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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): June 20, 1995
HORNBECK OFFSHORE SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-10809 74-2153030
(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification No.)
incorporation)
7707 Harborside Drive, Galveston, Texas 77554
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 488-0067
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Item 5. Other Events
Adoption of Stockholder Rights Plan
On June 20, 1995, the Board of Directors of Hornbeck Offshore
Services, Inc. (the "Company") declared a dividend on each outstanding share of
common stock, par value $.10 per share (the "Common Stock"), of the Company of
one right to purchase (individually a "Right" and collectively the "Rights")
Series B Junior Participating Preferred Stock, par value $1.00 per share (the
"Preferred Stock"). The dividend is payable to stockholders of record on July
5, 1995 (the "Record Date"). Each Right will, upon the occurrence of events,
described below, that make it exercisable, entitle the registered holder to
purchase from the Company one one-hundredth of one share of the Preferred Stock
at a price of $60.00 (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement dated
as of June 20, 1995 (the "Rights Agreement"), between the Company and First
Interstate Bank of Texas, N.A., as the rights agent (the "Rights Agent").
Initially, the Rights will be represented by all certificates
representing outstanding shares of Common Stock and no separate certificates
for the Rights will be distributed. Until the Distribution Date (as defined
below) or earlier redemption, exchange, expiration or termination of the
Rights, (a) new certificates representing shares of Common Stock issued after
the Record Date will contain a legend incorporating the Rights Agreement by
reference and (b) the surrender for transfer of any certificates representing
shares of Common Stock outstanding as of the Record Date will constitute the
surrender for transfer of the Rights associated with the shares of Common Stock
represented by such certificate.
The Rights will separate from the Common Stock on the
Distribution Date, which is defined in the Rights Agreement as the earlier of
(i) the tenth business day following the date of a public announcement that a
person or group of affiliated or associated persons (an "Acquiring Person") has
acquired beneficial ownership of 20% or more of the Company's Common Stock (the
date of the announcement of such acquisition being the "Stock Acquisition
Date"), or (ii) the tenth business day (or such later date as may be determined
by the Board of Directors before the Distribution Date occurs) following the
commencement or public announcement of a tender or exchange offer that would,
if consummated, result in a person becoming an Acquiring Person, whether any
purchases actually occur pursuant to such offer or not. The definition of
Acquiring Person under the Rights Agreement excludes (A) the Company, (B) any
subsidiary of the Company, (C) any employee benefit plan or employee stock plan
of the Company or of any subsidiary of the Company or any person organized,
appointed, established, or holding Common Stock for or pursuant to the terms of
any such plan or (D) any person whose ownership of 20% or more of the shares of
Common Stock of the Company then outstanding results solely from (i) any action
or transaction approved by the Board of Directors before such person acquires
such 20% beneficial ownership or (ii) a reduction in the number of issued and
outstanding shares of Common Stock pursuant to a transaction or transactions
approved by the Board of Directors. Any person excluded from becoming an
Acquiring Person
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by reason of clause (i) or (ii) above will nevertheless become an Acquiring
Person if it acquires any additional shares of Common Stock, unless such
acquisition of additional shares of Common Stock occurs by reason of a
transaction falling within the scope of such clause (i) or (ii). As soon as
practicable following the Distribution Date, the Rights will separate from the
Common Stock, and separate certificates evidencing the Rights will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date. From and after the Distribution Date, such separate
certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date and
will expire at the close of business on June 20, 2005, unless earlier redeemed,
exchanged or terminated by the Company, in each case as described below.
If a person becomes an Acquiring Person (a "Flip-In Event") in
a manner other than pursuant to a tender or exchange offer for all outstanding
shares of Common Stock at a price and on terms that a majority of the
Continuing Directors (as defined in the Rights Agreement) determines to be fair
to and otherwise in the best interests of the Company and its stockholders (a
"Permitted Offer"), each holder of a Right will thereafter have the right to
receive, upon exercise of such Right and payment of the Purchase Price, that
number of shares of Preferred Stock (or, in certain circumstances, Common
Stock, cash, property or other securities) having a Current Market Price (as
defined in the Rights Agreement) equal to two times the exercise price of the
Right. Notwithstanding the foregoing, following the occurrence of any Flip-In
Event, all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person (or by
certain related parties) will be null and void in the circumstances set forth
in the Rights Agreement. Rights do not become exercisable following the
occurrence of a Flip-In Event until they are no longer redeemable by the
Company, as set forth below.
If, at any time on or after the Stock Acquisition Date, (i)
the Company is acquired in a merger or other business combination transaction
(other than certain mergers that follow a Permitted Offer), or (ii) 50% or more
of the assets or earning power of the Company and its subsidiaries (taken as a
whole) is sold or transferred in one or a series of related transactions (each
of the events described in (i) and (ii) above being a "Flip-Over Event"), each
holder of a Right (except Rights that previously have been voided as set forth
above) shall thereafter have the right to receive, upon exercise, a number of
shares of common stock of the acquiring company having a Current Market Price
equal to two times the exercise price of the Right.
The Purchase Price payable and the number of shares of
Preferred Stock or other securities, including without limitation Common Stock,
or property issuable upon exercise of the Rights are subject to adjustment from
time to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) upon
the grant to holders of the Preferred Stock of certain rights or warrants to
subscribe for or purchase at less than the Current Market Price shares of
Preferred Stock or securities convertible into Preferred Stock or (iii) upon
the distribution to holders of Preferred Stock of evidences of
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indebtedness or assets (excluding regular periodic cash dividends) or of
subscription rights or warrants (other than those referred to above).
The number of outstanding Rights is also subject to certain
adjustments from time to time in the event of, among other things, a stock
split of the Common Stock or a stock dividend on the Common Stock payable in
shares of Common Stock or subdivisions, consolidations or combinations of the
Common Stock occurring, in any such case, before the Distribution Date.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least 1% of the
Purchase Price. Fractions of shares of Preferred Stock (other than integral
multiples of one one-hundredth of a share) which would otherwise be issued upon
exercise or redemption of the Rights may, at the election of the Company, be
evidenced by depositary receipts. The Rights Agreement also provides that the
Company may pay cash in lieu of fractional shares.
Shares of Preferred Stock purchasable upon exercise of the
Rights will not be redeemable. Each share of Preferred Stock will be entitled,
when, as and if declared, to a minimum preferential quarterly dividend payment
of $1.00 per share but will be entitled to an aggregate dividend of 100 times
the dividend declared per share of Common Stock. In the event of liquidation,
the holders of the Preferred Stock will be entitled to a minimum preferential
liquidation payment of $100.00 per share (plus any accrued but unpaid
dividends) but will be entitled to an aggregate payment of 100 times the
payment made per share of Common Stock. Each share of Preferred Stock will
have 100 votes, voting together with the Common Stock. Finally, in the event
of any merger, consolidation or other transaction in which shares of Common
Stock are converted or exchanged, each share of Preferred Stock will be
entitled to receive 100 times the amount received per share of Common Stock.
These rights are protected by customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend,
liquidation and voting rights, the value of the one one-hundredth interest in a
share of Preferred Stock purchasable upon exercise of each Right should
approximate the value of one share of Common Stock.
At any time on or before the close of business on the tenth
business day following a Stock Acquisition Date (or such later date as may be
authorized by the Board of Directors and a majority of the Continuing
Directors), the Company may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price"), payable at the election of
the Company in cash or shares of Common Stock. The Rights may be redeemed
after the time that any person has become an Acquiring Person only if such
redemption is approved by a majority of the Continuing Directors. Immediately
upon the action of the Board of Directors of the Company authorizing redemption
of the Rights and without any further action or notice, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be
to receive the Redemption Price.
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After the occurrence of a Flip-In Event and before a person
becomes the beneficial owner of 50% or more of the Common Stock then
outstanding, the Company may, if authorized by the Board of Directors, such
authorization having been approved by a majority of the Continuing Directors,
exchange the Rights (other than Rights owned by an Acquiring Person or an
affiliate or an associate of an Acquiring Person, which will have become void),
in whole or in part, at an exchange ratio per Right of one share of Common
Stock, and/or other equity securities deemed to have the same value as one
share of Common Stock subject to adjustment.
During any such time as the Rights are redeemable, the Company
may amend the Rights in any manner, including without limitation an amendment
to extend the time period during which the Rights may be redeemed, except that
the Company may not, during such time, amend the Rights to decrease the
Redemption Price or move forward the expiration date of the Rights. During any
such time as the Rights are not redeemable, the Company may amend the Rights
Agreement (a) to cure any ambiguity, defect, or inconsistency, (b) to make
changes that do not materially adversely affect the interests of holders of
Rights (excluding the interests of any Acquiring Person), or (c) to shorten or
lengthen any time period under the Rights Agreement, except that the Company
may not amend the Rights Agreement to lengthen the time period governing
redemption during any such time as the rights are not redeemable. Amendments
to the Rights Agreement from and after the time that any person or other entity
becomes an Acquiring Person require that at least two Continuing Directors be
then in office and a majority of the Continuing Directors approve such
amendment.
Until a Right is exercised, the holder thereof, as such, will
not have any rights as a stockholder of the Company, including without
limitation rights to vote or receive dividends.
The Rights have certain anti-takeover effects. The Rights
will cause substantial dilution to a person or group who attempts to acquire
the Company without the approval of the Company's Board of Directors. As a
result, the overall effect of the Rights may be to render more difficult or
discourage any attempt to acquire the Company even if such acquisition may be
favorable to the interests of the Company's stockholders. Because the
Company's Board of Directors can redeem the Rights or approve a Permitted
Offer, the Rights should not interfere with any merger or other business
combination approved by the Company's Board of Directors.
Because of the method of operation and financing of certain
vessels owned or to be owned by the Company, the Shipping Act, 1916, and the
Merchant Marine Act, 1936, require that the Company limit the ownership of its
capital stock by persons other than citizens of the United States, within the
meaning of such Acts. In accordance with such Acts, the Company's Restated
Certificate of Incorporation contains, among other things, restrictions on
transfers of its capital stock to, and the voting of its capital stock by,
persons other than citizens of the United States. Similarly, the Rights
Agreement generally provides that no Right may be exercised if the Company
determines (prior to the issuance of the Preferred Stock (or other securities
or property) issuable upon exercise of such Right) that (i) (A) the Preferred
Stock (or
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other securities or property) issuable upon exercise of such Right, or any
interest therein or right thereof, would be owned or controlled by persons
other than United States citizens and (B) after any such exercise, persons
other than United States citizens would own or control an aggregate percentage
of the shares of capital stock of the Company or any interest therein or right
thereof in excess of the Permitted Percentage (as defined in the Restated
Certificate of Incorporation of the Company) or (ii) that the exercise of such
Right would otherwise cause the Company not to be a citizen of the United
States within the meaning of the Shipping Act, 1916.
The form of Rights Agreement between the Company and the
Rights Agent specifying the terms of the Rights, which includes as Exhibit A
the Certificate of Designations of the Preferred Stock specifying the terms of
the Preferred Stock, as Exhibit B the form of Right Certificate, and as Exhibit
C the form of Summary of Rights to Purchase Stock, is attached hereto as
Exhibit 1 and is incorporated herein by reference. The foregoing description
of the Rights does not purport to be complete and is qualified by reference to
such Exhibits, which are incorporated herein by reference. The press release
announcing adoption of the Stockholder Rights Plan is attached as Exhibit 99.1
and incorporated herein by reference.
Change in Control Agreements
The Company has entered into change in control agreements (the
"Agreements") with the following officers of the Company: Larry D. Hornbeck,
Bernie W. Stewart, Robert W. Hampton, E.J. Hebert and Roger M. Sykes. The
Agreements set forth certain benefits that the Company will provide if their
employment is terminated or, under certain conditions, they elect to terminate
their employment after a "change in control" of the Company, as defined in the
Agreements. The Agreements continue in effect for three years and thereafter
until terminated by the Company upon specified notice; provided that they
continue for two years after a change in control of the Company. The
Agreements each provide that if the officer is terminated or if the officer so
elects to terminate employment within two years after a change in control of
the Company, the officer shall be entitled to a lump sum severance payment of
(a) up to three times the officer's highest annual compensation within the five
tax years preceding the change in control and (b) the difference between the
market value and the exercise price of unexercised stock options. In addition,
the officer shall be entitled to a two-year continuation of certain employee
benefits and reimbursement of certain legal fees, expenses and any applicable
excise taxes.
The Agreements between the Company and Messrs. Hornbeck,
Stewart, Hampton, Hebert and Sykes are attached hereto as Exhibits 10.1
through 10.5 and are incorporated herein by reference.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
* 4.1 Rights Agreement dated as of June 20, 1995 between
Hornbeck Offshore Services, Inc. and First Interstate
Bank of Texas, N.A., as Rights Agent, which includes
as Exhibit B the form of Right Certificate and as
Exhibit C the form of Summary of Rights to Purchase
Shares. (Form 8-A, June 21, 1995, Hornbeck Offshore
Services, Inc., Exhibit 4.1)
10.1 Change in Control Agreement dated as of June 20,
1995, by and between Hornbeck Offshore Services, Inc.
and Larry D. Hornbeck.
10.2 Change in Control Agreement dated as of June 20,
1995, by and between Hornbeck Offshore Services, Inc.
and Bernie W. Stewart.
10.3 Change in Control Agreement dated as of June 20,
1995, by and between Hornbeck Offshore Services, Inc.
and Robert W. Hampton.
10.4 Change in Control Agreement dated as of June 20,
1995, by and between Hornbeck Offshore Services, Inc.
and E.J. Hebert.
10.5 Change in Control Agreement dated as of June 20,
1995, by and between Hornbeck Offshore Services, Inc.
and Roger M. Sykes.
99.1 Press Release, dated June 20, 1995.
__________________________
* Incorporated by reference as set forth above.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: June 21, 1995
HORNBECK OFFSHORE SERVICES, INC.
By: /s/ Robert W. Hampton
------------------------------------
Robert W. Hampton
Vice President, Treasurer and
Chief Financial Officer
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Index To Exhibits.
* 4.1 Rights Agreement dated as of June 20, 1995 between
Hornbeck Offshore Services, Inc. and First Interstate
Bank of Texas, N.A., as Rights Agent, which includes
as Exhibit B the form of Right Certificate and as
Exhibit C the form of Summary of Rights to Purchase
Shares. (Form 8-A, June 21, 1995, Hornbeck Offshore
Services, Inc., Exhibit 4.1)
10.1 Change in Control Agreement dated as of June 20,
1995, by and between Hornbeck Offshore Services, Inc.
and Larry D. Hornbeck.
10.2 Change in Control Agreement dated as of June 20,
1995, by and between Hornbeck Offshore Services, Inc.
and Bernie W. Stewart.
10.3 Change in Control Agreement dated as of June 20,
1995, by and between Hornbeck Offshore Services, Inc.
and Robert W. Hampton.
10.4 Change in Control Agreement dated as of June 20,
1995, by and between Hornbeck Offshore Services, Inc.
and E.J. Hebert.
10.5 Change in Control Agreement dated as of June 20,
1995, by and between Hornbeck Offshore Services, Inc.
and Roger M. Sykes.
99.1 Press Release, dated June 20, 1995.
__________________________
* Incorporated by reference as set forth above.
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AGREEMENT
WHEREAS, Hornbeck Offshore Services, Inc. (the "Company")
considers it essential and in the best interests of the Company and its
stockholders to foster the continued employment of its key management
personnel;
WHEREAS, Larry D. Hornbeck ("Employee") is considered a key
management employee, currently serving as President and Chief Executive Officer
of the Company; and
WHEREAS, the Company desires to assure the future continuity
of Employee's services in the event of any actual or threatened "Change in
Control" (as defined in Section 6 below) of the Company.
IT IS THEREFORE AGREED AS FOLLOWS:
1. Effect of Agreement.
This Agreement shall be effective and binding immediately upon
its execution. However, except as specifically provided herein, this Agreement
shall not alter materially Employee's duties and obligations to the Company and
the remuneration and benefits which Employee may reasonably expect to receive
from the Company in the absence of a Change in Control.
2. Employment On and After Change in Control. Provided
that Employee is an employee of the Company immediately prior to a Change in
Control, the Company shall employ Employee, and Employee shall accept such
employment, effective upon such Change in Control for a period of twenty-four
(24) months after said Change in Control subject to the terms and conditions
stated herein.
3. Duties After Change in Control. Employee agrees that
during the term of his employment with the Company after a Change in Control,
he shall perform the duties described in Section 12 below and such other duties
for the Company and its subsidiaries consistent with his experience and
training as the Board of Directors of the Company (the "Board") or the Board's
representatives shall determine from time to time, which duties shall be at
least substantially equal in status, dignity and character to his duties at the
date hereof. He shall also have the title of President and Chief Executive
Officer. Employee further agrees to devote his entire working time and
attention to the business of the Company and its subsidiaries and to use his
best efforts to promote such business.
4. Compensation Prior to a Change in Control. Prior to
a Change in Control, the Company agrees to pay Employee compensation for his
services in an amount, and to provide him with life insurance, disability,
health and other benefits, at
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least equal to that which he presently receives, only with such changes as
shall be agreed upon between Employee and the Company. For the purpose of this
Section, compensation does not include any bonus or other incentive
compensation plan or stock purchase plan, which may vary from year to year at
the discretion of the Company.
5. Termination of Employment Prior to a Change of
Control. Employee shall be entitled to terminate his employment prior to a
Change in Control at any time upon thirty (30) days' prior written notice. The
Company, shall be able to terminate Employee's employment at any time prior to
a Change in Control with or without cause upon thirty (30) days' prior written
notice (or the payment of salary in lieu thereof). This Section shall not be
construed to reduce any accrued benefits payable in connection with any
termination of Employee's employment prior to a Change in Control.
Nothing expressed or implied in this Agreement shall create
any right or duty on the part of the Company or Employee to have Employee
remain in the employment of the Company prior to a Change in Control.
6. Termination of Employment On or After Change in
Control.
