Exhibit 10.1

McDERMOTT INTERNATIONAL, INC.

Restricted Stock Unit Grant Agreement

(February 27, 2019)

The Compensation Committee of the Board of Directors (the “Committee”) of McDermott International, Inc. (“McDermott” or the “Company”) has selected you to receive a grant of Restricted Stock Units (“RSUs”) under the [2016 McDermott International, Inc. Long-Term Incentive Plan][the Chicago Bridge & Iron 2008 Long-Term Incentive Plan, as amended and restated effective February 27, 2019] (the “Plan”), on February 27, 2019 (the “Date of Grant”). The provisions of the Plan are incorporated herein by reference.

Any reference or definition contained in this RSU Grant Agreement (this “Agreement”) shall, except as otherwise specified, be construed in accordance with the terms and conditions of the Plan and all determinations and interpretations made by the Committee with regard to any question arising hereunder or under the Plan shall be binding and conclusive on you and your beneficiaries, successors, assigns, estate or personal representatives. The term “Company,” as used in this Agreement shall include subsidiaries of McDermott, unless the context clearly indicates otherwise. Whenever the words “you” or “your” are used in any provision of this Agreement under circumstances where the provision should logically be construed to apply to any beneficiary, successors, assigns, estate or personal representative to whom any rights under this Agreement may be transferred by will or by the laws of descent and distribution, they shall be deemed to include any such person or estate. This Agreement shall be subject to the Plan and the Company’s Clawback Policy, which is attached hereto as Exhibit A and is incorporated herein by reference. Capitalized terms not defined in this Agreement but that are defined in the Plan shall have the respective meanings ascribed to such terms in the Plan.

Restricted Stock Units

RSU Award . You have been awarded the number of RSUs shown on the Notice of Grant dated February 27, 2019, which is incorporated herein by reference (this “Award”). Each RSU represents a right to receive the value of one Share on the Vesting Date (as set forth in the “Vesting Requirements” paragraph below), provided the vesting requirements set forth in this Agreement shall have been satisfied. No Shares or cash amounts are awarded or issued to you hereunder on the Date of Grant.

Vesting Requirements . Subject to the “Forfeiture of RSUs” paragraph below, RSUs do not provide you with any rights or interest therein until they become vested under one or more of the following circumstances (each such date a “Vesting Date”):

 

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in one-third (1/3) increments on the first, second and third anniversaries of the Date of Grant, provided that you are then still employed with the Company on the applicable anniversary;

 

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25% of the then-remaining outstanding RSUs if your employment with the Company is involuntarily terminated by reason of a Reduction in Force on or after the first anniversary and prior to the second anniversary of the Date of Grant;

 

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50% of the then-remaining outstanding RSUs if your employment with the Company is involuntarily terminated by reason of a Reduction in Force on or after the second anniversary and prior to the third anniversary of the Date of Grant;

 

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100% of the then-remaining outstanding RSUs on the earliest to occur prior to the third anniversary of the Date of Grant of: (1) the date of termination of your employment from the Company due to death or (2) your Disability; and

 

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If a Change in Control of the Company occurs, Section 14 of the Plan will control, with “Cause” and “Good Reason” given the meanings described below.

For purposes of this Agreement, a “Reduction in Force” shall mean a termination of employment with the Company due to elimination of a previously required position or previously required services, or due to the consolidation of departments, abandonment of facilities or offices, technological change or declining business activities, where such termination is intended to be permanent; or under other circumstances which the Committee, in accordance with standards uniformly applied with respect to similarly situated employees, designates as a reduction in force.

For purposes of this Agreement “Cause” means: (i) your continued failure to perform substantially your duties with the Company (occasioned by reason other than your physical or mental illness, death or disability) after a written demand for substantial performance is delivered to you by the Committee which specifically identifies the manner in which the Committee or the Chief Executive Officer believes that you have not substantially performed your duties, after which you shall have 30 days to defend or remedy such failure to substantially perform your duties; (ii) the engaging by you in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company; or (iii) your conviction of, with no further possibility of appeal for, or plea of guilty or nolo contendere by you to, any felony. The cessation of your employment under items (i) and (ii) of this paragraph shall not be deemed to be for “Cause” unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Committee at a meeting of the Committee called and held for such purpose (after reasonable notice is provided to you and you are given an opportunity, together with counsel, to be heard before the Committee), finding that, in the good faith opinion of the Committee, you are guilty of the conduct described in items (i) or (ii) of this paragraph, and specifying the particulars thereof in detail.

For purposes of this Agreement “Good Reason” means any one or more of the following events which occurs following a Change in Control: (a) a material diminution in your duties or responsibilities of from those applicable immediately before the date on which a Change in Control occurs; (b) a material reduction in your annual salary as in effect on the Effective Date of this Agreement or as the same may be increased from time to time; (c) the failure by the Company to continue in effect any compensation plan in which you participate immediately before the Change in Control which is material to your total compensation, unless a comparable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue your participation therein (or in such substitute or alternative plan) on a basis not materially less favorable than existed immediately before the Change in Control, unless the action by the Company applies to all similarly situated employees; (d) the failure by the Company to continue to provide you with material benefits in the aggregate that are substantially similar to those enjoyed by you under any of the Company’s pension, savings, life insurance, medical, health and accident, or disability plans in which you were participating immediately before the Change in Control if such benefits are material to your total compensation, the taking of any other action by the Company which would directly or indirectly materially reduce any of such benefits or deprive you of any fringe benefit enjoyed by you at the time of the Change in Control if such fringe benefit is material to your total compensation, unless the action by the Company applies to all similarly situated employees; or (e) a change in the location of your principal place of employment with the Company by more than 50 miles from the location where you were principally employed immediately before the Change in Control without your consent. If a Change in Control occurs and any of the events described above occurs prior to the third anniversary of such Change in Control (an “Event”), you shall give McDermott written notice (the “Notice”) within 60 days following your knowledge of an Event that you intend to terminate employment as a result. McDermott shall have 30 days following receipt of the Notice in which to cure the Event. If McDermott does not take such action within that time, the Event shall constitute Good Reason. If you do not provide the Notice within 60 days as required above then the Event shall not constitute Good Reason, and thereafter, for purposes of determining whether you have Good Reason, your terms and conditions of employment after the occurrence of the Event shall be substituted for those terms and conditions of your employment in effect immediately prior to the date of this Agreement.

 

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Forfeiture of RSUs . RSUs which are not and do not become vested upon your termination of employment with the Company for any reason shall, coincident therewith, terminate and be of no further force or effect.

In the event that, while you are employed by the Company or are performing services for or on behalf of the Company under any consulting agreement, (a) you are convicted of (i) a felony or (ii) a misdemeanor involving fraud, dishonesty or moral turpitude, or (b) you engage in conduct that adversely affects or may reasonably be expected to adversely affect the business reputation or economic interests of the Company, as determined in the sole judgment of the Committee, then all RSUs and all rights or benefits awarded to you under this Agreement shall be forfeited, terminated and withdrawn immediately upon (1) notice to the Committee of such conviction pursuant to (a) above or (2) final determination pursuant to (b) above by the Committee. The Committee shall have the right to suspend any and all rights or benefits awarded to you hereunder pending its investigation and final determination with regard to any such matters.

Payment of RSUs . In the sole discretion of the Committee, RSUs shall be paid in (i) Shares, (ii) cash equal to the Fair Market Value of the Shares otherwise deliverable on the Vesting Date, or (iii) any combination thereof, which shall be distributed or paid as soon as administratively practicable, but in any event no later than 30 days, after the applicable Vesting Date.

Taxes

You will realize income in connection with this Award in accordance with the tax laws of the jurisdictions applicable to you. You are solely responsible for the taxes associated with the RSUs, and you should consult with and rely on your own tax advisor, accountant or legal advisor as to the tax consequences to you of this grant.

By acceptance of this Agreement, you agree that any amount which the Company withholds on your behalf, including PAYE, federal or state income tax and employee national insurance contributions or FICA withholding, or pursuant to applicable Company policy, in connection with income realized by you under this Agreement will be satisfied by withholding cash or whole Shares having an aggregate Fair Market Value equal to but not exceeding the amount (as determined by the Company) of such tax withholding, unless the Committee determines to cause the withholding obligation to be satisfied by another method permitted by the Plan. If you are a non-U.S. based taxpayer, the amount which the Company will withhold will be determined based on the tax laws of the jurisdiction applicable to you or applicable Company policy as determined on each applicable Vesting Date. If you are a U.S. based taxpayer, the amount which the Company will withhold is set forth below, with your grade level for purposes of this Agreement determined on each applicable Vesting Date:

 

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For Participants Grades 11 and Below : The Company will automatically withhold payment of cash or delivery of whole Shares having an aggregate Fair Market Value equal to but not exceeding the minimum withholding due for federal income taxes with respect to this Award. Under the current rules, the minimum withholding rate for U.S. federal income taxes applicable to this Award is 22%.

 

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For non-Executive Committee (“EXCOM”) Participants Grades 12 through 14 : The Company will automatically withhold payment of cash or delivery of whole Shares having an aggregate Fair Market Value equal to but not exceeding a federal income tax rate of 33% with respect to this Award (provided that 33% is higher than the minimum withholding rate then in effect).

 

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For EXCOM Participants : The Company will automatically withhold payment of cash or delivery of whole Shares having an aggregate Fair Market Value equal to but not exceeding the maximum withholding due for federal income taxes with respect to this Award. Under the current rules, the maximum withholding rate for U.S. federal income taxes applicable to this Award is 37%.

 

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In each case above, the withholding amounts above are in addition to employment taxes (FICA and Medicare) as well as any applicable state withholding taxes that may be due. The Committee may, in its discretion, require or allow withholding of cash or Shares for taxes on a different basis than described above, on such terms and conditions as it may determine.

Regardless of the withholding method referred to above, you are liable to the Company for the amount of income tax and employee national insurance contributions or FICA withholding which the Company is required to withhold in connection with the income realized by you in connection with this Agreement, and you hereby authorize the Company to withhold such amount (as determined by the Company), in whole or in part, from subsequent salary payments, without further notice to you, if the withholding method referred to above is not utilized or does not completely cover such required tax withholding.

Transferability

RSUs granted hereunder are non-transferable other than by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order.

Securities and Exchange Commission Requirements

If you are a Section 16 insider, this type of transaction must be reported on a Form 4. Please be aware that if you intend to reject the grant, you should do so immediately after the Date of Grant to avoid potential Section 16 liability. Please advise Dennis Edge and Kim Wolford immediately by e-mail or telephone if you intend to reject this grant. Absent such notice of rejection, the Company intends to prepare and file the required Form 4 on your behalf (pursuant to your standing authorization for us to do so).

If you are currently subject to these requirements, you will have already been advised of your status. If you become a Section 16 insider at some future date, reporting will be required in the same manner noted above.

Other Information

Neither the action of the Company in establishing the Plan, nor any provision of the Plan, nor any action taken by the Company, your employer, the Committee or the Board of Directors under the Plan, nor any provision of this Agreement shall be construed as giving to you the right to be retained in the employ of the Company or any of its subsidiaries or affiliates.

This Award is intended to comply with or be exempt from Section 409A of the Internal Revenue Code of 1986, as amended, and in its implementing regulations (“Section 409A”), and ambiguous provisions, if any, shall be construed in a manner that is compliant with or exempt from the application of Section 409A, as appropriate. Notwithstanding any provision of this Award to the contrary, if you are a “specified employee” within the meaning of Section 409A as of the date of your termination of employment and the Company determines, in good faith, that immediate payments of any amounts or benefits would cause a violation of Section 409A, then any amounts or benefits which are payable under this Award upon your “separation from service” within the meaning of Section 409A which (i) are subject to the provisions of Section 409A; (ii) are not otherwise excluded under Section 409A; and (iii) would otherwise be payable during the first six-month period following such separation from service shall be paid on the first business day next following the earlier of (1) the date that is six months and one day following the date of termination or (2) the date of the participant’s death.

 

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Exhibit A

POLICY NO. 1405-003 —— EFFECTIVE DATE: 08/02/13

 

SUBJECT:		Clawback Policy
AFFECTS:		McDermott International, Inc. and its subsidiaries and affiliated companies (hereinafter referred to as “the Company”)
PURPOSE:		To govern the clawback of certain compensation awarded to executive officers of the Company.
POLICY:		If the consolidated financial statements of the Company and its subsidiaries are materially restated within three years of the first public release or filing with the U.S. Securities and Exchange Commission (the “SEC”) of such financial statements, and the Compensation Committee of the Board of Directors of the Company (the “Committee”) determines, in its reasonable discretion, that (1) any current or former executive officer (as defined in Rule 3b-7 promulgated by the SEC under the Securities Exchange Act of 1934, as amended) of the Company (an “Executive”) has engaged in intentional misconduct and (2) such misconduct caused or partially caused the need for such restatement, then the Committee may, within 12 months after such a material restatement, require that the executive forfeit and/or return to the Company all or a portion of the compensation vested, awarded or received under any bonus award (including pursuant to the Company’s Executive Incentive Compensation Plan), equity award (including any award of stock options, shares of restricted stock, deferred stock units or restricted stock units) or other award during the period subject to restatement and the 12-month period following the first public issuance or filing with the SEC of the financial statements that were restated (including, with respect to any such award that is subject to a multi-year vesting period, any compensation vested, awarded or received thereunder during such vesting period if such vesting period includes all or part of such 12-month period); provided, however, that any forfeiture and/or return of compensation by an Executive under this policy will, in any event, be limited to any portion thereof that the Executive would not have received if the consolidated financial statements of the Company and its subsidiaries had been reported properly at the time of first public release or filing with the SEC; provided, further, that this policy shall not apply with respect to any restatement of the consolidated financial statements of the Company and its subsidiaries as to which the need for restatement is determined following the occurrence of a Change in Control (as defined in the Company’s Director and Executive Officer Deferred Compensation Plan, as amended and restated November 8, 2010).   The vesting, payment or other receipt of any rights or benefits awarded by the Company to an Executive which are subject to this policy may be suspended pending an investigation and final determination by the Committee with regard to any alleged misconduct that may be subject to a determination by the Committee under this policy.   By accepting any award as to which this policy applies, each Executive must agree to the foregoing and agree to forfeit and/or return compensation to the Company as provided by this policy, as the same may be modified by, or superseded by a replacement policy adopted by, the Committee, as the Committee may deem necessary to comply with regulations issued by the SEC under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The terms of this policy shall in no way limit the ability of the Company to pursue forfeiture or reclamation of amounts under applicable law as the Compensation Committee may consider appropriate in its reasonable discretion.

Interpretation Contact for the above policy is the Senior Vice President, Chief Human Resources Officer and Executive Vice President, Chief Legal Officer and Corporate Secretary.

 

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Exhibit 10.2

McDERMOTT INTERNATIONAL, INC.

Performance Unit Grant Agreement

(February 27, 2019)

The Compensation Committee of the Board of Directors (the “Committee”) of McDermott International, Inc. (“McDermott” or the “Company”) has selected you to receive a grant of performance units (“Performance Units”) under the [2016 McDermott International, Inc. Long-Term Incentive Plan][the Chicago Bridge & Iron 2008 Long-Term Incentive Plan, as amended and restated effective February 27, 2019] (the “Plan”), on February 27, 2019 (the “Date of Grant”). The provisions of the Plan are incorporated herein by reference.

Any reference or definition contained in this Performance Unit Grant Agreement (this “Agreement”) shall, except as otherwise specified, be construed in accordance with the terms and conditions of the Plan and all determinations and interpretations made by the Committee with regard to any question arising hereunder or under the Plan shall be binding and conclusive on you and your beneficiaries, successors, assigns, estate or personal representatives. The term “Company,” as used in this Agreement, shall include subsidiaries of McDermott, unless the context clearly indicates otherwise. Whenever the words “you” or “your” are used in any provision of this Agreement under circumstances where the provision should logically be construed to apply to any beneficiary, successors, assigns, estate or personal representative to whom any rights under this Agreement may be transferred by will or by the laws of descent and distribution, they shall be deemed to include any such person or estate. This Agreement shall be subject to the Plan and the Company’s Clawback Policy, which is attached hereto as Exhibit A and is incorporated herein by reference. Capitalized terms not defined in this Agreement but that are defined in the Plan shall have the respective meanings ascribed to such terms in the Plan.

Performance Units

Grant of Performance Units . You have been awarded a grant of Performance Units shown on the Notice of Grant dated February 27, 2019, which is incorporated herein by reference (this “Award”). Each Performance Unit represents a right to receive the value of one Share on the Vesting Date (as set forth in the “Vesting Requirements” paragraph below), provided the applicable performance measures and vesting requirements set forth in this Agreement shall have been satisfied. No Shares or cash amounts are awarded or issued to you hereunder on the Date of Grant.

Vesting Requirements . Except as provided below, the Performance Units do not provide you with any rights or interest therein until they become vested, if at all, on the date performance is finally determined by the Committee, which shall be as soon as practicable following the end of the performance period (the “Vesting Date”), provided you are then still employed by the Company.

 

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Reduction in Force . In the event you terminate employment prior to the Vesting Date due to a “Reduction in Force,” then: 33% of the Performance Units will continue to vest, provided your termination date is on or after the first anniversary of the Date of Grant; and 66% of the Performance Units will continue to vest, provided your termination date is on or after the second anniversary of the Date of Grant. The number of Performance Units that will vest pursuant to the immediately preceding sentence will be determined by multiplying (a) the applicable percentage from the immediately preceding sentence by (b) the total number of Performance Units that would have vested, if any, based on actual performance had you remained employed with the Company until the Vesting Date, as determined in accordance with the schedules set forth under the caption “Earned Award” below.

For purposes of this Agreement, “Reduction in Force” means an involuntary termination of employment with the Company due to elimination of a previously required position or previously required services, or due to the consolidation of departments, abandonment of facilities or offices, technological change or declining business activities, where such termination is intended to be permanent; or under other circumstances which the Committee, in accordance with standards uniformly applied with respect to similarly situated employees, designates as a reduction in force.

 

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Death or Disability . 100% of the Performance Units shall vest on the Vesting Date in the event of the prior occurrence of either (1) the termination of your employment with the Company due to death or (2) your Disability, in each case subject to achievement of the applicable performance measures for vesting. The number of Performance Units that will vest pursuant to the preceding sentence will be the total number of Performance Units that would have vested, if any, based on actual performance had you remained employed with the Company until the Vesting Date, as determined in accordance with the schedules set forth under “Earned Award” below.

 

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Change in Control .

 

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If a Change in Control of the Company occurs, Section 14 of the Plan will control, with “Cause” and “Good Reason” given the meanings described below.

 

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In the event that, prior to the date the Change in Control becomes effective, your employment was terminated due to a “Reduction in Force” as described above, or due to your death or Disability as described above, a number of Performance Units will vest as of the Change in Control based on the greater of target level or the actual performance level measured through the date of the Change in Control as determined in accordance with Schedule A to this Agreement and, in the case of a “Reduction in Force,” multiplied by the applicable percentage determined pursuant to the “Reduction in Force” paragraph above.

