Exhibit 10.14
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Employment
Agreement
This Employment Agreement (the
“Agreement”) is made and entered into this 31st day of
December, 2008, effective as of January 1, 2008, by and between
Petroleum Development Corporation, a Nevada Corporation (the
“Company”), and Darwin L. Stump (the
“Employee”).
WHEREAS, the Company employs the Employee as
Chief Accounting Officer to perform the duties and services
incident to such position for the Company, and the Employee 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 will be January 1, 2008 (the
“Effective Date”), and the initial term will 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 will be
extended for an additional twelve (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., will be the
“Term.”
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Change of
Control . In
the event of a Change of Control, the Term of this Agreement will
automatically be extended to the date that is twenty-four (24)
months after the date of the Change of Control without any action
on the part of the Company or the Employee. Thereafter,
the date of the Change of Control will be treated as the Effective
Date for purposes of further automatic 12-month extensions of the
Agreement under this section. "Change of Control" of the
Company will occur on the earliest of the following
events:
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Change in
Ownership : A change in
ownership of the Company occurs on the date that any one person, or
more than one person acting as a group, acquires ownership of stock
of the Company that, together with stock held by such person or
group, constitutes more than 50% of the total fair market value or
total voting power of the stock of the Company, excluding the
acquisition of additional stock by a person or more than one person
acting as a
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group who is
considered to own more than 50% of the total fair market value or
total voting power of the stock of the Company.
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Change in
Effective Control : A
change in effective control of the Company occurs on the date that
either:
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Any one person,
or more than one person acting as a group, acquires (or has
acquired during the 12-month period ending on the date of the most
recent acquisition by such person or persons) ownership of stock of
the Company possessing 30% or more of the total voting power of the
stock of the Company; or
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A majority of
the members of the Board of Directors of the Company (the
“Board”) is replaced during any 12-month period by
directors whose appointment or election is not endorsed by a
majority of the members of the board of directors prior to the date
of the appointment or election; provided, that this paragraph (B)
will apply only to the Company if no other corporation is a
majority shareholder.
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Change in
Ownership of Substantial Assets : A change in the ownership of a substantial
portion of the Company's assets occurs on the date that any one
person, or more than one person acting as a group, acquires (or has
acquired during the 12-month period ending on the date of the most
recent acquisition by such person or persons) assets from the
Company that have a total gross fair market value equal to or more
than 40% of the total gross fair market value of the assets of the
Company immediately prior to such acquisition or acquisitions. For
this purpose, “gross fair market value” means the value
of the assets of the Company, or the value of the assets being
disposed of, determined without regard to any liabilities
associated with such assets.
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It is the
intent that this definition be construed consistent with the
definition of “Change of Control” as defined under
Internal Revenue Code Section 409A and the applicable Treasury
Regulations, as amended from time to time.
The place of
employment will be the Company’s headquarters building in
Bridgeport, West Virginia unless the Employee and the Company agree
to an alternative location.
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Position and
Responsibilities
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Position . The Employee shall serve as
the Chief Accounting Officer of the Company and shall report to the
Chief Financial Officer of the
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Company
and be under the general direction and control of the Chief
Financial Officer of the Company.
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Responsibilities . The Employee will 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. The Employee shall
perform such managerial duties and responsibilities for the Company
as may be reasonably be assigned to him by the Chief Financial
Officer of the Company and, at no additional compensation, shall
serve on 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
Financial Officer of the Company may from time to time
determine.
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Dedication
of Professional Services . The Employee shall devote
substantially all of his 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 his position with the
Company. Employee 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; provided, however, that this
restriction will not be construed as preventing Employee from
investing his or her 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 Employee in the operation of the
affairs of the business in which such investment is made and in
which his participation is solely that of a passive
investor.
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Adherence to
Standards . Employee shall comply with the
written policies, standards, rules and regulations of the Company
from time to time established for all executive officers of the
Company consistent with Employee's position and level of
authority.
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Minimum
Stock Ownership . Employee shall comply with the
minimum stock ownership requirements for executive officers of the
Company by March 9, 2009 (the fifth anniversary of the date such
minimum stock ownership requirements were adopted by the Board) and
until his Termination Date, Employees shall have a minimum stock
ownership equal to two (2) times the Employee’s Base Salary,
as defined in Section 4.a. (or such level as adjusted from time to
time).
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Base
Salary . The
Company shall pay the Employee an annual base salary of $227,500
(the “Base Salary”) commencing on the Effective Date
and ending on the Termination Date. The Base Salary will
be payable in accordance with the ordinary payroll practices of the
Company. The Compensation Committee shall review the
Base Salary annually, and the Base Salary may be changed by the
Compensation Committee in its sole discretion, taking into account
the base salaries, aggregate annual cash compensation, and other
compensation of individuals holding similar positions at other
comparable companies and the performance of the Employee and the
Company.
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Performance
Bonus . In
addition to his Base Salary, the Employee will be eligible to earn
an annual performance bonus (the “Bonus”) during the
Term as determined by the Compensation Committee in its sole
discretion. The Bonus shall be paid in cash no later
than March 15 of the following year.
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Retirement
Compensation . Pursuant to prior employment
agreements, the Employee, as of the Effective Date has earned a
right to ten (10) annual payments of $30,000 (total
$300,000). For each additional complete year of
employment with the Company, commencing on January 1, 2008 the
Employee will earn and be entitled to receive an annual retirement
payment equal to $7,500 (the “Retirement
Payment”). The Retirement Payment will be payable
to the Employee, or in the event of the Employee’s death, to
his estate, beneficiaries, or designees, on each of the first ten
anniversary dates following the date the Employee leaves the
service of the Company. The Retirement Payment will be
in addition to any deferred compensation, pension, or other
payments the Employee has earned under this and any other previous
and subsequent agreements with the Company and any other payments
he may be due under the Company’s employee benefit
plans.
