Document:

exv10w2

 

Exhibit 10.2

2006 PERFORMANCE UNIT AGREEMENT

          This 2006 Performance Unit Agreement (this “Agreement”) is between Oceaneering
international, inc. (the “Company”) and ______(the “Participant”), an employee of
the Company or one of its Subsidiaries, regarding an award (“2006 Performance Award”) of ______
units (“Performance Units”), each representing an initial notional value of $100.00, under the
2005 Incentive plan of oceaneering international, inc. (the “Plan”), awarded to the
Participant effective February 2, 2006 (the “Award Date”), and subject to the following terms and
conditions:

     1. Relationship to Plan. This Award is subject to all of the terms, conditions and provisions
of the Plan and administrative interpretations thereunder, if any, which have been adopted by the
Committee thereunder and are in effect on the date hereof. Except as defined or otherwise
specifically provided herein, capitalized terms shall have the same meanings ascribed to them under
the Plan.

     2. Vesting.

     (a) The 2006 Performance Award hereby granted shall become vested in full on the third
anniversary of the Award Date, provided the Participant is in Employment on such anniversary
date.

     (b) Performance Units subject to this 2006 Performance Award shall vest, irrespective
of the provisions set forth in subparagraph (a) above, provided that the Participant has
been in continuous Employment from the Award Date until the December 15th following the
later of (i) the Award Date, and (ii) his attainment of Retirement Age, in the following
amounts provided the Participant is in Employment on the applicable December 15th:

     (i) if such December 15th occurs within one year following the Award
Date, on such December 15th, one-third of the 2006 Performance Award shall
be thereupon vested and an additional one-third of the 2006 Performance
Award shall vest on each of the two subsequent anniversaries of such
December 15th;

     (ii) if such December 15th occurs between one and two years following
the Award Date, on such December 15th, two-thirds of the 2006 Performance
Award shall thereupon be vested and an additional one-third of the 2006
Performance Award shall vest on the subsequent anniversary of such December
15th; and

     (iii) if such December 15th occurs between two and three years
following the Award Date, on such December 15th, the entire 2006 Performance
Award shall thereupon be vested.

     (c) All Performance Units subject to this 2006 Performance Award shall vest,
irrespective of the provisions set forth in subparagraphs (a) or (b) above, provided that

 

 

the Participant has been in continuous Employment since the Award Date, upon the
earliest to occur of:

     (i) the date that the Company or any successor to the Company
terminates the Participant’s Employment for any reason on or after a Change
of Control; or

     (ii) the date that the Participant’s aggregate value of total annual
compensation (including salary, bonuses, long and short-term incentives,
deferred compensation and award of stock options, as well as all other
benefits in force on the date immediately prior to a Change of Control) is
reduced to a value that is ninety-five percent (95%) or less of the value
thereof on the date immediately prior to the Change of Control, or the
Participant’s scope of work responsibility is materially reduced from that
existing on the date immediately prior to the Change of Control, or the
Participant is requested to relocate more than 25 miles from his place of
Employment with the Company on the date immediately prior to the Change of
Control, in each case, on or after a Change of Control; or

     (iii) the Participant’s termination of Employment by reason of
Disability or death.

     (d) For purposes of this Agreement:

     (i) “Change of Control” means:

     (A) any Person is or becomes the “beneficial owner” (as defined in Rule
13d-3 under the Securities Exchange Act of 1934, as amended), directly or
indirectly, of securities of the Company representing 20% or more of the
combined voting power of the Company’s outstanding Voting Securities, other
than through the purchase of Voting Securities directly from the Company
through a private placement; or

     (B) individuals who constitute the Board on the date hereof (the
“Incumbent Board”) cease for any reason to constitute at least a majority
thereof, provided that any person becoming a Director subsequent to the date
hereof whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least two-thirds of the Directors
comprising the Incumbent Board shall from and after such election be deemed
to be a member of the Incumbent Board; or

     (C) the Company is merged or consolidated with another corporation or
entity and as a result of such merger or consolidation less than 60% of the
outstanding Voting Securities of the surviving or resulting corporation or
entity shall then be owned by the former shareholders of the Company; or

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     (D) a tender offer or exchange offer is made and consummated by a
Person other than the Company for the ownership of 20% or more of the Voting
Securities of the Company then outstanding; or

     (E) all or substantially all of the assets of the Company are sold or
transferred to a Person as to which:

     (1) the Incumbent Board does not have authority (whether by law
or contract) to directly control the use or further disposition of
such assets; and

     (2) the financial results of the Company and such Person are not
consolidated for financial reporting purposes.