For purposes of this Agreement, “Cause” means: (i) your continued failure to perform substantially your duties with the Company (occasioned by reason other than your physical or mental illness, death or disability) after a written demand for substantial performance is delivered to you by the Committee which specifically identifies the manner in which the Committee or the Chief Executive Officer believes that you have not substantially performed your duties, after which you shall have 30 days to defend or remedy such failure to substantially perform your duties; (ii) the engaging by you in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company; or (iii) your conviction of, with no further possibility of appeal for, or plea of guilty or nolo contendere by you to, any felony. The cessation of your employment under items (i) and (ii) of this paragraph shall not be deemed to be for “Cause” unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Committee at a meeting of the Committee called and held for such purpose (after reasonable notice is provided to you and you are given an opportunity, together with counsel, to be heard before the Committee), finding that, in the good faith opinion of the Committee, you are guilty of the conduct described in items (i) or (ii) of this paragraph, and specifying the particulars thereof in detail.

For purposes of this Agreement, “Good Reason” means any one or more of the following events which occurs following a Change in Control: (a) a material diminution in your duties or responsibilities of from those applicable immediately before the date on which a Change in Control occurs; (b) a material reduction in your annual salary as in effect on the Effective Date of this Agreement or as the same may be increased from time to time; (c) the failure by the Company to continue in effect any compensation plan in which you participate immediately before the Change in Control which is material to your total compensation, unless a comparable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue your participation therein (or in such substitute or alternative plan) on a basis not materially less favorable than existed immediately before the Change in Control, unless the action by the Company applies to all similarly situated employees; (d) the failure by the Company to continue to provide you with material benefits in the aggregate that are substantially similar to those enjoyed by you under any of the Company’s pension, savings, life insurance, medical, health and accident, or disability plans in which you were participating immediately before the Change in Control if such benefits are material to your

 

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total compensation, the taking of any other action by the Company which would directly or indirectly materially reduce any of such benefits or deprive you of any fringe benefit enjoyed by you at the time of the Change in Control if such fringe benefit is material to your total compensation, unless the action by the Company applies to all similarly situated employees; or (e) a change in the location of your principal place of employment with the Company by more than 50 miles from the location where you were principally employed immediately before the Change in Control without your consent. If a Change in Control occurs and any of the events described above occurs prior to the third anniversary of such Change in Control (an “Event”), you shall give the Company written notice (the “Notice”) within 60 days following your knowledge of an Event that you intend to terminate employment as a result. The Company shall have 30 days following receipt of the Notice in which to cure the Event. If the Company does not take such action within that time, the Event shall constitute Good Reason. If you do not provide the Notice within 60 days as required above then the Event shall not constitute Good Reason, and thereafter, for purposes of determining whether you have Good Reason, your terms and conditions of employment after the occurrence of the Event shall be substituted for those terms and conditions of your employment in effect immediately prior to the date of this Agreement.

Forfeiture of Performance Units . Except as provided above, Performance Units which are not vested as of the date of your termination of employment with the Company for any reason shall, coincident therewith, terminate and be of no further force or effect.

In the event that, while you are employed by the Company or are performing services for or on behalf of the Company under any consulting agreement, (a) you are convicted of (i) a felony or (ii) a misdemeanor involving fraud, dishonesty or moral turpitude, or (b) you engage in conduct that adversely affects or may reasonably be expected to adversely affect the business reputation or economic interests of the Company, as determined in the sole judgment of the Committee, then all Performance Units and all rights or benefits awarded to you under this Agreement shall be forfeited, terminated and withdrawn immediately upon (1) notice to the Committee of such conviction pursuant to (a) above or (2) final determination pursuant to (b) above by the Committee. The Committee shall have the right to suspend any and all rights or benefits awarded to you hereunder pending its investigation and final determination with regard to any such matters.

Earned Award . Except as otherwise provided above, the number of Performance Units in which you will vest, if any (the “Earned Award”), shall be determined as set forth in Schedule A with: (i) 50% based on the Company’s cumulative Operating Income for the performance period from January 1, 2019 through December 31, 2021 and (ii) 50% based on the Company’s relative Total Shareholder Return as compared to the Performance Peer Group (as set forth in Schedule B) for the period beginning January 1, 2019 through December 31, 2021.

Payment of Earned Award . You (or your estate or beneficiaries, if applicable) will receive the value of one Share for each Performance Unit that vests as an Earned Award. In the sole discretion of the Committee, Performance Units shall be paid in (i) Shares, (ii) cash equal to the Fair Market Value of the Shares otherwise deliverable on the Vesting Date, or (iii) any combination thereof, which shall be distributed or paid as soon as administratively practicable after the Vesting Date, but in any event no later than 15 days after the applicable Vesting Date or the date vesting occurs following a Change in Control (as applicable).

Taxes

You will realize income in connection with this Award in accordance with the tax laws of the jurisdictions applicable to you. You are solely responsible for the taxes associated with the Performance Units, and you should consult with and rely on your own tax advisor, accountant or legal advisor as to the tax consequences to you of this grant.

 

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By acceptance of this Agreement, you agree that any amount which the Company withholds on your behalf, including PAYE, federal or state income tax and employee national insurance contributions or FICA withholding, or pursuant to applicable Company policy, in connection with income realized by you under this Agreement will be satisfied by withholding cash or whole Shares having an aggregate Fair Market Value equal to but not exceeding the amount (as determined by the Company) of such tax withholding, unless the Committee determines to cause the withholding obligation to be satisfied by another method permitted by the Plan. If you are a non-U.S. based taxpayer, the amount which the Company will withhold will be determined based on the tax laws of the jurisdiction applicable to you or applicable Company policy as determined on each applicable Vesting Date. If you are a U.S. based taxpayer, the amount which the Company will withhold is set forth below, with your grade level for purposes of this Agreement determined on each applicable Vesting Date:

 

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For Participants Grades 11 and Below : The Company will automatically withhold payment of cash or delivery of whole Shares having an aggregate Fair Market Value equal to but not exceeding the minimum withholding due for federal income taxes with respect to this Award. Under the current rules, the minimum withholding rate for U.S. federal income taxes applicable to this Award is 22%.

 

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For non-Executive Committee (“EXCOM”) Participants Grades 12 through 14 : The Company will automatically withhold payment of cash or delivery of whole Shares having an aggregate Fair Market Value equal to but not exceeding a federal income tax rate of 33% with respect to this Award (provided that 33% is higher than the minimum withholding rate then in effect).

 

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For EXCOM Participants : The Company will automatically withhold payment of cash or delivery of whole Shares having an aggregate Fair Market Value equal to but not exceeding the maximum withholding due for federal income taxes with respect to this Award. Under the current rules, the maximum withholding rate for U.S. federal income taxes applicable to this Award is 37%.

In each case above, the withholding amounts above are in addition to employment taxes (FICA and Medicare) as well as any applicable state withholding taxes that may be due. The Committee may, in its discretion, require or allow withholding of cash or Shares for taxes on a different basis than described above, on such terms and conditions as it may determine.    

Regardless of the withholding method referred to above, you are liable to the Company for the amount of income tax and employee national insurance contributions or FICA withholding which the Company is required to withhold in connection with the income realized by you in connection with this Agreement, and you hereby authorize the Company to withhold such amount (as determined by the Company), in whole or in part, from subsequent salary payments, without further notice to you, if the withholding method referred to above is not utilized or does not completely cover such required tax withholding.

Transferability

Performance Units granted hereunder are non-transferable other than by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order.

Securities and Exchange Commission Requirements

If you are a Section 16 insider, this type of transaction must be reported on a Form 4. Please be aware that if you intend to reject the grant, you should do so immediately after the Date of Grant to avoid potential Section 16 liability. Please advise Dennis Edge and Kim Wolford immediately by e-mail or telephone if you intend to reject this grant. Absent such notice of rejection, the Company intends to prepare and file the required Form 4 on your behalf (pursuant to your standing authorization for us to do so).

 

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If you are currently subject to these requirements, you will have already been advised of your status. If you become a Section 16 insider at some future date, reporting will be required in the same manner noted above.

Other Information

Neither the action of the Company in establishing the Plan, nor any provision of the Plan, nor any action taken by the Company, your employer, the Committee or the Board of Directors under the Plan, nor any provision of this Agreement shall be construed as giving to you the right to be retained in the employ of the Company or any of its subsidiaries or affiliates.

This Award is intended to comply with or be exempt from Section 409A of the Internal Revenue Code of 1986, as amended, and its implementing regulations (“Section 409A”), and ambiguous provisions, if any, shall be construed in a manner that is compliant with or exempt from the application of Section 409A, as appropriate. Notwithstanding any provision of this Award to the contrary, if you are a “specified employee” within the meaning of Section 409A as of the date of your termination of employment and the Company determines, in good faith, that immediate payments of any amounts or benefits would cause a violation of Section 409A, then any amounts or benefits which are payable under this Award upon your “separation from service” within the meaning of Section 409A which (i) are subject to the provisions of Section 409A; (ii) are not otherwise excluded under Section 409A; and (iii) would otherwise be payable during the first six-month period following such separation from service shall be paid on the first business day next following the earlier of (1) the date that is six months and one day following the date of termination or (2) the date of the participant’s death. In addition, any payments to be made upon a Change in Control will only be made upon such event if such event qualifies as a “change in control event” within the meaning of Section 409A.

 

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Schedule A

Operating Income

The Earned Award with respect to the Operating Income performance measure is determined as follows:

 

Performance		Cumulative Operating Income  (1)		Earned Award with Respect to Cumulative Operating Income Performance
Maximum		³  ●			150	%
Target		●			100	%
Threshold		●			50	%
< Threshold		< ●			0	%

 

(1)	Excluding the impact of restructuring and any other unusual items recommended by Executive Management and approved by the Compensation Committee.

If a Change in Control of the Company occurs, the Committee will use its discretion to evaluate Operating Income achievement on a pro rata basis for the time period elapsed through the date of the Change in Control.

Relative Total Shareholder Return

The term “Total Shareholder Return” for the performance period means the rate of return (expressed as a percentage) achieved with respect to the common stock of the Company and the common stock of each company in the Performance Peer Group for the performance period if:

 

•

$100 were invested in the common stock of each such company at the beginning of the performance period based on the closing price of the common stock of such company on January 1, 2019;

 

•

All dividends declared with respect to a particular common stock during the performance period are reinvested in such common stock on a consistent basis across all measured companies (e.g. on the dividend payment date using the closing price of such common stock on such payment date);

 

•

The valuation of such common stock at the end of the performance period is based on the average closing price for the last twenty (20) trading days occurring on or before the last day of the performance period; and

 

•

For companies with stock traded only in a non-$US currency, each daily closing price and any dividends used in the beginning and ending calculations shall be adjusted into US dollars based on the respective reported exchange rate as of that day.

Following the calculation of Total Shareholder Return, the Committee or its designee shall determine the Company’s percentile rank (the “TSR Percentile Rank”) based on the Total Shareholder Return of the Company and each such other company for the performance period in accordance with the formula set forth below:

 

 

Where:		a = number of companies in the Performance Peer Group with Total Shareholder Return less than McDermott
		b = number of companies in the Performance Peer Group with Total Shareholder Return greater than McDermott
		n = total number of companies in the Performance Peer Group (not including McDermott)

 

Schedule A

The Committee may adjust the composition of the Performance Peer Group in consideration of extraordinary corporate events affecting individual companies in the Performance Peer Group, such as mergers, acquisitions, insolvencies, dissolutions or similar events.

Earned Awards between the amounts shown will be calculated by linear interpolation.    

 

Performance Period		TSR Percentile Rank		Earned Award with Respect to Relative TSR Performance
January 1, 2019		³ 90 th  Percentile			200	%
through		50 th Percentile			100	%
December 31, 2021		25 th Percentile			50	%
		< 25 th  Percentile			0	%

 

Schedule A

Schedule B

Performance Peer Group:

 

•

AECOM

•

Fluor Corporation

•

Halliburton Company

•

Jacobs Engineering Group, Inc.

•

John Wood Group PLC

•

KBR, Inc.

•

National Oilwell Varco, Inc.

•

Petrofac Limited

•

Saipem SpA

•

Schlumberger Limited

•

Subsea7 SA

•

TechnipFMC plc

In the event that a company included in the Performance Peer Group declares bankruptcy or a similar restructuring or reorganization, the deemed TSR for such company over the performance period shall be -100%. In the event that a company included in the Performance Peer Group is acquired, such company shall be replaced on the date immediately prior to the public announcement of the closing of the acquisition with an industry index for purposes of determining the performance of such company through the end of the performance period.

 

Schedule B

Exhibit A

POLICY NO. 1405-003 —— EFFECTIVE DATE: 08/02/13

 

SUBJECT:		Clawback Policy
AFFECTS:		McDermott International, Inc. and its subsidiaries and affiliated companies (hereinafter referred to as “the Company”)
PURPOSE:		To govern the clawback of certain compensation awarded to executive officers of the Company.
POLICY:		If the consolidated financial statements of the Company and its subsidiaries are materially restated within three years of the first public release or filing with the U.S. Securities and Exchange Commission (the “SEC”) of such financial statements, and the Compensation Committee of the Board of Directors of the Company (the “Committee”) determines, in its reasonable discretion, that (1) any current or former executive officer (as defined in Rule 3b-7 promulgated by the SEC under the Securities Exchange Act of 1934, as amended) of the Company (an “Executive”) has engaged in intentional misconduct and (2) such misconduct caused or partially caused the need for such restatement, then the Committee may, within 12 months after such a material restatement, require that the executive forfeit and/or return to the Company all or a portion of the compensation vested, awarded or received under any bonus award (including pursuant to the Company’s Executive Incentive Compensation Plan), equity award (including any award of stock options, shares of restricted stock, deferred stock units or restricted stock units) or other award during the period subject to restatement and the 12-month period following the first public issuance or filing with the SEC of the financial statements that were restated (including, with respect to any such award that is subject to a multi-year vesting period, any compensation vested, awarded or received thereunder during such vesting period if such vesting period includes all or part of such 12-month period); provided, however, that any forfeiture and/or return of compensation by an Executive under this policy will, in any event, be limited to any portion thereof that the Executive would not have received if the consolidated financial statements of the Company and its subsidiaries had been reported properly at the time of first public release or filing with the SEC; provided, further, that this policy shall not apply with respect to any restatement of the consolidated financial statements of the Company and its subsidiaries as to which the need for restatement is determined following the occurrence of a Change in Control (as defined in the Company’s Director and Executive Officer Deferred Compensation Plan, as amended and restated November 8, 2010).   The vesting, payment or other receipt of any rights or benefits awarded by the Company to an Executive which are subject to this policy may be suspended pending an investigation and final determination by the Committee with regard to any alleged misconduct that may be subject to a determination by the Committee under this policy.   By accepting any award as to which this policy applies, each Executive must agree to the foregoing and agree to forfeit and/or return compensation to the Company as provided by this policy, as the same may be modified by, or superseded by a replacement policy adopted by, the Committee, as the Committee may deem necessary to comply with regulations issued by the SEC under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The terms of this policy shall in no way limit the ability of the Company to pursue forfeiture or reclamation of amounts under applicable law as the Compensation Committee may consider appropriate in its reasonable discretion.

Interpretation Contact for the above policy is the Senior Vice President, Chief Human Resources Officer and Executive Vice President, Chief Legal Officer and Corporate Secretary.

 

Exhibit A-1

Exhibit 10.3

CHANGE IN CONTROL AGREEMENT

This Change in Control Agreement (this “Agreement”) is by and among McDermott International, Inc. (the “Company”), [●] (the “Employer”), and [●] (“Executive”).

The Company and the Employer consider it essential to the interests of the Company’s stockholders to secure the continued employment of key management personnel. The Board of Directors of the Company recognizes that the possibility of a Change in Control (as defined in Exhibit A ) exists and that the uncertainty this raises may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders. In order to encourage the continued attention and dedication of key management personnel, this Agreement is being entered into by the Company, the Employer and Executive.

The Company, the Employer and Executive agree as follows:

 

1.	D EFINITIONS . Capitalized terms used but not otherwise defined herein are defined in Exhibit A hereto.

 

2.	S EVERANCE B ENEFITS .

 

(a)

Entitlement to Benefits If Executive experiences a Covered Termination and executes a Waiver and Release in accordance with Section 2(b) below that is no longer subject to rescission, Executive will be entitled to the following:

 

(i)

Accrued Benefits. The Accrued Benefits, payable on the 60th day after the Covered Termination Date, or such earlier date as may be required by applicable law.

 

(ii)

EDCP. As of the Covered Termination Date, a fully vested and non-forfeitable interest in Executive’s account balance in the EDCP, payable in accordance with the terms of the EDCP.

 

(iii)

Unvested Equity-Based Awards. As of the Covered Termination Date, unless otherwise settled in accordance with the provisions of Section 3 of this Agreement and the plans and agreements referred to therein, a fully vested and non-forfeitable interest in any outstanding unvested equity-based awards, and to the extent applicable, payable on the 60th day after the Covered Termination Date; provided that no such award that is subject to Code Section 409A will be paid on a date earlier than is provided in the applicable plan and award agreement.

 

(iv)

Severance Payment Based on Salary. An amount equal to two (2) times the sum of (i) the Salary, and (ii) Executive’s target award under the EICP for the year in which the Covered Termination Date occurs, in a lump sum in cash on the 60th day after the Covered Termination Date.

 

1

(v)

Severance Payment Based on Bonus .

 

(1)

Current Performance Year . An amount equal to the product of (A) the Salary and (B) the Target Bonus Percentage, with the product of (A) and (B) prorated based on the number of days Executive was employed during the bonus year in which Executive’s Covered Termination Date occurs, in a lump sum in cash on the 60th day after the Covered Termination Date.

 

(2)

Prior Performance Year. If a bonus is paid under the EICP after Executive’s Covered Termination Date occurs for the immediately preceding calendar year, then Executive will be entitled to an amount equal to the product of (A) the Salary and (B) the Target Bonus Percentage (or, if greater, the actual amount of the bonus determined under the EICP for such prior calendar year), in a lump sum in cash at the later of (i) the 60th day after the Covered Termination Date and (ii) the time such bonus is paid to other EICP participants.

 

(vi)

Other Compensation. The Other Compensation payable or provided in the manner and time specified in applicable documents governing such amounts.

 

(b)

Waiver and Release. Notwithstanding any provision of this Agreement to the contrary, in order to receive the severance benefits payable under any provision of Section 2(a)(ii), (iii), (iv) and (v) of this Agreement, Executive must first execute an appropriate waiver and release agreement in a form acceptable to the Company (a currently acceptable form is attached hereto as Exhibit  B (the “Waiver and Release”)), whereby Executive shall agree to release and waive, in return for such severance benefits, any claims that Executive may have against the Company and the Employer and their respective Affiliates, directors, officers and other customary persons from any claim or liability arising out of or related to Executive’s employment with or termination of employment from the Employer and any of its Affiliates (except for amounts to which Executive is legally entitled pursuant to employee benefit plans and rights to indemnification); provided, however, such Waiver and Release shall not release any claim or cause of action by or on behalf of Executive for any payment or vested benefit that is due under either this Agreement or any employee benefit plan or program of the Company or the Employer until fully paid prior to the receipt thereof. Executive shall have 21 days (or 45 days, if applicable, as determined by the Company) after receipt of the Waiver and Release to consider and timely execute and return it to the Company. After return, Executive shall have an additional seven days in which Executive can revoke the Waiver and Release; thereafter, the Waiver and Release shall be irrevocable. The Company or the Employer shall provide the Waiver and Release to Executive no later than five days after his Termination Date. If the Waiver and Release is not timely executed and returned, or if it is revoked within the seven-day revocation period, no benefits shall be paid under this Agreement except those to which the Executive has a vested interest without regard to Section 2(a) of this Agreement.

