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EXHIBIT 10.14
EMPLOYMENT AGREEMENT
This Employment Agreement ("AGREEMENT") is made and entered into as of
February 7, 2005 (the "EFFECTIVE DATE"), by and between MARINER ENERGY, INC., a
Delaware corporation (hereafter "COMPANY"), and Dalton F. Polasek (hereafter
"EXECUTIVE").
1. EMPLOYMENT. During the Employment Period (as defined in Section 4
hereof), the Company shall employ Executive, and Executive shall serve, as Chief
Operating Officer, reporting to the President or Chief Executive Officer of the
Company.
2. DUTIES AND RESPONSIBILITIES OF EXECUTIVE.
(a) During the Employment Period, Executive shall devote his full
time and attention during normal business hours to the business of the
Company, will act in the best interests of the Company and will perform
with due care his duties and responsibilities. Executive's duties will
include those normally incidental to the position of Executive Vice
President as well as whatever additional duties may be assigned to him by
the Board of Directors of the Company (the "BOARD") or the Chief Executive
Officer of the Company. Executive agrees to cooperate fully with the Board
and the Chief Executive Officer of the Company and not to engage in any
activity that materially interferes with the performance of Executive's
duties hereunder. During the Employment Period, Executive will not hold
outside employment without the advance written approval of the Board.
Provided that it shall not be a violation of this Agreement for Executive
to (1) serve on corporate, civic, or charitable boards or committees
(except for boards or committees of a business organization that competes
with the Company in any business in which the Company is regularly
engaged), which are listed on EXHIBIT A so long as such service does not
materially interfere with the performance of Executive's duties and
responsibilities under this Agreement, as determined in the good faith
opinion of the Board, (2) manage personal investments, or (3) take
vacation days and reasonable absences due to injury or illness, as set
forth herein and/or permitted by the general policies of the Company.
(b) Executive represents and covenants to the Company that he is not
subject or a party to any employment agreement, noncompetition covenant,
nondisclosure agreement, or any other agreement, covenant, understanding,
or restriction that would prohibit Executive from executing this Agreement
and fully performing his duties and responsibilities hereunder, or would
in any manner, directly or indirectly, limit or affect the duties and
responsibilities that may now or in the future be assigned to Executive
hereunder.
(c) Executive acknowledges and agrees that Executive owes the
Company a duty of loyalty and that the obligations described in this
Agreement are in addition to, and not in lieu of, the obligations
Executive owes the Company under the common law.
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3. COMPENSATION.
(a) During the Employment Period (as defined in Section 4 hereof),
the Company shall pay to Executive an annualized base salary of $250,000
(the "BASE SALARY") in consideration for Executive's services under this
Agreement, payable on a not less than semi-monthly basis, in conformity
with the Company's customary payroll practices for executive salaries. For
all purposes of this Agreement, Executive's Base Salary shall include any
portion thereof which is deferred under any nonqualified plan or
arrangement. Each year, the Board shall review Executive's salary based on
market survey data, corporate performance, and performance of Executive.
If, in its sole and complete discretion, the Board determines that an
increase in Executive's salary is appropriate, the Board may make such
adjustment, and such adjusted salary shall thereafter be Executive's Base
Salary for purposes of this Agreement. Executive's Base Salary may not be
reduced except as part of a general reduction of salaries paid to
management employees that is necessitated by business conditions, as
determined by the Board.
(b) Executive may be eligible for an annual discretionary
performance bonus with respect to each calendar year during the Employment
Period (the "ANNUAL BONUS"). The amount, if any, of Executive's Annual
Bonus will be determined by the Board in its sole and complete discretion
based on market survey data, corporate performance, and performance of
Executive. Bonus determinations will be made by the Board at a time
convenient to the Board but typically within 60 calendar days of the end
of each calendar year. The Board will, on an annual basis (at or near the
beginning of each calendar year in the Employment Period) establish a
target bonus for Executive for the upcoming year, and will communicate
such target to Executive. If the Board determines to award Executive an
Annual Bonus, it will be payable in conformity with the Company's
customary payroll practices for executive bonuses. The Board may also
award additional bonuses or other compensation to Executive at any time in
its sole and complete discretion.
