**TAX MATTERS AGREEMENT****BY AND BETWEEN****HELIX ENERGY SOLUTIONS GROUP, INC.****AND****CAL DIVE INTERNATIONAL, INC.****Dated as of December 14, 2006**
 

 
         Section 1. Definition and Construction  2   Section 1.1. Definitions of Capitalized Terms  2   Section 1.2. Construction  8 Section 2. Indemnification; Allocation of Responsibility for Taxes  9   Section 2.1. Indemnification  9   Section 2.2. Allocation of Federal Income Taxes  9   Section 2.3. Allocation of State Income Taxes  10   Section 2.4. Foreign Income Taxes  10   Section 2.5. Allocation of Other Taxes  11   Section 2.6. Restructuring Taxes; Additional Taxes  11   Section 2.7. Payment for Certain Tax Benefits  12 Section 3. Proration of Taxes; Allocation of Tax Items  13   Section 3.1. Proration of Tax Items  13   Section 3.2. Allocation of Tax Assets and Earnings & Profits  13   Section 3.3. Parent Equity Awards  13   Section 3.4. Separation Transactions Occurring After the IPO Closing Date  14 Section 4. Preparation and Filing of Tax Returns  14   Section 4.1. Parent’s Responsibility  14   Section 4.2. Cal Dive Filed Returns  15   Section 4.3. Tax Accounting Practices  15   Section 4.4. Right to Review Combined Tax Returns  16   Section 4.5. Adjustment Requests; Carrybacks; Utilization of Tax Assets  16 Section 5. Payments Under this Agreement  17   Section 5.1. Joint Taxes  17   Section 5.2. Payments to Tax Authority  18   Section 5.3. Timing of Payments  19   Section 5.4. Tax Treatment of Payments  19   Section 5.5. Interest  19   Section 5.6. Refunds  19   Section 5.7. Payments by or to Other Members of the Groups  20   Section 5.8. Tax Benefits from Payment of Taxes  20 Section 6. Assistance and Cooperation; Retention of Tax Records  20   Section 6.1. Assistance and Cooperation  20 
 

 
           Section 6.2. Tax Records  21 Section 7. Tax Contests  21   Section 7.1. Notice  21   Section 7.2. Control of Tax Contests  21   Section 7.3. Reimbursement of Expenses  22 Section 8. Continuing Covenants  22 Section 9. Dispute Resolution  23 Section 10. General Provisions  23   Section 10.1. Effectiveness; Termination of Prior Tax Allocation Agreements  23   Section 10.2. Survival of Obligations  23   Section 10.3. Addresses and Notices  24   Section 10.4. Binding Effect  24   Section 10.5. Waiver  24   Section 10.6. Invalidity of Provisions  24   Section 10.7. Further Action  25   Section 10.8. Integration  25   Section 10.9. Construction  25   Section 10.10. No Double Recovery  25   Section 10.11. Setoff  25   Section 10.12. Counterparts  25   Section 10.13. No Third Party Rights  25   Section 10.14. Governing Law  26 
 

 
**TAX MATTERS AGREEMENT**     This Tax Matters Agreement (this “Agreement”) is entered into as of December 14, 2006,by and between Helix Energy Solutions Group, Inc., a Minnesota corporation (“Parent”), andCal Dive International, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent(“Cal Dive”).**Recitals**     Whereas, as of the date hereof, Cal Dive is a direct wholly-owned subsidiary ofParent;     Whereas, Parent is the common parent corporation of an affiliated group (as definedin Section 1504 of the Code) of corporations (the “Parent Consolidated Group”) that haselected to file consolidated Federal Income Tax returns;     Whereas, the Parent Consolidated Group has included Cal Dive and its direct andindirect eligible domestic Subsidiaries;     Whereas, certain Parent Group Members, on the one hand, and certain Cal Dive GroupMembers, on the other hand, file income Tax Returns on a consolidated, combined and/or unitarybasis for certain State Income Tax and Foreign Income Tax purposes;     Whereas, Parent and Cal Dive currently contemplate that Cal Dive will make an initialpublic offering (“IPO”) of shares of Cal Dive common stock pursuant to a registrationstatement on Form S-1 filed pursuant to the Securities Act of 1933, as amended;     Whereas, as a result of the IPO, Cal Dive and its direct and indirect eligibledomestic Subsidiaries will cease to be members of the Parent Consolidated Group, and Parent GroupMembers and Cal Dive Group Members will cease to file Income Tax Returns on a consolidated,combined and/or unitary basis for State Income Tax and Foreign Income Tax purposes;     Whereas, following the IPO, Cal Dive will be a common parent corporation of anaffiliated group of corporations, which will elect to file consolidated Federal Income Tax returns;and     Whereas, in contemplation of the IPO, the Companies desire to enter into thisAgreement to provide for the allocation among them of the liabilities for Taxes arising prior to,as a result of and subsequent to the IPO, and to provide for and agree upon other matters relatingto Taxes;**Agreements**     Now, Therefore, in consideration of the mutual agreements contained herein, theCompanies hereby agree as follows:
 

 
Section 1. Definition and Construction.     Section 1.1. Definitions of Capitalized Terms.     For purposes of this Agreement (including the recitals hereof), the following capitalizedterms shall have the meanings set forth below:     “Additional Tax” means: (a) with respect to any Post-IPO Event that affects the amount ofany Tax imposed on or attributable to any Group Member for which Parent isotherwise responsible under this Agreement, an amount equal to the excess (ifany) of (1) the cumulative amount of Tax for which Parent is otherwiseresponsible under this Agreement determined after taking into account any andall Post-IPO Events, over (2) the cumulative amount of Tax that Parent wouldotherwise be responsible for under this Agreement determined without takinginto account any Post-IPO Event; and  (b) subject to clause (a) and without duplication, with respect toany Post-IPO Event that affects a Tax Asset of any Group Member, an amountequal to the Tax Benefits from such Tax Asset that Parent would have otherwiserecognized if such Post-IPO Event had not occurred.     “Adjustment Request” means any formal or informal claim or request filed with any TaxAuthority, or with any administrative agency or court, for the adjustment, refund or credit ofTaxes, including (i) any amended Tax Return claiming adjustment to the Taxes as reported on the TaxReturn or, if applicable, as previously adjusted, or (ii) any claim for refund or credit of Taxespreviously paid.     “Affiliate” means any Person that directly or indirectly is “controlled” by the otherPerson in question. For purposes of the term Affiliate, the term “controlled” means thepossession, directly or indirectly, of the power to direct or cause the direction of the managementand policies of a Person, whether through ownership of voting securities, by contract or otherwise.Except as otherwise provided herein, the term Affiliate shall refer to Affiliates of a Person asdetermined after the IPO.     “Agreement” shall have the meaning provided in the preamble.     “Assets” means, collectively, the Parent Assets and the Cal Dive Assets.     “Boot Gain” “ shall have the meaning provided in Section 2.7.     “Cal Dive Assets” means those assets and equity interests in Entities related to theCal Dive Business that were held by Parent Group Members before the Restructuring and are held byCal Dive Group Members after the Restructuring.     “Cal Dive Business” has the meaning set forth in the Master Agreement.
