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EXHIBIT 10.1

EMPLOYMENT AGREEMENT

     This Employment Agreement (“Agreement”) between Stewart Enterprises, Inc., a Louisiana
corporation (the “Company”), and Thomas M. Kitchen (the “Employee”) is effective as of May 14, 2007
(the “Agreement Date”).

W I T N E S S E T H:

     WHEREAS, Employee is currently employed by the Company;

     WHEREAS, the Company desires to retain the services of Employee pursuant to the terms of this
Agreement, subject to Employee’s acceptance of the conditions stated herein;

     WHEREAS, Employee wishes to be employed by the Company in consideration of the compensation
and benefits set forth herein and pursuant to the terms hereof;

     WHEREAS, during the course of his employment with the Company, Employee will have received
extensive and unique knowledge, training and education in, and access to resources involving, the
Death Care Business (as defined below) at a substantial cost to the Company, which Employee
acknowledges will substantially enhance Employee’s skills and knowledge in such business;

     WHEREAS, during the course of his employment with the Company, Employee will have received
access to and information about the Company’s customers, suppliers, joint venture partners and
others having important commercial relationships with the Company, the preservation of which the
Employee acknowledges are vital to the continuing commercial success of the Company;

     WHEREAS, during the course of his employment with the Company, Employee will continue to have
access to valuable oral and written information, knowledge and data relating to the business and
operations of the Company and its subsidiaries that is non-public, confidential or proprietary in
nature and is particularly useful in the Death Care Business; and

     WHEREAS, in view of the training provided by the Company to Employee, its cost to the Company,
the importance of maintaining continuing favorable relationships with customers, suppliers,
partners and others, and the need for the Company to be protected against disclosures by Employee
of the Company’s and its subsidiaries’ trade secrets and other non-public, confidential or
proprietary information, the Company and Employee desire, among other things, to prohibit Employee
from disclosing or utilizing, outside the scope and term of his employment with the Company, any
non-public, confidential or proprietary information, knowledge and data relating to the business
and operations of the Company or its subsidiaries received by Employee during the course of his
employment, and to restrict the ability of Employee to compete with the Company or its subsidiaries
for a limited period of time;

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     NOW, THEREFORE, for and in consideration of the continued employment of Employee by the
Company and the payment of salary, benefits and other compensation to Employee by the Company, the
parties hereto agree as follows:

ARTICLE 1

EMPLOYMENT CAPACITY AND TERM

     Section 1.1 Capacity and Duties of Employee. The Employee is employed by the Company to
render services on behalf of the Company in the capacity set forth in Appendix A hereto, as such
Appendix may be amended or supplemented from time to time (as so amended or supplemented, “Appendix
A”). The Employee shall perform such duties, consistent with the Employee’s job title, as are
assigned to the title or titles held by the Employee as set forth from time to time in the
Company’s Bylaws and such other duties as may be prescribed from time to time by the Company’s
Board of Directors (the “Board”) or the executive of the Company to whom the Employee directly
reports.

     Section 1.2 Employment Term. The term of Employee’s employment under this Agreement (the
“Employment Term”) shall commence on the Agreement Date and shall continue through October 31,
2010, subject to extension as provided in Section 6.3 in the event of a Change of Control (as
defined in Section 6.2), and subject to any earlier termination of Employee’s status as an employee
pursuant to this Agreement. The Amended and Restated Employment Agreement between the Company and
the Employee dated November 8, 2006 and the Amended and Restated Change of Control Agreement
between the Company and the Employee dated November 8, 2006 shall automatically terminate upon the
effectiveness of this Agreement.

     Section 1.3 Devotion to Responsibilities. During the Employment Term, the Employee shall devote
all of his business time to the business of the Company, shall use his best efforts to perform
faithfully and efficiently his duties under this Agreement, and shall not engage in or be employed
by any other business; provided, however, that nothing herein shall prohibit the Employee from (a)
serving as a member of the board of directors, board of trustees or the like of any for-profit or
non-profit entity that does not compete with the Company, or performing services of any type for
any civic or community entity, whether or not the Employee receives compensation therefor, (b)
investing his assets in such form or manner as shall require no more than nominal services on the
part of the Employee in the operation of the business of the entity in which such investment is
made, or (c) serving in various capacities with, and attending meetings of, industry or trade
groups and associations, as long as the Employee’s activities permitted by clauses (a), (b) and (c)
above do not materially and unreasonably interfere with the ability of the Employee to perform the
services and discharge the responsibilities required of him under this Agreement. Notwithstanding
clause (b) above, during the Employment Term, the Employee may not beneficially own more than 2% of
the equity interests of a business organization required to file periodic reports with the
Securities and Exchange Commission under the Securities Exchange Act of 1934 (the “Exchange Act”)
and may not beneficially own more than 2% of the equity interests of a business organization that
competes with the Company. For purposes of this paragraph, “beneficially own” has the meaning
ascribed to that term in Rule 13d-3 under the Securities Exchange Act of 1934, as amended from time
to time (the “Exchange Act”).

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ARTICLE 2

COMPENSATION AND BENEFITS

     During the Employment Term, the Company shall provide the Employee with the compensation and
benefits described below:

     Section 2.1 Salary and Bonus. The Company shall pay the Employee a salary (“Base Salary”) at
an annual rate per fiscal year of the Company (“Fiscal Year”) as set forth in Appendix A, which
shall be payable to the Employee at such intervals as other salaried employees of the Company are
paid.

          (a) The Employee shall be eligible to receive an annual incentive bonus (the “Bonus”), up to
the maximum set forth in Appendix A. The Bonus will be awarded based upon factors to be
established or approved annually by the Compensation Committee in its discretion and set forth in
Appendix A or a supplement thereto. Any Bonus shall be paid no later than March 15 of the
following calendar year. In addition, for Fiscal Year 2007, any Bonus awarded shall be paid fifty
percent (50%) in cash and fifty percent (50%) in Class A common stock of the Company.

          (b) Any change in the Employee’s title, Base Salary or Bonus eligibility during the Employment
Term shall be set forth in one or more amendments or supplements to Appendix A to this Agreement,
each of which shall be signed by the Employee and a member of the Compensation Committee of the
Board of Directors of the Company.

     Section 2.2 Benefits. The Employee shall be eligible to participate in all benefit programs
provided to other employees of the Company from time to time in accordance with the eligibility and
other terms of such programs.

     Section 2.3 Expenses. The Employee shall be reimbursed for reasonable out-of-pocket expenses
incurred from time to time on behalf of the Company or any subsidiary in the performance of his
duties under this Agreement, upon the presentation of such supporting invoices, documents and forms
as the Company reasonably requests.

     Section 2.4 Supplemental Executive Retirement Agreement. In lieu of participating in the
Company’s Supplemental Executive Retirement Plan (the “SERP”), the Employee shall be entitled to
earn a supplemental retirement benefit on the terms and subject to the conditions set forth in the
Supplemental Executive Retirement Agreement between the Company and the Employee dated November 8,
2006 (the “SERP Agreement”). At such time as the Company has amended and restated the SERP to
incorporate all benefits of the Employee described in the SERP Agreement, the SERP Agreement shall
automatically terminate and the Employee shall simultaneously become a participant in the SERP.

     Section 2.5 Supplemental 401(k) Plan. Employee shall be entitled to participate in the
Company’s supplemental 401(k) plan (the Stewart Enterprises, Inc. Supplemental Retirement and
Deferred Compensation Plan) on the same basis as other executive officers.

     Section 2.6 Car Allowance. During the term of Executive’s employment hereunder, Executive
shall receive a car allowance of $12,000 per year.

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ARTICLE 3

LONG-TERM INCENTIVES

     Effective upon the Agreement Date or as otherwise provided in the unanimous consent of the
Compensation Committee of the Board of Directors of the Company approving such grants, the Employee
shall receive the following incentives under the Company’s stock incentive plans:

     Section 3.1 Restricted Stock.

          (a) Restricted Stock — Time Vest. An aggregate of 50,000 shares of the Class A common stock
of the Company as a time vested restricted stock award. Thirty-four percent (34%) of such shares
shall vest on the first anniversary of the Agreement Date. Thirty-three percent (33%) of such
shares shall vest on each of the second and third anniversaries of the Agreement Date.

