EXHIBIT 10.1

 

EMPLOYMENT AGREEMENT

between

HORIZON OFFSHORE, INC.

and

DAVID W. SHARP

Dated as of July 6, 2005

 

 

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EMPLOYMENT AGREEMENT

     This Employment Agreement (this “Agreement”) is entered into and effective
as of July 6, 2005 between Horizon Offshore, Inc., a Delaware corporation (the
“Company”), and David W. Sharp (“Executive”).

W I T N E S S E T H:

     WHEREAS, the Company and Executive are parties to that certain Amended and
Restated Employment and Non-Competition Agreement, dated as of July 1, 2003 (the
“Prior Agreement”);

     WHEREAS, the Company and Executive desire to terminate the Prior Agreement
and supersede and replace the Prior Agreement with this Agreement; and

     WHEREAS, the Company desires to continue to employ Executive, and Executive
desires to continue to serve the Company, on the terms and subject to the
conditions set forth herein.

     NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereby agree as follows:

     1. Employment. The Company agrees to continue to employ Executive, and
Executive agrees to be employed by the Company, during the Employment Period (as
defined in Section 4(a)), on the terms and subject to the conditions set forth
in this Agreement. Executive and the Company hereby agree that, effective as of
the date of this Agreement, the Prior Agreement is hereby terminated and shall
be of no further force or effect.

     2. Position and Duties.

          (a) Executive agrees to serve as President and Chief Executive Officer
of the Company or in such other capacity, position or duties of greater or equal
authority to which Executive may be assigned by the Company’s Board of Directors
(the “Board”). The Executive’s capacity, position or duties after a Change of
Control (which for purposes of this Agreement shall have the meaning given to
such term in Section 11.12(a) of the Company’s 2005 Stock Incentive Plan (the
“Incentive Plan”)) shall not be considered of greater or equal authority with
Executive’s capacity, position or duties prior to a Change of Control unless
(i) after the Change of Control Executive holds an equivalent position with, and
exercises equivalent or greater authority and has equivalent or greater duties
on behalf of, the Company or the Post-Transaction Corporation (as defined in the
Incentive Plan) and (ii) after the Change of Control, the Executive’s place of
Employment shall be in the Houston metropolitan area. Executive agrees to
perform diligently and to the best of Executive’s abilities the duties and
services pertaining to such capacities or positions as reasonably determined by
the Board, as well as such additional or different duties and services to which
Executive may from time to time be reasonably directed to perform by the Board.
Executive’s position, job descriptions, duties and/or responsibilities may be
modified from time to time in the sole discretion of the Board;

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provided, however, that Executive may not be assigned to any capacity or
position of lesser authority than that of an executive officer of the Company.
Executive agrees to devote his full business time and attention to the business
and affairs of the Company and shall use his best efforts in faithfully
performing his duties and responsibilities under this Agreement.

          (b) Executive may not engage, directly or indirectly, in any other
business, investment or activity that interferes with Executive’s performance of
his duties hereunder, is contrary to the interest of the Company or any of its
subsidiaries (each, a “Horizon Company”, or collectively, the “Horizon
Companies”) or requires any significant portion of Executive’s business time.
Notwithstanding the foregoing, the parties recognize and agree that Executive
may engage in passive personal investments and other business activities which
do not interfere with the business and affairs of the Company or interfere with
Executive’s performance of his duties hereunder.

          (c) Executive agrees to perform his duties and responsibilities under
this Agreement in accordance with the Company’s general policies and directives
as they may exist at any given time, including, without limitation, the
Company’s Code of Ethics and Business Conduct.

     3. Compensation and Related Matters.

          (a) During the Employment Period, the Company shall pay to Executive a
minimum annual base salary of $440,000 (such annual base salary, as it may be
increased from time to time as provided herein, the “Annual Base Salary”), which
shall be paid in equal installments in accordance with the Company’s regular
payroll practices for its similarly situated employees. The Annual Base Salary
shall increase by four percent (4%) on each anniversary of the date hereof
during the Employment Period. During the Employment Period, the Annual Base
Salary shall be reviewed at least annually; provided, however, that except as
provided in this Section 3(a), a salary increase shall not necessarily be
awarded as a result of any such review. Any increase in Annual Base Salary shall
not serve to limit or reduce any other obligation of the Company to Executive
hereunder. The Annual Base Salary shall not be reduced and may not be reduced
after any increase.

