-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WRO16ePqIXOC2CXFfWvWhW+62qGz5lLmdUZiM2E4P8K/HBGIwuGPk+8WxnyawMWI uCQEYt7rQxUZITvhkERDlg== 0000899243-02-000125.txt : 20020414 0000899243-02-000125.hdr.sgml : 20020414 ACCESSION NUMBER: 0000899243-02-000125 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020130 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TIDEWATER INC CENTRAL INDEX KEY: 0000098222 STANDARD INDUSTRIAL CLASSIFICATION: WATER TRANSPORTATION [4400] IRS NUMBER: 720487776 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06311 FILM NUMBER: 02521605 BUSINESS ADDRESS: STREET 1: 601 POYDRAS ST. STREET 2: SUITE 1900 CITY: NEW ORLEANS STATE: LA ZIP: 70130 BUSINESS PHONE: 5045681010 MAIL ADDRESS: STREET 1: 601 POYDRAS ST. STREET 2: SUITE 1900 CITY: NEW ORLEANS STATE: LA ZIP: 70130 FORMER COMPANY: FORMER CONFORMED NAME: TIDEWATER MARINE SERVICE INC DATE OF NAME CHANGE: 19780724 10-Q 1 d10q.txt FORM 10-Q FOR PERIOD ENDED DECEMBER 31, 2001 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 - For the Quarterly Period Ended December 31, 2001 ----------------- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 - For the Transition Period From ___________________________________ to _________________________________ Commission file number 1-6311 ------ TIDEWATER INC. --------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 72-0487776 -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 601 Poydras Street, Suite 1900, New Orleans, Louisiana 70130 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (504) 568-1010 ----------------------- NOT APPLICABLE --------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or of such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ------- 56,117,116 shares of Tidewater Inc. common stock $.10 par value per share were outstanding on January 11, 2002. Excluded from the calculation of shares outstanding at January 11, 2002 are 4,426,227 shares held by the Registrant's Grantor Stock Ownership Trust. Registrant has no other class of common stock outstanding. -1- PART I. FINANCIAL INFORMATION
Item 1. Financial Statements -------------------- TIDEWATER INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) - -------------------------------------------------------------------------------------------------- December 31, March 31, ASSETS 2001 2001 - -------------------------------------------------------------------------------------------------- Current assets: Cash and cash equivalents $ 12,042 95,153 Trade and other receivables 180,227 160,677 Marine operating supplies 28,604 28,632 Other current assets 2,971 4,125 - -------------------------------------------------------------------------------------------------- Total current assets 223,844 288,587 - -------------------------------------------------------------------------------------------------- Investments in, at equity, and advances to unconsolidated companies 14,898 16,544 Properties and equipment: Vessels and related equipment 1,808,806 1,613,604 Other properties and equipment 42,520 42,837 - -------------------------------------------------------------------------------------------------- 1,851,326 1,656,441 Less accumulated depreciation 886,664 884,765 - -------------------------------------------------------------------------------------------------- Net properties and equipment 964,662 771,676 - -------------------------------------------------------------------------------------------------- Goodwill, net 328,754 328,836 Other assets 106,500 99,849 - -------------------------------------------------------------------------------------------------- Total assets $ 1,638,658 1,505,492 ================================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY - -------------------------------------------------------------------------------------------------- Current liabilities: Accounts payable and accrued expenses 68,623 68,426 Accrued property and liability losses 9,946 6,825 Income taxes 5,907 8,336 - -------------------------------------------------------------------------------------------------- Total current liabilities 84,476 83,587 - -------------------------------------------------------------------------------------------------- Long-term debt 40,000 --- Deferred income taxes 167,830 155,744 Accrued property and liability losses 35,171 38,682 Other liabilities and deferred credits 47,119 49,139 Stockholders' equity: Common stock of $.10 par value, 125,000,000 shares authorized, issued 60,543,343 shares at December and 60,543,181 shares at March 6,054 6,055 Other stockholders' equity 1,258,008 1,172,285 - -------------------------------------------------------------------------------------------------- Total stockholders' equity 1,264,062 1,178,340 - -------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $ 1,638,658 1,505,492 ==================================================================================================
See Notes to Unaudited Condensed Consolidated Financial Statements. -2-
TIDEWATER INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except share and per share data) - ---------------------------------------------------------------------------------------------------------------------- Quarter Ended Nine Months Ended December 31, December 31, ------------------------ ----------------------- 2001 2000 2001 2000 - ---------------------------------------------------------------------------------------------------------------------- Revenues: Vessel revenues $ 178,616 154,766 550,526 415,713 Other marine revenues 3,212 4,361 9,128 26,435 - ---------------------------------------------------------------------------------------------------------------------- 181,828 159,127 559,654 442,148 - ---------------------------------------------------------------------------------------------------------------------- Costs and expenses: Vessel operating costs 96,565 94,202 290,269 270,457 Costs of other marine revenues 2,012 3,170 5,585 20,479 Depreciation and amortization 19,771 19,926 58,364 58,452 General and administrative 16,600 16,592 49,349 48,869 - ---------------------------------------------------------------------------------------------------------------------- 134,948 133,890 403,567 398,257 - ---------------------------------------------------------------------------------------------------------------------- 46,880 25,237 156,087 43,891 Other income (expenses): Foreign exchange gain (loss) (53) 82 (1,178) 20 Gain on sales of assets 780 2,335 1,021 22,659 Equity in net earnings of unconsolidated companies 1,585 1,479 4,527 5,514 Minority interests (49) 112 (142) (60) Interest and miscellaneous income 685 3,933 2,540 12,886 Interest and other debt costs (237) (326) (597) (650) - ---------------------------------------------------------------------------------------------------------------------- 2,711 7,615 6,171 40,369 - ---------------------------------------------------------------------------------------------------------------------- Earnings before income taxes 49,591 32,852 162,258 84,260 Income taxes 16,049 10,513 54,356 27,466 - ---------------------------------------------------------------------------------------------------------------------- Net earnings $ 33,542 22,339 107,902 56,794 ====================================================================================================================== Earnings per common share $ .60 .40 1.93 1.02 ====================================================================================================================== Diluted earnings per common share $ .60 .40 1.92 1.01 ====================================================================================================================== Weighted average common shares outstanding 56,043,842 55,770,190 56,021,765 55,686,582 Incremental common shares from stock options 182,053 591,772 321,795 492,317 - ---------------------------------------------------------------------------------------------------------------------- Adjusted weighted average common shares 56,225,895 56,361,962 56,343,560 56,178,899 ====================================================================================================================== Cash dividends declared per common share $ .15 .15 .45 .45 ======================================================================================================================
See Notes to Unaudited Condensed Consolidated Financial Statements. -3- TIDEWATER INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) - --------------------------------------------------------------------------------
Quarter Ended Nine Months Ended December 31, December 31, ------------------------ ----------------------- 2001 2000 2001 2000 - -------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities $ 46,654 33,901 153,729 91,481 - -------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Proceeds from sales of assets 3,549 3,102 10,001 45,128 Additions to properties and equipment (46,101) (209,340) (262,917) (253,147) Other --- (2,657) 195 (2,680) - -------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (42,552) (208,895) (252,721) (210,699) - -------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Credit facility borrowings $ --- --- 60,000 --- Principal payments on debt (20,000) --- (20,000) --- Proceeds from issuance of common stock 82 1,018 1,120 3,281 Cash dividends (8,417) (8,378) (25,238) (25,093) Other $ --- --- (1) --- - -------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities (28,335) (7,360) 15,881 (21,812) - -------------------------------------------------------------------------------------------------------------------- Net change in cash and cash equivalents (24,233) (182,354) (83,111) (141,030) Cash and cash equivalents at beginning of period 36,275 268,234 95,153 226,910 - -------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 12,042 85,880 12,042 85,880 ==================================================================================================================== Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 296 420 892 549 Income taxes $ 27,253 6,696 47,127 15,082 ====================================================================================================================
See Notes to Unaudited Condensed Consolidated Financial Statements. -4- TIDEWATER INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- (1) Interim Financial Statements The consolidated financial information for the interim periods presented herein has not been audited by independent accountants, but in the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the condensed consolidated balance sheets and the condensed consolidated statements of earnings and cash flows at the dates and for the periods indicated have been made. Results of operations for interim periods are not necessarily indicative of results of operations for the respective full years. (2) Stockholders' Equity At December 31, 2001 and March 31, 2001, 4,429,844 and 4,506,962 shares, respectively, of common stock were held in a grantor stock ownership plan trust for the benefit of stock-based employee benefits programs. These shares are not included in common shares outstanding for earnings per share calculations and transactions between the company and the trust, including dividends paid on the company's common stock, are eliminated in consolidating the accounts of the trust and the company. (3) Income Taxes Income tax expense for interim periods is based on estimates of the effective tax rate for the entire fiscal year. The effective tax rate applicable to pre-tax earnings was 32.4% and 33.5% for the quarter and nine-month period ended December 31, 2001. The effective tax rate applicable to pre-tax earnings was 32% and 32.6% for the quarter and nine-month period ended December 31, 2000, respectively. (4) New Accounting Pronouncements Effective April 1, 2001, the company adopted Statement of Financial Accounting Standards (SFAS) No. 138, "Accounting for Certain Derivative Instruments and Hedging Activities," that amends certain provisions of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." The pronouncements require that all derivatives be recognized as either assets or liabilities and measured at fair value. The adoption of SFAS No. 133, as amended, did not have a material impact on the company's financial statements. In July 2001, the Financial Accounting Standards Board issued SFAS No. 142, "Goodwill and Other Intangible Assets," which establishes a new method of testing goodwill for impairment using a fair-value-based approach and does not permit amortization of goodwill as previously required by Accounting Principles Board (APB) Opinion No. 17, "Intangible Assets." An impairment loss would be recorded if the recorded goodwill exceeds its implied fair value. SFAS No. 142 is effective for fiscal years beginning after December 15, 2001; however, early adoption is allowed for companies with fiscal years beginning after March 15, 2001 provided the first quarter financial statements have not been previously issued. The company elected to adopt SFAS No. 142 effective April 1, 2001 and, accordingly, no goodwill amortization was recorded during fiscal 2002. The company completed its transitional goodwill impairment test within six months of adopting SFAS No. 142 as required and the test determined there is no goodwill impairment. The transitional impairment test required fair value be tested as of the first day of the company's fiscal year and therefore the fair value of the reporting unit was determined using carrying amounts as of April 1, 2001. The company performed its annual impairment test as of December 31, 2001 and the test determined -5- there is no goodwill impairment. Interim testing will be performed when an event occurs or circumstances indicate that the carrying amount of goodwill may be impaired. Goodwill amortization on a pre-tax basis for the quarter and nine-month period ended December 31, 2001 would have been $2.3 million and $6.9 million, respectively, or $.03 per share and $.08 per share after tax, respectively, had the company not adopted SFAS No. 142. For the quarter and nine-month period ended December 31, 2000, pre-tax goodwill amortization amounted to $2.3 million and $6.9 million, respectively, or $.03 per share and $.08 per share after tax, respectively. Also in July 2001, the Financial Accounting Standards Board issued SFAS No. 143, "Accounting for Asset Retirement Obligations" which requires companies to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. The company does not anticipate any financial statement impact with the adoption of this statement. In August 2001, the Financial Accounting Standards Board issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" which establishes one accounting model to be used for long-lived assets to be disposed of by sale and broadens the presentation of discontinued operations to include more disposal transactions. SFAS No. 144 supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets to Be Disposed Of" and the accounting and reporting provisions of APB Opinion No. 30. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. The company does not anticipate any financial statement impact with the adoption of this statement. -6- INDEPENDENT ACCOUNTANTS' REVIEW REPORT -------------------------------------- The Board of Directors and Shareholders Tidewater Inc. We have reviewed the accompanying condensed consolidated balance sheet of Tidewater Inc. and subsidiaries as of December 31, 2001, and the related condensed consolidated statements of earnings and cash flows for the three-month and nine-month periods ended December 31, 2001 and 2000. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States. We have previously audited, in accordance with auditing standards generally accepted in the United States, the consolidated balance sheet of Tidewater Inc. and subsidiaries as of March 31, 2001, and the related consolidated statements of earnings, stockholders' equity and cash flows for the year then ended, not presented herein, and in our report dated April 23, 2001, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of March 31, 2001, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. Ernst & Young LLP New Orleans, Louisiana January 16, 2002 -7- Item 2. Management's Discussion and Analysis ------------------------------------ The company provides services to the global offshore energy industry through the operation of a diversified fleet of marine service vessels. Revenues, net earnings and cash flows from operations are dependent upon the activity level of the vessel fleet which is ultimately dependent upon oil and natural gas prices which, in turn, are determined by the supply/demand relationship for oil and natural gas. The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and related disclosures. FORWARD LOOKING INFORMATION - --------------------------- In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the company notes that certain statements set forth in this Quarterly Report on Form 10-Q which provide other than historical information and which are forward looking, involve risks and uncertainties that may impact the company's actual results of operations. The company faces many risks and uncertainties, many of which are beyond the control of the company, including: fluctuations in oil and gas prices; level of fleet additions by competitors; changes in capital spending by customers in the energy industry for exploration, development and production; unsettled political conditions, civil unrest and governmental actions, especially in higher risk countries of operations; foreign currency fluctuations; and environmental and labor laws. Readers should consider all of these risk factors as well as other information contained in this report. MARINE OPERATIONS - ----------------- Offshore service vessels provide a diverse range of services and equipment to the energy industry. Fleet size, utilization and vessel day rates primarily determine the amount of revenues and operating profit because operating costs and depreciation do not change proportionally when revenue changes. Operating costs primarily consist of crew costs, repair and maintenance, insurance, fuel, lube oil and supplies. Fleet size and utilization are the major factors which affect crew costs. The timing and amount of repair and maintenance costs are influenced by customer demands, vessel age and scheduled drydockings to satisfy safety and inspection requirements mandated by regulatory agencies. Whenever possible, vessel drydockings are done during seasonally slow periods to minimize the impact on vessel operations and are only done if economically justified, given the vessel's age and physical condition. -8- The following table compares revenues and operating costs (excluding general and administrative expense and depreciation expense) for the quarters and nine-month periods ended December 31 and for the quarter ended September 30, 2001. Vessel revenues and operating costs relate to vessels owned and operated by the company while other marine services relate to third-party activities of the company's shipyards, brokered vessels and other miscellaneous marine-related activities.
