Employment Agreement
Exhibit
10.6
This
Employment Agreement (the “Agreement”) is made and entered into
this 15th day of November, 2006, by and between Petroleum Development
Corporation, a Nevada Corporation (the “Company”), and Xxxxxxx XxXxxxxxxx (the
“Employee”).
WHEREAS,
the Company wishes to employ the Employee as Chief Financial Officer and
to
perform the duties and services incident to such position for the Company,
and
the Employee wishes to be so employed by the Company, all upon the terms
and
conditions set forth in this Agreement;
NOW
THEREFOR, in consideration of the premises and mutual covenants and obligations
set forth herein and for other good and valuable consideration, the receipt
and
sufficiency of which is hereby acknowledged and accepted, the parties hereto,
intending to be legally bound, agree as follows:
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1.
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Effective
Date and Term
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a.
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Initial
Term. The effective date of this Agreement shall be
November 13, 2006 (the “Effective Date”), and the initial term shall be
for the period beginning on the Effective Date and ending
December 31, 2008.
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b.
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Automatic
Extensions. The Term of this Agreement shall be extended
for an additional 12 months beginning on December 31, 2007 and
on each
successive December 31 unless either party provides the other
with at
least 30 days prior written notice, or unless the contract has
been
terminated by the parties in accordance with the provisions of
Section 7
of this Agreement. The period of time from the Effective Date
until the Termination Date, as defined in Section 7b., shall be
the “Term.”
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c.
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Change
of Control. In the event of a Change of Control, the Term
of this Agreement will automatically be extended to the date
24 months
after the date of the Change of Control without any action on
the part of
the Company or the Employee. Thereafter the date of the Change
of Control will be treated as the Effective Date for purposes
of further
automatic 12-month extensions of the Agreement under this
section. "Change of Control" of the Company shall occur on the
earliest of the following events:
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(i)
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Change
in Ownership: A change in ownership of the Company occurs on
the date that
any one person, or more than one person acting as a group, acquires
ownership of stock of the Company that, together with stock held
by such
person or group, constitutes more than 50% of the total fair
market value
or total voting power of the stock of the Company, excluding
the
acquisition of additional stock by a person or more than one
person acting
as a group who is considered to own more than 50% of the total
fair market
value or total voting power of the stock of the
Company.
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(ii)
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Change
in Effective Control: A change in effective control of the Company
occurs
on the date that either:
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(A)
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Any
one person, or more than one person acting as a group, acquires
(or has
acquired during the l2-month period ending on the date of the
most recent
acquisition by such person or persons) ownership of stock of
the Company
possessing 35% or more of the total voting power of the stock
of the
Company; or
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(B)
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A
majority of the members of the Board of Directors of the Company
(the
“Board”) is replaced during any l2-month period by directors whose
appointment or election is not endorsed by a majority of the
members of
the board of directors prior to the date of the appointment or
election;
provided, that this paragraph (B) shall apply only to the Company
if no
other corporation is a majority
shareholder.
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(iii)
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Change
in Ownership of Substantial Assets: A change in the ownership
of a
substantial portion of the Company's assets occurs on the date
that any
one person, or more than one person acting as a group, acquires
(or has
acquired during the l2-month period ending on the date of the
most recent
acquisition by such person or persons) assets from the Company
that have a
total gross fair market value equal to or more than 40% of the
total gross
fair market value of the assets of the Company immediately prior
to such
acquisition or acquisitions. For this purpose, “gross fair market value”
means the value of the assets of the Company, or the value of
the assets
being disposed of, determined without regard to any liabilities
associated
with such assets.
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It
is the
intent that this definition be construed consistent with the definition
of
“Change of Control” as defined under Internal Revenue Code Section 409A and the
applicable Treasury Regulations, as amended from time to time.
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2.
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Place
of Employment
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The
place
of employment shall be the Company’s headquarters building in Bridgeport, West
Virginia unless the Employee and the Company agree to an alternative
location.
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3.
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Position
and Responsibilities
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a.
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Position.
The Employee shall serve as the Chief Financial Officer and
Treasurer
of the Company and shall report to the President of the Company
(“President”) and be under the general direction and control of the
President.
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b.
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Responsibilities. The
Employee shall have obligations, duties, authority and power
to do such
acts as are customarily done by a person holding the same or
an equivalent
position in corporations of similar size to the Company. The
Employee
shall perform such managerial duties and responsibilities for
the Company
as may be reasonably be assigned to him by the President and,
at no
additional compensation, shall serve on the Board and in other
such
positions with any subsidiary corporation of the Company, or
any
partnership, limited liability company or other entity in which
the
Company has an interest (herein collectively called “Affiliates”), as the
President may from time to time
determine.
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c.
