to full-time performance of the Executive’s duties.
For purposes of this Agreement, " Disability " shall
mean the absence of the Executive from the Executive’s duties
with the Company on a full-time basis for 120 consecutive calendar
days by reason of any medically determinable physical or mental
impairment or the Executive is "totally disabled" within the
meaning of the Company’s long-term disability plan applicable
to the Executive. All determinations to be made with respect to
clauses (i) and (ii) above shall be made by a physician
selected by the Company or its insurers and acceptable to the
Executive or the Executive’s legal representative (such
agreement as to acceptability not to be withheld unreasonably).
(b) Cause . The Company
may terminate the Executive’s employment during the
Employment Period for Cause. For purposes of this Agreement, "
Cause " shall mean (i) a material violation by
the Executive of the Executive’s obligations under
Sections 4(a), 10 or 11 of this Agreement (other than as a
result of incapacity due to physical or mental illness) which is
either willful and deliberate on the Executive’s part or is
committed in bad faith or without reasonable belief that such
violation is in the best interests of the Company, (ii) the
Executive’s gross negligence in performance, or intentional
non-performance (continuing for 10 days after receipt of
written notice of need to cure from the Company), of any of the
Executive’s duties and responsibilities under this Agreement,
or reasonable instructions of the Board or the officer(s) of the
Company to whom the Executive reports within the scope of the
Executive’s employment by the Company, (iii) the
Executive’s dishonesty, fraud or misconduct with respect to
the business or affairs of the Company, (iv) the
Executive’s violation of the Company’s ethics policy
which is willful or deliberate on the Executive’s part or is
committed in bad faith or (vi) the final and non-appealable
conviction by a court of competent jurisdiction of the Executive of
a felony involving
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moral turpitude or the entering of a guilty plea or a plea of
nolo contendere to such crime by the Executive.
(c) Good Reason; Other
Terminations . The Executive’s employment may be
terminated by the Executive (i) during the Employment Period
for Good Reason, or (ii) during the Employment Period, other
than for Good Reason. For purposes of
this Agreement, " Good Reason " shall mean:
(i) A material diminution in the
Executive’s base salary.
(ii) A material diminution in
the Executive’s authority, duties, or responsibilities.
(iii) A material diminution in
the authority, duties, or responsibilities of the supervisor to
whom the Executive is required to report.
(iv) The Company’s
requiring the Executive to be based at any office or location other
than that described in Section 4(a)(i)(B).
(v) Any other action or inaction
that constitutes a material breach by the Company of this
Agreement. (vi) Notwithstanding
anything to the contrary above, the Executive’s termination
of employment shall not constitute Good Reason unless (i) the
Executive notifies the Company of the condition or event
constituting Good Reason within 90 days of the
condition’s occurrence and the Company fails to cure the
condition, to the extent curable, specified in the notice within
30 days following such notification and (ii) the
Executive terminates employment within 10 days following the
expiration of the cure period set forth above.
(vii) Notwithstanding anything
herein to the contrary, the interim assignment of the
Executive’s position, authority, duties, or responsibilities
to any Person while the Executive is absent from his duties during
any of the 120 business days set forth under the definition of
Disability in Section 5(a) shall not constitute a Good Reason for
Executive to terminate his employment with the Company.
(d) Notice of
Termination . Any termination by the Company for Cause, or by
the Executive for any reason (including without limitation Good
Reason), shall be communicated by Notice of Termination to the
other party hereto given in accordance with Section 16(c) 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 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 Executive’s 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 shall be
not more than thirty 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 hereunder or preclude the Executive
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or the Company from asserting such fact or circumstance in
enforcing the Executive’s or the Company’s right
hereunder. (e) Date of
Termination . " Date of Termination " means
(i) if the Executive’s 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 Executive’s
employment is terminated by the Company other than for Cause, the
Date of Termination shall be the date on which the Company notifies
the Executive of such termination, (iii) if the
Executive’s 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,
or (iv) if the Executive’s employment is terminated by
the Executive other than for Good Reason, the date of the receipt
of the Notice of Termination or any later date specified therein.
(f) Deemed Resignation .
Any termination of the Executive’s employment shall
constitute an automatic resignation of the Executive as an officer
of the Company and each Affiliate and from the board of directors
or similar governing body of the Company and any Affiliate and from
the board of managers or similar governing body of any corporation,
limited liability company, or other entity in which the Company or
any Affiliate holds an equity interest and with respect to which
board or similar governing body the Executive serves as the
Company’s or Affiliate’s designee or other
representative. 6.