          (b) In consideration of Executive’s execution and delivery of this
Agreement, the Company shall pay to Executive a bonus in the amount of $220,000
in cash. Fifty percent (50%) of such bonus shall be payable by the Company in
one lump sum promptly following the execution and delivery of this Agreement by
the Company and Executive and the remaining fifty percent (50%) shall be paid on
December 31, 2005. In addition, subject to the approval of the Incentive Plan by
the Company’s stockholders at the Company’s 2005 annual meeting, the Company
shall grant to Executive 6,266,442 shares of restricted common stock pursuant to
the Incentive Plan within five business days of the date of the Incentive Plan
is approved by Company’s stockholders (the “Restricted Shares”). Twenty-five
percent (25%) of the Restricted Shares shall vest on September 30, 2005 and an
additional twenty-five percent (25%) shall vest on each of the first, second and
third anniversaries of the date of this Agreement. Executive shall have the
right to satisfy his withholding tax obligation with respect to the issuance and
vesting of

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the Restricted Shares, in whole or in part, by electing to have the Company
withhold Restricted Shares that Executive otherwise would be entitled to receive
hereunder in accordance with, and subject to the conditions set forth in,
Section 11.7 of the Incentive Plan. The Restricted Shares shall be 100% vested
upon a Change of Control. Except as provided in this Section 3(b), the
Restricted Shares granted to Executive pursuant to this Agreement shall be
subject to all of the restrictions applicable to shares of the Company’s
restricted stock granted under the Incentive Plan and such further restrictions
as may be determined by the Compensation Committee of the Board (the
“Compensation Committee”) pursuant to the Incentive Plan. Prior to the grant of
any Restricted Shares to Executive hereunder, Executive agrees to execute and
deliver to the Company a restricted stock agreement in form and substance
reasonably satisfactory to the Compensation Committee.

          (c) In the event that the Incentive Plan is not approved by the
Company’s stockholders at the Company’s 2005 annual meeting or any adjournment
thereof, then the Company shall not be obligated hereunder to issue any of the
Restricted Shares to Executive and, in lieu thereof, the Company shall pay to
Executive an additional cash bonus of $880,000 (“Additional Cash Bonus”), which
shall vest and be payable in four equal installments, the first of which shall
be payable within five business days after the Company’s 2005 annual meeting and
thereafter on each of the first, second and third anniversaries of the date of
this Agreement. Notwithstanding the foregoing, in the event that the Incentive
Plan is not approved by the Company’s stockholders at the Company’s 2005 annual
meeting or any adjournment thereof, if Executive’s employment hereunder is
terminated by the Company for any reason other than death, Disability (as
defined below) or Cause (as defined below) or by Executive pursuant to
Section 4(c)(vi), the Company shall be obligated to pay to Executive the total
amount of the unpaid Additional Cash Bonus in a lump sum.

          (d) Executive shall be eligible to earn an annual incentive bonus
under the Company’s management incentive plan for each fiscal year ending during
the Employment Period based on Executive’s achievement of performance objectives
during each such fiscal year as approved by the Compensation Committee. Any such
annual incentive bonus shall not exceed 150% of the Annual Base Salary in effect
at the end of the fiscal year with respect to which such bonus is paid and shall
be based upon pre-established goals as determined by the Compensation Committee
and set out in writing. Each such annual incentive bonus shall be paid on
April 15 of the year following the year with respect to which such bonus is
paid.

          (e) During the Employment Period, Executive shall participate in any
long-term incentive plan that may be maintained or adopted by the Company, as
approved by the Board or the Compensation Committee. It is specifically
understood and agreed that all determinations related to Executive’s
participation, including, without limitation, those relating to performance
goals applicable to Executive and Executive’s level of participation and payout
opportunities shall be made in the sole discretion of the Compensation
Committee.

          (f) During the Employment Period, Executive shall be entitled to
receive prompt reimbursement for all reasonable and necessary expenses incurred
by Executive in performing services hereunder, including all expenses of travel
and living expenses while away

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from home on business or at the request of and in the service of the Company,
provided that such expenses are incurred and accounted for in accordance with
the policies and procedures established by the Company.

