Document:

exh10-2.htm

 

  

  

  

 

EXHIBIT 10.2

 

 

 

MODU SALE AGREEMENT

 

THIS MODU SALE AGREEMENT (this “Agreement”) is entered into on the 23rd day of July, 2012, by and between

 

	
(1)  

	
TRANSOCEAN DISCOVERER 534 LLC, a company organized and existing under and by virtue of the laws of the State of Delaware (“Seller”); and

 

	
(2)  

	
HELIX ENERGY SOLUTIONS GROUP, INC., a company organized and existing and by virtue of the laws of the State of Minnesota (“Buyer”)

 

(the Buyer and Seller are referred to herein individually as a “Party” and collectively as the “Parties”).

 

WHEREAS the Seller is the owner of the Unit (as defined below) which is currently warm-stacked in Johor, Malaysia, and subject to laid-up status from ABS (as defined below); and

 

WHEREAS the Buyer wishes to purchase, and the Seller wishes to sell, the Unit on the terms and conditions set forth below;

 

NOW, THEREFORE for and in consideration of the premises and the mutual agreements contained herein, the Buyer and the Seller hereby agree as follows:

 

	
1.  

	
DEFINITIONS AND INTERPRETATION

 

	
1.1.  

	
Definitions.  In this Agreement, unless the context otherwise requires:

 

	
(a)  

	
“ABS” means the American Bureau of Shipping.

 

	
(b)  

	
“Affiliate” means, with respect to one of the Parties hereto, any other company or legal entity which (i) is owned or controlled by such Party, (ii) owns or controls such Party, or (iii) is under common ownership or control as such Party. As used in the preceding sentence, “control” shall mean the right or ability to control more than fifty percent (50%) of the voting rights of a company or entity.

 

	
(c)  

	
“Business Day” means a day on which banks are open for business in New York City, USA, London, UK,  and Singapore.

 

	
(d)  

	
“Certificate of Acceptance” means the Certificate of Acceptance of Delivery in the form of Schedule 2 to be delivered at the Closing in respect of the Unit.

 

	
(e)  

	
“Closing” means the consummation of the purchase and sale of the Unit.

 

	
(f)  

	
“Closing Date” means the date of the Closing with respect to the Unit in accordance with Article 7.1.

 

	
(g)  

	
“Closing Time” means the date and time stated on the Certificate of Acceptance of Delivery.

 

	
(h)  

	
“Damages” has the meaning given in Article 10.1.

 

	
(i)  

	
“Delivery Location” means the entrance to the Port of Singapore.

 

	
(j)  

	
“De Minimis Losses” means Partial Losses that would not reasonably be expected to cost more than two per cent (2%) of the Sale Price in the aggregate to repair, replace or rectify.

 

	
(k)  

	
“Gross Negligence” means conduct which a reasonable person would perceive to entail a high degree of risk of loss or physical injury to others coupled with heedlessness or indifference to

 

  

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or disregard of the consequences; provided that such heedlessness, indifference or disregard need not be conscious.

 

	
(l)  

	
“Group” means, in relation to a Party, (i) that Party and its Affiliates, (ii) contractors and sub-contractors of that Party and/or its Affiliates and (iii) the respective officers, directors, agents and employees of any person within (i) or (ii) above, provided that members of the Seller’s Group shall never be deemed to be members of the Buyer’s Group.

 

	
(m)  

	
“GST” means tax on goods and services chargeable on the transaction, and any similar replacement or additional tax such as Value Added Tax (VAT) and Sales Tax.

 

	
(n)  

	
“Lien” means a lien, mortgage, security interest, pledge or other charge or encumbrance.

 

	
(o)  

	
“Onboard Unit Equipment” means any machinery, engines, equipment, anchors, cable, pumps, tools, furniture, electrical, mechanical, or chemical, hydraulic and other systems, actually located onboard the Unit as listed in Part B of Schedule 1, incorporated into the Unit or attached to the Unit in each case at the date of the Inspection (as defined in Article 5.1(a)).

 

	
(p)  

	
“Onshore Unit Equipment” means the equipment belonging to the Unit which is not located thereon, but is designated together with its current location in Part A of Schedule 1.

 

	
(q)  

	
“Outside Date” means 31 August 2012, as may be postponed in accordance with Article 7.3 (or such later date as may be either (i) agreed between the Parties or (ii) if a Partial Loss occurs, required to allow Closing to occur pursuant to Article 9.2).

 

	
(r)  

	
“Partial Loss” means:

 

	
(i)  

	
any matter in respect of which the Unit is not in the Inspection Condition (as defined in Article 5.1(b) whether by reason of physical loss or damage to the Unit (or any part thereof) or otherwise; and/or

 

	
(ii)  

	
the inability of the Seller to deliver any Onboard Unit Equipment or Onshore Unit Equipment which the Seller is required to deliver at Closing pursuant to this Agreement, which damage is covered under Seller’s hull and machinery policies (irrespective of deductibles), but excludes a Total Loss.

 

	
(s)  

	
“Services Agreement” means the transition services agreement related to, and constituting a continuation of, the arrangement for the sale of the Unit, a form of which transition services agreement is attached hereto as Annex A, to be entered into between the Seller (or one of its Affiliates) and the Buyer on the Closing Date pursuant to which the Seller (or one of its Affiliates) shall, after Closing, arrange for certain services to be performed in order to to assist the Buyer in the overhaul of the Unit’s top drive and two gear boxes. Notwithstanding any stipulation to the contrary wherever contained, the Services Agreement will be solely goverened by the terms and conditions contained in such agreement.

 

	
(t)  

	
“Tax” means any tax, fee, levy, duty or charge, including income, export, capital gains, sales, value added, transfer, customs, stamp, registration tax, fee, levy, duty or charge, that is assessed by any country or any other governmental authority and any fines, penalties or interest with respect to the foregoing.

 

	
(u)  

	
“Total Loss” has the meaning given in Article 9.1.

 

	
(v)  

	
“Unit” means the deepwater floater “Discoverer 534”, of Sonat Offshore Discoverer Class Design, originally built in 1975 by Mitsui Engineering & Shipbuilding, Japan, registered in Panama, Official No. 7240-76-H , IMO Number 7403469, with a gross tonnage of 17,284 T (registered). The Unit shall also include:

 

	
(i)  

	
all non-proprietary equipment operating manuals that the Seller has in its possession;

 

  

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(ii)  

	
all non-proprietary software pertaining to the Unit except that specifically excluded below;

 

	
(iii)  

	
all other non-proprietary technical and regulatory documents pertaining to the Unit that the Seller has in its possession;

 

	
(iv)  

	
the Onshore Unit Equipment; and

 

	
(v)  

	
the Onboard Unit Equipment.

 

Notwithstanding the foregoing, for the avoidance of doubt, the Unit shall not include:

 

	
  

	
(1)

	
any item of any kind which is not actually located on, incorporated in or attached to the Unit except as is designated above or in Schedule 1; or

 

	
  

	
(2)

	
any form of business management and preventive maintenance software or any other software the license to which does not allow transfer without the licensor’s consent, provided that Seller shall provide its reasonable assistance to Buyer upon Buyer’s written request to obtain such consent; or

 

	
  

	
(3)

	
any equipment or material belonging to a third party and listed on Part C of Schedule 1.

 

Items included in the definition of the “Unit”, but not located thereon, shall be delivered to the Buyer at their then current location onshore.  The Buyer shall be responsible for the payment to all licensors of any fees, expenses or costs associated with the transfer of any licensed software from the Seller or the Seller’s Affiliates to the Buyer or the Buyer’s Affiliates, to the extent Buyer requests transfer of such licenses. In this Agreement “non-proprietary” means free from intellectual property rights that restrict or prohibit transfer or assignment, and, for the purposes of this Agreement, all systems and software, manuals and other documents that have been developed by the Seller or an Affiliate of the Seller and listed on Part D of Schedule 1 shall be deemed to be “proprietary”.

 

	
(w)  

	
“United States Dollars” (or “US$”) means the legal currency of the United States of America.

 

	
(x)  

	
“Wilful Misconduct” means any intentional wrongful act (or intentional wrongful failure to act) with knowledge that such act (or failure to act) is wrongful and which is intended to cause injury to a person or loss of or damage to property.

 

	
(y)  

	
“VAT” means value added tax chargeable under VATA 1994 and any similar replacement or additional tax.

 

	
(z)  

	
“VATA 1994” means the Value Added Tax Act 1994 (as amended).

 

	
1.2.  

	
Interpretation.  In this Agreement, unless the context otherwise requires:

 

	
(a)  

	
Article headings are inserted for convenience of reference only and shall be ignored in the construction of this Agreement;

 

	
(b)  

	
References to Articles and Schedules are to be construed as references to Articles of, and Schedules to, this Agreement and references to this Agreement include its Schedules;

 

	
(c)  

	
The words “include”, “includes” and “including” shall be deemed to be followed by the words “without limitation”;

 

	
(d)  

	
A reference to “law” or “regulation” includes any present or future regulation, rule, directive, requirement, request, or guideline (whether or not having the force of law) of any government entity, central bank or any self-regulatory or other supra-national authority;

 

  

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(e)  

	
The words “hereof,” “herein,” “hereto,” and “hereunder” and words of similar import shall, unless otherwise expressly specified, refer to this Agreement as a whole and not to any particular portion or provision of this Agreement;

 

	
(f)  

	
Words denoting the singular only shall include the plural and vice versa and words denoting a gender include every gender;

 

	
(g)  

	
All references in this Agreement to contracts, agreements, and other documents shall be deemed to refer to such contracts, agreements and other documents as amended, modified and supplemented from time to time;

 

	
(h)  

	
The exclusions and limitations of liability in Articles 4.1 of this Agreement shall be given a wide interpretation in favour of the Seller and the contra proferentem rule shall not in any case apply to the disadvantage of the Seller.  Where general words are used in any exclusion or limitation provision in favour of the Seller, such words shall not be limited by the nature of this Agreement, or by the character or effect of any breach of contract, breach of duty or any other act or omission (including negligence) alleged by the Buyer; and

 

	
(i)  

	
References to any statute or other legislative provision are to be construed as references to any such statute or other legislative provision as the same may be re-enacted or amended or substituted by any subsequent statute or legislative provision (whether before or after the date hereof) and shall include any regulations, orders, instruments or other subordinate legislation issued or made under such statute or legislative provision.

 

	
2.  

	
SALE AND PURCHASE

 

The Seller hereby agrees to sell the Unit to the Buyer, and the Buyer hereby agrees to purchase the Unit from the Seller, upon the terms and conditions set forth in this Agreement.

 

	
3.  

	
CONSIDERATION

 

	
3.1.  

	
Sale Price.  Subject to the terms hereof, the aggregate purchase price (the “Sale Price”) to be paid by the Buyer to the Seller for the Unit is EIGHTY-FIVE MILLION UNITED STATES DOLLARS (US$ 85,000,000).  The Buyer and the Seller hereby agree that the Sale Price represents a purchase of the Unit as a unit and not a sale of the separate components.  The Onshore Unit Equipment together with the Onboard Unit Equipment are included in the Sale Price and have no value separate and apart from the Unit.

 

	
3.2.  

	
Deposit.  As security for the fulfilment of this Agreement, the Buyer shall within five (5) calendar days of signing of this Agreement by both Parties, pay to the Seller a deposit equal to FOUR MILLION TWO HUNDRED FIFTY THOUSAND UNITED STATES DOLLARS (US$ 4,250,000), representing five percent (5%) of the Sale Price (the “Deposit”), in immediately available funds by wiring the same to the Seller’s Bank Account on terms that the Seller undertakes to refund the Deposit to the Buyer when obligated to do so pursuant to this Agreement. The Deposit (together with any interest accrued thereon) shall be refunded to the Buyer only:

 

	
(a)  

	
If the Unit suffers a Total Loss prior to Closing;

 

	
(b)  

	
If the condition precedent set forth in Article 6.2(a) is not satisfied; and/or

 

	
(c)  

	
If required pursuant to Articles 7.3(c) and 9.2(g).

 

Otherwise, the Deposit shall be non-refundable. If the Deposit is not paid in accordance with this Article 3.2, the Seller shall have the right to terminate this Agreement immediately by providing written notice to the Buyer.

 

  

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3.3.  

	
Closing Payment.  At Closing and subject to the provisions of this Agreement (including Articles 6 and 7 below), the Buyer shall pay to the Seller an amount (the “Closing Payment”) equal to the Sale Price less the Deposit.

 

	
3.4.  

	
Wire Instructions.  All payments to the Seller under this Agreement, including the Closing Payment, are to be made in United States Dollars in immediately available funds, in full, without any set-off or counterclaim whatsoever, free and clear of any deductions or withholdings, to the following bank account (the “Seller’s Bank Account”):

 

Bank: Wells Fargo Bank, N.A., 420 Montgomery Street, San Francisco

Swift: WFBI US 6S

ABA: 121000248

Acct #: 4020009528]

Account of: Transocean Discover 534 LLC

Attention: N/A

 

or such other account as may be designated by the Seller in writing from time to time.

 

	
3.5.  

	
If the Closing Payment is not paid in accordance with this Agreement and Seller is not in material breach of this Agreement, the Seller shall have the right to terminate this Agreement, in which case the Deposit (together with any interest accrued thereon) shall automatically be deemed to have been forfeited by the Buyer to the Seller, after which (save for any claims under Articles 10.1(a), 10.1(b) and/or 10.2(b)) neither Party shall have any claim of whatever nature against the other.  The Seller and the Buyer agree that the Deposit (together with any interest accrued thereon) represents a genuine and reasonable pre-estimate of the loss that the Seller would suffer in the event the Buyer fails to pay the Closing Payment in accordance with this Agreement.  Such Deposit is not a penalty but liquidated damages for the Seller’s loss of bargain.

 

	
4.  

	
REPRESENTATIONS AND WARRANTIES

 

	
4.1.  

	
Disclaimer of Warranties.  The Parties agree that at the Closing Time, the Unit will be delivered to the Buyer subject to laid up status from ABS and the Seller makes no representations or warranties as to what surveys, inspections or works may be required upon, or prior to reactivation of the Unit. The Buyer hereby represents and warrants to the Seller that the Buyer has inspected the Unit and its associated classification records and is fully satisfied with the condition and status thereof. The Parties agree that there is to be no dry-docking or diver’s inspection of the Unit prior to delivery or at the Closing Time. Except only as may be otherwise expressly stated in Article 4.3 below, the Buyer hereby acknowledges that the sale, purchase and delivery of the Unit is on an “AS IS, WHERE IS” basis, with all faults (whether or not reasonably discoverable by the Buyer or its surveyors on or before Closing) accepted by the Buyer, and that this Agreement and the sale and purchase of the Unit are WITHOUT ANY REPRESENTATION, WARRANTY, GUARANTY OR CONDITION, EXPRESSED OR IMPLIED, BY THE SELLER, AND THAT THE SELLER DOES NOT MAKE ANY WARRANTY, GUARANTY, OR REPRESENTATION OF ANY KIND, EITHER EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, WITH REGARD TO THE UNIT, INCLUDING AS TO SEAWORTHINESS, VALUE, DESIGN, OPERATION, MERCHANTABILITY, FITNESS FOR USE OR PARTICULAR PURPOSE OF THE UNIT OR AS TO THE ELIGIBILITY OF THE UNIT FOR ANY PARTICULAR TRADE, AND NOTWITHSTANDING ANYTHING ELSE CONTAINED IN THIS AGREEMENT THE BUYER HEREBY WAIVES AS AGAINST THE SELLER AND ITS AFFILIATES ALL WARRANTIES, REMEDIES AND LIABILITIES ARISING BY LAW OR OTHERWISE (INCLUDING ON THE BASIS OF NEGLIGENCE OF ANY DEGREE) WITH RESPECT TO THE UNIT.  As between the Seller and the Buyer, the execution by the Buyer of the Certificate of Acceptance shall be conclusive proof that the Unit is in full and complete compliance with all requirements of this Agreement other than as stated in Article 4.3.

