Employment Agreement

Amendment to Employment Agreement

 
 
 
                              EMPLOYMENT AGREEMENT
 
            This Employment Agreement ("AGREEMENT") is made and entered into as
of February 7, 2005 (the "EFFECTIVE DATE"), by and between MARINER ENERGY, INC.,
a Delaware corporation (hereafter "COMPANY"), and Scott D. Josey (hereafter
"EXECUTIVE").
 
      1. EMPLOYMENT. During the Employment Period (as defined in Section 4
hereof), the Company shall employ Executive, and Executive shall serve, as Chief
Executive Officer and President.
 
      2. DUTIES AND RESPONSIBILITIES OF EXECUTIVE.
 
            (a) During the Employment Period, Executive shall devote his full
      time and attention during normal business hours to the business of the
      Company, will act in the best interests of the Company and will perform
      with due care his duties and responsibilities. Executive's duties will
      include those normally incidental to the position of Chief Executive
      Officer and President as well as whatever additional duties may be
      assigned to him by the Board of Directors of the Company (the "BOARD").
      Executive agrees to cooperate fully with the Board and not to engage in
      any activity that materially interferes with the performance of
      Executive's duties hereunder. During the Employment Period, Executive will
      not hold outside employment without the advance written approval of the
      Board. Provided that it shall not be a violation of this Agreement for
      Executive to (1) serve on corporate, civic, or charitable boards or
      committees (except for boards or committees of a business organization
      that competes with the Company in any business in which the Company is
      regularly engaged), which are listed on EXHIBIT A so long as such service
      does not materially interfere with the performance of Executive's duties
      and responsibilities under this Agreement, as determined in the good faith
      opinion of the Board, (2) manage personal investments, or (3) take
      vacation days and reasonable absences due to injury or illness, as set
      forth herein and/or permitted by the general policies of the Company.
 
            (b) Executive represents and covenants to the Company that he is not
      subject or a party to any employment agreement, noncompetition covenant,
      nondisclosure agreement, or any other agreement, covenant, understanding,
      or restriction that would prohibit Executive from executing this Agreement
      and fully performing his duties and responsibilities hereunder, or would
      in any manner, directly or indirectly, limit or affect the duties and
      responsibilities that may now or in the future be assigned to Executive
      hereunder.
 
            (c) Executive acknowledges and agrees that Executive owes the
      Company a duty of loyalty and that the obligations described in this
      Agreement are in addition to, and not in lieu of, the obligations
      Executive owes the Company under the common law.
 
      3.    COMPENSATION.
 
            (a) During the Employment Period (as defined in Section 4 hereof),
      the Company shall pay to Executive an annualized base salary of $375,000
      (the "BASE
 
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      SALARY") in consideration for Executive's services under this Agreement,
      payable on a not less than semi-monthly basis, in conformity with the
      Company's customary payroll practices for executive salaries. For all
      purposes of this Agreement, Executive's Base Salary shall include any
      portion thereof which is deferred under any nonqualified plan or
      arrangement. Each year, the Board shall review Executive's salary based on
      market survey data, corporate performance, and performance of Executive.
      If, in its sole and complete discretion, the Board determines that an
      increase in Executive's salary is appropriate, the Board may make such
      adjustment, and such adjusted salary shall thereafter be Executive's Base
      Salary for purposes of this Agreement. Executive's Base Salary may not be
      reduced except as part of a general reduction of salaries paid to
      management employees that is necessitated by business conditions, as
      determined by the Board.
 
            (b) Executive may be eligible for an annual discretionary
      performance bonus with respect to each calendar year during the Employment
      Period (the "ANNUAL BONUS"). The amount, if any, of Executive's Annual
      Bonus will be determined by the Board in its sole and complete discretion
      based on market survey data, corporate performance, and performance of
      Executive. Bonus determinations will be made by the Board at a time
      convenient to the Board but typically within 60 calendar days of the end
      of each calendar year. The Board will, on an annual basis (at or near the
      beginning of each calendar year in the Employment Period) establish a
      target bonus for Executive for the upcoming year, and will communicate
      such target to Executive. If the Board determines to award Executive an
      Annual Bonus, it will be payable in conformity with the Company's
      customary payroll practices for executive bonuses. The Board may also
      award additional bonuses or other compensation to Executive at any time in
      its sole and complete discretion.
 
            (c) Any salary, bonus, and other compensation payments hereunder
      shall be subject to such payroll and other taxes, withholdings, and
      deductions as may be required by applicable law or with respect to
      Executive's coverage in the Company's insurance and other employee benefit
      plans.
 
      4. TERM OF EMPLOYMENT. The initial term of this Agreement shall be for the
period beginning on the Effective Date and ending at midnight (EST) on March 2,
2006 (the "INITIAL TERM"); provided, however, that if the Company consummates an
initial public offering of its common stock prior to March 3, 2006, the Initial
Term shall end on March 2, 2007. For all purposes of this Agreement, the
consummation of a sale under Rule 144A and/or Regulation D of equity securities
of the Company shall be treated as the consummation of an initial public
offering by the Company. On March 3, 2006 (or 2007, if applicable) and on March
3 of each succeeding year (each such date being referred to as a "RENEWAL
DATE"), this Agreement shall automatically renew and extend for a period of 12
months (a "RENEWAL TERM") unless written notice of non-renewal is delivered from
one party to the other at least 90 days prior to such Renewal Date (in which
case the Termination Date shall be the day immediately prior to such Renewal
Date). Notwithstanding any other provision of this Agreement, this Agreement may
be terminated at any time during the Initial Term or the Renewal Term (if any)
in accordance with Section 6. The period from the Effective Date through the
Termination Date of this Agreement, regardless of the time or reason for such
termination, shall be referred to herein as the
 
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"EMPLOYMENT PERIOD." In the event that this Agreement is not renewed, Executive
shall become an at-will employee of the Company and the Company shall have the
right to terminate Executive's employment with the Company at any time.
 
      5. BENEFITS. Subject to the terms and conditions of this Agreement,
Executive shall be entitled to the following benefits during the Employment
Period:
 
            (a) REIMBURSEMENT OF BUSINESS EXPENSES. The Company agrees to
      reimburse Executive for reasonable business-related expenses incurred in
      the performance of Executive's duties under this Agreement. Executive is
      authorized to incur reasonable business expenses for promoting the
      business and reputation of the Company, including (without limitation)
      reasonable expenditures for travel, lodging, club memberships (including
      initiation fees and monthly dues), meals and client, patron, customer
      and/or business associate entertainment. The Company shall reimburse
      within 30 days Executive for reasonable expenses incurred by Executive in
      furtherance of the Company's business, provided that such expenses are
      incurred in accordance with the Company's policies and upon presentation
      of documentation in accordance with the expense reimbursement policies of
      the Company as they may exist from time to time, and submission to the
      Company of adequate documentation in accordance with the Internal Revenue
      Code of 1986, as amended (the "Code"), federal income tax regulations, and
      administrative pronouncements.
 
