AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (the "Agreement") is made
effective as of the 1st day of May, 2002 (the "Effective Date"), between CAL
DIVE INTERNATIONAL, INC., a Minnesota corporation, ("Company"), and JAMES LEWIS
CONNOR, III ("Employee"), an individual residing at 50 Highland Circle, The
Woodlands, Texas 77381.
WHEREAS, Employee has extensive legal and management skills and
experience applicable to the oil-field services industry and the oil and gas
industry, together with other knowledge and ability beneficial to Company; and
WHEREAS, the Company wishes to continue to employ Employee as Senior
Vice President, General Counsel and Secretary of Company and Employee is willing
to accept such continued employment upon the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
SECTION 1. TERM OF EMPLOYMENT AND EMPLOYMENT DUTIES.
(a) Term of Employment. Employee agrees to be employed by the Company
pursuant to the terms and conditions contained herein, for a period commencing
on the date hereof until April 30, 2004, and thereafter terminating twelve (12)
months after delivery to Employee of a written notice of termination by the
Company (the "Employment Term"); provided, however, that the occurrence of any
event described in Sections 7(a), 7(b) or 7(c) prior to the end of the
Employment Term shall result in the immediate termination of Employee's
employment and the Employment Term, subject to the terms of such applicable
section. Employee shall devote Employee's time, energy and skill to the affairs
of the Company and any of its affiliated business entities and to the promotion
of their interests. Any provision of this Agreement to the contrary
notwithstanding, Employee shall immediately resign from any offices held with
the Company, or its affiliates (as that term is defined in the regulations
promulgated under the Securities Exchange Act of 1934, as amended; hereinafter
"Affiliates") upon written request by the Company. Any resignation made pursuant
to a written request by the Company under this Section shall not affect
Employee's rights under this Agreement for any compensation, benefits or
payments.
(b) Duties of Employee. Employee's duties shall include all the normal
duties associated with the above-described position with Company and all other
responsibilities assigned from time to time by the Chairman of the Board, Board
of Directors and President of the Company. During the Employment Term, (i)
Employee services shall be rendered on a full time basis, (ii) Employee shall
have no other employment and no substantial outside business activities and
(iii) the headquarters for the performance of Employee's services shall be the
principal executive or operating offices of the Company, subject to travel for
such reasonable lengths of time as the performance of Employee's duties in the
business of the Company may require.
SECTION 2. COMPENSATION.
(a) Salary. During the Employment Term, as compensation for Employee's
services and covenants and agreements hereunder and subject to such changes
therein as the Board may make from time to time, the Company agrees to pay
Employee an initial salary for the period from the date hereof to April 30, 2003
at the annual rate of One Hundred Twenty-Five Thousand and No/100 Dollars
($125,000.00), payable in equal semi-monthly installments ("Salary") in
accordance with the Company's regular payroll practices for its senior
management executives, prorated for any partial year employment and subject to
normal increases as approved by the Board adjustments; such Salary as annualized
being herein referred to as "Annual Salary".
(b) Incentive Bonus. During the Employment Term, in addition to the
Annual Salary payable to Employee pursuant to paragraph (a) above, Employee
shall be entitled to an annual incentive bonus (the "Incentive Bonus") based on
the achievement of personal, departmental and Company performance objectives,
payable not later than three months after the close of each fiscal year of the
Company, commencing with the fiscal year ending December 31, 2002, as
established annually or from time to time by the Board of Directors, together
with an additional bonus from Energy Resource Technology, Inc. of 0.2% of the
Annual Net Profit of Energy Resource Technology, Inc. with such Annual Net
Profit calculated on the same basis as the ERT Bonus Program for key employees
of Energy Resource Technology, Inc.
(c) Reimbursement of Expenses. During the Employment Term, Employee
will be reimbursed by the Company for Employee's reasonable business expenses
incurred in connection with the performance of Employee's duties hereunder,
including, without limitation, a home fax line, car mileage, cell phone and
business calls and other expenses consistent with Company policy from time to
time.
(d) Stock Options. Subject to Board approval, Employee will receive an
initial award of 30,000 stock options.
SECTION 3. BENEFITS.
(a) Employee Benefits. During the Employment Term, Employee shall be
entitled to participate in any medical/dental, life insurance, accidental death,
long term disability insurance plan and 401(k) or other insurance and retirement
plans that have been or which may be adopted by the Company (as long as such
plan is not discontinued) for the general and overall benefit of executive
employees of the Company, according to the participation or eligibility
requirements of each such plan.
