Exhibit 10.1

PARAGON OFFSHORE SERVICES LLC

2014 Short-Term Incentive Plan

(“STIP”)

Plan Overview, Terms and Conditions

Plan Purpose

The success of Paragon Offshore Services LLC (“Paragon Offshore”) and its
subsidiaries (collectively, the “Company”) is a result of the efforts of all key
employees. In order to focus each employee’s efforts on optimizing the Company’s
overall operational and financial results, the Company maintains this Short-Term
Incentive Plan (the “Plan”) to reward employees for successful achievement of
specific goals.

An effective incentive plan should both align employee interests with those of
shareholders and motivate and influence employee behavior. Key positions within
the Company have the ability to make a positive contribution to key factors that
increase shareholder value. These factors can be quantified and measured through
achievement of various financial and operational targets, such as EBITDA, safety
and cash operating margin. The objectives of using such targets in the
formulation of the specific Company goals are to link an employee’s incentive
award more closely to the metrics that lead to the creation of shareholder
wealth and to promote a culture of high performance and an environment of
teamwork.

Eligibility and Participation

All full-time shore-based employees and select offshore employees (Rig Managers,
Assistant Rig Managers and Captains) are eligible to receive a bonus under the
Plan, based upon performance, subject to the approval of the Compensation
Committee (the “Committee”) of the Board of Directors (the “Board”) of Paragon
Offshore. Each such employee will be considered either a “Corporate” employee or
a “Division” employee for purposes of determining the employee’s actual target
bonus, as described later.

To be eligible to receive a bonus payment with respect to a Plan period, an
employee must be actively employed by the Company on the last day of such Plan
period and must continue to be employed through the date on which bonus payments
for such Plan period are made. An employee shall not be eligible to receive any
bonus payment if the employee’s employment with the Company terminates for any
reason, either voluntarily or involuntarily (except as noted below), before that
date on which bonus payments for a Plan period are made. The Plan period is the
period that commences on July 1, 2014 and ends at the close of December 31, 2014
unless otherwise specified.

However, in the event of death, disability or retirement, the employee or estate
of the former employee may receive a pro-rated payment from the Plan, at the
discretion of the Committee and the Chief Executive Officer (the “CEO”). For
purposes of the Plan, “disability” means any termination of employment with the
Company or an affiliate of the Company because of a long-term or total
disability, as determined by the Company’s disability insurance programs.
“Retirement” means a termination of employment with the Company on a voluntary
basis by a person if, immediately prior to such termination of employment, the
sum of the age and the number of years of continuous service of such person with
the Company (or a predecessor thereto) is equal to or greater than 60.

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Plan Funding

The Award Pool for the Plan period will primarily be a function of the Company’s
performance on two key metrics.

 

  •   Company EBITDA versus budget (weighted 65%)

 

  •   Company Safety results versus the IADC average (weighted 35%)

EBITDA will be defined as the Company’s earnings before the deduction of
interest, tax, depreciation and amortization expenses, subject to adjustment to
exclude certain gains or losses.

The Company’s performance will be determined in each of these two measures
according to the following scales:

 

Company EBITDA (65%)

Level of

Achievement

   Threshold   Target   Maximum

% of Target

   75%   100%   115%

Bonus Pool Multiple

   0.50   1.00   2.00

 

Company Safety (35%)

Level of

Achievement

   Threshold    Target    Maximum

Performance

   Improvement over prior

six-month period

   IADC Industry

Average

   £ 90% of IADC

Industry Average

Bonus Pool Multiple

   0.50    1.00    2.00

Achievement at levels between the points shown above will be determined via
linear interpolation. Performance below Threshold for EBITDA or Minimum for
Safety will yield no pool funding for that portion of the Award Pool. Safety is
measured by Lost Time Incident Rate (“LTIR”) as compared to the International
Association of Drilling Contractors (“IADC”) Industry Average. Note that the
Company Safety results and the IADC Industry Average will be based on the
six-month period ending September 30, 2014.

 

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The Award Pool available will be determined first by multiplying (i) 50% of the
sum of the full year target bonuses for all eligible employees at the end of the
Plan period (“Aggregate Target Bonuses”) by (ii) the Company’s weighted
performance as measured by EBITDA and Safety results, based on the scales above.
The 50% multiplier in subpart (i) above provides for the fact that the Plan
period represents 50% of the fiscal year for 2014. This calculated result will
be increased by 10% to establish a CEO merit performance-award pool, thus
yielding the Total Plan Award Pool for the Plan period.

