Exhibit 10.18
Hercules Offshore, Inc.
Deferred Compensation Plan
Amended and Restated Effective January 1, 2007

 

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Hercules Offshore, Inc.

Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 
TABLE OF CONTENTS

                      Page  
ARTICLE I.
  DEFINITIONS     1  
ARTICLE II.
  SELECTION, ENROLLMENT, ELIGIBILITY     8  
2.1
  Selection by Committee     8  
2.2
  Enrollment and Eligibility Requirements; Commencement of Participation     8  
ARTICLE III.
  DEFERRAL COMMITMENTS/COMPANY CONTRIBUTION AMOUNTS/        
 
  COMPANY RESTORATION AMOUNTS/VESTING/CREDITING/TAXES     9  
3.1
  Maximum Deferral     9  
3.2
  Timing of Deferral Elections; Effect of Election Form     9  
3.3
  Withholding and Crediting of Annual Deferral Amounts     11  
3.4
  Company Contribution Amount     11  
3.5
  Company Restoration Amount     12  
3.6
  Vesting     12  
3.7
  Crediting/Debiting of Account Balances     13  
3.8
  FICA and Other Taxes     14  
ARTICLE IV.
  SCHEDULED DISTRIBUTION; UNFORESEEABLE EMERGENCIES     15  
4.1
  Scheduled Distributions     15  
4.2
  Postponing Scheduled Distributions     15  
4.3
  Other Benefits Take Precedence Over Scheduled Distributions     16  
4.4
  Unforeseeable Emergencies     16  
ARTICLE V.
  CHANGE IN CONTROL BENEFIT     17  
5.1
  Change in Control Benefit     17  
5.2
  Payment of Change in Control Benefit     17  
ARTICLE VI.
  RETIREMENT BENEFIT     17  
6.1
  Retirement Benefit     18  
6.2
  Payment of Retirement Benefit     18  
ARTICLE VII.
  TERMINATION BENEFIT     18  
7.1
  Termination Benefit     18  
7.2
  Payment of Termination Benefit     19  

 

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Hercules Offshore, Inc.

Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 

                      Page  
ARTICLE VIII.
  DISABILITY BENEFIT     19  
8.1
  Disability Benefit     19  
8.2
  Payment of Disability Benefit     19  
ARTICLE IX.
  DEATH BENEFIT     19  
9.1
  Death Benefit     19  
9.2
  Payment of Death Benefit     20  
ARTICLE X.
  BENEFICIARY DESIGNATION     20  
10.1
  Beneficiary     20  
10.2
  Beneficiary Designation; Change; Spousal Consent     20  
10.3
  Acknowledgment     20  
10.4
  No Beneficiary Designation     20  
10.5
  Doubt as to Beneficiary     20  
10.6
  Discharge of Obligations     20  
ARTICLE XI.
  LEAVE OF ABSENCE     21  
11.1
  Paid Leave of Absence     21  
11.2
  Unpaid Leave of Absence     21  
ARTICLE XII.
  TERMINATION OF PLAN, AMENDMENT OR MODIFICATION     21  
12.1
  Termination of Plan     21  
12.2
  Amendment     22  
12.3
  Plan Agreement     22  
12.4
  Effect of Payment     22  
ARTICLE XIII.
  ADMINISTRATION     22  
13.1
  Committee Duties     22  
13.2
  Administration Upon Change In Control     22  
13.3
  Agents     23  
13.4
  Binding Effect of Decisions     23  
13.5
  Indemnity of Committee     23  
13.6
  Employer Information     23  
ARTICLE XIV.
  OTHER BENEFITS AND AGREEMENTS     23  
14.1
  Coordination with Other Benefits     23  

 

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Hercules Offshore, Inc.

Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 

                      Page  
ARTICLE XV.
  CLAIMS PROCEDURES     23  
15.1
  Presentation of Claim     23  
15.2
  Notification of Decision     24  
15.3
  Review of a Denied Claim     24  
15.4
  Decision on Review     24  
15.5
  Legal Action     25  
ARTICLE XVI.
  TRUST     25  
16.1
  Establishment of the Trust     25  
16.2
  Interrelationship of the Plan and the Trust     25  
16.3
  Distributions From the Trust     25  
ARTICLE XVII.
  MISCELLANEOUS     26  
17.1
  Status of Plan     26  
17.2
  Unsecured General Creditor     26  
17.3
  Employer's Liability     26  
17.4
  Nonassignability     26  
17.5
  Not a Contract of Employment     26  
17.6
  Furnishing Information     26  
17.7
  Terms     27  
17.8
  Captions     27  
17.9
  Governing Law     27  
17.10
  Notice     27  
17.11
  Successors     27  
17.12
  Spouse's Interest     27  
17.13
  Validity     27  
17.14
  Incompetent     27  
17.15
  Domestic Relations Orders     28  
17.16
  Distribution in the Event of Income Inclusion Under Code Section 409A     28  
17.17
  Deduction Limitation on Benefit Payments     28  

 

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Hercules Offshore, Inc.

Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 
Purpose
          The purpose of this Plan is to provide specified benefits to Directors
and a select group of management or highly compensated Employees who contribute
materially to the continued growth, development and future business success of
Hercules Offshore, Inc., a Delaware corporation, and its subsidiaries, if any,
that sponsor this Plan. This Plan shall be unfunded for tax purposes and for
purposes of Title I of ERISA.
          This Plan is intended to comply with all applicable law, including
Code Section 409A and related Treasury guidance and Regulations, and shall be
operated and interpreted in accordance with this intention. In order to
transition to the requirements of Code Section 409A and related Treasury
Regulations, the Committee may make available to Participants certain transition
relief provided under Notice 2007-86, as described more fully in Appendix A of
this Plan.
ARTICLE I.
Definitions
          For the purposes of this Plan, unless otherwise clearly apparent from
the context, the following phrases or terms shall have the following indicated
meanings:

1.1   “Account Balance” shall mean, with respect to a Participant, an entry on
the records of the Employer equal to the sum of the Participant’s Annual
Accounts. The Account Balance shall be a bookkeeping entry only and shall be
utilized solely as a device for the measurement and determination of the amounts
to be paid to a Participant, or his or her designated Beneficiary, pursuant to
this Plan.       If a Participant is both an Employee and a Director and
participates in the Plan in each capacity, then separate Account Balances (and
separate Annual Accounts, if applicable) shall be established for such
Participant as a device for the measurement and determination of the (a) amounts
deferred under the Plan that are attributable to the Participant’s status as an
Employee, and (b) amounts deferred under the Plan that are attributable to the
Participant’s status as a Director.   1.2   “Annual Account” shall mean, with
respect to a Participant, an entry on the records of the Employer equal to
(a) the sum of the Participant’s Annual Deferral Amount, Company Contribution
Amount and Company Restoration Amount for any one Plan Year, plus (b) amounts
credited or debited to such amounts pursuant to this Plan, less (c) all
distributions made to the Participant or his or her Beneficiary pursuant to this
Plan that relate to the Annual Account for such Plan Year. The Annual Account
shall be a bookkeeping entry only and shall be utilized solely as a device for
the measurement and determination of the amounts to be paid to a Participant, or
his or her designated Beneficiary, pursuant to this Plan.   1.3   “Annual
Deferral Amount” shall mean that portion of a Participant’s Base Salary, Bonus
and Director Fees that a Participant defers in accordance with Article 3 for any
one Plan Year, without regard to whether such amounts are withheld and credited
during such Plan Year.

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Hercules Offshore, Inc.

Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 

1.4   “Annual Installment Method” shall mean the method used to determine the
amount of each payment due to a Participant who has elected to receive a benefit
over a period of years in accordance with the applicable provisions of the Plan.
The amount of each annual payment due to the Participant shall be calculated by
multiplying the balance of the Participant’s benefit by a fraction, the
numerator of which is one and the denominator of which is the remaining number
of annual payments due to the Participant. The amount of the first annual
payment shall be calculated as of the close of business on or around the
Participant’s Benefit Distribution Date, and the amount of each subsequent
annual payment shall be calculated on or around each anniversary of such Benefit
Distribution Date. For purposes of this Plan, the right to receive a benefit
payment in annual installments shall be treated as the entitlement to a single
payment.   1.5   “Base Salary” shall mean the annual compensation relating to
services performed during any calendar year that is payable only in cash and
that is designated as base salary or compensation in the payroll records of the
Employer, and, by way of further limitation, excluding distributions and any
other form of income whether or not payable in cash from nonqualified deferred
compensation plans, bonuses (including amounts that qualify as Bonus),
commissions, overtime, fringe benefits , welfare benefits, severance pay, stock
options, stock appreciation rights, phantom shares, restricted shares, other
equity-based LTIP Amounts, compensation, relocation expenses, incentive
payments, non-monetary awards, director fees and other fees, moving expenses,
reimbursements and automobile and other allowances paid to a Participant for
employment services rendered (whether or not such allowances are included in the
Employee’s gross income). Base Salary shall be calculated before reduction for
compensation voluntarily deferred or contributed by the Participant pursuant to
all qualified or nonqualified plans of any Employer and shall be calculated to
include amounts not otherwise included in the Participant’s gross income under
Code Sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans established by
any Employer; provided, however, that all such amounts will be included in
compensation only to the extent that had there been no such plan, the amount
would have been payable in cash to the Employee.   1.6   “Beneficiary” shall
mean one or more persons, trusts, estates or other entities, designated in
accordance with Article 10, that are entitled to receive benefits under this
Plan upon the death of a Participant.   1.7   “Beneficiary Designation Form”
shall mean the form established from time to time by the Committee that a
Participant completes, signs and returns to the Committee to designate one or
more Beneficiaries.   1.8   “Benefit Distribution Date” shall mean the date upon
which all or an objectively determinable portion of a Participant’s vested
benefits will become eligible for distribution. Except as otherwise provided in
the Plan, a Participant’s Benefit Distribution Date shall be determined based on
the earliest to occur of an event or scheduled date set forth in Articles 4
through 9, as applicable.   1.9   “Board” shall mean the board of directors of
the Company.

