EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), is made and entered into as
of May 5, 2005 (the "Effective Date"), by and between Delta Petroleum
Corporation, a Colorado corporation (hereafter "Company") and Xxxx X. Xxxxxxx
(hereafter "Executive"). The Company and Executive may sometimes hereafter be
referred to singularly as a "Party" or collectively as the "Parties."
W I T N E S S E T H:
WHEREAS, the Company desires to continue to secure the employment
services of Executive subject to the terms and conditions hereafter set forth;
and
WHEREAS, the Executive is willing to enter into this Agreement upon the
terms and conditions hereafter set forth;
NOW, THEREFORE, in consideration of Executive's employment with the
Company, and the premises and mutual covenants contained herein, the Parties
hereto agree as follows:
1. Employment. During the Employment Period (as defined in Section 4
hereof), the Company shall employ Executive, and Executive shall serve as,
Executive Vice President and Chief Operating Officer of the Company.
Executive's principal place of employment shall be at the main corporate
offices of the Company in Denver Colorado.
2. Compensation.
(a) Base Salary. The Company shall pay to Executive during the
Employment Period a base salary of $225,000.00 per year, as adjusted pursuant
to the subsequent provisions of this paragraph (the "Base Salary"). The Base
Salary shall be payable in accordance with the Company's normal payroll
schedule and procedures for its executives. The Base Salary shall be subject
to at least annual review and may be increased (but not decreased without
Executive's express consent) by the Compensation Committee (the "Compensation
Committee") of the Board of Directors of the Company (the "Board") at any
time. Nothing contained herein shall preclude the payment of any other
compensation to Executive at any time as determined by the Compensation
Committee.
(b) Bonus. In addition to the Base Salary in Section 2(a), for
each annual period based on each fiscal year of the Company during the
Employment Period (as defined in Section 4) (each such annual period being
referred to as a "Bonus Period"), Executive shall be entitled to a bonus equal
to a percentage of Executive's Base Salary paid during each such one (1) year
period (referred to herein as the "Bonus"); provided, however, Executive shall
be entitled to the Bonus only if Executive has met the performance criteria
set by the Compensation Committee for the applicable period. In the event
that the Employment Period ends before the end of the Bonus Period, Executive
shall be entitled to a prorata portion of the Bonus for that year (based on
the number of days in which he was employed during the year divided by 365) as
determined based on satisfaction of the performance criteria for that period
on a prorata basis, unless Executive was terminated for Cause (as defined in
Section 6(d)) in which event he shall not be entitled to any Bonus for that
year. Executive acknowledges that the amount and performance criteria for
Executive's Bonus to be earned for each Bonus Period shall be set on or before
the beginning of the applicable Bonus Period in the form of a Target Bonus
award expressed as a percentage of the then current base salary. The Target
Bonus will be determined from competitive data and reviewed and approved by
the Committee and will be in force for the duration of the Agreement. Each
year prior the performance period, the Executive shall have the opportunity to
meet with and discuss the general award criteria with the Compensation
Committee prior to the finalization of such criteria. If Executive
successfully meets the performance criteria established by the Compensation
Committee the exact bonus payment will be determined based upon performance
against the award criteria expressed as a percent of the Target Bonus.
Employer shall pay Executive the earned Bonus amount within the earlier of:
(i) thirty days (30) from the submission of the preliminary audit results for
the end of the fiscal year; (ii) ninety days (90) days after the end of the
Bonus Period or, (iii) thirty days (30) his Employment Period, as applicable.
(c) Stock Options. Executive shall be eligible from time to time
to receive grants of stock options and other long-term equity incentive
compensation, as commensurate with his executive and/or director position,
under the terms of the Company's equity compensation plans.
3. Duties and Responsibilities of Executive. During the Employment
Period, Executive shall devote his services full-time to the business of the
Company and perform the duties and responsibilities assigned to him under the
Company's articles of incorporation or bylaws, or as assigned by the Chairman
of the Board, the Board, the Compensation Committee, or the Chief Executive
Officer of the Company, to the best of his ability and with reasonable
diligence. In determining Executive's duties and responsibilities, Executive
shall not be assigned duties and responsibilities that are inappropriate for
his executive position. This Section 3 shall not be construed as preventing
Executive from (a) engaging in reasonable volunteer services for charitable,
educational or civic organizations, or (b) investing his assets in such a
manner that will not require a material amount of his time or services in the
operations of the businesses in which such investments are made; provided,
however, no such other activity shall conflict with Executive's loyalties and
duties to the Company. Executive shall at all times use his best efforts to
in good faith comply with United States laws applicable to Executive's actions
on behalf of the Company and its Affiliates (as defined in Section 6(d)).
Executive understands and agrees that he may be required to travel from time
to time for purposes of the Company's business.
4. Term of Employment. Executive's initial term of employment with the
Company under this Agreement shall be for the period from the Effective Date
through December 31, 2006 (the "Initial Term of Employment"). Thereafter, the
Employment Period hereunder shall be automatically extended repetitively for
an additional one (1) year period on January 1, 2007, and each one-year
anniversary thereof, unless Notice of Termination (pursuant to Section 7) is
given by either the Company or Executive to the other Party at least sixty
(60) days prior to the end of the Initial Term of Employment or any one-year
extension thereof, as applicable, that the Agreement will not be renewed for a
successive one-year period after the end of the current one-year period. The
Company and Executive shall each have the right to give Notice of Termination
at will, with or without cause, at any time subject, however, to the terms and
conditions of this Agreement regarding the rights and duties of the Parties
upon termination of employment. The Initial Term of Employment, and any
one-year extension of employment hereunder, shall each be referred to herein
as a "Term of Employment." The period from the Effective Date through the
date of Executive's termination of employment with the Company and all
Affiliates, for whatever reason, shall be referred to herein as the
"Employment Period."
