Exhibit 10.7**EXECUTIVE EMPLOYMENT AGREEMENT**     This **EXECUTIVE EMPLOYMENT AGREEMENT**(this “***Agreement***”) is entered into as of the 15th day ofJanuary, 2007 (the “***Effective Date***”) by and between HERCULES OFFSHORE, INC., a Delaware corporation(the “***Company***”) and **TERRY CARR**(the “***Executive***”).     WHEREAS, the Company, after consultation with the Nominating, Governance and CompensationCommittee of the Board (the “***NGC Committee***”) and the Board of Directors (the “***Board***”) hasdetermined that it is advisable and in the best interests of the Company and its stockholders tosecure the employment and dedication of the Executive, and to provide the Executive withcompensation and benefit arrangements which are competitive with those of other similarly situatedcorporations;     WHEREAS, the Company also believes it is imperative to diminish the inevitable distraction ofthe Executive by virtue of the personal uncertainties and risks created by a pending or threatenedChange of Control (hereinafter defined) and to encourage the Executive’s full attention anddedication to the Company currently and in the event of any threatened or pending Change ofControl;     WHEREAS, the Company desires to employ the Executive, and the Executive is willing to acceptsuch employment, all upon the terms and conditions set forth herein;     NOW, THEREFORE, in consideration of the premises, the terms and provisions set forth herein,the mutual benefits to be gained by the performance thereof and other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged, and intending to belegally bound hereby, the parties hereto agree as follows:     1. **Certain Definitions.**          (a) “***Affiliate***” shall have the meaning ascribed to such term under Rule 12(b)-2 under theSecurities Exchange Act of 1934 (the “***Exchange Act***”).          (b) “***Associate***” shall mean, with reference to any Person, (i) any corporation, firm,partnership, association, unincorporated organization or other entity (other than the Company or asubsidiary of the Company) of which such Person is an officer or general partner (or officer orgeneral partner of a general partner) or is, directly or indirectly, the beneficial owner of 10% ormore of any class of equity securities, (ii) any trust or other estate in which such Person has asubstantial beneficial interest or as to which such Person serves as trustee or in a similarfiduciary capacity and (iii) any relative or spouse of such Person, or any relative of such spouse,who has the same home as such Person.          (c) The “***Employment Period***” shall mean the period commencing on the Effective Date and endingon February 28, 2008, unless extended pursuant to this paragraph. If neither party shall providewritten notice of termination at least six months prior to the scheduled expiration of thethen-current term of this Agreement (each such date by which such notice must be
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provided, a “***Renewal Date***”), the Employment Period shall automatically be extended for twoadditional years. Upon a Change of Control the Employment Period shall be automatically extendedto the third anniversary of the Change of Control.          (d) The term ***“group”***is used as it is defined for purposes of the Exchange Act.          (e) ***“Person”***means an individual, entity or group.          (f) ***“Subsidiary***” shall mean (i) in the case of a corporation, any corporation of which theCompany directly or indirectly owns shares representing 50% or more of the combined voting power ofthe shares of all classes or series of capital stock of such corporation that have the right tovote generally on matters submitted to a vote of the stockholders of such corporation and (ii) inthe case of a partnership or other business entity not organized as a corporation, any suchbusiness entity of which the Company directly or indirectly owns 50% or more of the voting, capitalor profits interests (whether in the form of partnership interests, membership interests orotherwise).     2. **Change of Control.**For the purpose of this Agreement, a **"*****Change of Control*****”**shall mean (i)the consummation of a reorganization, merger, consolidation or other transaction, in any case, withrespect to which Persons who were stockholders (or members) of the Company immediately prior tosuch reorganization, merger or consolidation do not, immediately thereafter, own equity interestsrepresenting at least 51% of the total combined voting power of the Company or the resultingreorganized, merged or consolidated entity, as applicable, (ii) the sale, lease, transfer or otherdisposition of all or substantially all of the assets of the Company and its Subsidiaries, taken asa whole (other than to one or more Subsidiaries of the Company), or (iii) the occurrence of (A)the consummation of a transaction or series of related transactions in which the Company issues, asconsideration for the acquisition (through a merger, reorganization, stock purchase, asset purchaseor otherwise) of the assets or capital stock of an unaffiliated third party, equity in the Companyrepresenting more than 35% of the outstanding equity of the Company calculated as of theconsummation of such transaction or transactions, in conjunction with (B) a change in thecomposition of the Board, as a result of which fewer than 50% of the incumbent directors aredirectors who had been directors of the Company at the time of the approval by the Board of theissuance of such equity in the Company.     3. **Employment Agreement.**The Company hereby agrees to employ the Executive, and the Executivehereby accepts employment with the Company in accordance with the terms and conditions of thisAgreement, for the Employment Period.     4. **Terms of Employment.**          (a) Position and Duties.               (i) During the Employment Period, (A) the Executive’s position (including status, offices,titles and reporting requirements), authority, duties and responsibilities shall be (x) prior to aChange of Control, at least commensurate in all material respects with the most significant ofthose held, exercised and assigned at any time during the 90-day period immediately preceding thelater of the Effective Date or the most recent Renewal Date and (y) upon and after a Change ofControl, the Executive’s position shall be at least commensurate in all respects (disregarding anychange or changes that are in the aggregate *de minimis*) with the most significant of those held,exercised and assigned at any time during the 180-day period immediately preceding