 

	
4.2.  

	
Buyer’s Representations.  The Buyer hereby represents, covenants and warrants to the Seller the following:

 

	
(a)  

	
The Buyer is duly incorporated and validly existing under the laws of its country of incorporation and has full legal right, power and authority to enter into this Agreement and any other documents to which it is, or may become, a party which are referred to in this Agreement

 

  

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and to perform its obligations hereunder and thereunder.  The Buyer has power and authority to enter into and perform this Agreement and those documents and the execution and delivery of this Agreement and those documents and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorised and no other corporate proceeding on the part of the Buyer is necessary to authorise the execution and delivery of this Agreement and any other documents relating thereto or to consummate the transactions contemplated hereby or thereby;

 

	
(b)  

	
The execution or delivery of this Agreement and the other documents to which the Buyer is, or may become, a party which are referred to in this Agreement, and completion of all transactions contemplated hereby, will not either now, or after notice or lapse of time, or both:

 

	
1.  

	
conflict with, violate, result in a breach or right of termination or acceleration under or require any consent or authorization under any of the terms, conditions or provisions of any mortgage, indenture, agreement, loan, guarantee, note, bond, permit, license, lease, grant, patent, or other undertaking or authorisation, written or oral, to or by which the Buyer is a party or is bound;

 

	
2.  

	
conflict with, result in a breach of or require any consent under any of the terms, conditions or provisions of the Buyer’s certificate of incorporation, by-laws or equivalent governing instruments; or

 

	
3.  

	
result in a violation by the Buyer of any judgment, decree, order (including an executive order), award, writ, injunction or decree applicable to, or binding upon, the Buyer.

 

	
(c)  

	
This Agreement will be conducted in accordance with: (i) all applicable United States export and re-export controls and economic sanctions, including the International Emergency Economic Powers Act, the Export Administration Regulations and all other applicable economic sanctions laws and regulations, including the regulations set forth in 31 CFR Chapter V; and (ii) other applicable economic sanctions and export control laws in other countries in which the Buyer does business.  The Buyer warrants and covenants that it will not transfer, export or re-export the items that are subject of this Agreement to: Iran, Sudan, Cuba, Syria or North Korea; entities owned or controlled by the governments of Iran or Sudan; any Cuban national, wherever located; or any individual or entity included on the List of Specially Designated Nationals and Blocked Persons maintained by the US Treasury Department’s Office of Foreign Assets Control, except to the extent appropriate licenses are first obtained by Buyer any such purpose.

 

	
4.3.  

	
Seller’s Representations.  The Seller hereby represents, covenants and warrants to the Buyer the following:

 

	
(a)  

	
The Seller is the legal and beneficial owner of the Unit, the Onshore Unit Equipment and the Onboard Unit Equipment, and there are no employees, operations or business that will attach to the Unit and that the Buyer will assume;

 

	
(b)  

	
On Closing, the Unit, the Onshore Unit Equipment and the Onboard Unit Equipment  will be free of any and all Liens;

 

	
(c)  

	
The Seller is duly formed and validly existing under the laws of its country of formation and has full legal right, power and authority to enter into this Agreement, and to perform its obligations hereunder.  The Seller has power and authority to enter into and perform this Agreement and the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorised and no other corporate proceeding on the part of the Seller is necessary to authorise the execution and delivery of this Agreement or to consummate the transactions contemplated hereby;

 

	
(d)  

	
The execution or delivery of this Agreement and completion of all transactions contemplated hereby, will not either now, or after notice or lapse of time, or both:

 

  

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1.  

	
conflict with, violate, result in a breach or right of termination or acceleration under or require any consent or authorization under any of the terms, conditions or provisions of any mortgage, indenture, agreement, loan, guarantee, note, bond, permit, license, lease, grant, patent, or other undertaking or authorization, written or oral, to or by which the Seller is a party or is bound;

 

	
2.  

	
conflict with, result in a breach of or require any consent under any of the terms, conditions or provisions of Seller’s certificate of formation, by-laws or equivalent governing instruments; or

 

	
3.  

	
result in a violation by the Seller of any judgment, decree, order (including an executive order), award, writ, injunction or decree applicable to, or binding upon, the Seller.

 

	
(e)  

	
There are to Seller’s knowledge no claims pending or threatened against Seller or the Unit that could reasonably be anticipated to result in a Lien on the Unit.

 

	
(f)  

	
The Seller has not executed a contract that obligates the Unit to perform any drilling or other services.

 

	
5.  

	
CERTAIN COVENANTS

 

	
5.1.  

	
Condition of Unit for Purposes of Closing.

 

	
(a)  

	
The Buyer hereby represents and warrants to the Seller that the Buyer (or its appointed representative) inspected the Unit (including its equipment on board and onshore) and its associated ABS classification records in the period from 30 May 2012 to 7 June 2012 (the “Inspection”) and accepts and is fully satisfied with the condition and status thereof. The Parties agree that there is to be no dry-docking or diver’s inspection of the Unit prior to delivery. The Seller further agrees, subject to the Buyer’s payment of the Deposit, to make the captain, chief engineer, ETO, and drilling superintendent of the Unit available for a period of five (5) consecutive calendar days to perform a walk through of the Unit with the Buyer’s project team and provide responses to Buyer’s reasonable inquiries regarding the status of the Unit.

 

	
(b)  

	
The Seller agrees that, solely for the purpose of determining whether the Buyer shall have the obligation to close, the Unit is to be in, at the Closing Date, the same overall condition, irrespective of any class conditions or recommendations, as at the time of the Inspection, fair wear and tear excepted and subject to De Minimis Losses and the provisions of Article 9.2 (“Inspection Condition”); PROVIDED THAT if the Buyer fails to notify the Seller prior to the Closing Date that the Unit is not in such Inspection Condition, the Unit will be conclusively presumed to be in such Inspection Condition at the Closing Date for all purposes of this Agreement and the Buyer shall have no further rights hereunder in connection with the actual condition or composition of the Unit.  The Buyer shall provide written notice to the Seller prior to the Closing in the event that the Buyer believes that the Unit is not in the Inspection Condition, and/or that the composition of the Unit is not as required by this Agreement. Any such notice shall specifically list the deficiencies claimed by the Buyer and must be subject to reasonable verification by the Seller (with any actual deficiencies referred to herein as “Deficiencies”). In the event the Buyer notifies the Seller of Deficiencies, such Deficiencies shall be subject to the provisions of Article 9.2.  Under no circumstances shall the Seller be liable or obligated after the Closing Date to the Buyer with regard to the physical condition or composition of the Unit, the Onshore Unit Equipment or the Onboard Unit Equipment unless otherwise stated in Article 4.3 above, and the Buyer hereby agrees that all rights it may otherwise have in connection therewith shall be automatically and irrevocably waived from and after Closing without any further act of the Buyer or the Seller.

 

	
(c)  

	
Subject to (i) the payment of the Deposit by the Buyer pursuant to Article 3.2 hereto, (ii) the Buyer signing the Seller’s letters of indemnity in the form set out in Schedule 3 to this Agreement, and (iii) the Buyer providing the Seller with written evidence that the Buyer has procured suitable insurance (including waiver of subrogation in favour of the Seller’s group) to adequately cover the risk of injury to, illness or death of such representatives, the Buyer shall

 

  

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have the right to put three (3) representatives on board the Unit at the Buyer’s own cost, risk and liability up to two (2) weeks prior to the Closing to confirm that the Unit is in the Inspection Condition; PROVIDED, HOWEVER, that any such attendance shall not be conducted in such a way as to interfere in any material respect with the operation of the Unit.  In the event the Closing of the sale and purchase of the Unit does not take place for any reason, the Buyer shall immediately remove, at the Buyer’s expense, any person the Buyer has placed on the Unit.  For the avoidance of doubt, Buyer’s representatives shall be forbidden from soliciting any employees of the Seller or its Affiliates without the prior written consent of the Seller pursuant to Article 16.1 below.  Seller shall have the right to remove Buyer’s representatives for any reason and Buyer shall have the right to replace such representatives at Buyer’s cost.

 

	
(d)  

	
For the avoidance of doubt, the Buyer agrees that no re-activation of any part of the Unit from its warm stacked status shall be required on the part of the Seller in order for the Unit to be in the Inspection Condition. There shall be no testing of the functionality of any part of the Unit or its equipment prior to delivery. For the avoidance of doubt, any deterioration of the Unit due to normal corrosion after the date of the Inspection for the time and place of the Unit’s location shall be treated as fair wear and tear.

 

	
6.  

	
CONDITIONS PRECEDENT

 

	
6.1.  

	
Buyer’s Conditions Precedent.  The obligations of the Buyer to consummate the transactions to be performed by it in connection with the Closing are, in all respects, subject to satisfaction or waiver by the Buyer of the below-listed conditions precedent:

 

	
(a)  

	
The Unit shall be in the Inspection Condition; and

 

	
(b)  

	
The representations and warranties of the Seller set forth in Article 4.3 shall be true and correct in all material respects as of the Closing Date with the same force and effect as if such representations and warranties had been made at and as of the Closing Date.

 

	
6.2.  

	
Seller’s Conditions Precedent.  The obligations of the Seller to consummate the transactions to be performed by it in connection with the Closing are, in all respects, subject to satisfaction (or waiver by the Seller) of the below-listed conditions precedent:

 

	
(a)  

	
Issuance of any required authorization, sanction, licence or approval for the transactions contemplated by this Agreement, under relevant laws or agreements, including those required by all relevant customs laws and notifications and by flagging and registry authorities for transfer of the Unit to the Delivery Location. The Seller shall use its reasonable endeavors to obtain such approvals as soon as reasonably practicable; and

 

	
(b)  

	
The representations and warranties of the Buyer set forth in Article 4.2 shall be true and correct in all material respects as of the Closing Date with the same force and effect as if such representations and warranties had been made at and as of the Closing Date.

 

	
7.  

	
CLOSING

 

	
7.1.  

	
Closing.  Subject to the other terms and conditions of this Agreement, the Seller shall sell and the Buyer shall purchase the Unit, and the Closing shall be held in London at the offices of Ince & Co at International House, 1 St Katharine’s Way, London E1W 1AY. The Closing shall take place on a Business Day nominated in writing by the Seller (the “Closing Date”), which shall be a date between July 23, 2012 and on or before the Outside Date, but as soon as reasonably practicable. The Seller shall provide the Buyer with eighteen (18) and five (5) calendar days’ approximate notice and three (3) days’ definite notice of when the Seller intends to deliver the Unit.

 

	
7.2.  

	
Documents to be Delivered by Seller and Buyer.  On the Closing Date, representatives of the Seller and the Buyer shall meet as contemplated above for the purpose of completing the sale and purchase of the Unit.

 

  

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(a)  

	
Seller’s Deliveries.  Simultaneously with the Seller’s receipt of  Sale Price and delivery of the items listed in Article 7.2(b), the Seller shall deliver to the Buyer the following in respect of the Unit:

 

	
1.  

	
An executed (and, if necessary, notarized and/or apostilled) Bill of Sale for the Unit in a form acceptable for recording at the country in which the Buyers are to register the Unit (the “Bill of Sale”), and any other documents reasonably required for Buyer to change the registry of the Unit. The Seller must be informed at least 10 Business Days prior to the Closing Date of the Country or the Country shall be presumed to be the Republic of Panama;

 

	
2.  

	
A certified copy of a resolution of the board of directors of the Seller approving the terms of this Agreement and the transactions contemplated herein;

 

	
3.  

	
A Certificate of Good Standing of the Seller (or the equivalent document in the country of incorporation of the Seller);

 

	
4.  

	
A certified copy of a Certificate of Incumbency for the Seller (or the equivalent document in the country of incorporation of the Seller) showing a list of the current directors and officers of the Seller;

 

	
5.  

	
A certificate in English stating that the Seller’s representations, covenants and warranties made in Article 4.3 are true and correct as of the Closing Date.

 

	
6.  

	
(If separate from the resolution referred to in Article 7.2(a)2 above) an original Power of Attorney of the Seller, duly notarised and apostilled, authorising the Seller’s appointed representatives to execute all necessary documents and take all necessary action in order to sell the Unit to the Buyer;

 

	
7.  

	
Any non-proprietary technical or regulatory documentation pertaining to the Unit which the Seller may have in its possession or, to the Seller’s knowledge, the possession of any of its Affiliates and which is not already aboard the Unit, including applicable class certificates, class attestations, loadline certificates, operating manuals, radio licenses, and engineering drawings; PROVIDED, HOWEVER that the Seller does not represent that (a) it has in its possession (or shall have in its possession at Closing) any such documentation, (b) any documentation that it does have (or may have at Closing) is (or shall be) current, valid or correct, and (c) the Unit is (or shall be) capable of obtaining any needed documentation;  PROVIDED further that the Seller shall have no obligation to seek, obtain or deliver to the Buyer any documentation which is not in its possession or control at Closing.  The Buyer shall also be entitled to retain a hard copy of the Unit’s preventive maintenance records, PROVIDED that this documentation may be provided to the Buyer’s representatives either onboard the Unit or at the onshore location of the documentation; and

 

	
8.  

	
A certified copy of a Transcript of Register for the Unit dated no more than five (5) Business Days prior to the Closing Date reflecting that there are no mortgages, liens or other encumbrances recorded on the Unit.

 

	
(b)  

	
Buyer’s Deliveries.  Simultaneously with delivery of the Unit as contemplated herein  and the items set forth in Article 7.2(a), the Buyer shall pay the Sale Price to the Seller in full and free of bank charges in accordance with Article 3.3 and 3.4, and shall deliver to the Seller the following in respect of the Unit:

 

	
1.  

	
A receipt from the bank of the Buyer evidencing the irrevocable and unconditional transfer of the Closing Payment  to the Seller's Bank Account (provided that, for the avoidance of doubt, Closing shall not take place until the Closing Payment has been received into the Seller’s Bank Account);

 

	
2.  

	
A certified copy in English of a resolution of the board of directors of the Buyer approving the terms of this Agreement and the transactions contemplated herein;

 

  

9

  

 

	
3.  