 

2

(c)

Reduction to Avoid Parachute Taxes. Exhibit C hereto sets forth the manner of reduction to be applied to avoid parachute taxes.

In no event shall the payments or benefits provided for in Sections 2(a)(i), 2(a)(iii), 2(a)(iv) and 2(a)(v) above that are not subject to Code Section 409A be paid later than March 15th of the calendar year immediately following the calendar year in which Executive’s Covered Termination Date occurs.

 

3.

C HANGE IN C ONTROL E QUITY -B ASED B ENEFITS . If a Change in Control occurs, any benefits Executive may be entitled to with respect to any equity-based compensation shall be determined in accordance with the applicable plans and award agreements. In the event of any conflict between the terms of any such plan or award agreement and Section 2(a)(iii) of this Agreement, the terms of such plan or award agreement shall control.

 

4.	I NTERNAL R EVENUE C ODE S ECTION  409A .

 

(a)

Compliance . It is the intent of the parties that the provisions of this Agreement either comply with Code Section 409A and the Treasury regulations and guidance issued thereunder or that one or more elements of compensation or benefits be exempt from Code Section 409A. Accordingly, the parties intend that this Agreement be interpreted and operated in a manner consistent with such requirements in order to avoid the application of penalty taxes under Code Section 409A to the extent reasonably practicable. The Company and the Employer shall neither cause nor permit: (i) any payment, benefit or consideration to be substituted for a benefit that is payable under this Agreement if such action would result in the failure of any amount that is subject to Code Section 409A to comply with the applicable requirements of Code Section 409A; or (ii) any adjustments to any equity interest to be made in a manner that would result in the equity interest’s becoming subject to Code Section 409A unless, after such adjustment, the equity interest is in compliance with the requirements of Code Section 409A to the extent applicable. A Covered Termination is an “involuntary separation from service” for purposes of Code Section 409A.

 

(b)

Waiting Period for Specified Employees . Notwithstanding any provision of this Agreement to the contrary, if Executive is a “Specified Employee” (as that term is defined in Code Section 409A) as of Executive’s Covered Termination Date, then any amounts or benefits which are payable under this Agreement upon Executive’s “Separation from Service” (within the meaning of Code Section 409A), which are subject to the provisions of Code Section 409A and not otherwise excluded under Code Section 409A, and would otherwise be payable during the first six-month period following such Separation from Service, shall be paid on the first business day that (i) is at least six months after the date after Executive’s Covered Termination Date or (ii) follows Executive’s date of death, if earlier.

 

3

5.	C ONFIDENTIALITY AND N ON -D ISCLOSURE .

 

(a)

Executive acknowledges that, pursuant to this Agreement, the Company and the Employer agree to provide Executive with Confidential Information regarding the Company and the Employer and their respective businesses and have previously provided Executive other such Confidential Information. In return for this and other consideration provided under this Agreement, Executive agrees that Executive will not, while employed by the Employer or any of its Affiliates and thereafter, disclose or make available to any other person or entity, or use for Executive’s own personal gain, any Confidential Information, except for such disclosures as required in the performance of Executive’s duties hereunder as may otherwise be required by applicable law or legal process (in which case Executive shall notify the Company and the Employer of such legal or judicial proceeding as soon as practicable following Executive’s receipt of notice of such a proceeding, and permit the Company and the Employer to seek to protect its interests and information). For purposes of this Agreement, “Confidential Information” shall mean any and all information, data and knowledge that has been created, discovered, developed or otherwise become known to the Company, the Employer or any of their respective Affiliates or ventures or in which property rights have been assigned or otherwise conveyed to the Company, the Employer or any of their respective Affiliates or ventures, which information, data or knowledge has commercial value in the business in which the Company, the Employer or any of their respective affiliates is engaged, except such information, data or knowledge as is or becomes known to the public without Executive’s violation of any of the terms of this Section 5. By way of illustration, but not limitation, Confidential Information includes business trade secrets, secrets concerning the Company’s and the Employer’s plans and strategies, nonpublic information concerning material market opportunities, technical trade secrets, processes, formulas, know-how, improvements, discoveries, developments, designs, inventions, techniques, marketing plans, manuals, records of research, reports, memoranda, computer software, strategies, forecasts, new products, unpublished financial information, projections, licenses, prices, costs, and employee, customer and supplier lists or parts thereof.

 

(b)

Nothing in this Agreement shall prohibit or restrict Executive from lawfully (i) initiating communications directly with, cooperating with, providing information to, causing information to be provided to, or otherwise assisting in an investigation by any governmental or regulatory agency, entity, or official(s) (collectively, “Governmental Authorities”) regarding a possible violation of any law; (ii) responding to any inquiry or legal process directed to Executive individually from any such Governmental Authorities; (iii) testifying, participating or otherwise assisting in an action or proceeding by any such Governmental Authorities relating to a possible violation of law; or (iv) making any other disclosures that are protected under the whistleblower provisions of any

 

4

applicable law. Additionally, pursuant to the federal Defend Trade Secrets Act of 2016, Executive shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (i) is made (A) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made to Executive’s attorney in relation to a lawsuit for retaliation against Executive for reporting a suspected violation of law; or (iii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. This Agreement does not require Executive to obtain prior authorization from the Company before engaging in any conduct described in this paragraph, or to notify the Company that Executive has engaged in any such conduct.

 

6.

R ETURN OF P ROPERTY . Executive agrees that at the time of Executive’s leaving employ with the Employer or any of its Affiliates, Executive will deliver to the Employer (and will not keep in his possession, recreate or deliver to anyone else) all Confidential Information as well as all other devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, materials, equipment, customer or client lists or information, or any other documents or property (including all reproductions of the aforementioned items) belonging to the Company, the Employer or any of their respective Affiliates, regardless of whether such items were prepared by Executive.

 

7.	N ON -S OLICITATION .

 

(a)

Executive agrees to the non-solicitation provisions of this Section 7: (i) in consideration for the Confidential Information provided by the Company to Executive; and (ii) to protect the Confidential Information of the Company disclosed or entrusted to Executive by the Company or created or developed by Executive for the Company, the business goodwill of the Company developed through the efforts of Executive and the business opportunities disclosed or entrusted to Executive by the Company. Executive agrees that in the event that Executive fails to comply with any of the provisions of this Section 7, Executive will repay to the Company any payments received pursuant to this Agreement and no further benefits will be payable to Executive under this Agreement.

 

(b)

Executive agrees that, while employed by the Employer or any of its Affiliates and for 12 months following a Covered Termination or any termination of employment by Executive, Executive shall not, without the prior written consent of the Company and the Employer, directly or indirectly, (i) hire or induce, entice or solicit (or attempt to induce, entice or solicit) any employee of the Company, the Employer or any of their respective Affiliates or ventures to leave the employment of the Company, the Employer or any of their respective Affiliates or ventures or (ii) solicit or attempt to solicit the business of any customer or acquisition prospect of the Company, the Employer or any of their respective Affiliates or ventures with whom Executive had any actual contact while employed at the Employer.

 

5

(c)

Executive acknowledges that these restrictive covenants under this Agreement, for which Executive received valuable consideration from the Company and the Employer as provided in this Agreement, including, but not limited to the agreement of the Company and the Employer to provide Executive with Confidential Information are ancillary to otherwise enforceable provisions of this Agreement, that the consideration provided by the Company and the Employer gives rise to the interest of each of the Company and the Employer in restraining Executive and that the restrictive covenants are designed to enforce Executive’s consideration or obligations under this Agreement. Additionally, Executive acknowledges that these restrictive covenants contain limitations as to time and scope of activity to be restrained that are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other legitimate business interests of the Company and the Employer, including, but not limited to, the Company’s and the Employer’s need to protect their Confidential Information.

 

(d)

Executive acknowledges and agrees that in the event of any breach by Executive of any of Executive’s covenants or agreements contained herein, including, without limitation, a breach of Section 5, 6 or 7, the Company would suffer substantial and irrevocable harm and money damages would not be a sufficient remedy for such a breach. Therefore, in the event of any such breach and in addition to any other remedy the Company may have at law or in equity in the event of any such breach, the Company shall be entitled to seek and receive specific performance and temporary, preliminary and permanent injunctive relief from any breach of any of the covenants or agreements of this Agreement from any court of competent jurisdiction without the necessity of proving the amount of any actual damages to it resulting from such breach.

 

8.	N OTICES . For purposes of this Agreement, notices and all other communications must be in writing and will be deemed to have been given when personally delivered or when mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

If to the Company or the Employer:		757 N. Eldridge Parkway
		Houston, TX 77079
		Attn: John M. Freeman,
		Executive Vice President,
		Chief Legal Officer and
		Corporate Secretary
If to Executive:

or to such other address as either party may furnish to the other in writing in accordance with this Section.

 

6

9.

A PPLICABLE L AW . The validity, interpretation, construction and performance of this Agreement will be governed by and construed in accordance with the substantive laws of the State of Texas, but without giving effect to any principles of conflict of laws thereunder which would result in the application of the laws of any other jurisdiction.

 

10.

S EVERABILITY . If any provision of this Agreement is determined to be invalid or unenforceable, then the invalidity or unenforceability of that provision will not affect the validity or enforceability of any other provision of this Agreement and all other provisions shall remain in full force and effect.

 

11.	W ITHHOLDING OF T AXES . The Company or the Employer, as applicable, may withhold from any payments under this Agreement all federal, state, local or other taxes as may be required pursuant to any applicable law or governmental regulation or ruling.

 

12.

N O A SSIGNMENT ; S UCCESSORS . Executive’s right to receive payments or benefits under this Agreement shall not be assignable or transferable, whether by pledge, creation of a security interest or otherwise, whether voluntary, involuntary, by operation of law or otherwise, other than a transfer by will or by the laws of descent or distribution, and in the event of any attempted assignment or transfer contrary to this Section 12 the Company or Employer will have no liability to pay any amount so attempted to be assigned or transferred. This Agreement inures to the benefit of and is enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

This Agreement is binding upon and inures to the benefit of the Company and the Employer and their respective successors and assigns (including, without limitation, any company into or with which the Company may merge or consolidate).

 

13.	N UMBER AND G ENDER . Wherever appropriate herein, words used in the singular will include the plural, the plural will include the singular, and the masculine gender will include the feminine gender.

 

14.

C ONFLICTS . This Agreement constitutes the entire understanding of the parties with respect to its subject matter and supersedes any other agreement or other understanding, whether oral or written, express or implied, between them concerning, related to or otherwise in connection with, the subject matter hereof.

 

15.

A MENDMENT AND W AIVER . No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Executive and such officer as may be specifically designated by the Board. No written waiver by any party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this Agreement to be performed by any other party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time (unless specifically provided in such written waiver).

 

7

16.	C OUNTERPARTS . This Agreement may be executed in several counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same instrument.

 

17.

T ERM . This Agreement is effective March 16, 2019 and shall expire on March 15, 2022 (“Term”), unless a Change in Control has occurred during the Term in which event the Agreement shall expire on the later of March 15, 2022 or one year after the Change in Control; provided that terms of this Agreement which must survive the expiration of the Term of this Agreement in order to be effectuated (including the provisions of Sections 5, 6 and 7 and the related definitional provisions) will survive.

[Intentionally Left Blank]

 

8

McDERMOTT INTERNATIONAL, INC.
By:
Name:
Title:
Date:
[●]
By:
Name:
Title:
Date:
EXECUTIVE
By:
Name:
Date:

 

9

EXHIBIT A

D EFINITIONS

The following terms have the meanings set forth below.

“Accrued Benefits” means

 

(i)

any portion of Executive’s Salary earned through the Covered Termination Date and not yet paid;

 

(ii)

reimbursement for any and all amounts advanced in connection with Executive’s employment for reasonable and necessary expenses incurred by Executive through the date of Covered Termination in accordance with the Company’s policies and procedures on reimbursement of expenses; and

 

(iii)

any earned vacation pay not theretofore used or paid in accordance with the Company’s policy for payment of earned and unused vacation time.

“Affiliate” means an Affiliate within the meaning of Rule 12b-2 promulgated under Section 12 of the Exchange Act.

“Board” means the Board of Directors of the Company.

“ Cause ” means

 

(i)

the continued failure of Executive to perform substantially Executive’s duties with the Company (occasioned by reason other than physical or mental illness or disability of Executive) after a written demand for substantial performance is delivered to Executive by the Compensation Committee of the Board which specifically identifies the manner in which the Compensation Committee of the Board or the Chief Executive Officer believes that Executive has not substantially performed Executive’s duties, after which Executive shall have 30 days to defend or remedy such failure to substantially perform Executive’s duties;

 

(ii)

the engaging by Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company; or

 

(iii)

the conviction of Executive with no further possibility of appeal for, or plea of guilty or nolo contendere by Executive to, any felony.

The cessation of employment of Executive under subparagraph (i) and (ii) above shall not be deemed to be for “Cause” unless and until there shall have been delivered to Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Compensation Committee of the Board at a meeting of such Committee called and held for such purpose (after reasonable notice is provided to Executive and Executive is given

 

A-1

an opportunity, together with counsel, to be heard before such Committee), finding that, in the good faith opinion of such Committee, Executive is guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in detail.

A “Change in Control” will be deemed to have occurred upon the occurrence of any of the following:

 

(a)

30% Ownership Change : Any Person, other than an ERISA-regulated pension plan established by the Company, the Employer, or an Affiliate of either of them, makes an acquisition of Outstanding Voting Stock and is, immediately thereafter, the beneficial owner of 30% or more of the then Outstanding Voting Stock, unless such acquisition is made directly from the Company in a transaction approved by a majority of the Incumbent Directors; or any group is formed that is the beneficial owner of 30% or more of the Outstanding Voting Stock; or

 

(b)

Board Majority Change : Individuals who are Incumbent Directors cease for any reason to constitute a majority of the members of the Board; or

 

(c)

Major Mergers and Acquisitions : Consummation of a Business Combination unless, immediately following such Business Combination, (i) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Voting Stock immediately before such Business Combination beneficially own, directly or indirectly, at least 50% of the then outstanding shares of voting stock of the parent corporation resulting from such Business Combination in substantially the same relative proportions as their ownership, immediately before such Business Combination, of the Outstanding Voting Stock, (ii) if the Business Combination involves the issuance or payment by the Company of consideration to another entity or its shareholders, the total fair market value of such consideration plus the principal amount of the consolidated long-term debt of the entity or business being acquired (in each case, determined as of the date of consummation of such Business Combination by a majority of the Incumbent Directors) does not exceed 50% of the sum of the fair market value of the Outstanding Voting Stock plus the principal amount of the Company’s consolidated long-term debt (in each case, determined immediately before such consummation by a majority of the Incumbent Directors), (iii) no Person (other than any corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of the then outstanding shares of voting stock of the parent corporation resulting from such Business Combination and (iv) a majority of the members of the board of directors of the parent corporation resulting from such Business Combination were Incumbent Directors of the Company immediately before consummation of such Business Combination; or

 

A-2

(d)

Major Asset Dispositions : Consummation of a Major Asset Disposition unless, immediately following such Major Asset Disposition, (i) individuals and entities that were beneficial owners of the Outstanding Voting Stock immediately before such Major Asset Disposition beneficially own, directly or indirectly, at least 50% of the then outstanding shares of voting stock of the Company (if it continues to exist) and of the entity that acquires the largest portion of such assets (or the entity, if any, that owns a majority of the outstanding voting stock of such acquiring entity) and (ii) a majority of the members of the Board (if it continues to exist) and of the entity that acquires the largest portion of such assets (or the entity, if any, that owns a majority of the outstanding voting stock of such acquiring entity) were Incumbent Directors of the Company immediately before consummation of such Major Asset Disposition; or

 

(e)

Other Circumstances : Such other circumstances as may be deemed by the Board in its sole discretion to constitute a change in control of the Company.

For purposes of the definition of a “Change in Control,”

 

(1)

“Person” means an individual, entity or group;

 

(2)

“group” has the same meaning as used in Section 13(d)(3) of the Exchange Act;

 

(3)

“beneficial owner” is used as it is defined for purposes of Rule 13d-3 under the Exchange Act;

 

(4)

“Outstanding Voting Stock” means outstanding voting securities of the Company entitled to vote generally in the election of directors; and any specified percentage or portion of the Outstanding Voting Stock (or of other voting stock) is determined based on the combined voting power of such securities;

 

(5)

“Incumbent Director” means a director of the Company (x) who was a director of the Company on the effective date of this Agreement or (y) who becomes a director after such date and whose election, or nomination for election by the Company’s shareholders, was approved by a vote of a majority of the Incumbent Directors at the time of such election or nomination, except that any such director will not be deemed an Incumbent Director if his or her initial assumption of office occurs as a result of an actual or threatened election contest or other actual or threatened solicitation of proxies by or on behalf of a Person other than the Board;

 

A-3

(6)

“election contest” is used as it is defined for purposes of Rule 14a-11 under the Exchange Act;

 

(7)

“Business Combination” means

 

(x)

a merger or consolidation involving the Company or its stock, or

 

(y)

an acquisition by the Company, directly or through one or more subsidiaries, of another entity or its stock or assets;

 

(8)

“parent corporation resulting from a Business Combination” means the Company if its stock is not acquired or converted in the Business Combination and otherwise means the entity which as a result of such Business Combination owns the Company or all or substantially all the Company’s assets either directly or through one or more subsidiaries; and

 

(9)

“Major Asset Disposition” means the sale or other disposition in one transaction or a series of related transactions of 50% or more of the assets of the Company and its subsidiaries on a consolidated basis; and any specified percentage or portion of the assets of the Company will be based on fair market value, as determined by a majority of the Incumbent Directors.

“Code” means the Internal Revenue Code of 1986, as amended.

“Company” means McDermott International, Inc., and, except for purposes of determining whether a Change in Control has occurred, any successor thereto.

“Confidential Information” means any and all information, data and knowledge that has been created, discovered, developed or otherwise become known to the Company, the Employer or any of their respective Affiliates or in which property rights have been assigned or otherwise conveyed to the Company, the Employer or any of their respective Affiliates, which information, data or knowledge has commercial value in the business in which the Company, the Employer or any of their respective Affiliates or ventures is engaged, except such information, data or knowledge as is or becomes known to the public without violation of the terms of this Agreement. By way of illustration, but not limitation, Confidential Information includes business trade secrets, secrets concerning the Company’s, the Employer’s or any of their respective Affiliates’ plans and strategies, nonpublic information concerning material market opportunities, technical trade secrets, processes, formulas, know-how, improvements, discoveries, developments, designs, inventions, techniques, marketing plans, manuals, records of research, reports, memoranda, computer software, strategies, forecasts, new products, unpublished financial information, projections, licenses, prices, costs, and employee, customer and supplier lists.

 

A-4

“Covered Termination” means a termination of Executive’s employment (such that Executive ceases to be employed by the Employer, the Company or any of their respective Affiliates) that is a “Separation from Service” (as defined in Code Section 409A and the Treasury regulations and guidance issued thereunder) within the one-year period following a Change in Control during the Term of this Agreement due to:

 

(a)

an involuntary termination that does not result from any of the following:

 

(1)

death;

 

(2)

Disability; or

 

(3)

termination for Cause; or

 

(b)

a termination by Executive for Good Reason.