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Equity
Compensation Grant . In addition to cash compensation,
the Employee will be eligible to earn equity compensation during
the Term. The amounts and form of all equity
compensation awards shall be determined at the sole discretion of
the Board or its designee and only in accordance with shareholder
approved stock compensation plans.
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Other
Compensation . The Employee will 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
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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.b. 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 the Employee with coverage
under all employee pension and welfare benefit programs, plans and
practices commensurate with his positions in the Company and to the
extent permitted under the respective employee benefit
plan.
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Vacation . The Employee will be entitled to
twenty (20) days of paid vacation in each calendar year, to be
taken at such times as is reasonably determined by the Employee to
be consistent with the Employee’s responsibilities under this
Agreement.
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Expense
Reimbursement . The Employee is authorized to incur
reasonable expenses in carrying out his duties and responsibilities
under this Agreement, including, without limitation, expenses
related to travel, meals, entertaining, and similar items related
to such duties and responsibilities. The Company shall
reimburse the Employee for all such expenses on presentation by
Employee from time to time of appropriately itemized and approved
(consistent with the Company’s policy) accounts of such
expenditures. The Company shall reimburse the Employee
for reasonable dues and expenses of membership in such club or
clubs as the Board reasonably deems necessary for the Employee to
entertain on behalf of the Company and for costs associated with
continuing education and professional dues if approved in advance
by the Chief Financial Officer and Treasurer of the
Company. All expense reimbursements for a calendar year
will be paid in the normal course, but no later than March 15 of
the following calendar year.
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Life and
Disability Insurance . The Company will reimburse the
Employee for the cost of life insurance on the Employee in the face
amount of one million dollars ($1,000,000) with a person or persons
named by the Employee as either the owner or the beneficiary as the
Employee directs, and for the cost of the Employee's current
disability policy with scheduled adjustments. All
reimbursements for a calendar year will be paid in the normal
course, but no later than March 15 of the following calendar
year.
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Health
Insurance . The Company agrees that it will
include the Employee under any hospital, surgical, or group health
plan or policy adopted generally for the benefit of its
employees. The payment of the premiums for the Employee
and his dependents will be determined in accordance with the rules
and regulations adopted by the Company for its
employees. In addition to including the Employee and his
dependents in such plan, the Company shall pay all reasonable
hospital, surgical, medical, dental, and prescription expenses of
the Employee and his dependents not covered by such a
plan. In the event the Company has no group health plan,
the Company agrees to pay all reasonable premiums on any health
insurance policy obtained by the Employee to provide such
coverage.
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Automobile . During the Term, the Employee will
be entitled to use of a Company automobile or payment of a car
allowance in accordance with a plan approved by the Board or its
designee.
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Confidential
Material and Employee Obligations .
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Confidential
Material . The
Employee shall not, directly or indirectly, either during the Term
or thereafter, disclose to anyone (except in the regular course of
the Company's business or as required by law), or use in any
manner, any information acquired by the Employee during his
employment by the Company with respect to any clients or customers
of the Company or any confidential, proprietary or secret aspect of
the Company's operations or affairs unless such information has
become public knowledge other than by reason of actions, direct or
indirect, of the Employee. Information subject to the provisions of
this paragraph will include, without limitation:
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Brokers,
broker/dealer firms, law firms used to prepare Company and
partnership registration statements, due diligence investigations,
or other parties involved with the registration, review, or
offering of the Company’s securities and drilling
programs;
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Names,
addresses, and other information regarding investors in the
Company’s drilling programs;
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Names,
addresses and other information regarding investors who participate
with the Company in the drilling, completion or operation of oil
and gas wells as joint venture partners, working interest owners,
or in any other form of ownership;
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Lists of or
information about personnel seeking employment with or who are
currently employed by the Company;
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Maps, logs,
drilling reports and any other information regarding past, planned
or possible future leasing, drilling, acquisition, or
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other
operations that the Company has completed or is investigating or
has investigated for possible inclusion in future
activities;
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Any other
information or contacts relating to the Company's drilling,
development, fund-raising, purchasing, engineering, marketing,
merchandising, and selling activities.
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Return of
Confidential Material . All maps, logs, data, drawings and
other records, electronic data and written material prepared or
compiled by the Employee or furnished to the Employee during the
Term will be the sole and exclusive property of the Company and
none of such material may be retained by the Employee upon
termination of his employment. Notwithstanding the
foregoing, the Employee will be under no obligation to return
public information.
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Non-Compete . The Employee shall not directly,
either during the Term or for a period of one (1) year thereafter,
engage in any Competitive Business in West Virginia, Pennsylvania,
Colorado, Utah, Wyoming, North Dakota, Michigan, Ohio, Kentucky,
Texas and Tennessee; provided, however, that the ownership of less
than five percent (5%) of the outstanding capital stock of a
corporation whose shares are traded on a national securities
exchange or on the over-the-counter market shall not be deemed
engaging any Competitive Business. "Competitive
Business" shall mean the oil and natural gas industry, including
oil and gas leasing, drilling, and other operations, syndication
and marketing of partnership or other investments related to oil
and natural gas operations, or any other b
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