(b) Vacation and Holidays. During the Employment Term, Employee shall
enjoy such vacation, holiday and similar rights and privileges as are enjoyed
generally by Company's senior management executives.
SECTION 4. NONDISCLOSURE AND NONUSE OF CONFIDENTIAL INFORMATION
(a) Nondisclosure Period. During the period commencing with the date of
this Agreement and ending on either: (i) the fifth anniversary of the date of
the termination of Employee's employment with the Company if such termination
arises as a result of: (x) the voluntary termination or retirement by Employee;
or (y) the termination of Employee by the Company for Cause; or (ii) the date
which is eighteen (18) months following the date of termination of Employee's
employment with the Company if such termination arises for any reason other than
as provided in subparagraph 4 (a)(i) above, Employee covenants and agrees with
the Company that Employee shall not disclose or use any Confidential Information
of which Employee is or becomes aware, whether or not such information is
developed by him, except to the extent that such disclosure or use is directly
related to and required by Employee's performance of duties assigned to Employee
by the Company. Employee shall take all appropriate steps to safeguard
Confidential Information and to protect it against disclosure, misuse,
espionage, loss and theft.
(b) Confidential Information. As used in this Agreement, the term
"Confidential Information" means information that is not generally known to the
public and that is or has been used, developed or obtained, either prior to, on
or following the date of this Agreement, by the Company in connection with its
businesses, including but not limited to: (i) products or services; (ii) fees,
costs and pricing structures: (iii) designs; (iv) analysis; (v) drawings,
photographs and reports; (vi) computer software, including operating systems,
applications and program listings; (vii) flow charts, manuals and documentation;
(viii) data bases; (ix) accounting and business methods; (x) inventions,
devices, new developments, methods and processes, whether patentable or
unpatentable and whether or not reduced to practice; (xi) customers and clients
and customer or client lists; (xii) other copyrightable works; (xiii) all
technology and trade secrets; and (xiv) all similar and related information in
whatever form. Confidential Information shall not include any information that
has become generally available to the public through no fault or participation
of Employee prior to the date that Employee proposes to disclose or use such
information. Information shall not be deemed to become generally available to
the public because individual portions of the information have become separately
published, but only if all material features comprising such information have
become publicly available in combination.
SECTION 5. NON-COMPETITION AND NON-SOLICITATION.
(a) Non-Competition. Employee acknowledges and agrees with the Company
that Employee's services to the Company are unique in nature and that the
Company would be irreparably damaged if Employee were to provide similar
services to any person or entity competing with the Company or engaged in a
similar business. Employee accordingly covenants and agrees with the Company
that during the period commencing with the date of this Agreement and ending on
the later to occur of: (i) April 30, 2007; and (ii) (A) the second anniversary
of the date of the termination of Employee's employment with the Company if such
termination arises as a result of voluntary termination or retirement by
Employee or termination by the Company for Cause, or (B) the first anniversary
of the date of termination of Employee's employment with the Company if such
termination arises for any reason other than as provided in the preceding
subparagraph 5(a)(ii)(A). Employee shall not, other than as a lawyer, directly
or indirectly, either for Employee or for any other individual, corporation,
partnership, joint venture or other entity, participate in any business
(including, without limitation, any division, group or franchise of a larger
organization) that engages or which proposes to engage in the business of
providing diving services in the Gulf of Mexico or any other business actively
engaged in by the Company on the date of termination of Employee's employment in
the area or areas where the Company is conducting such business; provided that,
until such time as the Company waives in writing any rights it may have to
enforce the terms of this Section 5 (the "Waiver"), during the period commencing
on the date of the termination of Employee's employment with the Company and
ending on the date on which either the non-competition provisions contained in
this Section 5 terminate or the Waiver is delivered to Employee, whichever is
earlier, the Company will pay to Employee either the amounts due under Section
7(d), if appropriate, or an amount equal to Employee's Annual Salary as of the
date Employee's employment was terminated (which will be paid over time in
accordance with the Salary payment schedule in effect from time to time for
senior management executives of the Company) and during such time period
Employee shall be entitled to all insurance benefits received by other senior
management executives of the Company. For purposes of this Agreement, the term
"participate in" shall include, without limitation, having any direct or
indirect interest in any corporation, partnership, joint venture or other
entity, whether as a sole proprietor, owner, stockholder, partner, joint
venturer, creditor or otherwise, or rendering any direct or indirect service or
assistance to any individual, corporation, partnership, joint venture and other
business entity (whether as a
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director, officer, manager, supervisor, employee, agent, consultant or
otherwise) but not ownership of 2% or less of the capital stock of a public
company.
