1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into effective as
of the 1st day of July, 2001 (the "Effective Date") by and between GM
Offshore, Inc., a Delaware corporation (the "Company"), and Xxxx X. Xxxxx (the
"Executive").
W I T N E S S E T H:
WHEREAS, the Company wishes to assure itself of the services of the
Executive for the period provided in this Agreement, and the Executive wishes
to serve in the employ of the Company on the terms and conditions hereinafter
provided; and
WHEREAS, it is in the best interests of the Company and its shareholders
to assure that the Company will have the continued attention and dedication of
the Executive to their assigned duties without distraction in potentially
disturbing circumstances arising from the possibility of a Change of Control
(as defined in Section 1 below) of GulfMark Offshore, Inc., a Delaware
corporation ("Parent"), which is the sole shareholder of the Company; and
WHEREAS, it is imperative to diminish the inevitable distraction of the
Executive by virtue of the personal uncertainties and risks created by a
pending or threatened Change of Control and to encourage the Executive's full
attention and dedication to the Company currently and in the event of any
threatened or pending Change of Control; and
WHEREAS, it is imperative to provide the Executive with compensation and
benefits arrangements upon a Change of Control which ensure that the
compensation and benefits expectations of the Executive will be satisfied and
which are competitive with those of other corporations.
NOW, THEREFORE, in order to accomplish these objectives, and in
consideration of the mutual covenants and agreements set forth herein and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
1. Change of Control. For the purposes of this Agreement, a "Change
of Control" shall mean the occurrence of any one or more of the following:
(a) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
twenty percent (20%) or more of either (i) the then outstanding shares of
common stock of Parent or (ii) the combined voting power of the then
outstanding voting securities of Parent entitled to vote generally in the
election of directors; provided, however, that the following acquisitions
shall not constitute a Change of Control: (i) any acquisition directly from
Parent; (ii) any acquisition by Parent; (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by Parent or any
corporation controlled by Parent; or
1
2
(b) Parent shall sell, lease, exchange or transfer (in one
transaction or a series of related transactions) substantially all of its
assets, except to a wholly owned subsidiary; or
(c) Approval by the stockholders of Parent of any plan or
proposal for the liquidation or dissolution of the Company; or
(d) Individuals who, as of the date hereof, constitute the Board
of Parent (the "Incumbent Board") cease for any reason to constitute at least
a majority of the Board; provided, however, that any individual 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 a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or
(e) Subject to applicable law, in a Chapter 11 bankruptcy
proceeding, the appointment of a trustee or the conversion of a case involving
Parent to a case under Chapter 7; or
(f) Any consolidation, reorganization, or merger of Parent in
which Parent is not the continuing or surviving corporation or pursuant to
which shares of Parent's common stock would be converted into cash, securities
or other property, other than a consolidation, reorganization or merger of
Parent in which the holders of Parent's common stock immediately prior to the
consolidation, reorganization or merger have the same proportionate ownership
of common stock of the surviving corporation immediately after the
consolidation, reorganization or merger.
2. Employment Period. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the
employ of the Company, in accordance with the terms and provisions of this
Agreement, for the period commencing on the Effective Date and ending on June
30, 2003 (the "Term").
3. Terms of Employment. The following terms shall govern the
Executive's employment during the Term:
(a) Position and Duties.
(i) During the Term, the Executive shall be employed as a
Vice President of the Company with corresponding authority, duties and
responsibilities.
2
3
(ii) During the Term, and excluding any periods of vacation
and sick leave to which the Executive is entitled, the Executive agrees to
devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Term, it shall not be a violation of this
Agreement for the Executive to serve on corporate, civic or charitable boards
or committees, deliver lectures, fulfill speaking engagements, teach at
educational institutions, and manage personal investments, so long as such
activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the
Effective Date, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of the
Executive's responsibilities to the Company.
(b) Compensation. During the Term, and prior to the termination
of the Executive's employment as described in Section 4 or 5
hereof, the Executive shall be entitled to the following items of
compensation:
(i) Base Salary. During the Term, the Executive shall
receive an annual base salary ("Annual Base Salary"), which shall be
paid in equal installments on a semi-monthly basis (less applicable
withholding and salary deductions), of $170,000.00. Any discretionary
increase in Annual Base Salary during the Term shall not serve to limit
or reduce any other obligation to the Executive under this Agreement.