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Dedication
of Professional Services. The Employee shall devote
substantially all of his business time, best efforts and attention
to
promote and advance the business of the Company and its Affiliates
to
perform diligently and faithfully all the duties, responsibilities
and
obligations of his position with the Company. Employee shall
not be
employed in any other business activity, other than with the
Company and
its Affiliates, during the Term, whether or not such activity
is pursued
for gain, profit or other pecuniary advantage without approval
by the
Compensation Committee of the Board of Directors. Provided,
however, that this restriction shall not be construed as preventing
Employee from investing his or her personal assets in a business
which
does not compete with the Company or its Affiliates, where the
form or
manner of such investment will not require services of any significance
on
the part of Employee in the operation of the affairs of the business
in
which such investment is made and in which his participation
is solely
that of a passive investor.
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d.
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Adherence
to Standards. Employee shall comply with the written policies,
standards, rules and regulations of the Company from time to
time
established for all executive officers of the Company consistent
with
Employee's position and level of
authority.
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e.
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Minimum
Stock Ownership. Employee shall comply with the Company’s
minimum stock ownership requirements for officers (other than
the Chief
Executive Officer); such requirements being that by the fifth
anniversary
of the Effective Date and until his Termination Date, the Employee
shall
maintain a minimum stock ownership equal to two times the Employee’s Base
Salary, as defined in Section 4a.
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4.
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Compensation
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a.
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Base
Salary. The Company shall pay the Employee an annual base
salary of $235,000 (the “Base Salary”) commencing on the Effective Date
and ending on the Termination Date. The Base Salary shall be
payable in accordance with the ordinary payroll practices of
the
Company. The Base Salary shall be reviewed annually by the
Compensation Committee of the Board (“Compensation Committee”), and may be
changed by the Compensation Committee in its sole discretion,
taking into
account the base salaries, aggregate annual cash compensation,
and other
compensation of individuals holding similar positions at other
comparable
companies and the performance of the Employee and the
Company.
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b.
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Signing
Bonus. In addition to his Base Salary, the Employee shall
receive a $83,000 signing bonus (the “Signing Bonus”) payable on the first
pay period following the Effective Date; provided, however, that
if the
Employee’s employment with the Company is terminated before the
anniversary of the Effective Date, pursuant to Section 7.g, the
Employee
shall refund a pro-rata portion of the Signing Bonus. The
refund shall be equal to $83,000 multiplied by a fraction, the
numerator
of which shall be the number of full and fractional months remaining
from
his Termination Date until the anniversary of his date of hire
and the
denominator of which shall be 12.
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c.
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Performance
Bonus. In addition to his Base Salary and the Signing
Bonus, the Employee shall be eligible to earn an annual performance
bonus
(the “Bonus”) during the Term, first payable in 2008 for 2007 performance,
based on the achievement of corporate performance objectives
to be
determined no later than the later of ninety (90) days after
the start of
each calendar year or fifteen (15) days after the filing of the
corresponding 10-K, in writing by the Compensation Committee in
its sole discretion. Performance criteria used in the
determination of the Bonus amount may include net income, cash
flow,
EBITDA, earnings per share, oil and gas production, reserves,
or such
other criteria as the Compensation Committee may determine to
be critical
to the performance of the Employee and the Company. The “Target
Bonus” will be a specified percentage of the Base Salary, as contained
in
the Petroleum Development Corporation Short-Term Incentive Compensation
Plan, which may be earned if the Employee meets all of the criteria
established by the Compensation Committee, however the Bonus
may be less
than or more than the Target Bonus based on the level of performance
of
the Employee and the criteria established by the Compensation
Committee. For 2007, the Target Bonus shall be equal to 50% of
the Employee’s Base Salary. Notwithstanding the preceding
sentence, the Bonus for a given year shall not exceed the maximum
percentage of the aggregate Base Salary, as contained in the
Petroleum
Development Corporation Short-Term Incentive Compensation Plan,
for such
year. For 2007, this maximum percentage shall be 75% of the
Employee’s Base Salary. The Bonus shall be paid in cash no
later than March 15 of the following year. To the extent
practicable, the Bonus shall meet the requirements for qualified
performance-based compensation under Internal Revenue Code Section
162(m).
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d.
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Retirement
Compensation. For each complete year worked under this
Agreement beginning from the Effective Date and each anniversary
thereof,
the Employee shall earn and be entitled to receive an annual
retirement
payment equal to $7,500 (the “Retirement Payment”). For
example, if the Employee is employed for five years and eight
months under
this Agreement, the annual Retirement Payment would be 5 x $7,500
=
$37,500. The Retirement Payment will be payable to the
Employee, or in the event of the Employee’s death, to his estate,
beneficiaries, or designees, on each of the first ten anniversary
dates
following the date the Employee leaves the service of the
Company. The Retirement Payment will be in addition to any
deferred compensation, pension, or other payments the Employee
has earned
under this and any other previous and subsequent agreements with
the
Company and any other payments he may be due under the Company’s employee
benefit plans.
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e.