	
A Certificate of Good Standing of the Buyer in English (or the equivalent documents in the country of incorporation of the Buyer);

 

	
4.  

	
Certified copies of Certificate of Incumbency for the Buyer (or the equivalent documents in the country of incorporation of the Buyer) showing a list of the current directors and officers of the Buyer with a certified translation in English;

 

	
5.  

	
Original Power of Attorney in English of the Buyer, duly notarised and apostilled, authorising the Buyer’s appointed representatives to execute all necessary documents and take all necessary action in order to purchase the Unit from the Seller; and

 

	
6.  

	
A certificate in English stating that the Buyer’s representations, covenants and warranties made in Article 4.2 are true and correct as of the Closing Date.

 

	
7.3. 

	
Outside Date.

 

	
(a)  

	
In the event that the Closing does not occur on or before the Outside Date or Extended Outside Date (as applicable), for whatever reason (save as provided in Article 3.2), either Party may terminate this Agreement by providing written notice to the other, in which case the Deposit (together with any interest accrued thereon) shall be retained by the Seller and neither Party shall have any further obligation hereunder to the other Party.

 

	
(b)  

	
In the event that the Closing does not occur on or before the Outside Date by reason of a breach of this Agreement by the Seller, the Parties hereby agree that the Closing Date shall be extended by a period of 10 (ten) Business Days (the “Extended Outside Date”) in order to allow the Seller time to cure such breach and proceed to Closing.

 

	
(c)

	
In the event that the Closing does not occur on or before the Extended Outside Date by reason of a breach of this Agreement by the Seller, the Buyer may terminate this Agreement by providing written notice to the Seller, in which case the Deposit together with any interest accrued thereon shall be returned to the Buyer within 5 days of termination thereafter, after which (save for any claims under Articles 10.1(a), 10.1(b) and/or 10.2(b)) neither Party shall have any claim of whatever nature against the other.

 

	
8.  

	
DELIVERY AND POST-CLOSING MATTERS

 

	
8.1.  

	
The Unit shall be delivered to the Buyer free from all Liens.  Concurrently with the delivery of the Bill of Sale, (i) the Seller shall deliver to the Buyer, and the Buyer shall accept from the Seller, the Unit, and (ii) each Party shall acknowledge such delivery and acceptance by executing and delivering the Certificate of Acceptance.  The risk of loss, and title to the Unit, shall pass to the Buyer as of the Closing Time.

 

	
8.2.  

	
The Unit with the Onboard Unit Equipment shall be delivered to the Delivery Location. Seller shall at its cost and expense prepare the Unit to be transferred from its current location to the Delivery Location and secure all licenses and permits relating thereto.

 

	
8.3.  

	
Buyer shall take control of the Unit after Seller confirms that the Sale Payment has been received into the Seller’s Bank Account, at which time Buyer may move the Unit from the Delivery Location.

 

	
8.4.  

	
Upon delivery of the Unit pursuant to Article 8.1 above, the Buyer shall change the name of the Unit and within thirty (30) days alter all markings on the Unit accordingly.

 

	
8.5.  

	
The Buyer shall be responsible for obtaining any licenses, permits and other similar governmental or other authorizations as well as for filing appropriate documentation as required by the laws of the country in which the Unit is delivered, in relation to the movement of the Unit from and after the Closing.  This includes but is not limited to customs declarations, authorizations, permits and licenses.

 

	
8.6.  

	
The Buyer shall, no later than thirty (30) calendar days after the Closing and at its sole cost and expense remove all equipment specified in Schedule 1 Part A which is located onshore at the yard(s). If the Buyer has not removed such equipment after the said period of thirty (30) days, the Buyer

 

  

10

  

 

	
  

	
acknowledges and agrees that the Seller has the right to dispose of the said equipment in any manner it sees fit.  Such disposal and the cost of storage and or demurrage until such time that the equipment is suitably disposed shall be at the Buyer’s cost.

 

	
8.7.  

	
Upon Closing, the Buyer and Seller shall enter into the Services Agreement.

 

	
8.8.  

	
The Buyer agrees to provide to the Seller and the Seller agrees to provide to the Buyer, all requisite documentation and assistance as may be required for completion of any customs procedures and formalities associated with this sale.

 

	
8.9.  

	
The Buyer warrants that, for a period of two (2) years following the Closing, the Unit shall not be used for conventional drilling purposes, except for top hole drilling services provided as ancillary services with respect  to the plugging and abandoning of a well.

 

	
9.  

	
TOTAL LOSS;  PARTIAL LOSS

 

	
9.1.  

	
Total Loss. If during the period between the date of this Agreement and the Closing Time, there is an actual total casualty loss, constructive total casualty loss or compromised total casualty loss (collectively, a “Total Loss”) of the Unit, this Agreement shall terminate and neither Party shall have any further claim of whatsoever nature against the other.

 

	
9.2.  

	
Partial Loss.

 

	
(a)  

	
If during the period between the date of this Agreement and the Closing Time, the Unit suffers a Partial Loss, then the terms of this Article 9.2 shall apply and the Seller shall provide written notice to the Buyer of such Partial Loss.

 

	
(b)  

	
The Parties agree that the Seller shall not be required to remedy De Minimis Losses, whether pursuant to Articles 5.1 or 9 or otherwise.  In respect of Partial Losses other than De Minimis Losses, the following provisions of this Article 9.2 shall apply.

 

	
(c)  

	
At the time of giving the notice referred to in paragraph (a) above, the Seller shall either (i) notify the Buyer that the Seller will perform the work necessary to cause the Unit to meet the requirements specified herein (“Repair Work”), or (ii) notify the Buyer that the Seller does not intend to perform the Repair Work, in which case the provisions of Articles 9.2(d)and 9.2(e) shall apply.

 

	
(d)  

	
If the Seller notifies the Buyer that it does not intend to perform the Repair Work, and the Parties are able to agree in writing on the costs of such Repair Work or other acceptable Sale Price reduction within ten (10) Business Days of the Buyer’s receipt of notice under paragraph (a) above, the Sale Price shall be reduced by such agreed amount and the sale shall be completed as soon as reasonably practicable.

 

	
(e)  

	
If the Seller notifies the Buyer that it does not intend to perform such Repair Work, and the Parties are unable to agree in writing on the costs of the Repair Work or other acceptable Sale Price reduction within the time period specified in Article 9.2(d), then the Parties shall mandate Noble Denton to assess the reasonable cost of carrying out such Repair Work.  Noble Denton shall provide an assessment of such cost with reasons and the Parties agree that such amount shall constitute the amount for the Repair Work in question and such assessment shall be final and binding upon both Parties and the Sale Price shall be reduced by such amount and the sale shall be completed as soon as reasonably practicable.

 

	
(f)  

	
If, under Article 9.2(e), Noble Denton is required to assess any damage to the Unit and quantify the cost of any Repair Work, Noble Denton shall be instructed jointly by the Parties to carry out such assessment and quantification, such appointment expressly to require Noble Denton to act impartially when carrying out such assessment and quantification.  The cost of any such appointment is to be shared equally between the Parties.

 

	
(g)  

	
If the Repair Work in the reasonable opinion of Noble Denton is likely to last more than ninety (90) calendar days the Buyer shall have the right to terminate this Agreement by notice to the 

 

  

11

  

 

	
 

	
Seller.  In such case, the Deposit shall be refunded to the Buyer within five (5) Business Days of the Seller’s receipt of such notice.

 

	
10.  

	
INDEMNITY AND LIABILITY

 

	
10.1.  

	
Buyer’s Indemnities.  The Buyer shall defend, release, indemnify and hold harmless the Seller’s Group from and against all liens, claims, demands, causes of action, liability, damages, costs, expenses and losses (including attorneys’ fees) (collectively, “Damages”) which arise out of or in connection with:

 

	
(a)  

	
injury to, illness or death of any member of the Buyer’s Group; and/or

 

	
(b)  

	
loss of or damage to the property of any member of the Buyer’s Group (including the Unit on or after the Closing Time); and/or

 

	
(c)  

	
the presence of employees, subcontractors, invitees, customers and/or agents of the Buyer or its Group on the Unit; and/or

 

	
(d)  

	
the Unit or the operation of the Unit to the extent the alleged event giving rise to such claim occurred on or after the Closing Time; and/or

 

	
(e)  

	
any breach of any of the representations or warranties made by the Buyer in Article 4.2 or any breach by the Buyer of any of the representations, warranties, covenants or agreements set forth in this Agreement.

 

	
10.2.  

	
Seller’s Indemnities.  Subject to Article 10.1 above and the other provisions of this Agreement, including Articles 4.1 and 11, the Seller shall release, indemnify, defend and hold the Buyer harmless from and against any Damages arising out of or in connection with:

 

	
(a)  

	
claims made against the Unit which have been incurred prior to the Closing Time; and/or

 

	
(b)  

	
any breach of any of the representations or warranties made by the Seller in Article 4.3 or any breach by the Seller of any of the representations, warranties, covenants or agreements set forth in this Agreement.

 

	
10.3.  

	
General Indemnity and Liability Provisions.

 

	
(a)  

	
Application of Indemnities.

 

	
  

	
(i)

	
No person shall be entitled to rely on or enforce any indemnity or any exclusion or limitation of liability contained in this Agreement to recover (or exclude or limit that person’s liability in respect of) any losses caused by that person’s Gross Negligence or Wilful Misconduct, or by the Gross Negligence or Wilful Misconduct of any other person within the same Group.

 

	
  

	
(ii)

	
Subject only to paragraph (i) above, all of the indemnities, allocations of risk, limitations and exclusions of liability and other agreements contained in this Article 10 or elsewhere in this Agreement shall apply (to the extent permitted by law) notwithstanding the negligence of any person or party, strict liability, liability imposed by statute, or any other breach of obligation of any person or any other event or condition.  Indemnified Parties (as defined in paragraph (c) below) shall be entitled to reasonable attorneys’ fees incurred in asserting or enforcing the indemnities granted herein.

 

	
(b)  

	
Consequential Damages.  Without prejudice to any provisions of this Agreement, in no event shall either the Seller, on the one hand, or the Buyer, on the other, be liable to the other (or to any other party claiming indemnification hereunder) for any loss of use, loss of revenue, profit or anticipated profit, delay, business interruption and other similar losses, whether direct or indirect, and any indirect or consequential losses whatsoever.

 

  

12

  

 

	
(c)  

	
Recouped Amount. If, after an indemnity payment (an “Indemnity Payment”) is made under this Article 10 by a Party owing a duty of indemnification hereunder (an “Indemnifying Party”) to a party claiming indemnification (an “Indemnified Party”), any Indemnified Party receives, directly or indirectly, any refund, rebate, credit, settlement or other payment or amount from any person relating to such Indemnity Payment (a “Recouped Amount”) which was not included in the Indemnifying Party’s favour when calculating the Indemnity Payment, the Indemnified Party shall promptly inform the Indemnifying Party and pay an amount equal to the Recouped Amount to the Indemnifying Party. In addition, if any Indemnified Party becomes aware of circumstances that could reasonably give rise to a Recouped Amount, the Indemnified Party shall promptly so notify the Indemnifying Party and shall use commercially reasonable efforts to collect and obtain such potential Recouped Amount.

 

	
(d)  

	
Indemnification Notices for Claims. If any Indemnified Party is seeking indemnification under this Agreement from an Indemnified Party, the Indemnified Party shall give prompt written notice of the claim to the Indemnifying Party describing in reasonable detail the nature of the claim, an estimate of the loss or damages attributable to the claim (which estimate will not be conclusive or binding) and the basis for the Indemnified Party’s request for indemnification hereunder.

 

	
11.  

	
TAXES AND FEES

 

	
11.1.  

	
Apportionment of Tax Liabilities.

 

	
(a)  

	
The Seller shall solely bear all corporate income tax and/or, capital gains tax assessed on account of this sale. The Seller shall bear all Taxes and customs charges resulting from the move of the Unit to the Delivery Location.

 

	
(b)  

	
If any GST or any indirect taxes of similar nature are chargeable on the Sale Price of the Unit, the Seller shall submit to the Buyer an invoice containing the GST amount (or an invoice containing any indirect tax of similar nature) and the Buyer shall pay the Seller the amount of such GST (or any indirect tax of similar nature) on presentation to the Buyer of such GST invoice.

 

	
(c)  

	
Except as otherwise stated in paragraph (a) above, the Buyer shall bear all other Taxes including all transfer, registration, customs duties, stamp duties, fees, import, excise and any other type of Taxes, fees and charges which are assessed on account of or in connection with the sale or a deemed importation of the Unit as a result of or in connection with the sale, whether or not levied directly upon the Buyer or an Affiliate of the Buyer, and the Sale Price shall be net of such amounts.  As used herein, the expression “Taxes, fees and charges” shall include fines, penalties and any interest with respect to Taxes, fees and charges.

 

	
11.2.  

	
Seller’s Tax Indemnity to Buyer etc.  The Seller shall be liable for and shall indemnify the Buyer and the Buyer’s Affiliates against any and all Damages arising out of or relating to any Tax for which the Seller is responsible under Article 11.1.

 

	
11.3.  

	
Buyer’s Tax Indemnity to Seller etc.  The Buyer shall be liable for and shall indemnify the Seller and the Seller’s Affiliates against any and all Damages arising out of or relating to any Tax for which the Buyer is responsible under Article 11.1.

 

	
11.4.  

	
Registry Fees.  Any fees and expenses in connection with the registration under Buyer’s flag shall be for Buyer’s account, whereas similar charges in connection with the closing of the Seller’s registry shall be for Seller’s account.

 

	
12.  

	
CHOICE OF LAW AND VENUE

 

	
12.1.  

	
Choice of Law and Jurisdiction.  This Agreement shall be governed by and construed in accordance with English law, without regard to its rules of conflict of laws that would require the application of laws of a different jurisdiction.  TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS AND SUBMITS TO THE EXCLUSIVE JURISDICTION OF

 

 

  

13

  

	
  

	
THE COURTS OF ENGLAND IN LONDON (THE “CHOSEN COURTS”), FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT AND AGREES NOT TO COMMENCE ANY SUCH PROCEEDINGS EXCEPT IN THE CHOSEN COURTS.  EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN THE CHOSEN COURTS AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN THE CHOSEN COURTS HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

	
12.2.  

	
Seller’s Agent for Service of Process.  The Seller hereby irrevocably appoints Ince Process Agents Limited at its registered office (presently being at 5th floor, International House, 1 St Katharine’s Way, London E1W 1AY) as its agent to receive and accept on its behalf any process or other document relating to any proceedings in the English courts in connection with this Agreement.

 

	
12.3.  

	
Buyer’s Agent for Service of Process.  The Buyer hereby irrevocably appoints EC3 Services Limited at its registered office in England (presently being at St Botolph Building, 138 Houndsditch, London EC3A 7AR) (or such other person being a firm of solicitors resident in England as it may substitute by notice) as its agents to receive and accept on its behalf any process or other document relating to any proceedings in the English courts in connection with this Agreement.

 

	
13.  

	
COST OF THE TRANSACTION; AGENCY FEES

 

	
13.1.  