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5. Benefits. Subject to the terms and conditions of this Agreement,
during the Employment Period, Executive shall be entitled to all of the
following:
(a) Reimbursement of Business Expenses. The Company shall pay or
reimburse Executive for all reasonable travel, entertainment and other
business expenses paid or incurred by Executive in the performance of his
duties hereunder. The Company shall also provide Executive with suitable
office space, including staff support, and paid parking.
(b) Other Employee Benefits. Executive shall be entitled to
participate in any pension, retirement, 401(k), profit-sharing, and other
employee benefits plans or programs of the Company to the same extent as
available to any other officers of the Company under the terms of such plans
or programs. Executive shall also be entitled to participate in any group
insurance, hospitalization, medical, dental, health, life, accident,
disability and other employee benefits plans or programs of the Company to the
extent available to any other officers of the Company under the terms of such
plans or programs.
(c) Vacation and Holidays. Executive shall be entitled to no less
than the 20 days of paid vacation per year (prorated in any calendar year
during which he is employed for less than the entire year based on the number
of days in such calendar year in which he was employed). Executive shall also
be entitled to all paid holidays and personal days provided by the Company for
its officers under the Company's policy as then effective.
6. Rights and Payments upon Termination. The Executive's right to
compensation and benefits for periods after the date on which his employment
terminates with the Company and all Affiliates (the "Termination Date"), shall
be determined in accordance with this Section 6, as follows:
(a) Minimum Payments. Executive shall be entitled to the following
minimum payments under this Section 6(a), in addition to any other payments or
benefits to which he is entitled to receive under the terms of any employee
benefit plan or program or Section 6(b) or Section 8:
(1) his unpaid salary for the full month in which his
Termination Date occurred; provided, however, if Executive is terminated for
Cause (as defined in Section 6(d)), he shall only be entitled to receive his
accrued but unpaid salary through his Termination Date;
(2) his unpaid vacation days for that year which have accrued
through his Termination Date; and
(3) reimbursement of his reasonable business expenses that
were incurred but unpaid as of his Termination Date.
Such salary and accrued vacation days shall be paid to Executive
within five (5) business days following the Termination Date in a cash lump
sum less applicable withholdings. Business expenses shall be reimbursed in
accordance with the Company's normal procedures.
(b) Other Severance Payments. In the event that during the Term of
Employment (i) Executive's employment is involuntarily terminated by the
Company (except due to a "No Severance Benefits Event" (as defined in Section
6(e)), (ii) Executive's employment is terminated due to his "Disability" or
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"Retirement" (as such terms are defined in Section 6(e)), or (ii) Executive
terminates his own employment hereunder for "Good Reason" (as defined in
Section 6(e)), then in any such event under clause (i), (ii) or (iii), the
following severance benefits shall be provided to Executive or, in the event
of his death before receiving all such benefits, to his "Designated
Beneficiary" (as defined in Section 6(e)) following his death:
(1) The Company shall pay to Executive as additional
compensation (the "Additional Payment"), an amount equal to two (2) times the
sum of:
(A) the Executive's highest Base Salary in effect at any
time within 12 months before the Termination Date; plus
(B) the highest amount of the annual automobile allowance
payable to the Executive within 12 months before the Termination Date; plus
(C) an amount equal to the annual average of the annual
bonuses (includes any incentive cash compensation) paid or payable to the
Executive by the Company and any Subsidiary for the three fiscal years of the
Company immediately preceding the fiscal year in which the Termination Date
occurs, but not less than the greater of (a) Executive's highest annual Target
Bonus during any of these three preceding fiscal years or (b) the Executive's
Target Bonus for the fiscal year in which the Termination Date occurs.
For clause (C) (above) of this definition: (a) the calculation
of the average of the annual bonuses of the Executive shall include a fiscal
year during which the Executive was employed by the Company and a participant
in a bonus or incentive cash compensation plan even if the Executive did not
earn any bonus or incentive cash compensation for that fiscal year; (b) the
bonus or incentive cash compensation paid or payable to the Executive for only
part of a fiscal year of the Company shall be annualized (on the same basis as
the one on which the bonus or compensation was prorated) for that fiscal year
to calculate the average; and (c) the "targeted bonus" for the fiscal year of
the Company in which the Termination Date occurs shall be the amount
identified as a "target" by the Board (or the committee thereof that
administers the bonus or incentive cash compensation Plan) for the Executive.
The Company shall make the Additional Payment to Executive in a
cash lump sum not later than sixty (60) calendar days following the
Termination Date.
(2) The Company shall maintain continued group health plan
coverage following the Termination Date under all plans subject to the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA")
(as codified in Code Section 4980B and Part 6 of Subtitle B of Title I of
ERISA) for Executive and his eligible spouse and dependents for the maximum
period for which such qualified beneficiaries are eligible to receive COBRA
coverage. However, Executive (and his spouse and dependents) shall not be
required to pay more for such COBRA coverage than is charged by the Company to
its officers who are then in active service for the Company and receiving
coverage under such plan and, therefore, the Company shall be responsible for
the difference between the amount charged hereunder and the full COBRA
premiums. In all other respects, Executive (and his spouse and dependents)
shall be treated the same as other COBRA qualified beneficiaries under the
terms of such plans and the provisions of COBRA. In the event of any change
to a group health plan following the Termination Date, Executive and his
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spouse and dependents, as applicable, shall be treated consistently with the
then-current officers of the Company with respect to the terms and conditions
of coverage and other substantive provisions of the plan. Executive and his
spouse hereby agree to acquire and maintain any and all coverage that either
or both of them are entitled to at any time during their lives under the
Medicare program or any similar program of the United States or any agency
thereof. Executive and his spouse further agree to pay any required premiums
for Medicare coverage from their personal funds.
