Exhibit 10.1

SEVERANCE AGREEMENT

THIS SEVERANCE AGREEMENT (together with its Exhibit, this “Agreement”) is made
as of May 2, 2016 (the “Effective Date”), by and between Diamond Offshore
Drilling, Inc., a Delaware corporation (together with its successors and
assigns, the “Company”), and Kelly Youngblood (the “Executive,” and, together
with the Company, a “Party”).

W I T N E S S E T H:

WHEREAS, the Company wishes to employ the Executive as its Senior Vice President
and Chief Financial Officer, and the Executive wishes to accept and begin such
employment, and in connection therewith the Parties agree to the terms and
conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing premises and the promises and
covenants herein, the Parties agree as follows:

 

1. Termination by the Company Without Cause; Termination by the Executive for
Good Reason.

 

  (a) In the event that the Executive’s employment with the Company is
terminated during the term of this Agreement (the “Term”) (1) by the Company
other than for Permanent Disability (as defined below) or for Cause (as defined
below) or (2) by the Executive for Good Reason (as defined below), the Company
shall provide the Executive with the following (in lieu of separation payments
under any other Company severance plan, policy or arrangement):

 

  (i) Unpaid base salary through the date the employment of the Executive
terminates (the “Termination Date”), paid no later than the next following
payment date in accordance with the Company’s normal payroll payment practices.

 

  (ii) Other or additional benefits in accordance with the then-applicable terms
of any applicable plan, program, corporate governance document, policy,
agreement or other arrangement of the Company or any of its subsidiaries
“Company Arrangements”); provided, however, that this shall not result in a
duplication of benefits or payments to the Executive or his beneficiaries, as
the case may be.

 

  (iii) Subject to Section 1(c), separation payments at a rate of $55,000 per
month for a period of 12 months, commencing with the month following the month
in which the “Revocation Period” as defined in the release referred to in
Section 1(c) ends (and thereafter on the first Company payroll date of each
month), but subject to deferral as provided in Section 3 hereof.

 

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  (iv) Subject to Section 1(c), the Executive and his dependents shall be
entitled to continued participation (at the Company’s expense), for a period of
12 months following the Termination Date (which shall be concurrent with any
health care continuation benefits under COBRA), in the group medical plan of the
Company in which they were participating as of such date.

 

  (b) For purposes of this Agreement:

 

  (i) “Permanent Disability” shall mean that the Executive has been unable, due
to physical or mental incapacity, to substantially perform his job duties and
responsibilities for the Company for 90 days out of any 180 consecutive days.

 

  (ii) “Cause” shall mean that: (1) the Executive is convicted of, or pleads
guilty or nolo contendere to, a felony, (2) the Executive engages in conduct
that constitutes either (x) a material and willful breach of the Company’s Code
of Business Conduct and Ethics or any other policy applicable to employees of
the Company, (y) willful, or reckless, material misconduct in the performance of
the Executive’s duties, or (z) willful, habitual neglect of the Executive’s
material duties; provided, however, that for purposes of clauses (2)(y) and
(2)(z) of this paragraph, Cause shall not include any act or omission believed
by the Executive in good faith to have been in or not opposed to the interest of
the Company (without any intent by the Executive to gain, directly or
indirectly, a profit to which he is not legally entitled).

 

  (iii) “Good Reason” shall mean the occurrence of any of the following events,
without the Executive’s prior written consent and without cure by the Company
within 30 days after the Executive gives notice of such event to the Company
requesting cure, such notice to be given within 90 days after the Executive
learns that such event has occurred: (1) the assignment to the Executive of
duties that are materially inconsistent with his position (including his status,
offices, titles and reporting relationships), authority, duties or
responsibilities, all as in effect on the Effective Date; (2) actions by the
Company that have resulted in a substantial diminution in his position,
authority, duties or responsibilities as compared to his position, authority,
duties or responsibilities at the Effective Date; (3) any failure to elect or
appoint the Executive as Senior Vice President and Chief Financial Officer of
the Company or to maintain him in such position throughout the Term; (4) any
reduction in Base Salary or target Annual Bonus opportunity from the amounts in
effect on the Effective Date; or (5) any failure of the Company to obtain the
assumption in writing of its obligation to perform this Agreement by any
successor to all or substantially all of the business or assets of the Company
within 15 calendar days after a merger, consolidation, sale or similar
transaction.