          (b) Restricted
Stock — Performance Based (ROE). An aggregate of 60,000 shares of the Class A
common stock of the Company as a performance-based restricted stock award. 20,000 of such shares
shall vest on October 31, 2008 if the Company’s return on equity (“ROE”) for fiscal 2008 is greater
or equal to ten percent (10%). 20,000 of such shares shall vest on October 31, 2009 if ROE for
fiscal 2009 is greater or equal to eleven percent (11%). 20,000 of such shares shall vest on
October 31, 2010 if ROE for fiscal 2010 is greater or equal to twelve percent (12%). To the extent
not already vested, 60,000 of such shares shall vest on October 31, 2010 if the ROE for fiscal
years 2008, 2009 and 2010 is greater than or equal to eleven percent (11%) on a compounded annual
basis. The calculation of ROE shall be made by the Compensation Committee and shall include such
positive or negative adjustments as the Compensation Committee shall in good faith deem appropriate
in order to reflect unusual items, non-recurring items or items outside of management’s
responsibility or control, consistent with the types of adjustments made by the Committee in the
past in determining whether performance criteria were met by Company executives under the annual
bonus plan. The calculation of ROE by the Committee shall be final and binding absent a showing by
the Employee of manifest error or bad faith. Attachment 2 to Appendix A provides an example of the
ROE calculation.

          (c) Restricted
Stock — Performance Based (Stock Price). An aggregate of 60,000 shares of the
Class A common stock of the Company as a performance-based restricted stock award. 20,000 of such
shares shall vest on October 31, 2008 if the closing price per share of the Company’s Class A
common stock on its principal trading market (the “Closing Price”) equals or exceeds $8 per share
for twenty consecutive trading days during fiscal 2008. 20,000 of such shares shall vest on
October 31, 2009 if the Closing Price of the Company’s Class A common stock equals or exceeds $9
per share for twenty consecutive trading days during fiscal 2009. 20,000 of such shares shall vest
on October 31, 2010 if the Closing Price of the Company’s Class A common stock equals or exceeds
$10 per share for twenty consecutive trading days during fiscal 2010. To the extent not already
vested, all 60,000 of such shares shall vest on October 31, 2010 if the Closing Price of the
Company’s Class A common stock equals or exceeds $10 per share for twenty consecutive trading days
at any time after the Agreement Date and on or before October 31, 2010.

          (d) The restrictions on the restricted stock granted pursuant to this Section 3.1 shall lapse
upon a Change of Control, as defined in Section 6.2.

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          (e) Unvested restricted stock shall be forfeited upon the termination of the Employee’s
employment for any reason; provided, however, that in the event that the Employee’s
employment is terminated by the Company without Cause (as defined in Section 4.3) or by the
Employee for Good Reason (as defined in Section 4.4), then unvested restricted stock that otherwise
would have vested on the next anniversary date of the Agreement Date shall fully vest on the date
of such termination.

     Section 3.2 Stock Options

          (a) Effective upon the Agreement Date, the Company shall grant to the Employee options under
the Company’s stock incentive plans to purchase an aggregate of 180,000 shares of the Class A
common stock of the Company at an exercise price per share equal to the closing price per share of
the Class A common stock on the Nasdaq Stock Market on the Agreement Date, as such number of shares
and price per share may be adjusted from time to time, as provided in the plans, subject to the
following vesting conditions:

               (i) Options to purchase 60,000 of such shares shall vest on October 31, 2008 if the Closing
Price of the Company’s Class A common stock equals or exceeds $8 per share for twenty consecutive
trading days during fiscal 2008.

               (ii) Options to purchase 60,000 of such shares shall vest on October 31, 2009 if the Closing
Price of the Company’s Class A common stock equals or exceeds $9 per share for twenty consecutive
trading days during fiscal 2009.

               (iii) Options to purchase 60,000 of such shares shall vest on October 31, 2010 if the Closing
Price of the Company’s Class A common stock equals or exceeds $10 per share for twenty consecutive
trading days during fiscal 2010.

               (iv) To the extent not already vested, options to purchase all 180,000 of such shares shall
vest on October 31, 2010 if the Closing Price of the Company’s Class A common stock equals or
exceeds $10 per share for twenty consecutive trading days at any time after the Agreement Date and
on or before October 31, 2010.

          (b) The options will expire seven years after the Agreement Date.

          (c) The options shall vest upon a Change in Control.

          (d) Vested options shall be exercisable for thirty days after Employee’s Date of Termination.
Unvested options shall be forfeited upon termination of Employee’s employment for any reason.

ARTICLE 4

TERMINATION OF EMPLOYMENT

     Section 4.1 Death. The Employee’s status as an employee shall terminate immediately and
automatically upon the Employee’s death during the Employment Term.

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     Section 4.2 Disability. The Employee’s status as an employee may be terminated for
“Disability” as follows:

          (a) The Employee’s status as an employee shall terminate if the Employee has a disability that
would entitle him to receive benefits under the Company’s long-term disability insurance policy in
effect at the time either because he is Totally Disabled or Partially Disabled, as such terms are
defined in such policy. Any such termination shall become effective on the first day on which the
Employee is eligible to receive payments under such policy (or on the first day that he would be so
eligible, if he had applied timely for such payments).

          (b) If the Company has no long-term disability plan in effect, if (i) the Employee is rendered
incapable because of physical or mental illness of satisfactorily discharging his duties and
responsibilities under this Agreement for a period of 90 consecutive days and (ii) a duly qualified
physician chosen by the Company and reasonably acceptable to the Employee or his legal
representatives so certifies in writing, the Board shall have the power to determine that the
Employee has become disabled. If the Board makes such a determination, the Company shall have the
continuing right and option, during the period that such disability continues, and by notice given
in the manner provided in this Agreement, to terminate the status of Employee as an employee. Any
such termination shall become effective 30 days after such notice of termination is given, unless
within such 30-day period, the Employee becomes capable of rendering services of the character
contemplated hereby (and a physician chosen by the Company and reasonably acceptable to the
Employee or his legal representatives so certifies in writing) and the Employee in fact resumes
such services.

          (c) The “Disability Effective Date” shall mean the date on which termination of employment
becomes effective due to Disability.

     Section 4.3 Cause. The Company may terminate the Employee’s status as an employee for Cause.
As used herein, “Cause” shall mean the Employee’s: (a) breach of this Agreement; (b) intentional
failure to perform his prescribed duties; (c) unauthorized acts or omissions that could reasonably
be expected to cause material financial harm to the Company or materially disrupt Company
operations; (d) commission of a felony; (e) commission of an act of dishonesty (even if not a
crime) resulting in the enrichment of the Employee at the expense of the Company; (f) knowing
falsification or knowing attempted falsification of financial records of the Company in violation
of SEC Rule 13b2-1; or (g) willful failure to follow established Company policies or procedures;
provided, however, that no such termination may take place in the case of (a) through (c) or (g)
above unless the Company has provided written notice to the Employee of such conduct and the
Employee has failed to remedy such conduct within 10 days following receipt of such notice.

     Section 4.4 Good Reason. The Employee may terminate his status as an employee for Good
Reason. As used herein, the term “Good Reason” shall mean:

          (a) The occurrence of any of the following during the Employment Term:

               (i) the assignment to the Employee of any duties or responsibilities that are inconsistent
with the Employee’s status, title and position as set forth in Appendix A;

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provided, that following a Change of Control, if the Company is controlled by another company
(directly or indirectly), Employee shall be deemed to have been assigned duties and
responsibilities inconsistent with his status, title and position as set forth in Appendix A if he
does not hold an equivalent position in the ultimate parent company.

               (ii) any removal of the Employee from, or any failure to reappoint or reelect the Employee to,
the position set forth in Appendix A (other than in connection with the expiration of the
Employment Term), except in connection with a termination of Employee’s status as an employee as
permitted by this Agreement.