The following illustrates the calculation of the Total Plan Award Pool, assuming
Aggregate Target Bonuses of $10 million, EBITDA performance at target (or 1.00
multiple) and Safety performance at halfway between target and maximum (or 1.50
multiple). This example is included for illustrative purposes only:

 

Total Plan Award Pool Calculation Illustration   Step 1: Company Performance
Calculation (“Award Pool”)    EBITDA           Safety           

Company

Performance Multiple

 

(1.00 x .65)

     x         (1.50 x .35 )      =         1.18    Step 2: Total Plan Award
Pool    Initial Pool           + 10% (CEO Merit Pool)           
Total Plan Award Pool  

(1.18 x $10 million)

     =       $ 11.80 million x 1.10        =       $ 12.98 million   

The Total Plan Award Pool will be allocated as described in the next sections.

Individual Target Bonus

The target bonus for an employee is an amount equal to 50% of the employee’s
salary at the end of the Plan period multiplied by the assigned target bonus
percentage. Target bonuses range from 4% to 100% of 50% of such salary. The 50%
multipliers in the prior sentences provide for the fact that the Plan period
represents 50% of the fiscal year for 2014. The assigned targets are based on
competitive market data and internal equity considerations and are reviewed each
year. Note that, for purposes of calculating the Aggregate Target Bonuses, a
target bonus percentage of up to 6% will be used for those employees covered
under the Plan that do not have a formal target bonus percentage.

The determination of an individual’s actual award will be based 50% on the
achievement of the stated Financial and Operating goals under the Plan pursuant
to the terms outlined in sections below, and 50% will be based on merit,
individual and team performance and/or additional selected criteria, including
regulatory compliance.

 

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Financial and Operating Goals

Goals for the following categories will be approved by the Committee for each
Plan period. The performance for the 50% of the bonus tied to Financial and
Operating results will be based on the goals and weights as shown below, and are
different for Corporate and Division employees:

 

Corporate Employees

   Assigned Weight  

Company EBITDA

     65.0 % 

Company Safety

     35.0 % 

 

Division Employees

   Assigned Weight  

Division Cash Operating Margin

     65.0 % 

Division Safety

     17.5 % 

Company Safety

     17.5 % 

Cash operating margin is defined as contract drilling revenues less contract
drilling cost including reimbursables. The specific goals for the Company and
each Division will be communicated after these are set by the Committee. The
performance scales for the Plan period for these metrics are provided in Exhibit
1.

Determination of Individual Awards

Each individual’s target bonus will be adjusted by the overall Corporate and/or
Division Financial and Operating results depending on the employee (see Exhibit
1). This will be the Adjusted Target Bonus.

Next, an individual bonus multiplier ranging from 0 to a maximum of 2.0 may be
applied to half of the Adjusted Target Bonus to reflect merit, individual and
team performance and/or additional selected criteria, including regulatory
compliance, subject to the approval of the Committee and CEO.

For example, if an individual’s bonus target at a Division is $10,000, and the
Division performance multiple for Financial and Operating goals is 1.2, the
Adjusted Target Bonus would be $12,000 ($10,000 x 1.2); $6,000 for Financial and
Operating performance, $6,000 for individual achievement. If the manager’s
recommendation for individual achievement is 0.8 (or 80%), the final bonus
adjusts to $10,800 ($6,000 x 0.8 = $4,800 for individual achievement + $6,000
for Financial and Operating results). The aggregate total of these awards will
be the “Aggregate Calculated Pool”.

 

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Amounts may be adjusted for employees hired or promoted during the Plan period
considering length of service or time in position. Note that if on a cumulative
basis the sum of the awards in the Aggregate Calculated Pool is greater than the
Total Plan Award Pool, bonuses will be adjusted on a pro-rata basis to remain
within the constraints of the Total Plan Award Pool.

Plan Funding and Individual Awards under the 2014 Noble Corporation Short-Term
Incentive Plan (“Noble STIP”) for Transferred Employees

