EXHIBIT 10.06
August 15, 2001
T. Xxx Xxxxxxx
President
Oceaneering International, Inc.
00000 XX000
Xxxxxxx, Xxxxx 00000
Re: Change of Control Agreement ("COC Agreement")
Dear Xx. Xxxxxxx:
Oceaneering International, Inc. (the "Company") considers the establishment and
maintenance of a sound and vital management to be essential for the protection
and enhancement of the best interests of the Company and its shareholders. The
Company recognizes that, as is the case with many publicly-held corporations,
the possibility of a "Change of Control" (as defined herein) may arise and that
such possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its shareholders. Accordingly, the Board of
Directors of the Company (the "Board") has determined that appropriate steps
should be taken to assure the Company of the continuation of your service and to
reinforce and encourage the attention and dedication of members of the Company's
management to their assigned duties without distraction in circumstances arising
from the possibility of a Change of Control of the Company. In particular the
Board believes it important, should the Company or its shareholders receive a
proposal for or notice of transfer of control of the Company, or consider one
itself, that you be able to assess and advise the Company whether such transfer
would be or is in the best interests of the Company and its shareholders, and to
take such other action regarding such transfer as the Board might determine to
be appropriate without being influenced by the uncertainties of your own
situation.
In order to induce you to remain in the employ of the Company, this letter
agreement (the "Agreement"), prepared pursuant to authority granted by the Board
and which supercedes and replaces the previous Senior Executive Severance
Agreement dated October 4, 1993 between you and the Company, sets forth the
compensation and severance benefits which the Company agrees will be provided to
you should your employment with the Company be terminated in connection with a
Change of Control under the circumstances described below as well as certain
other benefits which will be made available to you.
Reference is made to Annex I hereto for definitions of certain terms used in
this Agreement, and such definitions are incorporated herein by such reference
with the same effect as if set forth herein. Certain capitalized terms used in
this Agreement in connection with the description of various Plans are defined
in the respective Plans, but if any conflicts with a definition herein
contained, this Agreement shall prevail.
1. Termination of Employment in Connection with a Change of Control.
(a) During the Effective Period, if there is a termination of your
employment with the Company either by the Company without
Cause or by you for Good Reason either (x) prior to the
Effective Date, unless it is reasonably demonstrated by the
Company that such termination of your employment
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(a) was not at the request of a third party who has taken
steps reasonably calculated to effect the Change of Control
and (b) otherwise did not arise in connection with or
anticipation of the Change of Control or (y) on or after the
Effective Date, commences during the life of this Agreement
you shall be entitled to the following benefits:
(i) all benefits conferred upon you by the Severance
Package, and
(ii) in addition, all benefits payable under the provisions
either of the Plans and Other Plans in which you are a
participant immediately prior to the Effective Date, or
of those plans in existence at the time of your
Termination Date or pursuant to any other agreement
between you and the Company, whichever are more
favorable to you, in accordance with the terms and
conditions of such Plans or Other Plans, such benefits
to be paid under such Plans or Other Plans and not under
this Agreement to the extent they are more favorable to
you.
(b) You shall also be entitled to any such benefits if your
termination results from your death or Disability if your
death or Disability occurs:
(i) during the Effective Period but after the Effective
Date, and
(ii) with respect to the benefits conferred by the Severance
Package only, after either it has been decided that you
will be terminated without Cause during the Effective
Period, or you have given notice of termination for Good
Reason during the Effective Period;
(c) You shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other
employment, nor shall the amount of any payment provided for
in this Agreement be reduced by any compensation earned by you
as the result of employment by another Person after any
Termination Date.
2. Procedures for Termination of Employment.
If your employment be terminated or intended to be terminated:
(a) For Cause, the Company shall transmit to you written notice
setting forth the Cause for which you are proposed to be
dismissed in sufficient detail to permit a reasonable
assessment of the bona fides thereof, and setting a meeting of
the Board not less than 30 days following the date of such
notice at which the Board shall consider your termination and
at which you and your counsel shall have the opportunity to be
heard, following which the Board shall either by resolution
withdraw the notice, or if it so finds in its good faith
opinion, issue its report within 10 days thereafter that Cause
exists and specifying the particulars of its findings, in
which latter event a "final notice" shall occur. After receipt
of a "final notice" of intended termination for Cause, you may
contest such "final notice" in any court described in Section
4(b)(i) and all provisions of this Agreement, shall be
continued until a Termination Date is determined pursuant to
such contest. Within 10 days
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following the commencement of any such contest, the Company
must escrow all amounts which would have been due pursuant to
Section 1(a) if the "final notice" were not valid at a bank of
your choice. Should the contest result from which no further
appeal is possible find that:
(i) "final notice" is valid then the Termination Date shall
be the date no further appeal is possible;
(ii) "final notice" is not valid then the Termination Date
shall be the date no further appeal is possible.
(b) For Good Reason, you shall transmit to the Company written
notice setting forth the Good Reason for which you are
proposed to terminate your employment in sufficient detail to
permit a reasonable assessment of the bona fides thereof. The
Board shall issue a resolution to you not more than 10 days
following the date of such notice as to either:
(i) Their Acceptance - In the event the Board accepts your
notice of Good Reason, then the Termination Date is
established and you are entitled to receive the amounts
pursuant to Section 1(a); or
(ii) Their Rejection - In the event the Board rejects your
notice of Good Reason, then (A) the Company must escrow
within 10 days following the rejection the amounts which
would have been due pursuant to Section 1(a) if your
termination for Good Reason had been accepted at a bank
of your choice, (B) you must proceed to dispute
resolution pursuant to Section 4, and (C) all provisions
of this Agreement shall be continued until a termination
is determined pursuant to such dispute resolution from
which no further appeal is possible. The Termination
Date shall be the date on which no further appeal is
possible.
3. Excise Tax.
(a) Any other provision of this Agreement to the contrary
notwithstanding, if the present value (as defined herein) of
the total amount of payments and benefits to be paid or
provided to you under this Agreement which are considered to
be "parachute payments" within the meaning of Section 280G(b)
of the Internal Revenue Code of 1986, as amended (the "Code"),
when added to any other such "parachute payments" received by
you from the Company upon or after a Change of Control,
whether or not under this Agreement, is in excess of the
amount you can receive without causing you to be subject to an
excise tax with respect to such amount on account of Code
Section 4999, the Company shall pay to you an additional
amount (hereinafter referred to as the "Excise Tax Premium").
The Excise Tax Premium shall be equal to the excise tax
determined under Code Sections 280G and 4999 attributable to
the total amount of payments and benefits to be paid or
provided to you under this Agreement and any other "parachute
payments" received by you upon or after a Change of Control.
The Excise Tax Premium shall also include any amount
attributable to excise tax on the Excise Tax Premium. The
Company shall also pay to you an additional
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amount (the "Additional Amount") such that the net amount
received by you, after paying any applicable Excise Tax
Premium and any federal or state income, excise or other tax
on such additional amount, shall be equal to the amount that
you would have received if such Excise Tax Premium were not
applicable. You shall be deemed to pay income taxes on the
date of termination of your employment at the highest marginal
rate of income taxation in effect in your taxing jurisdiction.
The Additional Amount shall include any amount attributable to
income, excise or other tax on the Additional Amount.
(b) Not later than 30 days following your Termination Date or, if
later, the Effective Date, as provided herein, the independent
public accountants acting as auditors for the Company on the
date of the Change of Control (or another accounting firm
designated by you) shall determine whether the sum of the
present value of any "parachute payments" payable under this
Agreement and the present value of any other "parachute
payments" received by you from the Company upon or after a
Change of Control is in excess of the amount you can receive
without causing you to be subject to an excise tax with
respect to such amount on account of Code Section 4999, and
shall determine the amount of any Excise Tax Premium and
Additional Amount payable to you. The Excise Tax Premium and
Additional Amount shall be paid to you as soon as practicable
but in no event later than 30 days following your Termination
Date, and shall be net of any amounts required to be withheld
for taxes.
(c) For purposes of this Section 3, "present value" means the
value determined in accordance with the principles of Section
1274(b)(2) of the Code under the rules provided in Treasury
Regulations under Section 280G of the Code.
(d) References to Code Section 280G herein are specific references
to Section 280G as added to the Code by the Tax Reform Act of
1984 and as amended by the Tax Reform Act of 1986. To the
extent Code Section 280G is again amended prior to the
termination of this Agreement, or is replaced by a successor
statute, the provisions of this Section 3 shall be deemed
modified without further action of the parties in a manner
consistent with such amendments or successor statutes, as the
case may be. In the event that Code Section 280G or any
successor statute is repealed, this Section 6 shall cease to
be effective on the effective date of such repeal. The parties
recognize that Treasury Regulations under Code Sections 280G
and 4999 may affect the amount that may be paid hereunder and
agree that, upon the issuance of any such regulations, this
Agreement may be modified as in good faith may be deemed
necessary in light of the provisions of such regulations to
achieve the purposes hereof, and that consent to such
modifications shall not be unreasonably withheld.
(e) The foregoing notwithstanding, if you receive payment from the
Company for reimbursement of any excise taxes pursuant to any
other agreement, to the extent any Excise Tax Premium under
this Agreement be duplicative, you shall not be entitled to
receive payment of such an Excise Tax Premium.
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4. Dispute Resolution.
(a) This Agreement shall be governed in all respects, including as
to validity, interpretation and effect, by the internal laws
of the State of Texas without regard to choice of law
principles.
(b) It is irrevocably agreed that if any dispute arises with
respect to any action, suit or other legal proceeding
pertaining to this Agreement or to the interpretation of or
enforcement of any of your rights hereunder under this
Agreement:
(i) the Company and you agree that exclusive jurisdiction
for any such suit, action or legal proceeding shall be
in the state district courts of Texas sitting in Xxxxxx
County, Texas;
(ii) we are each at the time present in Texas for the
purpose of conferring personal jurisdiction;
(iii) the Company and you each consent to the jurisdiction of
each such court in any such suit, action or legal
proceeding and will comply with all requirements
necessary to give such court jurisdiction;
(iv) the Company and you each waive any objection it may
have to the laying of venue of any such suit, action or
legal proceeding in any of such court;
(v) the Company and you each waive any objection or right
to removal that may otherwise arise in any such suit,
action or legal proceeding;
(vi) any such suit, action or legal proceeding may be
brought in such court, and any objection that the
Company or you may now or hereafter have to the venue
of such action or proceeding in any such court or that
such action or proceeding was brought in an
inconvenient court is waived;
(vii) service of process in any such suit, action or legal
proceeding may be effected by mailing a copy thereof by
registered or certified mail, return receipt requested
(or any substantially similar form of mail), postage
prepaid, to such party provided in Section 7 hereof;
and
(viii) prior to any trial on the merits, the Company and you
will submit to court supervised, non-binding mediation.
(c) Notwithstanding any contrary provision of Texas law, the
Company shall have the burden of proof with respect to any of
the following:
(i) that Cause existed at the time any notice was given to
you under Section 2;
(ii) that Good Reason did not exist at the time notice was
given to the Company under Section 2;
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(iii) that the Company is not in default in performance of
its obligations under this Agreement;
(iv) that the termination of your employment was not at the
request of a third party who has taken steps reasonably
calculated to effect the Change of Control and
otherwise did not arise in connection with or
anticipation of the Change of Control; and
(v) that a Change of Control has not occurred.
5. Successors; Binding Agreement.
(a) In the event any Successor does not assume this Agreement by
operation of law the Company will seek to have any Successor,
by agreement in form and substance satisfactory to you,
expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be
required to perform it. If there has been a Change of Control
prior to, or a Change of Control will result from, any such
succession, then failure of the Company to obtain at your
request such agreement prior to or upon the effectiveness of
any such succession (unless assumption occurs as a matter of
law) shall constitute Good Reason for termination by you of
your employment and, upon delivery of a notice of termination
by you to the Company, you shall be entitled to the benefits
provided for herein.
(b) This Agreement shall inure to the benefit of and be
enforceable by your personal and legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees.
6. Fees and Expenses.
The Company shall pay all legal and other costs (including but not
limited to, administrative, accounting, tax, human resource and
expert witness fees and expenses) incurred by you as a result of
your seeking to obtain, assert or enforce any right or benefit
conferred upon you by this Agreement.
You shall prepare an estimate of any fees you expect to incur in the
following 90 days and claim reimbursement for under this Section 6
no later than 10 days after notice by you to the Company that you
intend to seek legal representation under this Agreement. The
Company shall pay such estimates to you within 10 days of your
notice. At the end of the 90 days, and each 90 days thereafter, you
shall prepare a subsequent estimate and submit it to the Company
within 10 days and the Company agrees to pay all subsequent such
estimates to you within 10 days of each notice until the matter has
been resolved. After the matter has been resolved, you will submit
an appropriate accounting of actual expenses and estimates; such
that:
(i) if estimates paid to you exceed actuals, you will
promptly submit a refund to the Company; or
(ii) if actuals exceed estimates paid to you, you will submit
a final request for reimbursement from the Company,
which the Company will promptly pay.
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7. Notices.
Any and all notices required or permitted to be given hereunder
shall be in writing and shall be deemed to have been given when
delivered in person to the persons specified below or deposited in
the United States mail, certified or registered mail, postage
prepaid and addressed as follows:
If to the Company: Oceaneering International, Inc.
00000 XX 000
Xxxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
If to you: T. Xxx Xxxxxxx
0 Xxxxx Xxxxx
Xxxxxxx, XX 00000
Either party may change, by the giving of notice in accordance with
this Section 7, the address to which notices are thereafter to be
sent.
8. Indemnity.
You will receive, to the fullest extent possible and to such greater
extent as applicable law hereafter may permit, indemnity from the
Company on terms at least as favorable as that provided under (i)
any Indemnity Agreement of the Company to which your are a party or
an intended beneficiary, or (ii) the Company's Bylaws as in effect
on the Effective Date or, if earlier, your Termination Date.
9. Validity.
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force
and effect.
10. Survival.
All obligations undertaken and benefits conferred pursuant to this
Agreement, shall survive any termination of your employment and
continue until performed in full.
11. Miscellaneous.
(a) No provision of this Agreement may be modified, waived or
discharged unless such modification, waiver or discharge is
agreed to in writing signed by you and the Company. No waiver
by either party hereto at any time of any breach by the other
party hereto of, or of compliance with, any condition or
provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not
expressly set forth in this Agreement.
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(b) Failure to pay within 10 days of a payment due date or notice
thereon (whether payment is disputed or not) will result in a
default under this Agreement. Past due amounts will accrue
interest and compound at the lesser of 2% per month or the
highest interest rate allowed by law.
12. Duplicate Originals.
This Agreement has been executed in duplicate originals, with one to
be held by each of the parties hereto.
If this letter correctly sets forth our understanding with respect to the
subject matter hereof, please sign and return one copy of this letter to the
Company.
Sincerely,
OCEANEERING INTERNATIONAL, INC.
BY /s/ Xxxx X. Xxxx
-----------------------
Xxxx X. Xxxx
Chief Executive Officer
Agreed to as of the 16th
day of November 2001:
/s/ T. Xxx Xxxxxxx
------------------
T. Xxx Xxxxxxx
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ANNEX I TO CHANGE OF CONTROL AGREEMENT DATED AUGUST 15, 2001
BETWEEN
OCEANEERING INTERNATIONAL, INC.
AND
T. XXX XXXXXXX
Definition of Certain Terms
"AGREEMENT" means this Change of Control Agreement between you and the Company
dated as of August 15, 2001.
"BOARD" means the Board of Directors of the Company.
"BYLAWS" means the bylaws of the Company, except as otherwise specified, as in
effect at the day hereof and as the same shall be amended or otherwise modified
to, but not on or after, any Change of Control.
"CAUSE" means your conviction by a court of competent jurisdiction, from which
conviction no further appeal can be taken, of a felony-grade crime involving
moral turpitude related to your employment with the Company.
"CHANGE OF CONTROL" means the earliest date at which:
(i) any Person is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of the combined
voting power of the Company's outstanding Voting Securities, other
than through the purchase of Voting Securities directly from the
Company through a private placement; or
(ii) individuals who constitute the Board on the date hereof (the
"Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of
at least two-thirds of the directors comprising the Incumbent Board
shall from and after such election be deemed to be a member of the
Incumbent Board; or
(iii) the Company is merged or consolidated with another corporation or
entity and as a result of such merger or consolidation less than
60% of the outstanding Voting Securities of the surviving or
resulting corporation or entity shall then be owned by the former
stockholders of the Company; or
(iv) a tender offer or exchange offer is made and consummated by a
Person other than the Company for the ownership of 20% or more of
the Voting Securities of the Company then outstanding; or
(v) all or substantially all of the assets of the Company are sold or
transferred to a Person as to which (a) the Incumbent Board does
not have authority (whether by law or contract) to directly control
the use or further disposition of such assets and (b) the financial
results of the Company and such Person are not consolidated for
financial reporting purposes.
9
Anything else in this definition to the contrary notwithstanding, no Change of
Control shall be deemed to have occurred by virtue of any transaction which
results in you, or a group of Persons which includes you, acquiring more than
20% of either the combined voting power of the Company's outstanding Voting
Securities or the Voting Securities of any other corporation or entity which
acquires all or substantially all of the assets of the Company, whether by way
of merger, consolidation, sale of such assets or otherwise.
"COMPANY" means Oceaneering International, Inc., a Delaware corporation,
headquartered in Houston, Texas.
"DISABILITY" means your continuing full-time absence from your duties with the
Company for 90 days or longer as a result of physical or mental incapacity,
which absence is anticipated to extend for 90 additional days or longer. Your
need for absence and its anticipated duration shall be determined solely by a
medical physician of your choice to be approved by the Company, which approval
shall not be unreasonably withheld.