     (F) Anything else in this definition to the contrary notwithstanding,
no Change of Control shall be deemed to have occurred by virtue of any
transaction which results in the Participant, or a group of Persons which
includes the Participant, acquiring more than 20% of either the combined
voting power of the Company’s outstanding Voting Securities or the Voting
Securities of any other corporation or entity which acquires all or
substantially all of the assets of the Company, whether by way of merger,
consolidation, sale of such assets or otherwise.

     (ii) “Disability” means physical or mental impairment:

     (A) which causes a Participant to be unable to perform the normal
duties for an Employer as determined by the Committee in its sole
discretion; and

     (B) which is expected either to result in death or to last for a
continuous period of at least 12 months. The Committee may require that the
Participant be examined by a physician or physicians selected by the
Committee.

     (iii) “Employment” means employment with the Company or any of its
Subsidiaries.

     (iv) “Person” means, any individual, corporation, partnership, group,
association or other “person,” as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended, and the related
rules and regulations promulgated thereunder.

     (v) “Retirement Age” means the earlier to occur of:

     (A) age 65 or more, or

     (B) age 60 or more with at least 15 years of continuous Employment,

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     provided that the Participant has remained in Employment until the earlier to occur
of (A) or (B).

     (vi) “Voting Securities” means, with respect to any corporation or
other business enterprise, those securities, which under ordinary
circumstances are entitled to vote for the election of directors or others
charged with comparable duties under applicable law.

     3. Forfeiture of 2006 Performance Award. If the Participant’s Employment terminates under any
circumstances (except those provided in Paragraph 2 of this Agreement or in any other written
agreement between the Participant and the Company which provides for vesting of Performance Units
granted hereby), all unvested Performance Units as of the termination date shall be forfeited.

     4. Determination
of Final Value of Performance Units. The Committee shall, as soon as
practicable after the close of the 2006-2008 Performance Period, determine the final value of each
Performance Unit granted hereunder in accordance with the 2006 Performance Award: Goals and
Measures (a copy of which has been furnished to the Participant). Such final value may range from
$0 to $125.

     5. Settlement
and Payment. Settlement of all 2006 Performance Awards will be made by payment in
cash.

     (a) Third Anniversary, Attainment of Retirement Age, Termination After Disability or
Death. Payment of vested 2006 Performance Awards that vest by reason of Subparagraphs 2(a),
(b) or (c)(iii) of this Agreement shall be made as soon as administratively practicable
after the close of the 2006-2008 Performance Period. In no event shall such payment be made
later than the 15th day of the third calendar month of the year following the year in which
the third anniversary of the Award Date occurs.

     (b) Change of Control. Payment of vested 2006 Performance Awards that vest by reason
of Subparagraph 2(a) after a Change of Control has occurred shall be made as soon as
administratively practicable after the close of the 2006-2008 Performance Period. Payment
of vested Performance Awards that vest (i) in accordance with Subparagraph 2(b) to a
Participant who has attained Retirement Age at any time and who then terminates Employment
after a Change of Control, (ii) upon actual termination as contemplated by Subparagraph
2(c)(i) or constructive termination upon the occurrence of any of the events described in
Subparagraph 2(c)(ii) of this Agreement, or (iii) upon termination as described in
Subparagraph 2(c)(iii) after a Change of Control, shall be made as soon as administratively
practicable after termination occurs. Payment of vested Performance Awards that vest (i) in
accordance with Subparagraph 2(b) to a Participant who had attained Retirement Age at any
time and who then terminated Employment prior to a Change of Control, or (ii) upon
termination as described in Subparagraph 2(c)(iii) prior to a Change of Control, shall be
made as soon administratively practicable after a Change of Control occurs. Any payment
made pursuant to this Subparagraph 5(b) will be made as if each Performance Goal had been
satisfied at the Target level, with no reduction for such date occurring prior to the close
of the 2006-2008 Performance Period.

