Document:

exv10w9

Exhibit 10.9

BAKER HUGHES INCORPORATED

TERMS AND CONDITIONS

OF

AWARD AGREEMENTS

(January 24, 2007)

	1.	 	CHANGE IN CONTROL/TERMINATION OF EMPLOYMENT. The following provisions will apply in the
event a Change in Control of the Company occurs, or your employment with the Company and all
Affiliates (collectively, the “Company Group”) terminates, before the last day of the
Performance Period (as that term is defined in the Performance Unit Agreement awarded to you
(the “Agreement”)).
	 
	 	 	1.1 Termination Generally. If your employment with the Company Group terminates on
or before the last day of the Performance Period for any reason other than one of the
reasons described in Sections 1.2 through 1.5 below, all of your rights in the Agreement,
including all rights to the Performance Units granted to you, will lapse and be completely
forfeited on the date your employment terminates.
	 
	 	 	1.2 Potential or Actual Change in Control.

	 	 	 	(i) Termination Without Cause or for Good Reason in Connection With a Potential
Change in Control on or Before the Last Day of the Performance Period. If
(a) the Company Group terminates your employment without Cause on or before the last
day of the Performance Period prior to a Change in Control of the Company (whether
or not a Change in Control ever occurs) and such termination is at the request or
direction of a Person who has entered into an agreement with the Company the
consummation of which would constitute a Change in Control of the Company or is
otherwise in connection with or in anticipation of a Change in Control of the
Company (whether or not a Change in Control ever occurs) or (b) you terminate your
employment with the Company Group for Good Reason on or before the last day of the
Performance Period prior to a Change in Control of the Company (whether or not a
Change in Control ever occurs) and such termination or the circumstance or event
which constitutes Good Reason occurs at the request or direction of a Person who has
entered into an agreement with the Company the consummation of which would
constitute a Change in Control of the Company or is otherwise in connection with or
in anticipation of a Change in Control of the Employer (whether or not a Change in
Control ever occurs), then the Company will pay to you in cash an amount determined
under the following formula in lieu of any other amounts under the Agreement:

(1) multiplied by (2) multiplied by (3) divided by (4)

	 	 	 	where (1) is $100, (2) is the number of Performance Units that were awarded to you
under the Agreement, (3) is the number of days from (and including) the first day of
the Performance Period to (and including) the day before the date your employment
relationship with the Company Group terminates as described in this Section 1.2(i),
and (4) is the number of days during the Performance Period. Any

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	 	 	 	amount payable to you pursuant to this Section 1.2(i) will be paid by the Company to
you ten (10) business days after the date of your Separation From Service if you are
not a Specified Employee or on the date that is six months following your Separation
From Service if you are a Specified Employee. Such payment will be made to you in
exchange for the Performance Units and thereafter you shall have no further rights
with respect to such Performance Units or the Agreement and the Company Group will
have no further obligations to you pursuant to the Performance Units or the
Agreement. For purposes of these Terms and Conditions, “Separation From Service”
has the meaning ascribed to that term in Section 409A and “Specified Employee” means
a person who is, as of the date of the person’s Separation From Service, a
“specified employee” within the meaning of Section 409A, taking into account the
elections made and procedures established in resolutions adopted by the
Administrative Committee of Baker Hughes. For purposes of these Terms and
Conditions, “Section 409A” means section 409A of the Internal Revenue Code of 1986,
as amended and the Department of Treasury rules and regulations issued thereunder.
	 
	 	 	 	(ii) Employment Not Terminated Before a Change in Control on or Before the Last
Day of the Performance Period. If a Change in Control of the Company occurs on
or before the last day of the Performance Period and your employment with the
Company Group does not terminate before the date the Change in Control of the
Company occurs, then the Company will pay to you in cash an amount determined under
the following formula in lieu of any other amounts under the Agreement:

(1) multiplied by (2) multiplied by (3) divided by (4)

	 	 	 	where (1) is $100, (2) is the number of Performance Units that were awarded to you
under the Agreement, (3) is the number of days from (and including) the first day of
the Performance Period to (and including) the day before the date the Change in
Control of the Company occurs, and (4) is the number of days during the Performance
Period. Any amount payable to you pursuant to this Section 1.2(ii) will be paid by
the Company to you (a) ten (10) business days after the date the Change in Control
of the Company occurs if the Change in Control of the Company qualifies as a change
in the ownership or effective control of the corporation, or in the ownership of a
substantial portion of the assets of the corporation, within the meaning of Section
409A, or (b) on March 12, 2010, if the Change in Control of the Company does not so
qualify. Such payment will be made to you in exchange for the Performance Units and
thereafter you shall have no further rights with respect to such Performance Units
or the Agreement and the Company Group will have no further obligations to you
pursuant to the Performance Units or the Agreement.

