EXHIBIT 10.43
HS RESOURCES, INC.
Key Employee Severance Agreement
THIS KEY EMPLOYEE SEVERANCE AGREEMENT (the "Agreement") is entered into as
of March 12, 2001, by and between _________________ ("Employee") and HS
Resources, Inc., a Delaware corporation (the "Company").
RECITALS
A. Employee is a key employee of Company.
B. As an inducement for the Employee to continue in the employ of the
Company, the Employee and the Company wish to provide for a severance payment to
the Employee in the event of termination of the Employee's employment with the
Company following a change in control of the Company. The Employee and the
Company expressly acknowledge that this consideration is adequate to support the
contractual obligations provided for hereunder.
THE PARTIES HERETO AGREE AS FOLLOWS:
1. TERM. This Agreement shall continue until terminated by mutual agreement of
the parties.
2. DEFINITIONS.
a. TERMINATION FOR CAUSE. For purposes of this Agreement, "Cause" shall
include, but not be limited to, the following:
i. Willful dishonesty towards the Company, fraud upon the Company or
deliberate injury or intended injury to the Company;
ii. Conviction of a felony; or
iii. Continued abuse of alcohol or drugs on the job or otherwise
materially affecting job performance.
b. "GOOD REASON." "Good Reason" shall mean:
i. The assignment to Employee of any duties inconsistent with, or a
significant adverse change in, Employee's position, duties,
responsibilities or status with the Company as they existed
immediately prior to a Change in Control (as defined below); or
removal of Employee from or failure to re-elect Employee to any
of such positions, except in connection with the
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termination of employment for Cause or Disability, in each case
as defined herein; or
ii. A reduction by the Company in the Employee's base salary or
target bonus in effect immediately prior to the Change in
Control; or
iii. The Company's requiring Employee to relocate to a city other than
the city of Employee's residence immediately prior to the Change
in Control; or
iv. The failure by the Company to continue in effect any material
benefit available to employees of the Company generally, or to
key employees of the Company including, but not limited to any
retirement, pension or incentive plan, life, accident, disability
or health insurance plans, stock or cash bonus plans or savings
and profit sharing plans, in which the Employee is participating
at the time of a Change in Control of the Company (or plans
providing Employee with substantially similar benefits); any
action by the Company which would adversely affect the Employee's
participation in or materially reduce the Employee's benefits
under any of such plans or deprive the Employee of any material
fringe benefit enjoyed by the Employee at the time of the Change
in Control; or the failure by the Company to make available to
the Employee the number of paid vacation days to which the
Employee had been entitled in accordance with the Company's
normal vacation policy.
c. "CHANGE IN CONTROL." For purposes of this Agreement, "Change in
Control" of the Company shall be deemed to have taken place if:
i. any person or group (as defined in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) becomes the beneficial owner (as defined in Rule 13d-3 of
the Exchange Act), directly or indirectly, of securities of the
Company representing 33% or more of the combined voting power of
the Company's then outstanding securities, excluding (A) any
person who becomes such a beneficial owner in connection with a
transaction described in clause (A) of paragraph (iii) below; (B)
Xxxxxxxx X. Xxxxxx and/or P. Xxxxxxx Xxxxxx and their
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affiliates; or (C) a trustee or fiduciary holding securities
under an employee benefit plan of the Company; or
ii. the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals
who, on the date hereof, constitute the Board and any new
director (other than a director whose initial assumption of
office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation,
relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election
by the Company's stockholders was approved or recommended by a
vote of at least two-thirds (2/3) of the directors then still in
office who either were directors on the date hereof or whose
appointment, election or nomination for election was previously
so approved or recommended; or
iii. there is consummated a merger or consolidation of the Company or
any direct or indirect subsidiary of the Company with any other
corporation, other than (A) a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent
thereof) at least 67% of the combined voting power of the
securities of the Company or such surviving entity or any parent
thereof outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no person (other than the person or persons
specified in clauses (A) through (C) of subparagraph (i) above)
is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 33% or more of the
combined voting power of the Company's then outstanding
securities; or
iv. the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated
an agreement for the
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sale or disposition by the Company of all or substantially all of
the Company's assets, other than a sale or disposition by the
Company of all or substantially all of the Company's assets to an
entity, at least 67% of the combined voting power of the voting
securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the
Company immediately prior to such sale.
