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EXHIBIT 10.9
EXECUTIVE AGREEMENT
This Executive Agreement ("Agreement") between Oil States
International, Inc., a Delaware corporation (the "Company"), and Xxxxx X. Xxxxxx
(the "Executive") is made and entered into effective as of the date of the
consummation of the initial public offering of the common stock of the Company
(the "Effective Date").
WHEREAS, Executive is a key executive of the Company or a subsidiary;
and
WHEREAS, the Company believes it to be in the best interests of its
stockholders to attract, retain and motivate key executives and ensure
continuity of management; and
WHEREAS, it is in the best interest of the Company and its stockholders
if the key executives can approach material business development decisions
objectively and without concern for their personal situation; and
WHEREAS, the Company recognizes that the possibility of a Change of
Control (as defined below) of the Company may result in the departure of key
executives to the detriment of the Company and its stockholders; and
WHEREAS, the Board of Directors of the Company has authorized this
Agreement and certain similar agreements in order to retain and motivate key
management and to ensure continuity of key management;
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Executive agree as
follows:
1. TERM OF AGREEMENT
A. This Agreement shall commence on the Effective Date and, subject
to the provisions for earlier termination in this Agreement,
shall continue in effect through the third anniversary of the
Effective Date; provided, however, commencing on the Effective
Date and on each day thereafter, the term of this Agreement shall
automatically be extended for one additional day unless the Board
of Directors of the Company shall give written notice to
Executive that the term shall cease to be so extended in which
event the Agreement shall terminate on the third anniversary of
the date such notice is given.
B. Notwithstanding anything in this Agreement to the contrary, this
Agreement, if in effect on the date of a Change of Control, shall
automatically be extended for the 24-month period following the
Change of Control.
C. Termination of this Agreement shall not alter or impair any
rights of Executive arising hereunder on or before such
termination.
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2. CERTAIN DEFINITIONS
A. "Cause" shall mean:
(i) Executive's conviction of (or plea of nolo contendere
to) a felony, dishonesty or a breach of trust as
regards the Company or any subsidiary;
(ii) Executive's commission of any act of theft, fraud,
embezzlement or misappropriation against the Company or
any subsidiary that is materially injurious to the
Company or such subsidiary regardless of whether a
criminal conviction is obtained;
(iii) Executive's willful and continued failure to devote
substantially all of his business time to the Company's
business affairs (excluding failures due to illness,
incapacity, vacations, incidental civic activities and
incidental personal time) which failure is not remedied
within a reasonable time after written demand is
delivered by the Company, which demand specifically
identifies the manner in which the Company believes
that Executive has failed to devote substantially all
of his business time to the Company's business affairs;
or
(iv) Executive's unauthorized disclosure of confidential
information of the Company that is materially injurious
to the Company.
For purposes of this definition, no act, or failure
to act, on Executive's part shall be deemed "willful" unless
done, or omitted to be done, by Executive not in good faith
and without reasonable belief that Executive's action or
omission was in the best interest of the Company.
B. "Change of Control" shall mean any of the following:
(i) any "person" (as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), (other than a trustee or
other fiduciary holding securities under an employee
benefit plan of the Company or any affiliate, SCF III,
L.P., SCF IV, L.P., or any affiliate of SCF-III, L.P.