(a) For purposes of this Agreement, the term
"Change in Control" means (i) the occurrence
of any event which results in any individual
or entity or any combination of individuals
or entities acting in concert having
beneficial ownership or control of 20% or
more of the Company's outstanding capital
stock with voting rights and within an
eighteen-month period of such event, there is
a forty percent (40%) or greater change in
the composition of the Board, (ii) the sale
of all or substantially all fifty percent
(50%) or more of the Company's assets (or a
separate identifiable operating division's or
subsidiary's assets in which event the terms
of this Agreement shall apply only to the
extent Employee has primary responsibility
for such operating division or subsidiary) as
determined based on the fair market value as
of the last day of the preceding fiscal year,
or gross revenue generation for the
twelve-month period ending on the last day of
the preceding fiscal year, with respect to
the Company's, operating division's or
subsidiary's assets, whichever is applicable,
or (iii) individuals who constitute the Board
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on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a
majority thereof, provided that any person
becoming a director subsequent to the date
hereof whose election, or nomination for
election by the Company's stockholders, was
approved by a vote of at least three-quarters
of the directors comprising the remaining
members of the Incumbent Board (either by a
specific vote or by approval of the proxy
statement of the Company in which such person
is named as a nominee for director, without
objection to such nomination) shall be, for
purposes of this clause (iii), considered as
though such person were a member of the
incumbent Board.
(b) Employee's employment on and after a Change
in Control may be terminated with just cause
by the Company at any time upon not less than
ten (10) days' prior written notice. Prior
to termination for just cause on and after a
Change in Control, the Board of Directors
shall by majority vote have declared that
Employee's termination is for just cause
specifically stating the basis for such
determination. In the event such a
termination for just cause occurs, the
provisions of Sections 9(a) and 12 below
shall apply.
Employee's employment may be terminated
on or after a Change in Control without just
cause pursuant to the constructive
termination procedures described in the next
paragraph or by the Company giving Employee
not less than thirty (30) days' prior written
notice. In the event Employee's employment is
terminated pursuant to the preceding
sentence:
(i) the provisions of Section 9(b) below
shall apply; and
(ii) although Employee's employment term
shall be deemed terminated at the
end of such notice period (or, in
the case of a constructive
termination described in the next
paragraph, as of the date Employee
notifies the Company of such
termination), such termination shall
in no way affect the term of this
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Agreement or Employee's duties and
obligations under Section 12 below.
For purposes of this Section 6(b),
Employee shall be considered as having been
terminated by the Company on or after a
Change in Control for other than just cause
provided that he has notified the Company of
any of the following within ten (10) days of
the occurrence thereof:
(i) the assignment to Employee of any
duties of lesser status, dignity and
character (including officer status)
than his duties immediately prior to
the effective date of the Change in
Control or a substantial reduction
in the nature or status of his
responsibilities from those in
effect immediately prior to the
effective date of the Change in
Control;
(ii) a post-Change in Control reduction
by the Company in Employee's annual
base salary or bonus level or
incentive plan benefit (as in effect
immediately prior to the effective
date of the Change in Control);
provided, however, that any
reduction made necessary due to
economic factors within the offshore
marine services business, as
determined at the discretion of the
Board, and applicable to all or
substantially all (50% or more) of
Company management shall not be
considered a termination event under
this Section 6(b);
(iii) relocation of Employee's office to a
location which is more than 75 miles
from the location in which Employee
principally works for the Company
immediately prior to the effective
date of the Change in Control; the
relocation of the appropriate
principal executive office of the
Company or the Company's operating
division or subsidiary for which
Employee performed the majority of
his services for the Company during
the year prior to the effective date
of the Change in Control to a
location which is more than 75 miles
from the location of such office
immediately prior to such date; or
his being required by the
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Company in order to perform duties of
substantially equal status, dignity
and character to those duties he
performed immediately prior to the
effective date of the Change in
Control to travel on the Company's
business to a substantially greater
extent than is consistent with his
business travel obligations as of
such date; or
(iv) the failure of the Company to
continue to provide Employee with
benefits substantially equivalent to
those enjoyed by him under any of
the Company's life insurance,
medical, health and accident or
disability plans in which he was
participating immediately prior to
the effective date of the Change in
Control, the taking of any action by
the Company which would directly or
indirectly materially reduce any of
such benefits or deprive him of any
material fringe benefit enjoyed by
him immediately prior to the
effective date of the Change in
Control, or the failure of the
Company to provide him with at least
the number of paid vacation days to
which he is entitled on the basis of
years of service under the Company's
normal vacation policy in effect
immediately prior to the effective
date of the Change in Control.
(c) In the event Employee's employment is
terminated on or after a Change in Control in
any manner not described in Section 6(b)
above:
(i) the provisions of Section 9(b) shall
not apply and Employee shall instead
receive the sums and benefits
described in Section 9(a); and
(ii) such termination shall in no way
affect the term of this Agreement or
Employee's duties or obligations
under Section 12 below.
(d) Any termination of employment of Employee
following the commencement of any discussions
by a stockholder or group of stockholders
owning legally or beneficially more than 20%
of the common stock or an officially desig-
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nated representative of the Board of
Directors with a third party that results
within 180 days in a Change in Control shall
(unless such termination is for cause or
wholly unrelated to such discussions) be
deemed to be a termination of Employee on and
after a Change in Control for purposes of
this Agreement.
7. Notice of Termination. Any termination by the
Company or assertion of termination by Employee shall be communicated by
written notice of termination to the other party at the following address:
Hornbeck Offshore Services, Inc.
7707 Harborside Drive
Galveston, Texas 77554
ATTN: Chairman of the Board
Mr. Larry D. Hornbeck
Hornbeck Offshore Services, Inc.
7707 Harborside Drive
Galveston, Texas 77554
8. Disability. If as a result of Employee's incapacity
due to physical or mental illness, he shall have been absent from his duties
with the Company for one hundred eighty (180) days within any twelve (12)
consecutive-month period and within thirty (30) days after written notice of
the Company's intention to terminate his employment is given, Employee shall
not have returned to the performance of his duties with the Company
substantially on a full-time basis, the Company may terminate his employment
for disability. This shall not constitute a termination for the purposes of
obtaining benefits pursuant to Section 9.
9. Benefits Upon Termination And Leave Of Employment On
or After Change in the Control.
(a) If Employee is terminated for just cause on
or after a Change in Control, he shall only
receive the accrued sums and benefits payable
to him through the date he is terminated; the
provisions of Section 9(b) below shall not be
applicable in such case and Employee shall
not receive (or shall cease receiving) the
payments and benefits described in Section
9(b).
(b) Subject to Employee's compliance with the
provisions of Section 12(a) below, if
Employee is terminated during the twenty-four
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(24) month period beginning on and continuing
after a Change in Control other than for just
cause (either at the discretion of the
Company's management or constructively by the
operation of Section 6), he shall receive the
following payments and benefits in lieu of
any other sums or benefits otherwise payable
to him by the Company:
(i) all then accrued pay,
benefits, executive
compensation and fringe
benefits, including (but not
limited to) pro rata bonus
and incentive plan earnings;
(ii) medical, health and
disability benefits which are
substantially similar to the
benefits the Company is
providing him as of the date
his employment is terminated
for a period of twenty-four
(24) months thereafter;
(iii) three times the highest annual
compensation amount of his
base period compensation; and
(iv) an amount equal to the
market value of the Company's
common stock on the Date of
Termination or on any other
date within 180 days
preceding the Date of
Termination, on whichever
date the value is highest,
multiplied by the aggregate
number of Options granted to
Employee more than six months
prior to the Date of
Termination under the
Company's Employee Incentive
Stock Plans ("Incentive
Plans") which remain
unexercised on the Date of
Termination, less the
aggregate option price of all
such options. This provision
is not intended to permit the
Employee to receive the
benefit of any additional
options other than those
previously granted under the
Incentive Plans.
The foregoing payments and benefits shall be deemed
compensation payable for the duties to be
- 7 -
<PAGE> 8
performed by Employee pursuant to Section 12 below.
For purposes of this Agreement, (A) Employee's "base
period compensation" is the annual "compensation" (as
defined below) which was includable in his gross
income for his base period (i.e., his most recent
five taxable years ending before the date of the
Change in Control); and (B) if Employee's base period
includes a short taxable year or less than all of a
taxable year, compensation for such short or
incomplete taxable year shall be annualized before
determining his annual compensation during the base
period. (In annualizing compensation, the frequency
with which payments are expected to be made over an
annual period shall be taken into account. Thus, any
amount of compensation for such a short or incomplete
taxable year that represents a payment that would not
be made more than once per year shall not be
annualized). For purposes of Section 9(b)(iii) and
the definitions pertaining to said Section,
Employee's "compensation" is the compensation
(including but not limited to base salary and bonus)
which was payable to him by the Company or a related
entity determined without regard to the following
Sections of the Internal Revenue Code of 1986, as
amended (the "Code"): 125 (cafeteria plans) and
402(a)(8) (cash or deferred arrangements).
Except for the benefits described in Section 9(b)(ii) above,
the sums due pursuant to this Section 9(b) shall be paid in a
lump sum on or before the fifteenth business day following the
Date of Termination. All sums due hereunder shall be subject
to appropriate withholding and statutory requirements.
Employee shall not be required to mitigate the amount of any
payment provided for in this Section 9(b) by seeking other
employment or otherwise. Notwithstanding anything stated in
this Section 9(b) to the contrary, however, the Company shall
not be required to provide medical, health and/or disability
benefits to the extent such benefits would duplicate benefits
received by Employee in connection with his employment with
any new employer.
Notwithstanding anything stated in this Agreement to the
contrary, in the event that Employee becomes entitled to the
payments hereunder (the "Agreement Payments"), if any of the
Agreement Payments will be subject to the tax (the "Excise
Tax") imposed by Section 4999 of the Code (or any similar tax
that may hereafter be imposed), the Company shall pay or cause
- 8 -
<PAGE> 9
to be paid to Employee at the time specified below an
additional amount (the "Gross-up Payment") such that the net
amount retained by Employee, after deduction of any Excise Tax
on the sums due pursuant to this Section 9(b) and any federal,
state and local income tax and Excise Tax upon the Gross-up
Payment provided for in this paragraph but before deduction
for any federal, state or local income tax on the Agreement
Payments, shall be equal to the Total Payments.
For purposes of determining whether any of the sums due
pursuant to this Section 9(b) will be subject to the Excise
Tax and the amount of such Excise Tax, (a) any other payments
or benefits received or to be received by Employee in
connection with a Change in Control of the Company or
Employee's termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or
agreement with the Company, any person whose actions result in
a Change of Control of the Company or any person affiliated
with the Company or such person) (which, together with the
Agreement Payments, shall constitute the "Total Payments")
shall be treated as "parachute payments" within the meaning of
Section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of Section 280G(b)(1) of the Code
shall be treated as subject to the Excise Tax, unless in the
opinion of tax counsel selected by the Company's independent
auditors such other payments or benefits (in whole or in part)
do not constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning
of Section 280G(b)(4) of the Code in excess of the base amount
within the meaning of Section 280G(b)(3) of the Code or are
otherwise not subject to the Excise Tax, (b) the amount of the
Total Payments which shall be treated as subject to the Excise
Tax shall be equal to the lesser of (1) the total amount of
the Total Payments or (2) the amount of excess parachute
payments within the meaning of Section 280G(b)(1) of the Code
(after applying clause (a), above), and (c) the value of any
non-cash benefits or any deferred payment or benefit shall be
determined by the Company's independent auditors in accordance
with the principles of Sections 280G(d)(3) and (4) of the
Code.
For purposes of determining the amount of the Gross-up
Payment, Employee shall be deemed to pay federal income taxes
at the highest marginal rate of federal income taxation for
the calendar year in which the Gross-up Payment is to be made
and the applicable state and
- 9 -
<PAGE> 10
local income taxes at the highest marginal rate of taxation
for the calendar year in which the Gross-up Payment is to be
made, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local
taxes. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account
hereunder at the time the Gross-up Payment is made, Employee
shall repay to the Company at the time that the amount of such
reduction in Excise Tax is finally determined the portion of
the Gross-up Payment attributable to such reduction (plus the
portion of the Gross-up Payment attributable to the Excise Tax
and federal and state and local income tax imposed on the
portion of the Gross-up Payment being repaid by Employee if
such repayment results in a reduction in Excise Tax and/or a
federal and state and local income tax deduction), plus
interest on the amount of such repayment at the rate provided
in Section 1274(b)(2)(B) of the Code. In the event that the
Excise Tax is determined to exceed the amount taken into
account hereunder at the time the Gross-up Payment is made
(including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-up
Payment), the Company shall make or cause to be made an
additional Gross-up Payment in respect of such excess (plus
any interest payable with respect to such excess) at the time
that the amount of such excess is finally determined.
The Gross-up Payment or portion thereof provided for above
shall be paid not later than the thirtieth day following
payment of any amounts required to be paid pursuant to this
Section 9(b); provided, however, that if the amount of such
Gross-up Payment or portion thereof cannot be finally
determined on or before such day, the Company shall pay or
cause to be paid to Employee on such day an estimate, as
determined in good faith by the Company, of the minimum amount
of such payments and shall pay or cause to be paid the
remainder of such payments (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) as soon as the
amount thereof can be determined, but in no event later than
the forty-fifth day after payment of any amounts required to
be paid hereunder. In the event that the amount of the
estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan to
Employee, repayable on the fifth day after demand by the
Company (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code).
- 10 -
<PAGE> 11
10. Special Situations. The parties agree that in the
event that a Change in Control occurs for any one of the following reasons, the
provisions of Sections 2, 6 and 9 shall not apply:
(a) the purchase of more than fifty percent (50%) of the
stock of the Company by an employee stock ownership plan or similar employee
benefit plan of which Employee is a participant; or
(b) the purchase of more than fifty percent (50%) of the
stock or ninety percent (90%) of the assets of the Company by a group of
individuals or entities including Employee as a member or participant,
including but not limited to those transactions commonly known as a leveraged
or other forms of management buy-outs.
11. Disputes. Any dispute arising under this Agreement
(except Section 12) shall be promptly submitted to arbitration under the Rules
of the American Arbitration Association. An arbitrator is to be mutually
agreed upon by the parties or upon failure of agreement, designated by the
American Arbitration Association.
12. Non-Competition, Non-Solicitation, and
Confidentiality.
(a) In consideration of this Agreement and other
good and valuable consideration, Employee
agrees that for so long as he is employed by
the Company and for six (6) months
thereafter, he shall not own, manage, operate,
control, be employed by or otherwise engage
in any competitive business. Employee's
agreement pursuant to the preceding sentence
shall be in addition to any other agreement
or legal obligation he may have with or to
the Company. For purposes of the preceding
sentence, a "competitive business" is any
business engaged in the offshore marine
services business and/or any business
conducted by the Company, its affiliates or
any subsidiaries thereof as of the date
Employee's employment is terminated to the
extent such business generated at least 25%
of the total gross revenue of the Company for
the immediately preceding calendar year. A
business which is conducted by the Company,
its affiliates or any subsidiaries which is
subsequently sold by the Company is not a
competitive business as of the date such
business is sold. An "affiliate" of the
- 11 -
<PAGE> 12
Company is any company which either controls,
is controlled by or is under common control
with the Company. The phrase "any business
conducted by the Company, its affiliates or
any subsidiaries thereof" includes not only
current businesses but also any new
businesses under consideration or
investigation on the date Employee's
employment with the Company is terminated so
long as it could reasonably be anticipated
that such new business would generate at
least 25% of the gross revenues for the
Company in the future.
Employee also agrees that during the
six (6) month period described in the first
sentence of this Section 12(a) he will not
directly or indirectly, on behalf of himself
or any other person or entity, make a
solicitation or conduct business, with any
customer or potential customer of the Company
with which he had contact while employed by
the Company, its affiliates and/or any
subsidiaries thereof, with respect to any
services which are competitive with any
business conducted by the Company, its
affiliates or any subsidiaries thereof. For
purposes of the preceding sentence, a
"customer" is any person or entity that has
purchased services from the Company, its
affiliates or any subsidiaries thereof within
the twenty-four (24) month period ending on
the date Employee's employment is terminated.
A "potential customer" is any person or
entity that the Company solicited for
business within twelve (12) months prior to
the date Employee's employment with the
Company is terminated.
The Company and Employee recognize that
his responsibilities on behalf of the Company
have resulted in contacts throughout the
United States and certain foreign countries.
Employee's contacts on behalf of the Company
represent a substantial asset of the Company
which are entitled to protection. In
recognition of this situation, the covenants
set forth in this Section 12 shall apply to
competitive businesses and solicitation in
the United States, United Kingdom, and any
other foreign countries in which the Company,
its affiliates and/or the subsidiaries
- 12 -
<PAGE> 13
thereof has (have) conducted $100,000 or more
of business during the twelve-month period
ending on the date Employee's employment with
the Company terminated.
Before and forever after his
termination or resignation, Employee shall
keep confidential and refrain from utilizing
or disseminating any confidential,
proprietary or trade secret information of
the Company for any purpose other than
furthering the business interests of the
Company.
(b) During Employee's employment hereunder and
during six (6) months following his
resignation or the termination of his
employment hereunder for any reason, Employee
will not induce or attempt to influence any
present or future employee of the Company,
its affiliates or any subsidiaries thereof to
leave its employ.
13. Other Agreements. Except to the extent expressly set
forth herein, this Agreement shall not modify or lessen any benefit or
compensation to which Employee is entitled under any agreement between Employee
and the Company or under any plan maintained by the Company in which he
participates or participated. Benefits or compensation shall be payable
thereunder, if at all, according to the terms of the applicable plan(s) or
agreement(s). The terms of this Agreement shall supersede any existing
agreement between Employee and the Company executed prior to the date hereof to
the extent any such Agreement is inconsistent with the terms hereof.
14. Successors; Binding Agreement. The Company will
require any successor (whether direct or indirect by purchase, merger,
consolidation or otherwise, to all or substantially all (50% or more) of the
business and/or assets of the Company) to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place.
This Agreement shall inure to the benefit of and be
enforceable by Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Employee should die before all amounts that would still be payable to Employee
hereunder if Employee had continued to live are paid, all such unpaid amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to Employee's devisee, legatee, or other designee or, if there
be no such designee, to Employee's estate.