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the Applicable Date and (B) the Executive’s services shall be performed at the location wherethe Executive was employed immediately preceding the Applicable Date or any office which is theheadquarters of the Company and is less than 50 miles from such location. For purposes of thisAgreement, “***Applicable Date***” shall mean, at any time of determination, the latest to have occurredof the Effective Date, the most recent Renewal Date, or any date on which a Change of Control hasoccurred.               (ii) During the Employment Period, and excluding any periods of vacation and sick leave towhich the Executive is entitled, the Executive agrees to devote his full attention and time duringnormal business hours to the business and affairs of the Company. During the Employment Period itshall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic orcharitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach ateducational institutions or (C) manage personal investments, in each such case, so long as suchactivities do not significantly interfere with the performance of the Executive’s responsibilitiesas an employee of the Company in accordance with this Agreement; provided, however, the Executivemay not serve on the board of a publicly traded for profit corporation or similar body of apublicly traded for profit business organized in other than corporate form without the consent ofthe NGC Committee. It is expressly understood and agreed that to the extent that any suchactivities have been conducted by the Executive prior to the Applicable Date, the continued conductof such activities (or the conduct of activities similar in nature and scope thereto) subsequent tothe Applicable Date shall not thereafter be deemed to interfere with the performance of theExecutive’s responsibilities to the Company.          (b) Compensation.               (i) *Base Salary*. During the Employment Period, the Executive shall receive an annual basesalary (“***Annual Base Salary***”) in the amount of $270,000, which shall be paid on a monthly basis.During the Employment Period, the Annual Base Salary shall be reviewed at least once in any fiscalyear of the Company and may be increased at any time and from time to time as shall besubstantially consistent with increases in base salary generally awarded in the ordinary course ofbusiness to other executives of the Company and its affiliated companies. As used in thisAgreement, the term “***affiliated companies***” shall include any company controlled by, controlling orunder common control with the Company.               (ii) *Annual Bonus*. In addition to Annual Base Salary, the Executive shall be awarded for anyfiscal year ending during the Employment Period, a bonus of up to 100% of Annual Base Salary(target of 50%) depending upon meeting goals agreed upon with the Board. During the EmploymentPeriod, the annual target bonus as a percentage of Annual Base Salary may be increased, but notdecreased, from time to time by the Board.               (iii) *Restricted Shares in Hercules Offshore, Inc.*The Executive shall be awarded 10,000restricted shares of Hercules Offshore, Inc. stock which shall vest over a three (3) year period.The Executive will also be eligible to receive other forms of incentive compensation in the future,such as the restricted stock as determined by the Board.               (iv) *Hiring Bonus*. On the Effective Date of this Agreement, the Executive shall receive ahiring bonus in the amount of $100,000.
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               (v) *Incentive, Savings and Retirement Plans*. During the Employment Period, the Executiveshall be entitled to participate in all incentive, savings and retirement plans, practices,policies and programs applicable generally to other executives of the Company and its affiliatedcompanies. Such plans, practices, policies and programs shall provide the Executive with incentiveopportunities (measured with respect to both regular and special incentive opportunities, to theextent, if any, that such distinction is applicable), savings opportunities and retirement benefitopportunities, in each case, equal to such plans, practices, policies and programs provided by theCompany and its affiliated companies for similarly situated senior executives of the Company andits affiliated companies.               (vi) *Welfare Benefit Plans*. During the Employment Period, the Executive and/or theExecutive’s dependents, as the case may be, shall be eligible for participation in and shallreceive all benefits under welfare benefit plans, practices, policies and programs provided by theCompany and its affiliated companies (including, without limitation, medical, prescription, dental,disability, salary continuance, employee life, group life, accidental death and travel accidentinsurance plans and programs) to the extent applicable generally to similarly situated seniorexecutives of the Company and its affiliated companies. Such plans, practices, policies andprograms shall provide the Executive with benefits which are equal, in the aggregate, to suchplans, practices, policies and programs provided by the Company and its affiliated companies forsimilarly situated senior executives of the Company and its affiliate companies.               (vii) *Expenses.*During the Employment Period, the Executive shall be entitled to receiveprompt reimbursement for all reasonable and documented expenses incurred by the Executive inaccordance with the policies, practices and procedures of the Company and its affiliated companiesin effect for similarly situated senior executives of the Company and its affiliated companies.All reimbursable expenses shall be appropriately documented in reasonable detail by the Executiveupon submission of any request for reimbursement and in a format and manner consistent with theCompany’s expense reporting policy.               (viii) *Fringe Benefits*. During the Employment Period, the Executive shall be entitled tofringe benefits in accordance with the plans, practices, programs and policies of the Company andits affiliated companies in effect for similarly situated senior executives of the Company and itsaffiliated companies.               (ix) *Vacation*. During the Employment Period, the Executive shall be entitled to four (4)weeks paid vacation per year, or such greater amount as is afforded to similarly situated seniorexecutives of the Company or its affiliated companies.               (x) *Equity Awards*. In addition to Annual Base Salary and annual bonus, the Executive may beawarded an equity award at the discretion of the Company for any fiscal year ending during theEmployment Period.     5. **Termination of Employment.**          (a) Death or Disability. The Executive’s employment shall terminate automaticallyupon the Executive’s death during the Employment Period. If the Company determines in good faiththat the Disability of the Executive has occurred during the Employment Period (pursuant to thedefinition of Disability set forth below), it may give to the Executive written