(b) Non-Solicitation. Employee covenants and agrees with the Company
that during the period commencing with the date of this Agreement and ending on
the later to occur of (i) April 30, 2005; and (ii) (A) the second anniversary of
the date of termination of Employee's employment with the Company if such
termination arises as a result of voluntary termination by the Company or for
Cause, or (B) the date which is eighteen (18) months following the termination
of Employee's employment with the Company if such termination arises for any
reason other than as provided in the preceding subparagraph 5(b)(ii)(A) above,
Employee shall not, directly or indirectly, for Employee or for any other
individual, corporation, partnership, joint venture or other entity, (x) make
any offer of employment, solicit or hire any supervisor, employee of the Company
or its affiliates or induce or attempt to induce any employee of the Company or
its affiliates to leave their employ or in any way interfere with the
relationship between the Company or its affiliates and any of their employees;
or (y) induce or attempt to induce any supplier, licensee, licensor, franchisee,
or other business relation of the Company or its affiliates to cease doing
business with them or in any way interfere with the relationship between the
Company or its affiliates and any customer or business relation.
(c) Other Non-Competition Agreements. Employee represents and warrants
to the Company that Employee is not a party to any agreement containing a
non-competition provision or other restriction with respect to (a) the nature of
any services or business which Employee is entitled to perform or conduct for
the Company or (b) the disclosure or use of any information which, directly or
indirectly, relates to the nature of the business of the Company or the services
to be rendered by the Employee to the Company.
(d) Duty to Inform. For the period of one (1) year immediately
following the end of Employee's employment with the Company, Employee agrees to
inform each new employer, prior to accepting employment, of the existence of
this agreement and provide that employer with a copy of it. In addition,
Employee hereby authorizes the Company to forward a copy of this Agreement to
any actual or prospective new employer.
SECTION 6. COMPANY'S OWNERSHIP OF INTELLECTUAL PROPERTY.
(a) Company Intellectual Property. In the event that Employee as part
of Employee's activities on behalf of the Company generates, authors or
contributes to any invention, design, new development, device, product, method
or process (whether or not patentable or reduced to practice or comprising
Confidential Information), any copyrightable work (whether or not comprising
Confidential Information) or any other form of Confidential Information relating
directly or indirectly to the Company's business as prior hereto, now or
hereinafter conducted (collectively, "Intellectual Property"), Employee
acknowledges that such Intellectual Property is the exclusive property of the
Company and hereby assigns all right, title and interest in and to such
Intellectual Property to the Company. Any copyrightable work prepared in whole
or in part by Employee shall be deemed a work made for hire under Section 201(b)
of the 1976 Copyright Act, and the Company shall own all of the rights comprised
in the copyright therein. Employee shall promptly and fully disclose all
Intellectual Property to the Company and shall cooperate with the Company to
protect the Company's interest in and rights to such Intellectual Property,
including without limitation providing reasonable assistance in securing patent
protection and copyright registrations and executing all documents as reasonably
requested by the Company, whether such requests occur prior to or after
termination of Employee's employment with the Company.
(b) Return of Confidential Information. As requested by the Company
from time to time and upon the termination of Employee's employment with the
Company for any reason, Employee shall promptly deliver to the Company all
copies and embodiments, in whatever form, of all Confidential Information or
Intellectual Property in Employee's possession or within Employee's control
(including, but not limited to, written records, notes, photographs, manuals,
notebooks, documentation, program listings, flow charts, magnetic media, disks,
diskettes, tapes and all other materials containing any Confidential Information
or Intellectual Property) irrespective of the location or form of such material
and, if requested by the Company, shall provide the Company with written
confirmation that all such materials have been delivered to the Company.
SECTION 7. TERMINATION OF AGREEMENT.
(a) Termination for Cause. This Agreement may be terminated by the
Company at any time during the Employment Term for Cause, in which event
Employee shall have no further rights under this Agreement (but the Company's
rights shall survive as herein otherwise herein provided including, without
limitation, rights under Sections 4, 5 and 6). For purposes of the preceding
sentence, Cause shall mean: (i) any breach or threatened breach by Employee of
any of Employee's agreements contained in Sections 4, 5 or 6; (ii) repeated or
willful neglect by Employee in performing any duty or carrying out any
responsibility assigned or delegated to him pursuant to Section 1(b) hereof,
which neglect shall not have permanently ceased within ten (10) business days
after written notice to Employee thereof; or (iii) the commission by Employee of
any criminal act involving moral turpitude or a felony that results in an arrest
or indictment, or the commission by Employee,
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based on reasonable proof, of any act of fraud or embezzlement involving the
Company or its customers or suppliers. In the event that the Company elects to
terminate this Agreement for Cause, it will give Employee written notice of such
termination.