Quarter Quarter Ended Nine Months Ended Ended December 31, December 31, Sept 30, ----------------- ------------------ ------- (In thousands) 2001 2000 2001 2000 2001 - -------------------------------------------------------------------------------------------------- Revenues: Vessel revenues: United States $ 44,328 54,367 172,582 135,677 59,252 International 134,288 100,399 377,944 280,036 124,844 - -------------------------------------------------------------------------------------------------- 178,616 154,766 550,526 415,713 184,096 Other marine revenues 3,212 4,361 9,128 26,435 3,167 - -------------------------------------------------------------------------------------------------- $ 181,828 159,127 559,654 442,148 187,263 ================================================================================================== Operating costs: Vessel operating costs: Crew costs $ 52,205 46,600 155,125 135,951 52,395 Repair and maintenance 20,386 25,719 65,088 75,797 20,064 Insurance 5,350 5,464 16,051 15,151 6,008 Fuel, lube and supplies 7,479 8,002 23,030 20,825 7,780 Other 11,145 8,417 30,975 22,733 10,631 - -------------------------------------------------------------------------------------------------- 96,565 94,202 290,269 270,457 96,878 Costs of other marine revenues 2,012 3,170 5,585 20,479 2,041 - -------------------------------------------------------------------------------------------------- $ 98,577 97,372 295,854 290,936 98,919 ==================================================================================================
Marine support services are conducted worldwide with assets that are highly mobile. Revenues are principally derived from offshore service vessels, which regularly and routinely move from one operating area to another, often to and from offshore operating areas in different continents. Because of this asset mobility, revenues and long-lived assets attributable to the company's international marine operations in any one country are not "material" as that term is defined by SFAS No. 131. As a result of the uncertainty of certain customers to make payment of vessel charter hire, the company has deferred the recognition of approximately $5.2 million of billings as of December 31, 2001 ($7.0 million of billings as of March 31, 2001), which would otherwise have been recognized as revenue. The company will recognize the amounts as revenue as cash is collected or at such time as the uncertainty has been significantly reduced. For the nine months ended December 31, 2001 domestic results of operations benefited from increases in average day rates; however, current quarter domestic results of operations continued to feel the impact of reduced natural gas drilling activity in the U.S. Gulf of Mexico as a result of lower natural gas prices. Natural gas prices began softening at the end of the first quarter of fiscal 2002 on the news that inventory levels for the resource were increasing. Prices continued to decrease throughout the current fiscal year as warmer than normal weather and economic slowdowns in the U.S. and globally reduced natural gas demands, consequently applying even more downward pressure on gas prices. Exploration and production companies in the U.S. Gulf of Mexico, cautious over the decrease in the commodity prices for natural gas, have eased their capital investments as evidenced by the significant drop in offshore rig fleet utilization rates during the last half of calendar year 2001. Although there is uncertainty in the market, leading energy analysts believe the natural gas market will improve in the latter half of 2002. Vessel demand in the domestic market is -9- is primarily driven by natural gas exploration and production and at present, it is unknown how much further vessel demand will be affected by the current softening in natural gas prices and the state of the global economic environment. Fiscal 2002 international results of operations continue to benefit from increases in average day rates. International vessel demand is primarily driven by crude oil production, and at present time crude oil commodity prices are at levels high enough to sustain growth. International exploration and production spending is expected to continue to increase which should strengthen international vessel demand. Marine operating profit and other components of earnings before income taxes for the quarters and nine-month periods ended December 31 and for the quarter ended September 30, 2001 consist of the following:
Quarter Quarter Ended Nine Months Ended Ended December 31, December 31, Sept 30, ---------------- ------------------ ------- (In thousands) 2001 2000 2001 2000 2001 - ------------------------------------------------------------------------------------------------- Vessel activity: United States $ 6,923 10,125 54,784 5,070 19,023 International 42,310 18,090 107,476 44,865 34,829 - ------------------------------------------------------------------------------------------------- 49,233 28,215 162,260 49,935 53,852 Gain on sales of assets 784 2,335 1,025 22,659 187 Other marine services 1,085 1,036 3,228 5,572 1,015 - ------------------------------------------------------------------------------------------------- Operating profit 51,102 31,586 166,513 78,166 55,054 - ------------------------------------------------------------------------------------------------- Equity in net earnings of unconsolidated companies 1,585 1,479 4,527 5,514 1,443 Interest and other debt costs (237) (326) (597) (650) (160) Corporate general and administrative (3,276) (3,520) (9,911) (10,407) (3,381) Other income 417 3,633 1,726 11,637 573 - ------------------------------------------------------------------------------------------------- Earnings from continuing operations before income taxes $ 49,591 32,852 162,258 84,260 53,529 =================================================================================================
U.S.-based vessel revenues for the quarter ended December 31, 2001 decreased approximately 18.5% from the comparative period in fiscal 2001 primarily due to a 36.6% decrease in utilization rates for the towing-supply/supply vessels, the company's major income producing asset in the domestic market, as a result of the current softness in the domestic market. Average day rates for the towing-supply/supply vessels increased 12.4% for the comparative periods; however, the increase in average day rates was insufficient to mitigate the downward effect that lower vessel utilization had on revenues. U.S.-based vessel revenues for the nine-month period ended December 31, 2001 increased 27.2% as compared to the same period in fiscal 2001 as a result of higher average day rates. Average day rates increased due to stronger demand for the company's vessels in the U.S. Gulf of Mexico. Average day rates for the towing supply/supply vessels increased by approximately 51.3% for the current nine-month period as compared to the same period in fiscal 2001. Utilization for the towing-supply/supply vessels for the current nine-month period ended December 31, 2001 decreased slightly from the comparative period in fiscal 2001 as a result of the current softness in the domestic market. U.S.-based operating profit for the quarter ended December 31, 2001 decreased 31.6% from the comparative period in fiscal 2001 primarily due to lower revenues. U.S.-based operating profit increased significantly for the nine-month period ended December 31, 2001 as compared to the same period in fiscal 2001 primarily due to higher vessel revenues and lower repair and maintenance -10- costs. Repair and maintenance costs decreased during the comparative periods as a result of fewer domestic drydockings being performed. The company incurred high repair and maintenance costs for the nine-month period ended December 30, 2000 as a result of an intense drydocking program the company initiated while vessel demand and average day rates in the domestic market were not fully recovered in order to ready its equipment for the expected increase in demand for its vessels when market conditions in the U.S. Gulf of Mexico improved. Current quarter U.S.-based vessel revenues decreased 25.2% as compared to the previous quarter as a result of lower utilization and average day rates resulting from the current softness in the U.S. Gulf of Mexico natural gas market. As of December 31, 2001, the towing supply/supply vessels operating in the U.S. Gulf of Mexico are experiencing approximately $7,200 average day rates and 30% utilization. U.S.-based operating profit for the current quarter also decrease due to lower revenues. International-based vessel revenues for the quarter and nine-month period ended December 31, 2001 increased 33.8% and 35.0%, respectively, as compared to the same periods in fiscal 2001 as a result of higher average day rates, utilization and an increase in the number of active vessels in the international-based fleet. Vessel demand in the international markets continues to remain strong as international drilling activity continues to recover from the curtailment in oil industry capital investment as a result of the drop in oil prices that commenced in the fall of 1997. The number of active vessels in the international-based fleet increased due to an aggressive deepwater vessel acquisition program that began during the second quarter of fiscal 2001. Sixteen deepwater vessels have been purchased to date, seven of which are fulfilling bareboat contractual obligations that existed at the time the vessels were purchased. The bareboat charter agreements on four of the seven vessels will expire at various times over the next two years while the bareboat charter agreements on the remaining three vessels will expire at various times over the next two years with the option to extend certain contracts for another two years. In a bareboat charter agreement, the bareboat charterer leases a vessel for a pre-arranged fee and is able to market the vessel and is also responsible for providing the crew and all other operating costs related to the vessel. For the vessels that Tidewater has under bareboat contracts, only revenue and depreciation expense is recorded related to the vessels' activity. As Tidewater incurs no operating costs related to the vessels, the related bareboat day rates are less than comparable vessels operating under normal charter hire agreements. For the quarter and nine-month period ended December 31, 2001 and for the quarter ended September 30, 2001, the seven bareboat chartered deepwater vessels experienced 100% utilization for each respective period and average day rates of approximately $6,200, $6,175 and $6,100, respectively. International-based vessel operating profit for the quarter and nine-month period ended December 31, 2001 increased approximately 134% and 140%, respectively, as compared to the same periods in fiscal 2001 due to an increase in revenues. Revenues increased as a result of an increase in the number of active vessels in the international fleet and also as a result of improved average day rates and utilization. Current quarter international-based vessel revenues increased 8% as compared to the previous quarter due to higher utilization and average day rates. Current quarter operating profit increased 21.5% as compared to the prior quarter due to higher revenues. During the second quarter of fiscal 2002, the company withdrew from active service 20 older little-used vessels at which time they were removed from the utilization statistics. Nine vessels were withdrawn from the domestic market and 11 were withdrawn from the international market. Vessels withdrawn from active service are intended to be sold. Vessel utilization rates are a function of vessel days worked and vessel days available for active vessels only. -11- Gain on sales of assets for the nine-month period ended December 31, 2001 includes a $1.6 million gain from the sale of the company's interest in its consolidated marine joint venture, Maritide Offshore Oil Services Company S.A.E., in August 2001 for approximately $3.5 million; a gain of approximately $2.7 million from vessel sales; and a $3.3 million writedown in the carrying values of certain vessels that were withdrawn from active service and held for sale. The writedown is a result of reviewing the recoverability of the carrying values of the vessels that were withdrawn from active service. Gain on sales of assets for the nine-month period ended December 31, 2000 included a $16.8 million gain resulting from the sale of the company's 40% holding in its marine joint venture, National Marine Service. Vessel utilization is determined primarily by market conditions and to a lesser extent by drydocking requirements. Vessel day rates are determined by the demand created through the level of offshore exploration, development and production spending by energy companies relative to the supply of offshore service vessels. Suitability of equipment and the degree of service provided also influence vessel day rates. The day based utilization percentages and average day rates tables include a new vessel class category for the deepwater vessel fleet. Included in this class are large platform supply vessels and large, high-horsepowered anchor-handling towing supply vessels that are capable of operating in deepwater markets globally. The deepwater vessel fleet statistics for the prior year were included in the towing-supply/supply vessel class statistics. Accordingly, prior year's towing-supply/supply vessel class statistics have been restated to exclude the effect of the deepwater vessels. The following tables compare day-based utilization percentages and average day rates by vessel class and in total for the quarters and nine-month periods ended December 31 and for the quarter ended September 30, 2001: -12-
Quarter Quarter Ended Nine Months Ended Ended December 31, December 31, Sept 30, ---------------- ----------------- -------- 2001 2000 2001 2000 2001 - -------------------------------------------------------------------------------------------------------------------- UTILIZATION: ----------- Domestic-based fleet: -------------------- Deepwater vessels 100.0% 88.7 100.0 96.1 100.0 Towing-supply/supply 40.2 63.4 57.4 60.9 59.3 Crew/utility 84.9 93.0 89.3 89.6 93.2 Offshore tugs 48.8 32.4 43.1 35.5 42.6 Other 57.2 11.2 42.9 21.9 47.7 Total 51.8% 59.9 59.8 59.2 61.1 International-based fleet: ------------------------- Deepwater vessels 90.8% 79.0 92.9 77.5 92.5 Towing-supply/supply 82.4 80.6 78.0 77.7 77.3 Crew/utility 90.2 95.3 87.6 93.6 84.0 Offshore tugs 75.9 72.8 72.3 68.9 70.1 Other 67.0 49.7 56.2 46.3 56.0 Total 82.3% 78.8 78.1 75.8 76.8 Worldwide fleet: --------------- Deepwater vessels 91.5% 80.5 93.5 81.9 93.1 Towing-supply/supply 67.2 74.0 70.5 71.1 70.7 Crew/utility 88.1 94.5 88.2 92.2 86.9 Offshore tugs 64.4 54.2 59.9 53.7 58.4 Other 64.4 41.1 53.0 41.0 54.0 Total 71.5% 71.8 71.7 69.6 71.4 ==================================================================================================================== AVERAGE VESSEL DAY RATES: ------------------------ Domestic-based fleet: -------------------- Deepwater vessels $ 11,761 11,530 11,765 11,605 11,774 Towing-supply/supply 6,631 5,897 7,010 4,632 7,042 Crew/utility 3,089 2,544 2,971 2,265 2,948 Offshore tugs 6,131 6,298 7,175 6,135 7,467 Other 1,490 1,434 1,471 1,451 1,467 Total $ 5,255 5,306 5,974 4,410 6,088 International-based fleet: ------------------------- Deepwater vessels $ 11,763 8,633 10,832 8,448 10,778 Towing-supply/supply 6,140 5,095 5,965 5,022 5,971 Crew/utility 2,622 2,244 2,497 2,242 2,479 Offshore tugs 4,566 4,226 4,680 4,089 4,682 Other 1,148 1,362 1,064 1,428 1,070 Total $ 5,496 4,391 5,338 4,272 5,346 Worldwide fleet: --------------- Deepwater vessels $ 11,764 9,148 10,911 9,320 10,864 Towing-supply/supply 6,245 5,361 6,274 4,892 6,299 Crew/utility 2,803 2,346 2,666 2,250 2,640 Offshore tugs 5,073 4,796 5,446 4,708 5,541 Other 1,227 1,366 1,143 1,430 1,155 Total $ 5,434 4,674 5,522 4,316 5,565 ====================================================================================================================
-13- The following table compares the average number of vessels by class and geographic distribution for the quarters and nine-month periods ended December 31 and for the quarter ended September 30, 2001:
Quarter Quarter Ended Nine Months Ended Ended December 31, December 31, Sept 30, ---------------- ----------------- -------- 2001 2000 2001 2000 2001 - ------------------------------------------------------------------------------------------ Domestic-based fleet: - -------------------- Deepwater vessels 2 3 2 3 2 Towing-supply/supply 103 117 108 119 109 Crew/utility 34 25 28 26 24 Offshore tugs 29 32 29 32 29 Other 9 9 8 9 9 - ------------------------------------------------------------------------------------------ Total 177 186 175 189 173 - ------------------------------------------------------------------------------------------ International-based fleet: - ------------------------- Deepwater vessels 24 13 23 9 23 Towing-supply/supply 183 186 189 187 189 Crew/utility 52 48 51 48 52 Offshore tugs 39 38 40 38 40 Other 25 31 27 32 26 - ------------------------------------------------------------------------------------------ Total 323 316 330 314 330 - ------------------------------------------------------------------------------------------ Owned or chartered vessels included in marine revenues 500 502 505 503 503 Vessels held for sale 43 41 36 47 34 Joint-venture and other 28 27 28 37 28 - ------------------------------------------------------------------------------------------ Total 571 570 569 587 565 ==========================================================================================
The above table includes a new vessel class for the deepwater vessel fleet. Prior year's vessel averages for the deepwater vessel fleet were reported with the towing-supply/supply class; and accordingly, the average number of vessels for the towing-supply/supply class have been restated to exclude the effect of the deepwater vessel fleet. During the second quarter of fiscal 2002, the company withdrew from active service 20 older little-used vessels, primarily towing-supply/supply vessels, at which time they were removed from the utilization statistics. Nine vessels were withdrawn from the domestic market and 11 were withdrawn from the international market. The company's sale of its interest in its consolidated marine joint venture, Maritide Offshore Oil Services Company S.A.E., resulted in a decrease of five international towing-supply/supply vessels. For the nine months ended December 31, 2001 the company sold or scrapped 22 vessels. On September 30, 2001 the company purchased 10 large crewboat vessels which are included in the domestic-based fleet. During the second quarter of fiscal 2001, the company sold its 40% holding in its unconsolidated marine joint venture, National Marine Service. As a result of the sale, the joint venture vessel count decreased by 24 vessels. During the third quarter of fiscal 2001, the company sold four vessels to its 40%-owned unconsolidated joint venture, Sonatide Marine, Ltd. In addition throughout fiscal 2001, the company sold or scrapped a total of 37 vessels. -14- General and administrative expenses for the quarters and nine-month periods ended December 31 and for the quarter ended September 30, 2001:
Quarter Quarter Ended Nine Months Ended Ended December 31, December 31, Sept 30, -------------------- --------------------- -------- (In thousands) 2001 2000 2001 2000 2001 - ------------------------------------------------------------------------------------------------------------------- Personnel $ 9,995 9,989 29,370 30,131 9,930 Office and property 3,011 2,690 8,537 8,172 2,798 Sales and marketing 1,002 1,094 3,452 3,292 1,273 Professional services 997 1,126 3,921 3,120 1,656 Other 1,595 1,693 4,069 4,154 1,340 - ------------------------------------------------------------------------------------------------------------------- $ 16,600 16,592 49,349 48,869 16,997 ===================================================================================================================
General and administrative expenses for the quarter and nine-month period ended December 31, 2001 were comparable to the same periods in fiscal 2001 and were slightly lower than the previous period. LIQUIDITY, CAPITAL RESOURCES AND OTHER MATTERS - ---------------------------------------------- The company's current ratio, level of working capital and amount of cash flows from continuing operations for any year are directly related to fleet activity and vessel day rates. Fleet activity and vessel day rates are ultimately determined by the supply/demand relationship for oil and natural gas. Variations from year-to-year in these items are primarily the result of market conditions. Cash from ongoing operations in combination with available lines of credit provide the company, in management's opinion, with adequate resources to satisfy present financing requirements. At December 31, 2001, $160 million of the company's $200 million revolving line of credit was available for future financing needs. Continued payment of dividends, currently $.15 per quarter per common share, is subject to declaration by the Board of Directors. Net cash provided by operating activities for any period will fluctuate according to the level of business activity for the applicable period. For the nine months ended December 31, 2001, net cash from operating activities was $153.7 million as compared to $91.2 million for the nine months ended December 2000. Investing activities for the nine months ended December 31, 2001 used $252.7 million of cash which included $10 million from proceeds from the sale of assets, primarily the sale of the company's interest in its consolidated marine joint venture, Maritide Offshore Oil Services Company S.A.E. Sale proceeds were offset by additions to properties and equipment which was comprised of approximately $12 million in capitalized repairs and maintenance and $249.2 million for the construction of offshore marine vessels and the acquisition of two deepwater anchor-handling towing supply vessels and 10 large crewboats. Investing activities for the nine months ended December 31, 2000 used $210.7 million of cash which included $45.1 million of proceeds from the sale of assets, primarily the sale of the company's 40% holding in National Marine Service, that were offset by additions to properties and equipment totaling $253.1 million which were comprised of approximately $11.1 million in capitalized repairs and maintenance and $240.4 million for the construction of offshore marine vessels and the acquisition of seven large platform supply vessels and four large anchor-handling towing supply vessels. Financing activities for the nine months ended December 31, 2001 and 2000 included $25.2 million and $25.1 million, respectively, of cash for quarterly cash dividends of $.15 per share. On January 10, 2001 the company entered into agreements with three shipyards for the construction of 12 vessels. The new-build program was initiated in order to better service the needs of the company's customers in the deepwater markets of the world. Seven of the vessels to -15- be constructed are large platform supply vessels and five are large anchor-handling towing supply vessels capable of working in most deepwater markets of the world. Four of the platform supply vessels are being constructed at the company's shipyard, Quality Shipyards LLC, while the remaining eight vessels are being constructed at two Far East shipyards. The four vessels being constructed at Quality Shipyards LLC are being built to full Jones Act compliance. As of December 31, 2001, $150 million has been expended on these 12 vessels of the total $323 million commitment to the shipyards. Scheduled delivery of the vessels will commence in February 2002 with final delivery of the last vessel expected in January 2003. The company is financing the new-build program from its current cash balances, its projected cash flow and its revolving line of credit. In addition to the new-build program discussed above, the company has committed to the construction of three platform supply vessels, one 135-foot crewboat, four 165-foot crewboats and four 175-foot crewboats for approximately $84 million. Eleven of the vessels are being built at U.S. shipyards and one platform supply vessel is being built in Brazil. Scheduled delivery of the three platform supply vessels is expected to commence in October 2002 with final delivery in December 2002. The expected delivery date of the 135-foot crewboat is February 2002. Scheduled delivery of the four 165-foot crewboats is expected to commence in May 