 

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  (c) Upon termination of his employment hereunder in a termination governed by
this Section 1, the Executive shall be entitled to the benefits described in
Section 1(a)(iii) and (iv) only if he executes, and delivers to the Company
within 21 days after the Termination Date, a valid Release substantially in the
form attached hereto as Exhibit A (as such form may be changed by Company as
shall be necessary to render such form valid, binding and enforceable under
then-current applicable law), which Release he does not revoke during the
“Revocation Period” as defined in such Release.

 

2. Term of Agreement. The Term of this Agreement shall commence on the Effective
Date and shall expire one year after the Effective Date. Should Executive remain
in the employ of Company (or any affiliate) beyond the Term, Executive will be
deemed an “at will” employee and, accordingly, Executive’s employment may be
terminated at any time for any reason or no reason.

 

3. Section 409A.

 

  (a) It is the Parties’ intention that all payments, benefits and entitlements
received by the Executive under this Agreement be provided in a manner that does
not impose any additional taxes, interest or penalties on the Executive with
respect to such payments, benefits and entitlements under Section 409A of the
Code, and its implementing regulations (“Section 409A”), and the provisions of
this Agreement shall be construed and administered in accordance with such
intent. Each of the Parties has used, and will continue to use, its best
reasonable efforts to avoid the imposition of such additional taxes, interest or
penalties, and the Parties agree to work together in good faith to amend this
Agreement, and to structure any payment, benefit or other entitlement received
by the Executive, in a manner that avoids imposition of such additional taxes,
interest or penalties while preserving the affected payment, benefit or
entitlement to the maximum extent practicable and maintaining the basic
financial provisions of this Agreement without violating any applicable
requirement of Section 409A. For purposes of this Agreement, “Code” shall mean
the Internal Revenue Code of 1986, as amended, and any reference to a particular
section of the Code shall include any provision that modifies, replaces or
supersedes such section.

 

  (b)

All payments to be made to the Executive hereunder, to the extent they
constitute a deferral of compensation subject to the requirements of
Section 409A (after taking into account all exclusions applicable to such
payments under Section 409A), shall be made no later, and shall not be made any
earlier, than at the time or times specified herein for such payments to be
made, except as otherwise permitted or required under Section 409A. The date of
the Executive’s “separation from service”, as defined in Section 409A (and as
determined by applying the default presumptions in Treas. Reg.
§1.409A-1(h)(1)(ii)), shall be

 

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  treated as the date of the Executive’s termination of employment for purposes
of determining the time of payment of any amount that becomes payable to the
Executive hereunder upon the Executive’s termination of employment and that is
properly treated as a deferral of compensation subject to Section 409A after
taking into account all exclusions applicable to such payment under
Section 409A. In addition, no such payment or distribution of deferred
compensation shall be made to the Executive prior to the earlier of (a) the
expiration of the six (6) month period measured from the date of the Executive’s
“separation from service”, or (b) the date of the Executive’s death, if the
Executive is deemed at the time of such separation from service to be a
“specified employee” within the meaning of Section 409A and if such delayed
commencement is otherwise required to avoid additional tax under
Section 409A(a)(2) of the Code. All payments and benefits that are delayed
pursuant to the immediately preceding sentence shall be paid to the Executive in
a lump sum upon the first business day immediately following the earlier of
(x) the expiration of such six (6) month period or (y) the Executive’s date of
death, without interest. Each individual installment payment that becomes
payable under this Agreement, including each payment under Section 1(a)(iii),
shall be treated as a right to receive a series of “separate payments” for
purposes of Section 409A and Treasury Reg. §1.409A-2(b)(2)(iii). To the extent
that the payment or reimbursement of any expense or the provision of any in-kind
benefits under this Agreement would be considered deferred compensation under
Section 409A (after taking into account all exclusions applicable to such
reimbursements and benefits under Section 409A): (i) the payment or
reimbursement of such expenses or the provision of in-kind benefits in one of
the Executive’s taxable years shall not affect the payment or reimbursement of
any expense or payment of in-kind benefits in any other taxable year of the
Executive; (ii) any payment or reimbursement for expenses under this Agreement
shall be made in accordance with the Company’s applicable plans and policies as
soon as soon as administratively practicable after such expense has been
incurred, but in any event on or before the last day of the Executive’s taxable
year following the taxable year in which the expense was incurred; and (iii) any
such payment or reimbursement or in-kind benefit may not be liquidated or
exchanged for any other benefit.