“Covered Termination Date” means (i) if Executive’s employment is terminated for Cause, the date on which the Company delivers to Executive the requisite resolution, or, with respect to a termination under subparagraph (iii) of the definition of Cause, the date on which the Employer notifies Executive of such termination, (ii) if Executive’s employment is terminated by the Employer for a reason other than Cause or Executive’s death, the date on which the Employer notifies Executive of such termination, (iii) if Executive’s employment is terminated by Executive for Good Reason, the date on which Executive notifies the Employer of such termination (after having given the Company notice and a 30-day cure period), or (iv) if Executive’s employment is terminated by reason of death, the date of death of Executive.

“Disability” means circumstances which would qualify Executive for long-term disability benefits under the Company’s or the Employer’s long-term disability plan, whether or not Executive is covered under such plan.

“EDCP” means the McDermott International, Inc. Director and Executive Deferred Compensation Plan, as in effect on the Covered Termination Date.

“EICP” means the McDermott International, Inc. Executive Incentive Compensation Plan, or any successor plan thereto.

“Employer” means [●], and any successor thereto.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Excise Tax” means any excise tax imposed under Code Section 4999.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Good Reason” means any one or more of the following events which occurs following a Change in Control:

 

(a)

a material diminution in the duties or responsibilities of Executive from those applicable immediately before the date on which a Change in Control occurs;

 

A-5

(b)

a material reduction in Executive’s annual Salary as in effect on the Effective Date of this Agreement or as the same may be increased from time to time;

 

(c)

the failure by the Company or the Employer to continue in effect any compensation plan in which Executive participates immediately before the Change in Control which is material to Executive’s total compensation, unless a comparable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company or the Employer to continue Executive’s participation therein (or in such substitute or alternative plan) on a basis not materially less favorable than existed immediately before the Change in Control, unless the action by the Company or the Employer applies to all similarly situated employees;

 

(d)

the failure by the Company and the Employer to continue to provide Executive with material benefits in the aggregate that are substantially similar to those enjoyed by Executive under any of the Company’s (or the Employer’s or their respective Affiliates’) pension, savings, life insurance, medical, health and accident, or disability plans in which Executive was participating immediately before the Change in Control if such benefits are material to Executive’s total compensation, the taking of any other action by the Company or the Employer which would directly or indirectly materially reduce any of such benefits or deprive Executive of any fringe benefit enjoyed by Executive at the time of the Change in Control if such fringe benefit is material to Executive’s total compensation, unless the action by the Company or the Employer applies to all similarly situated employees; or

 

(e)

a change in the location of Executive’s principal place of employment with the Employer or the Company by more than 50 miles from the location where Executive was principally employed immediately before the Change in Control without Executive’s consent.

If a Change in Control occurs and any of the events described above occurs prior to the first anniversary of such Change in Control (an “Event”), Executive shall give the Company written notice (the “Executive Notice”) within 60 days following Executive’s knowledge of an Event that Executive intends to terminate employment as a result. The Company shall have 30 days following receipt of the Executive Notice in which to cure the Event. If the Company does not take such action within that time, the Event shall constitute Good Reason. If Executive does not provide the Executive Notice within 60 days as required above then the Event shall not constitute Good Reason, and thereafter, for purposes of determining whether Executive has Good Reason, Executive’s terms and conditions of employment after the occurrence of the Event shall be substituted for those terms and conditions of Executive’s employment in effect immediately prior to the date of this Agreement.

 

A-6

“Other Compensation” shall mean all payments and benefits to which Executive may be entitled under the terms of any applicable compensation arrangement or benefit plan or program of the Company that do not specify the time of distribution, other than such payments and benefits provided for under Section 2(a)(i) through Section 2(a)(v) of this Agreement; provided that Other Compensation shall not include any entitlement to severance under any severance policy of the Company generally applicable to the salaried employees of the Company.

“Salary” means Executive’s annual base salary as in effect immediately before the termination of Executive’s employment or, if higher, the base salary in effect immediately before the first event or circumstance constituting Good Reason.

“Target Bonus Percentage” means Executive’s target incentive award opportunity under the EICP in effect immediately before the termination of Executive’s employment or, if higher, immediately before the first event or circumstance constituting Good Reason.

 

A-7

EXHIBIT B

W AIVER A ND R ELEASE

FORM WAIVER AND RELEASE

Pursuant to the terms of the Change in Control Agreement made as of March 16, 2019, by and among McDermott International, Inc. (the “Company”), [●] (the “Employer”) and me, and in consideration of the payments made to me and other benefits to be received by me pursuant thereto, I, [●], do freely and voluntarily enter into this WAIVER AND RELEASE (the “Release”), which shall become effective and binding on the eighth day following my signing the Release as provided herein (the “Effective Date”). It is my intent to be legally bound, according to the terms set forth below.

In exchange for the payments and other benefits to be provided to me by the Company and the Employer pursuant to Section 2 of the Change in Control Agreement (the “Separation Payment” and “Separation Benefits”), I hereby agree and state as follows:

 

1.

I, individually and on behalf of my heirs, personal representatives, successors, and assigns, release, waive, and discharge the Company and the Employer, their respective predecessors, successors, parents, subsidiaries, merged entities, operating units, affiliates, divisions, insurers, administrators, trustees, and the agents, representatives, officers, directors, shareholders, employees and attorneys of each of the foregoing (hereinafter, “Released Parties”), both individually and in their official capacities, from all claims, debts, liabilities, demands, obligations, promises, acts, agreements, costs, expenses, damages, actions, and causes of action, whether in law or in equity, whether known or unknown, suspected or unsuspected, arising from my employment and termination from employment with the Employer and its affiliates, including, but not limited to, any and all claims pursuant to Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991 (42 U.S.C. § 2000e, et seq .), which prohibits discrimination in employment based on race, color, national origin, religion or sex; the Civil Rights Act of 1866 (42 U.S.C. §§1981, 1983 and 1985), which prohibits violations of civil rights; the Age Discrimination in Employment Act of 1967, as amended, and as further amended by the Older Workers Benefit Protection Act (29 U.S.C. §621, et seq .), which prohibits age discrimination in employment; the Employee Retirement Income Security Act of 1974, as amended (29 U.S.C. § 1001, et seq . ), which protects certain employee benefits; the Americans with Disabilities Act of 1990, as amended (42 U.S.C. § 12101, et seq .), which prohibits discrimination against the disabled; the Family and Medical Leave Act of 1993 (29 U.S.C. § 2601, et seq .), which provides medical and family leave; the Fair Labor Standards Act (29 U.S.C. § 201, et seq. ), including the wage and hour laws relating to payment of wages; and all other federal, state and local laws and regulations regarding employment or compensation or prohibiting employment discrimination, or pursuant to any contract I may have with the Released Party, including the Change in Control Agreement [and             ]; provided that the foregoing release shall not apply to any right explicitly set forth in the Change in Control Agreement to any payments and benefits to be provided in connection with the termination of my employment. This Release also includes, but is not limited to, a release of any claims for breach of contract, mental pain,

 

B-1

suffering and anguish, emotional upset, impairment of economic opportunities, unlawful interference with employment rights, defamation, intentional or negligent infliction of emotional distress, fraud, wrongful termination, wrongful discharge in violation of public policy, breach of any express or implied covenant of good faith and fair dealing, that the Company, the Employer or any of their respective Affiliates has dealt with me unfairly or in bad faith, and all other common law contract and tort claims. This Release is not intended to indicate that any such claims exist or that, if they do exist, they are meritorious. Rather, I am simply agreeing that, in exchange for the consideration received by me through this Release, any and all Released Claims that I may have against any Released Party, regardless of whether they actually exist, are expressly settled, compromised and waived. This Release includes matters attributable to the sole or partial negligence (whether gross or simple) or other fault, including strict liability, of any Released Party.

Notwithstanding the foregoing, I am not waiving any rights or claims that may arise after this Release is signed by me. Moreover, this Release does not apply to any claims or rights which, by operation of law, cannot be waived. Nothing in this Release shall affect in any way my rights of indemnification and directors and officers liability insurance coverage provided to me pursuant to the Company’s by-laws and/or pursuant to any agreement in effect prior to the effective date of my termination, which shall continue in full force and effect, in accordance with their respective terms, following the effective date of this Release.

 

2.

I forever waive and relinquish any right or claim to reinstatement to active employment with the Company, the Employer, their respective affiliates, subsidiaries, divisions, parent, and successors. I further acknowledge that neither the Company nor the Employer has any obligation to rehire or return me to active duty at any time in the future.

 

3.

I acknowledge that all agreements applicable to my employment respecting noncompetition, nonsolicitation and the confidential or proprietary information of the Company and the Employer and their respective affiliates shall continue in full force and effect in accordance with the terms of such agreements.

 

4.

I agree that I will refrain from any libel, slander, defamation or other disparaging comments about the Company, the Employer, their respective affiliates, or any current or former officer, director or employee of the Company, the Employer or any of their respective affiliates. However, I understand that nothing in this Release prohibits me from filing a charge with, or reporting possible violations of federal law or regulation to any governmental agency or entity, including, but not limited to, the U.S. Equal Opportunity Commission, the Department of Justice, the Securities and Exchange Commission, Congress, and any Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. Nothing in this Release limits my ability to communicate with any government agencies or participate in any investigation or proceeding that may be conducted by any government agency, including providing documents or other information, without notice to the Company. I understand that I will not be in breach of the covenant contained in this paragraph solely by reason of my testimony which is compelled by process of law.

 

B-2

5.	I hereby acknowledge and affirm as follows:

 

a.

I have been advised to consult with an attorney prior to signing this Release and have had adequate opportunity to do so.

 

b.

I have been extended a period of [21] [45] days in which to consider this Release.

 

c.

I understand that for a period of seven days following my execution of this Release, I may revoke the Release by notifying Company and the Employer, in writing, of my desire to do so. I understand that after the seven-day period has elapsed and I have not revoked the Release, it shall then become effective and enforceable. I understand that the Separation Payment will not be made under the Change in Control Agreement and I will not be entitled to the Severance Benefits made under the Change in Control Agreement until after the seven-day period has elapsed and I have not revoked the Release.

 

d.

I acknowledge that I have received payment for all wages due at time of my employment termination, including reimbursement for any and all business-related expenses. I further acknowledge that the Separation Payment and the Separation Benefits are consideration to which I am not otherwise entitled under any Company plan, program, or prior agreement.

 

e.

I certify that I have returned all property of the Company, the Employer and their respective affiliates, including, but not limited to, keys, credit and fuel cards, computers, cell phones, and other electronic devices, files, lists, and documents of all kinds regardless of the medium in which they are maintained.

 

f.

I have carefully read the contents of this Release and I understand its contents. I am executing this Release voluntarily, knowingly, and without any duress or coercion.

 

6.

I acknowledge that this Release shall not be construed as an admission by any of the Released Parties of any liability whatsoever, or as an admission by any of the Released Parties of any violation of my rights or the rights of any other person, or any violation of any order, law, statute, duty or contract.

 

7.

I agree that the terms and conditions of this Release are confidential and that I will not, directly or indirectly, disclose the existence of or terms of this Release to anyone other than my attorney or tax advisor, except to the extent such disclosure may be required for accounting or tax reporting purposes or otherwise be required by law or direction of a court. Nothing in this provision shall be construed to prohibit me from disclosing this Release to the Equal Employment Opportunity Commission in connection with any complaint or charge submitted to that agency.

 

B-3

8.	In the event that any provision of this Release should be held void, voidable, or unenforceable, the remaining portions shall remain in full force and effect.

 

9.

I hereby declare that this Release constitutes the entire and final settlement between me and the Company and the Employer, superseding any and all prior agreements, and that neither the Company nor the Employer has made any promise or offered any other agreement, except those expressed in this Release, to induce or persuade me to enter into this Release.

 

B-4

IN WITNESS WHEREOF, I have signed this Release on the      day of                 , 20    .

 

Printed Name

 

B-5

EXHIBIT C

Excise Tax Modified Cutback Provisions

Anything in this Agreement to the contrary notwithstanding, in the event the Firm (as defined below) shall determine that Executive shall become entitled to payments and/or benefits provided by this Agreement which would be subject to the excise tax imposed by Code Section 4999 (the “ Payments ”), the Firm shall determine whether to reduce any of the Payments to the Reduced Amount (as defined below). The Payments shall be reduced to the Reduced Amount only if the Firm determines that Executive would have a greater Net After-Tax Receipt (as defined below) of aggregate Payments if the Executive’s Payments were reduced to the Reduced Amount. If such a determination is not made by the Firm, Executive shall receive all Payments to which Executive is entitled under this Agreement.

If the Firm determines that aggregate Payments should be reduced to the Reduced Amount, the Company shall promptly give Executive notice to that effect and a copy of the detailed calculation thereof. All determinations made by the Firm under this Exhibit  C shall be binding upon the Company and Executive absent manifest error and shall be made as soon as reasonably practicable but in no event later than 15 business days of the receipt of notice from the Company that there has been a Payment, or such earlier time as is requested by the Company. For purposes of reducing the Payments to the Reduced Amount, only amounts payable under this Agreement (and no other Payments) shall be reduced. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing, in order, cash payments otherwise due under Sections 2(a)(iv), 2(a)(v)(1) and 2(a)(v)(2) of this Agreement, and then by reducing equity-based compensation otherwise due under Section 2(a)(iii) of this Agreement in chronological order with the most recent equity based compensation awards reduced first.

As a result of the uncertainty in the application of Code Section 4999 at the time of the initial determination by the Firm hereunder, it is possible that amounts will have been paid or distributed by the Company to or for the benefit of Executive pursuant to this Agreement which should not have been so paid or distributed (“ Overpayment ”) or that additional amounts which will have not been paid or distributed by the Company to or for the benefit of Executive pursuant to this Agreement could have been so paid or distributed (“ Underpayment ”), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that the Firm, based upon the assertion of a deficiency by the Internal Revenue Service against either the Company or Executive which the Firm believes has a high probability of success determines that an Overpayment has been made, Executive shall pay any such Overpayment to the Company together with interest at the applicable federal rate provided for in Code Section 7872(f)(2); provided , however, that no amount shall be payable by Executive to the Company if and to the extent such payment would not either reduce the amount on which Executive is subject to tax under Code Sections 1 and 4999 or generate a refund of such taxes. In the event that the Firm, based upon controlling precedent or substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be paid promptly (but in no event later than 60 days following the date on which the Underpayment is determined) by the Company to or for the benefit of Executive together with interest at the applicable federal rate provided for in Code Section 7872(f)(2).

 

C-1

For purposes hereof, the following terms have the meanings set forth below:

“ Firm ” shall mean an internationally recognized accounting or employee benefits consulting firm selected by the Company with the input of Executive (but without Executive’s consent) and which shall not, during the one year preceding the date of its selection, have acted in any way on behalf of the Company or its affiliated companies.

“ Net After-Tax Receipt ” shall mean the present value (as determined in accordance with Code Sections 280G(b)(2)(A)(ii) and 280G(d)(4)) of a Payment net of all taxes imposed on Executive with respect thereto under Code Sections 1 and 4999 and under applicable state and local laws, determined by applying the highest marginal rate under Code Section 1 and under state and local laws which applied to the Executive’s taxable income for the immediately preceding taxable year, or such other rate(s) as Executive certifies, in Executive’s sole discretion, as likely to apply to Executive in the relevant tax year(s).

“ Reduced Amount ” shall mean the greatest amount of Payments that can be paid that would not result in the imposition of the excise tax under Code Section 4999 if the Firm determines to reduce Payments pursuant to the first paragraph of this Exhibit C .

 

C-2

Exhibit 10.4

CHANGE IN CONTROL AGREEMENT

This Change in Control Agreement (this “Agreement”) is by and among McDermott International, Inc. (the “Company”), [●] (the “Employer”), and [●] (“Executive”).

The Company and the Employer consider it essential to the interests of the Company’s stockholders to secure the continued employment of key management personnel. The Board of Directors of the Company recognizes that the possibility of a Change in Control (as defined in Exhibit A ) exists and that the uncertainty this raises may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders. In order to encourage the continued attention and dedication of key management personnel, this Agreement is being entered into by the Company, the Employer and Executive.

The Company, the Employer and Executive agree as follows:

 

1.	D EFINITIONS . Capitalized terms used but not otherwise defined herein are defined in Exhibit A hereto.

 

2.	S EVERANCE B ENEFITS .

 

(a)

Entitlement to Benefits If Executive experiences a Covered Termination and executes a Waiver and Release in accordance with Section 2(b) below that is no longer subject to rescission, Executive will be entitled to the following:

 

(i)

Accrued Benefits. The Accrued Benefits, payable on the 60th day after the Covered Termination Date, or such earlier date as may be required by applicable law.

 

(ii)

EDCP. As of the Covered Termination Date, a fully vested and non-forfeitable interest in Executive’s account balance in the EDCP, payable in accordance with the terms of the EDCP.

 

(iii)

Unvested Equity-Based Awards. As of the Covered Termination Date, unless otherwise settled in accordance with the provisions of Section 3 of this Agreement and the plans and agreements referred to therein, a fully vested and non-forfeitable interest in any outstanding unvested equity-based awards, and to the extent applicable, payable on the 60th day after the Covered Termination Date; provided that no such award that is subject to Code Section 409A will be paid on a date earlier than is provided in the applicable plan and award agreement.

 

(iv)

Severance Payment Based on Salary. An amount equal to two (2) times the sum of (i) the Salary, and (ii) Executive’s target award under the EICP for the year in which the Covered Termination Date occurs, in a lump sum in cash on the 60th day after the Covered Termination Date.

 

1

(v)

Severance Payment Based on Bonus .

 

(1)

Current Performance Year . An amount equal to the product of (A) the Salary and (B) the Target Bonus Percentage, with the product of (A) and (B) prorated based on the number of days Executive was employed during the bonus year in which Executive’s Covered Termination Date occurs, in a lump sum in cash on the 60th day after the Covered Termination Date.

 

(2)

Prior Performance Year. If a bonus is paid under the EICP after Executive’s Covered Termination Date occurs for the immediately preceding calendar year, then Executive will be entitled to an amount equal to the product of (A) the Salary and (B) the Target Bonus Percentage (or, if greater, the actual amount of the bonus determined under the EICP for such prior calendar year), in a lump sum in cash at the later of (i) the 60th day after the Covered Termination Date and (ii) the time such bonus is paid to other EICP participants.

 

(vi)

Other Compensation. The Other Compensation payable or provided in the manner and time specified in applicable documents governing such amounts.

 

(b)

Waiver and Release. Notwithstanding any provision of this Agreement to the contrary, in order to receive the severance benefits payable under any provision of Section 2(a)(ii), (iii), (iv) and (v) of this Agreement, Executive must first execute an appropriate waiver and release agreement in a form acceptable to the Company (a currently acceptable form is attached hereto as Exhibit  B (the “Waiver and Release”)), whereby Executive shall agree to release and waive, in return for such severance benefits, any claims that Executive may have against the Company and the Employer and their respective Affiliates, directors, officers and other customary persons from any claim or liability arising out of or related to Executive’s employment with or termination of employment from the Employer and any of its Affiliates (except for amounts to which Executive is legally entitled pursuant to employee benefit plans and rights to indemnification); provided, however, such Waiver and Release shall not release any claim or cause of action by or on behalf of Executive for any payment or vested benefit that is due under either this Agreement or any employee benefit plan or program of the Company or the Employer until fully paid prior to the receipt thereof. Executive shall have 21 days (or 45 days, if applicable, as determined by the Company) after receipt of the Waiver and Release to consider and timely execute and return it to the Company. After return, Executive shall have an additional seven days in which Executive can revoke the Waiver and Release; thereafter, the Waiver and Release shall be irrevocable. The Company or the Employer shall provide the Waiver and Release to Executive no later than five days after his Termination Date. If the Waiver and Release is not timely executed and returned, or if it is revoked within the seven-day revocation period, no benefits shall be paid under this Agreement except those to which the Executive has a vested interest without regard to Section 2(a) of this Agreement.

