Document:

exv10w29

 

Exhibit 10.29

Tier I

TEMPLE-INLAND INC.

RESTRICTED STOCK UNITS AGREEMENT

     This Agreement is entered into between TEMPLE-INLAND INC., a Delaware corporation
(“Temple-Inland”) and the Employee named above, and is an integral and inseparable term of
Employee’s employment as an employee of Temple-Inland or an Affiliate. In consideration of the
mutual covenants hereinafter set forth and for other good and valuable consideration, Temple-Inland
and the Employee hereby agree as follows:

	1.	 	Grant of Restricted Stock Units. Subject to the restrictions, terms and conditions
of this Agreement and the Plan Documents (as hereafter defined), Temple-Inland hereby awards
to the Employee the number of restricted stock units stated above (the “Restricted Stock
Units”).

	2.	 	Governing Documents. This Agreement and the Restricted Stock Units awarded hereby
are subject to all the restrictions, terms and provisions of the Temple-Inland Inc. 2003 Stock
Incentive Plan (the “Plan”) and the Temple-Inland Standard Terms and Conditions for Restricted
Stock Units dated February 1, 2008 (the “Standard Terms and Conditions”; together with the
Plan, the “Plan Documents”) which are herein incorporated by reference and to the terms of
which the Employee hereby agrees. Capitalized terms used in this Agreement that are not
defined herein shall have the meaning set forth in the Plan Documents.

	3.	 	No Stockholder Rights. The Restricted Stock Units will be represented by a book
entry credited in the name of the Employee and are not actual shares of Common Stock. The
Employee will not have the right to vote the Restricted Stock Units. The Employee was granted
“Bonus Phantom Shares” as of the date hereof which entitle the Employee to certain dividend
equivalent payments for cash dividends with respect to the Restricted Stock Units, subject to
the achievement of the performance goals specified by the Committee at the time of grant of
the Bonus Phantom Shares. The Employee acknowledges and agrees that (a) the Employee’s sole
rights with respect to dividend equivalent payments with respect to the cash dividends arise
from the Bonus Phantom Shares and, (b) the Employee has no rights under this Agreement or the
Plan Documents with respect to the payment of dividend equivalent payments or the adjustment
of the Restricted Stock Units to reflect the payment of cash dividends.

	4.	 	General Vesting Requirements. Except as otherwise provided in the Plan Documents and
subject to the conditions of paragraphs 5 and 6 hereof: (a) all of the Employee’s Restricted
Stock Units shall vest as of the occurrence of a Vesting Date, provided that the Employee has
not incurred a Separation From Service prior to the Vesting Date, (b) no payment of the
Restricted Stock Units shall be made unless the Performance Goal set forth in Exhibit A hereto
has been achieved, and (c) any Restricted Stock Units that have not vested on or prior to the
earlier of the Employee’s Separation From Service or the Scheduled Vesting Date shall be
forfeited, and the Employee shall not thereafter have any rights with respect to the
Restricted Stock Units so forfeited.

	5.	 	Retirement Vesting. Notwithstanding paragraph 4 hereof, any Restricted Stock Units
that do not vest as of a Vesting Date that occurs by reason of Employee’s Retirement solely by
reason of the second sentence of paragraph 6 hereof shall remain outstanding and shall vest as
of the Scheduled Vesting Date (which shall be the Vesting Date for purposes of paragraph 7
hereof), subject to the Performance Goal set forth in Exhibit A hereof being achieved as of
the Scheduled Vesting Date.

	6.	 	Committee Certification of Performance Goals. Notwithstanding anything herein to the
contrary, in no event shall any Restricted Stock Units vest as of the Scheduled Vesting Date
unless the Committee has certified that the Performance Goal set forth in Exhibit A hereto has
been achieved. In the case of a Vesting Date described in clause (b) of the definition of
Vesting Date (as set forth in the Standard Terms and Conditions) that occurs by reason of
Retirement, in no event shall any Restricted Stock Units vest as of such Vesting Date unless
the Committee has certified that Temple-Inland has achieved the

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Exhibit 10.29

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	 	 	Performance Goal set forth in Exhibit A through the end of the later of the calendar quarter during which Retirement
occurred or the first full calendar quarter after the Date of Grant.

	7.	 	Payment of Restricted Stock Units. Subject to the terms and conditions hereof,
Exhibit B hereto and the Plan Documents, Temple-Inland will pay to the Employee the cash value
of the Restricted Stock Units (determined based on Fair Market Value of the Common Stock on
the Vesting Date) as soon as practicable after the Vesting Date, but not later than ninety
days after the Vesting Date (or, if earlier, March 15 of the calendar year following the
Vesting Date), provided that if the Vesting Date occurs upon or after a Change in Control,
payment shall be made not later than the fifth business day after the Vesting Date.

	8.	 	Arbitration. The Employee and Temple-Inland agree that this Agreement arises out of,
and is inseparable from, the Employee’s employment with Temple-Inland or any of its
Affiliates. The Employee and Temple-Inland further agree to final and binding arbitration as
the exclusive forum for resolution of any dispute of any nature whatsoever, whether initiated
by the Employee or Temple-Inland, arising out of, related to, or connected with Employee’s
employment with, or termination by, Temple-Inland or any of its Affiliates. This includes,
without limitation, any dispute arising out of the application, interpretation, enforcement,
or claimed breach of this Agreement. The only exceptions to the scope of this arbitration
provision are claims arising under any written agreement between the Employee and
Temple-Inland or its Affiliate that expressly provides that such claims are not subject to
binding arbitration. Arbitration under this provision shall be conducted under the employment
dispute rules and procedures of either the American Arbitration Association or of
JAMS/Endispute, according to the preference of the party initiating such arbitration. Appeal
from, or confirmation of, any arbitration award under this paragraph may be made to any court
of competent jurisdiction under standards applicable to appeal or confirmation of arbitration
awards under the Federal Arbitration Act. This arbitration provision and related proceedings
shall be subject to and governed by the Federal Arbitration Act. 

	9.	 	Miscellaneous. The Committee may from time to time modify or amend this Agreement in
accordance with the provisions of the Plan. This Agreement shall be binding upon and inure to
the benefit of Temple-Inland and its successors and assigns and shall be binding upon and
inure to the benefit of the Employee and his or her legatees, distributees and personal
representatives. By signing this Agreement, the Employee acknowledges and expressly agrees
that the Employee has read the Agreement and the Plan Documents and agrees to their terms.
This Agreement may be executed by Temple-Inland and the Employee by means of electronic or
digital signatures, which shall have the same force and effect as manual signatures. The
Employee acknowledges and agrees that clicking “I Accept” on the Company’s online grant
acceptance screen has the effect of affixing the Employee’s electronic signature to this
Agreement. This Agreement shall be governed by and construed in accord with federal law,
where applicable, and otherwise with the laws of the State of Texas.