2002 with final delivery of the last vessel in September 2003. Scheduled delivery of the four 175-foot crewboats is expected to commence in October 2002 with final delivery of the last vessel in October 2003. As of December 31, 2001, $12 million has been expended on these vessels. Subsequent to December 31, 2001 the company committed to the construction of three platform supply vessels for a total of $40.6 million. A U.S. shipyard will build two of the vessels and a Norwegian shipyard will construct the third vessel. Scheduled delivery of the three vessels is expected to commence in July 2002 with final delivery of the last vessel in April 2003. The company is capitalizing interest costs incurred on borrowed funds used to construct vessels. Interest and debt costs incurred net of interest capitalized for the quarter and nine-month period ended December 31, 2001 was approximately $237,000 and $597,000, respectively. Interest costs capitalized for the quarter and nine month period ended December 31, 2001 was approximately $423,000 and $708,000, respectively. CURRENCY FLUCTUATIONS AND INFLATION - ----------------------------------- Because of its significant international operations, the company is exposed to currency fluctuations and exchange risk. To minimize the financial impact of these items the company attempts to contract a majority of its services in United States dollars. The company continually monitors the currency exchange risks associated with all contracts in foreign currencies. Day-to-day operating costs are generally affected by inflation. However, because the energy services industry requires specialized goods and services, general economic inflationary trends may not affect the company's operating costs. The major impact on operating costs is the level of offshore exploration, development and production spending by energy exploration and production companies. As this spending increases, prices of goods and services used by the energy industry and the energy services industry will increase. Future increases in vessel day rates may shield the company from the inflationary effects on operating costs. ENVIRONMENTAL MATTERS - --------------------- During the ordinary course of business the company's operations are subject to a wide variety of environmental laws and regulations. The company attempts to comply with these laws and regulations in order to avoid costly accidents and related environmental damage. Compliance with existing governmental regulations that have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not -16- had, nor is expected to have, a material effect on the company. The company is proactive in establishing policies and operating procedures for safeguarding the environment against any environmentally hazardous material aboard its vessels and at shore base locations. Whenever possible, hazardous materials are maintained or transferred in confined areas to ensure containment if accidents occur. In addition the company has established operating policies that are intended to increase awareness of actions that may harm the environment. Item 3. Quantitative and Qualitative Disclosure About Market Risk --------------------------------------------------------- At December 31, 2001 the company had $40 million of debt outstanding. The outstanding debt represents unsecured borrowings from the company's revolving credit facility. The fair value of this debt approximates the carrying value because the borrowings will bear interest at market rates, which currently range from 2.56 to 3.35 percent. Monies were borrowed under the revolving credit facility to finance the company's new-build program previously disclosed. Interest expense associated with the borrowings is being capitalized. The company is exposed to foreign currency fluctuations and exchange risks but attempts to minimize the financial impact of these items by contracting the majority of its services in United States dollars. The company periodically enters into spot and forward derivative financial instruments as a hedge against foreign currency denominated assets and liabilities and currency commitments. As of December 31, 2001 the company had eight forward contracts outstanding totaling $22.3 million that qualified as hedge instruments. The forward contracts were purchased to hedge against any possible foreign exchange exposure the company may experience with its commitment to a Singapore shipyard that is currently constructing three platform supply vessels for delivery between July 2002 and November 2002. -17- PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K -------------------------------- A. At page 20 of this report is the index for those exhibits required to be filed as a part of this report. B. The company's report on Form 8-K dated October 8, 2001 reported that Dean E. Taylor has been promoted to President of the company and has also been appointed to the Tidewater Board of Directors. It is expected that Mr. Taylor will become Chief Executive Officer in March 2002. C. The company's report on Form 8-K dated December 6, 2001 reported that Tidewater elected Jeff Platt, head of its South and Central American divisions, and Jim Donnelly, head of its European and African divisions, to the office of Vice President. The company also announced the promotion of Stephen Dick to Executive Vice President in charge of all North American operations. D. The company's report on Form 8-K dated December 19, 2001 reported that William C. O'Malley, chairman and chief executive officer, issued a Quarterly Report to Shareholders. -18- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TIDEWATER INC. --------------------------------------------------- (Registrant) Date: January 30, 2002 /s/ William C. O'Malley --------------------------------------------------- William C. O'Malley Chairman of the Board, and Chief Executive Officer Date: January 30, 2002 /s/ J. Keith Lousteau --------------------------------------------------- J. Keith Lousteau Senior Vice President and Chief Financial Officer Date: January 30, 2002 /s/ Joseph M. Bennett --------------------------------------------------- Joseph M. Bennett Vice President and Corporate Controller (Principal Accounting Officer) -19- EXHIBIT INDEX Exhibit Number - ------ 3(a) Tidewater Inc. Bylaws 10(a) Amended and Restated Tidewater Inc. 1992 Stock Option and Restricted Stock Plan dated September 27, 2001 10(b) Amended and Restated Tidewater Inc. 1997 Stock Incentive Plan dated September 27, 2001 10(c) Tidewater Inc. 2001 Stock Incentive Plan dated July 27, 2001 15 Letter re Unaudited Interim Financial Information -20- EX-3.(A) 3 dex3a.txt TIDEWATER INC. BYLAWS Exhibit 3(a) TIDEWATER INC. AMENDED AND RESTATED BYLAWS (amended and restated through October 5, 2001) ARTICLE I OFFICES Section 1. The principal office shall be in the City of Wilmington, County of New Castle, State of Delaware, and the name of the resident agent in charge thereof is The Corporation Trust Company. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETING OF STOCKHOLDERS Section 1. Meetings of the stockholders for the election of directors shall be held at such time and place either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. The Annual Meeting of Stockholders for the election of Directors and such other business as may properly be brought before the meeting shall be held on such date and at such time and place or places, within or without the State of Delaware, as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. Section 3. Written notice of the annual meeting shall be served upon or mailed to each stockholder entitled to vote thereat at such address as appears on the books of the corporation, at least ten days prior to the meeting. Section 4. At least ten days before every election of directors, a complete list of the stockholders entitled to vote at said election, arranged in alphabetical order, with the residence of each and the number of voting shares held by each, shall be prepared by the Secretary. Such list shall be open at the place where the election is to be held for said ten days, to the examination during ordinary business hours of any stockholder for any purpose germane to the meeting, and shall be produced and kept at the time and place of election during the whole time thereof, and subject to the inspection of any stockholder who may be present. -1- Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the Chairman of the Board and shall be called by the Chairman of the Board or Secretary at the request in writing of a majority of the Board of Directors. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting of stockholders, stating the time and place and object thereof, shall be served upon or mailed to each stockholder entitled to vote thereat at such address as appears on the books of the corporation, at least ten days before such meeting. Section 7. Business transacted at all special meetings shall be confined to the objects stated in the call. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall be requisite and shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute, by the certificate of incorporation or by these bylaws. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy and entitled to vote thereat shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation or of these bylaws, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. At any meeting of the stockholders, every stockholder having the right to vote may vote in person or by proxy appointed in the manner described in subsections (c)(1) and (c)(2) of Section 212 of the Delaware General Corporation Laws. The validity and use of any authorized proxy shall be limited to the meeting for which given. Each holder of common stock represented at a meeting of stockholders shall be entitled to one vote for each share of common stock held of record on all matters on which stockholders generally are entitled to vote. Except where the transfer books of the corporation shall have been closed or a date shall have been fixed as a record date for the determination of its stockholders entitled to vote, no share of stock shall be voted on at any election of directors which shall have been transferred on the books of the corporation within twenty days next preceding such election of directors. -2- Section 11. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (A) specified in the notice of the meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (B) otherwise properly brought before the meeting by or at the direction the Board of Directors, or (C) otherwise properly brought before the meeting by a stockholder. For business to be properly brought before an annual meeting by a stockholder, if such business relates to the election of directors of the corporation, the procedures in Article III, Section 13 must be complied with. If such business relates to any other matter, the stockholder must have given timely notice thereof in writing to the Secretary. To be timely, a stockholders notice must be delivered or mailed and received at the principal executive offices of the corporation, not less than 75 days nor more than 100 days prior to the anniversary date of the immediately preceding annual meeting of stockholders of the corporation; provided, however, that in the event that the annual meeting is called for a date (including any change in a date designated by the Board of Directors pursuant to Section 2 of this Article II) more than 50 days prior to such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or public disclosure of the date of the meeting was made, whichever first occurs. A stockholders notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (A) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (B) the name and address, as they appear on the corporations books, of the stockholder proposing such business, (C) the class and number of shares of the corporation which are beneficially owned by the stockholder, and (D) any material interest of the stockholder in such business. Notwithstanding anything in the bylaws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in this Section 11 and except that any stockholder proposal which complies with Rule 14a-8 of the proxy rules (or any successor provisions) promulgated under the Securities and Exchange Act of 1934, as amended, and is to be included in the corporations proxy statement for an annual meeting of the stockholders shall be deemed to comply with the requirements of this Section 11. The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 11, and if he should so determine, the chairman shall so declare to the meeting that any such business not properly brought before the meeting shall not be transacted. ARTICLE III BOARD OF DIRECTORS NUMBER AND CLASSIFICATION OF DIRECTORS Section 1. The number of directors of the corporation (exclusive of directors who may in certain events be elected by the holders of outstanding Preferred Stock voting separately -3- as a class) shall be not less than five (5) or more than eleven (11), the exact number of directors to be determined from time to time by resolution adopted by a majority of the entire Board. As used in this Article, "entire Board" means the total number of directors which the corporation would have if there were no vacancies. In the event that the Board is increased by such a resolution, the vacancy or vacancies so resulting shall be filled by a vote of a majority of the directors then in office. No decrease in the Board shall shorten the term of any incumbent director. Directors need not be stockholders. Section 2. Commencing with the 1970 election of directors, the Board of Directors shall be divided into three classes as nearly equal in number as may be, with the term of office of one class expiring each year. At the annual meeting of stockholders in 1970, directors of the first class shall be elected to hold office for a term expiring at the next succeeding annual meeting; directors of the second class shall be elected to hold office for a term expiring at the second succeeding annual meeting; and directors of the third class shall be elected to hold office for a term expiring at the third succeeding annual meeting. If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional director of any class elected to fill a vacancy resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class. Any vacancy on the Board of Directors that results from an increase in the number of directors may be filled by a majority of the Board of Directors then in office, provided that a quorum is present, and any other vacancy occurring in the Board of Directors may be filled by a majority of the Directors then in office, even if less than a quorum, or by a sole remaining director. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his predecessor. Notwithstanding the foregoing, whenever the holders of any outstanding shares of Preferred Stock shall be entitled, voting separately as a class, to elect directors, the terms of all directors elected by such holder shall expire at the next succeeding annual meeting of stockholders. Subject to the foregoing, at each annual meeting of stockholders, the successors to the class of directors whose term shall then expire shall be elected to hold office for a term expiring at the third succeeding annual meeting. Section 3. The property and business of the corporation shall be managed by or under the direction of its Board of Directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these bylaws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD Section 4. The directors of the corporation may hold their meetings, both regular and special, either within or without the State of Delaware. Section 5. Immediately following each Annual Meeting of Stockholders the Board of Directors shall hold a regular meeting for the purpose of organization, election of officers and the transaction of other business, and notice to the newly elected directors of such meeting shall not be necessary in order to legally constitute the meeting so long as a quorum shall be present, or the directors may meet at such place and time as shall be fixed by the consent in writing of all the -4- directors. Section 6. Regular meetings of the Board may be held without notice at such time and place as shall from time to time be determined by the Board. Section 7. Special meetings of the Board of Directors may be called by the Chairman of the Board, the President, or any majority of the directors then in office. Notice thereof stating the place, date and hour of the meeting shall be given to each director either by mail not less than forty-eight (48) hours before the date of the meeting, by telephone or telegram on twenty-four (24) hours' notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances. Meetings may be held at any time without notice if all the directors are present or if all those not present waive such notice in accordance with Section 2 of Article IV of these bylaws. Section 8. A majority of the Board of Directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation or by these bylaws. If a quorum shall not be present at any meeting of directors, the directors present thereat may adjourn the meeting from time to time without notice other than announcement at the meeting, until a quorum shall be present. COMMITTEES OF DIRECTORS Section 9. The Board of Directors may, by resolution and passed by a majority of the entire Board, designate one or more committees, each committee to consist of two or more of the directors of the corporation, which, to the extent provided in said resolution, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the corporation, and may have power to authorize the seal of the corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of such absent or disqualified member. Section 10. No committee of the Board of Directors not in existence on June 19, 1991 may be created if the powers or responsibilities of such committee would diminish, duplicate, contravene or be otherwise inconsistent with the powers and responsibilities of any committee in existence on such date without the affirmative vote of 80% of the Board of Directors. Notwithstanding any other provision of these Bylaws, this Section 10 of Article III may not be amended without the affirmative vote of 80% of the Board of Directors. Section 11. The committees shall keep regular minutes of their proceedings and report the same to the Board when required. -5- COMPENSATION OF DIRECTORS Section 12. Directors and members of committees may receive such compensation, if any, for their services, and such reimbursement for expenses, as may be fixed or determined by the Board of Directors. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity as an officer, agent, employee, or otherwise and receiving compensation therefor. DIRECTORS EMERITUS Section 13. In order to publicly recognize distinguished service to or on behalf of the corporation, one or more directors may, pursuant to a majority vote of stockholders or a majority vote of the Board of Directors, be elected to serve as Director Emeritus. Candidates for designation of the title Director Emeritus shall be selected from among former Board members upon retirement or other separation from active service to the corporation. Each Director Emeritus elected shall be publicly honored by being listed or otherwise identified in the corporations annual report to stockholders for the year in which such election shall occur and thereafter at the pleasure of the Board of Directors. Each Director Emeritus shall continue to serve the corporation at the discretion of the Board of Directors. They shall be entitled to receive notice of and to attend regular meetings of the Board of Directors but shall not be entitled to vote thereat and shall not be deemed to be a Director of the corporation for any purposes whatsoever under any applicable law or under the bylaws of the corporation. There shall be paid to each Director Emeritus a regular meeting fee for each Board of Directors meeting attended by such Director Emeritus, plus reimbursement for direct expenses actually incurred by them in attending such meetings. NOMINATION OF DIRECTORS Section 14. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors. Nominations for election to the Board of Directors of the corporation at a meeting of stockholders may be made by the Board of Directors or by any stockholder of the corporation entitled to vote for the election of directors at such meeting who complies with the notice procedures set forth in this Section 13. Such nominations, other than those made by or on behalf of the Board of Directors, shall be made by notice in writing delivered or mailed by first class United States mail, postage prepaid, to the Secretary and received not less than 75 days nor more than 100 days prior to the anniversary date of the immediately preceding the annual meeting of stockholders of the corporation; provided, however, that in the event that the meeting is called for a date (including any change in a date designated by the Board pursuant to Section 2 of Article II) more than 50 days prior to such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or public disclosure of the date of the meeting was made, whichever first occurs. Such notice shall set forth (A) as to each proposed nominee (i) the name, age, business addressed, and, if known, residence address of each such nominee, (ii) the principal occupation or employment of each such nominee, (iii) the number of shares of stock of the corporation -6- which are beneficially owned by each such nominee, and (iv) any other information concerning the nominee that must be disclosed as to nominees in proxy solicitations pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including such person's written consent to be named as a nominee and to serve as a director if elected); and (B) as to the stockholder giving the notice (i) the name and address, as they appear on the corporation's books, of such stockholder, and (ii) the class and number of shares of the corporation which are beneficially owned by such stockholder. The corporation may require any proposed nominee to furnish such other information as may reasonably be required by the corporation to determine the eligibility of such proposed nominee to serve as a director of the corporation. The chairman of the meeting may, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. ARTICLE IV NOTICES Section 1. Whenever under the provisions of the statutes or of the certificate of incorporation or of these bylaws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder at such address as appears on the books of the corporation, and such notice shall be deemed to be given at the time when the same shall be thus mailed. Notice may also be given personally or by telegram, telex or cable and such notice shall be deemed to be given at the time of receipt thereof if given personally and at the time of transmission thereof if given by telegram, telex or cable. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation, or of these bylaws, a waiver thereof in writing signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the Directors and shall be a Chief Executive Officer, President, one or more Vice Presidents, Secretary, Treasurer, and Controller. The Board of Directors may also choose a Chairman of the Board whose duties shall be fixed by the Board of Directors from time to time. The Chairman of the Board and Chief Executive Officer shall be chosen from the members of the Board of Directors, but none of the other officers need be a member of the Board. Should the Board of Directors choose more than one Vice President, it may establish separate classifications of Vice Presidents and distinguish -7- relative ranking among the classifications so chosen. The Board may also choose one or more Assistant Secretaries and Assistant Treasurers. Two or more offices may be held by the same person. Section 2. The Board of Directors at its first meeting after each annual meeting of stockholders shall choose the officers of the Corporation. Section 3. The Board may appoint such other officers and agents as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the Board of Directors or by such persons as the Board of Directors may designate. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify in their stead. Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the entire Board of Directors. If the office of any officer becomes vacant for any reason, the vacancy may be filled by the Board of Directors. THE CHIEF EXECUTIVE OFFICER Section 6. The Chairman of the Board of Directors shall be the Chief Executive Officer of the Corporation; he shall preside at all meetings of the stockholders and directors, shall be ex officio member of all standing committees, shall have general and active management of the business of the corporation, and shall see that all orders and resolutions of the Board are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation. PRESIDENT AND VICE PRESIDENT Section 8. The President and then Vice Presidents, in order of their classification and then in order of seniority within their classification, at the direction of the Board of Directors, in case of disability of the Chairman of the Board, or his absence from the particular place where the act is to be performed, shall perform the duties and exercise the powers of the Chairman of the Board, and shall perform such other duties as the Board of Directors shall prescribe; provided, however, that a President or any Vice President who is not a citizen of the United States shall not perform any of the powers of the Chairman of the Board. THE SECRETARY AND ASSISTANT SECRETARIES Section 9. The Secretary shall attend all sessions of the Board and all meetings of the -8- stockholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or President, under whose supervision he shall be. He shall keep in safe custody the seal of the corporation, and, when authorized by the Board, affix the same to any instrument requiring it and, when so affixed, it shall be attested by his signature or by the signature of the Treasurer or an Assistant Secretary. Section 10. The Assistant Secretaries in order of their seniority shall, in case of disability of the Secretary, or his absence from the particular place where the act is to be performed, perform the duties and exercise the powers of the Secretary and shall perform such other duties as the Board of Directors shall prescribe. THE TREASURER AND ASSISTANT TREASURER Section 11. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the Board, taking proper vouchers for such disbursements, and shall render to the President and directors, at the regular meetings of the Board, or whenever they may require it, an account of all his transactions as Treasurer and of the financial condition of the corporation. Section 13. If required by the Board of Directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the Board for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The Assistant Treasurers shall perform such duties as the Board of Directors shall prescribe. THE CONTROLLER Section 15. The Controller shall be responsible for the development and maintenance of the accounting systems used by the corporation and its subsidiaries. The Controller shall be authorized to implement policies and procedures to ensure that the corporation and its subsidiaries maintain internal accounting control systems designed to provide reasonable assurance that the accounting records accurately reflect business transactions and that such transactions are in accordance with management's authorization. Additionally, the Controller shall be responsible for internal and external financial reporting for the corporation and its subsidiaries and shall perform such other duties as the Board of Directors shall prescribe. -9- ARTICLE VI CERTIFICATE OF STOCK Section 1. The certificates of stock of the corporation shall be numbered and shall be entered in the books of the corporation as they are issued. They shall exhibit the holder's name and number of shares and shall be signed by the Chief Executive Officer, President or a Vice President and the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary. The designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificates which the corporation shall issue to represent such class or series of stock. Certificates may be issued for partly paid shares and in such case upon the face or back of the certificates issued to represent any such partly paid shares, the total amount of the consideration to be paid therefor, and the amount paid thereon shall be specified. LOST CERTIFICATES Section 2. The Board of Directors may direct a new certificate or certificates theretofore issued by the corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative to advertise the same in such manner as it shall require and/or give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost or destroyed. TRANSFER OF STOCK Section 3. Except as otherwise provided in the Certificate of Incorporation of the corporation, upon surrender to the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. CLOSING OF TRANSFER BOOKS Section 4. The Board of Directors may close the stock transfer books of the corporation for a period not exceeding fifty days preceding the date of any meeting of stockholders or the date for payment of any dividend or the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect or for a period of not exceeding fifty days in connection with obtaining the consent of stockholders for -10- any purpose. In lieu of closing the stock transfer books as aforesaid, the Board of Directors may fix in advance a date, not exceeding fifty days preceding the date of any meeting of stockholders, or the date of the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect or a date in connection with obtaining such consent, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting, and any adjournment thereof, or entitled to receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, or to give such consent, and in such case such stockholders and only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting and any adjournment thereof, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, or to give such consent, as the case may be, notwithstanding any transfer of any stock on the books of the corporation after any such record date fixed as aforesaid. REGISTERED STOCKHOLDERS Section 5. The corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The Board of Directors shall present at each annual meeting and when called for by vote of the stockholders at any special meeting of the stockholders, a full and clear statement of the business and condition of the corporation. -11- CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the Board of Directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. ARTICLE VIII INDEMNIFICATION Section 1. Subject to Section 3 of this Article VIII, the corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, director emeritus, officer, employee or agent of the corporation or any of its subsidiaries, or is or was serving at the request of the corporation as a director, director emeritus, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Section 2. Subject to Section 3 of this Article VIII, the corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, director emeritus, officer, employee or agent of the corporation or any of its subsidiaries, or is or was serving at the request of the corporation as -12- a director, director emeritus, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. Section 3. Any indemnification under this Article VIII (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, director emeritus, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 1 or 2 of this Article VIII, as the case may be. Such determination shall be made (A) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (B) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (C) by the stockholders. To the extent, however, that a director, director emeritus, officer, employee or agent has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith, without the necessity of authorization in the specific case. Section 4. For purposes of any determination under Section 3 of this Article VIII, a person shall be deemed to have acted in good faith and in manner he reasonably believed to be in or not opposed to the best interests of the corporation, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe his conduct was unlawful, if his action is based on the records or books of account of the corporation or another enterprise, or on information supplied to him by the officers of the corporation or another enterprise in the course of their duties, or on the advice of legal counsel for the corporation or another enterprise or on information or records given or reports made to the corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the corporation or another enterprise. The term "another enterprise" as used in this Section 4 shall mean any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise of which such person is or was serving at the request of the corporation as a director, director emeritus, officer, employee or agent. The provisions of this Section 4 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Sections 1 or 2 of this Article VIII, as the case may be. Section 5. Notwithstanding any contrary determination in the specific case under Section 3 of this Article VIII, and notwithstanding the absence of any determination thereunder, any director, director emeritus, officer, employee or agent may apply to any court of competent -13- jurisdiction in the State of Delaware for indemnification to the extent otherwise permissible under Sections 1 and 2 of this Article VIII. The basis of such indemnification by a court shall be a determination by such court that indemnification of the director, director emeritus, officer, employee or agent is proper in the circumstances because he has met the applicable standards of conduct set forth in Sections 1 or 2 of this Article VIII, as the case may be. Neither a contrary determination in the specific case under Section 3 of this Article VIII nor the absence of any determination thereunder shall be a defense to such application or create a presumption that the director, director emeritus, officer, employee or agent seeking indemnification has not met any applicable standard of conduct. Notice of any application for indemnification pursuant to this Section 5 shall be given to the corporation promptly upon the filing of such application. If successful, in whole or in part, the director, director emeritus, officer, employee or agent seeking indemnification shall also be entitled to be paid the expense of prosecuting such application. Section 6. Expenses incurred in defending or investigating a threatened or pending action, suit or proceeding shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director, director emeritus, officer, employee or agent to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the corporation as authorized in this Article VIII. Section 7. Without limiting any of the provisions of this Article VIII, if any action, suit or proceeding is brought against a director, director emeritus, officer, employee or agent and such director, director emeritus, officer, employee or agent is entitled to be indemnified under this Article VIII or to advancement of expenses hereunder (an "indemnified party"), (A) the indemnified party may retain counsel satisfactory to him and the corporation, (B) the corporation shall pay all reasonable fees and expenses of such counsel for the indemnified party promptly as statements therefor are received, (C) the indemnified party shall keep the corporation reasonably apprised of the status of such action, claim or proceeding, and (D) the corporation will use all reasonable efforts to assist in the vigorous defense of any such matter; provided, that the corporation shall not be liable for any settlement of any action, suit or proceeding without its prior written consent, which consent, however, shall not be unreasonably withheld. Section 8. Any indemnified party wishing to claim indemnification under this Article VIII, upon learning of any such action, suit or proceeding, shall promptly notify the corporation (but the failure to so notify the corporation shall not relieve the corporation from any liability that it may have under this Article VIII except to the extent such failure prejudices the corporation). The indemnified parties as a group may retain only one law firm to represent them with respect to each matter unless there is, under applicable standards of professional conduct, a conflict on any significant issue between the positions of any two or more indemnified parties, in which case the indemnified parties as a group shall be entitled to retain only the minimum number of law firms necessary for separate representation of each conflicting position. Section 9. The indemnification and advancement of expenses provided by or granted pursuant to this Article VIII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any Bylaw, agreement, contract, vote of stockholders or disinterested directors or pursuant to the direction -14- (howsoever embodied) of any court of competent jurisdiction or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, it being the policy of the corporation that indemnification of the persons specified in Sections 1 and 2 of this Article VIII shall be made to the fullest extent permitted by law. The provisions of this Article VIII shall not be deemed to preclude the indemnification of any person who is not specified in Sections 1 or 2 of this Article VIII but whom the corporation has the power or obligation to indemnify under the provisions of the General Corporation Law of the State of Delaware, or otherwise. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, director emeritus, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person. Section 10. The corporation may purchase and maintain insurance on behalf of any person who is or was a director, director emeritus, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, director emeritus, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power or the obligation to indemnify him against such liability under the provisions of this Article VIII. Section 11. For purposes of this Article VIII, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, directors emirate, officers, employees and agents, so that any person who is or was a director, director emeritus, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, director emeritus, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, shall stand in the same position under the provisions of this Article VIII with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. For purposes of this Article VIII, references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the corporation" shall include any service as a director, director emeritus, officer, employee or agent of the corporation which imposes duties on, or involves services by, such person with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the corporation" as referred to in this Article VIII. Section 12. The rights to indemnification provided in this Article VIII with respect to a particular threatened, pending or completed action, suit or proceeding shall vest in the indemnified party upon the occurrence of the event or chain of events giving rise to such threatened, pending or completed action, suit or proceeding, and no amendment or repeal of this -15- Article VIII shall adversely affect any right to indemnification to which an indemnified party would have been entitled prior to the time of such amendment or repeal. ARTICLE IX AMENDMENTS Section 1. These bylaws may be altered or repealed at any regular meeting of the stockholders or at any special meeting of the stockholders at which a quorum is present or represented, provided notice of the proposed alteration or repeal be contained in the notice of such special meeting, by the affirmative vote of a majority of the stock entitled to vote at such meeting and present or represented thereat, or by the affirmative vote of a majority of the Board of Directors at any regular meeting or any special meeting of the Board if notice of the proposed alteration or repeal be contained in the notice of such special meeting. Section 2. Notwithstanding any other provisions of these bylaws (including Section 1 of this Article IX) or the Certificate of Incorporation, the adoption by stockholders of any alteration, amendment, change, addition to or repeal of all or any part of Sections 1 or 2 of Article III or this Section 2 of Article IX of these bylaws, or the adoption by stockholders of any other provision of these bylaws which is inconsistent with or in addition to such Sections of these bylaws, shall require the affirmative vote of the holders of not less than eighty percent (80%) of the votes entitled to be cast by the holders of all then outstanding stock of the Corporation entitled to vote in the election of directors, considered for purposes of this Section 2 as one class. -16- EX-10.(A) 4 dex10a.txt 1992 STOCK OPTION AND RESTRICTED STOCK PLAN Exhibit 10(a) AMENDED AND RESTATED TIDEWATER INC. 1992 STOCK OPTION AND RESTRICTED STOCK PLAN (Effective November 29, 2001) WHEREAS, Tidewater Inc., a Delaware corporation (the "Company"), amended and restated the Tidewater Inc. 1992 Stock Option and Restricted Stock Plan (the "Plan") effective July 27, 2001; WHEREAS, the Company further authorized an amendment to the Plan on September 27, 2001 to extend the post-retirement exercise period of options granted under the Plan on July 21, 1995 to non-employee directors and to allow for the extension of the post-retirement exercise period of options granted under the Plan to William C. O'Malley on March 26, 1996; WHEREAS, the Company now wishes to further amend the Plan to allow the Board of Directors or the Compensation Committee of the Board to determine the post-termination exercise period for options granted under the Plan; NOW, THEREFORE, pursuant to the power reserved to the Board in Section 21 of the Plan, Section 10 of the Plan entitled "Exercise of Options" and Section 11 of the Plan entitled "Automatic Grants to Non-Employee Directors" are hereby amended to read as set forth herein and, as amended, the Plan is hereby restated to reflect such amendments and to read in its entirety as follows: 1. Purpose The purpose of the 1992 Stock Option and Restricted Stock Plan (the "Plan") is to promote the interests of Tidewater Inc. (the "Company") and its shareholders by attracting and retaining directors and key employees capable of furthering the future success of the Company and by providing such persons an additional incentive through stock ownership to continue and increase their efforts with respect to the Company or its subsidiaries. The Plan provides for granting such persons (a) options for the purchase of Common Shares of the Company (the "Shares") and (b) Shares which are both restricted as to transferability and subject to a substantial risk of forfeiture ("Restricted Shares"). 2. Administration The Plan shall be administered by a committee (the "Committee") consisting of not less than two Directors appointed by the Board of Directors, each of whom shall (a) qualify as a "non-employee director" under Rule 16B-3 under the Securities Exchange Act of 1934, as in effect August 15, 1996 and (b) qualify as an "outside director under Section 162 (m) of the Internal Revenue Code of 1986, as amended. Unless otherwise determined by the Board or required by the Plan, the Compensation Committee of the Board of Directors shall be the Committee. Subject to the limitations and conditions hereinafter set forth, the 1 Committee shall have authority to grant options hereunder, to determine the number of Shares for which each option shall be granted and the option price or prices, to make awards of Restricted Shares, to determine the number of Restricted Shares to be granted, and to establish in its discretion the restrictions to which any such Restricted Shares shall be subject. The Committee shall have full power to construe and interpret the Plan, to establish and amend rules for its administration, and to establish in its discretion terms and conditions applicable to the exercise of options and the grant of Restricted Shares. 3. Shares Subject to the Plan The Shares to be transferred or sold pursuant to the grant of Restricted Shares or the exercise of options granted under the Plan shall be authorized Shares, and may be issued Shares reacquired by the Company and held in its treasury or may be authorized but unissued Shares. Subject to adjustment as provided in Section 19 hereof, the aggregate number of Shares to be granted as Restricted Shares or to be delivered upon the exercise of options granted under the Plan shall not exceed 2,200,000 shares. If an option expires or terminates for any reason during the term of the Plan and prior to the exercise in full of such option, or if Restricted Shares are forfeited as provided in the grant of such Shares, the number of Shares previously subject to but not delivered under such option or grant of Restricted Shares shall be available for the grant of options or Restricted Shares thereafter. 4. Eligibility Options or Restricted Shares may be granted from time to time to key employees, including officers, of the Company and any subsidiary ("eligible, employees"), as defined in this Section 4, and options shall be granted automatically to non-employee Directors as provided in Section 11 hereof. From time to time, the Committee shall designate from such eligible employees those who will be granted options or Restricted Shares and, in connection therewith, the number of Shares to be covered by each grant of options or Restricted Shares. Persons granted options are referred to hereinafter as "optionees," and persons granted Restricted Shares are referred to hereinafter as "grantees." Nothing in the Plan, or in any grant of options or Restricted Shares pursuant to the Plan, shall confer on any person any right to continue in the employ of the Company or any of its subsidiaries, nor in any way interfere with the right of the Company or any of its subsidiaries to terminate the person's employment at any time. The term "subsidiary" shall mean any corporation now existing or hereafter organized or acquired (other than the Company) `in an unbroken chain of corporations beginning with the Company if, at the time of the granting of the option, each of the corporations (including the Company) other than the last corporation in the unbroken chain owns stock possessing 40% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain; provided that, for all purposes in connection with the grant or exercise 2 of ISOs, as defined in Section 5 below, "50%" shall be substituted for "40%" in the above definition. PROVISIONS RELATING TO OPTIONS 5. Character of Options It is the intent of the Plan that options granted hereunder shall be incentive stock options ("ISOs") as such term is defined in Section 422A of the Internal Revenue Code of 1986, as amended from time to time (the "Code"), to the extent and only to the extent that such options are so identified in writing in the stock option agreement relating thereto. All options not identified as ISOs at the time of grant are intended to be "nonqualified" or "nonstatutory" stock options which are not ISOs. 6. Stock Option Agreement Each option granted under the Plan shall be evidenced by a stock option agreement which shall be executed by the Company and by the person to whom the option is granted and which shall identify as an ISO any option intended to be such. The agreement shall contain such terms and provisions, not inconsistent with the Plan, as shall be determined by the Committee. 7. Limitation on ISO Grants The aggregate fair market value (determined on the date the ISO is granted) of the Shares with respect to which ISOs are exercisable for the first time by an optionee during any calendar year shall not exceed $100,000. 8. Option Exercise Price The price per Share to be paid by the optionee on the date an option is exercised shall be not less than the fair market value of one Share on the date the option is granted, provided that if the option granted is an ISO and if the optionee, on the date of the option grant, owns (within the meaning of Section 425 (d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any subsidiary thereof, the price per Share to be paid by the optionee at the time an option is exercised shall be not less than 110% of the fair market value of one Share on the date the option is granted. For purposes of this Plan, the term "fair market value" of a Share shall be the closing selling price thereof on the consolidated transaction reporting system for New York Stock Exchange issues on the date of reference or, if no Shares are traded on that date, the most recent date on which Shares are traded, provided that such determination of fair market value for ISOs shall comply with regulations issued by the Secretary of the Treasury for the purposes of determining fair market value of securities subject to an ISO plan under Section 422A of the Code. 3 9. Option Term The period after which options granted under the Plan may not be exercised shall be determined by the Committee with respect to each option granted, but may not exceed ten years from the date on which the option is granted, subject to the third paragraph of Section 10 hereof, provided that in the case of any ISO granted to any optionee who, on the date of the option grant, owns (within the meaning of Section 425 (d) of the code) stock possessing more than 1O% of the total combined voting power of all classes of stock of the Company or any subsidiary thereof, the maximum such option period shall be five years rather than ten years. 