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Hercules Offshore, Inc.

Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 

1.10   “Bonus” shall mean any compensation earned by a Participant under the
Hercules Offshore Incentive Plan, also known as “HERO Bonus.”   1.11   “Change
in Control” shall mean the occurrence of a “change in the ownership,” a “change
in the effective control” or a “change in the ownership of a substantial portion
of the assets” of a corporation, as determined in accordance with this Section.
      In order for an event described below to constitute a Change in Control
with respect to a Participant, except as otherwise provided in part (b)(ii) of
this Section, the applicable event must relate to the corporation for which the
Participant is providing services, the corporation that is liable for payment of
the Participant’s Account Balance (or all corporations liable for payment if
more than one), as identified by the Committee in accordance with Treas. Reg.
§1.409A-3(i)(5)(ii)(A)(2), or such other corporation identified by the Committee
in accordance with Treas. Reg. §1.409A-3(i)(5)(ii)(A)(3).       In determining
whether an event shall be considered a “change in the ownership,” a “change in
the effective control” or a “change in the ownership of a substantial portion of
the assets” of a corporation, the following provisions shall apply:

  (a)   A “change in the ownership” of the applicable corporation shall occur on
the date on which any one person, or more than one person acting as a group,
acquires ownership of stock of such corporation that, together with stock held
by such person or group, constitutes more than 50% of the total fair market
value or total voting power of the stock of such corporation, as determined in
accordance with Treas. Reg. §1.409A-3(i)(5)(v). If a person or group is
considered either to own more than 50% of the total fair market value or total
voting power of the stock of such corporation, or to have effective control of
such corporation within the meaning of part (b) of this Section, and such person
or group acquires additional stock of such corporation, the acquisition of
additional stock by such person or group shall not be considered to cause a
“change in the ownership” of such corporation.     (b)   A “change in the
effective control” of the applicable corporation shall occur on either of the
following dates:

  (i)   The date on which any one person, or more than one person acting as a
group, acquires (or has acquired during the 12-month period ending on the date
of the most recent acquisition by such person or persons) ownership of stock of
such corporation possessing 30% or more of the total voting power of the stock
of such corporation, as determined in accordance with Treas. Reg.
§1.409A-3(i)(5)(vi). If a person or group is considered to possess 30% or more
of the total voting power of the stock of a corporation, and such person or
group acquires additional stock of such corporation, the acquisition of
additional stock by such person or group shall not be considered to cause a
“change in the effective control” of such corporation; or

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Hercules Offshore, Inc.

Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 

  (ii)   The date on which a majority of the members of the applicable
corporation’s board of directors is replaced during any 12-month period by
directors whose appointment or election is not endorsed by a majority of the
members of such corporation’s board of directors before the date of the
appointment or election, as determined in accordance with Treas. Reg.
§1.409A-3(i)(5)(vi). In determining whether the event described in the preceding
sentence has occurred, the applicable corporation to which the event must relate
shall only include a corporation identified in accordance with Treas. Reg.
§1.409A-3(i)(5)(ii) for which no other corporation is a majority shareholder.

  (c)   A “change in the ownership of a substantial portion of the assets” of
the applicable corporation shall occur on the date on which any one person, or
more than one person acting as a group, acquires (or has acquired during the
12-month period ending on the date of the most recent acquisition by such person
or persons) assets from the corporation that have a total gross fair market
value equal to or more than 40% of the total gross fair market value of all of
the assets of the corporation immediately before such acquisition or
acquisitions, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vii).
A transfer of assets shall not be treated as a “change in the ownership of a
substantial portion of the assets” when such transfer is made to an entity that
is controlled by the shareholders of the transferor corporation, as determined
in accordance with Treas. Reg. §1.409A-3(i)(5)(vii)(B).

1.12   “Code” shall mean the Internal Revenue Code of 1986, as it may be amended
from time to time.   1.13   “Committee” shall mean the committee described in
Article 13.   1.14   “Company” shall mean Hercules Offshore, Inc., a Delaware
corporation, and any successor to all or substantially all of the Company’s
assets or business.   1.15   “Company Contribution Amount” shall mean, for any
one Plan Year, the amount determined in accordance with Section 3.4.   1.16  
“Company Restoration Amount” shall mean, for any one Plan Year, the amount
determined in accordance with Section 3.5.   1.17   “Director” shall mean any
member of the board of directors of any Employer.   1.18   “Director Fees” shall
mean the annual fees earned by a Director from any Employer, including retainer
fees and meetings fees, as compensation for serving on the board of directors.  
1.19   “Disability” or “Disabled” shall mean that a Participant is either
(a) unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, or (b) by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than 3 months under an accident
and health plan covering employees of the

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Hercules Offshore, Inc.

Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 

    Participant’s Employer. For purposes of this Plan, a Participant shall be
deemed Disabled if determined to be totally disabled by the Social Security
Administration. A Participant shall also be deemed Disabled if determined to be
disabled in accordance with the applicable disability insurance program of such
Participant’s Employer, provided that the definition of “disability” applied
under such disability insurance program complies with the requirements of this
Section.   1.20   “Election Form” shall mean the form, which may be in
electronic format, established from time to time by the Committee that a
Participant completes, signs and returns to the Committee to make an election
under the Plan.   1.21   “Employee” shall mean a person who is an employee of an
Employer.   1.22   “Employer(s)” shall be defined as follows:

  (a)   Except as otherwise provided in part (b) of this Section, the term
“Employer” shall mean the Company and/or any of its subsidiaries (now in
existence or hereafter formed or acquired) that have been selected by the Board
to participate in the Plan and have adopted the Plan as a sponsor.     (b)   For
the purpose of determining whether a Participant has experienced a Separation
from Service, the term “Employer” shall mean:

  (i)   The entity for which the Participant performs services and with respect
to which the legally binding right to compensation deferred or contributed under
this Plan arises; and     (ii)   All other entities with which the entity
described above would be aggregated and treated as a single employer under Code
Section 414(b) (controlled group of corporations) and Code Section 414(c) (a
group of trades or businesses, whether or not incorporated, under common
control), as applicable. In order to identify the group of entities described in
the preceding sentence, the Committee shall use an ownership threshold of at
least 50% as a substitute for the 80% minimum ownership threshold that appears
in, and otherwise must be used when applying, the applicable provisions of
(A) Code Section 1563 for determining a controlled group of corporations under
Code Section 414(b), and (B) Treas. Reg. §1.414(c)-2 for determining the trades
or businesses that are under common control under Code Section 414(c).

1.23   “ERISA” shall mean the Employee Retirement Income Security Act of 1974,
as it may be amended from time to time.   1.24   “401(k) Plan” shall mean, with
respect to an Employer, a plan qualified under Code Section 401(a) that contains
a cash or deferral arrangement described in Code Section 401(k), adopted by the
Employer, as it may be amended from time to time, or any successor thereto.  
1.25   “LTIP Amounts” shall mean compensation under the Hercules Offshore
Long-Term Incentive Plan or any other long-term incentive plan or long-term
incentive arrangement of any Employer.

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Hercules Offshore, Inc.

Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 

1.26   “Participant” shall mean any Employee or Director (a) who is selected to
participate in the Plan, (b) whose executed Plan Agreement, Election Form and
Beneficiary Designation Form are accepted by the Committee, and (c) whose Plan
Agreement has not terminated.   1.27   “Performance-Based Compensation” shall
mean compensation the entitlement to or amount of which is contingent on the
satisfaction of pre-established organizational or individual performance
criteria relating to a performance period of at least 12 consecutive months, as
determined by the Committee in accordance with Treas. Reg. §1.409A-1(e).   1.28
  “Plan” shall mean the Hercules Offshore, Inc. Deferred Compensation Plan,
which shall be evidenced by this instrument, as it may be amended from time to
time, and by any other documents that together with this instrument define a
Participant’s rights to amounts credited to his or her Account Balance.   1.29  
“Plan Agreement” shall mean a written agreement in the form prescribed by or
acceptable to the Committee that evidences a Participant’s agreement to the
terms of the Plan and which may establish additional terms or conditions of Plan
participation for a Participant. Unless otherwise determined by the Committee,
the most recent Plan Agreement accepted with respect to a Participant shall
supersede any prior Plan Agreements for such Participant. Plan Agreements may
vary among Participants and may provide additional benefits not set forth in the
Plan or limit the benefits otherwise provided under the Plan.   1.30   “Plan
Year” shall mean a period beginning on January 1 of each calendar year and
continuing through December 31 of such calendar year.   1.31   “Retirement,”
“Retire(s)” or “Retired” shall mean with respect to a Participant who is an
Employee, a Separation from Service on or after the earlier of the attainment of
(a) age 65 or (b) age 55 with 10 Years of Service, and shall mean with respect
to a Participant who is a Director, a Separation from Service. If a Participant
is both an Employee and a Director and participates in the Plan in each
capacity, (a) the determination of whether the Participant qualifies for
Retirement as an Employee shall be made when the Participant experiences a
Separation from Service as an Employee and such determination shall only apply
to the applicable Account Balance established in accordance with Section 1.1 for
amounts deferred under the Plan as an Employee, and (b) the determination of
whether the Participant qualifies for Retirement as a Director shall be made at
the time the Participant experiences a Separation from Service as a Director and
such determination shall only apply to the applicable Account Balance
established in accordance with Section 1.1 for amounts deferred under the Plan
as a Director.   1.32   “Separation from Service” shall mean a termination of
services provided by a Participant to his or her Employer, whether voluntarily
or involuntarily, other than by reason of death or Disability, as determined by
the Committee in accordance with Treas. Reg. §1.409A-1(h). In determining
whether a Participant has experienced a Separation from Service, the following
provisions shall apply:

  (a)   For a Participant who provides services to an Employer as an Employee,
except as otherwise provided in part (c) of this Section, a Separation from
Service shall occur when

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Hercules Offshore, Inc.

Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 

      such Participant has experienced a termination of employment with such
Employer. A Participant shall be considered to have experienced a termination of
employment when the facts and circumstances indicate that the Participant and
his or her Employer reasonably anticipate that either (i) no further services
will be performed for the Employer after a certain date, or (ii) that the level
of bona fide services the Participant will perform for the Employer after such
date (whether as an Employee or as an independent contractor) will permanently
decrease to no more than 20% of the average level of bona fide services
performed by such Participant (whether as an Employee or an independent
contractor) over the immediately preceding 36-month period (or the full period
of services to the Employer if the Participant has been providing services to
the Employer less than 36 months).       If a Participant is on military leave,
sick leave, or other bona fide leave of absence, the employment relationship
between the Participant and the Employer shall be treated as continuing intact,
provided that the period of such leave does not exceed 6 months, or if longer,
so long as the Participant retains a right to reemployment with the Employer
under an applicable statute or by contract. If the period of a military leave,
sick leave, or other bona fide leave of absence exceeds 6 months and the
Participant does not retain a right to reemployment under an applicable statute
or by contract, the employment relationship shall be considered to be terminated
for purposes of this Plan as of the first day immediately following the end of
such six-month period. In applying the provisions of this paragraph, a leave of
absence shall be considered a bona fide leave of absence only if there is a
reasonable expectation that the Participant will return to perform services for
the Employer.     (b)   For a Participant who provides services to an Employer
as an independent contractor, except as otherwise provided in part (c) of this
Section, a Separation from Service shall occur upon the expiration of the
contract (or in the case of more than one contract, all contracts) under which
services are performed for such Employer, provided that the expiration of such
contract(s) is determined by the Committee to constitute a good-faith and
complete termination of the contractual relationship between the Participant and
such Employer.     (c)   For a Participant who provides services to an Employer
as both an Employee and an independent contractor, a Separation from Service
generally shall not occur until the Participant has ceased providing services
for such Employer as both as an Employee and as an independent contractor, as
determined in accordance with the provisions set forth in parts (a) and (b) of
this Section, respectively. Similarly, if a Participant either (i) ceases
providing services for an Employer as an independent contractor and begins
providing services for such Employer as an Employee, or (ii) ceases providing
services for an Employer as an Employee and begins providing services for such
Employer as an independent contractor, the Participant will not be considered to
have experienced a Separation from Service until the Participant has ceased
providing services for such Employer in both capacities, as determined in
accordance with the applicable provisions set forth in parts (a) and (b) of this
Section.

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Hercules Offshore, Inc.

Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 

      Notwithstanding the foregoing provisions in this part (c), if a
Participant provides services for an Employer as both an Employee and as a
Director, to the extent permitted by Treas. Reg. §1.409A-1(h)(5) the services
provided by such Participant as a Director shall not be taken into account in
determining whether the Participant has experienced a Separation from Service as
an Employee, and the services provided by such Participant as an Employee shall
not be taken into account in determining whether the Participant has experienced
a Separation from Service as a Director.

1.33   “Trust” shall mean one or more trusts established by the Company in
accordance with Article 16.   1.34   “Unforeseeable Emergency” shall mean a
severe financial hardship of the Participant resulting from (a) an illness or
accident of the Participant, the Participant’s spouse, the Participant’s
Beneficiary or the Participant’s dependent (as defined in Code Section 152
without regard to paragraphs (b)(1), (b)(2) and (d)(1)(b) thereof), (b) a loss
of the Participant’s property due to casualty, or (c) such other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant, all as determined by the Committee based
on the relevant facts and circumstances.   1.35   “Years of Plan Participation”
shall mean the total number of full Plan Years a Participant has been a
Participant in the Plan prior to his or her Separation from Service (determined
without regard to whether deferral elections have been made by the Participant
for any Plan Year). A partial year shall not be treated as a full Plan Year for
purposes of this definition.   1.36   “Years of Service” shall mean the total
number of full years in which a Participant has been employed by one or more
Employers. For purposes of this definition, a year of employment shall be a
365 day period (or 366 day period in the case of a leap year) that, for the
first year of employment, commences on the Employee’s date of hiring and that,
for any subsequent year, commences on an anniversary of that hiring date. A
partial year of employment shall not be treated as a Year of Service.

ARTICLE II.
Selection, Enrollment, Eligibility

2.1   Selection by Committee. Participation in the Plan shall be limited to
Directors and, as determined by the Committee in its sole discretion, a select
group of management or highly compensated Employees. From that group, the
Committee shall select, in its sole discretion, those individuals who may
actually participate in this Plan.   2.2   Enrollment and Eligibility
Requirements; Commencement of Participation.

  (a)   As a condition to participation, each Director or selected Employee
shall complete, execute and return to the Committee a Plan Agreement, an
Election Form and a Beneficiary Designation Form by the deadline(s) established
by the Committee in accordance with the applicable provisions of this Plan. In
addition, the Committee shall establish from time to time such other enrollment
requirements as it determines, in its sole discretion, are necessary.

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  (b)   Each Director or selected Employee who is eligible to participate in the
Plan shall commence participation in the Plan on the date that the Committee
determines that the Director or Employee has met all enrollment requirements set
forth in this Plan and required by the Committee, including returning all
required documents to the Committee within the specified time period.     (c)  
If a Director or an Employee fails to meet all requirements established by the
Committee within the period required, that Director or Employee shall not be
eligible to participate in the Plan during such Plan Year.

ARTICLE III.
Deferral Commitments/Company Contribution Amounts/
Company Restoration Amounts/Vesting/Crediting/Taxes

3.1   Maximum Deferral.

  (a)   Annual Deferral Amount. For each Plan Year, a Participant may elect to
defer, as his or her Annual Deferral Amount, a percentage of his or her Base
Salary, Bonus and/or Director Fees in whole percentage increments up to the
following maximum percentages for each deferral elected:

          Deferral Maximum Percentage  
Base Salary
    80 %
Bonus
    100 %
Director Fees
    100 %

  (b)   Short Plan Year. Notwithstanding the foregoing, if a Participant first
becomes a Participant after the first day of a Plan Year, then to the extent
required by Section 3.2 and Code Section 409A and related Treasury Regulations,
the maximum amount of the Participant’s Base Salary, Bonus or Director Fees that
may be deferred by the Participant for the Plan Year shall be determined by
applying the percentages set forth in Section 3.1(a) to the portion of such
compensation attributable to services performed after the date that the
Participant’s deferral election is made.

3.2   Timing of Deferral Elections; Effect of Election Form.

  (a)   General Timing Rule for Deferral Elections. Except as otherwise provided
in this Section 3.2, in order for a Participant to make a valid election to
defer Base Salary, Bonus and/or Director Fees, the Participant must submit an
Election Form on or before the deadline established by the Committee, which in
no event shall be later than the December 31st preceding the Plan Year in which
such compensation will be earned.         For example, the General Timing Rule
for Deferral Elections must be irrevocable and submitted no later than
December 31, 2008 for Base Salary earned in 2009 and Bonus earned in 2009 (but
such Bonus payable in 2010).

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Deferred Compensation Plan

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      Any deferral election made in accordance with this Section 3.2(a) shall be
irrevocable; provided, however, that if the Committee permits or requires
Participants to make a deferral election by the deadline described above for an
amount that qualifies as Performance-Based Compensation, the Committee may
permit a Participant to subsequently change his or her deferral election for
such compensation by submitting a new Election Form in accordance with
Section 3.2(d) below.     (b)   Timing of Deferral Elections for Newly Eligible
Plan Participants. A Director or selected Employee who first becomes eligible to
participate in the Plan on or after the beginning of a Plan Year, as determined
in accordance with Treas. Reg. §1.409A-2(a)(7)(ii) and the “plan aggregation”
rules provided in Treas. Reg. §1.409A-1(c)(2), may be permitted to make an
election to defer the portion of Base Salary, Bonus and/or Director Fees
attributable to services to be performed after such election, provided that the
Participant submits an Election Form on or before the deadline established by
the Committee, which in no event shall be later than 30 days after the
Participant first becomes eligible to participate in the Plan.         If a
deferral election made in accordance with this Section 3.2(b) relates to
compensation earned based upon a specified performance period, the amount
eligible for deferral shall be equal to (i) the total amount of the Base Salary,
Bonus or Directors Fees, as the case may be, for the performance period,
multiplied by (ii) a fraction, the numerator of which is the number of days
remaining in the service period after the Participant’s deferral election is
made, and the denominator of which is the total number of days in the
performance period.         Any deferral election made in accordance with this
Section 3.2(b) shall become irrevocable no later than the 30th day after the
date the Director or selected Employee becomes eligible to participate in the
Plan.     (c)   Timing of Deferral Elections for Performance-Based Compensation.
Subject to the limitations described below, the Committee may determine that an
irrevocable deferral election for an amount that qualifies as Performance-Based
Compensation may be made by submitting an Election Form on or before the
deadline established by the Committee, which in no event shall be later than
6 months before the end of the performance period.         In order for a
Participant to be eligible to make a deferral election for Performance-Based
Compensation in accordance with the deadline established pursuant to this
Section 3.2(c), the Participant must have performed services continuously from
the later of (i) the beginning of the performance period for such compensation,
or (ii) the date upon which the performance criteria for such compensation are
established, through the date upon which the Participant makes the deferral
election for such compensation. In no event shall a deferral election submitted
under this Section 3.2(d) be permitted to apply to any amount of
Performance-Based Compensation that has become readily ascertainable.     (d)  
Timing Rule for Deferral of Compensation Subject to Risk of Forfeiture. With
respect to compensation (i) to which a Participant has a legally binding right
to payment

