Exhibit 10.1

EMPLOYMENT AGREEMENT

RANDAL REED

This Employment Agreement (this “Agreement”), dated effective as of May 4, 2006
(the Effective Date”), is by and between Hercules Offshore, Inc, a Delaware
corporation (the “Company”), with its principal place of business at 11 Greenway
Plaza, Suite 2950 Houston, Texas 77046 and Randal Reed, (“Executive”).

RECITALS

WHEREAS, the Company is a Houston-based offshore oil services contractor; and

WHEREAS, the Company desires to employ Executive as an officer of the Company
and of Hercules Liftboat Company, LLC (“HLC”), a wholly owned subsidiary of the
Company, and Executive desires to accept such employment upon the conditions and
terms set forth hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual promises, terms, covenants and
conditions set forth herein and the performance of each, it is hereby agreed as
follows:

AGREEMENTS

 

  1. EMPLOYMENT AND DUTIES.

(a) The Company hereby employs Executive as President of HLC. As such, Executive
shall have responsibilities, duties and authority commensurate with such
position and shall perform such responsibilities, and shall be based at HLC’s
principal office in Lafayette, Louisiana. Executive will report to the President
and Chief Executive Officer of the Company. Additional or different duties,
titles or executive positions may, however, be assigned to Executive from time
to time, provided that any such changes are consistent and compatible with
Executive’s experience, background and managerial skills. Executive hereby
accepts this employment upon the terms and conditions herein contained and
agrees to devote his full business time, energy, attention, skills, and best
efforts to promote and further the business of the Company.

(b) Executive shall faithfully adhere to, execute and fulfill all lawful
policies established by the Company.

(c) Executive shall not, during the term of Executive’s employment hereunder, be
engaged in any business activity other than on behalf of the Company; provided,
however, that the foregoing limitation shall not be construed as prohibiting
Executive from making personal passive investments in any business in which
Executive does not, directly or indirectly, provide services or participate in
the management thereof, provided such investments do not violate the terms of
Section 4 of this Agreement.

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(d) The Company shall provide Executive with an office in Lafayette, Louisiana,
or at such location as shall be designated by the President and Chief Executive
Officer or the Board of Directors of the Company, which location shall be
reasonably acceptable to the Executive.

2. COMPENSATION. For all services rendered by Executive, the Company shall
compensate Executive as follows:

(a) Base Salary. Beginning on the date of this Agreement and through the end of
the Term (as hereinafter defined), the base salary payable to Executive shall be
One Hundred Seventy Thousand Dollars ($170,000.00) per annum, payable in
accordance with the Company’s standard payroll procedures.

(b) Perquisites, Benefits and Other Compensation. Executive shall be entitled to
receive additional benefits and compensation from the Company in such form and
to such extent as specified below:

 

  (i) An annual bonus of up to 100% of base salary (target of 50%) depending
upon meeting predetermined goals established by the Board of Directors.

 

  (ii) The Company shall reimburse Executive in accordance with the Company’s
policies for all reasonable business travel and other out-of-pocket expenses
reasonably incurred by Executive in the performance of his services pursuant to
this Agreement. All reimbursable expenses shall be appropriately documented in
reasonable detail by Executive upon submission of any request for reimbursement,
and in a format and manner consistent with the Company’s expense reporting
policy.

 

  (iii) The Company shall provide Executive five weeks of paid vacation per year
or such greater amount as may be afforded senior officers in accordance with
Company’s policies in effect from time to time.

 

  (iv) The Company shall provide Executive with other executive perquisites as
may be available to or deemed appropriate for Executive by the Board of
Directors, participation in all other Company-wide Executive benefits as may be
adopted from time to time by the Company, and participation in any other
insurance and Executive benefits or plans that includes all the executive
officers of Company, including any pension, profit-sharing, bonus or stock
option plan, life insurance, health, medical, hospitalization, or surgical
insurance plan or policy, whether now existing or hereinafter established.

3. TERM; TERMINATION; RIGHTS ON TERMINATION. The term of this Agreement shall
begin on the Effective Date and continue for two (2) years (the “Term”). This
Agreement and Executive’s employment may be terminated in any one of the
following ways:

(a) Death. The death of the Executive shall immediately terminate this Agreement
with no severance compensation due to Executive’s estate.

