This
Severance Agreement (this “Agreement”) is entered into
effective this 26 th day of May, 2009 (the “Effective
Date”), by and between Delta Petroleum Corporation
(“Delta” or “the Company”) and Roger A.
Parker (“Parker”). As used herein,
“Parties” means, collectively, Delta and Parker, and
“Party” means either Delta or Parker.
WHEREAS, Delta and
Parker are parties to that certain Employment Agreement dated
May 5, 2005 (the “Employment Agreement”), that
certain Change-In-Control Executive
Severance
Agreement dated April 30, 2007 (the “Change-In-Control
Agreement”) and various stock option agreements, stock rights
and other stock arrangements (the “Stock Agreements”);
and
WHEREAS, Delta and
Parker agree that as of the close of business on the Effective
Date, Parker has resigned from his positions as director, officer
and employee of Delta and any of its subsidiaries, including his
positions of Chairman and CEO; and
WHEREAS, in
consideration for Parker’s resignation, Parker is
(a) relinquishing all his rights in, to and under the
Employment Agreement, the Change-In-Control Agreement, the Stock
Agreements, all bonuses relating to past and pending transactions
benefiting Delta (except as expressly provided below) and any other
interests he might claim arising from his efforts as Chairman
and/or CEO, and (b) agreeing to stay on as a consultant on the
terms described herein to facilitate an orderly transition and to
assist in certain pending transactions and Delta desires to provide
the payments and other consideration specified herein.
NOW, THEREFORE, in
consideration of the provisions herein, and other good and valuable
consideration the receipt and sufficiency of which is hereby
acknowledged by Delta and Parker, the Parties agree as
follows:
1.
Resignation . Effective as of the close of business on the
Effective Date, Parker hereby resigns, and Delta accepts such
resignation, from all his positions as director, officer and
employee of Delta and any of its subsidiaries, including his
positions of Chairman and CEO.
2.
Consideration . Subject to Section 2(b), Delta agrees
to pay Parker $4,700,000 in cash (the “Cash
Consideration”), issue to Parker 1,000,000 shares of Delta
common stock (the “Shares”) and pay Parker the
aggregate of any accrued unpaid salary, vacation days and
reimbursement of his reasonable business expenses incurred through
the Effective Date (the “Accrued Amounts”).
(a)
Effective Date Consideration . On the ADEA Effective Date
(as defined below), Delta shall pay to Parker $1,811,892 of the
Cash Consideration plus the Accrued Amounts by wire transfer in
immediately available funds.
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(b) Rabbi
Trust Consideration . On the ADEA Effective Date, Delta shall
deposit (1) the Shares and (2) $2,888,108 of the Cash
Consideration (the “Trust Cash”) into a grantor trust
(the “Rabbi Trust”) established for the purpose of the
payment of benefits to Parker under this Agreement, in satisfaction
of the amounts payable under the Change-In-Control Agreement (which
the Parties agree is $4,588,108), to which Parker otherwise would
have been entitled upon a separation from service but for the
provisions of Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”), and its related guidance
(“Section 409A”). The trust agreement shall be
substantially similar to the model trust agreement provided by the
Internal Revenue Service in Revenue Procedure 92-64, modified as
necessary for Section 409A, and shall be reasonably acceptable
to Parker and Delta. Delta shall select the trustee for the Rabbi
Trust, which trustee must be reasonably acceptable to Parker, and
Delta shall pay all fees associated with the Rabbi Trust. The
Parties acknowledge and agree that any interest accrued on the
Trust Cash shall be deemed the property of Delta and paid by the
trustee to Delta. The Shares and the Trust Cash shall be
distributed to Parker on November 27, 2009, or the first
business day on or following the date that is six months after
Parker’s separation from service as determined in accordance
with Section 409A, if later (the “Trust Distribution
Date”). Delta’s obligations to pay benefits under this
Agreement shall continue to constitute an unfunded, unsecured
promise to pay until the Trust Distribution Date. Rabbi Trust
assets shall be subject to the claims of Delta creditors under
federal and state law in the event of Delta’s insolvency.