	 	 	1.3 Disability. Notwithstanding any other provision of the Agreement or these Terms
and Conditions to the contrary, if you become permanently disabled before the last day of
the Performance Period and while in the active employ of one or more members of the Company
Group, then the Employer will pay to you in cash an amount determined under the following
formula in lieu of any other amounts under the Agreement:

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(1) multiplied by (2) multiplied by (3) divided by (4)

	 	 	where (1) is $100, (2) is the number of Performance Units that were awarded to you under the
Agreement, (3) is the number of days from (and including) the first day of the Performance
Period to (and including) the day you become permanently disabled, and (4) is the number of
days during the Performance Period. Any amount payable to you pursuant to this Section 1.3
will be paid by the Company to you ten (10) business days after the date you become
permanently disabled. Such payment will be made to you in exchange for the Performance
Units and thereafter you shall have no further rights with respect to such Performance Units
or the Agreement and the Company Group will have no further obligations to you pursuant to
the Performance Units or the Agreement. For purposes of this Section 1.3, you will be
“permanently disabled” if you (a) are unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment which 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) are, by reason of any medically determinable physical or mental impairment
which 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 three (3) months under an accident and health plan covering employees of the Company
Group.
	 
	 	 	1.4 Death. Notwithstanding any other provision of the Agreement or these Terms and
Conditions to the contrary, if you die before the last day of the Performance Period and
while in the active employ of one or more members of the Company Group, then the Employer
will pay to your estate in cash an amount determined under the following formula in lieu of
any other amounts under the Agreement:

(1) multiplied by (2) multiplied by (3) divided by (4)

	 	 	where (1) is $100, (2) is the number of Performance Units that were awarded to you under the
Agreement, (3) is the number of days from (and including) the first day of the Performance
Period to (and including) the date of your death, and (4) is the number of days during the
Performance Period. Any amount payable to your estate pursuant to this Section 1.4 will be
paid to your estate by the Employer ten (10) business days after the date of your death.
Such payment will be made in exchange for the Performance Units and thereafter your estate
and heirs, executors, administrators shall have no further rights with respect to such
Performance Units or the Agreement and the Company Group will have no further obligations
pursuant to the Performance Units or the Agreement.
	 
	 	 	1.5 Retirement. Notwithstanding any other provision of the Agreement or these Terms
and Conditions to the contrary, if your employment with the Company Group terminates as a
result of your Retirement before the last day of the Performance Period, then the number of
Performance Units issued to you under the Agreement shall automatically be reduced (without
further action by you and/or the Company) on the date your employment relationship with the
Company Group terminates to that number of Performance Units determined under the following
formula (the “Retirement Adjusted Performance Units”):

(1) multiplied by (2) divided by (3)

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	 	 	where (1) is the number of Performance Units that were originally awarded to you under the
Agreement, (2) is the number of days from (and including) the first day of the Performance
Period to (and including) the day before the date your employment relationship with the
Company Group terminates due to Retirement, and (3) is the number of days during the
Performance Period. The excess of the Performance Units that were originally awarded to you
under the Agreement over the Retirement Adjusted Performance Units shall be immediately
forfeited on the date of the termination of your employment relationship with the Company
Group due to Retirement. Any amount payable to you pursuant to this Section 1.5 will be
paid on March 12, 2010. For purposes of this Section 1.5, the term “Retirement” means the
voluntary termination of your employment relationship with the Company Group on or after the
date on which the sum of your age and years of service with the Company Group equals 65.
	 
