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                                                                   Exhibit 10.7

                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT


         THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (hereinafter called
this "Agreement") is entered into effective as of June 27, 1996 (the "Effective
Date"), by and between MARINER ENERGY, INC., a Delaware corporation
(hereinafter called "Company"), and Thomas E. Young (hereinafter called
"Employee").

         WHEREAS, (i) Company and Employee entered into that certain Employment
Agreement effective as of June 27, 1996 (the "Original Employment Agreement"),
and (ii) the Original Employment Agreement was amended pursuant to that certain
First Amendment to Employment Agreement effective as of January 1, 1997 (the
"Employment Agreement First Amendment"), by and between Company and Employee
(the Original Employment Agreement as amended by the Employment Agreement First
Amendment is referred to herein as the "Employment Agreement"); and

         WHEREAS, Company and Employee also entered into that certain letter
agreement (including Exhibit A thereto) dated June 27, 1996 (the "Letter
Agreement"), concerning Employee's participation in Company's Employee
Overriding Royalty Interest Pool Program; and

         WHEREAS, Company and Employee desire to amend and restate the
Employment Agreement and the Letter Agreement, and in connection therewith, to
incorporate the provisions of the Letter Agreement, as amended and restated,
into the Employment Agreement, as amended and restated, all as hereinafter
provided;

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto agree as follows:

         1.       Employment.

                  For the period June 27, 1996 through October 31, 1998,
                  Company hereby employs Employee as an employee of Company to
                  perform such duties and responsibilities and act in such
                  capacity as may from time to time be determined by Company.
                  On and after November 1, 1998, Company hereby employs
                  Employee to serve as Vice President - Land of Company. The
                  permanent place of Employee's employment shall be at a
                  location within a 50-mile radius of the central business
                  district of the City of Houston, Texas; provided, however,
                  Employee shall be required to undertake such ordinary and
                  usual travel as is necessary to properly discharge his duties
                  and responsibilities hereunder. Employee hereby accepts such
                  employment, and agrees to serve Company faithfully,
                  diligently and in a good and workmanlike manner.

         2.       Term.

                  The term of employment shall begin on the Effective Date and
                  end on September 30, 2000, subject, however, to the
                  provisions of paragraph 3.


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -1-
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         3.       Extension and Termination.

                  3.1      If either Employee or Company elects to terminate
                           this Agreement at the end of the term stated in
                           paragraph 2, or at the end of any extended term
                           hereof as hereinafter provided, notice of the
                           election to terminate shall be given to the other
                           party no later than six (6) months before the end of
                           this Agreement. If no notice is given by either
                           party, the term, or extended term, of this Agreement
                           shall be deemed to have been extended for an
                           additional three (3) months.

                  3.2      In the event Company elects to terminate this
                           Agreement as provided in paragraph 3.1 above:

                           3.2.1    Company shall pay to Employee his salary
                                    and other benefits provided elsewhere in
                                    this Agreement for Employee's services
                                    rendered to Company hereunder through the
                                    end of such term or extended term.

                           3.2.2    Company shall pay to Employee, on or before
                                    the last day of his employment hereunder, a
                                    lump sum cash payment equal to six (6)
                                    months' salary at Employee's monthly rate
                                    for the month immediately preceding the
                                    month in which Company elects to terminate
                                    this Agreement.

                           3.2.3    Company shall pay to Employee, on or before
                                    the last day of his employment hereunder, a
                                    lump sum cash payment for all (a) vacation
                                    time carried forward from a previous year
                                    in accordance with paragraph 8, and (b) all
                                    earned and unused vacation time for the
                                    then current year. Earned vacation time
                                    shall, for the purpose of this paragraph,
                                    be calculated by dividing the number of
                                    days in the calendar year which have
                                    transpired by 365, and then multiplying the
                                    result by the number of vacation days to
                                    which Employee is entitled for that year
                                    pursuant to paragraph 8.

                           3.2.4    If Employee has a leased automobile, the
                                    lease payments on which are guaranteed by
                                    Company, Employee shall have the option, to
                                    be exercised on or before the last day of
                                    his employment hereunder, of assuming the
                                    remaining lease payments and retaining the
                                    automobile, or assigning the lease
                                    agreement to Company in return for
                                    Company's agreement to assume the remaining
                                    lease payments.

                           3.2.5    Interests vested in Employee under
                                    paragraph 9 of this Agreement shall be
                                    assigned in due course in compliance with
                                    paragraph 9.4. Company and Employee agree
                                    that the promises, covenants and


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -2-
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                                    undertakings of paragraph 9 shall survive
                                    the termination of employment of Employee
                                    and shall be binding on all assigns of
                                    Company.

                  3.3      In the event Employee elects to terminate this
                           Agreement as provided in paragraph 3.1 above:

                           3.3.1    Employee agrees to serve to the end of the
                                    term, or extended term hereof, unless
                                    waived by Company.

                           3.3.2    The provisions of paragraphs 3.2.1, 3.2.3,
                                    3.2.4, and 3.2.5 shall be applicable, but
                                    Employee shall not be entitled to the
                                    payment provided for in paragraph 3.2.2.

                  3.4      Company may at its option consent to a request by
                           Employee to terminate this Agreement at a time other
                           than that stated in paragraph 2, as extended, in
                           which case the date requested by Employee and agreed
                           to by Company will be the end of the term of this
                           Agreement and the provisions of paragraph 3.3 shall
                           be applicable.

                  3.5      Company may terminate this Agreement for "Cause" (as
                           hereinafter defined in this paragraph 3.5) upon
                           written notice of such termination to Employee by
                           Company. Any termination of this Agreement by
                           Company for Cause shall be effective thirty (30)
                           days after written notice of termination for Cause
                           is given by Company to Employee. If Company
                           terminates this Agreement for Cause, Company shall
                           have no liability or obligation to Employee
                           thereafter under this Agreement except (i) for the
                           payment of his salary and other benefits through the
                           month of discharge, prorated in the case of salary
                           for the month of discharge on a daily basis to the
                           date of termination, and (ii) that the provisions of
                           paragraph 3.2.5 shall be applicable. As used in this
                           Agreement, the term "Cause" means (a) Employee is
                           found guilty of, admits in writing facts amounting
                           to, or is held civilly liable for fraud,
                           embezzlement or dishonesty, (b) Employee is
                           convicted of a felony involving a crime of moral
                           turpitude or any other felony if the Board of
                           Directors of Company in good faith determines that
                           the continued employment of Employee would be
                           materially detrimental to Company (in any case which
                           felony through lapse of time or otherwise is not
                           subject to appeal), (c) Employee knowingly discloses
                           trade secrets or confidential Company matters to
                           unauthorized persons, (d) Employee willfully
                           breaches or habitually neglects any duties he is
                           required to perform under the terms of this
                           Agreement and any such breach or neglect is not
                           cured within thirty (30) days after Company has
                           provided Employee with written notice of such breach
                           or neglect, (e) Employee materially breaches any of
                           the other material terms of this Agreement and any
                           such breach is not cured within thirty (30) days
                           after Company has provided Employee with written
                           notice of such breach, and (f) the occurrence of an


AMENDED AND RESTATED EMPLOYMENT
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                                      -3-
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                           action or finding described in paragraph 17, except
                           as otherwise provided in paragraph 17. The waiver by
                           Company of a breach of any provision of this
                           Agreement by Employee shall not operate or be
                           construed as a waiver of any subsequent breach by
                           Employee.

                  3.6      In the event Company terminates this Agreement or
                           discharges Employee other than as provided in
                           paragraphs 3.1, 3.4 or 3.5 above, Employee shall be
                           entitled to receive on the date of such termination
                           or discharge:

                           3.6.1    A lump sum cash payment equal to Employee's
                                    salary, at Employee's monthly rate for the
                                    month immediately preceding the month in
                                    which such termination or discharge occurs,
                                    for the unexpired portion of the term or
                                    extended term hereof then in effect.

                           3.6.2    The payments and other benefits provided
                                    for in paragraphs 3.2.2, 3.2.3, 3.2.4 and
                                    3.2.5 hereof.

                  3.7      In the event Employee terminates this Agreement for
                           "Good Reason" (as defined in paragraph 3.9), and
                           prior to such termination Employee has not
                           terminated this Agreement under paragraph 3.1
                           hereof, Employee shall be entitled to receive from
                           Company on the date of such termination:

                           3.7.1    A lump sum cash payment equal to Employee's
                                    salary, at Employee's monthly rate in
                                    effect at the effective time of such
                                    termination (but prior to giving effect to
                                    any reduction therein which precipitated
                                    such termination), for the unexpired
                                    portion of the term or extended term hereof
                                    then in effect.

                           3.7.2    A lump sum cash payment equal to six (6)
                                    months' salary, at Employee's rate in
                                    effect at the time of such termination (but
                                    prior to giving effect to any reduction
                                    therein which precipitated such
                                    termination).

                           3.7.3    The payments and other benefits provided
                                    for in paragraphs 3.2.3, 3.2.4 and 3.2.5.

                  3.8      Any termination of this Agreement by Employee for
                           Good Reason shall be effective thirty (30) days
                           after written notice of termination for Good Reason
                           is given by Employee to Company

                  3.9      As used in this Agreement, the term "Good Reason"
                           means any one or more of the following events has
                           occurred:

                           3.9.1    The assignment to Employee of any duties
                                    materially inconsistent with Employee's
                                    position (including office, title and
                                    reporting


AMENDED AND RESTATED EMPLOYMENT
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                                      -4-

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                                    requirements), authority, duties or
                                    responsibilities with Company or any other
                                    action that results in a material
                                    diminution in, or interference with, such
                                    position, authority, duties or
                                    responsibilities, and any such assignment
                                    or action is not cured within thirty (30)
                                    days after Employee has provided Company
                                    with written notice of such assignment or
                                    action;

                           3.9.2    The failure to continue to provide Employee
                                    with office space, related facilities and
                                    support personnel (including, but not
                                    limited to, administrative and secretarial
                                    assistance) (a) that are both commensurate
                                    with Employee's responsibilities to and
                                    position with Company and not materially
                                    dissimilar to the office space, related
                                    facilities and support personnel provided
                                    to other employees of Company having
                                    comparable responsibility to that of
                                    Employee or (b) that are physically located
                                    at Company's principal executive offices,
                                    and any such failure is not cured within
                                    thirty (30) days after Employee has
                                    provided Company with written notice of
                                    such failure;

                           3.9.3    Any (a) reduction in Employee's monthly
                                    salary as established in paragraph 5
                                    (including subsequent increases), (b)
                                    reduction in, discontinuance of, or failure
                                    to allow or continue to allow Employee's
                                    participation in, the incentive
                                    compensation program provided under
                                    paragraph 9 hereof, or (c) reduction in, or
                                    failure to allow or continue Employee's
                                    participation in, any employee benefit plan
                                    or program (except when such benefit plan
                                    or program is replaced with another benefit
                                    plan, program or arrangement that provides
                                    Employee, in the aggregate, with reasonably
                                    comparable benefits) in which Employee is
                                    participating or is eligible to participate
                                    prior to such reduction or failure (other
                                    than as a result of the expiration of such
                                    plan or program), and any such reduction,
                                    discontinuance or failure is not cured
                                    within thirty (30) days after Employee has
                                    provided Company with written notice of
                                    such reduction or failure;

                           3.9.4    The relocation of Employee's or Company's
                                    principal office and principal place of
                                    Employee's performance of his duties and
                                    responsibilities to a location more than 50
                                    miles outside of the central business
                                    district of the City of Houston, Texas; or

                           3.9.5    A breach of any material provision of this
                                    Agreement by Company (other than any breach
                                    described in paragraphs 3.9.1, 3.9.2,
                                    3.9.3, and 3.9.4) which is not cured within
                                    thirty (30) days after Employee has
                                    provided Company with written notice of
                                    such breach.


AMENDED AND RESTATED EMPLOYMENT
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                                      -5-

<PAGE>   6

         4.       Confidential Information.

                  4.1      Employee agrees that he will, during the term of
                           this Agreement, and for a period of four (4) years
                           from the date of termination of his employment
                           hereunder, keep secret and confidential and not
                           disclose to any party not a party to this Agreement,
                           land or lease data, geological or geophysical data,
                           well data or any other information which he may
                           receive as a result of the performance of his duties
                           hereunder, except when disclosure is necessary for
                           the performance of his duties to Company hereunder.
                           This paragraph shall not apply to information that
                           is in the public domain through no action of
                           Employee.

                  4.2      Upon termination of his employment hereunder,
                           Employee shall promptly deliver to Company all
                           written information and documents (whether
                           confidential or not), and all copies thereof,
                           relating to Company's business and activities and
                           which are in the possession of or under the control
                           of Employee.

         5.       Salary.

                  5.1      As compensation for his services rendered to Company
                           hereunder for the period June 27, 1996 -- December
                           31, 1996, Company shall pay to Employee a salary at
                           the rate of $7,916.67 per month.

                  5.2      As compensation for his services rendered to Company
                           hereunder for the period January 1, 1997 -- December
                           31, 1997, Company shall pay to Employee a salary at
                           the rate of $8,166.66 per month.

                  5.3      As compensation for his services rendered to Company
                           hereunder for the period January 1, 1998 - October
                           31, 1998, Company shall pay to Employee a salary at
                           the rate of $8,750.00 per month.

                  5.4      As compensation for his services rendered to Company
                           hereunder on and after November 1, 1998, Company
                           shall pay to Employee a salary at the rate of
                           $10,000.00 per month.

                  5.5      Employee's salary may be reviewed at such times as
                           may be determined by Company, and Company may at its
                           discretion increase this salary. Employee's salary
                           shall be paid in two equal monthly installments,
                           payable on the fifteenth and last days of each month
                           (or on the first business day of Company thereafter
                           if any such payment date is not a business day of
                           Company), subject to any and all necessary
                           withholdings and deductions.


AMENDED AND RESTATED EMPLOYMENT
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                                      -6-

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         6.       Automobile Allowance.

                  For the period June 27, 1996 through October 31, 1998,
                  Company agrees to pay an automobile allowance of $175.00 per
                  month to Employee. On and after November 1, 1998, Company
                  agrees to pay an automobile allowance of $250.00 per month to
                  Employee. In addition to such monthly allowance, Company
                  shall pay, in accordance with Company policy, for all
                  gasoline, insurance and maintenance required for use of the
                  automobile.

         7.       Business Expenses.

                  Employee is authorized to incur reasonable business expenses
                  in accordance with Company's policies as may be established
                  from time to time for promoting the business of Company,
                  including expenditures for entertainment and travel. Company
                  shall reimburse Employee from time to time for all such
                  business expenses in accordance with those policies adopted
                  by Company which include, but are not limited to, the
                  requirement that Employee timely present to Company:

                  7.1      The amount of the expenditure;

                  7.2      The time, place and description of the expense;

                  7.3      The business reason for the expenditure and business
                           benefit derived or expected to be derived therefrom;
                           and

                  7.4      The name and occupation of the person or persons
                           entertained to establish the business relationship
                           with Company.

                  With respect to any reimbursable business expense
                  contemplated above exceeding twenty-five dollars ($25.00),
                  Employee will furnish documentary evidence of such expense to
                  Company.

         8.       Vacation.

                  Employee shall be entitled to an annual vacation leave of
                  twenty (20) days per calendar year at full pay. The timing
                  and use of such vacation days shall be requested by Employee
                  and approved by Company in accordance with its policy. Up to
                  five (5) days of vacation leave may be carried over from one
                  calendar year to the next calendar year. Employee shall not
                  be entitled to receive payment in lieu of unused vacation
                  time except as otherwise provided herein. With prior
                  approval, vacation may be deferred if business matters keep
                  Employee from taking his normal vacation.


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -7-

<PAGE>   8

         9.       Incentive Compensation.

                  9.1      Definitions.

                  An "AFFILIATE" of a specified person is any person that,
                  directly or indirectly through one or more intermediaries,
                  controls, is controlled by or is under common control with
                  that specified person.

                  "BENEFICIAL OWNERSHIP" of a security shall be determined in
                  accordance with Rule 13d-3 promulgated under the Securities
                  Exchange Act of 1934.