- 13 -
<PAGE> 14
15. Injunction. The remedy at law for any breach of
Section 12 will be inadequate and the Company, its affiliates and any
subsidiaries thereof would suffer continuing and irreparable injury to their
business as a direct result of any such breach. Accordingly, notwithstanding
anything stated herein, if Employee shall breach or fail to perform any term,
condition or duty contained in Section 12 hereof, then, in such event, the
Company shall be entitled to institute and prosecute proceedings in any court
of competent jurisdiction, either in law or in equity, to obtain the specific
performance thereof by Employee or to seek a temporary restraining order or
injunctive relief, without any requirement to show actual damages or post bond,
to restrict Employee from violating the provisions of Section 12; however,
nothing herein shall be construed to prevent the Company seeking such other
remedy in the courts, in case of any breach of this Agreement by Employee, as
the Company may elect or invoke. Notwithstanding any other provision herein to
the contrary, if court proceedings are instituted by the Company to enforce
Section 12 hereof, and the Company is the prevailing party, the Company shall
receive, in addition to any damages awarded, reasonable attorneys' fees, court
costs and ancillary expenses.
16. Miscellaneous. This Agreement may not be modified or
discharged unless such waiver, modification or discharge is agreed to in
writing and signed by Employee and such officers of the Company as may be
specifically designated by its Board for that purpose. Except for any failure
to give the ten (10) day notice described in Section 6(b) above, the failure of
either party to this Agreement to object to any breach by the other party or
the non-breaching party's conduct or conduct forbearance shall not constitute a
waiver of that party's rights to enforce this Agreement. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of any subsequent breach by such
other party or any similar or dissimilar provisions or conditions at the same
or any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Texas.
Except as provided in Section 15 above, the Company shall pay all
legal fees, expenses of arbitration, and related expenses incurred by Employee,
in connection with this Agreement following a Change in Control of the Company,
including, without limitation, (a) all such fees and expenses, if any, incurred
in contesting or disputing any termination of Employee's employment following a
Change in Control or incurred by Employee in seeking advice with respect to the
matters hereunder or (b) Employee
- 14 -
<PAGE> 15
seeking to obtain or enforce any right or benefit provided by this Agreement.
17. Severability. The parties hereto intend this
Agreement to be enforced to the maximum extent permitted by law. In the event
any provision of this Agreement is deemed to be invalid or unenforceable by any
court of competent jurisdiction, such provisions shall be deemed to be
restricted in scope or otherwise modified to the extent necessary to render the
same valid and enforceable. In the event the provisions of Section 12 cannot
be modified or restricted so as to be valid and enforceable, then the same as
well as the Company's obligation to make any payment or transfer any benefit to
Employee in connection with any termination of Employee's employment shall be
deemed excised from this Agreement, and this Agreement shall be construed and
enforced as if such provisions had originally been incorporated herein as so
restricted or modified or as if such provisions had not originally been
contained herein, as the case may be. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement which shall remain in full force and
effect.
18. Survival. The obligations of the parties under this
Agreement shall survive the term of this Agreement.
19. Term of Agreement. This Agreement shall have an
initial term expiring on the earlier of (a) the third anniversary of the date
hereof, assuming there has been no Change in Control of the Company, or (b) the
Employee's normal retirement date (age 65); provided, however, that the period
provided in the clause (a) shall be automatically extended for successive
periods of one (1) year on a continuing basis unless either party shall give
written notice of its intention not to so extend at least six (6) months prior
to the end of the initial three (3) year period or any renewal period. No
notice by the Company of its intention not to extend shall be effective if,
within one year prior to the original expiration date, or if a renewal period,
within one year prior to the termination date proposed by the Company, the
Company has received notice, official or unofficial, or otherwise has reason to
believe that steps have or are being taken or considered by any person or
entity that would when completed bring about a Change in Control of the
Company. This Agreement shall in any case continue in effect for two (2) years
following a Change in Control of the Company.
- 15 -
<PAGE> 16
Date: June 20, 1995.
Employee Hornbeck Offshore Services, Inc.
/S/ LARRY D. HORNBECK By: /S/ LARRY D. HORNBECK
(LARRY D. HORNBECK)
Its: CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
- 16 -
<PAGE> 1
AGREEMENT
WHEREAS, Hornbeck Offshore Services, Inc. (the "Company")
considers it essential and in the best interests of the Company and its
stockholders to foster the continued employment of its key management
personnel;
WHEREAS, Bernie W. Stewart ("Employee") is considered a key
management employee, currently serving as Senior Vice President and Chief
Operating Officer of the Company; and
WHEREAS, the Company desires to assure the future continuity
of Employee's services in the event of any actual or threatened "Change in
Control" (as defined in Section 6 below) of the Company.
IT IS THEREFORE AGREED AS FOLLOWS:
1. Effect of Agreement.
This Agreement shall be effective and binding immediately upon
its execution. However, except as specifically provided herein, this Agreement
shall not alter materially Employee's duties and obligations to the Company and
the remuneration and benefits which Employee may reasonably expect to receive
from the Company in the absence of a Change in Control.
2. Employment On and After Change in Control. Provided
that Employee is an employee of the Company immediately prior to a Change in
Control, the Company shall employ Employee, and Employee shall accept such
employment, effective upon such Change in Control for a period of twenty-four
(24) months after said Change in Control subject to the terms and conditions
stated herein.
3. Duties After Change in Control. Employee agrees that
during the term of his employment with the Company after a Change in Control,
he shall perform the duties described in Section 12 below and such other duties
for the Company and its subsidiaries consistent with his experience and
training as the Board of Directors of the Company (the "Board") or the Board's
representatives shall determine from time to time, which duties shall be at
least substantially equal in status, dignity and character to his duties at the
date hereof. He shall also have the title of Senior Vice President and Chief
Operating Officer. Employee further agrees to devote his entire working time
and attention to the business of the Company and its subsidiaries and to use
his best efforts to promote such business.
4. Compensation Prior to a Change in Control. Prior to
a Change in Control, the Company agrees to pay Employee compensation for his
services in an amount, and to provide him with life insurance, disability,
health and other benefits, at
<PAGE> 2
least equal to that which he presently receives, only with such changes as
shall be agreed upon between Employee and the Company. For the purpose of this
Section, compensation does not include any bonus or other incentive
compensation plan or stock purchase plan, which may vary from year to year at
the discretion of the Company.
5. Termination of Employment Prior to a Change of
Control. Employee shall be entitled to terminate his employment prior to a
Change in Control at any time upon thirty (30) days' prior written notice. The
Company, shall be able to terminate Employee's employment at any time prior to
a Change in Control with or without cause upon thirty (30) days' prior written
notice (or the payment of salary in lieu thereof). This Section shall not be
construed to reduce any accrued benefits payable in connection with any
termination of Employee's employment prior to a Change in Control.
Nothing expressed or implied in this Agreement shall create
any right or duty on the part of the Company or Employee to have Employee
remain in the employment of the Company prior to a Change in Control.
6. Termination of Employment On or After Change in
Control.
(a) For purposes of this Agreement, the term
"Change in Control" means (i) the occurrence
of any event which results in any individual
or entity or any combination of individuals
or entities acting in concert having
beneficial ownership or control of 20% or
more of the Company's outstanding capital
stock with voting rights and within an
eighteen-month period of such event, there is
a forty percent (40%) or greater change in
the composition of the Board, (ii) the sale
of all or substantially all fifty percent
(50%) or more of the Company's assets (or a
separate identifiable operating division's or
subsidiary's assets in which event the terms
of this Agreement shall apply only to the
extent Employee has primary responsibility
for such operating division or subsidiary) as
determined based on the fair market value as
of the last day of the preceding fiscal year,
or gross revenue generation for the
twelve-month period ending on the last day of
the preceding fiscal year, with respect to
the Company's, operating division's or
subsidiary's assets, whichever is applicable,
or (iii) individuals who constitute the Board
- 2 -
<PAGE> 3
on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a
majority thereof, provided that any person
becoming a director subsequent to the date
hereof whose election, or nomination for
election by the Company's stockholders, was
approved by a vote of at least three-quarters
of the directors comprising the remaining
members of the Incumbent Board (either by a
specific vote or by approval of the proxy
statement of the Company in which such person
is named as a nominee for director, without
objection to such nomination) shall be, for
purposes of this clause (iii), considered as
though such person were a member of the
incumbent Board.
(b) Employee's employment on and after a Change
in Control may be terminated with just cause
by the Company at any time upon not less than
ten (10) days' prior written notice. Prior
to termination for just cause on and after a
Change in Control, the Board of Directors
shall by majority vote have declared that
Employee's termination is for just cause
specifically stating the basis for such
determination. In the event such a
termination for just cause occurs, the
provisions of Sections 9(a) and 12 below
shall apply.
Employee's employment may be terminated
on or after a Change in Control without just
cause pursuant to the constructive
termination procedures described in the next
paragraph or by the Company giving Employee
not less than thirty (30) days' prior written
notice. In the event Employee's employment is
terminated pursuant to the preceding
sentence:
(i) the provisions of Section 9(b) below
shall apply; and
(ii) although Employee's employment term
shall be deemed terminated at the
end of such notice period (or, in
the case of a constructive
termination described in the next
paragraph, as of the date Employee
notifies the Company of such
termination), such termination shall
in no way affect the term of this
Agreement
- 3 -
<PAGE> 4
or Employee's duties and obligations
under Section 12 below.
For purposes of this Section 6(b),
Employee shall be considered as having been
terminated by the Company on or after a
Change in Control for other than just cause
provided that he has notified the Company of
any of the following within ten (10) days of
the occurrence thereof:
(i) the assignment to Employee of any
duties of lesser status, dignity and
character (including officer status)
than his duties immediately prior to
the effective date of the Change in
Control or a substantial reduction
in the nature or status of his
responsibilities from those in
effect immediately prior to the
effective date of the Change in
Control;
(ii) a post-Change in Control reduction
by the Company in Employee's annual
base salary or bonus level or
incentive plan benefit (as in effect
immediately prior to the effective
date of the Change in Control);
provided, however, that any
reduction made necessary due to
economic factors within the offshore
marine services business, as
determined at the discretion of the
Board, and applicable to all or
substantially all (50% or more) of
Company management shall not be
considered a termination event under
this Section 6(b);
(iii) relocation of Employee's office to a
location which is more than 75 miles
from the location in which Employee
principally works for the Company
immediately prior to the effective
date of the Change in Control; the
relocation of the appropriate
principal executive office of the
Company or the Company's operating
division or subsidiary for which
Employee performed the majority of
his services for the Company during
the year prior to the effective date
of the Change in Control to a
location which is more than 75 miles
from the location of such office
immediately prior to such date; or
his being required by the
- 4 -
<PAGE> 5
Company in order to perform duties of
substantially equal status, dignity
and character to those duties he
performed immediately prior to the
effective date of the Change in
Control to travel on the Company's
business to a substantially greater
extent than is consistent with his
business travel obligations as of
such date; or
(iv) the failure of the Company to
continue to provide Employee with
benefits substantially equivalent to
those enjoyed by him under any of
the Company's life insurance,
medical, health and accident or
disability plans in which he was
participating immediately prior to
the effective date of the Change in
Control, the taking of any action by
the Company which would directly or
indirectly materially reduce any of
such benefits or deprive him of any
material fringe benefit enjoyed by
him immediately prior to the
effective date of the Change in
Control, or the failure of the
Company to provide him with at least
the number of paid vacation days to
which he is entitled on the basis of
years of service under the Company's
normal vacation policy in effect
immediately prior to the effective
date of the Change in Control.
(c) In the event Employee's employment is
terminated on or after a Change in Control in
any manner not described in Section 6(b)
above:
(i) the provisions of Section 9(b) shall
not apply and Employee shall instead
receive the sums and benefits
described in Section 9(a); and
(ii) such termination shall in no way
affect the term of this Agreement or
Employee's duties or obligations
under Section 12 below.
(d) Any termination of employment of Employee
following the commencement of any discussions
by a stockholder or group of stockholders
owning legally or beneficially more than 20%
of the common stock or an officially desig-
- 5 -
<PAGE> 6
nated representative of the Board of
Directors with a third party that results
within 180 days in a Change in Control shall
(unless such termination is for cause or
wholly unrelated to such discussions) be
deemed to be a termination of Employee on and
after a Change in Control for purposes of
this Agreement.
7. Notice of Termination. Any termination by the
Company or assertion of termination by Employee shall be communicated by
written notice of termination to the other party at the following address:
Hornbeck Offshore Services, Inc.
7707 Harborside Drive
Galveston, Texas 77554
ATTN: Chairman of the Board
Mr. Bernie W. Stewart
Hornbeck Offshore Services, Inc.
7707 Harborside Drive
Galveston, Texas 77554
8. Disability. If as a result of Employee's incapacity
due to physical or mental illness, he shall have been absent from his duties
with the Company for one hundred eighty (180) days within any twelve (12)
consecutive-month period and within thirty (30) days after written notice of
the Company's intention to terminate his employment is given, Employee shall
not have returned to the performance of his duties with the Company
substantially on a full-time basis, the Company may terminate his employment
for disability. This shall not constitute a termination for the purposes of
obtaining benefits pursuant to Section 9.
9. Benefits Upon Termination And Leave Of Employment On
or After Change in the Control.
(a) If Employee is terminated for just cause on
or after a Change in Control, he shall only
receive the accrued sums and benefits payable
to him through the date he is terminated; the
provisions of Section 9(b) below shall not be
applicable in such case and Employee shall
not receive (or shall cease receiving) the
payments and benefits described in Section
9(b).
(b) Subject to Employee's compliance with the
provisions of Section 12(a) below, if
Employee is terminated during the twenty-four
- 6 -
<PAGE> 7
(24) month period beginning on and continuing
after a Change in Control other than for just
cause (either at the discretion of the
Company's management or constructively by the
operation of Section 6), he shall receive the
following payments and benefits in lieu of
any other sums or benefits otherwise payable
to him by the Company:
(i) all then accrued pay,
benefits, executive
compensation and fringe
benefits, including (but not
limited to) pro rata bonus
and incentive plan earnings;
(ii) medical, health and
disability benefits which are
substantially similar to the
benefits the Company is
providing him as of the date
his employment is terminated
for a period of twenty-four
(24) months thereafter;
(iii) three times the highest
annual compensation amount of
his base period compensation;
and
(iv) an amount equal to the
market value of the Company's
common stock on the Date of
Termination or on any other
date within 180 days
preceding the Date of
Termination, on whichever
date the value is highest,
multiplied by the aggregate
number of Options granted to
Employee more than six months
prior to the Date of
Termination under the
Company's Employee Incentive
Stock Plans ("Incentive
Plans") which remain
unexercised on the Date of
Termination, less the
aggregate option price of all
such options. This provision
is not intended to permit the
Employee to receive the
benefit of any additional
options other than those
previously granted under the
Incentive Plans.
The foregoing payments and benefits shall be deemed
compensation payable for the duties to be
- 7 -
<PAGE> 8
performed by Employee pursuant to Section 12 below.
For purposes of this Agreement, (A) Employee's "base
period compensation" is the annual "compensation" (as
defined below) which was includable in his gross
income for his base period (i.e., his most recent
five taxable years ending before the date of the
Change in Control); and (B) if Employee's base period
includes a short taxable year or less than all of a
taxable year, compensation for such short or
incomplete taxable year shall be annualized before
determining his annual compensation during the base
period. (In annualizing compensation, the frequency
with which payments are expected to be made over an
annual period shall be taken into account. Thus, any
amount of compensation for such a short or incomplete
taxable year that represents a payment that would not
be made more than once per year shall not be
annualized). For purposes of Section 9(b)(iii) and
the definitions pertaining to said Section,
Employee's "compensation" is the compensation
(including but not limited to base salary and bonus)
which was payable to him by the Company or a related
entity determined without regard to the following
Sections of the Internal Revenue Code of 1986, as
amended (the "Code"): 125 (cafeteria plans) and
402(a)(8) (cash or deferred arrangements).
Except for the benefits described in Section 9(b)(ii) above,
the sums due pursuant to this Section 9(b) shall be paid in a
lump sum on or before the fifteenth business day following the
Date of Termination. All sums due hereunder shall be subject
to appropriate withholding and statutory requirements.
Employee shall not be required to mitigate the amount of any
payment provided for in this Section 9(b) by seeking other
employment or otherwise. Notwithstanding anything stated in
this Section 9(b) to the contrary, however, the Company shall
not be required to provide medical, health and/or disability
benefits to the extent such benefits would duplicate benefits
received by Employee in connection with his employment with
any new employer.
Notwithstanding anything stated in this Agreement to the
contrary, in the event that Employee becomes entitled to the
payments hereunder (the "Agreement Payments"), if any of the
Agreement Payments will be subject to the tax (the "Excise
Tax") imposed by Section 4999 of the Code (or any similar tax
that may hereafter be imposed), the Company shall pay or cause
- 8 -
<PAGE> 9
to be paid to Employee at the time specified below an
additional amount (the "Gross-up Payment") such that the net
amount retained by Employee, after deduction of any Excise Tax
on the sums due pursuant to this Section 9(b) and any federal,
state and local income tax and Excise Tax upon the Gross-up
Payment provided for in this paragraph but before deduction
for any federal, state or local income tax on the Agreement
Payments, shall be equal to the Total Payments.
For purposes of determining whether any of the sums due
pursuant to this Section 9(b) will be subject to the Excise
Tax and the amount of such Excise Tax, (a) any other payments
or benefits received or to be received by Employee in
connection with a Change in Control of the Company or
Employee's termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or
agreement with the Company, any person whose actions result in
a Change of Control of the Company or any person affiliated
with the Company or such person) (which, together with the
Agreement Payments, shall constitute the "Total Payments")
shall be treated as "parachute payments" within the meaning of
Section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of Section 280G(b)(1) of the Code
shall be treated as subject to the Excise Tax, unless in the
opinion of tax counsel selected by the Company's independent
auditors such other payments or benefits (in whole or in part)
do not constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning
of Section 280G(b)(4) of the Code in excess of the base amount
within the meaning of Section 280G(b)(3) of the Code or are
otherwise not subject to the Excise Tax, (b) the amount of the
Total Payments which shall be treated as subject to the Excise
Tax shall be equal to the lesser of (1) the total amount of
the Total Payments or (2) the amount of excess parachute
payments within the meaning of Section 280G(b)(1) of the Code
(after applying clause (a), above), and (c) the value of any
non-cash benefits or any deferred payment or benefit shall be
determined by the Company's independent auditors in accordance
with the principles of Sections 280G(d)(3) and (4) of the
Code.