            (b) BENEFIT PLANS AND PROGRAMS. To the extent permitted by
      applicable law and subject to the terms and eligibility requirements of
      any such plan or program, Executive will be eligible to participate in all
      benefit plans and programs, including improvements or modifications of the
      same, that are maintained by the Company generally for executive employees
      of the Company, subject to the eligibility requirements and other terms
      and conditions of those plans and programs. The Company will not, however,
      by reason of this Section 5(b) be obligated either (1) to institute,
      maintain, or refrain from changing, amending, or discontinuing any such
      benefit plan or program, or (2) to provide Executive with all benefits
      provided to any other person or individual employed by the Company or any
      of its affiliates.
 
            (c) LIFE INSURANCE. Consistent with current practices, the Company
      shall provide Executive with life insurance equal to two times the Base
      Salary.
 
      6. TERMINATION OF EMPLOYMENT.
 
            (a) COMPANY'S RIGHT TO TERMINATE. At any time during the Initial
      Term or any Renewal Term, the Company shall have the right to terminate
      this Agreement and Executive's employment with the Company for any of the
      following reasons:
 
                  (1) Upon Executive's death (in which case the Termination Date
            shall be the date of Executive's death);
 
                  (2) Upon Executive's Disability (as defined below);
 
                  (3) For Cause (as defined in Section 7); or
 
 
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                  (4) For any other reason whatsoever, in the sole and complete
            discretion of the Company.
 
            (b) EXECUTIVE'S RIGHT TO TERMINATE. At any time during the Initial
      Term or any Renewal Term, Executive will have the right to terminate this
      Agreement and Executive's employment with the Company for:
 
                  (1) Good Reason (as defined in Section 7); or
 
                  (2) For any other reason whatsoever, in the sole and complete
            discretion of Executive.
 
            (c) "DISABILITY." For purposes of this Agreement, "Disability" means
      that Executive has sustained sickness or injury that renders Executive
      incapable of performing the duties and services required of Executive
      hereunder for a period of 60 consecutive calendar days or a total of 120
      calendar days during any 12 month period.
 
            (d) "NOTICES." Any termination of this Agreement by the Company
      under Section 6(a) (other than termination due to the death of Executive),
      or by Executive under Section 6(b) shall be communicated by a Notice of
      Termination to the other party. A "Notice of Termination" means a written
      notice that (1) indicates the specific termination provision in this
      Agreement relied upon and (2) if the termination is by the Company for
      Cause or by Executive for Good Reason, sets forth in reasonable detail the
      facts and circumstances claimed to provide a basis for termination of
      Executive's employment under the provision so indicated. The Notice of
      Termination must specify the Termination Date. In the case of a
      termination by the Company for Cause or due to Executive's Disability, or
      by Executive for Good Reason, the Termination Date may be as early as the
      date notice is given but no later than 30 calendar days after notice is
      given, unless otherwise agreed to in writing by both parties. In the case
      of a termination by the Company or by Executive for any other reason, the
      Termination Date may be as early as 14 calendar days after notice is given
      but no later than 60 calendar days after notice is given, unless otherwise
      agreed to by the parties in writing.
 
      7.    SEVERANCE PAYMENTS.
 
            (a) TERMINATION BY THE COMPANY. If (1) the Company terminates this
      Agreement and Executive's employment with the Company and its affiliates
      during the Initial Term or the Renewal Term (if any) pursuant to Section
      6(a)(4) or pursuant to delivery by the Company to Executive of a notice of
      non-renewal in accordance with Section 4, (2) Executive signs and does not
      revoke a waiver and release agreement substantially similar to Exhibit B,
      and (3) Executive continues to comply with Executive's ongoing obligations
      under Sections 11 and 12 of this Agreement, then, subject to Section 7(h),
      the Company shall pay Executive severance in accordance with Section 7(c).
      Such severance payments shall be in addition to payment by the Company of
      all previously unpaid amounts (including, without limitation, salary,
      bonuses, equity plans, incentive compensation plans, fringe benefits, and
      expense reimbursements) owed to Executive under this Agreement with
      respect to periods prior to the Termination Date.
 
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<PAGE>
 
            (b) TERMINATION BY EXECUTIVE. If (1) Executive terminates this
      Agreement and Executive's employment with the Company and its affiliates
      during the Initial Term or the Renewal Term (if any) pursuant to Section
      6(b)(1), (2) Executive signs and does not revoke a waiver and release
      agreement substantially similar to Exhibit B, and (3) Executive continues
      to comply with Executive's ongoing obligations under Sections 11 and 12 of
      this Agreement, then, subject to Section 7(h), the Company shall pay
      Executive severance in accordance with Section 7(c). Such severance
      payments shall be in addition to payment by the Company of all previously
      unpaid amounts (including, without limitation, salary, bonuses, equity
      plans, incentive compensation plans, fringe benefits, and expense
      reimbursements) owed to Executive under this Agreement with respect to
      periods prior to the Termination Date.
 
            (c) SEVERANCE AMOUNT. If the Company is required to pay Executive
      severance by the express terms of Section 7(a) or 7(b), the Company shall
      pay Executive the following as severance:
 
                  (1) Executive's Base Salary at the highest rate in effect
            prior to the Termination Date as salary continuation for a period of
            two years commencing on the date on which Executive's employment
            with the Company is terminated (the "TERMINATION DATE") (the
            "SEVERANCE PERIOD"), payable in equal monthly installments pursuant
            to the Company's customary payroll practices for executive salaries;
            provided, however, that, at the option of either the Company or
            Executive, the amounts payable under this Section 7(c) shall be paid
            by the Company in one lump sum.
 
                  (2) Executive, Executive's spouse, and Executive's dependents
            will continue to be eligible for coverage under the Company's group
            health plan or any successor plan on the same basis as active
            executive employees of the Company, their spouses, and their
            dependents for the duration of the Severance Period. If and when
            group health coverage under another employer's plan is made
            available to Executive, Executive's spouse, or Executive's
            dependents, the Company's obligations under this paragraph will
            cease with respect to each person to whom such coverage is made
            available, notwithstanding that such person may not in fact become
            covered under such other employer's plan. Executive's portion of the
            premium for such coverage shall be withheld from the salary
            continuation payments described in paragraph (1) immediately above
            or, if salary continuation has been paid in a lump sum, Executive
            shall reimburse the Company for Executive's portion of the premium
            on a monthly basis.
 
                  (3) An amount equal to the sum of amounts paid or payable to
            Executive as bonuses by the Company for the year prior to the year
            in which the Termination Date occurs. This amount will be payable in
            one lump sum, to Executive within 30 days after the end of the
            Severance Period.
 
                  (4) Executive shall become 100% vested in all of the shares of
            restricted stock granted to Executive under the Mariner Energy, Inc.
            Equity
 
                                       5
<PAGE>
 
            Participation Plan to the extent Executive is less than 100% vested
            in such shares as of the Termination Date.
 
                  (5) Executive shall become 50% vested in all of the rights and
            interests granted to Executive under the Company's stock and other
            equity plans (other than the Mariner Energy, Inc. Equity
            Participation Plan), including without limitation any stock options,
            restricted stock, restricted stock units, performance units, and/or
            performance shares to the extent Executive is less than 50% vested
            in such award as of the Termination Date.
 
                  (6) Notwithstanding any other provision hereof, if the Company
            incurs an obligation to pay severance under this Section 7(c) in
            connection with the termination of Executive's employment after the
            consummation of an initial public offering by the Company, then,
            subject to Section 7(h), Executive shall be entitled to receive the
            amounts specified in Section 8(a) in lieu of the amounts specified
            in Sections 7(c)(1) and 7(c)(3).
 