                  A "CHANGE IN CONTROL" shall have occurred if, after the
                  Effective Date:

                                    (i) Any person or group of affiliated
                           persons (other than Joint Energy Development
                           Investments Limited Partnership ("JEDI") or an
                           affiliate of Enron Corp.) shall become the
                           beneficial owner, directly or indirectly, of 66-2/3
                           percent or more of the outstanding Voting Stock of
                           Newco unless Newco becomes a subsidiary of an entity
                           which does not have a beneficial owner, directly or
                           indirectly, of 66-2/3 percent or more of the
                           outstanding Voting Stock of such entity (other than
                           JEDI or an affiliate of Enron Corp.); or

                                    (ii) Newco shall approve (x) a merger or
                           consolidation of Newco with or into any other
                           person, if as a result any person (other than JEDI
                           or an affiliate of Enron Corp.) shall become the
                           beneficial owner, directly or indirectly, of 66-2/3
                           percent or more of the outstanding Voting Stock of
                           Newco unless Newco becomes a subsidiary of an entity
                           which does not have a beneficial owner, directly or
                           indirectly, of 66-2/3 percent or more of the
                           outstanding Voting Stock of such entity (other than
                           JEDI or an affiliate of Enron Corp.), (y) any sale,
                           lease, exchange or other transfer of two-thirds or
                           more of the consolidated assets of Newco and its
                           subsidiaries taken as a whole in one transaction or
                           a series of related transactions whether by direct
                           sale of assets, sale of stock of a subsidiary or a
                           merger involving any subsidiary, or (z) the
                           dissolution of Newco; or

                                    (iii) Recognizing that the events described
                           in this clause and the events described in clause
                           (ii) above may not necessarily be mutually
                           exclusive, any sale, exchange or other transfer of
                           two-thirds or more of the outstanding Voting Stock
                           of Company or any sale, lease, exchange or other
                           transfer of two-thirds or more of the consolidated
                           assets of Company and its subsidiaries (if any)
                           taken as a whole in one transaction or a series of
                           related transactions.

                  "COMPANY" means Mariner Energy, Inc., a Delaware corporation.


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -8-

<PAGE>   9

                  "COMPANY GROUP" means any or all of Company or any of its
                  affiliates, Hardy Oil & Gas plc or any of its affiliates,
                  Joint Energy Development Investments Limited Partnership or
                  any of its affiliates, Enron Capital & Trade Resources Corp.
                  or any of its affiliates, and any and all other persons
                  paying introduction/placement fees to Joint Energy
                  Development Investments Limited Partnership or any of its
                  affiliates or Enron Capital & Trade Resources Corp. or any of
                  its affiliates for access to one or more Working Interests of
                  Company.

                  "COMPANY'S WORKING INTEREST" and "WORKING INTEREST OF
                  COMPANY" mean, with respect to any Prospect, the Working
                  Interest in such Prospect acquired by Company and, for
                  purposes of this paragraph 9, shall include each portion
                  thereof that Company may subsequently transfer to another
                  member of Company Group or to any other person.

                  "CONTROL" means (a) holding, directly or indirectly, more
                  than 50 percent of the outstanding voting securities of a
                  non-individual person, (b) having the right, directly or
                  indirectly, to more than 50 percent of the profits of a
                  non-individual person, (c) having the right, directly or
                  indirectly, to more than 50 percent of the assets of a
                  non-individual person if it is dissolved or (d) having the
                  contractual power to designate more than 50 percent of the
                  directors (or individuals exercising similar functions) of a
                  non-individual person.

                  "DEVELOPMENT ACREAGE" means the acreage within a Prospect
                  covering a known or inferred geologic structure upon which
                  Company and/or its joint working interest owners or a farmee
                  of Company's Working Interest in a Prospect have drilled a
                  well capable of commercial oil and/or gas production. Such
                  acreage shall be deemed to be Development Acreage from the
                  surface of the earth down through the deepest known
                  productive horizon. The committee described in paragraph
                  9.5.1(a), below, shall designate acreage within a Prospect as
                  Development Acreage based upon the most current
                  interpretation available at the time of designation.

                  "EFFECTIVE DATE" means the effective date of this amended and
                  restated Employment Agreement.

                  "EXPLORATION AND DEVELOPMENT COSTS" means, with respect to
                  any Prospect or Prospects, and without duplication, all
                  direct, capital costs actually incurred by Company Group in
                  connection with exploration and development of such Prospect
                  or Prospects, including, without limitation, all costs
                  incurred in preparing for drilling, drilling, testing,
                  completing, equipping (including, without limitation,
                  installation of platforms, facilities and pipelines and dry
                  hole costs) and recompleting wells, all geological and
                  geophysical costs, and all leasehold costs (including bonus,
                  delay rentals and all other costs of acquiring and
                  maintaining in force the leases, or portions thereof or
                  undivided interests therein, included in such Prospects).
                  Exploration and Development Costs shall not include lease
                  operating expenses or general and administrative expenses of
                  the Company Group.


AMENDED AND RESTATED EMPLOYMENT
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                                      -9-

<PAGE>   10

                  "EXPLORATORY ACREAGE" means the acreage comprising a Prospect
                  which has not been designated by the committee described in
                  paragraph 9.5.1(a), below, as either Development Acreage or a
                  Producing Property Acquisition. Exploratory Acreage shall not
                  be limited as to depth (except to the extent, if any, to
                  which Company's Working Interest therein is limited as to
                  depth).

                  "FPF/TLP EXPLOITATION PROSPECT" means any Prospect containing
                  a hydrocarbon reservoir which (a) exhibits a sufficient
                  likelihood of such hydrocarbon reservoir being economic,
                  based on commercially producible shows of hydrocarbons in a
                  well drilled within such reservoir, together with other
                  geological and geophysical data and interpretations, such
                  that Company in its reasonable judgment plans to develop such
                  reservoir, and (b) is reasonably expected by Company to be
                  exploited and/or developed by utilizing a floating production
                  facility and/or a tension leg platform.

                  "FPF/TLP EXPLORATION PROSPECT" means any Prospect (other than
                  an FPF/TLP Exploitation Prospect) with respect to which
                  Company reasonably expects to utilize a floating production
                  facility and/or a tension leg platform in connection with
                  operations to be conducted on such Prospect.

                  "INITIAL WELL" means, with respect to a Prospect, the first
                  well drilled on such Prospect in which Company participates
                  as a Working Interest owner or with respect to which Company
                  retains an overriding royalty or other interest in oil and
                  gas production from such well.

                  "MAJOR PROSPECT" means any FPF/TLP Exploration Prospect,
                  FPF/TLP Exploitation Prospect, Subsea Tieback Exploration
                  Prospect or Subsea Tieback Exploitation Prospect with respect
                  to which the total amount estimated by Company for
                  Exploration and Development Costs to be incurred by Company
                  Group (i.e., net to Company Group's interest) through the end
                  of the primary development period for the field comprising
                  such Prospect exceeds $30 million.

                  "NET PROFIT SHARE LEASE" means an oil and gas lease which
                  provides for sharing between lessor and lessee of the net
                  profits or net proceeds, as defined in said lease, from the
                  sale of oil and/or gas produced therefrom.

                  "NEWCO" means Mariner Holdings, Inc., a Delaware corporation,
                  or its successors.

                  "OVERRIDING ROYALTY INTEREST" means an interest in gross
                  production of oil and gas under each oil and gas lease (or
                  portion thereof) included within a Prospect, which interest
                  (except as herein otherwise provided) shall be free of all
                  costs of acquisition, exploration, drilling, completing,
                  equipping, operating and developing any oil and gas produced
                  from such lease.

                  A "PARENT" of a specified person is another person that
                  controls such specified person directly or indirectly through
                  one or more intermediaries.


AMENDED AND RESTATED EMPLOYMENT
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<PAGE>   11

                  "PAYOUT" means, for each Initial Well and each subsequent
                  well drilled on a Prospect, the point in time at which the
                  revenue to Company or its assigns from its interest in oil
                  and gas production from such well (after deduction of
                  Company's or its assigns' prorata part of the burden of (i)
                  all landowners' royalties, overriding royalties, net profits
                  interests, production payments or other burdens upon,
                  measured by or payable out of such production and (ii) all
                  applicable ad valorem, production, severance, sales,
                  gathering, windfall profits excise and similar taxes) equals
                  the sum incurred by or for the account of Company or its
                  assigns (x) in preparing for drilling, drilling, testing,
                  completing, equipping (including, without limitation,
                  installation of platforms, facilities and pipelines),
                  operating, reworking and recompleting the well, and marketing
                  the production therefrom, and (y) for such well's allocable
                  share of geological and geophysical costs, leasehold costs
                  and other common costs. "Leasehold costs" shall mean payments
                  for bonus, delay rentals, and all other costs of acquiring
                  from the landowners (or, in the case of an acquisition by
                  Company (but not any assignee of Company), from predecessors
                  in title to such leases) and maintaining in force the leases
                  allocated to the well. Leases "allocated" to a well shall
                  mean the leases or portions thereof or undivided interests
                  therein to which production from a well is attributed,
                  whether on a lease or unit basis. With respect to each such
                  well, "common costs" shall mean capital costs that are
                  attributable to (a) such Prospect as a whole or (b) such well
                  and one or more other wells (but not all wells) on such
                  Prospect and shall include, without limitation, costs of
                  drilling, plugging and abandoning non-productive wells on
                  such Prospect. Each such well's allocable share of common
                  costs shall be determined by Company in any manner it deems
                  appropriate from time to time.

                  The expression "2.5 TIMES PAYOUT" means, for each Initial
                  Well and each subsequent well drilled on a Prospect, the
                  point in time at which such revenue to Company or its assigns
                  from its interest in oil and gas production from such well,
                  after such deductions mentioned above, equals the product of
                  2.5 times the sum incurred by or for the account of Company
                  or its assigns (x) in preparing for drilling, drilling,
                  testing, completing, equipping, operating, reworking and
                  recompleting the well, and marketing the production
                  therefrom, and (y) for such well's allocable share of
                  geological and geophysical costs, leasehold costs and other
                  common costs as mentioned above.

                  A "PERSON" is an individual, a corporation, a trust, a
                  partnership, a limited liability company, an association or
                  any other entity.

                  "PRODUCING PROPERTY ACQUISITION" means a lease or leases, or
                  portions thereof or undivided interests therein, acquired by
                  Company during the term or extended term of this Agreement
                  principally for the value of existing oil and gas production
                  thereon and further development of oil and gas reserves
                  considered proved under such lease or leases at the time of
                  acquisition. A Producing Property Acquisition shall include
                  acquisition of such leasehold interests even though Company
                  may have previously acquired interests in some or all of the
                  same leases as a Prospect acquisition (i.e.,


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -11-

<PAGE>   12

                  prior to the time such leases were considered to contain
                  proved oil and gas reserves). Company may in its sole
                  discretion designate a Producing Property Acquisition in
                  whole or in part as a Prospect.

                  "PROSPECT" means the lease or leases, or portions thereof or
                  undivided interests therein, acquired by Company within the
                  United States and its coastal waters while Employee is
                  employed by Company and during the term or extended term of
                  this Agreement covering lands which in the sole opinion of
                  Company may contain one or more hydrocarbon accumulations
                  capable of being commercially produced. For purposes of this
                  definition of Prospect, the acquisition of a lease or leases
                  shall mean the acquisition by Company of legal or beneficial
                  rights or interests in a lease or leases, including (without
                  limitation) contractual rights to acquire or earn a lease or
                  leases (whether by farmout agreement or otherwise, and
                  whether such contractual rights are subject to certain
                  conditions such as the drilling or completion of a commercial
                  well, and without regard to the results of the drilling or
                  completion of any such well under such contract). A Prospect
                  shall not include a prospect acquired by Company by merger or
                  consolidation of Company with or into another entity unless
                  such prospect is so designated by Company. A Prospect shall
                  not include a Producing Property Acquisition unless such
                  Prospect is so designated by Company, and shall not include
                  leases included in a Prospect under previous Employee
                  Incentive Compensation Plans. All Prospects shall be deemed
                  to be without depth limitation unless Company designates
                  specified depths only at the time said Prospect is initially
                  acquired by Company. Notwithstanding the date or dates on
                  which leases in a Prospect are actually acquired by Company,
                  solely for purposes of determining the employees of Company
                  who are entitled to receive an Overriding Royalty Interest
                  therein, such leases, or portions thereof or undivided
                  interests therein, shall be deemed to have been acquired by
                  Company as of the date on which Company's management approved
                  such Prospect acquisition. In furtherance of the foregoing,
                  if any lease or leases, or portions thereof or undivided
                  interests therein, acquired by Company on or after April 18,
                  1996, but prior to the commencement of the term of this
                  Agreement, would constitute a "Prospect" under the foregoing
                  definition but for the fact that such lease or leases, or
                  portions thereof or undivided interests therein, were not
                  acquired by Company during the term of this Agreement, the
                  same shall, nevertheless, be deemed to have been acquired by
                  Company as of the commencement of the term of this Agreement
                  and shall constitute a Prospect for purposes of this
                  paragraph 9.

                  "SUBSEA TIEBACK EXPLOITATION PROSPECT" means any Prospect
                  containing a hydrocarbon reservoir which (a) exhibits a
                  sufficient likelihood of such hydrocarbon reservoir being
                  economic, based on commercially producible shows of
                  hydrocarbons in a well drilled within such reservoir,
                  together with other geological and geophysical data and
                  interpretations, such that Company in its reasonable judgment
                  plans to develop such reservoir, and (b) is reasonably
                  expected by Company to be exploited and/or developed by
                  utilizing a subsea tieback system.


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -12-

<PAGE>   13

                  "SUBSEA TIEBACK EXPLORATION PROSPECT" means any Prospect
                  (other than a Subsea Tieback Exploitation Prospect) with
                  respect to which Company reasonably expects to utilize a
                  subsea tieback system in connection with operations to be
                  conducted on such Prospect.

                  A "SUBSIDIARY" of a specified person is an entity controlled
                  by such person directly or indirectly through one or more
                  intermediaries.

                  "VOTING STOCK" means shares of capital stock of the specified
                  entity the holders of which are entitled to vote for election
                  of directors thereof.

                  "WORKING INTEREST" means the leasehold working interest, or
                  undivided interest therein, under an oil and gas lease which
                  obligates the owner thereof to bear his percentage of the
                  costs and expenses relating to the maintenance and
                  development of, and operations relating to, such lease and
                  the well or wells associated therewith.

                  9.2      Employee's Property Interest.

                  9.2.1    Subject to the other provisions of this paragraph 9,
                           Employee shall own, be immediately vested with, and
                           be entitled to receive the benefits of an Overriding
                           Royalty Interest equal to an undivided percentage of
                           Company's Working Interest, more specifically
                           described below, in each well on a Prospect and the
                           lease or leases allocated thereto, as follows:


                           EMPLOYEE: Thomas E. Young

                          OVERRIDING ROYALTY INTEREST
                                       IN
                         FPF/TLP EXPLORATION PROSPECTS,
                        FPF/TLP EXPLOITATION PROSPECTS,
                      SUBSEA TIEBACK EXPLORATION PROSPECTS
                                      AND
                     SUBSEA TIEBACK EXPLOITATION PROSPECTS

<TABLE>
<CAPTION>
     Group               Time Period        Before Payout      After Payout
     -----               -----------        -------------      ------------
<S>                <C>                      <C>                <C>     
Groups XIV-XXII       4/18/96-12/31/98        0.051562           0.206249
  Group XXIII      1/1/99 and Thereafter      0.063020           0.252083
</TABLE>

                          OVERRIDING ROYALTY INTEREST
                                       IN
                              ALL OTHER PROSPECTS

<TABLE>
<CAPTION>
     Group               Time Period        Before Payout      After Payout
     -----               -----------        -------------      ------------
<S>                <C>                      <C>                <C>     
Groups XIV-XXII       4/18/96-12/31/98         0.05625            0.22500
  Group XXIII      1/1/99 and Thereafter       0.06875            0.27500
</TABLE>


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -13-

<PAGE>   14

                  At 7:00 a.m. on the first day of the month following the
                  month in which Payout of such well occurs, the Overriding
                  Royalty Interest shall increase from the applicable
                  before-Payout percentage to the applicable after-Payout
                  percentage. Except as herein otherwise expressly provided,
                  references in this paragraph 9 to Employee's "Overriding
                  Royalty Interest" with respect to any Prospect shall mean the
                  applicable before-Payout and after-Payout percentages of
                  Company's Working Interest in such Prospect as set forth
                  above.