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     “Cal Dive Filed Returns” shall have the meaning provided in Section 4.2.     “Cal Dive Group” means, collectively, Cal Dive and its direct and indirectSubsidiaries immediately after the IPO, including, without limitation, the Subsidiaries set forthon Schedule 1.1.     “Cal Dive Group Member” means, individually, each member of the Cal Dive Group, andthe term “Cal Dive Group Members” means, collectively, as the context requires, all or lessthan all of the members of the Cal Dive Group.     “Cal Dive Indemnitees” shall have the meaning provided in Section 2.1(a).     “Cal Dive Separate Return” means a Tax Return that includes one or more Cal Dive GroupMembers and does not include any Parent Group Member, including any such Tax Return filed forFederal Income Tax purposes by an affiliated group (as defined in Section 1504 of the Code) ofcorporations the common parent of which is a Cal Dive Group Member or any other corporation that isnot a Parent Group Member.     “Cal Dive’s Allocated Tax Liability” shall have the meaning provided in Section5.1(a).     “Cal Dive’s Cumulative Tax Payment” shall have the meaning provided in Section5.1(a).     “Cal Dive’s Redetermined Allocated Tax Liability” shall have the meaning provided inSection 5.1(b).     “Carryback Item” means any net operating loss, net capital loss, excess tax credit orother similar Tax item which may or must be carried from one Tax Year to another Tax Year under theCode or other applicable Tax Law.     “Code” means the Internal Revenue Code of 1986, as amended, or any successor law.     “Combined Tax Return” means, with respect to any Income Tax, a Tax Return that isfiled by one or more Parent Group Members and which includes, to any extent, one or more Cal DiveGroup Members or in which income, deductions, or credits of any Parent Group Member may be combinedwith, or offset against, income, deductions or credits of any Cal Dive Group Member, including theConsolidated Return filed by Parent for the Parent Consolidated Group.     “Companies” means Parent and Cal Dive, collectively, and “Company” means, asthe context requires, any one of Parent or Cal Dive.     “Consolidated Return” means any Federal Income Tax Return which is filed on aconsolidated basis by Parent (or any other member of the Parent Group), as common parent, and itseligible Subsidiaries (as determined under Section 1504(a) of the Code or any successor provision)and which includes, to any extent, any Cal Dive Group Member (as determined under Section 1504(a)of the Code or any successor provision).     “Controlling Company” shall have the meaning provided in Section 7.2(a).
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     “Default Rate” means a rate of interest equal to the underpayment rate provided inSection 6621(c) of the Code, determined as of the date any applicable payment required to be madeunder this Agreement is due.     “Dividend” means, collectively, the distributions contemplated by Sections 3.5 and 3.7of the Master Agreement.     “Entity” means a partnership (whether general or limited), a corporation, a limitedliability company, an association, a joint stock company, a trust, a joint venture, anunincorporated organization or any other entity, without regard to whether it is treated as adisregarded entity for Federal Income Tax purposes.     “Equity Award” means any equity-based incentive compensation award, grant or agreementthat provides for the delivery of shares of Parent stock to any Person as compensation forservices, including, but not limited to, an option to acquire shares of Parent stock (or otherequity-based incentives the economic value of which is designed to mirror that of an option,including incentive stock options, non-qualified stock options, discounted non-qualified stockoptions, cliff options and tandem stock options), restricted stock, restricted stock units, stockappreciation rights, phantom stock units, performance shares, dividend equivalents, stock payments,deferred stock payments, performance-based awards or warrants granted under any plan, agreement orarrangement to the extent shares of Parent stock are issued, issuable or transferred (as opposed tocash compensation).     “Federal Income Tax” means any Tax imposed by Subtitle A or F of the Code.     “Federal Income Tax Return” means any report of Federal Income Taxes due, any claimsfor refund of Federal Income Taxes paid, any information return with respect to Federal IncomeTaxes, or any other similar report, statement, declaration, or document required to be filed underFederal Income Tax Law, including any attachments, exhibits, or other materials submitted with anyof the foregoing, and including any amendments or supplements to any of the foregoing.     “Final Determination” means the final resolution of liability for any Tax, whichresolution may be for a specific issue or adjustment or for a Tax Year, (a) by IRS Form 870 or870-AD (or any successor forms thereto) on the date of acceptance by or on behalf of theControlling Company, or by a comparable form under the Tax Laws of a state, local or foreign taxingjurisdiction, except that an IRS Form 870 or 870-AD or comparable form shall not constitute a FinalDetermination to the extent that it reserves (whether by its terms or by operation of law) theright of the Controlling Company to file a claim for refund or the right of the Tax Authority toassert a further deficiency in respect of such issue or adjustment or for such Tax Year (as thecase may be); (b) by a decision, judgment, decree, or other order by a court of competentjurisdiction, which has become final and unappealable; (c) by a closing agreement or accepted offerin compromise under Sections 7121 or 7122 of the Code, or a comparable agreement under the Tax Lawsof a state, local or foreign taxing jurisdiction; (d) by any allowance of a refund or credit inrespect of an overpayment of Tax, but only after the expiration of all periods during which suchrefund may be recovered (including by way of offset) by the jurisdiction imposing such Tax; (e) bya final settlement resulting from a treaty-based competent
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authority determination; or (f) by any other final disposition, including by reason of theexpiration of the applicable statute of limitations.     “Foreign Income Tax” means any Tax imposed by any foreign country or any possession ofthe United States, or by any political subdivision of any foreign country or possession of theUnited States, which is an “income tax” as defined in Treasury Regulations Section 1.901-2.     “Group” means the Parent Group or the Cal Dive Group, as the context requires, and theterm “Groups” means the Parent Group and the Cal Dive Group.     “Group Member” means any Parent Group Member or any Cal Dive Group Member.     “Income Tax” means each of any Federal Income Tax, State Income Tax or Foreign IncomeTax, as the context requires.     “Indemnification Expenses” shall have the meaning provided in Section 7.3.     “Indemnified Company” means (i) Parent, in cases where it is entitled to beindemnified for Losses by Cal Dive under this Agreement, and (ii) Cal Dive, in cases where it isentitled to be indemnified for Losses by Parent under this Agreement.     “Indemnifying Company” means (i) Parent, in cases where it is obligated to indemnifyCal Dive for Losses under this Agreement, and (ii) Cal Dive, in cases where it is obligated toindemnify Parent for Losses under this Agreement.     “Independent Firm” means a nationally recognized accounting firm; provided,however, that such term shall not include any accounting firm that performs or haspreformed audit services with respect to Parent or Cal Dive.     “IPO” shall have the meaning provided in the recitals to this Agreement.     “IPO Closing Date” means the first date on which the proceeds of any sale of Cal Divestock to the underwriters in the IPO are received by Cal Dive or any of its Subsidiaries.     “IRS” means the Internal Revenue Service.     “Joint Taxes” shall have the meaning provided in Section 5.1.     “Loss” means any loss, cost, fine, penalty, fee, damage, obligation, liability,payment in settlement, Tax or other expense of any kind, including reasonable attorneys’ fees andcosts, but excluding any consequential, special, punitive or exemplary damages.     “Master Agreement” means that certain Master Agreement dated December 8, 2006, asamended from time to time, between Parent and Cal Dive, and to which this Agreement is attached asan exhibit.
