Exhibit 10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
     This Amended and Restated Employment Agreement (“Agreement”) is made and
entered into as of March 2, 2006 (the “Effective Date”), by and among Mariner
Energy, Inc., a Delaware corporation (“MEI”), Mariner Energy Resources, Inc., a
Delaware corporation (“MERI”) (MEI and MERI may be separately referred to as an
“Employer” or collectively referred to as the “Employers”), and Judd Hansen
(“Executive”).
     1. Employment. During the Employment Period (as defined in Section 4
hereof), (i) MEI shall employ Executive, and Executive shall serve, as Vice
President of MEI, and (ii) MERI shall employ Executive, and Executive shall
serve, as Vice President of MERI.
     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 Employers, will
act in the best interests of the Employers and will perform with due care his
duties and responsibilities. Executive’s duties will include those normally
incidental to the positions set forth in Section 1 hereof as well as whatever
additional duties may be assigned to him by the Board of Directors of MEI (the
“MEI Board”), the Chief Executive Officer of MEI, the Board of Directors of MERI
(the “MERI Board”), or the Chief Executive Officer of MERI. Executive agrees to
cooperate fully with the MEI Board, the Chief Executive Officer of MEI, the MERI
Board, and the Chief Executive Officer of MEI, 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 employment other than that
set forth in Section 1 hereof without the advance written approval of the Board
of MEI and the Board of MERI. 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
an Employer in any business in which the Employer 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 of MEI and the
Board of MERI, (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 Employers.
    (b) Executive represents and covenants to the Employers 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.

 

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    (c) Executive acknowledges and agrees that Executive owes the Employers 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 Employers
under the common law. MEI and MERI each acknowledge that Executive’s
simultaneous employment with the Employers will not be considered a violation of
any provision of this Section 2.
     3. Compensation.
    (a) During the Employment Period (as defined in Section 4 hereof), (i) MEI
shall pay to Executive an annualized base salary of $93,750 (the “MEI Base
Salary”) (ii) and MERI shall pay to Executive an annualized base salary of
$93,750 (the “MERI Base Salary”), in consideration for Executive’s services
under this Agreement, payable on a not less than semi-monthly basis, in
conformity with MEI’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 MEI Board and the MERI Board shall independently review
Executive’s MEI Base Salary and MERI Base Salary, respectively, based on market
survey data, corporate performance, and performance of Executive. If, in its
sole and complete discretion, either the MEI Board or the MERI Board determines
that an increase in Executive’s Base Salary is appropriate, such Board may make
such adjustment, and such adjusted salary shall thereafter be Executive’s Base
Salary for purposes of this Agreement. Neither Executive’s MEI Base Salary or
his MERI Base Salary may 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 respective Board.
    (b) Executive may be eligible for an annual discretionary performance bonus
with respect to each calendar year during the Employment Period from either or
both Employers (the “MEI Annual Bonus” and the “MERI Annual Bonus”). The amount,
if any, of Executive’s Annual Bonus will be determined by the respective Board
in its sole and complete discretion based on market survey data, corporate
performance, and performance of Executive. Annual Bonus determinations will be
made by the respective Board at a time convenient to such Board but typically
within 60 calendar days of the end of each calendar year. Each of the MEI Board
and the MERI 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 either
Board determines to award Executive an Annual Bonus, it will be payable in
conformity with MEI’s customary payroll practices for executive bonuses. Either
Board may also award additional bonuses or other compensation to Executive at
any time in its sole and complete discretion.
    (c) MEI shall act as agent for MERI with respect to (i) the payment of
MERI’s Base Salary, Annual Bonus, and any other bonuses or compensation payable
by MERI to Executive, and (ii) coverage of Executive under the MEI employee
benefit plans, including retirement, welfare, deferral and incentive plans, all
as provided in that certain Agency Agreement by and between MEI and MERI,
entered into as of March 2, 2006. 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

 

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applicable law or with respect to Executive’s coverage in MEI’s employee benefit
plans. Further, in the event Executive is no longer employed by MERI but
continues to be employed by MEI, MEI shall assume the financial obligations
described in this Section 3 and Executive’s MEI Base Salary, Annual Bonus and
other forms of compensation may be adjusted accordingly to reflect Executive’s
duties with MEI.
     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,
2007 (the “Initial Term”). On March 3, 2007 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 an Employer to the
Executive (or the Executive to an Employer) 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
“Employment Period.” In the event that this Agreement is not renewed by an
Employer or by Executive with respect to either or both Employers, Executive
shall become an at-will employee of such Employer and such Employer shall have
the right to terminate Executive’s employment with the Employer 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. Each Employer agrees to reimburse
Executive for reasonable business-related expenses incurred in the performance
of Executive’s duties under this Agreement.
    (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 MEI generally for executive employees, subject to the eligibility
requirements and other terms and conditions of those plans and programs. Neither
MEI nor MERI will, 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 an Employer or any
affiliates of an Employer.
     6. Termination of Employment.
    (a) Employer’s Right to Terminate. At any time during the Initial Term or
any Renewal Term, each Employer shall independently have the right to terminate
this Agreement with respect to itself and to terminate Executive’s employment
with such Employer for any of the following reasons:

