[Rowan Companies, Inc.
letterhead]
Mr. D. F.
McNease
2800 Post Oak Boulevard, Suite 5450
Houston, Texas 77056-6127
In
connection with your separation from Rowan Companies, Inc., a
Delaware corporation (“Rowan”), and in consideration of
your continuing agreements and valuable services to Rowan and its
subsidiaries and affiliates which are directly or indirectly
controlled by Rowan (collectively, the “Company”) as
provided herein, you and Rowan have agreed to the terms and
conditions as contained in this letter agreement (the “Letter
Agreement”) and in the attachment to the Letter Agreement
(the “Attachment”) to (hereinafter the Attachment and
the Letter Agreement are jointly the “Agreement”)
concerning your separation from employment and resignation as a
director, both effective as of the close of business on
December 31, 2008 (the “Separation Date”). The
Attachment is part of the Letter Agreement for all purposes. Your
resignations as an officer and director are attached hereto as
Exhibit A.
You
affirm and agree that your employment relationship ends on your
Separation Date, and as of such date you withdraw unequivocally,
completely and finally from your employment, you resign all
positions, titles, responsibilities and authority as a director,
officer or employee of the Company, and waive all rights in
connection with such relationship, except with respect to vested
benefits as provided for under plan documents of the Company, the
benefits and payments described in this Agreement, and such rights
as reserved under Section 13 hereof. You agree to return all
Company personal property in your possession to Rowan promptly
after your Separation Date.
Rowan
agrees to provide you with the benefits, payments and other items
described in this Agreement.
1. Consulting and Cooperation. Following the Separation
Date, Rowan agrees to engage you in a consulting capacity, and you
agree to serve Rowan in a consulting capacity, for the twenty-four
month period commencing on the Separation Date and ending on
December 31, 2010 (the “Consulting Period”).
During the Consulting Period, you agree to consult, cooperate with
and advise the officers of Rowan or the Board of Directors of Rowan
(the “Board”) as and when requested by any of them upon
reasonable notice, with respect to matters involving the business
and affairs of the Company. It is agreed and understood that your
status while performing services hereunder will for all purposes be
that of an independent contractor and not that of an employee of
Rowan. You and Rowan agree that your consulting services during the
Consulting Period are not reasonably anticipated to exceed 20% of
the average level of services performed by you for the Company
during the 36-month period
immediately
preceding your Separation Date as determined under Treasury
Regulation §1.409A- 1(h)(1)(ii) as promulgated under
Section 409A of the Internal Revenue Code of 1986, as amended,
and the rules, notices and regulations thereunder (collectively,
the “Code”). Rowan shall provide you with the necessary
resources to perform any consulting services requested by Rowan.
You acknowledge that you are responsible for payment of your
estimated federal income taxes, employment taxes, social security
taxes and any other taxes that may accrue under law by reason of
the compensation for your services to be provided as a consultant
hereunder. You further acknowledge that after the Separation Date
you are not entitled nor eligible to participate in any employee
benefit plans of the Company except as specifically provided in the
Attachment.