For purposes of determining the amount of the Gross-up
Payment, Employee shall be deemed to pay federal income taxes
at the highest marginal rate of federal income taxation for
the calendar year in which the Gross-up Payment is to be made
and the applicable state and
- 9 -
<PAGE> 10
local income taxes at the highest marginal rate of taxation
for the calendar year in which the Gross-up Payment is to be
made, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local
taxes. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account
hereunder at the time the Gross-up Payment is made, Employee
shall repay to the Company at the time that the amount of such
reduction in Excise Tax is finally determined the portion of
the Gross-up Payment attributable to such reduction (plus the
portion of the Gross-up Payment attributable to the Excise Tax
and federal and state and local income tax imposed on the
portion of the Gross-up Payment being repaid by Employee if
such repayment results in a reduction in Excise Tax and/or a
federal and state and local income tax deduction), plus
interest on the amount of such repayment at the rate provided
in Section 1274(b)(2)(B) of the Code. In the event that the
Excise Tax is determined to exceed the amount taken into
account hereunder at the time the Gross-up Payment is made
(including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-up
Payment), the Company shall make or cause to be made an
additional Gross-up Payment in respect of such excess (plus
any interest payable with respect to such excess) at the time
that the amount of such excess is finally determined.
The Gross-up Payment or portion thereof provided for above
shall be paid not later than the thirtieth day following
payment of any amounts required to be paid pursuant to this
Section 9(b); provided, however, that if the amount of such
Gross-up Payment or portion thereof cannot be finally
determined on or before such day, the Company shall pay or
cause to be paid to Employee on such day an estimate, as
determined in good faith by the Company, of the minimum amount
of such payments and shall pay or cause to be paid the
remainder of such payments (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) as soon as the
amount thereof can be determined, but in no event later than
the forty-fifth day after payment of any amounts required to
be paid hereunder. In the event that the amount of the
estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan to
Employee, repayable on the fifth day after demand by the
Company (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code).
- 10 -
<PAGE> 11
10. Special Situations. The parties agree that in the
event that a Change in Control occurs for any one of the following reasons, the
provisions of Sections 2, 6 and 9 shall not apply:
(a) the purchase of more than fifty percent (50%) of the
stock of the Company by an employee stock ownership plan or similar employee
benefit plan of which Employee is a participant; or
(b) the purchase of more than fifty percent (50%) of the
stock or ninety percent (90%) of the assets of the Company by a group of
individuals or entities including Employee as a member or participant,
including but not limited to those transactions commonly known as a leveraged
or other forms of management buy-outs.
11. Disputes. Any dispute arising under this Agreement
(except Section 12) shall be promptly submitted to arbitration under the Rules
of the American Arbitration Association. An arbitrator is to be mutually
agreed upon by the parties or upon failure of agreement, designated by the
American Arbitration Association.
12. Non-Competition, Non-Solicitation, and
Confidentiality.
(a) In consideration of this Agreement and other
good and valuable consideration, Employee
agrees that for so long as he is employed by
the Company and for six (6) months
thereafter, he shall not own, manage, operate,
control, be employed by or otherwise engage
in any competitive business. Employee's
agreement pursuant to the preceding sentence
shall be in addition to any other agreement
or legal obligation he may have with or to
the Company. For purposes of the preceding
sentence, a "competitive business" is any
business engaged in the offshore marine
services business and/or any business
conducted by the Company, its affiliates or
any subsidiaries thereof as of the date
Employee's employment is terminated to the
extent such business generated at least 25%
of the total gross revenue of the Company for
the immediately preceding calendar year. A
business which is conducted by the Company,
its affiliates or any subsidiaries which is
subsequently sold by the Company is not a
competitive business as of the date such
business is sold. An "affiliate" of the
- 11 -
<PAGE> 12
Company is any company which either controls,
is controlled by or is under common control
with the Company. The phrase "any business
conducted by the Company, its affiliates or
any subsidiaries thereof" includes not only
current businesses but also any new
businesses under consideration or
investigation on the date Employee's
employment with the Company is terminated so
long as it could reasonably be anticipated
that such new business would generate at
least 25% of the gross revenues for the
Company in the future.
Employee also agrees that during the
six (6) month period described in the first
sentence of this Section 12(a) he will not
directly or indirectly, on behalf of himself
or any other person or entity, make a
solicitation or conduct business, with any
customer or potential customer of the Company
with which he had contact while employed by
the Company, its affiliates and/or any
subsidiaries thereof, with respect to any
services which are competitive with any
business conducted by the Company, its
affiliates or any subsidiaries thereof. For
purposes of the preceding sentence, a
"customer" is any person or entity that has
purchased services from the Company, its
affiliates or any subsidiaries thereof within
the twenty-four (24) month period ending on
the date Employee's employment is terminated.
A "potential customer" is any person or
entity that the Company solicited for
business within twelve (12) months prior to
the date Employee's employment with the
Company is terminated.
The Company and Employee recognize that
his responsibilities on behalf of the Company
have resulted in contacts throughout the
United States and certain foreign countries.
Employee's contacts on behalf of the Company
represent a substantial asset of the Company
which are entitled to protection. In
recognition of this situation, the covenants
set forth in this Section 12 shall apply to
competitive businesses and solicitation in
the United States, United Kingdom, and any
other foreign countries in which the Company,
its affiliates and/or the subsidiaries
- 12 -
<PAGE> 13
thereof has (have) conducted $100,000 or more
of business during the twelve-month period
ending on the date Employee's employment with
the Company terminated.
Before and forever after his
termination or resignation, Employee shall
keep confidential and refrain from utilizing
or disseminating any confidential,
proprietary or trade secret information of
the Company for any purpose other than
furthering the business interests of the
Company.
(b) During Employee's employment hereunder and
during six (6) months following his
resignation or the termination of his
employment hereunder for any reason, Employee
will not induce or attempt to influence any
present or future employee of the Company,
its affiliates or any subsidiaries thereof to
leave its employ.
13. Other Agreements. Except to the extent expressly set
forth herein, this Agreement shall not modify or lessen any benefit or
compensation to which Employee is entitled under any agreement between Employee
and the Company or under any plan maintained by the Company in which he
participates or participated. Benefits or compensation shall be payable
thereunder, if at all, according to the terms of the applicable plan(s) or
agreement(s). The terms of this Agreement shall supersede any existing
agreement between Employee and the Company executed prior to the date hereof to
the extent any such Agreement is inconsistent with the terms hereof.
14. Successors; Binding Agreement. The Company will
require any successor (whether direct or indirect by purchase, merger,
consolidation or otherwise, to all or substantially all (50% or more) of the
business and/or assets of the Company) to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place.
This Agreement shall inure to the benefit of and be
enforceable by Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Employee should die before all amounts that would still be payable to Employee
hereunder if Employee had continued to live are paid, all such unpaid amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to Employee's devisee, legatee, or other designee or, if there
be no such designee, to Employee's estate.
- 13 -
<PAGE> 14
15. Injunction. The remedy at law for any breach of
Section 12 will be inadequate and the Company, its affiliates and any
subsidiaries thereof would suffer continuing and irreparable injury to their
business as a direct result of any such breach. Accordingly, notwithstanding
anything stated herein, if Employee shall breach or fail to perform any term,
condition or duty contained in Section 12 hereof, then, in such event, the
Company shall be entitled to institute and prosecute proceedings in any court
of competent jurisdiction, either in law or in equity, to obtain the specific
performance thereof by Employee or to seek a temporary restraining order or
injunctive relief, without any requirement to show actual damages or post bond,
to restrict Employee from violating the provisions of Section 12; however,
nothing herein shall be construed to prevent the Company seeking such other
remedy in the courts, in case of any breach of this Agreement by Employee, as
the Company may elect or invoke. Notwithstanding any other provision herein to
the contrary, if court proceedings are instituted by the Company to enforce
Section 12 hereof, and the Company is the prevailing party, the Company shall
receive, in addition to any damages awarded, reasonable attorneys' fees, court
costs and ancillary expenses.
16. Miscellaneous. This Agreement may not be modified or
discharged unless such waiver, modification or discharge is agreed to in
writing and signed by Employee and such officers of the Company as may be
specifically designated by its Board for that purpose. Except for any failure
to give the ten (10) day notice described in Section 6(b) above, the failure of
either party to this Agreement to object to any breach by the other party or
the non-breaching party's conduct or conduct forbearance shall not constitute a
waiver of that party's rights to enforce this Agreement. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of any subsequent breach by such
other party or any similar or dissimilar provisions or conditions at the same
or any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Texas.
Except as provided in Section 15 above, the Company shall pay all
legal fees, expenses of arbitration, and related expenses incurred by Employee,
in connection with this Agreement following a Change in Control of the Company,
including, without limitation, (a) all such fees and expenses, if any, incurred
in contesting or disputing any termination of Employee's employment following a
Change in Control or incurred by Employee in seeking advice with respect to the
matters hereunder or (b) Employee
- 14 -
<PAGE> 15
seeking to obtain or enforce any right or benefit provided by this Agreement.
17. Severability. The parties hereto intend this
Agreement to be enforced to the maximum extent permitted by law. In the event
any provision of this Agreement is deemed to be invalid or unenforceable by any
court of competent jurisdiction, such provisions shall be deemed to be
restricted in scope or otherwise modified to the extent necessary to render the
same valid and enforceable. In the event the provisions of Section 12 cannot
be modified or restricted so as to be valid and enforceable, then the same as
well as the Company's obligation to make any payment or transfer any benefit to
Employee in connection with any termination of Employee's employment shall be
deemed excised from this Agreement, and this Agreement shall be construed and
enforced as if such provisions had originally been incorporated herein as so
restricted or modified or as if such provisions had not originally been
contained herein, as the case may be. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement which shall remain in full force and
effect.
18. Survival. The obligations of the parties under this
Agreement shall survive the term of this Agreement.
19. Term of Agreement. This Agreement shall have an
initial term expiring on the earlier of (a) the third anniversary of the date
hereof, assuming there has been no Change in Control of the Company, or (b) the
Employee's normal retirement date (age 65); provided, however, that the period
provided in the clause (a) shall be automatically extended for successive
periods of one (1) year on a continuing basis unless either party shall give
written notice of its intention not to so extend at least six (6) months prior
to the end of the initial three (3) year period or any renewal period. No
notice by the Company of its intention not to extend shall be effective if,
within one year prior to the original expiration date, or if a renewal period,
within one year prior to the termination date proposed by the Company, the
Company has received notice, official or unofficial, or otherwise has reason to
believe that steps have or are being taken or considered by any person or
entity that would when completed bring about a Change in Control of the
Company. This Agreement shall in any case continue in effect for two (2) years
following a Change in Control of the Company.
- 15 -
<PAGE> 16
Date: June 20, 1995.
Employee Hornbeck Offshore Services, Inc.
/S/ BERNIE W. STEWART By: /S/ LARRY D. HORNBECK
(BERNIE W. STEWART)
Its: CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
- 16 -
<PAGE> 1
AGREEMENT
WHEREAS, Hornbeck Offshore Services, Inc. (the "Company")
considers it essential and in the best interests of the Company and its
stockholders to foster the continued employment of its key management
personnel;
WHEREAS, Robert W. Hampton ("Employee") is considered a key
management employee, currently serving as Vice President, Treasurer and Chief
Financial Officer of the Company; and
WHEREAS, the Company desires to assure the future continuity
of Employee's services in the event of any actual or threatened "Change in
Control" (as defined in Section 6 below) of the Company.
IT IS THEREFORE AGREED AS FOLLOWS:
1. Effect of Agreement.
This Agreement shall be effective and binding immediately upon
its execution. However, except as specifically provided herein, this Agreement
shall not alter materially Employee's duties and obligations to the Company and
the remuneration and benefits which Employee may reasonably expect to receive
from the Company in the absence of a Change in Control.
2. Employment On and After Change in Control. Provided
that Employee is an employee of the Company immediately prior to a Change in
Control, the Company shall employ Employee, and Employee shall accept such
employment, effective upon such Change in Control for a period of twenty-four
(24) months after said Change in Control subject to the terms and conditions
stated herein.
3. Duties After Change in Control. Employee agrees that
during the term of his employment with the Company after a Change in Control,
he shall perform the duties described in Section 12 below and such other duties
for the Company and its subsidiaries consistent with his experience and
training as the Board of Directors of the Company (the "Board") or the Board's
representatives shall determine from time to time, which duties shall be at
least substantially equal in status, dignity and character to his duties at the
date hereof. He shall also have the title of Vice President, Treasurer and
Chief Financial Officer. Employee further agrees to devote his entire working
time and attention to the business of the Company and its subsidiaries and to
use his best efforts to promote such business.
4. Compensation Prior to a Change in Control. Prior to
a Change in Control, the Company agrees to pay Employee compensation for his
services in an amount, and to provide him
<PAGE> 2
with life insurance, disability, health and other benefits, at least equal to
that which he presently receives, only with such changes as shall be agreed
upon between Employee and the Company. For the purpose of this Section,
compensation does not include any bonus or other incentive compensation plan or
stock purchase plan, which may vary from year to year at the discretion of the
Company.
5. Termination of Employment Prior to a Change of
Control. Employee shall be entitled to terminate his employment prior to a
Change in Control at any time upon thirty (30) days' prior written notice. The
Company, shall be able to terminate Employee's employment at any time prior to
a Change in Control with or without cause upon thirty (30) days' prior written
notice (or the payment of salary in lieu thereof). This Section shall not be
construed to reduce any accrued benefits payable in connection with any
termination of Employee's employment prior to a Change in Control.
Nothing expressed or implied in this Agreement shall create
any right or duty on the part of the Company or Employee to have Employee
remain in the employment of the Company prior to a Change in Control.
6. Termination of Employment On or After Change in
Control.
(a) For purposes of this Agreement, the term
"Change in Control" means (i) the occurrence
of any event which results in any individual
or entity or any combination of individuals
or entities acting in concert having
beneficial ownership or control of 20% or
more of the Company's outstanding capital
stock with voting rights and within an
eighteen-month period of such event, there is
a forty percent (40%) or greater change in
the composition of the Board, (ii) the sale
of all or substantially all fifty percent
(50%) or more of the Company's assets (or a
separate identifiable operating division's or
subsidiary's assets in which event the terms
of this Agreement shall apply only to the
extent Employee has primary responsibility
for such operating division or subsidiary) as
determined based on the fair market value as
of the last day of the preceding fiscal year,
or gross revenue generation for the
twelve-month period ending on the last day of
the preceding fiscal year, with respect to
the Company's, operating division's or
subsidiary's assets, whichever is applicable,
- 2 -
<PAGE> 3
or (iii) individuals who constitute the Board
on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a
majority thereof, provided that any person
becoming a director subsequent to the date
hereof whose election, or nomination for
election by the Company's stockholders, was
approved by a vote of at least three-quarters
of the directors comprising the remaining
members of the Incumbent Board (either by a
specific vote or by approval of the proxy
statement of the Company in which such person
is named as a nominee for director, without
objection to such nomination) shall be, for
purposes of this clause (iii), considered as
though such person were a member of the
incumbent Board.
(b) Employee's employment on and after a Change
in Control may be terminated with just cause
by the Company at any time upon not less than
ten (10) days' prior written notice. Prior
to termination for just cause on and after a
Change in Control, the Board of Directors
shall by majority vote have declared that
Employee's termination is for just cause
specifically stating the basis for such
determination. In the event such a
termination for just cause occurs, the
provisions of Sections 9(a) and 12 below
shall apply.
Employee's employment may be terminated
on or after a Change in Control without just
cause pursuant to the constructive
termination procedures described in the next
paragraph or by the Company giving Employee
not less than thirty (30) days' prior written
notice. In the event Employee's employment is
terminated pursuant to the preceding
sentence:
(i) the provisions of Section 9(b) below
shall apply; and
(ii) although Employee's employment term
shall be deemed terminated at the
end of such notice period (or, in
the case of a constructive
termination described in the next
paragraph, as of the date Employee
notifies the Company of such
termination), such termination shall
in
- 3 -
<PAGE> 4
no way affect the term of this
Agreement or Employee's duties and
obligations under Section 12 below.
For purposes of this Section 6(b),
Employee shall be considered as having been
terminated by the Company on or after a
Change in Control for other than just cause
provided that he has notified the Company of
any of the following within ten (10) days of
the occurrence thereof:
(i) the assignment to Employee of any
duties of lesser status, dignity and
character (including officer status)
than his duties immediately prior to
the effective date of the Change in
Control or a substantial reduction
in the nature or status of his
responsibilities from those in
effect immediately prior to the
effective date of the Change in
Control;
(ii) a post-Change in Control reduction
by the Company in Employee's annual
base salary or bonus level or
incentive plan benefit (as in effect
immediately prior to the effective
date of the Change in Control);
provided, however, that any
reduction made necessary due to
economic factors within the offshore
marine services business, as
determined at the discretion of the
Board, and applicable to all or
substantially all (50% or more) of
Company management shall not be
considered a termination event under
this Section 6(b);
(iii) relocation of Employee's office to a
location which is more than 75 miles
from the location in which Employee
principally works for the Company
immediately prior to the effective
date of the Change in Control; the
relocation of the appropriate
principal executive office of the
Company or the Company's operating
division or subsidiary for which
Employee performed the majority of
his services for the Company during
the year prior to the effective date
of the Change in Control to a
location which is more than 75 miles
from the location of such office
immediately prior to such
- 4 -
<PAGE> 5
date; or his being required by the
Company in order to perform duties
of substantially equal status,
dignity and character to those
duties he performed immediately
prior to the effective date of the
Change in Control to travel on the
Company's business to a
substantially greater extent than is
consistent with his business travel
obligations as of such date; or
(iv) the failure of the Company to
continue to provide Employee with
benefits substantially equivalent to
those enjoyed by him under any of
the Company's life insurance,
medical, health and accident or
disability plans in which he was
participating immediately prior to
the effective date of the Change in
Control, the taking of any action by
the Company which would directly or
indirectly materially reduce any of
such benefits or deprive him of any
material fringe benefit enjoyed by
him immediately prior to the
effective date of the Change in
Control, or the failure of the
Company to provide him with at least
the number of paid vacation days to
which he is entitled on the basis of
years of service under the Company's
normal vacation policy in effect
immediately prior to the effective
date of the Change in Control.