10. Exercise of Options The time or times at which or during which options granted under the Plan may be exercised, and any conditions pertaining to such exercise or to the vesting in the optionee of the right to exercise options, shall be determined by the Committee in its sole discretion. No option granted under the Plan shall be assignable or otherwise transferable by the optionee, either voluntarily or involuntarily, except (a) by will, (b) by the laws of descent and distribution, (c) in the case of non-qualified stock options only, if permitted by the Committee and so provided in the stock option agreement or an amendment thereto, (i) pursuant to a domestic relations order, (ii) to family members, a family partnership or trust for the benefit of family members, or (iii) a to charitable institutions. For employee optionees, an option shall lapse if an optionee's employment by the Company or a subsidiary is terminated for any reason, provided that the option may thereafter be exercised, to the extent it was exercisable on the date of termination of employment, for such a period of time as the Committee or Board shall specify. However, in no event may any option be exercised by anyone after the later of (a) the final date upon which the optionee could have exercised it had the optionee continued in the employment of the Company or its subsidiaries to such date, or (b) one year after the optionee's death. An option may be exercised only by a notice in writing complying in all respects with the applicable stock option agreement. Such notice may instruct the Company to deliver Shares due upon the exercise of the option to any registered broker or dealer approved by the Company (an "approved broker") in lieu of delivery to the optionee. Such instructions shall designate the account into which the Shares are to be deposited. The optionee may tender such notice, properly executed by the optionee, together with the aforementioned delivery instructions, to an approved broker. The purchase price of the Shares as to which an option is exercised shall be paid in cash or by check, except that the Committee may, in its discretion, allow such payment to be by surrender of unrestricted Shares (at their fair market value on the date of exercise), or by a combination of cash, check and 4 unrestricted Shares. The obligation of the Company to deliver Shares upon such exercise shall be subject to all applicable laws, rules and regulations, and to such approvals by governmental agencies as may be deemed appropriate by the Committee, including, among others, such steps as counsel for the Company shall deem necessary or appropriate to comply with requirements of relevant securities laws. Such obligation shall also be subject to the condition that the Shares reserved for issuance upon the exercise of options granted under the Plan shall have been duly listed on any national securities exchange which then constitutes the principal trading market for the Shares. 11. Automatic Grants to Nonemployee Directors During each year of the term of this Plan, each Director who is not then an employee of the Company or any subsidiary shall receive on the date of the annual shareholders meeting options to purchase 1,000 Shares. Each such option shall have a term of ten years and must be exercised within one year of termination of service as a Director, except that, in the event of termination of Board service as a result of retirement (at age 65 or later or after having completed five or more years of service on the Board), options granted to non-employee Directors under the Plan on the day of the 1995 and 1996 annual meetings of stockholders of the Company (and remaining outstanding on the date of this amendment to the Plan to extend the post-retirement exercise period) may be exercised within five years from the date of termination of Board service, but no later than ten years after the date of grant. Each such option shall become exercisable six months after the date of grant. The price per Share to be paid by the holder of such an option shall equal the fair market value of one Share on the date the option is granted. The purchase price of the Shares as to which such an option is exercised shall be paid only in cash or by certified or bank check. Any Director holding options granted under this Section 11 who is a member of the Committee shall not participate in any action of the Committee with respect to any claim or dispute involving such Director. PROVISIONS RELATING TO RESTRICTED SHARES 12. Granting of Restricted Shares The Committee may grant Restricted Shares to eligible employees at any time. In granting Restricted Shares, the Committee shall determine in its sole discretion the period or periods during which the restrictions on transferability applicable to such Shares will be in force (the "Restricted Period"). The Restricted Period may be the same for all such Shares granted at a particular time or to any one grantee or may be different with respect to different grantees or with respect to various of the Shares granted to the same grantee, all as determined by the Committee in its sole discretion. Each grant of Restricted Shares under the Plan shall be evidenced by an 5 agreement which shall be executed by the Company and by the person to whom the Restricted Shares are granted. The agreement shall contain such terms and provisions, not inconsistent with the Plan, as shall be determined by the Committee. 13. Restrictions on Transferability During the Restricted Period applicable to each grant of Restricted Shares, such Shares may not be sold, assigned, transferred or otherwise disposed of, or mortgaged, pledged or otherwise encumbered. Furthermore, a grantee's eventual right, if any, to such Shares may not be assigned or transferred except by will or by the laws of descent and distribution. The restrictions on the transferability of Restricted Shares imposed by this Section are referred to in this Plan as the "Transferability Restrictions." 14. Determination of Vesting Restrictions With respect to each grant of Restricted Shares, the Committee shall determine in its sole discretion the restrictions on vesting which will apply to the Shares for the Restricted Period, which restrictions, as initially determined and as they may be modified pursuant to the Plan, are referred to hereinafter as the "Vesting Restrictions." By way of illustration but not by way of limitation, any such determination of Vesting Restrictions by the Committee may provide (a) that the grantee will not be entitled to any such Shares unless he or she is still employed by the Company or its subsidiaries at the end of the Restricted Period; (b) that the grantee will become vested in such Shares according to such schedule as the Committee may determine; (c) that the grantee will become vested in such Shares in any combination of the foregoing or under such other terms and conditions as the Committee in its sole discretion may determine; and (d) how any such Vesting Restrictions will be applied, modified or accelerated in the case of the grantee's death, total and permanent disability (as determined by the Committee), or retirement. 15. Manner of Holding and Delivering Restricted Shares Unless the Committee shall otherwise determine, each certificate issued for Restricted Shares granted hereunder will be registered in the name of the grantee and will be held by the Company with a stock power executed in blank by the grantee covering such Shares. The certificates for such Shares will remain in the possession of the Company until the earlier of the end of the applicable Restricted Period or, if the Committee has provided for earlier termination of the Transferability Restrictions following a grantee's death, total and permanent disability, retirement, or earlier vesting of such Shares, such earlier termination of the Transferability Restrictions. At whichever time is applicable, the certificates representing the number of such Shares to which the grantee is then entitled will be delivered to the grantee free and clear of the Transferability Restrictions, provided that in the case of a grantee who is not entitled to receive the full number of such Shares evidenced by the certificates then being released from escrow 6 because of the application of the Vesting Restrictions, such certificates will be canceled, and a new certificate representing the Shares, if any, to which the grantee is entitled pursuant to the Vesting Restriction, will be issued and delivered to the grantee, free and clear of the Transferability Restrictions. 16. Transfer in the Event of Death, Disability or Retirement Notwithstanding a grantee's death, total and permanent disability, or retirement, the certificates for his or her Restricted Shares will remain in the possession of the Company and the Transferability Restrictions will continue to apply to such Shares unless the Committee determines otherwise. Upon the termination of the Transferability Restrictions, either upon any such determination by the Committee or at the end of the Applicable Restricted Period, as the case may be, the portion of such grantee's Restricted Shares to which he or she is entitled, determined pursuant to his or her applicable Vesting Restrictions, will be awarded and delivered to the grantee or to the person or persons to whom the grantee's rights, if any, to the Shares shall pass by will or by the applicable law of descent and distribution, as the case may be. 17. Limitations on obligation to Deliver Shares The Company shall not be obligated to deliver any Restricted Shares free and clear, of the Transferability Restrictions until the Company has satisfied itself that such delivery complies with all laws and regulations by which the Company is bound. Furthermore, prior to receiving delivery of any Restricted Shares free of the Transferability Restrictions, the grantee or other person entitled to receive such Shares must pay the Company an amount equal to the taxes, if any, which the Company is required to withhold due to such delivery. GENERAL PROVISIONS 18. Shareholder Rights. Except for the Transferability Restrictions, a grantee of Restricted Shares shall have all the rights of a holder of the Shares, including the right to receive dividends paid on such Shares and the right to vote such Shares at meetings of shareholders of the Company. However, no optionee shall have any of the rights of a shareholder with respect to any Shares unless and until he or she has exercised his or her option with respect to such Shares and has paid the full purchase price therefor. 19. Changes in Shares The aggregate number of Shares for which options or Restricted Shares may be granted or options exercised, the maximum number of Shares which, with respect to any one person at any time, may be subject to restrictions or subject to unexercised and outstanding options, and the number of Shares subject to each outstanding option or Restricted Share grant and option prices per share shall be 7 subject to appropriate adjustment for any changes in the number of outstanding Shares resulting from a merger, recapitalization, stock exchange, stock split, stock dividend, corporate division or other change in the Company's corporate or capital structure. 20. Change of Control (a) This Section 20 has been amended, effective October 1, 1999 (the "Amendment") to read as provided herein. However, to the extent that (and only to the extent that) any right to which a grantee of outstanding options or restricted stock under the Plan is entitled prior to the effective date of the Amendment (whether under the Plan, related agreements, amendments thereto, or interpretations by the Compensation Committee) would be detrimentally affected by the Amendment, the Amendment shall not apply. By way of illustration, and not limitation, the following interpretations of the Compensation Committee with respect to an "Acceleration Date", as defined in the Plan (and related agreements and amendments thereto) prior to the Amendment, remain in full force and effect: (i) the 30-day exercisability period following an Acceleration Date shall not be affected by the termination of employment of an optionee on the Acceleration Date or during such 30-day period, and (ii) all outstanding options, both non-qualified and incentive, shall be accelerated and become exercisable in full at the Acceleration Date (and to the extent, if any, required by section 422(d) of the Internal Revenue Code of 1986, as amended from time to time (the "Code"), accelerated incentive stock options shall thereby become non-qualified stock options). (b) Notwithstanding any other provision of the Plan (or any provision of any agreement with respect to any grant hereunder), immediately prior to any Change of Control of the Company (as defined in Section 20(d) hereof), all stock options (whether non-qualified or incentive and whether granted to an employee or to a nonemployee Director) which are then outstanding hereunder shall become fully vested and exercisable and all Transferability Restrictions and Vesting Restrictions on Restricted Shares then outstanding hereunder shall automatically lapse and be deemed waived. As used in the immediately preceding sentence, "immediately prior" to the Change of Control shall mean sufficiently in advance of the Change of Control to permit the grantee to take all steps reasonably necessary (i) if an optionee, to exercise any such option fully and (ii) to deal with the Shares purchased under any such option and any formerly Restricted Shares on which restrictions have lapsed so that both types of Shares may be treated in the same manner in connection with the Change of Control as the Shares of other shareholders. To the extent, if any, required by section 422(d) of the Code, incentive stock options which become exercisable immediately prior to a Change of Control pursuant to this Section 20(b) shall thereby become non-qualified stock options. Notwithstanding any other provision of the Plan (or any provision of any agreement with respect to any grant hereunder), (i) any stock option which becomes exercisable pursuant to this Section 20(b) shall remain exercisable until the earlier of the end of the option term or the lapse 8 of the option, and (ii) any lapse and deemed waiver of Transferability Restrictions and Vesting Restrictions on Restricted Shares pursuant to this Section 20(b) shall be a permanent lapse and deemed waiver of such restrictions. (c) If any corporation, person or other entity (other than the Company) makes a tender offer or exchange offer for shares of the Company's common stock pursuant to which purchases are made (an "Offer"), then from and after the date of the first purchase of the Company's common stock pursuant to the Offer (the "Acceleration Date"), all outstanding options shall automatically become fully exercisable and the Transferability Restrictions and Vesting Restrictions on Restricted Shares shall automatically be deemed waived by the Company, without the necessity of any action by any person, for a period of 30 calendar days following the Acceleration Date. Subject to the other provisions of this Section 20, following the expiration of the 30-day period, any options not exercised and any shares of the Company's common stock issued hereunder not tendered or exchanged shall again be subject to the terms and conditions applicable prior to the Offer." (d) As used in this Section 20, "Change of Control" shall mean: (i) the acquisition by any "Person" (as defined in Section 20(e) hereof) of "Beneficial Ownership" (as defined in Section 20(e) hereof) of 30% or more of the outstanding Shares of the Company's Common Stock, $0.10 par value per share (the "Common Stock") or 30% or more of the combined voting power of the Company's then outstanding securities; provided, however, that for purposes of this subsection (d)(i), the following shall not constitute a Change of Control: (A) any acquisition (other than a "Business Combination" (as defined in Section 20(d)(iii) hereof) which constitutes a Change of Control under Section 20(d)(iii) hereof) of Common Stock directly from the Company, (B) any acquisition of Common Stock by the Company or its subsidiaries, (C) any acquisition of Common Stock by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (D) any acquisition of Common Stock by any corporation pursuant to a Business Combination which does not constitute a Change of Control under Section 20(d)(iii) hereof; or (ii) individuals who, as of the effective date of the Amendment, constitute the Board (the "Incumbent Board" cease for any reason to constitute at least a majority of the Board; provided, however, that any 9 individual becoming a director subsequent to the effective date of the Amendment whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered a member of the Incumbent Board, unless such individual's initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Incumbent Board; or (iii) consummation of a reorganization, merger or consolidation (including a merger or consolidation of the Company or any direct or indirect subsidiary of the Company), or sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), in each case, unless, immediately following such Business Combination, (A) the individuals and entities who were the Beneficial Owners of the Company's outstanding Common Stock and the Company's voting securities entitled to vote generally in the election of directors immediately prior to such Business Combination have direct or indirect Beneficial Ownership, respectively, of more than 50% of the then outstanding shares of common stock, and more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, of the Post-Transaction Corporation (as defined in Section 20(e) hereof), and (B) except to the extent that such ownership existed prior to the Business Combination, no Person (excluding the Post-Transaction Corporation and any employee benefit plan or related trust of either the Company, the Post-Transaction Corporation or any subsidiary of either corporation) Beneficially Owns, directly or indirectly, 30% or more of the then outstanding shares of common stock of the corporation resulting from such Business Combination or 30% or more of the combined voting power of the then outstanding voting securities of such corporation, and (C) at least a majority of the members of the board of directors of the Post-Transaction Corporation were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (iv) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. (e) As used in Section 20(d) hereof, the following words or terms shall have the meanings indicated: (i) Affiliate: "Affiliate" (and variants thereof) shall mean a Person that controls, or is controlled by, or is under common control with, 10 another specified Person, either directly or indirectly. (ii) Beneficial Owner: "Beneficial Owner" (and variants thereof), with respect to a security, shall mean a Person who, directly or indirectly (through any contract, understanding, relationship or otherwise), has or shares (i) the power to vote, or direct the voting of, the security, and/or (ii) the power to dispose of, or to direct the disposition of, the security. (iii) Person: "Person" shall mean a natural person or company, and shall also mean the group or syndicate created when two or more Persons act as a syndicate or other group (including, without limitation, a partnership or limited partnership) for the purpose of acquiring, holding, or disposing of a security, except that "Person" shall not include an underwriter temporarily holding a security pursuant to an offering of the security. (iv) Post-Transaction Corporation: Unless a Change of Control includes a Business Combination (as defined in Section 20(d)(iii) hereof), "Post-Transaction Corporation" shall mean the Company after the Change of Control. If a Change of Control includes a Business Combination, "Post-Transaction Corporation" shall mean the corporation resulting from the Business Combination unless, as a result of such Business Combination, an ultimate parent corporation controls the Company or all or substantially all of the Company's assets either directly or indirectly, in which case, "Post-Transaction Corporation" shall mean such ultimate parent corporation. 21. Amendment and Discontinuance The Board of Directors may alter, suspend, or discontinue the Plan. 22. Governing Law The Plan shall be applied and construed in accordance with and governed by the law of the State of Delaware, to the extent such law is not superseded by or inconsistent with federal law. 11 23. Effective Date and Duration of Plan The Plan shall become effective only if approved by the holders of a majority of the Company's Shares outstanding and entitled to vote at the annual meeting of stockholders and if so approved shall be effective from the date of such meeting. The term during which options and Restricted Shares may be granted under the Plan shall expire ten years after the date the Plan became effective. 24. Withholding At any time that a participant is required to pay to the Company an amount required to be withheld under the applicable income tax laws in connection with the issuance of shares of Common Stock upon exercise of an option or upon the lapse of restrictions on shares of restricted stock, the participant may satisfy this obligation in whole or in part by electing (the "Election") to have the Company withhold shares of Common Stock having a value up to the amount of the maximum applicable tax under federal (including FICA), state and local law; provided, however, that the Committee shall have the right to disapprove of any portion of a participant's Election that is in excess of the amount required to be withheld under applicable income tax laws. The value of the shares to be withheld shall be based on the fair market value of the Common Stock on the date that the amount of tax to be withheld is required to be determined (the "Tax Date"). Each Election must be made prior to the Tax Date. The Committee may disapprove of any Election as provided above or may suspend or terminate the right to make Elections. If a participant makes an election under Section 83 (b) of the Internal Revenue Code with respect to shares of restricted stock, an Election is not permitted to be made and the participant is required to pay the amount of the withholding tax liability to the Company in cash. This Amended and Restated Plan is executed effective September 27, 2001. TIDEWATER INC. By: s/ Cliffe F. Laborde ----------------------------------- Cliffe F. Laborde Executive Vice President, Secretary and General Counsel 12 EX-10.(B) 5 dex10b.txt 1997 STOCK INCENTIVE PLAN Exhibit 10(b) AMENDED AND RESTATED TIDEWATER INC. 1997 STOCK INCENTIVE PLAN (Effective September 27, 2001) WHEREAS, Tidewater Inc., a Delaware corporation (the "Company"), amended and restated the Tidewater Inc. 1997 Stock Incentive Plan (the "Plan") effective June 9, 2000; and WHEREAS, the Company wishes to amend the Plan to extend the post-retirement exercise period of options granted to non-employee directors under the Plan in 1998 and 1999, the result of which will be that all outstanding options granted under the Plan and held by current or former non-employee directors will have a five-year post retirement exercise period; NOW, THEREFORE, pursuant to the power provided to the Board in Section 9.10.A. of the Plan, Section 8.4 of the Plan entitled "Exercise After Termination of Board Service" is hereby amended to read as set forth herein and, as so amended, the Plan is hereby restated in its entirety as follows: 1. Purpose. The purpose of the 1997 Stock Incentive Plan (the "Plan") of Tidewater Inc. ("Tidewater") is to increase shareholder value and to advance the interests of Tidewater and its subsidiaries (collectively, the "Company") by furnishing stock-based economic incentives (the "Incentives") designed to attract, retain and motivate key employees, officers and directors and to strengthen the mutuality of interests between such employees, officers and directors and Tidewater's shareholders. Incentives consist of opportunities to purchase or receive shares of common stock, $.10 par value per share, of Tidewater (the "Common Stock"), on terms determined under the Plan. As used in the Plan, the term "subsidiary" means any corporation of which Tidewater owns (directly or indirectly) within the meaning of Section 425(f) of the Internal Revenue Code of 1986, as amended (the "Code"), 50% or more of the total combined voting power of all classes of stock. 