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Equity
Compensation Grant. As a long term incentive, on the
Effective Date under the Company’s Long-Term Equity Compensation Plan, the
Employee shall receive an award of stock options equal in value
to thirty
percent (30%) of the 2007 Base Salary of the Employee and restricted
stock
equal in value to seventy percent (70%) of the 2007 Base Salary
of the
Employee. For this purpose, the value of the stock shall be
based on the closing market price of the Company on November
14, 2006 and
the value of the stock and the value of the stock options shall
be
determined by the compensation committee. The stock
options and restricted stock shall vest at the rate of 25% for
each
complete year worked by the Employee under this Agreement, beginning
from
the Effective Date and each anniversary
thereof.
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f.
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Other
Compensation. The Employee shall continue to be eligible to
participate in all other cash or stock compensation plans or
programs
maintained by the Company, as in effect from time to time, in
which other
senior executives of the Company are allowed to
participate.
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5.
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Employee
Benefits
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a.
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Participation
in Company Benefit Plans. During the Term, the Company
shall provide the Employee with coverage under all employee pension
and
welfare benefit programs, plans and practices commensurate with
his
positions in the Company and to the extent permitted under the
respective
employee benefit plan. The Company is also providing the
Employee a comprehensive moving package as outlined under its
written
Executive Relocation Policy dated October 1, 2006 except the
parties
acknowledge that as part of this relocation the Company will
not be
responsible for (1) the amount of any real estate fees for the
sale of the
Employee’s current residence in Atlanta, nor (1) any expenses associated
with the move of household furniture and
furnishings.
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b.
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Vacation. The
Employee will be entitled to four weeks of paid vacation in each
calendar
year, to be taken at such times as is reasonably determined by
the
Employee to be consistent with the Employee’s responsibilities under this
Agreement.
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c.
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Expense
Reimbursement. The Employee is authorized to incur
reasonable expenses in carrying out his duties and responsibilities
under
this Agreement, including, without limitation, expenses related
to travel,
meals, entertaining, and similar items related to such duties
and
responsibilities. The Company will reimburse the Employee for
all such expenses on presentation by Employee from time to time
of
appropriately itemized and approved (consistent with the Company’s policy)
accounts of such expenditures. The Company shall reimburse the
Employee for reasonable dues and expenses of membership in such
club or
clubs as the Board shall deem reasonably necessary for the Employee
to
entertain on behalf of the Company and for costs associated with
continuing education and professional dues if approved in advance
by the
President. All expense reimbursements for a calendar year shall
be paid in the normal course, but no later than March 15 of the
following
calendar year.
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d.
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Life
and Disability Insurance. The Company will reimburse the
Employee for the cost of life insurance on the Employee in the
face amount
of one million dollars with a person or persons named by the
Employee as
either the owner or the beneficiary as the Employee shall direct,
and for
the cost of a disability policy consistent with what is provided
to other
executive officers of the Company.
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e.
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Health
Insurance. The Company agrees that it will include the
Employee under any hospital, surgical, or group health plan or
policy
adopted generally for the benefit of its employees. The payment
of the premiums for the Employee and his dependents shall be
determined in
accordance with the rules and regulations adopted by the Company
for its
employees. In addition to including the Employee and his
dependents in such plan, the Company shall pay all reasonable
hospital,
surgical, medical, dental, and prescription expenses of the Employee
and
his dependents not covered by such a plan. In the event the
Company has no group health plan, the Company agrees to pay all
reasonable
premiums on any health insurance policy obtained by the Employee
to
provide such coverage.
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f.
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Automobile. During
the Term, the Employee shall be entitled to use of a Company
automobile
for general business purposes.
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6.
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Confidential
Material and Employee
Obligations.
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a.
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Confidential
Material. The Employee shall not, directly or indirectly,
either during the Term or thereafter, disclose to anyone (except
in the
regular course of the Company's business or as required by law),
or use in
any manner, any information acquired by the Employee during his
employment
by the Company with respect to any clients or customers of the
Company or
any confidential, proprietary or secret aspect of the Company's
operations
or affairs unless such information has become public knowledge
other than
by reason of actions, direct or indirect, of the Employee. Information
subject to the provisions of this paragraph shall include, without
limitation:
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(i)
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Brokers,
broker/dealer firms, law firms used to prepare partnership registration
statements, due diligence investigators, or other parties involved
with
the registration, review, or offering of the Company’s drilling
programs;
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(ii)
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Names,
addresses, and other information regarding investors in the Company’s
drilling programs;
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(iii)
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Names,
addresses and other information regarding investors who participate
with
the Company in the drilling, completion or operation of oil and
gas xxxxx
as joint venture partners, working interest owners, or in any
other form
of ownership;
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(iv)
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Lists
of or information about personnel seeking employment with or
who are
currently employed by the Company;
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(v)
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Maps,
logs, drilling reports and any other information regarding past,
planned
or possible future leasing, drilling, acquisition, or other operations
that the Company has completed or is investigating or has investigated
for
possible inclusion in future
activities;
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(vi)
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Any
other information or contacts relating to the Company's drilling,
development, fund-raising, purchasing, engineering, marketing,
merchandising, and selling
activities.