	
Whether or not the transactions contemplated hereby shall be consummated, the Parties agree that each Party will pay the fees, expenses and disbursements of such Party and its agents, representatives, and counsel incurred in connection with the subject matter of this Agreement.  In particular the Buyer shall be fully responsible for the costs incurred by it in carrying out the inspection of the Unit, inclusive of logistical requirements such as helicopter flights. The Seller shall be responsible for any payment of the brokerage fees to Pareto Offshore AS.

 

	
14.  

	
NOTICES

 

	
14.1.  

	
All notices and other communications (“Notices”) under this Agreement shall be in writing and shall be marked for the attention of the person, and sent to the address, or fax number, given in this Article (or such other address, fax number or person as the recipient may notify the other party in accordance with the provisions of this Article) and shall be delivered personally, or sent by fax, or by international courier service.

 

	
14.2.  

	
A Notice shall be deemed to have been given:

 

	
(a)  

	
if delivered personally, at the time of delivery; or

 

	
(b)  

	
in the case of fax, at the time of transmission; or

 

	
(c)  

	
in the case of delivery by international courier service, two (2) Business Days after being delivered into the custody of such service; and

 

if deemed receipt under the previous paragraphs of this Article 14.2 is not within business hours of the place of receipt (meaning 9 am to 5.30 pm Monday to Friday on a day that is not a public holiday in the place of receipt), when business next starts in the place of receipt.  To prove service it is sufficient to prove that the Notice was transmitted by fax to the fax number of the party or, in the case of international courier service, that the envelope containing the notice was properly addressed and delivered to the courier company.

 

	
14.3.  

	
The addresses for service of Notice are:

 

  

14

  

 

Seller:

 

Transocean Discoverer 534 LLC

4 Greenway Plaza

Houston, Texas 77046

Attn:  Larry D. McMahan

 

 

with copies to:

 

Transocean Management Limited

Chemin de Blandonnet 10

CH-1214 Vernier

Switzerland

Attn: Christophe Raimbault

Fax:  +41 22 930 9094

 

and

 

Ince & Co LLP

International House

1 St Katharine’s Way

London E1W 1AY

UK

Fax: +44 20 7481 4968

Ref: RBE/LSJ/8465/8777

 

Buyer:

 

 

Helix Energy Solutions Group, Inc.

400 North Sam Houston Parkway East, Suite 400

Houston, Texas 77006

 

For the attention of:                    Owen Kratz

Fax number:                                +1 281 618 0505

 

with copy to:

 

Helix Energy Solutions Group, Inc.

400 North Sam Houston Parkway East, Suite 400

Houston, Texas 77006

 

For the attention of:                    Alisa Johnson

Fax number:                                +1 281 618 0505

 

	
15.  

	
ENTIRE AGREEMENT

 

	
15.1.  

	
This Agreement, and any documents referred to in it, constitute the entire agreement between the Parties and supersede any arrangement, understanding or previous agreement between them relating to the subject matter they cover. Each Party acknowledges that in entering into this Agreement, and any documents referred to in it, does not rely on, and shall have no remedy in respect of, any statement, representation, assurance or warranty of any person other than as expressly set out in this Agreement or those documents. Nothing in this Article 15 operates to limit or exclude any liability for fraud.

 

	
16.  

	
EMPLOYEES

 

	
16.1.  

	
The Buyer undertakes that neither it nor any of its Affiliates shall solicit any employees of the Seller or its Affiliates without the prior written consent of the Seller; provided that Seller shall cooperate reasonably with the Buyer with regard to the employment by Buyer of Seller’s personnel currently 

 

  

15

  

 

	
  

	
assigned to the Unit.

 

	
16.2.  

	
Solicitation by the Buyer or any Affiliate thereof by way of a general newspaper advertisement or other general solicitation that does not specifically target an employee or group of employees of the Seller or an Affiliate thereof shall not be considered a violation of Article 16.1 above.

 

	
17.  

	
PUBLICITY

 

	
17.1.  

	
Unless a Party has obtained the prior written consent of the other Party or has already publicly disclosed the information that the other Party intends to disclose, each Party agrees to treat as confidential all documents and other information which it may obtain in connection with this Agreement and neither party shall make any broadcast, press release, advertisement, public disclosure or other public announcement or statement with respect to this Agreement, including the Sale Price, the Unit or any of the terms or conditions hereof, unless required by law or the rules of any stock exchange. However, the Seller or its Affiliates may disclose such information without the Buyer’s prior written consent in the Fleet Status Reports or Fleet Status Update Summaries of Transocean Ltd. to the extent the Seller or its Affiliates believe that it is necessary or prudent to do so.

 

	
18.  

	
GENERAL

 

	
18.1.  

	
The invalidity, illegality or unenforceability of any provision or any part of any provision of this Agreement shall not affect the continuation in force of such other part or the remainder of this Agreement.

 

	
18.2.  

	
Save as provided in Articles 10 and 11, this Agreement and the documents referred to in it are made for the benefit of the Parties and their successors and permitted assigns, and are not intended to benefit, or be enforceable by, anyone else. Notwithstanding the foregoing the Buyer may transfer the rights hereunder to any of its Affiliates, which are organized and existing under and by virtue of the laws of any OECD country, without the prior consent of the Seller provided that the Buyer remains responsible for the payment of the Sale Price.

 

	
18.3.  

	
No amendment or addition to this Agreement shall be valid unless agreed in writing by each of the Parties hereto.

 

	
18.4.  

	
This Agreement may be executed in any number of counterparts by the Parties hereto on separate counterparts, each of which when executed and delivered shall constitute an original, but all of which shall together constitute one and the same instrument.

 

	
18.5.  

	
The provisions of Articles 10, 11, 12, 13, 14, 15, 16, 17 and this Article 18.5 and any other provisions which, due to their nature should reasonably be expected to survive, shall survive any termination of this Agreement.

 

 

 

[Remainder of Page Intentionally Left Blank.]

 

 

 

  

16

  

 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed in multiple originals by their duly authorized officers, all as of the day and year first above written.

 

	
TRANSOCEAN DISCOVERER

534 LLC

 

 

By:       /s/ Larry McMahan      

Name: Larry McMahan          

Title:    President           

	
HELIX ENERGY SOLUTIONS GROUP, INC.

 

 

 

 

By:       /s/ Anthony Tripodo        

Name: Anthony Tripodo           

Title:    Executive Vice President       

      and Chief Financial Officer    

 

 

 

  

17

  

 

ANNEX A

 

TRANSITION SERVICES AGREEMENT

 

This TRANSITION SERVICES AGREEMENT (this “Agreement”) is made and entered into as of 23 July 2012, between TRANSOCEAN DISCOVERER 534 LLC, a company organized and existing under and by virtue of the laws of the State of Delaware, or one of its Affiliates (“Seller”) and HELIX ENERGY SOLUTIONS GROUP, INC., a company organized and existing and by virtue of the laws of the State of Minnesota (“Buyer”) (the Seller and the Buyer are referred to herein individually as a “Party” and collectively as the “Parties”).

 

WHEREAS Seller and Buyer have entered into a MODU Sale Agreement dated as of the date hereof(the “MODU Sale Agreement”), pursuant to which the Seller has agreed to sell and the Buyer has agreed to purchase, on the terms and subject to the conditions therein set out, the deepwater floater drilling rig known as the “Discoverer 534” (the “Unit”);

 

AND WHEREAS, the Buyer desires that the Seller arrange for certain services to be provided to the Buyer during the Transition Period (as defined hereunder);

 

AND WHEREAS, the Seller is willing, on the terms and subject to the conditions herein set out, to arrange for the Services (as defined hereunder) to be provided during the Transition Period;

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned hereby intend to be legally bound by this Agreement and the Parties to this Agreement agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

    Section 1.1. Definitions.  The following terms shall have the meaning ascribed thereto when used throughout this Agreement and the Exhibits hereto:

         

       (a) “Affiliate” shall mean, with respect to any Person, any other company or legal entity which (i) is owned or controlled by such Person, (ii) owns or controls such Person, or (iii) is under common ownership or control as such Person.  As used in the preceding sentence, “control” shall mean the right or ability to control more than fifty percent (50%) of the voting rights of a company or entity.

 

       (b) “Applicable Law” means all constitutions, treaties, laws, statutes, ordinances, rules, regulations, orders, interpretations, permits, judgments, decrees, injunctions, writs and orders of any Governmental Authority or arbitrator that apply to any of the Parties, the Unit, or the terms of this Agreement.

 

       (c) “Business Day” shall mean any day other than a Saturday or Sunday on which banks are open for business in New York, USA, London, UK and Singapore.

 

       (d) “Claims” all liens, claims, demands, causes of action, liability, damages, costs, expenses and losses (including attorneys' fees).

 

       (e) “Completion Date” shall mean the time and date upon the completion of the Services.

 

       (f) “Consequential Loss” shall mean (i) consequential or indirect loss under English law; and (ii) loss and/or deferral of production, loss of product, loss of use, loss of revenue, profit or anticipated profit (if any), Claims related to business interruption, howsoever caused, in each case whether direct or indirect and whether foreseeable or not.

      

       (g) “Delivery Date” means the date and time when the Unit is delivered to the Buyer pursuant to the MODU Sale Agreement.

 

       (h) “Governmental Authority” means any federal, state, local, municipal or other governmental, administrative, judicial or regulatory entity having or asserting jurisdiction over a Party, the Unit or this Agreement.

 

       (i) “Gross Negligence” means such wanton and reckless conduct, carelessness or omission as constitutes in effect an utter disregard for harmful, foreseeable and avoidable consequences

 

       (j) “Group” means, in relation to a Party, (i) that Party and its Affiliates, (ii) contractors and sub-contractors of that Party and/or its Affiliates and (iii) the respective directors, officers, agents and employees of any Person within (i) or (ii) above.

 

       (k) “Person” means any corporation, partnership, limited partnership, limited liability company or individual.

 

       (l) “Regardless of Cause” means whether or not any Claim is asserted to have arisen by virtue of tort (including negligence), breach of statutory duty, breach of contract (including this Agreement) or quasi-contract, strict liability, breach of representation or warranty (express or implied), breach of any laws, regulations, rules or orders of any government or other authority having jurisdiction, or otherwise, on the part of the Party or other Person seeking indemnity or of any other Person;  except where expressly stated to the contrary, Regardless of Cause also means whether or not any Claim is asserted to have arisen by virtue of (i) Gross Negligence, (ii) Wilful Misconduct or (iii) deliberate repudiatory breach of this Agreement or any other contract, on the part of the Party or other Person seeking indemnity or of any other Person.

 

       (m) “Serviced Equipment” means the equipment identified on Exhibit A as being subject to the Services.

 

       (n) “Termination Date” means the date which is earliest of (i) the date the Unit becomes an actual or is declared a constructive or compromised total loss, or (ii) the Completion Date.

 

       (o) “Third Party” shall mean any party which is not a member of the Seller’s Group or the Buyer’s Group.

 

       (p) “Transition Period” means the period between the Delivery Date and the Termination Date.

 

       (q) “Wilful Misconduct” shall mean any intentional wrongful act (or intentional wrongful failure to act) with knowledge that such act (or failure to act) is wrongful and which is intended to cause injury to a Person or physical loss of or damage to property.

 

Any term used herein which is defined in the MODU Sale Agreement and not otherwise defined herein shall bear, in this Agreement, the meaning attributed to it in the MODU Sale Agreement.

 

ARTICLE I

 

SERVICES

 

    Section 1.1. Services.  The Seller hereby agrees to cause to be provided through its Affiliates or other third parties , the services described in Exhibit A hereto with respect to the Unit (the “Services”), subject to the terms and conditions hereof, in particular the indemnity obligations of the Buyer.  The Completion Date shall be no later than December 1, 2012. The Services shall be performed at Seller’s risk and cost; the consideration for Seller’s performance of the Services is Buyer’s agreement to purchase the Unit and delivery of the purchase price therefor.

 

   Section 1.2. The Services may only be used in connection with the activities of the Unit, and consistent in all material respects in scope and type with the past practices of the Seller and its Affiliates.  Without prejudice to the other terms and conditions hereof, the Services shall be provided in a manner similar to that followed by the Seller or its Affiliates in the operation of the Unit prior to the Unit being laid up by Seller and in the servicing of equipment of Seller’s Affiliates similar to the Serviced Equipment in preparation for drilling operations, provided that the gear boxes shall be repaired and reinstalled in accordance with international good oilfield practices to ensure that the gear system is operational. Seller shall use its reasonable efforts to provide that any third party contracts for rendering the Services shall permit Seller to transfer any warranties thereunder to Buyer and shall transfer the same to Buyer at completion of the Services. For the avoidance of doubt, Buyer agrees that it shall pay for the commissioning of the Serviced Equipment.

 

    Section 1.3.  Buyer shall provide all assistance reasonably requested by Seller or its Affiliates in connection with the Services to be provided under this Agreement. Buyer shall also provide reasonable access to Seller to the Unit after Closing at the yard designated by Buyer in Singapore for purposes of removing the Seller’s BOP, located on the Unit as of the date hereof. Such removal shall be at Seller’s sole risk and cost and shall be completed by Seller no later than December 1, 2012.

 

    Section 1.4. Party Representatives.  Buyer and Seller shall each appoint a representative (respectively “Buyer’s Representative” and “Seller’s Representative”, and together, the “Representatives”) who shall each have authority to fully represent and bind Buyer or Seller respectively as to operational issues related to Services consistent with the terms of this Agreement, and to otherwise act on behalf of the Party to this Agreement appointing such Representative.  Either Party may withdraw authority of its Representative immediately upon written notice to the other Party, and shall designate a replacement Representative upon ten (10) Business Day’s prior written notice to the other Party.  Each Party shall direct that the Representative appointed by it shall use reasonable efforts to resolve in an amicable and co-operative manner issues which are raised by either of the Parties in relation to the Services.  If the Representatives are unable to resolve any issue within ten (10) Business Days of it being notified to the other, the dispute resolution procedure in Section 5.5 shall apply. Buyer’s Representative or its designee shall have the right to be present with the Serviced Equipment at all times during performance of the Services, but the presence of Buyer’s Representative shall in no way affect Seller’s obligations hereunder. Buyer shall also be permitted to have a representative of the classification society for the Unit present at testing and installation of the Serviced Equipment.

 

    Section 1.5. Excluded Services.  The Services shall not include any service which is not expressly described herein (including any exhibit hereto).

 

    Section 1.6. MODU Sale Agreement.  The Parties agree that Articles 8.6 and 9.2 of the MODU Sale Agreement shall not apply to the Serviced Equipment.

 

ARTICLE II

 

INDEMNITIES AND LIMITATIONS ON CLAIMS

 

    Section 2.1. Indemnities.