(b) Termination Upon Death. This Agreement shall terminate
automatically upon the death of Employee during the Employment Term. In such
event, the Company shall be obligated to pay to Employee's estate, or to such
person or persons as Employee may designate in writing to the Company, (i)
through the last day of the fiscal year in which Employee's death shall have
occurred, the salary (payable in the same manner as described in Section 2(a)
hereof) to which Employee would have been entitled under Section 2(a) hereof had
such death not occurred, and (ii) as soon as reasonably practicable after
Employee's death, any accrued but, as of the date of such death, unpaid
Incentive Bonus (or, if such death shall have occurred after the first three (3)
months of the Company's fiscal year, any prorated portion thereof).
(c) Termination Upon Disability. This Agreement may be terminated by
the Company at any time during the Employment Term in the event that Employee
shall have been unable, because of Disability, to perform Employee's principal
duties for the Company for a cumulative period of six (6) months within any
eighteen (18) month period. Prior to Employee's termination for Disability as
provided herein, Employee shall remain eligible to receive the compensation and
benefits set forth in Section 2 and Section 3 hereof. Upon such termination,
Employee shall be entitled to receive as soon as reasonably practicable
thereafter, any accrued, but as of the date of such termination, unpaid
Incentive Bonus (or, if such termination shall have occurred after the first
three (3) months of the Company's fiscal year, any prorated portion thereof).
For purposes of this Section 7(c), Disability shall mean any physical or mental
condition of Employee which shall substantially impair Employee's ability to
perform Employee's principal duties hereunder. In the event that the Company
elects to terminate this Agreement by reason of Disability under this Section
7(c), it will give written notice of such termination, and, at the Company's
discretion, Employee's employment will terminate sixty (60) days thereafter.
(d) Termination by the Company Without Cause After Change in Control.
If the Company terminates this Agreement for any reason other than pursuant to
the terms of Sections 7(a), 7(b), or 7(c), and such termination occurs within
six (6) months after the occurrence of a Change in Control and a Material Change
in Senior Management, then, in addition to any amounts otherwise due under this
Agreement, the Company shall: (1) pay to Employee an amount equal to two times
Salary together with an amount equal to the Incentive Bonus paid to Employee for
Employee's last complete year of employment; (2) continue Employee's
participation in the Company's medical, dental, accidental death, and life
insurance plans, as provided in Section 3 of this Agreement, for two (2) years,
subject to COBRA required benefits thereafter; and (3) cause Employee to be
fully vested in any stock options or stock grants held by Employee. The Company
shall make the payment due in one lump sum within ten (10) days of the effective
date of termination.
A "Change in Control" shall be deemed to have occurred at any time
after the date of this Agreement that any person (including those
persons who own more than 10% of the combined voting power of the
Company's outstanding voting securities on the date hereof) becomes the
beneficial owner, directly or indirectly, of 45% or more of the
combined voting power of the Company's then outstanding voting
securities.
A "Material Change in Senior Management" shall mean any one or both of
the CEO and COO cease their employment with the Company.
(e) Termination by Employee with Good Cause after Change in Control. If
Employee terminates this Agreement for Good Cause and such termination occurs
within two (2) years of the occurrence of a Change in Control, then, in addition
to any amounts otherwise due under this Agreement, the Company shall: (1) pay to
Employee an amount equal to two times Salary together with an amount equal to
the Incentive Bonus paid to Employee for Employee's last complete year of
employment; (2) continue Employee's participation in the Company's medical,
dental, accidental death, and life insurance plans, as provided in Section 3 of
this Agreement, for two (2) years, subject to COBRA required benefits
thereafter, and (3) cause Employee to be fully vested in any stock options or
stock grants held by Employee. The Company shall make the payment due in one
lump sum within ten (10) days of the effective date of termination.
