Exhibit 10.20
SEVERANCE AND CHANGE OF CONTROL AGREEMENT
This Severance and Change of Control Agreement
(“Agreement”) between Cal Dive International, Inc.,
a Delaware corporation (the “Company”), and Lisa M.
Buchanan (the “Executive”) is dated as of January 1,
2008 (the “Agreement Date”).
WITNESSETH
In consideration of the mutual undertakings of
this Agreement, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows.
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms
have the meanings specified:
Section 1.1
Affiliate. “Affiliate”
shall mean any Person controlled by, controlling, or under
common control with, the Company.
Section 1.2
Business. “Business”
shall mean the subsea marine construction business of the
Company.
Section 1.3
Cause. “Cause” shall
mean the Executive’s (a) willful breach of Section 5.1 of
this Agreement; (b) conviction of, or plea of guilty or nolo
contendere to, a felony or other crime involving dishonesty
or moral turpitude; (c) material breach of the Company’s
Code of Ethics and Business Conduct, insider trading policy
statement or other Board adopted policies applicable to
management conduct; (d) knowing falsification of information
contained in any report filed by the Company with the Securities
and Exchange Commission or with any exchange on which the
Company’s securities are listed for trading; or (e)
substantial, willful and repeated failure to perform duties as
instructed by the Company’s Board of Directors.
The Executive’s employment shall not be
deemed terminated for Cause unless the Company shall have
delivered to the Executive a termination notice with a copy of a
resolution adopted by the affirmative vote of not less than
three-quarters of the entire Board at a meeting called for such
purpose (after reasonable notice is provided to the Executive
and the Executive has had an opportunity, with counsel, to be
heard by the Board) finding that the Executive should be
terminated for Cause and specifying in reasonable detail the
grounds therefore.
Section 1.4
Change of Control. “Change of
Control” shall mean:
(a)
the acquisition by any Person of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under
the Securities Exchange Act of 1934 (the “Exchange
Act”)) of more than 30% of the outstanding shares of the
Company’s Common Stock, $.01 par value per share (the
“Common Stock”), provided, however, that for
purposes of this subsection (a), the following events shall not
constitute a Change of Control:
(i)
The continuing ownership by Helix of those
shares of Company Common Stock that Helix owns as of the date of
this Agreement;
(ii)
any Company issuance or sale of its Common
Stock to a Person;
(iii)
any acquisition of Common Stock by the
Company;
(iv)
any acquisition of Common Stock by any employee
benefit plan (or related trust) sponsored or maintained by the
Company or a Company Affiliate; or
(v)
any acquisition of Common Stock by any entity
pursuant to a transaction that complies with clauses (i), (ii)
and (iii) of subsection (c) of this Section 1.3; or
(b)
individuals who, as of the Agreement Date,
constitute the Board (the “Incumbent Board”) cease
for any reason to constitute at least a majority of the Board;
provided, however, that any individual who becomes a director
after the Agreement Date through either (i) an election by the
Incumbent Board to fill a vacancy, or (ii) an election by the
Company’s stockholders following a nomination of such
individual by the vote of at least a majority of the directors
then comprising the Incumbent Board, shall be considered a
member of the Incumbent Board, unless such individual’s
initial assumption of office is a result of an actual or
threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than
the Incumbent Board; or
(c)
consummation of a reorganization, merger or
consolidation, or sale or other disposition of all of
substantially all of the assets of the Company (a
“Business Combination”), in each case, unless,
following such Business Combination,
(i)
Persons who were the beneficial owners of the
Company’s outstanding Common Stock and any other
securities of the Company having Voting Power immediately prior
to such Business Combination continue to be the beneficial
owners, respectively, of 50% or more of the then outstanding
shares of common stock, and 50% or more of the Voting Power of
the then outstanding voting securities of the corporation
resulting from such Business Combination (which, for purposes of
paragraphs (i), (ii) and (iii) hereof, shall include a
corporation which as a result of such transaction controls the
Company or all or substantially all of the Company’s
assets either directly or indirectly; and
(ii)
except to the extent that such ownership in the
Company existed prior to the Business Combination, no Person
(excluding, for the purpose of this clause, any corporation
resulting from such Business Combination or any employee benefit
plan or related trust of the Company or the corporation
resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of the then outstanding
shares of common stock of the corporation resulting from such
Business Combination or 20% or more of the combined Voting Power
of the then outstanding voting securities of such corporation;
and
(iii)
at least a majority of the members of the board
of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of
the execution of the initial agreement providing for such
Business Combination, or,
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in the absence of an agreement, of the action
taken by the Board approving such Business Combination; or
(d)
approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company.