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b.
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Return
of Confidential Material. All maps, logs, data, drawings
and other records and written material prepared or compiled by
the
Employee or furnished to the Employee during the Term shall be
the sole
and exclusive property of the Company and none of such material
shall be
retained by the Employee upon termination of his
employment. Notwithstanding the foregoing, the Employee shall
be under no obligation to return public
information.
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c.
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No
Solicitation. The Employee shall not, directly or
indirectly, either during the Term or for a period of one (1)
year
thereafter (i) solicit, directly or indirectly, the services of any
person who was a full-time employee of the Company, its subsidiaries,
divisions, or affiliates, or otherwise induce such employee to
terminate
or reduce employment, or (ii) solicit the business of any person
who was a client or customer of the Company, its subsidiaries,
divisions,
or affiliates, in each case at any time during the last year
of the Term.
For purposes of this Agreement, the term "person" shall include
natural
persons, corporations, business trusts, associations, sole
proprietorships, unincorporated organizations, partnerships,
joint
ventures, limited liability companies or partnerships, and governments,
or
any agencies, instrumentalities, or political subdivisions
thereof.
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d.
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Non-Compete. Beginning
with the second anniversary of the Effective Date, the Employee
shall not,
directly or indirectly, either during the Term or for a period
of one (1)
year thereafter, engage in any Competitive Business in West Virginia,
Pennsylvania, Colorado, Utah, Wyoming, North Dakota, Michigan,
Ohio,
Kentucky and Tennessee; provided, however, that the ownership
of less than
five percent (5%) of the outstanding capital stock of a corporation
whose
shares are traded on a national securities exchange or on the
over-the-counter market shall not be deemed engaging any Competitive
Business. "Competitive Business" shall mean the oil and natural
gas industry, including oil and gas leasing, drilling, and other
operations, syndication and marketing of partnership or other
investments
related to oil and natural gas operations, or any other business
activities that are the same as or similar to the Company’s business
operations as its business exists on the Effective Date or on
the
Termination Date.
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e.
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Remedies. Employee
acknowledges and agrees that the Company's remedy at law for
a breach or a
threatened breach of the provisions herein would be inadequate,
and in
recognition of this fact, in the event of a breach or threatened
breach by
Employee of any of the provisions of this Agreement, it is agreed
that the
Company shall be entitled to equitable relief in the form of
specific
performance, a temporary restraining order, a temporary or permanent
injunction or any other equitable remedy which may then be available,
without posting bond or other security. Employee acknowledges
that the granting of a temporary injunction, a temporary restraining
order
or other permanent injunction merely prohibiting Employee from
engaging in
any business activities would not be an adequate remedy upon
breach or
threatened breach of this Agreement, and consequently agrees
upon any such
breach or threatened breach to the granting of injunctive relief
prohibiting Employee from engaging in any activities prohibited
by this
Agreement. No remedy herein conferred is intended to be
exclusive of any other remedy, and each and every such remedy
shall be
cumulative and shall be in addition to any other remedy given
hereunder
now or hereinafter existing at law or in equity or by statute
or
otherwise.
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7.
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Termination
of the Agreement
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a.
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Notice
of Termination. Either the Employee or the Board may
terminate this Agreement at any time and in his or their sole
discretion
upon no less than 30 days written Notice of Termination to the
other
party. "Notice of Termination" shall mean a written notice
which shall indicate the specified termination provision in this
Agreement
relied upon (Section 7.c., Section 7.d., Section 7.e., Section
7.f or
Section 7.g.) and shall set forth in reasonable detail the facts
and
circumstances claimed to provide a basis for termination of Employee's
employment under the provision so indicated; provided, however,
no such
purported termination shall be effective without such Notice
of
Termination; provided further, however, any purported termination
by the
Company or by Employee shall be communicated by a Notice of Termination
to
the other party hereto in accordance with Section 8 (“Notices”)
of this Agreement.
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b.
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Termination
Date. The “Termination Date” shall mean the date specified
in the Notice of Termination. The Termination Date shall not
be less than
thirty (30) days after the date such Notice of Termination is
given;
provided, however, that if within fifteen (15) days after any
Notice of
Termination is given the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning the
termination,
the Termination Date shall be the date finally determined by
either mutual
written agreement of the parties or by the final judgment, order
or decree
of a court of competent jurisdiction (the time for appeal there
from
having expired and no appeal having been
taken).
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c.
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Termination
by the Company for Just Cause.