                  (7) Payments under this Section 7(c) shall be in lieu of any
            severance benefits otherwise due to Executive under any severance
            pay plan or program maintained by the Company that covers its
            employees or executives generally. If Executive receives payment
            under Section 8(a), payments otherwise payable under Section 7(c)(1)
            shall terminate.
 
            (d) TERMINATION IN EVENT OF EXECUTIVE'S DISABILITY. If (1) the
      Company terminates Executive's employment with the Company and its
      affiliates during the Initial Term or the Renewal Term (if any) pursuant
      to Section 6(a)(2), (2) Executive signs and does not revoke a waiver and
      release agreement substantially similar to Exhibit B, and (3) Executive
      continues to comply with Executive's ongoing obligations under Section 11
      and 12 of this Agreement, then, subject to Section 7(h), the Company shall
      pay Executive the severance described in accordance with Section 7(e).
      Such severance payments shall be in addition to payment by the Company of
      all previously unpaid amounts (including, without limitation, salary,
      bonuses, equity plans, incentive compensation plans, fringe benefits, and
      expense reimbursements) owed to Executive under this Agreement with
      respect to periods prior to the Termination Date.
 
            (e) DISABILITY SEVERANCE. If the Company is required to pay
      Executive severance by the express terms of Section 7(d), the Company
      shall pay Executive the following as severance:
 
                  (1) Executive's Base Salary at the highest rate in effect
            prior to the Termination Date as salary continuation for the
            duration of the Severance Period, payable in equal monthly
            installments pursuant to the Company's customary payroll practices
            for executive salaries; provided, however, that, at the option of
            either the Company or Executive, the amounts payable under this
            Section 7(e) shall be paid by the Company in one lump sum.
 
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<PAGE>
 
                  (2) Executive, Executive's spouse, and Executive's dependents
            will continue to be eligible for coverage under the Company's group
            health plan or any successor plan on the same basis as active
            executive employees of the Company, their spouses, and their
            dependents for the duration of the Severance Period. Executive's
            portion of the premium for such coverage shall be withheld from the
            salary continuation payments described in paragraph (1) immediately
            above or, if salary continuation has been paid in a lump sum,
            Executive shall reimburse the Company for Executive's portion of the
            premium on a monthly basis. If and when group health coverage under
            another employer's plan is made available to Executive, Executive's
            spouse, or Executive's dependents, the Company's obligations under
            this paragraph will cease with respect to each person to whom such
            coverage is made available, notwithstanding that such person may not
            in fact become covered under such other employer's plan.
 
                  (3) An amount equal to the sum of amounts paid or payable to
            Executive as bonuses awarded by the Company for the calendar year
            prior to the calendar year in which the Termination Date occurs.
            This amount will be payable in one lump sum to Executive within 30
            days after the end of the Severance Period.
 
                  (4) Executive shall become 100% vested in all of the shares of
            restricted stock granted to Executive under the Mariner Energy, Inc.
            Equity Participation Plan to the extent Executive is less than 100%
            vested in such shares as of the Termination Date.
 
                  (5) Executive shall become 50% vested in all of the rights and
            interests granted to Executive under the Company's stock and other
            equity plans (other than the Mariner Energy, Inc. Equity
            Participation Plan), including without limitation any stock options,
            restricted stock, restricted stock units, performance units, and/or
            performance shares to the extent Executive is less than 50% vested
            in such award as of the Termination Date.
 
                  (6) Notwithstanding any other provision hereof, if the Company
            incurs an obligation to pay severance under this Section 7(e) in
            connection with termination of Executive's employment after the
            consummation of an initial public offering by the Company, then,
            subject to Section 7(h), Executive shall be entitled to receive the
            amounts specified in Section 8(a) in lieu of the amounts specified
            in Sections 7(e)(1) and 7(e)(3).
 
                  (7) Payments under this Section 7(e) shall be in lieu of any
            severance benefits otherwise due to Executive under any severance
            pay plan or program maintained by the Company that covers its
            employees or executives generally.
 
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            (f) "CAUSE" means the occurrence or existence, prior to occurrence
      of circumstances constituting Good Reason, of any of the following events:
 
                  (1) Executive's gross negligence or material mismanagement in
            performing, or material failure or inability (excluding as a result
            of death or Disability) to perform, Executive's duties and
            responsibilities as described herein or as lawfully directed by the
            Board;
 
                  (2) Executive's having committed any act of willful misconduct
            or material dishonesty against the Company or any of its affiliates
            (including theft, misappropriation, embezzlement, forgery, fraud,
            falsification of records, or misrepresentation) or any act that
            results in, or could reasonably be expected to result in, material
            injury to the reputation, business or business relationships of the
            Company or any of its affiliates;
 
                  (3) Executive's material breach of this Agreement, any
            fiduciary duty owed by Executive to the Company or its affiliates,
            or any written workplace policies applicable to Executive (including
            the Company's code of conduct and policy on workplace harassment)
            whether adopted on or after the date of this Agreement;
 
                  (4) Executive's having been convicted of, or having entered a
            plea bargain, a plea of nolo contendre or settlement admitting guilt
            for, any felony, any crime of moral turpitude, or any other crime
            that could reasonably be expected to have a material adverse impact
            on the Company's or any of its affiliates' reputations; or
 
                  (5) Executive's having committed any material violation of any
            federal law regulating securities (without having relied on the
            advice of the Company's attorney to perform required acts on
            Executive's behalf) or having been the subject of any final order,
            judicial or administrative, obtained or issued by the Securities and
            Exchange Commission, for any securities violation involving fraud,
            including, for example, any such order consented to by Executive in
            which findings of facts or any legal conclusions establishing
            liability are neither admitted nor denied.
 
            (g) "GOOD REASON" means the occurrence, prior to occurrence of
      circumstances constituting Cause, of any of the following events without
      Executive's consent:
 
                  (1) Any material breach by the Company of this Agreement,
            provided that Executive provides the Board written notice of such
            breach within 90 days from the first date that he is aware, or
            reasonably should be aware, of such breach and such breach is not
            remedied within 30 days of the Board's receipt of such written
            notice;
 
                  (2) Any requirement by the Company that Executive relocate
            outside of the Houston metropolitan area;
 
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                  (3) Failure of any successor to assume this Agreement not
            later than the date as of which it acquires substantially all of the
            equity, assets or businesses of the Company;
 
                  (4) Any material reduction in Executive's title,
            responsibilities, or duties (including a change that causes
            Executive to cease reporting to the Board); or
 
                  (5) The assignment to Executive of any duties materially
            inconsistent with his duties as Chief Executive Officer and
            President of the Company.
 
            (h) LATER DETERMINATIONS. Notwithstanding any other provision of
      this Agreement, if Executive's employment with the Company is terminated
      such that Executive is entitled to severance from the Company and within
      one year following such termination the Board determines that Cause exists
      or existed on, prior to, or after such termination, Executive shall not be
      entitled to any severance from the Company, and any and all severance
      payments from the Company to Executive in any form or amount shall cease
      and any such payments or reimbursements already made to Executive must be
      returned to the Company.
 
