Exhibit 10.12
Employment
Agreement
This Employment Agreement (the
“Agreement”) is made and entered into
this 31st day of December, 2008 by and between Petroleum
Development Corporation, a Nevada Corporation (the
“Company”), and Barton R. Brookman (
“Brookman”).
WHEREAS, the Company wishes to
employ Brookman as Senior Vice President of Exploration and
Production and to perform the duties and services incident to such
position for the Company, and Brookman wishes to be so employed by
the Company, all upon the terms and conditions set forth in this
Agreement;
NOW THEREFORE, in consideration of
the premises and mutual covenants and obligations set forth herein
and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged and accepted, the
parties hereto, intending to be legally bound, agree as
follows:
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Initial
Term. The
effective date of this Agreement shall be January 1, 2008 (the
“Effective Date”), and the initial term shall be for
the period beginning on the Effective Date and ending December 31,
2009.
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Automatic
Extensions. The Term of this Agreement shall be
extended for an additional 12 months beginning on December 31, 2008
and on each successive December 31 unless either party provides the
other with at least thirty (30) days prior written notice, or
unless the contract has been terminated by the parties in
accordance with the provisions of Section 7 of this
Agreement. The period of time from the Effective Date
until the Termination Date, as defined in Section 7.b., shall be
the “Term.”
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The place of employment shall be
the Company’s offices in Denver, Colorado, unless Brookman
and the Company mutually agree to an alternative
location. Brookman acknowledges that there may be
substantial business travel associated with Brookman’s
position.
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Position and
Responsibilities
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Position. Brookman shall serve as Senior Vice
President of Exploration and Production of the Company and shall
initially report to the Chief Executive Officer of the Company (the
“Chief Executive Officer”) and be under the general
direction and control of the Chief Executive Officer.
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Responsibilities. Brookman shall have obligations,
duties, authority and power to do such acts as are customarily done
by a person holding the same or an equivalent position in
corporations of similar size to the Company. Brookman
shall perform such managerial duties and
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responsibilities for the Company as may be
reasonably be assigned to him by the Chief Executive Officer and,
at no additional compensation, if requested, shall serve
on the Board of Directors of the Company (the "Board") and in other
such positions with any subsidiary corporation of the Company, or
any partnership, limited liability company or other entity in which
the Company has an interest (herein collectively called
“Affiliates”), as the Chief Executive Officer may from
time to time determine.
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Dedication
of Professional Services. Brookman shall devote substantially
all of Brookman’s business time, best efforts and attention
to promote and advance the business of the Company and its
Affiliates to perform diligently and faithfully all the duties,
responsibilities and obligations of Brookman’s position with
the Company. Brookman shall not be employed in any other
business activity, other than with the Company and its Affiliates,
during the Term, whether or not such activity is pursued for gain,
profit or other pecuniary advantage without approval by the
Compensation Committee of the Board (the “Compensation
Committee”); provided, however, that this restriction shall
not be construed as preventing Brookman from investing
Brookman’s personal assets in a business which does not
compete with the Company or its Affiliates, where the form or
manner of such investment will not require services of any
significance on the part of Brookman in the operation of the
affairs of the business in which such investment is made and in
which Brookman’s participation is solely that of a passive
investor.
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Adherence to
Standards. Brookman shall comply with the
written policies, standards, rules and regulations of the Company
from time to time established for all employees or executive
officers of the Company consistent with Brookman's position and
level of authority.
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Minimum
Stock Ownership. Brookman shall comply with the
Company’s minimum stock ownership requirements for officers
(other than the Chief Executive Officer) such requirements being
that by the fifth anniversary of the date that Brookman became
Senior Vice President of Exploration and Production and until
Brookman’s Termination Date, Brookman shall maintain a
minimum stock ownership equal to two times Brookman’s Base
Salary, as defined in Section 4.a.