2. Confidentiality. You agree, for yourself and for your
heirs, dependents, assigns, agents, executors, administrators,
trustees and legal representatives, that you will (and will use
your best efforts to cause such affiliates to) hold in a fiduciary
capacity for the benefit of the Company all trade secrets, and
information, knowledge or data relating to the Company treated as
confidential by the Company which have been and will be given to
you by the Company and which shall not have been or hereafter
become public knowledge (other than by your acts or the acts of
your affiliates in violation of this Agreement) (hereinafter being
collectively referred to as “Confidential
Information”). Examples of “Confidential
Information” include, without limitation, rig descriptions
and drawings, layouts, arrangement drawings, customer contacts and
customer lists. You agree that you shall not, without the prior
written consent of Rowan or as may otherwise be required by law or
legal process, communicate or divulge any Confidential Information
to anyone other than Rowan and those designated by Rowan. In the
event that you may be required by law or legal process to
communicate or divulge any Confidential Information, you agree to
so notify the General Counsel of Rowan and to exercise your
commercially reasonable best efforts to assure that confidential
treatment will be accorded to such of the Confidential Information
which Rowan so designates, and you shall then disclose only that
portion of the Confidential Information that is legally required to
be disclosed. Rowan shall advance and pay your reasonable legal
fees (and related legal expenses) incurred in connection with any
such event. Any such payment shall be due upon receipt by Rowan of
your written request for payment, accompanied by such evidence of
the legal fees and expenses incurred by you as Rowan reasonably may
require. Any such payment shall be made on the last business day of
the calendar month following the calendar month in which the
payment becomes due; provided, however, that any such payment shall
be made not later than the close of the calendar year following the
calendar year in which the legal fees and expenses are incurred by
you. You will obtain the consent of the General Counsel of Rowan to
your selection of legal counsel for this purpose, which consent
shall not be unreasonably withheld. You agree to return all
Confidential Information, including all photocopies, extracts and
summaries thereof, and any such information stored electronically
on tapes, computer disks or in any other manner, to Rowan as soon
as practicable and in no event later than your Separation
Date.
3. Non-Competition. You acknowledge that during your
employment the Company provided you with access to Confidential
Information of the Company and specialized knowledge concerning any
business in which the Company was engaged at any time in the two
years preceding the Separation Date (as described in the Forms 10-K
and 10-Q of Rowan),
2
including the
provision of international and domestic contract drilling services
and the production of equipment for the drilling, mining, steel and
timber industries (collectively, the “Company
Business”), all of which was developed by the Company at
great cost and that are of critical importance in securing and
maintaining business prospects, in retaining the accounts and
goodwill of present customers and protecting the business of the
Company throughout the United States and other locations in which
it conducts the Company Business. You acknowledge that if a
competitor of the Company gained access to said Confidential
Information, the competitor would be able to unfairly compete with
the Company in the Company Business anywhere in the United States,
Europe, and elsewhere. Accordingly, you agree that without the
prior written consent of the Board (which consent may be withheld
in its sole discretion) (i) for the two-year period commencing
on your Separation Date, you will not in the United States or any
other country where the Company conducts operations related to the
Company Business, directly or indirectly, either as an individual,
proprietor, stockholder (other than as a holder of up to one (1%)
percent of the outstanding shares of a corporation whose shares are
listed on a stock exchange or traded in accordance with the
automated quotation system of the National Association of
Securities Dealers), partner, officer, employee, director
(including as a director of the buyer of LeTourneau Technologies,
Inc., a Delaware corporation) or otherwise, work for, become an
employee of, invest in, provide consulting services or in any way
engage in any business which provides, produces, leases or sells
products or services of the same or similar type provided,
produced, leased or sold in the Company Business in any area where
the Company provided, produced, leased or sold such products or
services at any time during the two years preceding your Separation
Date and (ii) you will not accept any position with any person
that has within the two years preceding the Separation Date
purchased or acquired more than one percent (1%) of the common
stock or any significant assets of the Company.
4. Non-Solicitation. For the two - year period
commencing on your Separation Date, you agree that you will not,
directly or indirectly, for your benefit or for the benefit of any
other person, firm or entity, solicit the employment or services
of, or hire, any person who was employed by the Company upon your
Separation Date, or within six months prior thereto. In addition,
for the two-year period commencing on your Separation Date, you
will not, directly or indirectly, and will not encourage or assist
others to, without the prior written consent of the Board (which
consent may be withheld in its sole discretion) (i) make, or
in any way participate in, any “solicitation” (as such
terms are used in the Securities Exchange Act of 1934, as the same
may be amended from time to time (the “Exchange Act”),
or to vote or seek to advise or influence in any manner whatsoever
any person or entity with respect to the voting of any securities
of Rowan, or (ii) form, join, or in any way communicate or
associate (by phone, e-mail or otherwise) with other stockholders
of Rowan or participate in a “group” (within the
meaning of Section 13(d)(3) of the Exchange Act) with respect
to any voting securities of Rowan.