 

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(b) Disability. If, as a result of incapacity due to physical or mental illness
or injury, Executive shall have been absent from full-time duties hereunder for
four (4) consecutive months, then thirty (30) calendar days after receiving
written notice (which notice may occur before or after the end of such
four-month period, but which shall not be effective earlier than the last day of
such four-month period), the Company may terminate Executive’s employment
hereunder provided Executive is unable to resume full-time duties at the
conclusion of such notice period. Also, Executive may terminate his employment
hereunder if his health should become impaired to an extent that makes the
continued performance of his duties hereunder hazardous to his physical or
mental health or Executive’s life, provided that Executive shall have furnished
the Company with a written statement from a qualified doctor to such effect and
provided, further, that, at the Company’s request made within thirty (30) days
of the date of such written statement, Executive shall submit to an examination
by a doctor selected by the Company who is reasonably acceptable to Executive or
Executive’s doctor and such doctor shall have concurred in the conclusion of
Executive’s doctor. If this Agreement is terminated during the Term as a result
of Executive’s disability, Executive shall receive from the Company, in a
lump-sum payment due within ten (10) days of the effective date of termination,
a severance payment equal to three (3) times his monthly base salary at the rate
then in effect.

(c) For Cause. The Company may terminate this Agreement ten (10) calendar days
after written notice to Executive for cause, which shall be: (i) Executive’s
material and irreparable breach of this Agreement; (ii) Executive’s gross
negligence in the performance or intentional nonperformance (continuing for ten
(10) days after receipt of written notice of need to cure) of any of Executive’s
duties and responsibilities hereunder or reasonable instructions of the Board of
Directors of the Company within the scope of his employment by the Company;
(iii) Executive’s dishonesty, fraud or misconduct with respect to the business
or affairs of the Company; (iv) Executive’s indictment or conviction of a felony
crime or crime involving moral turpitude; or (v) violation of the Company’s drug
policy or anti-harassment policy by Executive. In the event of a termination for
cause, as enumerated above, Executive shall have no right to any severance
compensation.

(d) Without Cause. At any time after the commencement of employment, before the
expiration of the Term, the Company or Executive may, without cause, terminate
this Agreement and Executive’s employment, effective ninety (90) days after
written notice is provided to the other party. Should Executive be terminated by
the Company without cause effective during the Term, Executive shall receive as
severance from the Company, (1) in installment payments (without interest) in
accordance with normal payroll practices of the Company, Executive’s monthly
base salary at the rate then in effect for the remainder of the Term, but not
less than twelve months; (2) an additional sum, payable in monthly installment
payments, equal to the annual bonus referred to in Section 2 hereof for the year
prior to the year in which Executive is terminated without cause. Also as
severance, the Company will continue to provide for and pay to Executive,
without exception until the termination date of this Agreement, but not less
than twelve months, the medical benefits set forth in Section 2(b) (iv) hereof.
Provided, however, that Executive is not entitled to the severance compensation

 

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described in this Section 3(d) if on the effective date of the discharge he is
engaged in any activities prohibited by Section 4 of this Agreement.
Furthermore, if Executive resigns or otherwise terminates his employment without
cause pursuant to this Section 3(d), Executive shall receive no severance
compensation.

(e) Expiration of Term. Unless sooner terminated pursuant to the terms of this
Agreement, this Agreement will terminate effective upon the expiration of the
Term. Executive acknowledges that this Agreement may terminate pursuant to this
Section 3(e) with or without a corresponding termination of Executive’s
employment with the Company. If this Agreement terminates pursuant to this
Section 3(e) and Executive remains employed by the Company thereafter, then
Executive shall be an “at will” Executive of the Company following such
termination. In the event of a termination of Executive’s employment pursuant to
this Section 3(e), Executive shall have no right to any severance compensation.

(f) Effect of Termination.

 

  (i) Upon termination of this Agreement for any reason provided in subsections
(a) through (e) above, Executive shall be entitled to receive all compensation
earned and all benefits and reimbursements due through the effective date of
termination. Additional compensation subsequent to termination, if any, will be
due and payable Executive only to the extent and in the manner expressly
provided herein. Executive will not be entitled to any other payments or
benefits from the Company, except as provided in this Agreement or under the
Company’s benefit policies then in effect. All other rights and obligations of
the Company and Executive under this Agreement shall cease as of the effective
date of termination, except that Executive’s obligations under Sections 4, 5, 6
and 7 and the Company’s and Executive’s obligations under Section 8 herein shall
survive such termination in accordance with their terms.

