EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), is executed on January 11,
2006 to be effective as of January 1, 2006 (the "Effective Date"), by and
between Delta Petroleum Corporation, a Colorado corporation (hereafter
"Company") and Xxxxxxx X. Xxxxxxxx (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, General Counsel and Corporate Secretary 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 $240,000.00 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. As an inducement
to enter into this Agreement, Executive has been granted a Stock Award (as
such term is defined in the Change in Control Agreement) of 40,000 restricted
shares of the Company's Common Stock, ownership of which shall vest on the
third anniversary of the Effective Date.
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").
2
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."
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:
3
(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
"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
4
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
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
5
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.
(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
6
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 January 1, 2006, 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
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:
7
(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).
(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.
8
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.
(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.
9
(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 technical and business information, whether patentable or not,
10
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.
11
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
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
12
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 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
13
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 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
14
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
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.
15
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.
(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
16
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.
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.
17
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
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.
18
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.]
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/ Xxxxxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxx Name: Xxxxxxx X. Xxxxxxxx
Executive Vice President and
Chief Operating Officer
Date: 1/11/06 Date: 1/11/06
Address for Notices:
Xxxxxxx X. Xxxxxxxx
Delta Petroleum Corporation
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
ATTEST: COMPANY:
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxx
Title: Executive Assistant Its: Chairman / CEO
Name: Xxxx X. Xxxxx Name: Xxxxx X. Xxxxxx
Date: 1/11/06 Date: 1/11/06
Address for Notices:
Delta Petroleum Corporation
c/o Chairman of the Board
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
19