 

	
(a)  

	
Indemnity by the Buyer. The Buyer shall be solely responsible for and shall defend, release, indemnify and hold harmless the Seller’s Group from and against any and all Claims howsoever arising from or in connection with:

 

	
(i)  

	
death, illness of or injury to any Person within the Buyer’s Group; and/or

 

	
(ii)  

	
loss of or damage to any property owned by any member of the Buyer’s Group including the Unit,

 

	
(iii)  

	
personal injury including death or disease or loss of or damage to the property of any Third Party, and

 

	
(iv)  

	
Consequential Loss suffered by the Buyer’s Group or any Third Party,

 

Regardless of Cause.

 

	
(b)  

	
Indemnity by the Seller.  The Seller shall be solely responsible for and shall defend, release, indemnify and hold harmless the Buyer’s Group from and against any and all Claims howsoever arising from or in connection with:

 

	
(i)  

	
death, illness of or injury to any Person within the Seller’s Group; and/or

 

	
(ii)  

	
loss of or damage to any property owned by any member of the Seller’s Group,

 

	
(iii)  

	
Consequential Loss suffered by the Seller’s Group,

 

Regardless of Cause.

 

    Section 2.2. Limitation on Remedies.  Subject only to Section 2.1 above:

 

         (a) Buyer hereby expressly waives any right Buyer may have to claim, collect or receive damages other than under breach of contractfor any non-performance, inadequate performance, faulty performanceor other failure or breach by Seller under or relating to this Agreement, Regardless of Cause. Nothing in this paragraph shall be construed to limit in any way Buyer’s right to recover physical possession of the Serviced Equipment following the Closing, as that term is defined in the MODU Sale Agreement.

 

         (b) Without limiting the generality of any other provision hereof, it is not the intent of Seller or its Affiliates to render professional advice or opinions; Buyer shall not rely on Seller or its Affiliates for such professional advice or opinions.  Buyer shall seek all third party professional advice and opinions as it may desire or need.

 

    Section 2.3. Relationship of the Parties. The Buyer understands and agrees that neither the Seller nor any of member if its Group shall be the agent of the Buyer, and no fiduciary duty or other legal duty or obligation or special standard of care imposed on an agent toward a principal or any other Person shall be imposed on the Seller or any member of its Group.  The Buyer understands and agrees that the Seller’s relationship to the Buyer under this Agreement is strictly a contractual arrangement on the terms and conditions set forth in this Agreement, and the Buyer hereby waives any and all rights that it may otherwise have under any Applicable Law or legal precedent to make any claim or take any action against the Seller or any of member if its Group based on any theory of agency, fiduciary duty or any implied or special standard of care.  This Agreement is not intended to and shall not be construed as creating a joint venture, partnership, agency or other association within the meaning of the common law or under the laws of any jurisdiction in which either Party is organized, or conducting business.

 

    Section 2.4. Term and Termination.

 

         (a) Term. This Agreement shall remain in full force and effect until the Termination Date.

 

ARTICLE III

 

FORCE MAJEURE

 

    Section 3.1. Effect and Definition.  No failure or omission by the Seller or the Buyer to perform or carry out any of its obligations in accordance with this Agreement (other than an obligation to make payment) shall give rise to any claim by the other Party or be deemed a breach of this Agreement if such failure or omission arises from an event of Force Majeure.

   

    For the purpose of this section, “Force Majeure” shall mean any event or circumstance that is beyond the reasonable control of, and not solely the result of the fault or negligence of, the party affected thereby, including but not limited to lightning, earthquakes, tornadoes, hurricanes, floods, washouts, storms, fires, explosions, epidemics, acts of God, other natural disasters, acts of the public enemy, computer crimes, cyberterrorism, confiscation or seizure by a Governmental Authority or other governmental interference (whether actual or claiming to act as such), insurrections, riots, civil disturbance, sabotage, terrorism, threats of sabotage or terrorism, vandalism, wars and warlike actions (whether declared or undeclared and whether actual, pending or expected), arrests or other restraints by a Governmental Authority (whether actual or claiming to act as), blockades, embargoes, boycotts, strikes, lockouts, labor unrest and other labor disputes.

 

    Section 3.2. Notification Requirements.  The Party claiming to be affected by a force majeure event shall (i) promptly notify the other Party of the beginning and end of any event claimed to be Force Majeure; and (ii) take all reasonable steps and precautions to alleviate or rectify the effects thereof; and (iii) resume performance in accordance with this Agreement as soon as is reasonably possible.

 

ARTICLE IV

 

GOVERNMENT RESTRICTIONS/BUSINESS ETHICS

 

Notwithstanding anything in this Agreement to the contrary, (a) neither Seller nor any member of its Group shall be required to undertake any actions, omissions, services or performance which would or may place the Seller or any member of its Group in violation of any Applicable Law, including without limitation, the U.S. Federal Foreign Corrupt Practices Act and the United Kingdom Bribery Act, as in force from time to time and (b) the Buyer acknowledges receipt from the Seller of the Seller’s Company Policy on Business Conduct and the Buyer agrees that the Seller shall not be required to take any actions, omissions, services or performance which would place the Seller or any member of its Group in violation of such Company Policy.

 

ARTICLE V

 

MISCELLANEOUS

 

    Section 5.1. Amendment and Modification. This Agreement may be amended or supplemented at any time by the Parties but only pursuant to an instrument in writing signed by both Parties.

 

    Section 5.2. Entire Agreement; Assignment; Binding Effect. This Agreement constitutes the entire agreement between the Parties and supersede any arrangement, understanding or previous agreement between them relating to its subject matter. Each Party acknowledges that in entering into this Agreement, and any documents referred to in it, does not rely on, and shall have no remedy in respect of, any statement, representation, assurance or warranty of any Person other than as expressly set out in this Agreement. Nothing in this Section 5.2 operates to limit or exclude any liability for fraud.  Neither Party may assign any of its rights hereunder without the prior written consent of the other Party.  However nothing shall prevent the Seller from causing performance of its obligations hereunder by Affiliates or Third Parties.

 

    Section 5.3. Severability. If any provision of this Agreement is held invalid or unenforceable, no other provision shall be affected.  With respect to the provision held invalid or unenforceable, the Parties shall amend this Agreement as necessary to effect the original intent of the Parties as closely as possible.

 

    Section 5.4. Notices. All notices and other communications (“Notices”) under this Agreement shall be in writing and shall be marked for the attention of the person(s), and sent to the address(es), or fax number(s), given in this Section (or such other address(es), fax number(s) or person(s) as the relevant Party may notify the other in accordance with the provisions of this section) and shall be delivered personally, or sent by fax, or by international courier service.

 

       (a) Notices to the Seller:

 

Transocean Discoverer 534 LLC

4 Greenway Plaza

Houston, Texas 77046

 

For the attention of:      Larry D. McMahan

 

with copies to:

 

Transocean Management Limited

Chemin de Blandonnet 10

CH-1214 Vernier

Switzerland

 

Attn: : Christophe Raimbault

Fax:  +41 22 930 9094

 

and

 

Ince & Co LLP

International House

1 St. Katharine’s Way

London E1W 1AY

UK

 

Attn:           Renaud Barbier-Emery

Fax:           +44 20 7481 4968

 

       (b) Notices to the Buyer:

 

Helix Energy Solutions Group, Inc.

400 North Sam Houston Parkway East, Suite 400

Houston, Texas 77006

Singapore 089316

 

Attn:           Owen Kratz

Fax:           +1 281 618 0505

 

With copy to:

 

Helix Energy Solutions Group, Inc.

400 North Sam Houston Parkway East, Suite 400

Houston, Texas 77006

Singapore 089316

 

Attn:           Alisa Johnson

Fax:           +1 281 618 0505

 

 

A Notice shall be deemed to have been given:

 

       (a) if delivered personally, at the time of delivery; or

 

       (b) in the case of fax, at the time of transmission; or

 

       (c) in the case of delivery by international courier service, two (2) Business Days after being delivered into the custody of such service; and

 

if deemed receipt under the previous paragraphs of this Section 5.4 is not within business hours of the place of receipt (meaning 9 am to 5.30 pm Monday to Friday on a day that is not a public holiday in the place of receipt), when business next starts in the place of receipt.  To prove service it is sufficient to prove that the Notice was transmitted by fax to the fax number of the Party or, in the case of international courier service, that the envelope containing the notice was properly addressed and delivered to the courier company.

 

    Section 5.5. Governing Law and Jurisdiction.  This Agreement shall be governed by and construed in accordance with the laws of England and the Parties heeby irrevocably submit to the exclusive jurisdiction of the English Courts in London.

 

    Section 5.6. Seller’s Agent for Service of Process.  The Seller hereby irrevocably appoints [Ince Process Agents Limited at its registered office (presently being at 5th floor, International House, 1 St Katharine’s Way, London E1W 1AY)] as its agent to receive and accept on its behalf any process or other document relating to any proceedings in the English courts in connection with this Agreement.

 

    Section 5.7. Buyer’s Agent for Service of Process.  The Buyer hereby irrevocably appoints EC3 Services Limited at its registered office in England (presently being at St Botolph Building, 138 Houndsditch, London EC3A 7AR) (or such other Person being a firm of solicitors resident in England as it may substitute by notice) as its agents to receive and accept on its behalf any process or other document relating to any proceedings in the English courts in connection with this Agreement.

 

    Section 5.8. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

 

    Section 5.9. Interpretation. In this Agreement:

 

       (a) The headings are for convenience of reference only and shall be ignored in construing this Agreement;

 

       (b) Where the context requires, the singular includes the plural and vice versa;

 

       (c) The words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”;

 

       (d) Unless the context otherwise indicates, references in this Agreement to articles, sections or exhibits are references, respectively, to articles, sections or exhibits of or to this Agreement;

 

       (e) All references in this Agreement to contracts, agreements and other documents shall be deemed to refer to such contracts, agreements and other documents as amended, modified and supplemented from time to time;

 

       (f) The words “hereof,” “herein,” “hereto,” and “hereunder” and words of similar import shall, unless otherwise expressly specified, refer to this Agreement as a whole and not to any particular portion or provision of this Agreement; and

 

       (g) References to any Person in or party to this Agreement shall include reference to such Person’s lawful successors and assigns.

 

Each of the Parties acknowledge that it and its counsel have reviewed and revised this Agreement and that any rule of construction to the effect that any ambiguities are to be resolved against the drafting party or proferens shall not be employed in the interpretation of this Agreement.

 

    Section 5.10. No Third Party Beneficiaries.

 

       (a) The indemnities in Section 2.1 are made for the benefit of the Persons identified in these sections and, accordingly, each of those Persons may in their own right enforce those provisions in accordance with the Contracts (Rights of Third Parties) Act 1999 (“CRiTPA”). In accordance with section 2(3) of CRiTPA, the whole or any part of this Agreement may be rescinded or varied by agreement between the Seller and the Buyer without the consent of such third parties.

 

       (b) Save as provided in paragraph (a) above, a Person who is not a Party to this Agreement has no right under CRiTPA or otherwise to enforce any term of this Agreement.

 

    Section 5.11. The provisions of Articles II, IV and V shall survive any termination of this Agreement howsoever occurring.

 

[Remainder of this Page Intentionally Left Blank]

 

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and unconditionally delivered as a deed as of the date first written above.

 

 

TRANSOCEAN DISCOVERER 534 LLC

 

 

 

 

/s/ Larry McMahan        

Name: Larry McMahan

Title:    President

 

 

 

HELIX ENERGY SOLUTIONS GROUP, INC.

 

 

 

 

/s/ Anthony Tripodo      

Name: Anthony Tripodo

Title:    Executive Vice President

        and Chief Financial Officer

 

 

EXHIBIT A

 

Services

 

 

The Services to be arranged by Seller during the Transition Period pursuant to the terms of this Agreement shall be limited to the services specifically described below:

 

       (a) Provision of repair services with respect to the Unit’s top drive and delivery of such top drive following the repair services to the Buyer at the Singapore shipyard designated by the Buyer.

 

       (b) Provision of overhaul services with respect to the Unit’s two gear boxes, delivery of such gear boxes following the overhaul services to the Buyer at the Singapore shipyard designated by the Buyer and installation of such gear boxes pursuant to Buyer’s instructions on the Unit.exh10-3.htm

 

  

  

  

 

EXHIBIT 10.3

 

HELIX ENERGY SOLUTIONS GROUP, INC.

 

2005 LONG TERM INCENTIVE PLAN

 

(As Amended and Restated Effective May 9, 2012)

 

 

ARTICLE I

 

ESTABLISHMENT, PURPOSE AND DURATION

 

  1.1   Amendment and Restatement.   The Company hereby amends and restates the “Helix Energy Solutions Group, Inc. 2005 Long Term Incentive Plan,” as set forth in this document. The Plan permits the grant of Options, SARs, Restricted Stock, Restricted Stock Units, Cash Awards and Performance Awards. The Plan shall become effective on the latest of (a) the date the Plan is approved by the Board (b) the date the Plan is approved by the holders of at least a majority of the outstanding shares of voting stock of the Company and (с) if the provisions of the corporate charter, by-laws or applicable state law prescribes a greater degree of stockholder approval for this action, the approval by the holders of that percentage, at a meeting of stockholders.

 

  1.2   Purpose of the Plan.   The purpose of the Plan is to provide incentives to directors, corporate officers and other employees of the Company and its Affiliates by enabling them to acquire shares of common stock of the Company and to receive other compensation. based on the increase in value of the common stock of the Company or certain other performance measures. The Plan is intended to advance the best interests of the Company, its Affiliates and its stockholders by providing those persons who have substantial responsibility for the management and growth of the Company and its Affiliates with additional performance incentives and an opportunity to obtain or increase their proprietary interest in the Company, thereby encouraging them to continue in their employment with the Company and its Affiliates.

 

  1.3   Grants Under the Plan.   The applicable provisions of the Plan will continue in effect with respect to an Award granted under the Plan for as long as such Award remains outstanding.

 

 

ARTICLE II

 

DEFINITIONS

 

The words and phrases defined in this Article shall have the meaning set out below throughout the Plan, unless the context in which any such word or phrase appears reasonably requires a broader, narrower or different meaning.

 

     2.1    "Affiliate" means any corporation, partnership, limited liability company or association, trust or other entity or organization which, directly or indirectly, controls, is controlled by, or is under common control with, the Company. For purposes of the preceding sentence, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any entity or organization, shall mean the possession, directly or indirectly, of the power (a) to vote more than 50 percent (50%) of the securities having ordinary voting power for the election of directors of the controlled entity or organization, or (b) to direct or cause the direction of the management and policies of the controlled entity or organization, whether through the ownership of voting securities or by contract or otherwise.

 

 

  

 

 

     2.2    "Award" means, individually or collectively, a grant under the Plan of Options, SARs, Restricted Stock, Restricted Stock Units, Cash Awards and Performance Awards in each case subject to the terms and provisions of the Plan.

 

     2.3    "Award Agreement" means an agreement that sets forth the terms and conditions applicable to an Award granted under the Plan.

 

     2.4    "Board" means the board of directors of the Company.

 

     2.5    "Cash Award" means an Award denominated in cash and granted pursuant to Article IX.