(c) In the event Employee's employment is
terminated on or after a Change in Control in
any manner not described in Section 6(b)
above:
(i) the provisions of Section 9(b) shall
not apply and Employee shall instead
receive the sums and benefits
described in Section 9(a); and
(ii) such termination shall in no way
affect the term of this Agreement or
Employee's duties or obligations
under Section 12 below.
(d) Any termination of employment of Employee
following the commencement of any discussions
by a stockholder or group of stockholders
owning legally or beneficially more than 20%
- 5 -
<PAGE> 6
of the common stock or an officially
designated representative of the Board of
Directors with a third party that results
within 180 days in a Change in Control shall
(unless such termination is for cause or
wholly unrelated to such discussions) be
deemed to be a termination of Employee on and
after a Change in Control for purposes of
this Agreement.
7. Notice of Termination. Any termination by the
Company or assertion of termination by Employee shall be communicated by
written notice of termination to the other party at the following address:
Hornbeck Offshore Services, Inc.
7707 Harborside Drive
Galveston, Texas 77554
ATTN: Chairman of the Board
Mr. Robert W. Hampton
Hornbeck Offshore Services, Inc.
7707 Harborside Drive
Galveston, Texas 77554
8. Disability. If as a result of Employee's incapacity
due to physical or mental illness, he shall have been absent from his duties
with the Company for one hundred eighty (180) days within any twelve (12)
consecutive-month period and within thirty (30) days after written notice of
the Company's intention to terminate his employment is given, Employee shall
not have returned to the performance of his duties with the Company
substantially on a full-time basis, the Company may terminate his employment
for disability. This shall not constitute a termination for the purposes of
obtaining benefits pursuant to Section 9.
9. Benefits Upon Termination And Leave Of Employment On
or After Change in the Control.
(a) If Employee is terminated for just cause on
or after a Change in Control, he shall only
receive the accrued sums and benefits payable
to him through the date he is terminated; the
provisions of Section 9(b) below shall not be
applicable in such case and Employee shall
not receive (or shall cease receiving) the
payments and benefits described in Section
9(b).
- 6 -
<PAGE> 7
(b) Subject to Employee's compliance with the
provisions of Section 12(a) below, if
Employee is terminated during the twenty-four
(24) month period beginning on and continuing
after a Change in Control other than for just
cause (either at the discretion of the
Company's management or constructively by the
operation of Section 6), he shall receive the
following payments and benefits in lieu of
any other sums or benefits otherwise payable
to him by the Company:
(i) all then accrued pay,
benefits, executive
compensation and fringe
benefits, including (but not
limited to) pro rata bonus
and incentive plan earnings;
(ii) medical, health and
disability benefits which are
substantially similar to the
benefits the Company is
providing him as of the date
his employment is terminated
for a period of twenty-four
(24) months thereafter;
(iii) three times the highest
annual compensation amount of
his base period compensation;
and
(iv) an amount equal to the
market value of the Company's
common stock on the Date of
Termination or on any other
date within 180 days
preceding the Date of
Termination, on whichever
date the value is highest,
multiplied by the aggregate
number of Options granted to
Employee more than six months
prior to the Date of
Termination under the
Company's Employee Incentive
Stock Plans ("Incentive
Plans") which remain
unexercised on the Date of
Termination, less the
aggregate option price of all
such options. This provision
is not intended to permit the
Employee to receive the
benefit of any additional
options other than those
previously granted under the
Incentive Plans.
- 7 -
<PAGE> 8
The foregoing payments and benefits shall be deemed
compensation payable for the duties to be performed
by Employee pursuant to Section 12 below. For
purposes of this Agreement, (A) Employee's "base
period compensation" is the annual "compensation" (as
defined below) which was includable in his gross
income for his base period (i.e., his most recent
five taxable years ending before the date of the
Change in Control); and (B) if Employee's base period
includes a short taxable year or less than all of a
taxable year, compensation for such short or
incomplete taxable year shall be annualized before
determining his annual compensation during the base
period. (In annualizing compensation, the frequency
with which payments are expected to be made over an
annual period shall be taken into account. Thus, any
amount of compensation for such a short or incomplete
taxable year that represents a payment that would not
be made more than once per year shall not be
annualized). For purposes of Section 9(b)(iii) and
the definitions pertaining to said Section,
Employee's "compensation" is the compensation
(including but not limited to base salary and bonus)
which was payable to him by the Company or a related
entity determined without regard to the following
Sections of the Internal Revenue Code of 1986, as
amended (the "Code"): 125 (cafeteria plans) and
402(a)(8) (cash or deferred arrangements).
Except for the benefits described in Section 9(b)(ii) above,
the sums due pursuant to this Section 9(b) shall be paid in a
lump sum on or before the fifteenth business day following the
Date of Termination. All sums due hereunder shall be subject
to appropriate withholding and statutory requirements.
Employee shall not be required to mitigate the amount of any
payment provided for in this Section 9(b) by seeking other
employment or otherwise. Notwithstanding anything stated in
this Section 9(b) to the contrary, however, the Company shall
not be required to provide medical, health and/or disability
benefits to the extent such benefits would duplicate benefits
received by Employee in connection with his employment with
any new employer.
Notwithstanding anything stated in this Agreement to the
contrary, in the event that Employee becomes entitled to the
payments hereunder (the "Agreement Payments"), if any of the
Agreement Payments will be subject to the tax (the "Excise
Tax") imposed by
- 8 -
<PAGE> 9
Section 4999 of the Code (or any similar tax that may
hereafter be imposed), the Company shall pay or cause to be
paid to Employee at the time specified below an additional
amount (the "Gross-up Payment") such that the net amount
retained by Employee, after deduction of any Excise Tax on the
sums due pursuant to this Section 9(b) and any federal, state
and local income tax and Excise Tax upon the Gross-up Payment
provided for in this paragraph but before deduction for any
federal, state or local income tax on the Agreement Payments,
shall be equal to the Total Payments.
For purposes of determining whether any of the sums due
pursuant to this Section 9(b) will be subject to the Excise
Tax and the amount of such Excise Tax, (a) any other payments
or benefits received or to be received by Employee in
connection with a Change in Control of the Company or
Employee's termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or
agreement with the Company, any person whose actions result in
a Change of Control of the Company or any person affiliated
with the Company or such person) (which, together with the
Agreement Payments, shall constitute the "Total Payments")
shall be treated as "parachute payments" within the meaning of
Section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of Section 280G(b)(1) of the Code
shall be treated as subject to the Excise Tax, unless in the
opinion of tax counsel selected by the Company's independent
auditors such other payments or benefits (in whole or in part)
do not constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning
of Section 280G(b)(4) of the Code in excess of the base amount
within the meaning of Section 280G(b)(3) of the Code or are
otherwise not subject to the excise Tax, (b) the amount of the
Total Payments which shall be treated as subject to the Excise
Tax shall be equal to the lesser of (1) the total amount of
the Total Payments or (2) the amount of excess parachute
payments within the meaning of Section 280G(b)(1) of the Code
(after applying clause (a), above), and (c) the value of any
non-cash benefits or any deferred payment or benefit shall be
determined by the Company's independent auditors in accordance
with the principles of Sections 280G(d)(3) and (4) of the
Code.
For purposes of determining the amount of the Gross-up
payment, Employee shall be deemed to pay federal income taxes
at the highest marginal rate of federal income
- 9 -
<PAGE> 10
taxation for the calendar year in which the Gross-up Payment
is to be made and the applicable state and local income taxes
at the highest marginal rate of taxation for the calendar year
in which the Gross-up Payment is to be made, net of the
maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes. In the
event that the Excise Tax is subsequently determined to be
less than the amount taken into account hereunder at the time
the Gross-up Payment is made, Employee shall repay to the
Company at the time that the amount of such reduction in
Excise Tax is finally determined the portion of the Gross-up
Payment attributable to such reduction (plus the portion of
the Gross-up Payment attributable to the Excise Tax and
federal and state and local income tax imposed on the portion
of the Gross-up Payment being repaid by Employee if such
repayment results in a reduction in Excise Tax and/or a
federal and state and local income tax deduction), plus
interest on the amount of such repayment at the rate provided
in Section 1274(b)(2)(B) of the Code. In the event that the
Excise Tax is determined to exceed the amount taken into
account hereunder at the time the Gross-up Payment is made
(including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-up
Payment), the Company shall make or cause to be made an
additional Gross-up Payment in respect of such excess (plus
any interest payable with respect to such excess) at the time
that the amount of such excess is finally determined.
The Gross-up Payment or portion thereof provided for above
shall be paid not later than the thirtieth day following
payment of any amounts required to be paid pursuant to this
Section 9(b); provided, however, that if the amount of such
Gross-up payment or portion thereof cannot be finally
determined on or before such day, the Company shall pay or
cause to be paid to Employee on such day an estimate, as
determined in good faith by the Company, of the minimum amount
of such payments and shall pay or cause to be paid the
remainder of such payments (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) as soon as the
amount thereof can be determined, but in no event later than
the forty-fifth day after payment of any amounts required to
be paid hereunder. In the event that the amount of the
estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan to
Employee, repayable on the fifth day after demand by the
Company
- 10 -
<PAGE> 11
(together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
10. Special Situations. The parties agree that in the
event that a Change in Control occurs for any one of the following reasons, the
provisions of Sections 2, 6 and 9 shall not apply:
(a) the purchase of more than fifty percent (50%) of the
stock of the Company by an employee stock ownership plan or similar employee
benefit plan of which Employee is a participant; or
(b) the purchase of more than fifty percent (50%) of the
stock or ninety percent (90%) of the assets of the Company by a group of
individuals or entities including Employee as a member or participant,
including but not limited to those transactions commonly known as a leveraged
or other forms of management buy-outs.
11. Disputes. Any dispute arising under this Agreement
(except Section 12) shall be promptly submitted to arbitration under the Rules
of the American Arbitration Association. An arbitrator is to be mutually
agreed upon by the parties or upon failure of agreement, designated by the
American Arbitration Association.
12. Non-Competition, Non-Solicitation, and
Confidentiality.
(a) In consideration of this Agreement and other
good and valuable consideration, Employee
agrees that for so long as he is employed by
the Company and for six (6) months
thereafter, he shall not own, manage, operate,
control, be employed by or otherwise engage
in any competitive business. Employee's
agreement pursuant to the preceding sentence
shall be in addition to any other agreement
or legal obligation he may have with or to
the Company. For purposes of the preceding
sentence, a "competitive business" is any
business engaged in the offshore marine
services business and/or any business
conducted by the Company, its affiliates or
any subsidiaries thereof as of the date
Employee's employment is terminated to the
extent such business generated at least 25%
of the total gross revenue of the Company for
the immediately preceding calendar year. A
business which is conducted by the Company,
its affiliates or any subsidiaries which is
- 11 -
<PAGE> 12
subsequently sold by the Company is not a
competitive business as of the date such
business is sold. An "affiliate" of the
Company is any company which either controls,
is controlled by or is under common control
with the Company. The phrase "any business
conducted by the Company, its affiliates or
any subsidiaries thereof" includes not only
current businesses but also any new
businesses under consideration or
investigation on the date Employee's
employment with the Company is terminated so
long as it could reasonably be anticipated
that such new business would generate at
least 25% of the gross revenues for the
Company in the future.
Employee also agrees that during the
six (6) month period described in the first
sentence of this Section 12(a) he will not
directly or indirectly, on behalf of himself
or any other person or entity, make a
solicitation or conduct business, with any
customer or potential customer of the Company
with which he had contact while employed by
the Company, its affiliates and/or any
subsidiaries thereof, with respect to any
services which are competitive with any
business conducted by the Company, its
affiliates or any subsidiaries thereof. For
purposes of the preceding sentence, a
"customer" is any person or entity that has
purchased services from the Company, its
affiliates or any subsidiaries thereof within
the twenty-four (24) month period ending on
the date Employee's employment is terminated.
A "potential customer" is any person or
entity that the Company solicited for
business within twelve (12) months prior to
the date Employee's employment with the
Company is terminated.
The Company and Employee recognize that
his responsibilities on behalf of the Company
have resulted in contacts throughout the
United States and certain foreign countries.
Employee's contacts on behalf of the Company
represent a substantial asset of the Company
which are entitled to protection. In
recognition of this situation, the covenants
set forth in this Section 12 shall apply to
competitive businesses and solicitation in
- 12 -
<PAGE> 13
the United States, United Kingdom, and any
other foreign countries in which the Company,
its affiliates and/or the subsidiaries
thereof has (have) conducted $100,000 or more
of business during the twelve-month period
ending on the date Employee's employment with
the Company terminated.
Before and forever after his
termination or resignation, Employee shall
keep confidential and refrain from utilizing
or disseminating any confidential,
proprietary or trade secret information of
the Company for any purpose other than
furthering the business interests of the
Company.
(b) During Employee's employment hereunder and
during six (6) months following his
resignation or the termination of his
employment hereunder for any reason, Employee
will not induce or attempt to influence any
present or future employee of the Company,
its affiliates or any subsidiaries thereof to
leave its employ.
13. Other Agreements. Except to the extent expressly set
forth herein, this Agreement shall not modify or lessen any benefit or
compensation to which Employee is entitled under any agreement between Employee
and the Company or under any plan maintained by the Company in which he
participates or participated. Benefits or compensation shall be payable
thereunder, if at all, according to the terms of the applicable plan(s) or
agreement(s). The terms of this Agreement shall supersede any existing
agreement between Employee and the Company executed prior to the date hereof to
the extent any such Agreement is inconsistent with the terms hereof.
14. Successors; Binding Agreement. The Company will
require any successor (whether direct or indirect by purchase, merger,
consolidation or otherwise, to all or substantially all (50% or more) of the
business and/or assets of the Company) to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place.
This Agreement shall inure to the benefit of and be
enforceable by Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Employee should die before all amounts that would still be payable to Employee
hereunder if Employee had continued to live are paid, all such unpaid amounts,
unless otherwise provided herein, shall be paid in accordance with the
- 13 -
<PAGE> 14
terms of this Agreement to Employee's devisee, legatee, or other designee or,
if there be no such designee, to Employee's estate.
15. Injunction. The remedy at law for any breach of
Section 12 will be inadequate and the Company, its affiliates and any
subsidiaries thereof would suffer continuing and irreparable injury to their
business as a direct result of any such breach. Accordingly, notwithstanding
anything stated herein, if Employee shall breach or fail to perform any term,
condition or duty contained in Section 12 hereof, then, in such event, the
Company shall be entitled to institute and prosecute proceedings in any court
of competent jurisdiction, either in law or in equity, to obtain the specific
performance thereof by Employee or to seek a temporary restraining order or
injunctive relief, without any requirement to show actual damages or post bond,
to restrict Employee from violating the provisions of Section 12; however,
nothing herein shall be construed to prevent the Company seeking such other
remedy in the courts, in case of any breach of this Agreement by Employee, as
the Company may elect or invoke. Notwithstanding any other provision herein to
the contrary, if court proceedings are instituted by the Company to enforce
Section 12 hereof, and the Company is the prevailing party, the Company shall
receive, in addition to any damages awarded, reasonable attorneys' fees, court
costs and ancillary expenses.
16. Miscellaneous. This Agreement may not be modified or
discharged unless such waiver, modification or discharge is agreed to in
writing and signed by Employee and such officers of the Company as may be
specifically designated by its Board for that purpose. Except for any failure
to give the ten (10) day notice described in Section 6(b) above, the failure of
either party to this Agreement to object to any breach by the other party or
the non-breaching party's conduct or conduct forbearance shall not constitute a
waiver of that party's rights to enforce this Agreement. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of any subsequent breach by such
other party or any similar or dissimilar provisions or conditions at the same
or any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Texas.
Except as provided in Section 15 above, the Company shall pay all
legal fees, expenses of arbitration, and related expenses incurred by Employee,
in connection with this Agreement following a Change in Control of the Company,
including, without limitation, (a) all such fees and expenses, if any, incurred
in
- 14 -
<PAGE> 15
contesting or disputing any termination of Employee's employment following a
Change in Control or incurred by Employee in seeking advice with respect to the
matters hereunder or (b) Employee seeking to obtain or enforce any right or
benefit provided by this Agreement.
17. Severability. The parties hereto intend this
Agreement to be enforced to the maximum extent permitted by law. In the event
any provision of this Agreement is deemed to be invalid or unenforceable by any
court of competent jurisdiction, such provisions shall be deemed to be
restricted in scope or otherwise modified to the extent necessary to render the
same valid and enforceable. In the event the provisions of Section 12 cannot
be modified or restricted so as to be valid and enforceable, then the same as
well as the Company's obligation to make any payment or transfer any benefit to
Employee in connection with any termination of Employee's employment shall be
deemed excised from this Agreement, and this Agreement shall be construed and
enforced as if such provisions had originally been incorporated herein as so
restricted or modified or as if such provisions had not originally been
contained herein, as the case may be. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement which shall remain in full force and
effect.
18. Survival. The obligations of the parties under this
Agreement shall survive the term of this Agreement.
19. Term of Agreement. This Agreement shall have an
initial term expiring on the earlier of (a) the third anniversary of the date
hereof, assuming there has been no Change in Control of the Company, or (b) the
Employee's normal retirement date (age 65); provided, however, that the period
provided in the clause (a) shall be automatically extended for successive
periods of one (1) year on a continuing basis unless either party shall give
written notice of its intention not to so extend at least six (6) months prior
to the end of the initial three (3) year period or any renewal period. No
notice by the Company of its intention not to extend shall be effective if,
within one year prior to the original expiration date, or if a renewal period,
within one year prior to the termination date proposed by the Company, the
Company has received notice, official or unofficial, or otherwise has reason to
believe that steps have or are being taken or considered by any person or
entity that would when completed bring about a Change in Control of the
Company. This Agreement shall in any case continue in effect for two (2) years
following a Change in Control of the Company.