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Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 

      in a subsequent year, and (ii) that is subject to a forfeiture condition
requiring the Participant’s continued services for a period of at least
12 months from the date the Participant obtains the legally binding right, the
Committee may determine that an irrevocable deferral election for such
compensation may be made by timely delivering an Election Form to the Committee
in accordance with its rules and procedures, no later than the 30th day after
the Participant obtains the legally binding right to the compensation, provided
that the election is made at least 12 months in advance of the earliest date at
which the forfeiture condition could lapse, as determined in accordance with
Treas. Reg. §1.409A-2(a)(5).         Any deferral election(s) made in accordance
with this Section 3.2(d) shall become irrevocable no later than the 30th day
after the Participant obtains the legally binding right to the compensation
subject to such deferral election(s).

3.3   Withholding and Crediting of Annual Deferral Amounts. The Base Salary,
Bonus and/or Director Fees portion of the Annual Deferral Amount for each
Participant shall be determined based on the applicable percentage under the
Participant’s Election Form and withheld at the time the Base Salary, Bonus or
Director Fees are or otherwise would be paid to the Participant, whether or not
this occurs during the Plan Year itself. Annual Deferral Amounts shall be
credited to the Participant’s Annual Account for such Plan Year at the time such
amounts would otherwise have been paid to the Participant.

3.4   Company Contribution Amount.

  (a)   For each Plan Year, an Employer may be required to credit amounts to a
Participant’s Annual Account in accordance with employment or other agreements
entered into between the Participant and the Employer, which amounts shall be
part of the Participant’s Company Contribution Amount for that Plan Year. Such
amounts shall be credited to the Participant’s Annual Account for the applicable
Plan Year on the date or dates prescribed by such agreements.     (b)   For each
Plan Year, an Employer, in its sole discretion, may, but is not required to,
credit any amount it desires to any Participant’s Annual Account under this
Plan, which amount shall be part of the Participant’s Company Contribution
Amount for that Plan Year. The amount so credited to a Participant may be
smaller or larger than the amount credited to any other Participant, and the
amount credited to any Participant for a Plan Year may be zero, even though one
or more other Participants receive a Company Contribution Amount for that Plan
Year. The Company Contribution Amount described in this Section 3.4(b), if any,
shall be credited to the Participant’s Annual Account for the applicable Plan
Year on a date or dates to be determined by the Committee.     (c)   If not
otherwise specified in the Participant’s employment or other agreement entered
into between the Participant and the Employer, the amount (or the method or
formula for determining the amount) of a Participant’s Company Contribution
Amount shall be set forth in writing in one or more documents, which shall be
deemed to be incorporated into

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Hercules Offshore, Inc.

Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 

      this Plan in accordance with Section 1.28, no later than the date on which
such Company Contribution Amount is credited to the applicable Annual Account of
the Participant.

3.5   Company Restoration Amount. A Participant’s Company Restoration Amount for
any Plan Year shall be that amount, if any, determined by the Committee and
designated by the Committee as a Company Restoration Amount for such Participant
for that Plan year . A Company Restoration Amount determined and declared by the
Committee may be for the purpose of making up for certain limits applicable to
the 401(k) Plan or other qualified plan for such Plan Year, as identified by the
Committee, or for such other purposes as determined by the Committee in its sole
discretion. The amount, if any, so credited to a Participant under this Plan for
any Plan Year (a) may be smaller or larger than the amount credited to any other
Participant, and (b) may differ from the amount credited to such Participant in
the preceding Plan Year. The Participant’s Company Restoration Amount, if any,
shall be credited to the Participant’s Annual Account for the applicable Plan
Year on a date or dates to be determined by the Committee. The amount (or the
method or formula for determining the amount) of a Participant’s Company
Restoration Amount shall be set forth in writing in one or more documents, which
shall be deemed to be incorporated into this Plan in accordance with Section
1.28, no later than the date on which such Company Restoration Amount is
credited to the applicable Annual Account of the Participant.   3.6   Vesting.

  (a)   A Participant shall at all times be 100% vested in the portion of his or
her Account Balance attributable to Annual Deferral Amounts, plus amounts
credited or debited on such amounts pursuant to Section 3.7.     (b)   A
Participant shall be vested in the portion of his or her Account Balance
attributable to any Company Contribution Amounts, plus amounts credited or
debited on such amounts pursuant to Section 3.7, in accordance with the vesting
schedule(s) set forth in his or her Plan Agreement, employment agreement or any
other agreement entered into between the Participant and his or her Employer. If
not addressed in such agreements, a Participant shall vest in the portion of his
or her Account Balance attributable to any Company Contribution Amounts, plus
amounts credited or debited on such amounts pursuant to Section 3.7, based on
the number of Years of Plan Participation credited to the Participant following
the Plan Year to which the contribution relates in accordance with the following
schedule and a new vesting schedule shall apply to each Company Contribution
Amount.

          Years of Plan Participation Credited to Participant   Following the
Year to which Contribution Relates   Vested Percentage  
Less than 1 year
    0 %
1 year or more, but less than 2
    25 %
2 years or more, but less than 3
    50 %
3 years or more, but less than 4
    75 %
4 years or more
    100 %

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Hercules Offshore, Inc.

Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 

  (c)   A Participant shall at all times be 100% vested in the portion of his or
her Account Balance attributable to any Company Restoration Amounts, plus
amounts credited or debited on such amounts pursuant to Section 3.7.     (d)  
Notwithstanding anything to the contrary contained in this Section 3.6, in the
event of a Change in Control, or upon a Participant’s Disability, Separation
from Service on or after qualifying for Retirement, or death prior to Separation
from Service, any amounts that are not vested in accordance with Sections 3.6(b)
or 3.6(c) above, shall immediately become 100% vested.     (e)   Notwithstanding
subsection 3.6(d) above, the vesting schedules described in Sections 3.6(b) or
3.6(c) above shall not be accelerated upon a Change in Control to the extent
that the Committee determines that such acceleration would cause the deduction
limitations of Section 280G of the Code to become effective. In the event of
such a determination, the Participant may request independent verification of
the Committee’s calculations with respect to the application of Section 280G. In
such case, the Committee must provide to the Participant within 90 days of such
a request an opinion from a nationally recognized accounting firm selected by
the Participant (the “Accounting Firm”). The opinion shall state the Accounting
Firm’s opinion that any limitation in the vested percentage hereunder is
necessary to avoid the limits of Section 280G and contain supporting
calculations. The cost of such opinion shall be paid for by the Company.     (f)
  Section 3.6(e) shall not prevent the acceleration of the vesting schedules
described in Sections 3.6(b) and 3.6(c) if such Participant is entitled to a
“gross-up” payment, to eliminate the effect of the Code section 4999 excise tax,
pursuant to his or her employment agreement or other agreement entered into
between such Participant and the Employer.

3.7   Crediting/Debiting of Account Balances. In accordance with, and subject
to, the rules and procedures that are established from time to time by the
Committee, in its sole discretion, amounts shall be credited or debited to a
Participant’s Account Balance in accordance with the following rules:

  (a)   Measurement Funds. The Participant may elect one or more of the
measurement funds selected by the Committee, in its sole discretion, which are
based on certain mutual funds (the “Measurement Funds”), for the purpose of
crediting or debiting additional amounts to his or her Account Balance. As
necessary, the Committee may, in its sole discretion, discontinue, substitute or
add a Measurement Fund. Each such action will take effect as of the first day of
the first calendar quarter that begins at least 30 days after the day on which
the Committee gives Participants advance written notice of such change.     (b)
  Election of Measurement Funds. A Participant, in connection with his or her
initial deferral election in accordance with Section 3.2 above, shall elect, on
the Election Form,

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Hercules Offshore, Inc.

Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 

      one or more Measurement Fund(s) (as described in Section 3.7(a) above) to
be used to determine the amounts to be credited or debited to his or her Account
Balance. If a Participant does not elect any of the Measurement Funds as
described in the previous sentence, the Participant’s Account Balance shall
automatically be allocated into the lowest-risk Measurement Fund, as determined
by the Committee, in its sole discretion. The Participant may (but is not
required to) elect, by submitting an Election Form to the Committee that is
accepted by the Committee, to add or delete one or more Measurement Fund(s) to
be used to determine the amounts to be credited or debited to his or her Account
Balance, or to change the portion of his or her Account Balance allocated to
each previously or newly elected Measurement Fund. If an election is made in
accordance with the previous sentence, it shall apply as of the first business
day deemed reasonably practicable by the Committee, in its sole discretion, and
shall continue thereafter for each subsequent day in which the Participant
participates in the Plan, unless changed in accordance with the previous
sentence. Notwithstanding the foregoing, the Committee, in its sole discretion,
may impose limitations on the frequency with which one or more of the
Measurement Funds elected in accordance with this Section 3.7(b) may be added or
deleted by such Participant; furthermore, the Committee, in its sole discretion,
may impose limitations on the frequency with which the Participant may change
the portion of his or her Account Balance allocated to each previously or newly
elected Measurement Fund.     (c)   Proportionate Allocation. In making any
election described in Section 3.7(b) above, the Participant shall specify on the
Election Form, in increments of one percent (1%), the percentage of his or her
Account Balance or Measurement Fund, as applicable, to be allocated/reallocated.
    (d)   Crediting or Debiting Method. The performance of each Measurement Fund
(either positive or negative) will be determined on a daily basis based on the
manner in which such Participant’s Account Balance has been hypothetically
allocated among the Measurement Funds by the Participant.     (e)   No Actual
Investment. Notwithstanding any other provision of this Plan that may be
interpreted to the contrary, the Measurement Funds are to be used for
measurement purposes only, and a Participant’s election of any such Measurement
Fund, the allocation of his or her Account Balance thereto, the calculation of
additional amounts and the crediting or debiting of such amounts to a
Participant’s Account Balance shall not be considered or construed in any manner
as an actual investment of his or her Account Balance in any such Measurement
Fund. In the event that the Company or the Trustee (as that term is defined in
the Trust), in its own discretion, decides to invest funds in any or all of the
investments on which the Measurement Funds are based, no Participant shall have
any rights in or to such investments themselves. Without limiting the foregoing,
a Participant’s Account Balance shall at all times be a bookkeeping entry only
and shall not represent any investment made on his or her behalf by the Company
or the Trust; the Participant shall at all times remain an unsecured creditor of
the Company.

3.8   FICA and Other Taxes.

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Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 

  (a)   Annual Deferral Amounts. For each Plan Year in which an Annual Deferral
Amount is being withheld from a Participant, the Participant’s Employer(s) shall
withhold from that portion of the Participant’s Base Salary and/or Bonus that is
not being deferred, in a manner determined by the Employer(s), the Participant’s
share of FICA and other employment taxes on such Annual Deferral Amount. If
necessary, the Committee may reduce the Annual Deferral Amount in order to
comply with this Section 3.8.     (b)   Company Restoration Amounts and Company
Contribution Amounts. When a Participant becomes vested in a portion of his or
her Account Balance attributable to any Company Restoration Amounts and/or
Company Contribution Amounts, the Participant’s Employer(s) shall withhold from
that portion of the Participant’s Base Salary and/or Bonus, that is not
deferred, in a manner determined by the Employer(s), the Participant’s share of
FICA and other employment taxes on such amounts. If necessary, the Committee may
reduce the vested portion of the Participant’s Company Restoration Amount or
Company Contribution Amount, as applicable, in order to comply with this
Section 3.8.     (c)   Distributions. The Participant’s Employer(s), or the
trustee of the Trust, shall withhold from any payments made to a Participant
under this Plan all federal, state and local income, employment and other taxes
required to be withheld by the Employer(s), or the trustee of the Trust, in
connection with such payments, in amounts and in a manner to be determined in
the sole discretion of the Employer(s) and the trustee of the Trust.

ARTICLE IV.
Scheduled Distribution; Unforeseeable Emergencies

4.1   Scheduled Distributions. In connection with each election to defer an
Annual Deferral Amount, a Participant may elect to receive all or a portion of
such Annual Deferral Amount, plus amounts credited or debited on that amount
pursuant to Section 3.7, in the form of a lump sum payment, calculated as of the
close of business on or around the Benefit Distribution Date designated by the
Participant in accordance with this Section (a “Scheduled Distribution”). The
Benefit Distribution Date for the amount subject to a Scheduled Distribution
election shall be the first day of any Plan Year designated by the Participant,
which may be no sooner than three (3) Plan Years after the end of the Plan Year
to which the Participant’s deferral election relates, unless otherwise provided
on an Election Form approved by the Committee.       Subject to the other terms
and conditions of this Plan, including any required six-month delay, each
Scheduled Distribution elected shall be paid out during a 60 day period
commencing immediately after the Benefit Distribution Date. By way of example,
if a Scheduled Distribution is elected for Annual Deferral Amounts that are
earned in the Plan Year commencing January 1, 2008, the earliest Benefit
Distribution Date that may be designated by a Participant would be January 1,
2012, and the Scheduled Distribution would be paid out during the 60 day period
commencing immediately after such Benefit Distribution Date.

4.2   Postponing Scheduled Distributions. A Participant may elect to postpone a
Scheduled Distribution described in Section 4.1 above, and have such amount paid
out during a 60 day

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Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 

    period commencing immediately after an allowable alternative Benefit
Distribution Date designated in accordance with this Section 4.2. In order to
make such an election, the Participant must submit an Election Form to the
Committee in accordance with the following criteria:

  (a)   The election of the new Benefit Distribution Date shall have no effect
until at least 12 months after the date on which the election is made;     (b)  
The new Benefit Distribution Date selected by the Participant for such Scheduled
Distribution must be the first day of a Plan Year that is no sooner than 5 years
after the previously designated Benefit Distribution Date; and     (c)   The
election must be made at least 12 months prior to the Participant’s previously
designated Benefit Distribution Date for such Scheduled Distribution.

    For purposes of applying the provisions of this Section 4.2, a Participant’s
election to postpone a Scheduled Distribution shall not be considered to be made
until the date on which the election becomes irrevocable. Such an election shall
become irrevocable no later than the date that is 12 months prior to the
Participant’s previously designated Benefit Distribution Date for such Scheduled
Distribution.

4.3   Other Benefits Take Precedence Over Scheduled Distributions. Should an
event occur prior to any Benefit Distribution Date designated for a Scheduled
Distribution that would trigger a benefit under Articles 5 through 9, as
applicable, all amounts subject to a Scheduled Distribution election shall be
paid in accordance with the other applicable provisions of the Plan and not in
accordance with this Article 4.   4.4   Unforeseeable Emergencies.

  (a)   If a Participant experiences an Unforeseeable Emergency prior to the
occurrence of a distribution event described in Articles 5 through 9, as
applicable, the Participant may petition the Committee to receive a partial or
full payout from the Plan. The payout, if any, from the Plan shall not exceed
the lesser of (i) the Participant’s vested Account Balance, calculated as of the
close of business on or around the Benefit Distribution Date for such payout, as
determined by the Committee in accordance with provisions set forth below, or
(ii) the amount necessary to satisfy the Unforeseeable Emergency, plus amounts
necessary to pay Federal, state, or local income taxes or penalties reasonably
anticipated as a result of the distribution. A Participant shall not be eligible
to receive a payout from the Plan to the extent that the Unforeseeable Emergency
is or may be relieved (A) through reimbursement or compensation by insurance or
otherwise, (B) by liquidation of the Participant’s assets, to the extent the
liquidation of such assets would not itself cause severe financial hardship or
(C) by cessation of deferrals under this Plan.         If the Committee, in its
sole discretion, approves a Participant’s petition for payout from the Plan, the
Participant’s Benefit Distribution Date for such payout shall be the date on
which such Committee approval occurs and such payout shall be distributed to the
Participant in a lump sum no later than 60 days after such Benefit Distribution
Date. In

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Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 

      addition, in the event of such approval the Participant’s outstanding
deferral elections under the Plan shall be cancelled.     (b)   A Participant’s
deferral elections under this Plan shall also be cancelled to the extent the
Committee determines that such action is required for the Participant to obtain
a hardship distribution from an Employer’s 401(k) Plan pursuant to Treas. Reg.
§1.401(k)-1(d)(3).

ARTICLE V.
Change In Control Benefit

5.1   Change in Control Benefit. A Participant, in connection with his or her
commencement of participation in the Plan, shall have an opportunity to
irrevocably elect to receive his or her vested Account Balance in the form of a
lump sum payment in the event that a Change in Control occurs prior to the
Participant’s Separation from Service, Disability or death (the “Change in
Control Benefit”). The Benefit Distribution Date for the Change in Control
Benefit, if any, shall be the date on which the Change in Control occurs.      
If a Participant elects not to receive a Change in Control Benefit, or fails to
make an election in connection with his or her commencement of participation in
the Plan, the Participant’s Account Balance shall be paid in accordance with the
other applicable provisions of the Plan.   5.2   Payment of Change in Control
Benefit. The Change in Control Benefit, if any, shall be calculated as of the
close of business on or around the Participant’s Benefit Distribution Date, as
determined by the Committee, and paid to the Participant no later than 60 days
after the Participant’s Benefit Distribution Date.

ARTICLE VI.
Retirement Benefit

6.1   Retirement Benefit. If a Participant experiences a Separation from Service
that qualifies as a Retirement, the Participant shall be eligible to receive his
or her vested Account Balance in either a lump sum or annual installment
payments, as elected by the Participant in accordance with Section 6.2 (the
“Retirement Benefit”). A Participant’s Retirement Benefit shall be calculated as
of the close of business on or around the applicable Benefit Distribution Date
for such benefit, which shall be the first day after the end of the six-month
period immediately following the date on which the Participant experiences such
Separation from Service if the Participant is an Employee or has any Account
Balance attributable to his or her prior status as an Employee, and for all
other Participants, the date on which the Participant experiences a Separation
from Service; provided, however, if a Participant changes the form of
distribution for one or more Annual Accounts in accordance with Section 6.2(b),
the Benefit Distribution Date for the Annual Account(s) subject to such change
shall be determined in accordance with Section 6.2(b).

