Exhibit 10.35

 

GLOBALSANTAFE

 

PENSION EQUALIZATION PLAN

 

ARTICLE I

 

PURPOSE

 

The GlobalSantaFe Pension Equalization Plan (the “Plan”) constitutes an
amendment and restatement in its entirety of the GlobalSantaFe Benefit
Equalization Retirement Plan, formerly known as the Global Marine Benefit
Equalization Retirement Plan (the “Prior Plan”), and merger with the Equity
Restoration Plan of GlobalSantaFe Corporation, formerly known as the Equity
Restoration Plan of Santa Fe International Corporation (the “Legacy Santa Fe
Plan”). Effective as of July 1, 2002, this Plan supercedes the Prior Plan and
the Legacy Santa Fe Plan, and the rights of all Participants who are active
participants in the Plan on or after the Effective Date shall be governed by the
terms of this Plan. Except to the extent otherwise expressly provided in the
Plan or as required to reflect the fact that the benefits of Prior Plan
participants and Legacy Santa Fe Plan Participants accrued under the Prior Plan
or the Legacy Santa Fe Plan are continued under this Plan, the provisions of
this Plan shall apply only to a Participant who terminates employment with the
Company and its Affiliates on or after July 1, 2002.

 

1.1 Purpose of the Plan: The purpose of this Plan is generally to provide the
amount of the benefit that would otherwise be paid under the Pension Plans, as
in effect on the applicable date, but which cannot be paid under these plans on
account of (a) the limitations of Section 401(a)(17) of the Internal Revenue
Code of 1986, as amended (the “Code”), which limits the annual compensation that
may be taken into account in computing benefits under the Pension Plans to
$200,000 (or such other dollar amount as may be prescribed by the Secretary of
the Treasury or his or her delegate), and (b) Section 415 of the Code, which
limits the benefits and contributions under qualified plans.

 

1.2 ERISA Status: Program A of the Plan, detailed in Article III below, is
intended to qualify for the exemptions provided under Title I of the Employee
Retirement Income Security Act of 1924, as amended from time to time (“ERISA”),
for plans that are not qualified under Code Section 401(a) and that are
maintained primarily to provide deferred compensation for a select group of
management or highly compensated employees. Program B of the Plan, set forth in
Article IV below, is intended to qualify for the exemptions provided under Title
I of ERISA for plans that are excess benefit plans as defined in Section 3(36)
of ERISA.

 

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ARTICLE II

 

DEFINITIONS

 

Except as otherwise indicated, for purposes of the Plan, the terms listed below
shall be defined as follows:

 

Affiliate: The term “Affiliate” shall have the identical meaning of that term as
set out in the Pension Plan.

 

Basic Earnings: The term “Basic Earnings” shall have the identical meaning of
that term as set forth in the Pension Plans, only without regard to the
limitations imposed by Section 401(a)(17) of the Code. Salary continuation
payments made pursuant to a severance plan, program, agreement or policy
maintained by the Company, or any Affiliate by which the Participant was
employed, shall be included in a Participant’s “Basic Earnings,” provided that
salary continuation payments are so included under the Pension Plans. Lump-sum
severance payments, however, shall not be included in a Participant’s “Basic
Earnings,” unless the Participant is covered by an enforceable severance
agreement that augments the Participant’s pension benefit by adding years of
service. In the event that a Participant is covered by such an agreement, any
lump-sum severance payment based on a multiple or percentage of salary shall be
included and shall be deemed to accrue over the shorter of (a) the period of
time that amounts would normally have been paid had the Participant’s salary at
the time of termination continued until the severance payments were exhausted or
(b) the number of years of service imputed by the Participant’s severance
agreement.

 

Benefits Executive Committee: The committee established by the Board to
administer the Plan.

 

Board: The Board of Directors of the Company.

 

Bonus: The term “Bonus” shall have the identical meaning of that term as set out
in the Pension Plans, only without regard to the limitations imposed by Section
401(a)(17) of the Code. Bonus continuation payments made pursuant to a severance
plan, program, agreement or policy maintained by the Company, or any Affiliate
by which the Participant was employed, shall be included in a Participant’s
“Bonus,” provided that bonus continuation payments are so included under the
Pension Plans. Lump-sum severance payments, however, shall not be included in a
Participant’s “Bonus,” unless the Participant is covered by an enforceable
severance agreement that augments the Participant’s pension benefit by adding
years of service. In the event that a Participant is covered by such an
agreement, any lump-sum severance payment based on a multiple or percentage of
deemed bonus shall be included and shall be deemed paid as follows: (a) any
payment based on a multiple of deemed bonus shall be divided by the multiplier
and each fraction thereof shall constitute a single annual “Bonus,” which shall
be deemed paid on the customary annual bonus date (as determined by the Benefits
Executive Committee) over the number of years represented by the multiplier and
(b) any payment that is 100%

 

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or less than the deemed bonus shall be deemed to be paid on the customary bonus
date next following the date of the Participant’s termination of employment.