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     6. Notices. Unless the Company notifies the Participant in writing of a different procedure,
any notice or other communication to the Company with respect to this Agreement or the Plan shall
be in writing addressed to the Corporate Secretary of the Company and shall be: (a) by registered
or certified United States mail, postage prepaid, to 11911 FM 529, Houston, Texas 77041-3011; or
(b) by hand delivery or otherwise to 11911 FM 529, Houston, Texas 77041-3011. Any such notice
shall be deemed effectively delivered or given upon receipt.

          Notwithstanding the foregoing, in the event that the address of the Company’s principal
executive offices is changed prior to the date of any exercise of this 2006 Performance Award,
notices shall instead be made pursuant to the foregoing provisions at the then current address of
the Company’s principal executive offices.

          Any notice or other communication to the Participant with respect to this Agreement or the
Plan shall be given in writing and shall be deemed effectively delivered or given upon receipt or,
in the case of notices mailed by the Company to the Participant, five days after deposit in the
United States mail, postage prepaid, addressed to the Participant at the address specified at the
end of this Agreement or at such other address as the Participant hereafter designates by written
notice to the Company.

     7. Assignment of 2006 Performance Award. Except as otherwise permitted by the Committee and
as provided in the immediately following paragraph, the Participant’s rights under the Plan and
this Agreement are personal, and no assignment or transfer of the Participant’s rights under and
interest in this 2006 Performance Award may be made by the Participant other than by a domestic
relations order. This 2006 Performance Award is payable during his lifetime only to the
Participant, or in the case of a Participant who is mentally incapacitated, this 2006 Performance
Award shall be payable to his guardian or legal representative.

          The Participant may designate a beneficiary or beneficiaries (the “Beneficiary”) to whom the
2006 Performance Award under this Agreement, if any, will pass upon the Participant’s death and may
change such designation from time to time by filing with the Company a written designation of
Beneficiary on the form attached hereto as Exhibit A, or such other form as may be prescribed by
the Committee; provided that no such designation shall be effective unless so filed prior to the
death of the Participant and no such designation shall be effective as of a date prior to receipt
by the Company. The Participant may change his Beneficiary without the consent of any prior
Beneficiary by filing a new designation with the Company. The last such designation that the
Company receives in accordance with the foregoing provisions will be controlling. Following the
Participant’s death, the 2006 Performance Award, if any, will pass to the designated Beneficiary
and such person will be deemed the Participant for purposes of any applicable provisions of this
Agreement. If no such designation is made or if the designated Beneficiary does not survive the
Participant’s death, the 2006 Performance Award shall pass by will or, if none, then by the laws of
descent and distribution.

     8. Withholding. The Company’s obligations under this Agreement shall be subject to the
satisfaction of all applicable federal, state and local income and employment tax withholding
requirements (the “Required Withholding”). The Company may withhold an

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appropriate amount of cash necessary to satisfy the Participant’s Required Withholding, and
deliver the remaining amount of cash to the Participant, unless the Participant has made
arrangements with the consent of the Company for the Participant to deliver to the Company cash,
check, other available funds or shares of previously owned Common Stock for the full amount of the
Required Withholding by 5:00 p.m. Central Standard Time on the date an amount is included in the
income of the Participant. The amount of the Required Withholding and the number of shares to
satisfy the Participant’s Required Withholding shall be based on the Fair Market Value of the
shares on the date prior to the applicable date of income inclusion.

     9. Successors and Assigns. This Agreement shall bind and inure to the benefit of and be
enforceable by the Participant, the Company and their respective permitted successors and assigns
(including personal representatives, heirs and legatees), except that the Participant may not
assign any rights or obligations under this Agreement except to the extent and in the manner
expressly permitted in Section 7 of this Agreement.

     10. No Employment Guaranteed. No provision of this Agreement shall confer any right upon the
Participant to continued Employment with the Company or any Subsidiary.

     11. Qualified Performance Awards. The Performance Units and the related 2006 Performance
Award granted hereunder are intended to qualify as qualified performance-based compensation under
Section 162(m) of the Code. The Committee shall take such action as necessary to so qualify such
2006 Performance Award under the provisions of Section 162(m) and the related regulations and
Treasury pronouncements. No action taken to comply with Section 162(m) shall be deemed to impair a
benefit under this Agreement.