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     “Other Tax” means any Tax that is not an Income Tax, including any value added tax,any real or personal property Tax, any flat minimum dollar Tax, any withholding Tax or any capitalduty Tax.     “Parent Assets” means those assets and equity interests in Entities, if any, relatedto the Parent Business that were held by Cal Dive Group Members before the Restructuring and areheld by Parent Group Members after the Restructuring.     “Parent Business” has the meaning set forth in the Master Agreement.     “Parent Consolidated Group” shall have the meaning provided in the recitals to thisAgreement.     “Parent Filed Returns” shall have the meaning provided in Section 4.1(a).     “Parent Group” means, collectively, Parent and its direct and indirect Subsidiaries,other than Cal Dive Group Members, as determined immediately after the IPO, including, withoutlimitation, the Subsidiaries set forth on Schedule 1.2.     “Parent Group Member” means, individually, each member of the Parent Group, and theterm “Parent Group Members” means, collectively, as the context requires, all or less thanall of the members of the Parent Group.     “Parent Indemnitees” shall have the meaning provided in Section 2.1(b).     “Payment Date” means (i) with respect to any Federal Income Tax, (a) each of the duedates for any required installment of estimated Federal Income Taxes determined under Section 6655of the Code, (b) the due date (determined without regard to extensions) for filing any Tax Returndetermined under Section 6072 of the Code and (c) the date any Tax Return is filed, and (ii) withrespect to any other Tax, the corresponding due dates determined under the applicable Tax Law.     “Payment Period” shall have the meaning provided in Section 5.5.     “Person” means an individual, any Entity or a governmental entity or any department,agency or political subdivision thereof.     “Post-IPO Tax Benefit” shall have the meaning provided in Section 2.7.     “Post-IPO Events” shall have the meaning provided in Section 2.6(b).     “Post-IPO Period” means, with respect to any Tax, any Tax Year beginning after the IPOClosing Date, and, in the case of any Straddle Period, the portion of such Straddle Periodbeginning on the day after the IPO Closing Date.     “Pre-IPO Period” means, with respect to any Tax, any Tax Year ending on or before theIPO Closing Date, and, in the case of any Straddle Period, the portion of such Straddle Periodending on and including the IPO Closing Date.
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     “Prior Tax Allocation Agreements” means any written or oral agreement or any otherarrangements relating to the allocation of Taxes existing between or among any Parent Group Memberand any Cal Dive Group Member prior to the date hereof (other than this Agreement).     “Reimbursement Statement” shall have the meaning provided in Section 7.3.     “Restructuring” means the restructuring by Parent of the Assets to cause the ParentAssets to be held by the Parent Group and the Cal Dive Assets to be held by the Cal Dive Group.     “Restructuring Taxes” means any and all Taxes imposed on or attributable to any GroupMember that arise from or are attributable to such Group Member’s distribution, transfer,assignment, other disposition, receipt, purchase or other acquisition of Assets pursuant to theRestructuring, however effected.     “Separate Company Tax” means any Tax computed by reference to the assets andactivities of a member or members of a single Group.     “Straddle Period” means, with respect to any Tax, any Tax Year beginning on or beforethe IPO Closing Date and ending after the IPO Closing Date.     “State Income Tax” means any Tax imposed by any state of the United States, theDistrict of Columbia or any political subdivision of the foregoing, which is imposed on ormeasured, in whole or in part, by income, capital or net worth or a taxable base in the nature ofincome, capital or net worth, including franchise Taxes based on such factors.     “Subsidiary” means, with respect to any Person, each Entity that such Person directlyor indirectly owns, beneficially or of record, (i) an amount of voting securities or otherinterests in such Entity that is sufficient to enable such Person to elect at least a majority ofthe members of such Entity’s board of directors or other governing body or (ii) at least 50% of theoutstanding equity or financial interests of such Entity.     “Tax” or “Taxes” means any income, gross income, gross receipts, profits,capital stock, capital duty, franchise, withholding, payroll, social security, workerscompensation, unemployment, disability, property, ad valorem, stamp, excise, severance, occupation,service, sales, use, license, lease, transfer, import, export, value added, alternative minimum,estimated or other similar tax (including any fee, assessment, or other charge in the nature of orin lieu of any tax) imposed by any Tax Authority, and any interest, penalties, additions to tax oradditional amounts in respect of the foregoing.     “Tax Asset” means any Tax Item that has accrued for Tax purposes, but has not beenused during a Tax Year, and that could reduce a Tax in another Tax Year, including a net operatingloss, net capital loss, investment tax credit, foreign tax credit, research and experimentationcredit, charitable deduction or credit related to alternative minimum tax or any other Tax credit,but does not include the tax basis of an asset.     “Tax Authority” means, with respect to any Tax, the governmental entity or politicalsubdivision thereof that imposes such Tax, and the agency (if any) charged with the collection ofsuch Tax for such governmental entity or political subdivision, including the IRS.
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     “Tax Benefit” means any refund received or credit or other Tax Item that actuallyreduces otherwise required Tax payments (including any reduction in estimated Tax payments).     “Tax Contest” means an audit, review, examination or any other administrative orjudicial proceeding with the purpose or effect of redetermining Taxes of any Group Member(including any administrative or judicial review of any claim for refund) for any Tax Year.     “Tax Detriment” means an increase in the Tax liability of any Group Member for any TaxYear or a decrease in a Tax Asset of any Group Member. Except as otherwise provided in thisAgreement, a Tax Detriment shall be deemed to have been realized from a Tax Item in a Tax Year onlyif and to the extent that the Tax liability of the Group Member for such Tax Year, after takinginto account the effect of the Tax Item on the Tax liability of such Group Member in the currentTax Year and all prior Tax Years, is more than it would have been if such Tax liability weredetermined without regard to such Tax Item.     “Tax Item” means, with respect to any Tax, any item of income, gain, loss, deductionor credit, or other attribute that may have the effect of increasing or decreasing any Tax.     “Tax Law” means the law of any governmental entity or political subdivision thereofrelating to any Tax, including the Code, and any controlling judicial or administrativeinterpretations of such law relating to any Tax.     “Tax Records” means Tax Returns, Tax Return workpapers, documentation relating to anyTax Contests and any other books of account or records required to be maintained under the Code orother applicable Tax Laws or under any record retention agreement with any Tax Authority.     “Tax Return” means any report of Taxes due, any claims for refund of Taxes paid, anyinformation return with respect to Taxes or any other similar report, statement, declaration ordocument required to be filed under the Code or other Tax Law, including any attachments, exhibitsor other materials submitted with any of the foregoing, and including any amendments or supplementsto any of the foregoing.     “Tax Year” means, with respect to any Tax, the year, or shorter period, if applicable,for which the Tax is reported as provided under applicable Tax Law.     “Treasury Regulations” means the regulations promulgated from time to time under theCode as in effect for the relevant Tax Year.     Other capitalized terms defined elsewhere in this Agreement shall have the meanings giventhem.     Section 1.2. Construction.     Unless the context otherwise requires: (i) references to a Section (other than in connectionwith the Code or the Treasury Regulations) refer to a section of this Agreement; (ii) the word“including” shall mean “including, but not limited to”; and (iii) words used in the singular shallalso denote the plural, and words used in the plural shall also denote the singular.