Employees of the Company, who (i) were employees of Noble Corporation or its
subsidiaries (“Transferred Employees”) during all of the period that commences
on or, if applicable, after January 1, 2014 and ends at the close of June 30,
2014, and (ii) were eligible for awards under the Noble STIP with respect to the
period thereunder that commences on January 1, 2014 and ends at the close of
June 30, 2014 (the “Noble STIP Period”), shall remain eligible for awards
calculated pursuant to the terms of the Noble STIP, except that such awards
shall be paid by the Company at the time awards are determined under this Plan.
The general terms and provisions of the 2014 Noble STIP shall govern the
determination of award amounts to Transferred Employees, except as otherwise
provided in the Employee Matters Agreement as defined below. For purposes of
this Plan, a separate Award Pool will be established for Transferred Employees
with respect to the Noble STIP Period, except that the plan period for Safety
results and the IADC Industry Average will be based on the six-month period
ending March 31, 2014. This separate Award Pool will be determined first by
multiplying (i) the Aggregate Target Bonuses by (ii) Noble Corporation’s
weighted performance as measured by EBITDA and Safety results during the Noble
STIP Period. This calculated result will be increased by 10% to establish a CEO
merit performance-award pool, thus yielding the Total (Separate) Plan Award Pool
hereunder for the Noble STIP Period. The target bonus for a Transferred Employee
is an amount equal to 50% of the employee’s salary at the end of this Plan
period multiplied by the assigned target bonus percentage. The 50% multiplier in
the prior sentence provides for the fact that Noble STIP Period represents 50%
of the fiscal year for 2014.

Reimbursements from Noble Corporation to the Company for amounts payable, if
any, to Transferred Employees that relate to the Noble STIP (i) shall be
governed by the provisions of the Employee Matters Agreement by and between
Noble Corporation and Paragon Offshore plc dated as of July 31, 2014 (the
“Employee Matters Agreement”), and (ii) shall offset any amounts payable under
the separate Award Pool established pursuant to the preceding paragraph.

Review and Approval

The Board will approve the Company’s budget for the Plan period in terms of
EBITDA and Cash Operating Margin at the time that, or as soon as possible after,
this Plan is adopted. The specific goals for EBITDA (Corporate employees) and
Division Cash Operating Margin (Division employees) will be communicated shortly
thereafter.

 

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If, after the establishment of goals for a Plan period, the budget changes
substantially due to subsequent events, such as the acquisition, spin-off or
sale of assets, any unusual or non- recurring item or any unforeseen event that
impacts the Company, a Division or the industry as a whole, then the Committee
may make adjustments to the respective goals in order that the affected
participants may not be adversely impacted by such an event or item. Any such
revised goals shall be applicable to the Plan period from and after the time of
their approval.

After the end of the Plan period, the Committee, in its best business judgment,
will make the final determination on the size of the Total Plan Award Pool for
such Plan period. All bonus calculations, allocations and recommendations are
subject to review and approval by the Committee.

Separately, managers having responsibility for recommending the allocation of
bonuses to eligible employees shall submit their recommended bonus for each
employee to the CEO for review and approval. Notwithstanding anything otherwise
contained in this Plan, the Committee and the CEO (and any delegated designee of
the CEO) shall have the authority to adjust individual bonus amounts as deemed
to be appropriate for any reason, including, but not limited to, Company or
Division performance, individual employee performance, employee conduct, etc.

At-Will Employment

Nothing in the Plan guarantees or constitutes a contract for any specific term
of employment or otherwise limits the Company’s or an employee’s right to
terminate the employment relationship for any reason at any time.

 

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Exhibit 1

2014 Financial and Operating Goals

STIP

Corporate Employees

 

Company EBITDA (65%)

Level of Achievement

   Threshold   Target   Maximum

% of Target

   75%   100%   115%

Bonus Pool Multiple

   0.50   1.00   2.00

 

Company Safety (35%)

Level of Achievement

   Minimum    Target    Maximum

Performance

   Improvement over prior

six-month period

   IADC Industry

Average

   £ 90% of IADC

Industry Average

Bonus Pool Multiple

   0.50    1.00    2.00

Division Employees

 

Company EBITDA (65%)

Level of Achievement

   Threshold   Target   Maximum

% of Target

   75%   100%   115%

Bonus Pool Multiple

   0.50   1.00   2.00

 

Division Safety (17.5%)

Level of Achievement

   Minimum    Target    Maximum

Performance

   Improvement over prior

six-month period

   IADC Industry

Average

   £ 90% of IADC

Industry Average

Bonus Pool Multiple

   0.50    1.00    2.00

 

Company Safety (17.5%)

Level of Achievement

   Minimum    Target    Maximum

Performance

   Improvement over prior

six-month period

   IADC Industry

Average

   £ 90% of IADC

Industry Average

Bonus Pool Multiple

   0.50    1.00    2.00

 

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Notes:

(1)  Achievement at levels between the points shown will be determined via
linear interpolation

(2)  Safety is measured by Lost Time Incident Rate (“LTIR”) as compared to the
International Association of Drilling Contractors (“IADC”) Industry Average. The
Safety results and IADC Industry Average will be based on the six-month period
ending September 30, 2014

(3)  Cash operating margin is defined as contract drilling revenues less
contract drilling cost including reimbursables

 

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