         9.2.2    Under previous Employee Incentive Compensation Plans,
                  Employee has received or is entitled to receive overriding
                  royalty interests ("Existing ORIs") in certain prospects (the
                  "Existing Prospects"). The Existing ORIs are equal to an
                  undivided percentage of Company's Working Interest, more
                  specifically described below by Group and Time Period during
                  which Company acquired such Existing Prospects, in each well
                  on an Existing Prospect and the lease or leases allocated
                  thereto, as follows:


                           EMPLOYEE: Thomas E. Young

<TABLE>
<CAPTION>
                                                         EXISTING ORI
                                                         ------------
  GROUP               DATES           BEFORE PAYOUT      AFTER PAYOUT
---------       ----------------      -------------      ------------
<S>             <C>                   <C>                <C>
GROUP I           4/1/87-9/3/87            --                 --
GROUP II         9/4/87-10/31/87           --                 --
GROUP III        11/1/87-7/16/88           --                 --
GROUP IV        7/17/88-12/15/88           --                 --
GROUP V         12/16/88-3/31/89           --                 --
GROUP VI         4/1/89-9/24/90            --                 --
GROUP VII        9/25/90-6/30/91           --                 --
GROUP VIII       7/1/91-9/30/91         0.03750%            0.1500%
GROUP IX         10/1/91-2/14/93        0.05000%            0.2000%
GROUP X          2/15/93-6/30/93        0.05000%            0.2000%
GROUP XI         7/1/93-4/29/94         0.05000%            0.2000%
GROUP XII        4/30/94-3/31/95        0.05000%            0.2000%
GROUP XIII       4/1/95-4/17/96         0.05000%            0.2000%
</TABLE>


                  The provisions of paragraphs 9.4, 9.5, 9.6 and 9.7 shall
                  apply to the Existing ORIs in the Existing Prospects as fully
                  as such provisions apply to any Overriding Royalty Interest
                  in a Prospect to which Employee is entitled under this
                  Agreement.


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -14-

<PAGE>   15

                  Mention is made that, effective June 1, 1996, Company
                  repurchased certain of the Existing ORIs from Employee as
                  contemplated by the Stockholders' Agreement referred to in
                  paragraph 9.5.1(a).

                  9.3      Governmental Filings.

                  Company will assist Employee in Filing an 83b Election with
                  the Internal Revenue Service on each Prospect, on a prospect
                  by prospect or lease by lease basis, as the case may be,
                  denoting the transfer to Employee of the Overriding Royalty
                  Interest and stating the value of such interest for the
                  purposes at the time the interest is acquired.

                  9.4      Assignment of Overriding Royalty Interest.

                  Except as otherwise expressly provided in paragraphs 9.4.8
                  and 9.4.9, Employee shall not be entitled to obtain
                  recordable assignments of his interest under this paragraph 9
                  until his completion of three years of employment by Company
                  and, except as otherwise expressly provided herein, Employee
                  shall forfeit ownership of such interest if Employee's
                  employment is terminated by Company pursuant to paragraph 3.5
                  or by Employee without Good Reason as defined in paragraph
                  3.9, prior to the completion of such three years of
                  employment. Upon completion of three years of employment of
                  Employee by Company, Employee's ownership of interests
                  theretofore or thereafter transferred to him pursuant to this
                  Agreement will no longer be subject to forfeiture, and
                  assignments will be made in accordance with this paragraph
                  9.4. Subject to the other provisions of this paragraph 9,
                  Employee shall be entitled to the revenue arising from his
                  Overriding Royalty Interest whether or not he is entitled to
                  a recordable assignment. Subject to the foregoing provisions
                  of this paragraph 9.4 and to the provisions of paragraph 9.5,
                  as soon as practicable after the end of each calendar quarter
                  during the term or extended term of this Agreement, Employee
                  shall be entitled to receive recordable assignments of his
                  Overriding Royalty Interest in a lease or leases (or portions
                  thereof) acquired by Company in a Prospect during such
                  calendar quarter. If Employee's employment is terminated by
                  Company pursuant to paragraph 3.5 or by Employee without Good
                  Reason as defined in paragraph 3.9, during any such calendar
                  quarter, Employee shall not be entitled to receive recordable
                  assignments that would otherwise have been due under this
                  paragraph in respect of any lease or leases (or portions
                  thereof) acquired by Company in a Prospect during such
                  calendar quarter or thereafter (and Employee shall not own,
                  be vested with or be entitled to receive the benefits of any
                  Overriding Royalty Interest that would have been granted by
                  such recordable assignments) unless the termination is at the
                  end of the term or extended term of this Agreement. As soon
                  as practicable after the end of each such calendar quarter,
                  Company shall provide Employee with the following:


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -15-

<PAGE>   16

                           (a)      A recordable assignment of his Overriding
                                    Royalty Interest in the leases (or portions
                                    thereof) acquired by Company in each
                                    Prospect during such calendar quarter.

                           (b)      A plat outlining the geographical limits of
                                    each such Prospect. Company shall review
                                    each Prospect plat each calendar quarter in
                                    light of drilling activity on or near the
                                    Prospect, and expand the plat boundary if
                                    new leases are acquired which Company
                                    believes to contain a prospective
                                    hydrocarbon accumulation that is located on
                                    the same geological feature as such
                                    Prospect. Employee shall be entitled to his
                                    Overriding Royalty Interest in any lease
                                    acquired by Company within the Prospect
                                    plat boundary (and, to the extent provided
                                    in paragraph 9.7.2, in any renewal,
                                    extension or new lease within the Prospect
                                    plat boundary) for as long as such lease
                                    within the boundary remains in effect.

                  9.4.1    Upon execution and delivery of such recordable
                           assignment to Employee, Company shall record the
                           assignment.

                  9.4.2    If, prior to the drilling of the Initial Well on a
                           Prospect or thereafter, Company believes in good
                           faith that there is a substantial likelihood that it
                           may be necessary to exercise its discretion under
                           paragraph 9.5 with respect to adjustment of
                           Employee's Overriding Royalty Interest in leases
                           included within such Prospect, Company may defer
                           delivery of a recordable assignment of Employee's
                           Overriding Royalty Interest pending a determination
                           under paragraph 9.5.

                  9.4.3    Upon request by Company, Employee agrees to execute
                           and deliver any and all transfer orders, division
                           orders and other documents as may be necessary or
                           appropriate to cause all revenue attributable to his
                           interest in a well to be paid to Company on his
                           behalf until delivery by Company to Employee of a
                           recordable assignment of his interest in such well
                           pursuant to this paragraph 9. In such event, Company
                           agrees promptly to process such funds and pay all
                           funds due Employee at the same time third parties
                           are paid revenue distributions from such well by
                           Company. After an assignment is delivered to
                           Employee, Company shall promptly give appropriate
                           notice to the disbursing entities in order to
                           facilitate direct payment to Employee of all revenue
                           attributable to his interest in such well.

                  9.4.4.   Subject to the last sentence of this paragraph
                           9.4.4, Company or its assigns shall quarterly
                           perform Payout calculations on each well which has
                           not reached Payout in every Prospect so that
                           payments to Employee may be made on a proper before
                           payout/after payout basis on each well in every
                           Prospect. Company or its assigns shall prepare a
                           quarterly Payout statement for each well within each
                           Prospect and shall provide Employee a copy of said


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -16-

<PAGE>   17

                           quarterly Payout statements within ninety (90) days
                           following the end of the quarter. If Company or its
                           assigns fails to provide said quarterly Payout
                           statements for any such well(s) to at least five (5)
                           employees (whether or not such employees include
                           Employee) who are entitled to receive an Overriding
                           Royalty Interest in such well(s) pursuant to this
                           Agreement and/or other employment agreements with
                           Company for a period of four (4) consecutive
                           quarters, any such employee (including without
                           limitation, Employee) may give Company written
                           notice of said failure. If Company or its assigns
                           does not provide the overdue quarterly Payout
                           statements to each employee entitled to same within
                           thirty (30) days following receipt of such notice,
                           all wells within such Prospect which had previously
                           been considered before Payout pursuant to paragraph
                           9.2 shall be deemed to be after Payout pursuant to
                           paragraph 9.2 as of the first day of the month
                           following the month in which the earliest delinquent
                           quarterly Payout statement should have been
                           provided. When Payout status is reached on a well,
                           Company or its assigns shall deliver notice of such
                           event to Employee, the operator of such well and
                           each purchaser of production from such well and
                           Company or its assigns shall direct such operator or
                           purchaser of production (as appropriate) to disburse
                           future revenues attributable to Employee's and
                           Company's respective interests in such well on an
                           after-Payout basis. Notwithstanding the foregoing,
                           if Employee's Overriding Royalty Interest in any
                           such well is adjusted pursuant to any provisions of
                           this paragraph 9 so as to be the same percentage
                           before and after Payout of such well, then the
                           provisions of this paragraph 9.4.4 shall no longer
                           apply from and after the date of such adjustment.

                  9.4.5    Should Employee be married or divorced at such time
                           as Employee earns the right to have an Overriding
                           Royalty Interest assigned to him hereunder, Company
                           shall have no obligation to make assignments to
                           Employee's spouse/or former spouse. Any division of
                           community property shall be the responsibility of
                           Employee.

                  9.4.6    All interests assigned by Company to Employee shall
                           be subject to the terms, conditions and provisions
                           of (a) any joint operating agreement at any time
                           theretofore or thereafter entered into by Company or
                           its assigns with other Working Interest owners
                           covering any of the leases affected by the
                           Overriding Royalty Interest herein provided for, and
                           (b) any farm-out or other agreements under which
                           Company acquires or may acquire its interest in the
                           leases; including, particularly, by way of
                           illustration and not by way of limitation, (i) any
                           provision of an applicable farm-out agreement
                           requiring reduction of Company's interest in the
                           leases after "payout" of an earning well or wells
                           thereunder, in which event Employee's Overriding
                           Royalty in such leases shall be proportionately
                           reduced, and (ii) any provision requiring forfeiture
                           of interest for nonparticipation, recoupment of
                           multiple recovery costs and the like to the extent
                           that Company would forfeit its Working


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -17-

<PAGE>   18

                           Interest for nonparticipation either forever or
                           until recoupment of drilling and/or operating costs
                           by the third parties electing to participate, or
                           such other like reason; and in the event any such
                           provisions come into effect, Employee's Overriding
                           Royalty in such leases shall be suspended until such
                           time, if ever, as such multiple recovery of costs by
                           the participating leasehold owners has been
                           recovered or such other cause for suspension is
                           removed and such Working Interest of Company is
                           reinstated, at which time Employee's Overriding
                           Royalty shall be so reinstated.

                           All interests assigned by Company to Employee shall
                           be subject to the terms, conditions and provisions
                           of the leases, any assignments and/or subleases
                           thereof theretofore made or agreed to be made by
                           Company, and any amendments or modifications of the
                           leases, theretofore or thereafter made, and Employee
                           agrees that any such amendments or modifications may
                           be made without the consent or joinder of Employee.

                  9.4.7    Company or its assigns shall not have the right to
                           sell, assign, farmout, convey or otherwise encumber
                           Employee's Overriding Royalty Interest, except as
                           otherwise provided in this paragraph 9.

                           9.4.8(a) Except as otherwise provided in the fifth
                                    sentence of paragraph 9.4, and
                                    notwithstanding anything (other than such
                                    fifth sentence of paragraph 9.4) contained
                                    herein to the contrary, if, after the
                                    Effective Date and during the term or
                                    extended term hereof, there shall have been
                                    a Change in Control, then Employee shall be
                                    entitled to receive recordable assignments
                                    of his Overriding Royalty Interest,
                                    adjusted in the manner described
                                    hereinbelow, in any lease or leases (or
                                    portions thereof or undivided interests
                                    therein) theretofore acquired by Company
                                    and not yet assigned during the term or
                                    extended term hereof and, upon subsequent
                                    acquisition by Company, in any lease or
                                    leases (or portions thereof or undivided
                                    interests therein) thereafter acquired by
                                    Company, in all Prospects acquired by
                                    Company prior to such Change in Control
                                    (without regard to whether or not Employee
                                    has then completed three years of
                                    employment by Company). Said Overriding
                                    Royalty Interest shall be assigned in the
                                    following manner:

                                    Employee's after-Payout interest shall be
                                    reduced to one-half of Employee's
                                    after-Payout interest stated in paragraph
                                    9.2 (as such after-Payout interest stated
                                    in paragraph 9.2 may have previously been
                                    reduced pursuant to other provisions of
                                    this paragraph 9) and Employee's
                                    before-Payout interest shall be increased


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -18-

<PAGE>   19

                                    to twice Employee's before-Payout interest
                                    stated in paragraph 9.2 (as such
                                    before-Payout interest stated in paragraph
                                    9.2 may have previously been reduced
                                    pursuant to other provisions of this
                                    paragraph 9) with the result that
                                    Employee's interests before and after
                                    Payout shall be equal.

                           9.4.8(b) Except as otherwise provided in the fifth
                                    sentence of paragraph 9.4, and
                                    notwithstanding anything (other than such
                                    fifth sentence of paragraph 9.4) contained
                                    herein to the contrary, if, after the
                                    Effective Date and during the term or
                                    extended term hereof, Company's Working
                                    Interest in any Prospect is sold,
                                    transferred or conveyed to the holder of
                                    any indebtedness of Company or of Newco or
                                    of any parent or subsidiary of Company or
                                    Newco, or to any unaffiliated third party,
                                    by or pursuant to a foreclosure of any
                                    mortgage or other security interest therein
                                    securing such indebtedness or any part
                                    thereof or by transfer or conveyance in
                                    lieu of such foreclosure, then Employee
                                    shall be entitled to receive, prior to the
                                    consummation of such sale, transfer or
                                    conveyance, a recordable assignment of his
                                    Overriding Royalty Interest, adjusted in
                                    the manner described in paragraph 9.4.8(a),
                                    in any lease or leases (or portions thereof
                                    or undivided interests therein) theretofore
                                    acquired by Company and not yet assigned
                                    during the term or extended term hereof
                                    and, upon subsequent acquisition by
                                    Company, in any lease or leases (or
                                    portions thereof or undivided interests
                                    therein) thereafter acquired by Company, in
                                    all Prospects acquired by Company prior to
                                    such sale, transfer or conveyance (without
                                    regard to whether or not Employee has then
                                    completed three years of employment by
                                    Company).

                  9.4.9    Except as otherwise provided in the fifth sentence
                           of paragraph 9.4, and notwithstanding anything
                           (other than such fifth sentence of paragraph 9.4)
                           contained herein to the contrary, if, during the
                           term or extended term hereof, all or substantially
                           all of Company's Working Interests in all or
                           substantially all Exploratory Acreage then owned by
                           Company are sold, transferred or conveyed to an
                           unaffiliated third party, then Employee shall be
                           entitled to receive, prior to the consummation of
                           such sale, transfer or conveyance, recordable
                           assignments of his Overriding Royalty Interest,
                           adjusted in the manner described in paragraph
                           9.4.8(a), in all leases (or portions thereof or
                           undivided interests therein) that cover and include
                           such Exploratory Acreage not yet assigned during the
                           term or extended term hereof (without regard to
                           whether or not Employee has then completed three
                           years of employment by Company).


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -19-

<PAGE>   20

                  9.5      Retained Company Discretion

                  9.5.1    Employee and Company recognize that in instances
                           where all or a portion of Company's Working Interest
                           in a lease or leases will be sold or farmed out to
                           unaffiliated third parties, Employee's Overriding
                           Royalty Interest might in some circumstances have a
                           negative effect on the marketability of Company's
                           Working Interest to third parties. In such cases,
                           Company will in good faith attempt to transfer
                           Company's Working Interest subject to Employee's
                           Overriding Royalty Interest provided for in this
                           paragraph 9; provided, however, if, in Company's
                           good faith judgment, Company's Working Interest
                           cannot be sold or farmed out subject to Employee's
                           Overriding Royalty Interest, Company may elect to
                           adjust Employee's Overriding Royalty Interest as
                           hereinafter provided.