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The headings contained in this Agreement are for reference purposes only and shall not affectin any way the meaning or interpretation of this Agreement.Section 2. Indemnification; Allocation of Responsibility for Taxes.     Section 2.1. Indemnification. (a) Parent’s Indemnity of Cal Dive.     Parent shall indemnify Cal Dive, each other Cal Dive Group Member and their respectivedirectors, officers and employees (collectively, the “Cal Dive Indemnitees”), and hold themharmless from and against any and all Losses that arise from or are attributable to:     (1) any and all Taxes that are specifically allocated to or are theresponsibility of Parent under this Agreement;     (2) any failure by Parent to make a payment required by this Agreement to CalDive when due; and     (3) any breach or nonperformance by Parent of any of its representations,warranties or covenants contained in this Agreement. (b) Cal Dive’s Indemnity of Parent.     Cal Dive shall indemnify Parent, each other Parent Group Member and their respectivedirectors, officers and employees (collectively, the “Parent Indemnitees”), and hold themharmless from and against any and all Losses that arise from or are attributable to:     (1) any and all Taxes that are specifically allocated to or are theresponsibility of Cal Dive under this Agreement;     (2) any failure by Cal Dive to make a payment required by this Agreement toParent when due; and     (3) any breach or nonperformance by Cal Dive of any of its representations,warranties or covenants contained in this Agreement.     Section 2.2. Allocation of Federal Income Taxes.     Except as provided in Section 2.6, the responsibility for Federal Income Taxes,including any adjustment to such Federal Income Taxes as a result of a Final Determination, imposedon or attributable to any Cal Dive Group Member shall be allocated between Parent and Cal Dive asfollows: (a) Parent’s Responsibility for Federal Income Taxes.     Parent shall be responsible for any and all Federal Income Taxes, including any adjustment tosuch Federal Income Taxes as a result of a Final Determination, to the extent such
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Federal Income Taxes are imposed on or are attributable to any Cal Dive Group Member for anyPre-IPO Period. (b) Cal Dive’s Responsibility for Federal Income Taxes.     Cal Dive shall be responsible for any and all Federal Income Taxes, including any adjustmentto such Federal Income Taxes as a result of a Final Determination, that are imposed on or areattributable to any Cal Dive Group Member for any Post-IPO Period.     Section 2.3. Allocation of State Income Taxes.     Except as provided in Section 2.6, the responsibility for any and all State IncomeTaxes, including any adjustment to such State Income Taxes as a result of a Final Determination,imposed on or attributable to any Cal Dive Group Member shall be allocated between Parent and CalDive as follows: (a) Parent’s Responsibility for State Income Taxes.     Parent shall be responsible for any and all State Income Taxes, including any adjustment tosuch State Income Taxes as a result of a Final Determination, that are imposed on or areattributable to any Cal Dive Group Member for any Pre-IPO Period. (b) Cal Dive’s Responsibility for State Income Taxes.     Cal Dive shall be responsible for any and all State Income Taxes, including any adjustment tosuch State Income Taxes as a result of a Final Determination, that are imposed on or areattributable to any Cal Dive Group Member for any Post-IPO Period.     Section 2.4. Foreign Income Taxes.     Except as provided in Section 2.6, the responsibility for Foreign Income Taxes,including any adjustment to such Foreign Income Taxes as a result of a Final Determination, thatare imposed on or are attributable to any Cal Dive Group Member shall be allocated between Parentand Cal Dive as follows: (a) Parent’s Responsibility for Foreign Income Taxes.     Parent shall be responsible for any and all Foreign Income Taxes, including any adjustment tosuch Foreign Income Taxes as a result of a Final Determination, that are imposed on or areattributable to any Cal Dive Group Member for any Pre-IPO Period. (b) Cal Dive’s Responsibility for Foreign Income Taxes.     Cal Dive shall be responsible for any and all Foreign Income Taxes, including any adjustmentto such Foreign Income Taxes as a result of a Final Determination, that are imposed on or areattributable to any Cal Dive Group Member for any Post-IPO Period.
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     Section 2.5. Allocation of Other Taxes.     Except as provided in Section 2.6, the responsibility for Other Taxes, including anyadjustment to such Other Taxes as a result of a Final Determination, imposed on or attributable toany Cal Dive Group Member shall be allocated between Parent and Cal Dive as follows: (a) Other Taxes imposed on Cal Dive Group Members.     Cal Dive shall be responsible for any and all Other Taxes imposed on or attributable to anyCal Dive Group Member with respect to any Tax Year. (b) Other Taxes Imposed on Multiple Group Members.     Notwithstanding anything to the contrary in Section 2.5(a), with respect to any OtherTaxes for any Tax Year that are imposed under applicable Tax Law on one or more Parent GroupMembers and one or more Cal Dive Group Members:     (1) Parent shall be responsible for any and all such Other Taxes to the extentany Parent Group Member is primarily responsible for such Other Taxes underapplicable Tax Law; and     (2) Cal Dive shall be responsible for any and all such Other Taxes to theextent any Cal Dive Group Member is primarily responsible for such Other Taxes underapplicable Tax Law.     Section 2.6. Restructuring Taxes; Additional Taxes. (a) Restructuring Taxes.     Notwithstanding any other provision of this Agreement to the contrary, the responsibility forRestructuring Taxes imposed on or attributable to any Group Member shall be allocated betweenParent and Cal Dive as follows:     (1) Parent’s Responsibility for Restructuring Taxes. Except asprovided in Section 2.6(a)(2), Parent shall be responsible for any and allRestructuring Taxes, including any adjustment to such Restructuring Taxes as aresult of a Final Determination, that are imposed on or attributable to any GroupMember with respect to any Tax Year.     (2) Cal Dive’s Responsibility for Restructuring Taxes. NotwithstandingSection 2.6(a)(1), Cal Dive shall be responsible for any and allRestructuring Taxes, including any adjustment to such Restructuring Taxes as aresult of a Final Determination, that are imposed on or attributable to any GroupMember to the extent that such Restructuring Taxes result, in whole or in part, fromany act or failure to act by any Cal Dive Group Member after the IPO Closing Date,including any such act or failure to act that results in Parent recognizing incomeor gain for Federal Income Tax purposes in excess of the amount of the Dividend.
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 (b) Additional Taxes.     Subject to Section 2.6(a), but notwithstanding any other provision of this Agreementto the contrary, Cal Dive shall be responsible for one hundred percent (100%) of any AdditionalTaxes, determined for each applicable Tax Year, imposed on any Group Member that result or arise,in whole or in part, from any act, failure to act, event or transaction that relates to any CalDive Group Member’s breach of any representation, covenant or agreement contained in this Agreementthat occurs after the IPO Closing Date (a “Post-IPO Event”), including Additional Taxesresulting or arising from any Cal Dive Group Member failing to provide assistance and cooperationto Parent in accordance with Section 6.1 or failing to retain Tax Records in accordancewith Section 6.2. (c) Combined Tax Returns Filed After the IPO Closing Date.     Subject to Section 2.6(a) and Section 2.6(b), but notwithstanding any otherprovision of this Agreement to the contrary, in the event any Combined Tax Return includes anyportion of a Post-IPO Period, the Income Taxes that are treated as imposed on or attributable tothe Cal Dive Group Members included in such Combined Tax Return for purposes of this Agreementshall be determined as if such Cal Dive Group Members were not required to join and did not join inthe filing of the Combined Tax Return for the Post-IPO Period but instead filed their ownconsolidated, combined or unitary Tax Return based solely on their income, apportionment factorsand other Tax Items included in such Combined Tax Return for the Post-IPO Period, with such IncomeTaxes being calculated in accordance with the principles of Treasury Regulations Section1.1552-1(a)(2)(ii) for calculating the “separate tax liability” of a member of an affiliated groupor an applicable corresponding provision under the Tax Laws of any state, local or foreignjurisdiction, as such corresponding provision is reasonably interpreted by Parent.     Section 2.7. Payment for Certain Tax Benefits.     As a result of the transactions contemplated in conjunction with the IPO, Parent willrecognize a substantial amount of taxable gain (the “Boot Gain”) as a result of cashdistributions by Cal Dive to Parent. As a result of this recognition of the Boot Gain, Cal Divewill be entitled to increase its Tax basis in the assets contributed to Cal Dive by Parent and suchincrease in Tax basis may result in a Tax Benefit to Cal Dive. For each taxable year of Cal Divethat ends after the IPO Closing Date, but on or before the tenth anniversary of the IPO ClosingDate, Cal Dive shall compute its hypothetical Tax liability without taking into account the Taxbasis adjustment attributable to the recognition by Parent of the Boot Gain and subtract from suchhypothetical Tax liability its actual Tax liability for such year to determine the amount of thepost IPO Tax Benefit (“Post-IPO Tax Benefit”) for that year relating to the Tax basisadjustment resulting from the recognition by Parent of the Boot Gain, such calculations beingsubject to Parent’s review and approval. For each taxable year described in this section, Cal Diveshall pay to Parent 90% of the Post-IPO Tax Benefit recognized with respect to such taxable year,such payment to be made by Cal Dive to Parent on or before the 15th day following the date on whichCal Dive files each Tax Return for such taxable year which includes such a Tax Benefit.
