CONFORMED COPY
Separation
Agreement
This Separation Agreement (the "Agreement") is
made and entered into this 19th day of May, 2009 by and between
Petroleum Development Corporation, a Nevada Corporation (the
"Company") and Eric R. Stearns (the "Employee") (collectively, the
"Parties").
WHEREAS, the Parties acknowledge that Employee
currently serves in the capacity of Executive Vice President with
the primary responsibility for acquisitions and divestitures and
that the Company desires to change the role of the Employee and
assign him different duties;
WHEREAS, the Parties acknowledge that the
Employee does not wish to give up his current responsibility
relating to acquisitions and divestitures and the Parties further
acknowledge that the shift in duties would be a material diminution
in the Employee's authority, duties and
responsibilities;
WHEREAS, Employee desires to terminate his
employment with the Company pursuant to the "Good Reason"
provisions of his Employment Agreement dated December 31, 2008
between the Parties, and has given written notice of his intention
to terminate his employment with the Company unless he continues to
have responsibility for acquisitions and divestitures for the
Company (Exhibit A);
WHEREAS, the Company has advised the Employee
that it does not intend to reconsider the actions taken with
respect to Employee;
WHEREAS, the Parties desire to enter into a
definitive agreement to set forth the terms of Employee's
separation from the Company;
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:
1.
Termination Date . Employee resigns his employment and his
position as Executive Vice President of the Company (and also
resigns his Subsidiary positions with respect to Unioil, Riley
Natural Gas, WWWV LLC and any other position, title or office
affiliated with the Company) effective as of June 18, 2009 (the
"Termination Date"). The Parties acknowledge that his resignation
is due to "Good Reason" as defined under his Employment
Agreement.
2.
Nondisparagement . Employee agrees not to make negative
comments or otherwise disparage the Company or its officers,
directors, employees, shareholders or agents, in any manner likely
to be harmful to them or their business, business reputation or
personal reputation. The Company agrees that the members of the
Board and officers of the Company as of the date hereof will not,
while employed by the Company or serving as a director of the
Company, as the case may be, make negative comments about the
Employee or otherwise disparage the Employee in any manner that is
likely to be harmful to the Employee's business or personal
reputation. The foregoing shall not be violated by truthful
statements in response to legal process or required governmental
testimony or filings, and the foregoing limitation on the Company's
directors and officers will not be violated by statements that they
in good faith believe are necessary or
appropriate to
make in connection with performing their duties for or on behalf of
the Company. Either Party will be entitled to exercise the remedies
provided for in Section 6.e. of the Employment
Agreement.
3.
References . The Chief Executive Officer of the Company
shall provide employment references when requested by Employee and
all such references shall characterize Employee's separation as
voluntary.
4.
Compensation and Benefits .
(a) The
Company shall pay to Employee the following amounts:
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Separation
Compensation . Within
thirty (30) days after the Termination Date or seven (7) days after
the Revocation Date (as defined in Section 11 below) without
revocation, whichever is greater, the Company shall pay to the
Employee a lump sum amount of $2,001,000, such amount is
acknowledged by the Parties as being in full satisfaction of the
amount due to Employee pursuant to Section 7(1) of his Employment
Agreement; providing for three times the sum of: (a) the Employee's
highest Base Salary during the previous two years of employment
immediately preceding the Termination Date, plus (b) the highest
Bonus paid to the Employee during the same two year
period.
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Accrued and
Unpaid Compensation .
Employee will be entitled to receive any compensation earned but
not yet paid in 2009 prior to the Termination Date paid in
accordance with the Company's normal payroll practices.
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Expense
Reimbursement . Company
shall pay to the Employee any unpaid expense reimbursement for
periods on or prior to the Termination Date upon presentation by
the Employee of an accounting of such expenses in accordance with
normal Company practices. Employee agrees to submit all unpaid
expense reimbursements to the Company by July 18, 2009. In no event
shall such expense reimbursements be made later than July 31, 2009.
The Parties acknowledge that Employee will not be entitled to any
expense reimbursements (including, but not limited to,
reimbursements for costs of premiums on Employee's one million
dollar life insurance policy and reimbursements for the cost of the
Employee's current disability policy) for any expenses incurred on
or after the Termination Date.
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Stock
Options and Restricted Stock . The Parties acknowledge that as of the date of
this Agreement the unvested Company stock options have an exercise
price that is greater than the current fair market value of the
stock and that such stock options are likely to have an exercise
price greater than the fair market value of the stock when they
vest on the Termination Date. Company acknowledges that fourteen
thousand five hundred (14,500) shares of restricted stock listed on
Exhibit B shall become fully vested.
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Performance
Shares . Employee
acknowledges that he is not entitled to any shares or other
compensation related to the performance shares under the Company's
2007, 2008, and 2009 Long-Term Incentive Programs.
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Retirement
Payment . Company shall
pay Employee the Retirement Payment earned under Section 4.c. of
the Employment Agreement. The Retirement Payment shall be paid in
ten (10) annual installments on the first business day of January
each year, beginning January 2, 2010. The annual retirement payment
shall be $37,500, which amount is acknowledged by the Parties as
being equal to $7,500 times the number of completed years of
service under his Employment Agreement and the predecessor
employment agreement (i.e., five years).
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COBRA
Coverage . Company shall
continue coverage of the Employee and any dependents c
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