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Exhibit 10.29

Tier I

Exhibit A

PERFORMANCE GOAL

The RSU Phantom Shares Performance Goal is an ROI of at least one percent
(annualized) for the Performance Measurement Period. ROI means operating
income (as currently shown on the parent company income statement, or the
reported equivalent in the event of any change in reporting), excluding
significant unusual items (currently reported as other operating income
(expense) not allocated to segments, or the reported equivalent in the
event of any change in reporting) divided by beginning of year investment
defined as parent company total assets (or the reported equivalent in the
event of any change in reporting), less certain assets (assets held for
sale, municipal bonds related to capital leases included in other assets
and acquisitions/divestitures) and certain liabilities (current
liabilities, excluding current portion of long-term debt).

For purposes of the foregoing, “Performance Measurement Period” means the
period beginning the first day of Temple-Inland’s fiscal year that
includes the Date of Grant and ending on the last day of the fiscal year
immediately preceding the Scheduled Vesting Date (or, in the case of any
Vesting Date that occurs by reason of the Employee’s Retirement, through
the end of the later of the calendar quarter during which Retirement
occurs or the first full calendar quarter after the Date of Grant).

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Exhibit 10.29

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Exhibit B

SECTION 409A PAYMENT DATE

IN THE EVENT OF CERTAIN CHANGES IN CONTROL

If, prior to the calendar year that includes the Scheduled Vesting Date, the
Employee will have either (a) attained age 65 or (b) attained age 55 and
completed at least five years of employment by Temple-Inland or any of its
Affiliates, and assuming that the Employee does not incur a Separation From
Service prior to such calendar year, then the following shall apply:

Notwithstanding the provisions of paragraph 7 of the Agreement, if the
Vesting Date occurs by reason of a Change in Control and such Change in
Control does not constitute a “change in control event” (within the meaning
of Treasury Regs. § 1.409A-3(i)(5)), (a) payment of the cash value of the
Restricted Stock Units shall not be made as soon as practicable after such
Vesting Date but shall instead be made as soon as practicable (but in all
events within five business days) after the earlier of the Employee’s
Separation From Service (subject to paragraph 9 of the Temple-Inland Inc.
Standard Terms and Conditions for Restricted Stock Units) or the Scheduled
Vesting Date and (b) the cash value of the Restricted Stock Units shall be
determined based on Fair Market Value on the earlier of such dates.

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Exhibit 10.29

Tier I

TEMPLE-INLAND INC.

STANDARD TERMS AND CONDITIONS

FOR RESTRICTED STOCK UNITS

February 1, 2008

	1.	 	Certain Definitions: For purposes of this Temple-Inland Inc. Standard Terms and
Conditions for Restricted Stock Units (the “Standard Terms and Conditions”), the Temple-Inland
Inc. 2003 Stock Incentive Plan (the “Plan,” and together with the Standard Terms and
Conditions, the “Plan Documents”), and Restricted Stock Units to which this Standard Terms and
Conditions applies, the following terms shall have the meanings set forth below:

	 	a.	 	Change in Control:

	 	i.	 	A change in control shall be deemed to have occurred if the event
set forth in any one of the following paragraphs shall have occurred:

	 	(1)	 	any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of Temple-Inland (not including in
the securities beneficially owned by such Person any securities acquired
directly from Temple-Inland or its Affiliates) representing 20% or more
of the combined voting power of Temple-Inland’s then outstanding
securities, excluding any Person who becomes such a Beneficial Owner in
connection with a transaction described in clauses (a), (b) or (c) of
paragraph (3) below;
	 
	 	(2)	 	within any twenty-four (24) month period, the
following individuals cease for any reason to constitute a majority of
the number of directors then serving on the Board: individuals who, on
the Effective Date, constitute the Board and any new director (other than
a director whose initial assumption of office is in connection with an
actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of
Temple-Inland) whose appointment or election by the Board or nomination
for election by Temple-Inland’s shareholders was approved or recommended
by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved or
recommended;
	 
	 	(3)	 	there is consummated a merger, consolidation of
Temple-Inland or any direct or indirect subsidiary of Temple-Inland with
any other corporation or any recapitalization of Temple-Inland (for
purposes of this paragraph (III), a “Business Event”) unless, immediately
following such Business Event (a) the directors of Temple-Inland
immediately prior to such Business Event continue to constitute at least
a majority of the board of directors of Temple-Inland, the surviving
entity or any parent thereof, (b) the voting securities of Temple-Inland
outstanding immediately prior to such Business Event continue to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of Temple-Inland or any
subsidiary of Temple-Inland, at least 60% of the combined voting power of
the securities of Temple-Inland or such surviving entity or any parent
thereof outstanding immediately after such Business Event, and (c) in the
event of a recapitalization, no Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of Temple-Inland or such
surviving entity or any parent thereof (not including in the securities
Beneficially Owned by such Person any securities acquired directly from
Temple-Inland or its Affiliates) representing 20% or more of the combined
voting power of the then outstanding securities of Temple-Inland or such
surviving entity or

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	 	 	 	any parent thereof (except to the extent such
ownership existed prior to the Business Event);

	 	(4)	 	the shareholders of Temple-Inland approve a plan of
complete liquidation or dissolution of Temple-Inland;
	 
	 	(5)	 	there is consummated an agreement for the sale,
disposition or long-term lease by Temple-Inland of substantially all of
Temple-Inland’s assets, other than (a) such a sale, disposition or lease
to an entity, at least 50% of the combined voting power of the voting
securities of which are owned by shareholders of Temple-Inland in
substantially the same proportions as their ownership of Temple-Inland
immediately prior to such sale or disposition or (b) the distribution
directly to Temple-Inland’s shareholders (in one distribution or a series
of related distributions) of all of the stock of one or more subsidiaries
of Temple-Inland that represent substantially all of Temple-Inland’s
assets; or
	 
	 	(6)	 	any other event that the Board, in its sole
discretion, determines to be a Change in Control for purposes of this
Agreement.
	 
	 	 	 	Notwithstanding the foregoing, a “Change in Control” under clauses (1)
through (5) above shall not be deemed to have occurred by virtue of the
consummation of any transaction or series of integrated transactions
immediately following which the record holders of the common stock of
Temple-Inland immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate
ownership in one or more entities which, singly or together,
immediately following such transaction or series of transactions, own
all or substantially all of the assets of Temple-Inland as constituted
immediately prior to such transaction or series of transactions.

	 	ii.	 	For purposes of this definition of “Change in Control”:

	 	(1)	 	“Affiliate” shall have the meaning set forth in
Rule 12b-2 promulgated under Section 12 of the Exchange Act.
	 
	 	(2)	 	“Beneficial Owner” shall have the meaning set forth
in Rule 13d-3 under the Exchange Act.
	 
	 	(3)	 	“Effective Date” means, the Date of Grant of the
applicable Restricted Stock Units.
	 
	 	(4)	 	“Exchange Act” shall mean the Securities Exchange
Act of 1934, as amended from time to time.
	 