               (iii) the Company’s requiring the Employee to be based anywhere other than in the metropolitan
area set forth in Appendix A, except for required travel in the ordinary course of the Company’s
business;

          (b) any breach of this Agreement by the Company that continues for a period of 10 days after
written notice thereof is given by the Employee to the Company;

          (c) the failure by the Company to obtain the assumption of its obligations under this
Agreement by any successor or assign as contemplated in this Agreement; or

          (d) any purported termination by the Company of the Employee’s status as an employee for Cause
that is not effected pursuant to a Notice of Termination satisfying the requirements of this
Agreement.

     Section 4.5 Voluntary Termination by the Company. The Company may terminate the Employee’s
status as employee for other than death, Disability or Cause.

     Section 4.6 Voluntary Termination by the Employee. The Employee may voluntarily terminate the
Employee’s status as employee for other than Good Reason.

     Section 4.7 Notice of Termination. Any termination by the Company or by the Employee, shall
be communicated by Notice of Termination to the other party hereto given in accordance with Article
9 Section 9.2 of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a
written notice that (a) indicates the specific termination provision in this Agreement relied upon
(b) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Employee’s employment under the provisions so indicated
and (c) 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 30 days after the giving
of such notice). The failure by the Employee or the Company to set forth in the Notice of
Termination any fact or circumstance that contributes to a showing of Good Reason, Disability or
Cause shall not negate the effect of the notice nor waive any right of the Employee or the Company,
respectively, hereunder or preclude the Employee or the Company, respectively, from asserting such
fact or circumstance in enforcing the Employee’s or the Company’s rights hereunder.

     Section 4.8 Date of Termination. “Date of Termination” means (a) if Employee’s employment is
terminated by reason of his death or Disability, the Date of Termination shall be the date of death
of Employee or the Disability Effective Date, as the case may be, (b) if

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Employee’s employment is terminated by the Company for Cause, or by the Employee for Good
Reason, the date of delivery of the Notice of Termination or any later date specified therein
(which date shall not be more than 30 days after the giving of such notice) as the case may be, (c)
if the Employee’s employment is terminated by the Company for reasons other than death, Disability
or Cause, the Date of Termination shall be the date on which the Company notifies the Employee of
such termination or any later date specified therein, and (d) if the Employee’s employment is
terminated voluntarily by the Employee for reasons other than Good Reason, the Date of Termination
shall be the date on which the Employee notifies the Company of such termination or any later date
specified therein (which date shall not be later than 30 days after the giving of such notice) as
the case may be.

ARTICLE 5

OBLIGATIONS UPON TERMINATION

     Section 5.1 Death. If the Employee’s status as an employee is terminated by reason of the
Employee’s death, this Agreement shall terminate without further obligation to the Employee’s legal
representatives under this Agreement, other than the obligation to pay accrued salary through the
Date of Termination and to make any payments due pursuant to employee benefit plans maintained by
the Company or its subsidiaries.

     Section 5.2 Disability. If Employee’s status as an employee is terminated by reason of
Employee’s Disability, this Agreement shall terminate without further obligation to the Employee,
other than the obligation to pay accrued salary through the Date of Termination and to make any
payments due pursuant to employee benefit plans maintained by the Company or its subsidiaries.

     Section 5.3 Termination by the Company for Reasons other than Death, Disability or Cause;
Termination by the Employee for Good Reason. If the Company terminates the Employee’s status as an
employee for reasons other than death, Disability or Cause, or the Employee terminates his
employment for Good Reason, then, except as provided in Section 6.4, the Company shall pay to the
Employee an amount equal to a single year’s Base Salary in effect at the Date of Termination,
payable over a two-year period as follows: beginning on the first regular payroll date that is at
least six months after the Date of Termination, the Employee shall be paid one-fourth of a single
year’s Base Salary, and the remaining three-fourths shall be paid in equal installments on the
Company’s regular bi-weekly payroll dates over the following 18 months.

     Section 5.4 Cause. If the Employee’s status as an employee is terminated by the Company for
Cause, this Agreement shall terminate without further obligation to the Employee other than for
accrued salary through the Date of Termination, obligations imposed by law and obligations imposed
pursuant to any employee benefit plan maintained by the Company or its subsidiaries.

     Section 5.5 Resignation from Board of Directors. If Employee is a director of the Company and
his employment is terminated for any reason other than death, the Employee shall, if requested by
the Company, immediately resign as a director of the Company. If such

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resignation is not received when so requested, the Employee shall forfeit any right to receive
any payments pursuant to this Agreement.

     Section 5.6 No Acceleration of Payments. No acceleration of payments and benefits provided
for herein shall be permitted, except that the Company may accelerate payment, if permitted under
the regulations under Section 409A of the Code, as necessary to allow the Employee to pay FICA
taxes on amounts payable hereunder and additional taxes resulting from the payment of such FICA
amount, or as necessary to pay taxes and penalties arising as a result of the payments provided for
in this Agreement failing to meet the requirements of Section 409A of the Code.

ARTICLE 6

CHANGE OF CONTROL

     Section 6.1 In the event a Change of Control occurs during the Employment Term, then the
provisions of this Article 6 shall be applicable.

     Section 6.2 “Change of Control” means:

          (a) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of more than 30% of the outstanding shares of the Company’s
Class A Common Stock, no par value per share (the “Common Stock”); provided, however, that for
purposes of this subsection (a), the following acquisitions shall not constitute a Change of
Control:

               (i) any acquisition of Common Stock directly from the Company,

               (ii) any acquisition of Common Stock by the Company,

               (iii) any acquisition of Common Stock by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the Company, or

               (iv) any acquisition of Common Stock by any corporation pursuant to a transaction that
complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 6.2; or

          (b) individuals who, as of the date of this Agreement constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the date of this Agreement whose election, or
nomination for election by the Company’s shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be considered a member of the
Incumbent Board, unless such individual’s 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
Incumbent Board; or

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          (c) consummation of a reorganization, merger or consolidation, or sale or other disposition of
all or substantially all of the assets of the Company (a “Business Combination”), in each case,
unless, following such Business Combination,

               (i) all or substantially all of the individuals and entities who were the beneficial owners of
the Company’s outstanding common stock and the Company’s voting securities entitled to vote
generally in the election of directors immediately prior to such Business Combination have direct
or indirect beneficial ownership, respectively, of 50% or more of the then outstanding shares of
common stock, and 50% or more of the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, of the corporation resulting
from such Business Combination (which, for purposes of this paragraph (i) and paragraphs (ii) and
(iii), shall include a corporation which as a result of such transaction controls the Company or
all or substantially all of the Company’s assets either directly or through one or more
subsidiaries), and

               (ii) except to the extent that such ownership existed prior to the Business Combination, no
person (excluding any corporation resulting from such Business Combination or any employee benefit
plan or related trust of the Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of the then outstanding shares of common
stock of the corporation resulting from such Business Combination or 20% or more of the combined
voting power of the then outstanding voting securities of such corporation, and

               (iii) at least 50% of the members of the board of directors of the corporation resulting from
such Business Combination were members of the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board, providing for such Business Combination; or

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

     Section 6.3 Upon a Change of Control, the Employment Term shall automatically continue
following such Change of Control for a period equal to the then remaining Employment Term or two
years, whichever period is longer, subject to any earlier termination of Employee’s status as an
employee pursuant to this Agreement.

     Section 6.4 If, on or within two years following a Change of Control, the Company terminates
Employee’s employment for reasons other than death, Disability or Cause or Employee terminates his
employment for Good Reason, then, instead of the payments provided in Section 5.3, Employee shall
receive from Company the equivalent of two times Employee’s Base Salary in effect at the Date of
Termination paid on the first regular payroll date that is at least six months after the Date of
Termination.

     Section 6.5 All options granted pursuant to this Agreement shall vest upon a Change of
Control.

     Section 6.6 All restrictions on shares of restricted stock granted pursuant to this Agreement
shall lapse upon a Change of Control.