 

2

(c)

Reduction to Avoid Parachute Taxes. Exhibit C hereto sets forth the manner of reduction to be applied to avoid parachute taxes.

In no event shall the payments or benefits provided for in Sections 2(a)(i), 2(a)(iii), 2(a)(iv) and 2(a)(v) above that are not subject to Code Section 409A be paid later than March 15th of the calendar year immediately following the calendar year in which Executive’s Covered Termination Date occurs.

 

3.

C HANGE IN C ONTROL E QUITY -B ASED B ENEFITS . If a Change in Control occurs, any benefits Executive may be entitled to with respect to any equity-based compensation shall be determined in accordance with the applicable plans and award agreements. In the event of any conflict between the terms of any such plan or award agreement and Section 2(a)(iii) of this Agreement, the terms of such plan or award agreement shall control.

 

4.	I NTERNAL R EVENUE C ODE S ECTION  409A .

 

(a)

Compliance . It is the intent of the parties that the provisions of this Agreement either comply with Code Section 409A and the Treasury regulations and guidance issued thereunder or that one or more elements of compensation or benefits be exempt from Code Section 409A. Accordingly, the parties intend that this Agreement be interpreted and operated in a manner consistent with such requirements in order to avoid the application of penalty taxes under Code Section 409A to the extent reasonably practicable. The Company and the Employer shall neither cause nor permit: (i) any payment, benefit or consideration to be substituted for a benefit that is payable under this Agreement if such action would result in the failure of any amount that is subject to Code Section 409A to comply with the applicable requirements of Code Section 409A; or (ii) any adjustments to any equity interest to be made in a manner that would result in the equity interest’s becoming subject to Code Section 409A unless, after such adjustment, the equity interest is in compliance with the requirements of Code Section 409A to the extent applicable. A Covered Termination is an “involuntary separation from service” for purposes of Code Section 409A.

 

(b)

Waiting Period for Specified Employees . Notwithstanding any provision of this Agreement to the contrary, if Executive is a “Specified Employee” (as that term is defined in Code Section 409A) as of Executive’s Covered Termination Date, then any amounts or benefits which are payable under this Agreement upon Executive’s “Separation from Service” (within the meaning of Code Section 409A), which are subject to the provisions of Code Section 409A and not otherwise excluded under Code Section 409A, and would otherwise be payable during the first six-month period following such Separation from Service, shall be paid on the first business day that (i) is at least six months after the date after Executive’s Covered Termination Date or (ii) follows Executive’s date of death, if earlier.

 

3

5.	C ONFIDENTIALITY AND N ON -D ISCLOSURE .

 

(a)

Executive acknowledges that, pursuant to this Agreement, the Company and the Employer agree to provide Executive with Confidential Information regarding the Company and the Employer and their respective businesses and have previously provided Executive other such Confidential Information. In return for this and other consideration provided under this Agreement, Executive agrees that Executive will not, while employed by the Employer or any of its Affiliates and thereafter, disclose or make available to any other person or entity, or use for Executive’s own personal gain, any Confidential Information, except for such disclosures as required in the performance of Executive’s duties hereunder as may otherwise be required by applicable law or legal process (in which case Executive shall notify the Company and the Employer of such legal or judicial proceeding as soon as practicable following Executive’s receipt of notice of such a proceeding, and permit the Company and the Employer to seek to protect its interests and information). For purposes of this Agreement, “Confidential Information” shall mean any and all information, data and knowledge that has been created, discovered, developed or otherwise become known to the Company, the Employer or any of their respective Affiliates or ventures or in which property rights have been assigned or otherwise conveyed to the Company, the Employer or any of their respective Affiliates or ventures, which information, data or knowledge has commercial value in the business in which the Company, the Employer or any of their respective affiliates is engaged, except such information, data or knowledge as is or becomes known to the public without Executive’s violation of any of the terms of this Section 5. By way of illustration, but not limitation, Confidential Information includes business trade secrets, secrets concerning the Company’s and the Employer’s plans and strategies, nonpublic information concerning material market opportunities, technical trade secrets, processes, formulas, know-how, improvements, discoveries, developments, designs, inventions, techniques, marketing plans, manuals, records of research, reports, memoranda, computer software, strategies, forecasts, new products, unpublished financial information, projections, licenses, prices, costs, and employee, customer and supplier lists or parts thereof.

 

(b)

Nothing in this Agreement shall prohibit or restrict Executive from lawfully (i) initiating communications directly with, cooperating with, providing information to, causing information to be provided to, or otherwise assisting in an investigation by any governmental or regulatory agency, entity, or official(s) (collectively, “Governmental Authorities”) regarding a possible violation of any law; (ii) responding to any inquiry or legal process directed to Executive individually from any such Governmental Authorities; (iii) testifying, participating or otherwise assisting in an action or proceeding by any such Governmental Authorities relating to a possible violation of law; or (iv) making any other disclosures that are protected under the whistleblower provisions of any

 

4

applicable law. Additionally, pursuant to the federal Defend Trade Secrets Act of 2016, Executive shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (i) is made (A) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made to Executive’s attorney in relation to a lawsuit for retaliation against Executive for reporting a suspected violation of law; or (iii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. This Agreement does not require Executive to obtain prior authorization from the Company before engaging in any conduct described in this paragraph, or to notify the Company that Executive has engaged in any such conduct.

 

6.

R ETURN OF P ROPERTY . Executive agrees that at the time of Executive’s leaving employ with the Employer or any of its Affiliates, Executive will deliver to the Employer (and will not keep in his possession, recreate or deliver to anyone else) all Confidential Information as well as all other devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, materials, equipment, customer or client lists or information, or any other documents or property (including all reproductions of the aforementioned items) belonging to the Company, the Employer or any of their respective Affiliates, regardless of whether such items were prepared by Executive.

 

7.	N ON -C OMPETITION ; N ON -S OLICITATION .

 

(a)

Executive agrees to the non-competition and non-solicitation provisions of this Section 7: (i) in consideration for the Confidential Information provided by the Company to Executive; and (ii) to protect the Confidential Information of the Company disclosed or entrusted to Executive by the Company or created or developed by Executive for the Company, the business goodwill of the Company developed through the efforts of Executive and the business opportunities disclosed or entrusted to Executive by the Company. Executive agrees that in the event that Executive fails to comply with any of the provisions of this Section 7, Executive will repay to the Company any payments received pursuant to this Agreement and no further benefits will be payable to Executive under this Agreement.

 

(b)

Executive agrees that, while employed by the Employer or any of its Affiliates and for 12 months following a Covered Termination or any termination of employment by Executive, Executive shall not, without the prior written consent of the Company and the Employer, directly or indirectly, (i) carry on or engage in any Competing Business (as defined below) in the Restricted Area (as defined below); and (ii) own, manage, operate, join, become an employee, partner, owner or member of (or an independent contractor to), control or participate in or loan money to, sell or lease equipment to or sell or lease real property to any Person that engages in a Competing Business in the Restricted Area.

 

5

(c)

Notwithstanding the restrictions contained in Section 7(b), Executive may own an aggregate of not more than 1% of the outstanding capital stock or other equity security of any class of any corporation or other entity engaged in a Competing Business, if such capital stock or other equity security is listed on a national securities exchange or regularly traded in the over-the-counter market by a member of a national securities exchange, without violating the provisions of Section 7(b);, provided that Executive does not have the power, directly or indirectly, to control or direct the management or affairs of any such corporation or other entity and is not involved in the management of such corporation.

 

(d)

Executive agrees that, while employed by the Employer or any of its Affiliates and for 12 months following a Covered Termination or any voluntary termination of employment by Executive, Executive shall not, without the prior written consent of the Company and the Employer, directly or indirectly, (i) hire or induce, entice or solicit (or attempt to induce, entice or solicit) any employee of the Company, the Employer or any of their respective Affiliates or ventures to leave the employment of the Company, the Employer or any of their respective Affiliates or ventures or (ii) solicit or attempt to solicit the business of any customer or acquisition prospect of the Company, the Employer or any of their respective Affiliates or ventures with whom Executive had any actual contact while employed at the Employer.

 

(e)

Executive acknowledges that these restrictive covenants under this Agreement, for which Executive received valuable consideration from the Company and the Employer as provided in this Agreement, including, but not limited to the agreement of the Company and the Employer to provide Executive with Confidential Information are ancillary to otherwise enforceable provisions of this Agreement, that the consideration provided by the Company and the Employer gives rise to the interest of each of the Company and the Employer in restraining Executive and that the restrictive covenants are designed to enforce Executive’s consideration or obligations under this Agreement. Additionally, Executive acknowledges that these restrictive covenants contain limitations as to time and scope of activity to be restrained that are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other legitimate business interests of the Company and the Employer, including, but not limited to, the Company’s and the Employer’s need to protect their Confidential Information.

 

(f)

For purposes of this Agreement, the following terms shall have the following meanings: “Business” means any business in which the Company is engaged or in which the Company has taken material steps to engage during the prior two years of Executive’s employment; “Competing Business” means any Person which, wholly or in any significant part, engages in any business competing with the Business in the Restricted Area; and “Restricted Area” means any state or, if outside the United States, any country or subdivision thereof in which the Company (i) is then currently engaged in the Business, (ii) has engaged in the Business during the prior two years of Executive’s employment, or (iii) is actively pursuing business opportunities for the Business, and in each such case Executive

 

6

either (x) received Confidential Information about the Company’s operations in such location or (y) worked in such location during the prior two years of Executive’s employment.

 

(g)

Executive acknowledges and agrees that in the event of any breach by Executive of any of Executive’s covenants or agreements contained herein, including, without limitation, a breach of Section 5, 6 or 7, the Company would suffer substantial and irrevocable harm and money damages would not be a sufficient remedy for such a breach. Therefore, in the event of any such breach and in addition to any other remedy the Company may have at law or in equity in the event of any such breach, the Company shall be entitled to seek and receive specific performance and temporary, preliminary and permanent injunctive relief from any breach of any of the covenants or agreements of this Agreement from any court of competent jurisdiction without the necessity of proving the amount of any actual damages to it resulting from such breach.

 

8.	N OTICES . For purposes of this Agreement, notices and all other communications must be in writing and will be deemed to have been given when personally delivered or when mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

If to the Company or the Employer:		757 N. Eldridge Parkway
		Houston, TX 77079
		Attn: John M. Freeman,
		Executive Vice President,
		Chief Legal Officer and
		Corporate Secretary
If to Executive:

or to such other address as either party may furnish to the other in writing in accordance with this Section.

 

9.

A PPLICABLE L AW . The validity, interpretation, construction and performance of this Agreement will be governed by and construed in accordance with the substantive laws of the State of Texas, but without giving effect to any principles of conflict of laws thereunder which would result in the application of the laws of any other jurisdiction.

 

10.

S EVERABILITY . If any provision of this Agreement is determined to be invalid or unenforceable, then the invalidity or unenforceability of that provision will not affect the validity or enforceability of any other provision of this Agreement and all other provisions shall remain in full force and effect.

 

7

11.	W ITHHOLDING OF T AXES . The Company or the Employer, as applicable, may withhold from any payments under this Agreement all federal, state, local or other taxes as may be required pursuant to any applicable law or governmental regulation or ruling.

 

12.

N O A SSIGNMENT ; S UCCESSORS . Executive’s right to receive payments or benefits under this Agreement shall not be assignable or transferable, whether by pledge, creation of a security interest or otherwise, whether voluntary, involuntary, by operation of law or otherwise, other than a transfer by will or by the laws of descent or distribution, and in the event of any attempted assignment or transfer contrary to this Section 12 the Company or Employer will have no liability to pay any amount so attempted to be assigned or transferred. This Agreement inures to the benefit of and is enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

This Agreement is binding upon and inures to the benefit of the Company and the Employer and their respective successors and assigns (including, without limitation, any company into or with which the Company may merge or consolidate).

 

13.	N UMBER AND G ENDER . Wherever appropriate herein, words used in the singular will include the plural, the plural will include the singular, and the masculine gender will include the feminine gender.

 

14.

C ONFLICTS . This Agreement constitutes the entire understanding of the parties with respect to its subject matter and supersedes any other agreement or other understanding, whether oral or written, express or implied, between them concerning, related to or otherwise in connection with, the subject matter hereof.

 

15.

A MENDMENT AND W AIVER . No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Executive and such officer as may be specifically designated by the Board. No written waiver by any party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this Agreement to be performed by any other party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time (unless specifically provided in such written waiver).

 

16.	C OUNTERPARTS . This Agreement may be executed in several counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same instrument.

 

17.

T ERM . This Agreement is effective March 16, 2019 and shall expire on March 15, 2022 (“Term”), unless a Change in Control has occurred during the Term in which event the Agreement shall expire on the later of March 15, 2022 or one year after the Change in Control; provided that terms of this Agreement which must survive the expiration of the Term of this Agreement in order to be effectuated (including the provisions of Sections 5, 6 and 7 and the related definitional provisions) will survive.

 

8

[Intentionally Left Blank]

 

9

McDERMOTT INTERNATIONAL, INC.
By:
Name:
Title:
Date:
[●]
By:
Name:
Title:
Date:
EXECUTIVE
By:
Name:
Date:

 

10

EXHIBIT A

D EFINITIONS

The following terms have the meanings set forth below.

“Accrued Benefits” means

 

(i)

any portion of Executive’s Salary earned through the Covered Termination Date and not yet paid;

 

(ii)

reimbursement for any and all amounts advanced in connection with Executive’s employment for reasonable and necessary expenses incurred by Executive through the date of Covered Termination in accordance with the Company’s policies and procedures on reimbursement of expenses; and

 

(iii)

any earned vacation pay not theretofore used or paid in accordance with the Company’s policy for payment of earned and unused vacation time.

“Affiliate” means an Affiliate within the meaning of Rule 12b-2 promulgated under Section 12 of the Exchange Act.

“Board” means the Board of Directors of the Company.

“ Cause ” means

 

(i)

the continued failure of Executive to perform substantially Executive’s duties with the Company (occasioned by reason other than physical or mental illness or disability of Executive) after a written demand for substantial performance is delivered to Executive by the Compensation Committee of the Board which specifically identifies the manner in which the Compensation Committee of the Board or the Chief Executive Officer believes that Executive has not substantially performed Executive’s duties, after which Executive shall have 30 days to defend or remedy such failure to substantially perform Executive’s duties;

 

(ii)

the engaging by Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company; or

 

(iii)

the conviction of Executive with no further possibility of appeal for, or plea of guilty or nolo contendere by Executive to, any felony.

The cessation of employment of Executive under subparagraph (i) and (ii) above shall not be deemed to be for “Cause” unless and until there shall have been delivered to Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Compensation Committee of the Board at a meeting of such Committee called and held for such purpose (after reasonable notice is provided to Executive and Executive is given

 

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an opportunity, together with counsel, to be heard before such Committee), finding that, in the good faith opinion of such Committee, Executive is guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in detail.

A “Change in Control” will be deemed to have occurred upon the occurrence of any of the following:

 

(a)

30% Ownership Change : Any Person, other than an ERISA-regulated pension plan established by the Company, the Employer, or an Affiliate of either of them, makes an acquisition of Outstanding Voting Stock and is, immediately thereafter, the beneficial owner of 30% or more of the then Outstanding Voting Stock, unless such acquisition is made directly from the Company in a transaction approved by a majority of the Incumbent Directors; or any group is formed that is the beneficial owner of 30% or more of the Outstanding Voting Stock; or

 

(b)

Board Majority Change : Individuals who are Incumbent Directors cease for any reason to constitute a majority of the members of the Board; or

 

(c)

Major Mergers and Acquisitions : Consummation of a Business Combination unless, immediately following such Business Combination, (i) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Voting Stock immediately before such Business Combination beneficially own, directly or indirectly, at least 50% of the then outstanding shares of voting stock of the parent corporation resulting from such Business Combination in substantially the same relative proportions as their ownership, immediately before such Business Combination, of the Outstanding Voting Stock, (ii) if the Business Combination involves the issuance or payment by the Company of consideration to another entity or its shareholders, the total fair market value of such consideration plus the principal amount of the consolidated long-term debt of the entity or business being acquired (in each case, determined as of the date of consummation of such Business Combination by a majority of the Incumbent Directors) does not exceed 50% of the sum of the fair market value of the Outstanding Voting Stock plus the principal amount of the Company’s consolidated long-term debt (in each case, determined immediately before such consummation by a majority of the Incumbent Directors), (iii) no Person (other than any corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of the then outstanding shares of voting stock of the parent corporation resulting from such Business Combination and (iv) a majority of the members of the board of directors of the parent corporation resulting from such Business Combination were Incumbent Directors of the Company immediately before consummation of such Business Combination; or

 

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(d)

Major Asset Dispositions : Consummation of a Major Asset Disposition unless, immediately following such Major Asset Disposition, (i) individuals and entities that were beneficial owners of the Outstanding Voting Stock immediately before such Major Asset Disposition beneficially own, directly or indirectly, at least 50% of the then outstanding shares of voting stock of the Company (if it continues to exist) and of the entity that acquires the largest portion of such assets (or the entity, if any, that owns a majority of the outstanding voting stock of such acquiring entity) and (ii) a majority of the members of the Board (if it continues to exist) and of the entity that acquires the largest portion of such assets (or the entity, if any, that owns a majority of the outstanding voting stock of such acquiring entity) were Incumbent Directors of the Company immediately before consummation of such Major Asset Disposition; or

 

(e)

Other Circumstances : Such other circumstances as may be deemed by the Board in its sole discretion to constitute a change in control of the Company.

For purposes of the definition of a “Change in Control,”

 

(1)

“Person” means an individual, entity or group;

 

(2)

“group” has the same meaning as used in Section 13(d)(3) of the Exchange Act;

 

(3)

“beneficial owner” is used as it is defined for purposes of Rule 13d-3 under the Exchange Act;

 

(4)

“Outstanding Voting Stock” means outstanding voting securities of the Company entitled to vote generally in the election of directors; and any specified percentage or portion of the Outstanding Voting Stock (or of other voting stock) is determined based on the combined voting power of such securities;

 

(5)

“Incumbent Director” means a director of the Company (x) who was a director of the Company on the effective date of this Agreement or (y) who becomes a director after such date and whose election, or nomination for election by the Company’s shareholders, was approved by a vote of a majority of the Incumbent Directors at the time of such election or nomination, except that any such director will not be deemed an Incumbent Director if his or her initial assumption of office occurs as a result of an actual or threatened election contest or other actual or threatened solicitation of proxies by or on behalf of a Person other than the Board;

 

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(6)

“election contest” is used as it is defined for purposes of Rule 14a-11 under the Exchange Act;

 

(7)

“Business Combination” means

 

(x)

a merger or consolidation involving the Company or its stock, or

 

(y)

an acquisition by the Company, directly or through one or more subsidiaries, of another entity or its stock or assets;

 

(8)

“parent corporation resulting from a Business Combination” means the Company if its stock is not acquired or converted in the Business Combination and otherwise means the entity which as a result of such Business Combination owns the Company or all or substantially all the Company’s assets either directly or through one or more subsidiaries; and

 

(9)

“Major Asset Disposition” means the sale or other disposition in one transaction or a series of related transactions of 50% or more of the assets of the Company and its subsidiaries on a consolidated basis; and any specified percentage or portion of the assets of the Company will be based on fair market value, as determined by a majority of the Incumbent Directors.

