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EXHIBIT 10.18
[LETTERHEAD OF MARINER ENERGY, INC.]
September 26, 1996
Re: (1) Termination of Employment
(2) Employment Agreement effective March 31, 1987, as amended (the
"Employment Agreement"), by and between Trafalgar House Oil and
Gas Inc. (heretofore also known as Hardy Oil & Gas USA Inc. and
now known as Mariner Energy, Inc.) ("Mariner") and ▇▇▇▇ ▇. ▇▇▇▇▇▇
("you" or "Pedlar")
(3) Change in Control Agreement dated as of February 12, 1996 (the
"Change in Control Agreement"), between Mariner and Pedlar
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Dear ▇▇▇▇:
This letter (this "letter agreement") sets forth our agreement with
respect to the termination of your employment with Mariner. Defined terms used
herein and not otherwise defined herein shall have the meaning assigned to such
terms in the Employment Agreement.
1. You and Mariner acknowledge and agree that (a) through September
30, 1996, you will hold the office/position of Vice President of
Finance of Mariner, but from August 19, 1996, through September
30, 1996, you will not hold the position of Chief Financial
Officer of Mariner, and (b) from and after October 1, 1996, you
will not be employed by, and will not hold any office or position
with, Mariner or any of its affiliates, whether as an officer,
employee, independent contractor, or otherwise.
2. You will be entitled to the following:
(a) Through September 30, 1996, (1) Mariner will pay to
you (i) a salary at the rate of $5,316.67 per semi-monthly
period, and (ii) an automobile allowance at the rate of $400.00
per month, and (2) subject to the other provisions of this letter
agreement, you will receive all benefits to which you are
entitled under the Employment Agreement and Mariner's plans,
programs and policies.
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September 26, 1996
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(b) On September 30, 1996, Mariner will pay to you a
lump sum in the amount of $339,506.67.
(c) During the period beginning October 1, 1996, and
ending on the first to occur of (1) March 31, 1999, and (2) the
date on which you become a full-time employee of any person or
entity (it being understood and agreed that your becoming an
independent contractor of any other person or entity or otherwise
becoming self-employed shall not constitute becoming a full-time
employee of such person or entity), Mariner will, at its expense,
continue benefits to you under Mariner's medical, dental,
prescription drug service, life insurance, accidental death and
dismemberment insurance and disability plans, programs, and/or
policies; provided, however, that if your participation in any
such plan, program or policy is not permitted by the terms
thereof, Mariner will provide, at its expense, substantially
similar benefits as those provided thereunder.
(d) You will be entitled to any benefits or rights you
have earned under Mariner's Employee Capital Accumulation Plan
(401(k)) (the "401(k) Plan") in accordance with the terms
thereof.
(e) Except as otherwise provided in Section 2 (e)(1),
(2) and (3) of this letter agreement, and subject to the terms of
paragraph 9 of the Employment Agreement, you shall be entitled to
receive the benefits under paragraph 9 of the Employment
Agreement of an Overriding Royalty Interest equal to an undivided
percentage (as specified in paragraph 9.2 of the Employment
Agreement) of Mariner's Working Interest in each well in any
Prospect or Prospects acquired by Mariner on or before September
30, 1996, and the lease or leases allocated thereto. You shall
not be entitled to receive any Overriding Royalty Interest or
other interest in or benefits with respect to any Prospect or
Prospects acquired by Mariner after September 30, 1996.
(1) With respect to each well in any Prospect
resulting from the United States Department of
Interior Mineral Management Service's outer
continental shelf lease sale 161 held on September
25, 1996 (individually, a "161 Prospect", and
collectively, the "161 Prospects"), and the lease
or leases allocated thereto, your Overriding
Royalty Interest for purposes of paragraph 9.2 of
the Employment Agreement shall be as follows:
(i) The before Payout percentage of
Mariner's Working Interest shall be
0.053125%; and
(ii) The after Payout percentage of
Mariner's Working Interest shall be
0.212500%.
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September 26, 1996
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(2) Your Overriding Royalty Interests shall not
be adjusted under paragraph 9.5.2 of the Employment
Agreement.
(3) You hereby expressly waive the provisions,
and protections contained therein, set forth in
paragraph 9.4.8(a) of the Employment Agreement
insofar and only insofar as same relate to the sale
of all of the common stock of Hardy Oil & Gas USA
Inc. by Hardy Holdings Inc. to Mariner Holdings,
Inc., and further insofar and only insofar as same
relate to the equalization of your before Payout
and after Payout Overriding Royalty Interest. You
do not waive your entitlement to recordable
assignments of your Overriding Royalty Interest
that have not previously been executed, delivered
and recorded; provided, however, that such
assignments of your Overriding Royalty Interest
shall be so executed, delivered and recorded at
such time or times as are provided in those
provisions of paragraph 9.4 of the Employment
Agreement that are not waived herein.