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Section 3. Proration of Taxes; Allocation of Tax Items.     For purposes of apportioning Taxes and Tax Items between Pre-IPO Periods and Post-IPO Periodsand preparing and filing Tax Returns under this Agreement, the following provisions shall apply:     Section 3.1. Proration of Tax Items. (a) General Method.     Except as provided in Section 3.1(b), Tax Items of the Cal Dive Group Members shall beapportioned between Pre-IPO Periods and Post-IPO Periods in accordance with the principles ofTreasury Regulations Section 1.1502-76(b) or an applicable corresponding provision under the TaxLaws of any state, local or foreign jurisdiction, as such corresponding provision is reasonablyinterpreted and applied by Parent. No election shall be made under Treasury Regulations Section1.1502-76(b)(2)(ii) (relating to ratable allocation of a year’s items). (b) Restructuring Tax Items.     In determining the apportionment of Tax Items between Pre-IPO Periods and Post-IPO Periods,any Tax Items relating to the Restructuring shall be treated as extraordinary items described inTreasury Regulations Section 1.1502-76(b)(2)(ii)(C) and shall be allocated to Pre-IPO Periods, andany Taxes related to such Tax Items shall be treated under Treasury Regulations Section1.1502-76(b)(2)(iv) as relating to such extraordinary item and shall be allocated to Pre-IPOPeriods.     Section 3.2. Allocation of Tax Assets and Earnings & Profits. (a) Allocation of Tax Assets.     Parent shall determine in accordance with applicable Tax Laws the allocation of any applicableTax Assets among Parent, each other Parent Group Member, Cal Dive and each other Cal Dive GroupMember. The Companies hereby agree that in the absence of controlling legal authority or unlessotherwise provided under this Agreement, each Tax Asset shall be allocated to the Group Member whogenerated such Tax Asset. (b) Earnings & Profits.     On or before the first anniversary of the IPO Closing Date, Parent shall advise Cal Dive inwriting of the decrease in Parent’s earnings and profits under Section 312(h) of the Codeattributable to the IPO; provided, however, that Parent shall provide Cal Dive withestimates of such amounts (determined in accordance with past practice) prior to such anniversaryas reasonably requested by Cal Dive.     Section 3.3. Parent Equity Awards.     Except as otherwise required by applicable Tax Law and subject to the following sentence,Parent shall be entitled to claim on its Tax Returns any and all Tax deductions
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attributable to an exercise, or a disqualifying disposition, grant, vesting, payment ordelivery of shares, or other consideration in lieu of shares, by Parent, under or in connectionwith an Equity Award (including a payment of dividends in connection with an Equity Award), and noCal Dive Group Member shall attempt to claim on any Tax Return any such Tax deductions.Notwithstanding the foregoing sentence, if Parent determines that under applicable Tax Law (or as aresult of a Final Determination) no Parent Group Member is entitled to claim such Tax deductionsbut a Cal Dive Group Member is entitled to claim such Tax deductions, such Cal Dive Group Membershall be entitled to claim such Tax deductions on its applicable Tax Returns, and Cal Dive shallpay to Parent the “deemed tax benefit” of such Tax deductions, regardless of whether any Cal DiveGroup Member actually claims such Tax deductions or realizes a Tax Benefit from claiming any suchTax deductions. For purposes of this Section 3.3, the “deemed tax benefit” shallconclusively be the total amount of the available Tax deductions for any such exercise,disqualifying disposition, grant, vesting or payment multiplied by 40%. Cal Dive shall pay the“deemed tax benefit” amount, if any, to Parent no later than twenty (20) days after the later of(a) Parent’s notification to Cal Dive that a Cal Dive Group Member is entitled to claim such Taxdeductions or (b) the occurrence of any applicable exercise, disqualifying disposition, grant,vesting, payment or delivery of shares, or other consideration in lieu of shares, by Parent underor in connection with an Equity Award. Further, if the performance of the obligations described inthis Section 3.3 shall become impracticable or impossible due to any change in Tax Law orthe interpretation thereof by any Tax Authority subsequent to the date of this Agreement, theparties hereto shall use their best efforts to find an alternative means to achieve the same orsubstantially the same result as that contemplated by this Section 3.3.     Section 3.4. Separation Transactions Occurring After the IPO Closing Date.     If the Parent Group Member transfers any part of the Cal Dive Business (including anySubsidiary) to the Cal Dive Group, or any Cal Dive Group Member transfers any part of the ParentBusiness (including any Subsidiary) to the Parent Group, after the IPO Closing Date in atransaction contemplated by the Restructuring, such transfer will be deemed to have occurredimmediately before the IPO Closing Date for purposes of computing the Taxes imposed on orattributable to the Cal Dive Group and the Parent Group.Section 4. Preparation and Filing of Tax Returns.     Section 4.1. Parent’s Responsibility. (a) Parent Filed Returns.     Parent shall have the exclusive obligation and right to prepare and file, or to cause to beprepared and filed, all Tax Returns that include any Group Member if Parent is responsible underthis Agreement for any portion of the Taxes reported on such Tax Returns (“Parent FiledReturns”), including (i) all Combined Tax Returns and (ii) all Cal Dive Separate Returns forwhich Parent is responsible for any portion of any Tax reported on such Cal Dive Separate Return,and Parent shall have the exclusive obligation and right to prepare and file, or to cause to beprepared and filed, all Adjustment Requests made with respect to Parent Filed Returns. Cal Diveshall, and shall cause each other Cal Dive Group Member to, assist and cooperate with
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Parent in accordance with Section 6 with respect to the preparation and filing of allParent Filed Returns, including providing information required to be provided in Section 6.In the case of any Parent Filed Return which is required by applicable Tax Law to be signed by anyCal Dive Group Member (or by its authorized representative), Cal Dive shall cause such Cal DiveGroup Member (or its authorized representative) to sign such Parent Filed Return. (b) Preparation of Parent Filed Returns.     Parent shall have the exclusive right, in its sole discretion, with respect to each ParentFiled Return to determine (i) the manner in which such Parent Filed Return shall be prepared andfiled, including the elections, methods of accounting, positions, conventions and principles oftaxation to be used and the manner in which any Tax Item shall be reported, (ii) whether anyextensions may be requested, (iii) the elections that will be made on such Parent Filed Return,(iv) whether an Adjustment Request should be made with respect to any Parent Filed Return, (v)whether any refunds shall be paid by way of refund or credited against any liability for therelated Tax and (vi) whether to retain outside firms to prepare or review such Parent FiledReturns. (c) Election to Join Combined Tax Returns.     Cal Dive shall cause each Cal Dive Group Member to elect and join in filing Combined TaxReturns with any Parent Group Member that Parent reasonably determines are required to be filedunder applicable Tax Laws or will result in the minimization of the net present value of theaggregate Tax to the Group Members eligible to join in such Combined Tax Returns. (d) Appointment as Agent.     Cal Dive hereby irrevocably designates, and agrees to cause each other Cal Dive Group Memberto so designate, Parent as its sole and exclusive agent and attorney-in-fact to take such action(including execution of documents) as Parent, in its sole discretion, may deem appropriate in anyand all matters (including Tax Contests) relating to Combined Tax Returns.     Section 4.2. Cal Dive Filed Returns.     Cal Dive shall have the exclusive obligation and right to prepare and file, or to cause to beprepared and filed, all Cal Dive Separate Returns that are not Parent Filed Returns (“Cal DiveFiled Returns”), and Cal Dive shall have the exclusive obligation and right to prepare andfile, or to cause to be prepared and filed, all Adjustment Requests made with respect to Cal DiveFiled Returns.     Section 4.3. Tax Accounting Practices. (a) In General.     Except as otherwise provided in Section 4.3(b), to the extent the Tax accountingpractices or reporting position with respect to Tax Items reported on any Cal Dive Filed Returnmight adversely affect any Parent Group Member, Cal Dive shall prepare such Cal Dive Filed Returnand report such Tax Items in a manner that is consistent with Parent’s past Tax accounting