	 	(5)	 	“Person” shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and
14(d) thereof, except that such term shall not include (i) Temple-Inland
or any of its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of Temple-Inland or any of its
Affiliates, (iii) an underwriter temporarily holding securities pursuant
to an offering of such securities, or (iv) a corporation owned, directly
or indirectly, by the stockholders of Temple-Inland in substantially the
same proportions as their ownership of stock of Temple-Inland.

	 	b.	 	Participant: means any Eligible Employee who has been awarded
Restricted Stock Units pursuant to the Plan.
	 
	 	c.	 	Restricted Stock Units: means a book entry representing an award of
Phantom Shares of Common Stock that are subject to restrictions as provided herein.

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	 	d.	 	Restricted Stock Units Agreement: means the written agreement executed
by Temple-Inland and an Eligible Employee.
	 
	 	e.	 	Retirement: means a Participant’s Separation From Service after either
(i) attaining age 65 or (ii) attaining age 55 and completing at least five years of
service with Temple-Inland or any of its Affiliates.
	 
	 	f.	 	Separation From Service: means a Participant’s separation from service
(within the meaning of Section 409A of the Code) with Temple-Inland and its Affiliates
after the Date of Grant of the relevant Restricted Stock Units.
	 
	 	g.	 	Temple-Inland: means Temple-Inland Inc. and any successor thereto.
	 
	 	h.	 	Vesting Date: means, with respect to any award of Restricted Stock
Units hereunder, the earliest of (a) such date or dates as the Committee shall specify
in the Restricted Stock Units Agreement evidencing such award of Restricted Stock Units
as the Scheduled Vesting Date(s), (b) the Participant’s Retirement, (c) the occurrence
of a Change in Control, (d) the Participant’s death, or (e) the Participant’s becoming
disabled (within the meaning of Section 409A of the Code).

	 	 	Capitalized terms used herein but not defined herein shall have the meaning assigned to such
terms in the Plan.
	 
	2.	 	Acceptance of Restricted Stock Units Agreement; Time of Grant of Options; Stock Option
Agreements: Restricted Stock Units shall be immediately cancelled and expire if the
applicable Restricted Stock Units Agreement is not accepted (in such manner as may be
specified by Temple-Inland) by such Participant (or his or her agent or attorney) and
delivered to Temple-Inland (in such manner as may be specified by Temple-Inland) within 60
days after the Date of Grant of the Restricted Stock Units (unless an extension of such
deadline for extenuating circumstances is approved by a Vice President of Temple-Inland).

	 
	3.	 	Form of Awards: Restricted Stock Units, when issued, will be represented by a book
entry in the name of the Participant.
	 
	4.	 	Nonalienation of Benefits: Except as required by applicable law, no right or benefit
under the Plan or any Restricted Stock Units Agreement shall be subject to anticipation,
alienation, sale, assignment, hypothecation, pledge, exchange, transfer, encumbrance or
charge, and any attempt to anticipate, alienate, sell, assign, hypothecate, transfer, pledge,
exchange, transfer, encumber or charge the same shall be void. No right or benefit hereunder
shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of
the person entitled to such benefit. If any Participant shall become bankrupt or attempt to
anticipate, alienate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or
charge any right or benefit under the Plan or any Restricted Stock Units Agreement, then such
right or benefit shall, in the discretion of the Committee, cease and terminate, and in such
event, the Committee in its discretion may hold or apply the same or any part thereof for the
benefit of the Participant or his beneficiary, spouse, children or other dependents, or any of
them, in such manner and in such proportion as the Committee may deem proper.
	 
	5.	 	Withholding: Temple-Inland’s obligation to pay Restricted Stock Units in accordance
with, and subject to the terms of, the applicable Restricted Stock Units Agreement, shall be
subject to the satisfaction of applicable federal, state and local tax withholding
requirements. Restricted Stock Unit payments that are withheld to satisfy applicable
withholding taxes shall be determined based on the Fair Market Value of the Common Stock on
the date the withholding tax obligation arises. Only the required statutory minimum tax may be
withheld; excess tax withholding is not allowed.
	 
	6.	 	No Right to Continued Employment; No Additional Rights: Nothing contained in the
Plan or in any Restricted Stock Units Agreement shall confer on any Participant any right to
continue in the employ of Temple-Inland or any of its Affiliates or interfere in any way with
the right of Temple-Inland or an Affiliate to terminate the employment of a Participant at any
time, with or without cause, notwithstanding the Restricted Stock Units awarded to the
Participant may be forfeited. Nothing in the Plan Documents or any Restricted Stock Units
Agreement shall be construed to give any employee of Temple-Inland or any Affiliate any right
to receive an award of Restricted Stock Units or as evidence of any agreement or
understanding, express or

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	 	 	implied, that Temple-Inland or any Affiliate will employ the
Participant in any particular position or at any particular rate of remuneration, or for any
particular period of time.
	 
	7.	 	Changes in Stock: In the event of any change in the outstanding stock covered by
Restricted Stock Units by reason of any stock dividend, split-up, spin-off, recapitalization,
reclassification, combination or exchange of shares, merger, consolidation or liquidation or
the like, the Committee shall provide for a substitution for or adjustment in the number and class of shares covered by the Restricted Stock Units. The
Committee’s determination with regard to any such substitution or adjustment shall be
conclusive. The Committee may at any time, in its sole discretion, make such amendments to
the terms of Restricted Stock Units Agreements as it deems necessary or appropriate to
reflect any adjustments or substitutions made pursuant to this paragraph.
	 
	8.	 	Exclusion from Pension, Profit-Sharing and Other Benefit Computations: By acceptance
of a Restricted Stock Units award under the Plan, a Participant shall be deemed to have agreed
that any compensation arising out of the award constitutes special incentive compensation that
shall not be taken into account as “salary”, “pay”, “compensation” or “bonus” in determining
the amount of any payment under any pension, retirement or profit-sharing plan of
Temple-Inland or any Affiliate. In addition, each Participant shall be deemed to have agreed
that neither the award, vesting nor payment of Restricted Stock Units shall be taken into
account in determining the amount of any life insurance coverage or short or long-term
disability coverage provided by Temple-Inland or any Affiliate.
	 
	9.	 	Section 409A: Notwithstanding any provision to the contrary in a Restricted Stock
Units Agreement or the Plan, if a Participant is a “specified employee” (within the meaning of
Section 409A(a)(2)(B) of the Code), then to the extent required by Section 409A(a)(2)(B) of
the Code, no payment of Restricted Stock Units shall be made to the Participant prior to the
earlier of (a) the expiration of the six month period measured from the date of the
Participant’s Separation From Service, and (b) the date of the Participant’s death.
	 
	10.	 	Applicability: This Standard Terms and Conditions shall apply to Restricted Stock
Units as to which the Committee designates it as applying, and the Committee may designate it
as applying in whole or in part in its discretion to a Restricted Stock Units award.
	 
	11.	 	Plan Controls: In the event of any conflict between the Plan and the terms of a
Restricted Stock Units Agreement or the Standard Terms and Conditions, the Plan shall govern.

8exv10w7

 

Exhibit 10.7

EXECUTIVE EMPLOYMENT AGREEMENT

     This EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of the 15th day of
January, 2007 (the “Effective Date”) by and between HERCULES OFFSHORE, INC., a Delaware corporation
(the “Company”) and TERRY CARR (the “Executive”).

