Exhibit 10.12

HERCULES OFFSHORE 2004 LONG-TERM INCENTIVE PLAN

SUMMARY OF STOCK OPTION GRANT

You have been granted the option to purchase shares of Common Stock of Hercules
Offshore, Inc., a Delaware corporation (the “Company”) on the terms and
conditions set forth below and in accordance with the Stock Option Award
Agreement (the “Agreement”) to which this Summary of Stock Option Grant is
attached and the Hercules Offshore 2004 Long-Term Incentive Plan (the “Plan”):

 

Optionee Name:

  Employee Name Number of Option Shares Granted:   Type of Option (check one):  
¨ Incentive Stock Option  

x Nonqualified Stock Option

Effective Date:   Exercise Price per Share:   Vesting Schedule:  

 

% of Grant

 

Date Vested

1/3%   First anniversary date of grant 1/3%   Second anniversary date of grant
1/3%   Third anniversary date of grant

By your signature and the signature of the Company’s representative below, you
and the Company agree that the Option is granted under and governed by the terms
of the Agreement and the Plan.

 

OPTIONEE:     HERCULES OFFSHORE, INC.  

 

    By  

 

  (Signature of Optionee)     Name:  

 

      Title:  

 

 

 

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HERCULES OFFSHORE 2004 LONG-TERM INCENTIVE PLAN

CONSENT OF OPTIONEE’S SPOUSE

I have reviewed the Stock Option Award Agreement, the Summary of Stock Option
Grant, and the Hercules Offshore 2004 Long-Term Incentive Plan and agree to and
accept all of the terms set forth therein to the extent of any interest I may
now have or may have in the future pursuant to the grant of the Option described
therein to my spouse.

 

OPTIONEE’S SPOUSE:

 

[Signature of Optionee’s Spouse, if any]

 

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HERCULES OFFSHORE, INC.

STOCK OPTION AWARD AGREEMENT

THIS AGREEMENT is made as of the Effective Date (as set forth on the Summary of
Stock Option Grant) between HERCULES OFFSHORE, INC., a Delaware corporation (the
“Company”), and Optionee pursuant to the Hercules Offshore 2004 Long-Term
Incentive Plan (the “Plan”).

WHEREAS, the Board, or a Committee designated by the Board, has authority to
grant Options under the Plan to Employees and directors of the Company; and

WHEREAS, the Board or the Committee, as appropriate, has determined to award
Optionee the Option described in this Agreement;

NOW, THEREFORE, the Company and Optionee agree as follows:

1. Effect of Plan and Authority of Board or Committee. This Agreement and the
Option granted hereunder are subject to the Plan, which is incorporated herein
by reference. The Board or the Committee is authorized to make all
determinations and interpretations with respect to matters arising under the
Plan, this Agreement and the Option granted hereunder. Capitalized terms used
and not otherwise defined herein have the respective meanings given them in the
Plan or in the Summary of Stock Option Grant, which is attached hereto and
incorporated herein by this reference for all purposes.

2. Grant of Option. On the terms and conditions set forth in this Agreement, the
Summary of Stock Option Grant and the Plan, as of the Effective Date, the
Company hereby grants to Optionee the option to purchase the number of shares of
Common Stock set forth on the Summary of Stock Option Grant at the Exercise
Price per share set forth on the Summary of Stock Option Grant (the “Option”).
The Option is intended to be an Incentive Stock Option or a Nonqualified Stock
Option, as provided in the Summary of Stock Option Grant. It is agreed that the
exercise price is at least 100% of the Fair Market Value of a share of Common
Stock on the Effective Date (110% of Fair Market Value if the Option is intended
to be an ISO and if Optionee owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company, within the meaning
of Section 422(b)(6) of the Code).

