VP Operations Employment Agreement - Carl Annessa

FORM: VP OPERATIONS
EMPLOYMENT AGREEMENT


THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 1st day of January, 2001, but is effective for all purposes as of the Commencement Date (as hereinafter defined), by and between HORNBECK-LEEVAC MARINE OPERATORS, INC., a Delaware corporation, (the "Employer"), and CARL G. ANNESSA, residing at 1201 Bluewater Drive, Mandeville, Louisiana 70471 (the "Employee").


WITNESSETH:


1. Employment. Employer hereby employs Employee, and Employee hereby accepts such employment, upon the terms and subject to the conditions set forth in this Agreement. Employee shall be employed by Employer but may serve (and if requested by Employer shall serve) as an officer and/or director of its parent, HORNBECK-LEEVAC Marine Services, Inc., a Delaware corporation ("Parent"), or any subsidiary or affiliate of Employer or Parent.


2. Term. The term of employment under this Agreement shall commence on January 1, 2001 (the "Commencement Date") and shall continue through December 31, 2003; provided, however, that beginning on January 1, 2004, and on every third January 1 thereafter (each a "Renewal Date"), the term of this Agreement shall automatically be extended three additional years unless either party gives the other written notice of termination at least ninety (90) days prior to any such Renewal Date. Written notice by Employer shall be solely pursuant to duly adopted resolution of Employer's or Parent's board of directors or, at such time as Parent is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, the compensation committee of Parent's board of directors. If Employee is terminated by Employer pursuant to such notice of nonrenewal, Employer shall pay to Employee as severance pay an amount equal to one half of Employee's basic annualized salary for the year preceding such termination and shall continue Employee's medical insurance and other benefits for six months following such termination. Employee shall have no further rights or obligations hereunder.


3. Compensation and Benefits.


(a) Employer shall pay to Employee as compensation for all
services rendered by Employee a basic annualized salary of $160,000
during the initial three (3) year term of this Agreement (the "Basic
Salary"), or such other sums as the parties may agree on from time to
time, payable semi-monthly or in other more frequent installments, as
determined by the Board (as hereinafter defined). The compensation
committee of the board of directors of Parent, by providing direction
through the board of directors of Employer (collectively, the board of
directors of Parent, the compensation committee of Parent and the board
of directors of Employer are referred to as the "Board") shall have the
right to increase Employee's compensation from time to time and
Employee shall be entitled to an annual review thereof or more
frequently as determined by the Board. In addition, the Board, in its
discretion, may, with respect to any year during the term hereof, award
a bonus or bonuses to Employee; provided, however, Employer shall
annually provide Employee with a bonus as more particularly described
in Appendix "A" attached hereto, which Appendix "A" may be modified,
supplemented, or replaced from time to time by written agreement
between Employer and Employee.


The compensation provided for in this Section 3(a) shall be in addition to any pension or profit sharing payments set aside or allocated for the benefit of Employee in either a tax qualified plan or otherwise.


(b) If the Board determines in its sole discretion that
general economic conditions, the economic conditions of the oil and gas
industry or the financial condition of Parent require such measures,
the Board may reduce Employee's compensation hereunder, but in any such
case by no more nor less than the percentage by which it has reduced
and only if it reduces concurrently the compensation of all executive
management and mid-management shore-based employees of Parent and its
subsidiaries.


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(c) Employer shall reimburse Employee for all reasonable
expenses incurred by Employee in the performance of his duties under
this Agreement; provided, however, that Employee must furnish to
Employer an itemized account, satisfactory to Employer, in
substantiation of such expenditures.


(d) Employee shall be entitled to such fringe benefits
including, but not limited to, medical and family insurance benefits as
may be provided from time to time by Employer to other senior officers
of Employer; provided, however, that any health insurance shall not
provide for a preexisting condition limitation, and, provided further,
that during the term of this Agreement, such fringe benefits shall
always be equal to, at a minimum, the maximum fringe benefits provided
in a particular year to any other officer of Employer or Parent other
than with respect to the grant of an award under any Incentive
Compensation Plan of Employer.


(e) To the extent permitted by applicable law and terms of the
benefit plans, Employer shall include in Employee's credited service,
in any case where credited service is relevant in determining
eligibility for or benefits under any employee benefits plan, the
Employee's service for any parent, subsidiary or affiliate of Employer
or for any predecessor thereof and time served at prior employers.


(f) Employer shall provide Employee with an automobile during
the term of the Agreement as approved by the CEO and President.
Employer will also pay for auto insurance, maintenance and fuel.
Employee may use the automobile for personal use and will pay all taxes
related to such personal use.


(g) Employee shall be eligible to participate in such
incentive compensation and stock option plans that have been approved
or may in the future be approved by the shareholders of Parent or
Employer and administered by the Board.


4. Duties. Employee is engaged and shall serve as Vice President of Operations of (i) Parent, (ii) Hornbeck Offshore Services, Inc., (iii) Employer, (iv) LEEVAC Marine, Inc. and (v) any other subsidiaries of Parent that may be formed or acquired. In addition, Employee shall have such other duties and hold such other offices as may from time to time be reasonably assigned to him by the Board.


5. Extent of Services; Vacations and Days Off.


(a) During the term of his employment under this Agreement,
Employee shall devote his full business time, energy and attention to
the benefit and business of Employer as may be necessary in performing
his duties pursuant to this Agreement. Employee shall not provide
services of a business nature to any other person other than that which
has been disclosed and permitted by the Employer.