"Good Cause" shall mean the occurrence of both of the following events:
(1) a Material Change in Senior Management; together with (2) any of
the following:
(i) the assignment by the Company to Employee of duties that are
materially inconsistent with Employee's office with the
Company at the time of such assignment, or the removal by the
Company from Employee of a material portion of those duties
usually appertaining to Employee's office with the Company at
the time of such removal;
(ii) a material change by the Company, without Employee's prior
written consent, in Employee's responsibilities to the
Company, as such responsibilities are ordinarily and
customarily required from time to time of a senior officer of
a corporation engaged in the Company's business;
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(iii) any removal of Employee from, or any failure to reelect or to
reappoint Employee to, the office stated in Section 1(b);
(iv) The Company's direction that Employee discontinue service (or
not seek reelection or reappointment) as a director, officer
or member of any corporation or association of which Employee
is a director, officer, or member at the date of this
Agreement;
(v) a reduction by the Company in the amount of Employee's salary
in effect at the time of the occurrence of a Change in Control
or the failure of the Company to pay such salary to Employee
at the time and in the manner specified in this Agreement;
(vi) the discontinuance (without comparable replacement) or
material reduction by the Company of Employee's participation
in any bonus or other employee benefit arrangement (including,
without limitation, any profit-sharing, thrift, life
insurance, medical, dental, hospitalization, stock option or
retirement plan or arrangement) in which Employee is a
participant under the terms of this Agreement, as in effect on
the date hereof or as may be improved from time to time
hereafter;
(vii) the moving by the Company of Employee's principal office
space, related facilities, or support personnel, from the
Company's principal operating offices, or the Company's
requiring Employee to perform a majority of Employee's duties
outside the Company's principal operating offices for a period
of more than 30 consecutive days;
(viii) the relocation, without Employee's prior written consent, of
the Company's principal Employee offices to a location outside
the county in which such offices are located at the time of
the signing of this Agreement;
(ix) in the event the Company requires Employee to reside at a
location more than twenty-five (25) miles from the Employee's
principal offices, except for occasional travel in connection
with the Company business to an extent and in a manner which
is substantially consistent with Employee's current business
travel obligations;
(x) in the event Employee consents to a relocation of the
Employee's principal offices, the failure of the Company to
(A) pay or reimburse Employee on an after-tax basis for all
reasonable moving expenses incurred by Employee in connection
with such relocation or (B) indemnify Employee on an after-tax
basis against any loss realized by Employee on the sale of
Employee's principal residence in connection with such
relocation;
(xi) the failure of the Company to continue to provide Employee
with office space, related facilities and support personnel
(including, without limitation, administrative and secretarial
assistance) that are commensurate with Employee's
responsibilities to and position with the Company, and no less
than those prior to this Agreement;
(xii) any significant change in Employee's reporting relationships
or changes in senior management of the Company; or
(xiii) the failure by the Company to promptly reimburse Employee for
the reasonable business expenses incurred by Employee in the
performance of Employee's duties for the Company, in
accordance with this Agreement.
(f) Gross-Up Payments - Certain Additional Payments by the Company.
(i) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or
distribution by the Company, or any of its Affiliates, under
this Agreement to or for the benefit of Employee (any such
payments or distributions being individually referred to
herein as a Payment, and any two or more of such payments or
distributions being referred to herein as Payments), would be
subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code (the "Code"; such excise tax, together
with any interest thereon, any penalties, additions to tax, or
additional amounts with respect to such excise tax, and any
interest in respect of such penalties, additions to tax or
additional amounts, being collectively referred herein to as
the "Excise Tax"), then Employee shall be entitled to receive
an additional payment or payments (individually, a "Gross-Up
Payment" with any two or more of such additional payments
being referred to "Gross-Up Payments") in an amount such that
after payment by Employee of all Excise Taxes imposed upon the
Payment(s) and, if applicable, Gross-Up Payment(s), Employee
retains a total amount of Gross-Up Payments, whether one or
more, equal to the Excise Tax imposed upon the Payment(s) and,
if applicable, Gross-Up Payment(s).