"EFFECTIVE DATE" means the earliest date upon which (i) any of the events set
forth under the definition of Change of Control shall have occurred, (ii) the
receipt by the Company of a Schedule 13D stating the intention of any Person to
take actions which, if accomplished, would constitute a Change of Control, (iii)
the public announcement by any Person of its intention to take any such action,
in each case without regard for any contingency or condition which has not been
satisfied on such date, (iv) the agreement by the Company to enter into a
transaction which, if consummated, would result in a Change of Control, or (v)
consideration by the Board of a transaction which, if consummated, would result
in a Change of Control.
If, however, an Effective Date occurs but the proposed transaction to which it
relates ceases to be actively considered or it is not consummated within 12
months of such Effective Date, the Effective Period will be deemed not to have
commenced for purposes of this Agreement. If an Effective Date occurs with
respect to a proposed transaction which ceases to be actively considered but for
which active consideration is revived, the Effective Date with respect to the
Change of Control that ultimately occurs shall be that date when consideration
was revived and carried through to consummation.
"EFFECTIVE PERIOD" means the period beginning on the Effective Period
Commencement Date and ending on the Effective Period Conclusion Date.
"EFFECTIVE PERIOD COMMENCEMENT DATE" means the date falling one year prior to
the Effective Date.
"EFFECTIVE PERIOD CONCLUSION DATE" means the date falling two years after the
occurrence of a merger or consolidation set forth under clause (iii) of the
definition of Change of Control, but in no event later than three years after
the first event that constituted a Change of Control.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
"FISCAL YEAR BONUS PLAN" means for each year, the Company's fiscal year bonus
plan, or any other plan adopted by the Board which provides for the payment of
additional compensation or equity consideration on an annual basis to senior
executive officers contingent upon the Company's
10
performance, including stock performance and results of operations for that
specific year, in either case as such plan shall be amended or modified prior
to, but not on or after, any Termination Date.
"GOOD REASON" means any of the following:
(i) except as a result of your death or due to Disability, a change in
your status, title(s) or position(s) with the Company, including as
an officer of the Company, which, in your reasonable judgment, does
not represent a promotion, with commensurate adjustment of
compensation, from your status, title(s) and position(s)
immediately prior to the Effective Date; or the withdrawal from you
of any duties or responsibilities which in your reasonable opinion
are consistent with such status, title(s) or position(s); or any
removal of you from or any failure to reappoint or reelect you to
such position(s); or
(ii) a reduction by the Company in your annual Base Salary, SERP (or
equivalent), annual bonus opportunity or aggregate long term
incentive compensation in effect immediately prior to the Effective
Date and as may subsequently be increased thereafter; or
(iii) the failure by the Company to continue in effect any Plan in which
you were participating immediately prior to the Effective Date
other than as a result of the normal expiration or amendment of any
such Plan in accordance with its terms, or the taking of any
action, or the failure to act, by the Company which would adversely
affect your continued participation in any such Plan on at least as
favorable a basis to you as is the case immediately prior to the
Effective Date or which would materially reduce your benefits under
any of such Plans or deprive you of any material benefit enjoyed by
you immediately prior to the Effective Date, except as proposed by
you to the Company; or
(iv) the relocation of the principal place of your employment to a
location 25 miles further from your principal residence without
your express written consent; or
(v) the failure by the Company upon a Change of Control to obtain the
assumption of this Agreement by any Successor (other than by
operation of law); or
(vi) any refusal by the Company to continue to allow you to attend to
matters or engage in activities not directly related to the
business of the Company which you attended to or were engaged in
immediately prior to a Change of Control which do not otherwise
violate your obligations hereunder; or
(vii) any default by the Company in the performance of its obligations
under this Agreement, whether before or after a Change of Control.
"INDEMNITY AGREEMENT" means that certain agreement between you and the Company
dated as of November 16, 2001, and any successor thereto.
"LONG TERM INCENTIVE BONUS PLAN" means the Company's long term incentive plans
(including agreements issued thereunder, e.g., restricted stock agreements and
stock option agreements) or any other plan or agreement approved by the Board,
other than the Fiscal Year Bonus Plan, which provides for the payment of
additional compensation or equity consideration to senior executive officers
contingent on the Company's performance, including stock performance
11
and results of operations for a specific time period, and in either case, as
such plan may be amended or modified prior to, but not on or after, any
Termination Date.
"MARKET VALUE" when used with respect to a Share, means the mean between the
highest and lowest sales price per Share on the New York Stock Exchange or if
not listed thereon, on such other exchange as shall at the time constitute the
principal exchange for trading in Shares. If the Shares are not publicly traded,
the Market Value shall be as determined by an independent appraiser appointed by
you for such purpose.
"OTHER PLANS" means any thrift; bonus or incentive; stock option or stock
accumulation; pension; medical, disability, accident or life insurance plan,
program or policy of the Company which is intended to benefit employees of the
Company that are similarly situated to you (other than the Plans or as otherwise
provided to you in this Agreement).
"PERSON" means any individual, corporation, partnership, group, association or
other "person," as such term is used in Sections 13(d) and 14(d) of the Exchange
Act, other than the Company or any Plans sponsored by the Company.
"PERQUISITES" means individual perquisites benefits customarily provided to you
by the Company as of the date this Agreement is signed.
"PLANS" means the Fiscal Year Bonus Plan, the Long Term Incentive Bonus Plan and
the SERP.
"RESTRICTED STOCK AGREEMENTS" means any grant by the Company to you of Shares
which are, at the relevant time, subject to possible forfeiture.
"SERP" means the Company's Supplemental Executive Retirement Plan, as the same
shall be amended or modified to, but not on or after, any Effective Date.
"SEVERANCE PACKAGE" means your right to receive, and the Company's obligation to
pay and/or perform on, the following:
(a) On or within five days following an applicable Termination Date, the
Company shall pay to you a lump sum, cash amount equal to the
greater of:
(i) $2,025,000; or
(ii) the sum of:
(A) three times the highest annual rate of your Base Salary
in effect during the then current year or any of the
three years preceding the Termination Date;
(B) three times the maximum award you would have been
eligible to receive under the then current Fiscal Year
Bonus Plan in respect of the then current year,
regardless of any limitations otherwise applicable to
the then current fiscal year (i.e., the failure to have
completed any vesting period or the current measurement
period, or the failure to achieve any performance goal
applicable to all or any portion of the measurement
period;
12
(C) three times the amount equaling the maximum percentage
of your Base Salary contribution level by the Company
for you in SERP for the then current year multiplied by
the highest annual rate of Base Salary in effect during
the then current year or any of the three years
preceding the Termination Date; and
(b) All the outstanding contingent compensation issued or awarded to you
under the Plans shall become vested, exercisable, distributable and
unrestricted (any contrary provision in the Plans or Other Plans
notwithstanding). You shall have the right immediately to:
(i) for one year thereafter, exercise all or any portion of all
your options covered by any Plan or Other Plans and to have
the underlying Shares issued to you;
(ii) for one year thereafter, in lieu of such exercise as provided
in Subsection (b)(i) above, as elected by you, to receive a
cash amount within five days following an applicable
Termination Date equal to the spread between the exercise
price and the higher Market Value of the shares, multiplied
by the number of shares of outstanding stock options;
(iii) all Shares of Restricted Stock issued under the Plans or
Other Plans shall be vested with all conditions to have been
deemed to have been satisfied with respect to all such shares
of Restricted Stock provided that such share had not
theretofore been forfeited;
(iv) to receive a cash amount within five days following an
applicable Termination Date equal to all tax assistance
payments associated with the issuance of Shares covered by
Restricted Stock held by you under a Plan or Other Plans and
vested pursuant to Subsection (b)(iii) above. Any obligation
to not sell Shares issued under Restricted Stock programs for
any period of time after vesting to keep associated tax
assistance payments is eliminated; and
(v) obtain the full benefit of any other contingent compensation
rights to which you may be entitled under the Plans or Other
Plans, in each case as though all applicable performance
targets had been met or achieved at maximum levels for all
performance periods (including those extending beyond the
Effective Date) and any Plan contingencies had been satisfied
in full at the date of the Change of Control and the maximum
possible benefits thereunder had been earned at the date of
the Change of Control, and
(c) The Company shall maintain in full force and effect for your
continued benefit for a three-year period after the Termination Date
all Other Plans in which you were entitled to participate
immediately prior to the Termination Date (at no greater cost or
expense to you than was the case immediately prior to the Change of
Control), including without limitation plans providing medical,
dental, life and disability insurance coverage, provided that your
continued participation is possible under the general terms and
provisions of such plans and programs. In the event that your
participation in any such plan or program is not possible, the
Company shall arrange to provide you, at the Company's cost and
expense, with benefits substantially similar to those which you are
entitled to receive under such plans and programs.
13
Anything else in this Agreement to the contrary notwithstanding, if:
(i) your employment is terminated in connection with a merger,
consolidation or a tender offer or an exchange offer;
(ii) you are entitled to the benefits provided for under Section 1
hereof; and
(iii) your Termination Date precedes or occurs on the date of the closing,
thereof, then unless otherwise agreed to by both parties in writing,
all amounts to which you are or shall become entitled to under this
Agreement, which are calculable as of the closing date, shall be
accelerated to, and become immediately due and payable
contemporaneously with such closing.
"SHARES" means shares of Common Stock, $.01 par value, of the Company at the
date of this Agreement, as the same shall be subsequently amended, modified or
changed.
"STOCK OPTION AGREEMENTS" means any agreements providing for the grant by the
Company to you of options to purchase Shares.
"SUCCESSOR" shall mean any Person that succeeds to, or has the ability to
control, the Company's business as a whole, directly by merger, consolidation,
spin-off or similar transaction, or indirectly by purchase of the Company's
Voting Securities or acquisition of all or substantially all of the assets of
the Company.
"TERMINATION DATE" means the date, which is the final date of your service
pursuant to Section 2 of this Agreement.
"VOTING SECURITIES" means, with respect to any corporation or business
enterprise, those securities, which under ordinary circumstances are entitled to
vote for the election of directors or others charged with comparable duties
under applicable law.
14
August 15, 2001
Xxxxxx X. Xxxxxxxxxxx, Xx.
Senior Vice President
Oceaneering International, Inc.
00000 XX000
Xxxxxxx, Xxxxx 00000
Re: Change of Control Agreement ("COC Agreement")
Dear Xx. Xxxxxxxxxxx:
Oceaneering International, Inc. (the "Company") considers the establishment and
maintenance of a sound and vital management to be essential for the protection
and enhancement of the best interests of the Company and its shareholders. The
Company recognizes that, as is the case with many publicly-held corporations,
the possibility of a "Change of Control" (as defined herein) may arise and that
such possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its shareholders. Accordingly, the Board of
Directors of the Company (the "Board") has determined that appropriate steps
should be taken to assure the Company of the continuation of your service and to
reinforce and encourage the attention and dedication of members of the Company's
management to their assigned duties without distraction in circumstances arising
from the possibility of a Change of Control of the Company. In particular the
Board believes it important, should the Company or its shareholders receive a
proposal for or notice of transfer of control of the Company, or consider one
itself, that you be able to assess and advise the Company whether such transfer
would be or is in the best interests of the Company and its shareholders, and to
take such other action regarding such transfer as the Board might determine to
be appropriate without being influenced by the uncertainties of your own
situation.
In order to induce you to remain in the employ of the Company, this letter
agreement (the "Agreement"), prepared pursuant to authority granted by the Board
and which supercedes and replaces the previous Senior Executive Severance
Agreement dated March 17, 1989 between you and the Company, sets forth the
compensation and severance benefits which the Company agrees will be provided to
you should your employment with the Company be terminated in connection with a
Change of Control under the circumstances described below as well as certain
other benefits which will be made available to you.
Reference is made to Annex I hereto for definitions of certain terms used in
this Agreement, and such definitions are incorporated herein by such reference
with the same effect as if set forth herein. Certain capitalized terms used in
this Agreement in connection with the description of various Plans are defined
in the respective Plans, but if any conflicts with a definition herein
contained, this Agreement shall prevail.
1. Termination of Employment in Connection with a Change of Control.
(a) During the Effective Period, if there is a termination of your
employment with the Company either by the Company without
Cause or by you for Good Reason either (x) prior to the
Effective Date, unless it is reasonably demonstrated by the
Company that such termination of your employment
1
(a) was not at the request of a third party who has taken
steps reasonably calculated to effect the Change of Control
and (b) otherwise did not arise in connection with or
anticipation of the Change of Control or (y) on or after the
Effective Date, commences during the life of this Agreement
you shall be entitled to the following benefits:
(i) all benefits conferred upon you by the Severance
Package, and
(ii) in addition, all benefits payable under the provisions
either of the Plans and Other Plans in which you are a
participant immediately prior to the Effective Date, or
of those plans in existence at the time of your
Termination Date or pursuant to any other agreement
between you and the Company, whichever are more
favorable to you, in accordance with the terms and
conditions of such Plans or Other Plans, such benefits
to be paid under such Plans or Other Plans and not under
this Agreement to the extent they are more favorable to
you.
(b) You shall also be entitled to any such benefits if your
termination results from your death or Disability if your
death or Disability occurs:
(i) during the Effective Period but after the Effective
Date, and
(ii) with respect to the benefits conferred by the Severance
Package only, after either it has been decided that you
will be terminated without Cause during the Effective
Period, or you have given notice of termination for Good
Reason during the Effective Period;
(c) You shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other
employment, nor shall the amount of any payment provided for
in this Agreement be reduced by any compensation earned by you
as the result of employment by another Person after any
Termination Date.
2. Procedures for Termination of Employment.
If your employment be terminated or intended to be terminated:
(a) For Cause, the Company shall transmit to you written notice
setting forth the Cause for which you are proposed to be
dismissed in sufficient detail to permit a reasonable
assessment of the bona fides thereof, and setting a meeting of
the Board not less than 30 days following the date of such
notice at which the Board shall consider your termination and
at which you and your counsel shall have the opportunity to be
heard, following which the Board shall either by resolution
withdraw the notice, or if it so finds in its good faith
opinion, issue its report within 10 days thereafter that Cause
exists and specifying the particulars of its findings, in
which latter event a "final notice" shall occur. After receipt
of a "final notice" of intended termination for Cause, you may
contest such "final notice" in any court described in Section
4(b)(i) and all provisions of this Agreement, shall be
continued until a Termination Date is determined pursuant to
such contest. Within 10 days
2
following the commencement of any such contest, the Company
must escrow all amounts which would have been due pursuant to
Section 1(a) if the "final notice" were not valid at a bank of
your choice. Should the contest result from which no further
appeal is possible find that:
(i) "final notice" is valid then the Termination Date shall
be the date no further appeal is possible;
(ii) "final notice" is not valid then the Termination Date
shall be the date no further appeal is possible.
(b) For Good Reason, you shall transmit to the Company written
notice setting forth the Good Reason for which you are
proposed to terminate your employment in sufficient detail to
permit a reasonable assessment of the bona fides thereof. The
Board shall issue a resolution to you not more than 10 days
following the date of such notice as to either:
(i) Their Acceptance - In the event the Board accepts your
notice of Good Reason, then the Termination Date is
established and you are entitled to receive the amounts
pursuant to Section 1(a); or
(ii) Their Rejection - In the event the Board rejects your
notice of Good Reason, then (A) the Company must escrow
within 10 days following the rejection the amounts which
would have been due pursuant to Section 1(a) if your
termination for Good Reason had been accepted at a bank
of your choice, (B) you must proceed to dispute
resolution pursuant to Section 4, and (C) all provisions
of this Agreement shall be continued until a termination
is determined pursuant to such dispute resolution from
which no further appeal is possible. The Termination
Date shall be the date on which no further appeal is
possible.
3. Excise Tax.
(a) Any other provision of this Agreement to the contrary
notwithstanding, if the present value (as defined herein) of
the total amount of payments and benefits to be paid or
provided to you under this Agreement which are considered to
be "parachute payments" within the meaning of Section 280G(b)
of the Internal Revenue Code of 1986, as amended (the "Code"),
when added to any other such "parachute payments" received by
you from the Company upon or after a Change of Control,
whether or not under this Agreement, is in excess of the
amount you can receive without causing you to be subject to an
excise tax with respect to such amount on account of Code
Section 4999, the Company shall pay to you an additional
amount (hereinafter referred to as the "Excise Tax Premium").
The Excise Tax Premium shall be equal to the excise tax
determined under Code Sections 280G and 4999 attributable to
the total amount of payments and benefits to be paid or
provided to you under this Agreement and any other "parachute
payments" received by you upon or after a Change of Control.
The Excise Tax Premium shall also include any amount
attributable to excise tax on the Excise Tax Premium. The
Company shall also pay to you an additional
3
amount (the "Additional Amount") such that the net amount
received by you, after paying any applicable Excise Tax
Premium and any federal or state income, excise or other tax
on such additional amount, shall be equal to the amount that
you would have received if such Excise Tax Premium were not
applicable. You shall be deemed to pay income taxes on the
date of termination of your employment at the highest marginal
rate of income taxation in effect in your taxing jurisdiction.
The Additional Amount shall include any amount attributable to
income, excise or other tax on the Additional Amount.
(b) Not later than 30 days following your Termination Date or, if
later, the Effective Date, as provided herein, the independent
public accountants acting as auditors for the Company on the
date of the Change of Control (or another accounting firm
designated by you) shall determine whether the sum of the
present value of any "parachute payments" payable under this
Agreement and the present value of any other "parachute
payments" received by you from the Company upon or after a
Change of Control is in excess of the amount you can receive
without causing you to be subject to an excise tax with
respect to such amount on account of Code Section 4999, and
shall determine the amount of any Excise Tax Premium and
Additional Amount payable to you. The Excise Tax Premium and
Additional Amount shall be paid to you as soon as practicable
but in no event later than 30 days following your Termination
Date, and shall be net of any amounts required to be withheld
for taxes.
(c) For purposes of this Section 3, "present value" means the
value determined in accordance with the principles of Section
1274(b)(2) of the Code under the rules provided in Treasury
Regulations under Section 280G of the Code.
(d) References to Code Section 280G herein are specific references
to Section 280G as added to the Code by the Tax Reform Act of
1984 and as amended by the Tax Reform Act of 1986. To the
extent Code Section 280G is again amended prior to the
termination of this Agreement, or is replaced by a successor
statute, the provisions of this Section 3 shall be deemed
modified without further action of the parties in a manner
consistent with such amendments or successor statutes, as the
case may be. In the event that Code Section 280G or any
successor statute is repealed, this Section 6 shall cease to
be effective on the effective date of such repeal. The parties
recognize that Treasury Regulations under Code Sections 280G
and 4999 may affect the amount that may be paid hereunder and
agree that, upon the issuance of any such regulations, this
Agreement may be modified as in good faith may be deemed
necessary in light of the provisions of such regulations to
achieve the purposes hereof, and that consent to such
modifications shall not be unreasonably withheld.
(e) The foregoing notwithstanding, if you receive payment from the
Company for reimbursement of any excise taxes pursuant to any
other agreement, to the extent any Excise Tax Premium under
this Agreement be duplicative, you shall not be entitled to
receive payment of such an Excise Tax Premium.
4
4. Dispute Resolution.
(a) This Agreement shall be governed in all respects, including as
to validity, interpretation and effect, by the internal laws
of the State of Texas without regard to choice of law
principles.
(b) It is irrevocably agreed that if any dispute arises with
respect to any action, suit or other legal proceeding
pertaining to this Agreement or to the interpretation of or
enforcement of any of your rights hereunder under this
Agreement:
(i) the Company and you agree that exclusive jurisdiction
for any such suit, action or legal proceeding shall be
in the state district courts of Texas sitting in
Xxxxxx County, Texas;
(ii) we are each at the time present in Texas for the
purpose of conferring personal jurisdiction;
(iii) the Company and you each consent to the jurisdiction
of each such court in any such suit, action or legal
proceeding and will comply with all requirements
necessary to give such court jurisdiction;
(iv) the Company and you each waive any objection it may
have to the laying of venue of any such suit, action
or legal proceeding in any of such court;
(v) the Company and you each waive any objection or right
to removal that may otherwise arise in any such suit,
action or legal proceeding;
(vi) any such suit, action or legal proceeding may be
brought in such court, and any objection that the
Company or you may now or hereafter have to the venue
of such action or proceeding in any such court or that
such action or proceeding was brought in an
inconvenient court is waived;
(vii) service of process in any such suit, action or legal
proceeding may be effected by mailing a copy thereof
by registered or certified mail, return receipt
requested (or any substantially similar form of mail),
postage prepaid, to such party provided in Section 7
hereof; and
(viii) prior to any trial on the merits, the Company and you
will submit to court supervised, non-binding
mediation.
(c) Notwithstanding any contrary provision of Texas law, the
Company shall have the burden of proof with respect to any of
the following:
(i) that Cause existed at the time any notice was given to
you under Section 2;
(ii) that Good Reason did not exist at the time notice was
given to the Company under Section 2;
5
(iii) that the Company is not in default in performance of
its obligations under this Agreement;
(iv) that the termination of your employment was not at the
request of a third party who has taken steps
reasonably calculated to effect the Change of Control
and otherwise did not arise in connection with or
anticipation of the Change of Control; and
(v) that a Change of Control has not occurred.
5. Successors; Binding Agreement.
(a) In the event any Successor does not assume this Agreement by
operation of law the Company will seek to have any Successor,
by agreement in form and substance satisfactory to you,
expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be
required to perform it. If there has been a Change of Control
prior to, or a Change of Control will result from, any such
succession, then failure of the Company to obtain at your
request such agreement prior to or upon the effectiveness of
any such succession (unless assumption occurs as a matter of
law) shall constitute Good Reason for termination by you of
your employment and, upon delivery of a notice of termination
by you to the Company, you shall be entitled to the benefits
provided for herein.
(b) This Agreement shall inure to the benefit of and be
enforceable by your personal and legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees.
6. Fees and Expenses.
The Company shall pay all legal and other costs (including but not
limited to, administrative, accounting, tax, human resource and
expert witness fees and expenses) incurred by you as a result of
your seeking to obtain, assert or enforce any right or benefit
conferred upon you by this Agreement.
You shall prepare an estimate of any fees you expect to incur in the
following 90 days and claim reimbursement for under this Section 6
no later than 10 days after notice by you to the Company that you
intend to seek legal representation under this Agreement. The
Company shall pay such estimates to you within 10 days of your
notice. At the end of the 90 days, and each 90 days thereafter, you
shall prepare a subsequent estimate and submit it to the Company
within 10 days and the Company agrees to pay all subsequent such
estimates to you within 10 days of each notice until the matter has
been resolved. After the matter has been resolved, you will submit
an appropriate accounting of actual expenses and estimates; such
that:
(i) if estimates paid to you exceed actuals, you will
promptly submit a refund to the Company; or
(ii) if actuals exceed estimates paid to you, you will submit
a final request for reimbursement from the Company,
which the Company will promptly pay.
6
7. Notices.
Any and all notices required or permitted to be given hereunder
shall be in writing and shall be deemed to have been given when
delivered in person to the persons specified below or deposited in
the United States mail, certified or registered mail, postage
prepaid and addressed as follows:
If to the Company: Oceaneering International, Inc.
00000 XX 000
Xxxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
If to you: Xxxxxx X. Xxxxxxxxxxx, Xx.
00000 Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Either party may change, by the giving of notice in accordance with
this Section 7, the address to which notices are thereafter to be
sent.
8. Indemnity.
You will receive, to the fullest extent possible and to such greater
extent as applicable law hereafter may permit, indemnity from the
Company on terms at least as favorable as that provided under (i)
any Indemnity Agreement of the Company to which your are a party or
an intended beneficiary, or (ii) the Company's Bylaws as in effect
on the Effective Date or, if earlier, your Termination Date.
9. Validity.
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force
and effect.
10. Survival.
All obligations undertaken and benefits conferred pursuant to this
Agreement, shall survive any termination of your employment and
continue until performed in full.
11. Miscellaneous.
(a) No provision of this Agreement may be modified, waived or
discharged unless such modification, waiver or discharge is
agreed to in writing signed by you and the Company. No waiver
by either party hereto at any time of any breach by the other
party hereto of, or of compliance with, any condition or
provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not
expressly set forth in this Agreement.
7
(b) Failure to pay within 10 days of a payment due date or notice
thereon (whether payment is disputed or not) will result in a
default under this Agreement. Past due amounts will accrue
interest and compound at the lesser of 2% per month or the
highest interest rate allowed by law.
12. Duplicate Originals.
This Agreement has been executed in duplicate originals, with one to
be held by each of the parties hereto.
If this letter correctly sets forth our understanding with respect
to the subject matter hereof, please sign and return one copy of
this letter to the Company.
Sincerely,
OCEANEERING INTERNATIONAL, INC.
BY /s/ Xxxx X. Xxxx
---------------------------------
Xxxx X. Xxxx
Chief Executive Officer
Agreed to as of the 16th
day of November 2001:
/s/ Xxxxxx X. Xxxxxxxxxxx, Xx.
------------------------------
Xxxxxx X. Xxxxxxxxxxx, Xx.
8
ANNEX I TO CHANGE OF CONTROL AGREEMENT DATED AUGUST 15, 2001
BETWEEN
OCEANEERING INTERNATIONAL, INC.
AND
XXXXXX X. XXXXXXXXXXX, XX.
Definition of Certain Terms
"AGREEMENT" means this Change of Control Agreement between you and the Company
dated as of August 15, 2001.
"BOARD" means the Board of Directors of the Company.
"BYLAWS" means the bylaws of the Company, except as otherwise specified, as in
effect at the day hereof and as the same shall be amended or otherwise modified
to, but not on or after, any Change of Control.
"CAUSE" means your conviction by a court of competent jurisdiction, from which
conviction no further appeal can be taken, of a felony-grade crime involving
moral turpitude related to your employment with the Company.
"CHANGE OF CONTROL" means the earliest date at which:
(i) any Person is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of the combined
voting power of the Company's outstanding Voting Securities, other
than through the purchase of Voting Securities directly from the
Company through a private placement; or
(ii) individuals who constitute the Board on the date hereof (the
"Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of
at least two-thirds of the directors comprising the Incumbent
Board shall from and after such election be deemed to be a member
of the Incumbent Board; or
(iii) the Company is merged or consolidated with another corporation or
entity and as a result of such merger or consolidation less than
60% of the outstanding Voting Securities of the surviving or
resulting corporation or entity shall then be owned by the former
stockholders of the Company; or
(iv) a tender offer or exchange offer is made and consummated by a
Person other than the Company for the ownership of 20% or more of
the Voting Securities of the Company then outstanding; or
(v) all or substantially all of the assets of the Company are sold or
transferred to a Person as to which (a) the Incumbent Board does
not have authority (whether by law or contract) to directly
control the use or further disposition of such assets and (b) the
financial results of the Company and such Person are not
consolidated for financial reporting purposes.
9
Anything else in this definition to the contrary notwithstanding, no Change of
Control shall be deemed to have occurred by virtue of any transaction which
results in you, or a group of Persons which includes you, acquiring more than
20% of either the combined voting power of the Company's outstanding Voting
Securities or the Voting Securities of any other corporation or entity which
acquires all or substantially all of the assets of the Company, whether by way
of merger, consolidation, sale of such assets or otherwise.
"COMPANY" means Oceaneering International, Inc., a Delaware corporation,
headquartered in Houston, Texas.
"DISABILITY" means your continuing full-time absence from your duties with the
Company for 90 days or longer as a result of physical or mental incapacity,
which absence is anticipated to extend for 90 additional days or longer. Your
need for absence and its anticipated duration shall be determined solely by a
medical physician of your choice to be approved by the Company, which approval
shall not be unreasonably withheld.
"EFFECTIVE DATE" means the earliest date upon which (i) any of the events set
forth under the definition of Change of Control shall have occurred, (ii) the
receipt by the Company of a Schedule 13D stating the intention of any Person to
take actions which, if accomplished, would constitute a Change of Control, (iii)
the public announcement by any Person of its intention to take any such action,
in each case without regard for any contingency or condition which has not been
satisfied on such date, (iv) the agreement by the Company to enter into a
transaction which, if consummated, would result in a Change of Control, or (v)
consideration by the Board of a transaction which, if consummated, would result
in a Change of Control.
If, however, an Effective Date occurs but the proposed transaction to which it
relates ceases to be actively considered or it is not consummated within 12
months of such Effective Date, the Effective Period will be deemed not to have
commenced for purposes of this Agreement. If an Effective Date occurs with
respect to a proposed transaction which ceases to be actively considered but for
which active consideration is revived, the Effective Date with respect to the
Change of Control that ultimately occurs shall be that date when consideration
was revived and carried through to consummation.
"EFFECTIVE PERIOD" means the period beginning on the Effective Period
Commencement Date and ending on the Effective Period Conclusion Date.
"EFFECTIVE PERIOD COMMENCEMENT DATE" means the date falling one year prior to
the Effective Date.
"EFFECTIVE PERIOD CONCLUSION DATE" means the date falling two years after the
occurrence of a merger or consolidation set forth under clause (iii) of the
definition of Change of Control, but in no event later than three years after
the first event that constituted a Change of Control.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
"FISCAL YEAR BONUS PLAN" means for each year, the Company's fiscal year bonus
plan, or any other plan adopted by the Board which provides for the payment of
additional compensation or equity consideration on an annual basis to senior
executive officers contingent upon the Company's
10
performance, including stock performance and results of operations for that
specific year, in either case as such plan shall be amended or modified prior
to, but not on or after, any Termination Date.
"GOOD REASON" means any of the following:
(i) except as a result of your death or due to Disability, a change in
your status, title(s) or position(s) with the Company, including as
an officer of the Company, which, in your reasonable judgment, does
not represent a promotion, with commensurate adjustment of
compensation, from your status, title(s) and position(s)
immediately prior to the Effective Date; or the withdrawal from you
of any duties or responsibilities which in your reasonable opinion
are consistent with such status, title(s) or position(s); or any
removal of you from or any failure to reappoint or reelect you to
such position(s); or
(ii) a reduction by the Company in your annual Base Salary, SERP (or
equivalent), annual bonus opportunity or aggregate long term
incentive compensation in effect immediately prior to the Effective
Date and as may subsequently be increased thereafter; or
(iii) the failure by the Company to continue in effect any Plan in which
you were participating immediately prior to the Effective Date
other than as a result of the normal expiration or amendment of any
such Plan in accordance with its terms, or the taking of any
action, or the failure to act, by the Company which would adversely
affect your continued participation in any such Plan on at least as
favorable a basis to you as is the case immediately prior to the
Effective Date or which would materially reduce your benefits under
any of such Plans or deprive you of any material benefit enjoyed by
you immediately prior to the Effective Date, except as proposed by
you to the Company; or
(iv) the relocation of the principal place of your employment to a
location 25 miles further from your principal residence without
your express written consent; or
(v) the failure by the Company upon a Change of Control to obtain the
assumption of this Agreement by any Successor (other than by
operation of law); or
(vi) any refusal by the Company to continue to allow you to attend to
matters or engage in activities not directly related to the
business of the Company which you attended to or were engaged in
immediately prior to a Change of Control which do not otherwise
violate your obligations hereunder; or
(vii) any default by the Company in the performance of its obligations
under this Agreement, whether before or after a Change of Control.
"INDEMNITY AGREEMENT" means that certain agreement between you and the Company
dated as of November 16, 2001, and any successor thereto.
"LONG TERM INCENTIVE BONUS PLAN" means the Company's long term incentive plans
(including agreements issued thereunder, e.g., restricted stock agreements and
stock option agreements) or any other plan or agreement approved by the Board,
other than the Fiscal Year Bonus Plan, which provides for the payment of
additional compensation or equity consideration to senior executive officers
contingent on the Company's performance, including stock performance
11
and results of operations for a specific time period, and in either case, as
such plan may be amended or modified prior to, but not on or after, any
Termination Date.
"MARKET VALUE" when used with respect to a Share, means the mean between the
highest and lowest sales price per Share on the New York Stock Exchange or if
not listed thereon, on such other exchange as shall at the time constitute the
principal exchange for trading in Shares. If the Shares are not publicly traded,
the Market Value shall be as determined by an independent appraiser appointed by
you for such purpose.
"OTHER PLANS" means any thrift; bonus or incentive; stock option or stock
accumulation; pension; medical, disability, accident or life insurance plan,
program or policy of the Company which is intended to benefit employees of the
Company that are similarly situated to you (other than the Plans or as otherwise
provided to you in this Agreement).
"PERSON" means any individual, corporation, partnership, group, association or
other "person," as such term is used in Sections 13(d) and 14(d) of the Exchange
Act, other than the Company or any Plans sponsored by the Company.
"PERQUISITES" means individual perquisites benefits customarily provided to you
by the Company as of the date this Agreement is signed.
"PLANS" means the Fiscal Year Bonus Plan, the Long Term Incentive Bonus Plan and
the SERP.
"RESTRICTED STOCK AGREEMENTS" means any grant by the Company to you of Shares
which are, at the relevant time, subject to possible forfeiture.
"SERP" means the Company's Supplemental Executive Retirement Plan, as the same
shall be amended or modified to, but not on or after, any Effective Date.
"SEVERANCE PACKAGE" means your right to receive, and the Company's obligation to
pay and/or perform on, the following:
(a) On or within five days following an applicable Termination Date, the
Company shall pay to you a lump sum, cash amount equal to the
greater of:
(i) $1,353,000; or
(ii) the sum of:
(A) three times the highest annual rate of your Base Salary
in effect during the then current year or any of the
three years preceding the Termination Date;
(B) three times the maximum award you would have been
eligible to receive under the then current Fiscal Year
Bonus Plan in respect of the then current year,
regardless of any limitations otherwise applicable to
the then current fiscal year (i.e., the failure to have
completed any vesting period or the current measurement
period, or the failure to achieve any performance goal
applicable to all or any portion of the measurement
period;
12
(C) three times the amount equaling the maximum percentage
of your Base Salary contribution level by the Company
for you in SERP for the then current year multiplied by
the highest annual rate of Base Salary in effect during
the then current year or any of the three years
preceding the Termination Date; and
(b) All the outstanding contingent compensation issued or awarded to you
under the Plans shall become vested, exercisable, distributable and
unrestricted (any contrary provision in the Plans or Other Plans
notwithstanding). You shall have the right immediately to:
(i) for one year thereafter, exercise all or any portion of all
your options covered by any Plan or Other Plans and to have
the underlying Shares issued to you;
(ii) for one year thereafter, in lieu of such exercise as provided
in Subsection (b)(i) above, as elected by you, to receive a
cash amount within five days following an applicable
Termination Date equal to the spread between the exercise
price and the higher Market Value of the shares, multiplied
by the number of shares of outstanding stock options;
(iii) all Shares of Restricted Stock issued under the Plans or
Other Plans shall be vested with all conditions to have been
deemed to have been satisfied with respect to all such shares
of Restricted Stock provided that such share had not
theretofore been forfeited;
(iv) to receive a cash amount within five days following an
applicable Termination Date equal to all tax assistance
payments associated with the issuance of Shares covered by
Restricted Stock held by you under a Plan or Other Plans and
vested pursuant to Subsection (b)(iii) above. Any obligation
to not sell Shares issued under Restricted Stock programs for
any period of time after vesting to keep associated tax
assistance payments is eliminated; and
(v) obtain the full benefit of any other contingent compensation
rights to which you may be entitled under the Plans or Other
Plans, in each case as though all applicable performance
targets had been met or achieved at maximum levels for all
performance periods (including those extending beyond the
Effective Date) and any Plan contingencies had been satisfied
in full at the date of the Change of Control and the maximum
possible benefits thereunder had been earned at the date of
the Change of Control, and
(c) The Company shall maintain in full force and effect for your
continued benefit for a three-year period after the Termination Date
all Other Plans in which you were entitled to participate
immediately prior to the Termination Date (at no greater cost or
expense to you than was the case immediately prior to the Change of
Control), including without limitation plans providing medical,
dental, life and disability insurance coverage, provided that your
continued participation is possible under the general terms and
provisions of such plans and programs. In the event that your
participation in any such plan or program is not possible, the
Company shall arrange to provide you, at the Company's cost and
expense, with benefits substantially similar to those which you are
entitled to receive under such plans and programs.
13
Anything else in this Agreement to the contrary notwithstanding, if:
(i) your employment is terminated in connection with a merger,
consolidation or a tender offer or an exchange offer;
(ii) you are entitled to the benefits provided for under Section 1
hereof; and
(iii) your Termination Date precedes or occurs on the date of the closing
thereof, then unless otherwise agreed to by both parties in
writing, all amounts to which you are or shall become entitled to
under this Agreement, which are calculable as of the closing date,
shall be accelerated to, and become immediately due and payable
contemporaneously with such closing.
"SHARES" means shares of Common Stock, $.01 par value, of the Company at the
date of this Agreement, as the same shall be subsequently amended, modified or
changed.
"STOCK OPTION AGREEMENTS" means any agreements providing for the grant by the
Company to you of options to purchase Shares.
"SUCCESSOR" shall mean any Person that succeeds to, or has the ability to
control, the Company's business as a whole, directly by merger, consolidation,
spin-off or similar transaction, or indirectly by purchase of the Company's
Voting Securities or acquisition of all or substantially all of the assets of
the Company.
"TERMINATION DATE" means the date, which is the final date of your service
pursuant to Section 2 of this Agreement.
"VOTING SECURITIES" means, with respect to any corporation or business
enterprise, those securities, which under ordinary circumstances are entitled to
vote for the election of directors or others charged with comparable duties
under applicable law.
14
August 15, 2001
Xxxx X. Xxxx
Chairman and Chief Executive Officer
Oceaneering International, Inc.
00000 XX000
Xxxxxxx, Xxxxx 00000
Re: Change of Control Agreement ("COC Agreement")
Dear Xx. Xxxx:
Oceaneering International, Inc. (the "Company") considers the establishment and
maintenance of a sound and vital management to be essential for the protection
and enhancement of the best interests of the Company and its shareholders. The
Company recognizes that, as is the case with many publicly-held corporations,
the possibility of a "Change of Control" (as defined herein) may arise and that
such possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its shareholders. Accordingly, the Board of
Directors of the Company (the "Board") has determined that appropriate steps
should be taken to assure the Company of the continuation of your service and to
reinforce and encourage the attention and dedication of members of the Company's
management to their assigned duties without distraction in circumstances arising
from the possibility of a Change of Control of the Company. In particular the
Board believes it important, should the Company or its shareholders receive a
proposal for or notice of transfer of control of the Company, or consider one
itself, that you be able to assess and advise the Company whether such transfer
would be or is in the best interests of the Company and its shareholders, and to
take such other action regarding such transfer as the Board might determine to
be appropriate without being influenced by the uncertainties of your own
situation.
In order to induce you to remain in the service of the Company, this letter
agreement (the "Agreement"), prepared pursuant to authority granted by the Board
and which supercedes and replaces the previous Senior Executive Severance
Agreement and Supplemental Senior Executive Severance Agreement each dated March
17, 1989 between you and the Company, sets forth the compensation and severance
benefits which the Company agrees will be provided to you should your service
with the Company be terminated in connection with a Change of Control under the
circumstances described below as well as certain other benefits which will be
made available to you.
Contemporaneously herewith, you and the Company are entering into a Service
Agreement ("Service Agreement") that provides certain other, and sometimes
additional, compensation and benefits to you under the circumstances set forth
in the Service Agreement. Except to the extent expressly provided to the
contrary in this Agreement, you shall be entitled to compensation and benefits
under both this Agreement and the Service Agreement in the event of a Change of
Control.
1
Reference is made to Annex I hereto for definitions of certain terms used in
this Agreement, and such definitions are incorporated herein by such reference
with the same effect as if set forth herein. Certain capitalized terms used in
this Agreement in connection with the description of various Plans are defined
in the respective Plans, but if any conflicts with a definition herein
contained, this Agreement shall prevail.
1. Termination of Service in Connection with a Change of Control.
(a) During Service Agreement Phase A and during the Effective
Period, if there is a termination of your service with the
Company either by the Company without Cause or by you for Good
Reason either (x) prior to the Effective Date, unless it is
reasonably demonstrated by the Company that such termination
of your service (a) was not at the request of a third party
who has taken steps reasonably calculated to effect the Change
of Control and (b) otherwise did not arise in connection with
or anticipation of the Change of Control and if such Effective
Period or (y) on or after the Effective Date, commences during
the life of this Agreement you shall be entitled to the
following benefits:
(i) all benefits conferred upon you by the Severance
Package, and
(ii) in addition, all benefits payable under the provisions
either of the Plans and Other Plans in which you are a
participant immediately prior to the Effective Date, or
of those plans in existence at the time of your
Termination Date or pursuant to any other agreement
between you and the Company, whichever are more
favorable to you, in accordance with the terms and
conditions of such Plans or Other Plans, such benefits
to be paid under such Plans or Other Plans and not under
this Agreement to the extent they are more favorable to
you.
(b) You shall also be entitled to any such benefits if your
termination results from your death or Disability if your
death or Disability occurs:
(i) during the Effective Period but after the Effective
Date, and
(ii) with respect to the benefits conferred by the Severance
Package only, after either it has been decided that you
will be terminated without Cause during the Effective
Period, or you have given notice of termination for Good
Reason during the Effective Period;
(c) During Service Agreement Phase B and during the Effective
Period, if there is a termination of your service with the
Company for any reason other than your refusal to serve as
non-executive Chairman of the Board and during the life of
this Agreement, you shall be entitled to the following
benefits:
(i) all benefits conferred upon you by the Severance
Package, and
2
(ii) in addition, all benefits payable under the provisions
either of the Plans and Other Plans in which you are a
participant immediately prior to the Effective Date, or
of those plans in existence at the time of your
Termination Date or pursuant to any other agreement
between you and the Company, whichever are more
favorable to you, in accordance with the terms and
conditions of such Plans or Other Plans, such benefits
to be paid under such Plans or Other Plans and not under
this Agreement to the extent they are more favorable to
you.
Your refusal to serve as non-executive Chairman of the Board during
Service Agreement Phase B by reason of the Company's failure to
fulfill any of its obligations under the Service Agreement shall not
be considered refusal by you to serve as non-executive Chairman of
the Board.
(d) You shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other
employment or other service, nor shall the amount of any
payment provided for in this Agreement be reduced by any
compensation earned by you as the result of employment with or
service to another Person after any Termination Date.
2. Procedures for Termination of Service.
If your service be terminated or intended to be terminated:
(a) For Cause during Service Agreement Phase A, the Company shall
transmit to you written notice setting forth the Cause for
which you are proposed to be dismissed in sufficient detail to
permit a reasonable assessment of the bona fides thereof, and
setting a meeting of the Board not less than 30 days following
the date of such notice at which the Board shall consider your
termination and at which you and your counsel shall have the
opportunity to be heard, following which the Board shall
either by resolution withdraw the notice, or if it so finds in
its good faith opinion, issue its report within 10 days
thereafter that Cause exists and specifying the particulars of
its findings, in which latter event a "final notice" shall
occur. After receipt of a "final notice" of intended
termination for Cause, you may contest such "final notice" in
any court described in Section 4(b)(i) and all provisions of
this Agreement, shall be continued until a Termination Date is
determined pursuant to such contest. Within 10 days following
the commencement of any such contest, the Company must escrow
all amounts which would have been due pursuant to Section 1(a)
if the "final notice" were not valid at a bank of your choice.
Should the contest result from which no further appeal is
possible find that:
(i) "final notice" is valid then the Termination Date shall
be the date no further appeal is possible;
3
(ii) "final notice" is not valid then the Termination Date
shall be the date no further appeal is possible.
(b) For Good Reason during Service Agreement Phase A, you shall
transmit to the Company written notice setting forth the Good
Reason for which you are proposed to terminate your service in
sufficient detail to permit a reasonable assessment of the
bona fides thereof. The Board shall issue a resolution to you
not more than 10 days following the date of such notice as to
either:
(i) Their Acceptance - In the event the Board accepts your
notice of Good Reason, then the Termination Date is
established and you are entitled to receive the amounts
pursuant to Section 1(a); or
(ii) Their Rejection - In the event the Board rejects your
notice of Good Reason, then (A) the Company must escrow
within 10 days following the rejection the amounts which
would have been due pursuant to Section 1(a) if your
termination for Good Reason had been accepted at a bank
of your choice, (B) you must proceed to dispute
resolution pursuant to Section 4, and (C) all provisions
of this Agreement shall be continued until a termination
is determined pursuant to such dispute resolution from
which no further appeal is possible. The Termination
Date shall be the date on which no further appeal is
possible.
(c) If you claim benefits under Section 1(c), you shall transmit
to the Company written notice, in sufficient detail to permit
a reasonable assessment of the bona fides thereof, that your
service has been terminated under Section 1(c) for any such
reason. The Board shall issue a resolution to you not more
than 10 days following the date of such notice as to either:
(i) Their Acceptance - In the event the Board accepts your
notice claiming benefits under Section 1(c), then the
Termination Date is established; or
(ii) Their Rejection - In the event the Board rejects your
notice, then (A) the Company must escrow within 10 days
following the rejection the amounts which would have
been due pursuant to Section 1(c) if your notice had
been accepted at a bank of your choice, (B) you must
proceed to dispute resolution pursuant to Section 4 and
(C) all provisions of this Agreement shall be continued
until a termination is determined pursuant to such
dispute resolution from which no further appeal is
possible. The Termination Date shall be the date on
which no further appeal is possible.
3. Excise Tax.
(a) Any other provision of this Agreement to the contrary
notwithstanding, if the present value (as defined herein) of
the total amount of payments and
4
benefits to be paid or provided to you under this Agreement
which are considered to be "parachute payments" within the
meaning of Section 280G(b) of the Internal Revenue Code of
1986, as amended (the "Code"), when added to any other such
"parachute payments" received by you from the Company upon or
after a Change of Control, whether or not under this
Agreement, is in excess of the amount you can receive without
causing you to be subject to an excise tax with respect to
such amount on account of Code Section 4999, the Company shall
pay to you an additional amount (hereinafter referred to as
the "Excise Tax Premium"). The Excise Tax Premium shall be
equal to the excise tax determined under Code Sections 280G
and 4999 attributable to the total amount of payments and
benefits to be paid or provided to you under this Agreement
and any other "parachute payments" received by you upon or
after a Change of Control. The Excise Tax Premium shall also
include any amount attributable to excise tax on the Excise
Tax Premium. The Company shall also pay to you an additional
amount (the "Additional Amount") such that the net amount
received by you, after paying any applicable Excise Tax
Premium and any federal or state income, excise or other tax
on such additional amount, shall be equal to the amount that
you would have received if such Excise Tax Premium were not
applicable. You shall be deemed to pay income taxes on the
date of termination of your service at the highest marginal
rate of income taxation in effect in your taxing jurisdiction.
The Additional Amount shall include any amount attributable to
income, excise or other tax on the Additional Amount.
(b) Not later than 30 days following your Termination Date or, if
later, the Effective Date, as provided herein, the independent
public accountants acting as auditors for the Company on the
date of the Change of Control (or another accounting firm
designated by you) shall determine whether the sum of the
present value of any "parachute payments" payable under this
Agreement and the present value of any other "parachute
payments" received by you from the Company upon or after a
Change of Control is in excess of the amount you can receive
without causing you to be subject to an excise tax with
respect to such amount on account of Code Section 4999, and
shall determine the amount of any Excise Tax Premium and
Additional Amount payable to you. The Excise Tax Premium and
Additional Amount shall be paid to you as soon as practicable
but in no event later than 30 days following your Termination
Date, and shall be net of any amounts required to be withheld
for taxes.
(c) For purposes of this Section 3, "present value" means the
value determined in accordance with the principles of Section
1274(b)(2) of the Code under the rules provided in Treasury
Regulations under Section 280G of the Code.
(d) References to Code Section 280G herein are specific references
to Section 280G as added to the Code by the Tax Reform Act of
1984 and as amended by the Tax Reform Act of 1986. To the
extent Code Section 280G is again amended prior to the
termination of this Agreement, or is replaced by a
5
successor statute, the provisions of this Section 3 shall be
deemed modified without further action of the parties in a
manner consistent with such amendments or successor statutes,
as the case may be. In the event that Code Section 280G or any
successor statute is repealed, this Section 6 shall cease to
be effective on the effective date of such repeal. The parties
recognize that Treasury Regulations under Code Sections 280G
and 4999 may affect the amount that may be paid hereunder and
agree that, upon the issuance of any such regulations, this
Agreement may be modified as in good faith may be deemed
necessary in light of the provisions of such regulations to
achieve the purposes hereof, and that consent to such
modifications shall not be unreasonably withheld.
(e) The foregoing notwithstanding, if you receive payment from the
Company for reimbursement of any excise taxes pursuant to any
other agreement, to the extent any Excise Tax Premium under
this Agreement be duplicative, you shall not be entitled to
receive payment of such an Excise Tax Premium.
4. Dispute Resolution.
(a) This Agreement shall be governed in all respects, including as
to validity, interpretation and effect, by the internal laws
of the State of Texas without regard to choice of law
principles.
(b) It is irrevocably agreed that if any dispute arises with
respect to any action, suit or other legal proceeding
pertaining to this Agreement or to the interpretation of or
enforcement of any of your rights hereunder under this
Agreement:
(i) the Company and you agree that exclusive jurisdiction
for any such suit, action or legal proceeding shall be
in the state district courts of Texas sitting in
Xxxxxx County, Texas;
(ii) we are each at the time present in Texas for the
purpose of conferring personal jurisdiction;
(iii) the Company and you each consent to the jurisdiction
of each such court in any such suit, action or legal
proceeding and will comply with all requirements
necessary to give such court jurisdiction;
(iv) the Company and you each waive any objection it may
have to the laying of venue of any such suit, action
or legal proceeding in any of such court;
(v) the Company and you each waive any objection or right
to removal that may otherwise arise in any such suit,
action or legal proceeding;
(vi) any such suit, action or legal proceeding may be
brought in such court, and any objection that the
Company or you may now or
6
hereafter have to the venue of such action or
proceeding in any such court or that such action or
proceeding was brought in an inconvenient court is
waived;
(vii) service of process in any such suit, action or legal
proceeding may be effected by mailing a copy thereof
by registered or certified mail, return receipt
requested (or any substantially similar form of mail),
postage prepaid, to such party provided in Section 7
hereof; and
(viii) prior to any trial on the merits, the Company and you
will submit to court supervised, non-binding
mediation.
(c) Notwithstanding any contrary provision of Texas law, the
Company shall have the burden of proof with respect to any of
the following:
(i) that Cause existed at the time any notice was given to
you under Section 2;
(ii) that Good Reason did not exist at the time notice was
given to the Company under Section 2;
(iii) that the termination of your service was not for the
reasons set forth in Section 1(c);
(iv) that the Company is not in default in performance of
its obligations under this Agreement;
(v) that the termination of your service was not at the
request of a third party who has taken steps reasonably
calculated to effect the Change of Control and
otherwise did not arise in connection with or
anticipation of the Change of Control; and
(vi) that a Change of Control has not occurred.
5. Successors; Binding Agreement.
(a) In the event any Successor does not assume this Agreement by
operation of law the Company will seek to have any Successor,
by agreement in form and substance satisfactory to you,
expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be
required to perform it. If there has been a Change of Control
prior to, or a Change of Control will result from, any such
succession, then failure of the Company to obtain at your
request such agreement prior to or upon the effectiveness of
any such succession (unless assumption occurs as a matter of
law) shall (i) if during Service Agreement Phase A, constitute
Good Reason for termination by you of your service and, (ii)
if after Service Agreement Phase A, constitute a termination
of your status as non-executive Chairman of the Board for
reason other than your refusal to serve, and in
7
either case, upon delivery of a notice of termination by you
to the Company, you shall be entitled to the benefits provided
for herein.
(b) This Agreement shall inure to the benefit of and be
enforceable by your personal and legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees.
6. Fees and Expenses.
The Company shall pay all legal and other costs (including but not
limited to, administrative, accounting, tax, human resource and
expert witness fees and expenses) incurred by you as a result of
your seeking to obtain, assert or enforce any right or benefit
conferred upon you by this Agreement.
You shall prepare an estimate of any fees you expect to incur in the
following 90 days and claim reimbursement for under this Section 6
no later than 10 days after notice by you to the Company that you
intend to seek legal representation under this Agreement. The
Company shall pay such estimates to you within 10 days of your
notice. At the end of the 90 days, and each 90 days thereafter, you
shall prepare a subsequent estimate and submit it to the Company
within 10 days and the Company agrees to pay all subsequent such
estimates to you within 10 days of each notice until the matter has
been resolved. After the matter has been resolved, you will submit
an appropriate accounting of actual expenses and estimates; such
that:
(i) if estimates paid to you exceed actuals, you will
promptly submit a refund to the Company; or
(ii) if actuals exceed estimates paid to you, you will submit
a final request for reimbursement from the Company,
which the Company will promptly pay.
7. Notices.
Any and all notices required or permitted to be given hereunder
shall be in writing and shall be deemed to have been given when
delivered in person to the persons specified below or deposited in
the United States mail, certified or registered mail, postage
prepaid and addressed as follows:
If to the Company: Oceaneering International, Inc.
00000 XX 000
Xxxxxxx, Xxxxx 00000
Attention: Chairman, Compensation Committee
of the Board of Directors
If to you: Xxxx X. Xxxx
000 Xxxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
8
Either party may change, by the giving of notice in accordance with
this Section 7, the address to which notices are thereafter to be
sent.
8. Indemnity.
You will receive, to the fullest extent possible and to such greater
extent as applicable law hereafter may permit, indemnity from the
Company on terms at least as favorable as that provided under (i)
any Indemnity Agreement of the Company to which your are a party or
an intended beneficiary, or (ii) the Company's Bylaws as in effect
on the Effective Date or, if earlier, your Termination Date.
9. Validity.
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force
and effect.
10. Survival.
All obligations undertaken and benefits conferred pursuant to this
Agreement, shall survive any termination of your service and
continue until performed in full.
11. Miscellaneous.
(a) No provision of this Agreement may be modified, waived or
discharged unless such modification, waiver or discharge is
agreed to in writing signed by you and the Company. No waiver
by either party hereto at any time of any breach by the other
party hereto of, or of compliance with, any condition or
provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not
expressly set forth in this Agreement.
(b) Failure to pay within 10 days of a payment due date or notice
thereon (whether payment is disputed or not) will result in a
default under this Agreement. Past due amounts will accrue
interest and compound at the lesser of 2% per month or the
highest interest rate allowed by law.
12. Duplicate Originals.
This Agreement has been executed in duplicate originals, with one to
be held by each of the parties hereto.
9
If this letter correctly sets forth our understanding with respect to the
subject matter hereof, please sign and return one copy of this letter to the
Company.
Sincerely,
OCEANEERING INTERNATIONAL, INC.
BY: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxx X. Xxxxx, Chairman
Compensation Committee of the Board
Agreed to as of the 16th
day of November 2001:
/s/ Xxxx X. Xxxx
------------------------------
Xxxx X. Xxxx
10
ANNEX I TO CHANGE OF CONTROL AGREEMENT DATED AUGUST 15, 2001
BETWEEN
OCEANEERING INTERNATIONAL, INC.
AND
XXXX X. XXXX
Definition of Certain Terms
"AGREEMENT" means this Change of Control Agreement between you and the Company
dated as of August 15, 2001.
"BOARD" means the Board of Directors of the Company.
"BYLAWS" means the bylaws of the Company, except as otherwise specified, as in
effect at the day hereof and as the same shall be amended or otherwise modified
to, but not on or after, any Change of Control.
"CAUSE" means your conviction by a court of competent jurisdiction, from which
conviction no further appeal can be taken, of a felony-grade crime involving
moral turpitude related to your service with the Company.
"CHANGE OF CONTROL" means the earliest date at which:
(i) any Person is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of the combined
voting power of the Company's outstanding Voting Securities, other
than through the purchase of Voting Securities directly from the
Company through a private placement; or
(ii) individuals who constitute the Board on the date hereof (the
"Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of
at least two-thirds of the directors comprising the Incumbent Board
shall from and after such election be deemed to be a member of the
Incumbent Board; or
(iii) the Company is merged or consolidated with another corporation or
entity and as a result of such merger or consolidation less than
60% of the outstanding Voting Securities of the surviving or
resulting corporation or entity shall then be owned by the former
stockholders of the Company; or
(iv) a tender offer or exchange offer is made and consummated by a
Person other than the Company for the ownership of 20% or more of
the Voting Securities of the Company then outstanding; or
(v) all or substantially all of the assets of the Company are sold or
transferred to a Person as to which (a) the Incumbent Board does
not have authority (whether by law
11
or contract) to directly control the use or further disposition of
such assets and (b) the financial results of the Company and such
Person are not consolidated for financial reporting purposes.
Anything else in this definition to the contrary notwithstanding, no Change of
Control shall be deemed to have occurred by virtue of any transaction which
results in you, or a group of Persons which includes you, acquiring more than
20% of either the combined voting power of the Company's outstanding Voting
Securities or the Voting Securities of any other corporation or entity which
acquires all or substantially all of the assets of the Company, whether by way
of merger, consolidation, sale of such assets or otherwise.
"COMPANY" means Oceaneering International, Inc., a Delaware corporation,
headquartered in Houston, Texas.
"DISABILITY" means your continuing full-time absence from your duties with the
Company for 90 days or longer as a result of physical or mental incapacity,
which absence is anticipated to extend for 90 additional days or longer. Your
need for absence and its anticipated duration shall be determined solely by a
medical physician of your choice to be approved by the Company, which approval
shall not be unreasonably withheld.
"EFFECTIVE DATE" means the earliest date upon which (i) any of the events set
forth under the definition of Change of Control shall have occurred, (ii) the
receipt by the Company of a Schedule 13D stating the intention of any Person to
take actions which, if accomplished, would constitute a Change of Control, (iii)
the public announcement by any Person of its intention to take any such action,
in each case without regard for any contingency or condition which has not been
satisfied on such date, (iv) the agreement by the Company to enter into a
transaction which, if consummated, would result in a Change of Control, or (v)
consideration by the Board of a transaction which, if consummated, would result
in a Change of Control.
If, however, an Effective Date occurs but the proposed transaction to which it
relates ceases to be actively considered or it is not consummated within 12
months of such Effective Date, the Effective Period will be deemed not to have
commenced for purposes of this Agreement. If an Effective Date occurs with
respect to a proposed transaction which ceases to be actively considered but for
which active consideration is revived, the Effective Date with respect to the
Change of Control that ultimately occurs shall be that date when consideration
was revived and carried through to consummation.
"EFFECTIVE PERIOD" means the period beginning on the Effective Period
Commencement Date and ending on the Effective Period Conclusion Date.
"EFFECTIVE PERIOD COMMENCEMENT DATE" means the date falling one year prior to
the Effective Date.
"EFFECTIVE PERIOD CONCLUSION DATE" means the date falling two years after the
occurrence of a merger or consolidation set forth under clause (iii) of the
definition of Change of Control, but in no event later than three years after
the first event that constituted a Change of Control.
12
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
"FISCAL YEAR BONUS PLAN" means for each year, the Company's fiscal year bonus
plan, or any other plan adopted by the Board which provides for the payment of
additional compensation or equity consideration on an annual basis to senior
executive officers contingent upon the Company's performance, including stock
performance and results of operations for that specific year, in either case as
such plan shall be amended or modified prior to, but not on or after, any
Termination Date.
"GOOD REASON" means any of the following during Service Agreement Phase A:
(i) except as a result of your death or due to Disability, a change in
your status, title(s) or position(s) with the Company, including
as an officer of the Company, which, in your reasonable judgment,
does not represent a promotion, with commensurate adjustment of
compensation, from your status, title(s) and position(s)
immediately prior to the Effective Date; or the assignment to you
of any duties or responsibilities which, in your reasonable
judgment, are inconsistent with the scope of such duties or such
status, title(s) or position(s) or are not customarily assigned to
someone of your education, training and experience; or the
withdrawal from you of any duties or responsibilities which in
your reasonable opinion are consistent with such status, title(s)
or position(s); or any removal of you from or any failure to
reappoint or reelect you to such position(s); or
(ii) a reduction by the Company in your annual Base Salary, SERP (or
equivalent), annual bonus opportunity or aggregate long term
incentive compensation in effect immediately prior to the
Effective Date and as may subsequently be increased thereafter; or
(iii) the failure by the Company to continue in effect any Plan in which
you were participating immediately prior to the Effective Date
other than as a result of the normal expiration or amendment of
any such Plan in accordance with its terms, or the taking of any
action, or the failure to act, by the Company which would
adversely affect your continued participation in any such Plan on
at least as favorable a basis to you as is the case immediately
prior to the Effective Date or which would materially reduce your
benefits under any of such Plans or deprive you of any material
benefit enjoyed by you immediately prior to the Effective Date,
except as proposed by you to the Company; or
(iv) the relocation of the principal place for performance of your
service obligations to a location 25 miles further from your
principal residence without your express written consent; or
(v) the failure by the Company upon a Change of Control to obtain the
assumption of this Agreement by any Successor (other than by
operation of law); or
(vi) any purported termination by the Company of your service, which is
not effected by a notice of termination issued pursuant to Section
4 of your Service Agreement; and for purposes of this Agreement,
no such purported termination shall be effective; or
13
(vii) any refusal by the Company to continue to allow you to attend to
matters or engage in activities not directly related to the
business of the Company which you attended to or were engaged in
immediately prior to a Change of Control which do not otherwise
violate your obligations hereunder; or
(viii) any default by the Company in the performance of its obligations
under this Agreement, whether before or after a Change of Control.
"INDEMNITY AGREEMENT" means that certain agreement between you and the Company
dated as of November 16, 2001, and any successor thereto.
"LONG TERM INCENTIVE BONUS PLAN" means the Company's long term incentive plans
(including agreements issued thereunder, e.g., restricted stock agreements and
stock option agreements) or any other plan or agreement approved by the Board,
other than the Fiscal Year Bonus Plan, which provides for the payment of
additional compensation or equity consideration to senior executive officers
contingent on the Company's performance, including stock performance and results
of operations for a specific time period, and in either case, as such plan may
be amended or modified prior to, but not on or after, any Termination Date.
"MARKET VALUE" when used with respect to a Share, means the mean between the
highest and lowest sales price per Share on the New York Stock Exchange or if
not listed thereon, on such other exchange as shall at the time constitute the
principal exchange for trading in Shares. If the Shares are not publicly traded,
the Market Value shall be as determined by an independent appraiser appointed by
you for such purpose.
"OTHER PLANS" means any thrift; bonus or incentive; stock option or stock
accumulation; pension; medical, disability, accident or life insurance plan,
program or policy of the Company which is intended to benefit employees of the
Company that are similarly situated to you (other than the Plans or as otherwise
provided to you in this Agreement).
"PERSON" means any individual, corporation, partnership, group, association or
other "person," as such term is used in Sections 13(d) and 14(d) of the Exchange
Act, other than the Company or any Plans sponsored by the Company.
"PERQUISITES" means individual perquisites benefits customarily provided to you
by the Company as of the date this Agreement is signed.
"PLANS" means the Fiscal Year Bonus Plan, the Long Term Incentive Bonus Plan and
the SERP.
"RESTRICTED STOCK AGREEMENTS" means any grant by the Company to you of Shares
which are, at the relevant time, subject to possible forfeiture.
"SERVICE AGREEMENT PHASE A" means "Agreement Phase A" as defined in the Service
Agreement."
"SERVICE AGREEMENT PHASE X" xxxxx "Xxxxxxxxx Xxxxx X" as defined in the Service
Agreement.
14
"SERP" means the Company's Supplemental Executive Retirement Plan, as the same
shall be amended or modified to, but not on or after, any Effective Date.
"SEVERANCE PACKAGE" means your right to receive, and the Company's obligation to
pay and/or perform on, the following:
(a) If during Service Agreement Phase A, on or within five days
following an applicable Termination Date, the Company shall pay to
you a lump sum, cash amount equal to the greater of:
(i) $4,650,000; or
(ii) the sum of:
(A) three times the highest annual rate of your Base Salary
in effect during the then current year or any of the
three years preceding the Termination Date;
(B) three times the maximum award you would have been
eligible to receive under the then current Fiscal Year
Bonus Plan in respect of the then current year,
regardless of any limitations otherwise applicable to
the then current fiscal year (i.e., the failure to have
completed any vesting period or the current measurement
period, or the failure to achieve any performance goal
applicable to all or any portion of the measurement
period);
(C) three times the amount equaling the maximum percentage
of your Base Salary contribution level by the Company
for you in SERP for the then current year multiplied by
the highest annual rate of Base Salary in effect during
the then current year or any of the three years
preceding the Termination Date; and
(b) If during Service Agreement Phase B, on or within five days
following an applicable Termination Date, the Company shall pay to
you a lump sum, cash amount equal to $4,650,000.
(c) All then outstanding contingent compensation issued or awarded to
you to you under the Plans or Other Plans shall become vested,
exercisable, distributable and unrestricted (any contrary provision
in the Plans notwithstanding). You shall have the right immediately
to:
(i) for one year thereafter, exercise all or any portion of all
your options covered by any Plan or Other Plans and to have
the underlying Shares issued to you;
(ii) for one year thereafter, in lieu of such exercise as
provided in Subsection (c)(i) above, as elected by you, to
receive a cash amount within five days following an
applicable Termination Date equal to the spread between the
15
exercise price and the higher Market Value of the shares,
multiplied by the number of shares of outstanding stock
options;
(iii) all Shares of Restricted Stock issued under the Plans or
Other Plans shall be vested with all conditions to have been
deemed to have been satisfied with respect to all such
shares of Restricted Stock provided that such share had not
theretofore been forfeited;
(iv) to receive a cash amount within five days following an
applicable Termination Date equal to all tax assistance
payments associated with the issuance of Shares covered by
Restricted Stock held by you under a Plan or Other Plans and
vested pursuant to Subsection (c)(iii) above. Any obligation
to not sell Shares issued under Restricted Stock programs
for any period of time after vesting to keep associated tax
assistance payments is eliminated; and
(v) obtain the full benefit of any other contingent compensation
rights to which you may be entitled under the Plans or Other
Plans, in each case as though all applicable performance
targets had been met or achieved at maximum levels for all
performance periods (including those extending beyond the
Effective Date) and any Plan contingencies had been
satisfied in full at the date of the Change of Control and
the maximum possible benefits thereunder had been earned at
the date of the Change of Control, and
(d) The Company shall maintain in full force and effect for your
continued benefit for a three-year period after the Termination Date
all Other Plans in which you were entitled to participate
immediately prior to the Termination Date (at no greater cost or
expense to you than was the case immediately prior to the Change of
Control), including without limitation plans providing medical,
dental, life and disability insurance coverage, provided that your
continued participation is possible under the general terms and
provisions of such plans and programs. In the event that your
participation in any such plan or program is not possible, the
Company shall arrange to provide you, at the Company's cost and
expense, with benefits substantially similar to those which you are
entitled to receive under such plans and programs. In the event that
your participation in any such plan or program is not possible, the
Company shall arrange to provide you, at the Company's cost and
expense, with benefits substantially similar to those which you are
entitled to receive under such plans and programs.
(e) Notwithstanding any payments made under the Severance Package above,
no such payments shall interfere, mitigate, stop or otherwise cause
you to lose any benefits or compensation due you under the separate
Service Agreement dated August 15, 2001 due from the Company, except
that the benefits under (b), (c) and (d) of this definition shall
not be provided to you to the extent they are provided under the
Service Agreement.
16
Anything else in this Agreement to the contrary notwithstanding, if:
(i) your service is terminated in connection with a merger,
consolidation or a tender offer or an exchange offer;
(ii) you are entitled to the benefits provided for under Section 1
hereof; and
(iii) your Termination Date precedes or occurs on the date of the closing
thereof, then unless otherwise agreed to by both parties in writing,
all amounts to which you are or shall become entitled to under this
Agreement, which are calculable as of the closing date, shall be
accelerated to, and become immediately due and payable
contemporaneously with such closing.
"SHARES" means shares of Common Stock, $.01 par value, of the Company at the
date of this Agreement, as the same shall be subsequently amended, modified or
changed.
"STOCK OPTION AGREEMENTS" means any agreements providing for the grant by the
Company to you of options to purchase Shares.
"SUCCESSOR" shall mean any Person that succeeds to, or has the ability to
control, the Company's business as a whole, directly by merger, consolidation,
spin-off or similar transaction, or indirectly by purchase of the Company's
Voting Securities or acquisition of all or substantially all of the assets of
the Company.
"TERMINATION DATE" means the date which is the final date of your service
pursuant to Section 2 of this Agreement.
"VOTING SECURITIES" means, with respect to any corporation or business
enterprise, those securities, which under ordinary circumstances are entitled to
vote for the election of directors or others charged with comparable duties
under applicable law.
17
August 15, 2001
M. Xxxxx XxXxxx
Senior Vice President
Oceaneering International, Inc.
00000 XX000
Xxxxxxx, Xxxxx 00000
Re: Change of Control Agreement ("COC Agreement")
Dear Xx. XxXxxx:
Oceaneering International, Inc. (the "Company") considers the establishment and
maintenance of a sound and vital management to be essential for the protection
and enhancement of the best interests of the Company and its shareholders. The
Company recognizes that, as is the case with many publicly-held corporations,
the possibility of a "Change of Control" (as defined herein) may arise and that
such possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its shareholders. Accordingly, the Board of
Directors of the Company (the "Board") has determined that appropriate steps
should be taken to assure the Company of the continuation of your service and to
reinforce and encourage the attention and dedication of members of the Company's
management to their assigned duties without distraction in circumstances arising
from the possibility of a Change of Control of the Company. In particular the
Board believes it important, should the Company or its shareholders receive a
proposal for or notice of transfer of control of the Company, or consider one
itself, that you be able to assess and advise the Company whether such transfer
would be or is in the best interests of the Company and its shareholders, and to
take such other action regarding such transfer as the Board might determine to
be appropriate without being influenced by the uncertainties of your own
situation.
In order to induce you to remain in the employ of the Company, this letter
agreement (the "Agreement"), prepared pursuant to authority granted by the Board
and which supercedes and replaces the previous Senior Executive Severance
Agreement dated April 22, 1997 between you and the Company, sets forth the
compensation and severance benefits which the Company agrees will be provided to
you should your employment with the Company be terminated in connection with a
Change of Control under the circumstances described below as well as certain
other benefits which will be made available to you.
Reference is made to Annex I hereto for definitions of certain terms used in
this Agreement, and such definitions are incorporated herein by such reference
with the same effect as if set forth herein. Certain capitalized terms used in
this Agreement in connection with the description of various Plans are defined
in the respective Plans, but if any conflicts with a definition herein
contained, this Agreement shall prevail.