(c) Any salary, bonus, and other compensation payments hereunder
shall be subject to such payroll and other taxes, withholdings, and
deductions as may be required by applicable law or with respect to
Executive's coverage in the Company's insurance and other employee benefit
plans.
4. TERM OF EMPLOYMENT. The initial term of this Agreement shall be for the
period beginning on the Effective Date and ending at midnight (EST) on March 2,
2006 (the "INITIAL TERM"); provided, however, that if the Company consummates an
initial public offering of its common stock prior to March 3, 2006, the Initial
Term shall end on March 2, 2007. For all purposes of this Agreement, the
consummation of a sale under Rule 144A and/or Regulation D of equity securities
of the Company shall be treated as the consummation of an initial public
offering by the Company. On March 3, 2006 (or 2007, if applicable) and on March
3 of each succeeding year (each such date being referred to as a "RENEWAL
DATE"), this Agreement shall automatically renew and extend for a period of 12
months (a "RENEWAL TERM") unless written notice of non-renewal is delivered from
one party to the other at least 90 days prior to such Renewal Date (in which
case the Termination Date shall be the day immediately prior to such
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Renewal Date). Notwithstanding any other provision of this Agreement, this
Agreement may be terminated at any time during the Initial Term or the Renewal
Term (if any) in accordance with Section 6. The period from the Effective Date
through the Termination Date of this Agreement, regardless of the time or reason
for such termination, shall be referred to herein as the "EMPLOYMENT PERIOD." In
the event that this Agreement is not renewed, Executive shall become an at-will
employee of the Company and the Company shall have the right to terminate
Executive's employment with the Company at any time.
5. BENEFITS. Subject to the terms and conditions of this Agreement,
Executive shall be entitled to the following benefits during the Employment
Period:
(a) REIMBURSEMENT OF BUSINESS EXPENSES. The Company agrees to
reimburse Executive for reasonable business-related expenses incurred in
the performance of Executive's duties under this Agreement.
(b) BENEFIT PLANS AND PROGRAMS. To the extent permitted by
applicable law and subject to the terms and eligibility requirements of
any such plan or program, Executive will be eligible to participate in all
benefit plans and programs, including improvements or modifications of the
same, that are maintained by the Company generally for executive employees
of the Company, subject to the eligibility requirements and other terms
and conditions of those plans and programs. The Company will not, however,
by reason of this Section 5(b) be obligated either (1) to institute,
maintain, or refrain from changing, amending, or discontinuing any such
benefit plan or program, or (2) to provide Executive with all benefits
provided to any other person or individual employed by the Company or any
of its affiliates.
6. TERMINATION OF EMPLOYMENT.
(a) COMPANY'S RIGHT TO TERMINATE. At any time during the Initial
Term or any Renewal Term, the Company shall have the right to terminate
this Agreement and Executive's employment with the Company for any of the
following reasons:
(1) Upon Executive's death (in which case the Termination Date
shall be the date of Executive's death);
(2) Upon Executive's Disability (as defined below);
(3) For Cause (as defined in Section 7); or
(4) For any other reason whatsoever, in the sole and complete
discretion of the Company.
(b) EXECUTIVE'S RIGHT TO TERMINATE. At any time during the Initial
Term or any Renewal Term, Executive will have the right to terminate this
Agreement and Executive's employment with the Company for:
(1) Good Reason (as defined in Section 7); or
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(2) For any other reason whatsoever, in the sole and complete
discretion of Executive.