                           9.5.1(a) The Board of Directors of Company shall
                                    designate a committee of not less than
                                    three individual persons employed by
                                    Company, at least half of whom has been
                                    granted an employee Overriding Royalty
                                    Interest by Company, to exercise discretion
                                    on behalf of Company in reducing or
                                    modifying, pursuant to this paragraph 9.5.1
                                    only, the Overriding Royalty Interests
                                    provided for in this paragraph 9; provided,
                                    however, that the Board of Directors of
                                    Company shall have the right to designate a
                                    non-voting member of such committee, who
                                    may be a director of Company or otherwise,
                                    and such member shall have the right to
                                    participate in all meetings of such
                                    committee (and shall receive reasonable
                                    advance notice of any such meetings) and
                                    shall be entitled to the same information
                                    as is available to the other members of the
                                    committee. Such committee shall make all
                                    decisions under this paragraph 9.5.1
                                    subject to obtaining the approval of the
                                    Board of Directors of Company where such
                                    approval is required under the provisions
                                    of this paragraph 9.5.1. Any decision made
                                    by the committee shall require the approval
                                    of a majority of the members of the
                                    committee. Any change to this paragraph
                                    9.5.1(a) shall require the approval of the
                                    Board of Directors of Company and a
                                    majority of the Management Directors (as
                                    that term is defined in the Stockholders'
                                    Agreement dated April 2, 1996, between
                                    Enron Capital & Trade Resources Corp.,
                                    Newco and certain employees of and
                                    consultants to Company, as it may be
                                    amended and/or restated from time to time)
                                    who became stockholders pursuant to Section
                                    B.1 of that agreement.


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -20-

<PAGE>   21

                           9.5.1(b) With respect to any Prospect on which no
                                    initial Well has been drilled and no
                                    assignments of Overriding Royalty Interests
                                    have been made to Employee, the committee
                                    may modify or reduce the Overriding Royalty
                                    Interest of Employee in leases included
                                    within such Prospect in any manner
                                    necessary in the good faith judgment of the
                                    committee to make an interest in such
                                    Prospect saleable to any person not in
                                    Company Group; provided, however, in
                                    connection with any sale by Company of an
                                    interest in such Prospect to any such
                                    person, Employee's Overriding Royalty
                                    Interest shall be reduced to zero unless
                                    the committee recommends a lesser reduction
                                    and such recommendation is approved by the
                                    Board of Directors of Company. Such
                                    modification or reduction shall apply only
                                    to the interest sold to such a person, and
                                    shall not affect the interest retained by
                                    Company. Any reduction or exercise of
                                    discretion by Company under this paragraph
                                    shall be applied proportionately to all
                                    participants who are entitled to receive
                                    from Company an Overriding Royalty Interest
                                    in leases included within such Prospect.

                           9.5.1(c) With respect to any Prospect on which the
                                    Initial Well has been drilled and which
                                    Prospect has not been determined by Company
                                    to be capable of producing oil and/or gas,
                                    should Company desire to sell all or any
                                    portion of its Working Interest in such
                                    Prospect to unaffiliated third parties, the
                                    committee may adjust the Overriding Royalty
                                    Interest of Employee in leases included
                                    within such Prospect in the following
                                    manner:

                                    Employee's after-Payout interest shall be
                                    reduced to one-half of Employee's
                                    after-Payout interest stated in paragraph
                                    9.2 (as such after-Payout interest stated
                                    in paragraph 9.2 may have previously been
                                    reduced pursuant to other provisions of
                                    this paragraph 9) and Employee's
                                    before-Payout interest shall be increased
                                    to twice Employee's before-Payout interest
                                    stated in paragraph 9.2 (as such
                                    before-Payout interest stated in paragraph
                                    9.2 may have previously been reduced
                                    pursuant to other provisions of this
                                    paragraph 9), with the result that
                                    Employee's interests before and after
                                    Payout shall be equal.

                                    Such adjustment shall apply only to the
                                    interest sold to unaffiliated third
                                    parties, and shall not affect the interest
                                    retained by Company. Any exercise of
                                    discretion by


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -21-

<PAGE>   22

                                    Company under this paragraph shall be
                                    applied in like manner to all participants
                                    who are entitled to receive from Company an
                                    Overriding Royalty Interest in leases
                                    included within such Prospect.

                                    Notwithstanding anything contained herein
                                    to the contrary, if, after the Effective
                                    Date and during the term or extended term
                                    hereof, there shall have been a Change in
                                    Control, then neither Company nor the
                                    person acquiring the control shall have any
                                    right to make the adjustment described
                                    above in this paragraph 9.5.1(c).

                                    Notwithstanding anything contained herein
                                    to the contrary, if, after the Effective
                                    Date and during the term or extended term
                                    hereof, Company's Working Interest in any
                                    Prospect is sold, transferred or conveyed
                                    to the holder of any indebtedness of
                                    Company or of Newco or of any parent or
                                    subsidiary of Company or Newco, or to any
                                    unaffiliated third party, by or pursuant to
                                    a foreclosure of any mortgage or other
                                    security interest therein securing such
                                    indebtedness or any part thereof or by
                                    transfer or conveyance in lieu of such
                                    foreclosure, then such holder or other
                                    third party shall not have any right to
                                    make the adjustment described above in this
                                    paragraph 9.5.1.(c).

                           9.5.1(d) With respect to any Prospect which has not
                                    been determined by Company to be capable of
                                    producing oil and/or gas, and regardless of
                                    whether or not the Initial Well has been
                                    drilled thereon, should Company desire to
                                    farmout all or any portion of its Working
                                    Interest in such Prospect to unaffiliated
                                    third parties, the committee shall (unless
                                    the committee recommends otherwise and the
                                    Board of Directors approves such
                                    recommendation) adjust the Overriding
                                    Royalty Interest of Employee in leases
                                    included within such Prospect in the
                                    following manner:

                                    Employee's Overriding Royalty Interest
                                    shall be calculated by multiplying
                                    Employee's percentage interests stated in
                                    paragraph 9.2 above (as such interests may
                                    have previously been reduced pursuant to
                                    other provisions of this paragraph 9) by
                                    Company's overriding royalty interest set
                                    forth in the particular farmout agreement
                                    for said Prospect, for and during the
                                    period of time in which Company receives
                                    such overriding royalty interest.


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -22-

<PAGE>   23

                                    To the extent, if any, that Company's
                                    overriding royalty interest set forth in
                                    such farmout agreement converts to a
                                    Working Interest in such Prospect (whether
                                    by election of Company or otherwise), then,
                                    from and after such conversion, Employee's
                                    Overriding Royalty Interest shall be based
                                    upon such Working Interest of Company
                                    pursuant to paragraph 9.2 above; provided,
                                    however, if pursuant to such farmout
                                    agreement, only a portion of Company's
                                    overriding royalty interest converts to a
                                    Working Interest and Company retains,
                                    following such conversion, some overriding
                                    royalty interest in addition to such
                                    Working Interest, Employee shall be
                                    entitled to receive, as part of Employee's
                                    Overriding Royalty Interest based upon
                                    Company's Working Interest, an interest
                                    equal to the percentage stated in paragraph
                                    9.2 above (as such interest may have
                                    previously been reduced pursuant to other
                                    provisions of this paragraph 9) multiplied
                                    by Company's retained overriding royalty
                                    interest.

                                    Such adjustment shall apply only to the
                                    interest farmed out to unaffiliated third
                                    parties, and shall not affect the interest
                                    retained by Company. Any exercise of
                                    discretion by Company under this paragraph
                                    shall be applied in like manner to all
                                    participants who are entitled to receive
                                    from Company an Overriding Royalty Interest
                                    in leases included within such Prospect.

                                    With respect to each well drilled on the
                                    Prospect by a farmee of Company's Working
                                    Interest and solely for the purpose of this
                                    paragraph 9.5.1 (d), Payout shall be
                                    defined as the point in time at which the
                                    revenue to Company from its interest in oil
                                    and gas production from such well (after
                                    deduction of Company's prorata part of the
                                    burden of (i) all landowners' royalties,
                                    overriding royalties, net profits
                                    interests, production payments or other
                                    burdens upon, measured by or payable out of
                                    such production and (ii) all applicable ad
                                    valorem, production, severance, sales,
                                    gathering, windfall profits excise and
                                    similar taxes) equals the sum incurred by
                                    or for the account of Company (x) in
                                    preparing for drilling, drilling, testing,
                                    completing, equipping (including, without
                                    limitation, installation of platforms,
                                    facilities and pipelines), operating,
                                    reworking and recompleting the well, and
                                    marketing the production therefrom, and (y)
                                    for such well's allocable share of
                                    geological and geophysical costs, leasehold
                                    costs, all other costs of acquiring and
                                    maintaining in force the leases allocated
                                    to the well and other common costs. Leases


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -23-

<PAGE>   24

                                    "allocated" to a well and "common costs"
                                    shall have the respective meanings ascribed
                                    thereto in the definition of "Payout" set
                                    forth in paragraph 9.1.

                                    Notwithstanding anything contained herein
                                    to the contrary, if, after the Effective
                                    Date and during the term or extended term
                                    hereof, there has been a Change in Control,
                                    then neither Company nor the person
                                    acquiring the control shall have any right
                                    to make the adjustment described above in
                                    this paragraph 9.5.1(d).

                                    Notwithstanding anything contained herein
                                    to the contrary, if, after the Effective
                                    Date and during the term or extended term
                                    hereof, Company's Working Interest in any
                                    Prospect is sold, transferred or conveyed
                                    to the holder of any indebtedness of
                                    Company or of Newco or of any parent or
                                    subsidiary of Company or Newco, or to any
                                    unaffiliated third party, by or pursuant to
                                    a foreclosure of any mortgage or other
                                    security interest therein securing such
                                    indebtedness or any part thereof or by
                                    transfer or conveyance in lieu of such
                                    foreclosure, then such holder or other
                                    third party shall not have any right to
                                    make the adjustment described above in this
                                    paragraph 9.5.1.(d).

                           9.5.1(e) With respect to any Prospect on which the
                                    Initial Well has been drilled and which
                                    Prospect has been determined by Company to
                                    be capable of producing oil and/or gas,
                                    should Company desire to sell or farmout
                                    all or any portion of its Working Interest
                                    in such Prospect to unaffiliated third
                                    parties, the committee shall categorize
                                    geographical areas of the leases comprising
                                    the Prospect into Development Acreage and
                                    Exploratory Acreage.

                                    Any sale or farmout of Company's Working
                                    Interest in any such Development Acreage
                                    will be made subject to Employee's
                                    Overriding Royalty Interest provided for in
                                    paragraph 9.2 hereinabove (as such interest
                                    may have previously been adjusted pursuant
                                    to other provisions of this paragraph 9);
                                    provided, however, with respect to each
                                    well drilled on the Prospect by a purchaser
                                    or farmee or their assigns of Company's
                                    Working Interest, and solely for the
                                    purpose of this paragraph 9.5.1(e), Payout
                                    shall be defined as the point in time at
                                    which the revenue to purchaser or farmee or
                                    their assigns from its or their interest
                                    purchased or farmed in from Company in oil
                                    and/or gas production from such well


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -24-

<PAGE>   25

                                    (after deduction of purchaser's or farmee's
                                    prorata part of the burden of (i) all
                                    landowners' royalties, overriding
                                    royalties, net profits interests,
                                    production payments or other burdens upon,
                                    measured by or payable out of such
                                    production and (ii) all applicable ad
                                    valorem, production, severance, sales,
                                    gathering, windfall profits excise and
                                    similar taxes) equals the sum incurred by
                                    or for the account of purchaser or farmee
                                    or their assigns in preparing for drilling,
                                    drilling, testing, completing, equipping,
                                    operating, reworking and recompleting the
                                    well, and marketing the production
                                    therefrom.

                                    With respect to Company's Working Interest
                                    in Exploratory Acreage to be sold by
                                    Company, the committee may adjust the
                                    Overriding Royalty Interest of Employee in
                                    the following manner:

                                    Employee's after-Payout interest shall be
                                    reduced to one-half of Employee's
                                    after-Payout interest stated in paragraph
                                    9.2 (as such after-Payout interest stated
                                    in paragraph 9.2 may have previously been
                                    reduced pursuant to other provisions of
                                    this paragraph 9) and Employee's
                                    before-Payout interest shall be increased
                                    to twice Employee's before-Payout interest
                                    stated in paragraph 9.2 (as such
                                    before-Payout interest stated in paragraph
                                    9.2 may have previously been reduced
                                    pursuant to other provisions of this
                                    paragraph 9), with the result that
                                    Employee's interests before and after
                                    Payout shall be equal.

                                    With respect to Company's Working Interest
                                    in Exploratory Acreage to be farmed out by
                                    Company, the committee shall (unless the
                                    committee recommends otherwise and the
                                    Board of Directors approves such
                                    recommendation) adjust the Overriding
                                    Royalty Interest of Employee in the
                                    following manner:

                                    Employee's Overriding Royalty Interest
                                    shall be calculated by multiplying
                                    Employee's percentage interests stated in
                                    paragraph 9.2 above (as such interests
                                    stated in paragraph 9.2 may have previously
                                    been reduced pursuant to other provisions
                                    of this paragraph 9) by Company's
                                    overriding royalty interest set forth in
                                    the particular farmout agreement for said


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -25-

<PAGE>   26

                                    Prospect, for and during the period of time
                                    in which Company receives such overriding
                                    royalty interest.

                                    To the extent, if any, that Company's
                                    overriding royalty interest set forth in
                                    such farmout agreement converts to a
                                    Working Interest in such Prospect (whether
                                    by election of Company or otherwise), then,
                                    from and after such conversion, Employee's
                                    Overriding Royalty Interest shall be based
                                    upon such Working Interest of Company
                                    pursuant to paragraph 9.2 above; provided,
                                    however, if pursuant to such farmout
                                    agreement, only a portion of Company's
                                    overriding royalty interest converts to a
                                    Working Interest and Company retains,
                                    following such conversion, some overriding
                                    royalty interest in addition to such
                                    Working Interest, Employee shall be
                                    entitled to receive, as part of Employee's
                                    Overriding Royalty Interest and in addition
                                    to such Overriding Royalty Interest based
                                    upon Company's Working Interest, an
                                    interest equal to the percentage stated in
                                    paragraph 9.2 above (as such interest may
                                    have previously been reduced pursuant to
                                    other provisions of this paragraph 9)
                                    multiplied by Company's retained overriding
                                    royalty interest.

                                    Such adjustment shall apply only to the
                                    interest sold or farmed out to unaffiliated
                                    third parties, and shall not affect the
                                    interest retained by Company. Any exercise
                                    of discretion by Company under this
                                    paragraph shall be applied in like manner
                                    to all participants who are entitled to
                                    receive from Company an Overriding Royalty
                                    Interest in leases included within such
                                    Prospect.

                                    Notwithstanding anything contained herein
                                    to the contrary, if, after the Effective
                                    Date and during the term or extended term
                                    hereof, there shall have been a Change in
                                    Control, then neither Company nor the
                                    person acquiring the control shall have any
                                    right to make the adjustment described
                                    above in this paragraph 9.5.1(e).

                                    Notwithstanding anything contained herein
                                    to the contrary, if, after the Effective
                                    Date and during the term or extended term
                                    hereof, Company's Working Interest in any
                                    Prospect is sold, transferred or conveyed
                                    to the holder of any indebtedness of
                                    Company or of Newco or of any parent or
                                    subsidiary of Company or Newco, or to any
                                    unaffiliated third party, by or pursuant to
                                    a foreclosure of any mortgage or other
                                    security interest therein securing such
                                    indebtedness or any part thereof


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -26-

<PAGE>   27

                                    or by transfer or conveyance in lieu of
                                    such foreclosure, then such holder or other
                                    third party shall not have any right to
                                    make the adjustment described above in this
                                    paragraph 9.5.1.(e).