(b) Employee shall be entitled to vacations and holidays with
pay and to such personal and sick leave with pay in accordance with the
policy of Employer as may be established from time to time by Employer
and applied to other senior officers of Employer; provided, however,
that Employee shall annually be entitled to the maximum number of
vacation days and holidays afforded to any other officer of Employer or
Parent.


6. Facilities. Employer shall provide Employee with a fully furnished office, and the facilities of Employer shall be generally available to Employee in the performance of his duties pursuant to this Agreement; it being understood and contemplated by the parties that all equipment, supplies and office personnel required for Employee's performance of duties under this Agreement shall be supplied by Employer.


7. Illness or Incapacity, Termination on Death.


(a) If Employee dies during the term of his employment,
Employer shall pay to the estate of Employee such compensation,
including any bonus compensation earned but not yet paid, as would
otherwise have been payable to Employee for a period of one (1) year
following his death and shall


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continue to provide medical insurance and other benefits to which
Employee's dependents would otherwise have been entitled for the same
period. Except for the benefits set forth in the preceding sentence and
any life insurance benefits included in the benefit package provided at
such time by Employer to Employee, Employer shall have no additional
financial obligation under this Agreement to Employee or his estate.
After receiving the payments and health insurance benefits provided in
this subparagraph (a), Employee and his estate shall have no further
rights under this Agreement.


(b)


(i) During any period of disability, illness or
incapacity during the term of this Agreement that renders
Employee at least temporarily unable to perform the services
required under this Agreement for a period that shall not
equal or exceed ninety (90) continuous days (provided that a
return to full work status of less than five full days shall
be deemed not to interrupt the calculation of such 90 days),
Employee shall receive the compensation payable under Section
3(a) of this Agreement plus any bonus compensation earned
through the last day of such ninety (90) day period but not
yet paid, less any benefits received by him under any
disability insurance carried by or provided by Employer. All
rights of Employee under this Agreement (other than rights
already accrued) shall terminate as provided below upon
Employee's permanent disability (as defined below), although
Employee shall continue to receive any disability benefits to
which he may be entitled under any disability income insurance
that may be carried by or provided by Employer from time to
time; Employer hereby agrees to provide such insurance on a
same occupation basis.


(ii) The term "permanent disability" as used in this
Agreement shall mean "permanent disability" under any long
term disability plan maintained by Employer that covers
Employee. In the absence of such a plan, "permanent
disability" shall mean the inability of Employee, as
determined by the Board, by reason of physical or mental
disability to perform the duties required of him under this
Agreement for a period of at least ninety (90) days in any
one-year period. Upon such determination, the Board may
terminate Employee's employment under this Agreement upon ten
(10) days' prior written notice. If any determination of the
Board with respect to permanent disability is disputed by
Employee, the parties hereto agree to abide by the decision of
a panel of three physicians. Employee and the Board shall each
appoint one member, and the third member of the panel shall be
appointed by the other two members. Employee agrees to make
himself available for and submit to examinations by such
physicians as may be directed by the Board. Failure to submit
to any such examination shall constitute a breach of a
material part of this Agreement.


8. Other Terminations.


(a)


(i) Employee may terminate his employment hereunder
for any reason whatsoever upon giving at least thirty (30)
days' prior written notice. In addition, Employee shall have
the right to terminate his employment hereunder on the
conditions and at the times provided for in Section 8(d) of
the Agreement.


(ii) If Employee gives notice pursuant to Section
8(a)(i) above, Employer shall have the right to relieve
Employee, in whole or in part, of his duties under this
Agreement (without reduction in compensation through the
termination date).


(b)


(i) Except as otherwise provided in this Agreement,
Employer may terminate the employment of Employee hereunder
only for "good cause" (as defined below) and upon written
notice.


(ii) As used herein, "good cause" shall include:


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(1) Employee's conviction of either a felony
involving moral turpitude or any crime in connection
with his employment by Employer that causes Employer
a substantial detriment, but specifically shall not
include traffic offenses;


(2) actions or inactions by Employee that
clearly are contrary to the best interests of
Employer;


(3) Employee's willful failure to take
actions permitted by law and necessary to implement
policies of the Board that the Board has communicated
to him in writing, provided that such policies that
are reflected in minutes of a Board meeting attended
in its entirety by Employee shall be deemed
communicated to Employee;


(4) Employee's continued failure to devote
his full business time, energy and attention to his
duties as an executive officer of Employer or its
affiliates, following written notice from the Board
to Employee of such failure; or


(5) any condition that either resulted from
Employee's substantial dependence on alcohol, or any
narcotic drug or other controlled or illegal
substance. If any determination of substantial
dependence is disputed by Employee, the parties
hereto agree to abide by the decision of a panel of
three physicians appointed in the manner specified in
Section 7(b)(ii) of this Agreement.


(6) With respect to (2) through (5) above,
such circumstances shall not constitute "good cause"
unless Employee has failed to cure such circumstances
within 10 business days following written notice
thereof from the Board identifying in reasonable
detail the manner in which the Employer believes that
Employee has not performed such duties and indicating
the steps Employer requires to cure such
circumstances.


(iii) Termination of the employment of Employee for
reasons other than those expressly specified in this Agreement
as good cause shall be deemed to be a termination of
employment "without good cause."


(c)


(i) If Employer shall terminate the employment of
Employee without good cause effective on a date earlier than
the termination date provided for in Section 2 (with the
effective date of termination as so identified by Employer
being referred to herein as the "Accelerated Termination
Date"), Employee, until the termination date provided for in
Section 2 or until the date that is one (1) year after the
Accelerated Termination Date, whichever is later, shall
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