For purposes of clarity, in the event that (i) Executive
voluntarily resigns or otherwise voluntarily terminates his own employment,
except for Good Reason or due to his death, Disability or Retirement (as such
terms are defined in Section 6(e)), or (ii) Executive's employment is
terminated due to a No Severance Benefits Event (as defined in Section 6(e)),
then, in either such event under clause (i) or (ii), the Company shall have no
obligation to provide the severance benefits described in paragraphs (1) and
(2) (above) of this Section 6(b), except to offer COBRA coverage (as required
by COBRA law) but not at the special discounted rate described in paragraph
(2). Executive shall still be entitled to the severance benefits provided
under Section 6(a). The severance payments provided under this Agreement or
the Change in Control Agreement shall supersede and replace any severance
payments under any severance pay plan that the Company or any Affiliate
maintains for employees generally.
(c) Change in Control Agreement. Notwithstanding any provision
hereof to the contrary, if Executive is a party to the Change in Control
Agreement (as defined in Section 6(e)), in the event of a Severance Payment
Event (as defined in the Change in Control Agreement) affecting Executive, the
severance benefits described in Sections 6(a) and 6(b) hereof shall not be
payable to or on behalf of Executive; rather severance benefits provided as
the result of Severance Payment Event shall be determined and provided by the
Company pursuant solely to the terms and conditions of the Change in Control
Agreement. In addition, the post-termination restrictive covenants imposed on
Executive under Sections 15 and 16 hereof shall be superseded and replaced by
the restrictive covenants in the Change in Control Agreement if there is a
Severance Payment Event.
(d) Release Agreement. Notwithstanding any provision of this
Agreement to the contrary, in order to receive the severance benefits payable
under either Section 6(b) or Section 8, as applicable, the Executive must
first execute an appropriate release agreement (on a form provided by the
Company) whereby the Executive agrees to release and waive, in return for such
severance benefits, any claims that he may have against the Company including,
without limitation, for unlawful discrimination (e.g., Title VII of the Civil
Rights Act); provided, however, such release agreement shall not release any
claim or cause of action by or on behalf of the Executive for (a) any payment
or benefit that may be due or payable under this Agreement or any employee
benefit plan prior to the receipt thereof, (b) any willful failure by the
Company to cooperate with Executive in exercising his vested stock options in
accordance with their terms, (c) non-payment of salary or benefits to which he
is entitled from the Company as of the Termination Date, or (d) a breach of
this Agreement by the Company.
(e) Definitions.
(1) "Affiliate" has the same meaning ascribed to such term in
Rule 12b-2 under the Securities Exchange Act of 1934, as amended from time to
time.
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(2) "Cause" means any of the following: (A) the Executive's
conviction by a court of competent jurisdiction as to which no further appeal
can be taken of a crime involving moral turpitude or a felony or entering the
plea of nolo contendere to such crime by the Executive; (B) the commission by
the Executive of a material and demonstrable act of fraud, or a material and
demonstrable misappropriation of funds or property, of or upon the Company or
any Affiliate; (C) the knowing engagement by the Executive, without the
written approval of the Board or Compensation Committee, in any material
activity which directly competes with the business of the Company or any
Affiliate, or which would directly result in a material injury to the business
or reputation of the Company or any Affiliate; or (D) (i) the material breach
by Executive of any material provision of this Agreement, or (ii) the willful,
material and repeated nonperformance of Executive's duties to the Company or
any Subsidiary (other than by reason of Executive's illness or incapacity),
but only under clauses (C), (D) (i) or (D) (ii) after Notice from the Board or
Compensation Committee of such material breach or nonperformance (which Notice
specifically identifies the manner and sets forth specific facts,
circumstances and examples of which the Board or Compensation Committee
believes that Executive has breached this Agreement or not substantially
performed his duties) and his continued willful failure to cure such breach or
nonperformance within the time period set by the Board or Compensation
Committee but in no event more than 60 calendar days after his receipt of such
Notice; and, for purposes of clause (D), no act or failure to act on
Executive's part shall be deemed "willful" unless it is done or omitted by
Executive without his reasonable belief that such action or omission was in
the best interest of the Company (assuming disclosure of the pertinent facts,
any action or omission by Executive after consultation with, and in accordance
with the advice of, legal counsel reasonably acceptable to the Company shall
be deemed to have been taken in good faith and to not be willful for purposes
of this Agreement).
(3) "Change in Control" of the Company has the same definition
as set out in the Change of Control Agreement.
(4) "Change in Control Agreement" means the Change in Control
Executive Severance Agreement between Executive and the Company, originally
effective as of May 5, 2005, as may hereafter be amended or supplemented.
(5) "Code" means the Internal Revenue Code of 1986, as
amended, or its successor. References herein to any Section of the Code shall
include any successor provisions of the Code.
(6) "Designated Beneficiary" means the Executive's surviving
spouse, if any. If there is no such surviving spouse at the time of
Executive's death, then the Designated Beneficiary hereunder shall be
Executive's estate.
(7) "Disability" shall mean that Executive is entitled to
receive long-term disability ("LTD") income benefits under the LTD plan or
policy maintained by the Company that covers Executive. If, for any reason,
Executive is not covered under such LTD plan or policy, then "Disability"
shall mean a "permanent and total disability" as defined in Section 22(e)(3)
of the Code and Treasury regulations thereunder. Evidence of such Disability
shall be certified by a physician acceptable to both the Company and
Executive. In the event that the Parties are not able to agree on the choice
of a physician, each shall select one physician who, in turn, shall select a
third physician to render such certification. All costs relating to the
determination of whether Executive has incurred a Disability shall be paid by
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the Company. Executive agrees to submit to any examinations that are
reasonably required by the attending physician or other healthcare service
providers to determine whether he has a Disability.
(8) "Dispute" means any dispute, disagreement, claim, or
controversy arising in connection with or relating to the Agreement or the
validity, interpretation, performance, breach, or termination of the
Agreement.