	2.	 	PROHIBITED ACTIVITY. Notwithstanding any other provision of these Terms and Conditions or
the Agreement, if you engage in a “Prohibited Activity,” as described below, while employed by
one or more members of the Company Group, during the Performance Period or within two years
after the date your employment with the Company Group terminates, then your right to receive
payment under the Agreement, to the extent still outstanding at that time, shall be completely
forfeited. A “Prohibited Activity” shall be deemed to have occurred, as determined by the
Committee in its sole and absolute discretion, if you divulge any non-public, confidential or
proprietary information of the Company or of its past, present or future affiliates
(collectively, the “Baker Hughes Group”), but excluding information that (a) becomes generally
available to the public other than as a result of your public use, disclosure, or fault, or
(b) becomes available to you on a non-confidential basis after your employment termination
date from a source other than a member of the Baker Hughes Group prior to the public use or
disclosure by you, provided that such source is not bound by a confidentiality agreement or
otherwise prohibited from transmitting the information by a contractual, legal or fiduciary
obligation.
	 
	3.	 	TAX WITHHOLDING. To the extent that the receipt of the Performance Units or any payment
pursuant to the Agreement results in income, wages or other compensation to you for any
income, employment or other tax purposes with respect to which the Company has a withholding
obligation, you shall deliver to the Company at the time of such receipt or payment, as the
case may be, such amount of money as the Company may require to meet its obligation under
applicable tax laws or regulations, and, if you fail to do so, the Company is authorized to
withhold from any payment under the Agreement or from any cash or stock remuneration or other
payment then or thereafter payable to you any tax required to be withheld by reason of such
taxable income, wages or compensation.
	 
	4.	 	NONTRANSFERABILITY. The Agreement is not transferable by you otherwise than by will or by the
laws of descent and distribution.
	 
	5.	 	CAPITAL ADJUSTMENTS AND REORGANIZATIONS. The existence of the Performance Units shall not
affect in any way the right or power of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in its capital structure or its business,
engage in any merger or consolidation, issue any debt or equity

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	 	 	securities, dissolve or liquidate, or sell, lease, exchange or otherwise dispose of all or
any part of its assets or business, or engage in any other corporate act or proceeding.
	 
	6.	 	PERFORMANCE UNITS DO NOT AWARD ANY RIGHTS OF A SHAREHOLDER. You shall not have the voting
rights or any of the other rights, powers or privileges of a holder of the stock of the
Company with respect to the Performance Units that are awarded hereby.
	 
	7.	 	EMPLOYMENT RELATIONSHIP. For purposes of the Agreement, you shall be considered to be in the
employment of the Company Group as long as you have an employment relationship with the
Company Group. The Committee shall determine any questions as to whether and when there has
been a termination of such employment relationship, and the cause of such termination, under
the Plan and the Committee’s determination shall be final and binding on all persons.
	 
	8.	 	NOT AN EMPLOYMENT AGREEMENT. The Agreement is not an employment agreement, and no provision
of the Agreement shall be construed or interpreted to create an employment relationship
between you and the Company or any Affiliate or guarantee the right to remain employed by the
Company or any Affiliate for any specified term.
	 
	9.	 	LIMIT OF LIABILITY. Under no circumstances will the Company or an Affiliate be liable for
any indirect, incidental, consequential or special damages (including lost profits) of any
form incurred by any person, whether or not foreseeable and regardless of the form of the act
in which such a claim may be brought, with respect to the Plan.
	 
	10.	 	EMPLOYER LIABLE FOR PAYMENT. Except as specified in Section 1.2, the legal entity that is a
member of the Company Group and that is classified by the Company Group as your employer (the
“Employer”) is liable for the payment of any amounts that become due under the Agreement.
	 
	11.	 	MISCELLANEOUS. The Agreement is awarded pursuant to and is subject to all of the provisions
of the Plan, including amendments to the Plan, if any. In the event of a conflict between
these Terms and Conditions and the Plan provisions, the Plan provisions will control. The
term “you” and “your” refer to the Awardee named in the Agreement. Capitalized terms that are
not defined herein shall have the meanings ascribed to such terms in the Plan or the Agreement
	 
	12.	 	409A AMENDMENT. Effective January 24, 2007, the Compensation Committee of the Board of
Directors of the Company adopted this amendment to the Terms and Conditions of Award
Agreements (January 24, 2007) applicable to Performance Unit Awards granted in 2007.

5exv10w1

Exhibit 10.1

SEPARATION AGREEMENT AND RELEASE

     This Separation Agreement and Release (“Separation Agreement”) is entered into by and between
Randal R. Reed (“Executive” or “you”) and Hercules Offshore, Inc. (with its affiliates and
subsidiaries, including Hercules Liftboat Company LLC, the “Company”), and confirms the agreement
that has been reached with you in connection with your resignation from the Company.