      8.    CHANGE OF CONTROL.
 
            (a) Upon the termination of Executive's employment with the Company
      for any reason other than Cause at any time on or within nine months after
      a Change of Control that occurs during the Employment Period or upon the
      occurrence of a Change of Control within nine months following a
      termination of Executive's employment that entitles Executive to severance
      under Section 7(c), the Company shall pay Executive, subject to Section
      8(d) below, an amount equal to 2.99 times the sum of Executive's Base
      Salary plus his Average Bonus Amount. The Executive's "Average Bonus
      Amount" shall be the average annual amount paid or payable to Executive as
      bonuses for the Company's three calendar years ended immediately prior to
      the occurrence of the Change of Control (or for the number of calendar
      years that Executive has been an employee of the Company before the
      occurrence of the Change of Control, if less than three); provided that
      any payment otherwise payable under this Section 8(a) shall be subject to
      Section 7(h) notwithstanding that such payment is not a severance payment.
 
            (b) Upon the occurrence of a Change of Control that occurs during
      the Employment Period or within nine months following a termination of
      Executive's employment that entitles Executive to severance under Section
      7(c), Executive shall become 100% vested in all of the rights and
      interests granted to Executive under the Company's stock and other equity
      plans, including without limitation any stock options, restricted stock,
      restricted stock units, performance units, and/or performance shares to
      the extent Executive is less than 100% vested in such award as of the
      Termination Date.
 
            (c) "Change of Control" means (i) after the Effective Date, any
      person or group of affiliated or associated persons acquires more than 35%
      of the voting power of the Company; (ii) the consummation of a sale of all
      or substantially all of the assets of the
 
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      Company; (iii) the dissolution of the Company or (iv) the consummation of
      any merger, consolidation, or reorganization involving the Company in
      which, immediately after giving effect to such merger, consolidation or
      reorganization, less than 51% of the total voting power of outstanding
      stock of the surviving or resulting entity is then "beneficially owned"
      (within the meaning of Rule 13d-3 under the Securities Exchange Act of
      1934, as amended) in the aggregate by the stockholders of the Company
      immediately prior to such merger, consolidation or reorganization.
      Notwithstanding the foregoing, a Change of Control shall not include any
      acquisitions resulting from the consummation of the private placement
      offering of common stock of the Company under Rule 144A and/or Regulation
      D prior to March 31, 2005.
 
            (d) Except as provided below, such Change of Control payments shall
      be in addition to payment by the Company of all other amounts (including,
      without limitation, salary, bonuses, equity plans, incentive compensation
      plans, fringe benefits, and expense reimbursements) owed to Executive
      under other provisions of this Agreement. Notwithstanding the foregoing,
      if on or before the Change of Control Executive becomes or has become
      entitled to payment pursuant to Section 7(c), the amount payable under
      this Section 8 shall be reduced by the amount paid or payable to Executive
      under Section 7(c).
 
      9. GROSS-UP PARACHUTE PAYMENT. In the event that Executive shall become
entitled to any amounts (the "Regular Amounts"), whether pursuant to the terms
of this Agreement or any other plan, arrangement or agreement with the Company,
any person whose actions result in a change of ownership covered by Section
280G(b)(2) of the Code, or any person affiliated with the Company or such
person, that will be subject to the tax (the "Excise Tax") imposed by Section
4999 of the Code (and any similar tax that may hereafter be imposed), the
Company shall pay to Executive an additional amount (the "Gross-up Payment")
such that the net amount retained by Executive after payment of all applicable
federal and state taxes on the sum of the Regular Amount plus the Gross-up
Payment, is equal to the net amount that would have been retained by Executive
after payment of all applicable federal and state taxes on the Regular Amount if
it had not been subject to the Excise Tax.
 
      10. CONFLICTS OF INTEREST. Executive agrees that he shall promptly
disclose to the Board any conflict of interest involving Executive upon
Executive becoming aware of such conflict. Executive's ownership of an interest
not in excess of five percent in a business organization that competes with the
Company shall not be deemed to constitute a conflict of interest.
 
      11. CONFIDENTIALITY. The Company agrees to provide Executive valuable
Confidential Information of the Company and of third parties who have supplied
such information to the Company. In consideration of such Confidential
Information and other valuable consideration provided hereunder, Executive
agrees to comply with this Section 11.
 
            (a) "CONFIDENTIAL INFORMATION" means, without limitation and
      regardless of whether such information or materials are expressly
      identified as confidential or proprietary, (i) any and all non-public,
      confidential or proprietary information or work product of the Company or
      its affiliates, (ii) any information that gives the Company or
 
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<PAGE>
 
      its affiliates a competitive business advantage or the opportunity of
      obtaining such advantage, (iii) any information the disclosure or improper
      use of which is reasonably expected to be detrimental to the interests of
      the Company or its affiliates, (iv) any trade secrets of the Company or
      its affiliates, and (v) any other information of or regarding the Company
      or any of its affiliates, or its or their past, present or future, direct
      or indirect, potential or actual officers, directors, employees, owners,
      or business partners, including but not limited to information regarding
      any of their businesses, operations, assets (including any Oil and Gas
      Interests as defined below), liabilities, properties, systems, methods,
      models, processes, results, performance, investments, investors, financial
      affairs, future plans, business prospects, acquisition or investment
      opportunities, strategies, business partners, business relationships,
      contracts, contractual relationships, organizational or personnel matters,
      policies or procedures, management or compensation matters, compliance or
      regulatory matters, as well as any technical, seismic, industry, market or
      other data, studies or research, or any forecasts, projections,
      valuations, derivations or other analyses, performed, generated,
      collected, gathered, synthesized, purchased or owned by, or otherwise in
      the possession of, the Company or its affiliates or which Executive has
      learned of through his employment with the Company. Confidential
      Information also includes any non-public, confidential or proprietary
      information about or belonging to any third party which has been entrusted
      to the Company or its affiliates. Notwithstanding the foregoing,
      Confidential Information does not include any information which is or
      becomes generally known by the public other than as a result of
      Executive's actions or inactions. "OIL AND GAS INTERESTS" means: (a)
      direct and indirect interests in and rights with respect to oil, gas,
      mineral and related properties (including revenues or net revenues
      therefrom) and assets of any kind and nature, direct or indirect,
      including without limitation working, royalty and overriding royalty
      interests, mineral interests, leasehold interests, production payments,
      operating rights, net profits interests, other non-working interests and
      non-operating interests; (b) interests in and rights with respect to
      Hydrocarbons and other minerals or revenues therefrom and contracts or
      agreements in connection therewith and claims and rights thereto
      (including oil and gas leases, operating agreements, unitization and
      pooling agreements and orders, division orders, transfer orders, mineral
      deeds, royalty deeds, oil and gas sales, exchange and processing contracts
      and agreements and, in each case, interests thereunder), surface
      interests, fee interests, reversionary interests, reservations and
      concessions; (c) easements, rights of way, licenses, permits, leases, and
      other interests associated with, appurtenant to, or necessary for the
      operation of any of the foregoing; and (d) interests in equipment and
      machinery (including well equipment and machinery), oil and gas
      production, gathering, transmission, compression, treating, processing and
      storage facilities (including tanks, tank batteries, pipelines and
      gathering systems), pumps, water plants, electric plants, gasoline and gas
      processing plants, refineries and other tangible personal property and
      fixtures associated with, appurtenant to, or necessary for the operation
      of any of the foregoing, regardless of location. "HYDROCARBONS" means oil,
      condensate gas, casinghead gas and other liquid or gaseous hydrocarbons.
 