Rabbi Trust assets shall not, at any time, be located outside of
the United States or be transferred outside of the United
States.
(c)
Resale Registration . Delta, at its sole cost and expense,
shall prepare and file a registration statement on Form S-3, or
another appropriate form permitting registration of the Shares for
resale by Parker reasonably acceptable to Parker (the
“Registration Statement”) providing for the resale of
the Shares in accordance with Rule 415 of the Securities Act
from time to time by Parker within 30 days after the Effective
Date. Delta shall use its reasonable best efforts to cause the
Registration Statement to become effective on or before the Trust
Distribution Date, and to keep the Registration Statement
continuously effective until the end of the Effectiveness Period
(as defined below). If the Registration Statement covering resale
of the Shares ceases to be effective for any reason at any time
during the Effectiveness Period (other than because all securities
registered thereunder shall have been resold pursuant thereto),
Delta shall use its reasonable best efforts to obtain the prompt
withdrawal of any order suspending the effectiveness thereof. For
purposes of this Section 2, the “Effectiveness
Period” means the earlier of (i) the one year
anniversary of the Trust Distribution Date, or (ii) the date
on which all Shares held by Parker may be sold without restrictions
under Rule 144 promulgated under the Securities Act of 1933,
as amended (the “Securities Act”).
3.
Benefits . Delta shall provide or arrange to provide to
Parker as provided below any medical, prescription, dental,
disability, group life and accidental death insurance provided or
arranged by Delta or any of its subsidiaries (the “Welfare
Benefits”), at Delta’s sole expense and for a period of
36 months from the Effective Date (the “Benefit
Continuation Period”), Welfare Benefits that are
substantially the same as the Welfare Benefits provided to Parker
(and his spouse, dependents and beneficiaries) immediately before
the Effective Date, except that the Welfare Benefits to which
Parker is entitled under this Section 3 will be reduced to the
extent that comparable welfare benefits are received by Parker from
an employer other than Delta or its subsidiary during the Benefit
Continuation Period. Health insurance premiums and any
non-
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taxable benefit
shall be paid on Parker’s behalf as of the first day of each
month during the Benefit Continuation Period, and in no event shall
any such payment be made later than 30 days after the first
day of the month; provided that Parker makes a timely election to
receive such benefits under the Consolidated Omnibus Budget
Reconciliation Act of 1986, as amended (“COBRA”) to the
extent applicable; provided further that payments made after
December 31, 2009 shall be taxable to the extent necessary to
avoid the creation of a nondiscriminatory benefit under Section
105(h) of the Code. For any other Welfare Benefits, in lieu of
paying for such Welfare Benefits during the Benefit Continuation
Period and to the extent payment would be taxable, on the ADEA
Effective Date, Delta shall deposit into the Rabbi Trust an amount
equal to 36 times the excess of (i) the monthly premium
payable immediately prior to the Effective Date for such Welfare
Benefits substantially similar to those which Parker (and
Parker’s dependents) were receiving at such time, over
(ii) the aggregate monthly premiums(s) charged to Parker for
such coverage at such time, which amounts shall be paid to Parker
on the Trust Distribution Date. Payments or reimbursements for
Welfare Benefits in any taxable year shall not affect those payable
in any other taxable year. The fact that the cost of the
participation by Parker, or Parker’s spouse, dependents or
beneficiaries, in any plan for Welfare Benefits (a “Welfare
Benefit Plan”) was paid indirectly by Delta, as a
reimbursement or a credit to Parker, before the Effective Date does
not mean that the corresponding Welfare Benefits were not
“provided to Parker” by Delta for the purpose of this
Section 3.
(a) Parker
agrees to make himself reasonably available for consultation to
Delta’s Board of Directors for a period of six months from
the Effective Date (the “Consulting Service Term”). The
actual dates and time of availability shall be as the Parties
mutually agree in good faith. In no event shall Parker provide
services exceeding 20% of the average level of bona fide services
performed by Parker over the immediately preceding 36-month period.