     12. Code
Section 409A Compliance. If any provision of this Agreement would result in the
imposition of an excise tax under Section 409A of the Code and related regulations and Treasury
pronouncements (“Section 409A”), that provision will be reformed to avoid imposition of the excise
tax and no action taken to comply with Section 409A shall be deemed to impair a benefit under this
Agreement.

     13. Participant Limit. The 2006 Performance Award made hereunder shall not be in an amount
greater than $5,000,000 for any Participant.

     14. Governing Law. This Agreement shall be governed by, construed, and enforced in accordance
with the laws of the State of Texas, excluding any choice of law provision thereof that would
result in the application of the laws of any other jurisdiction.

     15. Amendment. Except as set forth herein, this Agreement cannot be modified, altered or
amended except by an agreement, in writing, signed by both the Company and the Participant.

	 	 	 	 	 
	 	 	OCEANEERING INTERNATIONAL,
INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 

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	Award Date: February 2, 2006

	 	Title:	 	 
	 

	 	 	 	 

     The Participant hereby accepts the foregoing 2006 Performance Unit Agreement, subject to the
terms and provisions of the Plan and administrative interpretations thereof referred to above.

	 	 	 	 	 
	 

	 	 	 	PARTICIPANT:
	 
	 	 	 	 
	Date:
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 	 	Participant’s Address:
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

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Exhibit A to 2006 Performance Unit

Agreement

Designation of Beneficiary

     I,                                                              (“Participant”), hereby declare that upon my death,
                                         (the “Beneficiary”) of
                                                                                                     (address), who is my
                                         (relationship), will be entitled to the 2006 Performance Award which may
become payable under the Plan and all other rights accorded the Participant under the Participant’s
2006 Performance Unit Agreement (capitalized terms used but not defined herein have the respective
meanings assigned to them in such agreement).

     It is understood that this designation of Beneficiary is made pursuant to the Agreement and is
subject to the conditions stated therein, including the Beneficiary’s survival of Participant. If
any such condition is not satisfied, such rights shall devolve according to the Participant’s last
will and testament, or if none, then the laws of descent and distribution.

     It is further understood that all prior designations of beneficiary under the Agreement are
hereby revoked upon the filing of this designation with the Company. This designation of
Beneficiary may only be revoked in writing, signed by the Participant, and filed with the Corporate
Secretary of the Company prior to the Participant’s death.

	 	 	 	 	 
	 

	 	 	 	 
	 

	 	Participant	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	Date	 	 

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EXHIBIT 10.3

2006 PERFORMANCE AWARD: GOALS AND MEASURES

ARTICLE 1

ESTABLISHMENT AND PURPOSE

     1.1
Establishment of the 2006-2008 Performance Goals. Oceaneering International, Inc. (the
“Company”), has previously established the 2005 Incentive Plan of Oceaneering International, Inc.
(the “Plan”). The Plan permits the establishment of Performance Goals and the award of Performance
Awards to Participants. The Committee has established Performance Goals (as detailed herein) for
the first performance period under the Plan which shall run from January 1, 2006 through December
31, 2008 (the “2006-2008 Performance Period”). This 2006-2008 Performance Period is subject to all
the provisions of the Plan.

     1.2
Establishment of 2006-2008 Performance Goal Targets. The 2006-2008 Performance Goal targets
are as follows:

	 	 	 
	ROIC/Kc:

	 	___%1     
	 	 	 
	Cumulative Three Year Cash Flow:

	 	$                    1

     1.3
Purpose. The establishment of Performance Goals for the 2006-2008 Performance Period is to
provide Participants with a long-term incentive opportunity in respect of the 2006-2008 Performance
Period. Performance Awards granted in February, 2006 (the “2006 Performance Awards”) are subject
to the attainment of these Performance Goals.

ARTICLE 2

DEFINITIONS

     2.1
Definitions. Whenever used in this document, capitalized terms shall have the meanings
assigned in the Plan, unless defined otherwise or specifically provided herein. The following
terms shall have the meanings set forth below:

     (a) “Average Cost of Capital” means the average (the arithmetic mean) of the Cost of
Capital for each of the three calendar years within the 2006-2008 Performance Period.