 

4. Severability. Each of the terms and provisions of this Agreement shall be
deemed severable in whole and in part. To the extent that any provision or
portion of this Agreement shall be determined to be invalid or unenforceable for
any reason, in whole or in part, the remaining provisions of this Agreement
shall remain in full force and effect so as to achieve the intentions of the
Parties, as set forth in this Agreement, to the maximum extent possible.

 

5. Assignment.

 

  (a) This Agreement shall be binding upon, and inure to the benefit of, the
Parties and their respective successors, heirs (in the case of the Executive)
and assigns.

 

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  (b) No rights or obligations of the Company under this Agreement may be
assigned or transferred by the Company except that such rights and obligations
may be assigned or transferred pursuant to a merger, consolidation or other
combination in which the Company is not the continuing entity, or a sale or
liquidation of all or substantially all of the business and assets of the
Company, provided that the assignee or transferee is the successor to all or
substantially all of the business and assets of the Company and such assignee or
transferee expressly assumes the liabilities, obligations and duties of the
Company as set forth in this Agreement.

 

  (c) No rights or obligations of the Executive under this Agreement may be
assigned or transferred by the Executive other than his rights to compensation
and benefits, which may be transferred only by will or by operation of law.
Notwithstanding the foregoing, the Executive shall be entitled, to the extent
permitted under applicable law and applicable Company Arrangements, to select
and change a beneficiary or beneficiaries to receive any compensation or benefit
hereunder following the Executive’s death by giving written notice thereof to
the Company. In the event of the Executive’s death or a judicial determination
of his incompetence, references in this Agreement to the Executive shall be
deemed, where appropriate, to refer to his beneficiary, estate or other legal
representative. In the event that Executive dies before all payments he may be
entitled to have been paid, all remaining payments shall be made to the
beneficiary specifically designated by the Executive in writing prior to his
death, or, if no such beneficiary was designated (or the Company is unable in
good faith to determine the beneficiary designated), to his personal
representative or estate.

 

6. Miscellaneous.

 

  (a) This Agreement shall be governed, interpreted, performed and enforced in
accordance with its express terms, and otherwise in accordance with the laws of
the State of Texas (without regard to choice of law or conflict of laws
principles), to the extent not displaced by federal law.

 

  (b) Except as otherwise expressly set forth herein, this Agreement contains
the entire agreement of the Parties with regard to the subject matter hereof,
and supersedes all prior agreements and understandings, written or oral, with
respect to such subject matter.

 

  (c)

No provision in this Agreement may be amended unless such amendment is set forth
in a writing that expressly refers to the provision of this Agreement that is
being amended and that is signed by the Executive and by an authorized officer
of the Company. No waiver by any Party of any breach of any condition or
provision contained in this Agreement shall be deemed a waiver of any similar or
dissimilar condition or provision at the same or any prior or subsequent time.
To be effective, any waiver must be set forth in a writing signed by the waiving
Party and must specifically refer to the condition(s) or provision(s) of this
Agreement being waived. In the event of any conflict between any provision of
this

 

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  Agreement and any provision of any Company Arrangement, the provisions of this
Agreement shall control unless the Executive otherwise agrees in a writing that
expressly refers to the provision of this Agreement whose control he is waiving.