                                    If any of the events set forth in the two
                                    immediately preceding sentences hereof
                                    should occur, such that the adjustment
                                    described above in this paragraph 9.5.1(e)
                                    with respect to the Overriding Royalty
                                    Interest of Employee in leases in such
                                    Exploratory Acreage is precluded from
                                    occurring as provided above, then, with
                                    respect to each well drilled on such
                                    Exploratory Acreage by a purchaser or
                                    farmee or their assigns of Company's
                                    Working Interest, and solely for purposes
                                    of this paragraph 9.5.1(e), Payout shall be
                                    defined as set forth above in this
                                    paragraph 9.5.1(e).

                  9.5.2    Within sixty (60) days after the end of each fiscal
                           year of Company, Company may in its sole discretion
                           elect to reduce the Overriding Royalty Interest set
                           forth in paragraph 9.2 with respect to Prospects
                           subject to this Agreement that were acquired by
                           Company during such fiscal year (which election, if
                           timely made as above provided, shall be effective as
                           of the beginning of such fiscal year) based on
                           actual Exploration and Development Costs incurred by
                           Company Group during such fiscal year in respect of
                           all Prospects subject to this Agreement, as follows
                           (with linear interpolation between indicated levels
                           of costs):

<TABLE>
<CAPTION>
                               Total E & D
                               Costs Level                    Permitted Reduction
                               -----------                    -------------------
                           <S>                                <C>
                           under $35 million                      no reduction
                           $70 million                            25.00%
                           $105 million                           33.33%
                           $140 million                           38.33%
                           $175 million                           41.67%
                           over $175 million                      **
</TABLE>

                           **Permitted Reduction shall be determined in the
                           sole discretion of Company.

                           The total Exploration and Development Costs levels
                           and resultant ranges and escalation increments
                           provided for above are "Base Year" figures for
                           fiscal year 1996-1997, and shall be adjusted
                           annually on a compound basis beginning with the
                           fiscal year commencing April 1, 1997, according to
                           the


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -27-

<PAGE>   28

                           then current Council of Petroleum Accountants
                           Societies' (COPAS) adjustment rate (based upon the
                           percentage increase or decrease in the average
                           weekly earnings of Crude Petroleum and Gas
                           Production Workers as of April 1 as published by the
                           United States Department of Labor, Bureau of Labor
                           Statistics).

                           The "Permitted Reduction" shall mean the percentage
                           by which Employee's Overriding Royalty Interest
                           (both before and after Payout) may be adjusted
                           downward. Each such adjustment shall determine
                           Employee's Overriding Royalty Interest for the
                           fiscal year in question, and shall be uniform on
                           Prospects acquired during that period (subject to
                           paragraphs 9.5.1 and 9.5.3). Without limiting the
                           foregoing, a Permitted Reduction shall apply to any
                           Major Prospect subject to this Agreement that was
                           acquired by Company during such fiscal year, whether
                           or not an adjustment of Employee's Overriding
                           Royalty Interest in such Major Prospect shall have
                           been made pursuant to paragraph 9.5.3.

                           All leases acquired in those Prospects, whether
                           during the same fiscal year or thereafter, shall be
                           subject to the same Employee's Overriding Royalty
                           Interest established at the time the Prospect was
                           acquired, subject, however, to adjustment as
                           provided for in this paragraph 9. A Permitted
                           Reduction in Employee's Overriding Royalty Interest
                           for a particular fiscal year, however, shall not
                           operate to reduce Employee's Overriding Royalty
                           Interest stated in paragraph 9.2 in respect of any
                           Prospects acquired by Company in any subsequent
                           fiscal year during the term or extended term hereof.

                           9.5.2(a) Notwithstanding the foregoing provisions of
                                    this paragraph 9.5.2, with respect to any
                                    FPF/TLP Exploitation Prospects acquired by
                                    Company during a fiscal year of Company for
                                    which Company's estimate of Exploration and
                                    Development Costs incurred or to be
                                    incurred by Company Group in respect of all
                                    FPF/TLP Exploitation Prospects acquired in
                                    such fiscal year exceeds $30 million
                                    through the end of the respective primary
                                    development periods for the fields
                                    comprising such FPF/TLP Exploitation
                                    Prospects (which periods, solely for
                                    purposes of the adjustment provided for in
                                    this paragraph, shall not exceed five (5)
                                    years), an alternative calculation will be
                                    made prior to determining the applicable
                                    "Permitted Reduction" of Employee's
                                    Overriding Royalty Interest with respect to
                                    such FPF/TLP Exploitation Prospects. Such
                                    alternative calculation shall be based upon
                                    the assumptions that the total Exploration
                                    and Development Costs to be incurred by
                                    Company Group in respect of all such
                                    FPF/TLP Exploitation Prospects will be
                                    incurred over a two (2) year period and
                                    that such Exploration and Development Costs
                                    will


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -28-

<PAGE>   29

                                    be in addition to a "base level" of $70
                                    million in Exploration and Development
                                    Costs to be incurred by Company Group
                                    exclusive of the identified FPF/TLP
                                    Exploitation Prospects. Such alternative
                                    Exploration and Development Costs level
                                    (the "alternative E & D Costs level") shall
                                    be determined as follows:

                                    The alternative E & D Costs level shall be
                                    the sum of:

                                    (i)      One-half of Company's estimate of
                                             Exploration and Development Costs
                                             incurred or to be incurred by
                                             Company Group through the end of
                                             the respective primary development
                                             periods in respect of all FPF/TLP
                                             Exploitation Prospects acquired in
                                             such fiscal year, plus

                                    (ii)     $70 million.

                                    The Overriding Royalty Interest set forth
                                    in paragraph 9.2 with respect to such
                                    FPF/TLP Exploitation Prospects (both before
                                    and after Payout) may, in Company's sole
                                    discretion, be reduced by the greater of
                                    (x) the "Permitted Reduction" percentage
                                    set forth in the table above in this
                                    paragraph for the actual "Total E & D Costs
                                    Level" for such fiscal year and (y) the
                                    "Permitted Reduction" percentage set forth
                                    in the table above that would be applicable
                                    if the "Total E & D Costs Level" for such
                                    fiscal year were equal to such "alternative
                                    E & D Costs level".

                                    If the Overriding Royalty Interest set
                                    forth in paragraph 9.2 with respect to such
                                    FPF/TLP Exploitation Prospects, when
                                    reduced pursuant to the foregoing
                                    provisions of this paragraph, exceeds
                                    two-thirds of the Overriding Royalty
                                    Interest set forth in paragraph 9.2,
                                    Company may, in its sole discretion,
                                    further reduce such Overriding Royalty
                                    Interest to an interest equal to two-thirds
                                    (before and after Payout, respectively) of
                                    such Overriding Royalty Interest set forth
                                    in paragraph 9.2. Further, if the
                                    Overriding Royalty Interest set forth in
                                    paragraph 9.2 with respect to any such
                                    FPF/TLP Exploitation Prospect, when reduced
                                    to such two-thirds level pursuant to the
                                    foregoing provisions of this paragraph,
                                    exceeds the Overriding Royalty Interest in
                                    such Prospect that would result from
                                    multiplying the Overriding Royalty Interest
                                    percentage set forth in paragraph 9.2 times
                                    a Working Interest percentage of 50% of
                                    8/8ths, Company may, in its sole


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -29-

<PAGE>   30

                                    discretion, further reduce such Overriding
                                    Royalty Interest set forth in paragraph 9.2
                                    with respect to such FPF/TLP Exploitation
                                    Prospect to a percentage (before and after
                                    Payout, respectively) that, when multiplied
                                    times Company's Working Interest in such
                                    FPF/TLP Exploitation Prospect, would equal
                                    the Overriding Royalty Interest percentage
                                    (before and after Payout, respectively) set
                                    forth in paragraph 9.2 times a Working
                                    Interest percentage of 50% of 8/8ths.

                           9.5.2(b) Notwithstanding the foregoing provisions of
                                    this paragraph 9.5.2, with respect to any
                                    Subsea Tieback Exploitation Prospects
                                    acquired by Company during such fiscal
                                    year, if the Overriding Royalty Interest
                                    set forth in paragraph 9.2 with respect to
                                    such Subsea Tieback Exploitation Prospects,
                                    when reduced pursuant to the foregoing
                                    provisions of this paragraph, exceeds the
                                    Overriding Royalty Interest in such
                                    Prospect that would result from multiplying
                                    the Overriding Royalty Interest percentage
                                    set forth in paragraph 9.2 times a Working
                                    Interest percentage of 50% of 8/8ths,
                                    Company may, in its sole discretion,
                                    further reduce such Overriding Royalty
                                    Interest set forth in paragraph 9.2 with
                                    respect to such Subsea Tieback Exploitation
                                    Prospect to a percentage (before and after
                                    Payout, respectively) that, when multiplied
                                    times Company's Working Interest in such
                                    Subsea Tieback Exploitation Prospect, would
                                    equal the Overriding Royalty Interest
                                    percentage (before and after Payout,
                                    respectively) set forth in paragraph 9.2
                                    times a Working Interest percentage of 50%
                                    of 8/8ths.

                           9.5.2(c) Notwithstanding the foregoing provisions of
                                    this paragraph 9.5.2, with respect to any
                                    FPF/TLP Exploration Prospects acquired by
                                    Company during such fiscal year, if the
                                    Overriding Royalty Interest set forth in
                                    paragraph 9.2 with respect to any such
                                    FPF/TLP Exploration Prospects, when reduced
                                    pursuant to the foregoing provisions of
                                    this paragraph, exceeds two-thirds of the
                                    Overriding Royalty Interest set forth in
                                    paragraph 9.2, Company may, in its sole
                                    discretion, further reduce such Overriding
                                    Royalty Interest to an interest equal to
                                    two-thirds (before and after Payout,
                                    respectively) of such Overriding Royalty
                                    Interest set forth in paragraph 9.2.
                                    Further, if the Overriding Royalty Interest
                                    set forth in paragraph 9.2 with respect to
                                    any such FPF/TLP Exploration Prospect, when
                                    reduced to such two-thirds level pursuant
                                    to the foregoing provisions of this
                                    paragraph, exceeds the Overriding Royalty
                                    Interest in such Prospect that


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  AGREEMENT--THOMAS E. YOUNG
                                      -30-

<PAGE>   31

                                    would result from multiplying the
                                    Overriding Royalty Interest percentage set
                                    forth in paragraph 9.2 times a Working
                                    Interest percentage of 50% of 8/8ths,
                                    Company may, in its sole discretion,
                                    further reduce such Overriding Royalty
                                    Interest set forth in paragraph 9.2 with
                                    respect to such FPF/TLP Exploration
                                    Prospect to a percentage (before and after
                                    Payout, respectively) that, when multiplied
                                    times Company's Working Interest in such
                                    FPF/TLP Exploration Prospect, would equal
                                    the Overriding Royalty Interest percentage
                                    (before and after Payout, respectively) set
                                    forth in paragraph 9.2 times a Working
                                    Interest percentage of 50% of 8/8ths.

                           9.5.2(d) Notwithstanding the foregoing provisions of
                                    this paragraph 9.5.2, with respect to any
                                    Subsea Tieback Exploration Prospects
                                    acquired by Company during such fiscal
                                    year, if the Overriding Royalty Interest
                                    set forth in paragraph 9.2 with respect to
                                    any such Subsea Tieback Exploration
                                    Prospects, when reduced pursuant to the
                                    foregoing provisions of this paragraph,
                                    exceeds the Overriding Royalty Interest in
                                    such Prospect that would result from
                                    multiplying the Overriding Royalty Interest
                                    percentage set forth in paragraph 9.2 times
                                    a Working Interest percentage of 50% of
                                    8/8ths, Company may, in its sole
                                    discretion, further reduce such Overriding
                                    Royalty Interest set forth in paragraph 9.2
                                    with respect to such Subsea Tieback
                                    Exploration Prospect to a percentage
                                    (before and after Payout, respectively)
                                    that, when multiplied times Company's
                                    Working Interest in such Subsea Tieback
                                    Exploration Prospect, would equal the
                                    Overriding Royalty Interest percentage
                                    (before and after Payout, respectively) set
                                    forth in paragraph 9.2 times a Working
                                    Interest percentage of 50% of 8/8ths.

                  9.5.3    With respect to any Major Prospect, Company may in
                           its sole discretion elect to adjust the Overriding
                           Royalty Interest set forth in paragraph 9.2,
                           effective as of the date of Company's acquisition of
                           such Major Prospect, as follows:

                           Employee's before-Payout interest shall be reduced
                           by the following formula:

<TABLE>
                           <S>                                  <C>
                           {{original~before-Payout~interest}
                           ---------------------------------- = {reduced~before-Payout~interest}
                                            X
                                           ---
                                            Y
</TABLE>


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -31-

<PAGE>   32

                           where "X" equals the total amount estimated by
                           Company for Exploration and Development Costs to be
                           incurred by Company Group in respect of such Major
                           Prospect through the end of the primary development
                           period for the field comprising such Major Prospect
                           (which period, solely for purposes of such
                           adjustment calculation, shall not exceed five (5)
                           years), and where "Y" equals $30 million.

                           Employee's after-Payout interest shall be increased
                           by adding thereto the full amount of the percentage
                           interest so deducted from Employee's before-Payout
                           interest until 2.5 times Payout is reached, at which
                           time Employee's after-Payout interest shall be
                           reduced by subtracting therefrom the same percentage
                           interest that was previously added thereto pursuant
                           to this sentence.

                           Such election may be made by Company whether or not
                           Employee's Overriding Royalty Interest in such Major
                           Prospect shall have been reduced pursuant to
                           paragraph 9.5.2. In the case of any such prior
                           reduction pursuant to paragraph 9.5.2, the term
                           "original before-Payout interest" as used above in
                           this paragraph shall refer to Employee's
                           before-Payout interest as previously reduced
                           pursuant to paragraph 9.5.2.

                  9.5.4    Notwithstanding anything contained herein to the
                           contrary, after an assignment is delivered to
                           Employee with respect to a Prospect pursuant to
                           paragraph 9.4, Company or its assigns may no longer
                           reduce or modify Employee's Overriding Royalty
                           Interest on any well in such Prospect without
                           written consent of Employee, except pursuant to
                           paragraphs 9.5.1(c), 9.5.1(d), 9.5.1(e), 9.5.2 and
                           9.5.3 in the case only of assignments other than
                           those delivered pursuant to paragraphs 9.4.8(a),
                           9.4.8(b) and 9.4.9.

                  9.5.5    In no event may any party other than Company reduce
                           or modify Employee's Overriding Royalty Interest
                           without written consent of Employee.

                  9.5.6    Company shall give Employee written notice of any
                           adjustment made to Employee's Overriding Royalty
                           Interest pursuant to the provisions of paragraphs
                           9.5.1(b), 9.5.1(c), 9.5.1(d), 9.5.1(e), 9.5.2 and
                           9.5.3 within one hundred twenty (120) days following
                           such adjustment.

                  9.5.7    Upon request by Company, Employee shall execute and
                           deliver to Company such reassignments, transfer
                           orders, division orders, releases and other
                           documents deemed by Company to be necessary or
                           appropriate to evidence any modification, reduction
                           or other adjustment pursuant to this paragraph 9.5.


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<PAGE>   33

                  9.6      Company's Preferential Right to Purchase.

                  If at any time during the term or extended term of this
                  Agreement, or if within one (1) year from the expiration of
                  this Agreement, Employee receives and desires to accept an
                  offer for the purchase of a part or all of Employee's
                  Overriding Royalty Interest assigned pursuant to this
                  paragraph 9 (the portion or all of such Overriding Royalty
                  Interest covered by such offer to purchase being herein
                  sometimes called the "Offered Interest"), from a prospective
                  third party purchaser who is ready, willing and able to
                  purchase the same, then Employee shall have the right to sell
                  such Offered Interest, but only after complying with the
                  following terms and provisions:

                  9.6.1    The offer shall first be reduced to writing and
                           signed by Employee and the offeror. Employee shall
                           give Company written notice of his receipt of, and
                           his desire to accept, such written offer, together
                           with a copy of such written offer signed by the
                           prospective third party purchaser and containing all
                           of the terms and conditions of such offer. The date
                           such written notice is given to Company is herein
                           sometimes called the "Original Date."