     (b) “Average Invested Capital” means the sum of Average Total Debt and Average
Shareholders’ Equity for each of the three calendar years within the 2006-2008 Performance
Period.

     (c) “Average Return on Invested Capital” or “ROIC” means a percentage derived by
dividing (i) the cumulative NOPAT (the sum of NOPAT for each of the three

 

			
	1	 	 In accordance with Instruction 2 to Item
402(k) of Regulation S-K, Oceaneering is not disclosing these and the other
amounts or items left blank herein, as they reflect confidential commercial or
business information.

 

 

calendar years within the 2006-2008 Performance Period) by (ii) Average Invested
Capital.

     (d) “Average Total Debt” means (i) the sum of the Total Debt as of the end of the prior
year and the Total Debt as of the end of the current year (ii) divided by two. For example,
the Average Total Debt for calendar year 2006 will be the Total Debt as of December 31,
2005, plus the Total Debt as of December 31, 2006, divided by two.

     (e) “Average Shareholders’ Equity” means (i) the sum of Shareholders’ Equity as of the
end of the prior year and Shareholders’ Equity as of the end of the current year (ii)
divided by two.

     (f) “Cost of Capital” or “Kc” means a percentage determined by dividing (i) the sum of
the Cost of Debt and the Cost of Equity for each of the three calendar years within the
2006-2008 Performance Period by (ii) the sum of Average Total Debt and Average Shareholders’
Equity for each of the three calendar years within the 2006-2008 Performance Period. All
components of Cost of Capital shall be obtained directly from the audited financial
statements of the Company for the applicable year.

     (g) “Cost of Debt” means the product of annual Interest Expense and 65% (100% less a
deemed income tax rate of 35%).

     (h) “Cost of Equity” means the product of Average Shareholders’ Equity and ___%, which
is the sum of the 4.37% yield on the 10-year Treasury Notes as of December 31, 2005, as
published by the U.S. Federal Reserve, plus an equity return premium of ___%.

     (i) “Cumulative Three Year Cash Flow” means the sum of the earnings before interest,
taxes, depreciation and amortization (“EBITDA”) amounts for each of the three calendar years
in the 2006-2008 Performance Period. EBITDA shall be calculated as Net Income (Loss) plus
(or Minus) Net Interest Expense (Income), plus provisions for income taxes (or minus benefit
from income taxes), plus depreciation and amortization. Each component of EBITDA shall be
obtained directly from the audited financials statements of the Company for the applicable
year.

     (j) “Income Before Income Taxes” means income before income taxes as reflected in the
audited financial statements of the Company for the applicable calendar year.

     (k) “Interest Expense” means interest expense, net of amounts capitalized, as reflected
in the audited financial statements of the Company for the applicable calendar year.

     (l) “Interest Income” means interest income as reflected in the audited financial
statements of the Company for the applicable calendar year.

     (m) “Net Income (Loss)” means net income (loss) as reflected in the audited financial
statements of the Company for the applicable calendar year.

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     (n) “Net Interest Expense (Income)” means the difference between (i) Interest Expense
and (ii) Interest Income for the applicable calendar year.

     (o) “Net Operating Profit After Taxes” or “NOPAT” means Net Income (Loss) plus (or minus) the product of (i) Net Interest Expense (Income) and (ii) 100%
minus the effective income tax rate for the applicable year. The effective income tax rate
will be determined by dividing the annual income tax provision (or benefit) by Income Before
Income Taxes. All components of NOPAT shall be obtained directly from the audited financial
statements of the Company for the applicable calendar year.

     (p) “Performance Unit” means the unit of measure underlying a Performance Award, with
an initial notional value of $100.

     (q) “ROIC/Kc” means a percentage derived by dividing (i) Average Return on Invested
Capital for the 2006-2008 Performance Period by (ii) Average Cost of Capital for the
2006-2008 Performance Period. A percentage greater than 100% indicates the Company earned a
rate of return on its Average Invested Capital in excess of its Average Cost of Capital.