Section 1.5
Companies. “Companies”
shall mean the Company and its subsidiaries collectively.
Section 1.6
Company. “Company”
shall mean (a) the Company as defined above and its successors
and assigns as permitted by Section 6.1(a), and (b) in
appropriate contexts, any subsidiary or corporate Affiliate of
the Company.
Section 1.7
Confidential Information.
“Confidential Information” shall mean any
information, knowledge or data of any nature and in any form
(including information that is electronically transmitted or
stored on any form of magnetic or electronic storage media)
relating to the past, current or prospective business or
operations of any of the Companies, that at the time or times
concerned is not generally known to persons engaged in
businesses similar to those conducted or contemplated by any of
the Companies, whether produced by any of the Companies or any
of their respective consultants, agents or independent
contractors or by the Executive, and whether or not marked
confidential, including without limitation information relating
to any of the Companies’ services, projects or jobs,
project or job locations, estimating or bidding procedures,
bidding strategies, business plans, business acquisitions, joint
ventures, processes, research and development ideas, methods or
techniques, training methods and materials, and other
operational methods or techniques, quality assurance procedures
or standards, operating procedures, files, plans,
specifications, proposals, drawings, charts, graphs, support
data, trade secrets, supplier lists, supplier information,
purchasing methods or practices, distribution and selling
activities, consultants’ reports, marketing and
engineering or other technical studies, maintenance records,
employment or personnel data, marketing data, strategies or
techniques, financial reports, budgets, projections, cost
analyses, pricing information and analyses, employee lists,
customer records, customer lists, customer source lists,
proprietary computer software, and internal notes and memoranda
relating to any of the foregoing.
Section 1.8
Date of Termination. “Date of
Termination” shall mean (a) if the Executive’s
employment is terminated by the Company, the date that the
Company notifies the Executive of such termination or any later
date specified in the notice of termination, which shall not be
more than 15 days after the date of the notice; (b) if the
Executive’s employment is terminated voluntarily by the
Executive, the date that the Executive notifies the
Company of such termination or any later date specified therein
(which date shall not be later than 15 days after the giving of
such notice), as the case may be; or (c) if the
Executive’s employment is terminated as a result of the
Executive’s death or Disability, the date of such
death or the date of determination of such Disability pursuant
to Section 1.9, as the case may be, but to the extent any
payments or benefits provided herein do not qualify for an
exclusion from Section 409A (“Section 409A”) of the
Internal Revenue Code of 1986, as amended, and the regulations
thereunder (the “Code”), a Date of Termination shall
occur only if such termination described in this Section 1.8
qualifies as a “separation from service” under
Section 409A.
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Section 1.9
Disability.
“Disability” shall be deemed to have occurred
if the Executive is rendered incapable of satisfactorily
discharging his duties and responsibilities to the Company
because of physical or mental illness, and either (i) the
Executive becomes eligible to receive benefits under the
Company’s long-term disability plan as in effect on the
Date of Termination, or (ii) if the Company has no long-term
disability plan in effect during such period, Employee shall be
incapable of performing his duties for a period of 90
consecutive days or 120 or more non-consecutive days within any
consecutive 365-day period. In the event of a dispute
between the Company and the Executive as to whether the
Executive has a Disability, the determination shall be made by a
licensed medical doctor selected by the Company and agreed to by
the Executive. If the parties cannot agree on a medical doctor,
each party shall select a medical doctor and the two doctors
shall select a third who shall be the approved medical doctor
for this purpose. The Executive agrees to submit to such tests
and examinations as such medical doctor shall deem
appropriate.