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Base
Salary. The
Company shall pay Brookman an annual base salary of $250,000 (the
“Base Salary”) commencing on the Effective Date and
ending on the Termination Date. The Base Salary shall be
payable in accordance with the ordinary payroll practices of the
Company. The Base Salary shall be reviewed annually by
the Compensation Committee and may be changed by the Compensation
Committee in its sole discretion,
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taking into
account the base salaries, aggregate annual cash compensation, and
other compensation of individuals holding similar positions at
other comparable companies, the performance of Brookman and the
Company, and other relevant factors.
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Succession-Related Grant.
On the date that
Brookman assumes the position of Senior Vice President of
Exploration and Production of the Company, Brookman will receive a
one-time award of restricted stock equal in value to
$250,000. For this purpose, the value of the restricted
stock will be determined by the Company’s compensation
consultants and will be based on the average closing price of the
stock of the Company for the month of December,
2007. The restricted stock will vest at the rate of 20%
for each complete year worked by Brookman under this Agreement,
beginning from the Effective Date.
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Performance
Bonus. Brookman shall be eligible to earn
an annual performance bonus (the “Bonus”) during the
Term based on criteria established by the Compensation Committee in
its sole discretion each year.
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Special
Restricted Stock Grant. Brookman shall receive a grant of
one thousand five hundred shares of restricted stock of the Company
on January 1, 2009. The restricted stock will vest on
January 1, 2010, provided Brookman is then in the employ of the
Company.
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Equity
Compensation Grant. As a long term incentive, on the
Effective Date under the Company’s Long-Term Equity
Compensation Plan, Brookman shall participate in any equity
compensation program provided to all executive officers, based on
criteria established by the Compensation Committee in its sole
discretion each year.
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Other
Compensation. Brookman shall continue to be
eligible to participate in all other cash or stock compensation
plans or programs maintained by the Company, as in effect from time
to time, in which other senior executives of the Company are
allowed to participate.
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Recoupment
of Certain Compensation. If the Company has to restate all or
a portion of its financial statements due to the material
noncompliance of the Company with any financial reporting
requirement under the securities laws, the Employee shall, for the
affected years, reimburse the Company for any excess bonus paid to
the Employee pursuant to Section 4.c. The reimbursements
shall be equal to the difference between the bonus paid to him for
the affected years and the bonus that would have been paid to the
Employee had the financial results been properly reported. Such
reimbursement shall be paid to the Company within ninety days after
the Company notifies the Employee of the amount owed to the
Company.
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Participation in Company Benefit
Plans. During
the Term, the Company shall provide Brookman with coverage under
all employee pension and welfare benefit programs, plans and
practices commensurate with Brookman’s positions in the
Company and to the extent permitted under the respective employee
benefit plan.
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Vacation. Brookman will be entitled to four
(4) weeks of paid vacation in each calendar year, to be taken at
such times as is reasonably determined by Brookman to be consistent
with Brookman’s responsibilities under this Agreement and the
Company’s vacation policy applicable to all
employees.
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Automobile. During the Term, Brookman shall be
entitled to an annual automobile allowance as approved by the
Compensation Committee and updated from time to time at its
discretion.