Annual Base Salary shall not be reduced after any such increase, and the
term "Annual Base Salary" as utilized in this Agreement shall refer to
Annual Base Salary as so increased.
(ii) Annual Bonus. During the Term, the Executive shall
receive, for each fiscal year ending during the Term, an annual bonus
(the "Annual Bonus"), in an amount to be determined at the discretion of
the Company. Any discretionary increase in the Annual Bonus during the
Term shall not serve to limit or reduce any other obligation to the
Executive under this Agreement.
(iii) Incentive, Savings and Retirement Plans. During the
Term, the Executive shall be entitled to participate in all incentive,
savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its
affiliated companies. As used in this Agreement, the term "affiliated
"companies" shall include any company controlled by, controlling or
under common control with the Company.
3
4
(iv) Welfare Benefit Plans. During the Term, the Executive
and/or the Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit
plans, practices, policies and programs provided by the Company and its
affiliated companies (including, without limitation, medical,
supplemental health, prescription, dental, disability, salary
continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated
companies.
(v) Expenses. During the Term, the Executive shall be
entitled to receive prompt reimbursement for all reasonable
out-of-pocket employment expenses incurred by the Executive in
accordance with the policies, practices and procedures of the Company
and its affiliated companies in effect with respect to other peer
executives of the Company and its affiliated companies.
(vi) Vacation. During the Term, the Executive shall be entitled
to paid vacation in amounts to be determined by the Company at the
beginning of each fiscal year. Such vacations shall be taken at such
times as are consistent with the reasonable business needs of the
Company. Up to an aggregate total of two weeks of unused vacation time
may be carried forward and used by the Executive in succeeding years.
(vii) Automobile. During the Term, the Company will provide the
Executive with an automobile (the "Automobile") for use by the Executive
in connection with the performance of his duties under this Agreement.
The Executive may also use the Automobile for reasonable personal use.
The Executive agrees to pay all operating costs of the Automobile, and
the Company agrees to reimburse to the Executive, to cover operating
costs of the Automobile related to non-personal use, 87.5% of the actual
operating costs of the Automobile upon the submission by the Executive
to the Company of receipts evidencing such operating costs. The
Executive agrees to limit personal use so as to not violate any of the
lease provisions concerning the Automobile, including, without
limitation, provisions related to mileage and maintenance restrictions,
and agrees to return the Automobile to the Company at the termination of
this Agreement.
(viii) Life Insurance. The Company shall purchase, or have
Parent purchase and assign to the Company, a split dollar whole life
insurance policy on the life of the Executive with a face value of
$500,000. The insurance policy shall be owned by the Executive. The
Executive shall have the right to designate one or more beneficiaries,
and to change such designation at any time and from time to time. The
4
5
Company shall pay all premiums on such policy. The Company shall own
the cash value of the insurance policy up to the aggregate amount of
premiums paid by the Company, and the Company shall be entitled to
recover from the cash value of the insurance policy or the death
proceeds the aggregate amount of premiums paid by the Company. The
Executive agrees to execute a collateral assignment in order to assign
the insurance policy to the Company from the purpose of securing the
Company's interest in the insurance policy. Such insurance coverage
shall be in addition to, and not in lieu of, any other insurance
normally provided by the Company to other peer executives of the Company
and its affiliated companies.
(ix)Club Membership. During the Term, the Company will pay all
reasonable period dues for membership in The Petroleum Club of
Lafayette. The membership will remain the property of the Company and
on the expiration of this Agreement will be transferred to such
individual as the Company may designate.
(x) Office and Support Staff. During the Term, the Executive
shall be entitled to an office or offices of a size and with furnishings
and other appointments, and to secretarial and other assistance, at
least equal to the most favorable of the foregoing provided to other
peer executives of the Company and its affiliated companies.