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ARTICLE 7

NONDISCLOSURE, NONCOMPETITION AND PROPRIETARY RIGHTS

     Section 7.1 Certain Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:

          (a) “Confidential Information” means any information, knowledge or data of any nature and in
any form (including information that is electronically transmitted or stored on any form of
magnetic or electronic storage media) relating to the past, current or prospective business or
operations of the Company and its subsidiaries, that at the time or times concerned is not
generally known to persons engaged in businesses similar to those conducted or contemplated by the
Company and its subsidiaries (other than information known by such persons through a violation of
an obligation of confidentiality to the Company), whether produced by the Company and its
subsidiaries or any of their consultants, agents or independent contractors or by Employee, and
whether or not marked confidential, including without limitation information relating to the
Company’s or its subsidiaries’ products and services, business plans, business acquisitions, joint
ventures, processes, product or service research and development ideas, methods or techniques,
training methods and materials, and other operational methods or techniques, quality assurance
procedures or standards, operating procedures, files, plans, specifications, proposals, drawings,
charts, graphs, support data, trade secrets, supplier lists, supplier information, purchasing
methods or practices, distribution and selling activities, consultants’ reports, marketing and
engineering or other technical studies, maintenance records, employment or personnel data,
marketing data, strategies or techniques, financial reports, budgets, projections, cost analyses,
price lists, formulae and analyses, employee lists, customer records, customer lists, customer
source lists, proprietary computer software, and internal notes and memoranda relating to any of
the foregoing.

          (b) “Death Care Business” means (i) the owning and operating of funeral homes and cemeteries,
including combined funeral home and cemetery facilities, (ii) the offering of services and products
to meet families’ funeral needs, including prearrangement, family consultation, the sale of caskets
and related funeral and cemetery products and merchandise (whether at physical locations or by
means of the Internet), the removal, preparation and transportation of remains, cremation, the use
of funeral home facilities for visitation and worship, and related transportation services, (iii)
the marketing and sale of funeral services and cemetery property or merchandise on an at-need or
prearranged basis, (iv) providing, managing and administering financing arrangements (including
trust funds, escrow accounts, insurance and installment sales contracts) for prearranged funeral
plans and cemetery property and merchandise, (v) providing interment services, the sale (on an
at-need or prearranged basis) of cemetery property including lots, lawn crypts, family and
community mausoleums and related cemetery merchandise such as monuments, memorials and burial
vaults, (vi) the maintenance of cemetery grounds pursuant to perpetual care contracts and laws or
on a voluntary basis, and (vii) offering mausoleum design, construction and sales services.

     Section 7.2 Nondisclosure of Confidential Information. During the Employment Term, Employee
shall hold in a fiduciary capacity for the benefit of the Company all Confidential Information
which shall have been obtained by Employee during Employee’s employment (whether prior to or after
the Agreement Date) and shall use such Confidential

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Information solely within the scope of his employment with and for the exclusive benefit of
the Company. For a period of five years after the Employment Term, commencing with the Date of
Termination, Employee agrees (a) not to communicate, divulge or make available to any person or
entity (other than the Company) any such Confidential Information, except upon the prior written
authorization of the Company or as may be required by law or legal process, and (b) to deliver
promptly to the Company any Confidential Information in his possession, including any duplicates
thereof and any notes or other records Employee has prepared with respect thereto. In the event
that the provisions of any applicable law or the order of any court would require Employee to
disclose or otherwise make available any Confidential Information, Employee shall give the Company
prompt prior written notice of such required disclosure and an opportunity to contest the
requirement of such disclosure or apply for a protective order with respect to such Confidential
Information by appropriate proceedings.

     Section 7.3 Limited Covenant Not to Compete. During the Employment Term and for a period of
two years thereafter, commencing with the Date of Termination, Employee agrees that, with respect
to each State of the United States or other jurisdiction, or specified portions thereof, in which
the Employee regularly (a) makes contact with customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of its subsidiaries, as identified in Appendix
B attached hereto and forming a part of this Agreement, and in which the Company or any of its
subsidiaries engages in the Death Care Business on the Date of Termination (collectively, the
“Subject Areas”), Employee will restrict his activities within the Subject Areas as follows:

          (a) Employee will not, directly or indirectly, for himself or others, own, manage, operate,
control, be employed in an executive, managerial or supervisory capacity by, consult with, or
otherwise engage or participate in or allow his skill, knowledge, experience or reputation to be
used in connection with, the ownership, management, operation or control of, any company or other
business enterprise engaged in the Death Care Business within any of the Subject Areas; provided,
however, that nothing contained herein shall prohibit Employee from making passive investments as
long as Employee does not beneficially own more than 2% of the equity interests of a business
enterprise engaged in the Death Care Business within any of the Subject Areas. For purposes of
this paragraph, “beneficially own” shall have the same meaning ascribed to that term in Rule 13d-3
under the Exchange Act.

          (b) Employee will not call upon any customer of the Company or its subsidiaries for the
purpose of soliciting, diverting or enticing away the business of such person or entity, or
otherwise disrupting any previously established relationship existing between such person or entity
and the Company or its subsidiaries;

          (c) Employee will not solicit, induce, influence or attempt to influence any supplier, lessor,
lessee, licensor, partner, joint venturer, potential acquiree or any other person who has a
business relationship with the Company or its subsidiaries, or who on the Date of Termination is
engaged in discussions or negotiations to enter into a business relationship with the Company or
its subsidiaries, to discontinue or reduce or limit the extent of such relationship with the
Company or its subsidiaries; and

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          (d) Employee will not make contact with any of the employees of the Company or its
subsidiaries with whom he had contact during the course of his employment with the Company for the
purpose of soliciting such employee for hire, whether as an employee or independent contractor, or
otherwise disrupting such employee’s relationship with the Company or its subsidiaries.

          (e) Employee further agrees that, for a period of one year from and after the Date of
Termination, Employee will not hire, on behalf of himself or any person or entity engaged in the
Death Care Business with which Employee is associated, any employee of the Company or its
subsidiaries as an employee or independent contractor, whether or not such engagement is solicited
by Employee; provided, however, that the restriction contained in this subsection (e) shall not
apply to Company employees who reside in, or are hired by Employee to perform work in, any of the
Subject Areas located within the States of Virginia, Arkansas or Georgia.

     Employee agrees that he will from time to time upon the Company’s request promptly execute any
supplement, amendment, restatement or other modification of Appendix B as may be necessary or
appropriate to correctly reflect the jurisdictions which, at the time of such modification, should
be covered by Appendix B and this Article 7 Section 7.3. Furthermore, Employee agrees that all
references to Appendix B in this Agreement shall be deemed to refer to Appendix B as so
supplemented, amended, restated or otherwise modified from time to time.

     Section 7.4 Injunctive Relief; Other Remedies. Employee acknowledges that a breach by
Employee of Section 7.2 or 7.3 of this Article 7 would cause immediate and irreparable harm to the
Company for which an adequate monetary remedy does not exist; hence, Employee agrees that, in the
event of a breach or threatened breach by Employee of the provisions of Section 7.2 or 7.3 of this
Article 7 during or after the Employment Term, the Company shall be entitled to injunctive relief
restraining Employee from such violation without the necessity of proof of actual damage or the
posting of any bond, except as required by non-waivable, applicable law. Nothing herein, however,
shall be construed as prohibiting the Company from pursuing any other remedy at law or in equity to
which the Company may be entitled under applicable law in the event of a breach or threatened
breach of this Agreement by Employee, including without limitation the recovery of damages and/or
costs and expenses, such as reasonable attorneys’ fees, incurred by the Company as a result of any
such breach or threatened breach. In addition to the exercise of the foregoing remedies, the
Company shall have the right upon the occurrence of any such breach or threatened breach to cancel
any unpaid salary, bonus, commissions or reimbursements otherwise outstanding at the Date of
Termination. In particular, Employee acknowledges that the payments provided under Article 5
Section 5.3 or Article 6 Section 6.4 are conditioned upon Employee fulfilling any noncompetition
and nondisclosure agreements contained in this Article 7. In the event Employee shall at any time
materially breach or threaten to breach any noncompetition or nondisclosure agreements contained in
this Article V, the Company may suspend or eliminate payments under Article 5 or Article 6 during
the period of such breach or threatened breach. Employee acknowledges that any such suspension or
elimination of payments would be an exercise of the Company’s right to suspend or terminate its
performance hereunder upon Employee’s breach of this Agreement; such suspension or elimination of
payments would not constitute, and should not be characterized as, the imposition of liquidated
damages.