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Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 

6.2   Payment of Retirement Benefit.

  (a)   In connection with a Participant’s election to defer an Annual Deferral
Amount, the Participant shall elect the form in which his or her Annual Account
for such Plan Year will be paid. The Participant may elect to receive each
Annual Account in the form of a lump sum or pursuant to an Annual Installment
Method of 5, 10 or 15 years. If a Participant does not make any election with
respect to the payment of an Annual Account, then the Participant shall be
deemed to have elected to receive such Annual Account as a lump sum.

  (b)   A Participant may change the form of payment for an Annual Account by
submitting an Election Form to the Committee in accordance with the following
criteria:

  (i)   The election shall not take effect until at least 12 months after the
date on which the election is made;

  (ii)   The new Benefit Distribution Date for such Annual Account shall be
5 years after the Benefit Distribution Date that would otherwise have been
applicable to such Annual Account; and

  (iii)   The election must be made at least 12 months prior to the Benefit
Distribution Date that would otherwise have been applicable to such Annual
Account.

For purposes of applying the provisions of this Section 6.2(b), a Participant’s
election to change the form of payment for an Annual Account shall not be
considered to be made until the date on which the election becomes irrevocable.
Such an election shall become irrevocable no later than the date that is
12 months prior to the Benefit Distribution Date that would otherwise have been
applicable to such Annual Account. Subject to the requirements of this
Section 6.2(b), the Election Form most recently accepted by the Committee that
has become effective for an Annual Account shall govern the form of payout of
such Annual Account.
The lump sum payment shall be made, or installment payments shall commence, no
later than 60 days after the applicable Benefit Distribution Date. Remaining
installments, if any, shall continue in accordance with the Participant’s
election for each Annual Account and shall be paid no later than 60 days after
each anniversary of the Benefit Distribution Date.
ARTICLE VII.
Termination Benefit

  7.1   Termination Benefit. If a Participant experiences a Separation from
Service that does not qualify as a Retirement, the Participant shall receive his
or her vested Account Balance in the form of a lump sum payment (the
“Termination Benefit”). A Participant’s Termination Benefit shall be calculated
as of the close of business on or around the Benefit Distribution Date for such
benefit, which shall be the first day after the end of the six-month period
immediately following the date on which the Participant experiences such
Separation from Service if the Participant is

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Hercules Offshore, Inc.

Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 

    an Employee or has any Account Balance attributable to his or her prior
status as an Employee, and for all other Participants, the date on which the
Participant experiences a Separation from Service.   7.2   Payment of
Termination Benefit. The Termination Benefit shall be paid to the Participant no
later than 60 days after the Participant’s Benefit Distribution Date.

ARTICLE VIII.
Disability Benefit

8.1   Disability Benefit. If a Participant becomes Disabled prior to the
occurrence of a distribution event described in Articles 5 through 7, as
applicable, the Participant shall receive his or her vested Account Balance in
the form of a lump sum payment or pursuant to an Annual Installment method of up
to 10 years (the “Disability Benefit”). If a Participant does not make any
election with respect to the payment of the Disability Benefit, then the
Participant shall be deemed to have elected to receive such Disability Benefit
in a lump sum. The Disability Benefit shall be calculated as of the close of
business on or around the Participant’s Benefit Distribution Date for such
benefit, which shall be the date on which the Participant becomes Disabled.

8.2   Payment of Disability Benefit.

  (a)   A Participant, in connection with his or her commencement of
participation in the Plan, shall elect on an Election Form to receive the
Disability Benefit in a lump sum or pursuant to an Annual Installment Method of
up to (10) years. If a Participant does not make any election with respect to
the payment of the Disability Benefit, then the Participant shall be deemed to
have elected to receive such Disability Benefit in a lump sum.

  (b)   A Participant may change the form of payment of the Disability Benefit
by submitting an Election Form to the Committee, provided that any such change
shall not be effective until at least twelve (12) months after the date on which
the election is submitted. For purposes of this Plan, the right to receive the
Disability Benefit in installment payments shall be treated as the entitlement
to a single payment.

  (c)   The lump sum payment shall be made, or installment payments shall
commence, no later than sixty (60) days after the Participant’s Benefit
Distribution Date. Remaining installments, if any, shall be paid no later than
sixty (60) days after each anniversary of the Participant’s Benefit Distribution
Date.

ARTICLE IX.
Death Benefit

9.1   Death Benefit. In the event of a Participant’s death prior to the complete
distribution of his or her vested Account Balance, the Participant’s
Beneficiary(ies) shall receive the Participant’s unpaid vested Account Balance
in a lump sum payment (the “Death Benefit”). The Death Benefit shall be
calculated as of the close of business on or around the Benefit Distribution
Date

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Hercules Offshore, Inc.

Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 

    for such benefit, which shall be the date on which the Committee is provided
with proof that
is satisfactory to the Committee of the Participant’s death.   9.2   Payment of
Death Benefit. The Death Benefit shall be paid to the Participant’s
Beneficiary(ies) no later than 60 days after the Participant’s Benefit
Distribution Date.

ARTICLE X.
Beneficiary Designation

10.1   Beneficiary. Each Participant shall have the right, at any time, to
designate his or her Beneficiary(ies) (both primary as well as contingent) to
receive any benefits payable under the Plan to a beneficiary upon the death of a
Participant. The Beneficiary designated under this Plan may be the same as or
different from the Beneficiary designation under any other plan of an Employer
in which the Participant participates.

10.2   Beneficiary Designation; Change; Spousal Consent. A Participant shall
designate his or her Beneficiary by completing and signing the Beneficiary
Designation Form, and returning it to the Committee or its designated agent. A
Participant shall have the right to change a Beneficiary by completing, signing
and otherwise complying with the terms of the Beneficiary Designation Form and
the Committee’s rules and procedures, as in effect from time to time. If the
Participant names someone other than his or her spouse as a Beneficiary, the
Committee may, in its sole discretion, determine that spousal consent is
required to be provided in a form designated by the Committee, executed by such
Participant’s spouse and returned to the Committee. Upon the acceptance by the
Committee of a new Beneficiary Designation Form, all Beneficiary designations
previously filed shall be canceled. The Committee shall be entitled to rely on
the last Beneficiary Designation Form filed by the Participant and accepted by
the Committee prior to his or her death.

10.3   Acknowledgment. No designation or change in designation of a Beneficiary
shall be effective until received and acknowledged in writing by the Committee
or its designated agent.

10.4   No Beneficiary Designation. If a Participant fails to designate a
Beneficiary as provided in Sections 10.1, 10.2 and 10.3 above or, if all
designated Beneficiaries predecease the Participant or die prior to complete
distribution of the Participant’s benefits, then the Participant’s designated
Beneficiary shall be deemed to be his or her surviving spouse. If the
Participant has no surviving spouse, the benefits remaining under the Plan to be
paid to a Beneficiary shall be payable to the executor or personal
representative of the Participant’s estate.

10.5   Doubt as to Beneficiary. If the Committee has any doubt as to the proper
Beneficiary to receive payments pursuant to this Plan, the Committee shall have
the right, exercisable in its discretion, to cause the Participant’s Employer to
withhold such payments until this matter is resolved to the Committee’s
satisfaction.

10.6   Discharge of Obligations. The payment of benefits under the Plan to a
Beneficiary shall fully and completely discharge all Employers and the Committee
from all further obligations under

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Hercules Offshore, Inc.

Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 

    this Plan with respect to the Participant, and that Participant’s Plan
Agreement shall terminate upon such full payment of benefits.

ARTICLE XI.
Leave Of Absence

11.1   Paid Leave of Absence. If a Participant is authorized by the
Participant’s Employer to take a paid leave of absence from the employment of
the Employer, and such leave of absence does not constitute a Separation from
Service, (a) the Participant shall continue to be considered eligible for the
benefits provided under the Plan, and (b) the Annual Deferral Amount shall
continue to be withheld during such paid leave of absence in accordance with
Section 3.2.

11.2   Unpaid Leave of Absence. If a Participant is authorized by the
Participant’s Employer to take an unpaid leave of absence from the employment of
the Employer for any reason, and such leave of absence does not constitute a
Separation from Service, such Participant shall continue to be eligible for the
benefits provided under the Plan. During the unpaid leave of absence, the
Participant shall not be allowed to make any additional deferral elections.
However, if the Participant returns to employment, the Participant may elect to
defer an Annual Deferral Amount for the Plan Year following his or her return to
employment and for every Plan Year thereafter while a Participant in the Plan,
provided such deferral elections are otherwise allowed and an Election Form is
delivered to and accepted by the Committee for each such election in accordance
with Section 3.2 above.

