Document:

exv10w5

 

Exhibit 10.5

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (“Agreement”) is made by and between Superior Offshore
International, Inc., a Delaware corporation (“Company”), and John F. Guarisco (“Executive”).

W I T N E S S E T H:

     WHEREAS, Executive is currently employed by the Company; and

     WHEREAS, Company is desirous of employing Executive in an executive capacity on the terms and
conditions, and for the consideration, hereinafter set forth and Executive is desirous of being so
employed by Company on such terms and conditions and for such consideration;

     WHEREAS, Company and Executive expect to enter into a Restricted Stock Agreement (the
“Restricted Stock Agreement”) pursuant to the Superior Offshore International, Inc. 2007 Stock
Incentive Plan prior to the consummation of an underwritten public offering of the Company’s common
stock (the “Initial Public Offering”);

     NOW, THEREFORE, for and in consideration of the mutual promises, covenants and obligations
contained herein, Company and Executive agree as follows:

ARTICLE 1: EMPLOYMENT AND DUTIES

     1.1 Employment; Effective Date. Effective as of April 1, 2007 (the “Effective Date”), and
continuing for the period of time set forth in Article 2 of this Agreement, Company agrees to
employ Executive and Executive agrees to be employed by Company, subject to the terms and
conditions of this Agreement.

     1.2 Positions. From and after the Effective Date, Company shall employ Executive in the
position of Treasurer of Company, or in such other positions as the parties mutually may agree.

     1.3 Duties and Services. Executive agrees to serve in the position referred to in paragraph
1.2 and to perform diligently and to the best of his abilities the duties and services appertaining
to such offices, as well as such additional duties and services appropriate to such offices which
the parties mutually may agree upon from time to time. Executive’s employment shall also be
subject to the policies maintained and established by Company that are of general applicability to
Company’s executive employees, as such policies may be amended from time to time.

     1.4 Other Interests. Executive agrees, during the period of his employment by Company, to
devote his primary business time, energy and best efforts to the business and affairs of Company
and its affiliates and not to engage, directly or indirectly, in any other business or

 

 

businesses, whether or not similar to that of Company, except with the prior consent of the
Board of Directors of Company (the “Board of Directors”). The foregoing notwithstanding, the
parties recognize and agree that Executive may engage in other business activities that do not
conflict with the business and affairs of Company or interfere with Executive’s performance of his
duties hereunder, which shall be at the sole determination of the Company’s Chief Executive Officer
(collectively, the “Other Permitted Business Activities”). The Company agrees that serving or
engaging in Other Permitted Business Activities shall not constitute Cause for purposes of
paragraph 2.2(iii).

     1.5 Duty of Loyalty. Executive acknowledges and agrees that Executive owes a fiduciary duty
of loyalty to act at all times in the best interests of Company. In keeping with such duty,
Executive shall make full disclosure to Company of all business opportunities pertaining to
Company’s business and shall not appropriate for Executive’s own benefit business opportunities
concerning Company’s business.

     1.6 Place of Employment. Executive’s performance of services under this Agreement shall be
rendered in Lafayette, Louisiana and Houston, Texas, subject to necessary travel requirements of
Executive’s position and duties hereunder. Executive shall not be required to relocate to a
location that is more than 50 miles from Lafayette, Louisiana or Houston, Texas without Executive’s
consent to such relocation.

ARTICLE 2: TERM AND TERMINATION OF EMPLOYMENT

     2.1 Term. Unless sooner terminated pursuant to other provisions hereof, Company agrees to
employ Executive for the period beginning on the Effective Date and ending on April 30, 2009 (the
“Initial Expiration Date”); provided, however, that beginning on the Initial Expiration Date, and
on each anniversary of the Initial Expiration Date thereafter, if this Agreement has not been
terminated pursuant to paragraph 2.2 or 2.3, then said term of employment shall automatically be
extended for an additional one-year period unless on or before the date that is 90 days prior to
the first day of any such extension period either party shall give written notice to the other that
no such automatic extension shall occur.

     2.2 Company’s Right to Terminate. Notwithstanding the provisions of paragraph 2.1, Company
shall have the right to terminate Executive’s employment under this Agreement at any time for any
of the following reasons:

     (i) upon Executive’s death;

     (ii) upon Executive’s becoming incapacitated by accident, sickness or other
circumstance which, in the opinion of a physician selected by Company, renders him mentally
or physically incapable of performing the duties and services required of him hereunder
(“Disability”);

     (iii) for cause, which for purposes of this Agreement shall mean Executive (A) has
willfully breached any of his duties and obligations hereunder resulting in materially
adverse consequences to Company or any of its affiliates, (B) has misappropriated funds or
property of Company or any of its affiliates, or (C) has engaged in conduct that is

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materially adverse to the interests of Company or any of its affiliates (each referred
to hereinafter as “Cause”); or

     (iv) for any other reason whatsoever, in the sole discretion of the Board of Directors.

     2.3 Executive’s Right to Terminate. Notwithstanding the provisions of paragraph 2.1,
Executive shall have the right to terminate his employment under this Agreement for any of the
following reasons:

     (i) within 60 days of and in connection with or based upon (A) a material breach by
Company of any material provision of this Agreement, (B) a material reduction in title of
the Executive set forth in paragraph 1.2 without Executive’s consent to such reduction or
(C) any requirement that Executive relocate in violation of paragraph 1.6 (each referred to
hereinafter as “Good Reason”); provided, however, that, prior to Executive’s termination of
employment under this paragraph 2.3(i), Executive must give written notice to Company of any
such breach, reduction or requirement and such breach, reduction or requirement must remain
uncorrected for 20 days following such written notice;

     (ii) at any time after there is a Change in Control (as such term is defined in
paragraph 6.1); or

     (iii) at any time for any other reason whatsoever, in the sole discretion of Executive.

     2.4 Notice of Termination. If Company or Executive desires to terminate Executive’s
employment hereunder at any time prior to expiration of the term of employment as provided in
paragraph 2.1, it or he shall do so by giving written notice to the other party that it or he has
elected to terminate Executive’s employment hereunder and stating the effective date and reason for
such termination, provided that no such action shall alter or amend any other provisions hereof or
rights arising hereunder.

ARTICLE 3: COMPENSATION AND BENEFITS

     3.1 Base Salary. During the period of this Agreement, Executive shall receive a minimum
annual base salary of $200,000. Executive’s annual base salary shall be reviewed by the Board of
Directors (or a committee thereof) on an annual basis, and, in the sole discretion of the Board of
Directors (or such committee), such annual base salary may be increased, but not decreased,
effective as of January 1 of each year. Executive’s annual base salary shall be paid in equal
installments in accordance with the Company’s standard policy regarding payment of compensation to
executives but no less frequently than monthly.

     3.2 Incentive Compensation. Executive shall be eligible to receive incentive compensation in
such amounts and on such terms as shall be determined in the sole discretion of the Board of
Directors (or a committee thereof).

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     3.3 Other Perquisites. During his employment hereunder, Executive shall be afforded the
following benefits as incidences of his employment:

     (i) Business and Entertainment Expenses — Subject to Company’s standard policies and
procedures with respect to expense reimbursement as applied to its executive employees
generally, Company shall reimburse Executive for, or pay on behalf of Executive, reasonable
and appropriate expenses incurred by Executive for business related purposes, including dues
and fees to industry and professional organizations and costs of entertainment and business
development.

     (ii) Car Allowance — Company shall provide to Executive an automobile or automobile
allowance as approved by the Chief Executive Officer or the Board of Directors (or a
committee thereof). Notwithstanding anything in this Agreement to the contrary, any such
reimbursement shall be made no later than March 15 of the calendar year following the
calendar year in which such reimbursable expenses were incurred.

     (iii) Life Insurance — Company shall provide and pay the premiums for a term life
insurance, convertible, and renewable, on the life of Executive at a face amount not less
than twice the amount of Executive’s annual base salary. Executive shall have the right to
designate the beneficiary or beneficiaries of such term life insurance policy. Company
shall provide Executive with additional cash compensation at the end of each calendar year
to fully offset taxes attributable to Executive as a result of payment of the life insurance
premiums by the Company.

     (iv) Tax and Estate Planning Advice — Company shall pay for or reimburse the costs of
tax and estate planning advice for Executive, including the costs of preparing estate
planning and wealth preservation documents for Executive and his spouse, up to a maximum of
$25,000 in any calendar year. Company shall provide Executive with additional cash
compensation at the end of each calendar year to fully offset taxes attributable to
Executive as a result of payment of such tax and estate planning advice by the Company.
Notwithstanding anything in this Agreement to the contrary, any such reimbursement shall be
made no later than March 15 of the calendar year following the calendar year in which such
reimbursable expenses were incurred.

     (v) Other Company Benefits — Executive and, to the extent applicable, Executive’s
spouse, dependents and beneficiaries, shall be allowed to participate in all benefits, plans
and programs, including improvements or modifications of the same, which are now, or may
hereafter be, available to other executive employees of Company. Such benefits, plans and
programs shall include, without limitation, any profit sharing plan, thrift plan, health
insurance or health care plan, life insurance, disability insurance, pension plan,
supplemental retirement plan, vacation and sick leave plan, and the like which may be
maintained by Company. Company shall not, however, by reason of this paragraph be obligated
to institute, maintain, or refrain from changing, amending, or discontinuing, any such
benefit plan or program, so long as such changes are similarly applicable to executive
employees generally.

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ARTICLE 4: PROTECTION OF INFORMATION

     4.1 Disclosure to Executive. Company shall disclose to Executive, or place Executive in a
position to have access to or develop, trade secrets or confidential information of Company or its
affiliates; and/or shall entrust Executive with business opportunities of Company or its
affiliates; and/or shall place Executive in a position to develop business good will on behalf of
Company or its affiliates.

     4.2 Property of Company. All documents, drawings, memoranda, notes, records, files,
correspondence, manuals, models, specifications, computer programs, e-mail, voice mail, electronic
databases, maps, and all other writings or materials of any type embodying any information relating
to Company or its business are and shall be the sole and exclusive property of Company. Upon
termination of Executive’s employment by Company, for any reason, Executive promptly shall deliver
the same, and all copies thereof, to Company; provided, however, that Executive may retain any
Company supplied cellular telephones in his possession at the time of such termination but Company
shall be entitled to immediately discontinue the cellular service for such telephones upon such
termination of employment.

     4.3 No Unauthorized Use or Disclosure. Executive will not, at any time during or after
Executive’s employment by Company, make any unauthorized disclosure of any confidential business
information or trade secrets of Company or its affiliates, or make any use thereof, except in the
carrying out of Executive’s employment responsibilities hereunder. Affiliates of the Company shall
be third party beneficiaries of Executive’s obligations under this paragraph. As a result of
Executive’s employment by Company, Executive may also from time to time have access to, or
knowledge of, confidential business information or trade secrets of third parties, such as
customers, suppliers, partners, joint venturers, and the like, of Company and its affiliates.
Executive also agrees to preserve and protect the confidentiality of such third party confidential
information and trade secrets to the same extent, and on the same basis, as Company’s confidential
business information and trade secrets.