3. Exercisability and Restrictions.

(a) Subject to the provisions of Section 3(b) and (c), this Option may be
exercised in installments on the vesting dates in the Vesting Schedule set forth
on the Summary of Stock Option Grant. Each installment shall be exercisable, as
to all or part of the shares covered by the installment, at any time or times
after the respective vesting date for such installment and until the expiration
or termination of the Option.

 

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(b) Upon exercise of all or any portion of the Option prior to a Conversion
Transaction, Optionee shall be required, as a condition to such exercise, to
execute and become a party to the Company’s Operating Agreement to the extent
Optionee is not already a party thereto.

(c) Upon exercise of all or any portion of the Option in accordance with this
Agreement and the Plan, Optionee may not sell, assign or transfer for a period
of one year following such exercise a portion of the shares of Common Stock
received upon such exercise equal to the Restriction Shares (as defined below).
The restriction in this Section 3(c) shall terminate immediately in the event
that (x) Optionee’s employment or service with the Company ceases for any reason
whatsoever, or (y) there is a Change in Control of the Company. “Restriction
Shares” shall mean a number of shares equal to the quotient obtained by dividing
(i) the product of (A) 50% times (B) the After-Tax Value (as defined below) of
the exercise in question by (ii) the Fair Market Value of a share of Common
Stock as of the date of exercise. “After-Tax Value” shall mean the (x) the
aggregate Fair Market Value of all shares received upon the applicable exercise
of the Option, minus (y) the aggregate exercise price paid for all shares upon
the applicable exercise of the Option, minus (z) the amount of taxes owed by
Optionee as a result of such exercise of the Option.

4. Term.

(a) Term of Option. This Option may not be exercised after the expiration of 10
years from the Effective Date (five years from the Effective Date if Optionee
owns stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company, within the meaning of Section 422(b)(6) of the
Code).

(b) Early Termination. Except as provided below, this Option may not be
exercised unless Optionee shall have been in the continuous employ or service of
the Company or an affiliate of the Company from the Effective Date to the date
of exercise of the Option. This Option may be exercised after the date of
Optionee’s termination of employment or service with the Company or a Subsidiary
only in accordance with the following:

(i) In the event Optionee’s employment or service is terminated on account of
death or permanent or total disability (within the meaning of Section 22(e)(3)
of the Code), this Option will automatically vest in full and may be exercised,
at any time and from time to time, in whole or in part, by Optionee or a legal
representative of Optionee (in the case of Optionee’s death), for up to three
years from the date of such termination of employment or service, unless the
Option, by its terms, expires earlier.

 

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(ii) In the event Optionee’s employment or service is terminated by the Company
without “Cause” (as such term is defined in the Employment Agreement between
Optionee and the Company), this Option will automatically vest in full and may
be exercised by Optionee, at any time and from time to time, in whole or in
part, for up to three years from the date of such termination of employment or
service, unless the Option, by its terms, expires earlier.

(iii) In the event Optionee’s employment or service is terminated for any reason
other than the reasons set forth in subparagraphs (i) and (ii) of this
Section 4(b), this Option may be exercised by Optionee, to the extent then
vested, at any time and from time to time, in whole or in part, for up to three
months from the date of such termination of employment or service, unless the
Option, by its terms, expires earlier.

5. Manner of Exercise and Payment. This Option shall be exercised by the
delivery of a written notice of exercise in a form prescribed by the Board or
the Committee to the Company, setting forth the number of shares of Common Stock
with respect to which the Option is to be exercised, accompanied by full payment
for such shares. The purchase price for such shares shall be payable to the
Company in the manner specified in Section 8 of the Plan.