     1. Termination of Employment. You agree to resign from the Company and to cease to be
employed by the Company in any capacity and to resign from all executive positions you then hold
with the Company and its subsidiaries, in each case effective as of December 15, 2008 (the
“Separation Date”). You further agree to execute any additional documents necessary to effectuate
the foregoing.

     2. Separation Pay and Benefits. In consideration of your execution of this Separation
Agreement and your compliance with its terms and conditions, the Company agrees to pay or provide
you (subject to the terms and conditions set forth in this Separation Agreement) with the benefits
described in this paragraph 2 and to adhere to the nondisparagement restrictions set forth in
paragraph 5b below. The benefits below shall be in full satisfaction of the Company’s obligations
under the terms of the Executive Employment Agreement dated as of October 3, 2006, as amended (the
“Employment Agreement”), by and between you and the Company, and all applicable cash or equity
incentive compensation plans and agreements under which you have any rights or benefits, and in
consideration of your additional agreements in this Agreement. In addition, you acknowledge and
agree that, except as provided herein, you are no longer eligible to participate in and shall not
receive any further payments or benefits under any stock option, bonus, incentive compensation,
employment contract, or medical, dental, life insurance, retirement, perquisite and other
compensation or benefit agreements, plans or arrangements of the Company.

          a. The Company shall continue to pay you at your current rate of base salary and benefits
through the Separation Date, in accordance with the Company’s payroll practices.

          b. The Company shall pay you an aggregate of $312,401 (the “Separation Amount”), which you
acknowledge equals one times the sum of (i) your current annual base salary ($200,000) and (ii)
the bonus paid to you in respect of the Company’s 2007 fiscal year ($112,401). The Separation
Amount shall be paid to you on June 15, 2009. There shall be deducted from the payment of the
Separation Amount all applicable federal, state and local withholding taxes and other appropriate
deductions.

          c. Beginning on the Separation Date and continuing until June 15, 2010 (the “Benefit
Continuation Period”), the Company shall provide you and your dependents with continued coverage
under the Company’s welfare benefit plans, described in Schedule A attached hereto, at the cost in
effect at the Separation Date; provided that, to the extent you become eligible for medical
insurance from a subsequent

 

 

employer, the Company’s medical insurance shall become secondary to such subsequent
employer’s medical insurance; and provided, further, however, that with respect to health and
medical benefits, to the extent such coverage cannot be extended or provided, the Company will pay
during the period described above the applicable premium under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”), associated with such benefits.

          d. The parties acknowledge and agree that you are party to Stock Option Agreements (the
“Option Agreements”) under which you have been granted options to purchase shares of common stock
of the Company (the “Options”) pursuant to the terms of the Hercules Offshore 2004 Long-Term
Incentive Plan (the “2004 LTIP”), as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	Vested	 	 	Exercisable	 	 	Unvested	 	 	 	 	 	 	 	 	 
	 	 	 	 	Options	 	 	Options	 	 	Options as	 	 	 	 	 	 	 	Remaining	 
	 	 	 	 	as of	 	 	as of	 	 	of	 	 	Exercise	 	 	Vesting	 
	 	Grant Date	 	 	12/10/2008	 	 	12/10/2008	 	 	12/10/2008	 	 	Price	 	 	Dates	 
	 	11/17/2004

	 	 	 	105,000	 	 	 	 	15,000	 	 	 	 	0	 	 	 	$	2.86	 	 	 	None	 
	 	11/1/2005

	 	 	 	75,000	 	 	 	 	75,000	 	 	 	 	0	 	 	 	$	20.00	 	 	 	None	 
	 	2/12/2007

	 	 	 	10,000	 	 	 	 	10,000	 	 	 	 	20,000	 	 	 	$	25.34	 	 	 	2/12/2009;

2/12/2010	 
	 	2/14/2008

	 	 	 	0	 	 	 	 	0	 	 	 	 	5,200	 	 	 	$	25.64	 	 	 	2/14/2009;

2/14/2010;

2/14/2011	 
	 

          In accordance with, and subject to, the terms and conditions of the Option Agreements, all
unvested options as of the Separation Date will vest on the Separation Date and you shall be
entitled to exercise all vested Options held by you as of the Separation Date until the earlier to
occur of the third anniversary of the Separation Date or the original expiration date of the
Options as set forth in the 2004 LTIP or applicable Option Agreements.