(xi) Benefits Not in Lieu of Compensation. No benefit or
perquisite provided to the Executive shall be deemed to be in lieu of
the Executive's Annual Base Salary, Annual Bonus or other compensation.
4. Termination of Employment.
(a) Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the Term. If the
Company determines in good faith that the Disability of the Executive has
occurred during the Term (pursuant to the definition of Disability set forth
below), it may give to the Executive written notice in accordance with Section
15(b) hereof of its intention to terminate the Executive's employment. In
such event, the Executive's employment with the Company shall terminate
effective on the 30th day after receipt of such notice by the Executive (the
"Disability Date"), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" shall mean the absence
of the Executive from the Executive's duties with the Company on a full-time
basis for 180 consecutive days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Executive or the
Executive's legal representative (such agreement as to acceptability not to be
withheld unreasonably).
5
6
(b) Termination by the Company for Cause. The Company may
terminate the Executive's employment during the Term for Cause. For purposes
of this Agreement, "Cause" shall mean (i) a material breach by the Executive
of the Executive's obligations under Section 3(a) (other than as a result of
incapacity due to physical or mental illness) which is demonstrably willful
and deliberate on the Executive's part and which is not remedied in a
reasonable period of time after receipt of written notice from the Company
specifically identifying such breach, (ii) the conviction of the Executive of
a felony involving moral turpitude, or (iii) the willful engaging by the
Executive in gross misconduct materially and demonstrably injurious to the
Company. For purposes of this paragraph, no act, or failure to act, on the
Executive's part shall be considered "willful" unless done, or omitted to be
done, by him not in good faith and without reasonable belief that his action
or omission was not in the best interest of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated for cause
unless and until there shall have been delivered to him a copy of a resolution
duly adopted by the affirmative vote of not less than two-thirds (2/3) of the
entire authorized membership of the Board at a meeting of the Board (after
reasonable notice and an opportunity for the Executive, together with counsel,
to be heard before the Board) finding that in the good faith of the Board the
Executive was guilty of conduct set forth in clauses (i), (ii) or (iii) of the
second sentence of this paragraph and specifying the particulars thereof in
detail.
(c) Voluntary Termination by Executive for Good Reason. The
Executive's employment may be terminated during the Term by the Executive for
Good Reason. For purposes of this Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position (including
status, offices, titles and reporting requirements), authority, duties
or responsibilities as contemplated by Section 3(a) or any removal of
the Executive from or failure to re-elect the Executive to any of such
positions or any other actions by the Company which results in a
diminution in such position, authority, duties or responsibilities
(except in connection with the termination of the Executive's
employment for Cause, Disability or retirement or as a result of the
Executive's death or by the Executive other than for Good Reason),
excluding for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 3(b) or the taking of any action by the Company
which would adversely affect the Executive's participation in or
6
7
materially reduce his benefits under any of the items described in
Section 3(b), other than an isolated, insubstantial and inadvertent
failure not occurring in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
(iii) the failure by the Company to pay (or reimburse the
Executive) for all reasonable moving expenses incurred by the Executive
relating to a change of principal residence in connection with a
relocation;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement (and for purposes of this Agreement, no such purported
termination shall be effective); or
(v) any failure by the Company to comply with and satisfy
Section 14(c) hereof, provided that such successor has received at
least ten days, prior written notice from the Company or the Executive
of the requirements of Section 14(c) hereof.
For purposes of this Section 4(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 16(b).
For purposes of this Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination
of the Executive's employment under the provision so indicated, and (iii) if
the Date of Termination (as defined below) is other than the date of receipt
of such notice, specifies the termination date (which date shall be not more
than 15 days after the giving of such notice). The failure by the Executive
or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or circumstance in enforcing
the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if
the Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability,
the Date of Termination shall be the date on which the Company notifies the
7
8
Executive of such termination, and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Date, as the case may be.