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(i)
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The
Company may terminate the Employee for “Just Cause” (as defined in Section
7.c.ii), provided that the Company
shall:
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(A)
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Give
the Employee Notice of Termination as specified in Section 7.a.,
and
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(B)
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Pay
the Employee his Base Salary through the Termination Date at
the rate in
effect at the time the Notice of Termination is given plus any
Bonus (only
for periods completed and accrued, but not paid), incentive,
deferred,
retirement or other compensation, and provide any other benefits,
which
have been earned or become payable as of the Termination Date,
pursuant to
the terms of this or any other agreement, or compensation or
benefit plan,
but which have not yet been paid or provided. To the extent
such amounts are considered non-qualified deferred compensation
payable
upon a separation from service under Internal Revenue Code Section
409A,
payment of those amounts so deferred under Section 409A may not
be made
until at least six (6) months following the Employee’s separation from
service of the Company (or, if earlier, the date of death of
Employee).
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(ii)
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For
purposes of this Agreement “Just Cause” shall be a good faith
determination of the Board that the
Employee:
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(A)
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Failed
to substantially perform his duties with the Company (other than
a failure
resulting from his incapacity due to physical or mental illness)
after a
written demand for substantial performance has been delivered
to him by
the Board, which demand specifically identifies the manner in
which the
Board believes he has not substantially performed his duties,
and the
Employee has failed to cure such deficiency within thirty (30)
days of the
receipt of such notice;
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(B)
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Has
engaged in conduct the consequences of which are materially adverse
to the
Company, monetarily or otherwise;
or
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(C)
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Has
pleaded guilty to or been convicted of a felony or a crime involving
moral
turpitude or dishonesty;
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(D)
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conduct
by Employee which demonstrates Employee's gross unfitness to
serve the
Company as Chief Financial Officer {that is not remedied by Employee
within fourteen (14) days of written notice of such unfitness
from the
Board} or
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(E)
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Has
materially breached the terms of this
Agreement.
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(iii)
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(A)
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No
act, or failure to act, on the Employee’s part shall be grounds for
termination with Just Cause unless he has acted or failed to
act with an
absence of good faith or without a reasonable belief that his
action or
failure to act was in or at least not opposed to the best interests
of the
Company.
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(B)
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The
Employee shall not be deemed to have been terminated with Just
Cause under
(ii)(B), (C) or (D), unless there shall have been delivered to
the
Employee a letter setting forth the reasons for the Company’s termination
of the Employee for Just Cause.
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d.
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Termination
by the Company Without Just Cause. In the event the Company
terminates this Agreement prior to its expiration (including
extensions as
provided in Section1.b) for any reason other than for Just Cause
or the
death or Disability (as defined in Section 7e.) of the Employee,
the
Company shall:
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(i)
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(A)
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If
the Termination Date for the Employee is on or prior to the anniversary
of
the Effective Date, pay to the Employee twelve months of Base
Salary.
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(B)
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If
the Termination Date for the Employee occurs after the anniversary
of the
Effective Date, but on or prior to the second anniversary of
the Effective
Date, pay to the Employee eighteen months of Base
Salary.
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(C)
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If
the Termination Date for the Employee occurs after the second
anniversary
of the Effective Date, pay to the Employee within 30 days after
the
Termination Date a severance payment equal to three times the
sum of: a)
the Employee’s highest Base Salary during the previous two years of
employment immediately preceding the Termination Date, plus b)
the highest
Bonus paid to the Employee during the same two year
period.
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(ii)
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Pay
to the Employee any unpaid expense reimbursement upon presentation
by the
Employee of an accounting of such expenses in accordance with
normal
Company practices,
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(iii)
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If
the Termination Date for the Employee is on or after the anniversary
of
the Effective Date, vest any unvested Company stock options or
restricted
stock,
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(iv)
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Pay
any deferred income or retirement payment or other benefit payments
due
under this or any other agreements or plans, provided such payments
may be
made under the schedule originally contemplated in the agreement
under
which they were granted, or in full without discount within 60
days of the
Termination Date at the discretion of the
Company,
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(v)
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Make
any other payments or provide any benefits earned under this
or any other
employment agreement or plan,
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(vi)
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Continue
coverage of the Employee under the Company’s group health plans at the
Company’s cost for a period equal to the lesser of (i) 18 months or (ii)
such period as the Employee is receiving COBRA health continuation
coverage from the Company.
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To
the extent such amounts are considered non-qualified deferred
compensation
payable upon a separation from service under Internal Revenue
Code Section
409A, payment of those amounts so deferred under Code Section
409A may not
be made until at least six (6) months following the Employee’s separation
from service of the Company (or, if earlier, the date of death
of
Employee).
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e.
