Exhibit 10.13
GASTAR EXPLORATION,
LTD.
EMPLOYEE CHANGE OF
CONTROL
SEVERANCE PLAN
The GASTAR EXPLORATION, LTD.
EMPLOYEE CHANGE OF CONTROL SEVERANCE PLAN (the
“Plan”) is hereby adopted effective as of
March 23, 2007 pursuant to the authorization of the Board of
Directors of GASTAR EXPLORATION, LTD. (the
“Company”). The Plan has been established to provide
financial security to Covered Employees in the event of a Change of
Control.
I.
DEFINITIONS AND
CONSTRUCTION
1.1 Definitions
. Where the following
words and phrases appear in the Plan, they shall have the
respective meanings set forth below, unless their context clearly
indicates to the contrary.
“Affiliate” shall mean with respect to any person or entity,
any entity, directly or indirectly, controlled by, controlling or
under common control with such person or entity.
“Annual
Pay” shall mean the
amount a Covered Employee is entitled to receive as wages or salary
on an annualized basis (including overtime), calculated immediately
prior to a Change of Control or, if greater, at any time
thereafter.
“Annual Target
Bonus” shall mean a
certain percentage (a “Bonus Target”) of a Covered
Employee’s Annual Pay. The specific percentage applicable to
a Covered Employee or class of Covered Employees is set forth in
Schedule A of this Plan.
“Board”
shall mean the Board of Directors or
Managers, as the case may be, of the Company or its
successor.
“Cause”
shall mean a termination of
employment of a Covered Employee evidenced by a resolution adopted
in good faith by 2/3 of the Committee that a Covered Employee:
(1) willfully and continually failed to substantially perform
his duties with the Employer (other than a failure resulting from
the Covered Employee’s incapacity due to physical or mental
illness), which failure continued for a period of at least 30 days
after a written notice of demand for substantial performance was
delivered to the Covered Employee specifying the manner in which
the Covered Employee has failed to substantially perform, or
(2) willfully engaged in conduct that is demonstrably and
materially injurious to the Employer and its Affiliates
collectively, monetarily or otherwise.
“Change of
Control” shall mean
the occurrence of any of the following events:
(1) the consummation of any
transaction (including without limitation, any merger,
consolidation, tender offer, or exchange offer) the result of which
is that any individual, entity, group or “person” (as
such term is used in Sections 13(d)(3) and 14(d)(2), of the
Securities Exchange Act of 1934 (the “Exchange Act”)),
other than the Company, a subsidiary or an employee benefit plan of
either, becomes the “beneficial owner” (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act),
directly or indirectly, of stock and/or securities of the Company
representing 50% or more of the combined voting power of the
Company’s then outstanding voting securities;
(2) a change in the composition of
the Board, as a result of which fewer than a majority of the
directors are Incumbent Directors. “Incumbent
Directors” shall mean directors who either (A) are
directors as of the effective date of this Plan, or (B) are
elected, appointed or nominated for election, thereafter to the
Board with the affirmative votes of at least a majority of the
Incumbent Directors at the time of such election, appointment or
nomination, provided that for purposes of this clause (B), in the
absence of evidence of affirmative votes of at least one-half of
such Incumbent Directors opposing the nomination of such director,
the nomination as director shall be
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deemed approved by the affirmative vote of a
majority of Incumbent Directors at the time of such nomination, if
such director is duly elected by shareholders of the Company after
being included as a nominee for director in a proxy statement or
consent solicitation prepared by Company management and distributed
to shareholders for such purpose, but “Incumbent
Director” shall not include an individual whose election or
nomination is in connection with (i) an actual or threatened
election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Securities Exchange Act of
1934) or an actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board or
(ii) a plan or agreement to replace a majority of the then
Incumbent Directors;
(3) the consummation of the sale,
lease, transfer, conveyance or other disposition (including by
merger or consolidation) in one or a series of related
transactions, of all or substantially all of the assets of the
Company and its subsidiaries, taken as a whole (other than to an
entity wholly owned, directly or indirectly, by the Company),
unless, following such transaction all or substantially all of the
persons who were the beneficial owners of the outstanding voting
stock and securities of the Company immediately prior to such
transaction beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding voting stock and securities
of the entity resulting from such transaction in substantially the
same proportions as immediately prior to such transaction;
or
(4) the adoption by the Board of a
plan relating to the liquidation or dissolution of the
Company.
“Code”
shall mean the Internal Revenue Code
of 1986, as amended.
“Committee” shall mean the Board; however, the Board may
delegate all or part of its authority as it may choose to any
committee of the Board or to any officer of the Company.
“Covered
Employee” shall
mean any individual who, immediately prior to the Change of
Control, is a regular employee of the Employer who is normally
scheduled to work 30 or more hours per week, other than any
individual who is, or is treated by the Company as, being a
consultant, independent contractor or part-time
employee.