2. Administration. 2.1. Composition. The Plan shall be administered by the Compensation Committee of the Board of Directors of Tidewater or by a subcommittee thereof (the "Committee"). The Committee shall consist of not fewer than two members of the Board of Directors, each of whom shall (a) qualify as a "non-employee director" under Rule 16b-3 under the Securities Exchange Act of 1934 (the "1934 Act") or any successor rule, and (b) qualify as an "outside director" under Section 162(m) of the Code. 2.2. Authority. The Committee shall have plenary authority to award Incentives under the Plan, to interpret the Plan, to establish any rules or regulations relating to the Plan that it determines to be appropriate, to enter into -1- agreements with participants as to the terms of the Incentives (the "Incentive Agreements") and to make any other determination that it believes necessary or advisable for the proper administration of the Plan. Its decisions in matters relating to the Plan shall be final and conclusive on the Company and participants. The Committee may delegate its authority hereunder to the extent provided in Section 3 hereof. The Committee shall not have authority to award Incentives under the Plan to directors who are not also employees of the Company ("Outside Directors"). Outside Directors may receive awards under the Plan only as specifically provided in Section 8 hereof. 3. Eligible Participants. Key employees and officers of the Company (including officers who also serve as directors of the Company) shall become eligible to receive Incentives under the Plan when designated by the Committee. Employees may be designated individually or by groups or categories, as the Committee deems appropriate. With respect to participants not subject to Section 16 of the 1934 Act or Section 162(m) of the Code, the Committee may delegate to appropriate personnel of the Company its authority to designate participants, to determine the size and type of Incentives to be received by those participants and to determine or modify performance objectives for those participants. Outside Directors may participate in the Plan only as specifically provided in Section 8 hereof. 4. Types of Incentives. Incentives may be granted under the Plan to eligible participants in the forms of (a) incentive stock options; (b) non-qualified stock options; and (c) restricted stock. 5. Shares Subject to the Plan. 5.1. Number of Shares. Subject to adjustment as provided in Section 9.5, a total of 3,000,000 shares of Common Stock are authorized to be issued under the Plan. Incentives with respect to no more than 500,000 shares of Common Stock may be granted through the Plan to a single participant in one calendar year. In the event that a stock option granted hereunder expires or is terminated or cancelled prior to exercise, any shares of Common Stock that were issuable thereunder may again be issued under the Plan. In the event that shares of restricted stock are issued as Incentives under the Plan and thereafter are forfeited such forfeited shares may again be issued under the Plan. Additional rules for determining the number of shares granted under the Plan may be made by the Committee, as it deems necessary or appropriate. 5.2. Type of Common Stock. Common Stock issued under the Plan may be authorized and unissued shares or issued shares held as treasury shares. 6. Stock Options. A stock option is a right to purchase shares of Common Stock from Tidewater. Stock options granted under this Plan may be incentive stock options or non-qualified stock options. Any option that is -2- designated as a non-qualified stock option shall not be treated as an incentive stock option. Each stock option granted by the Committee under this Plan shall be subject to the following terms and conditions: 6.1. Price. The exercise price per share shall be determined by the Committee, subject to adjustment under Section 9.5; provided that in no event shall the exercise price be less than the Fair Market Value of a share of Common Stock on the date of grant, except that in connection with an acquisition, consolidation, merger or other extraordinary transaction, options may be granted at less than the then Fair Market Value in order to replace options previously granted by one or more parties to such transaction (or their affiliates) so long as the aggregate spread on such replacement options for any recipient of such options is equal to or less than the aggregate spread on the options being replaced. 6.2. Number. The number of shares of Common Stock subject to the option shall be determined by the Committee, subject to Section 5.1 and subject to adjustment as provided in Section 9.5. 6.3. Duration and Time for Exercise. The term of each stock option shall be determined by the Committee. Each stock option shall become exercisable at such time or times during its term as shall be determined by the Committee. Notwithstanding the foregoing, the Committee may accelerate the exercisability of any stock option at any time, in addition to the automatic acceleration of stock options under Section 9.11. 6.4. Manner of Exercise. A stock option may be exercised, in whole or in part, by giving written notice to the Company, specifying the number of shares of Common Stock to be purchased. The exercise notice shall be accompanied by the full purchase price for such shares. The option price shall be payable in United States dollars and may be paid by (a) cash; (b) uncertified or certified check; (c) unless otherwise determined by the Committee, by delivery of shares of Common Stock held by the optionee for at least six months, which shares shall be valued for this purpose at the Fair Market Value on the business day immediately preceding the date such option is exercised; (d) unless otherwise determined by the Committee, through arrangements with a brokerage firm under which such firm, on behalf of the optionee, will pay the exercise price to the Company and the Company will promptly deliver to such firm the number of shares of Common Stock subject to the option so that the firm may sell such shares, or a portion thereof, for the account of the optionee, or (e) in such other manner as may be authorized from time to time by the Committee. 6.5. Incentive Stock Options. Notwithstanding anything in the Plan to the contrary, the following additional provisions shall apply to the grant of stock options that are intended to qualify as Incentive Stock Options (as such term is defined in Section 422 of the Code): -3- A. Any Incentive Stock Option agreement authorized under the Plan shall contain such other provisions as the Committee shall deem advisable, but shall in all events be consistent with and contain or be deemed to contain all provisions required in order to qualify the options as Incentive Stock Options. B. All Incentive Stock Options must be granted within ten years from the date on which this Plan is adopted by the Board of Directors. C. Unless sooner exercised, all Incentive Stock Options shall expire no later than ten years after the date of grant. D. No Incentive Stock Options shall be granted to any participant who, at the time such option is granted, would own (within the meaning of Section 422 of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the employer corporation or of its parent or subsidiary corporation. E. The aggregate Fair Market Value (determined with respect to each Incentive Stock Option as of the time such Incentive Stock Option is granted) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by a participant during any calendar year (under the Plan or any other plan of Tidewater or any of its subsidiaries) shall not exceed $100,000. To the extent that such limitation is exceeded, such options shall not be treated, for federal income tax purposes, as Incentive Stock Options. 7. Restricted Stock. 7.1. Grant of Restricted Stock. The Committee may award shares of restricted stock to such officers and key employees as the Committee determines pursuant to the terms of Section 3. An award of restricted stock shall be subject to such restrictions on transfer and forfeitability provisions and such other terms and conditions as the Committee may determine, subject to the provisions of the Plan. An award of restricted stock may also be subject to the attainment of specified performance goals or targets. To the extent restricted stock is intended to qualify as performance-based compensation under Section 162(m) of the Code, it must be granted subject to the attainment of performance goals as described in Section 7.2 below and meet the additional requirements imposed by Section 162(m). 7.2 Performance-Based Restricted Stock. To the extent that restricted stock granted under the Plan is intended to vest based upon the achievement of pre-established performance goals rather than solely upon continued employment over a period of time, the performance goals pursuant to which the restricted stock shall vest shall be any or a combination of the following performance measures: earnings per share, return on assets, an economic value added measure, shareholder return, earnings, stock price, return on equity, return -4- on total capital, safety performance, reduction of expenses or increase in cash flow of Tidewater, a division of Tidewater or a subsidiary. For any performance period, such performance objectives may be measured on an absolute basis or relative to a group of peer companies selected by the Committee, relative to internal goals or relative to levels attained in prior years. The Committee may not waive any of the pre-established performance goal objectives, except that such objectives shall be waived as provided in Section 9.11 hereof, or as may be provided by the Committee in the event of death, disability or retirement. 7.3. The Restricted Period. At the time an award of restricted stock is made, the Committee shall establish a period of time during which the transfer of the shares of restricted stock shall be restricted (the "Restricted Period"). The Restricted Period shall be a minimum of three years, except that if the vesting of the shares of restricted stock is based upon the attainment of performance goals, a minimum Restricted Period of one year is permitted. Each award of restricted stock may have a different Restricted Period. The expiration of the Restricted Period shall also occur as provided under Section 9.3 and under the conditions described in Section 9.11 hereof. 7.4. Escrow. The participant receiving restricted stock shall enter into an Incentive Agreement with the Company setting forth the conditions of the grant. Certificates representing shares of restricted stock shall be registered in the name of the participant and deposited with the Company, together with a stock power endorsed in blank by the participant. Each such certificate shall bear a legend in substantially the following form: The transferability of this certificate and the shares of Common Stock represented by it are subject to the terms and conditions (including conditions of forfeiture) contained in the Tidewater Inc. 1997 Stock Incentive Plan (the "Plan"), and an agreement entered into between the registered owner and Tidewater Inc. thereunder. Copies of the Plan and the agreement are on file at the principal office of the Company. 7.5. Dividends on Restricted Stock. Any and all cash and stock dividends paid with respect to the shares of restricted stock shall be subject to any restrictions on transfer, forfeitability provisions or reinvestment requirements as the Committee may, in its discretion, prescribe in the Incentive Agreement. 7.6. Forfeiture. In the event of the forfeiture of any shares of restricted stock under the terms provided in the Incentive Agreement (including any additional shares of restricted stock that may result from the reinvestment of cash and stock dividends, if so provided in the Incentive Agreement), such forfeited shares shall be surrendered and the certificates cancelled. The participants shall have the same rights and privileges, and be subject to the same forfeiture provisions, with respect to any additional shares received pursuant to Section 9.5 due to a recapitalization, merger or other change in capitalization. -5- 7.7. Expiration of Restricted Period. Upon the expiration or termination of the Restricted Period and the satisfaction of any other conditions prescribed by the Committee, the restrictions applicable to the restricted stock shall lapse and a stock certificate for the number of shares of restricted stock with respect to which the restrictions have lapsed shall be delivered, free of all such restrictions and legends, except any that may be imposed by law, to the participant or the participant's estate, as the case may be. 7.8. Rights as a Shareholder. Subject to the terms and conditions of the Plan and subject to any restrictions on the receipt of dividends that may be imposed in the Incentive Agreement, each participant receiving restricted stock shall have all the rights of a shareholder with respect to shares of stock during the Restricted Period, including without limitation, the right to vote any shares of Common Stock. 8. Stock Options for Outside Directors. 8.1 Grant of Options. Beginning with the 1997 annual meeting of stockholders and for as long as the Plan remains in effect and shares of Common Stock remain available for issuance hereunder, each Outside Director shall be automatically granted a non-qualified stock option on the day of the annual meeting of stockholders of Tidewater, provided such Outside Director continues to serve as a director following such annual meeting. An option to purchase no more than 5,000 shares shall be granted to each Outside Director each year, the exact number of which shall be set by the Committee. 8.2 Exercisability of Stock Options. The stock options granted to Outside Directors under this Section 8 shall become exercisable six months following the date of grant and shall expire ten years following the date of grant. 8.3 Exercise Price. The Exercise Price of the Stock Options granted to Outside Directors shall be equal to the Fair Market Value, as defined in the Plan, of a share of Common Stock on the date of grant. The Exercise Price may be paid as provided in Section 6.4 hereof. 8.4 Exercise After Termination of Board Service. In the event an Outside Director ceases to serve on the Board, the stock options granted hereunder must be exercised, to the extent otherwise exercisable at the time of termination of Board service, within one year from termination of Board service; provided, however, that (a) In the event of termination of Board service as a result of death or disability, the stock options must be exercised within two years from the date of termination of Board service; and -6- (b) In the event of termination of Board service as a result of retirement (at age 65 or later or after having completed five or more years of service on the Board), the stock options must be exercised within five years from the date of termination of Board service; and further provided, that no stock options may be exercised later than 10 years after the date of grant. 9. General. 9.1. Duration. Subject to Section 9.10, the Plan shall remain in effect until all Incentives granted under the Plan have either been satisfied by the issuance of shares of Common Stock or the payment of cash or been terminated under the terms of the Plan and all restrictions imposed on shares of Common Stock in connection with their issuance under the Plan have lapsed. 9.2. Transferability. No Incentives granted hereunder may be transferred, pledged, assigned or otherwise encumbered by a participant except: (a) by will; (b) by the laws of descent and distribution; (c) pursuant to a domestic relations order, as defined in the Code, if permitted by the Committee and so provided in the Incentive Agreement or an amendment thereto; or (d) as to options only, if permitted by the Committee and so provided in the Incentive Agreement or an amendment thereto, (i) to Immediate Family Members, (ii) to a partnership in which Immediate Family Members, or entities in which Immediate Family Members are the sole owners, members or beneficiaries, as appropriate, are the sole partners, (iii) to a limited liability company in which Immediate Family Members, or entities in which Immediate Family Members are the sole owners, members or beneficiaries, as appropriate, are the sole members, or (iv) to a trust for the sole benefit of Immediate Family Members. "Immediate Family Members" shall be defined as the spouse and natural or adopted children or grandchildren of the participant and their spouses. To the extent that an Incentive Stock Option is permitted to be transferred during the lifetime of the participant, it shall be treated thereafter as a nonqualified stock option. Any attempted assignment, transfer, pledge, hypothecation or other disposition of Incentives, or levy of attachment or similar process upon Incentives not specifically permitted herein, shall be null and void and without effect. 9.3. Effect of Termination of Employment or Death. Except as provided in Section 8.4 with respect to Outside Directors, in the event that a participant ceases to be an employee of the Company for any reason, including death, disability, early retirement or normal retirement, any Incentives may be exercised, shall vest or shall expire at such times as may be determined by the Committee in the Incentive Agreement. The Committee has complete authority to modify the treatment of an Incentive in the event of termination of employment of a participant by means of an amendment to the Incentive Agreement. Consent of the participant to the modification is required only if the modification materially -7- impairs the rights previously provided to the participant in the Incentive Agreement. 9.4. Additional Condition. Anything in this Plan to the contrary notwithstanding: (a) the Company may, if it shall determine it necessary or desirable for any reason, at the time of award of any Incentive or the issuance of any shares of Common Stock pursuant to any Incentive, require the recipient of the Incentive, as a condition to the receipt thereof or to the receipt of shares of Common Stock issued pursuant thereto, to deliver to the Company a written representation of present intention to acquire the Incentive or the shares of Common Stock issued pursuant thereto for his own account for investment and not for distribution; and (b) if at any time the Company further determines, in its sole discretion, that the listing, registration or qualification (or any updating of any such document) of any Incentive or the shares of Common Stock issuable pursuant thereto is necessary on any securities exchange or under any federal or state securities or blue sky law, or that the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with the award of any Incentive, the issuance of shares of Common Stock pursuant thereto, or the removal of any restrictions imposed on such shares, such Incentive shall not be awarded or such shares of Common Stock shall not be issued or such restrictions shall not be removed, as the case may be, in whole or in part, unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company. 9.5. Adjustment. In the event of any merger, consolidation or reorganization of the Company with any other corporation or corporations, there shall be substituted for each of the shares of Common Stock then subject to the Plan, including shares subject to restrictions, options or achievement of performance objectives, the number and kind of shares of stock or other securities to which the holders of the shares of Common Stock will be entitled pursuant to the transaction. In the event of any recapitalization, stock dividend, stock split, combination of shares or other change in the Common Stock, the number of shares of Common Stock then subject to the Plan, including shares subject to outstanding Incentives, shall be adjusted in proportion to the change in outstanding shares of Common Stock. In the event of any such adjustments, the purchase price of any option, the performance objectives of any Incentive, and the shares of Common Stock issuable pursuant to any Incentive shall be adjusted as and to the extent appropriate, in the reasonable discretion of the Committee, to provide participants with the same relative rights before and after such adjustment. No substitution or adjustment shall require the Company to issue a fractional share under this Plan and the substitution or adjustment shall be limited by deleting any fractional share. 9.6. Incentive Agreements. The terms of each Incentive shall be stated in an agreement approved by the Committee. -8- 9.7. Withholding. A. The Company shall have the right to withhold from any payments made under the Plan or to collect as a condition of payment, any taxes required by law to be withheld. At any time that a participant is required to pay to the Company an amount required to be withheld under applicable income tax laws in connection with the issuance of Common Stock, the lapse of restrictions on Common Stock or the exercise of an option, the participant may, subject to disapproval by the Committee, satisfy this obligation in whole or in part by electing (the "Election") to have the Company withhold shares of Common Stock having a value equal to the amount required to be withheld. The value of the shares to be withheld shall be based on the Fair Market Value of the Common Stock on the date that the amount of tax to be withheld shall be determined ("Tax Date"). B. Each Election must be made prior to the Tax Date. The Committee may disapprove of any Election, may suspend or terminate the right to make Elections, or may provide with respect to any Incentive that the right to make Elections shall not apply to such Incentive. If a participant makes an election under Section 83(b) of the Internal Revenue Code with respect to shares of restricted stock, an Election is not permitted to be made. 9.8. No Continued Employment. No participant under the Plan shall have any right, because of his or her participation, to continue in the employ of the Company for any period of time or to any right to continue his or her present or any other rate of compensation. 9.9. Deferral Permitted. Payment of cash or distribution of any shares of Common Stock to which a participant is entitled under any Incentive shall be made as provided in the Incentive Agreement. Payment may be deferred at the option of the participant if provided in the Incentive Agreement. 9.10. Amendments to or Termination of the Plan. A. The Board may amend, suspend or terminate the Plan or any portion thereof at any time, provided that no amendment shall be made without stockholder approval if such approval is necessary to comply with any tax or regulatory requirement, including any approval necessary to qualify Incentives as "performance- based" compensation under Section 162(m) or any successor provision, if such qualification is deemed necessary or advisable by the Committee. B. Any provision of this Plan or any Incentive Agreement to the contrary notwithstanding, the Committee may cause any Incentive granted hereunder to be cancelled in consideration of a cash payment or alternative Incentive made to the holder of such cancelled Incentive equal in value to such -9- cancelled Incentive. The determinations of value under this subparagraph shall be made by the Committee in its sole discretion. 