“Code” means the Internal Revenue Code of 1986, as amended.

“Company” means McDermott International, Inc., and, except for purposes of determining whether a Change in Control has occurred, any successor thereto.

“Confidential Information” means any and all information, data and knowledge that has been created, discovered, developed or otherwise become known to the Company, the Employer or any of their respective Affiliates or in which property rights have been assigned or otherwise conveyed to the Company, the Employer or any of their respective Affiliates, which information, data or knowledge has commercial value in the business in which the Company, the Employer or any of their respective Affiliates or ventures is engaged, except such information, data or knowledge as is or becomes known to the public without violation of the terms of this Agreement. By way of illustration, but not limitation, Confidential Information includes business trade secrets, secrets concerning the Company’s, the Employer’s or any of their respective Affiliates’ plans and strategies, nonpublic information concerning material market opportunities, technical trade secrets, processes, formulas, know-how, improvements, discoveries, developments, designs, inventions, techniques, marketing plans, manuals, records of research, reports, memoranda, computer software, strategies, forecasts, new products, unpublished financial information, projections, licenses, prices, costs, and employee, customer and supplier lists.

 

A-4

“Covered Termination” means a termination of Executive’s employment (such that Executive ceases to be employed by the Employer, the Company or any of their respective Affiliates) that is a “Separation from Service” (as defined in Code Section 409A and the Treasury regulations and guidance issued thereunder) within the one-year period following a Change in Control during the Term of this Agreement due to:

 

(a)    an

involuntary termination that does not result from any of the following:

(1)    death;

(2)    Disability; or

(3)    termination for Cause; or

 

(b)

a termination by Executive for Good Reason.

“Covered Termination Date” means (i) if Executive’s employment is terminated for Cause, the date on which the Company delivers to Executive the requisite resolution, or, with respect to a termination under subparagraph (iii) of the definition of Cause, the date on which the Employer notifies Executive of such termination, (ii) if Executive’s employment is terminated by the Employer for a reason other than Cause or Executive’s death, the date on which the Employer notifies Executive of such termination, (iii) if Executive’s employment is terminated by Executive for Good Reason, the date on which Executive notifies the Employer of such termination (after having given the Company notice and a 30-day cure period), or (iv) if Executive’s employment is terminated by reason of death, the date of death of Executive.

“Disability” means circumstances which would qualify Executive for long-term disability benefits under the Company’s or the Employer’s long-term disability plan, whether or not Executive is covered under such plan.

“EDCP” means the McDermott International, Inc. Director and Executive Deferred Compensation Plan, as in effect on the Covered Termination Date.

“EICP” means the McDermott International, Inc. Executive Incentive Compensation Plan, or any successor plan thereto.

“Employer” means [●], and any successor thereto.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Excise Tax” means any excise tax imposed under Code Section 4999.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Good Reason” means any one or more of the following events which occurs following a Change in Control:

 

(a)

a material diminution in the duties or responsibilities of Executive from those applicable immediately before the date on which a Change in Control occurs;

 

A-5

(b)

a material reduction in Executive’s annual Salary as in effect on the Effective Date of this Agreement or as the same may be increased from time to time;

 

(c)

the failure by the Company or the Employer to continue in effect any compensation plan in which Executive participates immediately before the Change in Control which is material to Executive’s total compensation, unless a comparable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company or the Employer to continue Executive’s participation therein (or in such substitute or alternative plan) on a basis not materially less favorable than existed immediately before the Change in Control, unless the action by the Company or the Employer applies to all similarly situated employees;

 

(d)

the failure by the Company and the Employer to continue to provide Executive with material benefits in the aggregate that are substantially similar to those enjoyed by Executive under any of the Company’s (or the Employer’s or their respective Affiliates’) pension, savings, life insurance, medical, health and accident, or disability plans in which Executive was participating immediately before the Change in Control if such benefits are material to Executive’s total compensation, the taking of any other action by the Company or the Employer which would directly or indirectly materially reduce any of such benefits or deprive Executive of any fringe benefit enjoyed by Executive at the time of the Change in Control if such fringe benefit is material to Executive’s total compensation, unless the action by the Company or the Employer applies to all similarly situated employees; or

 

(e)

a change in the location of Executive’s principal place of employment with the Employer or the Company by more than 50 miles from the location where Executive was principally employed immediately before the Change in Control without Executive’s consent.

If a Change in Control occurs and any of the events described above occurs prior to the first anniversary of such Change in Control (an “Event”), Executive shall give the Company written notice (the “Executive Notice”) within 60 days following Executive’s knowledge of an Event that Executive intends to terminate employment as a result. The Company shall have 30 days following receipt of the Executive Notice in which to cure the Event. If the Company does not take such action within that time, the Event shall constitute Good Reason. If Executive does not provide the Executive Notice within 60 days as required above then the Event shall not constitute Good Reason, and thereafter, for purposes of determining whether Executive has Good Reason, Executive’s terms and conditions of employment after the occurrence of the Event shall be substituted for those terms and conditions of Executive’s employment in effect immediately prior to the date of this Agreement.

 

A-6

“Other Compensation” shall mean all payments and benefits to which Executive may be entitled under the terms of any applicable compensation arrangement or benefit plan or program of the Company that do not specify the time of distribution, other than such payments and benefits provided for under Section 2(a)(i) through Section 2(a)(v) of this Agreement; provided that Other Compensation shall not include any entitlement to severance under any severance policy of the Company generally applicable to the salaried employees of the Company.

“Salary” means Executive’s annual base salary as in effect immediately before the termination of Executive’s employment or, if higher, the base salary in effect immediately before the first event or circumstance constituting Good Reason.

“Target Bonus Percentage” means Executive’s target incentive award opportunity under the EICP in effect immediately before the termination of Executive’s employment or, if higher, immediately before the first event or circumstance constituting Good Reason.

 

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EXHIBIT B

W AIVER A ND R ELEASE

FORM WAIVER AND RELEASE

Pursuant to the terms of the Change in Control Agreement made as of March 16, 2019, by and among McDermott International, Inc. (the “Company”), [●] (the “Employer”) and me, and in consideration of the payments made to me and other benefits to be received by me pursuant thereto, I, [●], do freely and voluntarily enter into this WAIVER AND RELEASE (the “Release”), which shall become effective and binding on the eighth day following my signing the Release as provided herein (the “Effective Date”). It is my intent to be legally bound, according to the terms set forth below.

In exchange for the payments and other benefits to be provided to me by the Company and the Employer pursuant to Section 2 of the Change in Control Agreement (the “Separation Payment” and “Separation Benefits”), I hereby agree and state as follows:

 

1.

I, individually and on behalf of my heirs, personal representatives, successors, and assigns, release, waive, and discharge the Company and the Employer, their respective predecessors, successors, parents, subsidiaries, merged entities, operating units, affiliates, divisions, insurers, administrators, trustees, and the agents, representatives, officers, directors, shareholders, employees and attorneys of each of the foregoing (hereinafter, “Released Parties”), both individually and in their official capacities, from all claims, debts, liabilities, demands, obligations, promises, acts, agreements, costs, expenses, damages, actions, and causes of action, whether in law or in equity, whether known or unknown, suspected or unsuspected, arising from my employment and termination from employment with the Employer and its affiliates, including, but not limited to, any and all claims pursuant to Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991 (42 U.S.C. § 2000e, et seq .), which prohibits discrimination in employment based on race, color, national origin, religion or sex; the Civil Rights Act of 1866 (42 U.S.C. §§1981, 1983 and 1985), which prohibits violations of civil rights; the Age Discrimination in Employment Act of 1967, as amended, and as further amended by the Older Workers Benefit Protection Act (29 U.S.C. §621, et seq .), which prohibits age discrimination in employment; the Employee Retirement Income Security Act of 1974, as amended (29 U.S.C. § 1001, et seq . ), which protects certain employee benefits; the Americans with Disabilities Act of 1990, as amended (42 U.S.C. § 12101, et seq .), which prohibits discrimination against the disabled; the Family and Medical Leave Act of 1993 (29 U.S.C. § 2601, et seq .), which provides medical and family leave; the Fair Labor Standards Act (29 U.S.C. § 201, et seq. ), including the wage and hour laws relating to payment of wages; and all other federal, state and local laws and regulations regarding employment or compensation or prohibiting employment discrimination, or pursuant to any contract I may have with the Released Party, including the Change in Control Agreement [and             ]; provided that the foregoing release shall not apply to any right explicitly set forth in the Change in Control Agreement to any payments and benefits to be provided in connection with the termination of my employment. This Release also includes, but is not limited to, a release of any claims for breach of contract, mental pain,

 

B-1

suffering and anguish, emotional upset, impairment of economic opportunities, unlawful interference with employment rights, defamation, intentional or negligent infliction of emotional distress, fraud, wrongful termination, wrongful discharge in violation of public policy, breach of any express or implied covenant of good faith and fair dealing, that the Company, the Employer or any of their respective Affiliates has dealt with me unfairly or in bad faith, and all other common law contract and tort claims. This Release is not intended to indicate that any such claims exist or that, if they do exist, they are meritorious. Rather, I am simply agreeing that, in exchange for the consideration received by me through this Release, any and all Released Claims that I may have against any Released Party, regardless of whether they actually exist, are expressly settled, compromised and waived. This Release includes matters attributable to the sole or partial negligence (whether gross or simple) or other fault, including strict liability, of any Released Party.

Notwithstanding the foregoing, I am not waiving any rights or claims that may arise after this Release is signed by me. Moreover, this Release does not apply to any claims or rights which, by operation of law, cannot be waived. Nothing in this Release shall affect in any way my rights of indemnification and directors and officers liability insurance coverage provided to me pursuant to the Company’s by-laws and/or pursuant to any agreement in effect prior to the effective date of my termination, which shall continue in full force and effect, in accordance with their respective terms, following the effective date of this Release.

 

2.

I forever waive and relinquish any right or claim to reinstatement to active employment with the Company, the Employer, their respective affiliates, subsidiaries, divisions, parent, and successors. I further acknowledge that neither the Company nor the Employer has any obligation to rehire or return me to active duty at any time in the future.

 

3.

I acknowledge that all agreements applicable to my employment respecting noncompetition, nonsolicitation and the confidential or proprietary information of the Company and the Employer and their respective affiliates shall continue in full force and effect in accordance with the terms of such agreements.

 

4.

I agree that I will refrain from any libel, slander, defamation or other disparaging comments about the Company, the Employer, their respective affiliates, or any current or former officer, director or employee of the Company, the Employer or any of their respective affiliates. However, I understand that nothing in this Release prohibits me from filing a charge with, or reporting possible violations of federal law or regulation to any governmental agency or entity, including, but not limited to, the U.S. Equal Opportunity Commission, the Department of Justice, the Securities and Exchange Commission, Congress, and any Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. Nothing in this Release limits my ability to communicate with any government agencies or participate in any investigation or proceeding that may be conducted by any government agency, including providing documents or other information, without notice to the Company. I understand that I will not be in breach of the covenant contained in this paragraph solely by reason of my testimony which is compelled by process of law.

 

B-2

5.	I hereby acknowledge and affirm as follows:

 

a.

I have been advised to consult with an attorney prior to signing this Release and have had adequate opportunity to do so.

 

b.

I have been extended a period of [21] [45] days in which to consider this Release.

 

c.

I understand that for a period of seven days following my execution of this Release, I may revoke the Release by notifying Company and the Employer, in writing, of my desire to do so. I understand that after the seven-day period has elapsed and I have not revoked the Release, it shall then become effective and enforceable. I understand that the Separation Payment will not be made under the Change in Control Agreement and I will not be entitled to the Severance Benefits made under the Change in Control Agreement until after the seven-day period has elapsed and I have not revoked the Release.

 

d.

I acknowledge that I have received payment for all wages due at time of my employment termination, including reimbursement for any and all business-related expenses. I further acknowledge that the Separation Payment and the Separation Benefits are consideration to which I am not otherwise entitled under any Company plan, program, or prior agreement.

 

e.

I certify that I have returned all property of the Company, the Employer and their respective affiliates, including, but not limited to, keys, credit and fuel cards, computers, cell phones, and other electronic devices, files, lists, and documents of all kinds regardless of the medium in which they are maintained.

 

f.

I have carefully read the contents of this Release and I understand its contents. I am executing this Release voluntarily, knowingly, and without any duress or coercion.

 

6.

I acknowledge that this Release shall not be construed as an admission by any of the Released Parties of any liability whatsoever, or as an admission by any of the Released Parties of any violation of my rights or the rights of any other person, or any violation of any order, law, statute, duty or contract.

 

7.

I agree that the terms and conditions of this Release are confidential and that I will not, directly or indirectly, disclose the existence of or terms of this Release to anyone other than my attorney or tax advisor, except to the extent such disclosure may be required for accounting or tax reporting purposes or otherwise be required by law or direction of a court. Nothing in this provision shall be construed to prohibit me from disclosing this Release to the Equal Employment Opportunity Commission in connection with any complaint or charge submitted to that agency.

 

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8.	In the event that any provision of this Release should be held void, voidable, or unenforceable, the remaining portions shall remain in full force and effect.

 

9.

I hereby declare that this Release constitutes the entire and final settlement between me and the Company and the Employer, superseding any and all prior agreements, and that neither the Company nor the Employer has made any promise or offered any other agreement, except those expressed in this Release, to induce or persuade me to enter into this Release.

 

B-4

IN WITNESS WHEREOF, I have signed this Release on the      day of             , 20    .

 

 

Printed Name

 

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EXHIBIT C

Excise Tax Modified Cutback Provisions

Anything in this Agreement to the contrary notwithstanding, in the event the Firm (as defined below) shall determine that Executive shall become entitled to payments and/or benefits provided by this Agreement which would be subject to the excise tax imposed by Code Section 4999 (the “ Payments ”), the Firm shall determine whether to reduce any of the Payments to the Reduced Amount (as defined below). The Payments shall be reduced to the Reduced Amount only if the Firm determines that Executive would have a greater Net After-Tax Receipt (as defined below) of aggregate Payments if the Executive’s Payments were reduced to the Reduced Amount. If such a determination is not made by the Firm, Executive shall receive all Payments to which Executive is entitled under this Agreement.

If the Firm determines that aggregate Payments should be reduced to the Reduced Amount, the Company shall promptly give Executive notice to that effect and a copy of the detailed calculation thereof. All determinations made by the Firm under this Exhibit  C shall be binding upon the Company and Executive absent manifest error and shall be made as soon as reasonably practicable but in no event later than 15 business days of the receipt of notice from the Company that there has been a Payment, or such earlier time as is requested by the Company. For purposes of reducing the Payments to the Reduced Amount, only amounts payable under this Agreement (and no other Payments) shall be reduced. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing, in order, cash payments otherwise due under Sections 2(a)(iv), 2(a)(v)(1) and 2(a)(v)(2) of this Agreement, and then by reducing equity-based compensation otherwise due under Section 2(a)(iii) of this Agreement in chronological order with the most recent equity based compensation awards reduced first.

As a result of the uncertainty in the application of Code Section 4999 at the time of the initial determination by the Firm hereunder, it is possible that amounts will have been paid or distributed by the Company to or for the benefit of Executive pursuant to this Agreement which should not have been so paid or distributed (“ Overpayment ”) or that additional amounts which will have not been paid or distributed by the Company to or for the benefit of Executive pursuant to this Agreement could have been so paid or distributed (“ Underpayment ”), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that the Firm, based upon the assertion of a deficiency by the Internal Revenue Service against either the Company or Executive which the Firm believes has a high probability of success determines that an Overpayment has been made, Executive shall pay any such Overpayment to the Company together with interest at the applicable federal rate provided for in Code Section 7872(f)(2); provided , however, that no amount shall be payable by Executive to the Company if and to the extent such payment would not either reduce the amount on which Executive is subject to tax under Code Sections 1 and 4999 or generate a refund of such taxes. In the event that the Firm, based upon controlling precedent or substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be paid promptly (but in no event later than 60 days following the date on which the Underpayment is determined) by the Company to or for the benefit of Executive together with interest at the applicable federal rate provided for in Code Section 7872(f)(2).

 

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For purposes hereof, the following terms have the meanings set forth below:

“ Firm ” shall mean an internationally recognized accounting or employee benefits consulting firm selected by the Company with the input of Executive (but without Executive’s consent) and which shall not, during the one year preceding the date of its selection, have acted in any way on behalf of the Company or its affiliated companies.

“ Net After-Tax Receipt ” shall mean the present value (as determined in accordance with Code Sections 280G(b)(2)(A)(ii) and 280G(d)(4)) of a Payment net of all taxes imposed on Executive with respect thereto under Code Sections 1 and 4999 and under applicable state and local laws, determined by applying the highest marginal rate under Code Section 1 and under state and local laws which applied to the Executive’s taxable income for the immediately preceding taxable year, or such other rate(s) as Executive certifies, in Executive’s sole discretion, as likely to apply to Executive in the relevant tax year(s).

“ Reduced Amount ” shall mean the greatest amount of Payments that can be paid that would not result in the imposition of the excise tax under Code Section 4999 if the Firm determines to reduce Payments pursuant to the first paragraph of this Exhibit C .

 

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Exhibit 10.5

CHICAGO BRIDGE & IRON

2008 LONG-TERM INCENTIVE PLAN

(As amended and restated effective February 27, 2019)

ARTICLE 1

Establishment, Objectives and Duration

1.1      Establishment of the Plan. McDermott International, Inc., a corporation organized and existing under the laws of the Republic of Panama (hereinafter referred to as the “Company”), having assumed sponsorship for the Chicago Bridge & Iron 2008 Long-Term Incentive Plan, as amended (the “Prior Plan”), in connection with the May 10, 2018, closing of the transactions contemplated by that certain Business Combination Agreement among the Company, Chicago Bridge & Iron Company N.V., and certain of their respective subsidiaries, dated as of December 18, 2017 (the “Business Combination”), does hereby amend and restate the Prior Plan (hereinafter referred to as this “Plan”), as set forth in this document. This Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units (each as hereinafter defined). This amended and restated Plan is effective as of February 27, 2019 (the “Effective Date”) and shall remain in effect as provided in Section 1.3 hereof.

1.2      Objectives. This Plan is designed to promote the success and enhance the value of the Company by linking the personal interests of Participants (as hereinafter defined) to those of the Company’s stockholders, and by providing Participants with an incentive for outstanding performance. This Plan is further intended to provide flexibility to the Company in its ability to motivate, attract and retain the employment and/or services of Participants.

1.3      Duration. This Plan, as amended and restated, shall commence on the Effective Date, as described in Section 1.1 hereof, and shall remain in effect, subject to the right of the Board of Directors (as hereinafter defined) to amend or terminate this Plan at any time pursuant to Article 15 hereof, until all Shares (as hereinafter defined) subject to it shall have been purchased or acquired according to this Plan’s provisions; provided, however, that in no event may an Award (as hereinafter defined) be granted under this Plan on or after May 4, 2026.