(f) After September 30, 1996, and commencing no later
than October 1, 1999, Mariner will, at its expense, provide you
with twelve (12) consecutive months of reasonable outplacement
services, such services to be commensurate with those provided a
Vice President of Finance/Chief Financial Officer position;
provided, however, that Mariner's obligation to provide you with
such services shall terminate at such time as you become a full-
time employee of any person or entity (it being understood and
agreed that your becoming an independent contractor of any other
person or entity or otherwise becoming self-employed shall not
constitute becoming a full-time employee of such person or
entity). Such services will be selected by you subject to
Mariner's prior approval, which approval shall not be
unreasonably withheld.
(g) On or before October 11, 1996, you will be provided
with a favorable letter of recommendation from ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, Mariner's Chairman, President and Chief Executive
Officer.
3. Subject to the provisions of Section 11 of the Change in Control
Agreement and Mariner's obligations to you thereunder, Mariner
may withhold from any amounts payable under this letter agreement
such federal, state, or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
4. In the event of a conflict between the provisions of this letter
agreement, on the one hand, and any of the provisions of the
Employment Agreement, the Change in Control Agreement, that
certain withdrawal of offers letter from Mariner to you dated
June 13, 1996, that certain notice of termination letter from you
to Mariner dated August 2, 1996 (the
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September 26, 1996
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"Pedlar Termination Letter"), or that certain notice of
termination letter from Mariner to you dated August 6, 1996 (the
"Mariner Termination Letter"), on the other hand, the provisions
of this letter agreement shall control, but only to the extent of
such conflict. In addition, and without limiting the generality of
the preceding sentence, Mariner and Pedlar expressly acknowledge
and agree that Pedlar's entitlements set forth in Section 2 above
are in lieu of any benefits to which Pedlar may otherwise be
entitled to under, and Pedlar shall not be entitled to any
benefits under, Section 7 of the Change in Control Agreement or
under paragraph 3 of the Employment Agreement. This letter
agreement is intended to resolve certain disputed issues arising
out of the Pedlar Termination Letter and the Mariner Termination
Letter, and is entered into for the purposes of clarifying the
agreements made by you and Mariner in settlement of those disputed
issues as the same are more particularly set out herein. Except
as expressly provided herein with respect to the resolution of
such disputed issues, nothing contained in this letter agreement
is intended as, nor shall this letter agreement be construed as,
modifying, changing, limiting, waiving, releasing or otherwise
affecting in any manner the rights, interests, duties, or
obligations of Pedlar or Mariner under the Employment Agreement
and/or the Change in Control Agreement. It is further understood
and agreed that all of the respective terms and provisions of the
Employment Agreement and the Change in Control Agreement that
state they survive the termination thereof and/or termination of
Pedlar's employment with Mariner, or are otherwise designed to
survive any such termination, shall so survive the Employment
Agreement and the Change in Control Agreement, respectively.
5. Written notices required or furnished under this letter agreement
shall be sent to the following addresses:
to Mariner: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President and Chief
Executive Officer
to Pedlar: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
6. This letter agreement does not constitute an admission of
liability of any kind by Mariner or its affiliates or by Pedlar.
This letter agreement is personal to Pedlar and, without the prior
written consent of Mariner, shall not be assignable by Pedlar
otherwise than by will or the laws of descent and distribution.
The terms of this letter agreement shall be binding upon and inure
to the benefit of Mariner and its affiliates, successors and
assigns and upon Pedlar and his heirs, devisees and permitted
assigns. The terms of this letter agreement may be changed,
modified or discharged only by an instrument in writing signed by
the
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September 26, 1996
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parties hereto. This letter agreement shall be construed,
enforced and interpreted in accordance with the laws of the State
of Texas without reference to its principles of conflicts of law.
This letter agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but
shall not be binding until signed by or on behalf of both Pedlar
and Mariner.
7. Before September 30, 1996, Pedlar shall submit an invoice to, and
request by Pedlar that, Mariner reimburse Pedlar for his
reasonable attorney's fees incurred in connection with the
termination of Pedlar's employment with Mariner. Upon such
submission, Mariner will, on September 30, 1996, reimburse Pedlar
for such fees in an amount equal to the lesser of (a) the amount
reflected on such invoice, and (b) $2,500.00.
Very truly yours,
MARINER ENERGY, INC.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Vice President of Land and Legal
AGREED TO THIS 26 DAY OF
SEPTEMBER, 1996.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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