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practices and reporting positions with respect to such Tax Items (unless such past Taxaccounting practices or reporting positions are no longer permissible under the Code or otherapplicable Tax Law), and to the extent any Tax Items are not covered by past Tax accountingpractices or reporting positions (or in the event such past Tax accounting practices or reportingpositions are no longer permissible under the Code or other applicable Tax Law), in accordance withreasonable Tax accounting practices and reporting positions selected by Parent. (b) Reporting of Restructuring Tax Items.     Parent shall determine the proper Tax treatment of any Tax Items relating to the Restructuringand the method for reporting such Tax Item on any Tax Return. Such treatment and reporting methodshall be used by Cal Dive in preparing and filing any Cal Dive Filed Return unless there is noreasonable basis for such Tax treatment. To the extent any Cal Dive Filed Return includes a TaxItem relating to the Restructuring, Cal Dive shall submit a copy of such Cal Dive Filed Return toParent for its review. Cal Dive shall use its reasonable best efforts to make such Cal Dive FiledReturn available for Parent’s review sufficiently in advance of the due date for filing such CalDive Filed Return to provide Parent with a meaningful opportunity to analyze and comment on suchCal Dive Filed Return and have such Cal Dive Filed Return modified before filing.     Section 4.4. Right to Review Combined Tax Returns.     Parent shall make each Combined Tax Return and related workpapers available for review by CalDive, if requested, to the extent (i) such Combined Tax Return relates to Taxes for which Cal Divemay be responsible under this Agreement or (ii) Cal Dive reasonably determines that it must inspectsuch Combined Tax Return to confirm its compliance with the terms of this Agreement. Parent shalluse its reasonable best efforts to make such Combined Tax Return available for review as requiredunder this paragraph sufficiently in advance of the due date for filing such Combined Tax Return toprovide Cal Dive with a meaningful opportunity to analyze and comment on such Combined Tax Returnand have such Combined Tax Return modified before filing. Parent and Cal Dive shall attempt ingood faith to resolve any issues arising out of the review of such Combined Tax Returns.     Section 4.5. Adjustment Requests; Carrybacks; Utilization of Tax Assets. (a) Adjustment Requests and Carrybacks Requiring Parent’s Consent.     Except as otherwise required by applicable Tax Law or unless Parent otherwise consents inwriting, Cal Dive hereby agrees to cause each Cal Dive Group Member (i) to not make any AdjustmentRequest with respect to any Income Tax for any Pre-IPO Period and (ii) to make any availableelections to relinquish the right to claim in any Pre-IPO Period any Carryback Items of any CalDive Group Member arising in a Post-IPO Period, including making the election under Section172(b)(3) of the Code (and any similar provision of any other applicable Tax Laws) to relinquishthe right to carry back net operating losses. With respect to any Adjustment Request to whichParent grants its consent under the preceding sentence, Cal Dive shall reimburse Parent for itslegal, accounting, administrative and other related expenses incurred in preparing, filing andmaking any such Adjustment Request.
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 (b) Carrybacks to Pre-IPO Periods.     Notwithstanding Section 4.5(a), if any Cal Dive Group Member is required by applicableTax Law to carry back a Carryback Item arising in a Post-IPO Period to a Pre-IPO Period, theCompanies agree that any Carryback Item of any Parent Group Member that may be carried back to thesame Pre-IPO Period shall be deemed to be used before any Carryback Item of any Cal Dive GroupMember. If any Parent Group Member receives a refund or realizes a Tax Benefit as a result of aCarryback Item of any Cal Dive Group Member arising in a Post-IPO Period being carried back to aPre-IPO Period, Parent shall make a payment to Cal Dive in an amount equal to such refund or therealized Tax Benefit within 30 days following either the receipt of such refund or the filing ofthe Tax Return reflecting the realization of such Tax Benefit. (c) Other Adjustment Requests Permitted.     With respect to any Tax imposed on or attributable to any Group Member for any applicablePre-IPO Period, Parent may make an Adjustment Request with respect to such Tax, including carryingback a Carryback Item of any Parent Group Member arising in a Post-IPO Period to any Pre-IPOPeriod. Any refund or other Tax Benefit obtained as a result of any such Adjustment Requestpursuant to the preceding sentence shall be for the account of Parent, and Parent shall have noobligation to compensate or make a payment to any Cal Dive Group Member in the event any suchAdjustment Request results in a Tax Detriment to any Cal Dive Group Member. (d) Utilization of Tax Assets.     With respect to each Combined Tax Return and any adjustment to the Income Taxes reflected on aCombined Tax Return as a result of a Tax Contest, Adjustment Request or otherwise, each GroupMember included in such Combined Tax Return shall be entitled to use, in accordance with applicableTax Laws, any and all Tax Assets of each other Group Member included in such Combined Tax Return.Except as provided in Section 5.1(c) with respect to Joint Taxes, no Group Member thatutilizes the Tax Assets of any other Group Member shall be required to compensate or make anypayment to such other Group Member with respect to the utilization of such Tax Assets.Section 5. Payments Under this Agreement.     Section 5.1. Joint Taxes.     With respect to any Tax for any Tax Year for which Parent and Cal Dive are each responsiblefor a portion of such Tax under this Agreement (a “Joint Tax”), the following provisionsshall apply: (a) Joint Taxes Relating to Parent Filed Returns.     With respect to any Joint Tax that is reflected or reported on any Parent Filed Return, Parentshall determine the amount of such Joint Tax that Cal Dive is responsible for under Section2 (“Cal Dive’s Allocated Tax Liability”). At least 15 days prior to an applicablePayment Date, Parent shall deliver to Cal Dive a statement setting forth in appropriate detail
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Parent’s determination of Cal Dive’s Allocated Tax Liability and the amount (if any) of thecumulative net payments made with respect to such Joint Tax prior to the date of such statement bythe Cal Dive Group (“Cal Dive’s Cumulative Tax Payment”). Not more than 30 days after CalDive’s receipt of such statement, Cal Dive shall pay Parent an amount equal to the excess (if any)of Cal Dive’s Allocated Tax Liability, over Cal Dive’s Cumulative Tax Payment. If Cal Dive’sCumulative Tax Payment is greater than Cal Dive’s Allocated Tax Liability, then Parent shall paysuch excess to Cal Dive within 30 days of Parent’s receipt of the corresponding Tax Benefit(i.e., through either a reduction in Parent’s otherwise required Tax payment or a refund ofprior Tax payments). (b) Adjustments to Joint Taxes.     If there is any adjustment to any Joint Tax described in Section 5.1(a), whether as aresult of a Tax Contest, Adjustment Request or otherwise, Parent shall redetermine Cal Dive’sAllocated Tax Liability (“Cal Dive’s Redetermined Allocated Tax Liability”). Afterdetermining Cal Dive’s Redetermined Allocated Tax Liability, Parent shall deliver to Cal Dive astatement setting forth in appropriate detail Parent’s determination of Cal Dive’s RedeterminedAllocated Tax Liability and the amount (if any) of Cal Dive’s Cumulative Tax Payments made withrespect to such Joint Tax prior to the date of such statement. Not more than 30 days after CalDive’s receipt of such statement, Cal Dive shall pay Parent an amount equal to the excess (if any)of Cal Dive’s Redetermined Allocated Tax Liability, over Cal Dive’s Cumulative Tax Payments. IfCal Dive’s Cumulative Tax Payment is greater than Cal Dive’s Redetermined Allocated Tax Liability,then Parent shall pay such excess to Cal Dive within 30 days of Parent’s receipt of thecorresponding Tax Benefit (i.e., through either a reduction in Parent’s otherwise requiredTax payment or a refund of prior Tax payments). (c) Payments for Use of Tax Assets.     If a Parent Group Member realizes a Tax Benefit upon its utilization of a Tax Asset of a CalDive Group Member, Parent shall make a payment to Cal Dive equal to the Tax Benefit realized to theextent such utilized Tax Asset of the Cal Dive Group Member arose or accrued during any Post-IPOPeriod. If a Cal Dive Group Member realizes a Tax Benefit upon its utilization of a Tax Asset of aParent Group Member, Cal Dive shall make a payment to Parent equal to the Tax Benefit realized tothe extent such utilization occurs during any Post-IPO Period. Any payment required to be madeunder this Section 5.1(c) shall be paid within 30 days following either the receipt of arefund or the filing of the Tax Return reflecting the realization of such Tax Benefit.     Section 5.2. Payments to Tax Authority.     With respect to each Tax Return that a Company is required to prepare and file under thisAgreement, such Company shall pay, or cause to be paid, to the applicable Tax Authority when due(including extensions) all Taxes determined to be due and payable. With respect to any Joint Taxesdescribed in Section 5.1(a), Parent shall pay, or cause to be paid, to the applicable TaxAuthority when due such Joint Taxes.