(9) "Good Reason" means the occurrence of any of the following
events, except in connection with termination of the Executive's employment
for Cause or Disability, without Executive's express written consent:
(A) The assignment to the Executive of any duties
inconsistent in any material respect with the Executive's position, within the
6 month period prior to change in control or two years thereafter, which in
this definition includes status, reporting relationship to the top-paid
corporate executive, office, title, scope of responsibility over corporate
level staff or operations functions, or responsibilities as an officer of the
Company or any other material diminution in the Executive's position,
authority, duties, or responsibilities, other than (in any case or
circumstance) an isolated and inadvertent action not taken in bad faith that
is remedied by the Company promptly within 30 days after Notice thereof to the
Company by the Executive (for purposes of clarity and not limitation, if (i)
the Company becomes a division, a wholly or majority-owned subsidiary, or
other similar entity of another person or entity or combination thereof and
(ii) after such reorganization the Executive is not placed in a substantially
equivalent position with the parent entity or reorganized combination entity
as he had with the Company immediately prior to such reorganization, then such
occurrence shall be deemed an assignment of duties materially inconsistent
with Executive's position for purposes of this definition of Good Reason); or
(B) in the event of a Change in Control, the Company
requires the Executive to be based at any office or location farther than 35
miles from the Executive's office or principal job location immediately before
the Change in Control, except for required business travel to an extent
substantially consistent with the Executive's travel obligations immediately
before the Change in Control; or
(C) a reduction in the Executive's Base Salary or annual
bonus opportunity of more than five percent (5%) from the highest amount in
effect at any time the prior year.
Notwithstanding the foregoing definition of "Good Reason", the
Executive cannot terminate his employment hereunder for Good Reason unless he
(i) first notifies the Board or Compensation Committee in writing of the event
(or events) which the Executive believes constitutes a Good Reason event under
subparagraphs (A), (B) or (C) (above) within 120 days from the date of such
event, and (ii) provides the Company with at least 30 calendar days to cure,
correct or mitigate the Good Reason event so that it either (1) does not
constitute a Good Reason event hereunder or (2) Executive agrees, in writing,
that after any such modification or accommodation made by the Company that
such event shall not constitute a Good Reason event.
(10) "No Severance Benefits Event" means termination of
Executive's employment for Cause (as defined above).
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(11) "Retirement" means the termination of Executive's
employment for normal retirement at or after attaining age sixty (60) provided
that, on the date of his retirement, Executive has accrued at least five years
of active service as an employee with the Company or its Affiliates.
(12) "Subsidiary" means a corporation or other entity, whether
incorporated or unincorporated, of which at least a majority of the voting
securities is owned, directly or indirectly, by the Company.
7. Notice of Termination. Any termination by the Company or the
Executive shall be communicated by Notice of Termination to the other Party
hereto. For purposes of this Agreement, the term "Notice of Termination"
means a written notice which indicates the specific termination provision of
this Agreement relied upon and sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
8. Severance Benefits Following Nonrenewal of Agreement. In the event
that (a) this Agreement is not renewed by the Company (pursuant to Section 4)
for any reason other than a "No Severance Benefits Event" (as defined in
Section 6(c)) and (b) the employment of Executive is subsequently terminated
by the Company for any reason other than a No Severance Benefits Event or due
to his Disability within two (2) years following the expiration of the Term of
Employment hereunder due to nonrenewal by the Company, then Executive shall be
entitled to severance benefits (hereafter, the "Nonrenewal Severance
Benefits") provided that he first enters into a release agreement pursuant to
Section 6(d). The Nonrenewal Severance Benefits shall be computed in the same
manner as severance benefits are computed under Section 6(b)(1); provided,
however, the Additional Payment under that subsection shall be reduced by the
number of months that have elapsed between the last day of the Term of
Employment due to nonrenewal and the Executive's actual termination of
employment date. For example, if the Executive's employment is terminated
(other than due to a No Severance Benefits Event or his Disability) nine
months after the end of the Term of Employment due to the Company's
nonrenewal, he shall be entitled to an Additional Payment pursuant to Section
6(b)(1) that is computed based on 15 months (24 9 = 15) instead of 24
months. In the event of a termination of employment as described in this
Section 8, Executive shall still be entitled to the benefits under Section
6(b)(2) for discounted COBRA coverage. Notwithstanding the foregoing, this
Section 8 shall be null and void if there is a Severance Payment Event as
defined in the Change in Control Agreement.
9. No Mitigation. Subject to Section 6(b)(2), Executive shall not be
required to mitigate the amount of any payment or other benefits provided
under this Agreement by seeking other employment or in any other manner.
10. Restrictive Covenants. As an inducement to the Company to enter into
this Agreement, Executive represents to, and covenants with or in favor of,
the Company his compliance with the restrictive covenants in Sections 11
through 19, as a condition to the Company's obligation to provide any benefits
to Executive under this Agreement.
11. Trade Secrets.
(a) Access to Trade Secrets. As of the Effective Date and on an
ongoing basis, the Company agrees to give Executive access to Trade Secrets
which the Executive did not have access to, or knowledge of, before the
Effective Date.
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(b) Access to Specialized Training. As of the Effective Date and
on an ongoing basis, the Company has provided, and agrees to provide on an
ongoing basis, Executive with Specialized Training which the Executive does
not have access to, or knowledge of, before the Effective Date.
(c) Agreement Not to Use or Disclose Trade Secrets. In exchange
for the Company's promises to provide Executive with access to Trade Secrets
and Specialized Training and the other benefits provided under this Agreement,
Executive agrees that he will not during the Employment Period, or at any time
thereafter, disclose to anyone, including, without limitation, any person,
firm, corporation or other entity, or publish or use for any purpose, any
Trade Secrets and Specialized Training, except as required in the ordinary
course of the Company's business or as authorized by the Board.