ARTICLE 2

Definitions

As used in this Plan, the following terms shall have the respective meanings set forth below:

2.1      “Award” means a grant under this Plan of any Nonqualified Stock Option, Incentive Stock Option, Restricted Stock, Restricted Stock Unit, Performance Share or Performance Unit.

2.2      “Award Agreement” means an agreement entered into by the Company and a Participant, setting forth the terms and provisions applicable to an Award granted under this Plan.

2.3      “Beneficial Owner” or “Beneficial Ownership” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

2.4      “Board” or “Board of Directors” means the Board of Directors of the Company.

 

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2.5      “Change in Control” means the occurrence or existence of any of the following facts or circumstances after the Effective Date:

(a)    any person (other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation or other entity owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the Company’s then outstanding voting securities;

(b)    within any period of two (2) consecutive years (not including any period prior to the Effective Date), individuals who at the beginning of such period constitute the Board, and any new Directors (other than a Director designated by a Person who has entered into an agreement with the Company to effect any transaction described in Clause (a), (c), (d) or (e) of this Section 2.6) whose election by the Board or nomination for election by the stockholders of the Company, was approved by a vote of at least two-thirds (2/3) of the Directors, then still in office who either were Directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board;

(c)    a merger or consolidation of the Company, with any other corporation or other entity has been consummated, other than a merger or consolidation which results in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the combined voting power of the voting securities of the Company or the surviving entity outstanding immediately after such merger or consolidation;

(d)    the stockholders of the Company approve a plan of complete liquidation of the Company;

(e)    the consummation of a sale or disposition by the Company of all or substantially all of the Company’s assets other than to an entity that is under common control with the Company or to an entity for which at least fifty percent (50%) of the combined voting power of its voting securities outstanding immediately after such sale or disposition are owned or controlled by the stockholders of the Company immediately prior to such sale or disposition; or

(f)    within one year following the consummation of a merger or consolidation transaction involving the Company (whether as a constituent corporation, the acquiror, the direct or indirect parent entity of the acquiror, the entity being acquired, or the direct or indirect parent entity of the entity being acquired), as a result of which the voting securities of the Company outstanding immediately prior thereto continue to represent more than fifty percent (50%) but less than fifty-five percent (55%) of the combined voting power of the voting securities of the Company or the surviving entity outstanding immediately after such merger or consolidation (a “Merger of Equals”): (i) individuals who, at the time of the execution and delivery of the definitive agreement pursuant to which such transaction has been consummated by the parties thereto (a “Definitive Transaction Agreement”) (or, if there are multiple such agreements relating to such Merger of Equals, the first time of execution and delivery by the parties to any such agreement) (the “Execution Time”), constituted the Board cease, for any reason (excluding death, disability or voluntary resignation but including any such voluntary resignation effected in accordance with any Definitive Transaction Agreement), to constitute a majority of the Board; or (ii) the individual who, at the Execution Time, served as the Chief Executive Officer of the Company does not, for any reason (excluding as a result of death, disability or voluntary termination but including any such voluntary termination effected in accordance with any Definitive Transaction Agreement), serve as the Chief Executive Officer of the Company or, if the Company does not continue as a registrant with a class of equity securities registered pursuant to Section 12(b) of the Exchange Act, as the Chief Executive Officer of a corporation or other entity that is (A) a registrant with a class of equity securities registered pursuant to Section 12(b) of the Exchange Act and (B) the surviving entity in such Merger of Equals or a direct or indirect parent entity of the surviving entity or the Company following the consummation of such Merger of Equals.

 

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However, in no event shall a “Change in Control” be deemed to have occurred with respect to a Participant if the Participant is part of the purchasing group which consummates a transaction resulting in a Change-in-Control. A Participant shall be deemed “part of a purchasing group” for purposes of the preceding sentence if the Participant is an equity participant in the purchasing company or group (except for: (i) passive ownership of less than three percent (3%) of the stock of the purchasing company; or (ii) ownership of equity participation in the purchasing company or group which is otherwise not significant, as determined prior to the Change in Control by a majority of the non-employee continuing Directors).

2.6      “Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time.

2.7      “Committee” means the Compensation Committee of the Board, or such other committee of the Board appointed by the Board to administer this Plan (or the entire Board if so designated by the Board by written resolution), as specified in Article 3 hereof.

2.8      “Company” means McDermott International, Inc., a corporation organized and existing under the laws of the Republic of Panama, and, except where the context otherwise indicates, shall include the Company’s Subsidiaries and, except with respect to the definition of “Change in Control” set forth above and the application of any defined terms used in such definition, any successor to any of such entities as provided in Article 18 hereof.

2.9      “Consultant” means a natural person who is neither an Employee nor a Director and who performs services for the Company or a Subsidiary pursuant to a contract, provided that those services are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities.

2.10      “Director” means any individual who is a member of the Board of Directors; provided, however , that any member of the Board of Directors who is employed by the Company shall be considered an Employee with respect to Awards made under this Plan.

2.11      “Disability” in the case of an Employee, shall have the meaning ascribed to such term in the Participant’s governing long-term disability plan and, in the case of a Director or Consultant, shall mean a permanent and total disability within the meaning of Section 22(e)(3) of the Code, as determined by the Committee in good faith, upon receipt of medical advice that the Committee deems sufficient and competent, from one or more individuals selected by the Committee who are qualified to provide professional medical advice.

2.12      “Effective Date” shall have the meaning ascribed to such term in Section 1.1 hereof.

2.13      “Employee” means any person who is employed by the Company.

2.14      “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended from time to time.

2.15      “ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended from time to time.

2.16      “Fair Market Value” of a Share shall mean, as of a particular date, (a) if Shares are listed on a national securities exchange, the closing sales price per Share on the consolidated transaction reporting system for the principal national securities exchange on which Shares are listed on that date, or, if no such sale is so reported on that date, on the last preceding date on which such a sale was so reported, (b) if no Shares are so listed but are traded on an over-the-counter market, the mean between the closing bid and asked prices for Shares on that date, or, if there are no such quotations available for

 

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that date, on the last preceding date for which such quotations are available, as reported by the OTC Markets Group Inc. (or any similar organization or agency succeeding to its function of reporting prices), or (c) if no Shares are publicly traded, the most recent value determined by an independent appraiser appointed by the Company for that purpose.

2.17      “Fiscal Year” means the year commencing January 1 and ending December 31.

2.18      “Incentive Stock Option” or “ISO” means an Option to purchase Shares granted under Article 6 hereof and which is designated as an Incentive Stock Option and is intended to meet the requirements of Code Section 422, or any successor provision.

2.19      “Nonqualified Stock Option” or “NQSO” means an option to purchase Shares granted under Article 6 hereof and which is not an Incentive Stock Option.

2.20      “Option” means an Incentive Stock Option or a Nonqualified Stock Option.

2.21      “Option Price” means the price at which a Share may be purchased by a Participant pursuant to an Option, as determined by the Committee.

2.22      “Participant” means an eligible Director, Consultant or Employee who has been selected for participation in this Plan in accordance with Section 5.2.

2.23      “Performance-Based Award” means an Award that is designed to qualify for the Performance-Based Exception.

2.24      “Performance-Based Exception” means the performance-based exception from the deductibility limitations of Code Section 162(m).

2.25      “Performance Period” means, with respect to a Performance-Based Award, the period of time during which the performance goals specified in such Award must be met in order to determine the degree of payout and/or vesting with respect to that Performance-Based Award.

2.26      “Performance Share” means an Award designated as such and granted to an Employee, as described in Article 8 hereof.

2.27      “Performance Unit” means an Award designated as such and granted to an Employee, as described in Article 8 hereof.

2.28      “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Section 13(d) and 14(d) thereof, including a “group” (as that term is used in Section 13(d)(3) thereof).

2.29      “Restricted Stock” means an Award designated as such and granted to a Participant pursuant to Article 7 hereof.

2.30      “Restricted Stock Unit” or “RSU” means a contractual promise to distribute to a Participant one Share or cash equal to the Fair Market Value of one Share, determined in the sole discretion of the Committee, which shall be delivered to the Participant upon satisfaction of the vesting and any other requirements set forth in the related Award Agreement.

2.31      “Shares” means the common stock, par value $1.00 per share, of the Company.

2.32      “Subsidiary” means any corporation, partnership, joint venture, affiliate or other entity in which the Company has a majority voting interest.

 

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2.33      “Vesting Period” means the period during which an Award granted hereunder is subject to a service or performance-related restriction, as set forth in the related Award Agreement.

ARTICLE 3

Administration

3.1      The Committee. This Plan shall be administered by the Committee. The members of the Committee shall be appointed from time to time by, and shall serve at the discretion of, the Board of Directors.

3.2      Authority of the Committee. Except as limited by law or by the Articles of Incorporation or Amended and Restated By-Laws of the Company (each as amended from time to time), the Committee shall have full and exclusive power and authority to take all actions specifically contemplated by this Plan or that are necessary or appropriate in connection with the administration hereof and shall also have full and exclusive power and authority to interpret this Plan and to adopt such rules, regulations and guidelines for carrying out this Plan as the Committee may deem necessary or proper. The Committee shall have full power and sole discretion to: select Directors, Consultants and Employees who shall be granted Awards under this Plan; determine the sizes and types of Awards; determine the time when Awards are to be granted and any conditions that must be satisfied before an Award is granted; determine the terms and conditions of Awards in a manner consistent with this Plan; determine whether the conditions for earning an Award have been met and whether a Performance-Based Award will be paid at the end of an applicable performance period; determine the guidelines and/or procedures for the payment or exercise of Awards; and determine whether a Performance-Based Award should qualify, regardless of its amount, as deductible in its entirety for federal income tax purposes. Notwithstanding Section 4.4, the Committee may, in its sole discretion, accelerate the vesting or exercisability of an Award, eliminate or make less restrictive any restrictions contained in an Award, waive any restriction or other provision of this Plan or any Award or otherwise amend or modify any Award in any manner that is either (a) not adverse to the Participant to whom such Award was granted or (b) consented to in writing by such Participant, and (c) consistent with the requirements of Code Section 409A, if applicable. Notwithstanding the foregoing, subject to the provisions of Section 4.3 hereof, the terms of outstanding Awards may not be amended without the approval of the Company’s stockholders so as to (i) reduce the Option Price of any outstanding Option, (ii) cancel any outstanding Option in exchange for cash or other Awards (including substitutions and cash buyouts) or for an Option with an Option Price that is less than the Option Price of the original Option, (iii) permit repurchase from Participants, whether for cash or any other consideration, of any outstanding Options that have an Option Price greater than the then current Fair Market Value of a Share, or (iv) permit the grant of any Option that contains a so-called “reload” feature under which additional Options or other Awards are granted automatically to the Participant upon exercise of the original Option. The Committee may correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any Award in the manner and to the extent the Committee deems necessary or desirable to further this Plan’s objectives. Further, the Committee shall make all other determinations that may be necessary or advisable for the administration of this Plan. As permitted by law and the terms of this Plan, the Committee may delegate its authority as identified herein.

3.3      Delegation of Authority. To the extent permitted under applicable law, the Board or Committee may delegate to any committee of the Board (including, for the avoidance of doubt, a single-person committee), to the Chief Executive Officer and to other senior officers of the Company its duties under this Plan pursuant to such conditions or limitations as the Committee may establish; provided however, the Committee may not delegate any authority to grant Awards to a Director.

3.4      Decisions Binding. All determinations and decisions made by the Committee pursuant to the provisions of this Plan and all related orders and resolutions of the Committee shall be final, conclusive and binding on all persons concerned, including the Company, its stockholders, officers, Directors, Employees, Consultants, Participants and their estates and beneficiaries.

 

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ARTICLE 4

Shares Subject to this Plan

4.1      Number of Shares Available for Grants of Awards. Subject to adjustment as provided below in this Section 4.1 and in Section 4.3 hereof, there is reserved for issuance of Awards under this Plan the number of Shares available for grant pursuant to the Prior Plan but which have not yet been made subject to awards granted under the Prior Plan (the “Maximum Share Limitation”) all of which shall be available for Incentive Stock Options, as well as any other form of Award. Each Award settled in Shares and each Option shall be counted against the Maximum Share Limitation as one Share. If an Award under this Plan or the Prior Plan expires or is terminated, cancelled or forfeited, the Shares associated with the expired, terminated, cancelled or forfeited Award shall again be available for Awards under this Plan, and the Maximum Share Limitation shall be increased by the same amount as such Shares were counted against the Maximum Share Limitation under this Plan or its equivalent under the Prior Plan, as applicable. On and after the Effective Date, no additional grants will be made pursuant to the Prior Plan, and any Awards issued prior to the Effective Date will remain subject to the terms and conditions set forth in the Prior Plan. Shares that are tendered by a Participant or withheld as full or partial payment of withholding taxes related to the vesting or settlement of an Award other than Options shall become available again for Awards under this Plan. The following Shares shall not become available again for Awards under this Plan:

(i)    Shares that are tendered by a Participant or withheld (1) as full or partial payment of withholding taxes related to the exercise or settlement of Options, or (2) as payment for the Option Price of an Option; and

(ii)     Shares repurchased in the open market with the proceeds of the payment of the Option Price of an Option.

The foregoing notwithstanding, subject to applicable stock exchange listing requirements, the Maximum Share Limitation shall not be reduced by (x) Shares issued under Awards granted in assumption, substitution or exchange for previously granted awards of a company acquired by the Company or, to the extent allowed under applicable law and stock exchange requirements, otherwise a party to a transaction with the Company resulting in an adjustment of shares pursuant to Section 4.3 and (y) available shares under a stockholder approved plan of an acquired company (as appropriately adjusted to reflect the transaction) and such shares shall be available for Awards under this Plan. The Committee may from time to time adopt and observe such procedures concerning the counting of Shares against this Plan maximum as it may deem appropriate.

4.2      Limits on Grants in Any Fiscal Year. The aggregate grant date fair value of Awards to any individual Director, who is not an Employee on the date of grant, in any one Fiscal Year shall not exceed five hundred thousand dollars ($500,000). The maximum aggregate number of Shares with respect to which Awards may be granted in any fiscal year to any Participant in the form of Stock Options is 1,000,000; and the maximum aggregate number of Shares with respect to which Awards may be granted in the form of Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units combined in any fiscal year to any Participant is 500,000.

4.3      Adjustments in Authorized Shares. The existence of outstanding Awards shall not affect in any manner the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the capital stock of the Company or its business or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock (whether or not such issue is prior to, on a parity with or junior to the Shares) or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business or any other corporate act or proceeding of any kind, whether or not of a character similar to that of the acts or proceedings enumerated above.

 

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If there shall be any change in the Shares of the Company or the capitalization of the Company through merger, consolidation, reorganization, recapitalization, stock dividend, stock split, reverse stock split, split-up, spin-off, combination of shares, exchange of shares, dividend in kind or other like change in capital structure or distribution (other than normal cash dividends) to stockholders of the Company, the Committee, in its sole discretion, in order to prevent dilution or enlargement of Participants’ rights under this Plan, shall adjust, in such manner as it deems equitable, as applicable, the number and kind of Shares that may be granted as Awards under this Plan, the number and kind of Shares subject to outstanding Awards, the exercise or other price applicable to outstanding Awards, the Awards Limitations, the Fair Market Value of the Shares and other value determinations applicable to outstanding Awards; provided, however , that the number of Shares subject to any Award shall always be a whole number. In the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Committee shall be authorized, in its sole discretion, to: (a) grant or assume Awards by means of substitution of new Awards, as appropriate, for previously granted Awards or to assume previously granted Awards as part of such adjustment; (b) make provision, prior to the transaction, for the acceleration of the vesting and exercisability of, or lapse of restrictions with respect to, Awards and the termination of Options that remain unexercised at the time of such transaction; (c) provide for the acceleration of the vesting and exercisability of Options and the cancellation thereof in exchange for such payment as the Committee, in its sole discretion, determines is a reasonable approximation of the value thereof; (d) cancel any Awards and direct the Company to deliver to the Participants who are the holders of such Awards cash in an amount that the Committee shall determine in its sole discretion is equal to the fair market value of such Awards as of the date of such event, which, in the case of any Option, shall be the amount equal to the excess of the Fair Market Value of a Share as of such date over the per-share Option Price for such Option (for the avoidance of doubt, if such Option Price is less than such Fair Market Value, the Option may be canceled for no consideration); or (e) cancel Awards that are Options and give the Participants who are the holders of such Awards notice and opportunity to exercise prior to such cancellation.

ARTICLE 5

Eligibility and Participation

5.1      Eligibility. Persons eligible to participate in this Plan include all Directors, Employees who are in salary grades 7 and above or the equivalent classification following the completion of the Business Combination, and Consultants, as determined in the sole discretion of the Committee; provided that no individual who was an employee of McDermott International, Inc. or its subsidiaries immediately prior to the Business Combination is eligible to receive an award under the Plan after such consummation.

5.2      Actual Participation. Subject to the provisions of this Plan, the Committee may, from time to time, select from all Directors, Employees and Consultants, those to whom Awards shall be granted and shall determine the nature and amount of each Award. No Director, Employee or Consultant shall have the right to be selected for Participation in this Plan, or, having been so selected, to be selected to receive a future Award.

ARTICLE 6

Options

6.1      Grant of Options. Subject to the terms and provisions of this Plan, Options may be granted to Participants in such number, upon such terms, at any time, and from time to time, as shall be determined by the Committee; provided, however, that ISOs may be awarded only to Employees. Subject to the terms of this Plan, the Committee shall have discretion in determining the number of Shares subject to Options granted to each Participant.

 

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6.2      Option Award Agreement. Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the duration of the Option, the number of Shares to which the Option pertains, and such other provisions as the Committee shall determine that are not inconsistent with the terms of this Plan. The Award Agreement also shall specify whether the Option is intended to be an ISO or an NQSO (provided that, in the absence of such specification, the Option shall be an NQSO).

6.3      Option Price. The Option Price for each grant of an Option under this Plan shall be as determined by the Committee; provided, however , that, subject to any subsequent adjustment that may be made pursuant to the provisions of Section 4.3 hereof, the Option Price shall be not less than one hundred percent (100%) of the Fair Market Value of a Share on the date the Option is granted. Except as otherwise provided in Section 4.3 hereof, without prior stockholder approval no repricing of Options awarded under this Plan shall be permitted such that the terms of outstanding Options may not be amended to reduce the Option Price and further Options may not be replaced or regranted through cancellation, in exchange for cash, other Awards, or if the effect of the replacement or regrant would be to reduce the Option Price of the Options or would constitute a repricing under generally accepted accounting principles in the United States (as applicable to the Company’s public reporting). No Option may contain a right to dividend equivalents.

6.4      Duration of Options. Subject to any earlier expiration that may be effected pursuant to the provisions of Section 4.3 hereof, each Option shall expire at such time as the Committee shall determine at the time of grant; provided, further , that an Option shall not be exercisable later than the seventh (7th) anniversary date of its grant; provided, however, if the term of an Option (but not an ISO) expires when trading in the Shares is prohibited by applicable law or the Company’s insider trading policy (as then in effect), then the term of such Option shall expire on the 30th day after the expiration of such prohibition.

6.5      Exercise of Options. Options granted under this Plan shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for each grant or for each Participant.