5. Obligations of the Company upon Termination.
(a) Termination for Good Reason or Other Than for Cause, Death
or Disability Prior to a Change of Control or after Twelve Months after a
Change of Control. If, during the Term and prior to a Change of Control or
after twelve (12) months after a Change of Control, the Company shall
terminate the Executive's employment other than for Cause, Death or Disability
or the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum
in cash within 30 days after the Date of Termination the aggregate of
the following amounts:
A. the sum of (1) the Executive's Annual Base
Salary through the Date of Termination, (2) the product of (x) the
Annual Bonus paid or payable to the Executive for the immediately
preceding year and (y) a fraction, the numerator of which is the
number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365, (3) any
compensation previously deferred by the Executive (together with
any accrued interest or earnings thereon) and (4) any accrued
vacation pay, in each case to the extent not theretofore paid (the
sum of the amounts described in clauses (1), (2), (3) and (4)
shall be hereinafter referred to as the "Accrued Obligations";
and
B. the amount equal to the sum of (1) the
Executive's Annual Base Salary, calculated from the Date of
Termination through the remainder of the Term, and (2) the Annual
Bonus paid or payable to the Executive for the immediately
preceding fiscal year annualized and calculated from the Date of
Termination through the remainder of the Term; provided, however,
that such amount shall be reduced by the present value (determined
as provided in Section 280G(d)(4) of the Internal Revenue Code of
1986, as amended (the "Code")) of any other amount of severance
relating to salary or bonus continuation, if any, to be received
by the Executive upon termination of employment of the Executive
under any severance plan, policy or arrangement of the Company;
and
(ii) any or all Stock Options awarded to the Executive
under any plan not previously exercisable and vested shall become fully
exercisable and vested; and
8
9
(iii) for the remainder of the Term, provided that the
Executive's continued participation is possible under the general terms
and provisions of such plans and programs, the Company shall continue
benefits to the Executive and/or the Executive's family at least equal
to those which would have been provided to them in accordance with the
plans, programs, practices and policies described in Section 3(b)(iv) if
the Executive's employment had not been terminated in accordance with
the most favorable plans, practices, programs or policies of the Company
and its affiliated companies as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies and their families; provided, however, that if the
Executive becomes reemployed with another employer and is eligible to
receive medical or other welfare benefits under another employer-
provided plan, the medical and other welfare benefits described herein
shall be secondary to those provided under such other plan during such
applicable period of eligibility; in the event that the Executive's
participation in any such plan or program is barred, the Company shall
arrange to provide the Executive with benefits substantially similar to
those which he is entitled to receive under such plans and programs; and
(iv) subject to the provisions of Section 6, to the extent
not theretofore paid or provided, the Company shall timely pay or
provide to the Executive and/or the Executive's family any other amounts
or benefits required to be paid or provided or which the Executive
and/or the Executive's family is eligible to receive pursuant to this
Agreement and under any plan, program, policy or practice of or contract
or agreement with the Company and its affiliated companies as in effect
generally thereafter with respect to other peer executives of the
Company and its affiliated companies and their families (such other
amounts and benefits shall be hereinafter referred to as the "Other
Benefits"); and
(v) the Executive shall be entitled to use of the
Automobile until the earliest to occur of (x) the date the Executive is
employed elsewhere, or (y) six (6) months from the Date of Termination;
provided, however, that during such time period, the Executive shall be
solely responsible for all expenses incurred in the use of the
Automobile, including maintaining insurance of the same types and at the
same levels as previously maintained by the Company immediately prior to
the Date of Termination; and
(vi) in addition to the benefits to which the Executive is
entitled under any retirement plans or programs in which the Executive
participates or any successor plans or programs in effect on the Date of
Termination, the Company shall pay the Executive in one sum in cash at
the Executive's normal retirement age (or earlier retirement age should
the Executive so elect) as defined in the retirement plans or programs
9
10
in which the Executive participates or any successor plans or programs
in effect on the Date of Termination, an amount equal to the actuarial
equivalent of the retirement pension to which the Executive would have
been entitled under the terms of such retirement plans or programs
without regard to "vesting" thereunder, had the Executive accumulated
additional years of continuous service through the remainder of the Term
at his Annual Base Salary in effect on the Date of Termination under
such retirement plans or programs reduced by the single sum actuarial
equivalent of any amounts to which the Executive is entitled pursuant to
the provisions of said retirement plans and programs; for purposes of
this paragraph, "actuarial equivalent" shall be determined using the
same methods and assumptions utilized under the Company's retirement
plans and programs on the Effective Date; and
(vii) the Company shall promptly transfer and assign to the
Executive all such life insurance policies for which the Company or
Parent was previously reimbursing premium payments made by the Executive
pursuant to an agreement between the Executive and the Company or
Parent; and
(viii) for a period of six (6) months after the Date of
Termination, the Company shall promptly reimburse the Executive for
reasonable expenses incurred for outplacement services and/or
counseling.