(d) Agreement to Refrain from Defamatory Statements. Executive
shall refrain, both during the Employment Period and thereafter, from
publishing any oral or written statements about any directors, officers,
employees, agents, investors or representatives of the Company or any
Affiliate that are slanderous, libelous, or defamatory; or that disclose
private or confidential information about the business affairs, directors,
officers, employees, agents, investors or representatives of the Company or
any Affiliate; or that constitute an intrusion into the seclusion or private
lives of any of such directors, officers, employees, agents, investors or
representatives; or that give rise to unreasonable publicity about the private
lives of such persons; or that place any such person in a false light before
the public; or that constitute a misappropriation of the name or likeness of
any such person. A violation or threatened violation of these restrictive
covenants may be enjoined by a court of law notwithstanding the arbitration
provisions of Section 30.
(e) Definitions. The following terms, when used in this Agreement,
are defined below:
(1) "Restricted Territory" means, collectively Denver,
Colorado (and within a 100-mile radius of the boundaries of Denver, Colorado);
each county (or equivalent subdivision) of any state, district, or territory
of the United States of America as to which the Company conducts its business;
and each county (or equivalent territory) adjacent to any of the preceding
counties (or equivalent territories).
(2) "Specialized Training" includes the training the Company
provides to Executive that is unique to its business and enhances Executive's
ability to perform Executive's job duties effectively. Specialized Training
includes, without limitation, sales methods/techniques training; operation
methods training; engineering and scientific training; and computer and
systems training.
(3) "Trade Secrets" means any and all information and
materials (in any form or medium) that are proprietary to the Company or a
Subsidiary, or are treated as confidential by the Company or Subsidiary as
part of, or relating to, all or any portion of its or their business,
including information and materials about the products and services offered,
or the needs of customers served, by the Company or Subsidiary; compilations
of information, records and specifications, properties, processes, programs,
and systems of the Company or Subsidiary; research of or for the Company or
Subsidiary; and methods of doing business of the Company or Subsidiary. Trade
Secrets include, without limitation, all of the Company's or Subsidiary's
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technical and business information, whether patentable or not, which is of a
confidential, trade secret or proprietary character, and which is either
developed by the Executive alone, with others or by others; lists of
customers; identity of customers; existing or prospective oil or gas
properties, investors, participation agreements, working, royalty or other
interests; contract terms; bidding information and strategies; pricing methods
or information; computer software; computer software methods and
documentation; hardware; the Company's or Subsidiary's methods of operation;
the procedures, forms and techniques used in servicing accounts or properties;
seismic, geophysical, petrophysical, or geological data; well logs and other
well data; and other documents, information or data that the Company requires
to be maintained in confidence for the Company's business success.
12. Duty to Return Company Documents and Property. Upon termination of
the Employment Period, Executive shall immediately return and deliver to the
Company any and all papers, books, records, documents, memoranda and manuals,
e-mail, electronic or magnetic recordings or data, including all copies
thereof, belonging to the Company or relating to its business, in Executive's
possession, whether prepared by Executive or others. If at any time after the
Employment Period, Executive determines that he has any Trade Secrets in his
possession or control, Executive shall immediately return them to the Company,
including all copies thereof.
13. Best Efforts and Disclosure. Executive agrees that, while he is
employed with the Company, he shall devote his full business time and
attention to the Company's business and shall use his best efforts to promote
its success. Further, Executive shall promptly disclose to the Company all
ideas, inventions, computer programs, and discoveries, whether or not
patentable or copyrightable, which he may conceive or make, alone or with
others, during the Employment Period, whether or not during working hours, and
which directly or indirectly:
(a) relate to a matter within the scope, field, duties or
responsibility of Executive's employment with the Company; or
(b) are based on any knowledge of the actual or anticipated
business or interests of the Company; or
(c) are aided by the use of time, materials, facilities or
information of the Company.
Executive assigns to the Company, without further compensation, any and
all rights, titles and interest in all such ideas, inventions, computer
programs and discoveries in all countries of the world. Executive recognizes
that all ideas, inventions, computer programs and discoveries of the type
described above, conceived or made by Executive alone or with others within 12
months after the Termination Date (voluntary or otherwise), are likely to have
been conceived in significant part either while employed by the Company or as
a direct result of knowledge Executive had of proprietary information or Trade
Secrets. Accordingly, Executive agrees that such ideas, inventions or
discoveries shall be presumed to have been conceived during his Employment
Period, unless and until the contrary is clearly established by the Executive.
14. Inventions and Other Works. Any and all writings, computer
software, inventions, improvements, processes, procedures and/or techniques
which Executive may make, conceive, discover, or develop, either solely or
jointly with any other person or persons, at any time during the Employment
Period, whether at the request or upon the suggestion of the Company or
10
otherwise, which relate to or are useful in connection with any business now
or hereafter carried on or contemplated by the Company, including developments
or expansions of its present fields of operations, shall be the sole and
exclusive property of the Company. Executive agrees to take any and all
actions necessary or appropriate so that the Company can prepare and present
applications for copyright or Letters Patent therefor, and secure such
copyright or Letters Patent wherever possible, as well as reissue renewals,
and extensions thereof, and obtain the record title to such copyright or
patents. Executive shall not be entitled to any additional or special
compensation or reimbursement regarding any such writings, computer software,
inventions, improvements, processes, procedures and techniques. Executive
acknowledges that the Company from time to time may have agreements with other
persons or entities which impose obligations or restrictions on the Company
regarding inventions made during the course of work thereunder or regarding
the confidential nature of such work. Executive agrees to be bound by all
such obligations and restrictions, and to take all action necessary to
discharge the obligations of the Company.