                  9.6.2    Company shall thereafter have an option to purchase
                           the Offered Interest upon the same terms set forth
                           in said offer, which option may be exercised by
                           written notice thereof given to Employee within ten
                           (10) days after the Original Date.

                  9.6.3    If the Offered Interest is not purchased by Company
                           pursuant to the foregoing provisions of this
                           paragraph, then Employee shall have the right to
                           sell the Offered Interest to the prospective third
                           party purchaser named in such offer, provided that
                           such sale is consummated within thirty (30) days
                           from the expiration date of the option of Company
                           created hereby and provided that such sale is made
                           in strict conformity with the terms of such offer.

                  9.6.4    If, however, such sale of the Offered Interest does
                           not occur within such thirty-day period for the
                           price and upon the terms set forth in such offer,
                           then any sale of part or all of such Offered
                           Interest thereafter shall again be subject to the
                           option to purchase granted to Company under this
                           paragraph 9.6.

                  9.6.5    If Employee elects to take title to an Overriding
                           Royalty Interest in a legal entity other than
                           himself (which he may do only with Company's
                           consent), such entity shall take title subject to
                           all of the terms and conditions of this Agreement.

                  9.7      Additional Provisions Affecting Overriding Royalty
                           Interest.

                  In addition to the other provisions of this paragraph 9,
                  Employee's Overriding Royalty Interest shall be subject to
                  the following:


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  AGREEMENT--THOMAS E. YOUNG
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<PAGE>   34

                  9.7.1    Notwithstanding anything to the contrary contained
                           herein, Employee shall not have the right to take in
                           kind or separately dispose of the production of oil
                           and gas attributable to his Overriding Royalty
                           Interest.

                  9.7.2    Employee's Overriding Royalty Interest shall also
                           apply to the production of oil and gas under the
                           terms and provisions of any renewal, extension or
                           new lease, to the extent such renewal, extension or
                           new lease covers all or any portion of any lands
                           covered by the expired lease which was subject to
                           Employee's Overriding Royalty Interest or is within
                           the Prospect plat, and provided, however, that any
                           such renewal, extension or new lease shall have been
                           acquired by or for the benefit of Company, either
                           prior to or within one (1) year after the expiration
                           of the expired lease.

                  9.7.3    Except as otherwise provided in this paragraph 9, in
                           no event shall Employee ever be liable or
                           responsible in any way for payment of any part of
                           any exploration, drilling or production costs or
                           liabilities incurred by Company or its assigns or
                           other lessees attributable to the lease or leases in
                           a Prospect or to the production therefrom, it being
                           the intent of the parties that Employee's Overriding
                           Royalty Interest shall constitute a
                           non-participating royalty interest for all purposes.

                  9.7.4    Company will conduct and carry on the development,
                           maintenance and operation of any lease subject to
                           Employee's Overriding Royalty Interest in a manner
                           which it deems in its sole judgment to be reasonable
                           and prudent and in accordance with good oil and gas
                           field practices, and it will drill such wells as it
                           deems proper in its sole judgment from time to time
                           in order to protect such lease from drainage;
                           provided, however, (a) nothing herein contained
                           shall obligate Company to conduct any drilling
                           operations whatsoever upon such lease, or to
                           continue to operate any well or to operate or
                           maintain in force or attempt to maintain in force
                           such lease by payment of delay rentals, compensatory
                           royalties or other payments or by the drilling of
                           any wells upon said lease, or in any other manner,
                           and the extent and duration of all operations, as
                           well as the preservation of each of such leases by
                           delay rental payments or otherwise, shall be solely
                           at the will of Company, and (b) Company shall have
                           the right at any time to surrender, abandon or
                           otherwise terminate any such lease in whole or in
                           part without liability to Employee.

                  9.7.5    Company shall have the right to sell all production
                           attributable to Employee's Overriding Royalty
                           Interest on the same basis upon which the production
                           attributable to Company's interest in the same
                           production is sold, and shall account to Employee on
                           that basis. In no event shall Employee be entitled
                           to receive payments for production attributable to
                           his Overriding Royalty Interest calculated on a
                           basis higher than that upon which Company's interest
                           in the same production is calculated or computed on
                           a higher price than that payable to Company on
                           account of production attributable to its interest,
                           and


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  AGREEMENT--THOMAS E. YOUNG
                                      -34-

<PAGE>   35

                           in no event shall Employee be entitled to receive
                           payments on amounts suspended by purchasers of the
                           production pending determination of the authorized
                           price by governmental entities. However, if Company
                           sells any such production to an affiliate of
                           Company, the price therefor shall not be less than
                           would have been reasonably obtainable in a sale to a
                           non-affiliated purchaser.

                  9.7.6    There shall be deducted from the production, before
                           Employee's Overriding Royalty Interest is computed,
                           any production lost in the production from the
                           leases, or any lands pooled therewith, or used for
                           drilling, operating, development or production or in
                           plant operations (including gas injection, secondary
                           recovery, pressure maintenance, repressuring,
                           cycling operations, plant fuel or shrinkage)
                           conducted for the purpose of producing or processing
                           production from lands covered by the leases or from
                           any lands pooled with the leases.

                  9.7.7    Company shall have the right and option, but not the
                           obligation, to process gas produced and saved from
                           the leases. If Company elects to process or have
                           processed, such gas in a gas processing plant or
                           other facility, whether or not owned by Company,
                           then in such event Employee shall be paid his
                           percentage share provided for herein of the proceeds
                           of sale of all gasoline or other liquid hydrocarbons
                           or other products manufactured or extracted from
                           such gas as a result of such processing
                           (collectively, the "Products"), less the costs of
                           extraction or manufacture (which may consist of a
                           portion of the Products). Company shall also pay to
                           Employee the same percentage share of the proceeds
                           of sale of all residue gas sold by Company, less
                           expenses incurred by Company in transporting any
                           such gas to point of delivery and for dehydration
                           and/or compression of gas at or prior to such
                           delivery and other expenses and fees typically borne
                           by royalty owners (excluding expenses or fees for
                           capital projects funded by Company to the extent
                           such expenses or fees have been included in the
                           Payout calculation for the well from which such gas
                           is produced).

                  9.7.8    Employee's Overriding Royalty Interest shall bear
                           its proportionate share of all other costs of
                           marketing and transporting production from the
                           leases or from any lands pooled therewith which are
                           typically borne by royalty owners (excluding
                           expenses or fees for capital projects funded by
                           Company to the extent such expenses or fees have
                           been included in the Payout calculation for the well
                           from which such production is produced).

                  9.7.9    Employee's Overriding Royalty Interest shall also
                           bear its share of all ad valorem, production,
                           severance, sales, gathering and other taxes
                           typically borne by royalty owners (whether state,
                           federal or otherwise) assessed or levied on or in
                           connection with the Overriding Royalty Interest or
                           the production from the leases.


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -35-

<PAGE>   36

                  9.7.10   Company or its assigns shall have the right and
                           power, without any approval by Employee, to pool or
                           unitize any lease which is subject to Employee's
                           Overriding Royalty Interest, and to alter, change,
                           amend or terminate any pooling or unitization
                           agreements heretofore or hereafter entered into, as
                           to all or any part of a Prospect, as to any one or
                           more of the formations or horizons thereunder, upon
                           such terms and provisions as Company shall in its
                           sole discretion determine. If and whenever through
                           the exercise of such right and power, or pursuant to
                           any law now existing or hereafter enacted, or any
                           rule, regulation or order of any governmental body
                           now or hereafter promulgated, any of the leases of
                           Company are pooled or unitized in any manner,
                           Employee's Overriding Royalty Interest shall also be
                           pooled and unitized, and in such event Employee's
                           Overriding Royalty shall only be paid on that
                           portion of the production from the unit or units so
                           pooled, which is attributable to said leases under
                           and by virtue of the pooling and unitization.

                  9.7.11   Company may withhold payment to Employee of any
                           funds attributable to Employee's Overriding Royalty
                           Interest which Company, in its sole discretion,
                           deems to be subject to a risk of refund or
                           recoupment pursuant to any rule, regulation or order
                           of any governmental authority or any adverse claims
                           by third parties. During such suspense period,
                           Employee shall not be entitled to interest on sums
                           so withheld.

                  9.7.12   In the event Company's Working Interest in any lease
                           in which Employee is entitled to an Overriding
                           Royalty Interest covers less than all of the full
                           and entire undivided interest in and to the land
                           described therein, and in and to all the oil and gas
                           rights relating thereto, then in that event the
                           Overriding Royalty Interest as to that portion of
                           the leased premises in which Company's Working
                           Interest in such lease does not cover such full and
                           entire undivided interest shall be reduced
                           proportionately (i.e., in the proportion that the
                           undivided interest in and to said land and oil and
                           gas rights covered by such lease bears to such full
                           and entire undivided interest).

                  9.7.13   Notwithstanding anything contained in this paragraph
                           9 to the contrary, Employee's Overriding Royalty
                           Interest in any Net Profit Share Lease ("NPSL")
                           shall be reduced at the same time and in the same
                           percentage as Company's net revenue interest in said
                           NPSL is reduced pursuant to the provisions of said
                           NPSL.

                  9.7.14   Company and Employee further undertake and agree
                           promptly to execute and deliver, upon request of
                           either party, all assignments, reassignments,
                           transfer orders, division orders, releases and any
                           other documents as may be necessary to implement
                           this paragraph 9 or otherwise to more fully assure
                           to each party the rights and interests of such party
                           provided for in this paragraph 9.


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -36-

<PAGE>   37

         9.8      Substitution of Other Incentive Compensation.

                  9.8.1    Notwithstanding anything contained herein to the
                           contrary, but subject to the provisions of this
                           paragraph 9.8, if:

                           (a)      the Board of Directors of Company approves
                                    an incentive compensation program providing
                                    for annual incentive compensation and
                                    long-term, equity-based incentive
                                    compensation (through, for example and not
                                    for purposes of limitation, the use of
                                    stock options) (the "New Program"), and

                           (b)      a majority of the "Executives" (as defined
                                    in paragraph 9.8.3) have each entered into
                                    one or more written agreements with Company
                                    (including, but not limited to, a written
                                    amendment to and/or restatement of an
                                    existing written employment agreement)
                                    (such agreements entered into by such
                                    majority of the Executives being
                                    collectively referred to herein as the
                                    "Executive Amendments") providing for:

                                    (i)      such Executive's participation in
                                             the New Program; and

                                    (ii)     termination of such Executive's
                                             future participation in incentive
                                             compensation in the form of
                                             assignments of overriding oil and
                                             gas royalty interests ("ORRI
                                             Incentive Compensation"), and

                           (c)      Company has offered Employee the
                                    opportunity to participate in the New
                                    Program on a basis at least as favorable as
                                    the most favorable participation provided
                                    to other participants in the New Program
                                    who are or were in the same position within
                                    the same grade level as Employee at any
                                    time during the period beginning 90 days
                                    before the "Triggering Date" (as
                                    hereinafter defined) and ending on the date
                                    Employee and Company enter into the
                                    "Amendment" (as hereinafter defined)
                                    (participation in the New Program that is
                                    offered to Employee and satisfies the terms
                                    of this clause (c) is referred to herein as
                                    "Qualifying Participation");

                           then Employee and Company shall enter into a written
                           amendment to this Agreement (the "Amendment") which:

                           (x)      shall provide for Employee's participation
                                    in the New Program on a basis no less
                                    favorable than the Qualifying
                                    Participation;

                           (y)      shall provide for the termination of
                                    Employee's participation in the incentive
                                    compensation program described in this
                                    paragraph 9 for


AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT--THOMAS E. YOUNG
                                      -37-

<PAGE>   38

                                    periods after a date (the "Termination
                                    Date") that is no earlier than the latest
                                    date (the "Triggering Date") on which any
                                    of the Executives terminated his
                                    participation in ORRI Incentive
                                    Compensation under the Executive
                                    Amendments; and

                           (z)      except as otherwise provided in clauses (x)
                                    and (y) of this sentence, shall otherwise
                                    be in substantially the same form, and
                                    contain substantially the same terms and
                                    conditions, as the Executive Amendments.

                  9.8.2    For purposes of clause (y) of paragraph 9.8.1,
                           Company and Employee acknowledge and agree that
                           under the Amendment, (i) Employee will be entitled
                           under this paragraph 9 to receive an Overriding
                           Royalty Interest equal to an undivided percentage
                           (as specified in paragraph 9.2.1 of this Agreement)
                           of Company's Working Interest in each well on any
                           Prospect acquired, or deemed to have been acquired
                           under this paragraph 9, by Company on or before the
                           Termination Date, and the lease or leases allocated
                           thereto (collectively, the "Earned ORIs"), (ii)
                           Employee will not be entitled to receive any
                           Overriding Royalty Interest or other interest in or
                           benefits with respect to any Prospect or Prospects
                           acquired, or deemed to have been acquired under this
                           paragraph 9, by Company after the Termination Date,
                           or in the lease or leases allocated thereto, and
                           (iii) the provisions of this Agreement that state
                           they survive, by their terms survive, or are
                           otherwise designed to survive the Termination Date
                           and/or the termination of Employee's participation
                           in the incentive compensation program described in
                           this paragraph 9, and the respective rights and
                           obligations of Company and Employee under such
                           provisions with respect to the Existing ORIs in the
                           Existing Prospects and the Earned ORIs, shall
                           survive the Termination Date and/or such termination
                           of Employee's participation in the incentive
                           compensation program described in this paragraph 9
                           for the period or periods provided for in this
                           Agreement.

                  9.8.3    For purposes of this paragraph 9.8, the term
                           "Executives" means the following employees of
                           Company: Robert E. Henderson, Richard R. Clark,
                           Michael W. Strickler and Frank A. Pici; provided,
                           however, that the term -------- ------- "Executives"
                           shall not include any such individual to the extent
                           he is no longer an employee of Company at the time
                           Company has offered Qualifying Participation to
                           Employee; provided further, however, that if all of
                           such -------- ------- ------- individuals have
                           ceased to be an employee of Company prior to the
                           time Company has offered Qualifying Participation to
                           Employee, then Employee shall have no obligation
                           whatsoever (whether under this Paragraph 9.8 or
                           otherwise) to enter into the Amendment.

                  9.8.4    For purposes of clause (b) of paragraph 9.8.1, the
                           phrase "a majority of the Executives" shall have the
                           following meaning, as applicable:


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  AGREEMENT--THOMAS E. YOUNG
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<PAGE>   39

                           (a)      if there are four (4) Executives employed
                                    by Company at the time Company offers
                                    Qualifying Participation to Employee, the
                                    phrase "a majority of the Executives" shall
                                    mean three (3) of the Executives;

                           (b)      if there are three (3) Executives employed
                                    by Company at the time Company offers
                                    Qualifying Participation to Employee, the
                                    phrase "a majority of the Executives" shall
                                    mean two (2) of the Executives;

                           (c)      if there are two (2) Executives employed by
                                    Company at the time Company offers
                                    Qualifying Participation to Employee, the
                                    phrase "a majority of the Executives" shall
                                    mean all of the Executives; and

                           (d)      if there is one (1) Executive employed by
                                    Company at the time Company offers
                                    Qualifying Participation to Employee, the
                                    phrase "a majority of the Executives" shall
                                    mean such Executive.

         10.      Insurance.

                  Employee shall be eligible for participation in such
                  insurance programs as Company shall institute from time to
                  time covering medical and dental expenses and such life and
                  accidental death and dismemberment insurance programs as
                  Company shall institute from time to time. Payment of
                  premiums for such coverages shall be in accordance with
                  Company policy covering all employees as may be established
                  from time to time by Company. Employee shall also be eligible
                  for participation in such retirement, pension, deferred
                  compensation and other benefit programs Company shall
                  initiate from time to time.