ARTICLE XII.
Termination Of Plan, Amendment Or Modification

12.1   Termination of Plan. Although each Employer anticipates that it will
continue the Plan for an indefinite period of time, there is no guarantee that
any Employer will continue the Plan or will not terminate the Plan at any time
in the future. Accordingly, each Employer reserves the right to terminate the
Plan with respect to all of its Participants. In the event of a Plan termination
no new deferral elections shall be permitted for the affected Participants and
such Participants shall no longer be eligible to receive new company
contributions. However, after the Plan termination the Account Balances of such
Participants shall continue to be credited with Annual Deferral Amounts
attributable to a deferral election that was in effect prior to the Plan
termination to the extent deemed necessary to comply with Code Section 409A and
related Treasury Regulations, and additional amounts shall continue to credited
or debited to such Participants’ Account Balances pursuant to Section 3.7. The
Measurement Funds available to Participants following the termination of the
Plan shall be comparable in number and type to those Measurement Funds available
to Participants in the Plan Year preceding the Plan Year in which the Plan
termination is effective. In addition, following a Plan termination, Participant
Account Balances shall remain in the Plan and shall not be distributed until
such amounts become eligible for distribution in accordance with the other
applicable provisions of the Plan. Notwithstanding the preceding sentence, to
the extent permitted by Treas. Reg. §1.409A-3(j)(4)(ix), the Employer may
provide that upon termination of the Plan, all Account Balances of the
Participants shall be distributed,

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    subject to and in accordance with any rules established by such Employer
deemed necessary to comply with the applicable requirements and limitations of
Treas. Reg. §1.409A-3(j)(4)(ix).   12.2   Amendment. Any Employer may, at any
time, amend or modify the Plan in whole or in part with respect to that
Employer. Notwithstanding the foregoing, (i) no amendment or modification shall
be effective to decrease the value of a Participant’s vested Account Balance in
existence at the time the amendment or modification is made, (ii) no amendment
or modification of this Section 12.2 or Section 13.2 of the Plan shall be
effective unless and until two-thirds (2/3) of Participants with an Account
Balance in the Plan as of the date of such proposed amendment or modification
provide prior written consent in a time and manner determined by the Committee.

12.3   Plan Agreement. Despite the provisions of Sections 12.1, if a
Participant’s Plan Agreement contains benefits or limitations that are not in
this Plan document, the Employer may only amend or terminate such provisions
with the written consent of the Participant.

12.4   Effect of Payment. The full payment of the Participant’s vested Account
Balance in accordance with the applicable provisions of the Plan shall
completely discharge all obligations to a Participant and his or her designated
Beneficiaries under this Plan, and the Participant’s Plan Agreement shall
terminate.

ARTICLE XIII.
Administration

13.1   Committee Duties. Except as otherwise provided in this Article 13, this
Plan shall be administered by the Company’s Benefits Committee, or such other
committee as the Board shall appoint. Members of the Committee may be
Participants under this Plan. The Committee shall also have the discretion and
authority to (a) make, amend, interpret, and enforce all appropriate rules and
regulations for the administration of this Plan, and (b) decide or resolve any
and all questions, including benefit entitlement determinations and
interpretations of this Plan, as may arise in connection with the Plan. Any
individual serving on the Committee who is a Participant shall not vote or act
on any matter relating solely to himself or herself. When making a determination
or calculation, the Committee shall be entitled to rely on information furnished
by a Participant or the Company.

13.2   Administration Upon Change In Control. Within 120 days following a Change
in Control, the individuals who comprised the Committee immediately prior to the
Change in Control (whether or not such individuals are members of the Committee
following the Change in Control) may, by written consent of the majority of such
individuals, appoint an independent third party administrator (the
“Administrator”) to perform any or all of the Committee’s duties described in
Section 13.1 above, including without limitation, the power to determine any
questions arising in connection with the administration or interpretation of the
Plan, and the power to make benefit entitlement determinations. Upon and after
the effective date of such appointment, (a) the Company must pay all reasonable
administrative expenses and fees of the Administrator, and (b) the Administrator
may only be terminated with the written consent of the majority of Participants
with an Account Balance in the Plan as of the date of such proposed termination.

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Hercules Offshore, Inc.

Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 

13.3   Agents. In the administration of this Plan, the Committee or the
Administrator, as applicable, may, from time to time, employ agents and delegate
to them such administrative duties as it sees fit (including acting through a
duly appointed representative) and may from time to time consult with counsel.  
13.4   Binding Effect of Decisions. The decision or action of the Committee or
Administrator, as applicable, with respect to any question arising out of or in
connection with the administration, interpretation and application of the Plan
and the rules and regulations promulgated hereunder shall be final and
conclusive and binding upon all persons having any interest in the Plan.   13.5
  Indemnity of Committee. All Employers shall indemnify and hold harmless the
members of the Committee, any Employee to whom the duties of the Committee may
be delegated, and the Administrator against any and all claims, losses, damages,
expenses or liabilities arising from any action or failure to act with respect
to this Plan, except in the case of willful misconduct by the Committee, any of
its members, any such Employee or the Administrator.   13.6   Employer
Information. To enable the Committee and/or Administrator to perform its
functions, the Company and each Employer shall supply full and timely
information to the Committee and/or Administrator, as the case may be, on all
matters relating to the Plan, the Trust, the Participants and their
Beneficiaries, the Account Balances of the Participants, the compensation of its
Participants, the date and circumstances of the Separation from Service,
Disability or death of its Participants, and such other pertinent information as
the Committee or Administrator may reasonably require.

ARTICLE XIV.
Other Benefits And Agreements

14.1   Coordination with Other Benefits. The benefits provided for a Participant
and Participant’s Beneficiary under the Plan are in addition to any other
benefits available to such Participant under any other plan or program for
employees of the Participant’s Employer. The Plan shall supplement and shall not
supersede, modify or amend any other such plan or program except as may
otherwise be expressly provided.

ARTICLE XV.
Claims Procedures

15.1   Presentation of Claim. Any Participant or Beneficiary of a deceased
Participant (such Participant or Beneficiary being referred to below as a
“Claimant”) may deliver to the Committee a written claim for a determination
with respect to the amounts distributable to such Claimant from the Plan. If
such a claim relates to the contents of a notice received by the Claimant, the
claim must be made within 60 days after such notice was received by the
Claimant. All other claims must be made within 180 days of the date on which the
event that caused the claim to arise occurred. The claim must state with
particularity the determination desired by the Claimant.

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Hercules Offshore, Inc.

Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 

15.2   Notification of Decision. The Committee shall consider a Claimant’s claim
within a reasonable time, but no later than 90 days after receiving the claim.
If the Committee determines that special circumstances require an extension of
time for processing the claim, written notice of the extension shall be
furnished to the Claimant prior to the termination of the initial 90 day period.
In no event shall such extension exceed a period of 90 days from the end of the
initial period. The extension notice shall indicate the special circumstances
requiring an extension of time and the date by which the Committee expects to
render the benefit determination. The Committee shall notify the Claimant in
writing:

  (a)   that the Claimant’s requested determination has been made, and that the
claim has been allowed in full; or     (b)   that the Committee has reached a
conclusion contrary, in whole or in part, to the Claimant’s requested
determination, and such notice must set forth in a manner calculated to be
understood by the Claimant:

  (i)   the specific reason(s) for the denial of the claim, or any part of it;  
  (ii)   specific reference(s) to pertinent provisions of the Plan upon which
such denial was based;     (iii)   a description of any additional material or
information necessary for the Claimant to perfect the claim, and an explanation
of why such material or information is necessary;     (iv)   an explanation of
the claim review procedure set forth in Section 15.3 below; and     (v)   a
statement of the Claimant’s right to bring a civil action under ERISA Section
502(a) following an adverse benefit determination on review.

15.3   Review of a Denied Claim. On or before 60 days after receiving a notice
from the Committee that a claim has been denied, in whole or in part, a Claimant
(or the Claimant’s duly authorized representative) may file with the Committee a
written request for a review of the denial of the claim. The Claimant (or the
Claimant’s duly authorized representative):

  (a)   may, upon request and free of charge, have reasonable access to, and
copies of, all documents, records and other information relevant (as defined in
applicable ERISA regulations) to the claim for benefits;     (b)   may submit
written comments or other documents; and/or     (c)   may request a hearing,
which the Committee, in its sole discretion, may grant.

15.4   Decision on Review. The Committee shall render its decision on review
promptly, and no later than 60 days after the Committee receives the Claimant’s
written request for a review of the denial of the claim. If the Committee
determines that special circumstances require an extension of time for
processing the claim, written notice of the extension shall be furnished to the

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Hercules Offshore, Inc.

Deferred Compensation Plan

Amended and Restated Effective January 1, 2007
 

    Claimant prior to the termination of the initial 60 day period. In no event
shall such extension exceed a period of 60 days from the end of the initial
period. The extension notice shall indicate the special circumstances requiring
an extension of time and the date by which the Committee expects to render the
benefit determination. In rendering its decision, the Committee shall take into
account all comments, documents, records and other information submitted by the
Claimant relating to the claim, without regard to whether such information was
submitted or considered in the initial benefit determination. The decision must
be written in a manner calculated to be understood by the Claimant, and it must
contain:

  (a)   specific reasons for the decision;     (b)   specific reference(s) to
the pertinent Plan provisions upon which the decision was based;     (c)   a
statement that the Claimant is entitled to receive, upon request and free of
charge, reasonable access to and copies of, all documents, records and other
information relevant (as defined in applicable ERISA regulations) to the
Claimant’s claim for benefits; and     (d)   a statement of the Claimant’s right
to bring a civil action under ERISA Section 502(a).

15.5   Legal Action. A Claimant’s compliance with the foregoing provisions of
this Article 15 is a mandatory prerequisite to a Claimant’s right to commence
any legal action with respect to any claim for benefits under this Plan.