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Confidential
Information. Brookman hereby acknowledges that in
connection with Brookman’s employment by the Company,
Brookman will be exposed to and may obtain certain Confidential
Information (as defined below) (including, without limitation,
procedures, memoranda, notes, records and customer and supplier
lists whether such information has been or is made, developed or
compiled by Brookman or otherwise has been or is made available to
him) regarding the business and operations of the Company and its
subsidiaries or affiliates. Brookman further
acknowledges that such Confidential Information is unique,
valuable, considered trade secrets and deemed proprietary by the
Company. For purposes of the Agreement,
“Confidential Information” includes, without
limitation, any information heretofore or hereafter acquired,
developed or used by any of the Company or their direct or indirect
subsidiaries relating to Business Opportunities or Intellectual
Property or other geological, geophysical, economic, financial or
management aspects of the business, operations, properties or
prospects of the Company or their direct or indirect subsidiaries,
whether oral or in written form (including
electronic). Brookman agrees that all Confidential
Information is and will remain the property of the Company or their
direct or indirect subsidiaries, as the case may
be. Brookman further agrees, except for disclosures
occurring in the good faith performance of Brookman’s duties
for the Company or their direct or indirect subsidiaries, during
the Term and for a period of three (3) years after the Termination
Date, to hold in the strictest confidence all Confidential
Information, and not to, directly or indirectly, duplicate, sell,
use, lease, commercialize, disclose or otherwise divulge to any
person or entity any portion of the Confidential Information or use
any Confidential Information, directly or
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indirectly, for
Brookman’s own benefit or profit or allow any person, entity
or third party, other than the Company or their direct or indirect
subsidiaries and authorized executives of the same, to use or
otherwise gain access to any Confidential
Information. Brookman will have no obligation under this
Agreement with respect to any information that becomes generally
available to the public other than as a result of a disclosure by
Brookman or Brookman’s agent or other representative or
becomes available to Brookman on a non-confidential basis from a
source other than the Company or their direct or indirect
subsidiaries. Further, Brookman will have no obligation
under this Agreement to keep confidential any of the Confidential
Information to the extent that a disclosure of it is required by
law or is consented to by the Company; provided, however, that if
and when such a disclosure is required by law, Brookman promptly
will provide the Company with notice of such requirement, so that
the Company may seek an appropriate protective order.
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Return of
Property. Brookman agrees to deliver promptly
to the Company, upon termination of Brookman’s employment
hereunder, or at any other time when the Company so requests, all
documents and property relating to the business of the Company or
their direct or indirect subsidiaries, including without
limitation: all geological and geophysical reports and related data
such as maps, charts, logs, seismographs, seismic records and other
reports and related data, calculations, summaries, memoranda and
opinions relating to the foregoing, production records, electric
logs, core data, pressure data, lease files, well files and
records, land files, abstracts, title opinions, title or curative
matters, contract files, notes, records, drawings, manuals,
correspondence, financial and accounting information, customer
lists, statistical data and compilations, patents, copyrights,
trademarks, trade names, inventions, formulae, methods, processes,
agreements, contracts, manuals, electronic data, or any
documents, whether written or digital and whether
prepared or compiled by Brookman or furnished to Brookman during
the Term, relating to the business of the Company or their direct
or indirect subsidiaries and all copies thereof and therefrom;
provided, however, that Brookman will be permitted to retain copies
of any documents or materials of a personal nature or otherwise
related to Brookman’s rights under this Agreement. The
aforementioned materials include materials on Brookman’s
personal computers, which materials shall be destroyed in a manner
satisfactory to the Company.
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Non-Compete
Obligations During Employment Term. Brookman agrees that
during the Term:
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Brookman will
not, other than through the Company, engage or participate in any
manner, whether directly or indirectly through any family member or
as an employee, employer, consultant, agent, principal, partner,
more than one percent shareholder, officer, director, licensor,
lender, lessor or in any other individual or representative
capacity, in any business or activity which is engaged in leasing,
acquiring, exploring, producing, gathering or marketing
hydrocarbons and related products; provided that the foregoing
shall not be deemed to restrain the participation by
Brookman’s spouse in any capacity set forth above in any
business or activity engaged in any such activity and provided
further that the Company may, in good faith, take such reasonable
action with respect to Brookman’s performance of
Brookman’s duties, responsibilities and authorities as set
forth in this Agreement as it deems necessary and appropriate to
protect its legitimate business interests with respect to any
actual or apparent conflict of interest reasonably arising from or
out of the participation by Brookman’s spouse in any such
competitive business or activity; and
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all investments
made by Brookman (whether in Brookman’s own name or in the
name of any family members or other nominees or made by
Brookman’s controlled affiliates), which relate to the
leasing, acquisition, exploration, production, gathering or
marketing of hydrocarbons and related products will be made solely
through the Company; and Brookman will not (directly or indirectly
through any family members or other persons), and will not permit
any of Brookman’s controlled affiliates to: (1) invest or
otherwise participate alongside the Company or its direct or
indirect subsidiaries in any Business Opportunities, or (2) invest
or otherwise participate in any business or activity relating to a
Business Opportunity, regardless of whether any of the Company or
its direct or indirect subsidiaries ultimately participates in such
business or activity, in either case, except through the
Company. Notwithstanding the foregoing, nothing in this
Section 6 shall be deemed to prohibit Brookman or any family member
from owning, or otherwise having an interest in, less than one
percent (1%) of any publicly-
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owned entity or
three percent (3%) or less of any private equity fund or similar
investment fund that invests in any business or activity engaged in
any of the activities set forth above, provided that Brookman has
no active role with respect to any investment by such fund in any
entity.