Obligations of the Company upon Termination and Upon Change of
Control. Upon the termination of Executive’s employment
hereunder, Executive shall receive from the Company as severance
those payments and benefits set forth in the applicable provisions
of this Section 6. (a)
Prior to a Change of Control: Good Reason or Other than for
Cause . If, during the Employment Period and prior to a Change
of Control, the Company shall terminate the Executive’s
employment other than for Cause, or the Executive shall terminate
employment for Good Reason:
(i) The Company shall pay to the
Executive, in a lump-sum in cash on the date 60 days after the
Date of Termination (unless other payment terms are specified in
this Section 6 or in Section 16(h)), the aggregate of the
following amounts: A. the sum of
(1) the Executive’s Annual Base Salary through the Date
of Termination to the extent not theretofore paid, (2) any
compensation previously deferred by the Executive, to the extent
permitted by the plan under which such deferral was made (together
with any accrued interest or earnings thereon), and any accrued
vacation pay, in each case to the extent not theretofore paid, and
(3) a separate sum equal to the amount of any earned but
unpaid bonus awarded to the Executive for any previously completed
taxable year (the sum of the amounts described in clauses (1),
(2) and (3) shall be hereinafter referred to as the "
Accrued Obligations "); and
B. the amount (such amount shall
be hereinafter referred to as the " Severance Amount
") equal to the sum of:
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(1) 2.0 times the amount of
the Executive’s Annual Base Salary; and
(2) 2.0 times the bonus (as a
percentage of Annual Base Salary) described in
Section 4(b)(ii) paid or payable in respect of the most
recently completed fiscal year of the Company or, if no such bonus
has been paid or is payable in respect of such year, any bonus
described in Section 4(b)(ii) paid or payable in respect of
the next preceding fiscal year; and
C. a lump sum amount equal to
the then current cost of the employer-provided welfare benefits
(other than group health plans) provided to the Executive and his
dependents, as of the Date of Termination, calculated for the
period from the Date of Termination until the later of the
expiration of the remaining Employment Period or the date
18 months following the Date of Termination (the "
Welfare Cash Payment ").
(ii) Until the later of the
expiration of the remaining Employment Period or the date 18 months
from the Date of Termination, the Company shall continue group
health benefits to the Executive and/or the Executive’s
dependents at least equal to those which would have been provided
to them in accordance with the group health plans provided to
active employees if the Executive’s employment had not been
terminated in accordance with the most favorable plans, practices,
programs or policies of the Company and its Affiliates as in effect
and applicable generally to other executives and their dependents
during the 90-day period immediately preceding the Applicable Date,
provided, however, that if the Executive becomes reemployed with
another employer and is eligible to receive group health benefits
under another employer provided plan, the group health benefits
described herein shall be secondary to those provided under such
other plan during such applicable period of eligibility; and
provided further, however, that with respect to health and medical
benefits, to the extent such coverage cannot be extended or
provided, the Company will pay during the period described above
the applicable premium under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, associated with such
benefits (such continuation of such benefits for the applicable
period herein set forth shall be hereinafter referred to as "
Welfare Benefit Continuation ").
(b) Following a Change of
Control: Good Reason or Other than for Cause . If, during the
Employment Period, the Company shall terminate the
Executive’s employment other than for Cause within
24 months following a Change of Control, or the Executive
shall terminate employment for Good Reason within 24 months
following a Change of Control, then the Company shall pay or
provide to the Executive all the amounts and benefits set forth in
Section 6(a) above at such times as provided therein; provided
however, that: (i) instead of
the Severance Amount calculated pursuant to Section 6(a)(i)(B)
above, a Severance Amount equal to 2.5 times the sum of
(x) the Executive’s Annual Base Salary, and (y) the
target bonus (as a percentage of Annual Base Salary) described in
Section 4(b)(ii) payable for year in which the termination
occurs. The Severance Amount calculated under this Section shall be
reduced (if applicable) and paid as set forth in
Section 6(a)(i)(B); and
(ii) if the Date of Termination
occurs within 24 months following a Change of Control, then
effective as of the Date of Termination, each and every stock
option, restricted stock award, restricted stock unit award and
other equity-based award and performance award that is outstanding
as of the Date of Termination shall immediately vest and/or
become
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exercisable and any contractual restrictions on sale or transfer
of any such award (other than any such restriction arising by
operation of law) shall immediately terminate.
(c) Death . If the
Executive’s employment is terminated by reason of the
Executive’s death during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive’s legal representatives under this Agreement, other
than for (i) payment of Accrued Obligations (which shall be
paid to the Executive’s estate or beneficiary, as applicable,
in a lump-sum in cash on the date 60 days following the Date
of Termination) and (ii) payment to the Executive’s
estate or beneficiary, as applicable, in a lump-sum in cash on the
date 60 days following the Date of Termination of an amount
equal to the Severance Amount payable under Section 6(a)(i)(B).
(d) Disability . If the
Executive’s employment is terminated by reason of the Ex
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