     4.4 Remedies. Executive acknowledges that money damages would not be sufficient remedy for
any breach of this Article by Executive, and Company shall be entitled to specific performance and
injunctive relief as remedies for such breach or any threatened breach. Such remedies shall not be
deemed the exclusive remedies for a breach of this Article, but shall be in addition to all
remedies available at law or in equity to Company, including the recovery of damages from
Executive.

ARTICLE
5: NONCOMPETITION OBLIGATIONS

     5.1 In General. As part of the consideration for the compensation and benefits to be paid to
Executive hereunder; to protect the trade secrets and confidential information of Company and its
affiliates that have been and will in the future be disclosed or entrusted to Executive, the
business good will of Company and its affiliates that has been and will in the future be developed
in Executive, or the business opportunities that have been and will in the future be disclosed or
entrusted to Executive by Company and its affiliates; and as an additional incentive for Company to
enter into this Agreement, Company and Executive agree to the noncompetition obligations hereunder.
Executive shall not, directly or indirectly for Executive

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or for others, in the State of Texas and in all parishes of the State of Louisiana and in the
U.S. Gulf of Mexico:

     (i) engage in any business competitive with the business conducted by Company during
the term of employment of Executive in such states; or

     (ii) render advice or services to, be employed by, acquire an ownership interest in, or
otherwise assist, any other person, association, or entity who is engaged, directly or
indirectly, in any business competitive with the business conducted by Company during the
term of employment of Executive in such states with respect to such competitive business,
except that Executive may hold up to 2% of the outstanding shares of any publicly held
company engaged in such competitive activities.

The noncompetition obligations set forth above shall apply only during the period that Executive is
employed by Company and for one year thereafter.

     5.2 Enforcement and Remedies. Executive acknowledges that money damages would not be
sufficient remedy for any breach of this Article by Executive, and Company shall be entitled to
specific performance and injunctive relief as remedies for such breach or any threatened breach.
Such remedies shall not be deemed the exclusive remedies for a breach of this Article, but shall be
in addition to all remedies available at law or in equity to Company, including, without
limitation, the recovery of damages from Executive.

     5.3 Reformation. It is expressly understood and agreed that Company and Executive consider
the restrictions contained in this Article to be reasonable and necessary to protect the
proprietary information of Company. Nevertheless, if any of the aforesaid restrictions are found
by a court having jurisdiction to be unreasonable, or overly broad as to geographic area or time,
or otherwise unenforceable, the parties intend for the restrictions therein set forth to be
modified by such court so as to be reasonable and enforceable and, as so modified by the court, to
be fully enforced.

ARTICLE
6: EFFECT OF TERMINATION ON COMPENSATION;

ADDITIONAL PAYMENTS

     6.1 Defined Terms. For purposes of this Article 6, the following terms shall have the
meanings indicated:

     “Change in Control” means (i) a merger of Company with another entity, a consolidation
involving Company, or the sale of all or substantially all of the assets of Company to
another entity if, in any such case, (A) the holders of equity securities of Company
immediately prior to such transaction or event do not beneficially own immediately after
such transaction or event equity securities of the resulting entity entitled to 60% or more
of the votes then eligible to be cast in the election of directors generally (or comparable
governing body) of the resulting entity in substantially the same proportions that they
owned the equity securities of Company immediately prior to such transaction or event or (B)
the persons who were members of the Board of Directors immediately prior to such transaction
or event shall not constitute at least a majority of the board of directors of the resulting
entity immediately after such transaction or event,

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(ii) the dissolution or liquidation of Company, (iii) when any person or entity (other
than Louis E. Schaefer, Jr. or Schaefer Holdings, LP or their affiliates), including a
“group” as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, acquires or gains ownership or control (including, without limitation, power to
vote) of more than 50% of the combined voting power of the outstanding securities of, (A) if
Company has not engaged in a merger or consolidation, Company, or (B) if Company has engaged
in a merger or consolidation, the resulting entity, or (iv) as a result of or in connection
with a contested election of directors, the persons who were members of the Board of
Directors immediately before such election shall cease to constitute a majority of the Board
of Directors. For purposes of the preceding sentence, (1) “resulting entity” in the context
of a transaction or event that is a merger, consolidation or sale of all or substantially
all assets shall mean the surviving entity (or acquiring entity in the case of an asset
sale) unless the surviving entity (or acquiring entity in the case of an asset sale) is a
subsidiary of another entity and the holders of common stock of Company receive capital
stock of such other entity in such transaction or event, in which event the resulting entity
shall be such other entity, and (2) subsequent to the consummation of a merger or
consolidation that does not constitute a Change in Control, the term “Company” shall refer
to the resulting entity and the term “Board of Directors” shall refer to the board of
directors (or comparable governing body) of the resulting entity.

     “Termination Benefits” means (i) a lump sum cash payment equal to 100% of the sum of
(A) Executive’s annual base salary at the rate in effect under paragraph 3.1 on the date of
termination of Executive’s employment and (B) the highest annual incentive compensation
payment paid to Executive by Company (pursuant to paragraph 3.2 or otherwise) during the
three years prior to the date of termination of Executive’s employment, and (ii) all of the
outstanding stock options, restricted stock or unit awards and other equity based awards
granted by Company to Executive shall become fully vested and immediately exercisable in
full on the date of termination of Executive’s employment; provided, however, that if a
Change in Control occurs prior to the earlier of the consummation of an Initial Public
Offering and June 30, 2007 and the Executive’s employment is terminated prior to the
consummation of such Change in Control, then the percentage used in clause (i) of this
definition shall be zero.

     6.2 By Expiration. If Executive’s employment hereunder shall terminate upon expiration of the
term provided in paragraph 2.1 hereof because Executive has provided the notice contemplated in
such paragraph to Company, then all compensation and all benefits to Executive hereunder shall
continue to be provided until the expiration of such term and such compensation and benefits shall
terminate contemporaneously with termination of his employment. If Executive’s employment
hereunder shall terminate upon expiration of the term provided in paragraph 2.1 hereof because
Company has provided the notice contemplated in such paragraph to Executive, then (i) all
compensation and all benefits to Executive hereunder shall continue to be provided until the
expiration of such term, (ii) such compensation and benefits shall terminate contemporaneously with
termination of his employment, and (iii) Company shall provide Executive with the Termination
Benefits. Any lump sum cash payment due to Executive pursuant to clause (iii) of the preceding
sentence shall be paid to Executive within ten business days of the date of Executive’s termination
of employment with Company; provided, however, if Section 409A of the Internal Revenue Code on
1986, as amended (“Code”), is applicable and

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Executive is a “specified employee” under Section 409A(a)(2)(B)(i) of the Code, then on or
after the six-month anniversary of the date of termination. The Executive agrees to execute a
mutual release and waiver of claims against Employer in the form attached as Exhibit A on
the date that any such lump-sum payment is paid to the Executive.

     6.3 By Company. If Executive’s employment hereunder shall be terminated by Company prior to
expiration of the term provided in paragraph 2.1, then, upon such termination, regardless of the
reason therefor, all compensation and benefits to Executive hereunder shall terminate
contemporaneously with the termination of such employment; provided, however, if Executive complies
fully with his obligations under Article 5 hereof, that:

     (i) if such termination shall be for a reason encompassed by paragraph 2.2(i), then,
for a period of 6 months beginning on the date of such termination, Company shall pay to
Executive’s designated beneficiary (or his estate if Executive does not have a beneficiary
designation on file with Company for this purpose) his base salary at the rate in effect
under paragraph 3.1 on the date of such termination;

     (ii) if such termination shall be for a reason encompassed by paragraph 2.2(ii), then,
for a period of 6 months beginning on the date of such termination, Company shall pay to
Executive (or, in the event of Executive’s death, his designated beneficiary (or his estate
if Executive does not have a beneficiary designation on file with Company for this purpose))
his base salary at the rate in effect under paragraph 3.1 on the date of such termination;

     (iii) if such termination shall be for a reason encompassed by paragraphs 2.2(i) or
(ii), all of the outstanding stock options, restricted stock or unit awards and other equity
based awards granted by Company to Executive shall become fully vested and immediately
exercisable in full on the date of termination of Executive’s employment; and

     (iv) if such termination shall be for any reason other than those encompassed by
paragraphs 2.2(i), (ii), or (iii), then Company shall provide Executive with the Termination
Benefits. Any lump sum cash payment due to Executive pursuant to the preceding sentence
shall be paid to Executive within ten business days of the date of Executive’s termination
of employment with Company; provided that, if Section 409A of the Code is applicable and
Executive is a “specified employee” under Section 409A(a)(2)(B)(i) of the Code, then on or
after the six-month anniversary of the date of termination. The Executive agrees to execute
a mutual release and waiver of claims against Employer in the form attached as Exhibit
A on the date that any such lump-sum payment is paid to the Executive.

     6.4 By Executive. If Executive’s employment hereunder shall be terminated by Executive prior
to expiration of the term provided in paragraph 2.1, then, upon such termination, regardless of the
reason therefor, all compensation and benefits to Executive hereunder shall terminate
contemporaneously with the termination of such employment; provided, however, if Executive complies
fully with his obligations under Article 5 hereof, that:

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     (i) if such termination occurs for a reason encompassed by paragraph 2.3(i), then
Company shall provide Executive with the Termination Benefits; and

     (ii) if such termination shall occur within the 180-day period beginning on the date
upon which a Change in Control occurs, then Company shall provide Executive with the
Termination Benefits.

If Executive is entitled to Termination Benefits under either clause (i) or clause (ii) of the
preceding sentence, then Executive shall not also be entitled to additional Termination Benefits
under the other clause. Any lump sum cash payment due to Executive pursuant to this paragraph
shall be paid to Executive within ten business days of the date of Executive’s termination of
employment with Company; provided, however, if Section 409A of the Code is applicable and Executive
is a “specified employee” under Section 409A(a)(2)(B)(i) of the Code, then on or after the
six-month anniversary of the date of termination. The Executive agrees to execute a mutual release
and waiver of claims against Employer in the form attached as Exhibit A on the date that
any such lump-sum payment is paid to the Executive.

