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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.
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: /s/ XXXXXXX X. XXXXXXX
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Name: Xxxxxxx X. Xxxxxxx
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Title: President
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EXECUTIVE
/s/ XXXXX X. XXXXXX
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Xxxxx X. Xxxxxx
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