 

  (ii) If termination of Executive’s employment arises out of the Company’s
failure to pay Executive on a timely basis the amounts to which Executive is
entitled under this Agreement or as a result of any other breach of this
Agreement by the Company, as determined by a court of competent jurisdiction or
pursuant to the provisions of Section 14 below, the Company shall pay all
amounts and damages to which Executive may be entitled as a result of such
breach, including interest thereon and all reasonable legal fees and expenses
and other costs incurred by Executive to enforce Executive’s rights hereunder;
provided, however, that the Company will not be liable in any event for special,
indirect or consequential damages.

4. NON-COMPETITION; NO SOLICITATION.

(a) Executive recognizes that Company’s willingness to enter into this Agreement
is based in material part on Executive’s agreement to the provisions of this
Section 4, and that

 

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Executive’s breach of the provisions of this Section could materially damage the
Company. Company shall provide its confidential and trade secret information to
Executive, and Executive agrees not to disclose or use such information for any
reason other than Executive’s employment with Company without the express,
prior, written consent of Company. Therefore, in consideration of the Company’s
promise to provide Executive with its confidential and trade secrets, Executive
agrees that he will not, during the period of Executive’s employment by or with
the Company, and for the longer of (i) a period of one (1) year immediately
following the termination of Executive’s employment with the Company under this
Agreement or otherwise, and (ii) any period during which the Company is paying
severance to Executive pursuant to the terms of this Agreement (the “Non-Compete
Period”), for any reason whatsoever, directly or indirectly, for himself or on
behalf of or in conjunction with any other person, persons, company,
partnership, corporation, limited liability company or business of whatever
nature accept employment, act as a consultant or contractor, or otherwise
actively participate, assist, or compete, directly or indirectly, in the
liftboat or marine business against the Company or HLC in those states of the
United States, or in those countries in the world, where the Company or HLC
engages in the offshore drilling business.

(b) Executive agrees that he shall not during the Non-Compete Period, for any
reason whatsoever, directly or indirectly, for himself or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation,
limited liability company or business of whatever nature offer employment to, or
procure the making of an offer of employment to any employee of the Company who
was so employed at any time during the twelve (12) months prior to the date of
termination of Executives’ employment with the Company.

(c) Executive agrees that he shall not during the Non-Compete Period, for any
reason whatsoever, directly or indirectly, team or join with other employees of
the Company who were employees of the Company during the twelve (12) months
prior to the date of termination of Executives’ employment with the Company in
any business like or related to the liftboat or marine business.

(d) Because of the difficulty of measuring economic losses to the Company as a
result of a breach of the foregoing covenant, and because of the immediate and
irreparable damage that could be caused to the Company for which it would have
no other adequate remedy, Executive agrees that the foregoing covenant may be
enforced by the Company by injunctions, restraining orders and other equitable
actions, without showing any actual damage or that monetary damages would not
provide an adequate remedy and without any bond or other security being
required.

(e) The covenants in this Section 4 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant. Moreover, in the event any court of competent jurisdiction shall
determine that the scope, time or territorial restrictions set forth in this
Section 4 are ruled to be unreasonable and therefore unenforceable, then it is
the intention of the parties that such restrictions be enforced to the fullest
extent which the court deems reasonable, and this Agreement shall thereby be
reformed.

 

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(f) Executive hereby agrees that the period during which the agreements and
covenants of Executive made in this Section 4 shall be effective shall be
computed by excluding from such computation any time during which Executive is
in violation of any provision of this Section 4.

5. RETURN OF COMPANY PROPERTY. All records, designs, patents, business plans,
financial statements, manuals, memoranda, lists and other property delivered to
or compiled by Executive by or on behalf of the Company, or any entity
controlled by or under common control with the Company (an “Affiliate”) or the
representatives, vendors or customers thereof that pertain to the business of
the Company or any Affiliate shall be and remain the property of the Company or
such Affiliate, as the case may be, and be subject at all times to the
discretion and control thereof. Likewise, all correspondence, reports, records,
charts, advertising materials and other similar data pertaining to the business,
activities or future plans of the Company or its Affiliates that are collected
or held by Executive shall be delivered promptly to the Company or its
Affiliates, as the case may be, without request by such party, upon termination
of Executive’s employment, without regard to the cause or reasons for such
termination.