 

Code: The Internal Revenue Code of 1986, as amended from time to time.

 

Company: GlobalSantaFe Corporate Services Inc.

 

Effective Date: July 1, 2002.

 

ERISA: The Employee Retirement Income Security Act of 1974, as amended from time
to time.

 

Legacy Santa Fe Plan: The Equity Restoration Plan of GlobalSantaFe Corporation,
as in effect on June 30, 2002.

 

Lump-Sum Equivalent: With respect to any benefit hereunder, a lump-sum payment
equal in value at date of determination to such benefit when determined
actuarially, based upon the mortality table and interest rate used in the
Pension Plan.

 

Participant: An employee of the Company or its Affiliate who qualifies for
participation in the Plan under Sections 3.2 and/or 4.2 of the Plan.

 

Plan: The GlobalSantaFe Pension Equalization Plan, effective July 1, 2002, and
as thereafter may be amended from time to time.

 

Plan Administrator: The committee described in Section 7.1 of the Plan.

 

Prior Plan: The GlobalSantaFe Benefit Equalization Retirement Plan, as in effect
on June 30, 2002.

 

Pension Plan: Either (a) the GlobalSantaFe Retirement Plan for Employees, as
amended and restated effective July 1, 2002, and as thereafter may be amended
from time to time (and any successor thereto) or (b) the Pension Plan for the
Employees of the GlobalSantaFe Corporation, as amended and restated effective
July 1, 2002, and as thereafter may be amended from time to time (and any
successor thereto), whichever is applicable. The term “Pension Plans” shall
refer to both aforementioned plans or their successors by merger or otherwise.

 

ARTICLE III

 

PROGRAM A: RESTORATION OF BENEFITS REDUCED BY SECTION 401(A)(17)

 

3.1 Purpose: Section 401(a)(17) of the Code limits the amount of compensation
that may be taken into account under a qualified plan for any year to $200,000
(or such other dollar amount as may be prescribed by the Secretary of the
Treasury or his or her delegate). The purpose of Program A is to restore to
Participants any benefits that would have been available to them under the
Pension Plans had the limitations of Section 401(a)(17) of the Code not been
imposed.

 

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3.2 Participation: In order to participate in Program A of this Plan, an
individual must (a) have experienced a reduction in the benefits he would have
received from his Pension Plan as a result of the Code Section 401(a)(17)
limitations on the amount of annual compensation that may be included in the
calculation of benefits and (b) be a member of a select group of management or
highly compensated employees (as those terms are set forth in Section 201(2) of
ERISA) who are identified by the Plan Administrator.

 

3.3 Amount of Benefit:

 

(a) The benefit payable under Program A will be equal to (i) less (ii) below:

 

  (i) the monthly benefit for the Participant calculated under the Pension Plans
using the Participant’s Basic Earnings and Bonus without regard to the
limitations of Section 401(a)(17) of the Code, as amended, or any successor
sections of the Code; less

 

  (ii) the monthly benefit calculated and payable under the Pension Plans.

 

(b) For purposes of subsections (a)(i) and (ii), each Pension Plan benefit shall
be converted into a single life annuity commencing on the later of the
Participant’s normal retirement date under the Pension Plan or the date benefits
are paid under this Plan.

 

(c) The amount in subsection (a) will be subject to limits described in Article
V.

 

(d) Benefits under this Article III will be paid only to supplement benefits
actually payable from the Pension Plans.

 

ARTICLE IV

 

PROGRAM B: RESTORATION OF BENEFITS REDUCED BY SECTION 415

 

4.1 Purpose: Section 415 of the Code limits the benefits and contributions under
qualified plans. The purpose of Program B is to restore to Participants any
benefits that would have been available to them under the Pension Plans had the
limitations of Section 415 of the Code not been imposed.

 

4.2 Participation: In order to participate in Program B of this Plan, an
individual must (a) have experienced a reduction in the benefits he would have
received from a Pension Plan as a result of the Code Section 415 limitations and
(b) be selected for participation by the Plan Administrator.