     WHEREAS, the Company, after consultation with the Nominating, Governance and Compensation
Committee of the Board (the “NGC Committee”) and the Board of Directors (the “Board”) has
determined that it is advisable and in the best interests of the Company and its stockholders to
secure the employment and dedication of the Executive, and to provide the Executive with
compensation and benefit arrangements which are competitive with those of other similarly situated
corporations;

     WHEREAS, the Company also believes it is imperative to diminish the inevitable distraction of
the Executive by virtue of the personal uncertainties and risks created by a pending or threatened
Change of Control (hereinafter defined) and to encourage the Executive’s full attention and
dedication to the Company currently and in the event of any threatened or pending Change of
Control;

     WHEREAS, the Company desires to employ the Executive, and the Executive is willing to accept
such employment, all upon the terms and conditions set forth herein;

     NOW, THEREFORE, in consideration of the premises, the terms and provisions set forth herein,
the mutual benefits to be gained by the performance thereof and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto agree as follows:

     1. Certain Definitions.

          (a) “Affiliate” shall have the meaning ascribed to such term under Rule 12(b)-2 under the
Securities Exchange Act of 1934 (the “Exchange Act”).

          (b) “Associate” shall mean, with reference to any Person, (i) any corporation, firm,
partnership, association, unincorporated organization or other entity (other than the Company or a
subsidiary of the Company) of which such Person is an officer or general partner (or officer or
general partner of a general partner) or is, directly or indirectly, the beneficial owner of 10% or
more of any class of equity securities, (ii) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee or in a similar
fiduciary capacity and (iii) any relative or spouse of such Person, or any relative of such spouse,
who has the same home as such Person.

          (c) The “Employment Period” shall mean the period commencing on the Effective Date and ending
on February 28, 2008, unless extended pursuant to this paragraph. If neither party shall provide
written notice of termination at least six months prior to the scheduled expiration of the
then-current term of this Agreement (each such date by which such notice must be

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provided, a “Renewal Date”), the Employment Period shall automatically be extended for two
additional years. Upon a Change of Control the Employment Period shall be automatically extended
to the third anniversary of the Change of Control.

          (d) The term “group” is used as it is defined for purposes of the Exchange Act.

          (e) “Person” means an individual, entity or group.

          (f) “Subsidiary” shall mean (i) in the case of a corporation, any corporation of which the
Company directly or indirectly owns shares representing 50% or more of the combined voting power of
the shares of all classes or series of capital stock of such corporation that have the right to
vote generally on matters submitted to a vote of the stockholders of such corporation and (ii) in
the case of a partnership or other business entity not organized as a corporation, any such
business entity of which the Company directly or indirectly owns 50% or more of the voting, capital
or profits interests (whether in the form of partnership interests, membership interests or
otherwise).

     2. Change of Control. For the purpose of this Agreement, a "Change of Control” shall mean (i)
the consummation of a reorganization, merger, consolidation or other transaction, in any case, with
respect to which Persons who were stockholders (or members) of the Company immediately prior to
such reorganization, merger or consolidation do not, immediately thereafter, own equity interests
representing at least 51% of the total combined voting power of the Company or the resulting
reorganized, merged or consolidated entity, as applicable, (ii) the sale, lease, transfer or other
disposition of all or substantially all of the assets of the Company and its Subsidiaries, taken as
a whole (other than to one or more Subsidiaries of the Company), or (iii) the occurrence of (A)
the consummation of a transaction or series of related transactions in which the Company issues, as
consideration for the acquisition (through a merger, reorganization, stock purchase, asset purchase
or otherwise) of the assets or capital stock of an unaffiliated third party, equity in the Company
representing more than 35% of the outstanding equity of the Company calculated as of the
consummation of such transaction or transactions, in conjunction with (B) a change in the
composition of the Board, as a result of which fewer than 50% of the incumbent directors are
directors who had been directors of the Company at the time of the approval by the Board of the
issuance of such equity in the Company.

     3. Employment Agreement. The Company hereby agrees to employ the Executive, and the Executive
hereby accepts employment with the Company in accordance with the terms and conditions of this
Agreement, for the Employment Period.

     4. Terms of Employment.

          (a) Position and Duties.

               (i) During the Employment Period, (A) the Executive’s position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities shall be (x) prior to a
Change of Control, at least commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 90-day period immediately preceding the
later of the Effective Date or the most recent Renewal Date and (y) upon and after a Change of
Control, the Executive’s position shall be at least commensurate in all respects (disregarding any
change or changes that are in the aggregate de minimis) with the most significant of those held,
exercised and assigned at any time during the 180-day period immediately preceding

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the Applicable Date and (B) the Executive’s services shall be performed at the location where
the Executive was employed immediately preceding the Applicable Date or any office which is the
headquarters of the Company and is less than 50 miles from such location. For purposes of this
Agreement, “Applicable Date” shall mean, at any time of determination, the latest to have occurred
of the Effective Date, the most recent Renewal Date, or any date on which a Change of Control has
occurred.

               (ii) During the Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees to devote his full attention and time during
normal business hours to the business and affairs of the Company. During the Employment Period it
shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or
charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at
educational institutions or (C) manage personal investments, in each such case, so long as such
activities do not significantly interfere with the performance of the Executive’s responsibilities
as an employee of the Company in accordance with this Agreement; provided, however, the Executive
may not serve on the board of a publicly traded for profit corporation or similar body of a
publicly traded for profit business organized in other than corporate form without the consent of
the NGC Committee. It is expressly understood and agreed that to the extent that any such
activities have been conducted by the Executive prior to the Applicable Date, the continued conduct
of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to
the Applicable Date shall not thereafter be deemed to interfere with the performance of the
Executive’s responsibilities to the Company.

          (b) Compensation.

               (i) Base Salary. During the Employment Period, the Executive shall receive an annual base
salary (“Annual Base Salary”) in the amount of $270,000, which shall be paid on a monthly basis.
During the Employment Period, the Annual Base Salary shall be reviewed at least once in any fiscal
year of the Company and may be increased at any time and from time to time as shall be
substantially consistent with increases in base salary generally awarded in the ordinary course of
business to other executives of the Company and its affiliated companies. As used in this
Agreement, the term “affiliated companies” shall include any company controlled by, controlling or
under common control with the Company.

               (ii) Annual Bonus. In addition to Annual Base Salary, the Executive shall be awarded for any
fiscal year ending during the Employment Period, a bonus of up to 100% of Annual Base Salary
(target of 50%) depending upon meeting goals agreed upon with the Board. During the Employment
Period, the annual target bonus as a percentage of Annual Base Salary may be increased, but not
decreased, from time to time by the Board.

               (iii) Restricted Shares in Hercules Offshore, Inc. The Executive shall be awarded 10,000
restricted shares of Hercules Offshore, Inc. stock which shall vest over a three (3) year period.
The Executive will also be eligible to receive other forms of incentive compensation in the future,
such as the restricted stock as determined by the Board.

               (iv) Hiring Bonus. On the Effective Date of this Agreement, the Executive shall receive a
hiring bonus in the amount of $100,000.