15. Non-Solicitation Restriction. To protect Trade Secrets after
termination of the Employment Period, it is necessary to enter into the
following restrictive covenants, which are ancillary to the enforceable
promises between the Company and Executive in Sections 11 through 14 and other
provisions of this Agreement. Following the Termination Date (regardless of
the reason for termination), Executive hereby covenants and agrees that he
will not, directly or indirectly, without the prior written consent of the
Board or the Compensation Committee, either individually or as a principal,
partner, agent, consultant, contractor, employee, or as a director or officer
of any entity, or in any other manner or capacity whatsoever, except on behalf
of the Company, solicit business, or attempt to solicit business, in products
or services competitive with any products or services offered or performed by
the Company or any Subsidiary with respect to any property, drilling program,
or oil or gas development prospect, project or field, in which the Company or
any Subsidiary does business or has any business interest as of the
Termination Date, or either (a) from those individuals or entities with whom
the Company or Subsidiary was involved with, or participated in, any oil or
gas exploration or development project or (b) with respect to any property in
which the Company or Subsidiary had any working, royalty or other interest, at
any time during the two-year period ending on the Termination Date. The
prohibitions set forth in this Section 15 shall remain in effect for a period
of one (1) year following the Termination Date.
16. Non-Competition Restriction. Executive hereby agrees that in order
to protect Trade Secrets, it is necessary to enter into the following
restrictive covenant, which is ancillary to the enforceable promises between
the Company and Executive in Sections 11 through 15 and other provisions of
this Agreement. Executive hereby covenants and agrees that during the
Employment Period, and for a period of one (1) year following the Termination
Date (regardless of the reason for termination except an involuntary
termination of Executive by the Company without Cause (as defined in Section
6(e)), Executive will not, without the prior written consent of the Board or
the Compensation Committee, become interested in any capacity in which
Executive would perform any similar duties to those performed while at the
Company, directly or indirectly (whether as proprietor, stockholder, director,
partner, employee, agent, independent contractor, consultant, trustee, or in
any other capacity), with respect to any property, drilling program, oil or
gas leasehold, project or field, in which the Company or any Subsidiary
participates, or has any investment or other business interest in, within
the Restricted Territory or within five (5) miles of the boundary of any
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existing Company leasehold in the United States in which the Company or
Subsidiary has conducted business at any time within the two-year period
immediately preceding the Termination Date within a two-year period from such
date (a "Competing Enterprise"); provided, however, Executive shall not be
deemed to be participating or engaging in a Competing Enterprise solely by
virtue of his ownership of not more than one percent (1%) of any class of
stock or other securities which are publicly traded on a national securities
exchange or in a recognized over-the-counter market.
17. No-Recruitment Restriction. Executive agrees that during the
Employment Period, and for a period of one (1) year following the Termination
Date (except in the event of Executive's voluntary termination for Good Reason
or his involuntary termination without Cause), Executive will not, either
directly or indirectly, or by acting in concert with others, solicit or
influence, or seek to solicit or influence, any employee or independent
contractor performing services for the Company or any Subsidiary to terminate,
reduce or otherwise adversely affect his or her employment or other
relationship with the Company or any Subsidiary.
18. Tolling. If Executive violates any of the restrictions contained in
Sections 11 through 18, then notwithstanding any provision hereof to the
contrary, the restrictive period will be suspended and will not run in favor
of Executive from the time of the commencement of any such violation until the
time when the Executive cures the violation to the reasonable satisfaction of
the Board or Compensation Committee.
19. Reformation. If a court or arbitrator rules that any time period or
the geographic area specified in any restrictive covenant in Sections 11
through 18 is unenforceable, then the time period will be reduced by the
number of months, or the geographic area will be reduced by the elimination of
such unenforceable portion, or both, so that the restrictions may be enforced
in the geographic area and for the time to the full extent permitted by law.
20. No Previous Restrictive Agreements. Executive represents that,
except as disclosed in writing to the Company as of the Effective Date, he is
not bound by the terms of any agreement with any previous employer or other
third party to (a) refrain from using or disclosing any confidential or
proprietary information in the course of Executive's employment by the Company
or (b) refrain from competing, directly or indirectly, with the business of
such previous employer or any other person or entity. Executive further
represents that his performance under this Agreement and his work duties for
the Company do not, and will not, breach any agreement to keep in confidence
proprietary information, knowledge or data acquired by Executive in confidence
or in trust prior to Executive's employment with the Company, and Executive
will not disclose to the Company or induce the Company to use any confidential
or proprietary information or material belonging to any previous employer or
others.
21. Conflicts of Interest. In keeping with his fiduciary duties to
Company, Executive hereby agrees that he shall not become involved in a
conflict of interest, or upon discovery thereof, allow such a conflict to
continue at any time during the Employment Period. In this respect, Executive
agrees to fully comply with the conflict of interest agreement entered into by
Executive in his capacity as of an officer or director of the Company. In the
instance of a material violation of the conflict of interest agreement to
which Executive is a party, it may be necessary for Board to terminate
Executive's employment for Cause (as defined in Section 6(e)); provided,
however, Executive cannot be terminated for Cause hereunder unless the Board
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first provides Executive with notice and an opportunity to cure such conflict
of interest pursuant to the same procedures as set forth in clause (D) of the
definition of "Cause" in Section 6(e)(2).
22. Remedies. Executive acknowledges that the restrictions contained in
Sections 11 through 21 of this Agreement, in view of the nature of the
Company's business, are reasonable and necessary to protect the Company's
legitimate business interests, and that any violation of this Agreement would
result in irreparable injury to the Company. Notwithstanding the arbitration
provisions in Section 30, in the event of a breach or a threatened breach by
Executive of any provision of Sections 11 through 21 of this Agreement, the
Company shall be entitled to a temporary restraining order and injunctive
relief restraining Executive from the commission of any breach, and to recover
the Company's attorneys' fees, costs and expenses related to the breach or
threatened breach. Nothing contained in this Agreement shall be construed as
prohibiting the Company from pursuing any other remedies available to it for
any such breach or threatened breach, including, without limitation, the
recovery of money damages, attorneys' fees, and costs. These covenants and
agreements shall each be construed as independent of any other provisions in
this Agreement, and the existence of any claim or cause of action by Executive
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of such covenants
and agreements.