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Non-Compete
Obligations After Termination Date. Brookman agrees that
Brookman will not engage or participate in any manner, whether
directly or indirectly through any family member or other person or
as an employee, employer, consultant, agent principal, partner,
more than one percent shareholder, officer, director, licensor,
lender, lessor or in any other individual or representative
capacity:
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during the
one-year period following the Termination Date, in any business or
activity which is engaged in leasing, acquiring, exploring,
producing, gathering or marketing hydrocarbons and related products
within (1) any county or parish in which the Company owns any oil
and gas interests or conducts operations on the Termination Date or
in which the Company has owned any oil and gas interests or
conducted operations at any time during the six months immediately
preceding the Termination Date or (2) any county or
parish adjacent to any county or parish described in clause (1);
and
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during the
two-year period following the Termination Date, in any business or
activity which is in direct competition with the business of the
Company or its direct or indirect subsidiaries in the leasing,
acquiring, exploring, producing, gathering or marketing of
hydrocarbons and related products within the boundaries of, or
within a two-mile radius of the boundaries of, any mineral property
interest of any of the Company or its direct or indirect
subsidiaries (including, without limitation, a mineral lease,
overriding royalty interest, production payment, net profits
interest, mineral fee interest or option or right to acquire any of
the foregoing, or an area of mutual interest as designated pursuant
to contractual agreements between the Company and any third party)
or any other property on which any of the Company or its direct or
indirect subsidiaries has an option, right, license or authority to
conduct or direct exploratory activities, such as three-dimensional
seismic acquisition or other seismic, geophysical and geochemical
activities (but not including any preliminary geological mapping),
as of the Termination Date or as of the end of the six-month period
following such Termination Date;
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provided
that, this subsection (ii) will not preclude Brookman from making
investments in securities of oil and gas companies which are
registered on a national stock exchange, if the aggregate amount
owned by Brookman and all family members and affiliates does not
exceed 5% of such company’s outstanding
securities.
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Notwithstanding
the foregoing, nothing in this Section 6.c. shall be deemed to
restrain the participation by Brookman’s spouse in any
capacity set forth above in any business or activity described
above.
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Non-Solicitation. During the Term and for a period of
twenty-four (24) months after the Termination Date, Brookman will
not, whether for Brookman’s own account or for the account of
any other person (other than the Company or its direct or indirect
subsidiaries), intentionally solicit, endeavor to entice away from
the Company or its direct or indirect subsidiaries, or otherwise
interfere with the relationship of the Company or its direct or
indirect subsidiaries with, (i) any person who is employed by the
Company or its direct or indirect subsidiaries (including any
independent sales representatives or organizations), or (ii) any
client or customer of the Company or its direct or indirect
subsidiaries.
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Assignment
of Developments. Brookman assigns and agrees to
assign without further compensation to the Company and its
successors, assigns or designees, all of Brookman’s right,
title and interest in and to all Business Opportunities and
Intellectual Property (as those terms are defined below), and
further acknowledges and agrees that all Business Opportunities and
Intellectual Property constitute the exclusive property of the
Company.