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     Section 7.5 Requests for Waiver in Cases of Undue Hardship. In the event that Employee should
find any of the limitations of Article 7 Section 7.3 (including without limitation the geographic
restrictions of Appendix B) to impose a severe hardship on Employee’s ability to secure other
employment, Employee may make a request to the Company for a waiver of the designated limitations
before accepting employment that otherwise would be a breach of Employee’s promises and obligations
under this Agreement. Such request must be in writing and clearly set forth the name and address
of the organization with which employment is sought and the location, position and duties that
Employee will be performing. The Company will consider the request and, in its sole discretion,
decide whether and on what conditions to grant such waiver.

     Section 7.6 Governing Law of this Article V; Consent to Jurisdiction. Any dispute regarding
the reasonableness of the covenants and agreements set forth in this Article 7 (including Appendix
B hereto), or the territorial scope or duration thereof, or the remedies available to the Company
upon any breach of such covenants and agreements, shall be governed by and interpreted in
accordance with the laws of the State of the United States or other jurisdiction in which the
alleged prohibited competing activity or disclosure occurs, and, with respect to each such dispute,
the Company and Employee each hereby irrevocably consent to the exclusive jurisdiction of the state
and federal courts sitting in the relevant State (or, in the case of any jurisdiction outside the
United States, the relevant courts of such jurisdiction) for resolution of such dispute, and agree
to be irrevocably bound by any judgment rendered thereby in connection with such dispute, and
further agree that service of process may be made upon him or it in any legal proceeding relating
to this Article 7 and/or Appendix B by any means allowed under the laws of such jurisdiction. Each
party irrevocably waives any objection he or it may have as to the venue of any such suit, action
or proceeding brought in such a court or that such a court is an inconvenient forum.

     Section 7.7 Employee’s Understanding of this Article. Employee hereby represents to the
Company that he has read and understands, and agrees to be bound by, the terms of this Article 7
(including Appendix B hereto). Employee acknowledges that the geographic scope and duration of the
covenants contained in Article 7 Section 7.3 are the result of arm’s-length bargaining and are fair
and reasonable in light of (i) the importance of the functions performed by Employee and the length
of time it would take the Company to find and train a suitable replacement, (ii) the nature and
wide geographic scope of the operations of the Company and its subsidiaries, (iii) Employee’s level
of control over and contact with the business and operations of the Company and its subsidiaries in
a significant number of jurisdictions where same are conducted and (iv) the fact that all facets of
the Death Care Business are conducted by the Company and its subsidiaries throughout the geographic
area where competition is restricted by this Agreement. It is the desire and intent of the parties
that the provisions of this Agreement be enforced to the fullest extent permitted under applicable
law, whether now or hereafter in effect and, therefore, to the extent permitted by applicable law,
the parties hereto waive any provision of applicable law that would render any provision of this
Article 7 (including Appendix B hereto) invalid or unenforceable.

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ARTICLE 8

ARBITRATION

     Section 8.1 Binding Agreement to Arbitrate. Any claim or controversy arising out of any
provision of this Agreement (other than Article 7 hereof), or the breach or alleged breach of any
such provision, shall be settled by arbitration administered by the American Arbitration
Association (the “AAA”) under its National Rules for the Resolution of Employment Disputes (the
“Rules”), and judgment on the award rendered by the arbitrator(s) may be entered in any court
having jurisdiction thereof.

     Section 8.2 Selection and Qualifications of Arbitrators. If no party to the arbitration makes
a claim in excess of $1.0 million, exclusive of interest and attorneys’ fees, the proceedings shall
be conducted before a single neutral arbitrator selected in accordance with the Rules. If any
party makes a claim that exceeds $1.0 million, the proceedings shall be conducted before a panel of
three neutral arbitrators, one of whom shall be selected by each party within 15 days after
commencement of the proceeding and the third of whom shall be selected by the first two arbitrators
within 10 days after their appointment. If the two arbitrators selected by the parties are unable
or fail to agree on the third arbitrator, the third arbitrator shall be selected by the AAA. Each
arbitrator shall be a member of the bar of the State of Louisiana and actively engaged in the
practice of employment law for at least 15 years.

     Section 8.3 Location of Proceedings. The place of arbitration shall be New Orleans,
Louisiana.

     Section 8.4 Remedies. Any award in an arbitration initiated under this Article 8 shall be
limited to actual monetary damages, including if determined appropriate by the arbitrator(s) an
award of costs and fees to the prevailing party. “Costs and fees” mean all reasonable pre-award
expenses of the arbitration, including arbitrator’s fees, administrative fees, travel expenses,
out-of-pocket expenses such as copying, telephone, witness fees and attorneys’ fees. The
arbitrator(s) will have no authority to award consequential, punitive or other damages not measured
by the prevailing party’s actual damages, except as may be required by statute.

     Section 8.5 Opinion. The award of the arbitrators shall be in writing, shall be signed by a
majority of the arbitrators, and shall include findings of fact and a statement of the reasons for
the disposition of any claim.

ARTICLE 9

MISCELLANEOUS

     Section 9.1 Binding Effect.

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

          (b) This Agreement is personal to the Employee and shall not be assignable by the Employee
without the consent of the Company (there being no obligation to give such consent) other than such
rights or benefits as are transferred by will or the laws of descent and distribution.

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          (c) The Company shall require any successor to or assignee of (whether direct or indirect, by
purchase, merger, consolidation or otherwise) all or substantially all of the assets or businesses
of the Company (i) to assume unconditionally and expressly this Agreement and (ii) to agree to
perform all of the obligations under this Agreement in the same manner and to the same extent as
would have been required of the Company had no assignment or succession occurred, such assumption
to be set forth in a writing reasonably satisfactory to the Employee. In the event of any such
assignment or succession, the term “Company” as used in this Agreement shall refer also to such
successor or assign.

     Section 9.2 Notices. All notices hereunder must be in writing and shall be deemed to have
been given upon receipt of delivery by: (a) hand (against a receipt therefor), (b) certified or
registered mail, postage prepaid, return receipt requested, (c) a nationally recognized overnight
courier service (against a receipt therefor) or (d) telecopy transmission with confirmation of
receipt. All such notices must be addressed as follows:

If to the Company, to:

Stewart Enterprises, Inc.

1333 South Clearview Parkway

Jefferson, LA 70121

Attn: Chairman of the Compensation Committee of the Board of Directors

If to the Employee, to:

Thomas M. Kitchen

229 E. William David

Metairie, LA 70005

     or such other address as to which any party hereto may have notified the other in writing.

     Section 9.3 Governing Law. This Agreement shall be construed and enforced in accordance with
and governed by the internal laws of the State of Louisiana without regard to principles of
conflict of laws, except as expressly provided in Article 7 Section 7.6 above with respect to the
resolution of disputes arising under, or the Company’s enforcement of, Article 7 of this Agreement.

     Section 9.4 Withholding. The Employee agrees that the Company has the right to withhold, from
the amounts payable pursuant to this Agreement, all amounts required to be withheld under
applicable income and/or employment tax laws, or as otherwise stated in documents granting rights
that are affected by this Agreement.

     Section 9.5 Severability. If any term or provision of this Agreement (including without
limitation those contained in Appendix B), or the application thereof to any person or
circumstance, shall at any time or to any extent be invalid, illegal or unenforceable in any
respect as written, Employee and the Company intend for any court construing this Agreement to
modify or limit such provision temporally, spatially or otherwise so as to render it valid and
enforceable

-16-

 

to the fullest extent allowed by law. Any such provision that is not susceptible of such
reformation shall be ignored so as to not affect any other term or provision hereof, and the
remainder of this Agreement, or the application of such term or provision to persons or
circumstances other than those as to which it is held invalid, illegal or unenforceable, shall not
be affected thereby and each term and provision of this Agreement shall be valid and enforced to
the fullest extent permitted by law.

     Section 9.6 Waiver of Breach. The waiver by either party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach thereof.

     Section 9.7 Remedies Not Exclusive. Except as provided in Article 8 hereof, no remedy
specified herein shall be deemed to be such party’s exclusive remedy, and accordingly, in addition
to all of the rights and remedies provided for in this Agreement, the parties shall have all other
rights and remedies provided to them by applicable law, rule or regulation.

