UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): October 13, 2006
MARINER ENERGY, INC.
(Exact name of registrant as specified in its charter)
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| Delaware
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1-32747
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86-0460233 |
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(State or other jurisdiction of
incorporation or organization)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.) |
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One BriarLake Plaza, Suite 2000
2000 West Sam Houston Parkway South |
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Houston, Texas
(Address of principal executive offices)
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77042
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Registrant’s telephone number, including area code: (713) 954-5500
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
TABLE OF CONTENTS
Item 1.01 Entry into a Material Definitive Agreement.
Mariner Energy, Inc. (“Mariner”) has entered into Amendment No. 2, dated as of October 13, 2006,
among Mariner and Mariner Energy Resources, Inc., as borrowers, the Lenders (as defined in the
Credit Agreement described below), and Union Bank of California, N.A., as administrative agent and
as issuing lender for such Lenders (the “Amendment”), which amends the Amended and Restated Credit
Agreement, dated as of March 2, 2006, among the same parties, as previously amended (the “Credit
Agreement”).
The Amendment increases the borrowing base under the Credit Agreement from $362.5 million to $450
million, subject to redetermination or adjustment under the Credit Agreement. The Amendment is
attached as Exhibit 4.1 and incorporated herein by reference. The foregoing description of the
Credit Agreement, as amended by the Amendment, is a summary and is qualified in its entirety by the
complete text of the Amendment and the Credit Agreement which previously has been filed.
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| Item 1.01 |
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Entry into a Material Definitive Agreement, and |
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| Item 5.02 |
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Departure of Directors or Principal Officers; Election of
Directors; Appointment of Principal Officers. |
Effective October 16, 2006, the Board of Directors of Mariner Energy, Inc. (“Mariner”) appointed
John H. Karnes, age 45, as Senior Vice President, Chief Financial Officer and Treasurer. Mr.
Karnes replaced Rick G. Lester who had continued in that role on a consulting basis until his
October 16, 2006 resignation as an officer. Mariner announced on June 29, 2006 Mr. Lester’s
intention to resign to pursue personal interests and on August 16, 2006 announced his consulting
arrangements. Mr. Lester has agreed to assist in his successor’s transition until Mr. Lester’s
Consulting Agreement with Mariner terminates, which is expected in November 2006.
Mr. Karnes served as Senior Vice President and Chief Financial Officer of The Houston Exploration
Company from November 2002 through December 2005. He then served as Executive Vice President and
Chief Financial Officer of Maxxam Inc. from April 2006 to July 2006, and Senior Vice President and
Chief Financial Officer of CDX Gas, LLC from July 2006 to August 2006. Prior to joining Houston
Exploration, Mr. Karnes was Vice President and General Counsel of Encore Acquisition Company, a
NYSE-listed oil and gas producer, from January 2002 to November 2002, and Executive Vice President
and Chief Financial Officer of CyberCash, Inc., a NASDAQ-listed internet payment software and
services provider, during 2000 and 2001. He also served as Chief Operating Officer of CyberCash
during the disposition of its operating divisions through a pre-packaged Chapter 11 bankruptcy
proceeding in 2001. Earlier in his career, he served in senior management roles at several
publicly-traded companies, including Snyder Oil Corporation and Apache Corporation, practiced law
with the national law firm of Kirkland & Ellis, and was employed in various roles in the securities
industry. Mr. Karnes has a J.D. from Southern Methodist University School of Law and a B.B.A. in
Accounting from The University of Texas at Austin.
Mariner and Mr. Karnes have entered into an Employment Agreement, dated as of October 16, 2006 (the
“Employment Agreement”). The Employment Agreement has an initial term ending October 15, 2007 and
automatically renews each October 15 thereafter for an additional 12 months unless prior notice is
given. It provides for a base salary that may be adjusted annually in the sole discretion of
Mariner’s Board of Directors, a discretionary bonus, and participation in Mariner’s benefit plans
and programs. The initial base salary on an annualized basis is $235,000. If Mr. Karnes remains
employed by Mariner until such time in 2007 as bonuses in respect of performance in 2006 are paid
to other officers of Mariner, then for his services during 2006, Mariner will pay him a guaranteed
bonus of not less than $125,000 and grant him no fewer than 20,000 shares of restricted common
stock of Mariner, which is expected to have a four-year vesting schedule. In connection with
Mariner’s employment of Mr. Karnes, it plans to grant to him 15,000 shares of restricted common
stock under Mariner’s Amended and Restated Stock Incentive Plan, as amended, that would be subject
to four-year vesting, with an anticipated grant date no later than October 26, 2006.
Under the Employment Agreement, if Mr. Karnes terminates his employment for good reason or Mariner
terminates his employment without cause, he is entitled to a severance payment of (i) $375,000 if
the
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termination occurs before the earlier of April 16, 2007 or the occurrence of a change of control,
or (ii) a lump sum payment equal to 2.99 times the sum of his base salary and three-year average
annual bonus if the termination occurs on or after April 16, 2007 or the occurrence of a change of
control. If Mariner terminates his employment due to disability, he is entitled to a lump sum
payment equal to 2.99 times the sum of his base salary and three-year average annual bonus. Mr.
Karnes also is entitled to the following severance benefits if he resigns for good reason or
Mariner terminates his employment without cause or due to disability: (i) health care coverage for
a period of 18 months, and (ii) 50% vesting of all unvested rights under any equity plans of
Mariner. Subsequent awards under equity plans vest in accordance with their terms. In addition,
upon the occurrence of a change of control that occurs during the period Mr. Karnes is employed or
within nine months after he resigns for good reason or Mariner terminates his employment without
cause, he will become 100% vested in all unvested rights under any of Mariner’s stock and other
equity plans.
The Employment Agreement provides that Mr. Karnes is entitled to a full tax gross-up payment if the
aggregate payments and benefits to be provided constitute a “parachute payment” subject to a
Federal excise tax. It also includes confidentiality and non-solicitation provisions.
The foregoing description of the Employment Agreement is a summary and is qualified in its entirety
by the complete text of the Employment Agreement which is attached as Exhibit 10.1.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
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Description |
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4.1
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Amendment No. 2, dated as of October 13, 2006, among
Mariner Energy, Inc. and Mariner Energy Resources,
Inc., as Borrowers, the Lenders party thereto, and
Union Bank of California, N.A., as Administrative
Agent for such Lenders and as Issuing Lender for such
Lenders. |
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4.2*
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Amended and Restated Credit Agreement, dated as of
March 2, 2006, among Mariner Energy, Inc. and Mariner
Energy Resources, Inc., as Borrowers, the Lenders
party thereto from time to time, as Lenders, and
Union Bank of California, N.A., as Administrative
Agent and as Issuing Lender (incorporated by
reference to Exhibit 4.3 to Mariner’s Registration
Statement on Form S-4 (File No. 333-137441) filed on
September 19, 2006). |
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4.3*
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Amendment No. 1 and Consent, dated as of April 7,
2006, among Mariner Energy, Inc. and Mariner Energy
Resources, Inc., as Borrowers, the Lenders party
thereto, and Union Bank of California, N.A., as
Administrative Agent for such Lenders and as Issuing
Lender for such Lenders (incorporated by reference to
Exhibit 4.4 to Mariner’s Registration Statement on
Form S-4 (File No. 333-137441) filed on September 19,
2006). |
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10.1†
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Employment Agreement, by and between Mariner Energy,
Inc. and John H. Karnes, dated as of October 16,
2006. |
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Incorporated by reference as indicated. |
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Management contract. |
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