            (b) PROTECTION. In return for the Company's promise to provide
      Executive with Confidential Information, Executive promises (i) to keep
      the Confidential Information, and all documentation, materials and
      information relating thereto, strictly confidential, (ii) not to use the
      Confidential Information for any purpose other than as
 
                                       11
<PAGE>
 
      required in connection with fulfilling his duties as Chief Executive
      Officer and President for the benefit of the Company, and (iii) to return
      to the Company all documents containing Confidential Information in
      Executive's possession upon separation from the Company for any reason.
      For the sake of clarity, Executive specifically acknowledges and agrees
      that (x) the definition of Confidential Information in Section 11(a)
      includes (but is not limited to) any nonpublic information about the Oil
      and Gas Interests (as defined above) and any other assets, investments,
      properties, sites or locations in which the Company or its affiliates have
      an ownership or other interest or right, as well as any Oil and Gas
      Interests (as defined above), assets, investments, properties, sites,
      locations, acquisitions or other business prospects upon which the Company
      or its affiliates have expended resources in the past, are currently
      expending resources, or are contemplating expending resources in the
      future, and (y) that any use by Executive of such Confidential Information
      other than as required in connection with fulfilling his duties as
      Executive for the benefit of the Company will be a material breach of this
      Agreement. The immediately preceding sentence has been included for the
      purpose of highlighting certain aspects of the foregoing covenants and
      shall in no event be read to limit or narrow the foregoing covenants.
 
            (c) SCOPE. Executive understands and agrees that all Confidential
      Information, in whatever medium (verbal, written, electronic or other), is
      subject to this Agreement whether provided directly to Executive or not,
      whether provided to Executive prior to the Effective Date of this
      Agreement or not, and whether inadvertently disclosed to Executive or not.
      Confidential Information which was or is available to Executive or to
      which Executive had or has access will be deemed to have been provided to
      Executive. Executive also hereby agrees that Confidential Information
      shall be deemed to include information regarding the assets of the
      Company, even if such information was learned by Executive prior to
      formation of the Company.
 
            (d) VALUE AND SECURITY. Executive understands and agrees that all
      Confidential Information, and every portion thereof, constitutes the
      valuable intellectual property of the Company, its affiliates, and/or
      third parties, and Executive further acknowledges the importance of
      maintaining the security and confidentiality of the Confidential
      Information and of not misusing the Confidential Information.
 
            (e) DISCLOSURE REQUIRED BY LAW. If Executive is legally required to
      disclose any Confidential Information, Executive shall promptly notify the
      Company in writing of such request or requirement so that the Company may
      seek an appropriate protective order or other relief. Executive agrees to
      cooperate with and not to oppose any effort by the Company to resist or
      narrow such request or to seek a protective order or other appropriate
      remedy. In any case, Executive will (a) disclose only that portion of the
      Confidential Information that, according to the advice of Executive's
      counsel, is required to be disclosed (and Executive's disclosure of
      Confidential Information to Executive's counsel in connection with
      obtaining such advice shall not be a violation of this Agreement), (b) use
      reasonable efforts (at the expense of the Company) to obtain assurances
      that such Confidential Information will be treated confidentially, and (c)
      promptly notify the Company in writing of the items of Confidential
      Information so disclosed.
 
                                       12
<PAGE>
 
            (f) THIRD-PARTY CONFIDENTIALITY AGREEMENTS. To the extent that the
      Company possesses any Confidential Information which is subject to any
      confidentiality agreements with, or obligations to, third parties,
      Executive will comply with all such agreements or obligations in full. The
      immediately preceding sentence shall apply only if the Company has
      provided Executive with a copy of such agreements, and Executive may
      disclose such agreements and any related Confidential Information to
      Company's attorneys and rely on their advice regarding compliance
      therewith.
 
            (g) SURVIVAL. The covenants made by Executive in this Section 11,
      other than Paragraph (f) hereof, will be effective only during the
      Employment Period and for the two-year period immediately following the
      Employment Period, and to that extent (and only that extent) shall survive
      termination of this Agreement. The covenants made by Executive in
      Paragraph (f) of this Section 11 will be effective during the period
      specified in the confidentiality agreements described therein.
 
      12. NO SOLICITATION. Executive shall not, for a period of one year after
the Termination Date, either as principal, agent, independent contractor,
consultant, director, officer, employee, employer, advisor, stockholder,
partner, member, joint venturer, owner or in any other individual or
representative capacity whatsoever, whether paid or unpaid, either for his own
benefit or for the benefit of any other person or entity, either (A) contact or
solicit, with respect to hiring, any person known by Executive to be or to have
been, at any time during the 12-month period immediately preceding the
Termination Date, an employee of the Company or its affiliates, or (B) induce or
otherwise counsel, advise or encourage any employee of the Company or its
affiliates to leave the employment of the Company or their respective employment
with the Company's affiliates, as the case may be; provided, however, that this
restriction shall not apply to any solicitations contained in an advertisement
directed generally to the public or the trade, nor to any contacts resulting
from such a solicitation. If Executive fails to comply with this Section 12, the
Company shall be entitled to, among other remedies, compliance by Executive with
the terms of this section for an additional period of time that shall equal the
period over which such noncompliance occurred. Notwithstanding any other
provision hereof, this Section 12 shall not apply (1) if the Company terminates
Executive's employment with the Company and its affiliates pursuant to Section
6(a)(4) or pursuant to delivery by the Company to Executive of a notice of
non-renewal in accordance with Section 4, (2) if Executive terminates
Executive's employment with the Company and its affiliates pursuant to Section
6(b)(1), or (3) after the occurrence of a Change of Control.
 
      13. DEFENSE OF CLAIMS. Executive agrees that, during the Employment Period
and for a period of 36 months after the Termination Date, upon request from the
Company, Executive will cooperate with the Company and its affiliates in the
defense of any claims or actions that may be made by or against the Company or
any of its affiliates that relate to Executive's prior areas of responsibility,
except if Executive's reasonable interests are adverse to the Company or
affiliates in such claim or action. If Executive is not an employee of the
Company or an affiliate at such time, the Company agrees to compensate Executive
for his time spent on such matters at the rate of $150 per hour, and in
addition, to pay or reimburse Executive for all of Executive's reasonable travel
and other direct expenses incurred, or to be reasonably incurred, to comply with
Executive's obligations under this Section 13, provided Executive provides
reasonable documentation of same.
 
                                       13
<PAGE>
 
      14. WITHHOLDINGS: RIGHT OF OFFSET. The Company may withhold and deduct
from any payments made or to be made pursuant to this Agreement (a) all federal,
state, local and other taxes as may be required pursuant to any law or
governmental regulation or ruling, (b) any deductions consented to in writing by
Executive, and (c) any other sums owed by Executive to the Company, any
affiliate, or any employee benefit plan or program of the Company or any
affiliate.
 
      15. SEVERABILITY. It is the desire of the parties hereto that this
Agreement be enforced to the maximum extent permitted by law, and should any
provision contained herein be held unenforceable by a court of competent
jurisdiction or arbitrator (pursuant to Section 17), the parties hereby agree
and consent that such provision shall be reformed to create a valid and
enforceable provision to the maximum extent permitted by law; provided, however,
if such provision cannot be reformed, it shall be deemed ineffective and deleted
herefrom without affecting any other provision of this Agreement.
 