     Section 9.8 Company’s Reservation of Rights. Employee acknowledges and understands that the
Employee serves at the pleasure of the Board and that the Company has the right at any time to
terminate Employee’s status as an employee of the Company, subject to the rights of the Employee to
claim the benefits conferred by this Agreement.

     Section 9.9 JURY TRIAL WAIVER. THE PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING TO WHICH THEY ARE PARTIES INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT.

     Section 9.10 Survival. The rights and obligations of the Company and Employee contained in
Article 7 of this Agreement shall survive the termination of the Agreement. Following the Date of
Termination, each party shall have the right to enforce all rights, and shall be bound by all
obligations, of such party that are continuing rights and obligations under this Agreement.

     Section 9.11 Entire Agreement. This Agreement contains the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior agreements and
understandings, oral or written, between the parties hereto with respect to the subject matter
hereof. This Agreement may not be amended orally, but only by an agreement in writing by the
parties hereto.

     Section 9.12 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 shall constitute one and the
same instrument.

     Section 9.13 Section 409A of the Internal Revenue Code. In the event that any of the
compensation or benefits payable to the Employee hereunder are considered to be non-qualified
deferred compensation under Section 409A of the Code (“Section 409A”) and any regulations issued or
to be issued by the Department of the Treasury thereunder, the Company and the Employee shall
negotiate in good faith and agree to such amendments to this Agreement as they and their respective
tax counsel deem necessary to avoid the imposition of additional taxes and

-17-

 

penalties under Section 409A or such regulations, while preserving the economic benefits
intended to be conferred on the Employee by this Agreement.

     IN WITNESS WHEREOF, the Company and the Employee have caused this Agreement to be executed and
effective on the Agreement Date.

	 	 	 	 	 
	 	STEWART ENTERPRISES, INC.

 	 
	Dated:  May 14, 2007 	By:  	/s/JAMES W. MCFARLAND
 	 
	 	 	James W. McFarland 	 
	 	 	Compensation Committee Chairman 	 
	 
	 	EMPLOYEE:

 	 
	Dated:  May 14, 2007 	/s/ THOMAS M. KITCHEN
 	 
	 	Thomas M. Kitchen 	 
	 	 	 

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Appendix A to Employment Agreement

Between Stewart Enterprises, Inc.

and

Thomas M. Kitchen

Base Salary, Bonus Compensation and Benefits

	1.	 	Effective as of the date that Employee ceases to serve as Acting Chief Executive Officer,
Employee’s title(s) shall be Executive Vice President and Chief Financial Officer, and
Employee’s principal work location shall be the New Orleans, Louisiana metropolitan area.
Employee’s Base Salary shall be $400,000.
	 
	2.	 	For Fiscal Year 2007 (“FY 2007”), Employee shall be eligible to receive a maximum Bonus of
160% of his Base Salary for the number of days that he served as Acting Chief Executive
Officer and 140% of his Base Salary for the number of days that he served only as Executive
Vice President and Chief Financial Officer. See Attachment 1 to this Appendix A. For any
FY 2007 Bonus, one-half shall be paid in cash and one-half in shares of the Company’s Class A
Common Stock.
	 
	3.	 	Employee is expected to comply with the Company’s Executive Stock Ownership Policy.

	 	 	 	 	 
	 	Agreed to and accepted:

STEWART ENTERPRISES, INC.

 	 
	Date:  May 14, 2007 	By:  	/s/ JAMES W. MCFARLAND
 	 
	 	 	James W. McFarland 	 
	 	 	Compensation Committee Chairman 	 
	 
	 	EMPLOYEE

 	 
	Date:  May 14, 2007 	/s/ THOMAS M. KITCHEN
 	 
	 	Thomas M. Kitchen 	 
	 	 	 

A-1

 

	 	 	 	 	 

Appendix B to Employment Agreement

between Stewart Enterprises, Inc.

and

Thomas M. Kitchen

Jurisdiction In Which Competition

Is Restricted As Provided

In Article 7 Section 7.3

	A.	 	States and Territories of the United States:
	 
	1)	 	     Louisiana—  The following parishes in the State of Louisiana:
	 
	 	 	Orleans, St. Bernard, St. Tammany, Plaquemines, Jefferson, St. Charles, Tangipahoa
	 
	 	 	as well as any other parishes in the State of Louisiana in which the Employee regularly (a)
makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.
	 
	2)	 	     Florida—  The following counties in the State of Florida:
	 
	 	 	Seminole, Dade, Hillsborough, Duval, Orange, Pinellas, Indian River, Palm Beach, Volusia,
Lake, Brevard, Broward, Monroe, Collier, Pasco, Manatee, Polk, Hardee, Nassau, Baker, Clay,
St. Johns, St. Lucie, Osceola, Ockeechobee, Martin, Hendry, Marion, Alachua, Putnam, Levy,
Hernando, Citrus, Sumter, Sarasota, DeSoto, Charlotte, Glades
	 
	 	 	as well as any other counties in the State of Florida in which the Employee regularly (a)
makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.

Agreed to and Accepted:

	 	 	 	 	 
	Stewart Enterprises, Inc.	 	Employee
	 
	 	 	 	 
	By:

	 	/s/ JAMES W. MCFARLAND
	 	/s/ THOMAS M. KITCHEN
	 

	 	 
	 	 
	 

	 	James W. McFarland
	 	Effective Date: May 14, 2007
	 

	 	Compensation Committee Chairman	 	 
	 

	 	Effective Date: May 14, 2007	 	 

B-1

 

	3)	 	     Texas—  The following counties in the State of Texas:
	 
	 	 	Kaufman, Dallas, Collin, Tarrant, Lamar, Harris, Denton, Johnson, Rockwall, Brazoria,
Henderson, Van Zandt, Hunt, Ellis, Fannin, Wise, Parker, Red River, Delta, Galveston,

Ft. Bend, Waller, Montgomery, Liberty, Chambers, Hood, Bosque, Hill, Matagorda, Franklin,
Wharton, Somervell
	 
	 	 	as well as any other counties in the State of Texas in which the Employee regularly (a)
makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.
	 
	4)	 	     Maryland—  The following counties in the State of Maryland:
	 
	 	 	Baltimore, Baltimore City, Howard, Prince George’s, Anne Arundel, Montgomery, Carroll,
Frederick, Harford, Calvert, Charles, Wicomico, Worcester, Somerset, Dorchester, Washington
	 
	 	 	as well as any other counties in the State of Maryland in which the Employee regularly (a)
makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.
	 
	5)	 	     Virginia—  The following counties in the State of Virginia:
	 
	 	 	Chesterfield, Roanoke, Rockingham, Fairfax, Tazewell, Goochland, Pulaski, Albemarle,
Hanover, Henrico, Dinwiddie, Amelia, Powhatan, Charles City, Prince George, Bedford,
Montgomery, Franklin, Botetourt, Craig, Floyd, Augusta, Shenandoah, Page, Greene, Prince
William, Bland, Russell, Fluvanna, Louisa, Wythe, Giles, Carroll, Orange, Buckingham,
Nelson, King William, New Kent, Spotsylvania, Caroline, Buchanan, Loudoun, Arlington, Scott,
Washington, Richmond, Smythe, Frederick, Clarke
	 
	 	 	as well as any other counties in the State of Virginia in which the Employee regularly (a)
makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.
	 
	6)	 	     West Virginia—  The following counties in the State of West Virginia:
	 
	 	 	Raleigh, Kanawha, Fayette, Berkeley, Boone, Summers, Wyoming, Clay, Lincoln, Jackson,
Putnam, Roane, Greenbrier, Nicholas, Logan, Wayne, McDowell, Morgan, Jefferson, Mercer,
Mingo, Cabell, Mason, Fayetteville
	 
	 	 	as well as any other counties in the State of West Virginia in which the Employee regularly
(a) makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the

B-2

 

	 	 	activities of other employees of the Company or any of its subsidiaries as of the Date of
Termination.
	 