(c) "DISABILITY." For purposes of this Agreement, "Disability" means
that Executive has sustained sickness or injury that renders Executive
incapable of performing the duties and services required of Executive
hereunder for a period of 90 consecutive calendar days or a total of 120
calendar days during any 12 month period.
(d) "NOTICES." Any termination of this Agreement by the Company
under Section 6(a) (other than termination due to the death of Executive),
or by Executive under Section 6(b) shall be communicated by a Notice of
Termination to the other party. A "Notice of Termination" means a written
notice that (1) indicates the specific termination provision in this
Agreement relied upon and (2) if the termination is by the Company for
Cause or by Executive for Good Reason, sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated. The Notice of
Termination must specify the Termination Date. In the case of a
termination by the Company for Cause or due to Executive's Disability, or
by Executive for Good Reason, the Termination Date may be as early as the
date notice is given but no later than 30 calendar days after notice is
given, unless otherwise agreed to in writing by both parties. In the case
of a termination by the Company or by Executive for any other reason, the
Termination Date may be as early as 14 calendar days after notice is given
but no later than 60 calendar days after notice is given, unless otherwise
agreed to by the parties in writing.
7. SEVERANCE PAYMENTS.
(a) TERMINATION BY THE COMPANY. If (1) the Company terminates this
Agreement and Executive's employment with the Company and its affiliates
during the Initial Term or the Renewal Term (if any) pursuant to Section
6(a)(4), (2) Executive signs and does not revoke a waiver and release
agreement substantially similar to Exhibit B, and (3) Executive continues
to comply with Executive's ongoing obligations under Sections 11 and 12 of
this Agreement, then, subject to Section 7(h), the Company shall pay
Executive severance in accordance with Section 7(c). Such severance
payments shall be in addition to payment by the Company of all previously
unpaid amounts (including, without limitation, salary, bonuses, equity
plans, incentive compensation plans, fringe benefits, and expense
reimbursements) owed to Executive under this Agreement with respect to
periods prior to the Termination Date.
(b) TERMINATION BY EXECUTIVE. If (1) Executive terminates this
Agreement and Executive's employment with the Company and its affiliates
during the Initial Term or the Renewal Term (if any) pursuant to Section
6(b)(1), (2) Executive signs and does not revoke a waiver and release
agreement substantially similar to Exhibit B, and (3) Executive continues
to comply with Executive's ongoing obligations under Sections 11 and 12 of
this Agreement, then, subject to Section 7(h), the Company shall pay
Executive severance in accordance with Section 7(c). Such severance
payments shall be in addition to payment by the Company of all previously
unpaid amounts (including, without limitation, salary, bonuses, equity
plans, incentive compensation plans, fringe benefits,
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and expense reimbursements) owed to Executive under this Agreement with
respect to periods prior to the Termination Date.
(c) SEVERANCE AMOUNT. If the Company is required to pay Executive
severance by the express terms of Section 7(a) or 7(b), the Company shall
pay Executive the following as severance:
(1) Executive's Base Salary at the highest rate in effect
prior to the Termination Date as salary continuation for a period of
two years commencing on the date on which Executive's employment
with the Company is terminated (the "TERMINATION DATE") (the
"SEVERANCE PERIOD"), payable in equal monthly installments pursuant
to the Company's customary payroll practices for executive salaries;
provided, however, that, at the option of the Company, the amounts
payable under this Section 7(c) may be paid by the Company in one
lump sum.
(2) Executive, Executive's spouse, and Executive's dependents
will continue to be eligible for coverage under the Company's group
health plan or any successor plan on the same basis as active
executive employees of the Company, their spouses, and their
dependents for the duration of the Severance Period. If and when
group health coverage under another employer's plan is made
available to Executive, Executive's spouse, or Executive's
dependents, the Company's obligations under this paragraph will
cease with respect to each person to whom such coverage is made
available, notwithstanding that such person may not in fact become
covered under such other employer's plan. Executive's portion of the
premium for such coverage shall be withheld from the salary
continuation payments described in paragraph (1) immediately above
or, if salary continuation has been paid in a lump sum, Executive
shall reimburse the Company for Executive's portion of the premium
on a monthly basis.