6.6      Payment. Any Option granted under this Article 6 shall be exercised by the delivery of a notice of exercise to the Company or its outside administrator in the manner prescribed by the Committee from time to time in the related Award Agreement, setting forth the number of Shares with respect to which the Option is to be exercised, and either (i) accompanied by full payment of the Option Price for the Shares issuable on such exercise or (ii) exercised in a manner that is in accordance with applicable law and the “cashless exercise” procedures (if any) approved by the Committee involving a broker or dealer.

The Option Price upon exercise of any Option shall be payable to the Company in full: (a) in cash; (b) by tendering previously acquired Shares valued at their Fair Market Value per Share at the time of exercise; (c) by a combination of (a) and (b); or (d) any other method approved by the Committee, in its sole discretion.

Subject to any governing rules or regulations, as soon as practicable after receipt of a notification of exercise and full payment, the Company shall deliver to the Participant, in the Participant’s name, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option, or shall cause Shares to be issued or transferred to the Participant via book-entry registration.

6.7      Restrictions on Share Transferability. The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option granted under this Plan as it may deem advisable, including, without limitation, restrictions under applicable U.S. federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, and under any blue sky or state securities laws applicable to such Shares.

6.8      Termination of Employment, Service or Directorship. Each Option Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant’s employment, service or directorship with the Company and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in each Award Agreement entered into with a Participant with respect to an Option Award, need not be uniform among all Options granted pursuant to this Article 6 and may reflect distinctions based on the reasons for termination.

 

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ARTICLE 7

Restricted Stock

7.1      Grant of Restricted Stock. Subject to the terms and provisions of this Plan, the Committee at any time, and from time to time, may grant Shares as Restricted Stock (“Shares of Restricted Stock”) to Participants in such amounts as the Committee shall determine.

7.2      Restricted Stock Award Agreement. Each Award of Restricted Stock shall be evidenced by an Award Agreement that shall specify the Vesting Period, the number of Shares of Restricted Stock granted, and such other provisions as the Committee shall determine.

7.3      Other Restrictions. The Committee may impose such other conditions and/or restrictions on any Shares of Restricted Stock granted pursuant to this Plan as it may deem advisable, including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock, restrictions based upon the achievement of specific performance goals, time-based restrictions on vesting following the attainment of the performance goals and/or restrictions under applicable U.S. federal or state securities laws.

To the extent deemed appropriate by the Committee, the Company may retain any certificates representing Shares of Restricted Stock in the Company’s possession until such time as all conditions and/or restrictions applicable to such Shares have been satisfied or have lapsed.

7.4      Removal of Restrictions. Except as otherwise provided in this Article 7, Shares of Restricted Stock covered by each Restricted Stock Award made under this Plan shall become freely transferable by the Participant after all conditions and restrictions applicable to such Shares have been satisfied or have lapsed.

7.5      Voting Rights. To the extent permitted by the Committee or required by applicable law, Participants holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares during the applicable Vesting Period.

7.6      Dividends. During the applicable Vesting Period, Participants holding Shares of Restricted Stock granted hereunder shall, unless the Committee otherwise determines, be credited with cash dividends paid with respect to the Shares; provided, however, that such dividends shall be held by the Company and shall be subject to the same Vesting Period as the Shares of Restricted Stock with respect to which the dividends are paid.

7.7      Termination of Employment, Service or Directorship. Each Restricted Stock Award Agreement shall set forth the extent to which the Participant shall have the right to receive unvested Shares of Restricted Stock following termination of the Participant’s employment, service or directorship with the Company and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in each Award Agreement entered into with a Participant with respect to Shares of Restricted Stock, need not be uniform among all Shares of Restricted Stock granted pursuant to this Article 7 and may reflect distinctions based on the reasons for termination.

 

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ARTICLE 8

Performance Units and Performance Shares

8.1      Grant of Performance Units/Shares. Subject to the terms of this Plan, Performance Units and Performance Shares may be granted to Participants in such amounts and upon such terms, and at any time and from time to time, as shall be determined by the Committee.

8.2      Value of Performance Units/Shares. Each Performance Unit shall have an initial value that is established by the Committee at the time of grant. Each Performance Share shall represent the right to receive a Share subject to the satisfaction of relevant performance conditions. The Committee shall set performance goals in its discretion that, depending on the extent to which they are met, will determine the number and/or value of Performance Units/Shares which will be paid out to the Participant.

8.3      Earning of Performance Units/Shares. Subject to the terms of this Plan, after the applicable Performance Period has ended, the holder of Performance Units/Shares shall be entitled to receive payment of the number and value of Performance Units/Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance goals have been achieved.

8.4      Form and Timing of Payment of Performance Units/Shares. Subject to the provisions of Article 12 hereof, Payment of earned Performance Units/Shares to a Participant shall be made no later than March 15 following the end of the calendar year in which such Performance Units/Shares vest, or as soon as administratively practicable thereafter if payment is delayed due to unforeseeable events. Subject to the terms of this Plan, the Committee, in its sole discretion, may pay earned Performance Units/Shares in the form of cash or in Shares (or in a combination thereof) that have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period. Any Shares issued or transferred to a Participant for this purpose may be granted subject to any restrictions that are deemed appropriate by the Committee.

8.5      Voting Rights and Dividends. During the applicable Vesting Period, Participants holding Performance Shares shall not have voting rights with respect to the Shares underlying such Performance Shares. For the avoidance of doubt, a Performance Share shall not convey any rights as a stockholder until Shares are issued and delivered to the Participant. During the applicable Vesting Period, Participants holding Performance Shares granted hereunder may be credited with dividend equivalents, in the form of cash or additional Performance Shares (as determined by the Committee in its sole discretion), if a cash dividend is paid with respect to the Shares. The extent to which dividend equivalents shall be credited shall be determined in the sole discretion of the Committee. Such dividend equivalents shall be subject to the same vesting restrictions and performance restrictions as the Performance Shares with respect to which the dividend equivalents are paid.

8.6      Termination of Employment, Service or Directorship. Each Award Agreement providing for a Performance Unit/Share shall set forth the extent to which the Participant shall have the right to receive a payout of cash or Shares with respect to unvested Performance Unit/Shares following termination of the Participant’s employment, service or directorship with the Company and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with the Participant, need not be uniform among all Awards of Performance Units/Shares granted pursuant to this Article 8 and may reflect distinctions based on the reasons for termination.

 

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ARTICLE 9

Restricted Stock Units

9.1      Grant of RSUs. Subject to the terms and provisions of this Plan, the Committee at any time, and from time to time, may grant RSUs to eligible Participants in such amounts as the Committee shall determine.

9.2      RSU Award Agreement. Each RSU Award to a Participant shall be evidenced by an RSU Award Agreement entered into with that Participant, which shall specify the Vesting Period, the number of RSUs granted, and such other provisions as the Committee shall determine in its sole discretion.

9.3      Form and Timing of Delivery. If a Participant’s RSU Award Agreement provides for payment in cash, payment equal to the Fair Market Value of the Shares underlying the RSU Award, calculated as of the last day of the applicable Vesting Period, shall be made in a single lump-sum payment. If a Participant’s RSU Award Agreement provides for payment in Shares, the Shares underlying the RSU Award shall be delivered to the Participant. Such payment of cash or Shares shall be made no later than March 15 following the end of the calendar year during which the RSU Award vests, or as soon as administratively practicable thereafter if payment is delayed due to unforeseeable events. Such delivered Shares shall be freely transferable by the Participant.

9.4      Voting Rights and Dividends. During the applicable Vesting Period, Participants holding RSUs shall not have voting rights with respect to the Shares underlying such RSUs. For the avoidance of doubt, an RSU shall not convey any rights as a stockholder until Shares are issued and delivered to the Participant. During the applicable Vesting Period, Participants holding RSUs granted hereunder shall, unless the Committee otherwise determines, be credited with dividend equivalents, in the form of cash or additional RSUs (as determined by the Committee in its sole discretion), if a cash dividend is paid with respect to the Shares. The extent to which dividend equivalents shall be credited shall be determined in the sole discretion of the Committee. Such dividend equivalents shall be subject to a Vesting Period equal to the remaining Vesting Period of the RSUs with respect to which the dividend equivalents are paid.

9.5      Termination of Employment, Service or Directorship. Each RSU Award Agreement shall set forth the extent to which the applicable Participant shall have the right to receive a payout of cash or Shares with respect to unvested RSUs following termination of the Participant’s employment, service or directorship with the Company and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in each Award Agreement entered into with a Participant with respect to RSUs, need not be uniform among all RSUs granted pursuant to this Article 9 and may reflect distinctions based on the reasons for termination.

ARTICLE 10

Performance Measures

10.1      Performance Measures . The Committee may establish performance-measures for purposes of grants of Performance Units and Performance Shares. Subject to the terms of this Plan, each of these measures shall be defined by the Committee on a consolidated, group or division basis, on an absolute or relative basis or in comparison to one or more peer group companies or indices, and may include or exclude specified infrequent and unusual items as defined by the Company’s auditors.

 

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10.2      Adjustments . The Committee shall have the sole discretion to adjust determinations of the degree of attainment of the pre-established performance goals. The Committee shall retain the discretion to adjust such Awards downward.

ARTICLE 11

Transferability; Benefits on Death

Awards under this Plan are not transferable (either voluntarily or involuntarily), before or after Participant’s death, except as follows: (a) during Participant’s lifetime, pursuant to a domestic relations order, issued by a court of competent jurisdiction, that is not contrary to the terms and conditions of this Plan or the applicable Award Agreement, and in a form acceptable to the Committee, in its sole discretion; or (b) after Participant’s death, by will or pursuant to the applicable laws of descent and distribution, as may be the case. Any person to whom an Award is transferred in accordance with the provisions of the preceding sentence shall take such Award subject to all of the terms and conditions of this Plan and the applicable Award Agreement, including that the vesting and termination provisions thereof will continue to be applied with respect to the Participant. Options are exercisable only by the applicable Participant (or, during the Participant’s lifetime, by the Participant’s court appointed legal representative) or a person to whom the Options have been transferred in accordance with this Article. The Committee may prescribe and include in applicable Award Agreements other restrictions on transfer. Any attempted assignment that is in violation of this Article 11 shall be null and void.

ARTICLE 12

Deferrals

The Committee may, in its sole discretion, permit selected Participants to elect to defer payment of some or all types of Awards, or may provide for the deferral of an Award in an Award Agreement; provided, however, that the timing of any such election and payment of any such deferral shall be specified in the Award Agreement and shall conform to the applicable requirements of Code Section 409A(a)(2), (3) and (4) and the regulations and rulings issued thereunder. Any deferred payment, whether elected by a Participant or specified in an Award Agreement or by the Committee, may be forfeited if and to the extent that the applicable Award Agreement so provides.

ARTICLE 13

Rights of Employees, Directors and Consultants

13.1      Employment or Service. Nothing in this Plan shall interfere with or limit in any way the right of the Company to terminate any Participant’s employment or service at any time, nor confer upon any Participant any right to continue in the employ or service of the Company.

13.2      No Contract of Employment. Neither an Award nor any benefits arising under this Plan shall constitute part of a Participant’s employment contract with the Company or any Subsidiary, and accordingly, subject to the provisions of Article 15 hereof, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Board without giving rise to liability on the part of the Company or any Subsidiary for severance payments.

13.3      Transfers Between Participating Entities. For purposes of this Plan, a transfer of a Participant’s employment between the Company and a Subsidiary, or between Subsidiaries, shall not be deemed to be a termination of employment. Upon such a transfer, the Committee may make such adjustments to outstanding Awards as it deems appropriate to reflect the change in reporting relationships.

 

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ARTICLE 14

Change in Control

Notwithstanding Section 4.4 or any other provision of this Plan to the contrary, the provisions of this Article 14 shall apply in the event of a Change in Control, unless otherwise provided in the applicable Award Agreement, or as provided in an individual severance or employment agreement to which a Participant is a party.

14.1      Assumption of Awards . Upon a Change in Control, each then-outstanding Award may be adjusted or substituted in accordance with Section 4.3 (subject to the limitations set forth therein) with an award that meets the criteria set forth in this Section 14.1 (each, a “Replacement Award,” and each adjusted or substituted Award, a “Replaced Award”). An adjusted or substituted Award meets the conditions of this Section 14.1 (and hence qualifies as a Replacement Award) if (a) it is of the same type (e.g., stock option for Option, restricted stock for Restricted Stock, restricted stock unit for Restricted Stock Unit, etc.) as the Replaced Award, (b) it has a value at least equal to the value of the Replaced Award, (c) it relates to publicly traded equity securities of the Company or its successor in the Change in Control or another entity that is affiliated with the Company or its successor following the Change in Control, (d) if the Participant holding the Replaced Award is subject to U.S. federal income tax under the Code, the tax consequences to such Participant under the Code of the Replacement Award are not less favorable to such Participant than the tax consequences of the Replaced Award, and (e) its other terms and conditions are not less favorable to the Participant holding the Replacement Award than the terms and conditions of the Replaced Award (including the provisions that would apply in the event of a subsequent Change in Control). Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of the Replaced Award if the requirements of the preceding sentence are satisfied. The determination of whether the conditions of this Section 14.1 are satisfied will be made by the Committee, as constituted immediately before the Change in Control, in its sole discretion. Without limiting the generality of the foregoing, the Committee may determine the value of Awards and Replacement Awards that are stock options by reference to either their intrinsic value or their fair value.

14.2      Failure to Assume Awards . In the event that a Participant does not receive a Replacement Award that meets the conditions set forth in Section 14.1 with respect to any of his or her outstanding Awards upon a Change in Control, each such outstanding Award will become fully vested and exercisable (as applicable) and any restrictions applicable to such Award will lapse, with any applicable performance goals deemed to have been achieved at the greater of target level as of the date of such vesting or the actual performance level had the performance period ended on the date of the Change in Control. For the avoidance of doubt, if all Awards hereunder are terminated without any Replacement Awards, then the Company or its successor in the Change in Control may terminate all Awards whose exercise price is less than or equal to the value per Share realized in connection with the Change in Control (without any consideration therefor).

14.3      Termination Following Change in Control . If a Participant terminates his or her employment for good reason, the Participant is involuntarily terminated for reasons other than for cause, or the Participant’s employment terminates due to the Participant’s death or Disability during the three-year period commencing on the date of a Change in Control, then (A) all Replacement Awards held by the Participant will become fully vested and, if applicable, exercisable and free of restrictions (with any applicable performance goals deemed to have been achieved at the greater of target level or actual performance through the date of such Change in Control), and (B) all Options held by the Participant immediately before such termination of employment that the Participant also held as of the date of the Change in Control or that constitute Replacement Awards will remain exercisable for not less than three years following such termination of employment or until the expiration of the stated term of such Option, whichever period is shorter (provided, however, that if the applicable Award Agreement provides for a longer period of exercisability, that provision will control).

 

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ARTICLE 15

Amendment, Modification and Termination

15.1      Amendment, Modification, and Termination. The Board may at any time and from time to time, alter, amend, suspend or terminate this Plan in whole or in part, provided, however, that stockholder approval shall be required for any amendment that materially alters the terms of this Plan or is otherwise required by applicable legal requirements. No amendment or alteration that would adversely affect the rights of any Participant under any Award previously granted to such Participant shall be made without the consent of such Participant.

15.2      Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events . The Committee may make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4.3 hereof) affecting the Company or the financial statements of the Company or in recognition of changes in applicable laws, regulations or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent unintended dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan.

ARTICLE 16

Withholding

The Company shall have the right to deduct applicable taxes from any Award payment and withhold, at the time of delivery or vesting of cash or Shares under this Plan, or at the time applicable law otherwise requires, an appropriate amount of cash or number of Shares or a combination thereof for payment of taxes required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes. The Committee may permit withholding to be satisfied by the transfer to the Company of Shares theretofore owned by the holder of the Award with respect to which withholding is required. If Shares are used to satisfy tax withholding, such Shares shall be valued at their Fair Market Value on the date when the tax withholding is required to be made.

ARTICLE 17

Indemnification

Each person who is or shall have been a member of the Committee, or of the Board, or an officer of the Company to whom the Committee has delegated authority in accordance with Article 3 hereof, shall be indemnified and held harmless by the Company against and from: (a) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under this Plan, except for any such action or failure to act that constitutes willful misconduct on the part of such person or as to which any applicable statute prohibits the Company from providing indemnification; and (b) any and all amounts paid by him or her in settlement of any claim, action, suit or proceeding as to which indemnification is provided pursuant to clause (a) of this sentence, with the Company’s approval, or paid by him or her in satisfaction of any judgment or award in any such action, suit or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf.

The foregoing right of indemnification shall be in addition to any other rights of indemnification to which such persons may be entitled under the Company’s Amended and Restated Articles of Incorporation or Amended and Restated By-Laws (each, as amended from time to time), as a matter of law, or otherwise.

 

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ARTICLE 18

Successors

All obligations of the Company under this Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the direct or indirect result of a merger, consolidation, purchase of all or substantially all of the business and/or assets of the Company or other transaction.

ARTICLE 19

General Provisions

19.1      Restrictions and Legends. No Shares or other form of payment shall be issued or transferred with respect to any Award unless the Company shall be satisfied that such issuance or transfer will be in compliance with applicable U.S. federal and state securities laws. The Committee may require each person receiving Shares pursuant to an Award under this Plan to represent to and agree with the Company in writing that the Participant is acquiring the Shares for investment without a view to distribution thereof. Any certificates evidencing Shares delivered under this Plan (to the extent that such Shares are so evidenced) may be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the U.S. Securities and Exchange Commission, any securities exchange or transaction reporting system upon which the Shares are then listed or to which they are admitted for quotation and any applicable U.S. federal or state securities law. In addition to any other legend required by this Plan, any certificates for such Shares may include any legend that the Committee deems appropriate to reflect any restrictions on transfer of such Shares.

19.2      Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular and the singular shall include the plural.

19.3      Severability. If any provision of this Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

19.4      Requirements of Law. The granting of Awards and the issuance of Shares under this Plan shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

19.5      Uncertificated Shares. To the extent that this Plan provides for issuance of certificates to reflect the transfer of Shares, the transfer of such Shares may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange or transaction reporting system on which the Shares are listed or to which the Shares are admitted for quotation.

19.6      Clawback Policy. Notwithstanding any other provisions in this Plan, any Award shall be subject to recovery or clawback by the Company under any clawback policy adopted by the Company in accordance with applicable law, as amended or superseded from time to time.

19.7      Unfunded Plan. Insofar as this Plan provides for Awards of cash, Shares or rights thereto, it will be unfunded. Although the Company may establish bookkeeping accounts with respect to Participants who are entitled to cash, Shares or rights thereto under this Plan, it will use any such accounts merely as a bookkeeping convenience. Participants shall have no right, title or interest whatsoever in or to any investments that the Company may make to aid it in meeting its obligations under this Plan. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any

 

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Participant, beneficiary, legal representative or any other person. To the extent that any person acquires a right to receive payments from the Company under this Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts, except as expressly set forth in this Plan. This Plan is not intended to be subject to ERISA.

19.8      No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to this Plan or any Award. The Committee shall determine whether cash, Awards or other property shall be delivered or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.

19.9      Governing Law. This Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by mandatory provisions of the Code or the securities laws of the United States, will be governed by and construed in accordance with the laws of the State of Texas, without giving effect to any conflicts of laws provisions thereof that would result in the application of the laws of any other jurisdiction.

 

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