5. Employee Acknowledgements. You acknowledge and agree
that: (i) the Company is and will continue to be engaged in
the Company Business; (ii) during your employment you were one
of a limited number of persons that were primarily responsible for
the conduct, management, operation, and development of the Company
Business; (iii) the Company is and will be actively engaged in
the Company Business, throughout the United States,
Europe,
3
and elsewhere;
(iv) during your employment you occupied a position of trust
and confidence with the Company, and were familiar with the
Company’s Confidential Information; and (v) the terms
and conditions set forth in the non-competition, non-solicitation
and confidentiality provisions of this Agreement (the
“Post-Employment Obligations”) are reasonable and
constitute an otherwise enforceable agreement to which the
Post-Employment Obligations are ancillary or a part of as
contemplated by Tex. Bus. & Com. Code Ann. sections
15.50-15.52; (vi) the consideration given by the Company under
this Agreement for the Post-Employment Obligations, including,
without limitation, the access to Confidential Information and
specialized knowledge, are not illusory and give rise to the
Company’s interest in restraining and prohibiting you from
engaging in the unfair competition prohibited by the
Post-Employment Obligations and your promise not to engage in the
unfair competition prohibited by the Post-Employment Obligations is
designed to enforce your return promises, including your promise to
not use or disclose Confidential Information of the Company; and
(vii) compliance with the Post-Employment Obligations is a
condition precedent to the Company’s obligation to make
payments of any nature to you, subject to the other provisions
hereof.
6. Remedies for a Violation of Non-Competition, Non-Solicitation
and Confidentiality Provisions. Without limiting the right of
the Company to pursue all other legal and equitable rights
available to it for violation of any of the Post-Employment
Obligations, you agree that a violation of any of the
Post-Employment Obligations would cause irreparable injury to the
Company for which it would have no adequate remedy at law. Any
controversy or claim arising out of or relating to the
Post-Employment Obligations, or any alleged breach of the
Post-Employment Obligations, shall be settled by binding
arbitration in accordance with the provisions below.
Notwithstanding the foregoing, however, the Company specifically
retains the right before, during or after the pendency of any
arbitration to seek injunctive relief from a court having
jurisdiction for any actual or threatened breach of the
Post-Employment Obligations without necessity of complying with any
requirement as to the posting of a bond or other security (it being
understood that you hereby waive any such requirement). Any
injunctive relief shall be in addition to any other remedies to
which the Company may be entitled at law or in equity or otherwise,
and the institution and maintenance of an action or judicial
proceeding for, or pursuit of, such injunctive relief shall not
constitute a waiver of the right of the Company to submit the
dispute to arbitration.
If
the provisions of the Post-Employment Obligations should ever be
deemed to exceed the time, geographic or occupational limitations
permitted by the applicable law, you and Rowan agree that such
provisions shall be and are hereby reformed to the maximum time,
geographic or occupational limitations permitted by the applicable
law, and the determination of whether you violated such
Post-Employment Obligations will be based solely on the
limitation(s) as reformed.
In
addition to the consideration described above, you agree that 50%
of the total amount of severance payments set forth under
Item A.2 of the Attachment to this Agreement constitutes
additional consideration for the Post-Employment Obligations (the
“Post-Employment Obligation Consideration”). You
specifically recognize and agree that should all or any part of the
Post-Employment Obligations be held or found invalid or
unenforceable for any
4
reason
whatsoever by a court of competent jurisdiction in a legal
proceeding between you and Rowan, Rowan shall be entitled to
immediately cease payment of any unpaid Post-Employment Obligation
Consideration and return and receipt from you of any
Post-Employment Obligation Consideration already paid to you,
including interest on all amounts paid to you at the maximum lawful
rate; provided, however, that you shall not forfeit and shall have
no obligation to return any part of the Post-Employment Obligation
Consideration if the Post-Employment Obligations are held invalid
or unenforceable at the request of Rowan in such legal
proceeding.