     6.5 Additional Payments by Company. Notwithstanding anything to the contrary in this
Agreement, in the event that any payment or distribution by Company to or for the benefit of
Executive, whether paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (a “Payment”), would be subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended, or any interest or penalties with respect to such
excise tax (such excise tax, together with any such interest or penalties, are hereinafter
collectively referred to as the “Excise Tax”), Company shall pay to Executive an additional payment
(a “Gross-up Payment”) in an amount such that after payment by Executive of all taxes (including
any interest or penalties imposed with respect to such taxes), including any Excise Tax imposed on
any Gross-up Payment, Executive retains an amount of the Gross-up Payment equal to the Excise Tax
imposed upon the Payments. Company and Executive shall make an initial determination as to whether
a Gross-up Payment is required and the amount of any such Gross-up Payment. Executive shall notify
Company in writing of any claim by the Internal Revenue Service which, if successful, would require
Company to make a Gross-up Payment (or a Gross-up Payment in excess of that, if any, initially
determined by Company and Executive) within 10 days of the receipt of such claim. Company shall
notify Executive in writing at least 10 days prior to the due date of any response required with
respect to such claim if it plans to contest the claim. If Company decides to contest such claim,
Executive shall cooperate fully with Company in such action; provided, however, Company shall bear
and pay directly or indirectly all costs and expenses (including additional interest and penalties)
incurred in connection with such action and shall indemnify and hold Executive harmless, on an
after-tax basis, for any Excise Tax or income tax, including interest and penalties with respect
thereto, imposed as a result of Company’s action. If, as a result of Company’s action with respect
to a claim, Executive receives a refund of any amount paid by Company with respect to such claim,
Executive shall promptly pay such refund to Company. If Company fails to timely notify Executive
whether it will contest such claim or Company determines not to contest such claim, then Company
shall immediately pay to Executive the portion of such claim, if any, which it has not previously
paid to Executive.

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     6.6 No Duty to Mitigate Losses. Executive shall have no duty to find new employment following
the termination of his employment under circumstances which require Company to pay any amount to
Executive pursuant to this Article 6. Any salary or remuneration received by Executive from a
third party for the providing of personal services (whether by employment or by functioning as an
independent contractor) following the termination of his employment under circumstances pursuant to
which this Article 6 apply shall not reduce Company’s obligation to make a payment to Executive (or
the amount of such payment) pursuant to the terms of this Article 6.

     6.7 Liquidated Damages. In light of the difficulties in estimating the damages for an early
termination of this Agreement, Company and Executive hereby agree that the payments, if any, to be
received by Executive pursuant to this Article 6 shall be received by Executive as liquidated
damages.

     6.8 Other Benefits. This Agreement governs the rights and obligations of Executive and
Company with respect to Executive’s base salary and certain perquisites of employment. Except as
expressly provided herein, Executive’s rights and obligations both during the term of his
employment and thereafter with respect to stock options, restricted units or stock, incentive and
deferred compensation, life insurance policies insuring the life of Executive, and other benefits
under the plans and programs maintained by Company shall be governed by the separate agreements,
plans and other documents and instruments governing such matters.

ARTICLE 7: MISCELLANEOUS

     7.1 Notices. For purposes of this Agreement, notices and all other communications provided
for herein shall be in writing and shall be deemed to have been duly given when personally
delivered or when mailed by United States registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:

	 	 	 	 	 	 	 
	 

	 	If to Company to:
	 	Superior Offshore International, Inc.	 	 
	 

	 	 	 	900 S. College Road, Suite 301	 	 
	 

	 	 	 	Lafayette, Louisiana 70503	 	 
	 

	 	 	 	Attention: Chairman of the Board	 	 
	 
	 

	 	 	 	with a copy to (which copy shall not constitute notice):	 	 
	 
	 

	 	 	 	Bracewell & Giuliani LLP	 	 
	 

	 	 	 	711 Louisiana Street, Suite 2300	 	 
	 

	 	 	 	Houston, Texas 77002	 	 
	 

	 	 	 	Attention: William S. Anderson	 	 
	 

	 	 	 	Telephone: (713) 221-1122	 	 
	 

	 	 	 	Facsimile: (713) 437-5370	 	 
	 
	 	 	 	 	 	 
	 

	 	If to Executive to:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 

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or to such other address as either party may furnish to the other in writing in accordance
herewith, except that notices or changes of address shall be effective only upon receipt.

     7.2 Applicable Law. This Agreement is entered into under, and shall be governed for all
purposes by, the laws of the State of Texas. Any cause of action arising between the parties
regarding this Agreement shall be brought only in a court having jurisdiction over the Company in
Houston, Harris County, Texas. Executive consents to personal jurisdiction in any State or Federal
court of competent jurisdiction over the Company in Houston, Harris County, Texas and waives any
entitlement he might otherwise have to a transfer of venue under the preferred venue requirements
of State or Federal rules of civil procedure rules.

     7.3 No Waiver. No failure by either party hereto at any time to give notice of any breach by
the other party of, or to require compliance with, any condition or provision of this Agreement
shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.

     7.4 Severability. If a court of competent jurisdiction determines that any provision of this
Agreement is invalid or unenforceable, then the invalidity or unenforceability of that provision
shall not affect the validity or enforceability of any other provision of this Agreement, and all
other provisions shall remain in full force and effect.

     7.5 Counterparts. This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original, but all of which together will constitute one and the same
Agreement.

     7.6 Withholding of Taxes and Other Employee Deductions. Company may withhold from any
benefits and payments made pursuant to this Agreement all federal, state, city and other taxes as
may be required pursuant to any law or governmental regulation or ruling and all other normal
employee deductions made with respect to Company’s employees generally.

     7.7 Headings. The paragraph headings have been inserted for purposes of convenience and shall
not be used for interpretive purposes.

     7.8 Gender and Plurals. Wherever the context so requires, the masculine gender includes the
feminine or neuter, and the singular number includes the plural and conversely.

     7.9 Affiliate. As used in this Agreement, the term “affiliate” shall mean any entity which
owns or controls, is owned or controlled by, or is under common ownership or control with, Company.

     7.10 Assignment. This Agreement shall be binding upon and inure to the benefit of Company and
any successor of Company, by merger or otherwise. Except as provided in the preceding sentence,
this Agreement, and the rights and obligations of the parties hereunder, are personal and neither
this Agreement, nor any right, benefit, or obligation of either party hereto, shall be subject to
voluntary or involuntary assignment, alienation or transfer, whether by operation of law or
otherwise, without the prior written consent of the other party.

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     7.11 Term. This Agreement has a term co-extensive with the term of employment provided in
paragraph 2.1. Termination shall not affect any right or obligation of any party which is accrued
or vested prior to such termination.

     7.12 Release. The Executive hereby irrevocably releases the Company and its predecessors
(including Superior Offshore International, L.L.C.) and each and every affiliate, officer, member,
shareholder, manager, director and employee of the Company and its predecessors (including Superior
Offshore International, L.L.C.) (the “Releasees”) from any claims, liabilities, costs, expenses,
actions, suits or demands however arising, whether at law or in equity, contingent, known or
unknown, which the Executive or his heirs, successors or assigns may have or assert against the
Releasees as of the date of the Effective Date in respect of any ownership interest in the
Releasees or in connection with or arising out of any employment relationship with the Releasees
prior to the Effective Date (including claims for breach of any contract relating to employment or
compensation, or for discrimination based upon race, color, ethnicity, sex, age, national origin,
religion, disability, sexual orientation, or any other unlawful criterion or circumstance);
provided, however, that this release shall not apply to the Executive’s rights to accrued but
unpaid salary, accrued but unpaid vacation and unpaid reimbursable expenses, in each case to the
extent accrued prior to the Effective Date; provided, further, that this release shall not apply to
any rights, benefits, obligations or restrictions arising under this Agreement or the Restricted
Stock Agreement on or after the Effective Date.

     7.13 Entire Agreement. This Agreement and the Restricted Stock Agreement constitute the
entire agreement of the parties with regard to the subject matter hereof and thereof and supersede
all prior agreements and understandings, oral or written, between the parties with respect to the
subject matter hereof and thereof, and contain all the covenants, promises, representations,
warranties and agreements between the parties with respect to employment of Executive by Company or
any of its predecessors (including Superior Offshore International, L.L.C.). Without limiting the
scope of the preceding sentence, all understandings and agreements between the Executive, on the
one hand, and the Company or any of its predecessors or their respective shareholders, members,
managers or officers, on the other hand, preceding the date of execution of this Agreement and the
Restricted Stock Agreement and relating to the subject matter hereof or thereof are hereby null and
void and of no further force and effect. For the avoidance of doubt, Executive and Company hereby
agree that this Agreement and the Restricted Stock Agreement supersede the letter agreement, dated
January 10, 2007, between Executive, Company and Superior Offshore International, L.L.C., which
letter agreement the parties hereby agree is terminated and of no further force and effect and no
party thereto shall have any liability or further obligation pursuant thereto except for Section
4(c) thereof, which shall survive termination indefinitely. Any modification of this Agreement
will be effective only if it is in writing and signed by the party to be charged.

[Signatures Appear on Next Page]

-12-

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the                      day of April,
2007, to be effective as of the Effective Date.

	 	 	 	 	 	 	 
	 	 	SUPERIOR OFFSHORE INTERNATIONAL, INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name: Louis E. Schaefer, Jr.
	 	 
	 

	 	 	 	Title: Chairman of the Board of Directors	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 
	 	 	John F. Guarisco	 	 

[Signatures Page to Employment Agreement]

 

 

EXHIBIT A

GENERAL RELEASE

     THIS GENERAL RELEASE is entered into among Superior Offshore International, Inc., a Delaware
corporation (“Employer”), and                      (the “Employee”) as of the                      day of
                    . The Employer and the Employee agree as follows:

          1. Employment Status. The Employee’s employment with the Employer shall terminate
effective as of                     ,                     .

          2. Payment and Benefits. Upon the effectiveness of this Release as set forth in
Paragraphs 12 and 13 hereof, Employer shall provide the Employee with the payments and benefits set
forth in Paragraph [6.2, 6.3 or 6.4] of the Employment Agreement among the Employer and the
Employee, dated as of                     , 2007 (as amended from time to time, the “Employment
Agreement”).

          3. No Liability. This Release does not constitute an admission by the Employer, or
any of its subsidiaries, affiliates, divisions, trustees, officers, directors, partners, agents, or
employees, or by the Employee, of any unlawful acts or of any violation of federal, state or local
laws.

          4. Employee Release. In consideration of the payments and benefits set forth in
Paragraph [6.2, 6.3 or 6.4] of the Employment Agreement, the Employee for himself, his heirs,
administrators, representatives, executors, successors and assigns (collectively, “Employee
Releasors”) does hereby irrevocably and unconditionally release, acquit and forever discharge
the Employer and each of its subsidiaries, affiliates, divisions, successors, assigns, trustees,
officers, directors, partners, agents, and former and current employees, including without
limitation all persons acting by, through, under or in concert with any of them (collectively,
“Employer Releasees”), and each of them from any and all charges, complaints, claims,
liabilities, obligations, promises, agreements, controversies, damages, remedies, actions, causes
of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys’ fees and
costs) of any nature whatsoever, known or unknown, whether pursuant to contract or in law or equity
or otherwise and whether arising under any and all federal, state, local, county and/or municipal
statutes, regulations, rules, and/or ordinances, including, without limitation, Title VII of the
Civil Rights Act of 1964; the Age Discrimination in Employment Act, the Americans with Disabilities
Act, the Older Workers Benefit Protection Act, the Equal Pay Act of 1962, Chapter 21 of the Texas
Labor Code and Section 451 of the Texas Labor Code and/or claims under the Constitutions of the
United States and/or the State of Texas or any other unlawful criterion or circumstance, which
Employee Releasors had, now have, or may have or claim to have in the future against each or any of
the Employer Releasees by reason of any matter, cause or thing occurring, done or omitted to be
done from the beginning of the world until the date of the execution of this Release (the
“Employee Released Claims”); provided, however, that nothing herein shall
release Employer from any right of indemnification or to director and officer liability insurance
coverage under any Employer organizational documents or at law under any plan or agreement and
applicable to the Employee.