Notwithstanding the foregoing, a "Change in Control" shall not be
deemed to have occurred by virtue of the consummation of any
transaction or series of integrated transactions immediately following
which the record holders of the common stock of the Company
immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an
entity which owns all or substantially all of the assets of the
Company immediately following such transaction or series of
transactions.
d. "DISABILITY." Disability" shall mean a physical or mental condition
(other than that caused by or related to alcohol or drug abuse),
verified by a physician designated by the Company, which prevents the
Employee from carrying out one or more of the material aspects of
Employee's assigned duties for at least ninety (90) consecutive days.
3. PAYMENTS UPON CHANGE IN CONTROL.
a. Termination Following Change in Control. In the event of termination
of the Employee's employment within two years after the effective date
of a Change in Control of the Company, either by the Employee for Good
Reason or by the Company other than for Disability, retirement at age
65, or Cause, the Company shall pay the Employee as follows:
i. The Employee's base salary through the date of termination at the
rate then in effect at the time the notice of termination is
given; and
ii. The prorated portion of the bonus the Employee would have
received for that year had his employment not terminated; and
iii. A lump sum payment in consideration for Employee's obligations
under Sections 5 and 6 equal to the sum of:
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(A) the product of [2.99] [2.0] times the average of the
Employee's annual base salary in effect during the three
annual periods immediately preceding the date of
termination; plus
(B) the product of [2.99] [2.0] times the Employee's highest
annual bonus amount (other than any bonus or payment
designated as a special commendation bonus or the like) from
the three years immediately preceding the date of
termination, if any, previously paid to the Employee. In the
event the date of termination occurs in the course of a
bonus period, the fractional time period shall not be
considered in determining the additional payments to be made
under this paragraph.
iv. Unless the parties shall otherwise agree, all amounts payable
under this paragraph 3. shall be paid within ten (10) calendar
days after termination. Any amounts not timely paid shall bear
interest at a rate of eighteen percent (18%) per annum compounded
daily.
v. In addition, notwithstanding anything to the contrary contained
herein or in any agreement with respect hereto, the Company
shall, if requested by the Employee, pay for one year of health
insurance premiums (and, if applicable, administrative fees)
under COBRA.
4. EXCISE TAX PAYMENT. Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Employee (whether
paid or payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 4) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the U.S. Tax Code or
any interest or penalties are incurred by the Employee with respect to such
excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), then the
Employee shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Employee of all taxes
imposed upon the Gross-Up Payment (including any state and federal income
taxes and Excise
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Taxes, and interest and penalties imposed with respect to such taxes), the
Employee retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
5. COOPERATION OF EMPLOYEE. If the Employee receives a Gross-Up Payment
pursuant to Section 4 the Employee shall take any position requested by the
Company on the Employee's federal income tax return with respect to the
treatment of the Payment from the Company, Gross-up Payment, the payment of
any Indemnified Amount, and the receipt of any refund or interest paid by
the government to the Employee as a result of a Contest (such position, a
"Requested Position"), provided (i) the Company shall, at the request of
the Employee, provide the Employee with an opinion from a nationally
recognized accounting firm that there is "substantial authority" for the
Requested Position within the meaning of IRC Section 6662 and (ii) the
general long term or senior unsecured corporate credit rating of the
Company or its successor is at least BB as rated by Standard & Poor's and
Ba2 as rated by Xxxxx'x Investor Services (the "Credit Requirement") at the
time the Employee would be required to take a Requested Position or the
Company places in an escrow account on terms reasonably acceptable to the
Employee (the "Escrow Requirement") a sufficient amount of cash to insure
payment to the Employee of the Indemnified Amount that could become due to
the Employee pursuant to the following provisions. The Company shall
indemnify the Employee for any tax, penalty and interest incurred by the
employee as a result of taking the Requested Position. The amount for which
the Employee is indemnified under the preceding sentence (the "Indemnified
Amount") shall be computed on an after-tax basis, taking into account any
income or other taxes. The Employee shall keep the Company informed of all
developments in any audit with respect to a Requested Position. Upon