23. Withholdings; Right of Offset. The Company may withhold and deduct
from any benefits and payments made or to be made pursuant to this Agreement
(a) all federal, state, local and other taxes as may be required pursuant to
any law or governmental regulation or ruling, (b) all other normal employee
deductions made with respect to Company's employees generally, and (c) any
advances made to Executive and owed to Company.
24. Nonalienation. The right to receive payments under this Agreement
shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge or encumbrance by Executive, his dependents or
beneficiaries, or to any other person who is or may become entitled to receive
such payments hereunder. The right to receive payments hereunder shall not be
subject to or liable for the debts, contracts, liabilities, engagements or
torts of any person who is or may become entitled to receive such payments,
nor may the same be subject to attachment or seizure by any creditor of such
person under any circumstances, and any such attempted attachment or seizure
shall be void and of no force and effect.
25. Incompetent or Minor Payees. Should the Board or the Compensation
Committee determine, in its discretion, that any person to whom any payment is
payable under this Agreement has been determined to be legally incompetent or
is a minor, any payment due hereunder, notwithstanding any other provision of
this Agreement to the contrary, may be made in any one or more of the
following ways: (a) directly to such minor or person; (b) to the legal
guardian or other duly appointed personal representative of the person or
estate of such minor or person; or (c) to such adult or adults as have, in the
good faith knowledge of the Board or the Compensation Committee, assumed
custody and support of such minor or person; and any payment so made shall
constitute full and complete discharge of any liability under this Agreement
in respect to the amount paid.
26. Indemnification. The Company shall indemnify, defend and hold
harmless the Executive from and against any and all liability, costs and
damages arising from his service as an employee, officer or director of the
13
Company or its Affiliates as required by the articles of incorporation or
bylaws of the Company. This Section 26 shall be in addition to, and shall not
limit in any way, the rights of Executive to any other indemnification from
the Company, as a matter of law, contract or otherwise.
27. Severability. It is the desire of the parties hereto that this
Agreement be enforced to the maximum extent permitted by law, and should any
provision contained herein be held unenforceable by a court of competent
jurisdiction or arbitrator (pursuant to Section 30), the parties hereby agree
and consent that such provision shall be reformed to create a valid and
enforceable provision to the maximum extent permitted by law; provided,
however, if such provision cannot be reformed, it shall be deemed ineffective
and deleted herefrom without affecting any other provision of this Agreement.
This Agreement should be construed by limiting and reducing it only to the
minimum extent necessary to be enforceable under then applicable law.
28. Title and Headings; Construction. Titles and headings to Sections
hereof are for the purpose of reference only and shall in no way limit, define
or otherwise affect the provisions hereof. The words "herein", "hereof",
"hereunder" and other compounds of the word "here" shall refer to the entire
Agreement and not to any particular provision.
29. Governing Law; Jurisdiction. All matters or issues relating to the
interpretation, construction, validity, and enforcement of this Agreement
shall be governed by the laws of the State of Colorado, without giving effect
to any choice-of-law principle that would cause the application of the laws of
any jurisdiction other than Colorado. Jurisdiction and venue of any action or
proceeding relating to this Agreement or any Dispute (to the extent
arbitration is not required under Section 30) shall be exclusively in Denver,
Colorado.
30. Mandatory Arbitration. Except as provided in subsection (h) of this
Section 30, any Dispute (as defined in Section 6(e)) must be resolved by
binding arbitration in accordance with the following:
(a) Party may begin arbitration by filing a demand for arbitration
in accordance with the Arbitration Rules and concurrently Notifying the other
Party of that demand. If the Parties are unable to agree upon a panel of three
arbitrators within ten days after the demand for arbitration was filed (and do
not agree to an extension of that ten-day period), either Party may request
the Denver, Colorado office of the American Arbitration Association ("AAA") to
appoint the arbitrator or arbitrators necessary to complete the panel in
accordance with the Arbitration Rules. Each arbitrator so appointed shall be
deemed accepted by the Parties as part of the panel.
(b) The arbitration shall be conducted in the Denver, Colorado
metropolitan area at a place and time agreed upon by the Parties with the
panel, or if the Parties cannot agree, as designated by the panel. The panel
may, however, call and conduct hearings and meetings at such other places as
the Parties may agree or as the panel may, on the motion of one Party,
determine to be necessary to obtain significant testimony or evidence.
(c) The panel may authorize any and all forms of discovery upon a
Party's showing of need that the requested discovery is likely to lead to
material evidence needed to resolve the Dispute and is not excessive in scope,
timing, or cost.
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(d) The arbitration shall be subject to the Federal Arbitration Act
and conducted in accordance with the Arbitration Rules to the extent that they
do not conflict with this Section 30. The Parties and the panel may, however,
agree to vary to provisions of this Section 30 or the matters otherwise
governed by the Arbitration Rules.
(e) The arbitration hearing shall be held within 60 days after the
appointment of the panel. The panel's final decision or award shall be made
within 30 days after the hearing. That final decision or award shall be made
by unanimous or majority vote or consent of the arbitrators constituting the
panel, and shall be deemed issued at the place of arbitration. The panel's
final decision or award shall be based on this Agreement and applicable law.
(f) The panel's final decision or award may include injunctive
relief in response to any actual or impending breach of this Agreement or any
other actual or impending action or omission of a Party under or in connection
with this Agreement.
(g) The panel's final decision or award shall be final and binding
upon the Parties, and judgment upon that decision or award may be entered in
any court having jurisdiction. The Parties waive any right to apply or appeal
to any court for relief from the preceding sentence or from any decision of
the panel made before the final decision or award.
(h) Nothing in this Section 30 limits the right of either Party to
apply to a court having jurisdiction to (i) enforce the agreement to arbitrate
in accordance with this Section 30, (ii) seek provisional or temporary
injunctive relief, in response to an actual or impending breach of the
Agreement or otherwise so as to avoid an irreparable damage or maintain the
status quo, until a final arbitration decision or award is rendered or the
Dispute is otherwise resolved, or (iii) challenge or vacate any final
arbitration decision or award that does not comply with this Section 30. In
addition, nothing in this Section 30 prohibits the Parties from resolving any
Dispute (in whole or in part) by agreement.