     3. Accrued Benefits. You will be paid for any accrued but unused vacation days, and
for unreimbursed business expenses (in accordance with usual Company policies and practices, and in
no event later than the calendar year following the year in which the expenses are incurred), to
the extent not theretofore paid. In addition, following the Separation Date, you will be entitled
to receive vested amounts payable to you under the Company’s 401(k) plan and other retirement and
deferred compensation plans in accordance with the terms of such plans and applicable law. Except
as specifically set forth herein, your participation in all Company plans shall remain subject to
the terms and conditions of such plans as in effect from time to time and you agree that such terms
and conditions are binding on you and the Company.

     4. Return of Company Property. You agree that, on or before the Separation Date, you
will have returned to the Company any physical or personal property that is the property of the
Company, its subsidiaries and its affiliates that you have in your possession, custody or control,
including without limitation all Company files, memoranda, records and other documents in whatever
form, and all copies thereof, and all Company badges, keys and credit cards.

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     5. Nondisparagement.

          a. You agree that you will not, with intent to damage, disparage or encourage or induce
others to disparage any of the Company, its subsidiaries and affiliates, together with all of
their respective past and present directors and officers, as well as their respective past and
present managers, officers, shareholders, partners, employees, agents, attorneys, servants and
customers and each of their predecessors, successors and assigns (collectively, the “Company
Entities and Persons”).

          b. The Company agrees that neither the Company formally nor any director or officer, with
intent to damage you, will disparage you or encourage or induce others to disparage you.

          c. For the purposes of this Separation Agreement, the term “disparage” includes, without
limitation, comments or statements adversely affecting in any manner (i) the conduct of the
business of the Company Entities and Persons or of your business or (ii) the business reputation
of the Company Entities and Persons or of you. Nothing in this Separation Agreement is intended
to, or shall, prevent either party from providing truthful testimony in response to a valid
subpoena, court order, regulatory request or other judicial, administrative or legal process or
otherwise as required by law.

     6. Cooperation.

          a. The parties agree that they will reasonably cooperate with each other, and their
respective counsel, in connection with any investigation, inquiry, administrative proceeding or
litigation relating to any matter in which you were involved or of which you have knowledge as a
result of your service with the Company by providing truthful information, provided that in your
case, such cooperation does not unreasonably interfere with your then current professional and
personal commitments. The Company agrees to promptly reimburse you for reasonable out-of-pocket
expenses reasonably incurred by you in connection with your cooperation pursuant to this
paragraph.

          b. You agree that, in the event you are subpoenaed or otherwise required by any person or
entity (including, but not limited to, any government agency) to give testimony or produce
documents (in a deposition, court proceeding or otherwise) which in any way relates to your
employment by the Company, you will, to the extent not legally prohibited from doing so, give
prompt notice of such request to the General Counsel of the Company so that the Company may
contest the right of the requesting person or entity to such disclosure before making such
disclosure. Nothing in this provision shall require you to violate your obligation to comply with
valid legal process.

          c. You agree to provide, upon request, the Company with any information regarding discussions
you have held with third parties regarding potential transactions with the Company, and to
cooperate with the Company with respect to any disclosure requirements the Company may have with
respect thereto.

          d. You agree to cooperate with the Company in connection with its filings with the Securities
and Exchange Commission.

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     7. Restrictive Covenants. You acknowledge and agree that you continue to be bound by
the covenants set forth in Sections 10, 12 and 13 of the Employment Agreement, and such provisions
shall survive the termination of the Employment Agreement.

     8. Company Covenants. The Company acknowledges and agrees that it shall continue to
be bound by the provisions of Section 9 of the Employment Agreement and such provision shall
survive the termination of the Employment Agreement. Notwithstanding the above, you and the
Company hereby acknowledge that the payments made and the benefits provided pursuant to this
Separation Agreement are not being paid or provided on account of or in connection with a change in
ownership or control of the Company.