9.11. Change of Control; Tender Offer or Exchange Offer. A. This Section 9.11 has been amended, effective October 1, 1999 (the "Amendment") to read as provided herein. However, to the extent that (and only to the extent that) any right to which a grantee of outstanding options or restricted stock under the Plan is entitled prior to the effective date of the Amendment (whether under the Plan, related agreements, amendments thereto, or interpretations by the Compensation Committee) would be detrimentally affected by the Amendment, the Amendment shall not apply. B. Notwithstanding any other provision of the Plan (or any provision of any agreement with respect to any grant hereunder), immediately prior to any Change of Control of the Company (as defined in Section 9.11(D) hereof), all stock options (whether non-qualified or incentive and whether granted to an employee or to a nonemployee Director) which are then outstanding hereunder shall become fully vested and exercisable and all restrictions and limitations on restricted shares of Common Stock then outstanding hereunder shall automatically lapse and all performance criteria and other conditions relating to the payment of Incentives shall automatically be deemed to be achieved or waived by the Company. As used in the immediately preceding sentence, `immediately prior' to the Change of Control shall mean sufficiently in advance of the Change of Control to permit the grantee to take all steps reasonably necessary (i) if an optionee, to exercise any such option fully and (ii) to deal with the shares purchased under any such option and any formerly restricted shares on which restrictions have lapsed so that both types of shares may be treated in the same manner in connection with the Change of Control as the shares of Common Stock of other shareholders. To the extent, if any, required by section 422(d) of the Code, incentive stock options which become exercisable immediately prior to a Change of Control pursuant to this Section 9.11(B) shall thereby become non-qualified stock options. Notwithstanding any other provision of the Plan, including, without limitation, Section 9.11(C) hereof (or any provision of any agreement with respect to any grant hereunder), (i) any stock option which becomes exercisable pursuant to this Section 9.11(B) shall remain exercisable until the earlier of the end of the option term or the lapse of the option, and (ii) any lapse and deemed waiver of restrictions and limitations on restricted shares pursuant to this Section 9.11(B) shall be a permanent lapse and deemed waiver of such restrictions and limitations. C. If any corporation, person or other entity (other than the Company) makes a tender offer or exchange offer for shares of the Common Stock pursuant to which purchases are made (an "Offer"), then from and after the date of the first purchase of the Common Stock pursuant to the Offer (the "Acceleration Date"), all outstanding options shall automatically become fully exercisable, all restrictions or limitations on any Incentives shall lapse and all performance criteria and other conditions relating to the payment of Incentives shall be deemed to be achieved or waived by the Company, without the necessity of any action by -10- any person, for a period of 30 calendar days following the Acceleration Date. Subject to the other provisions of this Section 9.11, following the expiration of the 30-day period, any options not exercised and any shares of Common Stock issued hereunder not tendered or exchanged shall again be subject to the terms and conditions applicable prior to the Offer. D. As used in this Section 9.11, `Change of Control' shall mean: (i) the acquisition by any `Person' (as defined in Section 9.11(E) hereof) of `Beneficial Ownership' (as defined in Section 9.11(E) hereof) of 30% or more of the outstanding Shares of the Company's Common Stock, $0.10 par value per share (the "Common Stock") or 30% or more of the combined voting power of the Company's then outstanding securities; provided, however, that for purposes of this subsection (D)(i), the following shall not constitute a Change of Control: (A) any acquisition (other than a `Business Combination' (as defined in Section 9.11(D)(iii) hereof) which constitutes a Change of Control under Section 9.11(D)(iii) hereof) of Common Stock directly from the Company, (B) any acquisition of Common Stock by the Company or its subsidiaries, (C) any acquisition of Common Stock by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (D) any acquisition of Common Stock by any corporation pursuant to a Business Combination which does not constitute a Change of Control under Section 9.11(D)(iii) hereof; or (ii) individuals who, as of the effective date of the Amendment, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the effective date of the Amendment whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered a member of the Incumbent Board, unless such individual's initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Incumbent Board; or (iii) consummation of a reorganization, merger or consolidation (including a merger or consolidation of the Company or any direct or indirect -11- subsidiary of the Company), or sale or other disposition of all or substantially all of the assets of the Company (a `Business Combination'), in each case, unless, immediately following such Business Combination, (A) the individuals and entities who were the Beneficial Owners of the Company's outstanding Common Stock and the Company's voting securities entitled to vote generally in the election of directors immediately prior to such Business Combination have direct or indirect Beneficial Ownership, respectively, of more than 50% of the then outstanding shares of common stock, and more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, of the Post-Transaction Corporation (as defined in Section 9.11(E) hereof), and (B) except to the extent that such ownership existed prior to the Business Combination, no Person (excluding the Post-Transaction Corporation and any employee benefit plan or related trust of either the Company, the Post-Transaction Corporation or any subsidiary of either corporation) Beneficially Owns, directly or indirectly, 30% or more of the then outstanding shares of common stock of the corporation resulting from such Business Combination or 30% or more of the combined voting power of the then outstanding voting securities of such corporation, and (C) at least a majority of the members of the board of directors of the Post-Transaction Corporation were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (iv) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. E. As used in Section 9.11(D) hereof, the following words or terms shall have the meanings indicated: (i) Affiliate: 'Affiliate' (and variants thereof) shall mean a Person that controls, or is controlled by, or is under common control with, another specified Person, either directly or indirectly. (ii) Beneficial Owner: `Beneficial Owner' (and variants thereof), with respect to a security, shall mean a Person who, directly or indirectly (through any contract, understanding, relationship or otherwise), has or shares (i) the power to vote, or direct the voting of, the security, and/or (ii) the power to dispose of, or to direct the disposition of, the security. (iii) Person: 'Person' shall mean a natural person or company, and shall also mean the group or syndicate created when two or more Persons act as a syndicate or other group (including, without limitation, a partnership or -12- limited partnership) for the purpose of acquiring, holding, or disposing of a security, except that `Person' shall not include an underwriter temporarily holding a security pursuant to an offering of the security. (iv) Post-Transaction Corporation: Unless a Change of Control includes a Business Combination (as defined in Section 9.11(D)(iii) hereof), 'Post-Transaction Corporation' shall mean the Company after the Change of Control. If a Change of Control includes a Business Combination, 'Post-Transaction Corporation' shall mean the corporation resulting from the Business Combination unless, as a result of such Business Combination, an ultimate parent corporation controls the Company or all or substantially all of the Company's assets either directly or indirectly, in which case, 'Post-Transaction Corporation' shall mean such ultimate parent corporation. 9.12. Definition of Fair Market Value. Whenever "Fair Market Value" of Common Stock shall be determined for purposes of this Plan, it shall be the closing sale price on the consolidated transaction reporting system for New York Stock Exchange issues on the date of reference for a share of the Common Stock, or if no sale of the Common Stock shall have been made on that day, on the next preceding day on which there was a sale of the Common Stock. 9.13 Loans to Optionees. In the event of a Change of Control of the Company, as defined in Section 9.11, in connection with which a participant's employment with the Company will be terminated and the participant is precluded for any reason from selling shares of Common Stock, the Company shall, in connection with the exercise of an option, if requested by the participant, extend a loan to the participant in the maximum amount of the exercise price of the options to be exercised, plus the maximum tax liability that may be incurred in connection with the option exercise. Any such loan shall be unsecured, shall be on market terms and shall be payable in full no later than thirty days after the termination of the period during which the participant is precluded from selling shares of Common Stock. Any participant to whom a loan is extended hereunder shall, if requested by the Company, agree in writing not to sell shares of Common Stock for such period as shall be requested, it being understood that the Company's request that the participant not sell shares of Common Stock shall only be invoked to the extent necessary to preserve or recognize pooling-of-interests accounting treatment, tax-free reorganization status, or comparable corporate benefits from making such a request. -13- This Amended and Restated Plan is executed effective the 27th day of September, 2001. TIDEWATER INC. By: /s/ Cliffe F. Laborde ------------------------------- Cliffe F. Laborde Executive Vice President, Secretary and General Counsel -14- EX-10.(C) 6 dex10c.txt 2001 STOCK INCENTIVE PLAN Exhibit 10(c) TIDEWATER INC. 2001 STOCK INCENTIVE PLAN 1. Purpose. The purpose of the 2001 Stock Incentive Plan (the "Plan") of Tidewater Inc. ("Tidewater") is to increase shareholder value and to advance the interests of Tidewater and its subsidiaries (collectively, the "Company") by furnishing stock-based economic incentives (the "Incentives") designed to attract, retain and motivate key employees, officers and directors and to strengthen the mutuality of interests between such employees, officers and directors and Tidewater's shareholders. Incentives consist of opportunities to purchase or receive shares of common stock, $.10 par value per share, of Tidewater (the "Common Stock"), on terms determined under the Plan. As used in the Plan, the term "subsidiary" means any corporation, limited liability company or other entity, of which Tidewater owns (directly or indirectly) within the meaning of Section 425(f) of the Internal Revenue Code of 1986, as amended (the "Code"), 50% or more of the total combined voting power of all classes of stock, membership interests or other equity interests issued thereby. 2. Administration. 2.1. Composition. The Plan shall be administered by the Compensation Committee of the Board of Directors of Tidewater or by a subcommittee thereof (the "Committee"). The Committee shall consist of not fewer than two members of the Board of Directors, each of whom shall (a) qualify as a "non-employee director" under Rule 16b-3 under the Securities Exchange Act of 1934 (the "1934 Act") or any successor rule, and (b) qualify as an "outside director" under Section 162(m) of the Code. 2.2. Authority. The Committee shall have plenary authority to award Incentives under the Plan, to interpret the Plan, to establish any rules or regulations relating to the Plan that it determines to be appropriate, to enter into agreements with or provide notices to participants as to the terms of the Incentives (the "Incentive Agreements") and to make any other determination that it believes necessary or advisable for the proper administration of the Plan. Its decisions in matters relating to the Plan shall be final and conclusive on the Company and participants. The Committee may delegate its authority hereunder to the extent provided in Section 3 hereof. Directors who are not also employees of the Company ("Outside Directors") may receive awards under the Plan only as specifically provided in Section 9 hereof. 3. Eligible Participants. Key employees and officers of the Company (including officers who also serve as directors of the Company) shall become eligible to receive Incentives under the Plan when designated by the Committee. Employees may be designated individually or by groups or categories, as the Committee deems appropriate. With respect to participants not subject to Section 16 of the 1934 Act or Section 162(m) of the Code, the Committee may delegate to appropriate officers of the Company its authority to designate participants, to determine the size and type of Incentives to be received by those participants and to set and modify the terms of the Incentives; provided, however, that the per share exercise price of any options granted by an officer, rather than by the Committee, shall be equal to the Fair Market Value (as defined below). Outside Directors may participate in the Plan only as specifically provided in Section 9 hereof. -1- 4. Types of Incentives. Incentives may be granted under the Plan to eligible participants in the forms of (a) incentive stock options; (b) non-qualified stock options; (c) restricted stock and (d) Other Stock-Based Awards (as defined in Section 8 hereof). 5. Shares Subject to the Plan. 5.1. Number of Shares. Subject to adjustment as provided in Section 10.5, the maximum number of shares of Common Stock that may be delivered to participants and their beneficiaries under the Plan shall be 2,850,000 shares. 5.2. Share Counting. To the extent any shares of Common Stock covered by a stock option are not delivered to a participant or beneficiary because the Option is forfeited or canceled, or shares of Common Stock are not delivered because an Incentive is paid or settled in cash or used to satisfy the applicable tax withholding obligation, such shares shall not be deemed to have been delivered for purposes of determining the maximum number of shares of Common Stock available for delivery under this Plan. In the event that shares of Common Stock are issued as an Incentive and thereafter are forfeited or reacquired by the Company pursuant to rights reserved upon issuance thereof, such forfeited and reacquired Shares may again be issued under the Plan. If the exercise price of any stock option granted under the Plan or the applicable withholding tax obligation is satisfied by tendering shares of Common Stock to the Company (by either actual delivery or by attestation), only the number of shares of Common Stock issued net of the shares of Common Stock tendered shall be deemed delivered for purposes of determining the maximum number of shares of Common Stock available for delivery under the Plan. 5.3. Limitations on Number of Shares. Subject to Section 10.5, the following additional limitations are imposed under the Plan: A. The maximum number of shares of Common Stock that may be issued upon exercise of stock options intended to qualify as incentive stock options under Section 422 of the Code shall be 2,850,000 shares. Notwithstanding any other provision herein to the contrary, (i) all shares issuable under incentive stock options shall be counted against this limit and (ii) shares that are issued and are later forfeited, cancelled or reacquired by the Company, shares withheld to satisfy withholding tax obligations and shares delivered in payment of the Option price shall have no effect on this limitation. B. The maximum number of shares of Common Stock that may be covered by Incentives granted under the Plan to any one individual during any one calendar-year period shall be 500,000. C. The maximum number of shares of Common Stock that may be issued as restricted stock and Other Stock-Based Awards (as defined in Section 8) shall be 300,000 shares. 5.4. Type of Common Stock. Common Stock issued under the Plan may be authorized and unissued shares or issued shares held as treasury shares. -2- 6. Stock Options. A stock option is a right to purchase shares of Common Stock from Tidewater. Stock options granted under the Plan may be incentive stock options (as such term is defined in Section 422 of the Code) or non-qualified stock options. Any option that is designated as a non-qualified stock option shall not be treated as an incentive stock option. Each stock option granted by the Committee under this Plan shall be subject to the following terms and conditions: 6.1. Price. The exercise price per share shall be determined by the Committee, subject to adjustment under Section 10.5; provided that in no event shall the exercise price be less than the Fair Market Value of a share of Common Stock on the date of grant, except in case of a stock option granted in assumption or substitution for an outstanding award of a company acquired by the Company or with which the Company combines. 6.2. Number. The number of shares of Common Stock subject to the option shall be determined by the Committee, subject to Section 5 and subject to adjustment as provided in Section 10.5. 6.3. Duration and Time for Exercise. The term of each stock option shall be determined by the Committee. Each stock option shall become exercisable at such time or times during its term as shall be determined by the Committee. Notwithstanding the foregoing, the Committee may accelerate the exercisability of any stock option at any time, in addition to the automatic acceleration of stock options under Section 10.11. 6.4. Manner of Exercise. A stock option may be exercised, in whole or in part, by giving written notice to the Company, specifying the number of shares of Common Stock to be purchased. The exercise notice shall be accompanied by the full purchase price for such shares. The option price shall be payable in United States dollars and may be paid by (a) cash; (b) uncertified or certified check; (c) by delivery of shares of Common Stock which, unless otherwise determined by the Committee, shall have been held by the optionee for at least six months, and which shares shall be valued for this purpose at the Fair Market Value on the business day immediately preceding the date such option is exercised; (d) delivery of irrevocable written instructions to a broker approved by the Company (with a copy to the Company) to immediately sell a portion of the shares issuable under the option and to deliver promptly to the Company the amount of sale proceeds (or loan proceeds if the broker lends funds to the participant for delivery to the Company) to pay the exercise price; or (e) in such other manner as may be authorized from time to time by the Committee. 6.5. Incentive Stock Options. Notwithstanding anything in the Plan to the contrary, the following additional provisions shall apply to the grant of stock options that are intended to qualify as incentive stock options (as such term is defined in Section 422 of the Code): A. Any incentive stock option agreement authorized under the Plan shall contain such other provisions as the Committee shall deem advisable, but shall in all events be consistent with and contain or be deemed to contain all provisions required in order to qualify the options as incentive stock options. -3- B. All incentive stock options must be granted within ten years from the date on which this Plan is adopted by the Board of Directors. C. Unless sooner exercised, all incentive stock options shall expire no later than ten years after the date of grant. D. No incentive stock options shall be granted to any participant who, at the time such option is granted, would own (within the meaning of Section 422 of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the employer corporation or of its parent or subsidiary corporation. E. The aggregate Fair Market Value (determined with respect to each incentive stock option as of the time such incentive stock option is granted) of the Common Stock with respect to which incentive stock options are exercisable for the first time by a participant during any calendar year (under the Plan or any other plan of Tidewater or any of its subsidiaries) shall not exceed $100,000. To the extent that such limitation is exceeded, such options shall not be treated, for federal income tax purposes, as incentive stock options. 7. Restricted Stock. 7.1. Grant of Restricted Stock. The Committee may award shares of restricted stock to such officers and key employees as the Committee determines pursuant to the terms of Section 3. An award of restricted stock shall be subject to such restrictions on transfer and forfeitability provisions and such other terms and conditions, including the attainment of specified performance goals, as the Committee may determine, subject to the provisions of the Plan. To the extent restricted stock is intended to qualify as "performance-based compensation" under Section 162(m) of the Code ("Section 162(m)"), it must be granted subject to the attainment of performance goals as described in Section 7.2 below and meet the additional requirements imposed by Section 162(m). 7.2 Performance-Based Restricted Stock. To the extent that restricted stock granted under the Plan is intended to qualify as "performance-based compensation" under Section 162(m), the performance goals pursuant to which the restricted stock shall vest shall be any or a combination of the following performance measures applied to the Company, Tidewater, a division or a subsidiary: earnings per share, return on assets, an economic value added measure, shareholder return, earnings, stock price, return on equity, return on total capital, safety performance, reduction of expenses or increase in cash flow. For any performance period, such performance objectives may be measured on an absolute basis or relative to a group of peer companies selected by the Committee, relative to internal goals or relative to levels attained in prior years. If the performance-based restricted stock is intended to qualify as performance-based compensation under Section 162(m), the Committee may not waive any of the pre-established performance goal objectives, except for an automatic waiver under Section 10.10 hereof, or as may be provided by the Committee in the event of death or disability. -4- 7.3. The Restricted Period. At the time an award of restricted stock is made, the Committee shall establish a period of time during which the transfer of the shares of restricted stock shall be restricted and after which the shares of restricted stock shall be vested (the "Restricted Period"). Except for shares of restricted stock that vest based on the attainment of performance goals, the Restricted Period shall be a minimum of three years, with incremental vesting of portions of the award over the three-year period permitted. If the vesting of the shares of restricted stock is based upon the attainment of performance goals, a minimum Restricted Period of one year or more is permitted, with incremental vesting of portions of the award over the one-year period permitted. Each award of restricted stock may have a different Restricted Period. The expiration of the Restricted Period shall also occur as provided under Section 10.3 and under the conditions described in Section 10.10 hereof. 7.4. Escrow. The participant receiving restricted stock shall enter into an Incentive Agreement with the Company setting forth the conditions of the grant. Certificates representing shares of restricted stock shall be registered in the name of the participant and deposited with the Company, together with a stock power endorsed in blank by the participant. Each such certificate shall bear a legend in substantially the following form: The transferability of this certificate and the shares of Common Stock represented by it are subject to the terms and conditions (including conditions of forfeiture) contained in the Tidewater Inc. 2001 Stock Incentive Plan (the "Plan"), and an agreement entered into between the registered owner and Tidewater Inc. thereunder. Copies of the Plan and the agreement are on file at the principal office of the Company. 7.5. Dividends on Restricted Stock. Any and all cash and stock dividends paid with respect to the shares of restricted stock shall be subject to any restrictions on transfer, forfeitability provisions or reinvestment requirements as the Committee may, in its discretion, prescribe in the Incentive Agreement. 7.6. Forfeiture. In the event of the forfeiture of any shares of restricted stock under the terms provided in the Incentive Agreement (including any additional shares of restricted stock that may result from the reinvestment of cash and stock dividends, if so provided in the Incentive Agreement), such forfeited shares shall be surrendered and the certificates cancelled. The participants shall have the same rights and privileges, and be subject to the same forfeiture provisions, with respect to any additional shares received pursuant to Section 10.5 due to a recapitalization, merger or other change in capitalization. 