Section 1.10
Good Reason. “Good
Reason” shall mean any of the following events or
conditions, provided that, the Executive shall have provided
written notice to the Company within 90 days of the initial
existence of the condition described in this Section 1.10 and,
such event or condition continues uncured for a period of 30
days after written notice thereof is given by the Executive to
the Company:
(a)
A material reduction by the Company of the
Executive's base salary that is then in effect, without his
prior consent;
(b)
A material diminution in the Executive's duties
and status as an executive officer of the Company;
(c)
A failure in any material respect by the Company
to perform any of its obligations to the Executive under this
Agreement; or
(d)
The relocation by the Company of the
Executive’s principal place of employment by the Company
to a location that is more than 75 miles from the location of
the Company’s headquarters in Houston, Texas; provided
that the Company shall not be deemed to have relocated the
Executive’s principal place of business if the Company
requires the Executive to perform his normal duties outside of
the above location for less than an aggregate of 120 days during
any consecutive period of 365 days, as long as no more than 30
days of any such 120 days are consecutive.
Section 1.11
Person. “Person” shall
mean a natural person or entity, and shall also mean any
partnership, limited partnership, limited liability company,
syndicate, or other group that would be treated as a Person
under Sections 13(d)(3) or 14(d)(2) of the Exchange Act because
it had been formed for the purpose of acquiring, holding, or
disposing of a security; provided that “Person”
shall not include an underwriter temporarily holding a security
pursuant to an offering of the security.
Section 1.12
Section 409A. “Section
409A” shall mean Section 409A of the Internal Revenue Code
of 1986, as amended, and all regulations and guidance issued
thereunder.
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Section 1.13
Target Bonus. “Target
Bonus” shall refer to the target bonus established for the
Executive for the year in which the termination occurs (waiving
any subjective performance criteria and assuming achievement by
the Company of all objective performance goals of the bonus plan
at exactly 100%).
Section 1.14
Protected Period. “Protected
Period” shall mean the period beginning with the date of
the Change of Control and continuing through the second
anniversary thereof.
Section 1.15
Termination Bonus.
“Termination Bonus” shall mean an amount equal
to the product of (a) the Target Bonus and (b) the fraction
derived (expressed as a decimal) by dividing (1) the number of
days in the year that preceded the date of termination by (2)
365.
Section 1.16
Voting Power. “Voting
Power” shall mean the rights vested, by law or the
Company’s Certificate of Incorporation, in the
stockholders, or in one or more classes of stockholders, to vote
with respect to the election of directors.
ARTICLE 2
TERM
Section 2.1
Agreement Term. This Agreement
shall commence on the Agreement Date and continue in effect
through December 31, 2009, provided, however, that,
commencing on January 1, 2010 and each January 1st that is the
second anniversary date thereafter, the term of this Agreement
shall automatically be extended for two additional years unless,
not later than 90 days prior to the expiration date, the Company
or the Executive shall give written notice that it does not wish
to extend the term of this Agreement, in which case the
Agreement shall, subject to Section 3.6, be terminated as of
December 31 of the year that notice is given. Notwithstanding
any non-extension notice given by the Company, if a Change of
Control of the Company shall occur during the term of this
Agreement, this Agreement shall continue in effect through the
second anniversary of the Change of Control. For avoidance of
doubt, if neither party shall have given timely written notice
of termination of this Agreement prior to December 31, 2009,
then the contract shall automatically be extended through
December 31, 2011, and so forth.
ARTICLE 3
TERMINATION PRIOR TO CHANGE OF CONTROL
Section 3.1
Termination of Employment by the Company
without Cause or by Executive for Good Reason. If
during the term of this Agreement, and prior to a Change of
Control, the Company terminates the Executive’s employment
without Cause, or the Executive terminates his employment for
Good Reason, the Executive shall be entitled to the
following:
(a)
In addition to the sums payable in accordance
with Section 3.4, an amount equal to the sum of (1) the
Executive’s annual base salary in effect for the fiscal
year that the Date of Termination occurs and (2) the Termination
Bonus, which the Company shall pay such amount in a lump sum no
later than 10 days after the Date of Termination.