 

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      (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
      (4) For any other reason whatsoever, in the sole and complete discretion
of the Employer.
     (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 either Employer 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 90 consecutive calendar days or a total of 120 calendar days during any
12 month period.
    (d) “Notices.” Any termination of this Agreement by an Employer 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 an Employer 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 an Employer 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 an Employer 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 MEI. If (1) MEI terminates this Agreement and Executive’s
employment with MEI during the Initial Term or the Renewal Term (if any)
pursuant to Section 6(a)(4), (2) Executive signs and does not revoke a waiver
and release agreement substantially similar to Exhibit B with respect to MEI,
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), MEI shall
pay Executive severance in

 

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accordance with Section 7(c). Such severance payments shall be in addition to
payment by MEI of all previously unpaid amounts (including, without limitation,
salary, bonuses, equity plans, incentive compensation plans, fringe benefits,
and expense reimbursements) owed to Executive by either Employer under this
Agreement with respect to periods prior to the Termination Date.
    (b) Termination of MEI Employment by Executive. If (1) Executive terminates
this Agreement and Executive’s employment with MEI 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 with respect to MEI, 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), MEI shall pay Executive severance in accordance
with Section 7(c). Such severance payments shall be in addition to payment by
MEI of all previously unpaid amounts (including, without limitation, salary,
bonuses, equity plans, incentive compensation plans, fringe benefits, and
expense reimbursements) owed to Executive by either Employer under this
Agreement with respect to periods prior to the Termination Date.
    (c) Severance Amount. If MEI is required to pay Executive severance by the
express terms of Section 7(a) or 7(b), MEI shall pay Executive the following as
severance:
      (1) The sum of Executive’s MEI Base Salary and MERI Base Salary at the
highest rate in effect prior to the Termination Date as salary continuation for
a period of eighteen months commencing on the date on which Executive’s
employment with MEI is terminated (the “Termination Date”) (the “Severance
Period”), payable in equal monthly installments pursuant to MEI’s customary
payroll practices for executive salaries; provided, however, that, at the option
of MEI, the amounts payable under this Section 7(c) may be paid by MEI in one
lump sum.
      (2) Executive, Executive’s spouse, and Executive’s dependents will
continue to be eligible for coverage under MEI’s group health plan or any
successor plan on the same basis as active executive employees of MEI, 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, MEI’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 MEI 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 both Employers for the year prior to the year in which

 

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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 MEI’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) 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 MEI 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 of MEI Employment in Event of Executive’s Disability. If
(1) MEI terminates Executive’s employment with MEI 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 with respect to MEI, 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), MEI shall pay Executive the severance described in
accordance with Section 7(e). Such severance payments shall be in addition to
payment by MEI of all previously unpaid amounts (including, without limitation,
salary, bonuses, equity plans, incentive compensation plans, fringe benefits,
and expense reimbursements) owed to Executive by either Employer under this
Agreement with respect to periods prior to the Termination Date.
    (e) Disability Severance. If MEI is required to pay Executive severance by
the express terms of Section 7(d), MEI shall pay Executive the following as
severance:
      (1) The sum of Executive’s MEI Base Salary and MERI 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 MEI’s customary payroll practices for executive salaries; provided,
however, that, at the option of MEI, the amounts payable under this Section 7(e)
may be paid by MEI in one lump sum.
      (2) Executive, Executive’s spouse, and Executive’s dependents will
continue to be eligible for coverage under MEI’s group health plan or any
successor plan on the same basis as active executive employees of MEI, their
spouses, and their dependents for the duration of the Severance Period.