 

  (d) All numbers and headings contained in this Agreement are for reference
only and are not intended to qualify, limit or otherwise affect the meaning or
interpretation of any provision contained in this Agreement. When used in this
Agreement, (i) the words “hereof”, “herein”, “hereto” and “hereunder” and words
of similar import shall refer to this Agreement as a whole and not to any
particular provision of this Agreement unless otherwise indicated, (ii) the
terms defined in the singular shall have a comparable meaning when used in the
plural, and vice versa, and (iii) the term “including” shall mean “including,
without limitation” and the term “includes” shall mean “includes, without
limitation.”

 

7. Notices. Any notice, consent, demand, request, or other communication given
to a Party in connection with this Agreement shall be in writing and shall be
deemed to have been given to such Party (x) when delivered personally to such
Party or (y), provided that a written acknowledgment of receipt is obtained,
five days after being sent by prepaid certified or registered mail, or two days
after being sent by a nationally recognized overnight courier, to the address
(if any) specified below for such Party (or to such other address as such Party
shall have specified by 10 days’ advance notice given in accordance with this
Section 7) or (z) on the first business day after it is sent by facsimile to the
facsimile number (if any) set forth below (or to such other facsimile number as
shall have specified by 10 days’ advance notice given in accordance with this
Section 7), with a confirmatory copy sent by certified or registered mail or by
overnight courier in accordance with this Section 7.

If to the Company:

Diamond Offshore Drilling, Inc.

15415 Katy Freeway, Suite 100

Houston, Texas 77094

Attn: Corporate Secretary

If to the Executive:

The address of his principal residence as it appears in the Company’s records,
with a copy to him (during the Term) at his office in Houston, Texas.

 

8. Arbitration of All Disputes. Any claim, demand, request, investigation,
dispute, controversy, threat, discovery request, or request for testimony or
information (collectively, “Claim”) between the Executive and the Company or any
of its subsidiaries, including any Claim arising out of or relating to this
Agreement, any other agreement or arrangement between the Executive and the
Company or any of its subsidiaries, the Executive’s employment with the Company,
or any termination thereof shall be resolved

 

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  by binding confidential arbitration, to be held in Houston Texas, in
accordance with the Commercial Arbitration Rules (and not the National Rules for
Resolution of Employment Disputes) of the American Arbitration Association and
this Section 8. Judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.

 

9. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original copy of this Agreement and all
of which, when taken together, shall be deemed to constitute one and the same
agreement. Signatures delivered by facsimile shall be deemed effective for all
purposes.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
Effective Date.

 

DIAMOND OFFSHORE DRILLING, INC. By:   /s/ Marc Edwards   Name: Marc Edwards  
Title: President and Chief Executive Officer

 

EXECUTIVE: /s/ Kelly Youngblood Kelly Youngblood

 

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EXHIBIT A

FORM OF RELEASE

THIS RELEASE OF CLAIMS (this “Release”) is entered into as of
                     [the date the Executive signs this Release] (the “Release
Date”), by and between Kelly Youngblood (the “Executive”) and Diamond Offshore
Drilling, Inc. (the “Company”). Capitalized terms used but not defined herein
shall have the meanings ascribed to such terms in the Severance Agreement by and
between the Company and the Executive, dated as of May 2, 2016 (the “Severance
Agreement”).