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Termination
in the Event of Death or Disability. This Agreement may be
terminated by the Company in the event of the death or Disability
(as
hereinafter defined) of the Employee upon proper notification
to the
Employee (or his estate in the event of his death), provided
the Company
shall pay to the Employee (or to the estate of the Employee in
the event
of termination due to the death of the Employee) the compensation
and
other benefits described in Section 4. of this Agreement, except
for the
Bonus or incentive compensation, which would have been earned
for (6) months after the Termination Date. The
benefits provided under this Section shall be no less favorable
to
Employee in terms of amounts, deductibles and costs to him, if
any, than
such benefits provided by the Company to him and shall not be
interpreted
so as to limit any benefits to which Employee, as a terminated
employee of
the Company, or his family may be entitled under the Company's
life
insurance, medical, hospitalization or disability plans following
his
Termination Date or under applicable law, and any other benefits
or
payments earned by the employee under this or any other agreement
or
plan. "Disability" shall mean being eligible to receive a
disability benefit under the Federal Social Security Act. All
amounts payable under this Section 7e. shall be paid in a lump
sum as soon
as practicable, but no later than two and one-half (2-1/2) months
following the close of the calendar year in which the death or
Disability
occurred.
|
|
f.
|
Termination
by the Employee for Good
Reason.
|
|
(i)
|
In
the event the Employee terminate this Agreement for Good Reason
(as
defined in Section f.ii), the Company
shall:
|
|
(A)
|
Pay
to the employee within 30 days after the Termination Date a severance
payment equal to three times the sum of: a) the Employee’s highest Base
Salary during the previous two years of employment immediately
preceding
the Termination Date, plus b) the highest Bonus paid to the Employee
during the same two year period. If the agreement is terminated
within the first year, the “highest bonus” amount to be used for this
provision will be the target bonus in effect for year 2007 (i.e.
50% of
base compensation),
|
|
(B)
|
Pay
to the Employee any unpaid expense reimbursement upon presentation
by the
Employee of an accounting of such expenses in accordance with
normal
Company practices,
|
|
(C)
|
Vest
any unvested Company stock options or restricted
stock,
|
|
(D)
|
Pay
any deferred income or retirement payment or other benefit payments
due
under this or any other agreements or plans, provided such payments
may be
made under the schedule originally contemplated in the agreement
under
which they were granted, or in full without discount within 60
days of the
Termination Date at the discretion of the
Company,
|
|
(E)
|
Make
any other payments or provide any benefits earned under this
or any other
employment agreement or plan,
|
|
(F)
|
Continue
coverage of the Employee under the Company’s group health plans at the
Company’s cost for a period equal to the lesser of (i) 18 months or (ii)
such period as the Employee is receiving COBRA health continuation
coverage from the Company.
|
To
the
extent such amounts are considered non-qualified deferred compensation
payable
upon a separation from service under Internal Revenue Code Section 409A,
payment
of those amounts so deferred under Code Section 409A may not be made until
at
least six (6) months following the Employee’s separation from service of the
Company (or, if earlier, the date of death of Employee
|
(ii)
|
"Good
Reason" shall mean the occurrence of any of the following events
without
Employee's prior express written
consent:
|
|
(A)
|
The
Employee is assigned any duties materially and adversely inconsistent
with
his position, duties, responsibilities and status with the Company
as in
effect at the Effective Date or as may be assigned to the Employee
pursuant to Section 3 of this
Agreement;
|
|
(B)
|
The
title or offices in effect as of the date of this Agreement or
as the
Employee may be appointed to or elected to in accordance with
Section 3
are materially and adversely
changed;
|
|
(C)
|
There
is a Change of Control of the Company as defined in Section
1c.;
|
|
(D)
|
There
is a reduction in the Base Salary (as such Base Salary shall
have been increased from time to time) payable to the Employee
pursuant to
Section 4 of this Agreement;
|
|
(E)
|
The
Company fails to continue in effect any material employee benefit
plan
(including any medical, hospitalization, life insurance or disability
benefit plan in which Employee participates), or any material
fringe
benefit or perquisite enjoyed by him unless either an equitable
arrangement (embodied in an ongoing substitute or alternative
plan) has
been made with respect to the failure to continue such plan or
the
Employee is not materially and adversely damaged, or the failure
by the
Company to continue Employee's participation therein, or any
action by the
Company which would directly or indirectly materially reduce
his
participation therein or reward opportunities thereunder, or
the failure
by the Company to provide him with the benefits to which he is
entitled
under this Agreement; provided, however, that Employee continues
to meet
all eligibility requirements thereof and has not otherwise been
terminated in accordance with this
Agreement;
|
|
(F)
|
The
Company requires or attempts to require the Employee to be based
anywhere
more than 60 miles outside of Bridgeport, West Virginia, except
reasonably
required travel in connection with the Company’s
business;
|
|
(G)
|
The
Company fails to obtain a satisfactory agreement from any successor
or
assign of the Company to assume and agree to perform this Agreement,
as
contemplated in Section 10 (Successors)
hereof;
|
|
(H)
|
Any
material breach by the Company of any material provision of this
Agreement; or
|
|
(I)
|
Any
purported Termination of the Employee’s employment by the Company for Just
Cause that does not comply with the terms of Sections 7.c.ii
(Definition
of Just Cause) of this Agreement.
|
|
g.