(b)
Until the first anniversary of the Date of
Termination, the Company shall provide group life, long-term
disability and health insurance benefits (collectively, the
“Group Benefits”) to the Executive commensurate with
those provided to the Executive immediately
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prior to the Date of Termination (with the
Executive to pay any portion of an insurance premium that the
Executive paid prior to the Date of Termination) or,
alternatively, the Company shall reimburse the out-of-pocket
costs incurred by the Executive to obtain commensurate benefits,
including a gross-up payment to offset the income tax
consequences of such reimbursement; provided, that if the
Executive is provided some or all of his Group Benefits by a
subsequent employer, the Company’s obligation hereunder
shall be limited to making up any shortfall to the extent the
benefits provided by the subsequent employer are less favorable
than those provided by the Company; and provided further
, that Executive shall submit all benefit claims and requests
for reimbursement hereunder timely so that all payments due
under this Section 3.1(b) may be made by December 31 of the
calendar year following the year in which the expense was
incurred. Any gross-up payment shall be paid no later than
the end of the year following the year in which the Executive
remits the taxes to the applicable taxing authority.
(c)
Continuation coverage under the Company’s
plan(s) as required by the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA) and the Company’s group
health plan(s), under the same terms and conditions applicable
to other Company employees.
(d)
Automatic acceleration of the vesting of any
stock options, restricted stock or restricted stock units
granted to the Executive by the Company that were scheduled to
vest by their terms within 12 months following the Date of
Termination. To the extent this Section 3.1(d) changes the
terms of stock options, restricted stock or restricted stock
units held by the Executive now or in the future in a manner
that is beneficial to the Executive, this Section 3.1(d) shall
be deemed to be an amendment to the agreement between the
Company and the Executive setting forth the terms of such awards
and shall form a part of such agreement.
Section 3.2
Other Severance Plans. If the
Executive becomes entitled to severance benefits under Section
3.1, the Company shall not be required to pay to the Executive
any additional severance payment under any other severance
or salary continuation policy, plan, agreement or arrangement
maintained by the Company unless such other policy, plan,
agreement or arrangement expressly provides to the contrary, or
unless Executive elects to take the benefits of such other plan
or plans in lieu of the severance benefit payable under Section
3.1.
Section 3.3
Termination for Other Reasons. If
during the term of this Agreement, the Executive’s
employment is terminated by the Company for Cause, by the
Executive without Good Reason, or as a result of
Executive’s death or Disability, this Agreement shall
terminate without further obligation to the Executive other than
as provided in Section 3.4 hereof.
Section 3.4
Accrued Obligations and Other Benefits.
Upon the termination of Executive’s employment for
any reason, the Company shall promptly pay the Executive or his
legal representatives, in addition to any other benefits
provided herein, and in addition to any other benefits in which
the Executive is vested or becomes vested by virtue of the
termination of his employment (a) the Executive’s base
salary accrued through the Date of Termination, and (b) any
accrued vacation pay, in each case to the extent not previously
paid.
Section 3.5
Stock Options and Other Incentives.
The benefits provided for in this Article 3 are in
addition to the value or benefit of any stock options,
restricted stock, performance shares or similar awards, the
exercisability, vesting or payment of which is
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accelerated or otherwise enhanced pursuant to
the terms of any stock incentive plan or agreement heretofore or
hereafter adopted by the Company upon a termination of
Executive’s employment.
Section 3.6
Company Decision to not Renew Agreement.
If during the two-year period beginning with January 1 of the
year following the date the Company gives to the Executive a
non-extension notice under Section 2.1, the Company terminates
the Executive without Cause or the Executive terminates his
employment for Good Reason, then the Executive shall be entitled
to the same benefits as are provided under Section 3.1.
ARTICLE 4
TERMINATION FOLLOWING A CHANGE OF CONTROL
Section 4.1
Termination by the Company without Cause.
If following a Change of Control, the Company during the
Protected Period terminates the Executive’s employment
without Cause, or the Executive terminates his employment for
Good Reason, the Executive shall, subject to Section 4.2 hereof,
be entitled to the following:
(a)
In addition to sums payable under Section 4.4,
an amount equal to two times the sum of (a) the
Executive’s annual base salary in effect for the fiscal
year in which the Date of Termination occurs and (B) the Target
Bonus. The Company shall pay such amount in a lump sum no
later than 10 days following the Date of Termination.