(b) Termination upon Death. If the Executive's employment is
terminated by reason of the Executive's death during the Term, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for (i) payment of Accrued
Obligations (which shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination)
and (ii) the timely payment or provision of any and all Other Benefits, which
under their terms are available in the event of death.
(c) Termination upon Disability. If the Executive's employment
is terminated by reason of the Executive's Disability during the Term, this
Agreement shall terminate without further obligations to the Executive, other
than for (i) payment of Accrued Obligations (which shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination) and
(ii) the timely payment or provision of any and all Other Benefits, which
under their terms are available in the event of a Disability.
(d) Termination for Cause or Other than for Good Reason. If the
Executive's employment shall be terminated for Cause during the Term, this
Agreement shall terminate without further obligations to the Executive other
than the obligation to pay to the Executive Annual Base Salary through the
10
11
Date of Termination plus the amount of any compensation previously deferred by
the Executive and any accrued vacation pay, in each case to the extent
theretofore unpaid. If the Executive terminates employment during the Term,
excluding a termination for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for payment of
Accrued Obligations and the timely payment or provision of any and all Other
Benefits. In such case, all Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
(e) Termination within Twelve Months after a Change of Control.
If, within twelve (12) months after a Change of Control, the Company (or any
successor of the Company) shall terminate the Executive's employment other
than pursuant to Sections 2, 4(a) or 4(b) hereof or if the Executive shall
terminate his employment for Good Reason:
(i) the Company (or any successor of the Company) shall pay
to the Executive in a lump sum in cash within 30 days after the Date of
Termination the aggregate of the following amounts:
A. the Accrued Obligations; and
B. the amount equal to the sum of (1) the
Executive's Annual Base Salary at the rate in effect as of the
Date of Termination multiplied by two (2), and (2) the Annual
Bonus paid or payable to the Executive for the immediately
preceding fiscal year annualized and calculated from the Date
of Termination through the second anniversary of the Date of
Termination; provided, however, that such amount shall be
reduced by the present value (determined as provided in
Section 280G(d)(4) of the Code) of any other amount of
severance relating to salary or bonus continuation, if any, to
be received by the Executive upon termination of employment of
the Executive under any severance plan, policy or arrangement
of the Company; and
(ii) any or all Stock Options awarded to the Executive
under any plan not previously exercisable and vested shall become fully
exercisable and vested; and
(iii) for the period from the Date of Termination through
the first anniversary of the Date of Termination, provided that the
Executive's continued participation is possible under the general terms
and provisions of such plans and programs, the Company shall continue
benefits to the Executive and/or the Executive's family at least equal
to those which would have been provided to them in accordance with the
11
12
plans, programs, practices and policies described in Section 3(b)(iv) if
the Executive's employment had not been terminated in accordance with
the most favorable plans, practices, programs or policies of the Company
and its affiliated companies as in effect and applicable generally to
other peer executives and their families during the 90-day period
immediately preceding the Date of Termination or, if more favorable to
the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies and their families; provided, however, that if the Executive
becomes reemployed with another employer and is eligible to receive
medical or other welfare benefits under another employer-provided plan,
the medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during such applicable
period of eligibility; in the event that the Executive's participation
in any such plan or program is barred, the Company shall arrange to
provide the Executive with benefits substantially similar to those which
he is entitled to receive under such plans and programs; and
(iv) subject to the provisions of Section 6, to the extent
not theretofore paid or provided, the Company shall timely pay or
provide to the Executive and/or the Executive's family any other amounts
or benefits required to be paid or provided or which the Executive
and/or the Executive's family is eligible to receive pursuant to this
Agreement and under any plan, program, policy or practice of or contract
or agreement with the Company and its affiliated companies as in effect
and applicable generally to other peer executives and their families
during the 90-day period immediately preceding the Date of Termination
or, if more favorable to the Executive, as in effect generally