 

 

     Nothing in this Release is intended to interfere with the Employee’s right to make a complaint
or claim with a federal or state administrative agency including, for example, the National Labor
Relations Board, the Equal Employment Opportunity Commission or the Texas Workforce Commission.
However, by executing this Release, the Employee hereby waives the right to recover in any
proceeding that the Employee may bring before the Equal Employment Opportunity Commission or any
federal or state administrative agency or in any proceeding brought by the Equal Employment
Opportunity Commission or any state human rights commission on the Employee’s behalf. In addition,
this release is not intended to interfere with the Employee’s right to challenge that his waiver of
any and all ADEA claims pursuant to this Release is a knowing and voluntary waiver, notwithstanding
the Employee’s specific representation to the Employer Group that he has entered into this
Agreement knowingly and voluntarily and that he has been advised by the Employer Group to consult
with an attorney of his choice regarding same.

          5. Employer Release. The Employer on behalf of itself and its subsidiaries,
affiliates, divisions, successors, assigns, officers, directors, agents, partners and current and
former employees (collectively, the “Employer Releasors” and together with the Employee
Releasors, the “Releasing Parties”) agrees to and does hereby irrevocably and
unconditionally release, acquit and forever discharge the Employee, and his heirs, executors,
administrators, representatives, successors and assigns (hereinafter collectively referred to as
the “Employee Releasees”), with respect to and from any and all charges, complaints,
claims, liabilities, obligations, promises, agreements, controversies, damages, remedies, causes of
action, suits, rights, demands, costs, losses, debts, and expenses (including attorneys’ fees and
costs) of any kind whatsoever, known or unknown, whether in law or equity and whether arising under
federal, state or local law, which the Releasors had, now have, or may have or claim to have in the
future against each or any of the Employee Releasees by reason of any matter, course or thing
whatsoever from the beginning of the world until the date of execution of this Release (the
“Employer Released Claims” and, together with the Employee Released Claims, the
“Released Claims”); provided, however, that nothing herein shall release
the Employee from (i) obligations or restrictions arising under or referred to or described in the
Employment Agreement and nothing herein shall impair the right or ability of Employer to enforce
such provisions in accordance with the terms of the Employment Agreement or (ii) any claims arising
out of the Employee’s fraud or willful misconduct in connection with the conduct of the business of
the Employer Group.

          6. No Additional Facts; Bar. Each of the Releasing Parties hereby expressly waives
any rights such Releasing Party may have under the statutes of any jurisdiction or common law
principles of similar effect, to preserve Released Claims that such Releasing Party does not know
or suspect to exist in such Releasing Party’s favor at the time of executing this Release. Each of
the Releasing Parties understands and acknowledges that it may discover facts different from, or in
addition to, those which it knows or believes to be true with respect to the claims released
herein, and agrees that this release shall be and remain effective in all respects notwithstanding
any subsequent discovery of different and/or additional facts. Should any Releasing Party discover
that any fact relied upon in entering into this release was untrue, or that any fact was concealed,
or that an understanding of the facts or law was incorrect, no Releasing Party shall be entitled to
any relief as a result thereof, and the undersigned surrenders any rights it might have to rescind
this release on any ground. This release is intended to be and

 

 

is final and binding regardless of any claim of misrepresentation, promise made with the
intention of performing, concealment of fact, mistake of law, or any other circumstances
whatsoever. The Employee acknowledges and agrees that if he should hereafter make any claim or
demand or commence or threaten to commence any action, claim or proceeding against the Employer
Releasees with respect to any cause, matter or thing which is the subject of the release under
Paragraph 4 of this Release, this Release may be raised as a complete bar to any such action, claim
or proceeding, and the applicable Employer Releasee may recover from the Employee all costs
incurred in connection with such action, claim or proceeding, including attorneys’ fees. The
Employer Group acknowledges and agrees that if it should hereafter make any claim or demand or
commence or threaten to commence any action, claim or proceeding against any of the Employee
Releasees with respect to any cause, matter or thing which is the subject of the release under
Paragraph 5 of this Release, this Release may be raised as a complete bar to any such action, claim
or proceeding, and the applicable Employee Releasee may recover from Employer all costs incurred in
connection with such action, claim or proceeding, including attorneys’ fees.

          7. Restrictive Covenants. The Employee acknowledges that the provisions of Article 4
and Article 5 of the Employment Agreement shall continue to apply pursuant to their terms
notwithstanding the termination of the Employment Agreement.

          8. No Assignment of Released Claims. Each Releasing Party represents and warrants to
the Released Parties that there has been no assignment or other transfer of any interest in any
Released Claim.

          9. Severability. If any provision of this Release is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Release will remain in full force
and effect. Any provision of this Release held invalid or unenforceable only in part of degree
will remain in full force and effect to the extent not held invalid or unenforceable.

          10. Amendment. This Release may not be amended, modified or waived except in a
writing signed by the party against whom any such amendment, modification or waiver is sought to be
enforced.

          11. Governing Law. This Release shall be governed by and construed in accordance with
the laws of the State of Texas, without regard to conflicts of laws principles.

          12. Acknowledgment. The parties hereto have read this Release, understand it, and
voluntarily accept its terms, and the Employee acknowledges that he has been advised by Employer to
seek the advice of legal counsel before entering into this Release, and has been provided with a
period of twenty-one (21) days in which to consider entering into this Release.

          13. Revocation. The Employee has a period of seven (7) days following the execution
of this Release during which the Employee may revoke this Release, and this Release shall not
become effective or enforceable until such revocation period has expired. If, within the ten (10)
day period following such expiration, Employer fails to execute this Release, then this Release
shall become null and void and have no force or effect.

 

 

          14. Counterparts. This Release may be executed by the parties hereto in counterparts,
which taken together shall be deemed one original.

     IN WITNESS WHEREOF, the parties have executed this Release on the date first set forth above.

	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Executive	 	 
	 
	 	 	 	 	 	 
	 	 	Superior Offshore International, Inc.	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:exv10w6

 

Exhibit 10.6

FORM OF

SUPERIOR OFFSHORE INTERNATIONAL, INC.

2007 STOCK INCENTIVE PLAN

SECTION 1. PURPOSE; DEFINITIONS

     The purpose of the Plan is to give the Company a competitive advantage in attracting,
retaining and motivating officers, employees, directors and/or consultants and to provide the
Company and its Subsidiaries and Affiliates with a stock plan providing incentives directly related
to increases in Company shareholder value.

     Certain terms used herein have definitions given to them in the first place in which they are
used. In addition, for purposes of the Plan, the following terms are defined as set forth below:

     (a) “Affiliate” means a corporation or other entity controlled by, controlling or under common
control with the Company.

     (b) “Award” means a Stock Appreciation Right, Stock Option, Restricted Stock, Performance
Unit, or other stock-based award granted pursuant to the terms of the Plan.

     (c) “Award Agreement” means any written agreement, contract or other instrument or document
evidencing the grant of an Award.

     (d) “Award Cycle” means a period of consecutive fiscal years or portions thereof designated by
the Committee over which Performance Units are to be earned.

     (e) “Board” means the Board of Directors of the Company.

     (f) “Cause” means, unless otherwise provided by the Committee in an Award Agreement, (i)
“Cause” as defined in any Individual Agreement to which the Participant is a party, or (ii) if
there is no such Individual Agreement or if it does not define Cause: (A) conviction of the
Participant for committing a felony under federal law or the law of the state in which such action
occurred, (B) dishonesty in the course of fulfilling the Participant’s employment duties, or (C)
willful and deliberate failure on the part of the Participant to perform his or her employment
duties in any material respect. The Committee shall, unless otherwise provided in an Individual
Agreement with the Participant, have the sole discretion to determine whether “Cause” exists, and
its determination shall be final.

     (g) “Change in Control” and “Change in Control Price” have the meanings set forth in Sections
11(b) and (c), respectively.

     (h) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any
successor thereto.

     (i) “Commission” means the Securities and Exchange Commission or any successor agency.

 

 

     (j) “Committee” means the Committee referred to in Section 2.

     (k) “Common Stock” means common stock, par value $0.01 per share, of the Company.

     (l) “Company” means Superior Offshore International, Inc., a Delaware corporation.

     (m) “Covered Employee” means a Participant designated prior to the grant of Restricted Stock
or Performance Units by the Committee who is or may be a “covered employee” within the meaning of
Section 162(m)(3) of the Code in the year in which Restricted Stock or Performance Units are
expected to be taxable to such Participant.

     (n) “Disability” means, unless otherwise provided by the Committee, (i) “Disability” as
defined in any Individual Agreement to which the Participant is a party, or (ii) if there is no
such Individual Agreement or it does not define “Disability,” permanent and total disability as
determined under the Company’s Long Term Disability Plan applicable to the Participant.

     (o) “Early Retirement” means retirement from active employment with the Company or a
Subsidiary of the Company pursuant to the early retirement provisions of the applicable pension
plan (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended) of such employer, if any.

     (p) “Effective Date” shall have the meaning set forth in Section 16.

     (q) “Eligible Individuals” means directors, officers, employees and consultants of the Company
or any of its Subsidiaries or Affiliates, and prospective employees and consultants who have
accepted offers of employment or consultancy from the Company or its Subsidiaries or Affiliates,
who are or will be responsible for or contribute to the management, growth or profitability of the
business of the Company or its Subsidiaries or Affiliates.

     (r) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time,
and any successor thereto.

     (s) “Fair Market Value” means, except as otherwise provided by the Committee, as of any given
date, the closing reported sales price for a share of Common Stock traded on a national securities
market or exchange as may at the time be the principal market for the Common Stock, or if the
shares were not traded on such national securities market or exchange on such date, then on the
next preceding date on which such shares of Common Stock were traded, all as reported by such
source as the Committee may select. In the event the Common Stock is not traded on a national
securities market or exchange at the time a determination of its value is required to be made
hereunder, the determination of its fair market value shall be made by the Committee in such manner
as it deems appropriate, consistent with Treasury regulations and other formal
Internal Revenue Service guidance under Section 409A of the Code so that options granted under
this Plan shall not constitute deferred compensation subject to Section 409A of the Code.