1. Release.

(a) The Executive, on behalf of himself and his beneficiaries, estate and legal
representatives (collectively, with the Executive, the “Executive Releasors”)
hereby releases, acquits and forever discharges the Company, its parents,
subsidiaries, and each of their respective successors, assigns, officers,
directors, and employees (collectively, the “Company Released Parties”) from any
and all claims, causes of actions, demands, suits, costs, expenses and damages
of whatsoever nature and kind, whether known or unknown, whether now existing or
hereafter arising, at law or in equity, that any Executive Releasor may have, or
may have had, or may hereafter have, and that are based in whole or in part on
facts, whether or not now known, existing prior to the Release Date, and that
arise out of or relate to the Executive’s employment with or services for the
Company or its subsidiaries, or the termination of such employment or services,
other than the right to payment or benefits under Sections 1(a)(iii) and
1(a)(iv) of the Severance Agreement, for which execution of this Release is, in
part, a condition precedent. Notwithstanding the foregoing, this release does
not apply (i) to any vested benefits under any benefits plan, program, policies
or agreements of the Company or any of its affiliates which the Executive may
have as may be in effect from time to time; (ii) to the Executive’s right to
obtain contribution as permitted by law in the event of any judgment against the
Executive as a result of any act or failure to act for which the Executive and
the Company (or any of its subsidiaries or affiliates) are held jointly liable;
(iii) to any rights the Executive holds as an individual stockholder of the
Company; (iv) to any claim that cannot be waived by law; (v) to the Executive’s
right to enforce the terms of this Release; and (vi) to any right or claim that
arises after the date of the execution of this Release.

(b) The claims released by the Executive include, to the extent set forth in
Section 1(a), any and all claims under federal, state or local laws pertaining
to employment, including the Age Discrimination in Employment Act of 1967, as
amended, Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C.
Section 2000e et seq., the Fair Labor Standards Act as amended, 29 U.S.C.
Section 201 et seq., the Americans with Disabilities Act, as amended, 42 U.S.C.
Section 12101 et seq., the Reconstruction Era Civil Rights Act, as amended, 42
U.S.C. Section 1981 et seq., the Rehabilitation Act of 1973, as amended, 29
U.S.C. Section 701 et seq., the Family and Medical Leave Act of 1992, 29 U.S.C.
Section 2601 et seq., the Sarbanes-Oxley Act, as amended, the Dodd-Frank Act, as
amended and any and all state or local laws regarding employment discrimination
and/or U.S. federal, state or local laws of any type or description regarding
employment, including any claims in any way arising from or derivative of the
Executive’s employment with the Company or any of its subsidiaries or the
termination of such employment, as well as any claims under state contract or
tort law or otherwise.

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2. Representation by the Executive. The Executive represents that he has not
been convicted of, or pleaded guilty to or nolo contendere to, any felony and
has not engaged in conduct that constitutes Cause under the Severance Agreement.

3. Incorporation of Specific Provisions. Sections 4, 5, 6, 7 and 8 of the
Severance Agreement shall be deemed incorporated by reference in this Release
and shall be treated as if set forth in full herein, except that references in
them to this “Agreement” shall be deemed to be references to this “Release.”

4. Review and Revocation Period. The Executive hereby represents that he has
read this Release carefully and fully understands the terms hereof, and that he
has been advised to consult with an attorney and has had the opportunity to
consult with an attorney prior to signing this Release. The Executive
acknowledges that he is executing this Release voluntarily and knowingly,
without duress or coercion, and that he has not relied on any representations,
promises or agreements of any kind, other than those set forth in this Release.
The Executive further represents that he has had 21 days to review this Release.
If the Executive has executed this Release in fewer than 21 days after its
delivery, the Executive hereby acknowledges that his decision to execute this
Release prior to the expiration of such 21-day period was entirely voluntary.
The Executive may revoke his acceptance of this Release within seven days after
he has signed it and delivered it to the Company (the “Revocation Period”) by
sending written notice to the Company that the Executive wishes to revoke his
acceptance of it and not be bound by it. If the Executive timely revokes this
Release, the Company shall have no obligation to provide to the Executive the
benefits described or referenced in Sections 1(a)(iii) and 1(a)(iv) of the
Severance Agreement. This Release shall become effective on the seventh
(7th) day after the Executive signs it unless revoked in accordance with the
procedure set forth in the prior sentence. This Release shall be null and void
if not countersigned by the Company, and delivered to the Executive, within
seven days after the expiration of the Revocation Period.

IN WITNESS WHEREOF, the Parties have executed this Release as of the date and
year first above written.

 

DIAMOND OFFSHORE DRILLING, INC. By:   /s/ Marc Edwards   Name: Marc Edwards  
Title: President and Chief Executive Officer

 

EXECUTIVE: /s/ Kelly Youngblood Kelly Youngblood Date Signed: