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EXHIBIT 10.40
HS RESOURCES, INC.
FORM OF
KEY EMPLOYEE SEVERANCE AGREEMENT
THIS KEY EMPLOYEE SEVERANCE AGREEMENT (the "Agreement") is entered
into as of _____________, 1998, by and between _____________________
("Employee") and HS Resources, Inc., a Delaware corporation (the "Company").
RECITALS
A. Employee is a key employee of Company.
B. As an inducement for the Employee to continue in the employ of
the Company, the Employee and the Company wish to provide for a severance
payment to the Employee in the event of termination of the Employee's
employment with the Company following a change in control of the Company. The
Employee and the Company expressly acknowledge that this consideration is
adequate to support the contractual obligations provided for hereunder.
THE PARTIES HERETO AGREE AS FOLLOWS:
1. TERM. This Agreement shall continue until terminated by mutual
agreement of the parties.
2. DEFINITIONS.
a. TERMINATION FOR CAUSE. For purposes of this Agreement,
"Cause" shall include, but not be limited to, the following:
i. Willful dishonesty towards the Company, fraud upon
the Company or deliberate injury or intended injury
to the Company;
ii. Conviction of a felony; or
iii. Continued abuse of alcohol or drugs on the job or
otherwise materially affecting job performance.
b. "GOOD REASON." "Good Reason" shall mean:
i. The assignment to Employee of any duties inconsistent
with, or a significant adverse change in, Employee's
position, duties, responsibilities or status with the
Company as they existed immediately prior to a Change
in Control (as defined below); or removal of Employee
from or failure to re-elect Employee to any of such
positions, except in connection with the
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termination of employment for Cause or Disability, in
each case as defined herein; or
ii. A reduction by the Company in the Employee's base
salary or target bonus in effect immediately prior to
the Change in Control; or
iii. The Company's requiring Employee to relocate to a
city other than the city of Employee's residence
immediately prior to the Change in Control; or
iv. The failure by the Company to continue in effect any
material benefit available to employees of the
Company generally, or to key employees of the Company
including, but not limited to any retirement, pension
or incentive plan, life, accident, disability or
health insurance plans, stock or cash bonus plans or
savings and profit sharing plans, in which the
Employee is participating at the time of a Change in
Control of the Company (or plans providing Employee
with substantially similar benefits); any action by
the Company which would adversely affect the
Employee's participation in or materially reduce the
Employee's benefits under any of such plans or
deprive the Employee of any material fringe benefit
enjoyed by the Employee at the time of the Change in
Control; or the failure by the Company to make
available to the Employee the number of paid vacation
days to which the Employee had been entitled in
accordance with the Company's normal vacation policy.
c. "CHANGE IN CONTROL." For purposes of this Agreement, "Change
in Control" of the Company shall be deemed to have taken place
if:
i. Any person or group (as defined in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) becomes the beneficial
owner (as defined in Rule 13d-3 of the Exchange Act),
directly or indirectly, of securities of the Company
representing 33_% or more of the combined voting
power of the Company's then outstanding securities,
excluding (A) any person who becomes such a
beneficial owner in connection with a transaction
described in clause (A) of paragraph (iii) below (B)
Xxxxxxxx X. Xxxxxx and/or P. Xxxxxxx Xxxxxx
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and their affiliates; or (C) a trustee or fiduciary
holding securities under an employee benefit plan of
the Company.
ii. the following individuals cease for any reason to
constitute a majority of the number of directors then
serving: individuals who, on the date hereof,
constitute the Board and any new director (other than
a director whose initial assumption of office is in
connection with an actual or threatened election
contest, including but not limited to a consent
solicitation, relating to the election of directors
of the Company) whose appointment or election by the
Board or nomination for election by the Company's
stockholders was approved or recommended by a vote of
at least two-thirds (2/3) of the directors then still
in office who either were directors on the date
hereof or whose appointment, election or nomination
for election was previously so approved or
recommended; or
iii. there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the
Company with any other corporation, other than (A) a
merger or consolidation which would result in the
voting securities of the Company outstanding
immediately prior to such merger or consolidation
continuing to represent (either by remaining
outstanding or by being converted into voting
securities of the surviving entity or any parent
thereof) at least 60% of the combined voting power of
the securities of the Company or such surviving
entity or any parent thereof outstanding immediately
after such merger or consolidation, or (B) a merger
or consolidation effected to implement a
recapitalization of the Company (or similar
transaction) in which no person (other than the
person or persons specified in clauses (A) through
(D) of subparagraph (i) above) is or becomes the
beneficial owner, directly or indirectly, of
securities of the Company representing 33_% or more
of the combined voting power of the Company's then
outstanding securities; or
iv. the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or
there is consummated an agreement for the sale or
disposition by the Company of all or substantially
all of the
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Company's assets, other than a sale or disposition by
the Company of all or substantially all of the
Company's assets to an entity, at least 60% of the
combined voting power of the voting securities of
which are owned by stockholders of the Company in
substantially the same proportions as their ownership
of the Company immediately prior to such sale.
Notwithstanding the foregoing, a "Change in Control" shall not
be deemed to have occurred by virtue of the consummation of
any transaction or series of integrated transactions
immediately following which the record holders of the common
stock of the Company immediately prior to such transaction or
series of transactions continue to have substantially the same
proportionate ownership in an entity which owns all or
substantially all of the assets of the Company immediately
following such transaction or series of transactions.
d. "DISABILITY." "Disability" shall mean a physical or mental
condition (other than that caused by or related to alcohol or
drug abuse), verified by a physician designated by the
Company, which prevents the Employee from carrying out one or
more of the material aspects of Employee's assigned duties for
at least ninety (90) consecutive days.
3. PAYMENTS UPON CHANGE IN CONTROL.
a. TERMINATION FOLLOWING CHANGE IN CONTROL. In the event of
termination of the Employee's employment within two years
after the effective date of a Change in Control of the
Company, either by the Employee for Good Reason or by the
Company other than for Disability, retirement at age 65, or
Cause, the Company shall pay the Employee as follows:
i. The Employee's base salary through the date of
termination at the rate then in effect at the time
the notice of termination is given; and
ii. The prorated portion of the bonus the Employee would
have received for that year had his employment not
terminated; and
iii. A lump sum severance payment equal to the product of
[1.0] [2.0] [2.99] times the Employee's average
annual base salary in effect during the three (3)
year period immediately preceding the date of
termination ; and
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iv. A lump sum bonus payment equal to the product of
[1.0] [2.0] [2.99] times the Employee's highest
annual bonus amount (other than any bonus or payment
designated as a special commendation bonus or the
like) from the three years immediately preceding the
date of termination, if any, previously paid to the
Employee. In the event the date of termination
occurs in the course of a bonus period, the
fractional time period shall not be considered in
determining the additional payments to be made under
this paragraph.
v. Unless the parties shall otherwise agree, all amounts
payable under this paragraph 3. shall be paid within
ten (10) calendar days after termination. Any
amounts not timely paid shall bear interest at a rate
of eighteen percent (18%) per annum compounded daily.
vi. In addition, notwithstanding anything to the contrary
contained herein or in any agreement with respect
hereto, the Company shall, if requested by the
Employee, pay for one year of health insurance
premiums (and, if applicable, administrative fees)
under COBRA.
4. LIMITATION. In order to avoid adverse tax consequences to the Company
and the Employee from application of Sections 280G and 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), if payment of
the amounts prescribed in paragraph 3., when aggregated with all other
payments required to be made to the Employee by the Company (under any
agreement or arrangement between the Company and Employee) as a
consequence of a Change in Control, would result in an "excess
parachute payment" as such term is defined in Section 280G of the
Code, then the amount which otherwise would be paid to Employee under
paragraph 3. hereof shall be limited to the maximum whole dollar
amount which can be paid to the Employee without resulting in any
"excess parachute payment." In the event of a disagreement between
the Company and Employee as to whether a particular payment or
payments under this or any other agreement between the parties would
result in "excess parachute payments," the Company shall pay the
Employee the undisputed amount in accordance with paragraph 0.x.xx.,
and the Employee may request that the Company promptly obtain a ruling
from the Internal Revenue Service and, if so requested, the Company
shall submit a properly prepared
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ruling request, approved as to form and content by the Employee,
within sixty days after the date of the Employee's request. The
Employee may independently request a ruling on the same matter, and,
in the event a ruling requested by either the Company or the Employee
concludes that the disputed payment or payments is not an "excess
parachute payment," appropriate additional payments shall be promptly
made under paragraph 3. hereof. In the event the Internal Revenue
Service, at such time, maintains a no ruling policy on such requests,
in the event the Internal Revenue Service refuses to rule on the
specific issue presented, or in the event the Company fails to obtain
a ruling within one year of the date the ruling is requested, the
Employee may submit to the Company an opinion of independent tax
counsel stating that a reasonable basis exists for the position that
an additional payment will not result in an "excess parachute
payment," and the Company will, within thirty (30) days following
receipt of such opinion, make the requested additional payment to the
Employee, provided that the terms of such payment shall include an
agreement by the Employee that, in the event such payment is finally
determined to constitute an "excess parachute payment," the Employee
will refund the portion of the payment which constitutes an "excess
parachute payment" together with the amount of interest thereon
necessary to reduce the present value of such payment (measured from
the date of payment) to zero.
5. ASSIGNMENT. The rights and obligations of the parties under this
Agreement shall be binding upon and inure to the benefit of their
respective successors, assigns, executors, administrators and heirs.