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               (v) Incentive, Savings and Retirement Plans. During the Employment Period, the Executive
shall be entitled to participate in all incentive, savings and retirement plans, practices,
policies and programs applicable generally to other executives of the Company and its affiliated
companies. Such plans, practices, policies and programs shall provide the Executive with incentive
opportunities (measured with respect to both regular and special incentive opportunities, to the
extent, if any, that such distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, equal to such plans, practices, policies and programs provided by the
Company and its affiliated companies for similarly situated senior executives of the Company and
its affiliated companies.

               (vi) Welfare Benefit Plans. During the Employment Period, the Executive and/or the
Executive’s dependents, as the case may be, shall be eligible for participation in and shall
receive all benefits under welfare benefit plans, practices, policies and programs provided by the
Company and its affiliated companies (including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to similarly situated senior
executives of the Company and its affiliated companies. Such plans, practices, policies and
programs shall provide the Executive with benefits which are equal, in the aggregate, to such
plans, practices, policies and programs provided by the Company and its affiliated companies for
similarly situated senior executives of the Company and its affiliate companies.

               (vii) Expenses. During the Employment Period, the Executive shall be entitled to receive
prompt reimbursement for all reasonable and documented expenses incurred by the Executive in
accordance with the policies, practices and procedures of the Company and its affiliated companies
in effect for similarly situated senior executives of the Company and its affiliated companies.
All reimbursable expenses shall be appropriately documented in reasonable detail by the Executive
upon submission of any request for reimbursement and in a format and manner consistent with the
Company’s expense reporting policy.

               (viii) Fringe Benefits. During the Employment Period, the Executive shall be entitled to
fringe benefits in accordance with the plans, practices, programs and policies of the Company and
its affiliated companies in effect for similarly situated senior executives of the Company and its
affiliated companies.

               (ix) Vacation. During the Employment Period, the Executive shall be entitled to four (4)
weeks paid vacation per year, or such greater amount as is afforded to similarly situated senior
executives of the Company or its affiliated companies.

               (x) Equity Awards. In addition to Annual Base Salary and annual bonus, the Executive may be
awarded an equity award at the discretion of the Company for any fiscal year ending during the
Employment Period.

     5. Termination of Employment.

          (a) Death or Disability. The Executive’s employment shall terminate automatically
upon the Executive’s death during the Employment Period. If the Company determines in good faith
that the Disability of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written

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notice in accordance with Section 15(c) of this Agreement of its intention to terminate the
Executive’s employment. In such event, the Executive’s employment with the Company shall terminate
effective on the 30th day after receipt of such notice by the Executive (the “Disability Effective
Date”), provided that, within the 30 days after such receipt, the Executive shall not have returned
to full-time performance of the Executive’s duties. For purposes of this Agreement, “Disability”
shall mean the absence of the Executive from the Executive’s duties with the Company on a full-time
basis for 120 consecutive calendar days, and the Executive (i) is unable to engage in any
substantial gainful activity on behalf of the Company by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months or (ii) is, by reason of any medically
determinable physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, receiving income replacement
benefits for a period of not less than 3 months under an accident and health plan covering
employees of the Company. All determinations to be made with respect to clauses (i) and (ii) above
shall be made by a physician selected by the Company or its insurers and acceptable to the
Executive or the Executive’s legal representative (such agreement as to acceptability not to be
withheld unreasonably).

          (b) Cause. The Company may terminate the Executive’s employment during the Employment
Period for Cause. For purposes of this Agreement, “Cause” shall mean (i) a material violation by
the Executive of the Executive’s obligations under Section 4(a) of this Agreement (other than as a
result of incapacity due to physical or mental illness) which is either willful and deliberate on
the Executive’s part or is committed in bad faith or without reasonable belief that such violation
is in the best interests of the Company (ii) the Executive’s gross negligence in performance, or
intentional non-performance (continuing for 10 days after receipt of written notice of need to cure
from the Company), of any of the Executive’s duties and responsibilities under this Agreement, or
reasonable instructions of the Board or the officer(s) of the Company to whom the Executive reports
within the scope of the Executive’s employment by the Company, (iii) the Executive’s dishonesty,
fraud or misconduct with respect to the business or affairs of the Company, (iv) the Executive’s
violation of the Company’s drug policy or anti-harassment policy (v) the Executive’s violation of
the Company’s ethics policy which is willful or deliberate on the Executive’s part or is committed
in bad faith or (vi) the final and non-appealable conviction by a court of competent jurisdiction
of the Executive of a felony involving moral turpitude or the entering of a guilty plea or a plea
of nolo contendere to such crime by the Executive.

          (c) Good Reason; Other Terminations. The Executive’s employment may be terminated by
the Executive (i) during the Employment Period for Good Reason, or (ii) during the Employment
Period other than for Good Reason.

For purposes of this Agreement, “Good Reason” shall mean:

               (i) the assignment to the Executive of any duties inconsistent with the Executive’s position
(including status, offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement, or any other action by the
Company which results in a diminution in such position, authority, duties or responsibilities
excluding for this purpose an insubstantial or inadvertent action which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;

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               (ii) any failure by the Company to comply with any of the provisions of Section 4(b) of this
Agreement, other than an insubstantial or inadvertent failure which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;

               (iii) the Company’s requiring the Executive to be based at any office or location other than
that described in Section 4(a)(i)(B) hereof;

               (iv) any purported termination by the Company of the Executive’s employment otherwise than as
expressly permitted by this Agreement; or

               (v) any failure by the Company to comply with and satisfy Section 14(c) of this Agreement.

               (vi) within a 24 month period following a Change of Control, any failure to allow Executive to
participate in bonus (in cash and/or property) and equity compensation programs at a level at least
equal to the participation levels of similarly situated senior executives of the Company and its
affiliated companies.

               Notwithstanding anything herein to the contrary, the interim assignment of Executive’s
position, authority, duties, or responsibilities to any Person while Executive is absent from his
duties during any of the 120 business days set forth under the definition of Disability in Section
5(a) shall not constitute a Good Reason for Executive to terminate his employment with the Company.

               An extension of the Employment Period pursuant to Section 1(c) will not, in itself, impair or
render invalid or defective a Notice of Termination given in connection with termination of
employment for Good Reason based on whole or in part on facts or circumstances occurring prior to
the extension.

          (d) Notice of Termination. Any termination by the Company for Cause, or by the
Executive for any reason (including without limitation Good Reason), shall be communicated by
Notice of Termination to the other party hereto given in accordance with Section 15(c) of this
Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which
(i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive’s employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than thirty days after the giving of such
notice). The failure by the Executive or the Company to set forth in the Notice of Termination any
fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any
right of the Executive or the Company hereunder or preclude the Executive or the Company from
asserting such fact or circumstance in enforcing the Executive’s or the Company’s right hereunder.