     9. Waiver.

          a. You agree that, in consideration of the benefits to be provided to you under this
Separation Agreement, YOU HEREBY WAIVE, RELEASE AND FOREVER DISCHARGE ANY AND ALL KNOWN AND
UNKNOWN, SUSPECTED AND UNSUSPECTED, CLAIMS AND RIGHTS WHICH YOU EVER HAD, NOW HAVE OR MAY HAVE
AGAINST THE COMPANY AND ANY OF ITS SUBSIDIARIES OR AFFILIATED COMPANIES, AND THEIR RESPECTIVE
SUCCESSORS AND ASSIGNS, CURRENT AND FORMER OFFICERS, AGENTS, BOARD OF DIRECTORS MEMBERS,
REPRESENTATIVES AND EMPLOYEES, VARIOUS BENEFITS COMMITTEES, AND THEIR RESPECTIVE SUCCESSORS AND
ASSIGNS, HEIRS, EXECUTORS AND PERSONAL AND LEGAL REPRESENTATIVES, BASED ON ANY ACT, EVENT OR
OMISSION OCCURRING BEFORE YOU EXECUTE THIS SEPARATION AGREEMENT, ARISING OUT OF, DURING OR
RELATING TO YOUR EMPLOYMENT OR SERVICES WITH THE COMPANY OR THE TERMINATION OF SUCH EMPLOYMENT OR
SERVICES, EXCEPT AS PROVIDED BELOW (“CLAIMS”). This waiver and release includes, but is not
limited to, any claims which could be asserted now or in the future, under: common law, including,
but not limited to, breach of express or implied duties, wrongful termination, defamation, or
violation of public policy; any policies, practices, or procedures of the Company; any federal or
state statutes or regulations including, but not limited to, Title VII of the Civil Rights Act of
1964, as amended, 42 U.S.C. §2000e et seq., the Civil Rights Act of 1866 and 1871, the Americans
With Disabilities Act, 42 U.S.C. §12101 et seq., the Employee Retirement Income Security Act
(“ERISA”), 29 U.S.C. §1001 et seq. (excluding those rights relating exclusively to employee
pension benefits as governed by ERISA), the Family and Medical Leave Act, §2601 et. seq., the
Texas Labor Code, Chapters 21 and 22, each as amended, any comparable state laws, any contract of
employment, express or implied; any provision of the United States or of a state; any provision of
any other law, common or statutory, of the United States, or any applicable state.
Notwithstanding the foregoing, nothing contained in this paragraph 9a shall (i) impair any rights
or potential claims that you may have under the federal Age Discrimination in Employment Act of
1967 (the “ADEA”) subject to paragraph 9d; (ii) be construed to prohibit Executive from bringing
appropriate proceedings to enforce this Separation Agreement; (iii) effect any rights of
indemnification, or to be held harmless, or any coverage under directors and
officers liability insurance or rights or claims of contribution that you have or (iv) any
rights as a shareholder of the Company.

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          b. The Company has advised you to consult with an attorney of your choosing prior to signing
this Separation Agreement. You represent that you understand and agree that you have the right
and have been given the opportunity to review this Separation Agreement and the ADEA Release
attached hereto, with an attorney. You further represent that you understand and agree that the
Company is under no obligation to offer this Separation Agreement, and that you are under no
obligation to consent to the waiver.

          c. You represent that neither you nor your heirs, agents, representatives or attorneys have
filed or caused to be filed any lawsuit, complaint, or charge with respect to any Claim that you
are releasing in this Separation Agreement. You represent that you have not brought or filed, and
to the extent permitted by law will not bring or file, any claim, charge, or action with respect
to any Claim against the Company Entities and Persons, or any of them, and, except as prohibited
by law, agree not to seek any recovery arising out of, based upon, or relating to matters released
hereunder.

          d. In accordance with the ADEA release contained in Exhibit A hereto (the “ADEA Release”),
you shall have twenty-one (21) days from the date of this Agreement to consider the ADEA Release
and once you have signed the ADEA Release, you shall have seven (7) additional days from the date
of execution to revoke your consent to the ADEA Release. Any such revocation shall be made in
writing so as to be received by the Company prior to the eighth (8th) day following
your execution of the ADEA Release. If no such revocation occurs, the ADEA Release shall become
effective on the eighth (8th) day following your execution of the ADEA Release (the
“Effective Date”). Notwithstanding anything in this Agreement to the contrary, in the event that
you fail to sign the ADEA Release within 21 days or you revoke your ADEA Release thereafter as
provided above, this Separation Agreement shall remain in full force and effect but the Company
shall have no obligation to provide the benefits in paragraphs 2b or 5b above.