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notice in accordance with Section 15(c) of this Agreement of its intention to terminate theExecutive’s employment. In such event, the Executive’s employment with the Company shall terminateeffective on the 30th day after receipt of such notice by the Executive (the “***Disability EffectiveDate***”), provided that, within the 30 days after such receipt, the Executive shall not have returnedto full-time performance of the Executive’s duties. For purposes of this Agreement, “***Disability***”shall mean the absence of the Executive from the Executive’s duties with the Company on a full-timebasis for 120 consecutive calendar days, and the Executive (i) is unable to engage in anysubstantial gainful activity on behalf of the Company by reason of any medically determinablephysical or mental impairment which can be expected to result in death or can be expected to lastfor a continuous period of not less than 12 months or (ii) is, by reason of any medicallydeterminable physical or mental impairment which can be expected to result in death or can beexpected to last for a continuous period of not less than 12 months, receiving income replacementbenefits for a period of not less than 3 months under an accident and health plan coveringemployees of the Company. All determinations to be made with respect to clauses (i) and (ii) aboveshall be made by a physician selected by the Company or its insurers and acceptable to theExecutive or the Executive’s legal representative (such agreement as to acceptability not to bewithheld unreasonably).          (b) Cause. The Company may terminate the Executive’s employment during the EmploymentPeriod for Cause. For purposes of this Agreement, “***Cause***” shall mean (i) a material violation bythe Executive of the Executive’s obligations under Section 4(a) of this Agreement (other than as aresult of incapacity due to physical or mental illness) which is either willful and deliberate onthe Executive’s part or is committed in bad faith or without reasonable belief that such violationis in the best interests of the Company (ii) the Executive’s gross negligence in performance, orintentional non-performance (continuing for 10 days after receipt of written notice of need to curefrom the Company), of any of the Executive’s duties and responsibilities under this Agreement, orreasonable instructions of the Board or the officer(s) of the Company to whom the Executive reportswithin the scope of the Executive’s employment by the Company, (iii) the Executive’s dishonesty,fraud or misconduct with respect to the business or affairs of the Company, (iv) the Executive’sviolation of the Company’s drug policy or anti-harassment policy (v) the Executive’s violation ofthe Company’s ethics policy which is willful or deliberate on the Executive’s part or is committedin bad faith or (vi) the final and non-appealable conviction by a court of competent jurisdictionof the Executive of a felony involving moral turpitude or the entering of a guilty plea or a pleaof nolo contendere to such crime by the Executive.          (c) Good Reason; Other Terminations. The Executive’s employment may be terminated bythe Executive (i) during the Employment Period for Good Reason, or (ii) during the EmploymentPeriod other than for Good Reason.For purposes of this Agreement, “***Good Reason***” shall mean:               (i) the assignment to the Executive of any duties inconsistent with the Executive’s position(including status, offices, titles and reporting requirements), authority, duties orresponsibilities as contemplated by Section 4(a) of this Agreement, or any other action by theCompany which results in a diminution in such position, authority, duties or responsibilitiesexcluding for this purpose an insubstantial or inadvertent action which is remedied by the Companypromptly after receipt of notice thereof given by the Executive;
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               (ii) any failure by the Company to comply with any of the provisions of Section 4(b) of thisAgreement, other than an insubstantial or inadvertent failure which is remedied by the Companypromptly after receipt of notice thereof given by the Executive;               (iii) the Company’s requiring the Executive to be based at any office or location other thanthat described in Section 4(a)(i)(B) hereof;               (iv) any purported termination by the Company of the Executive’s employment otherwise than asexpressly permitted by this Agreement; or               (v) any failure by the Company to comply with and satisfy Section 14(c) of this Agreement.               (vi) within a 24 month period following a Change of Control, any failure to allow Executive toparticipate in bonus (in cash and/or property) and equity compensation programs at a level at leastequal to the participation levels of similarly situated senior executives of the Company and itsaffiliated companies.               Notwithstanding anything herein to the contrary, the interim assignment of Executive’sposition, authority, duties, or responsibilities to any Person while Executive is absent from hisduties during any of the 120 business days set forth under the definition of Disability in Section5(a) shall not constitute a Good Reason for Executive to terminate his employment with the Company.               An extension of the Employment Period pursuant to Section 1(c) will not, in itself, impair orrender invalid or defective a Notice of Termination given in connection with termination ofemployment for Good Reason based on whole or in part on facts or circumstances occurring prior tothe extension.          (d) Notice of Termination. Any termination by the Company for Cause, or by theExecutive for any reason (including without limitation Good Reason), shall be communicated byNotice of Termination to the other party hereto given in accordance with Section 15(c) of thisAgreement. For purposes of this Agreement, a “***Notice of Termination***” means a written notice which(i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extentapplicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basisfor termination of the Executive’s employment under the provision so indicated and (iii) if theDate of Termination (as defined below) is other than the date of receipt of such notice, specifiesthe termination date (which date shall be not more than thirty days after the giving of suchnotice). The failure by the Executive or the Company to set forth in the Notice of Termination anyfact or circumstance which contributes to a showing of Good Reason or Cause shall not waive anyright of the Executive or the Company hereunder or preclude the Executive or the Company fromasserting such fact or circumstance in enforcing the Executive’s or the Company’s right hereunder.          (e) Date of Termination. “***Date of Termination***” means (i) if the Executive’semployment is terminated by the Company for Cause, or by the Executive for Good Reason, the date ofreceipt of the Notice of Termination or any later date specified therein, as the case may be, (ii)if the Executive’s employment is terminated by the Company other than for Cause, the Date ofTermination shall be the date on which the Company notifies the Executive of such termination,(iii) if the Executive’s employment is terminated by reason of death or Disability, the Date of