thereafter with respect to other peer executives of the Company and its
affiliated companies and their families; and
(v) the Executive shall be entitled to use of the
Automobile until the earliest to occur of (x) the date the Executive is
employed elsewhere, or (y) six (6) months from the Date of Termination;
provided, however, that during such time period, the Executive shall be
solely responsible for all expenses incurred in the use of the
Automobile, including maintaining insurance of the same types and at the
same levels as previously maintained by the Company immediately prior to
the Date of Termination; and
(vi) in addition to the benefits to which the Executive is
entitled under any retirement plans or programs in which the Executive
participates or any successor plans or programs in effect on the Date of
Termination, the Company shall pay the Executive in one sum in cash at
the Executive's normal retirement age (or earlier retirement age should
12
13
the Executive so elect) as defined in the retirement plans or programs
in which the Executive participates or any successor plans or programs
in effect on the Date of Termination, an amount equal to the actuarial
equivalent of the retirement pension to which the Executive would have
been entitled under the terms of such retirement plans or programs
without regard to "vesting" thereunder, had the Executive accumulated
additional years of continuous service through the first anniversary of
the Date of Termination at his Annual Base Salary in effect on the Date
of Termination under such retirement plans or programs reduced by the
single sum actuarial equivalent of any amounts to which the Executive is
entitled pursuant to the provisions of said retirement plans and
programs; for purposes of this paragraph, "actuarial equivalent" shall
be determined using the same methods and assumptions utilized under the
Company's retirement plans and programs on the Effective Date; and
(vii) the Company shall promptly transfer and assign to
the Executive all such life insurance policies for which the Company or
Parent was previously reimbursing premium payments made by the Executive
pursuant to an agreement between the Executive and the Company or
Parent; and
(viii) for a period of six (6) months after the Date of
Termination, the Company shall promptly reimburse the Executive for
reasonable expenses incurred for outplacement services and/or
counseling.
6. Waiver of Rights For Other Severance. The Executive hereby agrees
any and all benefits or payments arising out of or relating to any plan,
program, policy or practice of or contract or agreement with the Company and
its affiliated companies relating to the severance of employment, shall be
fully offset against any benefits or payments due and owing hereunder.
7. Non-Exclusivity of Rights. Nothing herein shall limit or
otherwise affect such rights as the Executive may have under any contract or
agreement with the Company or any of its affiliated companies. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan, policy, practice or program of or any contract or agreement
with the Company or any of its affiliated companies at or subsequent to the
Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement.
13
14
8. Full Settlement; Resolution of Disputes.
(a) The Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Company may have against the Executive or others.
In no event shall the Executive be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement and, except as specifically
provided in Section 5, such amounts shall not be reduced whether or not the
Executive obtains other employment. The Company agrees to pay promptly as
incurred, to the full extent permitted by law, all legal fees and expenses
which the Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company, the Executive or others of
the validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result of
any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the
applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code.
(b) If there shall be any dispute between the Company and the
Executive (i) in the event of any termination of the Executive's employment by
the Company, whether such termination was for Cause, or (ii) in the event of
any termination of employment by the Executive, whether Good Reason existed,
then, unless and until there is a final, nonappealable judgment by a court of
competent jurisdiction declaring that such termination was for Cause or that
the determination by the Executive of the existence of Good Reason was not
made in good faith, as the case may be, the Company shall pay all amounts, and
provide all benefits, to the Executive and/or the Executive's family or other
beneficiaries, as the case may be, that the Company would be required to pay
or provide pursuant to Section 5 as though such termination were by the
Company without Cause or by the Executive with Good Reason; provided, however,
that the Company shall not be required to pay any disputed amounts pursuant to
this paragraph except upon receipt of an undertaking by or on behalf of the
Executive and/or the Executive's family or other beneficiaries, as the case
may be, to repay all such amounts to which the Executive is ultimately
adjudged by such court not to be entitled.