     10. Enforcement. If any provision of this Separation Agreement is held by a court of
competent jurisdiction to be illegal, void or unenforceable, such provision shall have no effect;
however, the remaining provisions shall be enforced to the maximum extent possible. Further, if a
court should determine that any portion of this Separation Agreement is overbroad or unreasonable,
such provision shall be given effect to the maximum extent possible by narrowing or enforcing in
part that aspect of the provision found overbroad or unreasonable. Additionally, the parties agree
that in the event of any breach of the terms of paragraphs 4, 5, 6 and 7 the other party may seek
injunctive and other equitable relief. In addition, you agree that your willful and knowing
failure to return Company property that relates to the maintenance of security of the Company
Entities and Persons or the maintenance of Proprietary Information shall entitle the Company to
such injunctive and other equitable relief.

     11. No Admission. This Separation Agreement is not intended, and shall not be
construed, as an admission that either you or the Company Entities and Persons have
violated any federal, state or local law (statutory or decisional), ordinance or regulation,
breached any contract or committed any wrong whatsoever.

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     12. Successor. This Separation Agreement is binding upon, and shall inure to the
benefit of, the parties and their respective heirs, executors, administrators, successors and
assigns.

     13. Choice of Law. This Separation Agreement shall be construed and enforced in
accordance with the laws of the State of Texas without regard to the principles of conflicts of
law.

     14. Entire Agreement. You acknowledge that this Separation Agreement constitutes the
complete understanding between the Company and you, and, supersedes any and all agreements,
understandings, and discussions, whether written or oral, between you and any of the Company
Entities and Persons, including your Employment Agreement, which shall terminate on the Separation
Date, except for the provisions of Sections 9, 10, 11(b), 12 and 13 of the Employment Agreement
which shall survive such termination. No other promises or agreements shall be binding on the
Company unless in writing and signed by both the Company and you after the date of this Separation
Agreement.

     15. Effective Date. You may accept this Separation Agreement by signing it and
returning it to James W. Noe, Senior Vice President, General Counsel, Chief Compliance Officer and
Secretary, Hercules Offshore, Inc., 9 Greenway Plaza, Suite 2200, Houston, Texas 77046. The
effective date of this Separation Agreement shall be the date it is signed by both parties,
provided that the provisions of paragraphs 2b and 5b shall not become effective until the Effective
Date, as defined in paragraph 9d. In the event you do not accept this Separation Agreement as set
forth above, this Separation Agreement, including but not limited to the obligation of the Company
to provide the payments and other benefits described herein, shall be deemed automatically null and
void.

	 	 	 	 	 	 	 	 	 	 	 
	Signature:

	 	/s/ Randal R. Reed	 	 
	 	Date:
	 	12/19/08	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Randal R. Reed	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	HERCULES OFFSHORE, INC.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ John T. Rynd	 	 	 	Date:	 	12/19/08	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Title:
	 	CEO and President	 	 	 	 	 	 	 	 

6

 

SCHEDULE A

List of Welfare Benefit Plans1

The Hercules Offshore, Inc. Medical, Dental, Vision and Prescription Drug Benefits Plan

The Hercules Offshore, Inc. Life Insurance Plan

The Hercules Offshore, Inc. Accidental and Death & Dismemberment Plan

The Hercules Offshore, Inc. Short Term Disability Plan

The Hercules Offshore, Inc. Welfare Benefit Plan

The Hercules Offshore, Inc. 401(k) Plan

The Hercules Offshore, Inc. Deferred compensation Plan

 

			
	1	 	Section 4(b)(iv) of the Employment Agreement provides
that the Executive and/or her dependents shall be eligible for participation in
and shall receive all benefits under welfare benefit plans, practices, policies
and programs provided by the Company and its affiliated companies to the extent
applicable generally to similarly situated executives of the Company.