6. INVENTIONS. Executive shall disclose promptly to the Company any and all
significant conceptions and ideas for inventions, improvements and valuable
discoveries, whether patentable or not, which are (a) conceived or made by
Executive, solely or jointly with another, during the period of employment or
within one year thereafter, (b) directly related to the business or activities
of the Company, and (c) conceived by Executive as a result of Executive’s
employment by the Company. Executive hereby assigns and agrees to assign all
Executive’s interests in any such invention, improvement or valuable discovery
to the Company or its nominee. Whenever requested to do so by the Company,
Executive shall execute any and all applications, assignments or other
instruments that the Company shall deem necessary to apply for and obtain
Letters Patent of the United States or any foreign country or to otherwise
protect the Company’ interest in any such invention, improvement or valuable
discovery.

7. CONFIDENTIALITY.

(a) Executive acknowledges and agrees that all Confidential Information (as
defined below) is confidential and a valuable, special, and unique asset of the
Company that gives the Company an advantage over its actual and potential,
current and future competitors. Executive further acknowledges and agrees that
Executive owes the Company a fiduciary duty to preserve and protect all
Confidential Information from unauthorized disclosure or unauthorized use;
certain Confidential Information constitutes “trade secrets” under the laws of
the State of Texas; and unauthorized disclosure or unauthorized use of the
Confidential Information would irreparably injure the Company.

(b) Both during the term of Executive’s employment and after the termination of
Executive’s employment for any reason (including wrongful termination),
Executive shall hold all Confidential Information in strict confidence, and
shall not use any Confidential Information except for the benefit of the
Company, in accordance with the duties assigned to Executive by the Company.
Executive shall not, at any time (either during or after the term of

 

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Executive’s employment), disclose any Confidential Information to any person or
entity (except other Executives of the Company who have a need to know the
information in connection with the performance of their employment duties), or
copy, reproduce, modify, decompile, or reverse engineer any Confidential
Information, or remove any Confidential Information from the Company’s premises,
without the prior written consent of the Board of Directors of the Company, or
permit any other person to do so. Executive shall take reasonable precautions to
protect the physical security of all documents and other material containing
Confidential Information (regardless of the medium on which the Confidential
Information is stored). This Agreement applies to all Confidential Information,
whether now known or later to become known to Executive.

(c) Upon the termination of Executive’s employment with the Company for any
reason (including wrongful termination), and upon request of the Company at any
other time, Executive shall promptly surrender and deliver to the Company all
documents and other written material of any nature containing or pertaining to
any Confidential Information and shall not retain any such document or other
material. Within five days of any such request, Executive shall certify to the
Company in writing that all such materials have been returned.

(d) As used in this Agreement, the term “Confidential Information” shall mean
any information or material known to or used by or for the Company or any of its
Affiliates (whether or not owned or developed by the Company or such Affiliate
and whether or not developed by Executive) that is not generally known to the
public. Confidential information includes, but is not limited to, the following:
(i) all trade secrets of the Company and its Affiliates; (ii) all information
that the Company or its Affiliates has marked as confidential or has otherwise
described to Executive (either in writing or orally) as confidential; (iii) all
nonpublic information concerning the Company’s and its Affiliates’ products,
services, prospective products, services, or transactions, research, product
designs, prices, discounts, costs, budgets, marketing plans, marketing
techniques, market studies, competition, test data, customers, customer lists
and records, suppliers and contracts; (iv) all business records and plans of the
Company and its Affiliates; (v) all personnel files of the Company and its
Affiliates;(vi) all financial information of or concerning the Company and its
Affiliates; (vii) all information relating to operating system software,
application software, software and system methodology, hardware platforms,
technical information, inventions, computer programs and listings, source codes,
object codes, copyrights, and other intellectual property; (viii) all technical
specifications; (ix) any proprietary information belonging to the Company or any
Affiliate; and (x) all of the Company’s or any Affiliate’s computer hardware or
software, training or instruction manuals and data and computer system passwords
and user codes.