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     Section 5.3. Timing of Payments.     In the event a Company is required to make a payment to the other Company under this Agreementand the time for making such payment is not otherwise provided for in this Agreement, the firstCompany shall make such payment within 30 days of its receipt of such other Company’s writtendemand for such payment, which written demand shall include in reasonable detail an explanation andcomputation of the amount due.     Section 5.4. Tax Treatment of Payments.     Unless otherwise required by applicable Tax Law, the Companies agree that any payments made byone Company to the other Company (other than any reimbursement of expense pursuant to Section4.5(a) and interest payments pursuant to Section 5.5) pursuant to this Agreement shallbe treated for all Tax and financial accounting purposes as nontaxable payments (dividenddistributions or capital contributions, as the case may be) made immediately prior to the IPO and,accordingly, as not includible in the Taxable income of the recipient Company or as deductible bythe payor Company. If, notwithstanding the previous sentence, there is a Final Determination thatthe recipient Company’s receipt of such payment is subject to Tax, the payor Company shall pay tothe recipient Company an additional amount that, when added to the prior payment, will result inthe recipient Company receiving an amount equal to such prior payment, after taking into accountall Taxes that are payable by the recipient Company with respect to the receipt of such priorpayment and such additional amount.     Section 5.5. Interest.     Any payment that is not made within the period prescribed in this Agreement (the “PaymentPeriod”) shall bear interest at the Default Rate, compounded semiannually, for the period fromand including the date immediately following the last date of the Payment Period through andincluding the date of payment. Notwithstanding Section 5.4, the interest payment shall betreated as interest expense to the payor (deductible to the extent provided by applicable Tax Law)and as interest income by the recipient (includible in income to the extent provided by applicableTax Law).     Section 5.6. Refunds. (a) Refund Received by Parent Group Members.     If a Parent Group Member receives a Tax refund with respect to Taxes for which a Cal DiveGroup Member is responsible hereunder, Parent shall pay to Cal Dive within 30 days following thereceipt of the Tax refund, an amount equal to such Tax refund. (b) Refund Received by Cal Dive Group Members.     If a Cal Dive Group Member receives a Tax refund with respect to Taxes for which a ParentGroup Member is responsible hereunder, Cal Dive shall pay to Parent within 30 days following thereceipt of the Tax refund, an amount equal to such Tax refund.
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     Section 5.7. Payments by or to Other Members of the Groups.     When appropriate under the circumstances to reflect the underlying liability for a Tax orentitlement to a Tax refund or Tax Benefit, a payment which is required to be made by or to aCompany may be made by or to another member of the Group to which that Company belongs, but nothingin this Section 5.7 shall relieve any Company of its obligations under this Agreement.     Section 5.8. Tax Benefits from Payment of Taxes.     With respect to any Tax Benefits received by a Cal Dive Group Member after the IPO ClosingDate that result from Taxes for which Parent is responsible hereunder, including as a result of theutilization of foreign tax credits and minimum tax credits, Cal Dive shall make a payment to Parentin an amount equal to the Tax Benefit received, with such payment being made within 30 daysfollowing the filing of the Tax Return reflecting the realization of such Tax Benefit. Forpurposes of this Section 5.8, the Cal Dive Group Member (i) shall be deemed to realize suchTax Benefit in the first Tax Year (or Tax Years) that such Tax Benefit (or the Tax Item giving riseto such Tax Benefit) may be realized under applicable Tax Law, (ii) shall be deemed to pay Tax atthe highest marginal corporate Tax rates in effect in each relevant Tax Year and (iii) shall bedeemed to have utilized the Tax Items attributable to the Taxes that are the responsibility ofParent giving rise to such Tax Benefit prior to similar Tax Items of any Cal Dive Group Member thatcould have otherwise been utilized by the Cal Dive Group Member.Section 6. Assistance and Cooperation; Retention of Tax Records.     Section 6.1. Assistance and Cooperation.     Cal Dive shall cause each Cal Dive Group Member to cooperate with Parent and its agents,including accounting firms and legal counsel, in connection with Tax matters relating to (i) thepreparation and filing of Tax Returns, (ii) determining the liability for and the amount of anyTaxes due (including estimated Taxes) or the right to an amount of any refund of Taxes and (iii)any Tax Contest. Such cooperation shall include making all information and documents, includingTax Records, in any Cal Dive Group Member’s possession relating to any Group Member available toParent for inspection during normal business hours upon reasonable notice and, upon request byParent, providing copies, at Cal Dive’s expense, of such information and documents, including TaxRecords. Cal Dive shall also make available to Parent, as reasonably requested and available,personnel (including each Cal Dive Group Member’s officers, directors, employees and agents)responsible for preparing, maintaining and interpreting information and documents relevant to Taxesand personnel reasonably required as witnesses or for purposes of providing information ordocuments in connection with any Tax Contest. Any information or documents provided under thisSection 6 shall be kept confidential by Parent, except as may otherwise be necessary inconnection with the filing of Tax Returns or in connection with any Tax Contest.
