UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
June 11, 2017
Date of Report (Date of earliest event reported)
Bonanza Creek Energy, Inc.
(Exact name of registrant as specified in its charter)
Delaware |
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001-35371 |
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61-1630631 |
(State or other jurisdiction of |
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(Commission File No.) |
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(I.R.S. employer identification number) |
410 17th Street, Suite 1400
Denver, Colorado 80202
(Address of principal executive offices, including zip code)
(720) 440-6100
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Carty Resignation
On June 11, 2017, Richard J. Carty, a member of the board of directors (the Board) of Bonanza Creek Energy, Inc. (the Company), as well as the President and Chief Executive Officer, notified the Company that he would resign from the Board effective immediately. Mr. Cartys resignation did not result from any disagreement with the Company regarding any matter related to the Companys operations, policies or practices.
In addition, on June 11, 2017, and based on a mutual decision with the Board, Mr. Carty left his role as President and Chief Executive Officer of the Company. In connection with the departure, Mr. Carty entered into a Separation and General Release Agreement with the Company (the Release), whereby (i) his employment agreement with the Company was terminated; (ii) he entered into a mutual release with the Company; (iii) he received accelerated vesting of the equity grants he was contractually obligated to receive upon the Companys emergence from bankruptcy, consisting of 137,814 non-qualified stock options and 137,814 restricted stock units; (iv) he was granted reimbursement of the payment of his COBRA premiums through the one year anniversary of the termination; and (v) if there is a change in control of the Company after June 4, 2017 and on or before June 5, 2018, he will receive (a) an amount equal to three years of his base salary as of his resignation date, (b) an amount equal to the 300% of the greater of (I) the annual average of any bonuses received for the previous two years and (II) his current target bonus amount as of his resignation date, and (c) his COBRA benefits discussed in subclause (iv) above will be extended to the 18 month anniversary of the termination.
The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the Separation and Release Agreement of Mr. Carty, which is filed herewith as Exhibit 10.1, and incorporated by reference herein in its entirety.
Interim Executive Officer
Effective June 11, 2017, the Board retained R. Seth Bullock, a managing director of Alvarez & Marsal, LLC (A&M), as interim Chief Executive Officer.
Seth Bullock, age 43, is a Managing Director with A&M and has been with the firm since 2014. Mr. Bullock brings over 20 years of experience in the energy industry. Prior to joining A&M, Mr. Bullock worked with several restructuring and investment advisory firms. Mr. Bullock earned a bachelors degree in Finance from Loyola University, New Orleans.
During his service at the Company, Mr. Bullock will continue to be employed by A&M and will not receive any compensation directly from the Company or participate in any of the Companys employee benefit plans. The Company will instead pay A&M for the services provided by Mr. Bullock a monthly fee of $135,000 plus reasonable out-of-pocket expenses for the services provided by Mr. Bullock.
Amendment to Severance Plan
Prior to the resignation of Mr. Carty, the Board approved the Bonanza Creek Energy, Inc. Fourth Amended and Restated Executive Change in Control and Severance Plan (the Severance Plan), which provides for severance benefits to the Companys named executive officers (and certain other executives and key employees). The following summary of the Severance Plan as it applies to the Companys current named executive officers is qualified in its entirety by reference to the full text of the Severance Plan, which is attached hereto as Exhibit 10.2 and incorporated by reference herein.
Termination Other Than Within One-Year Period Following Change in Control
On termination of a named executive officers employment by the Company without Cause or by the executive for Good Reason, in either case other than within the one-year period following a Change in Control (as such terms are defined in the Severance Plan), the executive is entitled to the following benefits:
· cash severance in an amount equal to the sum of the executives base salary and 50% of his or her annual bonus (calculated as the greater of the average of his or her annual bonus earned under the Companys Short Term Incentive Program for the two prior years and his or her then current target annual bonus), payable in ratable installments over the one-year period following such termination, and subject to reduction as described below;
· accelerated vesting of any equity incentive awards granted to the executive in connection with the Companys emergence from chapter 11 on April 28, 2017 (with the treatment of any other equity incentives governed by the terms of the applicable award agreement); and
· reimbursement of the employer portion of the cost of continued coverage under the Companys group health plan for one year (to the extent permitted by applicable law and without additional cost to the Company or the executive).
The amount of such cash severance will be reduced on a dollar-for-dollar basis (but not below $0) by the intrinsic value of any emergence equity awards that accelerated on such termination. For this purpose, intrinsic value means the aggregate spread value of unvested emergence options and the value of unvested emergence restricted stock units, as determined by the administrator in good faith using the closing price of the Companys common stock on the last trading day before the date of such termination. The administrator is the Compensation Committee of the Companys board of directors or another person or committee appointed by the board to administer the Severance Plan.