	7)	 	     Puerto Rico—  The following towns in the Commonwealth of Puerto Rico:
	 
	 	 	Canovanas, Carolina, Mayaguez, Yauco, Bayamón, San Juan, Ponce, Caguas, Humacao, San Juan
District, Loiza, Juncos, Gurabo, Trujillo Alto, Guaynabo, Cataño, Juana Díaz, Jayuya,
Peñuelas, Adjuntas, Utuado, Cayey, San Lorenzo, Patillas, Coamo, Guayama, Cidra, Águas
Buenas, Hormigueros, San German, Maricao, Las Marías, Anasco, Comerio, Toa Baja, Toa Alta,
Río Grande, Las Piedras, Guanica, Guayanilla, Sabana Grande, Lares, Naguaba, Yabucoa,
	 
	 	 	as well as any other towns in the Commonwealth of Puerto Rico in which the Employee
regularly (a) makes contact with customers of the Company or any of its subsidiaries, (b)
conducts the business of the Company or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of its subsidiaries as of the Date of
Termination.
	 
	8)	 	     North Carolina—  The following counties in the State of North Carolina:
	 
	 	 	Catawba, Wilson, Guilford, Haywood, Johnston, Wake, Nash, Iredell, Burke, Caldwell, Lincoln,
Alexander, Cleveland, Greene, Wayne, Edgecombe, Pitt, Davidson, Randolph, Forsyth, Stokes,
Rockingham, Caswell, Alamance, Jackson, Buncombe, Henderson, Transylvania, Swain, Madison,
Sampson, Franklin, Durham, Harnett, Granville, Chatham, Alleghany, Surry, Ashe, Watauga,
Yadkin, Pamilco, Halifax, Warren, Carteret, Jones, Lenoir, Beaufort, Vance, Lee, Moore,
Cumberland, Davie
	 
	 	 	as well as any other counties in the State of North Carolina in which the Employee regularly
(a) makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.
	 
	9)	 	     South Carolina—  The following counties in the State of South Carolina:
	 
	 	 	Greenville, Charleston, Aiken, Pickens, Laurens, Spartanburg, Anderson, Abbeville, Berkeley,
Dorchester, Colleton, Edgefield, Saluda, Lexington, Orangeburg, Barnwell, Richland,
Fairfield, Kershaw, Sumter, Calhoun, Newberry, Oconee, Georgetown
	 
	 	 	as well as any other counties in the State of South Carolina in which the Employee regularly
(a) makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.

B-3

 

	10)	 	     Tennessee—  The following counties in the State of Tennessee:
	 
	 	 	Davidson, Sumner, Robertson, Knox, Sullivan, Sevier, Wilson, Rutherford, Williamson,
Cheatham, Trousdale, Macon, Jefferson, Grainger, Union, Anderson, Loudon, Blount, Roane,
Greene, Washington, Carter, Johnson, Hawkins, Cocke, Cannon, Dekalb, Smith, Hamblen, Unicoi,
Giles, Lincoln, Cooke, Kingsport
	 
	 	 	as well as any other counties in the State of Tennessee in which the Employee regularly (a)
makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.
	 
	11)	 	     Arkansas—  The following counties in the State of Arkansas:
	 
	 	 	Saline, Pulaski, Hot Spring, Garland, Perry, Grant, Lonoke, Jefferson, Faulkner, Dallas,
Clark, Montgomery, Van Buren, Cleburne, Conway, Ouachita
	 
	 	 	as well as any other counties in the State of Arkansas in which the Employee regularly (a)
makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.
	 
	12)	 	     Georgia— The following counties in the State of Georgia:
	 
	 	 	Cobb, Cherokee, Henry, Dekalb, Fulton, Douglas, Paulding, Bartow, Pickens, Forsyth, Dawson,
Gordon, Clayton, Rockdale, Newton, Butts, Spalding, Gwinnett, Fayette, Coweta, Carroll,
Richmond
	 
	 	 	as well as any other counties in the State of Georgia in which the Employee regularly (a)
makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.
	 
	13)	 	     Alabama—  The following counties in the State of Alabama:
	 
	 	 	Mobile, Madison, Baldwin, Monroe, Washington, Jackson, Marshall, Morgan, Limestone, Clarke,
Elmore, Montgomery, Macon, Coosa, Tallapoosa, Autauga, Chilton, Walker, Jefferson, Blount,
Cullman, Winston, Tuscaloosa, Fayette, Marion, Wilcox, Marengo, Choctaw, Bibb, Talladega,
St. Clair, Shelby, Perry, Hale
	 
	 	 	as well as any other counties in the State of Alabama in which the Employee regularly (a)
makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.
	 
	14)	 	     Mississippi—  The following counties in the State of Mississippi:

B-4

 

	 	 	Hinds, Madison, Rankin, Simpson, Copiah, Claiborne, Warren, Yazoo, Jackson, George
	 
	 	 	as well as any other counties in the State of Mississippi in which the Employee regularly
(a) makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.
	 
	15)	 	     Pennsylvania—  The following counties in the State of Pennsylvania:
	 
	 	 	Montgomery, Philadelphia, Bucks, Delaware, Chester, Berks, Lehigh, Northampton, York
	 
	 	 	as well as any other counties in the State of Pennsylvania in which the Employee regularly
(a) makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.
	 
	16)	 	     Kentucky—  The following counties in the State of Kentucky:
	 
	 	 	Pike, Martin, Floyd, Knott, Letcher, Allen
	 
	 	 	as well as any other counties in the State of Kentucky in which the Employee regularly (a)
makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.
	 
	17)	 	     The District of Columbia
	 
	18)	 	     Kansas— The following counties in the State of Kansas:
	 
	 	 	Douglas, Leavenworth, Johnson, Miami, Franklin, Wyandotte, Sedgwick, Cowley, Sumner, Butler,
Harvey, Reno, Kingman
	 
	 	 	as well as any other counties in the State of Kansas in which the Employee regularly (a)
makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.
	 
	19)	 	     Missouri— The following counties in the State of Missouri:
	 
	 	 	Boone, Audrain, Callaway, Cole, Cooper, Howard, Moniteau, Randolph, Jackson, Lafayette,
Johnson, Cass, Clay, Ray, Platte, Clinton, Morgan, Pettis, Saline, Carroll

B-5

 

	 	 	as well as any other counties in the State of Missouri in which the Employee regularly (a)
makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.
	 
	20)	 	     Nebraska— The following counties in the State of Nebraska:
	 
	 	 	Lancaster, Otoe, Sarpy, Gage, Saline, Seward, Saunders, Cass, Butler, Douglas, Washington,
Dodge, Johnson
	 
	 	 	as well as any other counties in the State of Nebraska in which the Employee regularly (a)
makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.
	 
	 	 	Employee and the Company agree that, throughout the Employment Term, Employee shall comply
with all of the requirements and restrictions set forth in Article 7 of the Agreement of
which this Appendix B forms a part; however, Employee and the Company agree that,
notwithstanding anything to the contrary contained in Article 7, Section 3 of the Agreement,
Employee shall be required to restrict his post-employment activities in the State
of Nebraska only to: (i) complying with the restrictions set forth in Article 7, Section 2
of the Agreement and (ii) refraining from calling upon any customer of the Company or its
subsidiaries with whom Employee has done business and/or had personal contact for the
purpose of soliciting, diverting or enticing away the business of such person or entity, or
otherwise disrupting any previously established relationship existing between such person or
entity and the Company or its subsidiaries. The parties hereby acknowledge and agree that
this modification to the restrictions of Article 7, Section 7.3 as they relate to
post-employment competition in the State of Nebraska is being entered into solely to comply
with the limitations provided in Nebraska law on the extent to which non-competition
agreements may be enforced. This modification does not reflect the parties’ agreement as to
the extent of the limitations upon competition necessary to protect the legitimate interests
of the Company; rather, the provisions of Article 7 of the Agreement reflect such agreement.
	 
	21)	 	     Iowa— The following county in the State of Iowa:
	 
	 	 	Polk, Jasper, Marion, Warren, Madison, Dallas, Story, Boone, Pottawattamie
	 
	 	 	as well as any other counties in the State of Iowa in which the Employee regularly (a) makes
contact with customers of the Company or any of its subsidiaries, (b) conducts the business
of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.