7.7. Expiration of Restricted Period. Upon the expiration or termination of the Restricted Period and the satisfaction of any other conditions prescribed by the Committee, the restrictions applicable to the restricted stock shall lapse and a stock certificate for the number of shares of restricted stock with respect to which the restrictions have lapsed shall be delivered, free of all such restrictions and legends, except any that may be imposed by law, to the participant or the participant's estate, as the case may be. -5- 7.8. Rights as a Shareholder. Subject to the terms and conditions of the Plan and subject to any restrictions on the receipt of dividends that may be imposed in the Incentive Agreement, each participant receiving restricted stock shall have all the rights of a shareholder with respect to shares of stock during the Restricted Period, including without limitation, the right to vote any shares of Common Stock. 8. Other Stock-Based Awards. 8.1 Grant of Other Stock-Based Awards. The Committee may grant to eligible participants "Other Stock-Based Awards," which shall consist of awards, other than options or restricted stock provided for in Sections 6 and 7, the value of which is based in whole or in part on the value of shares of Common Stock. Other Stock-Based Awards may be awards of shares of Common Stock or may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, shares of, or appreciation in the value of, Common Stock (including, without limitation, securities convertible or exchangeable into or exercisable for shares of Common Stock), as deemed by the Committee consistent with the purposes of this Plan. The Committee shall determine the terms and conditions of any Other Stock-Based Award (including which rights of a shareholder, if any, the recipient shall have with respect to Common Stock associated with any such award) and may provide that such award is payable in whole or in part in cash. An Other Stock-Based Award may be subject to the attainment of such specified performance goals or targets as the Committee may determine, subject to the provisions of this Plan. To the extent that an Other Stock-Based Award is intended to qualify as "performance-based compensation" under Section 162(m), it must meet the additional requirements imposed thereby. 8.2 Performance-Based Other Stock-Based Awards. Any grant of an Other Stock-Based Award that is intended to qualify as "performance-based compensation" under Section 162(m) shall be conditioned on the achievement of one or more performance goals. The performance goals pursuant to which the Other Stock-Based Award shall vest shall be any or a combination of the following measures applied to the Company, Tidewater, a subsidiary or a division: earnings per share, return on assets, an economic value added measure, shareholder return, earnings, stock price, return on equity, return on total capital, safety performance, reduction of expenses or increase in cash flow. For any performance period, such performance objectives may be measured on an absolute basis or relative to a group of peer companies selected by the Committee, relative to internal goals or relative to levels attained in prior years. For grants of Other Stock-Based Awards intended to qualify as "performance-based compensation," the grants of Other Stock-Based Awards and the establishment of performance measures shall be made during the period required under Section 162(m). 8.3 Limitations. Other Stock-Based Awards granted under this Section 8 shall be subject to vesting periods that are equivalent in length to the Restricted Periods for restricted stock described in Section 7.3 hereof, except that the Committee may make special awards under this Section 8 with respect to an aggregate of no more than 100,000 shares of Common Stock, as adjusted under Section 10.5, which special awards shall not be subject to the minimum vesting period requirements described in Section 7.3. -6- 9. Stock Options for Outside Directors. 9.1 Grant of Options. During the period beginning on the day following the 2001 annual meeting of stockholders and ending on the day of the 2002 annual meeting of stockholders and during each period between annual meetings thereafter, for as long as the Plan remains in effect and shares of Common Stock remain available for issuance hereunder, each Outside Director may be granted non-qualified stock options to purchase up to 5,000 shares of Common Stock, the exact number of which shall be set by the Committee. 9.2 Exercisability of Stock Options. The stock options granted to Outside Directors under this Section 9 shall be exercisable six months after the date of grant and shall expire no later than ten years following the date of grant. 9.3 Exercise Price. The Exercise Price of the Stock Options granted to Outside Directors shall be equal to the Fair Market Value, as defined in the Plan, of a share of Common Stock on the date of grant. The Exercise Price may be paid as provided in Section 6.4 hereof. 9.4 Exercise After Termination of Board Service. In the event an Outside Director ceases to serve on the Board, the stock options granted hereunder must be exercised, to the extent otherwise exercisable at the time of termination of Board service, within one year from termination of Board service; provided, however, that A. In the event of termination of Board service as a result of death or disability, the stock options must be exercised within two years from the date of termination of Board service; and B. In the event of termination of Board service as a result of retirement (at age 65 or later or after having completed five or more years of service on the Board), the stock options must be exercised within five years from the date of termination of Board service; and further provided, that no stock options may be exercised later than ten years after the date of grant. 10. General. 10.1. Duration. Subject to Section 10.9, the Plan shall remain in effect until all Incentives granted under the Plan have either been satisfied by the issuance of shares of Common Stock or otherwise or been terminated under the terms of the Plan and all restrictions imposed on shares of Common Stock in connection with their issuance under the Plan have lapsed. 10.2. Transferability. No Incentives granted hereunder may be transferred, pledged, assigned or otherwise encumbered by a participant except: (a) by will; (b) by the laws of descent and distribution; (c) pursuant to a domestic relations order, as defined in the Code, if -7- permitted by the Committee and so provided in the Incentive Agreement or an amendment thereto; or (d) as to options only, if permitted by the Committee and so provided in the Incentive Agreement or an amendment thereto, (i) to Immediate Family Members, (ii) to a partnership in which Immediate Family Members, or entities in which Immediate Family Members are the sole owners, members or beneficiaries, as appropriate, are the sole partners, (iii) to a limited liability company in which Immediate Family Members, or entities in which Immediate Family Members are the sole owners, members or beneficiaries, as appropriate, are the sole members, or (iv) to a trust for the sole benefit of Immediate Family Members. "Immediate Family Members" shall be defined as the spouse and natural or adopted children or grandchildren of the participant and their spouses. To the extent that an incentive stock option is permitted to be transferred during the lifetime of the participant, it shall be treated thereafter as a nonqualified stock option. Any attempted assignment, transfer, pledge, hypothecation or other disposition of Incentives, or levy of attachment or similar process upon Incentives not specifically permitted herein, shall be null and void and without effect. 10.3. Effect of Termination of Employment or Death. Except as provided in Section 9.4 with respect to Outside Directors, in the event that a participant ceases to be an employee of the Company for any reason, including death, disability, early retirement or normal retirement, any Incentives may be exercised, shall vest or shall expire at such times as may be determined by the Committee and provided in the Incentive Agreement. The Committee has complete authority to modify the treatment of an Incentive in the event of termination of employment of a participant by means of an amendment to the Incentive Agreement. Consent of the participant to the modification is required only if the modification materially impairs the rights previously provided to the participant in the Incentive Agreement. 10.4. Additional Condition. Anything in this Plan to the contrary notwithstanding: (a) the Company may, if it shall determine it necessary or desirable for any reason, at the time of award of any Incentive or the issuance of any shares of Common Stock pursuant to any Incentive, require the recipient of the Incentive, as a condition to the receipt thereof or to the receipt of shares of Common Stock issued pursuant thereto, to deliver to the Company a written representation of present intention to acquire the Incentive or the shares of Common Stock issued pursuant thereto for his own account for investment and not for distribution; and (b) if at any time the Company further determines, in its sole discretion, that the listing, registration or qualification (or any updating of any such document) of any Incentive or the shares of Common Stock issuable pursuant thereto is necessary on any securities exchange or under any federal or state securities or blue sky law, or that the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with the award of any Incentive, the issuance of shares of Common Stock pursuant thereto, or the removal of any restrictions imposed on such shares, such Incentive shall not be awarded or such shares of Common Stock shall not be issued or such restrictions shall not be removed, as the case may be, in whole or in part, unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company. 10.5. Adjustment. In the event of any merger, consolidation or reorganization of the Company with any other corporation or corporations, there shall be substituted for each of the shares of Common Stock then subject to the Plan, including shares subject to restrictions, -8- options or achievement of performance objectives, the number and kind of shares of stock, other securities or property (including cash) to which the holders of the shares of Common Stock are entitled pursuant to the transaction. In the event of any recapitalization, stock dividend, stock split, combination of shares or other similar change in the Common Stock, the number of shares of Common Stock then subject to the Plan, including shares subject to outstanding Incentives, and all limitations on share issuances imposed by Section 5.3 hereof shall be adjusted in proportion to the change in outstanding shares of Common Stock. In the event of any such adjustments, the purchase price of any option and the performance objectives of any Incentive, shall also be adjusted as and to the extent appropriate, in the reasonable discretion of the Committee, to provide participants with the same relative rights before and after such adjustment. No substitution or adjustment shall require the Company to issue a fractional share under the Plan and the substitution or adjustment shall be limited by deleting any fractional share. 10.6. Withholding. A. The Company shall have the right to withhold from any payments made or stock issued under the Plan or to collect as a condition of payment, issuance or vesting, any taxes required by law to be withheld. At any time that a participant is required to pay to the Company an amount required to be withheld under applicable income tax laws in connection with the lapse of restrictions on Common Stock or the exercise of an option, the participant may, subject to disapproval by the Committee, satisfy this obligation in whole or in part by electing (the "Election") to deliver currently owned shares of Common Stock or to have the Company withhold shares of Common Stock, in each case having a value equal to the minimum statutory amount required to be withheld under federal, state and local law. The value of the shares to be delivered or withheld shall be based on the Fair Market Value of the Common Stock on the date that the amount of tax to be withheld shall be determined ("Tax Date"). B. Each Election must be made prior to the Tax Date. The Committee may disapprove of any Election, may suspend or terminate the right to make Elections, or may provide with respect to any Incentive that the right to make Elections shall not apply to such Incentive. If a participant makes an election under Section 83(b) of the Code with respect to shares of restricted stock, an Election to have shares withheld to satisfy withholding taxes is not permitted to be made. 10.7. No Continued Employment. No participant under the Plan shall have any right, because of his or her participation, to continue in the employ of the Company for any period of time or to any right to continue his or her present or any other rate of compensation. 10.8. Deferral Permitted. Payment of an Incentive may be deferred at the option of the participant if permitted in the Incentive Agreement. 10.9. Amendments to or Termination of the Plan. The Board may amend or discontinue this Plan at any time; provided, however, that no such amendment may: -9- A. without the approval of the shareholders, (i) increase, subject to adjustments permitted herein, the maximum number of shares of Common Stock that may be issued through the Plan, (ii) materially increase the benefits accruing to participants under the Plan or (iii) materially expand the classes of persons eligible to participate in this Plan, or B. materially impair, without the consent of the recipient, an Incentive previously granted. 10.10. Change of Control; Tender Offer or Exchange Offer. A. Notwithstanding any other provision of the Plan (or any provision of any agreement with respect to any grant hereunder), immediately prior to any Change of Control of the Company (as defined in Section 10.10(C) hereof), all stock options (whether non-qualified or incentive and whether granted to an employee or to an Outside Director) which are then outstanding hereunder shall become fully vested and exercisable and all restrictions and limitations on shares of restricted stock or Other Stock-Based Awards then outstanding hereunder shall automatically lapse and all performance criteria and other conditions relating to the payment of Incentives shall automatically be deemed to be achieved or waived by the Company. As used in the immediately preceding sentence, `immediately prior' to the Change of Control shall mean sufficiently in advance of the Change of Control to permit the grantee to take all steps reasonably necessary (i) if an optionee, to exercise any such option fully and (ii) to deal with the shares purchased or acquired under any such option or any Other Stock-Based Award and any formerly restricted shares on which restrictions have lapsed so that all types of shares may be treated in the same manner in connection with the Change of Control as the shares of Common Stock of other shareholders. To the extent, if any, required by section 422(d) of the Code, incentive stock options which become exercisable immediately prior to a Change of Control pursuant to this Section 10.10(A) shall thereby become non-qualified stock options. Notwithstanding any other provision of the Plan, including, without limitation, Section 10.10(B) hereof (or any provision of any agreement with respect to any grant hereunder), (i) any stock option which becomes exercisable pursuant to this Section 10.10(A) shall remain exercisable until the earlier of the end of the option term or the lapse of the option, and (ii) any lapse and deemed waiver of restrictions and limitations on any shares of restricted stock and any Other Stock-Based Awards pursuant to this Section 10.10(A) shall be a permanent lapse and deemed waiver of such restrictions and limitations. B. If any corporation, person or other entity (other than the Company) makes a tender offer or exchange offer for shares of the Common Stock pursuant to which purchases are made (an "Offer"), then from and after the date of the first purchase of the Common Stock pursuant to the Offer (the "Acceleration Date"), all outstanding options shall automatically become fully exercisable, all restrictions or limitations on any Incentives shall lapse and all performance criteria and other conditions relating to the payment of Incentives shall be deemed to be achieved or waived by the Company, without the necessity of any action by any person, for a period of 30 calendar days -10- following the Acceleration Date. Subject to the other provisions of this Section 10.10, following the expiration of the 30-day period, any options not exercised and any shares of Common Stock issued hereunder not tendered or exchanged shall again be subject to the terms and conditions applicable prior to the Offer. C. As used in this Section 10.10, `Change of Control' shall mean: (i) the acquisition by any `Person' (as defined in Section 10.10(D) hereof) of `Beneficial Ownership' (as defined in Section 10.10(D) hereof) of 30% or more of the outstanding shares of the Common Stock, or 30% or more of the combined voting power of the Company's then outstanding securities; provided, however, that for purposes of this subsection (C)(i), the following shall not constitute a Change of Control: (a) any acquisition (other than a `Business Combination' (as defined in Section 10.10(C)(iii) hereof) which constitutes a Change of Control under Section 10.10(C)(iii) hereof) of Common Stock directly from the Company, (b) any acquisition of Common Stock by the Company or its subsidiaries, (c) any acquisition of Common Stock by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (d) any acquisition of Common Stock by any corporation pursuant to a Business Combination which does not constitute a Change of Control under Section 10.10(C)(iii) hereof; or (ii) individuals who, as of the date of adoption of the Plan by the Board (the "Adoption Date"), constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Adoption Date whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered a member of the Incumbent Board, unless such individual's initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Incumbent Board; or (iii) consummation of a reorganization, merger or consolidation (including a merger or consolidation of the Company or any direct or indirect subsidiary of the Company), or sale or other disposition of all or substantially all -11- of the assets of the Company (a `Business Combination'), in each case, unless, immediately following such Business Combination, (a) the individuals and entities who were the Beneficial Owners of the Company's outstanding Common Stock and the Company's voting securities entitled to vote generally in the election of directors immediately prior to such Business Combination have direct or indirect Beneficial Ownership, respectively, of more than 50% of the then outstanding shares of common stock, and more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, of the Post-Transaction Corporation (as defined in Section 10.10(D) hereof), and (b) except to the extent that such ownership existed prior to the Business Combination, no Person (excluding the Post-Transaction Corporation and any employee benefit plan or related trust of either the Company, the Post-Transaction Corporation or any subsidiary of either corporation) Beneficially Owns, directly or indirectly, 30% or more of the then outstanding shares of common stock of the corporation resulting from such Business Combination or 30% or more of the combined voting power of the then outstanding voting securities of such corporation, and (c) at least a majority of the members of the board of directors of the Post-Transaction Corporation were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (iv) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. D. As used in Section 10.10(C) hereof, the following words or terms shall have the meanings indicated: (i) Affiliate: 'Affiliate' (and variants thereof) shall mean a Person that controls, or is controlled by, or is under common control with, another specified Person, either directly or indirectly. (ii) Beneficial Owner: 'Beneficial Owner' (and variants thereof), with respect to a security, shall mean a Person who, directly or indirectly (through any contract, understanding, relationship or otherwise), has or shares (a) the power to vote, or direct the voting of, the security, and/or (b) the power to dispose of, or to direct the disposition of, the security. (iii) Person: 'Person' shall mean a natural person or company, and shall also mean the group or syndicate created when two or more Persons act -12- as a syndicate or other group (including, without limitation, a partnership or limited partnership) for the purpose of acquiring, holding, or disposing of a security, except that `Person' shall not include an underwriter temporarily holding a security pursuant to an offering of the security. (iv) Post-Transaction Corporation: Unless a Change of Control includes a Business Combination (as defined in Section 10.10(C)(iii) hereof), 'Post-Transaction Corporation' shall mean the Company after the Change of Control. If a Change of Control includes a Business Combination, 'Post-Transaction Corporation' shall mean the corporation resulting from the Business Combination unless, as a result of such Business Combination, an ultimate parent corporation controls the Company or all or substantially all of the Company's assets either directly or indirectly, in which case, 'Post-Transaction Corporation' shall mean such ultimate parent corporation. 10.11. Definition of Fair Market Value. Whenever "Fair Market Value" of Common Stock shall be determined for purposes of this Plan, it shall be the closing sale price on the consolidated transaction reporting system for New York Stock Exchange issues on the date of reference for a share of the Common Stock, or if no sale of the Common Stock shall have been made on that day, on the next preceding day on which there was a sale of the Common Stock. 10.12 Loans to Optionees. In the event of a Change of Control of the Company, as defined in Section 10.10, in connection with which a participant's employment with the Company will be terminated and the participant is precluded for any reason from selling shares of Common Stock, the Company shall, in connection with the exercise of an option, if requested by the participant, extend a loan to the participant in the maximum amount of the exercise price of the options to be exercised, plus the maximum tax liability that may be incurred in connection with the option exercise. Any such loan shall be unsecured, shall be on market terms and shall be payable in full no later than thirty days after the termination of the period during which the participant is precluded from selling shares of Common Stock. Any participant to whom a loan is extended hereunder shall, if requested by the Company, agree in writing not to sell shares of Common Stock for such period as shall be requested, it being understood that the Company's request that the participant not sell shares of Common Stock shall only be invoked to the extent necessary to preserve or recognize pooling-of-interests accounting treatment, tax-free reorganization status, or comparable corporate benefits from making such a request. This Plan is executed effective the 27th day of July, 2001. TIDEWATER INC. By: /s/ Cliffe F. Laborde ----------------------------------- Cliffe F. Laborde Executive Vice President, Secretary and General Counsel -13- EX-15 7 dex15.txt LETTER RE UNAUDITED INTERIM FINANCIAL INFORMATION EXHIBIT 15 The Board of Directors and Shareholders Tidewater Inc. We are aware of the incorporation by reference in the Registration Statements (Forms S-8 No. 33-63094, No. 33-38240, No. 333-32729, No. 333-47687 and No. 333-66054) of Tidewater Inc. of our report dated January 16, 2002 relating to the unaudited condensed consolidated interim financial statements of Tidewater Inc. that are included in its Form 10-Q for the quarter ended December 31, 2001. Pursuant to Rule 436(c) of the Securities Act of 1933, our report is not a part of the registration statements prepared or certified by accountants within the meaning of Section 7 or 11 of the Securities Act of 1933. Ernst & Young LLP New Orleans, Louisiana January 16, 2002 -21- -----END PRIVACY-ENHANCED MESSAGE-----