     (t) “Incentive Stock Option” means any Stock Option designated as, and qualified as, an
“incentive stock option” within the meaning of Section 422(b) of the Code.

-2-

 

     (u) “Individual Agreement” means an employment, consulting or similar written agreement
between a Participant and the Company or one of its Subsidiaries or Affiliates.

     (v) “Involuntary Termination” means a Termination of Employment by reason of an Involuntary
Termination as defined in an Individual Agreement to which the Participant is a party that is then
in effect. If a Participant is not party to an Individual Agreement, or if it does not define
“Involuntary Termination,” no Termination of Employment of that Participant shall be considered to
be an Involuntary Termination.

     (w) “NonQualified Stock Option” means any Stock Option that is not an Incentive Stock Option.

     (x) “Normal Retirement” means retirement from active employment with the Company or a
Subsidiary of the Company at or after age 65 or such other age as may be established by the
Committee.

     (y) Option Price” shall have the meaning set forth in Section 5(d)(i).

     (z) “Outside Director” means a director who meets any applicable independence requirements of
the national stock exchange on which Common Stock is listed, if any, and who qualifies as an
“outside director” within the meaning of Section 162(m) of the Code and as a “non-employee
director” within the meaning of Rule 16b-3 promulgated under the Exchange Act.

     (aa) “Participant” means an Eligible Individual to whom an Award has been made.

     (bb) “Performance Goals” means the performance goals established by the Committee in
connection with the grant of Restricted Stock or Performance Units. In the case of Qualified
Performance-Based Awards, (i) such goals shall be based on the attainment of specified levels of
one or more of the following measures with respect to the Company or such subsidiary, division or
department of the Company for or within which the participant performs services: stock price,
market share, sales, asset quality, non-performing assets, cost, operating income, market spending
efficiency, revenue growth; earnings before interest, taxes, depreciation, and amortization;
earnings before interest and taxes; operating income; pre or after-tax income; earnings per share;
cash flow; cash flow per share; return on equity; return on invested capital; return on assets;
economic value added (or an equivalent metric); share price performance; total shareholder return;
improvement in or attainment of expense levels; and/or improvement in or attainment of working
capital levels and (ii) such Performance Goals shall be set by the Committee within the time period
prescribed by Section 162(m) of the Code and related regulations. Such Performance Goals also may
be based upon the attaining of specified levels of Company performance under one or more of the
measures described above relative to the performance of other corporations.

     (cc) “Performance Units” means an Award granted under Section 8.

     (dd) “Plan” means the Superior Offshore International, Inc. 2007 Stock Incentive Plan, as set
forth herein and as hereinafter amended from time to time.

-3-

 

     (ee) “Qualified Performance-Based Award” means an Award of Restricted Stock or Performance
Units designated as such by the Committee at the time of grant, based upon a determination that (i)
the recipient is or may be a “covered employee” within the meaning of Section 162(m)(3) of the Code
in the year in which the Company would expect to be able to claim a tax deduction with respect to
such Restricted Stock or Performance Units and (ii) the Committee wishes such Award to qualify for
the Section 162(m) Exemption.

     (ff) “Restricted Stock” means an Award granted under Section 7.

     (gg) “Retirement” means Normal or Early Retirement.

     (hh) “Rule 16b-3” means Rule 16b-3, as promulgated by the Commission under Section 16(b) of
the Exchange Act, as amended from time to time.

     (ii) “Section 162(m) Exemption” means the exemption from the limitation on deductibility
imposed by Section 162(m) of the Code that is set forth in Section 162(m)(4)(C) of the Code.

     (jj) “Stock Appreciation Right” means an Award granted under Section 6.

     (kk) “Stock Option” means an Award granted under Section 5.

     (ll) “Subsidiary” means any corporation, partnership, joint venture or other entity during any
period in which at least a 50% voting or profits interest is owned, directly or indirectly, by the
Company or any successor to the Company.

     (mm) “Termination of Employment” means the termination of the Participant’s employment with,
or performance of services for, the Company and any of its Subsidiaries or Affiliates. A
Participant employed by, or performing services for, a Subsidiary or an Affiliate shall also be
deemed to incur a Termination of Employment if the Subsidiary or Affiliate ceases to be such a
Subsidiary or an Affiliate, as the case may be, and the Participant does not immediately thereafter
become an employee of, or service-provider for, the Company or another Subsidiary or Affiliate.
Temporary absences from employment because of illness, vacation or leave of absence and transfers
among the Company and its Subsidiaries and Affiliates shall not be considered Terminations of
Employment.

SECTION 2. ADMINISTRATION

     (a) The Plan shall be administered by the Compensation Committee or such other committee of
the Board as the Board may from time to time designate (the “Committee”), which shall be composed
of not less than three Outside Directors, and shall be appointed by and serve at the pleasure of
the Board.

     (b) The Committee shall have plenary authority to grant Awards pursuant to the terms of the
Plan to Participants.

     (c) Among other things, the Committee shall have the authority, subject to the terms of the
Plan:

-4-

 

          (i) To select the Participants to whom Awards may from time to time be granted;

          (ii) To determine whether and to what extent any type of Award is to be granted hereunder;

          (iii) To determine the number of shares of Common Stock to be covered by each Award granted
hereunder;

          (iv) To determine the terms and conditions of any Award granted hereunder (including, but not
limited to, the Option Price (subject to Section 5(d)(i)), any vesting condition, restriction or
limitation (which may be related to the performance of the Participant, the Company or any
Subsidiary or Affiliate) and any vesting acceleration or forfeiture waiver regarding any Award and
the shares of Common Stock relating thereto, based on such factors as the Committee shall
determine;

          (v) Subject to the terms of the Plan, including without limitation Section 13, to modify,
amend or adjust the terms and conditions of any Award, at any time or from time to time, including
but not limited to Performance Goals; provided, however, that the Committee may not adjust upwards
the amount payable to a Covered Employee with respect to a Qualified Performance-Based Award or
waive or alter the Performance Goals associated therewith in a manner that would violate Section
162(m) of the Code; and

          (vi) To determine under what circumstances an Award may be settled in cash or Common Stock
under Sections 5(k), 5(l), 6(b)(ii), 6(c)(xi) and 8(b)(iv).

     (d) The Committee shall have the authority to adopt, alter and repeal such administrative
rules, guidelines and practices governing the Plan as it shall from time to time deem advisable, to
interpret the terms and provisions of the Plan and any Award issued under the Plan (and any
agreement relating thereto) and to otherwise supervise the administration of the Plan.

     (e) The Committee may act only by a majority of its members then in office. Except to the
extent prohibited by applicable law or the applicable rules of a stock exchange, the Committee may
(i) allocate all or any portion of its responsibilities and powers to any one or more of its
members and (ii) delegate all or any part of its responsibilities and powers to any person or
persons selected by it, provided that no such delegation may be made that would cause Awards or
other transactions under the Plan to become subject to (or lose an exemption under) the short-swing
profit recovery provisions of Section 16(b) of the Exchange Act or cause an Award designated as a
Qualified Performance-Based Award not to qualify for, or to cease to qualify for, the Section
162(m) Exemption. Any such allocation or delegation may be revoked by the Committee at any time.

     (f) Any determination made by the Committee with respect to any Award shall be made in the
sole discretion of the Committee at the time of the grant of the Award or, unless in contravention
of any express term of the Plan, at any time thereafter. All decisions made by the Committee or any
appropriately delegated officer pursuant to the provisions of the Plan shall be

-5-

 

final and binding
on all persons, including the Company, its Affiliates, Subsidiaries, shareholders and Participants.

     (g) Any authority granted to the Committee may also be exercised by the full Board, except to
the extent that the grant or exercise of such authority would cause any Award or transaction to
become subject to (or lose an exemption under) the short-swing profit recovery provisions of
Section 16(b) of the Exchange Act or cause an Award designated as a Qualified Performance-Based
Award not to qualify for, or to cease to qualify for, the Section 162(m) Exemption. To the extent
that any permitted action taken by the Board conflicts with action taken by the Committee, the
Board action shall control.

SECTION 3. COMMON STOCK SUBJECT TO PLAN

     (a) The maximum number of shares of Common Stock that may be delivered to Participants and
their beneficiaries under the Plan shall be 4,000,000. No Participant may be granted Stock Options
covering in excess of
                     shares of Common Stock in any calendar year and Stock Appreciation
Rights covering in excess of
                     shares of Common Stock in any calendar year. Shares subject to
an Award under the Plan may be authorized and unissued shares or may be treasury shares. No more
than
                     shares of Restricted Stock may be issued during the term of the Plan, and no more
than
                     may be issued in any calendar year.

     (b) If any Award is forfeited, or if any Stock Option (or Stock Appreciation Right, if any)
terminates, expires or lapses without being exercised, or if any Stock Appreciation Right is
exercised for cash, shares of Common Stock subject to such Awards shall again be available for
distribution in connection with Awards under the Plan. If the Option Price of any Stock Option or
the Strike Price (as defined in Section 6(c)(ii)) of any Stock Appreciation Right is satisfied by
delivering shares of Common Stock to the Company (by either actual delivery or by attestation),
only the number of shares of Common Stock delivered to the Participant net of the shares of Common
Stock delivered to the Company or attested to shall be deemed delivered for purposes of determining
the maximum numbers of shares of Common Stock available for delivery under the Plan. To the extent
any shares of Common Stock subject to an Award are not delivered to a Participant because such
shares are used to satisfy an applicable tax-withholding obligation, such shares shall not be
deemed to have been delivered for purposes of determining the maximum number of shares of Common
Stock available for delivery under the Plan. The maximum number of shares of Common Stock that may
be issued pursuant to Stock Options intended to be Incentive Stock
Options shall be                      shares.

     (c) In the event of any change in corporate capitalization (including, but not limited to, a
change in the number of shares of Common Stock outstanding), such as a stock split or a corporate
transaction, such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company (including any extraordinary cash or stock
dividend), any reorganization (whether or not such reorganization comes within the definition of
such term in Section 368 of the Code) or any partial or complete liquidation of the Company,
the Committee or Board shall make such substitution or adjustments in the aggregate number and kind
of shares reserved for issuance under the Plan, and the maximum limitation upon Stock Options and
Stock Appreciation Rights and other Awards to be granted to any Participant, in the

-6-

 

number, kind
and Option Price and Strike Price of shares subject to outstanding Stock Options and Stock
Appreciation Rights, in the number and kind of shares subject to other outstanding Awards granted
under the Plan and/or such other equitable substitution or adjustments as it may determine to be
appropriate in its sole discretion (including, without limitation, an amount in cash therefor);
provided, however, that the number of shares subject to any Award shall always be a whole number.
Such adjusted Option Price shall also be used to determine the amount payable by the Company upon
the exercise of any Stock Appreciation Right associated with any Stock Option.