- 15 -
<PAGE> 16
Date: June 20, 1995.
Employee Hornbeck Offshore Services, Inc.
/S/ ROBERT W. HAMPTON By: /S/ LARRY D. HORNBECK
(ROBERT W. HAMPTON)
Its: CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
- 16 -
<PAGE> 1
AGREEMENT
WHEREAS, Hornbeck Offshore Services, Inc. (the "Company")
considers it essential and in the best interests of the Company and its
stockholders to foster the continued employment of its key management
personnel;
WHEREAS, E. J. Hebert ("Employee") is considered a key
management employee, currently serving as Vice President - Operations of the
Company; and
WHEREAS, the Company desires to assure the future continuity
of Employee's services in the event of any actual or threatened "Change in
Control" (as defined in Section 6 below) of the Company.
IT IS THEREFORE AGREED AS FOLLOWS:
1. Effect of Agreement.
This Agreement shall be effective and binding immediately upon
its execution. However, except as specifically provided herein, this Agreement
shall not alter materially Employee's duties and obligations to the Company and
the remuneration and benefits which Employee may reasonably expect to receive
from the Company in the absence of a Change in Control.
2. Employment On and After Change in Control. Provided
that Employee is an employee of the Company immediately prior to a Change in
Control, the Company shall employ Employee, and Employee shall accept such
employment, effective upon such Change in Control for a period of twenty-four
(24) months after said Change in Control subject to the terms and conditions
stated herein.
3. Duties After Change in Control. Employee agrees that
during the term of his employment with the Company after a Change in Control,
he shall perform the duties described in Section 12 below and such other duties
for the Company and its subsidiaries consistent with his experience and
training as the Board of Directors of the Company (the "Board") or the Board's
representatives shall determine from time to time, which duties shall be at
least substantially equal in status, dignity and character to his duties at the
date hereof. He shall also have the title of Vice President - Operations.
Employee further agrees to devote his entire working time and attention to the
business of the Company and its subsidiaries and to use his best efforts to
promote such business.
4. Compensation Prior to a Change in Control. Prior to
a Change in Control, the Company agrees to pay Employee compensation for his
services in an amount, and to provide him with life insurance, disability,
health and other benefits, at
<PAGE> 2
least equal to that which he presently receives, only with such changes as
shall be agreed upon between Employee and the Company. For the purpose of this
Section, compensation does not include any bonus or other incentive
compensation plan or stock purchase plan, which may vary from year to year at
the discretion of the Company.
5. Termination of Employment Prior to a Change of
Control. Employee shall be entitled to terminate his employment prior to a
Change in Control at any time upon thirty (30) days' prior written notice. The
Company, shall be able to terminate Employee's employment at any time prior to
a Change in Control with or without cause upon thirty (30) days' prior written
notice (or the payment of salary in lieu thereof). This Section shall not be
construed to reduce any accrued benefits payable in connection with any
termination of Employee's employment prior to a Change in Control.
Nothing expressed or implied in this Agreement shall create
any right or duty on the part of the Company or Employee to have Employee
remain in the employment of the Company prior to a Change in Control.
6. Termination of Employment On or After Change in
Control.
(a) For purposes of this Agreement, the term
"Change in Control" means (i) the occurrence
of any event which results in any individual
or entity or any combination of individuals
or entities acting in concert having
beneficial ownership or control of 20% or
more of the Company's outstanding capital
stock with voting rights and within an
eighteen-month period of such event, there is
a forty percent (40%) or greater change in
the composition of the Board, (ii) the sale
of all or substantially all fifty percent
(50%) or more of the Company's assets (or a
separate identifiable operating division's or
subsidiary's assets in which event the terms
of this Agreement shall apply only to the
extent Employee has primary responsibility
for such operating division or subsidiary) as
determined based on the fair market value as
of the last day of the preceding fiscal year,
or gross revenue generation for the
twelve-month period ending on the last day of
the preceding fiscal year, with respect to
the Company's, operating division's or
subsidiary's assets, whichever is applicable,
or (iii) individuals who constitute the Board
- 2 -
<PAGE> 3
on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a
majority thereof, provided that any person
becoming a director subsequent to the date
hereof whose election, or nomination for
election by the Company's stockholders, was
approved by a vote of at least three-quarters
of the directors comprising the remaining
members of the Incumbent Board (either by a
specific vote or by approval of the proxy
statement of the Company in which such person
is named as a nominee for director, without
objection to such nomination) shall be, for
purposes of this clause (iii), considered as
though such person were a member of the
incumbent Board.
(b) Employee's employment on and after a Change
in Control may be terminated with just cause
by the Company at any time upon not less than
ten (10) days' prior written notice. Prior
to termination for just cause on and after a
Change in Control, the Board of Directors
shall by majority vote have declared that
Employee's termination is for just cause
specifically stating the basis for such
determination. In the event such a
termination for just cause occurs, the
provisions of Sections 9(a) and 12 below
shall apply.
Employee's employment may be terminated
on or after a Change in Control without just
cause pursuant to the constructive
termination procedures described in the next
paragraph or by the Company giving Employee
not less than thirty (30) days' prior written
notice. In the event Employee's employment is
terminated pursuant to the preceding
sentence:
(i) the provisions of Section 9(b) below
shall apply; and
(ii) although Employee's employment term
shall be deemed terminated at the
end of such notice period (or, in
the case of a constructive
termination described in the next
paragraph, as of the date Employee
notifies the Company of such
termination), such termination shall
in no way affect the term of this
- 3 -
<PAGE> 4
Agreement or Employee's duties and
obligations under Section 12 below.
For purposes of this Section 6(b),
Employee shall be considered as having been
terminated by the Company on or after a
Change in Control for other than just cause
provided that he has notified the Company of
any of the following within ten (10) days of
the occurrence thereof:
(i) the assignment to Employee of any
duties of lesser status, dignity and
character (including officer status)
than his duties immediately prior to
the effective date of the Change in
Control or a substantial reduction
in the nature or status of his
responsibilities from those in
effect immediately prior to the
effective date of the Change in
Control;
(ii) a post-Change in Control reduction
by the Company in Employee's annual
base salary or bonus level or
incentive plan benefit (as in effect
immediately prior to the effective
date of the Change in Control);
provided, however, that any
reduction made necessary due to
economic factors within the offshore
marine services business, as
determined at the discretion of the
Board, and applicable to all or
substantially all (50% or more) of
Company management shall not be
considered a termination event under
this Section 6(b);
(iii) relocation of Employee's office to a
location which is more than 75 miles
from the location in which Employee
principally works for the Company
immediately prior to the effective
date of the Change in Control; the
relocation of the appropriate
principal executive office of the
Company or the Company's operating
division or subsidiary for which
Employee performed the majority of
his services for the Company during
the year prior to the effective date
of the Change in Control to a
location which is more than 75 miles
from the location of such office
immediately prior to such date; or
his being required by the
- 4 -
<PAGE> 5
Company in order to perform duties of
substantially equal status, dignity
and character to those duties he
performed immediately prior to the
effective date of the Change in
Control to travel on the Company's
business to a substantially greater
extent than is consistent with his
business travel obligations as of
such date; or
(iv) the failure of the Company to
continue to provide Employee with
benefits substantially equivalent to
those enjoyed by him under any of
the Company's life insurance,
medical, health and accident or
disability plans in which he was
participating immediately prior to
the effective date of the Change in
Control, the taking of any action by
the Company which would directly or
indirectly materially reduce any of
such benefits or deprive him of any
material fringe benefit enjoyed by
him immediately prior to the
effective date of the Change in
Control, or the failure of the
Company to provide him with at least
the number of paid vacation days to
which he is entitled on the basis of
years of service under the Company's
normal vacation policy in effect
immediately prior to the effective
date of the Change in Control.
(c) In the event Employee's employment is
terminated on or after a Change in Control in
any manner not described in Section 6(b)
above:
(i) the provisions of Section 9(b) shall
not apply and Employee shall instead
receive the sums and benefits
described in Section 9(a); and
(ii) such termination shall in no way
affect the term of this Agreement or
Employee's duties or obligations
under Section 12 below.
(d) Any termination of employment of Employee
following the commencement of any discussions
by a stockholder or group of stockholders
owning legally or beneficially more than 20%
of the common stock or an officially desig-
- 5 -
<PAGE> 6
nated representative of the Board of
Directors with a third party that results
within 180 days in a Change in Control shall
(unless such termination is for cause or
wholly unrelated to such discussions) be
deemed to be a termination of Employee on and
after a Change in Control for purposes of
this Agreement.
7. Notice of Termination. Any termination by the
Company or assertion of termination by Employee shall be communicated by
written notice of termination to the other party at the following address:
Hornbeck Offshore Services, Inc.
7707 Harborside Drive
Galveston, Texas 77554
ATTN: Chairman of the Board
Mr. E. J. Hebert
Hornbeck Offshore Services, Inc.
7707 Harborside Drive
Galveston, Texas 77554
8. Disability. If as a result of Employee's incapacity
due to physical or mental illness, he shall have been absent from his duties
with the Company for one hundred eighty (180) days within any twelve (12)
consecutive-month period and within thirty (30) days after written notice of
the Company's intention to terminate his employment is given, Employee shall
not have returned to the performance of his duties with the Company
substantially on a full-time basis, the Company may terminate his employment
for disability. This shall not constitute a termination for the purposes of
obtaining benefits pursuant to Section 9.
9. Benefits Upon Termination And Leave Of Employment On
or After Change in the Control.
(a) If Employee is terminated for just cause on
or after a Change in Control, he shall only
receive the accrued sums and benefits payable
to him through the date he is terminated; the
provisions of Section 9(b) below shall not be
applicable in such case and Employee shall
not receive (or shall cease receiving) the
payments and benefits described in Section
9(b).
(b) Subject to Employee's compliance with the
provisions of Section 12(a) below, if
Employee is terminated during the twenty-four
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<PAGE> 7
(24) month period beginning on and continuing
after a Change in Control other than for just
cause (either at the discretion of the
Company's management or constructively by the
operation of Section 6), he shall receive the
following payments and benefits in lieu of
any other sums or benefits otherwise payable
to him by the Company:
(i) all then accrued pay,
benefits, executive
compensation and fringe
benefits, including (but not
limited to) pro rata bonus
and incentive plan earnings;
(ii) medical, health and
disability benefits which are
substantially similar to the
benefits the Company is
providing him as of the date
his employment is terminated
for a period of twenty-four
(24) months thereafter;
(iii) one and one-half times the
highest annual compensation
amount of his base period
compensation; and
(iv) an amount equal to the
market value of the Company's
common stock on the Date of
Termination or on any other
date within 180 days
preceding the Date of
Termination, on whichever
date the value is highest,
multiplied by the aggregate
number of Options granted to
Employee more than six months
prior to the Date of
Termination under the
Company's Employee Incentive
Stock Plans ("Incentive
Plans") which remain
unexercised on the Date of
Termination, less the
aggregate option price of all
such options. This provision
is not intended to permit the
Employee to receive the
benefit of any additional
options other than those
previously granted under the
Incentive Plans.
The foregoing payments and benefits shall be deemed
compensation payable for the duties to be performed
by Employee pursuant to Section 12
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<PAGE> 8
below. For purposes of this Agreement, (A)
Employee's "base period compensation" is the annual
"compensation" (as defined below) which was
includable in his gross income for his base period
(i.e., his most recent five taxable years ending
before the date of the Change in Control); and (B) if
Employee's base period includes a short taxable year
or less than all of a taxable year, compensation for
such short or incomplete taxable year shall be
annualized before determining his annual compensation
during the base period. (In annualizing
compensation, the frequency with which payments are
expected to be made over an annual period shall be
taken into account. Thus, any amount of compensation
for such a short or incomplete taxable year that
represents a payment that would not be made more than
once per year shall not be annualized). For purposes
of Section 9(b)(iii) and the definitions pertaining
to said Section, Employee's "compensation" is the
compensation (including but not limited to base
salary and bonus) which was payable to him by the
Company or a related entity determined without regard
to the following Sections of the Internal Revenue
Code of 1986, as amended (the "Code"): 125
(cafeteria plans) and 402(a)(8) (cash or deferred
arrangements).
Except for the benefits described in Section 9(b)(ii) above,
the sums due pursuant to this Section 9(b) shall be paid in a
lump sum on or before the fifteenth business day following the
Date of Termination. All sums due hereunder shall be subject
to appropriate withholding and statutory requirements.
Employee shall not be required to mitigate the amount of any
payment provided for in this Section 9(b) by seeking other
employment or otherwise. Notwithstanding anything stated in
this Section 9(b) to the contrary, however, the Company shall
not be required to provide medical, health and/or disability
benefits to the extent such benefits would duplicate benefits
received by Employee in connection with his employment with
any new employer.
Notwithstanding anything stated in this Agreement to the
contrary, in the event that Employee becomes entitled to the
payments hereunder (the "Agreement Payments"), if any of the
Agreement Payments will be subject to the tax (the "Excise
Tax") imposed by Section 4999 of the Code (or any similar tax
that may hereafter be imposed), the Company shall pay or cause
to be paid to Employee at the time specified below an
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<PAGE> 9
additional amount (the "Gross-up Payment") such that the net
amount retained by Employee, after deduction of any Excise Tax
on the sums due pursuant to this Section 9(b) and any federal,
state and local income tax and Excise Tax upon the Gross-up
Payment provided for in this paragraph but before deduction
for any federal, state or local income tax on the Agreement
Payments, shall be equal to the Total Payments.
For purposes of determining whether any of the sums due
pursuant to this Section 9(b) will be subject to the Excise
Tax and the amount of such Excise Tax, (a) any other payments
or benefits received or to be received by Employee in
connection with a Change in Control of the Company or
Employee's termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or
agreement with the Company, any person whose actions result in
a Change of Control of the Company or any person affiliated
with the Company or such person) (which, together with the
Agreement Payments, shall constitute the "Total Payments")
shall be treated as "parachute payments" within the meaning of
Section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of Section 280G(b)(1) of the Code
shall be treated as subject to the Excise Tax, unless in the
opinion of tax counsel selected by the Company's independent
auditors such other payments or benefits (in whole or in part)
do not constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning
of Section 280G(b)(4) of the Code in excess of the base amount
within the meaning of Section 280G(b)(3) of the Code or are
otherwise not subject to the Excise Tax, (b) the amount of the
Total Payments which shall be treated as subject to the Excise
Tax shall be equal to the lesser of (1) the total amount of
the Total Payments or (2) the amount of excess parachute
payments within the meaning of Section 280G(b)(1) of the Code
(after applying clause (a), above), and (c) the value of any
non-cash benefits or any deferred payment or benefit shall be
determined by the Company's independent auditors in accordance
with the principles of Sections 280G(d)(3) and (4) of the
Code.
For purposes of determining the amount of the Gross-up
Payment, Employee shall be deemed to pay federal income taxes
at the highest marginal rate of federal income taxation for
the calendar year in which the Gross-up Payment is to be made
and the applicable state and local income taxes at the highest
marginal rate of
- 9 -
<PAGE> 10
taxation for the calendar year in which the Gross-up Payment
is to be made, net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state and
local taxes. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account
hereunder at the time the Gross-up Payment is made, Employee
shall repay to the Company at the time that the amount of such
reduction in Excise Tax is finally determined the portion of
the Gross-up Payment attributable to such reduction (plus the
portion of the Gross-up Payment attributable to the Excise Tax
and federal and state and local income tax imposed on the
portion of the Gross-up Payment being repaid by Employee if
such repayment results in a reduction in Excise Tax and/or a
federal and state and local income tax deduction), plus
interest on the amount of such repayment at the rate provided
in Section 1274(b)(2)(B) of the Code. In the event that the
Excise Tax is determined to exceed the amount taken into
account hereunder at the time the Gross-up Payment is made
(including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-up
Payment), the Company shall make or cause to be made an
additional Gross-up Payment in respect of such excess (plus
any interest payable with respect to such excess) at the time
that the amount of such excess is finally determined.
The Gross-up Payment or portion thereof provided for above
shall be paid not later than the thirtieth day following
payment of any amounts required to be paid pursuant to this
Section 9(b); provided, however, that if the amount of such
Gross-up Payment or portion thereof cannot be finally
determined on or before such day, the Company shall pay or
cause to be paid to Employee on such day an estimate, as
determined in good faith by the Company, of the minimum amount
of such payments and shall pay or cause to be paid the
remainder of such payments (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) as soon as the
amount thereof can be determined, but in no event later than
the forty-fifth day after payment of any amounts required to
be paid hereunder. In the event that the amount of the
estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan to
Employee, repayable on the fifth day after demand by the
Company (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code).
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<PAGE> 11
10. Special Situations. The parties agree that in the
event that a Change in Control occurs for any one of the following reasons, the
provisions of Sections 2, 6 and 9 shall not apply:
(a) the purchase of more than fifty percent (50%) of the
stock of the Company by an employee stock ownership plan or similar employee
benefit plan of which Employee is a participant; or
(b) the purchase of more than fifty percent (50%) of the
stock or ninety percent (90%) of the assets of the Company by a group of
individuals or entities including Employee as a member or participant,
including but not limited to those transactions commonly known as a leveraged
or other forms of management buy-outs.
11. Disputes. Any dispute arising under this Agreement
(except Section 12) shall be promptly submitted to arbitration under the Rules
of the American Arbitration Association. An arbitrator is to be mutually
agreed upon by the parties or upon failure of agreement, designated by the
American Arbitration Association.
12. Non-Competition, Non-Solicitation, and
Confidentiality.