     (r) “Shareholders’ Equity” means the shareholders’ equity as reflected in the audited
financial statements of the Company for the applicable year.

     (s) “Total Debt” means the difference between (i) the sum of the debt components (in
both current and long-term liabilities), as reflected in the audited financial statements of
the Company for the applicable calendar year, and (ii) construction-in-progress as disclosed
in the footnotes to the audited financial statements of the Company to the extent such
amount is greater than $___.

ARTICLE 3

AWARD DETERMINATION

     3.1
Award Opportunities. The Committee has determined the Participants for the 2006-2008
Performance Period and each Participant’s 2006 Performance Award; such Participants and their
individual Performance Awards are reflected in the Committee records. A Participant’s 2006
Performance Award is keyed to the Company’s performance with respect to the 2006-2008 Performance
Goals, and may result in a payment to the Participant having a value from zero percent to one
hundred twenty-five percent of the initial notional value of the 2006 Performance Award.

     3.2
Performance Award Determination. As soon as is practicable after the close of the 2006-2008
Performance Period, the Committee shall calculate the value of 2006 Performance Awards for each
Participant as follows:

     (a) Determine ROIC/Kc for the 2006-2008 Performance Period.

3

 

     (b) Determine the Cumulative Three Year Cash Flow for the 2006-2008 Performance Period.

     (c) Determine the ROIC/Kc Performance Goal level based on the following:

	 	 	 
	Threshold Level:

	 	___%
	 	 	 
	Target Level:

	 	___%
	 	 	 
	Maximum Level:

	 	___%

     (d) Determine the Cumulative Three Year Cash Flow Performance Goal level based on the
following:

	 	 	 
	Threshold Level:

	 	$___
	 	 	 
	Target Level:

	 	$___
	 	 	 
	Maximum Level:

	 	$___

     (e) If the Company does not reach the Threshold level on both the ROIC/Kc and the
Cumulative Three Year Cash Flow Performance Goal, no amounts will be paid with respect to
the 2006 Performance Awards. If the Company reaches the Threshold level on at least one
Performance Goal, an amount will be payable with respect to the 2006 Performance Awards.

     (f) The 2006 Performance Award for any Participant shall not be in an amount greater
than $5,000,000.

     (g) Satisfaction of each Performance Goal at the Target level will result in a final
value of each Performance Unit of $100. The determination of the final value of each
Performance Unit shall be based on application of the following grid (with interpolation
between the specified levels):

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	UNIT VALUES	 	 	 	 	 	 	 	 	 
	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Cumulative	Maximum	 	$	________	 	 	$	________	 	 	$	________	 	 	$	________	 
	 
	Three	Target	 	$	________	 	 	$	________	 	 	$	________	 	 	$	________	 
	 
	Year	Threshold	 	$	________	 	 	$	________	 	 	$	________	 	 	$	________	 
	 
	Cash Flow	Below Threshold	 	$	________	 	 	$	________	 	 	$	________	 	 	$	________	 
	 
	 	 	 	Below	 	Threshold	 	Target	 	Maximum
	 
	 	 	 	Threshold	 	 	 	 	 	 	 	 	 	 	 	 

ROIC/Kc

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     (h) The Committee shall certify the determination of the final value of each
Performance Unit. If such value exceeds $100, the Committee retains the discretion to
reduce such value to any amount above or equal to $100.

ARTICLE 4

PAYMENT OF 2006 PERFORMANCE AWARDS

     4.1
Determination of Amount. 2006 Performance Awards will be determined as soon as practicable
after (a) the Company’s financial statements for each of the three calendar years in the 2006-2008
Performance Period have been certified, (b) the Committee has certified in writing that the various
Performance Goals and conditions set forth herein and in the Plan have all been met or satisfied,
and (c) the Committee has specifically authorized in writing the payment of any 2006 Performance
Awards based on attainment of either Performance Goal at a level greater than Target.

     4.2
Vesting. The 2006 Performance Awards will vest as set forth in the Participant’s Performance
Unit Agreement.

     4.3
Form of Payment. Each 2006 Performance Award will be paid in cash.

     4.4
Time of Payment. 2006 Performance Awards shall be paid as set forth in the Participant’s
Performance Unit Agreement.

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