in the aggregate amount of U.S. $[____] (the “Incentive Bonus”), which amount represents the target award and which is the maximum amount that may be earned and payable under the award. Subject to your acceptance of this Agreement, including your repayment obligations, the Company will advance and prepay the target amount of the Incentive Bonus, net of applicable taxes and withholdings, on or before August 31, 2020.
(b)The Incentive Bonus is subject to both performance-based and service-based vesting conditions. Except as otherwise provided herein, the Incentive Bonus will be earned and vested (i) based on the Parent and its subsidiaries’ level of achievement of the performance metrics described below during the third and fourth quarters of the 2020 fiscal year (the “Performance Period”), and (ii) provided you remain employed and in good standing through the Vesting Date. The performance metrics consist of (i) incremental backlog, (ii) health, safety and environmental (“HSE”) performance, and (iii) contract drilling costs (per day) (the “Performance Metrics”), weighted equally as described on Appendix A.
With respect to each Performance Metric, 50% of the target amount will vest based on achievement of “threshold” performance levels during the Performance Period, 100% of the target amount will vest based on achievement of “target” performance levels during the Performance Period, and 150% of the target amount will vest based on achievement of “stretch” performance levels during the Performance Period. As noted, no amount above the target pre-paid amount will be earned or payable; however, in connection with the determination of any clawback applicable to the Incentive Bonus, performance above target for one Performance Metric will be used to offset performance below target for another Performance Metric.
(c)During the first quarter of 2021, the Board of Directors of Parent, acting in good faith, will determine the level of achievement of the Performance Metrics and the percentage of the target amount of the Incentive Bonus, if any, earned as a result of such achievement. You will be required to repay the Net After-Tax Value of the unearned portion of the target Incentive Bonus in the event the target Performance Metrics are not met, subject to the right of offset discussed above. Any required repayment of the target Incentive Award under this Section 2(c) must be made promptly following the Parent’s determination of the level of achievement of the Performance Metrics and in all events within twenty (20) calendar days following the date of the Company notifies you that a repayment is due.
(d)Except as provided below, you will also be required to repay the Net After-Tax Value of the target Incentive Bonus, less any amount previously repaid pursuant to Section 2(c) above, if your employment with the Company terminates prior to the Vesting Date. Notwithstanding the foregoing, if your employment terminates prior to the Vesting Date as a result of a Qualifying Termination and the condition set forth in Section 3 is satisfied, the Incentive Bonus will not be required to be repaid, except for any amounts due pursuant to Section 2(c). Any required repayment of the target Incentive Bonus under this Section 2(d) must be made within sixty (60) calendar days following the date of your termination of employment with the Company.
3.Release Condition. Your eligibility and entitlement to retain any amounts under Sections 1 and 2 of this Agreement in connection with a Qualifying Termination (other than due to death) is dependent upon your execution and delivery to the Company, on or before the Release Expiration Date (as defined below), and non-revocation within any time provided by the Company to do so, of a release of all claims in a form provided by the Company (the “Release”), which Release shall release the Company and its affiliates, and the foregoing entities’ respective shareholders, members, partners, officers, managers, directors, fiduciaries, employees, representatives, attorneys, agents and benefit plans (and fiduciaries of such plans), from any and all claims, including any and all causes of action arising out of your employment with the Company or its affiliates or the termination of such employment, but excluding all claims to payments you may have under this Agreement or any vested rights or benefits under any of the Company’s benefit plans or any other agreement in which you are party to immediately prior to your termination of employment. If the Release is not executed and returned to the Company on or before the Release Expiration Date, and the required revocation period has not fully expired without revocation of the Release by you, then you shall not be entitled to any portion of payments under Sections 1 and 2. As used herein, the “Release Expiration Date” is that date that is twenty-one (21) days following the date upon which the Company delivers the Release to you (which shall occur no later than seven (7) days after the date of the Qualifying Termination) or, in the event that such termination of employment is “in connection with an exit