8. INDEMNIFICATION. If Executive is made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by the Company or its Affiliates against
Executive), by reason of the fact that he is or was performing services under
this Agreement, then the Company shall indemnify Executive against all expenses
(including reasonable attorneys’ fees), judgments, fines and amounts paid in
settlement, as actually and reasonably incurred by Executive in connection
therewith, and subject to the next sentence hereof, shall advance such expenses
to Executive, to the full extent permitted by the corporate law of the state in
which

 

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the Company is incorporated. If both Executive and the Company are made a party
to the same third-party action, complaint, suit or proceeding, then the Company
agrees to engage competent legal representation, and Executive agrees to use the
same representation, provided that if counsel selected by the Company shall have
a conflict of interest that prevents such counsel from representing Executive,
Executive may engage separate counsel and the Company shall pay all reasonable
attorneys’ fees of such separate counsel to the full extent permitted by the
corporate law of the state in which the Company is incorporated.

9. PRIOR AGREEMENTS. Executive hereby represents and warrants to the Company
that the execution of this Agreement by Executive, his employment by the Company
and the performance of his duties hereunder will not violate or be a breach of
any agreement with a former employer, client or any other person or entity.
Further, Executive agrees to indemnify the Company for any claim, including, but
not limited to, reasonable attorneys’ fees and expenses of investigation, by any
third party that such third party may now have or may hereafter come to have
against the Company based upon or arising out of any non-competition agreement,
invention or secrecy agreement between Executive and such third party that was
in existence as of the date of this Agreement.

10. ASSIGNMENT; BINDING EFFECT. Executive understands that Executive has been
selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Executive agrees, therefore, he cannot
assign all or any portion of his performance under this Agreement. Subject to
the preceding two sentences, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties hereto and their respective heirs,
legal representatives, successors and assigns.

11. COMPLETE AGREEMENT. Except as expressly provided herein, this Agreement is
not a promise of future employment. Executive has no oral understandings or
agreements with the Company or any of its officers, directors or representatives
covering the same subject matter as this Agreement. This written Agreement is
the final, complete and exclusive statement and expression of the agreement
between the Company and Executive and of all the terms of this Agreement, and it
cannot be varied, contradicted or supplemented by evidence of any prior or
contemporaneous oral or written agreements. This written Agreement may not be
later modified except by a further writing signed by a duly authorized officer
of the Company and Executive, and no term of this Agreement may be waived except
by writing signed by the party waiving the benefit of such term.

12. NOTICE. Whenever any notice is required hereunder it shall be given in
writing addressed as follows:

 

If to the Company:

  Hercules Offshore Inc   11 Greenway Plaza  

Houston, Texas 77046

 

Attention: Chief Executive Officer

If to Executive:

  Randal Reed  

1819 Pembroke

 

New Iberia, LA 70563

 

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Notice shall be deemed given and effective three days after the deposit in the
U.S. mail of a writing addressed as above and sent first class mail, certified,
return receipt requested, or when actually received. Either party may change the
address for notice by notifying the other party of such change in accordance
with this Section 12.

13. SEVERABILITY; HEADINGS. If any portion of this Agreement is held invalid or
inoperative, the other portions of this Agreement shall be deemed valid and
operative and, so far as is reasonable and possible, effect shall be given to
the intent manifested by the portion held invalid or inoperative. The Section
headings herein are for reference purposes only and are not intended in any way
to describe, interpret, define or limit the extent or intent of the Agreement or
any part hereof.

14. DISPUTE RESOLUTION.

(a) Except with respect to injunctive relief as provided in Section 4 (which
relief may be sought from any court or administrative agency with jurisdiction
with respect thereto), any unresolved dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration by a
single arbitrator in accordance with the rules of the American Arbitration
Association then in effect.

(b) The arbitrator shall not have the authority to add to, detract from, or
modify any provision hereof nor to award punitive damages to any injured party.
The arbitrator shall have the authority to order back-pay and severance
compensation payable in accordance with the terms of this Agreement in the event
the arbitrator determines that Executive was terminated prior to the expiration
of the Term without disability or good cause, as defined in Sections 3(b) and
3(c), respectively, or that the Company has otherwise materially breached this
Agreement. The arbitrator shall order reimbursement of the prevailing party’s
costs in enforcing this Agreement, including, without limitation, reasonable
attorneys’ fees and arbitration costs. A decision by the arbitrator shall be
final and binding. Judgment may be entered on the arbitrator’s award in any
court having jurisdiction.

15. GOVERNING LAW. This Agreement shall in all respects be construed according
to the laws of the State of Texas.

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of
the date first written above.

 

EXECUTIVE   Hercules Offshore, Inc.   By:  

/s/ Randall D. Stilley

/s/ Randal Reed

  Name:   Randall D. Stilley Randal Reed   Title:   President and Chief
Executive Officer

 

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