or SCF-IV, L.P. or any corporation owned, directly or
indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership
of stock of the Company), acquires "beneficial
ownership" (within the meaning of Rule 13d-3 under the
Exchange Act) of securities of the Company representing
35% or more of the combined voting power of the
Company's then outstanding securities; provided,
however, that if the Company engages in a merger or
consolidation in which the Company or surviving entity
in such merger or consolidation becomes a subsidiary of
another entity, then references to the Company's then
outstanding securities shall be deemed to refer to the
outstanding securities of such parent entity;
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(ii) a change in the composition of the Board, as a result
of which fewer than a majority of the directors are
Incumbent Directors. "Incumbent Directors" shall mean
directors who either (i) are directors of the Company
as of the Effective Date, or (ii) are elected, or
nominated for election, to the Board with the
affirmative votes of at least two-thirds of the
Incumbent Directors at the time of such election or
nomination, but Incumbent Director shall not include an
individual whose election or nomination occurs as a
result of either (1) an actual or threatened election
contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or
(2) an actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the
Board of Directors of the Company;
(iii) the consummation of a merger or consolidation of the
Company with any other corporation, other than a merger
or consolidation which would result in the voting
securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting
securities of the surviving entity (or if the surviving
entity is or shall become a subsidiary of another
entity, then such parent entity)) more than 50% of the
combined voting power of the voting securities of the
Company (or such surviving entity or parent entity, as
the case may be) outstanding immediately after such
merger or consolidation;
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company; or
(v) the sale or disposition (other than a pledge or similar
encumbrance) by the Company of all or substantially all
of the assets of the Company other than to a subsidiary
or subsidiaries of the Company.
C. "Date of Termination" shall mean the date the Notice of
Termination is given unless such termination is by Executive
in which event the Date of Termination shall not be less than
30 days following the date the Notice of Termination is given.
Further, a Notice of Termination given by Executive due to a
Good Reason event that is corrected by the Company before the
Date of Termination shall be void.
D. "Good Reason" shall mean:
(i) a material reduction in Executive's authority, duties
or responsibilities from those in effect immediately
prior to the Change of Control or the assignment to
Executive duties or responsibilities inconsistent in
any material respect from those of Executive in effect
immediately prior to the Change of Control;
(ii) a material reduction of Executive's compensation and
benefits, including, without limitation, annual base
salary, annual bonus, and equity incentive
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opportunities, from those in effect immediately prior
to the Change of Control;
(iii) the Company fails to obtain a written agreement from
any successor or assigns of the Company to assume and
perform this Agreement as provided in Section 9 hereof;
or
(iv) the Company requires Executive, without Executive's
consent, to be based at any office located more than 50
miles from the Company's offices to which Executive was
based immediately prior to the Change of Control,
except for travel reasonably required in the
performance of Executive's duties.
Notwithstanding the above however, Good Reason shall not exist
with respect to a matter unless Executive gives the Company
written notice of such matter within 30 days of the date
Executive knows or should reasonably have known of its
occurrence. If Executive fails to give such notice timely,
Executive shall be deemed to have waived all rights Executive
may have under this Agreement with respect to such matter.
E. "Notice of Termination" shall mean a written notice delivered
to the other party indicating the specific termination
provision in this Agreement relied upon for termination of
Executive's employment and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis
for termination of Executive's employment under the provision
so indicated.
F. "Protected Period" shall mean the 24-month period beginning
on the effective date of a Change of Control.
G. "Target AICP" shall mean the targeted value of Executive's
annual incentive compensation plan bonus for the year in which
the Date of Termination occurs or the fiscal year immediately
preceding the Change of Control, whichever is a greater
amount.
H. "Termination Base Salary" shall mean Executive's base salary
at the rate in effect at the time the Notice of Termination is
given or, if a greater amount, Executive's base salary at the
rate in effect immediately prior to the Change of Control.
3. NO EMPLOYMENT AGREEMENT.
This Agreement shall be considered solely as a "severance agreement"
obligating the Company to pay Executive certain amounts of compensation
and to provide certain benefits in the event and only in the event of
Executive's termination of employment for the specified reasons and at
the times specified herein. The parties agree that this Agreement shall
not be considered an employment agreement and that Executive is an "at
will" employee of the Company.
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4. REGULAR SEVERANCE BENEFITS.
Subject to Section 13, if the Company terminates Executive's employment
(i) other than for Cause and (ii) not during the Protected Period,
Executive shall receive the following compensation and benefits from
the Company:
A. Within 15 days of the Date of Termination the Company shall
pay to Executive in a lump sum, in cash, an amount equal to
1.5 times the sum of Executive's (i) Termination Base Salary
and (ii) Target AICP.
B. Notwithstanding anything in any Company stock plan or grant
agreement to the contrary, all restricted shares and
restricted stock units of Executive shall become 100% vested
and all restrictions thereon shall lapse as of the Date of
Termination and the Company shall promptly deliver such shares
to Executive.
C. For the 24-month period following the Date of Termination
(the "Regular Severance Period"), the Company shall continue
to provide Executive and Executive's eligible family
members, based on the cost sharing arrangement between the
Company and similarly situated active employees, with
medical and dental health benefits and disability coverage
and benefits at least equal to those which would have been
provided to Executive if Executive's employment had not been
terminated or, if more favorable to Executive, as in effect
generally at any time during such period. Notwithstanding
the foregoing, if Executive becomes eligible to receive
medical, dental and disability benefits under another
employer's plans during this Regular Severance Period, the
Company's obligations under this Section 4C shall be reduced
to the extent comparable benefits are actually received by
Executive during such period, and any such benefits actually
received by Executive shall be promptly reported by
Executive to the Company. In the event Executive is
ineligible under the terms of the Company's health and other
welfare benefit plans or programs to continue to be so
covered, the Company shall provide Executive with
substantially equivalent coverage through other sources or
will provide Executive with a lump sum payment in such
amount that, after all taxes on that amount, shall be equal
to the cost to Executive of providing Executive such benefit
coverage. The lump sum shall be determined on a present
value basis using the interest rate provided in Section
1274(b)(2)(B) of the Internal Revenue Code of 1986, as
amended (the "Code") on the Date of Termination.
CHANGE OF CONTROL SEVERANCE BENEFITS
5. SEVERANCE BENEFITS. Subject to Section 13, if either (a) Executive
terminates his employment during the Protected Period for a Good Reason
event or (b) the Company terminates Executive's employment during the
Protected Period other than for Cause, Executive shall receive the
following compensation and benefits from the Company:
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A. Within 15 days of the Date of Termination the Company shall
pay to Executive in a lump sum, in cash, an amount equal to
2.5 times the sum of Executive's (i) Termination Base Salary
and (ii) Target AICP.
B. Notwithstanding anything in any Company stock plan or grant
agreement to the contrary, (i) all restricted shares and
restricted stock units of Executive shall become 100% vested
and all restrictions thereon shall lapse as of the Date of
Termination and the Company shall promptly deliver such shares
to Executive and (ii) each then outstanding stock option of
Executive shall become 100% exercisable and, excluding any
incentive stock option granted prior to the Effective Date,
shall remain exercisable for the remainder of such option's
term.
C. Executive shall be fully vested in Executive's accrued
benefits under all qualified pension, nonqualified pension,
profit sharing, 401(k), deferred compensation and
supplemental plans maintained by the Company for Executive's
benefit, except to that the extent the acceleration of
vesting of such benefits would violate any applicable law or
require the Company to accelerate the vesting of the accrued
benefits of all participants in such plan or plans, in which
event the Company shall pay Executive a lump sum amount, in
cash, within 15 days following the Date of Termination,
equal to the present value of such unvested accrued benefits
that cannot become vested under the plan for the reasons
provided above.
D. For the 36-month period following the Date of Termination
(the "COC Severance Period"), the Company shall continue to
provide Executive and Executive's eligible family members,
based on the cost sharing arrangement between Executive and
the Company on the Date of Termination, with medical and
dental health benefits and disability coverage and benefits
at least equal to those which would have been provided to
Executive if Executive's employment had not been terminated
or, if more favorable to Executive, as in effect generally
at any time during such period. Notwithstanding the
foregoing, if Executive becomes eligible to receive medical,
dental and disability benefits under another employer's
plans during this COC Severance Period, the Company's
obligations under this Section 5D shall be reduced to the
extent comparable benefits are actually received by
Executive during such period, and any such benefits actually
received by Executive shall be promptly reported by
Executive to the Company. In the event Executive is
ineligible under the terms of the Company's health and other
welfare benefit plans or programs to continue to be so
covered, the Company shall provide Executive with
substantially equivalent coverage through other sources or
will provide Executive with a lump sum payment in such
amount that, after all taxes on that amount, shall be equal
to the cost to Executive of providing Executive such benefit
coverage. The lump sum shall be determined on a present
value basis using the interest rate provided in Section
1274(b)(2)(B) of the Code on the Date of Termination.
E. Throughout the term of the COC Severance Period or until
Executive accepts other employment, including as an
independent contractor, with a new employer,
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whichever occurs first, Executive shall be entitled to
receive outplacement services, payable by the Company, with
an aggregate cost not to exceed 15% of Executive's
Termination Base Salary, with an executive outplacement
service firm reasonably acceptable to the Company and
Executive.
6. PARACHUTE TAX GROSS UP.
If any payment (including without limitation any imputed income) made,
or benefit provided, to or on behalf of Executive pursuant to this
Agreement, including any accelerated vesting or any deferred
compensation or other award, in connection with a "change in control"
of the Company (within the meaning of Section 280G of the Code) results
in Executive being subject to the excise tax imposed by Section 4999 of
the Code (or any successor or similar provision) the Company shall
promptly pay Executive an additional amount in cash (the "Additional
Amount") such that the net amount of all such payments and benefits
received by Executive after paying all applicable taxes (including
penalties and interest) on such payments and benefits, including on
such Additional Amount, shall be equal to the net after-tax amount of
the payments and benefits (excluding the Additional Amount) that
Executive would have received if Section 4999 were not applicable to
such payments and benefits. Such determinations shall be made by the
Company's independent certified public accountants.
7. ACCELERATED VESTING OF OPTIONS UPON A CHANGE OF CONTROL.
Notwithstanding any provisions of any Company stock option plan or
option agreement to the contrary, upon a Change of Control all
outstanding unvested stock options, if any, granted to Executive under
any Company stock option plan (or options substituted therefor covering
the stock of a successor corporation) shall be fully vested and
exercisable as to all shares of stock covered thereby effective as of
the date of the Change of Control.
8. MITIGATION.
Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise
nor, except as provided in Section 4C and Section 5D, shall the amount
of any payment or benefit provided for in this Agreement be reduced by
any compensation earned or benefit received by Executive as the result
of employment by another employer or self_employment, by retirement
benefits, by offset against any amount claimed to be owed by Executive
to the Company or otherwise, except that any severance payments or
benefits that Executive is entitled to receive pursuant to a Company
severance plan or program for employees in general shall reduce the
amount of payments and benefits otherwise payable or to be provided
under this Agreement.
9. SUCCESSOR AGREEMENT.
The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially
all of the business and/or assets of the Company to assume expressly
and agree to perform this Agreement in the same manner and
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to the same extent that the Company would be required to perform if no
succession had taken place. Failure of the successor to so assume
shall constitute a breach of this Agreement and entitle Executive to
the benefits hereunder as if triggered by a termination by the Company
other than for Cause.
10. INDEMNITY.
In any situation where under applicable law the Company has the power
to indemnify, advance expenses to and defend Executive in respect of
any judgements, fines, settlements, loss, cost or expense (including
attorneys fees) of any nature related to or arising out of Executive's
activities as an agent, employee, officer or director of the Company or
in any other capacity on behalf of or at the request of the Company,
then the Company shall promptly on written request, indemnify
Executive, advance expenses (including attorney's fees) to Executive
and defend Executive to the fullest extent permitted by applicable law,
including but not limited to making such findings and determinations
and taking any and all such actions as the Company may, under
applicable law, be permitted to have the discretion to take so as to
effectuate such indemnification, advancement or defense. Such agreement
by the Company shall not be deemed to impair any other obligation of
the Company respecting Executive's indemnification or defense otherwise
arising out of this or any other agreement or promise of the Company
under any statute.