 

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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 MEI
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, MEI’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 both Employers 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 MEI’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) 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 MEI that covers its employees or executives generally.
    (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 respective Board or the Chief Executive Officer of
either Employer;
      (2) Executive’s having committed any act of willful misconduct or material
dishonesty against the Employer 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 either Employer or any of their affiliates;

 

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      (3) Executive’s material breach of this Agreement, any fiduciary duty owed
by Executive to an Employer or its affiliates, or any written workplace policies
applicable to Executive (including an Employer’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 an Employer’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 an Employer’s
attorney to perform required acts on the Chief Executive Officer’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 MEI of this Agreement, provided that Executive
provides the MEI 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 such Board’s receipt of such
written notice;
      (2) Any requirement by MEI that Executive relocate outside of the Houston
metropolitan area;
      (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 MEI;
      (4) Any material reduction in Executive’s title, responsibilities, or
duties; or
      (5) The assignment to Executive of any duties materially inconsistent with
his duties as Vice President of MEI.
    (h) Later Determinations. Notwithstanding any other provision of this
Agreement, if Executive’s employment with MEI is terminated such that Executive
is entitled to severance from MEI and within one year following such termination
the MEI Board determines that Cause exists or existed on, prior to, or after
such termination,

 

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Executive shall not be entitled to any severance from MEI, and any and all
severance payments from MEI to Executive in any form or amount shall cease and
any such payments or reimbursements already made to Executive must be returned
to MEI.
     8. Change of Control of MEI.
    (a) Upon the termination of Executive’s employment with MEI for any reason
other than Cause at any time on or within nine months after a Change of Control
of MEI that occurs during the Employment Period or upon the occurrence of a
Change of Control of MEI within nine months following a termination of
Executive’s employment that entitles Executive to severance under Section 7(c),
MEI shall pay Executive, subject to Section 8(d) below, an amount equal to 2.0
times the sum of Executive’s MEI Base Salary, his MERI Base Salary, plus his
Average Bonus Amount from each Employer. The Executive’s “Average Bonus Amount”
shall be the average annual amount paid or payable to Executive as bonuses for
both Employer’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 MEI 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 MEI 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 MEI; (ii) the consummation of a sale of all or substantially all of the
assets of MEI; (iii) the dissolution of MEI; or (iv) the consummation of any
merger, consolidation, or reorganization involving MEI 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 MEI immediately prior to such merger, consolidation or
reorganization.
    (d) Except as provided below, such Change of Control payments shall be in
addition to payment by MEI of all other amounts (including, without limitation,
salary, bonuses, equity plans, incentive compensation plans, fringe benefits,
and expense reimbursements) owed to Executive by either Employer 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

 

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     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 MEI, any
person whose actions result in a change of ownership covered by
Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the
“Code”), or any person affiliated with MEI 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), MEI 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 MEI Board and the MERI 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 an Employer shall not be deemed to constitute a conflict of interest.
     11. Confidentiality. Each Employer agrees to provide Executive valuable
Confidential Information of the Employer and of third parties who have supplied
such information to the Employer. 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 Employer or its affiliates, (ii) any
information that gives the Employer or 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 Employer or its affiliates, (iv) any trade secrets of
the Employer or its affiliates, and (v) any other information of or regarding
the Employer 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 Employer or its affiliates or which Executive has
learned of through his employment with the Employer.

 

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Confidential Information also includes any non-public, confidential or
proprietary information about or belonging to any third party which has been
entrusted to the Employer 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 Employer’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 required in connection with fulfilling his duties for the
benefit of the Employer, and (iii) to return to the Employer all documents
containing Confidential Information in Executive’s possession upon separation
from the Employer 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 Employer 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 Employer 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
Employer will be a material breach of this Agreement. The immediately preceding
sentence has been included for the purpose of highlighting certain aspects of
the

 

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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 Employer, even if such information was learned by Executive
prior to formation of the Employer.
     (d) Value and Security. Executive understands and agrees that all
Confidential Information, and every portion thereof, constitutes the valuable
intellectual property of the Employer, 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
Employer in writing of such request or requirement so that the Employer may seek
an appropriate protective order or other relief. Executive agrees to cooperate
with and not to oppose any effort by the Employer 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 Employer) to
obtain assurances that such Confidential Information will be treated
confidentially, and (c) promptly notify the Employer in writing of the items of
Confidential Information so disclosed.
     (f) Third-Party Confidentiality Agreements. To the extent that the Employer
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 Employer has provided Executive with a copy of such
agreements, and Executive may disclose such agreements and any related
Confidential Information to the Employer’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.

 

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     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 an Employer or its affiliates, or (B) induce or
otherwise counsel, advise or encourage any employee of an Employer or its
affiliates to leave the employment of an Employer or their respective employment
with such Employer’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 Employer 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 Employer terminates Executive’s employment with the Employer and its
affiliates pursuant to Section 6(a)(4) or pursuant to delivery by the Employer
to Executive of a notice of non-renewal in accordance with Section 4, (2) if
Executive terminates Executive’s employment with the Employer 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 an
Employer, Executive will cooperate with an Employer and its affiliates in the
defense of any claims or actions that may be made by or against an Employer or
any of its affiliates that relate to Executive’s prior areas of responsibility,
except if Executive’s reasonable interests are adverse to such Employer or
affiliates in such claim or action. If Executive is not an employee of an
Employer or an affiliate at such time, the Employer 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.
     14. Withholdings: Right of Offset. An Employer (or its agent) 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 Employer,
any affiliate, or any employee benefit plan or program of the Employer 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.