         11.      Outside Activities.

                  During the term or extended term of this Agreement, Employee
                  shall devote all of his working time, energy and talents to
                  the due discharge and performance of his duties hereunder, at
                  the direction and subject to the control of Company, and
                  shall perform such services and duties as shall reasonably be
                  required from him from time to time by Company. Employee
                  agrees that he will not knowingly become involved in a
                  conflict of interest with Company or its subsidiaries, or
                  upon discovery thereof, allow such a conflict to continue.
                  Moreover, Employee agrees to provide Company a statement of
                  all other directorships Employee holds, with a brief
                  description of the business activities of each organization.
                  This statement shall be provided on or before December 31 of
                  each year. If, in the opinion of Company, a conflict of
                  interest exists between Company (and its affiliates) and the
                  organization in which Employee holds a directorship, Company
                  can require Employee to resign the outside directorship.


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  AGREEMENT--THOMAS E. YOUNG
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<PAGE>   40

         12.      Right to Invest.

                  Nothing in this Agreement is intended or shall be construed
                  to limit Employee's right (i) to engage in passive personal
                  investments, including, but not limited to, holding as an
                  investment not more than five percent (5%) of any class of
                  the issued and outstanding and publicly traded (on a
                  recognized national or regional securities exchange or in the
                  over-the-counter market) capital stock or other securities of
                  any corporation or other entity that conducts activities that
                  compete with the business of Company or any affiliate of
                  Company; or (ii) to invest, individually or with others, in
                  oil and gas prospects, subject, however, in the case of oil
                  and gas prospects to the following conditions:

                  12.1     Company must have first had the right and
                           opportunity to purchase all of the interest in any
                           prospect made available to Employee, even if this
                           would preclude Employee's participation.

                  12.2     Company must have made known its election either to
                           participate in less than the full interest made
                           available to Employee and have no desire to acquire
                           an additional interest, or declined to participate
                           at all in the prospect. If Company elects to
                           participate in less than the full interest made
                           available to Employee, Employee may invest in the
                           portion of such interest not acquired by Company.

                  12.3     Employee must purchase his interest in the oil and
                           gas prospect on terms which are no more favorable
                           than those made available to Company.

         13.      Disability During Employment.

                  If Employee shall become unable to perform his duties by
                  reason of disability, he shall be entitled to receive, in
                  addition to any insurance benefits he may receive, all of his
                  salary for the first one (1) month of his disability, and
                  one-half (1/2) of his salary for the next three (3) months of
                  disability. Periods of disability shall not be cumulative so
                  long as they are separated by at least ninety (90) days of
                  continuous service.

                  The term "disability" shall mean disability which, in the
                  opinion of a doctor satisfactory to Company, renders Employee
                  unable to perform his duties hereunder as evidenced by such
                  doctor's certificate. The date disability commences shall be
                  the date Employee first absents himself from work during a
                  continuous period of disability.

         14.      Merger or Acquisition.

                  In the event Company should be acquired by or merged into
                  another company, by signature of Company's authorized
                  representatives, Company hereby agrees that this


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<PAGE>   41

                  Employment Agreement shall be binding upon Company, its
                  successors and assigns, and shall be disclosed to any party
                  considering merger with, or acquisition of, Company.

         15.      Arbitration.

                  15.1     If a dispute arises out of or related to this
                           Agreement and the dispute cannot be settled through
                           direct discussions, Company and Employee agree that
                           they shall first endeavor to settle the dispute in
                           an amicable fashion. If such efforts fail to resolve
                           the dispute, the dispute shall, except as otherwise
                           provided in paragraph 19, be resolved as follows:

                           15.1.1   Except as provided in paragraph 15.1.2
                                    below, any and all claims, demands, cause
                                    of action, disputes, controversies, and
                                    other matters in question arising out of or
                                    relating to this Agreement, any provision
                                    hereof, the alleged breach thereof, or in
                                    any way relating to the subject matter of
                                    this Agreement, involving Company,
                                    Employee, and/or their respective
                                    representatives, even though some or all of
                                    such claims allegedly are extracontractual
                                    in nature, whether such claims sound in
                                    contract, tort, or otherwise, at law or in
                                    equity, under state or federal law, whether
                                    provided by statute or the common law, for
                                    damages or any other relief, shall be
                                    resolved by binding arbitration pursuant to
                                    the Federal Arbitration Act in accordance
                                    with the Commercial Arbitration Rules then
                                    in effect with the American Arbitration
                                    Association (the "AAA"). The arbitration
                                    proceeding shall be conducted in Houston,
                                    Texas. The arbitration may be initiated by
                                    either party by providing to the other a
                                    written notice of arbitration specifying
                                    the claims, and the parties shall
                                    thereafter endeavor to agree on an
                                    arbitrator. If within thirty (30) days of
                                    the notice of initiation of the arbitration
                                    procedure, the parties are unable to agree
                                    on an arbitrator, the party requesting
                                    arbitration shall file a request with the
                                    AAA that the Houston, Texas office of the
                                    AAA provide a list of potential arbitrators
                                    to both parties. The parties shall
                                    thereafter have sixty (60) days to select
                                    an arbitrator from such list, with such
                                    selection to be by mutual agreement. If the
                                    parties fail to select an arbitrator within
                                    such time by mutual agreement, then either
                                    party may request that the Chief Judge of
                                    the U.S. District Court for the Southern
                                    District of Texas appoint an arbitrator,
                                    and any such appointment shall be binding.
                                    The arbitrator, utilizing the Commercial
                                    Arbitration Rules of the American
                                    Arbitration Association, shall within 120
                                    days of his or her selection, resolve all
                                    disputes between the parties. There shall
                                    be no transcript of the hearings before the
                                    arbitrator. The arbitrator's decision shall
                                    be in writing, but shall be as brief as
                                    possible. The arbitrator shall not assign
                                    the reasons for his or her decision. The
                                    arbitrator's decision


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                                      -41-

<PAGE>   42

                                    shall be final and non-appealable to the
                                    maximum extent permitted by law. Judgment
                                    upon any award rendered in any such
                                    arbitration proceeding may be entered by
                                    any federal or state court having
                                    jurisdiction. This agreement to arbitrate
                                    shall be enforceable in either federal or
                                    state court. The enforcement of this
                                    agreement to arbitrate and all procedural
                                    aspects of this agreement to arbitrate,
                                    including but not limited to, the
                                    construction and interpretation of this
                                    agreement to arbitrate, the issues subject
                                    to arbitration (i.e., arbitrability), the
                                    scope of the arbitrable issues, allegations
                                    of waiver, delay or defenses to
                                    arbitrability, and the rules governing the
                                    conduct of the arbitration, shall be
                                    governed by and construed pursuant to the
                                    Federal Arbitration Act and shall be
                                    decided by the arbitrator. In deciding the
                                    substance of any such claims, the
                                    arbitrator shall apply the substantive laws
                                    of the State of Texas (excluding Texas
                                    choice-of-law principles that might call
                                    for the application of some other State's
                                    law); provided, however, it is expressly
                                    agreed that the arbitrator shall have no
                                    authority to award treble, exemplary, or
                                    punitive damages under any circumstances
                                    regardless of whether such damages may be
                                    available under Texas law, the parties
                                    hereby waiving their right, if any, to
                                    recover treble, exemplary, or punitive
                                    damages in connection with any such claims.

                           15.1.2   Notwithstanding the agreement to arbitrate
                                    contained in paragraph 15.1.1 above, in the
                                    event that either party wishes to seek a
                                    temporary restraining order, a preliminary
                                    or temporary injunction, or other
                                    injunctive relief in connection with any or
                                    all such claims, demands, cause of action,
                                    disputes, controversies, and other matters
                                    in question arising out of or relating to
                                    this Agreement, any provision hereof, the
                                    alleged breach thereof, or in any way
                                    relating to the subject matter of this
                                    Agreement, involving Company, Employee,
                                    and/or their respective representatives,
                                    including disputes arising out of a breach
                                    or alleged breach of paragraph 4 or 16,
                                    even though some or all of such claims
                                    allegedly are extra-contractual in nature,
                                    whether such claims sound in contract,
                                    tort, or otherwise, at law or in equity,
                                    under state or federal law, whether
                                    provided by statute or the common law, for
                                    damages or any other relief, each party
                                    shall have the right to pursue such
                                    injunctive relief in court, rather than by
                                    arbitration. The parties agree that such
                                    action for a temporary restraining order, a
                                    preliminary or temporary injunction, or
                                    other injunctive relief will be brought in
                                    the State or federal courts residing in
                                    Houston, Harris County, Texas.

                  15.2     Company shall pay all costs and expenses of Company
                           and Employee (including, but not limited to,
                           attorneys' fees, the fees of the arbitrator and the
                           AAA and any other related costs) for any arbitration
                           proceeding or legal


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<PAGE>   43

                           action; provided, however, that if in any such
                           arbitration proceeding or legal action, the
                           arbitrator or court, respectively, determines that
                           Employee has prosecuted or defended any issue in
                           such proceeding or action in bad faith, the
                           arbitrator or court, respectively, may allocate the
                           portion of such costs and expenses relating to such
                           issue between the parties in any other manner deemed
                           fair, equitable and reasonable by the arbitrator or
                           court, respectively.

         16.      Noncompetition Obligations.

                  16.1     As part of the consideration for the compensation
                           and benefits to be paid to Employee hereunder, and
                           as an additional incentive for Company to enter into
                           this Agreement, Company and Employee agree to the
                           non-competition obligations hereunder. Employee will
                           not, directly or indirectly for Employee or for
                           others:

                           16.1.1   in any geographic area or market where
                                    Company or any of its subsidiaries are
                                    conducting any business as of the date of
                                    termination of the employment relationship
                                    or have during the previous twelve months
                                    conducted such business, engage in any
                                    business competitive with any such
                                    business; or

                           16.1.2   in any geographic area or market where
                                    Employee knew Company contemplated entering
                                    any business as of the date of termination
                                    of the employment relationship, but only if
                                    Company had, as of such date, invested
                                    significant resources toward entering into
                                    such business in such geographic area or
                                    market, engage in any business competitive
                                    with any such business;

                           16.1.3   render advice or services to, or otherwise
                                    assist, any other person, association, or
                                    entity who is engaged, directly or
                                    indirectly, in any business competitive
                                    with Company's business within the
                                    parameters described in paragraphs 16.1.1
                                    and 16.1.2 above with respect to such
                                    competitive business; or

                           16.1.4   induce any employee of Company or any of
                                    its subsidiaries to terminate his or her
                                    employment with Company or its
                                    subsidiaries, or hire or assist in the
                                    hiring of any such employee by any person,
                                    association, or entity not affiliated with
                                    Company.

                           These non-competition obligations shall commence
                           upon the date of execution of this Agreement and
                           extend until the earlier of (a) the expiration of
                           the term of this Agreement (or any extended term) or
                           (b) six (6) months after termination of the
                           employment relationship; provided, however, that
                           notwithstanding anything contained in this paragraph
                           16 to the contrary, such obligations shall only
                           apply after the termination of employment if the


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<PAGE>   44

                           termination of employment results from termination
                           for Cause by Company under paragraph 3.5 or
                           voluntary termination without Good Reason by
                           Employee (it being understood and agreed that
                           termination of this Agreement by Employee under
                           paragraph 3.1 shall not, for purposes of this
                           paragraph 16, constitute voluntary termination
                           without Good Reason by Employee).

                  16.2     Employee understands that the foregoing restrictions
                           may limit Employee's ability to engage in certain
                           businesses anywhere in the world during the period
                           provided for above, but acknowledges that Employee
                           will receive sufficiently high renumeration and
                           other benefits under this Agreement to justify such
                           restriction. Employee acknowledges that money
                           damages would not be sufficient remedy for any
                           breach of this Article by Employee, and Company
                           shall be entitled to enforce the provisions of this
                           Agreement and/or to specific performances and
                           injunctive relief as remedies for such breach or any
                           threatened breach. Such remedies shall not be deemed
                           the exclusive remedies for a breach of this Article,
                           but shall be in addition to all remedies available
                           at law or in equity to Company, including, without
                           limitation, the recovery of damages from Employee
                           and Employee's agents involved in such breach and
                           remedies available to Company pursuant to other
                           agreements with Employee.

                  16.3     It is expressly understood and agreed that Company
                           and Employee consider the restrictions contained in
                           this paragraph 16 to be reasonable and necessary.
                           Nevertheless, if any of the aforesaid restrictions
                           are found by a court having jurisdiction to be
                           unreasonable, or overly broad as to geographic area
                           or time, or otherwise unenforceable, the parties
                           intend for the restrictions therein set forth to be
                           modified by such courts so as to be reasonable and
                           enforceable and, as so modified by the court, to be
                           fully enforced.

         17.      Foreign Corrupt Practices Act.

                  Employee shall at all times comply with the United States
                  Foreign Corrupt Practices Act, generally codified in 15 USC
                  78 (FCPA), as the FCPA may hereafter be amended, and/or its
                  successor statutes. If Employee pleads guilty to or nolo
                  contendere or admits civil or criminal liability under the
                  FCPA, or if a court finds that Employee committed an action
                  resulting in any Company entity having civil or criminal
                  liability or responsibility under the FCPA with knowledge of
                  the activities giving rise to such liability or knowledge of
                  facts from which Employee should have reasonably inferred the
                  activities giving rise to liability had occurred or were
                  likely to occur, such action or finding shall constitute
                  Cause for termination by Company under paragraph 3.5 of this
                  Agreement unless Company's Board of Directors determines that
                  the actions found to be in violation of the FCPA were taken
                  in good faith and in compliance with all applicable policies
                  of Company.


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<PAGE>   45

         18.      Survival.

                  The provisions of paragraphs 4 and 16 shall survive any
                  termination of the employment relationship and/or of this
                  Agreement for the periods stated therein. The provisions of
                  paragraph 15 relating to arbitration shall survive any
                  termination of the employment relationship between Employee
                  and Company and the termination of this Agreement. Amounts,
                  compensation, rights and benefits which Employee is entitled
                  to receive or have accrued to Employee under this Agreement
                  or under any plan, program, arrangement, agreement or policy
                  of or with Company or any of its affiliates before, at or
                  subsequent to the termination of the employment relationship
                  between Employee and Company or the termination of this
                  Agreement shall not be superseded and shall survive any such
                  termination.

         19.      Certain Additional Payments by Company.

                  19.1     Anything in this Agreement to the contrary
                           notwithstanding, in the event it shall be determined
                           that any payment or distribution by Company or any
                           of its affiliates to or for the benefit of Employee,
                           whether paid or payable or distributed or
                           distributable pursuant to the terms of this
                           Agreement or otherwise (any such payments or
                           distributions being individually referred to herein
                           as a "Payment," and any two or more of such payments
                           or distributions being referred to herein as
                           "Payments"), would be subject to the excise tax
                           imposed by Section 4999 of the Internal Revenue Code
                           of 1986, as amended (the "Code") (such excise tax,
                           together with any interest thereon, any penalties,
                           additions to tax, or additional amounts with respect
                           to such excise tax, and any interest in respect of
                           such penalties, additions to tax or additional
                           amounts, being collectively referred herein to as
                           the "Excise Tax"), then Employee shall be entitled
                           to receive an additional payment or payments
                           (individually referred to herein as a "Gross-Up
                           Payment" and any two or more of such additional
                           payments being referred to herein as "Gross-Up
                           Payments") in an amount such that after payment by
                           Employee of all taxes (as defined in paragraph
                           19.11) imposed upon the Gross-Up Payment, Employee
                           retains an amount of such Gross-Up Payment equal to
                           the Excise Tax imposed upon the Payments.