          (e) Date of Termination. “Date of Termination” means (i) if the Executive’s
employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of
receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii)
if the Executive’s employment is terminated by the Company other than for Cause, the Date of
Termination shall be the date on which the Company notifies the Executive of such termination,
(iii) if the Executive’s employment is terminated by reason of death or Disability, the Date of

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Termination shall be the date of death of the Executive or the Disability Effective Date, as
the case may be, (iv) if the Executive’s employment is terminated by the Executive other than for
Good Reason, the date of the receipt of the Notice of Termination or any later date specified
therein, and (v) if the Executive’s employment is terminated on account of the death of the
Executive or Executive’s Disability, the Date of Termination shall be the date of such death or the
Disability Effective Date, respectively.

     6. Obligations of the Company upon Termination and Upon Change of Control.

          (a) Prior to a Change of Control: Good Reason or Other than for Cause. If, during
the Employment Period, the Company shall terminate the Executive’s employment other than for Cause,
or the Executive shall terminate employment for Good Reason:

               (i) the Company shall pay to the Executive, in a lump-sum in cash within 30 days after the
Date of Termination (unless other payment terms are specified in this Section 6(a)(i)), the
aggregate of the following amounts:

                    A. the sum of (1) the Executive’s Annual Base Salary through the Date of Termination to the
extent not theretofore paid, (2) any compensation previously deferred by the Executive, to the
extent permitted by the plan under which such deferral was made (together with any accrued interest
or earnings thereon), and any accrued vacation pay, in each case to the extent not theretofore
paid (the sum of the amounts described in clauses (1) and (2) shall be hereinafter referred to as
the “Accrued Obligations”); and

                    B. the amount (such amount shall be hereinafter referred to as the “Severance Amount”) equal
to the sum of:

                         (1) one and one-half times the amount of the Executive’s Annual Base Salary, and

                         (2) one and one-half times the bonus (as a percentage of Annual Base Salary) described in
Section 4(b)(ii) paid or payable in respect of the most recently completed fiscal year of the
Company or, if no such bonus has been paid or is payable in respect of such year, any bonus
described in Section 4(b)(ii) paid or payable in respect of the next preceding fiscal year.

                              The Severance Amount shall be reduced by the present value (determined as provided in Section
280G(d)(4) of the Internal Revenue Code of 1986, as amended (the “Code”)) of any other amount of
severance relating to salary or bonus continuation to be received by the Executive upon termination
of employment of the Executive under any severance plan, severance policy or severance arrangement
of the Company. The amount payable under this Section 6(a)(i)B shall be paid in a lump sum in cash
on the first business day after the six month anniversary of the Date of Termination; and

                    C. a separate sum equal to the amount of any earned but unpaid bonus awarded to the Executive;

               (ii) for a period of the longer of 18 months from the Date of Termination or the remaining
term of the Employment Period, or such longer period as any plan, program,

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practice or policy may provide, the Company shall continue benefits to the Executive and/or
the Executive’s dependents at least equal to those which would have been provided to them in
accordance with the plans, programs, practices and policies described in Section 4(b)(iv) of this
Agreement if the Executive’s employment had not been terminated in accordance with the most
favorable plans, practices, programs or policies of the Company and its affiliated companies as in
effect and applicable generally to other executives and their dependents during the 90-day period
immediately preceding the Applicable Date, provided, however, that if the Executive becomes
reemployed with another employer and is eligible to receive medical or other welfare benefits under
another employer provided plan, the medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during such applicable period of eligibility; and
provided further, however, that with respect to health and medical benefits, to the extent such
coverage cannot be extended or provided, the Company will pay during the period described above the
applicable premium under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
associated with such benefits (such continuation of such benefits for the applicable period herein
set forth shall be hereinafter referred to as “Welfare Benefit Continuation”); and

               (iii) to the extent not theretofore paid or provided, the Company shall timely pay or provide
to the Executive and/or the Executive’s dependents any other amounts or benefits required to be
paid or provided or which the Executive and/or the Executive’s dependents is eligible to receive
pursuant to this Agreement and under any plan, program, policy or practice or contract or agreement
of the Company and its affiliated companies as in effect and applicable generally to other
executives and their dependents during the 90-day period immediately preceding the Applicable Date
(such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”).

          (b) Following a Change of Control: Good Reason or Other than for Cause. If, during
the Employment Period, the Company shall terminate the Executive’s employment other than for Cause
following a Change of Control, or the Executive shall terminate employment for Good Reason
following a Change of Control, then the Company shall pay or provide to the Executive all the
amounts and benefits set forth in Section 6(a) above; provided however, that:

               (i) instead of the Severance Amount calculated pursuant to Section 6(a)(i)(B) above, a
Severance Amount equal to the product of:

                    (1) two and

                    (2) the sum of

                         (x) the Executive’s Annual Base Salary,

                         (y) the highest bonus (as a percentage of Annual Base Salary) described in Section 4(b)(ii)
paid or payable in respect of any of the two most recently completed fiscal years of the Company.
The Severance Amount calculated under this Section shall be reduced (if applicable) and paid as set
forth in Section 6(a)(i)(b); and

               (ii) if the Date of Termination occurs within 24 months following a Change of Control, then
effective as of the Date of Termination, each and every stock option, restricted stock award,
restricted stock unit award and other equity-based award and performance award that is outstanding
as of the Date of Termination shall immediately vest and/or become

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exercisable and any contractual restrictions on sale or transfer of any such award (other than
any such restriction arising by operation of law) shall immediately terminate.

          (c) Death. If the Executive’s employment is terminated by reason of the Executive’s
death during the Employment Period, this Agreement shall terminate without further obligations to
the Executive’s legal representatives under this Agreement, other than for (i) payment of Accrued
Obligations (which shall be paid to the Executive’s estate or beneficiary, as applicable, in a
lump-sum in cash within 30 days of the Date of Termination) and the timely payment or provision of
the Welfare Benefit Continuation and Other Benefits and (ii) payment to the Executive’s estate or
beneficiary, as applicable, in a lump-sum in cash within 30 days of the Date of Termination of an
amount equal to the Severance Amount payable under Section 6(a)(i)(B).

          (d) Disability. If the Executive’s employment is terminated by reason of the
Executive’s Disability during the Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than for (i) payment of Accrued Obligations (which shall be
paid to the Executive in a lump-sum in cash within 30 days of the Date of Termination) and the
timely payment or provision of the Welfare Benefit Continuation and Other Benefits (excluding, in
each case, Disability Benefits (as defined below)), and (ii) payment to the Executive in a lump-sum
in cash within 30 days of the Date of Termination of an amount equal to the greater of (A) the
Severance Amount under Section 6(a)(i)(B) and (B) the present value (determined as provided in
Section 280G(d)(4) of the Code) of any cash amount to be received by the Executive as a disability
benefit pursuant to the terms of any long term disability plan, policy or arrangement of the
Company and its affiliated companies (“Disability Benefits"), but not including any proceeds of
disability insurance covering the Executive to the extent paid for on a contributory basis by the
Executive (which shall be paid in any event as an Other Benefit).