Termination Within One-Year Period Following Change in Control
If such termination occurs within the one-year period following a Change in Control, each executive (other than Wade E. Jaques) will be entitled to the same benefits as described above, except that:
· the amount of the cash severance will be two times the amount described above, will be paid in a lump sum on the first business day 60 days after such termination, and will not be subject to any reduction for the value of any emergence equity award acceleration; and
· the reimbursement of the employer portion of the cost of continued coverage under the Companys group health plan will be for 18 months.
Mr. Jacques will be entitled to the same benefits as described above, except that the cash severance will be paid in a lump sum on the first business day 60 days after such termination and will not be subject to any reduction for the value of any emergence equity award acceleration.
Conditions to Severance Benefits
Each executives entitlement to the severance benefits described above is subject to the executives:
· tendering his or her resignation as a member of the Companys board of directors and of the boards of directors of any affiliates of the Company;
· execution of a general release in a form and substance approved by the administrator substantially similar to the form of general release appended to the Severance Plan; and
· full compliance with his or her post-termination obligations to the Company and its affiliates (including covenants not to compete or solicit).
Item 7.01 Regulation FD Disclosure
On June 12, 2017, the Company issued a press release with respect to the management changes described in Item 5.02 of this Current Report on Form 8-K and its 2017 capital program and production guidance. The press release is included in this report as Exhibit 99.1 and is incorporated herein by reference. This information shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.
Item 9.01 Exhibits.
(d) Exhibits
Exhibit No. |
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Description |
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10.1* |
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Separation and General Release Agreement dated as of June 11, 2017, by and between Bonanza Creek Energy, Inc. and Richard J. Carty. |
10.2* |
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Bonanza Creek Energy, Inc. Fourth Amended and Restated Executive Change in Control and Severance Plan. |
99.1* |
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Press release issued on June 12, 2017 by Bonanza Creek Energy, Inc. |
* Filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Bonanza Creek Energy, Inc. | |
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Date: June 12, 2017 |
By: |
/s/ Cyrus D. Marter IV |
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Cyrus D. Marter IV |
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Senior Vice President, General Counsel and Secretary |
EXHIBIT INDEX
Exhibit No. |
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Description |
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10.1* |
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Separation and General Release Agreement dated as of June 11, 2017, by and between Bonanza Creek Energy, Inc. and Richard J. Carty. |
10.2* |
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Bonanza Creek Energy, Inc. Fourth Amended and Restated Executive Change in Control and Severance Plan. |
99.1* |
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Press release issued on June 12, 2017 by Bonanza Creek Energy, Inc. |
* Filed herewith.
Exhibit 10.1
EXECUTION COPY
SEPARATION AND GENERAL RELEASE AGREEMENT
This SEPARATION AND GENERAL RELEASE AGREEMENT (this Agreement) is made as of June 11, 2017 by and between Bonanza Creek Energy, Inc. (the Company) and Richard J. Carty (You). The Company and You are collectively referred to herein as the Parties.
1. Separation. The Company understands that You have resigned, effective June 11, 2017 (the Separation Date), from employment, and from all positions, with the Company and its affiliates, including as a member of the Companys Board of Directors (the Board). Accordingly, effective on the Separation Date, You hereby acknowledge and agree that You will automatically resign (without the need for any additional documentation) from all of your positions as an employee, officer, manager and director (and/or member of any board or board equivalent) of the Company and all of its affiliates (and as a fiduciary of any benefit plan of the Company or any of its affiliates), and You will execute such additional documents as reasonably requested by the Company in good faith to evidence the foregoing. Except as required by law or as set forth in Section 2 below, the Separation Date will be the termination date of your employment for purposes of active participation in and coverage under all benefit plans and programs sponsored by or through the Company or its affiliates.
2. Separation Benefits. In consideration for your execution of the Release (as provided in Section 5 hereof) and the other promises contained herein, the Company will treat your resignation as a termination by the Company of your employment pursuant to Section 5(b)(i) of the Companys Fourth Amended and Restated Executive Change in Control and Severance Plan (the Severance Plan) and, accordingly, will pay or provide, or cause to be paid or provided, to You in accordance with, and subject to, the terms of the Severance Plan applicable to such a termination, the benefits set forth in Section 5(b)(i) of the Severance Plan as set forth on Appendix A attached hereof and such other benefits set forth on Appendix A (the Resignation Benefits). In addition to the Resignation Benefits, You will receive the following accrued obligations: (i) payment of your base salary through the Separation Date; (ii) payment to You, in accordance with the terms of the applicable retirement benefit plan of the Company or its affiliates or to the extent required by law, of any benefits to which You have a vested entitlement as of the Separation Date; (iii) payment of any accrued unused vacation; and (iv) payment to You of any approved but not yet reimbursed business expenses incurred in accordance with applicable policies of the Company and its affiliates (collectively, (i) through (iv), the (Accrued Benefits).