1. Termination of Employment in Connection with a Change of Control.
(a) During the Effective Period, if there is a termination of your
employment with the Company either by the Company without
Cause or by you for Good Reason either (x) prior to the
Effective Date, unless it is reasonably demonstrated by the
Company that such termination of your employment
1
(a) was not at the request of a third party who has taken
steps reasonably calculated to effect the Change of Control
and (b) otherwise did not arise in connection with or
anticipation of the Change of Control or (y) on or after the
Effective Date, commences during the life of this Agreement
you shall be entitled to the following benefits:
(i) all benefits conferred upon you by the Severance
Package, and
(ii) in addition, all benefits payable under the provisions
either of the Plans and Other Plans in which you are a
participant immediately prior to the Effective Date, or
of those plans in existence at the time of your
Termination Date or pursuant to any other agreement
between you and the Company, whichever are more
favorable to you, in accordance with the terms and
conditions of such Plans or Other Plans, such benefits
to be paid under such Plans or Other Plans and not under
this Agreement to the extent they are more favorable to
you.
(b) You shall also be entitled to any such benefits if your
termination results from your death or Disability if your
death or Disability occurs:
(i) during the Effective Period but after the Effective
Date, and
(ii) with respect to the benefits conferred by the Severance
Package only, after either it has been decided that you
will be terminated without Cause during the Effective
Period, or you have given notice of termination for Good
Reason during the Effective Period;
(c) You shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other
employment, nor shall the amount of any payment provided for
in this Agreement be reduced by any compensation earned by you
as the result of employment by another Person after any
Termination Date.
2. Procedures for Termination of Employment.
If your employment be terminated or intended to be terminated:
(a) For Cause, the Company shall transmit to you written notice
setting forth the Cause for which you are proposed to be
dismissed in sufficient detail to permit a reasonable
assessment of the bona fides thereof, and setting a meeting of
the Board not less than 30 days following the date of such
notice at which the Board shall consider your termination and
at which you and your counsel shall have the opportunity to be
heard, following which the Board shall either by resolution
withdraw the notice, or if it so finds in its good faith
opinion, issue its report within 10 days thereafter that Cause
exists and specifying the particulars of its findings, in
which latter event a "final notice" shall occur. After receipt
of a "final notice" of intended termination for Cause, you may
contest such "final notice" in any court described in Section
4(b)(i) and all provisions of this Agreement, shall be
continued until a Termination Date is determined pursuant to
such contest. Within 10 days
2
following the commencement of any such contest, the Company
must escrow all amounts which would have been due pursuant to
Section 1(a) if the "final notice" were not valid at a bank of
your choice. Should the contest result from which no further
appeal is possible find that:
(i) "final notice" is valid then the Termination Date shall
be the date no further appeal is possible;
(ii) "final notice" is not valid then the Termination Date
shall be the date no further appeal is possible.
(b) For Good Reason, you shall transmit to the Company written
notice setting forth the Good Reason for which you are
proposed to terminate your employment in sufficient detail to
permit a reasonable assessment of the bona fides thereof. The
Board shall issue a resolution to you not more than 10 days
following the date of such notice as to either:
(i) Their Acceptance - In the event the Board accepts your
notice of Good Reason, then the Termination Date is
established and you are entitled to receive the amounts
pursuant to Section 1(a); or
(ii) Their Rejection - In the event the Board rejects your
notice of Good Reason, then (A) the Company must escrow
within 10 days following the rejection the amounts which
would have been due pursuant to Section 1(a) if your
termination for Good Reason had been accepted at a bank
of your choice, (B) you must proceed to dispute
resolution pursuant to Section 4, and (C) all provisions
of this Agreement shall be continued until a termination
is determined pursuant to such dispute resolution from
which no further appeal is possible. The Termination
Date shall be the date on which no further appeal is
possible.
3. Excise Tax.
(a) Any other provision of this Agreement to the contrary
notwithstanding, if the present value (as defined herein) of
the total amount of payments and benefits to be paid or
provided to you under this Agreement which are considered to
be "parachute payments" within the meaning of Section 280G(b)
of the Internal Revenue Code of 1986, as amended (the "Code"),
when added to any other such "parachute payments" received by
you from the Company upon or after a Change of Control,
whether or not under this Agreement, is in excess of the
amount you can receive without causing you to be subject to an
excise tax with respect to such amount on account of Code
Section 4999, the Company shall pay to you an additional
amount (hereinafter referred to as the "Excise Tax Premium").
The Excise Tax Premium shall be equal to the excise tax
determined under Code Sections 280G and 4999 attributable to
the total amount of payments and benefits to be paid or
provided to you under this Agreement and any other "parachute
payments" received by you upon or after a Change of Control.
The Excise Tax Premium shall also include any amount
attributable to excise tax on the Excise Tax Premium. The
Company shall also pay to you an additional
3
amount (the "Additional Amount") such that the net amount
received by you, after paying any applicable Excise Tax
Premium and any federal or state income, excise or other tax
on such additional amount, shall be equal to the amount that
you would have received if such Excise Tax Premium were not
applicable. You shall be deemed to pay income taxes on the
date of termination of your employment at the highest marginal
rate of income taxation in effect in your taxing jurisdiction.
The Additional Amount shall include any amount attributable to
income, excise or other tax on the Additional Amount.
(b) Not later than 30 days following your Termination Date or, if
later, the Effective Date, as provided herein, the independent
public accountants acting as auditors for the Company on the
date of the Change of Control (or another accounting firm
designated by you) shall determine whether the sum of the
present value of any "parachute payments" payable under this
Agreement and the present value of any other "parachute
payments" received by you from the Company upon or after a
Change of Control is in excess of the amount you can receive
without causing you to be subject to an excise tax with
respect to such amount on account of Code Section 4999, and
shall determine the amount of any Excise Tax Premium and
Additional Amount payable to you. The Excise Tax Premium and
Additional Amount shall be paid to you as soon as practicable
but in no event later than 30 days following your Termination
Date, and shall be net of any amounts required to be withheld
for taxes.
(c) For purposes of this Section 3, "present value" means the
value determined in accordance with the principles of Section
1274(b)(2) of the Code under the rules provided in Treasury
Regulations under Section 280G of the Code.
(d) References to Code Section 280G herein are specific references
to Section 280G as added to the Code by the Tax Reform Act of
1984 and as amended by the Tax Reform Act of 1986. To the
extent Code Section 280G is again amended prior to the
termination of this Agreement, or is replaced by a successor
statute, the provisions of this Section 3 shall be deemed
modified without further action of the parties in a manner
consistent with such amendments or successor statutes, as the
case may be. In the event that Code Section 280G or any
successor statute is repealed, this Section 6 shall cease to
be effective on the effective date of such repeal. The parties
recognize that Treasury Regulations under Code Sections 280G
and 4999 may affect the amount that may be paid hereunder and
agree that, upon the issuance of any such regulations, this
Agreement may be modified as in good faith may be deemed
necessary in light of the provisions of such regulations to
achieve the purposes hereof, and that consent to such
modifications shall not be unreasonably withheld.
(e) The foregoing notwithstanding, if you receive payment from the
Company for reimbursement of any excise taxes pursuant to any
other agreement, to the extent any Excise Tax Premium under
this Agreement be duplicative, you shall not be entitled to
receive payment of such an Excise Tax Premium.
4
4. Dispute Resolution.
(a) This Agreement shall be governed in all respects, including as
to validity, interpretation and effect, by the internal laws
of the State of Texas without regard to choice of law
principles.
(b) It is irrevocably agreed that if any dispute arises with
respect to any action, suit or other legal proceeding
pertaining to this Agreement or to the interpretation of or
enforcement of any of your rights hereunder under this
Agreement:
(i) the Company and you agree that exclusive jurisdiction
for any such suit, action or legal proceeding shall be
in the state district courts of Texas sitting in
Xxxxxx County, Texas;
(ii) we are each at the time present in Texas for the
purpose of conferring personal jurisdiction;
(iii) the Company and you each consent to the jurisdiction
of each such court in any such suit, action or legal
proceeding and will comply with all requirements
necessary to give such court jurisdiction;
(iv) the Company and you each waive any objection it may
have to the laying of venue of any such suit, action
or legal proceeding in any of such court;
(v) the Company and you each waive any objection or right
to removal that may otherwise arise in any such suit,
action or legal proceeding;
(vi) any such suit, action or legal proceeding may be
brought in such court, and any objection that the
Company or you may now or hereafter have to the venue
of such action or proceeding in any such court or that
such action or proceeding was brought in an
inconvenient court is waived;
(vii) service of process in any such suit, action or legal
proceeding may be effected by mailing a copy thereof
by registered or certified mail, return receipt
requested (or any substantially similar form of mail),
postage prepaid, to such party provided in Section 7
hereof; and
(viii) prior to any trial on the merits, the Company and you
will submit to court supervised, non-binding
mediation.
(c) Notwithstanding any contrary provision of Texas law, the
Company shall have the burden of proof with respect to any of
the following:
(i) that Cause existed at the time any notice was given to
you under Section 2;
(ii) that Good Reason did not exist at the time notice was
given to the Company under Section 2;
5
(iii) that the Company is not in default in performance of
its obligations under this Agreement;
(iv) that the termination of your employment was not at the
request of a third party who has taken steps reasonably
calculated to effect the Change of Control and
otherwise did not arise in connection with or
anticipation of the Change of Control; and
(v) that a Change of Control has not occurred.
5. Successors; Binding Agreement.
(a) In the event any Successor does not assume this Agreement by
operation of law the Company will seek to have any Successor,
by agreement in form and substance satisfactory to you,
expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be
required to perform it. If there has been a Change of Control
prior to, or a Change of Control will result from, any such
succession, then failure of the Company to obtain at your
request such agreement prior to or upon the effectiveness of
any such succession (unless assumption occurs as a matter of
law) shall constitute Good Reason for termination by you of
your employment and, upon delivery of a notice of termination
by you to the Company, you shall be entitled to the benefits
provided for herein.
(b) This Agreement shall inure to the benefit of and be
enforceable by your personal and legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees.
6. Fees and Expenses.
The Company shall pay all legal and other costs (including but not
limited to, administrative, accounting, tax, human resource and
expert witness fees and expenses) incurred by you as a result of
your seeking to obtain, assert or enforce any right or benefit
conferred upon you by this Agreement.
You shall prepare an estimate of any fees you expect to incur in the
following 90 days and claim reimbursement for under this Section 6
no later than 10 days after notice by you to the Company that you
intend to seek legal representation under this Agreement. The
Company shall pay such estimates to you within 10 days of your
notice. At the end of the 90 days, and each 90 days thereafter, you
shall prepare a subsequent estimate and submit it to the Company
within 10 days and the Company agrees to pay all subsequent such
estimates to you within 10 days of each notice until the matter has
been resolved. After the matter has been resolved, you will submit
an appropriate accounting of actual expenses and estimates; such
that:
(i) if estimates paid to you exceed actuals, you will
promptly submit a refund to the Company; or
(ii) if actuals exceed estimates paid to you, you will submit
a final request for reimbursement from the Company,
which the Company will promptly pay.
6
7. Notices.
Any and all notices required or permitted to be given hereunder
shall be in writing and shall be deemed to have been given when
delivered in person to the persons specified below or deposited in
the United States mail, certified or registered mail, postage
prepaid and addressed as follows:
If to the Company: Oceaneering International, Inc.
00000 XX 000
Xxxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
If to you: M. Xxxxx XxXxxx
00 Xxxx Xxxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Either party may change, by the giving of notice in accordance with
this Section 7, the address to which notices are thereafter to be
sent.
8. Indemnity.
You will receive, to the fullest extent possible and to such greater
extent as applicable law hereafter may permit, indemnity from the
Company on terms at least as favorable as that provided under (i)
any Indemnity Agreement of the Company to which your are a party or
an intended beneficiary, or (ii) the Company's Bylaws as in effect
on the Effective Date or, if earlier, your Termination Date.
9. Validity.
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force
and effect.
10. Survival.
All obligations undertaken and benefits conferred pursuant to this
Agreement, shall survive any termination of your employment and
continue until performed in full.
11. Miscellaneous.
(a) No provision of this Agreement may be modified, waived or
discharged unless such modification, waiver or discharge is
agreed to in writing signed by you and the Company. No waiver
by either party hereto at any time of any breach by the other
party hereto of, or of compliance with, any condition or
provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not
expressly set forth in this Agreement.
7
(b) Failure to pay within 10 days of a payment due date or notice
thereon (whether payment is disputed or not) will result in a
default under this Agreement. Past due amounts will accrue
interest and compound at the lesser of 2% per month or the
highest interest rate allowed by law.
12. Duplicate Originals.
This Agreement has been executed in duplicate originals, with one to
be held by each of the parties hereto.
If this letter correctly sets forth our understanding with respect to the
subject matter hereof, please sign and return one copy of this letter to the
Company.
Sincerely,
OCEANEERING INTERNATIONAL, INC.
BY /s/ Xxxx X. Xxxx
-------------------------------
Xxxx X. Xxxx
Chief Executive Officer
Agreed to as of the 16th
day of November 2001:
/s/ M. Xxxxx XxXxxx
-------------------------------
M. Xxxxx XxXxxx
8
ANNEX I TO CHANGE OF CONTROL AGREEMENT DATED AUGUST 15, 2001
BETWEEN
OCEANEERING INTERNATIONAL, INC.
AND
M. XXXXX XxXXXX
Definition of Certain Terms
"AGREEMENT" means this Change of Control Agreement between you and the Company
dated as of August 15, 2001.
"BOARD" means the Board of Directors of the Company.
"BYLAWS" means the bylaws of the Company, except as otherwise specified, as in
effect at the day hereof and as the same shall be amended or otherwise modified
to, but not on or after, any Change of Control.
"CAUSE" means your conviction by a court of competent jurisdiction, from which
conviction no further appeal can be taken, of a felony-grade crime involving
moral turpitude related to your employment with the Company.
"CHANGE OF CONTROL" means the earliest date at which:
(i) any Person is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of the combined
voting power of the Company's outstanding Voting Securities, other
than through the purchase of Voting Securities directly from the
Company through a private placement; or
(ii) individuals who constitute the Board on the date hereof (the
"Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of
at least two-thirds of the directors comprising the Incumbent Board
shall from and after such election be deemed to be a member of the
Incumbent Board; or
(iii) the Company is merged or consolidated with another corporation or
entity and as a result of such merger or consolidation less than
60% of the outstanding Voting Securities of the surviving or
resulting corporation or entity shall then be owned by the former
stockholders of the Company; or
(iv) a tender offer or exchange offer is made and consummated by a
Person other than the Company for the ownership of 20% or more of
the Voting Securities of the Company then outstanding; or
(v) all or substantially all of the assets of the Company are sold or
transferred to a Person as to which (a) the Incumbent Board does
not have authority (whether by law or contract) to directly control
the use or further disposition of such assets and (b) the financial
results of the Company and such Person are not consolidated for
financial reporting purposes.
9
Anything else in this definition to the contrary notwithstanding, no Change of
Control shall be deemed to have occurred by virtue of any transaction which
results in you, or a group of Persons which includes you, acquiring more than
20% of either the combined voting power of the Company's outstanding Voting
Securities or the Voting Securities of any other corporation or entity which
acquires all or substantially all of the assets of the Company, whether by way
of merger, consolidation, sale of such assets or otherwise.
"COMPANY" means Oceaneering International, Inc., a Delaware corporation,
headquartered in Houston, Texas.
"DISABILITY" means your continuing full-time absence from your duties with the
Company for 90 days or longer as a result of physical or mental incapacity,
which absence is anticipated to extend for 90 additional days or longer. Your
need for absence and its anticipated duration shall be determined solely by a
medical physician of your choice to be approved by the Company, which approval
shall not be unreasonably withheld.
"EFFECTIVE DATE" means the earliest date upon which (i) any of the events set
forth under the definition of Change of Control shall have occurred, (ii) the
receipt by the Company of a Schedule 13D stating the intention of any Person to
take actions which, if accomplished, would constitute a Change of Control, (iii)
the public announcement by any Person of its intention to take any such action,
in each case without regard for any contingency or condition which has not been
satisfied on such date, (iv) the agreement by the Company to enter into a
transaction which, if consummated, would result in a Change of Control, or (v)
consideration by the Board of a transaction which, if consummated, would result
in a Change of Control.
If, however, an Effective Date occurs but the proposed transaction to which it
relates ceases to be actively considered or it is not consummated within 12
months of such Effective Date, the Effective Period will be deemed not to have
commenced for purposes of this Agreement. If an Effective Date occurs with
respect to a proposed transaction which ceases to be actively considered but for
which active consideration is revived, the Effective Date with respect to the
Change of Control that ultimately occurs shall be that date when consideration
was revived and carried through to consummation.
"EFFECTIVE PERIOD" means the period beginning on the Effective Period
Commencement Date and ending on the Effective Period Conclusion Date.
"EFFECTIVE PERIOD COMMENCEMENT DATE" means the date falling one year prior to
the Effective Date.
"EFFECTIVE PERIOD CONCLUSION DATE" means the date falling two years after the
occurrence of a merger or consolidation set forth under clause (iii) of the
definition of Change of Control, but in no event later than three years after
the first event that constituted a Change of Control.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
"FISCAL YEAR BONUS PLAN" means for each year, the Company's fiscal year bonus
plan, or any other plan adopted by the Board which provides for the payment of
additional compensation or equity consideration on an annual basis to senior
executive officers contingent upon the Company's
10
performance, including stock performance and results of operations for that
specific year, in either case as such plan shall be amended or modified prior
to, but not on or after, any Termination Date.