 

     2.6    "Change in Control" has the meaning prescribed in an Award Agreement between the Company and a Holder, or, if there is no Award Agreement, means the occurrence of any of the following events: (a) there shall be consummated (i) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Stock would be converted into cash, securities or other property, other than a merger of the Company where a majority of the Board of the surviving corporation is, and for a two-year period after the merger continues to be, persons who were directors of the Company immediately prior to the merger or were elected as directors, or nominated for election as director, by a vote of at least two-thirds of the directors then still in office who were directors of the Company immediately prior to the merger, or (ii) any sale, lease, exchange or transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company; (b) the shareholders of the Company shall approve any plan or proposal for the liquidation or dissolution of the Company; or (с) (i) any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act, other than the Company or a subsidiary thereof or any employee benefit plan sponsored by the Company or a subsidiary thereof, shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company representing 20 percent or more of the combined voting power of the Company’s then outstanding securities ordinarily (and apart from rights accruing in special circumstances) having the right to vote in the election of directors, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise, and (ii) at any time during a period of two years after such “person” becomes such a beneficial owner, individuals who immediately prior to the beginning of such period constituted the Board shall cease for any reason to constitute at least a majority thereof, unless the election or the nomination by the Board for election by the Company’s shareholders of each new director during such period was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period.

 

     2.7    "Code" means the United States Internal Revenue Code of 1986, as amended.

 

     2.8    "Committee" means a committee of at least two persons, who are members of the Compensation Committee of the Board and are appointed by the Compensation Committee of the Board, or, to the extent it chooses to operate as the Committee, the Compensation Committee of the Board. Each member of the Committee in respect of his or her participation in any decision with respect to an Award intended to satisfy the requirements of Section 162(m) of the Code must satisfy the requirements of “outside director” status within the meaning of Section 162(m) of the Code; provided, however, that the failure to satisfy such requirement shall not affect the validity of the action of any committee otherwise duly authorized and acting in the matter. As to Awards, grants or other transactions that are authorized by the Committee and that are intended to be exempt under Rule 16b-3 under the Exchange Act, the requirements of Rule 16b-3(d)(1) under the Exchange Act with respect to committee action must also be satisfied. For all purposes under the Plan, the Chief Executive Officer

 

 

2

 

 

of the Company shall be deemed to be the “Committee” with respect to Options, SARs and Restricted Stock granted by him or her pursuant to Section 4.1.

 

     2.9     "Company" means Helix Energy Solutions Group, Inc., a Minnesota corporation, or any successor (by reincorporation, merger or otherwise).

 

     2.10      "Corporate Change" shall have the meaning ascribed to that term in Section 4.5(c).

 

     2.11      "Covered Employee" means any Employee who is or may be a “covered employee,” as defined in Code Section 162(m).

 

     2.12      "Disability" means as determined by the Committee in its discretion exercised in good faith, a physical or mental condition of the Holder that would entitle him or her to payment of disability income payments under the Company’s long term disability insurance policy or plan for employees as then in effect; or in the event that the Holder is not covered, for whatever reason under the Company’s long term disability insurance policy or plan for employees or in the event the Company does not maintain such a long term disability insurance policy, “Disability” means a permanent and total disability as defined in Section 22(е)(3) of the Code. A determination of Disability may be made by a physician selected or approved by the Committee and, in this respect, the Holder shall submit to an examination by such physician upon request by the Committee.

 

     2.13      "Employee" means (a) a person employed by the Company or any Affiliate as a common law employee or (b) a person who has agreed to become a common law employee of the Company or any Affiliate and is expected to become such within six (6) months from the date of a determination made for purposes of the Plan.

 

     2.14      "Exchange Act" means the United States Securities Exchange Act of 1934, as amended from time to time.

 

     2.15      "Fair Market Value" of the Stock as of any particular date means (1) if the Stock is traded on a stock exchange, the closing sale price of the Stock on that date as reported on the principal securities exchange on which the Stock is traded, or (2) if the Stock is traded in the over-the-counter market, the average between the high bid and low asked price on that date as reported in such over-the-counter market; provided that (a) if the Stock is not so traded, (b) if no closing price or bid and asked prices for the stock was so reported on that date or (с) if, in the discretion of the Committee, another means of determining the fair market value of a share of Stock at such date shall be necessary or advisable, the Committee may provide for another means for determining such fair market value.

 

     2.16   "Fiscal Year" means the Company’s fiscal year.

 

     2.17   "Holder" means а person who has been granted an Award or any person who is entitled to receive Shares under an Award.

 

     2.18   "Incentive Option" means an incentive stock option that is intended to satisfy the requirements of Section 422 of the Code.

 

 

3

 

 

     2.19   "Minimum Statutory Tax Withholding Obligation" means the amount the Company or an Affiliate is required to withhold for federal, state and local taxes based upon the applicable minimum statutory withholding rates required by the relevant tax authorities.

 

     2.20   "Option" means an option to purchase Stock granted pursuant to Article V.

 

     2.21   "Option Price" shall have the meaning ascribed to that term in Section 5.4.

 

     2.22   "Optionee" means a person who is granted an Option under the Plan.

 

     2.23   "Option Agreement" means а written contract setting forth the terms and conditions of an Option.

 

     2.24   "Performance Award" means an Award made pursuant to Article X to an Employee which is subject to the attainment of one or more Performance Goals.

 

     2.25   "Performance Goal" means one or more standards established by the Committee to determine in whole or in part whether a Performance Award shall be earned.

 

     2.26   "Period of Restriction" means the period during which Restricted Stock is subject to а substantial risk of forfeiture (based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Committee, in its discretion), as provided in Article VII.

 

     2.27   "Plan" means the Helix Energy Solutions Group, Inc. 2005 Long Term Incentive Plan, as set forth in this document and as it may be amended from time to time.

 

     2.28   "Qualified Performance Awards" has the meaning set forth in Section 10.3.

 

     2.29   "Restricted Stock" means shares of restricted Stock issued or granted under the Plan pursuant to Article VII.

 

     2.30   "Restricted Stock Award" means an authorization by the Committee to issue or transfer Restricted Stock to a Holder.

 

     2.31   "Restricted Stock Unit" means a unit credited to а Holder’s ledger account maintained by the Company pursuant to Article VIII.

 

     2.32   "Restricted Stock Unit Award" means an Award granted pursuant to Article VII.

 

     2.33   "Retirement" means retirement in accordance with the terms of a retirement plan that is qualified under Section 401(а) of the Code and maintained by the Company or an Affiliate in which the Holder is a participant.

 

     2.34   "Section 409A" means Section 409А of the Code and Department of Treasury rules and regulations issued thereunder.

 

  

4

  

 

     2.35   "Stock" means the common stock of the Company, no par value per share (or such other par value as may be designated by act of the Company’s stockholders).

 

     2.36   "Stock Appreciation Right" or "SAR" means a right to receive a payment, in cash or shares of Stock, equal to the excess of the Fair Market Value of a specified number of shares of Stock on the date the right is exercised over a specified exercise price granted pursuant to Article VI.

 

     2.37   "Stock Award" means an Award in the form of shares of or that may be settled in shares of Stock, including a Restricted Stock Award, a Restricted Stock Unit Award or a Performance Award, and excluding Options and SARs.

 

     2.38   "Substantial Risk of Forfeiture" shall have the meaning ascribed to that term in Section 409А of the Code and Department of Treasury guidance issued thereunder.

 

     2.39   "Termination of Employment" means the termination of the Award recipient’s employment relationship with the Company and all Affiliates.

 

 

ARTICLE III

 

ELIGIBILITY AND PARTICIPATION

 

  3.1   Eligibility.  The persons who are eligible to receive Awards under the Plan are Employees and directors of the Company (except that directors may not receive Awards of Incentive Options).

 

  3.2   Participation.  Subject to the terms and provisions of the Plan, the Committee may, from time to time, select the Employees to whom Awards shall be granted and shall determine the nature and amount of each Award.

 

 

ARTICLE IV

 

GENERAL PROVISIONS RELATING TO AWARDS

 

     4.1   Authority to Grant Awards.  The Committee may grant Awards to those Employees as the Committee shall from time to time determine, under the terms and conditions of the Plan. Subject only to any applicable limitations set out in the Plan, the number of shares of Stock or other value to be covered by any Award to be granted under the Plan shall be as determined by the Committee in its sole discretion. However, the Chief Executive Officer of the Company is authorized to grant Options, SARs, and/or Stock Awards, with respect to no more than 200,000 shares of Stock per Fiscal Year, as inducements to hire prospective Employees and/or in connection with the promotion of current Employees, in each case who will not be officers of the Company subject to the provisions of Section 16 of the Exchange Act.

 

     4.2   Dedicated Shares; Maximum Awards.  The aggregate number of shares of Stock with respect to which Awards may be granted under the Plan is 10,300,000. The aggregate number of shares of Stock with respect to which Incentive Options may be granted under the Plan is 2,000,000. The maximum number of 

 

  

5

  

 

shares of Stock with respect to which Awards may be granted to an Employee during a Fiscal Year is 1,000,000. The maximum value of a Cash Award to which may be granted to an Employee during a Fiscal Year is $10,000,000. Each of the foregoing numerical limits stated in this Section 4.2 shall be subject to adjustment in accordance with the provisions of Section 4.5. If shares of Stock are withheld from payment of an Award to satisfy tax obligations with respect to the Award, such shares of Stock will count against the aggregate number of shares of Stock with respect to which Awards may be granted under the Plan. If Shares are tendered in payment of an Option Price of an Option, such shares of Stock will not be added to the aggregate number of shares of Stock with respect to which Awards may be granted under the Plan. To the extent that any outstanding Award is forfeited or cancelled for any reason or is settled in cash in lieu of share of Stock, the shares of Stock allocable to such portion of the Award may again be subject to an Award granted under the Plan.

 

     4.3   Non Transferability.  Except as specified in the applicable Award Agreements or in domestic relations court orders, Awards shall not be transferable by the Holder other than by will or under the laws of descent and distribution, and shall be exercisable, during the Holder’s lifetime, only by him or her. In the discretion of the Committee, any attempt to transfer an Award other than under the terms of the Plan and the applicable Award Agreement may terminate the Award.

 

     4.4   Requirements of Law.  The Company shall not be required to sell or issue any shares of Stock under any Award if issuing those shares of Stock would constitute or result in a violation by the Holder or the Company of any provision of any law, statute or regulation of any governmental authority. Specifically, in connection with any applicable statute or regulation relating to the registration of securities, upon exercise of any Option or pursuant to any other Award, the Company shall not be required to issue any shares of Stock unless the Committee has received evidence satisfactory to it to the effect that the Holder will not transfer the shares of Stock except in accordance with applicable law, including receipt of an opinion of counsel satisfactory to the Company to the effect that any proposed transfer complies with applicable law. The determination by the Committee on this matter shall be final, binding and conclusive. The Company may, but shall in no event be obligated to, register any shares of Stock covered by the Plan pursuant to applicable securities laws of any country or any political subdivision. In the event the shares of Stock issuable on exercise of an Option or pursuant to any other Award are not registered, the Company may imprint on the certificate evidencing the shares of Stock any legend that counsel for the Company considers necessary or advisable to comply with applicable law, or, should the shares of Stock be represented by book or electronic entry rather than a certificate, the Company may take such steps to restrict transfer of the shares of Stack as counsel for the Company considers necessary or advisable to comply with applicable law. The Company shall not be obligated to take any other affirmative action in order to cause or enable the exercise of an Option or any other Award, or the issuance of shares of Stock pursuant thereto, to comply with any law or regulation of any governmental authority.

 

     4.5   Changes in the Company's Capital Structure.

 

     (a) The existence of outstanding Awards shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of bonds, debentures, preferred or prior preference shares ahead of or affecting the Stock or Stock rights, the dissolution or liquidation of the Company, any sale or transfer of all or any part of its assets or business or any other corporate act or proceeding, whether of a similar character or otherwise.

 

  

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     (b) If the Company shall effect a subdivision or consolidation of Stock or other capital readjustment, the payment of a Stock dividend, or other increase or reduction of the number of shares of Stock outstanding, without receiving compensation therefor in money, services or property, then (1) the number, class or series and per share price of Stock subject to outstanding Options or other Awards under the Plan shall be appropriately adjusted in such a manner as to entitle a Holder to receive upon exercise of an Option or other Award, for the same aggregate cash consideration, the equivalent total number and class or series of Stock the Holder would have received had the Holder exercised his or her Option or other Award in full immediately prior to the event requiring the adjustment, and (2) the number and class or series of Stock then reserved to be issued under the Plan shall be adjusted by substituting for the total number and class or series of Stock then reserved, that number and class or series of Stock that would have been received by the owner of an equal number of outstanding shares of Stock of each class or series of Stock as the result of the event requiring the adjustment.

 

     (c) If while unexercised Options or other Awards remain outstanding under the Plan (1) the Company shall not be the surviving entity in any merger, consolidation or other reorganization (or survives only as a subsidiary of an entity other than an entity that was wholly-owned by the Company immediately prior to such merger, consolidation or other reorganization), (2) the Company sells, leases or exchanges or agrees to sell, lease or exchange all or substantially all of its assets to any other person or entity (other than an entity wholly-owned by the Company), (3) the Company is to be dissolved or (4) the Company is a party to any other corporate transaction (as defined under Section 424(a) of the Code and applicable Department of Treasury regulations) that is not described in clauses (1), (2) or (3) of this sentence (each such event is referred to herein as a “Corporate Change”), then, except as otherwise provided in an Award Agreement (provided that such exceptions shall not apply in the case of a reincorporation merger), or as a result of the Committee’s effectuation of one or more of the alternatives described below, there shall be no acceleration of the time at which any Award then outstanding may be exercised, and no later than ten days after the approval by the stockholders of the Company of such Corporate Change, the Committee, acting in its sole and absolute discretion without the consent or approval of any Holder, shall act to effect one or more of the following alternatives, which may vary among individual Holders and which may vary among Awards held by any individual Holder (provided that, with respect to а reincorporation merger in which Holders of the Company’s ordinary shares will receive one ordinary share of the successor corporation for each ordinary share of the Company, none of such alternatives shall apply and, without Committee action, each Award shall automatically convert into a similar award of the successor corporation exercisable for the same number of ordinary shares of the successor as the Award was exercisable for ordinary shares of Stock of the Company):

 

	
(1)  

	
accelerate the time at which some or all of the Awards then outstanding may be exercised so that such Awards may be exercised in full for a limited period of time on or before a specified date (before or after such Corporate Change) fixed by the Committee, after which specified date all such Awards that remain unexercised and all rights of Holders thereunder shall terminate;

 

	
(2)  

	
require the mandatory surrender to the Company by all or selected Holders of some or all of the then outstanding Awards held by such Holders (irrespective of whether such Awards are then exercisable under the provisions of the Plan or the applicable Award Agreement evidencing such Award) as of a date, before or after such Corporate Change, specified by the Committee, in which event the Committee shall thereupon cancel such Award and the Company shall pay to each such Holder an amount of cash per share equal to the excess, if any, of the per share price

 

  

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offered to stockholders of the Company in connection with such Corporate Change over the exercise prices under such Award for such shares;

 

	
(3)  

	
with respect to all or selected Holders, have some or all of their then outstanding Awards (whether vested or unvested) assumed or have a new award of a similar nature substituted for some or all of their then outstanding Awards under the Plan (whether vested or unvested) by an entity which is a party to the transaction resulting in such Corporate Change and which is then employing such Holder or which is affiliated or associated with such Holder in the same or a substantially similar manner as the Company prior to the Corporate Change, or a parent or subsidiary of such entity, provided that (A) such assumption or substitution is on a basis where the excess of the aggregate fair market value of the Stock subject to the Award immediately after the assumption or substitution over the aggregate exercise price of such Stock is equal to the excess of the aggregate fair market value of all Stock subject to the Award immediately before such assumption or substitution over the aggregate exercise price of such Stock, and (В) the assumed rights under such existing Award or the substituted rights under such new Award as the case may be will have the same terms and conditions as the rights under the existing Award assumed or substituted for, as the case may be;

 

	
(4)  

	
provide that the number and class or series of Stock covered by an Award (whether vested or unvested) theretofore granted shall be adjusted so that such Award when exercised shall thereafter cover the number and class or series of Stock or other securities or property (including, without limitation, cash) to which the Holder would have been entitled pursuant to the terms of the agreement or plan relating to such Corporate Change if, immediately prior to such Corporate Change, the Holder had been the holder of record of the number of shares of Stock then covered by such Award; or

 

	
(5)  

	
make such adjustments to Awards then outstanding as the Committee deems appropriate to reflect such Corporate Change (provided, however, that the Committee may determine in its sole and absolute discretion that no such adjustment is necessary).