9. Certain Additional Payments by the Company.
(a) Notwithstanding anything in this Agreement to the contrary,
in the event it shall be determined that any payment or distribution by the
Company to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
14
15
under this Section 9) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Code, or any successor provision thereto, or any
interest or penalties are incurred by the Executive with respect to such
excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and any Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determination, shall be
made by the Company's independent certified public accountants (the
"Accounting Firm") which shall provide detailed supporting calculations both
to the Company and the Executive within 15 business days of the receipt of
notice from the Executive that there has been a Payment, or such earlier time
as is requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting
the Change of Control, the Executive shall appoint another nationally
recognized accounting firm to make the determinations required hereunder
(which accounting firm shall then be referred to as the Accounting Firm
hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this
Section 9, shall be paid by the Company to the Executive within five days of
the receipt of the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall furnish
the Executive with a written opinion that failure to report the Excise Tax on
the Executive's applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code at
the time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 9(c) and the Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred, and any such Underpayment shall
be promptly paid by the Company to or for the benefit of the Executive.
15
16
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall apprise the Company
of the nature of such claim and the date on which such claim is requested to
be paid. The Executive shall not pay such claim prior to the expiration of
the 30-day period following the date on which it gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:
(i) give the Company any information reasonably requested
by the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions
of this Section 9(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and xxx for a refund or contest
the claim in any permissible manner, and the Executive agrees to prosecute and
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and xxx for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis, and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or
16
17
income tax (including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect to
such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Executive
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder, and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 9(c) hereof, the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall, subject
to the Company's complying with the requirements of Section 9(c), promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by
the Executive of an amount advanced by the Company pursuant to Section 9(c)
hereof, a determination is made that the Executive shall not be entitled to
any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to
the expiration of 30 days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required
to be paid.
10. Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its
affiliated companies, and their respective businesses, which shall have been
obtained by the Executive during the Executive's employment by the Company or
any of its affiliated companies and which shall not be or become public
knowledge (other than by acts by the Executive or representatives of the
Executive in violation of this Agreement). After termination of the
Executive's employment with the Company, the Executive shall not, without the
prior written consent of the Company or as may otherwise be required by law or
legal process, communicate or divulge any such information, knowledge or data
to anyone other than the Company and those designated by it. In no event
shall an asserted violation of the provisions of this section constitute a
basis for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
11. No Competition. During the Term and, unless the Agreement
terminates pursuant to Section 5(a) or 5(e), through the first anniversary of
the expiration thereof, the Executive shall not directly or indirectly engage
17
18
in any business which is competitive with any of those business activities in
which the Company or its affiliated companies were engaged directly or
indirectly during the Term of the Agreement; provided, however, that the
restriction in this section shall apply to the reasonable and limited
geographic area consisting of any state in which the Company or its affiliated
companies directly or indirectly has offices, operations or customers, or
otherwise conducts business. For purposes of this section, the Executive
shall be deemed to engage in a business if he directly or indirectly engages
or invests in, owns, manages, operates, controls or participates in the
ownership, management, operation or control of, is employed by, associated or
in any manner connected with, or renders services or advice to, any enterprise
engaged in any business which is competitive with any of those business
activities in which the Company or its affiliated companies were engaged
directly or indirectly during the Term of the Agreement; provided, however,
that the Executive may invest in the securities of any enterprise (but without
otherwise participating in the activities of such enterprise) if (x) such
securities are listed on any national or regional securities exchange or have
been registered under Section 12(g) of the Exchange Act and (y) the Executive
does not beneficially own (as defined in Rule 13d-3 promulgated under the
Exchange Act) in excess of 5% of the outstanding capital stock of such
enterprise.
The Executive agrees that if a court of competent jurisdiction
determines that the length of time or any other restriction, or portion
thereof, set forth in this section is overly restrictive and unenforceable,
the court may reduce or modify such restrictions to those which it deems
reasonable and enforceable under the circumstances, and as so reduced or
modified, the parties hereto agree that the restrictions of this section shall
remain in full force and effect. The Executive further agrees that if a court
of competent jurisdiction determines that any provision of this section is
invalid or against public policy, the remaining provisions of this section and
the remainder of this Agreement shall not be affected thereby, and shall
remain in full force and effect.