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(ii) Subject to the provisions of Section 7(f)(iii) through
7(f)(ix), any determination ("Determination") required to be
made under this Section 7(f)(ii), including whether a Gross-Up
Payment is required and the amount of such Gross-Up Payment,
shall initially be made, at the Company's expense, by
nationally recognized tax counsel mutually acceptable to the
Company and Employee ("Tax Counsel"). Tax Counsel shall
provide detailed supporting legal authorities, calculations,
and documentation both to the Company and Employee within
fifteen (15) business days of the termination of Employee's
employment, if applicable, or such other time or times as is
reasonably requested by the Company or Employee. If Tax
Counsel makes the initial Determination that no Excise Tax is
payable by Employee with respect to a Payment or Payments, it
shall furnish Employee with an opinion reasonably acceptable
to Employee that no Excise Tax will be imposed with respect to
any such Payment or Payments. Employee shall have the right to
dispute any Determination (a "Dispute") within fifteen (15)
business days after delivery of Tax Counsel's opinion with
respect to such Determination. The Gross-Up Payment, if any,
as determined pursuant to such Determination shall, at the
Company's expense, be paid by the Company to Employee within
five (5) business days of Employee's receipt of such
Determination. The existence of a Dispute shall not in any way
affect Employee's right to receive the Gross-Up Payment in
accordance with such Determination. If there is no Dispute,
such Determination shall be binding, final and conclusive upon
the Company and Employee, subject in all respects, however, to
the provisions of Section 7(f)(iii) through 7(f)(ix) below. As
a result of the uncertainty in the application of Sections
4999 and 280G of the Code, it is possible that Gross-Up
Payments (or portions thereof) which will not have been made
by the Company should have been made ("Underpayment"), and if
upon any reasonable written request from Employee or the
Company to Tax Counsel, or upon Tax Counsel's own initiative,
Tax Counsel, at the Company's expense, thereafter determines
that Employee is required to make a payment of any Excise Tax
or any additional Excise Tax, as the case may be, Tax Counsel
shall, at the Company's expense, determine the amount of the
Underpayment that has occurred and any such Underpayment shall
be promptly paid by the Company to Employee.
(iii) the Company shall release, defend, indemnify and hold harmless
Employee on a fully grossed-up after-tax basis from and
against any and all claims, losses, liabilities, obligations,
damages, impositions, assessments, demands, judgments,
settlements, costs and expenses (including reasonable
attorneys', accountants', and experts' fees and expenses) with
respect to any Tax liability of Employee resulting from any
Final Determination that any Payment is subject to the Excise
Tax.
(iv) If a party hereto receives any written or oral communication
with respect to any question, adjustment, assessment or
pending or threatened audit, examination, investigation or
administrative, court or other proceeding which, if pursued
successfully, could result in or give rise to a claim by
Employee against the Company under this Section 7(f)
("Claim"), including, but not limited to, a claim for
indemnification of Employee by the Company under Section
7(f)(iii), then such party shall promptly notify the other
party hereto in writing of such Claim ("Tax Claim Notice").
(v) If a Claim is asserted against Employee ("Employee Claim"),
Employee shall take or cause to be taken such action in
connection with contesting such Employee Claim as the Company
shall reasonably request in writing from time to time,
including the retention of counsel and experts as are
reasonably designated by the Company (it being understood and
agreed by the parties hereto that the terms of any such
retention shall expressly provide that the Company shall be
solely responsible for the payment of any and all fees and
disbursements of such counsel and any experts) and the
execution of powers of attorney, provided that:
(1) within thirty (30) calendar days after the Company
receives or delivers, as the case may be, the Tax
Claim Notice relating to such Employee Claim (or such
earlier date that any payment of the Taxes claimed is
due from Employee, but in no event sooner than five
(5) calendar days after the Company receives or
delivers such Tax Claim Notice), the Company shall
have notified Employee in writing ("Election Notice")
that the Company does not dispute its obligations
(including, but not limited to, its indemnity
obligations) under this Agreement and that the
Company elects to contest, and to control the defense
or prosecution of, such Employee Claim at the
Company's sole risk and sole cost and expense; and
(2) the Company shall have advanced to Employee on an
interest-free basis, the total amount of the Tax
claimed in order for Employee, at the Company's
request, to pay or cause to be paid the Tax claimed,
file a claim for refund of such Tax and, subject to
the provisions of the last sentence of Section
7(f)(vii), sue for a refund of such Tax if such claim
for refund is disallowed by the appropriate taxing
authority (it being understood and agreed by the
parties hereto that the Company shall only be
entitled to sue for a refund and the Company shall
not be entitled to initiate any proceeding in, for
example, United States Tax Court) and shall indemnify
and hold
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Employee harmless, on a fully grossed-up after-tax
basis, from any Tax imposed with respect to such
advance or with respect to any imputed income with
respect to such advance; and
(3) the Company shall reimburse Employee for any and all
costs and expenses resulting from any such request by
the Company and shall indemnify and hold Employee
harmless, on fully grossed-up after-tax basis, from
any Tax imposed as a result of such reimbursement.