      16. TITLE AND HEADINGS; CONSTRUCTION. Titles and headings to Sections
hereof are for the purpose of reference only and shall in no way limit, define
or otherwise affect the provisions hereof. Any and all Exhibits referred to in
this Agreement are, by such reference, incorporated herein and made a part
hereof for all purposes. The words "herein", "hereof", "hereunder" and other
compounds of the word "here" shall refer to the entire Agreement and not to any
particular provision hereof.
 
      17. ARBITRATION; INJUNCTIVE RELIEF; ATTORNEYS' FEES.
 
            (a) Subject to Section 17(b), any dispute, controversy or claim
      between Executive and the Company arising out of or relating to this
      Agreement, Executive's employment with Company, or the termination of
      either will be finally settled by arbitration in Houston, Texas before,
      and in accordance with the rules for the resolution of employment disputes
      then obtaining of, the American Arbitration Association. The arbitrator's
      award shall be final and binding on both parties.
 
            (b) Notwithstanding Section 17(a), an application for emergency or
      temporary injunctive relief by either party shall not be subject to
      arbitration under this Section 17; provided, however, that the remainder
      of any such dispute (beyond the application for emergency or temporary
      injunctive relief) shall be subject to arbitration under this Section 17.
      Executive acknowledges that Executive's violation of Sections 11 and/or 12
      of this Agreement will cause irreparable harm to the Company, Executive
      agrees not to contest that Executive's violation of Sections 11 and/or 12
      of this Agreement will cause irreparable harm to the Company and Executive
      agrees that the Company shall be entitled as a matter of right to specific
      performance of Executive's obligations under Sections 11 and 12 and an
      injunction, from any court of competent jurisdiction, restraining any
      violation or further violation of such agreements by Executive or others
      acting on his/her behalf, without any showing of irreparable harm and
      without any showing that the Company does not have an adequate remedy at
      law. The Company's right to injunctive relief shall be cumulative and in
      addition to any other remedies provided by law or equity.
 
                                       14
<PAGE>
 
            (c) Each side shall share equally the cost of the arbitrator and
      bear its own costs and attorneys' fees incurred in connection with any
      arbitration, unless a statutory claim authorizing the award of attorneys'
      fees is at issue, in which event the arbitrator may award a reasonable
      attorneys' fee in accordance with the jurisprudence of that statute.
 
            (d) Nothing in this Section 17 shall prohibit a party to this
      Agreement from (i) instituting litigation to enforce any arbitration award
      or (ii) joining another party to this Agreement in a litigation initiated
      by a person which is not a party to this Agreement.
 
      18. GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES
OF CONFLICT OF LAWS. THE EXCLUSIVE VENUE FOR THE RESOLUTION OF ANY DISPUTE
RELATING TO THIS AGREEMENT OR EXECUTIVE'S EMPLOYMENT (THAT IS NOT SUBJECT TO
ARBITRATION UNDER SECTION 17 FOR ANY REASON) SHALL BE IN THE STATE AND FEDERAL
COURTS LOCATED IN HARRIS COUNTY, TEXAS AND THE PARTIES HEREBY EXPRESSLY CONSENT
TO THE JURISDICTION OF THOSE COURTS.
 
      19. ENTIRE AGREEMENT AND AMENDMENT. This Agreement contains the entire
agreement of the parties with respect to Executive's employment and the other
matters covered herein (except to the extent that other agreements are
specifically referenced herein); moreover, this Agreement supersedes all prior
and contemporaneous agreements and understandings, oral or written, between the
parties hereto concerning the subject matter hereof and thereof. This Agreement
may be amended, waived or terminated only by a written instrument executed by
both parties hereto.
 
      20. SURVIVAL OF CERTAIN PROVISIONS. Wherever appropriate to the intention
of the parties hereto, the respective rights and obligations of said parties,
including, but not limited to, the rights and obligations set forth in Sections
6 through 18 hereof, shall survive any termination or expiration of this
Agreement for any reason.
 
      21. WAIVER OF BREACH. No waiver by either party hereto of a breach of any
provision of this Agreement by the other party, or of compliance with any
condition or provision of this Agreement to be performed by such other party,
will operate or be construed as a waiver of any subsequent breach by such other
party or any similar or dissimilar provision or condition at the same or any
subsequent time. The failure of either party hereto to take any action by reason
of any breach will not deprive such party of the right to take action at any
time while such breach continues.
 
      22. ASSIGNMENT. Neither this Agreement nor any rights or obligations
hereunder shall be assignable or otherwise subject to hypothecation by Executive
(except by will or by operation of the laws of intestate succession) or by the
Company, except that the Company may assign this Agreement to any successor
(whether by merger, purchase or otherwise) to all or substantially all of the
equity, assets or businesses of the Company, if such successor expressly agrees
to assume the obligations of the Company hereunder.
 
                                       15
<PAGE>
 
      23. NOTICES. Notices provided for in this Agreement shall be in writing
and shall be deemed to have been duly received (a) when delivered in person or
sent by facsimile transmission, (b) on the first business day after such notice
is sent by air express overnight courier service, or (c) on the third business
day following deposit in the United States mail, registered or certified mail,
return receipt requested, postage prepaid and addressed, to the following
address, as applicable:
 
                  (1)   If to Company, addressed to:
 
                        Mariner Energy, Inc.
                        Attn: Chairman of the Board
                        2101 Citywest Blvd.
                        19th Floor, Bldg. 2
                        Houston, TX 77042
                        (with a copy to the General Counsel)
 
                  (2)   If to Executive, addressed to the address set forth
                        below Executive's name on the execution page hereof;
 
or to such other address as either party may have furnished to the other party
in writing in accordance with this Section 23.
 
      24. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same instrument.
Each counterpart may consist of a copy hereof containing multiple signature
pages, each signed by one party, but together signed by both parties hereto.
 
      25. DEFINITIONS. The parties agree that as used in this Agreement the
following terms shall have the following meanings: an "affiliate" of a person
shall mean any person directly or indirectly controlling, controlled by, or
under common control with, such person; the terms "controlling, controlled by,
or under common control with" shall mean the possession, directly or indirectly,
of the power to direct or influence or cause the direction or influence of
management or policies (whether through ownership of securities or other
ownership interest or right, by contract or otherwise) of a person; the term
"person" shall mean a natural person, partnership (general or limited), limited
liability company, trust, estate, association, corporation, custodian, nominee,
or any other individual or entity in its own or any representative capacity, in
each case, whether domestic or foreign.
 
                             SIGNATURE PAGE FOLLOWS
 
                                       16
<PAGE>
 
      IN WITNESS WHEREOF, Executive and the Company have executed this Agreement
to be effective for all purposes as of the Effective Date.
 
                                           EXECUTIVE:
 
                                           Signature:     /s/ Scott D. Josey
                                                      --------------------------
                                                           SCOTT D. JOSEY
 
                                           Date: February 7, 2005
 
                                                 Address for Notices:
 
                                                         10 INWOOD OAKS
                                                         HOUSTON, TX  77024
 
                                            MARINER ENERGY, INC.
 