 

In effecting one or more of alternatives in (3), (4) or (5) immediately above, and except as otherwise may be provided in an Award Agreement, the Committee, in its sole and absolute discretion and without the consent or approval of any Holder, may accelerate the time at which some or all Awards then outstanding may be exercised.

 

     (d) In the event of changes in the outstanding Stock by reason of recapitalizations, reorganizations, mergers, consolidations, combinations, exchanges or other relevant changes in capitalization occurring after the date of the grant of any Award and not otherwise provided for by this Section 4.5, any outstanding Award and any Award Agreements evidencing such Award shall be subject to adjustment by the Committee in its sole and absolute discretion as to the number and price of Stock or other consideration subject to such Award. In the event of any such change in the outstanding Stock, the aggregate number of shares of Stock available under the Plan may be appropriately adjusted by the Committee, whose determination shall be conclusive.

 

     (e) After a merger of one or more corporations into the Company or after a consolidation of the Company and one or more corporations in which the Company shall be the surviving corporation, each Holder 

 

  

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shall be entitled to have his or her Restricted Stock appropriately adjusted based on the manner in which the shares of Stock were adjusted under the terms of the agreement of merger or consolidation.

 

       (f) The issuance by the Company of stock of any class or series, or securities convertible into, or exchangeable for, stock of any class or series, for cash or property, or for labor or services either upon direct sale or upon the exercise of rights or warrants to subscribe for them, or upon conversion or exchange of stock or obligations of the Company convertible into, or exchangeable for, stock or other securities, shall not affect, and no adjustment by reason of such issuance shall be made with respect to, the number, class or series, or price of shares of Stock then subject to outstanding Options or other Awards.

 

     4.6   Election Under Section 83(b) of the Code. No Holder shall exercise the election permitted under Section 83(b) of the Code with respect to any Award without providing written notice of the election to the Vice President - Tax of the Company.

 

     4.7   Forfeiture for Cause. Notwithstanding any other provision of the Plan or an Award Agreement, if the Committee finds by a majority vote that a Holder, before or after his or her Termination of Employment (a) committed a fraud, embezzlement, theft, felony or an act of dishonesty in the course of his or her employment by the Company or an Affiliate which conduct damaged the Company or an Affiliate or (b) disclosed trade secrets of the Company or an Affiliate, then as of the date the Committee makes its finding, any Awards awarded to the Holder that have not been exercised by the Holder (including all Awards that have not yet vested) will be forfeited to the Company. The findings and decision of the Committee with respect to such matter, including those regarding the acts of the Holder and the damage done to the Company, will be final for all purposes. No decision of the Committee, however, will affect the finality of the discharge of the individual by the Company or an Affiliate.

 

     4.8   Forfeiture Events. The Committee may specify in an Award Agreement that the Holder’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, Termination of Employment for cause, termination of the Holder’s provision of services to the Company or its Affiliates, violation of material policies of the Company and its Affiliates, breach of non-competition, confidentiality, or other restrictive covenants that may apply to the Holder, or other conduct by the Holder that is detrimental to the business or reputation of the Company and its Affiliates.

 

 

ARTICLE V

 

OPTIONS

 

     5.1   Authority to Grant Options.  Subject to the terms and provisions of the Plan, the Committee, at any time, and from time to time, may grant Options under the Plan to eligible persons in such number and upon such terms as the Committee shall determine.

 

     5.2   Type of Options Available. Options granted under the Plan may consist of nonqualified stock options that are not intended to satisfy the requirements of Section 422 of the Code and Incentive Options.

 

  

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     5.3   Option Agreement. Each Option grant under the Plan shall be evidenced by an Option Agreement that shall specify (a) the Option Price, (b) the duration of the Option, (c) the number of shares of Stock to which the Option pertains, (d) the exercise restrictions applicable to the Option, and (е) such other provisions as the Committee shall determine that are not inconsistent with the terms and provisions of the Plan.  Unless the Option Agreement specifies a shorter general term, an Option shall expire on the tenth anniversary of the date the Option is granted.  Options may not include provisions that “reload” the Option upon exercise.

 

     5.4   Option Price. The price at which shares of Stock may be purchased under an Option (the “Option Price”) shall not be less than 100 percent (100%) of the Fair Market Value of the shares of Stock on the date the Option is granted. Subject to the limitation set forth in the preceding sentence of this Section 5.4, the Committee shall determine the Option Price for each grant of an Option under the Plan. Except as provided in Section 4.5 (in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares)), the terms of outstanding Options may not be amended to reduce the Option Price of outstanding Options or cancel outstanding Options in exchange for cash, other Awards or new Options with an Option Price that is less than the Option Price of the original Options without shareholder approval.

 

     5.5   Exercise of Options. The Option Price shall be paid in full at the time of exercise in cash or, if permitted by the Committee and elected by the Optionee, the Optionee may purchase such shares by means of the Company withholding shares of Stock otherwise deliverable on exercise of the Award or tendering shares of Stock valued at Fair Market Value on the date of exercise, or any combination thereof.  The Committee, in its sole discretion, shall determine acceptable methods for Optionee to tender shares of Stock or other Awards.  The Committee may provide for procedures to permit the exercise or purchase of such Awards by use of the proceeds to be received from the sale of shares of Stock issuable pursuant to an Award (including cashless exercise procedures approved by the Committee involving a broker or dealer approved by the Committee).  The Committee may adopt additional rules and procedures regarding the exercise of Options from time to time, provided that such rules and procedures are not inconsistent with the provisions of this Section 5.5.

 

     5.6   Transferability of Options. No Option granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in an Optionee’s Option Agreement, all Options granted to an Optionee under the Plan shall be exercisable during his or her lifetime only by such Optionee. Any attempted assignment of an Option in violation of this Section 5.6 shall be null and void.

 

     5.7   No Rights as Stockholder. An Optionee shall not have any rights as a stockholder with respect to Stock covered by an Option until he or she exercises the Option; and, except as otherwise provided in Section 4.5, no adjustment for dividends, or otherwise, shall be made if the record date therefor is prior to the date of such exercise.

 

  

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ARTICLE VI

 

STOCK APPRECIATION RIGHTS

 

     The Committee may make Awards of SARs to eligible persons selected by it.  The exercise price for an SAR shall not be less than the Fair Market Value of the Stock on the grant date.  The holder of a tandem SAR may elect to exercise either the Option or the SAR, but not both.  The exercise period for a SAR shall extend no more than 10 years after date the SAR is granted.  SARs may not include provisions that “reload” the SAR upon exercise.  Subject to the foregoing provisions, the terms, conditions, and limitations applicable to any SAR, including, but not limited to, the term of any SAR and the date or dates upon which the SAR becomes vested and exercisable, shall be determined by the Committee.  Except as provided in Section 4.5, the Committee shall not directly or indirectly lower the exercise price of a previously granted SAR.

 

 

ARTICLE VII

 

RESTRICTED STOCK AWARDS

 

     7.1   Restricted Stock Awards. The Committee may make Awards of Restricted Stock to eligible persons selected by it. The amount of, the vesting and the transferability restrictions applicable to any Restricted Stock Award shall be determined by the Committee in its sole discretion. If the Committee imposes vesting or transferability restrictions on a Holder’s rights with respect to Restricted Stock, the Committee may issue such instructions to the Company’s share transfer agent in connection therewith as it deems appropriate. The Committee may also cause the certificate for Shares issued pursuant to a Restricted Stock Award to be imprinted with any legend which counsel for the Company considers advisable with respect to the restrictions or, should the Shares be represented by book or electronic entry rather than a certificate, the Company may take such steps to restrict transfer of the Shares as counsel for the Company considers necessary or advisable to comply with applicable law.

 

     7.2   Restricted Stock Award Agreement. Each Restricted Stock Award shall be evidenced by an Award Agreement that contains any vesting, transferability restrictions and other provisions not inconsistent with the Plan as the Committee may specify.

 

     7.3   Holder's Rights as Stockholder. Subject to the terms and conditions of the Plan, each recipient of a Restricted Stock Award shall have all the rights of a stockholder with respect to the shares of Restricted Stock included in the Restricted Stock Award during the Period of Restriction established for the Restricted Stock Award. Dividends paid with respect to Restricted Stock in cash or property other than shares of Stock or rights to acquire shares of Stock shall be paid to the recipient of the Restricted Stock Award currently. Dividends paid in shares of Stock or rights to acquire shares of Stock shall be added to and become a part of the Restricted Stock. During the Period of Restriction, (i) shares of Stock subject to a Restricted Stock Award shall be evidenced by book entry registration or in such other manner as the Committee may determine and (ii) the certificates evidencing the shares of such Restricted Stock (to the extent that such shares are so evidenced) shall contain appropriate legends and restrictions that describe the terms and conditions of the restrictions applicable thereto.

 

  

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ARTICLE VIII

 

RESTRICTED STOCK UNIT AWARDS

 

     8.1   Authority to Grant Restricted Stock Unit Awards. Subject to the terms and provisions of the Plan, the Committee, at any time, and from time to time, may grant Restricted Stock Unit Awards under the Plan to eligible persons in such amounts and upon such terms as the Committee shall determine. The amount of the vesting and the transferability restrictions applicable to any Restricted Stock Unit Award shall be determined by the Committee in its sole discretion. The Company shall maintain a bookkeeping ledger account which reflects the number of Restricted Stock Units credited under the Plan for the benefit of а Holder.

 

     8.2   Restricted Stock Unit Awards. А Restricted Stock Unit Award shall be similar in nature to Restricted Stock Award except that no shares of Stock are actually transferred to the Holder until a later date specified in the applicable Award Agreement. Each Restricted Stock Unit shall have a value equal to the Fair Market Value of a share of Stock.

 

     8.3   Restricted Stock Unit Award Agreement. Each Restricted Stock Unit Award shall be evidenced by an Award Agreement that contains any Substantial Risk of Forfeiture, transferability restrictions, form and time of payment provisions and other provisions not inconsistent with the Plan as the Committee may specify.

 

     8.4   Form of Payment Under Restricted Stock Unit Award. Payment under a Restricted Stock Unit Award shall be made in either cash or shares of Stock as specified in the Holder’s Award Agreement.

 

     8.5   Time of Payment Under Restricted Stock Unit Award. A Holder’s payment under a Restricted Stock Unit Award shall be made at such time as is specified in the Holder’s Award Agreement. The Award Agreement shall specify that the payment will be made (1) by a date that is no later than the date that is two and one-half (2-1/2) months after the end of the Fiscal Year in which the Restricted Stock Unit Award payment is no longer subject to a Substantial Risk of Forfeiture or (2) at а time that is permissible under Section 409А.

   

     8.6   Holder's Rights as Stockholder. A Holder of a Restricted Stock Unit Award shall have no rights of a stockholder with respect to the Restricted Stock Unit Award. A Holder shall have no voting rights with respect to any Restricted Stock Unit Award.

 

     8.7   Compliance With Section 409A. Restricted Stock Unit Awards shall be designed and operated in such a manner that they are either exempt from the application of, or comply with, the requirements of Section 409А.

 

 

ARTICLE IX

 

CASH AWARDS

 

     An Award may be in the form of a Cash Award.  The terms, conditions and limitations applicable to a Cash Award, including, but not limited to, vesting or other restrictions, shall be determined by the Committee.

 

  

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ARTICLE X

 

PERFORMANCE AWARDS

 

     10.1   Performance Awards.  Without limiting the type or number of Awards that may be made under the other provisions of this Plan, an Employee Award may be in the form of a Performance Award.  The terms, conditions and limitations applicable to an Award that is a Performance Award shall be determined by the Committee.  The Committee shall set Performance Goals in its discretion which, depending on the extent to which they are met, will determine the value and/or amount of Performance Awards that will be paid out to the Holder and/or the portion of an Award that may be exercised.

 

     10.2   Nonqualified Performance Awards.  Performance Awards granted to Holders that are not intended to qualify as qualified performance-based compensation under Code Section 162(m) shall be based on achievement of such Performance Goals and be subject to such terms, conditions and restrictions as the Committee or its delegate shall determine.

 

     10.3   Qualified Performance Awards.  Performance Awards granted to Employees under this Plan that are intended to qualify as qualified performance-based compensation under Code Section 162(m) shall be paid, vested or otherwise deliverable solely on account of the attainment of one or more pre-established, objective Performance Goals established by the Committee prior to the earlier to occur of (1) 90 days after the commencement of the period of service to which the Performance Goal relates and (2) the lapse of 25% of the period of service (as scheduled in good faith at the time the goal is established), and in any event while the outcome is substantially uncertain.  A Performance Goal is objective if a third party having knowledge of the relevant facts could determine whether the goal is met.  One or more of such goals may apply to the Employee, one or more business units, divisions or sectors of the Company, or the Company as a whole, and if so desired by the Committee, by comparison with a peer group of companies.  A Performance Goal shall include one or more of the following: earnings before interest, taxes, depreciation, amortization and exploration expenses (EBITDAX), capital management, term of service, return on capital employed, revenue growth, market share, margin growth, return on equity, total stockholder return, increase in net after-tax earnings per share, market price per share, growth in market price per share, increase in operating pre-tax earnings, operating profit or improvements in operating profit, improvements in certain asset or financial measures (including working capital and the ratio of revenues to working capital), credit quality, expense ratios, pre-tax earnings or variations of income criteria in varying time periods and economic value added.