6. MISCELLANEOUS.
a. COMPLETE AGREEMENT. This supersedes all other agreements
between the parties to the extent and only to the extent of
provisions in any other agreement that are less favorable to
the Employee than the provisions contained in this Agreement.
b. MODIFICATION, AMENDMENT, WAIVER. No modification, amendment
or waiver of any provisions of this Agreement shall be
effective unless approved in writing by both parties. The
failure at any time to enforce any of the provisions of this
Agreement shall in no way be construed as a waiver of such
provisions and shall not affect the right of either party
thereafter to enforce each and every provision hereof in
accordance with its terms.
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c. GOVERNING LAW; JURISDICTION. This Agreement shall be
construed in accordance with the laws of the state where
Employee resides at the time of termination. For the purposes
of any legal action, the Employee hereby submits to the
jurisdiction of and proper venue in (i) the state court of
general jurisdiction located in the county where the Company
maintains its primary office in the state in which the
Employee resides at the time of termination; or (ii) the
United States District Court in the District where the Company
maintains its primary office in the state in which the
Employee resides at the time of termination. The Employee
agrees that service upon the Employee in any such action may
be made by first class mail, certified or registered, to the
Employee's address as last appearing on the records of the
Company.
d. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision
of this Agreement shall be held to be prohibited by or invalid
under applicable law, such provision shall be ineffective only
to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining
provisions of this Agreement.
e. ATTORNEYS' FEES. In the event of litigation to interpret or
enforce this Agreement, the prevailing party shall be entitled
to reimbursement of its reasonable attorneys' fees and costs
of suit in addition to such other relief as may be granted.
f. NOTICES. All notices and other communications under this
Agreement (including notice of a change of address for
purposes of this Agreement) shall be in writing and shall be
given in person or by telegraph, telefax or first class mail,
certified or registered with return receipt requested, and
shall be deemed to have been duly given when delivered
personally or three days after mailing or one day after
transmission of a telegram or telefax (receipt confirmed), as
the case may be, to the respective persons named below:
If to the Company:
HS Resources, Inc.
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Chief Executive Officer
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with a copy to:
HS Resources, Inc.
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: General Counsel
If to the Employee:
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g. ACKNOWLEDGMENT. The Employee acknowledges that he is
voluntarily executing this Agreement after having had full
opportunity to consult with legal counsel and without being
pressured or influenced by any statement or representation of
any person acting on behalf of the Company including the
officers, agents and attorneys for the Company.
7. NO TERMINATION BY MERGER, TRANSFER OF ASSETS OR DISSOLUTION. This
Agreement shall not be terminated by any voluntary or involuntary
dissolution of the Company or the transfer of all or substantially all
the assets of the Company or the merger of the Company with or into
another entity.
8. GENERAL RELEASES.
a. Upon payment of the severance amount, and in further
consideration for it, the Employee shall voluntarily and
knowingly release and discharge the Company and its
successors, subrogees, assigns, insurers, principals, agents,
partners, heirs, employees, shareholders, officers, directors,
subsidiaries, affiliates and associates from any past, present
or future claims, actions, causes of action, wages,
reimbursements, liabilities, demands, rights, damages, costs,
attorneys' fees, expenses and controversies of every kind and
description which arise from or are based on acts, omissions,
events or circumstances which occurred before the Change in
Control.
b. The release shall include, by way of example and not
limitation, a complete and final release and discharge of all
claims and rights which arise from and are based
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on acts, omissions, events or circumstances which occurred
before the Change in Control, including those which arise out
of, relate to, or are based on (i) Employee's employment with
the Company, (ii) the negotiations leading up to the execution
of this Agreement, (iii) Title VII of the Civil Rights Act of
1964, all federal Civil Rights Acts, the Age Discrimination in
Employment Act, the Older Workers Benefit Protection Act, the
American with Disabilities Act, the Employee's Income
Retirement Security Act of 1974, and all other state and
federal statutes, (iv) any statements, acts or omissions by
any agent or representative of the Employee whether in his or
her representative or individual capacity or (v) wages claimed
pursuant to C.R.S. Section 8-4-104; Okla. Stat. Tit. 40
Sections 165.3 and 165.9; Cal. Labor Code Sections 201-203;
and Tex. Labor Code Xxx. Section 61.014.
c. The release shall include claims of every nature and kind,
known or unknown, suspected or unsuspected. The Employee
acknowledges that he may later discover facts different from,
or in addition to, those which he now knows to be, learns or
believes to be true with respect to his employment, and he
agrees that this Agreement provides for all of the releases
contained herein which shall be and remain effective in all
respects, notwithstanding such different or additional facts
or the discovery thereof.
IN WITNESS WHEREOF, the parties have executed this Severance Agreement
as of the day and year first above written.
COMPANY:
HS RESOURCES, INC., a Delaware corporation
By:
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Xxxxxxxx X. Xxxxxx
Chief Executive Officer and Chairman
EMPLOYEE:
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