(vi) Subject to the provisions of Section 7(f)(v) hereof, the
Company shall have the right to defend or prosecute, at the
sole cost, expense and risk of the Company, such Employee
Claim by all appropriate proceedings, which proceedings shall
be defended or prosecuted diligently by the Company to a Final
Determination; provided, however, that (i) the Company shall
not, without Employee's prior written consent, enter into any
compromise or settlement of such Employee Claim that would
adversely affect Employee, (ii) any request from the Company
to Employee regarding any extension of the statute of
limitations relating to assessment, payment, or collection of
Taxes for the taxable year of Employee with respect to which
the contested issues involved in, and amount of, Employee
Claim relate is limited solely to such contested issues and
amount, and (iii) the Company's control of any contest or
proceeding shall be limited to issues with respect to Employee
Claim and Employee shall be entitled to settle or contest, in
Employee's sole and absolute discretion, any other issue
raised by the Internal Revenue Service or any other taxing
authority. So long as the Company is diligently defending or
prosecuting such Employee Claim, Employee shall provide or
cause to be provided to the Company any information reasonably
requested by the Company that relates to such Employee Claim,
and shall otherwise cooperate with the Company and its
representatives in good faith in order to contest effectively
such Employee Claim. the Company shall keep Employee informed
of all developments and events relating to any such Employee
Claim (including, without limitation, providing to Employee
copies of all written materials pertaining to any such
Employee Claim), and Employee or Employee's authorized
representatives shall be entitled, at Employee's expense, to
participate in all conferences, meetings and proceedings
relating to any such Employee Claim.
(vii) If, after actual receipt by Employee of an amount of a Tax
claimed (pursuant to an Employee Claim) that has been advanced
by the Company pursuant to Section 7(f)(v)(2) hereof, the
extent of the liability of the Company hereunder with respect
to such Tax claimed has been established by a Final
Determination, Employee shall promptly pay or cause to be paid
to the Company any refund actually received by, or actually
credited to, Employee with respect to such Tax (together with
any interest paid or credited thereon by the taxing authority
and any recovery of legal fees from such taxing authority
related thereto), except to the extent that any amounts are
then due and payable by the Company to Employee, whether under
the provisions of this Agreement or otherwise. If, after the
receipt by Employee of an amount advanced by the Company
pursuant to Section 7(f)(v)(2), a determination is made by the
Internal Revenue Service or other appropriate taxing authority
that Employee shall not be entitled to any refund with respect
to such Tax claimed, and the Company does not notify Employee
in writing of its intent to contest such denial of refund
prior to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven and shall
not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of any
Gross-Up Payments and other payments required to be paid
hereunder.
(viii) With respect to any Employee Claim, if the Company fails to
deliver an Election Notice to Employee within the period
provided in Section 7(f)(v)(1) hereof or, after delivery of
such Election Notice, the Company fails to comply with the
provisions of Section 7(f)(v)(2) and (3) and 7(f)(vi) hereof,
then Employee shall at any time thereafter have the right (but
not the obligation), at Employee's election and in Employee's
sole and absolute discretion, to defend or prosecute, at the
sole cost, expense and risk of the Company, such Employee
Claim. Employee shall have full control of such defense or
prosecution and such proceedings, including any settlement or
compromise thereof. If requested by Employee, the Company
shall cooperate, and shall cause its Affiliates to cooperate,
in good faith with Employee and Employee's authorized
representatives in order to contest effectively such Employee
Claim. the Company may attend, but not participate in or
control, any defense, prosecution, settlement or compromise of
any Employee Claim controlled by Employee pursuant to this
Section 7(f)(viii) and shall bear its own costs and expenses
with respect thereto. In the case of any Employee Claim that
is defended or prosecuted by Employee, Employee shall, from
time to time, be entitled to current payment, on a fully
grossed-up after-tax basis, from the Company with respect to
costs and expenses incurred by Employee in connection with
such defense or prosecution.
(ix) In the case of any Employee Claim that is defended or
prosecuted to a Final Determination pursuant to the terms of
this Section 7(f)(ix), the Company shall pay, on a fully
grossed-up after-tax basis, to Employee in immediately
available funds the full amount of any Taxes arising or
resulting from or incurred in connection with such Employee
Claim that have not theretofore been paid by the Company to
Employee, together with the costs and expenses, on a fully
grossed-up after-tax
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basis, incurred in connection therewith that have not
theretofore been paid by the Company to Employee, within ten
(10) calendar days after such Final Determination. In the case
of any Employee Claim not covered by the preceding sentence,
the Company shall pay, on a fully grossed-up after-tax basis,
to Employee in immediately available funds the full amount of
any Taxes arising or resulting from or incurred in connection
with such Employee Claim at least ten calendar days before the
date payment of such Taxes is due from Employee, except where
payment of such Taxes is sooner required under the provisions
of this Section 7(f)(ix), in which case payment of such Taxes
(and payment, on a fully grossed-up after-tax basis, of any
costs and expenses required to be paid under this Section
7(f)(ix)) shall be made within the time and in the manner
otherwise provided in this Section 7(f)(ix).