                                            By:      /s/ Teresa G. Bushman
                                               --------------------------------
                                                     Teresa G. Bushman
                                                     Vice President and General
`                                                    Counsel
 
                                            Date: February 7, 2005
 
<PAGE>
 
                                    EXHIBIT A
 
                                      NONE
 
                                      A-1
<PAGE>
 
                                                                       EXHIBIT B
 
                          WAIVER AND RELEASE AGREEMENT
 
      This Waiver and Release Agreement (the "AGREEMENT") is between Mariner
Energy, Inc., a Delaware company ("COMPANY"), and SCOTT D. JOSEY ("EXECUTIVE"),
as provided pursuant to that employment agreement between Executive and Company
dated February 7, 2005 (the "EMPLOYMENT AGREEMENT") and attached hereto as
EXHIBIT A.
 
      WHEREAS, Executive's employment with Company is being terminated; and
 
      WHEREAS, Executive will be paid certain severance benefits in exchange for
his release and waiver of his claims against the Company Releasee (as defined
below) pursuant to this Agreement;
 
      NOW, THEREFORE, the parties agree to the following.
 
      1. Complete Release and Other Consideration from Executive. In exchange
for the severance benefits provided under Section 2 of this Agreement, Executive
agrees as follows:
 
            a.    Complete Release. On behalf of Executive and Executive's heirs
                  and assigns, Executive fully releases Company and its direct
                  and indirect, past present and future, parents, subsidiaries,
                  affiliates, divisions, predecessors, successors, and assigns,
                  and, with respect to all such entities, their partners,
                  members, shareholders, owners, officers, directors, attorneys,
                  agents, representatives and employees (collectively, the
                  "COMPANY RELEASEES"), from any and all claims, demands,
                  damages, losses, expenses, liabilities and causes of action
                  (including claims for attorneys' fees) (collectively,
                  "CLAIMS"), known or unknown, that Executive, his heirs,
                  executors, administrators, and assigns may have or may claim
                  to have against any of the Company Releasees based upon facts
                  occurring on or prior to the date Executive signs this
                  Agreement, including but not limited to any claims arising out
                  of Executive's employment relationship with and service as an
                  employee, officer or director of Company, and the termination
                  of such relationship or service, (the "RELEASE"); provided,
                  however, that this Release shall not apply to Company's
                  obligations under this Agreement. This Release includes,
                  without limitation, any claims arising out of any contract
                  (express or implied); any tort (whether based on negligent,
                  grossly negligent, or intentional conduct); or any federal,
                  state, or local law, including, without limitation, the Age
                  Discrimination in Employment Act and the Employee Retirement
                  Income Security Act ("ERISA"), other than benefits that
                  Executive is entitled to under the terms of an ERISA plan.
                  This Release does not include any claims under the Age
                  Discrimination in Employment Act that may arise after this
                  Agreement is executed.
 
                                      B-1
<PAGE>
 
            b.    Confidentiality. Except as may be required by law or court
                  order or as may be necessary in an action arising out of this
                  Agreement, Executive agrees not to disclose the existence or
                  terms of this Agreement to anyone other than Executive's
                  immediate family, attorneys, tax advisors, and financial
                  counselors, provided that Executive first informs them of this
                  confidentiality clause and secures their agreement to be bound
                  by it. Executive understands and agrees that a breach of this
                  confidentiality provision by any of these authorized persons
                  will be deemed a material breach of this Agreement by
                  Executive.
 
            c.    Executive agrees not to bring or join any lawsuit against any
                  of the Company Releasees in any court (except as necessary to
                  protect Executive's rights under this Agreement or with
                  respect to Executive's entry into this Agreement) relating to
                  Executive's employment, events occurring during Executive's
                  employment or the termination of Executive's employment.
                  Executive represents that, as of the effective date of this
                  Agreement, Executive has not brought or joined any lawsuit or
                  filed any charge or claim against any of the Company Releasees
                  in any court or before any government agency. If Executive
                  brings or joins any lawsuit against any of the Company
                  Releasees in any court (except as necessary to protect
                  Executive's rights under this Agreement or with respect to
                  Executive's entry into this Agreement) relating to Executive's
                  employment, events occurring during Executive's employment or
                  the termination of Executive's employment, and Executive is
                  the prevailing party in such lawsuit, Executive shall be
                  obligated to return to the Company all amounts paid to
                  Executive as benefits under this Agreement, to the extent
                  permitted under applicable law and ordered by the court.
                  Further, if any Company Releasee is the prevailing party in
                  any lawsuit Executive brings against such Company Releasee
                  relating to Executive's employment that has been waived in
                  this Agreement, to the extent permitted by applicable law
                  (such as if Executive's claims are found to be brought in bad
                  faith), Executive agrees to pay all costs and expenses
                  incurred by such person or entity, including reasonable
                  attorneys' fees, in defending against such lawsuit.
 
            This Agreement is not intended to indicate that any Claims exist or
            that, if they do exist, they are meritorious. Rather, Executive is
            simply agreeing that, in return for the Company's payment provided
            by this Agreement, any and all potential Claims that Executive may
            have against the Company Releasees, regardless of whether they
            actually exist, are expressly settled, compromised and waived. By
            signing this Agreement, Executive and the Company Releasees are
            bound by it. Anyone who succeeds to Executive's rights and
            responsibilities, such as heirs or the executor of Executive's
            estate, is also bound by this Agreement. The waiver and release
            provisions of this Agreement do not apply to any rights or claims
            that may arise after its effective date. This Release also applies
            to any claims brought by any person or agency or class action under
            which Executive may have a right or benefit.
 
                                      B-2
<PAGE>
 
      2. Consideration from Company. In exchange for Executive's obligations
under this Agreement, the Company shall pay Executive those severance payments
and benefits described in Sections 7, 8 and 9, as applicable, of the Employment
Agreement, which are incorporated herein by reference and made a part of this
Agreement. Executive acknowledges that Executive is not otherwise entitled to
receive such severance payments and benefits, these severance payments and
benefits are conditioned on Executive's compliance with the terms of this
Agreement and the Employment Agreement, including without limitation Sections 11
and 12 thereof. Executive acknowledges and agrees that Company will withhold any
taxes required by applicable law from the severance payments and benefits.
 
      3. Right to Consult an Attorney; Period of Review. Executive is encouraged
to consult with an attorney before signing this Agreement. From the date this
Agreement is first presented to Executive, Executive will have 21 [45, if
applicable] days in which to review this Agreement. Executive may use as little
or much of this 21 [45]-day review period as Executive chooses.
 
      4. Entire Agreement; Amendment; Continuing Obligations. This Agreement and
the Employment Agreement together contain the entire agreement of the parties
with respect to the termination of Executive's employment and the other matters
covered herein and therein; moreover, this Agreement supersedes all prior and
contemporaneous agreements and understandings, oral or written, between the
parties hereto concerning the subject matter hereof. This Agreement may be
amended, waived or terminated only by a written instrument executed by both
parties hereto. Executive hereby reaffirms and agrees to continue to abide by
all of Executive's continuing obligations under Sections 11 through 18 of the
Employment Agreement.
 