11. NOTICE.
For the purpose of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and delivered by
United States certified or registered mail (return receipt requested,
postage prepaid) or by courier guaranteeing overnight delivery or by
hand delivery (with signed receipt required), addressed to the
respective addresses set forth below, and such notice or communication
shall be deemed to have been duly given two days after deposit in the
mail, one day after deposit with such overnight carrier or upon
delivery with hand delivery. The addresses set forth below may be
changed by a writing in accordance herewith.
Company: Executive:
Oil States International, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Chairman of the Board
12. ARBITRATION.
The parties agree to resolve any claim or controversy arising out of or
relating to this Agreement, including but not limited to the
termination of employment of Executive, by binding arbitration under
the Federal Arbitration Act before one arbitrator in Houston, Texas,
administered by the American Arbitration Association under its
Commercial Arbitration Rules, and judgment on the award rendered by the
arbitrator may be entered in any court
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having jurisdiction thereof. The fees and expenses of the arbitrator
shall be borne solely by the non-prevailing party or, in the event
there is no clear prevailing party, as the arbitrator deems
appropriate. Except as provided above, each party shall pay its own
costs and expenses (including, without limitation, attorneys' fees)
relating to any mediation/arbitration proceeding conducted under this
Section 12.
13. WAIVER AND RELEASE.
As a condition to the receipt of any payment or benefit under this
Agreement, Executive must first execute and deliver to the Company a
binding general release, as prepared by the Company, that releases the
Company, its officers, directors, employees, agents, subsidiaries and
affiliates from any and all claims and from any and all causes of
action of any kind or character that Executive may have arising out of
Executive's employment with the Company or the termination of such
employment, but excluding (i) any claims and causes of action that
Executive may have arising under or based upon this Agreement, and (ii)
any vested rights Executive may have under any employee benefit plan or
deferred compensation plan or program of the Company.
14. EMPLOYMENT WITH AFFILIATES.
Employment with the Company for purposes of this Agreement includes
employment with any entity in which the Company has a direct or
indirect ownership interest of 50% or more of the total combined voting
power of all outstanding equity interests, and employment with any
entity which has a direct or indirect interest of 50% or more of the
total combined voting power of all outstanding equity interests of the
Company. For purposes of this Agreement, "Good Reason" shall be
construed to refer to Executive's positions, duties, and
responsibilities in the position or positions in which Executive serves
immediately before the Change of Control, but shall not include titles
or positions with subsidiaries and affiliates of the Company that are
held primarily for administrative convenience.
15. GOVERNING LAW.
(a) THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES.
(b) EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS IN XXXXXX COUNTY,
TEXAS, FOR THE PURPOSES OF ANY PROCEEDING ARISING OUT OF THIS
AGREEMENT.
16. ENTIRE AGREEMENT.
This Agreement is an integration of the parties' agreement and no
agreement or representatives, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.
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This Agreement hereby expressly terminates, rescinds and replaces in
full any prior agreement (written or oral) between the parties
relating to the subject matter hereof, including, without limitation,
that certain [ ] Agreement between the parties dated _________________.
17. WITHHOLDING OF TAXES.
The Company shall withhold from all payments and benefits provided
under this Agreement all taxes required to be withheld by applicable
law.
18. BENEFICIARY.
In the event Executive dies before receiving the lump sum severance
payment to which Executive was entitled hereunder, Executive's spouse
or, if there is no spouse, the beneficiary designated by Executive
under the Company-sponsored group term life insurance plan, shall
receive such payment.
IN WITNESS WHEREOF, the Company and Executive have executed this
Agreement effective for all purposes as of the Effective Date.
OIL STATES INTERNATIONAL, INC.
By:
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Name:
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Title:
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EXECUTIVE
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Xxxxx X. Xxxxxx
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