SECTION 4. ELIGIBILITY

     Awards may be granted under the Plan to Eligible Individuals.

SECTION 5. STOCK OPTIONS

     (a) Stock Options may be granted alone or in addition to other Awards granted under the Plan
and may be of two types: Incentive Stock Options and NonQualified Stock Options. Any Stock Option
granted under the Plan shall be in such form as the Committee may from time to time approve.

     (b) The Committee shall have the authority to grant any Participant Incentive Stock Options,
NonQualified Stock Options or both types of Stock Options; provided, however, that grants hereunder
are subject to the limits on grants set forth in Section 3. Incentive Stock Options may be granted
only to employees of the Company and its subsidiaries or parent corporation (within the meaning of
Section 424(f) of the Code). To the extent that any Stock Option is not designated as an Incentive
Stock Option or even if so designated does not qualify as an Incentive Stock Option on or
subsequent to its grant date, it shall constitute a NonQualified Stock Option.

     (c) Stock Options shall be evidenced by Award Agreements, the terms and provisions of which
may differ. An Award Agreement shall indicate on its face whether it is intended to be an agreement
for an Incentive Stock Option or a NonQualified Stock Option; provided that Stock Options intended
to be Incentive Stock Options shall comply with paragraph (d)(v) hereunder and any other provisions
to qualify as an Incentive Stock Option under the Code. The grant of a Stock Option shall occur on
the date the Committee by resolution selects a Participant to receive a grant of a Stock Option,
determines the number of shares of Common Stock to be subject to such Stock Option to be granted to
such Participant and specifies the terms and provisions of the Stock Option. The Company shall
notify a Participant of any grant of a Stock Option, and a written Award Agreement shall be duly
executed and delivered by the Company to the Participant. Such agreement or agreements shall become
effective upon execution by the Company and the Participant.

     (d) Stock Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions as the Committee shall deem
desirable:

          (i) Option Price. The Committee shall determine the option price per share of Common
Stock purchasable under a Stock Option (the “Option Price”). The Option Price per share of Common
Stock subject to a Stock Option shall not be less than the Fair Market Value of

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the Common Stock
subject to such Stock Option on the date of grant. Except for adjustments pursuant to Section
3(c), in no event may any Stock Option granted under this Plan be amended to decrease the Option
Price thereof, cancelled in conjunction with the grant of any new Stock Option with a lower Option
Price, or otherwise be subject to any action that would be treated, for accounting purposes, as a
“repricing” of such Stock Option, unless such amendment, cancellation, or action is approved by the
Company’s shareholders in accordance with applicable law and stock exchange rules.

          (ii) Option Term. The term of each Stock Option shall be fixed by the Committee, but
no Incentive Stock Option shall be exercisable more than 10 years after the date the Stock Option
is granted.

          (iii) Exercisability. Except as otherwise provided herein, Stock Options shall be
exercisable at such time or times and subject to such terms and conditions as shall be determined
by the Committee. If the Committee provides that any Stock Option is exercisable only in
installments, the Committee may at any time waive such installment exercise provisions, in whole or
in part, based on such factors as the Committee may determine. In addition, the Committee may at
any time accelerate the exercisability of any Stock Option.

          (iv) Method of Exercise. Subject to the provisions of this Section 5, Stock Options
may be exercised, in whole or in part, at any time during the option term by giving written notice
of exercise to the Company specifying the number of shares of Common Stock subject to the Stock
Option to be purchased. Such notice shall be accompanied by payment in full of the Option Price by
certified or bank check or such other instrument as the Company may accept. If approved by the
Committee, payment, in full or in part, may also be made in the form of unrestricted Common Stock
(by delivery of such shares or by attestation) already owned by the Participant of the same class
as the Common Stock subject to the Stock Option (based on the Fair Market Value of the Common Stock
on the date the Stock Option is exercised); provided, however, that, in the case of an Incentive
Stock Option, the right to make a payment in the form of already owned shares of Common Stock of
the same class as the Common Stock subject to the Stock Option may be authorized only at the time
the Stock Option is granted and provided, further, that such already owned shares have been held by
the Participant for at least six months at the time of exercise or had been purchased on the open
market. If approved by the Committee, to the extent permitted by applicable law, payment in full or
in part may also be made by delivering a properly executed exercise notice to the Company, together
with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount
of sale or loan proceeds necessary to pay the Option Price, and, if requested, the amount of any
federal, state, local or foreign withholding taxes. To facilitate the foregoing, the Company may
enter into agreements for coordinated procedures with one or more brokerage firms. No shares of
Common Stock shall be delivered until full payment therefor has been made. A Participant shall
have all of the rights of a shareholder of the Company holding the class or series of Common Stock that
is subject to such Stock Option (including, if applicable, the right to vote the shares and the
right to receive dividends), when the Participant has given written notice of exercise, has paid in
full for such shares and, if requested by the Company, has given the representation described in
Section 15(a).

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          (v) No Incentive Stock Option shall be granted to an individual if, at the time the Stock
Option is granted, such individual owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or of its parent or subsidiary corporation, within the
meaning of section 422(b)(6) of the Code, unless (i) at the time such Stock Option is granted, the
Stock Option price is at least 110% of the Fair Market Value of the Common Stock subject to the
Stock Option and (ii) such Stock Option by its terms is not exercisable after the expiration of
five years from the date of grant.

     (e) Nontransferability of Stock Options. No Stock Option shall be transferable by the
Participant other than (i) by will or by the laws of descent and distribution or any other
testamentary distribution; or (ii) in the case of a NonQualified Stock Option, unless otherwise
determined by the Committee, to such Participant’s children or family members, whether directly or
indirectly or by means of a trust or partnership or otherwise. For purposes of this Plan, unless
otherwise determined by the Committee, “family member” shall have the meaning given to such term in
General Instructions A.1(a)(5) to Form S-8 under the Securities Act of 1933 as amended, or any
successor thereto. All Stock Options shall be exercisable, subject to the terms of this Plan, only
by the Participant, the guardian or legal representative of the Participant, or any person to whom
such option is transferred pursuant to this paragraph, it being understood that the term “holder”
and “Participant” include such guardian, legal representative and other transferee; provided,
however, that Termination of Employment shall continue to refer to the Termination of Employment of
the original Participant.

     (f) Termination by Reason of Death, Disability, or Retirement. Unless otherwise
determined by the Committee at the time of grant and as set forth in an Award Agreement, if a
Participant incurs a Termination of Employment by reason of death, Disability or Retirement any
Stock Option held by such Participant may thereafter be exercised, to the extent then exercisable,
or on such accelerated basis as the Committee may determine, until the expiration of the stated
term of such Stock Option. In the event of Termination of Employment by reason of death,
Disability, or Retirement, if an Incentive Stock Option is exercised after expiration of the
exercise periods that apply for purposes of Section 422 of the Code, such Stock Option will
thereafter be treated as a NonQualified Stock Option.

     (g) Other Termination. Unless otherwise determined by the Committee at the time of
grant and as set forth in an Award Agreement: (A) if a Participant incurs a Termination of
Employment for Cause, all Stock Options held by such Participant shall thereupon terminate whether
they are exercisable or not; and (B) if a Participant incurs a Termination of Employment for any
reason other than death, Disability, Retirement or for Cause, any Stock Option held by such
Participant, to the extent it was then exercisable at the time of termination, or on such
accelerated basis as the Committee may determine, may be exercised for the balance of such Stock
Option’s term. In the event of Termination of Employment for any reason other than death,
Disability, Retirement or for Cause, if an Incentive Stock Option is exercised after the
expiration of the exercise periods that apply for purposes of Section 422 of the Code, such
Stock Option will thereafter be treated as a NonQualified Stock Option.

     (h) Cashing Out of Stock Option. On receipt of written notice of exercise, the
Committee may elect to cash out all or part of the portion of the shares of Common Stock for which
a Stock Option is being exercised by paying the Participant an amount, in cash or

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Common Stock,
equal to the excess of the Fair Market Value of the Common Stock over the Option Price times the
number of shares of Common Stock for which the Option is being exercised on the effective date of
such cash-out.

SECTION 6. STOCK APPRECIATION RIGHTS

     (a) Grant. Stock Appreciation Rights may be granted alone or in addition to other
Awards granted under the Plan.

     (b) Terms and Conditions of Stock Appreciation Rights. Stock Appreciation Rights shall
be subject to such terms and conditions as shall be determined by the Committee, including the
following:

          (i) Term. The Committee shall determine the stated term of each Stock Appreciation
Right granted under this Plan.

          (ii) Strike Price. Unless provided otherwise by the Committee, the strike price (the
“Strike Price”) per share of Common Stock subject to a Stock Appreciation Right shall be the Fair
Market Value of the Common Stock on the date of grant. Except for adjustments pursuant to Section
3(c), in no event may any Stock Appreciation Right granted under this Plan be amended to decrease
the Strike Price thereof, cancelled in conjunction with the grant of any new Stock Appreciation
Right with a lower Strike Price, or otherwise be subject to any action that would be treated, for
accounting purposes, as a “repricing” of such Stock Appreciation Right, unless such amendment,
cancellation, or action is approved by the Company’s shareholders in accordance with applicable law
and stock exchange rules.

          (iii) Exercisability. Except as otherwise provided herein, Share Appreciation Rights
shall be exercisable at such time or times and subject to such terms and conditions as shall be
determined by the Committee, and the Committee may at any time accelerate the exercisability of any
Stock Appreciation Right. If the Committee provides that any Stock Appreciation Right is
exercisable only in installments, the Committee may at any time waive such installment exercise
provisions, in whole or in part, based on such factors as the Committee may determine.

          (iv) Settlement. Upon the exercise of a Stock Appreciation Right, a Participant shall
be entitled to receive an amount in cash, shares of Common Stock or a combination of cash and
shares, equal to (A) the excess of the Fair Market Value of one share of Common Stock over the
applicable Strike Price multiplied by (B) the number of shares of Common Stock in respect of which
the Stock Appreciation Right shall have been exercised, with the Committee having the right to
determine the form of payment.

          (v) Nontransferability. No Stock Appreciation Right shall be transferable by a
Participant other than by will or by the laws of descent and distribution or as otherwise expressly
permitted by the Committee, including, if so permitted, pursuant to a transfer to such
Participant’s children or family members, whether directly or indirectly or by means of a trust or
partnership or otherwise. For purposes of this Plan, unless otherwise determined by the Committee,
“family member” shall have the meaning given to such term in General Instructions A.1(a)(5) to Form
S-8 under the Securities Act of 1933, as amended, and any successor thereto.

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All Stock Appreciation
Rights shall be exercisable, subject to the terms of this Plan, only by the Participant, the
guardian or legal representative of the Participant, or any person to whom such Stock Appreciation
Right is transferred pursuant to this paragraph, it being understood that the terms “holder” and
“Participant” include such guardian, legal representative and other transferee; provided, however,
that the term “Termination of Employment” shall continue to refer to the Termination of Employment
of the original Participant.