The panel may proceed to an award notwithstanding the failure of any
Party to participate in such proceedings. The prevailing Party in the
arbitration proceeding may be entitled to an award of reasonable attorneys'
fees incurred in connection with the arbitration in such amount, if any, as
determined by the panel in its discretion. The costs of the arbitration shall
be borne equally by the Parties unless otherwise determined by the panel in
its award.
The panel shall be empowered to impose sanctions and to take such other
actions as it deems necessary to the same extent a judge could impose
sanctions or take such other actions pursuant to the Federal Rules of Civil
Procedure and applicable law. Each party agrees to keep all Disputes and
arbitration proceedings strictly confidential except for disclosure of
information required by applicable law which cannot be waived.
This Section 30 shall not preclude the Parties at any time from mutually
agreeing to pursue non-binding mediation of the Dispute.
31. Binding Effect: Third Party Beneficiaries. This Agreement shall be
binding upon and inure to the benefit of the Parties hereto, and to their
respective heirs, executors, beneficiaries, personal representatives,
successors and permitted assigns hereunder, but otherwise this Agreement shall
not be for the benefit of any third parties.
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32. Entire Agreement; Amendment and Termination. This Agreement
contains the entire agreement of the Parties hereto with respect to the
matters covered herein; moreover, this Agreement supersedes all prior and
contemporaneous agreements and understandings, oral or written, between the
Parties concerning the subject matter hereof. This Agreement may be amended,
waived or terminated only by a written instrument that is identified as an
amendment, waiver or termination hereto and that is executed on behalf of both
Parties.
33. Survival of Certain Provisions. Wherever appropriate to the
intention of the Parties, the respective rights and obligations of the Parties
hereunder shall survive any termination or expiration of this Agreement.
34. Waiver of Breach. No waiver by either Party hereto of a breach of
any provision of this Agreement by any other Party, or of compliance with any
condition or provision of this Agreement to be performed by such other Party,
will operate or be construed as a waiver of any subsequent breach by such
other Party or any similar or dissimilar provision or condition at the same or
any subsequent time. The failure of either Party hereto to take any action by
reason of any breach will not deprive such Party of the right to take action
at any time while such breach continues.
35. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Company and its Subsidiaries (and its and their
successors), as well as upon any person or entity acquiring, whether by
merger, consolidation, purchase of assets, dissolution or otherwise, all or
substantially all of the capital stock, business and/or assets of the Company
(or its successor) regardless of whether the Company is the surviving or
resulting corporation. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation, dissolution or
otherwise) to all or substantially all of the capital stock, business 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 had occurred; provided, however, no such
assumption shall relieve the Company of any of its duties or obligations
hereunder unless otherwise agreed, in writing, by Executive.
This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representative, executors, administrators,
successors, and heirs. In the event of the death of Executive while any
amount is payable hereunder, all such amounts shall be paid to the Designated
Beneficiary (as defined in Section 6(e)).
36. Notice. Each notice or other communication required or permitted
under this Agreement shall be in writing and transmitted, delivered, or sent
by personal delivery, prepaid courier or messenger service (whether overnight
or same-day), or prepaid certified United States mail (with return receipt
requested), addressed (in any case) to the other Party at the address for that
Party set forth below that Party's signature on this Agreement, or at such
other address as the recipient has designated by Notice to the other Party.
Each notice or communication so transmitted, delivered, or sent (a) in
person, by courier or messenger service, or by certified United States mail
shall be deemed given, received, and effective on the date delivered to or
refused by the intended recipient (with the return receipt, or the equivalent
record of the courier or messenger, being deemed conclusive evidence of
delivery or refusal), or (b) by telecopy or facsimile shall be deemed given,
received, and effective on the date of actual receipt (with the confirmation
16
of transmission being deemed conclusive evidence of receipt, except where the
intended recipient has promptly Notified the other Party that the transmission
is illegible). Nevertheless, if the date of delivery or transmission is not a
business day, or if the delivery or transmission is after 5:00 p.m. on a
business day, the notice or other communication shall be deemed given,
received, and effective on the next business day.
37. Executive Acknowledgment. Executive acknowledges that (a) he is
knowledgeable and sophisticated as to business matters, including the subject
matter of this Agreement, (b) he has read this Agreement and understands its
terms and conditions, (c) he has had ample opportunity to discuss this
Agreement with his legal counsel prior to execution, and (d) no strict rules
of construction shall apply for or against the drafter or any other Party.
Executive represents that he is free to enter into this Agreement including,
without limitation, that he is not subject to any covenant not to compete that
would conflict with his duties under this Agreement.
38. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a copy hereof containing multiple
signature pages, each signed by one party hereto, but together signed by both
parties.
[Signature page follows.]
17
IN WITNESS WHEREOF, Executive has hereunto set his hand and Company has
caused this Agreement to be executed in its name and on its behalf by its duly
authorized officer, to be effective as of the Effective Date.
WITNESS: EXECUTIVE:
Signature: /s/ Xxxx X. Xxxxx Signature: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxx Name: Xxxx X. Xxxxxxx
Executive Vice President and
Chief Operating Officer
Date: May 5, 2005 Date: May 5, 2005
Address for Notices:
c/o Delta Petroleum Corp.
000 00xx Xxxxxx, #0000
Xxxxxx, XX 00000
ATTEST: COMPANY:
By: /s/ Xxxxxx X. Xxxxxx, Xx. By: /s/ Xxxxx X. Xxxxxx
Title: Chairman/Secretary Its: President and CEO
Name: Xxxxxx X. Xxxxxx, Xx. Name: Xxxxx X. Xxxxxx
Date: 5/5/2005 Date: 5/5/2005
Address for Notices:
Delta Petroleum Corporation
c/o Chairman of the Board
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
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