(3) An amount equal to the sum of amounts paid or payable to
Executive as bonuses by the Company for the year prior to the year
in which the Termination Date occurs. This amount will be payable in
one lump sum, to Executive within 30 days after the end of the
Severance Period.
(4) Executive shall become 100% vested in all of the shares of
restricted stock granted to Executive under the Mariner Energy, Inc.
Equity Participation Plan to the extent Executive is less than 100%
vested in such shares as of the Termination Date.
(5) Executive shall become 50% vested in all of the rights and
interests granted to Executive under the Company's stock and other
equity plans (other than the Mariner Energy, Inc. Equity
Participation Plan), including without limitation any stock options,
restricted stock, restricted stock units, performance units, and/or
performance shares to the extent Executive is less than 50% vested
in such award as of the Termination Date.
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(6) Notwithstanding any other provision hereof, if the Company
incurs an obligation to pay severance under this Section 7(c) in
connection with the termination of Executive's employment after the
consummation of an initial public offering by the Company, then,
subject to Section 7(h), Executive shall be entitled to receive the
amounts specified in Section 8(a) in lieu of the amounts specified
in Sections 7(c)(1) and 7(c)(3).
(7) Payments under this Section 7(c) shall be in lieu of any
severance benefits otherwise due to Executive under any severance
pay plan or program maintained by the Company that covers its
employees or executives generally. If Executive receives payment
under Section 8(a), payments otherwise payable under Section 7(c)(1)
shall terminate.
(d) TERMINATION IN EVENT OF EXECUTIVE'S DISABILITY. If (1) the
Company terminates Executive's employment with the Company and its
affiliates during the Initial Term or the Renewal Term (if any) pursuant
to Section 6(a)(2), (2) Executive signs and does not revoke a waiver and
release agreement substantially similar to Exhibit B, and (3) Executive
continues to comply with Executive's ongoing obligations under Section 11
and 12 of this Agreement, then, subject to Section 7(h), the Company shall
pay Executive the severance described in accordance with Section 7(e).
Such severance payments shall be in addition to payment by the Company of
all previously unpaid amounts (including, without limitation, salary,
bonuses, equity plans, incentive compensation plans, fringe benefits, and
expense reimbursements) owed to Executive under this Agreement with
respect to periods prior to the Termination Date.
(e) DISABILITY SEVERANCE. If the Company is required to pay
Executive severance by the express terms of Section 7(d), the Company
shall pay Executive the following as severance:
(1) Executive's Base Salary at the highest rate in effect
prior to the Termination Date as salary continuation for the
duration of the Severance Period, payable in equal monthly
installments pursuant to the Company's customary payroll practices
for executive salaries; provided, however, that, at the option of
the Company, the amounts payable under this Section 7(e) may be paid
by the Company in one lump sum.
(2) Executive, Executive's spouse, and Executive's dependents
will continue to be eligible for coverage under the Company's group
health plan or any successor plan on the same basis as active
executive employees of the Company, their spouses, and their
dependents for the duration of the Severance Period. Executive's
portion of the premium for such coverage shall be withheld from the
salary continuation payments described in paragraph (1) immediately
above or, if salary continuation has been paid in a lump sum,
Executive shall reimburse the Company for Executive's portion of the
premium on a monthly basis. If and when group health coverage under
another employer's plan is made available to Executive, Executive's
spouse, or Executive's dependents, the Company's obligations under
this paragraph will cease with respect to each
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person to whom such coverage is made available, notwithstanding that
such person may not in fact become covered under such other
employer's plan.
(3) An amount equal to the sum of amounts paid or payable to
Executive as bonuses awarded by the Company for the calendar year
prior to the calendar year in which the Termination Date occurs.
