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Exhibit 10.10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (hereinafter called this "Agreement") is
entered into effective as of August 1, 1998 (the "Effective Date"), by and
between MARINER ENERGY, INC. (hereinafter called "Company") and Xxxxxxxxxxx X.
Xxxxxxx (hereinafter called "Employee").
WHEREAS, Company desires to employ Employee upon the terms and
conditions set forth herein; and
WHEREAS, Employee desires to be employed by Company upon the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
1. Employment.
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.
The place of employment shall be at such place or places as
Company may designate. If Company elects to utilize
Employee's services outside the metropolitan area of the City
of Houston, Texas, Employee's relocation expenses and
allowances will be paid in accordance with Company's
relocation policy. 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 be for a term of two (2) years
beginning on the Effective Date, subject, however, to the
provisions of paragraph 3.
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 three (3) 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:
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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 three (3)
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.
3.3 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 and
3.2.3 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
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thereafter under this Agreement except 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. 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 the Company in
good faith determines that the continued employment
of the Employee would be materially detrimental to
the 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 the
Company has provided Employee with written notice of
such breach, and (f) the occurrence of an action or
finding described in paragraph 15, except as
otherwise provided in paragraph 15. 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 and 3.2.3 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
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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 three (3)
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 paragraph 3.2.3.
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 Any (a) reduction in Employee's monthly
salary as established in paragraph 5
(including subsequent increases), (b)
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; or
3.9.2 A breach of any material provision of this
Agreement by Company (other than any breach
described in paragraph 3.9.1) which is not
cured within thirty (30) days after
Employee has provided Company with written
notice of such breach.
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
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not apply to information that is in the public
domain through no action of Employee.
4.2 Upon termination of this 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; Signing Bonus.
5.1 As compensation for his services rendered to Company
hereunder, Company shall pay to Employee a salary at
the rate of $10,416.66 per month. 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.
5.2 Company shall pay Employee a bonus in the amount of
$7,500.00 upon commencement of the term of
Employee's employment under this Agreement.
6. Automobile Allowance.
Company agrees to pay an automobile allowance of $250.00
dollars 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;
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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.
9. 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 the Company shall
initiate from time to time.
10. 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 the
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Employee holds a directorship, Company can require Employee
to resign the outside directorship.
11. 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:
11.1 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.
11.2 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.
11.3 Employee must purchase his interest in the oil and
gas prospect on terms which are no more favorable
than those made available to Company.
12. 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.
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13. 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 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.
14. Arbitration.
14.1 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 18, be resolved as follows:
14.1.1 Except as provided in paragraph 14.1.2
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
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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 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.
14.1.2 Notwithstanding the agreement to arbitrate
contained in paragraph 14.1.1 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, 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
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or temporary injunction, or other
injunctive relief will be brought in the
State or federal courts residing in
Houston, Xxxxxx County, Texas.
14.2 The 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 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.
15. 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 3.3 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.
16. Survival.
The provisions of paragraphs 4 and 20 shall survive any
termination of the employment relationship and/or of this
Agreement for the periods stated therein. The provisions of
paragraph 14 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.
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17. Certain Additional Payments by Company.
17.1 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
17.11) imposed upon the Gross-Up Payment, Employee
retains an amount of such Gross-Up Payment equal to
the Excise Tax imposed upon the Payments.
17.2 Subject to the provisions of paragraph 17.3 through
17.11, any determination (individually, a
"Determination") required to be made under this
paragraph 17, 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 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,
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however, to the provisions of paragraph 17.3 through
17.11 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.
17.3 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 17.10) that
any Payment is subject to the Excise Tax.
17.4 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 17 ("Claim"), including, but not limited
to, a claim for indemnification of Employee by
Company under paragraph 17.3, then such party shall
promptly notify the other party hereto in writing of
such Claim ("Tax Claim Notice").
17.5 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
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:
17.5.1 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
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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
17.5.2 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 17.7,
xxx 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 xxx 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
17.5.3 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.
17.6 Subject to the provisions of paragraph 17.5 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 taxable year of Employee with respect to which the
contested issues involved in, and amount of, the 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 the
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
EMPLOYMENT AGREEMENT--XXXXXXXXXXX X. XXXXXXX
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14
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.
17.7 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
17.5.2 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 17.5.2, 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.