(a) In consideration of this Agreement and other
good and valuable consideration, Employee
agrees that for so long as he is employed by
the Company and for six (6) months
thereafter, he shall not own, manage, operate,
control, be employed by or otherwise engage
in any competitive business. Employee's
agreement pursuant to the preceding sentence
shall be in addition to any other agreement
or legal obligation he may have with or to
the Company. For purposes of the preceding
sentence, a "competitive business" is any
business engaged in the offshore marine
services business and/or any business
conducted by the Company, its affiliates or
any subsidiaries thereof as of the date
Employee's employment is terminated to the
extent such business generated at least 25%
of the total gross revenue of the Company for
the immediately preceding calendar year. A
business which is conducted by the Company,
its affiliates or any subsidiaries which is
subsequently sold by the Company is not a
competitive business as of the date such
business is sold. An "affiliate" of the
- 11 -
<PAGE> 12
Company is any company which either controls,
is controlled by or is under common control
with the Company. The phrase "any business
conducted by the Company, its affiliates or
any subsidiaries thereof" includes not only
current businesses but also any new
businesses under consideration or
investigation on the date Employee's
employment with the Company is terminated so
long as it could reasonably be anticipated
that such new business would generate at
least 25% of the gross revenues for the
Company in the future.
Employee also agrees that during the
six (6) month period described in the first
sentence of this Section 12(a) he will not
directly or indirectly, on behalf of himself
or any other person or entity, make a
solicitation or conduct business, with any
customer or potential customer of the Company
with which he had contact while employed by
the Company, its affiliates and/or any
subsidiaries thereof, with respect to any
services which are competitive with any
business conducted by the Company, its
affiliates or any subsidiaries thereof. For
purposes of the preceding sentence, a
"customer" is any person or entity that has
purchased services from the Company, its
affiliates or any subsidiaries thereof within
the twenty-four (24) month period ending on
the date Employee's employment is terminated.
A "potential customer" is any person or
entity that the Company solicited for
business within twelve (12) months prior to
the date Employee's employment with the
Company is terminated.
The Company and Employee recognize that
his responsibilities on behalf of the Company
have resulted in contacts throughout the
United States and certain foreign countries.
Employee's contacts on behalf of the Company
represent a substantial asset of the Company
which are entitled to protection. In
recognition of this situation, the covenants
set forth in this Section 12 shall apply to
competitive businesses and solicitation in
the United States, United Kingdom, and any
other foreign countries in which the Company,
its affiliates and/or the subsidiaries
- 12 -
<PAGE> 13
thereof has (have) conducted $100,000 or more
of business during the twelve-month period
ending on the date Employee's employment with
the Company terminated.
Before and forever after his
termination or resignation, Employee shall
keep confidential and refrain from utilizing
or disseminating any confidential,
proprietary or trade secret information of
the Company for any purpose other than
furthering the business interests of the
Company.
(b) During Employee's employment hereunder and
during six (6) months following his
resignation or the termination of his
employment hereunder for any reason, Employee
will not induce or attempt to influence any
present or future employee of the Company,
its affiliates or any subsidiaries thereof to
leave its employ.
13. Other Agreements. Except to the extent expressly set
forth herein, this Agreement shall not modify or lessen any benefit or
compensation to which Employee is entitled under any agreement between Employee
and the Company or under any plan maintained by the Company in which he
participates or participated. Benefits or compensation shall be payable
thereunder, if at all, according to the terms of the applicable plan(s) or
agreement(s). The terms of this Agreement shall supersede any existing
agreement between Employee and the Company executed prior to the date hereof to
the extent any such Agreement is inconsistent with the terms hereof.
14. Successors; Binding Agreement. The Company will
require any successor (whether direct or indirect by purchase, merger,
consolidation or otherwise, to all or substantially all (50% or more) of the
business and/or assets of the Company) to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place.
This Agreement shall inure to the benefit of and be
enforceable by Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Employee should die before all amounts that would still be payable to Employee
hereunder if Employee had continued to live are paid, all such unpaid amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to Employee's devisee, legatee, or other designee or, if there
be no such designee, to Employee's estate.
- 13 -
<PAGE> 14
15. Injunction. The remedy at law for any breach of
Section 12 will be inadequate and the Company, its affiliates and any
subsidiaries thereof would suffer continuing and irreparable injury to their
business as a direct result of any such breach. Accordingly, notwithstanding
anything stated herein, if Employee shall breach or fail to perform any term,
condition or duty contained in Section 12 hereof, then, in such event, the
Company shall be entitled to institute and prosecute proceedings in any court
of competent jurisdiction, either in law or in equity, to obtain the specific
performance thereof by Employee or to seek a temporary restraining order or
injunctive relief, without any requirement to show actual damages or post bond,
to restrict Employee from violating the provisions of Section 12; however,
nothing herein shall be construed to prevent the Company seeking such other
remedy in the courts, in case of any breach of this Agreement by Employee, as
the Company may elect or invoke. Notwithstanding any other provision herein to
the contrary, if court proceedings are instituted by the Company to enforce
Section 12 hereof, and the Company is the prevailing party, the Company shall
receive, in addition to any damages awarded, reasonable attorneys' fees, court
costs and ancillary expenses.
16. Miscellaneous. This Agreement may not be modified or
discharged unless such waiver, modification or discharge is agreed to in
writing and signed by Employee and such officers of the Company as may be
specifically designated by its Board for that purpose. Except for any failure
to give the ten (10) day notice described in Section 6(b) above, the failure of
either party to this Agreement to object to any breach by the other party or
the non-breaching party's conduct or conduct forbearance shall not constitute a
waiver of that party's rights to enforce this Agreement. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of any subsequent breach by such
other party or any similar or dissimilar provisions or conditions at the same
or any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Texas.
Except as provided in Section 15 above, the Company shall pay all
legal fees, expenses of arbitration, and related expenses incurred by Employee,
in connection with this Agreement following a Change in Control of the Company,
including, without limitation, (a) all such fees and expenses, if any, incurred
in contesting or disputing any termination of Employee's employment following a
Change in Control or incurred by Employee in seeking advice with respect to the
matters hereunder or (b) Employee
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<PAGE> 15
seeking to obtain or enforce any right or benefit provided by this Agreement.
17. Severability. The parties hereto intend this
Agreement to be enforced to the maximum extent permitted by law. In the event
any provision of this Agreement is deemed to be invalid or unenforceable by any
court of competent jurisdiction, such provisions shall be deemed to be
restricted in scope or otherwise modified to the extent necessary to render the
same valid and enforceable. In the event the provisions of Section 12 cannot
be modified or restricted so as to be valid and enforceable, then the same as
well as the Company's obligation to make any payment or transfer any benefit to
Employee in connection with any termination of Employee's employment shall be
deemed excised from this Agreement, and this Agreement shall be construed and
enforced as if such provisions had originally been incorporated herein as so
restricted or modified or as if such provisions had not originally been
contained herein, as the case may be. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement which shall remain in full force and
effect.
18. Survival. The obligations of the parties under this
Agreement shall survive the term of this Agreement.
19. Term of Agreement. This Agreement shall have an
initial term expiring on the earlier of (a) the third anniversary of the date
hereof, assuming there has been no Change in Control of the Company, or (b) the
Employee's normal retirement date (age 65); provided, however, that the period
provided in the clause (a) shall be automatically extended for successive
periods of one (1) year on a continuing basis unless either party shall give
written notice of its intention not to so extend at least six (6) months prior
to the end of the initial three (3) year period or any renewal period. No
notice by the Company of its intention not to extend shall be effective if,
within one year prior to the original expiration date, or if a renewal period,
within one year prior to the termination date proposed by the Company, the
Company has received notice, official or unofficial, or otherwise has reason to
believe that steps have or are being taken or considered by any person or
entity that would when completed bring about a Change in Control of the
Company. This Agreement shall in any case continue in effect for two (2) years
following a Change in Control of the Company.
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<PAGE> 16
Date: June 20, 1995.
Employee Hornbeck Offshore Services, Inc.
/S/ E. J. HEBERT By: /S/ LARRY D. HORNBECK
(E. J. HEBERT)
Its: CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
- 16 -
<PAGE> 1
AGREEMENT
WHEREAS, Hornbeck Offshore Services, Inc. (the "Company")
considers it essential and in the best interests of the Company and its
stockholders to foster the continued employment of its key management
personnel;
WHEREAS, Roger M. Sykes ("Employee") is considered a key
management employee, currently serving as Vice President - Marketing of the
Company; and
WHEREAS, the Company desires to assure the future continuity
of Employee's services in the event of any actual or threatened "Change in
Control" (as defined in Section 6 below) of the Company.
IT IS THEREFORE AGREED AS FOLLOWS:
1. Effect of Agreement.
This Agreement shall be effective and binding immediately upon
its execution. However, except as specifically provided herein, this Agreement
shall not alter materially Employee's duties and obligations to the Company and
the remuneration and benefits which Employee may reasonably expect to receive
from the Company in the absence of a Change in Control.
2. Employment On and After Change in Control. Provided
that Employee is an employee of the Company immediately prior to a Change in
Control, the Company shall employ Employee, and Employee shall accept such
employment, effective upon such Change in Control for a period of twenty-four
(24) months after said Change in Control subject to the terms and conditions
stated herein.
3. Duties After Change in Control. Employee agrees that
during the term of his employment with the Company after a Change in Control,
he shall perform the duties described in Section 12 below and such other duties
for the Company and its subsidiaries consistent with his experience and
training as the Board of Directors of the Company (the "Board") or the Board's
representatives shall determine from time to time, which duties shall be at
least substantially equal in status, dignity and character to his duties at the
date hereof. He shall also have the title of Vice President - Marketing.
Employee further agrees to devote his entire working time and attention to the
business of the Company and its subsidiaries and to use his best efforts to
promote such business.
4. Compensation Prior to a Change in Control. Prior to
a Change in Control, the Company agrees to pay Employee compensation for his
services in an amount, and to provide him with life insurance, disability,
health and other benefits, at
<PAGE> 2
least equal to that which he presently receives, only with such changes as
shall be agreed upon between Employee and the Company. For the purpose of this
Section, compensation does not include any bonus or other incentive
compensation plan or stock purchase plan, which may vary from year to year at
the discretion of the Company.
5. Termination of Employment Prior to a Change of
Control. Employee shall be entitled to terminate his employment prior to a
Change in Control at any time upon thirty (30) days' prior written notice. The
Company, shall be able to terminate Employee's employment at any time prior to
a Change in Control with or without cause upon thirty (30) days' prior written
notice (or the payment of salary in lieu thereof). This Section shall not be
construed to reduce any accrued benefits payable in connection with any
termination of Employee's employment prior to a Change in Control.
Nothing expressed or implied in this Agreement shall create
any right or duty on the part of the Company or Employee to have Employee
remain in the employment of the Company prior to a Change in Control.
6. Termination of Employment On or After Change in
Control.
(a) For purposes of this Agreement, the term
"Change in Control" means (i) the occurrence
of any event which results in any individual
or entity or any combination of individuals
or entities acting in concert having
beneficial ownership or control of 20% or
more of the Company's outstanding capital
stock with voting rights and within an
eighteen-month period of such event, there is
a forty percent (40%) or greater change in
the composition of the Board, (ii) the sale
of all or substantially all fifty percent
(50%) or more of the Company's assets (or a
separate identifiable operating division's or
subsidiary's assets in which event the terms
of this Agreement shall apply only to the
extent Employee has primary responsibility
for such operating division or subsidiary) as
determined based on the fair market value as
of the last day of the preceding fiscal year,
or gross revenue generation for the
twelve-month period ending on the last day of
the preceding fiscal year, with respect to
the Company's, operating division's or
subsidiary's assets, whichever is applicable,
or (iii) individuals who constitute the Board
- 2 -
<PAGE> 3
on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a
majority thereof, provided that any person
becoming a director subsequent to the date
hereof whose election, or nomination for
election by the Company's stockholders, was
approved by a vote of at least three-quarters
of the directors comprising the remaining
members of the Incumbent Board (either by a
specific vote or by approval of the proxy
statement of the Company in which such person
is named as a nominee for director, without
objection to such nomination) shall be, for
purposes of this clause (iii), considered as
though such person were a member of the
incumbent Board.
(b) Employee's employment on and after a Change
in Control may be terminated with just cause
by the Company at any time upon not less than
ten (10) days' prior written notice. Prior
to termination for just cause on and after a
Change in Control, the Board of Directors
shall by majority vote have declared that
Employee's termination is for just cause
specifically stating the basis for such
determination. In the event such a
termination for just cause occurs, the
provisions of Sections 9(a) and 12 below
shall apply.
Employee's employment may be terminated
on or after a Change in Control without just
cause pursuant to the constructive
termination procedures described in the next
paragraph or by the Company giving Employee
not less than thirty (30) days' prior written
notice. In the event Employee's employment is
terminated pursuant to the preceding
sentence:
(i) the provisions of Section 9(b) below
shall apply; and
(ii) although Employee's employment term
shall be deemed terminated at the
end of such notice period (or, in
the case of a constructive
termination described in the next
paragraph, as of the date Employee
notifies the Company of such
termination), such termination shall
in no way affect the term of this
- 3 -
<PAGE> 4
Agreement or Employee's duties and
obligations under Section 12 below.
For purposes of this Section 6(b),
Employee shall be considered as having been
terminated by the Company on or after a
Change in Control for other than just cause
provided that he has notified the Company of
any of the following within ten (10) days of
the occurrence thereof:
(i) the assignment to Employee of any
duties of lesser status, dignity and
character (including officer status)
than his duties immediately prior to
the effective date of the Change in
Control or a substantial reduction
in the nature or status of his
responsibilities from those in
effect immediately prior to the
effective date of the Change in
Control;
(ii) a post-Change in Control reduction
by the Company in Employee's annual
base salary or bonus level or
incentive plan benefit (as in effect
immediately prior to the effective
date of the Change in Control);
provided, however, that any
reduction made necessary due to
economic factors within the offshore
marine services business, as
determined at the discretion of the
Board, and applicable to all or
substantially all (50% or more) of
Company management shall not be
considered a termination event under
this Section 6(b);
(iii) relocation of Employee's office to a
location which is more than 75 miles
from the location in which Employee
principally works for the Company
immediately prior to the effective
date of the Change in Control; the
relocation of the appropriate
principal executive office of the
Company or the Company's operating
division or subsidiary for which
Employee performed the majority of
his services for the Company during
the year prior to the effective date
of the Change in Control to a
location which is more than 75 miles
from the location of such office
immediately prior to such date; or
his being required by the
- 4 -
<PAGE> 5
Company in order to perform duties of
substantially equal status, dignity
and character to those duties he
performed immediately prior to the
effective date of the Change in
Control to travel on the Company's
business to a substantially greater
extent than is consistent with his
business travel obligations as of
such date; or
(iv) the failure of the Company to
continue to provide Employee with
benefits substantially equivalent to
those enjoyed by him under any of
the Company's life insurance,
medical, health and accident or
disability plans in which he was
participating immediately prior to
the effective date of the Change in
Control, the taking of any action by
the Company which would directly or
indirectly materially reduce any of
such benefits or deprive him of any
material fringe benefit enjoyed by
him immediately prior to the
effective date of the Change in
Control, or the failure of the
Company to provide him with at least
the number of paid vacation days to
which he is entitled on the basis of
years of service under the Company's
normal vacation policy in effect
immediately prior to the effective
date of the Change in Control.
(c) In the event Employee's employment is
terminated on or after a Change in Control in
any manner not described in Section 6(b)
above:
(i) the provisions of Section 9(b) shall
not apply and Employee shall instead
receive the sums and benefits
described in Section 9(a); and
(ii) such termination shall in no way
affect the term of this Agreement or
Employee's duties or obligations
under Section 12 below.
(d) Any termination of employment of Employee
following the commencement of any discussions
by a stockholder or group of stockholders
owning legally or beneficially more than 20%
of the common stock or an officially design-
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<PAGE> 6
ated representative of the Board of Directors
with a third party that results within 180
days in a Change in Control shall (unless
such termination is for cause or wholly
unrelated to such discussions) be deemed to
be a termination of Employee on and after a
Change in Control for purposes of this
Agreement.
7. Notice of Termination. Any termination by the
Company or assertion of termination by Employee shall be communicated by
written notice of termination to the other party at the following address:
Hornbeck Offshore Services, Inc.
7707 Harborside Drive
Galveston, Texas 77554
ATTN: Chairman of the Board
Mr. Roger M. Sykes
Hornbeck Offshore Services, Inc.
7707 Harborside Drive
Galveston, Texas 77554
8. Disability. If as a result of Employee's incapacity
due to physical or mental illness, he shall have been absent from his duties
with the Company for one hundred eighty (180) days within any twelve (12)
consecutive-month period and within thirty (30) days after written notice of
the Company's intention to terminate his employment is given, Employee shall
not have returned to the performance of his duties with the Company
substantially on a full-time basis, the Company may terminate his employment
for disability. This shall not constitute a termination for the purposes of
obtaining benefits pursuant to Section 9.
9. Benefits Upon Termination And Leave Of Employment On
or After Change in the Control.
(a) If Employee is terminated for just cause on
or after a Change in Control, he shall only
receive the accrued sums and benefits payable
to him through the date he is terminated; the
provisions of Section 9(b) below shall not be
applicable in such case and Employee shall
not receive (or shall cease receiving) the
payments and benefits described in Section
9(b).
(b) Subject to Employee's compliance with the
provisions of Section 12(a) below, if
Employee is terminated during the twenty-four
- 6 -
<PAGE> 7
(24) month period beginning on and continuing
after a Change in Control other than for just
cause (either at the discretion of the
Company's management or constructively by the
operation of Section 6), he shall receive the
following payments and benefits in lieu of
any other sums or benefits otherwise payable
to him by the Company:
(i) all then accrued pay,
benefits, executive
compensation and fringe
benefits, including (but not
limited to) pro rata bonus
and incentive plan earnings;
(ii) medical, health and
disability benefits which are
substantially similar to the
benefits the Company is
providing him as of the date
his employment is terminated
for a period of twenty-four
(24) months thereafter;
(iii) one and one-half times the
highest annual compensation
amount of his base period
compensation; and
(iv) an amount equal to the
market value of the Company's
common stock on the Date of
Termination or on any other
date within 180 days
preceding the Date of
Termination, on whichever
date the value is highest,
multiplied by the aggregate
number of Options granted to
Employee more than six months
prior to the Date of
Termination under the
Company's Employee Incentive
Stock Plans ("Incentive
Plans") which remain
unexercised on the Date of
Termination, less the
aggregate option price of all
such options. This provision
is not intended to permit the
Employee to receive the
benefit of any additional
options other than those
previously granted under the
Incentive Plans.