 

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4.3 Amount of Benefit:

 

(a) The benefit payable under Program B will be equal to (i) less (ii) below:

 

  (i) the monthly benefit for the Participant calculated under the Pension Plans
using the Participant’s Basic Earnings and Bonus without regard to the
limitations of Section 415 of the Code, as amended, or any successor sections of
the Code; less

 

  (ii) the monthly benefit calculated and payable under the Pension Plans.

 

(b) For purposes of subsections (a)(i) and (ii), each Pension Plan benefit shall
be converted into a single life annuity commencing on the later of the
Participant’s normal retirement date under the Pension Plan or the date benefits
are paid under this Plan.

 

(c) The amount in subsection (a) will be subject to limits described in Article
V.

 

(d) Benefits under this Article IV will be paid only to supplement benefits
actually payable from the Pension Plans.

 

ARTICLE V

 

MAXIMUM BENEFIT

 

5.1 In the event that a Participant is eligible for both Program A and Program
B, the aggregate benefit shall not exceed an amount equal to (a) less (b) below:

 

(a) the monthly benefit for the Participant calculated under the Pension Plans
using the Participant’s Basic Earnings and Bonus without regard to the
limitations of Sections 401(a)(17) and 415 of the Code, as amended, or any
successor sections of the Code; less

 

(b) the monthly benefit calculated and payable under the Pension Plans.

 

For purposes of subsections (a) and (b), each Pension Plan benefit shall be
converted into a single life annuity commencing on the later of the
Participant’s normal retirement date under the Pension Plan or the date benefits
are paid under this Plan.

 

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ARTICLE VI

 

VESTING AND BENEFIT PAYMENT

 

6.1 Form and Timing of Payment: The monthly benefit determined to be payable
under this Plan shall be converted to a Lump-Sum Equivalent benefit. The
lump-sum amount so determined shall be payable to the Participant, spouse or
beneficiary at the time of the Participant’s termination from the Company and
its Affiliates.

 

Notwithstanding the foregoing, in the event that a Participant who is not on the
payroll of the Company or its Affiliates as of December 31, 2002, is entitled to
an additional benefit attributable to an imputed age and/or additional years of
service conferred by an enforceable severance agreement (“Enhanced Benefit”),
the portion of the Enhanced Benefit computed by applying the imputed age and
additional years of service to the Participant’s Basic Earnings and Bonus, as
limited by Code Section 401(a)(17), shall be paid in the same form as the
Participant’s Pension Plan benefit unless the Company has approved payment in
accordance with any other optional form described in the Pension Plan. For
purposes of the preceding sentence, the remaining portion of the Enhanced
Benefit computed by applying the imputed age and additional years of service to
the Participant’s Basic Earnings and Bonus without the Code Section 401(a)(17)
limit shall be paid in the form of a lump sum.

 

6.2 Vesting: A Participant shall become vested in the benefit payable under this
Plan at the same time that he becomes vested under the Pension Plans.

 

6.3 Effect of an Agreement: Benefits under the Plan may be increased, decreased
or otherwise modified by any legally binding contractual agreement between a
Participant and the Company or GlobalSantaFe Corporation. In addition, benefits
payable under the Prior Plan and Legacy Santa Fe Plan may be increased,
decreased or otherwise modified as described in the preceding sentence, provided
that the benefits were payable to a Participant who terminated employment with
the Company and its Affiliates between November 20, 2001 and July 1, 2002 and,
at the time of the Participant’s termination of employment, the Participant was
covered by an enforceable severance agreement that augmented the Participant’s
pension benefit by adding years of service.

 

6.4 SERP Offset Calculation: The monthly benefit payable under this Plan shall
offset the benefit, if any, payable under the GlobalSantaFe Supplemental
Executive Retirement Plan (the “SERP”). Pursuant to subsection (d) of the SERP’s
definition of “Normal Retirement Benefit,” the benefit payable under this Plan
shall, for purposes of the offset, be converted into a single life annuity
commencing on the later of the Participant’s normal retirement date under the
Pension Plan or the date benefits are paid under this Plan.

 

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ARTICLE VII

 

MISCELLANEOUS

 

7.1 Administration and Interpretation: The Plan shall be administered by the
Benefits Executive Committee. The determination of the Benefits Executive
Committee as to any disputed questions arising under this Plan, including
questions of construction and interpretation, shall be final, binding and
conclusive upon all persons. Benefits under this Plan will be paid only if the
Plan Administrator decides in its discretion that the claimant is entitled to
them.