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Termination shall be the date of death of the Executive or the Disability Effective Date, asthe case may be, (iv) if the Executive’s employment is terminated by the Executive other than forGood Reason, the date of the receipt of the Notice of Termination or any later date specifiedtherein, and (v) if the Executive’s employment is terminated on account of the death of theExecutive or Executive’s Disability, the Date of Termination shall be the date of such death or theDisability Effective Date, respectively.     6. **Obligations of the Company upon Termination and Upon Change of Control.**          (a) Prior to a Change of Control: Good Reason or Other than for Cause. If, duringthe Employment Period, the Company shall terminate the Executive’s employment other than for Cause,or the Executive shall terminate employment for Good Reason:               (i) the Company shall pay to the Executive**,**in a lump-sum in cash within 30 days after theDate of Termination (unless other payment terms are specified in this Section 6(a)(i)), theaggregate of the following amounts:                    A. the sum of (1) the Executive’s Annual Base Salary through the Date of Termination to theextent not theretofore paid, (2) any compensation previously deferred by the Executive, to theextent permitted by the plan under which such deferral was made (together with any accrued interestor earnings thereon), and any accrued vacation pay, in each case to the extent not theretoforepaid (the sum of the amounts described in clauses (1) and (2) shall be hereinafter referred to asthe “***Accrued Obligations***”); and                    B. the amount (such amount shall be hereinafter referred to as the “***Severance Amount***”) equalto the sum of:                         (1) one and one-half times the amount of the Executive’s Annual Base Salary, and                         (2) one and one-half times the bonus (as a percentage of Annual Base Salary) described inSection 4(b)(ii) paid or payable in respect of the most recently completed fiscal year of theCompany or, if no such bonus has been paid or is payable in respect of such year, any bonusdescribed in Section 4(b)(ii) paid or payable in respect of the next preceding fiscal year.                              The Severance Amount shall be reduced by the present value (determined as provided in Section280G(d)(4) of the Internal Revenue Code of 1986, as amended (the “***Code***”)) of any other amount ofseverance relating to salary or bonus continuation to be received by the Executive upon terminationof employment of the Executive under any severance plan, severance policy or severance arrangementof the Company. The amount payable under this Section 6(a)(i)B shall be paid in a lump sum in cashon the first business day after the six month anniversary of the Date of Termination; and                    C. a separate sum equal to the amount of any earned but unpaid bonus awarded to the Executive;               (ii) for a period of the longer of 18 months from the Date of Termination or the remainingterm of the Employment Period, or such longer period as any plan, program,
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practice or policy may provide, the Company shall continue benefits to the Executive and/orthe Executive’s dependents at least equal to those which would have been provided to them inaccordance with the plans, programs, practices and policies described in Section 4(b)(iv) of thisAgreement if the Executive’s employment had not been terminated in accordance with the mostfavorable plans, practices, programs or policies of the Company and its affiliated companies as ineffect and applicable generally to other executives and their dependents during the 90-day periodimmediately preceding the Applicable Date, provided, however, that if the Executive becomesreemployed with another employer and is eligible to receive medical or other welfare benefits underanother employer provided plan, the medical and other welfare benefits described herein shall besecondary to those provided under such other plan during such applicable period of eligibility; andprovided further, however, that with respect to health and medical benefits, to the extent suchcoverage cannot be extended or provided, the Company will pay during the period described above theapplicable premium under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amendedassociated with such benefits (such continuation of such benefits for the applicable period hereinset forth shall be hereinafter referred to as “***Welfare Benefit Continuation***”); and               (iii) to the extent not theretofore paid or provided, the Company shall timely pay or provideto the Executive and/or the Executive’s dependents any other amounts or benefits required to bepaid or provided or which the Executive and/or the Executive’s dependents is eligible to receivepursuant to this Agreement and under any plan, program, policy or practice or contract or agreementof the Company and its affiliated companies as in effect and applicable generally to otherexecutives and their dependents during the 90-day period immediately preceding the Applicable Date(such other amounts and benefits shall be hereinafter referred to as the “***Other Benefits***”).          (b) Following a Change of Control: Good Reason or Other than for Cause. If, duringthe Employment Period, the Company shall terminate the Executive’s employment other than for Causefollowing a Change of Control, or the Executive shall terminate employment for Good Reasonfollowing a Change of Control, then the Company shall pay or provide to the Executive all theamounts and benefits set forth in Section 6(a) above; provided however, that:               (i) instead of the Severance Amount calculated pursuant to Section 6(a)(i)(B) above, aSeverance Amount equal to the product of:                    (1) two and                    (2) the sum of                         (x) the Executive’s Annual Base Salary,                         (y) the highest bonus (as a percentage of Annual Base Salary) described in Section 4(b)(ii)paid or payable in respect of any of the two most recently completed fiscal years of the Company.The Severance Amount calculated under this Section shall be reduced (if applicable) and paid as setforth in Section 6(a)(i)(b); and               (ii) if the Date of Termination occurs within 24 months following a Change of Control, theneffective as of the Date of Termination, each and every stock option, restricted stock award,restricted stock unit award and other equity-based award and performance award that is outstandingas of the Date of Termination shall immediately vest and/or become