"GOOD REASON" means any of the following:
(i) except as a result of your death or due to Disability, a change in
your status, title(s) or position(s) with the Company, including as
an officer of the Company, which, in your reasonable judgment, does
not represent a promotion, with commensurate adjustment of
compensation, from your status, title(s) and position(s)
immediately prior to the Effective Date; or the withdrawal from you
of any duties or responsibilities which in your reasonable opinion
are consistent with such status, title(s) or position(s); or any
removal of you from or any failure to reappoint or reelect you to
such position(s); or
(ii) a reduction by the Company in your annual Base Salary, SERP (or
equivalent), annual bonus opportunity or aggregate long term
incentive compensation in effect immediately prior to the Effective
Date and as may subsequently be increased thereafter; or
(iii) the failure by the Company to continue in effect any Plan in which
you were participating immediately prior to the Effective Date
other than as a result of the normal expiration or amendment of any
such Plan in accordance with its terms, or the taking of any
action, or the failure to act, by the Company which would adversely
affect your continued participation in any such Plan on at least as
favorable a basis to you as is the case immediately prior to the
Effective Date or which would materially reduce your benefits under
any of such Plans or deprive you of any material benefit enjoyed by
you immediately prior to the Effective Date, except as proposed by
you to the Company; or
(iv) the relocation of the principal place of your employment to a
location 25 miles further from your principal residence without
your express written consent; or
(v) the failure by the Company upon a Change of Control to obtain the
assumption of this Agreement by any Successor (other than by
operation of law); or
(vi) any refusal by the Company to continue to allow you to attend to
matters or engage in activities not directly related to the
business of the Company which you attended to or were engaged in
immediately prior to a Change of Control which do not otherwise
violate your obligations hereunder; or
(vii) any default by the Company in the performance of its obligations
under this Agreement, whether before or after a Change of Control.
"INDEMNITY AGREEMENT" means that certain agreement between you and the Company
dated as of November 16, 2001, and any successor thereto.
"LONG TERM INCENTIVE BONUS PLAN" means the Company's long term incentive plans
(including agreements issued thereunder, e.g., restricted stock agreements and
stock option agreements) or any other plan or agreement approved by the Board,
other than the Fiscal Year Bonus Plan, which provides for the payment of
additional compensation or equity consideration to senior executive officers
contingent on the Company's performance, including stock performance
11
and results of operations for a specific time period, and in either case, as
such plan may be amended or modified prior to, but not on or after, any
Termination Date.
"MARKET VALUE" when used with respect to a Share, means the mean between the
highest and lowest sales price per Share on the New York Stock Exchange or if
not listed thereon, on such other exchange as shall at the time constitute the
principal exchange for trading in Shares. If the Shares are not publicly traded,
the Market Value shall be as determined by an independent appraiser appointed by
you for such purpose.
"OTHER PLANS" means any thrift; bonus or incentive; stock option or stock
accumulation; pension; medical, disability, accident or life insurance plan,
program or policy of the Company which is intended to benefit employees of the
Company that are similarly situated to you (other than the Plans or as otherwise
provided to you in this Agreement).
"PERSON" means any individual, corporation, partnership, group, association or
other "person," as such term is used in Sections 13(d) and 14(d) of the Exchange
Act, other than the Company or any Plans sponsored by the Company.
"PERQUISITES" means individual perquisites benefits customarily provided to you
by the Company as of the date this Agreement is signed.
"PLANS" means the Fiscal Year Bonus Plan, the Long Term Incentive Bonus Plan and
the SERP.
"RESTRICTED STOCK AGREEMENTS" means any grant by the Company to you of Shares
which are, at the relevant time, subject to possible forfeiture.
"SERP" means the Company's Supplemental Executive Retirement Plan, as the same
shall be amended or modified to, but not on or after, any Effective Date.
"SEVERANCE PACKAGE" means your right to receive, and the Company's obligation to
pay and/or perform on, the following:
(a) On or within five days following an applicable Termination Date, the
Company shall pay to you a lump sum, cash amount equal to the
greater of:
(i) $1,386,000; or
(ii) the sum of:
(A) three times the highest annual rate of your Base Salary
in effect during the then current year or any of the
three years preceding the Termination Date;
(B) three times the maximum award you would have been
eligible to receive under the then current Fiscal Year
Bonus Plan in respect of the then current year,
regardless of any limitations otherwise applicable to
the then current fiscal year (i.e., the failure to have
completed any vesting period or the current measurement
period, or the failure to achieve any performance goal
applicable to all or any portion of the measurement
period;
12
(C) three times the amount equaling the maximum percentage
of your Base Salary contribution level by the Company
for you in SERP for the then current year multiplied by
the highest annual rate of Base Salary in effect during
the then current year or any of the three years
preceding the Termination Date; and
(b) All the outstanding contingent compensation issued or awarded to you
under the Plans shall become vested, exercisable, distributable and
unrestricted (any contrary provision in the Plans or Other Plans
notwithstanding). You shall have the right immediately to:
(i) for one year thereafter, exercise all or any portion of all
your options covered by any Plan or Other Plans and to have
the underlying Shares issued to you;
(ii) for one year thereafter, in lieu of such exercise as provided
in Subsection (b)(i) above, as elected by you, to receive a
cash amount within five days following an applicable
Termination Date equal to the spread between the exercise
price and the higher Market Value of the shares, multiplied
by the number of shares of outstanding stock options;
(iii) all Shares of Restricted Stock issued under the Plans or
Other Plans shall be vested with all conditions to have been
deemed to have been satisfied with respect to all such shares
of Restricted Stock provided that such share had not
theretofore been forfeited;
(iv) to receive a cash amount within five days following an
applicable Termination Date equal to all tax assistance
payments associated with the issuance of Shares covered by
Restricted Stock held by you under a Plan or Other Plans and
vested pursuant to Subsection (b)(iii) above. Any obligation
to not sell Shares issued under Restricted Stock programs for
any period of time after vesting to keep associated tax
assistance payments is eliminated; and
(v) obtain the full benefit of any other contingent compensation
rights to which you may be entitled under the Plans or Other
Plans, in each case as though all applicable performance
targets had been met or achieved at maximum levels for all
performance periods (including those extending beyond the
Effective Date) and any Plan contingencies had been satisfied
in full at the date of the Change of Control and the maximum
possible benefits thereunder had been earned at the date of
the Change of Control, and
(c) The Company shall maintain in full force and effect for your
continued benefit for a three-year period after the Termination Date
all Other Plans in which you were entitled to participate
immediately prior to the Termination Date (at no greater cost or
expense to you than was the case immediately prior to the Change of
Control), including without limitation plans providing medical,
dental, life and disability insurance coverage, provided that your
continued participation is possible under the general terms and
provisions of such plans and programs. In the event that your
participation in any such plan or program is not possible, the
Company shall arrange to provide you, at the Company's cost and
expense, with benefits substantially similar to those which you are
entitled to receive under such plans and programs.
13
Anything else in this Agreement to the contrary notwithstanding, if:
(i) your employment is terminated in connection with a merger,
consolidation or a tender offer or an exchange offer;
(ii) you are entitled to the benefits provided for under Section 1
hereof; and
(iii) your Termination Date precedes or occurs on the date of the closing
thereof, then unless otherwise agreed to by both parties in
writing, all amounts to which you are or shall become entitled to
under this Agreement, which are calculable as of the closing date,
shall be accelerated to, and become immediately due and payable
contemporaneously with such closing.
"SHARES" means shares of Common Stock, $.01 par value, of the Company at the
date of this Agreement, as the same shall be subsequently amended, modified or
changed.
"STOCK OPTION AGREEMENTS" means any agreements providing for the grant by the
Company to you of options to purchase Shares.
"SUCCESSOR" shall mean any Person that succeeds to, or has the ability to
control, the Company's business as a whole, directly by merger, consolidation,
spin-off or similar transaction, or indirectly by purchase of the Company's
Voting Securities or acquisition of all or substantially all of the assets of
the Company.
"TERMINATION DATE" means the date, which is the final date of your service
pursuant to Section 2 of this Agreement.
"VOTING SECURITIES" means, with respect to any corporation or business
enterprise, those securities, which under ordinary circumstances are entitled to
vote for the election of directors or others charged with comparable duties
under applicable law.
14
August 15, 2001
Xxxxxx X. Xxxxxx
Senior Vice President
Oceaneering International, Inc.
00000 XX000
Xxxxxxx, Xxxxx 00000
Re: Change of Control Agreement ("COC Agreement")
Dear Xx. Xxxxxx:
Oceaneering International, Inc. (the "Company") considers the establishment and
maintenance of a sound and vital management to be essential for the protection
and enhancement of the best interests of the Company and its shareholders. The
Company recognizes that, as is the case with many publicly-held corporations,
the possibility of a "Change of Control" (as defined herein) may arise and that
such possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its shareholders. Accordingly, the Board of
Directors of the Company (the "Board") has determined that appropriate steps
should be taken to assure the Company of the continuation of your service and to
reinforce and encourage the attention and dedication of members of the Company's
management to their assigned duties without distraction in circumstances arising
from the possibility of a Change of Control of the Company. In particular the
Board believes it important, should the Company or its shareholders receive a
proposal for or notice of transfer of control of the Company, or consider one
itself, that you be able to assess and advise the Company whether such transfer
would be or is in the best interests of the Company and its shareholders, and to
take such other action regarding such transfer as the Board might determine to
be appropriate without being influenced by the uncertainties of your own
situation.
In order to induce you to remain in the employ of the Company, this letter
agreement (the "Agreement"), prepared pursuant to authority granted by the Board
and which supercedes and replaces the previous Senior Executive Severance
Agreement dated May 22, 1995 between you and the Company, sets forth the
compensation and severance benefits which the Company agrees will be provided to
you should your employment with the Company be terminated in connection with a
Change of Control under the circumstances described below as well as certain
other benefits which will be made available to you.
Reference is made to Annex I hereto for definitions of certain terms used in
this Agreement, and such definitions are incorporated herein by such reference
with the same effect as if set forth herein. Certain capitalized terms used in
this Agreement in connection with the description of various Plans are defined
in the respective Plans, but if any conflicts with a definition herein
contained, this Agreement shall prevail.
1. Termination of Employment in Connection with a Change of Control.
(a) During the Effective Period, if there is a termination of your
employment with the Company either by the Company without
Cause or by you for Good Reason either (x) prior to the
Effective Date, unless it is reasonably demonstrated by the
Company that such termination of your employment
1
(a) was not at the request of a third party who has taken
steps reasonably calculated to effect the Change of Control
and (b) otherwise did not arise in connection with or
anticipation of the Change of Control or (y) on or after the
Effective Date, commences during the life of this Agreement
you shall be entitled to the following benefits:
(i) all benefits conferred upon you by the Severance
Package, and
(ii) in addition, all benefits payable under the provisions
either of the Plans and Other Plans in which you are a
participant immediately prior to the Effective Date, or
of those plans in existence at the time of your
Termination Date or pursuant to any other agreement
between you and the Company, whichever are more
favorable to you, in accordance with the terms and
conditions of such Plans or Other Plans, such benefits
to be paid under such Plans or Other Plans and not under
this Agreement to the extent they are more favorable to
you.
(b) You shall also be entitled to any such benefits if your
termination results from your death or Disability if your
death or Disability occurs:
(i) during the Effective Period but after the Effective
Date, and
(ii) with respect to the benefits conferred by the Severance
Package only, after either it has been decided that you
will be terminated without Cause during the Effective
Period, or you have given notice of termination for Good
Reason during the Effective Period;
(c) You shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other
employment, nor shall the amount of any payment provided for
in this Agreement be reduced by any compensation earned by you
as the result of employment by another Person after any
Termination Date.
2. Procedures for Termination of Employment.
If your employment be terminated or intended to be terminated:
(a) For Cause, the Company shall transmit to you written notice
setting forth the Cause for which you are proposed to be
dismissed in sufficient detail to permit a reasonable
assessment of the bona fides thereof, and setting a meeting of
the Board not less than 30 days following the date of such
notice at which the Board shall consider your termination and
at which you and your counsel shall have the opportunity to be
heard, following which the Board shall either by resolution
withdraw the notice, or if it so finds in its good faith
opinion, issue its report within 10 days thereafter that Cause
exists and specifying the particulars of its findings, in
which latter event a "final notice" shall occur. After receipt
of a "final notice" of intended termination for Cause, you may
contest such "final notice" in any court described in Section
4(b)(i) and all provisions of this Agreement, shall be
continued until a Termination Date is determined pursuant to
such contest. Within 10 days
2
following the commencement of any such contest, the Company
must escrow all amounts which would have been due pursuant to
Section 1(a) if the "final notice" were not valid at a bank of
your choice. Should the contest result from which no further
appeal is possible find that:
(i) "final notice" is valid then the Termination Date shall
be the date no further appeal is possible;
(ii) "final notice" is not valid then the Termination Date
shall be the date no further appeal is possible.
(b) For Good Reason, you shall transmit to the Company written
notice setting forth the Good Reason for which you are
proposed to terminate your employment in sufficient detail to
permit a reasonable assessment of the bona fides thereof. The
Board shall issue a resolution to you not more than 10 days
following the date of such notice as to either:
(i) Their Acceptance - In the event the Board accepts your
notice of Good Reason, then the Termination Date is
established and you are entitled to receive the amounts
pursuant to Section 1(a); or
(ii) Their Rejection - In the event the Board rejects your
notice of Good Reason, then (A) the Company must escrow
within 10 days following the rejection the amounts which
would have been due pursuant to Section 1(a) if your
termination for Good Reason had been accepted at a bank
of your choice, (B) you must proceed to dispute
resolution pursuant to Section 4, and (C) all provisions
of this Agreement shall be continued until a termination
is determined pursuant to such dispute resolution from
which no further appeal is possible. The Termination
Date shall be the date on which no further appeal is
possible.
3. Excise Tax.
(a) Any other provision of this Agreement to the contrary
notwithstanding, if the present value (as defined herein) of
the total amount of payments and benefits to be paid or
provided to you under this Agreement which are considered to
be "parachute payments" within the meaning of Section 280G(b)
of the Internal Revenue Code of 1986, as amended (the "Code"),
when added to any other such "parachute payments" received by
you from the Company upon or after a Change of Control,
whether or not under this Agreement, is in excess of the
amount you can receive without causing you to be subject to an
excise tax with respect to such amount on account of Code
Section 4999, the Company shall pay to you an additional
amount (hereinafter referred to as the "Excise Tax Premium").
The Excise Tax Premium shall be equal to the excise tax
determined under Code Sections 280G and 4999 attributable to
the total amount of payments and benefits to be paid or
provided to you under this Agreement and any other "parachute
payments" received by you upon or after a Change of Control.
The Excise Tax Premium shall also include any amount
attributable to excise tax on the Excise Tax Premium. The
Company shall also pay to you an additional
3
amount (the "Additional Amount") such that the net amount
received by you, after paying any applicable Excise Tax
Premium and any federal or state income, excise or other tax
on such additional amount, shall be equal to the amount that
you would have received if such Excise Tax Premium were not
applicable. You shall be deemed to pay income taxes on the
date of termination of your employment at the highest marginal
rate of income taxation in effect in your taxing jurisdiction.
The Additional Amount shall include any amount attributable to
income, excise or other tax on the Additional Amount.
(b) Not later than 30 days following your Termination Date or, if
later, the Effective Date, as provided herein, the independent
public accountants acting as auditors for the Company on the
date of the Change of Control (or another accounting firm
designated by you) shall determine whether the sum of the
present value of any "parachute payments" payable under this
Agreement and the present value of any other "parachute
payments" received by you from the Company upon or after a
Change of Control is in excess of the amount you can receive
without causing you to be subject to an excise tax with
respect to such amount on account of Code Section 4999, and
shall determine the amount of any Excise Tax Premium and
Additional Amount payable to you. The Excise Tax Premium and
Additional Amount shall be paid to you as soon as practicable
but in no event later than 30 days following your Termination
Date, and shall be net of any amounts required to be withheld
for taxes.
(c) For purposes of this Section 3, "present value" means the
value determined in accordance with the principles of Section
1274(b)(2) of the Code under the rules provided in Treasury
Regulations under Section 280G of the Code.
(d) References to Code Section 280G herein are specific references
to Section 280G as added to the Code by the Tax Reform Act of
1984 and as amended by the Tax Reform Act of 1986. To the
extent Code Section 280G is again amended prior to the
termination of this Agreement, or is replaced by a successor
statute, the provisions of this Section 3 shall be deemed
modified without further action of the parties in a manner
consistent with such amendments or successor statutes, as the
case may be. In the event that Code Section 280G or any
successor statute is repealed, this Section 6 shall cease to
be effective on the effective date of such repeal. The parties
recognize that Treasury Regulations under Code Sections 280G
and 4999 may affect the amount that may be paid hereunder and
agree that, upon the issuance of any such regulations, this
Agreement may be modified as in good faith may be deemed
necessary in light of the provisions of such regulations to
achieve the purposes hereof, and that consent to such
modifications shall not be unreasonably withheld.
(e) The foregoing notwithstanding, if you receive payment from the
Company for reimbursement of any excise taxes pursuant to any
other agreement, to the extent any Excise Tax Premium under
this Agreement be duplicative, you shall not be entitled to
receive payment of such an Excise Tax Premium.
4
4. Dispute Resolution.
(a) This Agreement shall be governed in all respects, including as
to validity, interpretation and effect, by the internal laws
of the State of Texas without regard to choice of law
principles.