          (g) During the Employment Period, Executive shall be entitled to
participate in or receive benefits under any employee benefit plan or
arrangement made available by the Company to its similarly situated employees,
subject to and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements. Notwithstanding anything to the
contrary in this Agreement, it is specifically understood and agreed that the
Company shall not be obligated to institute, maintain, or refrain from changing,
amending, or discontinuing any employee benefit, program or plan, so long as
such actions are similarly applicable to covered employees generally. Except as
provided herein in Sections 5(b) and (c), Executive’s participation in such
plans shall terminate in accordance with the terms of the plans.

          (h) During the Employment Period, the Company shall pay Executive’s
reasonable country club initiation fee, membership dues and any reasonable costs
incurred by Executive in connection with country club business entertainment.

     4. Term and Termination.

          (a) Executive’s employment with the Company hereunder shall continue
until December 31, 2008 (the “Term”); provided, however, that on December 31,
2008 and on each subsequent anniversary of December 31, 2008, the term of
Executive’s employment under this Agreement shall be automatically extended for
one additional year unless, within 90 days prior to December 31, 2008 or any
subsequent anniversary thereof, either party hereto gives written notice to the
other of that party’s election not to so extend the term hereof (the Term and
any extension thereof pursuant to this Section 4(a) is hereinafter referred to
as the “Employment Period”).

          (b) Following Executive’s ceasing, for whatever reason, to be an
employee of the Company, each party shall have the right to enforce all its
rights, and shall be bound by all obligations, that are continuing rights and
obligations under the terms of this Agreement.

          (c) Executive’s employment with the Company and the Employment Period
hereunder: (i) shall terminate automatically upon on the death of Executive;
(ii) may be terminated by the Company in the event of Executive’s Disability (as
defined below) with at least 60 days advance notice thereof to Executive;
(iii) may be terminated by the Company for Cause (as defined below); (iv) may be
terminated by the Company for any reason upon 30 advance notice thereof to
Executive, provided that the Company shall thereafter comply with Sections 3 and
5; (v) may be terminated by either the Company or Executive in accordance with
Section 4(a); and (vi) may be terminated by Executive within 60 days of either
(A) a Change of Control and Executive not having an equivalent or greater
capacity, position and duties with either the Company, or if the Change of
Control results from a reorganization, share exchange, merger or consolidation,
the Post-Transaction Corporation, as he had with the Company prior to the Change
of Control, (B) a Change of Control and Executive’s place of employment being

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transferred outside the Houston metropolitan area or (C) Executive being
assigned to any capacity or position of lesser authority in violation of
Section 2 hereof, provided, however, that, prior to Executive’s termination of
his employment under this Section 4(c)(vi), Executive must give written notice
to Company of any such assignment and such assignment must remain uncorrected
for ten days following such written notice.

          (d) As used herein, “Disability” means, at any time during the
Employment Period, if as a result of Executive’s incapacity due to physical or
mental illness, either (i) Executive becomes eligible to receive benefits under
the Company’s long-term disability plan as in effect on the date of such
termination or (ii), if the Company has no long-term disability plan in effect
on such date, Employee shall have been absent from his duties hereunder on a
full-time basis for a period of 90 or more consecutive days, or 120 or more
non-consecutive days, within any consecutive 365-day period.

          (e) As used herein, “Cause” means any of the following:
(i) Executive’s gross negligence or willful misconduct in the performance of his
duties pursuant to this Agreement; (ii) Executive’s conviction of or plea of
guilty or nolo contendere to a misdemeanor involving fraud or moral turpitude or
a felony (or a crime of similar import in a foreign jurisdiction);
(iii) Executive’s breach of a material provision of the Company’s Code of Ethics
and Business Conduct, as amended or supplemented from time to time;
(iv) Executive willfully engaging in conduct that he knows or should know is
materially injurious to the Company or any other Horizon Company; or (v) any
material breach by Executive of any provision of this Agreement which remains
uncured (if curable) for more than 30 days following notice to Executive of such
breach. Determination as to whether or not “Cause” exists for termination of
Executive’s employment shall be made by the Board.

     5. Compensation Upon Termination.

          (a) Except for payments required by Sections 3(b), (c) and (d) and as
provided in this Section 5, if Executive’s employment hereunder is terminated,
all future compensation and benefits to which Executive is otherwise entitled
under this Agreement shall cease and terminate as of the date of such
termination. Executive, or his estate in the event of a termination as a result
of his death, shall be entitled to receive Executive’s Annual Base Salary
through the date of such termination and any annual incentive bonus that has
been earned but not paid as of the date of termination. Except as otherwise
provided in Section 3 and this Section 5, Executive shall not be entitled to any
other payments or other benefits from the Company except for those which may be
payable pursuant to the terms of the Company’s employee benefit and incentive
plans in which Executive participates or the applicable agreements underlying
such plans.