          (vi) Termination by Reason of Death, Disability, or Retirement. Unless otherwise
determined by the Committee at the time of grant and as set forth in an Award Agreement, if a
Participant incurs a Termination of Employment by reason of death, Disability, or Retirement, any
Stock Appreciation Right held by such Participant may thereafter be exercised, to the extent then
exercisable, or on such accelerated basis as the Committee may determine, until the expiration of
the stated term of such Stock Appreciation Right.

          (vii) Other Termination. Unless otherwise determined by the Committee at the time of
grant and as set forth in an Award Agreement: (A) if a Participant incurs a Termination of
Employment for Cause, all Stock Appreciation Rights held by such Participant shall thereupon
terminate whether they are exercisable or not; and (B) if a Participant incurs a Termination of
Employment for any reason other than death, Disability, Retirement or for Cause, any Stock
Appreciation Right held by such Participant, to the extent it was then exercisable at the time of
termination, or on such accelerated basis as the Committee may determine, may be exercised for the
balance of such Stock Appreciation Right’s term.

SECTION 7. RESTRICTED STOCK

     (a) Administration. Shares of Restricted Stock may be awarded either alone or in
addition to other Awards granted under the Plan. The Committee shall determine the Participants to
whom and the time or times at which grants of Restricted Stock will be awarded, the number of
shares to be awarded to any Participant, the conditions for vesting, the time or times within which
such Awards may be subject to forfeiture and any other terms and conditions of the Awards, in
addition to those contained in Section 7(c).

     (b) Awards and Certificates. Shares of Restricted Stock shall be evidenced in such
manner as the Committee may deem appropriate, including book-entry registration or issuance of one
or more stock certificates. Any certificate issued in respect of shares of Restricted Stock shall
be registered in the name of such Participant and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Award, substantially in the following form:

“THE TRANSFERABILITY OF THIS CERTIFICATE AND THE
SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS
(INCLUDING FORFEITURE) OF THE SUPERIOR OFFSHORE INTERNATIONAL, INC. 2007
STOCK INCENTIVE PLAN AND AN AWARD AGREEMENT. COPIES OF SUCH PLAN AND
AGREEMENT ARE ON FILE AT THE OFFICES OF SUPERIOR OFFSHORE INTERNATIONAL,
INC., 900 S. COLLEGE ROAD, SUITE 301, LAFAYETTE, LOUISIANA.”

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The Committee may require that the certificates evidencing such shares be held in custody by the
Company until the restrictions thereon shall have lapsed and that, as a condition of any Award of
Restricted Stock, the Participant shall have delivered a stock power, endorsed in blank, relating
to the Common Stock covered by such Award.

     (c) Terms and Conditions. Shares of Restricted Stock shall be subject to the following
terms and conditions:

          (i) The Committee may, prior to or at the time of grant, designate an Award of Restricted
Stock as a Qualified Performance-Based Award, in which event it shall condition the grant or
vesting, as applicable, of such Restricted Stock upon the attainment of Performance Goals. If the
Committee does not designate an Award of Restricted Stock as a Qualified Performance-Based Award,
it may also condition the grant or vesting thereof upon the attainment of Performance Goals.
Regardless of whether an Award of Restricted Stock is a Qualified Performance-Based Award, the
Committee may also condition the grant or vesting thereof upon the continued service of the
Participant. The conditions for grant or vesting and the other provisions of Restricted Stock
Awards (including without limitation any applicable Performance Goals) need not be the same with
respect to each recipient. The Committee may at any time, in its sole discretion, accelerate or
waive, in whole or in part, any of the foregoing restrictions; provided, however, that in the case
of Restricted Stock that is a Qualified Performance-Based Award, the applicable Performance Goals
must have been satisfied.

          (ii) Subject to the provisions of the Plan and the Award Agreement referred to in Section
7(c)(vi), during the period, if any, set by the Committee, commencing with the date of such Award
for which such Participant’s continued service is required (the “Restriction Period”), and until
the later of (A) the expiration of the Restriction Period and (B) the date the applicable
Performance Goals (if any) are satisfied, the Participant shall not be permitted to sell, assign,
transfer, pledge or otherwise encumber shares of Restricted Stock.

          (iii) Except as provided in this paragraph (iii) and Sections 7(c)(i) and 7(c)(ii) and the
Award Agreement, the Participant shall have, with respect to the shares of Restricted Stock, all of
the rights of a shareholder of the Company holding the class or series of Common Stock that is the
subject of the Restricted Stock, including, if applicable, the right to vote the shares and the
right to receive any cash dividends. If so determined by the Committee in the applicable Award
Agreement and subject to Section 15(e) of the Plan, (A) cash dividends on the class or series of
Common Stock that is the subject of the Restricted Stock Award shall be automatically deferred and
reinvested in additional Restricted Stock, held subject to the vesting of the underlying Restricted
Stock, or held subject to meeting Performance Goals applicable only to dividends, and (B) dividends
payable in Common Stock shall be paid in the form of Restricted
Stock of the same class as the Common Stock with which such dividend was paid, held subject to
the vesting of the underlying Restricted Stock, or held subject to meeting Performance Goals
applicable only to dividends.

          (iv) Except to the extent otherwise provided in the applicable Award Agreement or Section
7(c)(i), 7(c)(ii), 7(c)(v) or 10(a)(ii), upon a Participant’s Termination of Employment for any
reason during the Restriction Period or before the applicable Performance Goals are satisfied, all
shares still subject to restriction shall be forfeited by the Participant;

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provided, however, that
the Committee shall have the discretion to waive, in whole or in part, any or all remaining
restrictions (other than, in the case of Restricted Stock with respect to which a Participant is a
Covered Employee, satisfaction of the applicable Performance Goals) with respect to any or all of
such Participant’s shares of Restricted Stock.

          (v) If and when any applicable Performance Goals are satisfied and the Restriction Period
expires without a prior forfeiture of the Restricted Stock, unlegended certificates for such shares
shall be delivered to the Participant upon surrender of the legended certificates.

          (vi) Each Award shall be confirmed by, and be subject to, the terms of an Award Agreement.

SECTION 8. PERFORMANCE UNITS

     (a) Administration. Performance Units may be awarded either alone or in addition to
other Awards granted under the Plan. The Committee shall determine the Participants to whom and the
time or times at which Performance Units shall be awarded, the number of Performance Units to be
awarded to any Participant), the duration of the Award Cycle and any other terms and conditions of
the Award, in addition to those contained in Section 8(b).

     (b) Terms and Conditions. Performance Units Awards shall be subject to the following
terms and conditions:

          (i) The Committee may, prior to or at the time of the grant, designate Performance Units as
Qualified Performance-Based Awards, in which event it shall condition the settlement thereof upon
the attainment of Performance Goals. If the Committee does not designate Performance Units as
Qualified Performance-Based Awards, it may also condition the settlement thereof upon the
attainment of Performance Goals. Regardless of whether Performance Units are Qualified
Performance-Based Awards, the Committee may also condition the settlement thereof upon the
continued service of the Participant. The provisions of such Awards (including without limitation
any applicable Performance Goals) need not be the same with respect to each recipient. Subject to
the provisions of the Plan and the Award Agreement referred to in Section 8(b)(v), Performance
Units may not be sold, assigned, transferred, pledged or otherwise encumbered during the Award
Cycle. No more than                     shares of Common Stock may be subject to Qualified Performance Based
Awards granted to any Eligible Individual in any calendar year.

          (ii) Except to the extent otherwise provided in the applicable Award Agreement or Section
8(b)(ii) or 10(a)(iii), upon a Participant’s Termination of Employment for
any reason during the Award Cycle or before any applicable Performance Goals are satisfied,
all rights to receive cash or stock in settlement of the Performance Units shall be forfeited by
the Participant; provided, however, that the Committee shall have the discretion to waive, in whole
or in part, any or all remaining payment limitations (other than, in the case of Performance Units
that are Qualified Performance-Based Awards), with respect to any or all of such Participant’s
Performance Units.

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          (iii) A Participant may elect to further defer receipt of cash or shares in settlement of
Performance Units for a specified period or until a specified event, subject in each case to the
Committee’s approval and to such terms as are determined by the Committee. Such election must be
made prior to commencement of the Award Cycle for the Performance Units in question.

          (iv) At the expiration of the Award Cycle, the Committee shall evaluate the Company’s
performance in light of any Performance Goals for such Award, and shall determine the number of
Performance Units granted to the Participant which have been earned, and the Committee shall then
cause to be delivered (A) a number of shares of Common Stock equal to the number of Performance
Units determined by the Committee to have been earned, or (B) cash equal to the Fair Market Value
of such number of shares of Common Stock to the Participant, as the Committee shall elect.

          (v) Each Award shall be confirmed by, and be subject to, the terms of an Award Agreement.

SECTION 9. OTHER STOCK-BASED AWARDS

     Other Awards of Common Stock and other Awards that are valued in whole or in part by reference
to, or are otherwise based upon, Common Stock, including (without limitation) phantom stock,
dividend equivalents and convertible debentures, may be granted either alone or in conjunction with
other Awards granted under the Plan; provided that no such Awards can be granted with respect to
more than                     shares of Common Stock in any calendar year.

SECTION 10. CHANGE IN CONTROL PROVISIONS

     (a) Impact of Event. Notwithstanding any other provision of the Plan to the contrary,
unless otherwise provided by the Committee in any Award Agreement, in the event of a Change in
Control:

        (i) The Committee, in its discretion, shall act to effect one or more of the following
alternatives with respect to outstanding Stock Options, which may vary among individual
Participants and which may vary among Stock Options held by any individual Participant: (1)
determine a limited period of time for the exercise of such Stock Options in a manner determined by
the Committee (notwithstanding the provisions set forth in Section 5 with respect to the exercise
of such Stock Options) on or before a specified date (before or after such Change in Control) after
which specified date all unexercised Stock Options and all rights of Participants thereunder shall
terminate, (2) require the mandatory surrender to the Company by selected Participants of some or
all of the outstanding Stock Options held by such Participants (irrespective of whether such Stock
Options are then exercisable under the provisions of the
Plan) as of a date, before or after such Change in Control, specified by the Committee, in
which event the Committee shall thereupon cancel such Stock Options and the Company shall pay to
each Participant an amount of cash and other consideration, as determined by the Committee in its
sole discretion, where the total cash and other consideration paid or delivered per share is equal
to the excess, if any, of the Change in Control Price of the shares subject to such Stock Option
over the Option Price(s) under such Stock Options for such shares, (3) make such

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adjustments to
Stock Options then outstanding as the Committee deems appropriate to reflect such Change in Control
(provided, however, that the Committee may determine in its sole discretion that no adjustment is
necessary to Stock Options then outstanding) or (4) provide that thereafter upon any exercise of a
Stock Option theretofore granted the Participant shall be entitled to purchase under such Stock
Option, in lieu of the number of shares of Common Stock then covered by such Stock Option, the
number and class of shares of stock or other securities or property (including, without limitation,
cash) to which the Participant would have been entitled pursuant to the terms of the agreement of
merger, consolidation or sale of assets and dissolution if, immediately prior to such merger,
consolidation or sale of assets and dissolution, the Participant has been the Participant of record
of the number of shares of Common Stock then covered by such Stock Option.