      5. Revocation. Upon signing this Agreement, Executive will have 7 days to
revoke the Agreement. To properly revoke the Agreement, Company must receive
written notice of revocation from Executive by the close of business on the 7th
day after the date the Agreement is signed by Executive. Written notice must be
delivered pursuant to Section 23 of the Employment Agreement. Executive
understands that failure to revoke his acceptance of this Agreement within 7
days after the date he signs it will result in this Agreement being permanent
and irrevocable.
 
      6. Choice of Law. This Agreement will be governed in all respects by the
laws of the State of Texas, without regard to its choice of law principles. This
Agreement is subject to the arbitration provisions in Section 17 of the
Employment Agreement.
 
      7. Effectiveness of Agreement. This Agreement will be effective, and the
severance payments and benefits provided in Section 2 of this Agreement will be
made and provided, only if Executive executes this Agreement within 21 [45] days
of receiving it and only if Executive does not revoke this Agreement under
Section 5 above.
 
                                      B-3
<PAGE>
 
                                            EXECUTIVE
 
                                            Signature:__________________________
                                                            SCOTT D. JOSEY
 
                                            Date:_______________________________
 
                                            MARINER ENERGY, INC.
 
                                            By: _______________________________
                                                   [Name]
                                                   [Title]
 
                                            Date:______________________________
 
                                      B-4

 

 

 

EX-10.1 2 h75380exv10w1.htm EX-10.1

Exhibit 10.1

AMENDMENT TO EMPLOYMENT AGREEMENT

          This AMENDMENT (this “Amendment”) by and between Mariner Energy, Inc., a Delaware corporation (the “Company”), and Scott D. Josey (the “Executive”), dated this 12th day of August, 2010 and effective as of January 1, 2009, is an amendment to that certain Employment Agreement by and between the Company and the Executive dated as of February 7, 2005 (the “Employment Agreement”).

RECITALS

          The Company and the Executive have previously entered into the Employment Agreement to provide for terms and conditions of the Executive’s employment by the Company; and

          The Company and the Executive desire to make certain changes to the Employment Agreement to ensure that the Employment Agreement complies with the applicable requirements of Section 409A of the Internal Revenue Code (the “Code”); and

          Internal Revenue Service Notice 2010-6 permits this Amendment to be effective as of January 1, 2009 and for the Employment Agreement to be treated as being corrected on January 1, 2009.

          NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

          1. A new Section 26 is hereby added to the Employment Agreement to read as follows:

          “26. SECTION 409A.

     (a) Notwithstanding anything in this Agreement to the contrary, if any provision hereof would result in the imposition of an additional tax under Section 409A of the Code and related regulations and Treasury pronouncements (‘Section 409A’), that provision will be reformed to avoid imposition of the applicable tax to the extent permissible under Section 409A and no action so taken shall be deemed to adversely affect Executive’s rights under this Agreement.

     (b) Each payment under this Agreement is intended to be exempt from Section 409A or in compliance with Section 409A, including, but not limited to, being paid pursuant to a fixed schedule or specified date pursuant to Treasury Regulation § 1.409A-3(a) and the provisions of this Agreement will be administered, interpreted and construed accordingly. Without limiting the generality of the foregoing, the term ‘termination of employment’ or any similar term under this Agreement or the Merger Agreement will be interpreted to mean ‘separation from service’ within the meaning of Section 409A and Treasury Regulation § 1.409A-3(a)(1) to the extent necessary to comply with Section 409A. A ‘separation from

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service’ will occur if both parties reasonably expect the Executive’s level of service to permanently drop to less than half the Executive’s average level of service during the preceding three years, as determined pursuant to Code Section 409A(a)(2)(A)(i) and the Internal Revenue Service guidance of general applicability. Payment of the Annual Bonus under Section 3(b) is contingent upon employment on the date of payment. Subject to any six-month delay requirement set forth in Section 26(e), payments under Section 8(a) and payments to Executive on account of termination of employment pursuant to the Merger Agreement (as defined below) shall be paid on the 60th day following Executive’s termination of employment; payments under Sections 7(c)(1), 7(c)(3), 7(e)(1) and 7(e)(3) will be made as set forth in Section 8(a), as required by Sections 7(c)(6) and 7(e)(6). Any Gross-up Payment payable hereunder shall be paid to Executive at the time Executive receives payments or benefits to which the Excise Tax relates; notwithstanding the foregoing, in accordance with Section 409A requirements, any Gross-Up Payment shall be paid no later than the end of the calendar year next following the year in which Executive remits the related taxes.

     (c) All reimbursements or provision of in-kind benefits pursuant to this Agreement shall be made in accordance with Treas. Reg. § 1.409A-3(i)(1)(iv) such that the reimbursement or provision will be deemed payable at a specified time or on a fixed schedule relative to a permissible payment event. Specifically, the amount reimbursed or in-kind benefits provided under this Agreement during Executive’s taxable year may not affect the amounts reimbursed or provided in any other taxable year (except that total reimbursements may be limited by a lifetime maximum under a group health plan), the reimbursement of an eligible expense shall be made on or before the last day of Executive’s taxable year following the taxable year in which the expense was incurred, and the right to reimbursement or provision of in-kind benefit is not subject to liquidation or exchange for another benefit.

     (d) If the execution of a waiver and release is a condition to Executive receiving benefits under this Agreement, the Company will provide Executive with such waiver and release within seven days following Executive’s separation from service. In order to be eligible for benefits hereunder, Executive must execute and return such waiver and release to the Company on or before the last day of the minimum required waiver consideration period provided under the Age Discrimination in Employment Act and not revoke such waiver and release with the time period set forth in such waiver and release.

     (e) Notwithstanding any provision of this Agreement to the contrary, Executive and the Company agree that any benefit under this Agreement or any other agreement or arrangement (including pursuant to the Merger Agreement) which is subject to the six-month delay under

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Section 409A(a)(2)(B) of the Code shall not be paid or commence until the earliest of: (1) the first business day following the expiration of six months from Executive’s separation from service, (2) the date of Executive’s death, or (3) such earlier date as complies with the requirements of Section 409A, provided that in no event shall any such delayed payment be made prior to July 1, 2010.

     (f) As used in this Section 26, ‘Merger Agreement’ means the Agreement and Plan of Merger by and among Apache Corporation, ZMZ Acquisitions LLC, and the Company, dated as of April 14, 2010.”

          2. The first sentence of Section 2 of the Waiver and Release Agreement is hereby amended to read as follows:

“In exchange for Executive’s obligations under this Agreement, the Company shall pay Executive those severance payments and benefits described in Sections 7, 8 and 9, as applicable, of the Employment Agreement, and those payments and benefits to which Executive is entitled pursuant to the Agreement and Plan of Merger by and among Apache Corporation, ZMZ Acquisitions LLC, and the Company, dated as of April 14, 2010, both of which are incorporated herein by reference and made a part of this Agreement.”

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          IN WITNESS WHEREOF, the Executive and the Company have executed this Amendment as of the day and year first above written.

 

 

 

 

 

 

MARINER ENERGY, INC.
 

 

 

By:  

/s/ Jesus G. Melendrez  

 

 

 

Jesus G. Melendrez 

 

 

 

Senior Vice President, Chief
Commercial Officer and Acting
Chief Financial Officer 

 

 


EXECUTIVE
 

 

 

/s/ Scott D. Josey  

 

 

Scott D. Josey 

 

 

 

 

 

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