(x) For purposes of this Agreement, the term "Final Determination"
shall mean (A) a decision, judgment, decree or other order by
a court or other tribunal with appropriate jurisdiction, which
has become final and non-appealable; (B) a final and binding
settlement or compromise with an administrative agency with
appropriate jurisdiction, including, but not limited to, a
closing agreement under Section 7121 of the Code; (C) any
disallowance of a claim for refund or credit in respect to an
overpayment of Tax unless a suit is filed on a timely basis;
or (D) any final disposition by reason of the expiration of
all applicable statutes of limitations.
(xi) For purposes of this Agreement, the terms "Tax" and "Taxes"
mean any and all taxes of any kind whatsoever (including, but
not limited to, any and all Excise Taxes, income taxes, and
employment taxes), together with any interest thereon, any
penalties, additions to tax, or additional amounts with
respect to such taxes and any interest in respect of such
penalties, additions to tax, or additional amounts.
(g) Effect of Termination. In the event that the Employee is terminated
pursuant to any paragraph of this Section 7, Employee shall thereafter have no
further rights under this Agreement, except for those explicitly set forth in
the particular paragraph of this Section 7 which served as the basis for such
termination. Notwithstanding any such termination, the covenants and agreements
of Employee contained in Sections 4, 5(a) (so long as payments under Section
5(a) are continued as therein described), 5(b) and 6 hereof shall survive and
remain in full force and effect.
SECTION 8. NOTICES.
(a) Notices. All notices, requests, demands and other communications
hereunder must be in writing and shall be deemed to have been duly given if
delivered by hand, sent to the recipient by reputable express courier service
(charge prepaid), or mailed by first class, registered mail, return receipt
requested, postage and registry fees prepaid and addressed as follows:
If to Employee: At the address set forth on page 1 hereof.
If to the Company: Cal Dive International, Inc.
400 North Belt East, Suite 400
Houston, Texas 77060
Attention: President
(b) Change of Address. Addresses may be changed by notice in writing
signed by the addressee.
SECTION 9. GENERAL PROVISIONS.
(a) Company Subsidiaries. For purposes of this Agreement, the term
Company shall include all subsidiaries of the Company.
(b) Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provisions of any other jurisdiction, and this Agreement shall be
reformed, construed and enforced in such jurisdictions as if such invalid,
illegal or unenforceable provision had never been contained herein. The parties
agree that a court of competent jurisdiction making a determination of the
invalidity or unenforceability of any term or provision of Sections 4, 5 and 6
of this Agreement shall have the power to reduce the scope, duration or area of
any such term or provision, to delete specific words or phrases or to replace
any invalid or unenforceable term or provision in Sections 4, 5, 6 with a term
or provision that is valid and enforceable and that comes closest to expressing
the intention of the invalid or unenforceable term or provision, and this
Agreement shall be enforceable as so modified.
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(c) Complete Agreement. This Agreement, embodies the complete agreement
and understanding among the parties and supersedes and preempts any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
(d) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(e) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Company and Employee and their respective successors and assigns; provided that
the rights and obligations of Employee under this Agreement shall not be
assignable without the prior written consent of the Company.
(f) Governing Law. All questions concerning the construction, validity
and interpretation of this Agreement and the exhibits hereto shall be governed
by the internal law, and not the law of conflicts, of the State of Texas.
(g) Remedies. Each of the parties to this Agreement shall be entitled
to enforce its rights under this Agreement specifically, to recover damages and
costs (including reasonable attorneys fees) caused by any breach of any
provision of this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that Employee's breach of any
term or provision of this Agreement shall materially and irreparably harm the
Company, that money damages shall accordingly not be an adequate remedy for any
breach of the provisions of this Agreement and that any party in its sole
discretion and in addition to any other remedies it may have at law or in equity
may apply to any court of law or equity of competent jurisdiction (without
posting any bond or deposit) for specific performance and/or other injunctive
relief in order to enforce or prevent any violations of the provisions of this
Agreement.
(h) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company and
Employee.
IN WITNESS, WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
CAL DIVE INTERNATIONAL, INC. EMPLOYEE
By: /s/ MARTIN R. FERRON /s/ JAMES LEWIS CONNOR, III
Name: Martin R. Ferron James Lewis Connor, III
Title: President and Chief Operating Officer
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