ARTICLE XVI.
Trust

16.1   Establishment of the Trust. In order to provide assets from which to
fulfill its obligations to the Participants and their Beneficiaries under the
Plan, the Company may establish a trust by a trust agreement with a third party,
the trustee, to which each Employer may, in its discretion, contribute cash or
other property, including securities issued by the Company, to provide for the
benefit payments under the Plan (the “Trust”).   16.2   Interrelationship of the
Plan and the Trust. The provisions of the Plan and the Plan Agreement shall
govern the rights of a Participant to receive distributions pursuant to the
Plan. The provisions of the Trust shall govern the rights of the Employers,
Participants and the creditors of the Employers to the assets transferred to the
Trust. Each Employer shall at all times remain liable to carry out its
obligations under the Plan.   16.3   Distributions From the Trust. Each
Employer’s obligations under the Plan may be satisfied with Trust assets
distributed pursuant to the terms of the Trust, and any such distribution shall
reduce the Employer’s obligations under this Plan.

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ARTICLE XVII.
Miscellaneous

17.1   Status of Plan. The Plan is intended to be a plan that is not qualified
within the meaning of Code Section 401(a) and that “is unfunded and is
maintained by an employer primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees”
within the meaning of ERISA Sections 201(2), 301(a)(3) and 401(a)(1). The Plan
shall be administered and interpreted (a) to the extent possible in a manner
consistent with the intent described in the preceding sentence, and (b) in
accordance with Code Section 409A and related Treasury guidance and Regulations.

17.2   Unsecured General Creditor. Participants and their Beneficiaries, heirs,
successors and assigns shall have no legal or equitable rights, interests or
claims in any property or assets of an Employer. For purposes of the payment of
benefits under this Plan, any and all of an Employer’s assets shall be, and
remain, the general, unpledged unrestricted assets of the Employer. An
Employer’s obligation under the Plan shall be merely that of an unfunded and
unsecured promise to pay money in the future.

17.3   Employer’s Liability. An Employer’s liability for the payment of benefits
shall be defined only by the Plan and the Plan Agreement, as entered into
between the Employer and a Participant. An Employer shall have no obligation to
a Participant under the Plan except as expressly provided in the Plan and his or
her Plan Agreement.

17.4   Nonassignability. Neither a Participant nor any other person shall have
any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or
otherwise encumber, transfer, hypothecate, alienate or convey in advance of
actual receipt, the amounts, if any, payable hereunder, or any part thereof,
which are, and all rights to which are expressly declared to be, unassignable
and non-transferable. No part of the amounts payable shall, prior to actual
payment, be subject to seizure, attachment, garnishment or sequestration for the
payment of any debts, judgments, alimony or separate maintenance owed by a
Participant or any other person, be transferable by operation of law in the
event of a Participant’s or any other person’s bankruptcy or insolvency or be
transferable to a spouse as a result of a property settlement or otherwise.

17.5   Not a Contract of Employment. The terms and conditions of this Plan shall
not be deemed to constitute a contract of employment between any Employer and
the Participant. Such employment is hereby acknowledged to be an “at will”
employment relationship that can be terminated at any time for any reason, or no
reason, with or without cause, and with or without notice, unless expressly
provided in a written employment agreement. Nothing in this Plan shall be deemed
to give a Participant the right to be retained in the service of any Employer,
either as an Employee or a Director, or to interfere with the right of any
Employer to discipline or discharge the Participant at any time.

17.6   Furnishing Information. A Participant or his or her Beneficiary will
cooperate with the Committee by furnishing any and all information requested by
the Committee and take such other actions as may be requested in order to
facilitate the administration of the Plan and the

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     payments of benefits hereunder, including but not limited to taking such
physical examinations as the Committee may deem necessary.

17.7   Terms. Whenever any words are used herein in the masculine, they shall be
construed as though they were in the feminine in all cases where they would so
apply; and whenever any words are used herein in the singular or in the plural,
they shall be construed as though they were used in the plural or the singular,
as the case may be, in all cases where they would so apply.

17.8   Captions. The captions of the articles, sections and paragraphs of this
Plan are for convenience only and shall not control or affect the meaning or
construction of any of its provisions.

17.9   Governing Law. Subject to ERISA, the provisions of this Plan shall be
construed and interpreted according to the internal laws of the State of Texas
without regard to its conflicts of laws principles.

17.10   Notice. Any notice or filing required or permitted to be given to the
Committee under this Plan shall be sufficient if in writing and hand-delivered,
or sent by registered or certified mail, to the address below:

Hercules Offshore, Inc.
Attn: General Counsel
9 Greenway Plaza, Suite 2200
Houston, Texas 77046
Such notice shall be deemed given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark on the receipt for
registration or certification.
Any notice or filing required or permitted to be given to a Participant under
this Plan shall be sufficient if in writing and hand-delivered, or sent by mail,
to the last known address of the Participant.

17.11   Successors. The provisions of this Plan shall bind and inure to the
benefit of the Participant’s Employer and its successors and assigns and the
Participant and the Participant’s designated Beneficiaries.

17.12   Spouse’s Interest. The interest in the benefits hereunder of a spouse of
a Participant who has predeceased the Participant shall automatically pass to
the Participant and shall not be transferable by such spouse in any manner,
including but not limited to such spouse’s will, nor shall such interest pass
under the laws of intestate succession.

17.13   Validity. In case any provision of this Plan shall be illegal or invalid
for any reason, said illegality or invalidity shall not affect the remaining
parts hereof, but this Plan shall be construed and enforced as if such illegal
or invalid provision had never been inserted herein.

17.14   Incompetent. If the Committee determines in its discretion that a
benefit under this Plan is to be paid to a minor, a person declared incompetent
or to a person incapable of handling the disposition of that person’s property,
the Committee may direct payment of such benefit to the

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    guardian, legal representative or person having the care and custody of such
minor, incompetent or incapable person. The Committee may require proof of
minority, incompetence, incapacity or guardianship, as it may deem appropriate
prior to distribution of the benefit. Any payment of a benefit shall be a
payment for the account of the Participant and the Participant’s Beneficiary, as
the case may be, and shall be a complete discharge of any liability under the
Plan for such payment amount.

17.15   Domestic Relations Orders. If necessary to comply with a domestic
relations order, as defined in Code Section 414(p)(1)(B), pursuant to which a
court has determined that a spouse or former spouse of a Participant has an
interest in the Participant’s benefits under the Plan, the Committee shall have
the right to immediately distribute the spouse’s or former spouse’s interest in
the Participant’s benefits under the Plan to such spouse or former spouse.

17.16   Distribution in the Event of Income Inclusion Under Code Section 409A.
If any portion of a Participant’s Account Balance under this Plan is required to
be included in income by the Participant prior to receipt due to a failure of
this Plan to comply with the requirements of Code Section 409A and related
Treasury Regulations, the Committee may determine that such Participant shall
receive a distribution from the Plan in an amount equal to the lesser of (i) the
portion of his or her Account Balance required to be included in income as a
result of the failure of the Plan to comply with the requirements of Code
Section 409A and related Treasury Regulations, or (ii) the unpaid vested Account
Balance.

17.17   Deduction Limitation on Benefit Payments. If an Employer reasonably
anticipates that the Employer’s deduction with respect to any distribution from
this Plan would be limited or eliminated by application of Code Section 162(m),
then to the extent permitted by Treas. Reg. §1.409A-2(b)(7)(i), payment shall be
delayed as deemed necessary to ensure that the entire amount of any distribution
from this Plan is deductible. Any amounts for which distribution is delayed
pursuant to this Section shall continue to be credited/debited with additional
amounts in accordance with Section 3.7. The delayed amounts (and any amounts
credited thereon) shall be distributed to the Participant (or his or her
Beneficiary in the event of the Participant’s death) at the earliest date the
Employer reasonably anticipates that the deduction of the payment of the amount
will not be limited or eliminated by application of Code Section 162(m). In the
event that such date is determined to be after a Participant’s Separation from
Service and the Participant to whom the payment relates is an Employee or has
any Account Balance attributable to his or her prior status as an Employee, then
to the extent deemed necessary to comply with Treas. Reg. §1.409A-3(i)(2), the
delayed payment shall be made on the first day after the end of the six-month
period following such Participant’s Separation from Service.

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IN WITNESS WHEREOF, the Company has signed this Plan document effective as of
January 1, 2007.

            “Company”

Hercules Offshore, Inc., a Delaware corporation
      By:   /s/ James W. Noe       Title:  Senior Vice President, General
Counsel,        Chief Compliance Officer and Secretary   

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APPENDIX A
LIMITED TRANSITION RELIEF FOR DISTRIBUTION ELECTIONS MADE AVAILABLE IN
ACCORDANCE WITH NOTICE
2007-86
The capitalized terms below shall have the same meaning as provided in Article 1
of the Plan.
Opportunity to Make New (or Revise Existing) Distribution Elections.
Notwithstanding the required deadline for the submission of an initial
distribution election under Articles 4, 5, 6 and 8 of the Plan, the Committee
may, to the extent permitted by Notice 2007-86, provide a limited period in
which Participants may make new distribution elections, or revise existing
distribution elections, with respect to amounts subject to the terms of the
Plan, by submitting an Election Form on or before the deadline established by
the Committee, which in no event shall be later than December 31, 2008. Any
distribution election(s) made by a Participant, and accepted by the Committee,
in accordance with this Appendix A shall not be treated as a change in either
the form or timing of a Participant’s benefit payment for purposes of Code
Section 409A or the Plan. If any distribution election submitted by a
Participant in accordance with this Appendix A either (a) relates to an amount
that would otherwise be paid to the Participant in 2008, or (b) would cause an
amount to be paid to the Participant in 2008, such election shall not be
effective.

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