The Executive acknowledges that the restrictions imposed by this
Agreement are legitimate, reasonable and necessary to protect the Company's
and its affiliated companies' investment in their business and the goodwill
thereof. The Executive acknowledges that the scope and duration of the
restrictions contained herein are reasonable in light of the time that the
Executive has been engaged in the business of the Company and its affiliated
companies and the Executive's relationship with the suppliers, customers and
clients of the Company and its affiliated companies. The Executive further
acknowledges that the restrictions contained herein are not burdensome to the
Executive in light of the consideration paid therefor and the other
18
19
opportunities that remain open to the Executive. Moreover, the Executive
acknowledges that he has other means available to him for the pursuit of his
livelihood.
12. No Tampering. During the Term and, unless the Agreement
terminates pursuant to Section 5(a) or 5(e), through the first anniversary of
the expiration thereof, the Executive shall not (a) request, induce or attempt
to influence any distributor or supplier of goods or services to the Company
or its affiliated companies to curtail or cancel any business they may
transact with the Company or its affiliated companies; (b) request, induce or
attempt to influence any customers of the Company or its affiliated companies
or potential customers which have been in contact with the Company or its
affiliated companies to curtail or cancel any business they may transact with
any member of the Company or its affiliated companies; or (c) request, induce
or attempt to influence any employee of the Company or its affiliated
companies to terminate his or her employment with the Company or its
affiliated companies.
13. Remedies. The Executive acknowledges that a remedy at law for any
breach or attempted breach of the Executive's obligations under Sections 10,
11 and 12 may be inadequate, agrees that the Company may be entitled to
specific performance and injunctive and other equitable remedies in case of
any such breach or attempted breach, and further agrees to waive any
requirement for the securing or posting of any bond in connection with the
obtaining of any such injunctive or other equitable relief. The Company shall
have the right to offset against amounts paid to the Executive pursuant to the
terms hereof any amounts from time to time owing by the Executive to the
Company. The termination of the Agreement shall not be deemed a waiver by the
Company of any breach by the Executive of this Agreement or any other
obligation owed the Company, and notwithstanding such a termination the
Executive shall be liable for all damages attributable to such a breach.
14. Successors and Assigns.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) 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 expressly
19
20
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 no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company
as hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
15. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without reference to
principles of conflict of laws. The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than by a written agreement executed
by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive: Xxxx X. Xxxxx
107 Winged Xxxx Xxxxx
Xxxxxxxxx, XX 00000
If to the Company: GM Offshore, Inc.
0000 Xxxx Xxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the failure to
assert any right the Executive or the Company may have hereunder, including,
without limitation, the right of the Executive to terminate employment for
Good Reason pursuant to Section 4(c)(i)-(v) hereof, shall not be deemed to be
20
21
a waiver of such provision or right or any other provision or right of this
Agreement.
16. Prior Employment Agreements Superseded. Upon execution and
delivery of this Agreement, any and all prior employment agreements, if any,
between (a) the Company, GulfMark Offshore, Inc., GulfMark International, Inc.
and its and their affiliates and subsidiaries and (ii) the Executive shall be
of no further force or effect and this Agreement shall supersede all such
prior agreements, if any.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
Executive:
/s/ Xxxx X. Xxxxx
---------------------------
XXXX X. XXXXX
Company:
GM OFFSHORE, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------
Xxxxx X. Xxxxxxxx
President
The undersigned executes this Agreement to evidence its agreement to
guarantee to the Executive the prompt payment and the prompt performance when
due of all obligations and liabilities of the Company to the Executive arising
out of or pursuant to this Agreement, in which event the undersigned shall
have all of the rights of the Company described in this Agreement.
GULFMARK OFFSHORE, INC.
By: Xxxxx X. Xxxxxxx
--------------------------
Xxxxx X. Xxxxxxx
Chairman of the Board
21