                  19.2     Subject to the provisions of paragraph 19.3 through
                           19.11, any determination (individually, a
                           "Determination") required to be made under this
                           paragraph 19, including whether a Gross-Up Payment
                           is required and the amount of such Gross-Up Payment,
                           shall initially be made, at Company's expense, by
                           nationally recognized tax counsel mutually
                           acceptable to Company and Employee ("Tax Counsel").
                           Tax Counsel shall provide detailed supporting legal
                           authorities, calculations, and documentation both to
                           Company and Employee within 15 business days of the
                           termination of Employee's employment, if applicable,
                           or such other time or times as is reasonably
                           requested by Company or Employee. If Tax Counsel
                           makes the initial


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<PAGE>   46

                           Determination that no Excise Tax is payable by
                           Employee with respect to a Payment or Payments, it
                           shall furnish Employee with an opinion reasonably
                           acceptable to Employee that no Excise Tax will be
                           imposed with respect to any such Payment or
                           Payments. Employee shall have the right to dispute
                           any Determination (a "Dispute") within 15 business
                           days after delivery of Tax Counsel's opinion with
                           respect to such Determination. The Gross-Up Payment,
                           if any, as determined pursuant to such Determination
                           shall be paid by Company to Employee within five
                           business days of Employee's receipt of such
                           Determination. The existence of a Dispute shall not
                           in any way affect Employee's right to receive the
                           Gross-Up Payment in accordance with such
                           Determination. If there is no Dispute, such
                           Determination shall be binding, final and conclusive
                           upon Company and Employee, subject in all respects,
                           however, to the provisions of paragraph 19.3 through
                           19.11 below. As a result of the uncertainty in the
                           application of Sections 4999 and 280G of the Code,
                           it is possible that Gross-Up Payments (or portions
                           thereof) which will not have been made by Company
                           should have been made ("Underpayment"), and if upon
                           any reasonable written request from Employee or
                           Company to Tax Counsel, or upon Tax Counsel's own
                           initiative, Tax Counsel, at Company's expense,
                           thereafter determines that Employee is required to
                           make a payment of any Excise Tax or any additional
                           Excise Tax, as the case may be, Tax Counsel shall,
                           at Company's expense, determine the amount of the
                           Underpayment that has occurred and any such
                           Underpayment shall be promptly paid by Company to
                           Employee.

                  19.3     Company shall defend, hold harmless, and indemnify
                           Employee on a fully grossed-up after tax basis from
                           and against any and all claims, losses, liabilities,
                           obligations, damages, impositions, assessments,
                           demands, judgements, settlements, costs and expenses
                           (including reasonable attorneys', accountants', and
                           experts' fees and expenses) with respect to any tax
                           liability of Employee resulting from any Final
                           Determination (as defined in paragraph 19.10) that
                           any Payment is subject to the Excise Tax.

                  19.4     If a party hereto receives any written or oral
                           communication with respect to any question,
                           adjustment, assessment or pending or threatened
                           audit, examination, investigation or administrative,
                           court or other proceeding which, if pursued
                           successfully, could result in or give rise to a
                           claim by Employee against Company under this
                           paragraph 19 ("Claim"), including, but not limited
                           to, a claim for indemnification of Employee by
                           Company under paragraph 19.3, then such party shall
                           promptly notify the other party hereto in writing of
                           such Claim ("Tax Claim Notice").

                  19.5     If a Claim is asserted against Employee ("Employee
                           Claim"), Employee shall take or cause to be taken
                           such action in connection with contesting such
                           Employee Claim as Company shall reasonably request
                           in writing from time to time, including the
                           retention of counsel and experts as are reasonably


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                                      -46-

<PAGE>   47

                           designated by Company (it being understood and
                           agreed by the parties hereto that the terms of any
                           such retention shall expressly provide that Company
                           shall be solely responsible for the payment of any
                           and all fees and disbursements of such counsel and
                           any experts) and the execution of powers of
                           attorney, provided that:

                           19.5.1   within 30 calendar days after Company
                                    receives or delivers, as the case may be,
                                    the Tax Claim Notice relating to such
                                    Employee Claim (or such earlier date that
                                    any payment of the taxes claimed is due
                                    from Employee, but in no event sooner than
                                    five calendar days after Company receives
                                    or delivers such Tax Claim Notice), Company
                                    shall have notified Employee in writing
                                    ("Election Notice") that Company does not
                                    dispute its obligations (including, but not
                                    limited to, its indemnity obligations)
                                    under this Agreement and that Company
                                    elects to contest, and to control the
                                    defense or prosecution of, such Employee
                                    Claim at Company's sole risk and sole cost
                                    and expense; and

                           19.5.2   Company shall have advanced to Employee on
                                    an interest-free basis, the total amount of
                                    the tax claimed in order for Employee, at
                                    Company's request, to pay or cause to be
                                    paid the tax claimed, file a claim for
                                    refund of such tax and, subject to the
                                    provisions of the last sentence of
                                    paragraph 19.7, sue for a refund of such
                                    tax if such claim for refund is disallowed
                                    by the appropriate taxing authority (it
                                    being understood and agreed by the parties
                                    hereto that Company shall only be entitled
                                    to sue for a refund and Company shall not
                                    be entitled to initiate any proceeding in,
                                    for example, United States Tax Court) and
                                    shall indemnify and hold Employee harmless,
                                    on a fully grossed-up after tax basis, from
                                    any tax imposed with respect to such
                                    advance or with respect to any imputed
                                    income with respect to such advance; and

                           19.5.3   Company shall reimburse Employee for any
                                    and all costs and expenses resulting from
                                    any such request by Company and shall
                                    indemnify and hold Employee harmless, on
                                    fully grossed-up after-tax basis, from any
                                    tax imposed as a result of such
                                    reimbursement.

                  19.6     Subject to the provisions of paragraph 19.5 hereof,
                           Company shall have the right to defend or prosecute,
                           at the sole cost, expense and risk of Company, such
                           Employee Claim by all appropriate proceedings, which
                           proceedings shall be defended or prosecuted
                           diligently by Company to a Final Determination;
                           provided, however, that (i) Company shall not,
                           without Employee's prior written consent, enter into
                           any compromise or settlement of such Employee Claim
                           that would adversely affect Employee, (ii) any
                           request from Company to Employee regarding any
                           extension of the statute of limitations relating to
                           assessment, payment, or collection of taxes for the


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<PAGE>   48

                           taxable year of Employee with respect to which the
                           contested issues involved in, and amount of,
                           Employee Claim relate is limited solely to such
                           contested issues and amount, and (iii) Company's
                           control of any contest or proceeding shall be
                           limited to issues with respect to Employee Claim and
                           Employee shall be entitled to settle or contest, in
                           his sole and absolute discretion, any other issue
                           raised by the Internal Revenue Service or any other
                           taxing authority. So long as Company is diligently
                           defending or prosecuting such Employee Claim,
                           Employee shall provide or cause to be provided to
                           Company any information reasonably requested by
                           Company that relates to such Employee Claim, and
                           shall otherwise cooperate with Company and its
                           representatives in good faith in order to contest
                           effectively such Employee Claim. Company shall keep
                           Employee informed of all developments and events
                           relating to any such Employee Claim (including,
                           without limitation, providing to Employee copies of
                           all written materials pertaining to any such
                           Employee Claim), and Employee or his authorized
                           representatives shall be entitled, at Employee's
                           expense, to participate in all conferences, meetings
                           and proceedings relating to any such Employee Claim.

                  19.7     If, after actual receipt by Employee of an amount of
                           a tax claimed (pursuant to an Employee Claim) that
                           has been advanced by Company pursuant to paragraph
                           19.5.2 hereof, the extent of the liability of
                           Company hereunder with respect to such tax claimed
                           has been established by a Final Determination,
                           Employee shall promptly pay or cause to be paid to
                           Company any refund actually received by, or actually
                           credited to, Employee with respect to such tax
                           (together with any interest paid or credited thereon
                           by the taxing authority and any recovery of legal
                           fees from such taxing authority related thereto),
                           except to the extent that any amounts are then due
                           and payable by Company to Employee, whether under
                           the provisions of this Agreement or otherwise. If,
                           after the receipt by Employee of an amount advanced
                           by Company pursuant to paragraph 19.5.2, a
                           determination is made by the Internal Revenue
                           Service or other appropriate taxing authority that
                           Employee shall not be entitled to any refund with
                           respect to such tax claimed and Company does not
                           notify Employee in writing of its intent to contest
                           such denial of refund prior to the expiration of 30
                           days after such determination, then such advance
                           shall be forgiven and shall not be required to be
                           repaid and the amount of such advance shall offset,
                           to the extent thereof, the amount of any Gross-Up
                           Payments and other payments required to be paid
                           hereunder.

                  19.8     With respect to any Employee Claim, if Company fails
                           to deliver an Election Notice to Employee within the
                           period provided in paragraph 19.5.1 hereof or, after
                           delivery of such Election Notice, Company fails to
                           comply with the provisions of paragraph 19.5.2,
                           19.5.3 or 19.6 hereof, then Employee shall at any
                           time thereafter have the right (but not the
                           obligation), at his election and in his sole and
                           absolute discretion, to defend or prosecute, at the
                           sole cost,


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<PAGE>   49

                           expense and risk of Company, such Employee Claim.
                           Employee shall have full control of such defense or
                           prosecution and such proceedings, including any
                           settlement or compromise thereof. If requested by
                           Employee, Company shall cooperate, and shall cause
                           its affiliates to cooperate, in good faith with
                           Employee and his authorized representatives in order
                           to contest effectively such Employee Claim. Company
                           may attend, but not participate in or control, any
                           defense, prosecution, settlement or compromise of
                           any Employee Claim controlled by Employee pursuant
                           to this paragraph 19.8 and shall bear its own costs
                           and expenses with respect thereto. In the case of
                           any Employee Claim that is defended or prosecuted by
                           Employee, Employee shall, from time to time, be
                           entitled to current payment, on a fully grossed-up
                           after tax basis, from Company with respect to costs
                           and expenses incurred by Employee in connection with
                           such defense or prosecution.

                  19.9     In the case of any Employee Claim that is defended
                           or prosecuted to a Final Determination pursuant to
                           the terms of this paragraph 19.9, Company shall pay,
                           on a fully grossed-up after tax basis, to Employee
                           in immediately available funds the full amount of
                           any taxes arising or resulting from or incurred in
                           connection with such Employee Claim that have not
                           theretofore been paid by Company to Employee,
                           together with the costs and expenses, on a fully
                           grossed-up after tax basis, incurred in connection
                           therewith that have not theretofore been paid by
                           Company to Employee, within ten calendar days after
                           such Final Determination. In the case of any
                           Employee Claim not covered by the preceding
                           sentence, Company shall pay, on a fully grossed-up
                           after tax basis, to Employee in immediately
                           available funds the full amount of any taxes arising
                           or resulting from or incurred in connection with
                           such Employee Claim at least ten calendar days
                           before the date payment of such taxes is due from
                           Employee, except where payment of such taxes is
                           sooner required under the provisions of this
                           paragraph 19.9, in which case payment of such taxes
                           (and payment, on a fully grossed-up after tax basis,
                           of any costs and expenses required to be paid under
                           this paragraph 19.9 shall be made within the time
                           and in the manner otherwise provided in this
                           paragraph 19.9.

                  19.10    For purposes of this Agreement, the term "Final
                           Determination" shall mean (A) a decision, judgment,
                           decree or other order by a court or other tribunal
                           with appropriate jurisdiction, which has become
                           final and non-appealable; (B) a final and binding
                           settlement or compromise with an administrative
                           agency with appropriate jurisdiction, including, but
                           not limited to, a closing agreement under Section
                           7121 of the Code; (C) any disallowance of a claim
                           for refund or credit in respect to an overpayment of
                           tax unless a suit is filed on a timely basis; or (D)
                           any final disposition by reason of the expiration of
                           all applicable statutes of limitations.

                  19.11    For purposes of this Agreement, the terms "tax" and
                           "taxes" mean any and all taxes of any kind
                           whatsoever (including, but not limited to, any and
                           all


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<PAGE>   50

                           Excise Taxes, income taxes, and employment taxes),
                           together with any interest thereon, any penalties,
                           additions to tax, or additional amounts with respect
                           to such taxes and any interest in respect of such
                           penalties, additions to tax, or additional amounts.

         20.      No Obligation to Mitigate.

                  Employee shall not be required to mitigate the amount of any
                  payment or other benefit required to be paid to Employee
                  pursuant to this Agreement, whether by seeking other
                  employment or otherwise; nor shall the amount of any such
                  payment or other benefit be reduced on account of any
                  compensation earned by Employee as a result of employment by
                  another person or entity.

         21.      Miscellaneous.

                  21.1     This Agreement shall not be modified or amended
                           except in writing and signed by Company and
                           Employee. This Agreement shall be binding upon the
                           heirs, administrators, or executors and the
                           successors and assigns of each party to this
                           Agreement.

                  21.2     The rights and benefits of Employee under the
                           Agreement are personal to him and shall not be
                           assigned or transferred without the prior written
                           consent of Company. Subject to the foregoing, this
                           Agreement shall be binding upon and inure to the
                           benefit of the parties hereto and their respective
                           heirs, personal representatives, successors and
                           assigns.

                  21.3     All titles or headings of sections or paragraphs or
                           other divisions of this Agreement are only for the
                           convenience of the parties and shall not be
                           construed to have any effect or meaning with respect
                           to the other content of such sections or paragraphs
                           or other divisions, such content being controlling
                           as to the agreement between the parties hereto.

                  21.4     This Agreement is made and will be performed under,
                           and shall be governed by and construed in accordance
                           with, the law of the State of Texas.

                  21.5     EMPLOYEE AFFIRMS AND ATTESTS BY HIS SIGNATURE TO
                           THIS AGREEMENT THAT HE HAS READ THIS AGREEMENT
                           BEFORE SIGNING IT AND THAT HE FULLY UNDERSTANDS ITS
                           PURPOSES, TERMS AND PROVISIONS, WHICH HE HEREBY
                           EXPRESSLY ACKNOWLEDGED TO BE REASONABLE IN ALL
                           RESPECTS. EMPLOYEE FURTHER ACKNOWLEDGES RECEIPT OF
                           ONE COPY OF THIS AGREEMENT.


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         21.6     Notices contemplated under this Agreement shall be directed
                  to the following address:

                  If to Company:

                           Mariner Energy, Inc.
                           580 Westlake Boulevard, Suite 1300
                           Houston, Texas 77079

                           Attention:  President and Chief Executive Officer

                  If to Employee:

                           Thomas E. Young
                           1515 Banks
                           Houston, Texas 77006

                  Company and Employee may change the above addresses for
                  notice purposes by notifying the other in writing.

                  21.7     Company may withhold from any amounts payable under
                           this Agreement such federal, state, or local taxes
                           as shall be required to be withheld pursuant to any
                           applicable law or regulation.

                  21.8     ON THE EFFECTIVE DATE, THAT CERTAIN CHANGE IN
                           CONTROL AGREEMENT DATED FEBRUARY 12, 1996, BETWEEN
                           COMPANY AND EMPLOYEE SHALL TERMINATE AND BE FROM THE
                           EFFECTIVE DATE NULL, VOID AND OF NO FURTHER FORCE OR
                           EFFECT WHATSOEVER.

                  21.9     This Agreement supersedes and replaces the
                           Employment Agreement and the Letter Agreement;
                           provided, however, that (i) the provisions of
                           paragraph 3 of the Employment Agreement shall apply,
                           and the provisions of paragraph 3 of this Agreement
                           shall not apply, with respect to any claim, demand,
                           cause of action, right, obligation and/or liability
                           of Company and/or Employee with respect to, relating
                           to, or arising from any termination or alleged
                           termination of the Employment Agreement, this
                           Agreement and/or Employee's employment with Company
                           that occurred or arose during or relates to, or that
                           occurred or arose as a result of or with respect to
                           any act, failure to act, event or other matter that
                           occurred or arose during or relates to, the period
                           from June 27, 1996 through October 31, 1998, and
                           (ii) except as otherwise expressly provided herein,
                           nothing contained in this Agreement shall limit or
                           otherwise affect any rights or benefits which are
                           vested in, accrued to, or earned by Employee, or for
                           which Employee is entitled to, prior to the
                           Effective Date.


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<PAGE>   52

         Executed as of the Effective Date in duplicate originals at Houston,
Texas.

                           COMPANY:

                           MARINER ENERGY, INC.


                           By:   /s/ Robert E. Henderson
                               ------------------------------------------------
                           Printed Name: Robert E. Henderson
                           Printed Title: President and Chief Executive Officer

                           EMPLOYEE:

                           /s/ Thomas E. Young
                           ----------------------------------------------------
                           Thomas E. Young


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                                      -52-