          (e) Cause; By the Executive Other than for Good Reason. If the Executive’s employment
shall be terminated for Cause during the Employment Period or if the Executive terminates
employment during the Employment Period, excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the Executive other than the obligation (i) to pay
to the Executive his Annual Base Salary through the Date of Termination plus the amount of any
compensation previously deferred by the Executive, in each case to the extent theretofore unpaid
and (ii) provide any benefits required by applicable law. Any deferred compensation payable
pursuant to the terms of this Section 6(e) shall be paid in accordance with the terms and
conditions, if any, of the plan or arrangement under which such deferred compensation is due and,
if the plan or arrangement does not specify a date for payment, then on the first business day
after the six month anniversary of the Date of Termination.

          (f) Change of Control Benefit. Upon the occurrence of a Change of Control, each and
every stock option, restricted stock award, restricted stock unit award and other equity-based
award and performance award that is outstanding as of the date of the occurrence of a Change of
Control shall immediately vest and/or become exercisable and any contractual restrictions on sale
or transfer of any such award (other than any such restriction arising by operation of law) shall
immediately terminate.

     7. Non-exclusivity of Rights. Except as provided in Section 6(a)(ii), 6(b)(iii), 6(c) and
6(d) of this Agreement, nothing in this Agreement shall prevent or limit the Executive’s continuing
or future participation in any plan, program, policy or practice provided by the Company or any of

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its affiliated companies and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under any contract or agreement
with the Company or any of its affiliated companies. Amounts which are vested benefits or which
the Executive is otherwise entitled to receive under any plan, policy, practice or program of or
any contract or agreement with the Company or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with such plan, policy, practice or program
or contract or agreement except as explicitly modified by this Agreement.

     8. Full Settlement; Resolution of Disputes.

          (a) Except where the Executive’s employment is terminated by the Company for Cause or is
terminated by the Executive other than for Good Reason, the Company’s obligation to make payments
provided for in this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which
the Company may have against the Executive or others. In no event shall the Executive be obligated
to seek other employment or take any other action by way of mitigation of the amounts payable to
the Executive under any of the provisions of this Agreement and, except as provided in Section
6(a)(ii), 6(b)(iii), 6(c) and 6(d) of this Agreement, such amounts shall not be reduced whether or
not the Executive obtains other employment. If there is any contest by the Company concerning the
Payments or benefits to be provided to the Executive or his dependents hereunder whether through
litigation, arbitration or mediation, or with respect to the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance thereof, and the
Executive or his spouse is the prevailing party, the Company agrees to pay promptly upon conclusion
of the contest all legal fees and expenses which the Executive may reasonably have incurred.

          (b) If there shall be any dispute between the Company and the Executive (i) in the event of
any termination of the Executive’s employment by the Company, whether such termination was for
Cause, or (ii) in the event of any termination of employment by the Executive, whether Good Reason
existed, then, unless and until there is a final, nonappealable judgment by a court of competent
jurisdiction declaring that such termination was for Cause or that Good Reason did not exist, the
Company shall pay all amounts, and provide all benefits, to the Executive and/or the Executive’s
family or other beneficiaries, as the case may be, that the Company would be required to pay or
provide pursuant to Section 6(a) or 6(b) hereof as though such termination were by the Company
without Cause or by the Executive with Good Reason; provided, however, that the Company shall not
be required to pay any disputed amounts pursuant to this paragraph except upon receipt of an
undertaking (which need not be secured) by or on behalf of the Executive to repay all such amounts
to which the Executive is ultimately adjudged by such court not to be entitled.

     9. Certain Additional Payments by the Company.

          (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or
otherwise (including, without limitation, payments or distributions made pursuant to any deferred
compensation or supplemental retirement plan), but determined without regard to any additional
payments required under this Section 9) (a “Payment”) would be subject to the excise tax imposed by
Section 4999 of the Code (or any successor provision thereto), by reason of being

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considered “contingent on a change in ownership or control” of the Company, within the meaning
of Section 280G of the Code (or any successor provision thereto), or any interest or penalties are
incurred by the Executive with respect to such excise tax (such tax, together with any such
interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the
Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount
such that after payment by the Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments, it being understood and agreed, anything in this Agreement to the contrary
notwithstanding, that in no event shall the Executive be entitled to any payment pursuant to this
Section 9 other than in respect of payments made pursuant to Section 6(b).

          (b) Subject to the provisions of Section 9(c), all determinations required to be made under
this Section 9, including whether and when any Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be
made by the Company’s then current independent public accountants (the “Accounting Firm”) which
shall provide detailed supporting calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the Change of Control, the
Executive shall appoint another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the Accounting Firm
hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by the Company to the
Executive within five days of the receipt of the Accounting Firm’s determination. The Accounting
Firm shall furnish the Executive with a written opinion that reporting the Excise Tax, or the
failure to report the Excise Tax, as applicable, on the Executive’s applicable federal income tax
return in accordance with the determination made by the Accounting Firm pursuant to this Section
9(b) should not result in the imposition of a negligence or similar penalty. Any determination by
the Accounting Firm shall be binding upon the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been
made by the Company should have been made (“Underpayment”), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its remedies pursuant to
Section 9(c) and the Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.

          (c) The Executive shall notify the Company in writing of any claims by the Internal Revenue
Service that, if successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no later than ten business days after
the Executive is informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The Executive shall not pay
such claim prior to the expiration of the 30-day period following the date on which it gives such
notice to the Company (or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the Executive in

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writing prior to the expiration of such period that it desires to contest such claim, the
Executive shall:

               (i) give the Company any information reasonably requested by the Company relating to such
claim,

               (ii) take such action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the Company and reasonably
acceptable to the Executive,

               (iii) cooperate with the Company in good faith in order effectively to contest such claim, and

               (iv) permit the Company to participate in any proceedings relating to such claim;

               provided, however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such contest and shall
indemnify and hold the 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 such representation
and payment of costs and expenses. Without limitation on the foregoing provisions of this Section
9(c), the Company shall control all proceedings taken in connection with such contest and, at its
sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect to any imputed income
with respect to such advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the
Company’s control of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

          (d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to
Section 9(c), the Executive becomes entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Company’s complying with the requirements of Section 9(c)) promptly
pay to the Company the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 9(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration of 30 days after
such determination, then such advance shall be forgiven and shall not be required to be repaid

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and the amount of such advance shall be offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.

     10. Confidential Information. The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or data relating to the
Company or any of its affiliated companies, and their respective businesses, which shall have been
obtained by the Executive during the Executive’s employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After termination of the
Executive’s employment with the Company, the Executive shall not, without the prior written consent
of the Company or as may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those designated by it.
In no event shall an asserted violation of the provisions of this Section 10 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under this Agreement.