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exercisable and any contractual restrictions on sale or transfer of any such award (other thanany such restriction arising by operation of law) shall immediately terminate.          (c) Death. If the Executive’s employment is terminated by reason of the Executive’sdeath during the Employment Period, this Agreement shall terminate without further obligations tothe Executive’s legal representatives under this Agreement, other than for (i) payment of AccruedObligations (which shall be paid to the Executive’s estate or beneficiary, as applicable, in alump-sum in cash within 30 days of the Date of Termination) and the timely payment or provision ofthe Welfare Benefit Continuation and Other Benefits and (ii) payment to the Executive’s estate orbeneficiary, as applicable, in a lump-sum in cash within 30 days of the Date of Termination of anamount equal to the Severance Amount payable under Section 6(a)(i)(B).          (d) Disability. If the Executive’s employment is terminated by reason of theExecutive’s Disability during the Employment Period, this Agreement shall terminate without furtherobligations to the Executive, other than for (i) payment of Accrued Obligations (which shall bepaid to the Executive in a lump-sum in cash within 30 days of the Date of Termination) and thetimely payment or provision of the Welfare Benefit Continuation and Other Benefits (excluding, ineach case, Disability Benefits (as defined below)), and (ii) payment to the Executive in a lump-sumin cash within 30 days of the Date of Termination of an amount equal to the greater of (A) theSeverance Amount under Section 6(a)(i)(B) and (B) the present value (determined as provided inSection 280G(d)(4) of the Code) of any cash amount to be received by the Executive as a disabilitybenefit pursuant to the terms of any long term disability plan, policy or arrangement of theCompany and its affiliated companies (***“Disability Benefits"***)*,*but not including any proceeds ofdisability insurance covering the Executive to the extent paid for on a contributory basis by theExecutive (which shall be paid in any event as an Other Benefit).          (e) Cause; By the Executive Other than for Good Reason. If the Executive’s employmentshall be terminated for Cause during the Employment Period or if the Executive terminatesemployment during the Employment Period, excluding a termination for Good Reason, this Agreementshall terminate without further obligations to the Executive other than the obligation (i) to payto the Executive his Annual Base Salary through the Date of Termination plus the amount of anycompensation previously deferred by the Executive, in each case to the extent theretofore unpaidand (ii) provide any benefits required by applicable law. Any deferred compensation payablepursuant to the terms of this Section 6(e) shall be paid in accordance with the terms andconditions, if any, of the plan or arrangement under which such deferred compensation is due and,if the plan or arrangement does not specify a date for payment, then on the first business dayafter the six month anniversary of the Date of Termination.          (f) Change of Control Benefit. Upon the occurrence of a Change of Control, each andevery stock option, restricted stock award, restricted stock unit award and other equity-basedaward and performance award that is outstanding as of the date of the occurrence of a Change ofControl shall immediately vest and/or become exercisable and any contractual restrictions on saleor transfer of any such award (other than any such restriction arising by operation of law) shallimmediately terminate.     7. **Non-exclusivity of Rights.**Except as provided in Section 6(a)(ii), 6(b)(iii), 6(c) and6(d) of this Agreement, nothing in this Agreement shall prevent or limit the Executive’s continuingor future participation in any plan, program, policy or practice provided by the Company or any of
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its affiliated companies and for which the Executive may qualify, nor shall anything hereinlimit or otherwise affect such rights as the Executive may have under any contract or agreementwith the Company or any of its affiliated companies. Amounts which are vested benefits or whichthe Executive is otherwise entitled to receive under any plan, policy, practice or program of orany contract or agreement with the Company or any of its affiliated companies at or subsequent tothe Date of Termination shall be payable in accordance with such plan, policy, practice or programor contract or agreement except as explicitly modified by this Agreement.     8. **Full Settlement; Resolution of Disputes.**          (a) Except where the Executive’s employment is terminated by the Company for Cause or isterminated by the Executive other than for Good Reason, the Company’s obligation to make paymentsprovided for in this Agreement and otherwise to perform its obligations hereunder shall not beaffected by any set-off, counterclaim, recoupment, defense or other claim, right or action whichthe Company may have against the Executive or others. In no event shall the Executive be obligatedto seek other employment or take any other action by way of mitigation of the amounts payable tothe Executive under any of the provisions of this Agreement and, except as provided in Section6(a)(ii), 6(b)(iii), 6(c) and 6(d) of this Agreement, such amounts shall not be reduced whether ornot the Executive obtains other employment. If there is any contest by the Company concerning thePayments or benefits to be provided to the Executive or his dependents hereunder whether throughlitigation, arbitration or mediation, or with respect to the validity or enforceability of, orliability under, any provision of this Agreement or any guarantee of performance thereof, and theExecutive or his spouse is the prevailing party, the Company agrees to pay promptly upon conclusionof the contest all legal fees and expenses which the Executive may reasonably have incurred.          (b) If there shall be any dispute between the Company and the Executive (i) in the event ofany termination of the Executive’s employment by the Company, whether such termination was forCause, or (ii) in the event of any termination of employment by the Executive, whether Good Reasonexisted, then, unless and until there is a final, nonappealable judgment by a court of competentjurisdiction declaring that such termination was for Cause or that Good Reason did not exist, theCompany shall pay all amounts, and provide all benefits, to the Executive and/or the Executive’sfamily or other beneficiaries, as the case may be, that the Company would be required to pay orprovide pursuant to Section 6(a) or 6(b) hereof as though such termination were by the Companywithout Cause or by the Executive with Good Reason; provided, however, that the Company shall notbe required to pay any disputed amounts pursuant to this paragraph except upon receipt of anundertaking (which need not be secured) by or on behalf of the Executive to repay all such amountsto which the Executive is ultimately adjudged by such court not to be entitled.     9. **Certain Additional Payments by the Company.**          (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall bedetermined that any payment or distribution by the Company to or for the benefit of the Executive(whether paid or payable or distributed or distributable pursuant to the terms of this Agreement orotherwise (including, without limitation, payments or distributions made pursuant to any deferredcompensation or supplemental retirement plan), but determined without regard to any additionalpayments required under this Section 9) (a “***Payment***”) would be subject to the excise tax imposed bySection 4999 of the Code (or any successor provision thereto), by reason of being