B-6

 

	22)	 	     Nevada— The following counties in the State of Nevada:
	 
	 	 	Clark, Washoe, Douglas, Carson City
	 
	 	 	as well as any other counties in the State of Nevada in which the Employee regularly (a)
makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.
	 
	23)	 	     Arizona— The following counties in the State of Arizona:
	 
	 	 	Mohave, La Paz
	 
	 	 	as well as any other counties in the State of Arizona in which the Employee regularly (a)
makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.
	 
	24)	 	     Oregon— The following counties in the State of Oregon:
	 
	 	 	Josephine, Washington, Douglas, Curry, Jackson, Klamath, Clatsop, Columbia, Multnomah,
Clackamas, Yamhill, Tillamook
	 
	 	 	as well as any other counties in the State of Oregon in which the Employee regularly (a)
makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.
	 
	25)	 	     California—  The following counties in the State of California:
	 
	 	 	Glenn, Plumas, Sutter, Yuba, Colusa, Tehama, Fresno, San Mateo, Contra Costa, San Joaquin,
Stanislaus, Santa Clara, Mariposa, Orange, San Bernardino, Kern, Ventura, Inyo, Riverside,
Los Angeles, Monterey, Kings, Santa Barbara, Madera, Tulare, San Benito, Merced, San Luis
Obispo, Nevada, Alameda, Sacramento, El Dorado, Amador, Yolo, Solano, San Diego, Imperial,
Sonoma, Napa, Lake, Marin, Santa Cruz, Calaveras, Placer, Butte, Mendocino, San Francisco,
Mono, Tuolumne, Del Norte, Siskiyou
	 
	 	 	as well as any other counties in the State of California in which the Employee regularly (a)
makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.
	 
	 	 	Employee and the Company agree that, throughout the Employment Term, Employee shall comply
with all of the requirements and restrictions set forth in Article 7 of the Agreement of
which this Appendix B forms a part; however, Employee and the Company agree that,
notwithstanding anything to the contrary contained in Article 7, Section 7.2 or

B-7

 

		 	7.3 of the Agreement, Employee shall be required to restrict his post-employment
activities in the State of California only to: (i) complying with the restrictions set forth
in Article 7, Section 7.2 of the Agreement to the extent that Confidential Information
constitutes a trade secret under California law and (ii) complying with the restrictions set
forth in Article 7, Sections 7.3(c) and 7.3(d) of the Agreement. The parties hereby
acknowledge and agree that these modifications to the restrictions of Article 7, Sections
7.2 and 7.3 as they relate to post-employment disclosure and competition in the State of
California are being entered into solely to comply with the limitations provided in
California law on the extent to which nondisclosure and noncompetition agreements may be
enforced. These modifications do not reflect the parties’ agreement as to the extent of the
limitations upon disclosure and competition necessary to protect the legitimate interests of
the Company; rather, the provisions of Article 7 of the Agreement reflect such agreement.
	 
	27.	 	     Illinois—  The following counties in the State of Illinois:
	 
	 	 	Cook, Lake, McHenry, Kane, DuPage, Will
	 
	 	 	as well as any other counties in the State of Illinois in which the Employee regularly (a)
makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.
	 
	28.	 	     Washington—  The following counties in the State of Washington:
	 
	 	 	King, Snohomish, Kittitas, Pierce, Kitsap, Skagit, Chelan, Island
	 
	 	 	as well as any other counties in the State of Washington in which the Employee regularly (a)
makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.
	 
	29.	 	     Wisconsin—  The following counties in the State of Wisconsin:
	 
	 	 	Waukesha, Dodge, Ozaukee, Jefferson, Washington, Racine, Walworth, Milwaukee, Winnebago,
Fond du Lac, Green Lake, Calumet, Waushara, Outagamie, Waupaca, Kenosha, Brown, Shawano,
Oconte, Kewaunee
	 
	 	 	as well as any other counties in the State of Wisconsin in which the Employee regularly (a)
makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.
	 
	30.	 	     Ohio—  The following counties in the State of Ohio:

B-8

 

	 	 	Monroe, Harrison, Noble, Belmont, Licking, Jefferson, Guernsey, Fairfield, Muskingum, Perry,
Knox, Delaware, Franklin, Coshocton
	 
	 	 	as well as any other counties in the State of Ohio in which the Employee regularly (a) makes
contact with customers of the Company or any of its subsidiaries, (b) conducts the business
of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.
	 
	31.	 	     New Jersey—  The following counties in the State of New Jersey:
	 
	 	 	Burlington, Mercer, Hunterdon
	 
	 	 	as well as any other counties in the State of New Jersey in which the Employee regularly (a)
makes contact with customers of the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as of the Date of Termination.
	 
	B.	 	Acknowledgment
	 
	 	 	The Company and Employee acknowledge that Employee’s voluntary compliance with Article 7,
Sections 7.2 and 7.3 constitutes a significant part of the consideration for the Company’s
agreement to make the payments specified in Article 5 and 6. Therefore, the Company and
Employee acknowledge that it is the intent of this Agreement that if Employee engages in
conduct described as prohibited conduct in Article 7 Section 7.2 or 7.3, the Company may
suspend or eliminate payments under Article 5, including Section 5.3 of Article 5, and
Article 6, including Section 6.4 of Article 6, during the period of such conduct, even if
the parties’ contractual prohibitions on such conduct are determined to be invalid, illegal
or unenforceable under applicable law.
	 
	 	 	Furthermore, the parties acknowledge that any provision in this Appendix B that permits
Employee to engage, after the Date of Termination, in a particular jurisdiction, in conduct
otherwise prohibited by Article 7 Section 7.2 or 7.3 (for example, as in California and
Nebraska) has been agreed to solely in order to comply with the limitations provided in the
law of that jurisdiction on the extent to which nondisclosure and noncompetition agreements
may be enforced. Therefore, the parties acknowledge that, although Employee may be
permitted pursuant to this Appendix B to engage, after the Date of Termination, in certain
jurisdictions (such as California and Nebraska), in conduct otherwise prohibited by Article
7 Section 7.2 or 7.3, if Employee does engage in conduct prohibited by the provisions of
Article 7 Section 7.2 or 7.3 (as such provisions appear in the Agreement without giving
effect to any modifications to such provisions made by this Appendix B), Employee will
forfeit his or her right to payments under Article 5, including Section 5.3 of Article 5,
and Article 6, including Section 6.4 of Article 6, during the period of such conduct.

B-9exv10w1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (“Agreement”) is made by and between Superior Offshore
International, Inc., a Delaware corporation (“Company”), and Louis E. Schaefer, Jr. (“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 Chairman of the Board of Directors 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. 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.

     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 Houston, Texas, subject to necessary travel requirements of Executive’s position and
duties hereunder. Executive understands and agrees that he may be required to periodically travel
to, among other locations, the Company’s current headquarter office in Lafayette, Louisiana.
Executive shall not be required to relocate to a location that is more than 50 miles from 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
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
of Company (the “Board of Directors”).

 - 2 - 

 

     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 $550,000. 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).

     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

 - 3 - 

 

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.

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 - 

 

     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 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

 - 5 - 

 

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, (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

 - 6 - 

 

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 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,

 - 7 - 

 

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:

        (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.

 - 8 - 

 

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.

     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.

 - 9 - 

 

     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:
	 	Louis E. Schaefer, Jr.
	 

	 	 	 	2240 Marina Way
	 

	 	 	 	Kemah, Texas 77565

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,

 - 10 - 

 

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.

     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

 - 11 - 

 

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. 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 2nd day
of April, 2007, to be effective as of the Effective Date.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	SUPERIOR OFFSHORE INTERNATIONAL, INC.	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	By:
	 	 	 	/s/ James J. Mermis	 	 	 	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	James J. Mermis	 	 	 	 
	 

	 	 	 	Title:
	 	Chief Executive Officer	 	 	 	 
	 

	 	 	 	 	 	and President	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	/s/ Louis E. Schaefer, Jr.	 	 
	 	 	 	 	 	 	 
	 	 	Louis E. Schaefer, Jr.	 	 

[Signature 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:

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