          (b) If Executive’s employment under this Agreement is terminated
either by Executive pursuant to Section 4(c)(vi)(A) or (B) or by the Company for
any reason within 180 days after a Change of Control (other than pursuant to
Section 4(c)(ii) or (iii)), then (i) the Company shall pay to Executive, in one
lump-sum payment within 30 days after the date of such termination, an amount
equal to two times the sum of Executive’s Annual Base Salary and the average of
all annual incentive bonuses paid or payable annually to Executive for the
preceding

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three fiscal years (ii) the Company shall provide to Executive for a period of
two years following the date of such termination, life, health, accident and
disability insurance with deductibles, coverage limits and other terms no less
favorable to Executive than those provided to Executive on the date of such
termination, and the Company shall have no further obligations to Executive
under this Agreement except as expressly provided in Sections 3, 5(a) and 5(d).

          (c) If Executive’s employment under this Agreement is terminated
either by the Executive pursuant to 4(c)(vi)(C) or by the Company for any reason
other than pursuant to Section 4(c)(ii) or (iii) and such termination does not
occur within 180 days after a Change of Control, then the Company shall (i) pay
to Executive in a cash lump-sum payment within 30 days after the date of such
termination, an amount equal to the Annual Base Salary that otherwise would have
been payable to Executive had Executive remained employed by the Company through
the end of the then current Employment Period and (ii) continue to provide
Executive with life, health, accident and disability insurance with deductibles,
coverage limits and other terms no less favorable to Executive than those
provided to Executive on the date of such termination for the period remaining
in the then current Employment Period. The Executive shall have no duty or
obligation to mitigate the amounts or benefits required to be provided pursuant
to this Section 5(c), nor shall any such amounts or benefits be reduced or
offset by any other amounts to which Executive may become entitled; provided,
that if the Executive becomes eligible to receive life, health, accident or
disability insurance under another employer provided plan prior to the end of
the then current Employment Period, the corresponding life, health, accident or
disability benefits provided under Section 5(c)(ii) shall be terminated. As a
condition to the Executive receiving the benefits provided under
Section 5(c)(ii), the Executive agrees to permit verification of his employment
records by an independent attorney, selected by the Company but reasonably
acceptable to the Executive, who agrees to preserve the confidentiality of the
information disclosed by the Executive except to the extent required to permit
the Company to verify the life, health, accident or disability benefits received
by Executive from other active employment. The Company shall have no further
obligations to Executive under this Agreement except as provided in
Section 5(a).

          (d) If as a result of the automatic vesting of any Restricted Shares
because of a Change of Control and/or any other payments by the Company to
Executive, including but not limited to payments under this Agreement, Executive
is subjected to an excise tax pursuant to the “golden parachute” provisions of
Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), the
Company shall promptly pay to Executive such amounts as are necessary to place
Executive in the same after-tax position as Executive would have been had such
golden parachute provisions not been applicable to him as a result of such
automatic vesting and/or payments.

     6. Nondisclosure and Non-competition.

          (a) Certain Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:

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          (i) “Confidential Information” means any information, knowledge or
data of any nature and in any form (including information that is electronically
transmitted or stored on any form of magnetic or electronic storage media)
relating to the past, current or prospective business or operations of any of
the Horizon Companies, that at the time or times concerned is not generally
known to persons engaged in businesses similar to those conducted or
contemplated by any of the Horizon Companies (other than information known by
such persons through a violation of an obligation of confidentiality to the
Company), whether produced by the any of the Horizon Companies any of their
respective consultants, agents or independent contractors or by Executive, and
whether or not marked confidential, including, without limitation, information
relating to any of the Horizon Companies’ services, projects or jobs, project or
job locations, business plans, business acquisitions, processes, construction or
other contracts, estimating or bidding information, estimating or bidding
procedures, bidding strategies, research and development methods or techniques,
training methods or other operational methods or techniques, quality assurance
procedures or standards, operating procedures, files, plans, specifications,
proposals, drawings, charts, graphs, support data, trade secrets, supplier
lists, supplier information, purchasing methods or practices, consultants’
reports, marketing and engineering or other technical studies, maintenance
records, employment or personnel data, marketing data, strategies or techniques,
financial reports, budgets, projections, cost analyses, pricing information and
analyses, employee lists, customer lists, customer source lists, proprietary
computer software, and internal notes and memoranda relating to any of the
foregoing.