 

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     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 an Employer arising out of or relating to this Agreement,
Executive’s employment with an Employer, 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 all 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 Employer, Executive agrees not to contest that
Executive’s violation of Sections 11 and/or 12 of this Agreement will cause
irreparable harm to the Employer and Executive agrees that the Employer 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 Employer does not have an
adequate remedy at law. The Employer’s right to injunctive relief shall be
cumulative and in addition to any other remedies provided by law or equity.
     (c) Each party 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

 

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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, specifically
including the Employment Agreement entered into by and between MEI and Executive
as of February 7, 2005. 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 a party hereto of a breach of any
provision of this Agreement by another 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 a 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
either Employer, except that either Employer 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 such Employer, if such successor
expressly agrees to assume the obligations of such Employer hereunder.
     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 MEI, addressed to:
Mariner Energy, Inc.
Attn: Chief Executive Officer
One BriarLake Plaza, Suite 2000
2000 West Sam Houston Parkway South
Houston, TX 77042

 

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     (2) If to MERI, addressed to:
Mariner Energy Resources, Inc.
Attn: Chief Executive Officer
One BriarLake Plaza, Suite 2000
2000 West Sam Houston Parkway South
Houston, TX 77042
     (3) 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.
     26. Code Section 409A Compliance. Notwithstanding anything in this
Agreement to the contrary, if any provision hereof would result in the
imposition of an additional tax under Code Section 409A and related regulations
and Treasury pronouncements (“Section 409A”), that provision will be reformed to
avoid imposition of the applicable tax and no action taken to comply with
Section 409A shall be deemed to adversely affect Executive’s rights hereunder.
SIGNATURE PAGE FOLLOWS

 

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     IN WITNESS WHEREOF, Executive, MEI and MERI have executed this Agreement to
be effective for all purposes as of the Effective Date.

              EXECUTIVE:
 
       
 
  Signature:   /s/ Judd Hansen
 
       
 
      Judd Hansen

                  Date:   March 1, 2006
 
           
 
          Address for Notices:
 
           
 
          15718 Woodcroft Dr.
Houston, TX 77095

              MARINER ENERGY, INC.
 
       
 
  By:   /s/ Scott D. Josey
 
       
 
                [Name, Title]
 
      Chairman of the Board,
 
      Chief Executive Officer and President

         
 
  Date:   March 2, 2006

              MARINER ENERGY RESOURCES, INC.
 
       
 
  By:   /s/ Scott D. Josey
 
       
 
                [Name, Title]
 
      Chairman of the Board,
 
      Chief Executive Officer and President

         
 
  Date:   March 2, 2006

 

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Exhibit A
None

A - 1

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Exhibit B
WAIVER AND RELEASE AGREEMENT
     This Waiver and Release Agreement (the “Agreement”) is between Mariner
Energy, Inc., a Delaware corporation, (“Employer”) and Judd Hansen
(“Executive”), as provided pursuant to that employment agreement between
Executive and Employer dated March 2, 2006 (the “Employment Agreement”) and
attached hereto as Exhibit A.
WHEREAS, Executive’s employment with Employer is being terminated; and
     WHEREAS, Executive will be paid certain severance benefits in exchange for
his release and waiver of his claims against the Employer 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 Employer 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 “Employer 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 Employer 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 Employer, and the
termination of such relationship or service, (the “Release”); provided, however,
that this Release shall not apply to Employer’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) 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

B-1

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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
Employer 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
Employer Releasees in any court or before any government agency. If Executive
brings or joins any lawsuit against any of the Employer 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 Employer 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 Employer Releasee is
the prevailing party in any lawsuit Executive brings against such Employer
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 Employer’s payment provided by this Agreement, any and all
potential Claims that Executive may have against the Employer Releasees,
regardless of whether they actually exist, are expressly settled, compromised
and waived. By signing this Agreement, Executive and the Employer 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

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     2. Consideration from Employers. In exchange for Executive’s obligations
under this Agreement, Employer 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 Employer (or its agent)
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, Employer 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

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              EXECUTIVE:
 
       
 
  Signature:    
 
       
 
            Judd Hansen

         
 
  Date:    
 
       

              MARINER ENERGY, INC.
 
       
 
  By    
 
       
 
                [Name, Title]

         
 
  Date:    
 
       

B-4