This amount will be payable in one lump sum to Executive within 30
days after the end of the Severance Period.
(4) Executive shall become 100% vested in all of the shares of
restricted stock granted to Executive under the Mariner Energy, Inc.
Equity Participation Plan to the extent Executive is less than 100%
vested in such shares as of the Termination Date.
(5) Executive shall become 50% vested in all of the rights and
interests granted to Executive under the Company's stock and other
equity plans (other than the Mariner Energy, Inc. Equity
Participation Plan), including without limitation any stock options,
restricted stock, restricted stock units, performance units, and/or
performance shares to the extent Executive is less than 50% vested
in such award as of the Termination Date.
(6) Notwithstanding any other provision hereof, if the Company
incurs an obligation to pay severance under this Section 7(e) in
connection with termination of Executive's employment after the
consummation of an initial public offering by the Company, then,
subject to Section 7(h), Executive shall be entitled to receive the
amounts specified in Section 8(a) in lieu of the amounts specified
in Sections 7(e)(1) and 7(e)(3).
(7) Payments under this Section 7(e) shall be in lieu of any
severance benefits otherwise due to Executive under any severance
pay plan or program maintained by the Company that covers its
employees or executives generally.
(f) "CAUSE" means the occurrence or existence, prior to occurrence
of circumstances constituting Good Reason, of any of the following events:
(1) Executive's gross negligence or material mismanagement in
performing, or material failure or inability (excluding as a result
of death or Disability) to perform, Executive's duties and
responsibilities as described herein or as lawfully directed by the
Board or the Chief Executive Officer of the Company;
(2) Executive's having committed any act of willful misconduct
or material dishonesty against the Company or any of its affiliates
(including theft, misappropriation, embezzlement, forgery, fraud,
falsification of records, or misrepresentation) or any act that
results in, or could reasonably be expected to result in, material
injury to the reputation, business or business relationships of the
Company or any of its affiliates;
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(3) Executive's material breach of this Agreement, any
fiduciary duty owed by Executive to the Company or its affiliates,
or any written workplace policies applicable to Executive (including
the Company's code of conduct and policy on workplace harassment)
whether adopted on or after the date of this Agreement;
(4) Executive's having been convicted of, or having entered a
plea bargain, a plea of nolo contendre or settlement admitting guilt
for, any felony, any crime of moral turpitude, or any other crime
that could reasonably be expected to have a material adverse impact
on the Company's or any of its affiliates' reputations; or
(5) Executive's having committed any material violation of any
federal law regulating securities (without having relied on the
advice of the Company's attorney to perform required acts on the
Chief Executive Officer's behalf) or having been the subject of any
final order, judicial or administrative, obtained or issued by the
Securities and Exchange Commission, for any securities violation
involving fraud, including, for example, any such order consented to
by Executive in which findings of facts or any legal conclusions
establishing liability are neither admitted nor denied.
(g) "GOOD REASON" means the occurrence, prior to occurrence of
circumstances constituting Cause, of any of the following events without
Executive's consent:
(1) Any material breach by the Company of this Agreement,
provided that Executive provides the Board written notice of such
breach within 90 days from the first date that he is aware, or
reasonably should be aware, of such breach and such breach is not
remedied within 30 days of the Board's receipt of such written
notice;
(2) Any requirement by the Company that Executive relocate
outside of the Houston metropolitan area;
(3) Failure of any successor to assume this Agreement not
later than the date as of which it acquires substantially all of the
equity, assets or businesses of the Company;
(4) Any material reduction in Executive's title,
responsibilities, or duties or the Board directs Executive to cease
reporting to the President or Chief Executive Officer of the
Company; or
(5) The assignment to Executive of any duties materially
inconsistent with his duties as Chief Operating Officer of the
Company.
(h) LATER DETERMINATIONS. Notwithstanding any other provision of
this Agreement, if Executive's employment with the Company is terminated
s