payment of the Indemnified Amount, or (if the Indemnified Amount is not yet
payable) upon the Company's written affirmation, in form and substance
reasonably satisfactory to the Employee, of the Company's obligation to
indemnify the Employee with respect to the Requested Position, and provided
the Credit Requirement or the Escrow Requirement is satisfied at such time,
the Company shall be entitled, at its sole expense, to control the contest
of any disallowance or proposed disallowance of a Requested Position (a
"Contest"), and the Employee agrees to
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cooperate in connection with a Contest, including, without limitation,
executing powers of attorney and other documents at the reasonable request
of the Company. The Indemnified Amount shall be payable whenever an amount
is payable to the Internal Revenue Service as a result of the disallowance
of a Requested Position. Following payment by the Company of the
Indemnified Amount, if the Requested Position is sustained by the Internal
Revenue Service or the courts, the Company shall be entitled to any
resulting receipt of interest or refund of taxes, interest and penalties
that were properly attributable to the Indemnified Amount. If a Requested
Position is sustained in whole or in part in a final resolution of a
Contest, and if the Indemnified Amount therefore exceeds the amount of
taxes, penalties and interest payable by the Employee as a result of the
Requested Position (determined on an after-tax basis after taking into
account payments made pursuant to the preceding sentence and this
sentence), any such excess portion of the Indemnified Amount shall be
treated as a loan by the Company to Protected Officer, which loan Protected
Officer must repay to the Company together with interest at the applicable
federal rate under Code Section 7872(f)(2). If the Company's rights under
this Section 5 are supported by the Credit Requirement and at any time
thereafter and prior to the satisfaction of all of the Company's
obligations to the Employee under this Section 5 the Credit Requirement
should not be satisfied, the Company shall immediately then satisfy the
Escrow Requirement.
6. PROTECTION FOR COMPANY.
a. CONFIDENTIALITY. The Employee shall not, during his employment by the
Company or at any time thereafter, directly or indirectly use,
divulge, furnish or make accessible to anyone other than the Company,
its directors or Employees (otherwise than in the regular course of
the business of the Company), any knowledge or information regarding
any confidential or secret activities, projects, plans, reports,
customer names, financial information or documentary material relating
to the business or activities of the Company or any of its
subsidiaries. The Employee, upon leaving the employ of the Company,
shall not take with him or retain any books, records, data, reports,
letters, memoranda, notes or other writings or documents whatsoever,
or copies thereof, which reflect or deal with
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any secret, proprietary or confidential information, report or material
relating to the business or activities of the Company or any of its
subsidiaries.
b. POST-EMPLOYMENT NON-COMPETE. In the event the Employee's employment is
terminated for any reason following a Change of Control, the Employee
shall not, for a period of two years (the "Non-Compete Period")
following such termination (i) personally or through any person, firm
or corporation (including any new business started by Employee alone
or with others) as an employee, consultant or otherwise compete with
the Company or any of its Affiliates in its Major Business Activities
or offer or provide any service or information to any person, firm or
corporation that would assist such person firm or corporation in
competing with the Company in its Major Business Activities; (ii)
contact or solicit (directly or indirectly) any past or current
customer or joint venturer of the Company or any of its affiliates for
the purpose of diverting any existing or future Major Business
Activities of such customers to a competing source; (iii) contact or
solicit any employees of the Company or any of its affiliates, for the
purpose of causing, inviting or encouraging any such employee to alter
or terminate his, her or its employment relationship with the Company
or its affiliates; or (iv) willfully make any public statement or
perform or do any other act that disparages or is prejudicial or
injurious to the reputation or goodwill, or otherwise interfere with
the business of the Company, or any of its affiliates. For purposes of
this Agreement "Major Business Activities" means oil and gas
production and exploration activities in the Wattenberg Field of the
Denver-Julesburg Basin in the State of Colorado.
7. ASSIGNMENT. The rights and obligations of the parties under this Agreement
shall be binding upon and inure to the benefit of their respective
successors, assigns, executors, administrators and heirs.
8. MISCELLANEOUS.
a. COMPLETE AGREEMENT. This supersedes all other agreements between the
parties to the extent and only to the extent of provisions in any
other agreement that are less favorable to the Employee than the
provisions contained in this Agreement.