          (ii) “Company’s Business” means the provision of marine construction
or related services for customers in the offshore oil, gas or other
energy-related industries, including, without limitation, installing pipelines,
providing pipebury, hook-up and commissioning services, installing production
platforms and other offshore structures or disassembling and/or salvaging
production platforms and other offshore structures.

          (b) Nondisclosure of Confidential Information. Executive shall hold in
a fiduciary capacity for the benefit of the Company all Confidential Information
which shall have been obtained by Executive during Executive’s employment by the
Company and shall use such Confidential Information solely within the scope of
his employment with and for the exclusive benefit of the Company. At the end of
the employment term, Executive agrees (i) not to communicate, divulge or make
available to any person or entity (other than the Company) any such Confidential
Information, except upon the prior written authorization of the Company or as
may be required by law or legal process, and (ii) to deliver promptly to the
Company any Confidential Information in his possession, including any duplicates
thereof and any notes or other records Executive has prepared with respect
thereto. In the event that the provisions of any applicable law or the order of
any court would require Executive to disclose or otherwise make available any
Confidential Information then Executive shall give the Company prompt prior
written notice of such required disclosure and an opportunity to contest the
requirement of such

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disclosure or apply for a protective order with respect to such Confidential
Information by appropriate proceedings.

          (c) Limited Covenant Not to Compete. This Section 6(c) shall be
binding upon Executive during his employment with the Company and for a period
of one year thereafter; provided, however, that this Section 6(c) shall not be
binding upon Executive if the Company terminates Executive’s employment
hereunder other than pursuant to Section 4(c)(ii) or (iii):

          (i) Executive shall not, directly or indirectly, for himself or
others, own, manage, operate, control, be employed by, engage or participate in,
allow his skill, knowledge, experience or reputation to be used by, or otherwise
be connected in any manner with the ownership, management, operation or control
of, any company or other business enterprise engaged in any aspect of the
Company’s Business, within the States of Alabama, Florida, Louisiana,
Mississippi or Texas (including any adjacent offshore areas), and any other
state or other jurisdiction (or any adjacent offshore areas), whether within or
outside the United States (the “Territory”), in which the Company or any of its
subsidiaries carries on a like line of business on the date of termination of
Executive’s employment hereunder; provided, however, that nothing contained
herein shall prohibit Executive from making passive investments in any publicly
held company that do not exceed, in the aggregate, 1% of the outstanding equity
interest of such company.

          (ii) Executive shall not call upon any customer or potential customer
of any of the Horizon Companies within the Territory, for the purpose of
soliciting, diverting or enticing away the business of such person or entity, or
otherwise disrupting any previously established relationship existing between
such person or entity and any of the Horizon Companies.

          (iii) Executive shall not solicit, induce, influence or attempt to
influence any supplier, lessor, licensor, or any other person who has a business
relationship with any of the Horizon Companies, or who on the date of
termination of Executive’s employment hereunder is engaged in discussions or
negotiations to enter into a business relationship with any of the Horizon
Companies, to discontinue or reduce the extent of such relationship with any of
the Horizon Companies.

          (d) This Section 6(d) shall be binding upon Executive during his
employment with the Company and for a period of three years thereafter:

          (i) Executive shall not solicit any of the employees of the Horizon
Companies with whom he had contact during the course of his employment with the
Company for hire, whether as an employee or independent contractor, or otherwise
disrupting such employee’s relationship with any of the Horizon Companies;

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          (ii) Executive shall not hire without the consent of the Company any
employee of any of the Horizon Companies as an employee or independent
contractor, whether or not such engagement is solicited by Executive.

          (iii) Except as may be required by law or legal process, Executive
shall not, whether in writing or orally, criticize or disparage any of the
Horizon Companies or any of their respective former, current or future
directors, officers, employees, agents or representatives; provided, however,
that during the Employment Period, Executive may provide critical assessments of
any of the Horizon Companies to the Company within the scope of Executive’s
employment hereunder.

     (e) Protection of Information.

          (i) The Company shall disclose to Executive, or place Executive in a
position to have access to or develop, trade secrets or confidential information
of the Company; and/or shall entrust Executive with business opportunities of
the Company; and/or shall place Executive in a position to develop business good
will on behalf of the Company.

          (ii) Executive agrees not to disclose or utilize, for Executive’s
personal benefit or for the direct or indirect benefit of any other person or
entity, or for any other reason, whether for consideration or otherwise, during
the Employment Period or at any time thereafter, any information, ideas,
concepts, improvements, discoveries or inventions, whether patentable or not,
which are conceived, made, developed, or acquired by Executive, individually or
in conjunction with others, during Executive’s employment by the Company
(whether during business hours or otherwise and whether on the Company’s
premises or otherwise) which relate to the business, products, or services of
the Company (including, without limitation, all such business ideas, prospects,
proposals or other opportunities which are developed by Executive during his
employment hereunder, or originated by any third party and brought to the
attention of Executive during his employment hereunder, together with
information relating thereto (including, without limitation, data, memoranda,
opinions or other written, electronic or charted means, or any other trade
secrets or other confidential or proprietary information of or concerning the
Company)) (collectively, “Business Information”). Moreover, all documents,
drawings, notes, files, data, records, correspondence, manuals, models,
specifications, computer programs, E-mail, voice mail, electronic databases,
maps, and all other writings or materials of any type embodying any such
Business Information are and shall be the sole and exclusive property of the
Company. Upon termination of Executive’s employment by the Company, for any
reason, Executive promptly shall deliver all Business Information, and all
copies thereof, to the Company. As a result of knowledge of confidential
Business Information of third parties, such as customers, suppliers, partners,
joint ventures, and the like, of the Company, Executive also agrees to

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preserve and protect the confidentiality of such third party Business
Information to the same extent, and on the same basis, as the Company’s Business
Information.

          (iii) Executive agrees that, during his employment, any inventions
(whether or not patentable), concepts, ideas, expressions, discoveries, or
improvements, including, without limitation, products, processes, methods,
publications, works of authorship, software programs, designs, trade secrets,
technical specifications, algorithms, technical data, know-how, internal reports
and memoranda, marketing plans and any other patent or proprietary rights
conceived, devised, developed, or reduced to practice, in whole or in part, by
Executive during his employment with the Company (the “Developments”) are the
sole and exclusive property of the Company on a worldwide basis as works made
for hire or otherwise, and further that any revenue or other consideration
obtained from the sale, license or other transfer or conveyance of any such
Development, or a product or service incorporating such Development, is solely
for the benefit of and becomes the property of the Company. To the extent a
Development may not be considered work made by Executive for hire for the
Company, Executive agrees to assign, and automatically assigns at the time of
creation of the Development, without any requirement of further consideration,
any and all right, title and interest he may have in such Development. Executive
shall preserve each such Development as confidential and proprietary information
of the Company. Executive shall promptly disclose each such Development and
shall, upon demand, at the Company’s expense, execute and deliver to the Company
such documents, instruments, deeds, acts and things as the Company may request
to evidence or maintain the Company’s ownership of the Development, in any and
all countries of the world, or to effect enforcement thereof, and to assign all
rights, if any, of Executive in and to each of such Developments. In addition,
Executive agrees not to publish or seek to publish any information whatsoever
concerning any Development without the prior written consent of the Company,
which may be withheld in its sole and absolute discretion.

          (iv) Any inventions relating to the business of the Company conceived
or reduced to practice after Executive leaves the employ of the Company shall be
conclusively deemed to have been conceived and/or reduced to practice during the
period of the employment if conceived and/or reduced to practice within six
months from termination of employment, and shall be subject to the terms of this
Section 6(e).

          (f) Injunctive Relief. Executive acknowledges that a breach by
Executive of each of paragraph (b), (c), (d) and (e) of this Section 6 would
cause immediate and irreparable harm to the Company for which an adequate
monetary remedy does not exist; hence, Executive agrees that, in the event of a
breach or threatened breach by Executive of the provisions of paragraph (b),
(c), (d) or (e) of this Section 6 during or after the employment term, the
Company shall be entitled to injunctive relief restraining Executive from
violation of any such paragraph

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without the necessity of proof of actual damage or the posting of any bond,
except as required by non-waivable, applicable law. Nothing herein shall be
construed as prohibiting the Company from pursuing any other remedy at law or in
equity to which the Company may be entitled under applicable law in the event of
a breach or threatened breach of this Agreement by Executive including, but not
limited to, recovery of costs and expenses such as reasonable attorney’s fees
incurred by reason of any such breach, actual damages sustained by the Company
as a result of any such breach, and cancellation of any unpaid salary, bonus,
commissions or reimbursements otherwise outstanding at the date of termination
of Executive’s employment hereunder.

          (g) Executive’s Understanding of this Section. Executive hereby
represents to the Company that he has read and understands, and agrees to be
bound by, the terms of this Section 6. Executive acknowledges that the
geographic scope and duration of the covenants contained in paragraph (c) of
this Section 6 are the result of arm’s-length bargaining and are fair and
reasonable in light of (i) the importance of the functions performed by
Executive and the length of time it would take the Company to find and train a
suitable replacement, (ii) the nature and wide geographic scope of the
operations of the Company, (iii) Executive’s level of control over and contact
with the Company’s business and operations in all jurisdictions where same are
conducted and (iv) the fact that the Company’s Business is conducted throughout
the geographic area where competition is restricted by this Agreement. It is the
desire and intent of the parties that the provisions of this Agreement be
enforced to the fullest extent permitted under applicable law, whether now or
hereafter in effect and therefore, to the extent permitted by applicable law,
the parties hereto waive any provision of applicable law that would render any
provision of this Section 6 invalid or unenforceable.

     7. Miscellaneous.

          (a) This Agreement shall be binding upon and inure to the benefit of
the Company, its successors in interest, or any other person, association, or
entity which may hereafter acquire or succeed to all or substantially all of the
business assets of the Company by any means, whether indirectly or directly, and
whether by purchase, merger, consolidation, or otherwise. The term “Company” as
used herein shall include the Company and its successors and assigns.
Executive’s rights and obligations under this Agreement are personal and such
rights, benefits, and obligations of Executive shall not be voluntarily or
involuntary assigned, alienated, or transferred, whether by operation of law or
otherwise, without the prior written consent of the Company, other than in the
case of death or permanent disability of Executive.

          (b) This Agreement replaces and supersedes any previous agreements and
discussions pertaining to the subject matter covered herein. This Agreement
constitutes the entire agreement of the parties with regard to the terms of
Executive’s employment, termination of employment and severance benefits, and
contains all of the covenants, promises, representations, warranties, and
agreements between the parties with respect to such matters. Each party to this
Agreement acknowledges that no representation, inducement, promise, or
agreement, oral or written, has been made by either party with respect to the
foregoing matters which is not embodied herein, and that no agreement,
statement, or promise relating to the employment of Executive by the Company
that is not contained in this Agreement shall be valid

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or binding. Any modification of this Agreement will be effective only if it is
in writing and signed by each party whose rights hereunder are affected thereby.

          (c) For the purpose of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or (unless otherwise specified)
mailed by United States certified or registered mail, return receipt requested,
postage prepared, addressed as follows:

     
 
  If to Executive:
 
   
 
  David W. Sharp
 
  315 Cove Creek
 
  Houston, Texas 77042
 
  If to the Company:
 
   
 
  Horizon Offshore, Inc.
 
  2500 City West Blvd.
 
  Suite 2200
 
  Houston, Texas 77042
 
  Attn: General Counsel

or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

          (d) No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
signed by Executive and the Company. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement.

          (e) The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.

          (f) This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.

          (g) This Agreement sets forth the entire agreement of the parties
hereto in respect of the subject matter contained herein and supersedes all
prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto; and any prior agreement of the

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parties hereto in respect of the subject matter contained herein is hereby
terminated and cancelled.

          (h) This Agreement shall be construed and enforced in accordance with
and governed by the internal laws of the State of Texas without regard to
principles of conflict of laws.

          (i) Unless a shorter time is specified herein, all payments under this
Agreement shall be made at least within 2.5 months of the occurrence of the
event for which the payment is made (in no event will any payment be paid later
than 2.5 months after the tax year in which the event for which the payment is
required occurs).

          (j) This agreement is intended to be exempt from deferred
compensation, as defined in Code Section 409A and current guidance thereunder.
However, if it is determined that an exemption to Code Section 409A does not
apply, any provision of this Agreement may, with the written consent of
Executive, be terminated to make this Agreement exempt from 409A or the
Agreement may be modified to comply with Code Section 409A.

[signatures appear on the following page]

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     IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.

                  HORIZON OFFSHORE, INC.
 
           
 
  By:   /s/ DAVID W. SHARP               
 
  Name:                  
 
  Its                  
 
           
 
                              David W. Sharp

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