(b)
Until the second anniversary of the Date of
Termination, the Company shall provide Group Benefits to the
Executive commensurate with those provided to the Executive
immediately prior to the Date of Termination (with the Executive
to pay any portion of an insurance premium that the Executive
paid prior to the Date of Termination) or, alternatively, the
Company shall reimburse the out-of-pocket costs incurred by the
Executive to obtain commensurate benefits, including a gross-up
payment to offset the income tax consequences of such
reimbursement; provided, that if Executive is provided
some or all of his Group Benefits by a subsequent employer, the
Company’s obligation hereunder shall be limited to making
up any shortfall to the extent the benefits provided by the
subsequent employer are less favorable than those that would be
provided hereunder by the Company, and provided further ,
that Executive shall submit all benefit claims and requests for
reimbursement hereunder timely so that all payments due under
this Section 4.1(b) may be made by December 31 of the calendar
year following the year in which the expense was incurred.
Any gross-up payment made hereunder shall be paid no later
than the end of the year following the year in which the
Executive remits the taxes to the applicable taxing
authority.
(c)
Continuation coverage under the Company’s
plan(s) as required by the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA) and the Company’s group
health plan(s), under the same terms and conditions applicable
to other Company employees.
(d)
Automatic acceleration of the vesting of all
stock options, restricted stock or restricted stock units
granted to the Executive by the Company prior to the Date of
Termination. To the extent this Section 4.1(d) changes the
terms of stock options, restricted stock or restricted stock
units held by the Executive now or in the future in a manner
that is beneficial to the Executive, this Section 4.1(d) shall
be deemed to be an amendment to the
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agreement between the Company and the Executive
setting forth the terms of such awards and shall form a part of
such agreement.
Section 4.2
Other Severance Plans. If the
Executive becomes entitled to receive severance benefits under
Section 4.1, the Company shall not be required to pay the
Executive any additional severance payment under any other
severance or salary continuation policy, plan, agreement or
arrangement maintained by the Company unless such other policy,
plan, agreement or arrangement expressly provides to the
contrary, or unless Executive elects to take the benefits of
such other plan or plans in lieu of the severance payment
payable under Section 4.1.
Section 4.3
Termination for Other Reasons. If
during the Protected Period, the Executive’s employment is
terminated by the Company for Cause, by the Executive without
Good Reason, or as a result of Executive’s death or
Disability, this Agreement shall terminate without further
obligation to the Executive other than as provided in Section
4.4 hereof.
Section 4.4
Accrued Obligations and Other Benefits.
Upon the termination of Executive’s employment for
any reason, the Company shall promptly pay the Executive or his
legal representatives, in addition to any other benefits
provided herein, (a) the Executive’s base salary accrued
through the Date of Termination and (b) any accrued vacation
pay, in each case to the extent not previously paid.
Section 4.5
Stock Options and Other Incentives.
The benefits provided for in this Article 4 are in
addition to the value or benefit of any stock options,
restricted stock, performance shares or similar awards, the
exercisability, vesting or payment of which is accelerated or
otherwise enhanced pursuant to the terms of any stock incentive
plan or agreement heretofore or hereafter adopted by the Company
upon a termination of Executive’s employment.
Section 4.6
Excise Tax Provision .
(a)
Notwithstanding any other provision of this
Agreement, if a Change of Control occurs during the term of this
Agreement, and any of the payments or benefits received or to be
received by the Executive in connection with the Change of
Control or the Executive’s termination of employment
(whether pursuant to this Agreement or any other plan,
arrangement or agreement with the Company, any Person whose
actions cause a Change of Control or any Affiliate of the
Company or such Person) (all such payments and benefits,
including those under Section 4.1, but excluding any payment
made under this Section 4.6, being “Initial
Payments”) will be subject (in whole or in part) to an
excise tax imposed by section 4999 of the Code or any similar
tax (the “Excise Tax”), the Company shall pay to the
Executive an additional amount (the “Gross-Up
Payment”) such that the net amount retained by the