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b. MODIFICATION, AMENDMENT, WAIVER. No modification, amendment or waiver
of any provisions of this Agreement shall be effective unless approved
in writing by both parties. The failure at any time to enforce any of
the provisions of this Agreement shall in no way be construed as a
waiver of such provisions and shall not affect the right of either
party thereafter to enforce each and every provision hereof in
accordance with its terms.
c. GOVERNING LAW; JURISDICTION. This Agreement shall be construed in
accordance with the laws of the state where Employee resides at the
time of termination. For the purposes of any legal action, the
Employee and the Company hereby submits to the jurisdiction of and
proper venue in (i) the state court of general jurisdiction located in
the county where the Company maintains its primary office in the state
in which the Employee resides at the time of termination; or (ii) the
United States District Court in the District where the Company
maintains its primary office in the state in which the Employee
resides at the time of termination.
d. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be held
to be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or
the remaining provisions of this Agreement.
e. ATTORNEYS' FEES. In the event the Employee undertakes litigation to
enforce this Agreement and prevails upon any material issue, the
Employee shall be entitled to reimbursement of its reasonable
attorneys' fees and costs of suit in addition to such other relief as
may be granted.
f. NOTICES. All notices and other communications under this Agreement
(including notice of a change of address for purposes of this
Agreement) shall be in writing and shall be given in person or by
first class mail, certified or registered with return receipt
requested, and shall be deemed to have been duly given when delivered
personally or upon receipt to the persons named below:
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If to the Company:
HS Resources, Inc.
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Chief Executive Officer
with a copy to:
HS Resources, Inc.
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: General Counsel
If to the Employee:
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g. ACKNOWLEDGMENT. The Employee acknowledges that he is voluntarily
executing this Agreement after having had full opportunity to consult
with legal counsel and without being pressured or influenced by any
statement or representation of any person acting on behalf of the
Company including the officers, agents and attorneys for the Company.
9. NO TERMINATION BY MERGER, TRANSFER OF ASSETS OR DISSOLUTION. This Agreement
shall not be terminated by any voluntary or involuntary dissolution of the
Company or the transfer of all or substantially all the assets of the
Company or the merger of the Company with or into another entity. The
Company shall not enter into any such transaction without the other party
to the transaction expressly agreeing in writing to assume all of the
duties and obligations of Company hereunder.
10. REMEDIES. The parties acknowledge that the other party would be greatly
injured by, and have no adequate remedy at law for, breach of duties under
Sections 5, 6, 9 and 10 of this Agreement. The parties therefore consent
that if such breach occurs or is threatened, the non-breaching party may,
as appropriate and in addition to all other then available remedies, enjoin
the breaching party (or the party threatening to breach) from such breach
or threatened breach or may obtain other equitable relief requiring the
other party to perform its obligations hereunder.
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11. AMENDMENTS VOID UPON CERTAIN EVENTS. The parties acknowledge that (i) this
agreement supersedes and replaces the prior Severance Agreement between
them and (ii) certain changes in their relationship, if made in
contemplation of a merger transaction, may prevent the Company from
completing such transaction utilizing the pooling method of accounting (a
"Pooling Transaction"). The parties declare and represent to each other
that neither is aware of any offer or contemplated merger transaction.
Nevertheless, in order that the Company be afforded the greatest amount of
protection from the loss of an opportunity to undertake a Pooling
Transaction, the parties agree that the provisions of this Agreement, to
the extent they modify the prior Severance Agreement and would prevent a
Pooling Transaction because deemed in the opinion of the Company's
independent accountants to be in contemplation of such a Pooling
Transaction, shall be void. If the provisions of the foregoing sentence
become effective, the Company shall use its best efforts to preserve for
the Employee the intended benefits of this Agreement, and shall make any
payments, take any positions or otherwise act or refrain from acting or
shall restructure the provisions of this Agreement as requested by the
Employee so as to preserve to the maximum extent possible such intended
benefits for the Employee in the context of a Pooling Transaction.
IN WITNESS WHEREOF, the parties have executed this Severance Agreement as
of the day and year first above written.
COMPANY:
HS RESOURCES, INC., a Delaware corporation
By:_________________________________________
Xxxxxxxx X. Xxxxxx
Chief Executive Officer and Chairman
EMPLOYEE:
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