It is the intent of both Parker and Delta that Parker’s
employment with Delta and its subsidiaries shall terminate as of
the Effective Date, and that the consulting services shall not
constitute a continuation of his employment. Parker shall be
reimbursed by Delta for all his out of pocket expenses incurred in
connection with performance of the consulting services. In
addition, during the Consulting Service Term, Delta shall continue
to pay Parker $1,600 per month for purposes of his car
lease.
(b) Parker
shall be an independent contractor, not an employee or agent of
Delta or any of its subsidiaries or affiliates. Other than as
expressly provided in this Agreement, neither Delta or any of its
affiliates shall be required to furnish Parker with any employee
benefits for which officers or employees of such entities are
eligible at any time.
(c) To the
extent Parker materially fails to perform his duties under this
Section 4 and such failure continues after written notice
detailing such failure and a reasonable time period within which to
cure such failure, Delta may seek a claim for breach of contract
against Parker provided that the maximum amount of damages Delta
could recover under such claim shall be capped at $850,000. It is
acknowledged and agreed by the Parties that neither the death nor
disability of Parker shall constitute a failure to perform his
duties under this Section 4.
5. Other
Business and Activities . From and after the Effective Date,
and notwithstanding the consulting services to be provided
hereunder, Parker shall be free to pursue any other
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business and
activities in any industry, including the oil, gas and minerals
industry, whether or not competitive with Delta. It is expressly
acknowledged and agreed that Parker shall hereafter have no duty to
present any potential transactions to Delta or to disclose any
other business information to which he may be privy. Without
limiting the foregoing, and for purposes of clarification, it is
acknowledged and agreed that Sections 9 and 10 of the
Change-In-Control Agreement and 15 and 16 of the Employment
Agreement shall be null, void and of no effect.
6.
Parker’s Relinquishment of Rights . It is expressly
acknowledged and agreed that, subject to the actual receipt by
Parker of the consideration to be delivered pursuant to Sections 2,
3 and 4 above, Parker shall relinquish all rights he may have under
Section 3 of the Change-In-Control Agreement, Sections 1,
2, 3, 4, 5, 6, 7, and 8 of the Employment Agreement, all rights
under the Stock Agreements (provided that Parker shall retain any
and all shares of Delta that are fully vested, and issued and
outstanding in his name and the name of any of the members of his
family) and, except as set forth in Section 8(c), any and all
rights he may have to any other salary, bonus or other compensation
(including without limitation any compensation based on the success
of any past or pending transactions or litigation, including those
certain judgments obtained against the United States relating to
Delta’s interest in off-shore California leases). In the
event there is no actual receipt by Parker of the consideration to
be delivered pursuant to Sections 2, 3 and 4 above, then
Parker shall not have relinquished any such rights.
7.
Acknowledgement of Continuing Rights and Obligations . It is
acknowledged and agreed that, except as provided in Section 6
above, Parker shall continue to be entitled to his rights under the
Employment Agreement (including without limitation those contained
in Sections 9 and 26) and the Change-In-Control Agreement
(including without limitation those contained in Sections 14,
15, 16, 17 and 21). It is further acknowledged and agreed that
Parker shall continue to remain obligated under Sections 10,
11, 12, 14, 17 and 18 of the Employment Agreement, and
Sections 5, 6, 8, 11, 12 and 13 of the Change-In-Control
Agreement.
(a) Parker,
for himself, and Delta, for itself, and each Party for its
respective affiliates, successors, heirs, subrogees, assigns,
principals, agents, partners, employees, associates, attorneys and
representatives, voluntarily, knowingly and intentionally releases
and discharges the other Party and its respective predecessors,
successors, parents, subsidiaries, affiliates and assigns and each
of its respective officers, directors, principals, shareholders,
agents, attorneys, board members, and employees from any and all
claims, actions, liabilities, demands, rights, damages, costs,
expenses, and attorneys’ fees (including but not limited to
any claim of entitlement for attorneys’ fees under any
contract, statute, or rule of law allowing a prevailing party or
plaintiff to recover attorneys’ fees), of every kind and
description fro
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