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For purposes of this Agreement,
“Business Opportunities” means all business ideas,
prospects, proposals or other opportunities pertaining to the
lease, acquisition, exploration, production, gathering or marketing
of hydrocarbons and related products and the exploration potential
of geographical areas on which hydrocarbon exploration prospects
are located, which are developed by Brookman during the Term, or
originated by any third party and brought to the attention of
Brookman during the Term, together with information relating
thereto (including, without limitation, geological and seismic data
and interpretations thereof, whether in the form of maps, charts,
logs, seismographs, calculations, summaries, memoranda, opinions or
other written or charted means).
For purposes of this Agreement,
“Intellectual Property” shall mean all ideas,
inventions, discoveries, processes, designs, methods, substances,
articles, computer programs and improvements (including, without
limitation, enhancements to, or further interpretation or
processing of,
information that was in the
possession of Brookman prior to the date of this Agreement),
whether or not patentable or copyrightable, which do not fall
within the definition of Business Opportunities, which Brookman
discovers, conceives, invents, creates or develops, alone or with
others, during the Term, if such discovery, conception, invention,
creation or development (i) occurs in the course of
Brookman’s employment with the Company, or (ii) occurs with
the use of any of the time, materials or facilities of the Company
or its direct or indirect subsidiaries, or (iii) in the good faith
judgment of the Board, relates or pertains in any material way to
the purposes, activities or affairs of the Company or its direct or
indirect subsidiaries.
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Injunctive
Relief. Brookman acknowledges that a breach
of any of the covenants contained in this Section 6 may result in
material, irreparable injury to the Company for which there is no
adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of such
a breach or threat of breach, the Company will be entitled to
obtain a temporary restraining order and/or a preliminary or
permanent injunction restraining Brookman from engaging in
activities prohibited by this Section 6 or such other relief as may
be required to specifically enforce any of the covenants in this
Section 6. To the extent that the Company seeks a
temporary restraining order (but not a preliminary or permanent
injunction), Brookman agrees that a temporary restraining order may
be obtained ex parte.
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Adjustment
of Covenants. The parties consider the covenants
and restrictions contained in this Section 6 to be
reasonable. However, if and when any such covenant or
restriction is found to be void or unenforceable and would have
been valid had some part of it been deleted or had its scope of
application been modified, such covenant or restriction will be
deemed to have been applied with such modification as would be
necessary and consistent with the intent of the parties to have
made it valid, enforceable and effective.
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Detrimental
Activities . If Brookman engages in any activity
that violates any covenant or restriction contained in this Section
6, in addition to any other remedy the Company may have at law or
in equity, (A) Brookman will be entitled to no further payments or
benefits from the Company under this Agreement or otherwise, except
for any payments or benefits required to be made or provided under
applicable law, (B) all unexercised stock options, restricted stock
and other forms of equity compensation held by or credited to
Brookman will terminate effective as of the date on which Brookman
engages in that activity, unless terminated sooner by operation of
another term or condition of this Agreement or
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other
applicable plans and agreements, and (C) any exercise, payment or
delivery pursuant to any equity compensation award that occurred
within one year prior to the date on which Brookman engages in that
activity may be rescinded within one year after the first date that
a majority of the members of the Board first became aware that
Brookman engaged in that activity. In the event of any
such rescission, Brookman will pay to the Company the amount of any
gain realized or payment received as a result of the rescinded
exercise, payment or delivery, in such manner and on such terms and
conditions as may be required.
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Right of
Set-Off . Brookman consents to a deduction
from any amounts the Company owes Brookman from time to time
(including amounts owed as wages or other compensation, fringe
benefits, or vacation pay, as well as any other amounts owed to
Brookman by the Company), to the extent of the amounts Brookman
owes the Company under Section 6 above. Whether or not
the Company elects to make any set-off in whole or in part, if the
Company does not recover
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