 

     Unless otherwise stated, such a Performance Goal need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria).  In interpreting Plan provisions applicable to Qualified Performance Awards, it is the intent of this Plan to conform with the standards of Code Section 162(m) and Treasury Regulation § 1.162-27(e)(2)(i), as to grants to Covered Employees and the Committee in establishing such goals and interpreting this Plan shall be guided by such provisions.  Prior to the payment of any compensation based on the achievement of Performance Goals applicable to Qualified Performance Awards, the Committee must certify in writing that applicable Performance Goals and any of the material terms thereof were, in fact, satisfied.  For this purpose, approved minutes of the Committee meeting in which the certification is made shall be treated as such written certification.  Subject to 

 

  

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the foregoing provisions, the terms, conditions and limitations applicable to any Qualified Performance Awards made pursuant to this Plan shall be determined by the Committee.  The Committee may provide in any such Performance Award that any evaluation of performance may include or exclude any of the following events that occurs during a Performance Period: (a) asset write-downs, (b) litigation or claim judgments or settlements, (c) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, (d) any reorganization and restructuring programs, (e) extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to shareholders for the applicable year, (f) acquisitions or divestitures, (g) foreign exchange gains and losses and (h) settlement of hedging activities.

 

     10.4   Adjustment of Performance Awards.  Awards that are intended to qualify as Performance Awards may not be adjusted upward. The Committee may retain the discretion to adjust such Performance Awards downward, either on a formula or discretionary basis or any combination, as the Committee determines.

 

 

ARTICLE XI

 

ADMINISTRATION

 

     11.1   Awards. The Plan shall be administered by the Committee or, in the absence of the Committee, the Plan shall be administered by the Board. The members of the Committee shall serve at the discretion of the Board. The Committee shall have full and exclusive power and authority to administer the Plan and to take all actions that the Plan expressly contemplates or are necessary or appropriate in connection with the administration of the Plan with respect to Awards granted under the Plan.

 

     11.2   Minimum Vesting of Stock Awards. Any Stock Award granted to an Employee that (a) is not a Performance Award shall have a minimum vesting period of three years from the date of grant or (b) is a Performance Award shall have a minimum performance period of one year from the date of grant; provided, however, that (1) the Committee may provide for earlier vesting upon an Employee’s termination of employment by reason of death, Disability or Change in Control and (2) vesting of a Stock Award may occur incrementally over the three-year vesting period or one-year minimum performance period, as applicable.  The foregoing notwithstanding, 5% of the total number of shares of Stock available for issuance under this Plan shall not be subject to the minimum vesting period or performance period, as applicable, described in the preceding sentence.

 

     11.3   Authority of the Committee. The Committee shall have full and exclusive power to interpret and apply the terms and provisions of the Plan and Awards made under the Plan, and to adopt such rules, regulations and guidelines for implementing the Plan as the Committee may deem necessary or proper, all of which powers shall be exercised in the best interests of the Company and in keeping with the objectives of the Plan. А majority of the members of the Committee shall constitute a quorum for the transaction of business, and the vote of a majority of those members present at any meeting shall decide any question brought before that meeting. Any decision or determination reduced to writing and signed by a majority of the members shall be as 

 

  

14

  

 

effective as if it had been made by a majority vote at a meeting properly called and held. Аll questions of interpretation and application of the Plan, or as to award granted under the Plan, shall be subject to the determination, which shall be final and binding, of a majority of the whole Committee. No member of the Committee shall be liable for any act or omission of any other member of the Committee or for any act or omission on his or her own part, including but not limited to the exercise of any power or discretion given to him or her under the Plan, except those resulting from his or her own gross negligence or willful misconduct. In carrying out its authority under the Plan, the Committee shall have full and final authority and discretion, including but not limited to the following rights, powers and authorities, to:

 

     (a) determine the persons to whom and the time or times at which Awards will be made;

 

     (b) determine the number and exercise price of shares of Stock covered in each Award, subject to the terms and provisions of the Plan;

 

     (c) determine the terms, provisions and conditions of each Award, which need not be identical and need not match the default terms set forth in the Plan;

 

     (d) accelerate the time at which any outstanding Award will vest;

   

     (e) prescribe, amend and rescind rules and regulations relating to administration of the Plan; and

 

     (f) make all other determinations and take all other actions deemed necessary, appropriate or advisable for the proper administration of the Plan.

 

     The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Award to a Holder in the manner and to the extent the Committee deems necessary or desirable to further the Plan’s objectives. Further, the Committee shall make all other determinations that may be necessary or advisable for the administration of the Plan.  The Committee may delegate to the Chief Executive Officer and to other employees of the Company its administrative duties under this Plan (excluding its granting authority for Awards, other than pursuant to the specific authorization described in Section 4.1) pursuant to such conditions or limitations as the Committee may establish.  The Committee may engage or authorize the engagement of a third party administrator to carry out administrative functions under the Plan.

 

     The actions of the Committee in exercising all of the rights, powers, and authorities set out in this Article XI and all other Articles of the Plan, when performed in good faith and in its sole judgment, shall be final, conclusive and binding on all persons. The Committee may employ attorneys, consultants, accountants, agents, and other persons, any of whom may be an Employee, and the Committee, the Company, and its officers and Board shall be entitled to rely upon the advice, opinions, or valuations of any such persons.

 

     11.4   Decisions Binding. All determinations and decisions made by the Committee or the Board, as the case may be, pursuant to the provisions of the Plan and all related orders and resolutions of the Committee or the Board, as the case may be, shall be final, conclusive and binding on all persons, including the Company, its stockholders, Employees, Holders and the estates and beneficiaries of Employees and Holders.

 

     11.5   No Liability. Under no circumstances shall the Company, the Board or the Committee incur liability for any indirect, incidental, consequential or special damages (including lost profits) of any form incurred by any person, whether or not foreseeable and regardless of the form of the act in which such a claim 

 

  

15

  

 

may be brought, with respect to the Plan or the Company’s, the Committee’s or the Board’s roles in connection with the Plan.

 

 

ARTICLE XII

 

AMENDMENT OR TERMINATION OF PLAN

 

     12.1   Amendment, Modification, Suspension, and Termination. Subject to Section 12.2 the Committee may, at any time and from time to time, alter, amend, modify, suspend, or terminate the Plan and any Award Agreement in whole or in part; provided, however, that, without the prior approval of the Company’s stockholders and except as provided in Section 4.5, the Committee shall not directly or indirectly lower the Option Price of a previously granted Option, and no amendment of the Plan shall be made without stockholder approval if stockholder approval is required by applicable law or stock exchange rules.

 

     12.2   Awards Previously Granted. Notwithstanding any other provision of the Plan to the contrary, no termination, amendment, suspension, or modification of the Plan or an Award Agreement shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Holder holding such Award.

 

 

ARTICLE XIII

 

MISCELLANEOUS

 

     13.1   Unfunded Plan/No Establishment of a Trust Fund.  Holders shall have no right, title, or interest whatsoever in or to any investments that the Company or any of its Affiliates may make to aid in meeting obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Holder, beneficiary, legal representative, or any other person. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts, except as expressly set forth in the Plan. No property shall be set aside nor shall a trust fund of any kind be established to secure the rights of any Holder under the Plan. All Holders shall at all times rely solely upon the general credit of the Company for the payment of any benefit which becomes payable under the Plan. The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended.

 

     13.2   No Employment Obligation. The granting of any Award shall not constitute an employment contract, express or implied, nor impose upon the Company or any Affiliate any obligation to employ or continue to employ, or utilize the services of, any Holder. The right of the Company or any Affiliate to terminate the employment of any person shall not be diminished or affected by reason of the fact that an Award has been granted to him or her, and nothing in the Plan or an Award Agreement shall interfere with or limit in any way the right of the Company or its Affiliates to terminate any Holder’s employment at any time or for any reason not prohibited by law.

 

  

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     13.3   Tax Withholding. The Company or any Affiliate shall be entitled to deduct from other compensation payable to each Holder any sums required by federal, state or local tax law to be withheld with respect to the vesting or exercise of an Award or lapse of restrictions on an Award. In the alternative, the Company may require the Holder (or other person validly exercising the Award) to pay such sums for taxes directly to the Company or any Affiliate in cash or by check within one day after the date of vesting, exercise or lapse of restrictions. In the discretion of the Committee, and with the consent of the Holder, the Company may reduce the number of shares of Stock issued to the Holder upon such Holder’s exercise of an Option to satisfy the tax withholding obligations of the Company or an Affiliate; provided that the Fair Market Value of the shares of Stock held back shall not exceed the Company’s or the Affiliate’s Minimum Statutory Tax Withholding Obligation. The Committee may, in its discretion, permit a Holder to satisfy any Minimum Statutory Tax Withholding Obligation arising upon the vesting of Restricted Stock by delivering to the Holder of the Restricted Stock Award a reduced number of shares of Stock in the manner specified herein. If permitted by the Committee and acceptable to the Holder, at the time of vesting of shares of Restricted Stock, the Company shall (a) calculate the amount of the Company’s or an Affiliate’s Minimum Statutory Tax Withholding Obligation on the assumption that all such shares of vested Restricted Stock are made available for delivery, (b) reduce the number of such shares of Stock made available for delivery so that the Fair Market Value of the shares of Stock withheld on the vesting date approximates the Company’s or an Affiliate’s Minimum Statutory Tax Withholding Obligation and (с) in lieu of the withheld shares of Stock, remit cash to the United States Treasury and other applicable governmental authorities, on behalf of the Holder, in the amount of the Minimum Statutory Tax Withholding Obligation. The Company shall withhold only whole shares of Stock to satisfy its Minimum Statutory Tax Withholding Obligation. Where the Fair Market Value of the withheld shares of Stock does not equal the amount of the Minimum Statutory Tax Withholding Obligation, the Company shall withhold shares of Stock with a Fair Market Value slightly less than the amount of then Minimum Statutory Tax Withholding Obligation and the Holder must satisfy the remaining minimum withholding obligation in some other manner permitted under this Section 13.3. The withheld shares of Stock not made available for delivery by the Company shall be retained as treasury shares or will be cancelled and, in either case, the Holder’s right, title and interest in such shares of Stock shall terminate. The Company shall have no obligation upon vesting or exercise of any Award or lapse of restrictions on Restricted Stock until the Company or an Affiliate has received payment sufficient to cover the Minimum Statutory Tax Withholding Obligation with respect to that vesting, exercise or lapse of restrictions. Neither the Company nor any Affiliate shall be obligated to advise a Holder of the existence of the tax or the amount which it will be required to withhold.

 

     13.4   Written Agreement. Each Award shall be embodied in a written agreement or statement which shall be subject to the terms and conditions of the Plan. The Award Agreement shall be signed by a member of the Committee on behalf of the Committee and the Company or by an executive officer of the Company, other than the Holder, on behalf of the Company, and may be signed by the Holder to the extent required by the Committee. The Award Agreement may specify the effect of a Change in Control on the Award. The Award Agreement may contain any other provisions that the Committee in its discretion shall deem advisable which are not inconsistent with the terms and provisions of the Plan.

 

     13.5   Indemnification of the Committee. The Company shall indemnify each present and future member of the Committee against, and each member of the Committee shall be entitled without further action on his or her part to indemnity from the Company for, all expenses (including attorney’s fees, the amount of judgments and the amount of approved settlements made with a view to the curtailment of costs of litigation, other than amounts paid to the Company itself) reasonably incurred by such member in connection with or 

 

  

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arising out of any action, suit or proceeding in which such member may be involved by reason of such member being or having been a member of the Committee, whether or not he or she continues to be a member of the Committee at the time of incurring the expenses, including, without limitation, matters as to which such member shall be finally adjudged in any action, suit or proceeding to have been negligent in the performance of such member’s duty as a member of the Committee. However, this indemnity shall not include any expenses incurred by any member of the Committee in respect of matters as to which such member shall be finally adjudged in any action, suit or proceeding to have been guilty of grass negligence or willful misconduct in the performance of his or her duty as a member of the Committee. In addition, no right of indemnification under the Plan shall be available to or enforceable by any member of the Committee unless, within 60 days after institution of any action, suit or proceeding, such member shall have offered the Company, in writing, the opportunity to handle and defend same at its own expense. This right of indemnification shall inure to the benefit of the heirs, executors or administrators of each member of the Committee and shall be in addition to all other rights to which a member of the Committee may be entitled as a matter of law, contract or otherwise.

 

     13.6   Gender and Number. If the context requires, words of one gender when used in the Plan shall include the other and words used in the singular or plural shall include the other.

 

     13.7   Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

 

     13.8   Headings. Headings of Articles and Sections are included for convenience of reference only and do not constitute part of the Plan and shall not be used in construing the terms and provisions of the Plan.

 

     13.9   Other Compensation Plans. The adoption of the Plan shall not affect any other option, incentive or other compensation or benefit plans in effect for the Company or any Affiliate, nor shall the Plan preclude the Company from establishing any other forms of incentive compensation arrangements for Employees.

 

     13.10       Other Awards. The grant of an Award shall not confer upon the Holder the right to receive any future or other Awards under the Plan, whether or not Awards may be granted to similarly situated Holders, or the right to receive future Awards upon the same terms or conditions as previously granted.

 

     13.11      Successors.  All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result, of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

 

     13.12       Law Limitations/Governmental Approvals. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

 

     13.13       Delivery of Title. The Company shall have no obligation to issue or deliver evidence of title for shares of Stock issued under the Plan prior to:

 

     (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and

 

  

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     (b) completion of any registration or other qualification of the Stock under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable.

 

     13.14       Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any shares of Stock hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such shares of Stock as to which such requisite authority shall not have been obtained.

 

     13.15       No Fractional Shares.  No fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, additional Awards, or other property shall be issued or paid in lieu of fractional shares of Stock or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

 

     13.16       Waiver of Jury. Each Award Agreement shall specify that the Award recipient and the Company shall both waive a trial by jury of any or all issues arising in any action or proceeding between the parties or their successors, heirs and assigns, under or connected with the Award, the Plan, or any of the provisions of the Award Agreement or the Plan.

 

     13.17       Governing Law. The provisions of the Plan and the rights of all persons claiming thereunder shall be construed, administered and governed under the laws of the State of Texas, without regard to principles of conflicts of law.

 

     13.18       Compliance With Section 409A.  Awards shall be designed, granted and administered in such a manner that they are either exempt from the application of, or comply with, the requirements of Section 409A.  Each Award Agreement for an Award that is intended to comply with the requirements of Section 409A shall be construed and interpreted in accordance with such intention. If the Committee determines that an Award, Award Agreement, payment, distribution, deferral election, transaction, or any other action or arrangement contemplated by the provisions of the Plan would, if undertaken or implemented, cause a Holder to become subject to additional taxes under Section 409A, then unless the Committee specifically provides otherwise, such Award, Award Agreement, payment, distribution, deferral election, transaction or other action or arrangement shall not be given effect to the extent it causes such result and the related provisions of the Plan and/or Award Agreement will be deemed modified, or, if necessary, suspended in order to comply with the requirements of Section 409A to the extent determined appropriate by the Committee, in each case without the consent of or notice to the Holder.  The exercisability of an Option shall not be extended to the extent that such extension would subject the Holder to additional taxes under Section 409A.

 

  

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