          (ii) Stock Appreciation Rights outstanding as of the date of such Change in Control, and which
are not then exercisable and vested, shall become fully exercisable and vested.

          (iii) The restrictions and deferral limitations applicable to any Restricted Stock shall
lapse, and such Restricted Stock shall become free of all restrictions and become fully vested.

          (iv) All Performance Units shall be considered to be earned and payable in full, and any
deferral or other restriction shall lapse and such Performance Units shall be settled in cash or
shares of Common Stock, as determined by the Committee, as promptly as is practicable.

          (v) Any other Awards of Common Stock as set forth in Section 10 shall be considered earned and
payable in full and shall be settled in cash or shares of Common Stock, as determined by the
Committee, as promptly as practicable.

     (b) Definition of Change in Control. For purposes of the Plan, a “Change in Control”
shall mean the happening of any of the following events:

          (i) An acquisition by any individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 30% or more of either (1) the then outstanding shares
of common stock of the Company (the “Outstanding Company Common Stock”) or (2) the combined voting
power of the then outstanding voting securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting Securities”); excluding, however, the
following: (1) Any acquisition directly from the Company, other than an acquisition by virtue of
the exercise of a conversion privilege unless the security being so converted was itself acquired
directly from the Company, (2) Any acquisition
by the Company, (3) Any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any entity controlled by the Company, or (4) Any acquisition
pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (iii) of this
Section 10(b); or

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          (ii) A change in the composition of the Board such that the individuals who, as of the
Effective Date, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for
purposes of this Section 10(b), that any individual who becomes a member of the Board subsequent to
the Effective Date, whose election, or nomination for election by the Company’s shareholders, was
approved by a vote of at least a majority of those individuals who are members of the Board and who
were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be
considered as though such individual were a member of the Incumbent Board; but, provided, further,
that any such individual whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other than the Board
shall not be so considered as a member of the Incumbent Board; or

          (iii) Consummation of a reorganization, merger or consolidation or sale or other disposition
of all or substantially all of the assets of the Company (“Corporate Transaction”); excluding,
however, such a Corporate Transaction pursuant to which (1) all or substantially all of the
individuals and entities who are the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate
Transaction will beneficially own, directly or indirectly, more than 50% of, respectively, the
outstanding shares of common stock, and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case may be, of the
corporation resulting from such Corporate Transaction (including, without limitation, a corporation
which as a result of such transaction owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in substantially the same proportions
as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (other
than the Company, any employee benefit plan (or related trust) of the Company or such corporation
resulting from such Corporate Transaction) will beneficially own, directly or indirectly, 30% or
more of, respectively, the outstanding shares of common stock of the corporation resulting from
such Corporate Transaction or the combined voting power of the outstanding voting securities of
such corporation entitled to vote generally in the election of directors except to the extent that
such ownership existed prior to the Corporate Transaction, and (3) individuals who were members of
the Incumbent Board will constitute at least a majority of the members of the board of directors of
the corporation resulting from such Corporate Transaction; or

          (iv) The approval by the shareholders of the Company of a complete liquidation or dissolution
of the Company.

     (c) Change in Control Price. For purposes of the Plan, “Change in Control Price” means
the higher of (i) the highest reported sales price, regular way, of a share of Common Stock
in any transaction reported on the national securities market or exchange as may at the time
be the principal market for the Common Stock during the 60-day period prior to and including the
date of a Change in Control or (ii) if the Change in Control is the result of a tender or exchange
offer or a Corporate Transaction, the highest price per share of Common Stock paid in such tender
or exchange offer or Corporate Transaction; provided, however, that in the case of

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Incentive Stock
Options, the Change in Control Price shall be in all cases the Fair Market Value of the Common
Stock on the date such Incentive Stock Option or Tandem Stock Appreciation Right is exercised. To
the extent that the consideration paid in any such transaction described above consists all or in
part of securities or other noncash consideration, the value of such securities or other noncash
consideration shall be determined in the sole discretion of the Board.

SECTION 11. FORFEITURE OF AWARDS

     Notwithstanding anything in the Plan to the contrary, the Committee shall have the authority
under the Plan to provide in any Award Agreement that in the event of serious misconduct by a
Participant (including, without limitation, any misconduct prejudicial to or in conflict with the
Company or its Subsidiaries or Affiliates, or any Termination of Employment for Cause), or any
activity of a Participant in competition with the business of the Company or any Subsidiary or
Affiliate, any outstanding Award granted to such Participant shall be cancelled, in whole or in
part, whether or not vested or deferred. The determination of whether a Participant has engaged in
a serious breach of conduct or any activity in competition with the business of the Company or any
Subsidiary or Affiliate shall be determined by the Committee in good faith and in its sole
discretion. This Section 11 shall have no application following a Change in Control.

SECTION 12. TERM, AMENDMENT AND TERMINATION

     The Plan will terminate on the tenth anniversary of the Effective Date. Under the Plan, Awards
outstanding as of such date shall not be affected or impaired by the termination of the Plan.

     The Board may amend, alter, or discontinue the Plan, but no amendment, alteration or
discontinuation shall be made which would impair the rights of a Participant under a Stock Option
or a recipient of a Stock Appreciation Right, Restricted Stock Award, Performance Unit Award or
other Award theretofore granted without the Participant’s or recipient’s consent, except such an
amendment made to comply with applicable law (including Section 409A of the Code), stock exchange
rules or accounting rules. In addition, no such amendment shall be made without the approval of the
Company’s shareholders to the extent such approval is required by applicable law or stock exchange
rules.

     The Committee may amend the terms of any Stock Option or other Award theretofore granted,
prospectively or retroactively, but no such amendment shall cause a Qualified Performance-Based
Award to cease to qualify for the Section 162(m) Exemption or impair the rights of any holder
without the holder’s consent except such an amendment made to cause the Plan or Award to comply
with applicable law (including Section 409A of the Code), stock exchange rules or accounting rules.

     Subject to the above provisions, the Board shall have authority to amend the Plan to take into
account changes in law and tax and accounting rules as well as other developments, and to grant
Awards which qualify for beneficial treatment under such rules without shareholder approval.

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SECTION 13. UNFUNDED STATUS OF PLAN

     It is presently intended that the Plan constitute an “unfunded” plan for incentive and
deferred compensation. The Committee may authorize the creation of trusts or other arrangements to
meet the obligations created under the Plan to deliver Common Stock or make payments; provided,
however, that unless the Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the “unfunded” status of the Plan.

SECTION 14. GENERAL PROVISIONS

     (a) Representation. The Committee may require each person purchasing or receiving
shares pursuant to an Award to represent to and agree with the Company in writing that such person
is acquiring the shares without a view to the distribution thereof. The certificates for such
shares may include any legend which the Committee deems appropriate to reflect any restrictions on
transfer. Notwithstanding any other provision of the Plan or agreements made pursuant thereto, the
Company shall not be required to issue or deliver any certificate or certificates for shares of
Common Stock under the Plan prior to fulfillment of all of the following conditions:

          (i) Listing or approval for listing upon notice of issuance, of such shares on such securities
exchange as may at the time be the principal market for the Common Stock;

          (ii) Any registration or other qualification of such shares of the Company under any state or
federal law or regulation, or the maintaining in effect of any such registration or other
qualification which the Committee shall, in its absolute discretion upon the advice of counsel,
deem necessary or advisable; and

          (iii) Obtaining any other consent, approval, or permit from any state or federal governmental
agency which the Committee shall, in its absolute discretion after receiving the advice of counsel,
determine to be necessary or advisable.

     (b) No Limit of Other Arrangements. Nothing contained in the Plan shall prevent the
Company or any Subsidiary or Affiliate from adopting other or additional compensation arrangements
for its employees.

     (c) No Contract of Employment. Neither the Plan nor any Award shall constitute a
contract of employment. Neither the adoption of the Plan nor the grant of an Award shall confer
upon any employee any right to continued employment, nor shall either interfere in any way with the
right of the Company or any Subsidiary or Affiliate to terminate the employment of any employee at
any time.

     (d) Tax Withholding. No later than the date as of which an amount first becomes
includible in the gross income of the Participant for federal income tax purposes with respect to
any Award under the Plan, the Participant shall pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, any federal, state, local or foreign taxes of
any kind required by law to be withheld with respect to such amount. Unless otherwise determined by
the Company, withholding obligations may be settled with Common Stock, including Common Stock that
is part of the Award that gives rise to the withholding requirement; provided, that not more than
the legally required minimum withholding may be

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settled with Common Stock. The obligations of the
Company under the Plan shall be conditional on such payment or arrangements, and the Company and
its Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from
any payment otherwise due to the Participant. The Committee may establish such procedures as it
deems appropriate, including making irrevocable elections, for the settlement of withholding
obligations with Common Stock.

     (e) Dividends. Reinvestment of dividends in additional Restricted Stock at the time of
any dividend payment shall only be permissible if sufficient shares of Common Stock are available
under Section 3 for such reinvestment (taking into account then outstanding Stock Options and other
Awards).

     (f) Death Beneficiary. The Committee shall establish such procedures as it deems
appropriate for a Participant to designate a beneficiary to whom any amounts payable in the event
of the Participant’s death are to be paid or by whom any rights of the Participant, after the
Participant’s death, may be exercised.

     (g) Subsidiary Employees. In the case of a grant of an Award to any employee of a
Subsidiary of the Company, the Company may, if the Committee so directs, issue or transfer the
shares of Common Stock, if any, covered by the Award to the Subsidiary, for such lawful
consideration as the Committee may specify, upon the condition or understanding that the Subsidiary
will transfer the shares of Common Stock to the employee in accordance with the terms of the Award
specified by the Committee pursuant to the provisions of the Plan. All shares of Common Stock
underlying Awards that are forfeited or canceled should revert to the Company.

     (h) Governing Law. The Plan and all Awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Delaware, without reference
to principles of conflict of laws.

     (i) Nontransferability. Except as otherwise provided in Section 5(e) or 6(b)(v) or by
the Committee, Awards under the Plan are not transferable except by will or by laws of descent and
distribution.

     (j) Code Section 409A. It is intended that any grant of an Award to which Section
409A of the Code is applicable shall satisfy all of the requirements of such Code section.

SECTION 15. EFFECTIVE DATE OF PLAN

     The Plan shall be effective as of the date (the “Effective Date”) it is adopted by the Board,
provided that it is approved by the stockholders of the Company in accordance with all
applicable laws, regulations and stock exchange rules and listing standards.

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