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considered “contingent on a change in ownership or control” of the Company, within the meaningof Section 280G of the Code (or any successor provision thereto), or any interest or penalties areincurred by the Executive with respect to such excise tax (such tax, together with any suchinterest and penalties, are hereinafter collectively referred to as the “***Excise Tax***”), then theExecutive shall be entitled to receive an additional payment (a “***Gross-Up Payment***”) in an amountsuch that after payment by the Executive of all taxes (including any interest or penalties imposedwith respect to such taxes), including, without limitation, any income taxes (and any interest andpenalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, theExecutive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon thePayments, it being understood and agreed, anything in this Agreement to the contrarynotwithstanding, that in no event shall the Executive be entitled to any payment pursuant to thisSection 9 other than in respect of payments made pursuant to Section 6(b).          (b) Subject to the provisions of Section 9(c), all determinations required to be made underthis Section 9, including whether and when any Gross-Up Payment is required and the amount of suchGross-Up Payment and the assumptions to be utilized in arriving at such determination, shall bemade by the Company’s then current independent public accountants (the “***Accounting Firm***”) whichshall provide detailed supporting calculations both to the Company and the Executive within 15business days of the receipt of notice from the Executive that there has been a Payment, or suchearlier time as is requested by the Company. In the event that the Accounting Firm is serving asaccountant or auditor for the individual, entity or group effecting the Change of Control, theExecutive shall appoint another nationally recognized accounting firm to make the determinationsrequired hereunder (which accounting firm shall then be referred to as the Accounting Firmhereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company.Any Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by the Company to theExecutive within five days of the receipt of the Accounting Firm’s determination. The AccountingFirm shall furnish the Executive with a written opinion that reporting the Excise Tax, or thefailure to report the Excise Tax, as applicable, on the Executive’s applicable federal income taxreturn in accordance with the determination made by the Accounting Firm pursuant to this Section9(b) should not result in the imposition of a negligence or similar penalty. Any determination bythe Accounting Firm shall be binding upon the Company and the Executive. As a result of theuncertainty in the application of Section 4999 of the Code at the time of the initial determinationby the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have beenmade by the Company should have been made (“***Underpayment***”), consistent with the calculationsrequired to be made hereunder. In the event that the Company exhausts its remedies pursuant toSection 9(c) and the Executive thereafter is required to make a payment of any Excise Tax, theAccounting Firm shall determine the amount of the Underpayment that has occurred and any suchUnderpayment shall be promptly paid by the Company to or for the benefit of the Executive.          (c) The Executive shall notify the Company in writing of any claims by the Internal RevenueService that, if successful, would require the payment by the Company of the Gross-Up Payment.Such notification shall be given as soon as practicable but no later than ten business days afterthe Executive is informed in writing of such claim and shall apprise the Company of the nature ofsuch claim and the date on which such claim is requested to be paid. The Executive shall not paysuch claim prior to the expiration of the 30-day period following the date on which it gives suchnotice to the Company (or such shorter period ending on the date that any payment of taxes withrespect to such claim is due). If the Company notifies the Executive in
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writing prior to the expiration of such period that it desires to contest such claim, theExecutive shall:               (i) give the Company any information reasonably requested by the Company relating to suchclaim,               (ii) take such action in connection with contesting such claim as the Company shall reasonablyrequest in writing from time to time, including, without limitation, accepting legal representationwith respect to such claim by an attorney reasonably selected by the Company and reasonablyacceptable to the Executive,               (iii) cooperate with the Company in good faith in order effectively to contest such claim, and               (iv) permit the Company to participate in any proceedings relating to such claim;               provided, however, that the Company shall bear and pay directly all costs and expenses(including additional interest and penalties) incurred in connection with such contest and shallindemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax(including interest and penalties with respect thereto) imposed as a result of such representationand payment of costs and expenses. Without limitation on the foregoing provisions of this Section9(c), the Company shall control all proceedings taken in connection with such contest and, at itssole option, may pursue or forego any and all administrative appeals, proceedings, hearings andconferences with the taxing authority in respect of such claim and may, at its sole option, eitherdirect the Executive to pay the tax claimed and sue for a refund or contest the claim in anypermissible manner, and the Executive agrees to prosecute such contest to a determination beforeany administrative tribunal, in a court of initial jurisdiction and in one or more appellatecourts, as the Company shall determine; provided, however, that if the Company directs theExecutive to pay such claim and sue for a refund, the Company shall advance the amount of suchpayment to the Executive, on an interest-free basis and shall indemnify and hold the Executiveharmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penaltieswith respect thereto) imposed with respect to such advance or with respect to any imputed incomewith respect to such advance; and further provided that any extension of the statute of limitationsrelating to payment of taxes for the taxable year of the Executive with respect to which suchcontested amount is claimed to be due is limited solely to such contested amount. Furthermore, theCompany’s control of the contest shall be limited to issues with respect to which a Gross-UpPayment would be payable hereunder and the Executive shall be entitled to settle or contest, as thecase may be, any other issue raised by the Internal Revenue Service or any other taxing authority.          (d) If, after the receipt by the Executive of an amount advanced by the Company pursuant toSection 9(c), the Executive becomes entitled to receive any refund with respect to such claim, theExecutive shall (subject to the Company’s complying with the requirements of Section 9(c)) promptlypay to the Company the amount of such refund (together with any interest paid or credited thereonafter taxes applicable thereto). If, after the receipt by the Executive of an amount advanced bythe Company pursuant to Section 9(c), a determination is made that the Executive shall not beentitled to any refund with respect to such claim and the Company does not notify the Executive inwriting of its intent to contest such denial of refund prior to the expiration of 30 days aftersuch determination, then such advance shall be forgiven and shall not be required to be repaid