|
Termination
by the Employee for other than Good Reason. The Employee
may terminate this Agreement for other than Good Reason upon
proper
notification as provided in Section 7.a. In such event the
Company shall pay to the Employee:
|
|
(i)
|
The
compensation provided in Section 4 at the rate in effect at the
time the
Notice of Termination. The Base Salary, Bonus and incremental
Retirement
Payment shall be prorated for the portion of the year that the
Employee is
employed by the Company; provided, however, that if the Employee’s
termination occurs prior to March 31 of the year the Employee
shall not be
entitled to a prorated Bonus for the
year;
|
|
(ii)
|
Any
incentive, deferred or other compensation which has been earned
or has
become payable pursuant to the terms of this or any other agreement
or
compensation or benefit plan as of the Termination Date, but
which has not
yet been paid, provided such payments may be made under the schedule
originally contemplated in the agreement under which they were
granted or
in full without discount within 60 days of the Termination Date
at the
discretion of the Company;
|
|
(iii)
|
Any
unpaid expense reimbursement upon presentation by the Employee
of an
accounting of such expenses in accordance with normal Company
practices;
and
|
|
(iv)
|
Any
other payments for benefits earned under this or any other employment
agreement or plan.
|
To
the
extent such amounts are considered non-qualified deferred compensation
payable
upon a separation from service under Internal Revenue Code Section 409A,
payment
of those amounts so deferred under Section 409A may not be made until at
least
six (6) months following the Employee’s separation from service of the Company
(or, if earlier, the date of death of Employee).
|
8.
|
Notices.
For the purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be
deemed to
have been duly given when personally delivered, by facsimile
transmission
or sent by certified mail, return receipt requested, postage
prepaid, or
by expedited (overnight) courier with established national
reputation, shipping prepaid or billed to sender, in either case
addressed
to the respective addresses last given by each party to the
other (provided that all notices to the Company shall be
directed to the attention of the Secretary of the Company ) or
to such
other address as either party may have furnished to the other
in
writing in accordance herewith. All
notices and communication shall be deemed to have been received
on the
date of delivery thereof, or on the second day after deposit
thereof with
an expedited courier service, except that notice of change of
address
shall be effective only upon
receipt.
|
|
Company
at:
|
Petroleum
Development Corporation
|
|
X.X.
Xxx 00
|
|
|
000
X. Xxxx Xxxxxx
|
|
|
Xxxxxxxxxx,
XX 00000
|
|
|
Employee
at:
|
Xxxxxxx
XxXxxxxxxx
|
|
X.X.
Xxx 00
|
|
|
000
X. Xxxx Xxxxxx
|
|
|
Xxxxxxxxxx,
XX 00000
|
|
9.
|
Life
Insurance. The Company may, at any time after the execution
of this Agreement, maintain any outstanding life insurance policies
and
apply for and procure as owner and for its own benefit new life
insurance
on Employee, in such amounts and in such form or forms as the
Company may
determine. Employee shall, at the request of the Company,
submit to such medical examinations, supply such information,
and execute
such documents as may be required by the insurance company or
companies to
whom the Company has applied for such insurance. Employee
hereby represents that to his knowledge he is in excellent physical
and
mental condition.
|
|
10.
|
Successors.
This Agreement shall be binding on the Company and any successor
to any of
its businesses or assets. Without limiting the effect of the
prior sentence, the Company shall use its best efforts to require
any
successor or assign (whether direct or indirect, by purchase,
merger,
consolidation or otherwise) to all or substantially all of the
business
and/or assets of the Company to expressly assume and agree to
perform this
Agreement in the same manner and to the same extent that the
Company would
be required to perform it if no such succession or assignment
had taken
place. As used in this Agreement, "Company" shall mean the Company
as
hereinbefore defined and any successor or assign to its business
and/or
assets as aforesaid which assumes and agrees to perform this
Agreement or
which is otherwise obligated under this Agreement by the first
sentence of
this Section, entitled Successors, by operation of law or
otherwise.
|
|
11.
|
Binding
Effect. This Agreement shall inure to the benefit of and be
enforceable by Employee's personal and legal representatives,
executors,
administrators, successors, heirs, distributees, devisees and
legatees. If Employee should die while any amounts would still
be payable to him hereunder if he had continued to live, all
such amounts,
unless otherwise provided herein, shall be paid in accordance
with the
terms of this Agreement to Employee's
estate.
|
|
12.
|
Modification
and Waiver. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge
is
agreed to in writing and signed by Employee and such officer
of the
Company as may be specifically designated by the Board. No
waiver by either party hereto at any time of any breach by the
other party
hereto of, or compliance with, any condition or provision of
this
Agreement to be performed by such other party shall be deemed
a waiver of
similar or dissimilar provisions or conditions at the same or
at any prior
or subsequent time.
|
|
13.
|
Headings. Headings
used in this Agreement are for convenience only and shall not
be used to
interpret or construe its
provisions.
|
|
14.
|
Waiver
of Breach. The waiver of either the Company or Employee of
a breach of any provision of this Agreement shall not operate
or be
construed as a waiver of any subsequent breach by either the
Company or
Employee.
|
|
15.