17.8 With respect to any Employee Claim, if Company fails
to deliver an Election Notice to Employee within the
period provided in paragraph 17.5.1 hereof or, after
delivery of such Election Notice, Company fails to
comply with the provisions of paragraph 17.5.2,
17.5.3 or 17.6 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, 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
17.8 and shall bear its own costs and expenses with
respect thereto. In the case of any Employee
EMPLOYMENT AGREEMENT--XXXXXXXXXXX X. XXXXXXX
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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.
17.9 In the case of any Employee Claim that is defended
or prosecuted to a Final Determination pursuant to
the terms of this paragraph 17.9, 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 17.9, 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 17.9 shall be made within the time
and in the manner otherwise provided in this
paragraph 17.9.
17.10 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.
17.11 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 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.
18. No Obligation to Mitigate.
EMPLOYMENT AGREEMENT--XXXXXXXXXXX X. XXXXXXX
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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.
19. Annual Bonus; Stock Options.
19.1 In addition to the salary provided for in paragraph
5.1 hereof (the "Base Salary"), Employee shall be
eligible to receive, for each calendar year or
portion thereof occurring during the term of this
Agreement, an annual cash bonus based on performance
(the "Annual Bonus") in an amount up to twenty-five
percent (25%) of the Base Salary for such calendar
year or portion thereof (or such greater percentage
of such Base Salary as the Board of Directors or the
Committee may, in its discretion, determine) upon
approval of such Annual Bonus by the Board of
Directors of Company (the "Board of Directors") or a
committee of the Board of Directors designated by
the Board of Directors (the "Committee"). The amount
of any such Annual Bonus shall be determined by the
Board of Directors or the Committee, as the case may
be, in accordance with the cash incentive
compensation program of Company in effect with
respect to such determination. The Annual Bonus
shall be paid to Employee, less such amounts as
shall be required to be deducted or withheld
therefrom by applicable law and regulations, at such
time or times as is in accordance with the then
prevailing policy of Company relating to cash
incentive compensation payments.
19.2 As of the Effective Date, Company shall, or shall
cause Mariner Holdings Inc. to, grant to Employee
stock options for 1,429 shares of the common stock
of Mariner Holdings, Inc. ("Parent Common Stock")
pursuant to the Mariner Holdings Inc. 1996 Stock
Option Plan. To the fullest extent possible, the
options granted to Employee shall be incentive stock
options, and otherwise shall be non-qualified stock
options. The terms, conditions and restrictions with
regard to such stock options shall be evidenced by
an Incentive Stock Option Agreement substantially in
the form attached hereto as Exhibit A, which is
incorporated herein by reference and its terms,
conditions and restrictions shall be considered a
part of this Agreement.
20. Noncompetition Obligations.
20.1 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:
EMPLOYMENT AGREEMENT--XXXXXXXXXXX X. XXXXXXX
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17
20.1.1 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
20.1.2 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;
20.1.3 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 20.1.1
and 20.1.2 above with respect to such
competitive business; or
20.1.4 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
20 to the contrary, such obligations shall only
apply after the termination of employment if the
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 20, constitute voluntary termination
without Good Reason by Employee).
20.2 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 enumeration 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
EMPLOYMENT AGREEMENT--XXXXXXXXXXX X. XXXXXXX
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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.
20.3 It is expressly understood and agreed that Company
and Employee consider the restrictions contained in
this paragraph 20 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.
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.
EMPLOYMENT AGREEMENT--XXXXXXXXXXX X. XXXXXXX
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21.6 Notices contemplated under this Agreement shall be
directed to the following address:
If to Company:
Mariner Energy, Inc.
000 XxxxXxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: President and Chief Executive Officer
If to Employee:
Xxxxxxxxxxx X. Xxxxxxx
00000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
Company and Employee may change the above addresses
for notice purposes by notifying the other in
writing.
21.7 The 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.
Executed as of the Effective Date in duplicate originals at Houston,
Texas.
Acknowledged by: MARINER ENERGY, INC.
/s/ X. Xxxx Xxxxx By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------- ------------------------------
X. Xxxx Xxxxx Xxxxxx X. Xxxxxxxxx
Vice President - Administration President and
Chief Executive Officer
"COMPANY"
/s/ Xxxxxxxxxxx X. Xxxxxxx
----------------------------------
Xxxxxxxxxxx X. Xxxxxxx
"EMPLOYEE"
EMPLOYMENT AGREEMENT--XXXXXXXXXXX X. XXXXXXX
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