The foregoing payments and benefits shall be deemed
compensation payable for the duties to be performed
by Employee pursuant to Section 12
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<PAGE> 8
below. For purposes of this Agreement, (A)
Employee's "base period compensation" is the annual
"compensation" (as defined below) which was
includable in his gross income for his base period
(i.e., his most recent five taxable years ending
before the date of the Change in Control); and (B) if
Employee's base period includes a short taxable year
or less than all of a taxable year, compensation for
such short or incomplete taxable year shall be
annualized before determining his annual compensation
during the base period. (In annualizing
compensation, the frequency with which payments are
expected to be made over an annual period shall be
taken into account. Thus, any amount of compensation
for such a short or incomplete taxable year that
represents a payment that would not be made more than
once per year shall not be annualized). For purposes
of Section 9(b)(iii) and the definitions pertaining
to said Section, Employee's "compensation" is the
compensation (including but not limited to base
salary and bonus) which was payable to him by the
Company or a related entity determined without regard
to the following Sections of the Internal Revenue
Code of 1986, as amended (the "Code"): 125
(cafeteria plans) and 402(a)(8) (cash or deferred
arrangements).
Except for the benefits described in Section 9(b)(ii) above,
the sums due pursuant to this Section 9(b) shall be paid in a
lump sum on or before the fifteenth business day following the
Date of Termination. All sums due hereunder shall be subject
to appropriate withholding and statutory requirements.
Employee shall not be required to mitigate the amount of any
payment provided for in this Section 9(b) by seeking other
employment or otherwise. Notwithstanding anything stated in
this Section 9(b) to the contrary, however, the Company shall
not be required to provide medical, health and/or disability
benefits to the extent such benefits would duplicate benefits
received by Employee in connection with his employment with
any new employer.
Notwithstanding anything stated in this Agreement to the
contrary, in the event that Employee becomes entitled to the
payments hereunder (the "Agreement Payments"), if any of the
Agreement Payments will be subject to the tax (the "Excise
Tax") imposed by Section 4999 of the Code (or any similar tax
that may hereafter be imposed), the Company shall pay or cause
to be paid to Employee at the time specified below an
- 8 -
<PAGE> 9
additional amount (the "Gross-up Payment") such that the net
amount retained by Employee, after deduction of any Excise Tax
on the sums due pursuant to this Section 9(b) and any federal,
state and local income tax and Excise Tax upon the Gross-up
Payment provided for in this paragraph but before deduction
for any federal, state or local income tax on the Agreement
Payments, shall be equal to the Total Payments.
For purposes of determining whether any of the sums due
pursuant to this Section 9(b) will be subject to the Excise
Tax and the amount of such Excise Tax, (a) any other payments
or benefits received or to be received by Employee in
connection with a Change in Control of the Company or
Employee's termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or
agreement with the Company, any person whose actions result in
a Change of Control of the Company or any person affiliated
with the Company or such person) (which, together with the
Agreement Payments, shall constitute the "Total Payments")
shall be treated as "parachute payments" within the meaning of
Section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of Section 280G(b)(1) of the Code
shall be treated as subject to the Excise Tax, unless in the
opinion of tax counsel selected by the Company's independent
auditors such other payments or benefits (in whole or in part)
do not constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning
of Section 280G(b)(4) of the Code in excess of the base amount
within the meaning of Section 280G(b)(3) of the Code or are
otherwise not subject to the Excise Tax, (b) the amount of the
Total Payments which shall be treated as subject to the Excise
Tax shall be equal to the lesser of (1) the total amount of
the Total Payments or (2) the amount of excess parachute
payments within the meaning of Section 280G(b)(1) of the Code
(after applying clause (a), above), and (c) the value of any
non-cash benefits or any deferred payment or benefit shall be
determined by the Company's independent auditors in accordance
with the principles of Sections 280G(d)(3) and (4) of the
Code.
For purposes of determining the amount of the Gross-up
Payment, Employee shall be deemed to pay federal income taxes
at the highest marginal rate of federal income taxation for
the calendar year in which the Gross-up Payment is to be made
and the applicable state and local income taxes at the highest
marginal rate of
- 9 -
<PAGE> 10
taxation for the calendar year in which the Gross-up Payment
is to be made, net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state and
local taxes. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account
hereunder at the time the Gross-up Payment is made, Employee
shall repay to the Company at the time that the amount of such
reduction in Excise Tax is finally determined the portion of
the Gross-up Payment attributable to such reduction (plus the
portion of the Gross-up Payment attributable to the Excise Tax
and federal and state and local income tax imposed on the
portion of the Gross-up Payment being repaid by Employee if
such repayment results in a reduction in Excise Tax and/or a
federal and state and local income tax deduction), plus
interest on the amount of such repayment at the rate provided
in Section 1274(b)(2)(B) of the Code. In the event that the
Excise Tax is determined to exceed the amount taken into
account hereunder at the time the Gross-up Payment is made
(including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-up
Payment), the Company shall make or cause to be made an
additional Gross-up Payment in respect of such excess (plus
any interest payable with respect to such excess) at the time
that the amount of such excess is finally determined.
The Gross-up Payment or portion thereof provided for above
shall be paid not later than the thirtieth day following
payment of any amounts required to be paid pursuant to this
Section 9(b); provided, however, that if the amount of such
Gross-up Payment or portion thereof cannot be finally
determined on or before such day, the Company shall pay or
cause to be paid to Employee on such day an estimate, as
determined in good faith by the Company, of the minimum amount
of such payments and shall pay or cause to be paid the
remainder of such payments (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) as soon as the
amount thereof can be determined, but in no event later than
the forty-fifth day after payment of any amounts required to
be paid hereunder. In the event that the amount of the
estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan to
Employee, repayable on the fifth day after demand by the
Company (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code).
- 10 -
<PAGE> 11
10. Special Situations. The parties agree that in the
event that a Change in Control occurs for any one of the following reasons, the
provisions of Sections 2, 6 and 9 shall not apply:
(a) the purchase of more than fifty percent (50%) of the
stock of the Company by an employee stock ownership plan or similar employee
benefit plan of which Employee is a participant; or
(b) the purchase of more than fifty percent (50%) of the
stock or ninety percent (90%) of the assets of the Company by a group of
individuals or entities including Employee as a member or participant,
including but not limited to those transactions commonly known as a leveraged
or other forms of management buy-outs.
11. Disputes. Any dispute arising under this Agreement
(except Section 12) shall be promptly submitted to arbitration under the Rules
of the American Arbitration Association. An arbitrator is to be mutually
agreed upon by the parties or upon failure of agreement, designated by the
American Arbitration Association.
12. Non-Competition, Non-Solicitation, and
Confidentiality.
(a) In consideration of this Agreement and other
good and valuable consideration, Employee
agrees that for so long as he is employed by
the Company and for six (6) months
thereafter, he shall not own, manage, operate,
control, be employed by or otherwise engage
in any competitive business. Employee's
agreement pursuant to the preceding sentence
shall be in addition to any other agreement
or legal obligation he may have with or to
the Company. For purposes of the preceding
sentence, a "competitive business" is any
business engaged in the offshore marine
services business and/or any business
conducted by the Company, its affiliates or
any subsidiaries thereof as of the date
Employee's employment is terminated to the
extent such business generated at least 25%
of the total gross revenue of the Company for
the immediately preceding calendar year. A
business which is conducted by the Company,
its affiliates or any subsidiaries which is
subsequently sold by the Company is not a
competitive business as of the date such
business is sold. An "affiliate" of the
- 11 -
<PAGE> 12
Company is any company which either controls,
is controlled by or is under common control
with the Company. The phrase "any business
conducted by the Company, its affiliates or
any subsidiaries thereof" includes not only
current businesses but also any new
businesses under consideration or
investigation on the date Employee's
employment with the Company is terminated so
long as it could reasonably be anticipated
that such new business would generate at
least 25% of the gross revenues for the
Company in the future.
Employee also agrees that during the
six (6) month period described in the first
sentence of this Section 12(a) he will not
directly or indirectly, on behalf of himself
or any other person or entity, make a
solicitation or conduct business, with any
customer or potential customer of the Company
with which he had contact while employed by
the Company, its affiliates and/or any
subsidiaries thereof, with respect to any
services which are competitive with any
business conducted by the Company, its
affiliates or any subsidiaries thereof. For
purposes of the preceding sentence, a
"customer" is any person or entity that has
purchased services from the Company, its
affiliates or any subsidiaries thereof within
the twenty-four (24) month period ending on
the date Employee's employment is terminated.
A "potential customer" is any person or
entity that the Company solicited for
business within twelve (12) months prior to
the date Employee's employment with the
Company is terminated.
The Company and Employee recognize that
his responsibilities on behalf of the Company
have resulted in contacts throughout the
United States and certain foreign countries.
Employee's contacts on behalf of the Company
represent a substantial asset of the Company
which are entitled to protection. In
recognition of this situation, the covenants
set forth in this Section 12 shall apply to
competitive businesses and solicitation in
the United States, United Kingdom, and any
other foreign countries in which the Company,
its affiliates and/or the subsidiaries
- 12 -
<PAGE> 13
thereof has (have) conducted $100,000 or more
of business during the twelve-month period
ending on the date Employee's employment with
the Company terminated.
Before and forever after his
termination or resignation, Employee shall
keep confidential and refrain from utilizing
or disseminating any confidential,
proprietary or trade secret information of
the Company for any purpose other than
furthering the business interests of the
Company.
(b) During Employee's employment hereunder and
during six (6) months following his
resignation or the termination of his
employment hereunder for any reason, Employee
will not induce or attempt to influence any
present or future employee of the Company,
its affiliates or any subsidiaries thereof to
leave its employ.
13. Other Agreements. Except to the extent expressly set
forth herein, this Agreement shall not modify or lessen any benefit or
compensation to which Employee is entitled under any agreement between Employee
and the Company or under any plan maintained by the Company in which he
participates or participated. Benefits or compensation shall be payable
thereunder, if at all, according to the terms of the applicable plan(s) or
agreement(s). The terms of this Agreement shall supersede any existing
agreement between Employee and the Company executed prior to the date hereof to
the extent any such Agreement is inconsistent with the terms hereof.
14. Successors; Binding Agreement. The Company will
require any successor (whether direct or indirect by purchase, merger,
consolidation or otherwise, to all or substantially all (50% or more) of the
business and/or assets of the Company) to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place.
This Agreement shall inure to the benefit of and be
enforceable by Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Employee should die before all amounts that would still be payable to Employee
hereunder if Employee had continued to live are paid, all such unpaid amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to Employee's devisee, legatee, or other designee or, if there
be no such designee, to Employee's estate.
- 13 -
<PAGE> 14
15. Injunction. The remedy at law for any breach of
Section 12 will be inadequate and the Company, its affiliates and any
subsidiaries thereof would suffer continuing and irreparable injury to their
business as a direct result of any such breach. Accordingly, notwithstanding
anything stated herein, if Employee shall breach or fail to perform any term,
condition or duty contained in Section 12 hereof, then, in such event, the
Company shall be entitled to institute and prosecute proceedings in any court
of competent jurisdiction, either in law or in equity, to obtain the specific
performance thereof by Employee or to seek a temporary restraining order or
injunctive relief, without any requirement to show actual damages or post bond,
to restrict Employee from violating the provisions of Section 12; however,
nothing herein shall be construed to prevent the Company seeking such other
remedy in the courts, in case of any breach of this Agreement by Employee, as
the Company may elect or invoke. Notwithstanding any other provision herein to
the contrary, if court proceedings are instituted by the Company to enforce
Section 12 hereof, and the Company is the prevailing party, the Company shall
receive, in addition to any damages awarded, reasonable attorneys' fees, court
costs and ancillary expenses.
16. Miscellaneous. This Agreement may not be modified or
discharged unless such waiver, modification or discharge is agreed to in
writing and signed by Employee and such officers of the Company as may be
specifically designated by its Board for that purpose. Except for any failure
to give the ten (10) day notice described in Section 6(b) above, the failure of
either party to this Agreement to object to any breach by the other party or
the non-breaching party's conduct or conduct forbearance shall not constitute a
waiver of that party's rights to enforce this Agreement. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of any subsequent breach by such
other party or any similar or dissimilar provisions or conditions at the same
or any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Texas.
Except as provided in Section 15 above, the Company shall pay all
legal fees, expenses of arbitration, and related expenses incurred by Employee,
in connection with this Agreement following a Change in Control of the Company,
including, without limitation, (a) all such fees and expenses, if any, incurred
in contesting or disputing any termination of Employee's employment following a
Change in Control or incurred by Employee in seeking advice with respect to the
matters hereunder or (b) Employee
- 14 -
<PAGE> 15
seeking to obtain or enforce any right or benefit provided by this Agreement.
17. Severability. The parties hereto intend this
Agreement to be enforced to the maximum extent permitted by law. In the event
any provision of this Agreement is deemed to be invalid or unenforceable by any
court of competent jurisdiction, such provisions shall be deemed to be
restricted in scope or otherwise modified to the extent necessary to render the
same valid and enforceable. In the event the provisions of Section 12 cannot
be modified or restricted so as to be valid and enforceable, then the same as
well as the Company's obligation to make any payment or transfer any benefit to
Employee in connection with any termination of Employee's employment shall be
deemed excised from this Agreement, and this Agreement shall be construed and
enforced as if such provisions had originally been incorporated herein as so
restricted or modified or as if such provisions had not originally been
contained herein, as the case may be. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement which shall remain in full force and
effect.
18. Survival. The obligations of the parties under this
Agreement shall survive the term of this Agreement.
19. Term of Agreement. This Agreement shall have an
initial term expiring on the earlier of (a) the third anniversary of the date
hereof, assuming there has been no Change in Control of the Company, or (b) the
Employee's normal retirement date (age 65); provided, however, that the period
provided in the clause (a) shall be automatically extended for successive
periods of one (1) year on a continuing basis unless either party shall give
written notice of its intention not to so extend at least six (6) months prior
to the end of the initial three (3) year period or any renewal period. No
notice by the Company of its intention not to extend shall be effective if,
within one year prior to the original expiration date, or if a renewal period,
within one year prior to the termination date proposed by the Company, the
Company has received notice, official or unofficial, or otherwise has reason to
believe that steps have or are being taken or considered by any person or
entity that would when completed bring about a Change in Control of the
Company. This Agreement shall in any case continue in effect for two (2) years
following a Change in Control of the Company.
- 15 -
<PAGE> 16
Date: June 20, 1995.
Employee Hornbeck Offshore Services, Inc.
/S/ ROGER M. SYKES By: /S/ LARRY D. HORNBECK
(ROGER M. SYKES)
Its: CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
- 16 -
<PAGE> 1
PRIVILEGED AND CONFIDENTIAL PRESS RELEASE
ATTORNEYS' WORK PRODUCT
HORNBECK OFFSHORE SERVICES, INC.
ADOPTS STOCKHOLDER RIGHTS PLAN
FOR IMMEDIATE RELEASE - GALVESTON, TEXAS
HOUSTON, TX (June 20, 1995) -- Hornbeck Offshore Services, Inc. today
announced that its Board of Directors has adopted a Stockholder Rights Plan
designed to assure that all stockholders receive fair treatment in the event of
any takeover. The key provision of the Stockholder Rights Plan is a mechanism
that will distribute for each outstanding share of the Company's common stock
one Right that becomes exercisable upon certain triggering events. Each Right
will entitle the holder to buy one one-hundredth of a share of the Company's
Series B Junior Participating Preferred Stock, for an exercise price of $60.00.
The Rights will be distributed to stockholders of record on July 5, 1995.
The Rights will trade with the Company's common stock until exercisable. The
Rights will not be exercisable until ten business days following a public
announcement that a person or group has acquired 20% of the Company's common
stock or until ten business days after a person or group begins a tender offer
that would result in ownership of 20% of the Company's common stock, subject to
certain extensions by the Board.
If an acquiror becomes a 20% holder of the Company's common stock, the Rights
"flip in" and become Rights to buy the Company's common stock at a 50%
discount, and Rights owned by that acquiror become void. If the Company is
merged and its common stock is exchanged or converted, or if 50% or more of the
Company's assets or earning power is sold or transferred, the Rights "flip
over" and entitle the holders to buy shares of the acquiror's common stock at a
50% discount. A tender or exchange offer for all outstanding shares of the
Company's common stock at a price and on terms determined to be fair and
otherwise in the best interests of the Company and its stockholders by a
majority of the Company's continuing directors will not trigger either the
flip-in or flip-over provisions.
The Rights may be redeemed by Hornbeck Offshore Services, Inc. for $.0l per
Right at any time until ten business days following the first public
announcement that an acquiror has acquired the level of ownership that
"triggers" the Rights Plan. The Rights extend for ten years and will expire on
June 20, 2005.
<PAGE> 2
Commenting on the Rights Plan, Larry D. Hornbeck, the Chairman of the Board,
President and Chief Executive Officer of Hornbeck Offshore Services, Inc., said
that the Board of Directors is not aware of any effort to acquire control of
the Company.
The Board of Directors believes that the rights plan represents a sound and
reasonable means of safeguarding the interest of stockholders. Mr. Hornbeck
said the plan is similar to those adopted by a number of other companies
following favorable rulings by courts in various jurisdictions, including the
Delaware Supreme Court.
Hornbeck and its subsidiaries and affiliates own, manage and/or have an
interest in and operate a diversified fleet of 91 vessels primarily serving the
oil and gas industry. The fleet consists of supply, tug supply, crew, safety
standby and specialty service vessels with 62 units in the Gulf of Mexico and
29 in the North Sea. The Company maintains offices in Galveston, Texas and
Morgan City, Louisiana, with affiliated offices in Aberdeen, Scotland and
Douglas, Isle of Man. The Company's common stock is traded on The Nasdaq
National Market under the symbol "HOSS."
For additional information, contact Hornbeck's corporate offices at (409)
744-9500 or (713) 488-0067.
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