(b) It is irrevocably agreed that if any dispute arises with
respect to any action, suit or other legal proceeding
pertaining to this Agreement or to the interpretation of or
enforcement of any of your rights hereunder under this
Agreement:
(i) the Company and you agree that exclusive jurisdiction
for any such suit, action or legal proceeding shall be
in the state district courts of Texas sitting in
Xxxxxx County, Texas;
(ii) we are each at the time present in Texas for the
purpose of conferring personal jurisdiction;
(iii) the Company and you each consent to the jurisdiction
of each such court in any such suit, action or legal
proceeding and will comply with all requirements
necessary to give such court jurisdiction;
(iv) the Company and you each waive any objection it may
have to the laying of venue of any such suit, action
or legal proceeding in any of such court;
(v) the Company and you each waive any objection or right
to removal that may otherwise arise in any such suit,
action or legal proceeding;
(vi) any such suit, action or legal proceeding may be
brought in such court, and any objection that the
Company or you may now or hereafter have to the venue
of such action or proceeding in any such court or that
such action or proceeding was brought in an
inconvenient court is waived;
(vii) service of process in any such suit, action or legal
proceeding may be effected by mailing a copy thereof
by registered or certified mail, return receipt
requested (or any substantially similar form of mail),
postage prepaid, to such party provided in Section 7
hereof; and
(viii) prior to any trial on the merits, the Company and you
will submit to court supervised, non-binding
mediation.
(c) Notwithstanding any contrary provision of Texas law, the
Company shall have the burden of proof with respect to any of
the following:
(i) that Cause existed at the time any notice was given to
you under Section 2;
(ii) that Good Reason did not exist at the time notice was
given to the Company under Section 2;
5
(iii) that the Company is not in default in performance of
its obligations under this Agreement;
(iv) that the termination of your employment was not at the
request of a third party who has taken steps reasonably
calculated to effect the Change of Control and
otherwise did not arise in connection with or
anticipation of the Change of Control; and
(v) that a Change of Control has not occurred.
5. Successors; Binding Agreement.
(a) In the event any Successor does not assume this Agreement by
operation of law the Company will seek to have any Successor,
by agreement in form and substance satisfactory to you,
expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be
required to perform it. If there has been a Change of Control
prior to, or a Change of Control will result from, any such
succession, then failure of the Company to obtain at your
request such agreement prior to or upon the effectiveness of
any such succession (unless assumption occurs as a matter of
law) shall constitute Good Reason for termination by you of
your employment and, upon delivery of a notice of termination
by you to the Company, you shall be entitled to the benefits
provided for herein.
(b) This Agreement shall inure to the benefit of and be
enforceable by your personal and legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees.
6. Fees and Expenses.
The Company shall pay all legal and other costs (including but not
limited to, administrative, accounting, tax, human resource and
expert witness fees and expenses) incurred by you as a result of
your seeking to obtain, assert or enforce any right or benefit
conferred upon you by this Agreement.
You shall prepare an estimate of any fees you expect to incur in the
following 90 days and claim reimbursement for under this Section 6
no later than 10 days after notice by you to the Company that you
intend to seek legal representation under this Agreement. The
Company shall pay such estimates to you within 10 days of your
notice. At the end of the 90 days, and each 90 days thereafter, you
shall prepare a subsequent estimate and submit it to the Company
within 10 days and the Company agrees to pay all subsequent such
estimates to you within 10 days of each notice until the matter has
been resolved. After the matter has been resolved, you will submit
an appropriate accounting of actual expenses and estimates; such
that:
(i) if estimates paid to you exceed actuals, you will
promptly submit a refund to the Company; or
(ii) if actuals exceed estimates paid to you, you will submit
a final request for reimbursement from the Company,
which the Company will promptly pay.
6
7. Notices.
Any and all notices required or permitted to be given hereunder
shall be in writing and shall be deemed to have been given when
delivered in person to the persons specified below or deposited in
the United States mail, certified or registered mail, postage
prepaid and addressed as follows:
If to the Company: Oceaneering International, Inc.
00000 XX 000
Xxxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
If to you: Xxxxxx X. Xxxxxx
00000 Xxxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Either party may change, by the giving of notice in accordance with
this Section 7, the address to which notices are thereafter to be
sent.
8. Indemnity.
You will receive, to the fullest extent possible and to such greater
extent as applicable law hereafter may permit, indemnity from the
Company on terms at least as favorable as that provided under (i)
any Indemnity Agreement of the Company to which your are a party or
an intended beneficiary, or (ii) the Company's Bylaws as in effect
on the Effective Date or, if earlier, your Termination Date.
9. Validity.
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force
and effect.
10. Survival.
All obligations undertaken and benefits conferred pursuant to this
Agreement, shall survive any termination of your employment and
continue until performed in full.
11. Miscellaneous.
(a) No provision of this Agreement may be modified, waived or
discharged unless such modification, waiver or discharge is
agreed to in writing signed by you and the Company. No waiver
by either party hereto at any time of any breach by the other
party hereto of, or of compliance with, any condition or
provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not
expressly set forth in this Agreement.
7
(b) Failure to pay within 10 days of a payment due date or notice
thereon (whether payment is disputed or not) will result in a
default under this Agreement. Past due amounts will accrue
interest and compound at the lesser of 2% per month or the
highest interest rate allowed by law.
12. Duplicate Originals.
This Agreement has been executed in duplicate originals, with one to
be held by each of the parties hereto.
If this letter correctly sets forth our understanding with respect to the
subject matter hereof, please sign and return one copy of this letter to the
Company.
Sincerely,
OCEANEERING INTERNATIONAL, INC.
BY /s/ Xxxx X. Xxxx
-------------------------------
Xxxx X. Xxxx
Chief Executive Officer
Agreed to as of the 16th
day of November 2001:
/s/ Xxxxxx X. Xxxxxx
-------------------------------
Xxxxxx X. Xxxxxx
8
ANNEX I TO CHANGE OF CONTROL AGREEMENT DATED AUGUST 15, 2001
BETWEEN
OCEANEERING INTERNATIONAL, INC.
AND
XXXXXX X. XXXXXX
Definition of Certain Terms
"AGREEMENT" means this Change of Control Agreement between you and the Company
dated as of August 15, 2001.
"BOARD" means the Board of Directors of the Company.
"BYLAWS" means the bylaws of the Company, except as otherwise specified, as in
effect at the day hereof and as the same shall be amended or otherwise modified
to, but not on or after, any Change of Control.
"CAUSE" means your conviction by a court of competent jurisdiction, from which
conviction no further appeal can be taken, of a felony-grade crime involving
moral turpitude related to your employment with the Company.
"CHANGE OF CONTROL" means the earliest date at which:
(i) any Person is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities
of the Company representing 20% or more of the combined voting power
of the Company's outstanding Voting Securities, other than through
the purchase of Voting Securities directly from the Company through
a private placement; or
(ii) individuals who constitute the Board on the date hereof (the
"Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at
least two-thirds of the directors comprising the Incumbent Board
shall from and after such election be deemed to be a member of the
Incumbent Board; or
(iii) the Company is merged or consolidated with another corporation or
entity and as a result of such merger or consolidation less than 60%
of the outstanding Voting Securities of the surviving or resulting
corporation or entity shall then be owned by the former stockholders
of the Company; or
(iv) a tender offer or exchange offer is made and consummated by a Person
other than the Company for the ownership of 20% or more of the
Voting Securities of the Company then outstanding; or
(v) all or substantially all of the assets of the Company are sold or
transferred to a Person as to which (a) the Incumbent Board does not
have authority (whether by law or contract) to directly control the
use or further disposition of such assets and (b) the financial
results of the Company and such Person are not consolidated for
financial reporting purposes.
9
Anything else in this definition to the contrary notwithstanding, no Change of
Control shall be deemed to have occurred by virtue of any transaction which
results in you, or a group of Persons which includes you, acquiring more than
20% of either the combined voting power of the Company's outstanding Voting
Securities or the Voting Securities of any other corporation or entity which
acquires all or substantially all of the assets of the Company, whether by way
of merger, consolidation, sale of such assets or otherwise.
"COMPANY" means Oceaneering International, Inc., a Delaware corporation,
headquartered in Houston, Texas.
"DISABILITY" means your continuing full-time absence from your duties with the
Company for 90 days or longer as a result of physical or mental incapacity,
which absence is anticipated to extend for 90 additional days or longer. Your
need for absence and its anticipated duration shall be determined solely by a
medical physician of your choice to be approved by the Company, which approval
shall not be unreasonably withheld.
"EFFECTIVE DATE" means the earliest date upon which (i) any of the events set
forth under the definition of Change of Control shall have occurred, (ii) the
receipt by the Company of a Schedule 13D stating the intention of any Person to
take actions which, if accomplished, would constitute a Change of Control, (iii)
the public announcement by any Person of its intention to take any such action,
in each case without regard for any contingency or condition which has not been
satisfied on such date, (iv) the agreement by the Company to enter into a
transaction which, if consummated, would result in a Change of Control, or (v)
consideration by the Board of a transaction which, if consummated, would result
in a Change of Control.
If, however, an Effective Date occurs but the proposed transaction to which it
relates ceases to be actively considered or it is not consummated within 12
months of such Effective Date, the Effective Period will be deemed not to have
commenced for purposes of this Agreement. If an Effective Date occurs with
respect to a proposed transaction which ceases to be actively considered but for
which active consideration is revived, the Effective Date with respect to the
Change of Control that ultimately occurs shall be that date when consideration
was revived and carried through to consummation.
"EFFECTIVE PERIOD" means the period beginning on the Effective Period
Commencement Date and ending on the Effective Period Conclusion Date.
"EFFECTIVE PERIOD COMMENCEMENT DATE" means the date falling one year prior to
the Effective Date.
"EFFECTIVE PERIOD CONCLUSION DATE" means the date falling two years after the
occurrence of a merger or consolidation set forth under clause (iii) of the
definition of Change of Control, but in no event later than three years after
the first event that constituted a Change of Control.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
"FISCAL YEAR BONUS PLAN" means for each year, the Company's fiscal year bonus
plan, or any other plan adopted by the Board which provides for the payment of
additional compensation or equity consideration on an annual basis to senior
executive officers contingent upon the Company's
10
performance, including stock performance and results of operations for that
specific year, in either case as such plan shall be amended or modified prior
to, but not on or after, any Termination Date.
"GOOD REASON" means any of the following:
(i) except as a result of your death or due to Disability, a change in
your status, title(s) or position(s) with the Company, including as
an officer of the Company, which, in your reasonable judgment, does
not represent a promotion, with commensurate adjustment of
compensation, from your status, title(s) and position(s) immediately
prior to the Effective Date; or the withdrawal from you of any
duties or responsibilities which in your reasonable opinion are
consistent with such status, title(s) or position(s); or any removal
of you from or any failure to reappoint or reelect you to such
position(s); or
(ii) a reduction by the Company in your annual Base Salary, SERP (or
equivalent), annual bonus opportunity or aggregate long term
incentive compensation in effect immediately prior to the Effective
Date and as may subsequently be increased thereafter; or
(iii) the failure by the Company to continue in effect any Plan in which
you were participating immediately prior to the Effective Date other
than as a result of the normal expiration or amendment of any such
Plan in accordance with its terms, or the taking of any action, or
the failure to act, by the Company which would adversely affect your
continued participation in any such Plan on at least as favorable a
basis to you as is the case immediately prior to the Effective Date
or which would materially reduce your benefits under any of such
Plans or deprive you of any material benefit enjoyed by you
immediately prior to the Effective Date, except as proposed by you
to the Company; or
(iv) the relocation of the principal place of your employment to a
location 25 miles further from your principal residence without your
express written consent; or
(v) the failure by the Company upon a Change of Control to obtain the
assumption of this Agreement by any Successor (other than by
operation of law); or
(vi) any refusal by the Company to continue to allow you to attend to
matters or engage in activities not directly related to the business
of the Company which you attended to or were engaged in immediately
prior to a Change of Control which do not otherwise violate your
obligations hereunder; or
(vii) any default by the Company in the performance of its obligations
under this Agreement, whether before or after a Change of Control.
"INDEMNITY AGREEMENT" means that certain agreement between you and the Company
dated as of November 16, 2001, and any successor thereto.
"LONG TERM INCENTIVE BONUS PLAN" means the Company's long term incentive plans
(including agreements issued thereunder, e.g., restricted stock agreements and
stock option agreements) or any other plan or agreement approved by the Board,
other than the Fiscal Year Bonus Plan, which provides for the payment of
additional compensation or equity consideration to senior executive officers
contingent on the Company's performance, including stock performance
11
and results of operations for a specific time period, and in either case, as
such plan may be amended or modified prior to, but not on or after, any
Termination Date.
"MARKET VALUE" when used with respect to a Share, means the mean between the
highest and lowest sales price per Share on the New York Stock Exchange or if
not listed thereon, on such other exchange as shall at the time constitute the
principal exchange for trading in Shares. If the Shares are not publicly traded,
the Market Value shall be as determined by an independent appraiser appointed by
you for such purpose.
"OTHER PLANS" means any thrift; bonus or incentive; stock option or stock
accumulation; pension; medical, disability, accident or life insurance plan,
program or policy of the Company which is intended to benefit employees of the
Company that are similarly situated to you (other than the Plans or as otherwise
provided to you in this Agreement).
"PERSON" means any individual, corporation, partnership, group, association or
other "person," as such term is used in Sections 13(d) and 14(d) of the Exchange
Act, other than the Company or any Plans sponsored by the Company.
"PERQUISITES" means individual perquisites benefits customarily provided to you
by the Company as of the date this Agreement is signed.
"PLANS" means the Fiscal Year Bonus Plan, the Long Term Incentive Bonus Plan and
the SERP.
"RESTRICTED STOCK AGREEMENTS" means any grant by the Company to you of Shares
which are, at the relevant time, subject to possible forfeiture.
"SERP" means the Company's Supplemental Executive Retirement Plan, as the same
shall be amended or modified to, but not on or after, any Effective Date.
"SEVERANCE PACKAGE" means your right to receive, and the Company's obligation to
pay and/or perform on, the following:
(a) On or within five days following an applicable Termination Date, the
Company shall pay to you a lump sum, cash amount equal to the
greater of:
(i) $1,386,000; or
(ii) the sum of:
(A) three times the highest annual rate of your Base Salary
in effect during the then current year or any of the
three years preceding the Termination Date;
(B) three times the maximum award you would have been
eligible to receive under the then current Fiscal Year
Bonus Plan in respect of the then current year,
regardless of any limitations otherwise applicable to
the then current fiscal year (i.e., the failure to have
completed any vesting period or the current measurement
period, or the failure to achieve any performance goal
applicable to all or any portion of the measurement
period;
12
(C) three times the amount equaling the maximum percentage
of your Base Salary contribution level by the Company
for you in SERP for the then current year multiplied by
the highest annual rate of Base Salary in effect during
the then current year or any of the three years
preceding the Termination Date; and
(b) All the outstanding contingent compensation issued or awarded to you
under the Plans shall become vested, exercisable, distributable and
unrestricted (any contrary provision in the Plans or Other Plans
notwithstanding). You shall have the right immediately to:
(i) for one year thereafter, exercise all or any portion of all
your options covered by any Plan or Other Plans and to have
the underlying Shares issued to you;
(ii) for one year thereafter, in lieu of such exercise as provided
in Subsection (b)(i) above, as elected by you, to receive a
cash amount within five days following an applicable
Termination Date equal to the spread between the exercise
price and the higher Market Value of the shares, multiplied by
the number of shares of outstanding stock options;
(iii) all Shares of Restricted Stock issued under the Plans or Other
Plans shall be vested with all conditions to have been deemed
to have been satisfied with respect to all such shares of
Restricted Stock provided that such share had not theretofore
been forfeited;
(iv) to receive a cash amount within five days following an
applicable Termination Date equal to all tax assistance
payments associated with the issuance of Shares covered by
Restricted Stock held by you under a Plan or Other Plans and
vested pursuant to Subsection (b)(iii) above. Any obligation
to not sell Shares issued under Restricted Stock programs for
any period of time after vesting to keep associated tax
assistance payments is eliminated; and
(v) obtain the full benefit of any other contingent compensation
rights to which you may be entitled under the Plans or Other
Plans, in each case as though all applicable performance
targets had been met or achieved at maximum levels for all
performance periods (including those extending beyond the
Effective Date) and any Plan contingencies had been satisfied
in full at the date of the Change of Control and the maximum
possible benefits thereunder had been earned at the date of
the Change of Control, and
(c) The Company shall maintain in full force and effect for your
continued benefit for a three-year period after the Termination Date
all Other Plans in which you were entitled to participate
immediately prior to the Termination Date (at no greater cost or
expense to you than was the case immediately prior to the Change of
Control), including without limitation plans providing medical,
dental, life and disability insurance coverage, provided that your
continued participation is possible under the general terms and
provisions of such plans and programs. In the event that your
participation in any such plan or program is not possible, the
Company shall arrange to provide you, at the Company's cost and
expense, with benefits substantially similar to those which you are
entitled to receive under such plans and programs.
13
Anything else in this Agreement to the contrary notwithstanding, if:
(i) your employment is terminated in connection with a merger,
consolidation or a tender offer or an exchange offer;
(ii) you are entitled to the benefits provided for under Section 1
hereof; and
(iii) your Termination Date precedes or occurs on the date of the closing
thereof, then unless otherwise agreed to by both parties in writing,
all amounts to which you are or shall become entitled to under this
Agreement, which are calculable as of the closing date, shall be
accelerated to, and become immediately due and payable
contemporaneously with such closing.
"SHARES" means shares of Common Stock, $.01 par value, of the Company at the
date of this Agreement, as the same shall be subsequently amended, modified or
changed.
"STOCK OPTION AGREEMENTS" means any agreements providing for the grant by the
Company to you of options to purchase Shares.
"SUCCESSOR" shall mean any Person that succeeds to, or has the ability to
control, the Company's business as a whole, directly by merger, consolidation,
spin-off or similar transaction, or indirectly by purchase of the Company's
Voting Securities or acquisition of all or substantially all of the assets of
the Company.
"TERMINATION DATE" means the date, which is the final date of your service
pursuant to Section 2 of this Agreement.
"VOTING SECURITIES" means, with respect to any corporation or business
enterprise, those securities, which under ordinary circumstances are entitled to
vote for the election of directors or others charged with comparable duties
under applicable law.
14