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and the amount of such advance shall be offset, to the extent thereof, the amount of Gross-UpPayment required to be paid.     10. **Confidential Information. T**he Executive shall hold in a fiduciary capacity for thebenefit of the Company all secret or confidential information, knowledge or data relating to theCompany or any of its affiliated companies, and their respective businesses, which shall have beenobtained by the Executive during the Executive’s employment by the Company or any of its affiliatedcompanies and which shall not be or become public knowledge (other than by acts by the Executive orrepresentatives of the Executive in violation of this Agreement). After termination of theExecutive’s employment with the Company, the Executive shall not, without the prior written consentof the Company or as may otherwise be required by law or legal process, communicate or divulge anysuch information, knowledge or data to anyone other than the Company and those designated by it.In no event shall an asserted violation of the provisions of this Section 10 constitute a basis fordeferring or withholding any amounts otherwise payable to the Executive under this Agreement.     11. **Non-Competition; No Solicitation.**          (a) The Executive recognizes that the Company’s willingness to enter into this Agreement isbased in material part on the Executive’s agreement to the provisions of this Section 11, and thatthe Executive’s breach of the provisions of this Section could materially damage the Company. TheCompany shall provide confidential and trade secret information to the Executive immediately uponexecution of this Agreement and thereafter, and the Executive agrees not to disclose or use suchinformation for any reason other than the Executive’s employment with Company without the express,prior, written consent of Company. Therefore, in consideration of the Company’s promise to providethe Executive with its confidential information and trade secrets, the Executive agrees that hewill not, during the period of the Executive’s employment by or with the Company, and for a periodof one year immediately following the termination of the Executive’s employment with the Companyunder this Agreement for any reason other than termination by the Executive for Good Reason (the“***Non-Compete Period***”), for any reason whatsoever, directly or indirectly, for himself or on behalfof or in conjunction with any other person, persons, company, partnership, corporation, limitedliability company or business of whatever nature accept employment with, serve as an officer,director, member, manager, agent or joint venturer of, be an owner, controlling stockholder orpartner of, act as a consultant to or contractor for, or otherwise actively participate or assistany person, or compete against the Company or any of its subsidiaries or affiliates, directly orindirectly, with or without compensation, in the offshore drilling or liftboat businesses (or anyother business in which the Company or any of its subsidiaries or affiliates is then engaged) inthose states of the United States (including the state or federal waters offshore such states), orin those countries in the world (and the territorial waters thereof), where the business of theCompany is engaged.          (b) The Executive agrees that he shall not during the Non-Compete Period, for any reasonwhatsoever, directly or indirectly, for himself or on behalf of or in conjunction with any otherperson, persons, company, partnership, corporation, limited liability company or business ofwhatever nature induce or encourage any employee of the Company to terminate employment with theCompany or hire or offer employment to, or procure the making of an offer of employment to, anyemployee of the Company or any of its subsidiaries or affiliates who was so employed at any
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time during the 12 months prior to the date of termination of the Executives’ employment withthe Company.          (c) The Executive agrees that he shall not during the Non-Compete Period, for any reasonwhatsoever, directly or indirectly, (i) team or join with other employees of the Company who wereemployees of the Company or any of its subsidiaries or affiliates during the 12 months prior to thedate of termination of the Executive’s employment with the Company in any business like or relatedto the offshore drilling business or liftboat business (or any other business in which the Companyor any of its subsidiaries or affiliates is then engaged) or (ii) cause, induce or encourage anycustomer of the Company or any of its subsidiaries or affiliates to terminate or change adverselyany business relationship with the Company or any of its subsidiaries or affiliates.          (d) Because of the difficulty of measuring economic losses to the Company as a result of abreach of the foregoing covenants, and because of the immediate and irreparable damage that couldbe caused to the Company for which it would have no other adequate remedy, the Executive agreesthat the foregoing covenants may be enforced by the Company by injunctions, restraining orders andother equitable actions, without showing any actual damage or that monetary damages would notprovide an adequate remedy and without any bond or other security being required.          (e) Executive agrees that the limitations set forth in this Section 11 on his rights tocompete with the Company and its subsidiaries and affiliates are reasonable and necessary in orderto protect the goodwill, confidential information and trade secrets, and other legitimate interestsof the Company, its subsidiaries and affiliates during the Non-Compete Period. Executivespecifically agrees that, in view of the nature of the current and proposed business of theCompany, the limitations as to period of time and geographic area, as well as all otherrestrictions on his activities specified in Section 11, are reasonable and necessary for theprotection of the Company and its subsidiaries and affiliates.          (f) The covenants in this Section 11 are severable and separate, and the unenforceability ofany specific covenant shall not affect the provisions of any other covenant. Moreover, in theevent any court of competent jurisdiction shall determine that the scope, time or territorialrestrictions set forth in this Section 11 are unreasonable and therefore unenforceable, then it isthe intention of the parties that such restrictions be enforced to the fullest extent which thecourt deems reasonable, and this Agreement shall thereby be reformed.          (g) The Executive hereby agrees that the period during which the agreements and covenants ofthe Executive made in this Section 11 shall be effective shall be computed by excluding from suchcomputation any time during which the Executive is in violation of any provision of this Section11.     12. **Return of Company Property.**All records, designs, patents, business plans, financialstatements, manuals, memoranda, lists and other property delivered to or compiled by the Executiveby or on behalf of the Company, or any of its affiliated companies or the representatives, vendorsor customers thereof that pertain to the business of the Company or any of its affiliated companiesshall be and remain the property of the Company or any such affiliated company, as the case may be,and be subject at all times to the discretion and control thereof. Likewise, all correspondence,reports, records, charts, advertising materials and other similar data pertaining to