     11. Non-Competition; No Solicitation.

          (a) The Executive recognizes that the Company’s willingness to enter into this Agreement is
based in material part on the Executive’s agreement to the provisions of this Section 11, and that
the Executive’s breach of the provisions of this Section could materially damage the Company. The
Company shall provide confidential and trade secret information to the Executive immediately upon
execution of this Agreement and thereafter, and the Executive agrees not to disclose or use such
information for any reason other than the Executive’s employment with Company without the express,
prior, written consent of Company. Therefore, in consideration of the Company’s promise to provide
the Executive with its confidential information and trade secrets, the Executive agrees that he
will not, during the period of the Executive’s employment by or with the Company, and for a period
of one year immediately following the termination of the Executive’s employment with the Company
under this Agreement for any reason other than termination by the Executive for Good Reason (the
“Non-Compete Period”), for any reason whatsoever, directly or indirectly, for himself or on behalf
of or in conjunction with any other person, persons, company, partnership, corporation, limited
liability company or business of whatever nature accept employment with, serve as an officer,
director, member, manager, agent or joint venturer of, be an owner, controlling stockholder or
partner of, act as a consultant to or contractor for, or otherwise actively participate or assist
any person, or compete against the Company or any of its subsidiaries or affiliates, directly or
indirectly, with or without compensation, in the offshore drilling or liftboat businesses (or any
other business in which the Company or any of its subsidiaries or affiliates is then engaged) in
those states of the United States (including the state or federal waters offshore such states), or
in those countries in the world (and the territorial waters thereof), where the business of the
Company is engaged.

          (b) The Executive agrees that he shall not during the Non-Compete Period, for any reason
whatsoever, directly or indirectly, for himself or on behalf of or in conjunction with any other
person, persons, company, partnership, corporation, limited liability company or business of
whatever nature induce or encourage any employee of the Company to terminate employment with the
Company or hire or offer employment to, or procure the making of an offer of employment to, any
employee of the Company or any of its subsidiaries or affiliates who was so employed at any

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time during the 12 months prior to the date of termination of the Executives’ employment with
the Company.

          (c) The Executive agrees that he shall not during the Non-Compete Period, for any reason
whatsoever, directly or indirectly, (i) team or join with other employees of the Company who were
employees of the Company or any of its subsidiaries or affiliates during the 12 months prior to the
date of termination of the Executive’s employment with the Company in any business like or related
to the offshore drilling business or liftboat business (or any other business in which the Company
or any of its subsidiaries or affiliates is then engaged) or (ii) cause, induce or encourage any
customer of the Company or any of its subsidiaries or affiliates to terminate or change adversely
any business relationship with the Company or any of its subsidiaries or affiliates.

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

          (e) Executive agrees that the limitations set forth in this Section 11 on his rights to
compete with the Company and its subsidiaries and affiliates are reasonable and necessary in order
to protect the goodwill, confidential information and trade secrets, and other legitimate interests
of the Company, its subsidiaries and affiliates during the Non-Compete Period. Executive
specifically agrees that, in view of the nature of the current and proposed business of the
Company, the limitations as to period of time and geographic area, as well as all other
restrictions on his activities specified in Section 11, are reasonable and necessary for the
protection of the Company and its subsidiaries and affiliates.

          (f) The covenants in this Section 11 are severable and separate, and the unenforceability of
any specific covenant shall not affect the provisions of any other covenant. Moreover, in the
event any court of competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth in this Section 11 are unreasonable and therefore unenforceable, then it is
the intention of the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and this Agreement shall thereby be reformed.

          (g) The Executive hereby agrees that the period during which the agreements and covenants of
the Executive made in this Section 11 shall be effective shall be computed by excluding from such
computation any time during which the Executive is in violation of any provision of this Section
11.

     12. Return of Company Property. All records, designs, patents, business plans, financial
statements, manuals, memoranda, lists and other property delivered to or compiled by the Executive
by or on behalf of the Company, or any of its affiliated companies or the representatives, vendors
or customers thereof that pertain to the business of the Company or any of its affiliated companies
shall be and remain the property of the Company or any such affiliated company, as the case may be,
and be subject at all times to the discretion and control thereof. Likewise, all correspondence,
reports, records, charts, advertising materials and other similar data pertaining to

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the business, activities or future plans of the Company or its affiliated companies that are
collected or held by the Executive shall be delivered promptly to the Company or its affiliated
companies, as the case may be, without request by such party, upon termination of the Executive’s
employment, without regard to the cause or reasons for such termination.

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

     14. Successors.

          (a) This Agreement is personal to the Executive and without the prior written consent of the
Company shall not be assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s
legal representatives.

          (b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.

          (c) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession had taken place. As
used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor
to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise. If a Business Combination is consummated that would have resulted
in a Change of Control but for the satisfaction of the conditions specified in clauses (i), (ii)
and (iii) of Section 2(c) and if the parent corporation resulting from the Business Combination is
other than the Company (hereinafter a “New Parent”), then, as a condition to consummation of this
Business Combination, the New Parent shall be considered a successor for purposes of this Section
14.

     15. Miscellaneous.

          (a) Unfunded Obligation. This Agreement shall be an unfunded obligation of the
Company.

          (b) Governing Law; Headings; Amendments. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall
have no force or effect. This Agreement may not be amended or modified otherwise than by (i) a

15 of 17

 

written agreement executed by the parties hereto or their respective successors and legal
representatives, or (ii) as otherwise specified in Section 15(h) below.

          (c) Notices. All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:

	 	 	 
	If to the Executive:

	 	Terry Carr
	 

	 	10 W. Shady Lane
	 

	 	Houston, TX 77063
	 
	 	 
	If to the Company:

	 	Hercules Offshore, Inc.
	 

	 	Attn: Chief Executive Officer and President
	 

	 	11 Greenway Plaza, Suite 2950
	 

	 	Houston, Texas 77046

or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee.

          (d) Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

          (e) Withholding. The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld pursuant to any
applicable law or regulation.

          (f) Waivers. The Executive’s or the Company’s failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or the failure to
assert any right the Executive or the Company may have hereunder, including, without limitation,
the right of the Executive to terminate employment for Good Reason pursuant to Section 5(c)(i)-(vi)
of this Agreement, shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.

          (g) Entire Agreement. This Agreement embodies the entire agreement and understanding
of the parties hereto, and supersedes all prior agreements or understandings (whether written or
oral) with respect to the subject matter hereof.

          (h) 409A Compliance. Notwithstanding anything in this Agreement to the contrary, if
the Board determines, upon advice of counsel, that any provision of this Agreement does not, in
whole or in part, satisfy the requirements of Section 409A of the Code, the Board, in its sole
discretion, may unilaterally modify this Agreement in such manner as it deems appropriate to comply
with such Code section and any regulations or guidance issued thereunder; provided, that in making
any such modifications, the Board shall seek to minimize any adverse economic consequences to the
Executive.

          (i) No Third Party Beneficiaries. Except as otherwise provided herein, nothing
contained herein shall confer upon any Person, or any representative or beneficiary thereof, any
rights or remedies under this Agreement.

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     IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the
authorization from its Board, the Company has caused these presents to be executed in its name on
its behalf, all as of the day and year first above written.

	 	 	 	 	 
	 	EXECUTIVE

 	 
	 	/s/ Terrell L. Carr
 	 
	 	TERRELL L. CARR 	 
	 	 	 
	 
	 	HERCULES OFFSHORE, INC.

 	 
	 	By:  	/s/ John T. Rynd
 	 
	 	 	Name:  	John T. Rynd 	 
	 	 	Title:  	Senior Vice President 	 
	 

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