7. Non-Disparagement. You agree, for yourself and for your
heirs, dependents, assigns, agents, executors, administrators,
trustees and legal representatives, that you will not (and will use
your best efforts to cause such affiliates to not) at any time
engage in any form of conduct, or make any statements or
representations, including comments on any internet site,
“message board” or “chatroom”, that
disparage or otherwise impair the reputation, goodwill, or
commercial interests of the Company, or any of its agents,
officers, directors, employees and/or stockholders. Rowan agrees
that it will not (and will use its best efforts to cause its
officers and directors to not) issue any press release or make any
statements or representations, including comments on any internet
site, “message board” or “chatroom”, that
disparage or otherwise impair your business reputation. The
foregoing shall not be violated by: (i) truthful statements by
either party in response to legal process or required governmental
testimony or filings; (ii) statements by directors or officers
of Rowan that they in good faith believe are necessary or
appropriate to make in connection with performing their duties to
Rowan; or (iii) statements by you that you in good faith
believe are necessary or appropriate to make to refute statements
of Rowan, or the directors and officers of Rowan.
8. Litigation Assistance. You agree to assist Rowan in
litigation matters as may be reasonably requested by Rowan’s
General Counsel. Rowan and you agree to work out reasonable
accommodations for the provision of such litigation assistance so
that it does not unreasonably interfere with any of your personal
affairs, business endeavors or future employment. No such services
shall be requested of you except by Rowan’s General Counsel.
Rowan shall advance and pay your reasonable legal fees (and related
legal expenses) incurred in connection with any such event. Any
such payment shall be due upon receipt by Rowan of your written
request for payment, accompanied by such evidence of the legal fees
and expenses incurred by you as Rowan reasonably may require. Any
such payment shall be made on the last business day of the calendar
month following the calendar month in which the payment becomes
due; provided, however, that any such payment shall be made not
later than the close of the calendar year following the calendar
year in which the legal fees and expenses are incurred by you. You
will obtain the consent of the General Counsel of Rowan to your
selection of legal counsel for this purpose, which consent shall
not be unreasonably withheld.
9. Continuation of Personnel. From and after
September 1, 2008, you agree that you have not terminated and
you will not terminate any officer or executive of the Company
without prior consultation with and express consent of the
Board.
5
10. Legal Fees and Expenses. In any action arising out of
this Agreement, the prevailing party shall be entitled to his or
its costs of action, including but not limited to reasonable
attorneys’ fees and the fees of experts.
11. Clawback. In the event it is discovered after the
Separation Date that you committed fraud or engaged in intentional
misconduct that would have required disclosure under federal
securities laws during the time period from January 1, 2006
through the Separation Date (the “applicable period”),
you shall reimburse the Company for (i) any bonus and other
incentive-based or equity-based compensation received by you from
the Company during the applicable period, and (ii) any profits
realized from the sale of shares of the Company issued upon the
exercise of stock options or the vesting of restricted shares or
performance shares during the applicable period.
12. Assignment; Successors; Binding Agreement.
(a) Except
as otherwise provided in this Section 12, this Agreement may
not be assigned by either party without the prior, written consent
of the other party.
(b) This
Agreement shall extend to and be binding upon any successor
(whether direct or indirect, by purchase, merger, consolidation,
liquidation or otherwise) to all or substantially all of the
business and/or assets of Rowan. Additionally, Rowan shall require
any such successor by written agreement to expressly assume and
agree to perform all of the obligations of Rowan under this
Agreement upon or prior to such succession taking place. A copy of
such assumption and agreement shall be delivered to you promptly
after its execution by the successor. As used in this Agreement,
“Rowan” shall have the meaning ascribed to it in the
first paragraph of this Agreement and, except in determining under
Item A.8.E of the Attachment whether or not any “Change
in Control” has occurred, shall include any successor to its
business or assets as aforesaid, whether or not such successor
executes and delivers the agreement provided for in this
Section 12(b). Failure of Rowan to obtain such agreement prior
to the effectiveness of any such succession shall be a breach of
this Agreement, but shall not adversely affect your rights under
this Agreement as to either Rowan or the successor.
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