|
Amendments. No
amendments or variations of the terms and conditions of this
Agreement
shall be valid unless the same is in writing and signed by all
of the
parties hereto.
|
|
16.
|
Survival
of Obligations. The provisions of Section 5.e. and Section
6 of this Agreement shall continue to be binding upon the Employee
and
Company in accordance with their terms, notwithstanding the termination
of
the Employee’s employment with the Company for any reason or the
expiration of this Agreement.
|
|
17.
|
Severability. The
invalidity or unenforceability of any provision of this Agreement,
whether
in whole or in part, shall not in any way affect the validity
and/or
enforceability of any other provision contained herein. Any
invalid or unenforceable provision shall be deemed severable
to the extent
of any such invalidity or unenforceability. It is expressly
understood and agreed that while the Company and Employee consider
the
restrictions contained in this Agreement reasonable for the purpose
of
preserving for the Company the good will, other proprietary rights
and
intangible business value of the Company, if a final judicial
determination is made by a court having jurisdiction that the
time or
territory or any other restriction contained in this Agreement
is an
unreasonable or otherwise unenforceable restriction against Employee,
the
provisions of such clause shall not be rendered void but shall
be deemed
amended to apply as to maximum time and territory and to such
other extent
as such court may judicially determine or indicate to be
reasonable.
|
|
18.
|
Governing
Law. This Agreement shall be construed and enforced
pursuant to the laws of the State of West
Virginia.
|
|
19.
|
Arbitration. Any
controversy or claim arising out of or relating to this Agreement
or any
transactions provided for herein, or the breach thereof, other
than a
claim for injunctive relief, shall be settled by arbitration
in accordance
with the commercial Arbitration Rules of the American Arbitration
Association (the "Rules") in effect at the time demand for arbitration
is
made by any party. The evidentiary and procedural rules in such
proceedings shall be kept to the minimum level of formality that
is
consistent with the Rules. The Company shall name one arbitrator,
Employee
shall name a second and the two arbitrators so chosen shall name
a
neutral, third arbitrator, who shall serve as the sole arbitrator
of the
controversy or claim. The third arbitrator shall be experienced
in the matters in dispute. In the event that the third and sole
arbitrator is not agreed upon, the American Arbitration Association
shall
name him or her. Arbitration shall occur in Bridgeport, West
Virginia, or such other location agreed to by the Company and
Employee. The award made by the third arbitrator shall be final
and binding, and judgment may be entered in any court of law
having
competent jurisdiction. The award is subject to confirmation,
modification, correction, or vacation only as explicitly provided
in Title
9 of the United States Code. The prevailing party shall be
entitled to an award of pre- and post-award interest as well
as reasonable
attorneys' fees incurred in connection with the arbitration and
any
judicial proceedings related
thereto.
|
|
20.
|
Executive
Officer Status. Employee acknowledges that he may be deemed
to be an "executive officer" of the Company for purposes of the
Securities
Act of 1993, as amended (the "1933 Act"), and the Securities
Exchange Act
of 1934, as amended (the "1934 Act") and, if so, he shall comply
in all
respects with all the rules and regulations under the 1933 Act
and the
1934 Act applicable to him in a timely and non-delinquent manner.
In order
to assist the Company in complying with its obligations under
the 1933 Act
and 1934 Act, Employee shall provide to the Company such information
about
Employee as the Company shall reasonably request including, but
not
limited to, information relating to personal history and
stockholdings. Employee shall immediately report to the General
Counsel of the Company or other designated officer of the Company
all
changes in beneficial ownership of any shares of the Company
Common Stock
deemed to be beneficially owned by Employee and/or any members
of
Employee's immediate family.
|
|
21.
|
Pronouns. All
pronouns and any variations thereof shall be deemed to refer
to the
masculine, feminine, neuter, singular, or plural, as the identity
of the
person or entity may require. As used in this Agreement: (1)
words of the
masculine gender shall mean and include corresponding neuter
words or
words of the feminine gender, (2) words in the singular shall
mean and
include the plural and vice versa, and (3) the word "may" gives
sole
discretion without any obligation to take any
action.
|
|
22.
|
Counterparts. This
Agreement may be executed in one or more counterparts, each of
which shall
be deemed to be an original, but all of which together shall
constitute
but one document.
|
|
23.
|
Exhibits. Any
Exhibits attached hereto are incorporated herein by reference
and are an
integral part of this Agreement.
|
IN
WITNESS WHEREOF, the Company and the Employee have duly executed this Employment
Agreement as of the date first above written.
|
Company
|
Executive
|
|||
|
Petroleum
Development Corporation
|
||||
|
By:
|
/s/ Xxxxx X. Xxxxx | /s/ Xxxxxxx XxXxxxxxxx | ||
|
Xxxxx
X. Xxxxx
|
Xxxxxxx
XxXxxxxxxx
|
|||
|
Position:
|
Chairman
of the
|
|||
|
Compensation
Committee
|
||||