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the business, activities or future plans of the Company or its affiliated companies that arecollected or held by the Executive shall be delivered promptly to the Company or its affiliatedcompanies, as the case may be, without request by such party, upon termination of the Executive’semployment, without regard to the cause or reasons for such termination.     13. **Inventions.**The Executive shall disclose promptly to the Company any and all significantconceptions and ideas for inventions, improvements and valuable discoveries, whether patentable ornot, which are (a) conceived or made by the Executive, solely or jointly with another, during theperiod of employment or within one year thereafter, (b) directly related to the business oractivities of the Company or its affiliated companies, and (c) conceived by the Executive as aresult of the Executive’s employment by the Company. Executive hereby assigns and agrees to assignall the Executive’s interests in any such invention, improvement or valuable discovery to theCompany or its nominee. Whenever requested to do so by the Company, the Executive shall executeany and all applications, assignments or other instruments that the Company shall deem necessary toapply for and obtain Letters Patent of the United States or any foreign country or to otherwiseprotect the Company’ interest in any such invention, improvement or valuable discovery.     14. **Successors.**          (a) This Agreement is personal to the Executive and without the prior written consent of theCompany shall not be assignable by the Executive otherwise than by will or the laws of descent anddistribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’slegal representatives.          (b) This Agreement shall inure to the benefit of and be binding upon the Company and itssuccessors and assigns.          (c) The Company will require any successor (whether direct or indirect, by purchase, merger,consolidation or otherwise) to all or substantially all of the business and/or assets of theCompany to assume expressly and agree to perform this Agreement in the same manner and to the sameextent that the Company would be required to perform it if no such succession had taken place. Asused in this Agreement, “***Company***” shall mean the Company as hereinbefore defined and any successorto its business and/or assets as aforesaid which assumes and agrees to perform this Agreement byoperation of law, or otherwise. If a Business Combination is consummated that would have resultedin a Change of Control but for the satisfaction of the conditions specified in clauses (i), (ii)and (iii) of Section 2(c) and if the parent corporation resulting from the Business Combination isother than the Company (hereinafter a “***New Parent***”), then, as a condition to consummation of thisBusiness Combination, the New Parent shall be considered a successor for purposes of this Section14.     15. **Miscellaneous.**          (a) Unfunded Obligation. This Agreement shall be an unfunded obligation of theCompany.          (b) Governing Law; Headings; Amendments. This Agreement shall be governed by andconstrued in accordance with the laws of the State of Texas, without reference to principles ofconflict of laws. The captions of this Agreement are not part of the provisions hereof and shallhave no force or effect. This Agreement may not be amended or modified otherwise than by (i) a
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written agreement executed by the parties hereto or their respective successors and legalrepresentatives, or (ii) as otherwise specified in Section 15(h) below.          (c) Notices. All notices and other communications hereunder shall be in writing andshall be given by hand delivery to the other party or by registered or certified mail, returnreceipt requested, postage prepaid, addressed as follows:   If to the Executive: Terry Carr  10 W. Shady Lane  Houston, TX 77063   If to the Company: Hercules Offshore, Inc.  Attn: Chief Executive Officer and President  11 Greenway Plaza, Suite 2950  Houston, Texas 77046or to such other address as either party shall have furnished to the other in writing in accordanceherewith. Notice and communications shall be effective when actually received by the addressee.          (d) Severability. The invalidity or unenforceability of any provision of thisAgreement shall not affect the validity or enforceability of any other provision of this Agreement.          (e) Withholding. The Company may withhold from any amounts payable under thisAgreement such Federal, state or local taxes as shall be required to be withheld pursuant to anyapplicable law or regulation.          (f) Waivers. The Executive’s or the Company’s failure to insist upon strictcompliance with any provision hereof or any other provision of this Agreement or the failure toassert any right the Executive or the Company may have hereunder, including, without limitation,the right of the Executive to terminate employment for Good Reason pursuant to Section 5(c)(i)-(vi)of this Agreement, shall not be deemed to be a waiver of such provision or right or any otherprovision or right of this Agreement.          (g) Entire Agreement. This Agreement embodies the entire agreement and understandingof the parties hereto, and supersedes all prior agreements or understandings (whether written ororal) with respect to the subject matter hereof.          (h) 409A Compliance. Notwithstanding anything in this Agreement to the contrary, ifthe Board determines, upon advice of counsel, that any provision of this Agreement does not, inwhole or in part, satisfy the requirements of Section 409A of the Code, the Board, in its solediscretion, may unilaterally modify this Agreement in such manner as it deems appropriate to complywith such Code section and any regulations or guidance issued thereunder; provided, that in makingany such modifications, the Board shall seek to minimize any adverse economic consequences to theExecutive.          (i) No Third Party Beneficiaries. Except as otherwise provided herein, nothingcontained herein shall confer upon any Person, or any representative or beneficiary thereof, anyrights or remedies under this Agreement.
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     **IN WITNESS WHEREOF**, the Executive has hereunto set the Executive’s hand and, pursuant to theauthorization from its Board, the Company has caused these presents to be executed in its name onits behalf, all as of the day and year first above written.      **EXECUTIVE**