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     Section 6.2. Tax Records. (a) Retention of Tax Records.     Each Company shall preserve and keep all Tax Records exclusively relating to Separate CompanyTaxes of its Group for Pre-IPO Periods, and Parent shall preserve and keep all other Tax Recordsrelating to Taxes of the Groups for Pre-IPO Periods, for so long as the contents thereof may becomematerial in the administration of any matter under the Code or other applicable Tax Law, but in anyevent until the later of (i) the expiration of any applicable statutes of limitation, or (ii) sevenyears after the IPO Closing Date. If, prior to the expiration of the applicable statute oflimitation and such seven-year period, a Company reasonably determines that any Tax Records whichit is required to preserve and keep under this Section 6.2 are no longer material in theadministration of any matter under the Code or other applicable Tax Law, such Company may disposeof such Tax Records upon 90 days prior notice to the other Company. Such notice shall include alist of the Tax Records to be disposed of, describing in reasonable detail each file, book or otherrecord accumulation being disposed. The notified Company shall have the opportunity, at its costand expense, to copy or remove, within such 90-day period, all or any part of such Tax Records. (b) Access to Tax Records.     The Companies shall make available to members of the other Group for inspection and copyingduring normal business hours upon reasonable notice all Tax Records in their possession to theextent reasonably requested by any such member of the other Group in connection with thepreparation of Tax Returns, Tax Contests or the resolution of items under this Agreement.Section 7. Tax Contests.     Section 7.1. Notice.     Each Company shall provide prompt notice to the other Company of any pending or threatened Taxaudit, assessment or proceeding or other Tax Contest of which it becomes aware that could affectany Tax liability for which the other Company may be responsible under this Agreement;provided, however, that failure to give prompt notice shall not affect theindemnification obligations hereunder except to the extent the Indemnifying Company is actuallyprejudiced thereby. Such notice shall contain factual information (to the extent known) describingsuch audit, assessment or proceeding in reasonable detail and shall be accompanied by copies of anynotice and other documents received from any Tax Authority in respect of any such matters.     Section 7.2. Control of Tax Contests. (a) Tax Contests Relating to Tax Returns.     Except as otherwise provided in this Agreement, the Company responsible for preparing andfiling a Tax Return pursuant to Section 4 of this Agreement (the “ControllingCompany”) shall have the exclusive right, in its sole discretion, to control, contest andrepresent the interests of each Group in any Tax Contest relating to such Tax Return and toresolve, settle or agree to
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any deficiency, claim or adjustment proposed, asserted or assessed in connection with or as aresult of any such Tax Contest. The Controlling Company’s rights shall extend to any matterpertaining to the management and control of the Tax Contest, including execution of waivers, choiceof forum, scheduling of conferences and the resolution of any Tax Item. (b) Additional Taxes & Restructuring Taxes.     Notwithstanding any other provision of this Agreement to the contrary, Parent shall have theexclusive right, in its sole discretion, to control, contest and represent the interests of eachGroup in any Tax Contest relating, in whole or in part, to Additional Taxes and Restructuring Taxesand to resolve, settle or agree to any deficiency, claim or adjustment proposed, asserted orassessed in connection with or as a result of any such Tax Contest. Parent’s rights shall extendto any matter pertaining to the management and control of the Tax Contest, including execution ofwaivers, choice of forum, scheduling of conferences and the resolution of any Tax Item. (c) Other Taxes.     In the case of any Tax Contest with respect to any Other Tax for which Cal Dive is solelyresponsible under Section 2.5, Cal Dive shall have the exclusive right, in its solediscretion, to control, contest and represent the interests of the Cal Dive Group in such TaxContest and to resolve, settle or agree to any deficiency, claim or adjustment proposed, assertedor assessed in connection with or as a result of any such Tax Contest. With respect to any OtherTax not described in the preceding sentence, Parent shall have the exclusive right, in its solediscretion, to control, contest and represent the interests of the Groups in such Tax Contest andto resolve, settle or agree to any deficiency, claim or adjustment proposed, asserted or assessedin connection with or as a result of any such Tax Contest.     Section 7.3. Reimbursement of Expenses.     If the Indemnifying Company is not the Controlling Company, the Indemnifying Company shallreimburse the Controlling Company for its costs (including accountant’s fees, investigatory feesand fees and disbursements of tax counsel) (“Indemnification Expenses”) incurred in any TaxContest that are reasonably allocable to the portion of the contested Taxes that would be theresponsibility of the Indemnifying Company hereunder upon a Final Determination that such contestedTaxes are due. The Controlling Company shall provide the Indemnifying Company with a writtenstatement (a “Reimbursement Statement”) periodically (but not more often than monthly) thatsets forth the amount of the Controlling Company’s Indemnification Expenses since the most recentReimbursement Statement and due hereunder. Within 15 days of the Indemnifying Company’s receipt ofeach Reimbursement Statement, the Indemnifying Company shall pay to the Controlling Company thetotal amount of the Indemnification Expenses shown on such Reimbursement Statement.Section 8. Continuing Covenants.     Except as otherwise provided in this Agreement, each of Parent (for itself and each otherParent Group Member) and Cal Dive (for itself and each other Cal Dive Group Member) agrees (i) notto take any action reasonably expected to result in an increased Tax liability to another Group, areduction in a Tax Asset of another Group or an increased liability to another Group
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under this Agreement, (ii) not to take any action, fail to take any action or commit anyomission that would result in Additional Taxes and (iii) to take any action reasonably requested bya Company that would reasonably be expected to result in a Tax Benefit or avoid a Tax Detriment tosuch Company; provided, that such action does not result in any additional direct orindirect cost not fully compensated for by the requesting Company.Section 9. Dispute Resolution.     In the event that the Companies disagree as to the amount or calculation of any payment to bemade under this Agreement, or the interpretation or application of any provision under thisAgreement, the Companies shall attempt in good faith to resolve such dispute. If such dispute isnot resolved within 60 days following the commencement of the dispute, the Companies shall jointlyretain an Independent Firm, reasonably acceptable to the Companies, to resolve the dispute;provided, however, that in order to pursue any such dispute resolution under thisSection 9, the Indemnifying Company must first pay to the Indemnified Company, or place inan escrow account reasonably satisfactory to the Indemnified Company pending resolution of suchdispute, an amount equal to the payment which is the subject of such dispute. The Independent Firmshall act as an arbitrator to resolve all points of disagreement and its decision shall be finaland binding upon the Companies. Following the decision of the Independent Firm, the Companiesshall take, or cause to be taken, any action necessary to implement the decision of the IndependentFirm. The fees and expenses relating to the Independent Firm shall be borne by the Company thatdoes not prevail in the dispute resolution proceeding. Notwithstanding any provision of thisAgreement to the contrary, the provisions of Article VII of the Master Agreement shall apply to anydisagreement between the Companies relating to Restructuring Taxes or any matter relating to anyTax Contest.Section 10. General Provisions.     Section 10.1. Effectiveness; Termination of Prior Tax Allocation Agreements.     This Agreement shall be effective on the date first written above. Immediately prior to theclose of business on the date hereof (i) all Prior Tax Allocation Agreements shall be terminated,and (ii) amounts due under such Prior Tax Allocation Agreements as of the date hereof shall besettled. Upon such termination and settlement, no further payments by or to any Parent GroupMember or by or to any Cal Dive Group Member, with respect to such Prior Tax Allocation Agreements,shall be made, and all other rights and obligations resulting from such Prior Tax AllocationAgreements between the Companies and their Affiliates shall cease at such time. Any paymentspursuant to such Prior Tax Allocation Agreements shall be ignored for purposes of computing amountsdue under this Agreement.     Section 10.2. Survival of Obligations.     The representations, warranties, covenants and agreements set forth in this Agreement shall beunconditional and absolute and shall remain in effect without limitation as to time.
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     Section 10.3. Addresses and Notices.     All notices, consents, requests, instructions, approvals, statements, reports and othercommunications provided for herein shall be validly given, made or served, if in writing anddelivered personally or sent by registered mail, postage prepaid, or by facsimile transmission:     If to Parent:Helix Energy Solutions Group, Inc.