7

 

EXHIBIT A

WAIVER OF RIGHTS UNDER THE

AGE DISCRIMINATION AND EMPLOYMENT ACT

1. RANDAL R. REED (“EXECUTIVE” OR “YOU”) KNOWINGLY AND VOLUNTARILY, ON BEHALF OF YOURSELF
AND YOUR AGENTS, ATTORNEYS, SUCCESSORS, ASSIGNS, HEIRS AND EXECUTORS, RELEASES AND FOREVER
DISCHARGES HERCULES OFFSHORE, INC. (THE “COMPANY”) AND ALL OF ITS SUBSIDIARIES AND
AFFILIATES, TOGETHER WITH ALL OF THEIR RESPECTIVE PAST AND PRESENT DIRECTORS, MANAGERS,
OFFICERS, SHAREHOLDERS, PARTNERS, EMPLOYEES, AGENTS, ATTORNEYS AND SERVANTS,
REPRESENTATIVES, ADMINISTRATORS AND FIDUCIARIES (EXCEPT THAT IN THE CASE OF AGENTS,
REPRESENTATIVES, ADMINISTRATORS, ATTORNEYS AND FIDUCIARIES, ONLY TO THE EXTENT IN ANY WAY
RELATED TO THEIR EMPLOYMENT WITH, OR THE BUSINESS AFFAIRS OF THE COMPANY) AND EACH OF THEIR
PREDECESSORS, SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE “RELEASEES”) FROM ANY AND ALL
CLAIMS, CHARGES, COMPLAINTS, PROMISES, AGREEMENTS, CONTROVERSIES, LIENS, DEMANDS, CAUSES OF
ACTION, OBLIGATIONS, SUITS, DISPUTES, JUDGMENTS, DEBTS, BONDS, BILLS, COVENANTS, CONTRACTS,
VARIANCES, TRESPASSES, EXECUTIONS, DAMAGES AND LIABILITIES OF ANY NATURE WHATSOEVER
RELATING IN ANY WAY TO YOUR RIGHTS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967,
AS AMENDED (THE “ADEA”), WHETHER KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, WHICH AGAINST
YOU OR YOUR EXECUTORS, ADMINISTRATORS, SUCCESSORS OR ASSIGNS EVER HAD, NOW HAVE, OR MAY
HEREAFTER CLAIM TO HAVE AGAINST THE RELEASEES IN LAW OR EQUITY, BY REASON OF ANY MATTER,
CAUSE OR THING WHATSOEVER ARISING ON OR BEFORE THE DATE THIS ADEA RELEASE IS EXECUTED BY
YOU, AND WHETHER OR NOT PREVIOUSLY ASSERTED BEFORE ANY STATE OR FEDERAL COURT OR BEFORE ANY
STATE OR FEDERAL AGENCY OR GOVERNMENTAL ENTITY (THE “ADEA RELEASE”). This ADEA Release
includes, without limitation, any rights or claims relating in any way to your employment
relationship with the Company or any of the Releasees, or the termination thereof, arising
under the ADEA, including compensatory damages, punitive damages, attorney’s fees, costs,
expenses, and any other type of damage or relief. You represent that you have not
commenced or joined in any claim, charge, action or proceeding whatsoever against the
Company or any of the Releasees arising out of or relating to any of the matters set forth
in this ADEA Release. You further agree that you shall not be entitled to any personal
recovery in any claim, charge, action or proceeding whatsoever against the Company or any
of the Releasees for any of the matters set forth in this ADEA Release.

8

 

2. The Company has advised you to consult with an attorney of your choosing prior to
signing this ADEA Release. You represent that you understand and agree that you have the
right and have been given the opportunity to review this ADEA Release with an attorney.
You further represent that you understand and agree that the Company is under no obligation
to offer you this ADEA Release, and that you are under no obligation to consent to the ADEA
Release, and that you have entered into this ADEA Release freely and voluntarily.

3. You shall have twenty-one (21) days to consider this ADEA Release, and once you have
signed this ADEA Release, you shall have seven (7) additional days from the date of
execution to revoke your consent to this ADEA Release. Any such revocation shall be made
in writing so as to be received by the Company prior to the eighth (8th) day
following your execution of this ADEA Release. If no such revocation occurs, this ADEA
Release shall become effective on the eighth (8th) day following your execution
of this ADEA Release (the “Effective Date”). In the event that you revoke your consent,
this ADEA Release shall be null and void

IN WITNESS WHEREOF, the Executive has executed this ADEA Release as of the date set forth
below.

	 	 	 	 	 
	 	 	 
	 	  	
/s/ Randal R. Reed	 
	 	 	Randal R. Reed 	 
	 	 	 	 
	 
	 	 	 
	 	  	12/19/08	 
	 	 	Date 	 
	 	 	 	 
	 

9

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