“Effective
Date” shall mean
the date this Plan is approved by the Board.
“Employer”
shall mean the Company, Gastar
Exploration Texas LP, and each eligible entity designated as an
Employer in accordance with the provisions of Section 4.4 of
the Plan.
“ERISA”
shall mean the Employee Retirement
Income Security Act of 1974, as amended.
“Good
Reason” shall mean
the occurrence of any of the following events or conditions on or
following a Change of Control:
(1) the Employer’s requiring
the Covered Employee (without the consent of the Covered Employee)
to be based at any place outside a 35-mile radius of his place of
employment immediately prior to the Change of Control, except for
reasonably required travel on the Employer’s business that is
not materially greater than such travel requirements prior to the
Change of Control;
(2) a reduction in the Covered
Employee’s annual base salary or a material reduction in the
benefits provided to the Covered Employee immediately prior to the
Change of Control;
(3) any material breach by the
Company of any provision of this Plan;
(4) any purported termination of the
Covered Employee’s employment for Cause by the Employer that
does not otherwise comply with the terms of this Plan;
or
(5) a change in the Covered
Employee’s position or responsibilities that represents a
substantial reduction of the Covered Employee’s
responsibilities immediately prior thereto, except in connection
with the
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termination of the Covered Employee’s
employment for Cause, Permanent Disability, as a result of his
death, or by the Covered Employee other than for Good
Reason.
Notwithstanding the foregoing or
anything to the contrary contained herein, any event described in
the above clauses (1) through (5) that occurs prior to a
Change of Control (“Potential Good Reason Event”) and
the Covered Employee reasonably demonstrates was at the request of
a third party who had indicated an intention or taken steps
reasonably calculated to effect a Change of Control and who
effectuates a Change of Control within six months following such
event, shall constitute Good Reason for purposes of this Agreement
notwithstanding that it occurred prior to the Change of Control.
Further, any Potential Good Reason Event that occurs on or
subsequent to the execution of an agreement providing for a
transaction or transactions that if consummated would constitute a
Change of Control shall constitute a Good Reason if such Change of
Control is consummated within six months of such event.
“Involuntary
Termination” shall
mean any termination of the Covered Employee’s employment
with the Employer that occurs on or within two years following a
Change of Control, and which:
(1) does not result from a voluntary
resignation by the Covered Employee (other than a resignation
pursuant to clause (2) of this definition); or
(2) results from a resignation by a
Covered Employee for Good Reason; but
(3) the term ‘Involuntary
Termination’ shall not include: (A) a termination by
the Employer for Cause; (B) any termination as a result of a
Covered Employee’s death or Permanent Disability; or
(C) any termination as a result of a Covered Employee
declining to accept an offer of comparable employment from a
successor employer. For purposes of clause (C), “comparable
employment” shall mean employment that would not allow for a
termination of employment based on Good Reason for the Covered
Employee.
Notwithstanding the foregoing or
anything herein to the contrary, in the event that the employment
of a Covered Employee is terminated for a Potential Good Reason
Event within six months prior to a Change of Control, then for
purposes of this Plan the date of the Change of Control with
respect to that Covered Employee shall be deemed to be the date
immediately prior to the Covered Employee’s Termination
Date.
“Permanent
Disability” shall
mean that a physician selected or approved by the Chief Executive
Officer of the Company finds a Covered Employee, upon the basis of
medical evidence satisfactory to him, to be totally disabled,
whether due to physical or mental condition, so as to be prevented
from engaging in further employment by the Employer and that such
disability will be permanent and continuous during the remainder of
his life; provided, that no Covered Employee shall be deemed to
have become permanently disabled unless prior to the determination
by such physician, the Covered Employee has been determined to
qualify for long-term disability benefits under an applicable
long-term disability benefit plan of the Employer.
“Release”
shall mean a general release,
substantially in the form of Attachment 1, which is attached
hereto, from the Eligible Employee that releases the Company and
its Affiliates from employment related claims.
“Severance
Period” the period
of years set forth in Appendix A of this Plan for each Covered
Employee or class of Covered Employees.
“Termination
Date” shall mean
the date of the termination of a Covered Employee’s
employment with the Employer as determined in accordance with
Article III.
1.2 Number and Gender
. Wherever appropriate
herein, words used in the singular shall be considered to include
the plural and the plural to include the singular. The masculine
gender, where appearing in this Plan, shall be deemed to include
the feminine gender.
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1.3 Headings .
The headings of Articles and
Sections herein are included solely for convenience, and if there
is any conflict between such headings and the text of the Plan, the
text will control.
II.
CHANGE OF CONTROL SEVERANCE
BENEFITS
2.1 Severance Payments
. Subject to the further
provisions of this Article II and Section 4.12 hereof, if a
Covered Employee incurs an Involuntary