 

7.2 Expenses: The expenses of administering the Plan shall be borne by the
Company.

 

7.3 Indemnification and Exculpation: The members of the Benefits Executive
Committee, its agents, and officers, directors and employees of the Company and
its Affiliates shall be indemnified and held harmless by the Company against and
from any and all loss, cost, liability or expense that may be imposed upon or
reasonably incurred by them in connection with or resulting from any claim,
action, suit or proceeding to which they may be a party or in which they may be
involved by reason of any action taken or failure to act under this Plan and
against and from any and all amounts paid by them in settlement (with the
Company’s written approval) or paid by them in satisfaction of a judgment in any
such action, suit or proceeding. The foregoing provision shall not be applicable
to any person if the loss, cost, liability or expense is due to such person’s
gross negligence or willful misconduct.

 

7.4 Amendment: The Plan may be amended, in whole or in part, by action of the
Board, in its sole discretion, or, to the extent permissible under the
GlobalSantaFe Benefits Executive Committee Charter and Mandates, by action of
the Benefits Executive Committee. Benefits under the Plan may be increased,
decreased or otherwise modified by any legally binding contractual agreement
between a Participant and the Company or GlobalSantaFe Corporation.

 

7.5 Termination: The Board may, at its sole discretion, terminate, suspend or
amend the Plan at any time or from time to time, in whole or in part.

 

7.6 Not an Employment Agreement: Nothing contained in this Plan is intended to
nor shall it confer upon any Participant the right to be retained in the service
of the Company and its Affiliates, nor shall the existence of this Plan
interfere with the right of the Company and its Affiliates to terminate, lay
off, discharge or otherwise deal with any Participant.

 

7.7 Funding: All payments under this Plan shall be made from the general assets
of the Participant’s employer during the period the Participant accrued benefits
under this Plan. In the event that a Participant changed employers during the
period of benefit accrual under this Plan, each employer shall fund the
Participants’ payment under this Plan to the extent that the payment reflects
benefits accrued during the Participant’s

 

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tenure with such employer. Each Participant remains a general, unsecured
creditor of the employer responsible for funding the Participant’s payments
under this Plan with respect to benefits accrued or paid under this Plan.

 

7.8 Severability: In the event any provision of the Plan shall be held illegal
or invalid for any reason, any illegality or invalidity shall not affect the
remaining parts of the Plan, but the Plan shall be construed and enforced as if
the illegal or invalid provision had never been inserted, and the Company shall
have the privilege and opportunity to correct and remedy such questions of
illegality or invalidity by amendment as provided in the Plan.

 

7.9 Assignment of Benefits: A Participant may not, either voluntarily or
involuntarily, assign, anticipate, alienate, commute, pledge or encumber any
benefits to which he is or may become entitled to under the Plan, nor may the
same be subject to attachment or garnishment by any creditor of a Participant.

 

7.10 Tax Withholding: Such sum may be withheld from the lump-sum payment payable
under the Plan for any federal, state or local taxes required by law to be
withheld with respect to such payment, as the Company may reasonably estimate is
necessary to cover any taxes that may be assessed with regard to such payment.

 

7.11 Use and Form of Words: Words used herein in the masculine gender shall be
construed as also used in the feminine gender where they would so apply, and
vice versa. Words used in the singular form shall be construed as also used in
the plural form where they would so apply, and vice versa.

 

7.12 Effect on Other Plans: Amounts accrued or paid under this Plan shall not be
considered compensation for the purposes of the Company’s other employee benefit
plans. All amounts paid under this Plan will be a reduction of benefits
calculated and payable under the GlobalSantaFe Supplemental Executive Retirement
Plan.

 

7.13 Guarantee: By executing this Plan, GlobalSantaFe Corporation agrees to
guarantee the payment of all benefits payable hereunder.

 

7.14 Applicable Law: This Plan shall be governed and construed in accordance
with the laws of the State of Texas.

 

7.15 Scope: This Plan is intended only to remedy Pension Plan benefit reductions
caused by the operation of Sections 415 and/or 401(a)(17) of the Code and not
reductions for any other reason.

 

7.16 Plan Termination: No further benefits may be earned by a Participant under
this Plan after the termination of the Pension Plans, provided that the merger
of the Pension Plan for the Employees of the GlobalSantaFe Corporation with and
into the GlobalSantaFe Retirement Plan for Employees shall not be considered a
termination of either Pension Plan.

 

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IN WITNESS WHEREOF, this Plan, as amended and restated, has been executed as of
the 2nd day of December, 2003, but effective as of July 1, 2002.

 

GLOBALSANTAFE CORPORATION

By

 

/s/ Cheryl D. Richard

   

Cheryl D. Richard, Senior Vice President,

   

Human Resources

GLOBALSANTAFE CORPORATE SERVICES INC.

By

 

/s/ Richard E. McClaine

   

Richard E. McClaine, Vice President

 

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