6. Withholding Tax. Promptly after demand by the Company, and at its direction,
Optionee shall pay to the Company an amount equal to the applicable withholding
taxes due in connection with the exercise of the Option. Such withholding taxes
may be paid in cash or, subject to the further provisions of this Section 6 of
this Agreement, in whole or in part, by having the Company withhold from the
shares of Common Stock otherwise issuable upon exercise of the Option a number
of shares of Common Stock having a value equal to the amount of such withholding
taxes or by delivering to the Company a number of issued and outstanding shares
of Common Stock (excluding restricted shares still subject to a risk of
forfeiture) having a value equal to the amount of such withholding taxes. The
value of any shares of Common Stock so withheld by or delivered to the Company
shall be based on the Fair Market Value of such shares on the date on which the
tax withholding is to be made. Optionee shall pay to the Company in cash the
amount, if any, by which the amount of such withholding taxes exceeds the value
of the shares of Common Stock so withheld or delivered. An election by Optionee
to have shares withheld or to deliver shares to pay withholding taxes (an
“Election”) must be made at or prior to the time of exercise of the Option. All
Elections shall be made in the same manner as is required for the exercise of
the Option and shall be made on a form approved by the Company.

7. Delivery of Shares. Delivery of the certificates representing the shares of
Common Stock purchased upon exercise of this Option shall be made promptly after
receipt of notice of exercise and full payment of the exercise price and any
required withholding

 

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taxes. If the Company so elects, its obligation to deliver shares of Common
Stock upon the exercise of this Option shall be conditioned upon its receipt
from the person exercising this Option of an executed investment letter, in form
and content satisfactory to the Company and its legal counsel, evidencing the
investment intent of such person and such other matters as the Company may
reasonably require. If the Company so elects, the certificate or certificates
representing the shares of Common Stock, issued upon exercise of this Option
shall bear any legends required by the Company’s Operating Agreement as well as
a legend in substantially the following form:

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF l933 OR APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS SUCH
SHARES ARE FIRST REGISTERED THEREUNDER OR UNLESS THE COMPANY RECEIVES A WRITTEN
OPINION OF COUNSEL, WHICH OPINION AND COUNSEL ARE ACCEPTABLE TO THE COMPANY, TO
THE EFFECT THAT REGISTRATION THEREUNDER IS NOT REQUIRED.

8. Nonassignability. The Option granted hereunder may not be sold, transferred,
pledged, exchanged, hypothecated or otherwise disposed of, other than by will or
pursuant to the applicable laws of descent and distribution. In the case of the
death of Optionee or other person entitled to exercise the Option, the Company
may require, as a condition to the transfer of the Option by will or pursuant to
the laws of descent and distribution or the exercise thereof, that the person
entitled to exercise the Option execute and deliver to the Company such
instruments and documents as may be reasonably requested by the Company to
evidence and confirm such person’s right and title to the Option.

9. Notices. All notices between the parties hereto shall be in writing. Notices
to Optionee shall be given to Optionee’s address as contained in the Company’s
records. Notices to the Company shall be addressed to Randall Stilley at the
principal executive offices of the Company.

10. Relationship With Contract of Employment.

(a) The grant of an Option does not form part of Optionee’s entitlement to
remuneration or benefit pursuant to his contract of employment, if any, nor does
the existence of a contract of employment between any person and the Company or
a Subsidiary give such person any right or entitlement to have an Option granted
to him or any expectation that an Option might be granted to him whether subject
to any conditions or at all.

(b) The rights and obligations of Optionee under the terms of his contract of
employment with the Company or a Subsidiary, if any, shall not be affected by
the grant of an Option.

 

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(c) The rights granted to Optionee upon the grant of an Option shall not afford
Optionee any rights or additional rights to compensation or damages in
consequence of the loss or termination of his office or employment with the
Company or a Subsidiary for any reason whatsoever.

(d) Optionee shall not be entitled to any compensation or damages for any loss
or potential loss which he may suffer by reason of being or becoming unable to
exercise an Option in consequence of the loss or termination of his office or
employment with the Company or a Subsidiary for any reason (including, without
limitation, any breach of contract by his employer) or in any other
circumstances whatsoever.

11. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws (and not the principles relating to conflicts
of laws) of the State of Delaware, except as superseded by applicable federal
law.

 

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