3. No Other Compensation or Benefits. You hereby acknowledge and agree that the Accrued Benefits and the Resignation Benefits are in complete satisfaction of any and all compensation or benefits due to You from the Company or any of its affiliates, whether for services provided to the Company, any of its affiliates, or otherwise, and no further compensation or benefits are owed to You in connection with your termination of employment with the Company (including but not limited to any payment that otherwise may have been payable to You under the Third Amended and Restated Executive Change in Control and Severance Plan).
4. Restrictive Covenants. You hereby acknowledge and agree that You will abide by the terms and conditions of the Employee Restrictive Covenants, Proprietary Information and Inventions Agreement (the Restrictive Covenant Agreement) attached as Exhibit A to the Employment Agreement dated November 11, 2014 by and between You and the Company (the covenants set forth therein, collectively, the Restrictive Covenants), and agree that the Restrictive Covenants shall remain in full force and effect in accordance with their terms following the Separation Date and your execution of this Agreement; provided that, contingent upon the Release becoming irrevocable, for purposes of the Restrictive Covenant Agreement, the Company agrees to waive Your prospective obligations, as of the Separation Date, under Section 6.3 of the Employee Restrictive Covenants, Proprietary Information and Inventions Agreement to the extent such obligations pertain to any mineral property interest of the Company or the Companys Affiliates that is located within the State of Arkansas.
5. Release. The Resignation Benefits will only be due and payable if, within twenty-one days of the Separation Date, You deliver to the Company and do not revoke the executed general release of claims in the form attached on Exhibit A hereto (the Release). Contingent upon Your execution and non-revocation of the Release: (A) the Company, on its own behalf and on behalf of parents, subsidiaries, officers, shareholders, partners, members, individual employees, agents, representatives, directors, employees, attorneys, successors, and anyone acting on its behalf in their capacity as such (collectively, the Company Releasors), hereby releases You from all claims and causes of action by reason of any injuries and/or damages or losses, known or unknown, foreseen or unforeseen, patent or latent which the Company Releasors have sustained or which may be sustained as a result of any facts and circumstances arising out of or in any way related to Your employment by the Company, and to any other disputes, claims, disagreements, or controversies between You and the Company up to and including the date this Agreement is signed by the Company; provided that the Company Releasees are not releasing claims related to (i) fraud embezzlement or criminal misconduct by You, (ii) material breaches of Your fiduciary duties to the Company, or (iii) material claims that cause material damage to the Company Releasors of which the Board (excluding You) is unaware on the date hereof and (B) the Company will direct its current members of the Board and executive officers to not disparage or speak ill of You; provided that nothing herein shall prohibit or limit such persons from providing truthful statements or information required by law or in response to requests from regulatory agencies. It is the intention of the Company that this Release is a general release which shall be effective as a bar to each and every claim, demand, or cause of action it releases. The Company recognizes that the Company may have some claim, demand, or cause of action against You of which the Company is totally unaware and unsuspecting which the Company is giving up by execution of this Release. It is the intention of the Company in executing this Release that, to the extent set forth herein, it will deprive the Company of each such claim, demand or cause of action and prevent the Company from asserting it against the released parties.
6. Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Colorado without reference to principles of conflict of laws.
7. Entire Agreement. Except as otherwise expressly provided herein, this Agreement constitutes the entire agreement between You and the Company with respect to the
subject matter hereof and supersedes any and all prior agreements or understandings between You and the Company with respect to the subject matter hereof, whether written or oral. You acknowledge that, except as provided in this Agreement or as otherwise required by applicable law, You will not receive any additional compensation, severance or other benefits of any kind following the Separation Date. This Agreement will bind the heirs, personal representatives, successors and assigns of both You and the Company, and inure to the benefit of both You and the Company, and each of your respective heirs, successors and assigns, provided that You may not assign your rights or obligations hereunder. This Agreement may be amended or modified only by a written instrument executed by You and the Company.
[Signature Page Follows]
IN WITNESS WHEREOF, the Parties have executed this Agreement on the latest date set forth below.
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BONANZA CREEK ENERGY, INC. | |
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By: |
/s/ Cyrus D. Marter IV |
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Name: |
Cyrus D. Marter IV |
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Title: |
Senior Vice President, General Counsel and Secretary |
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Date: |
June 11, 2017 |
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EXECUTIVE | |
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/s/ Richard J. Carty | |
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Richard J. Carty | |
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Date: June 11, 2017 |
Exhibit A
The undersigned (Employee), in accordance with the Separation and General Release Agreement by and between Bonanza Creek Energy, Inc. (along with its successors or affiliates, the Company) and Employee, dated June 11, 2017 (the Separation Agreement), on Employees own behalf and on behalf of Employees heirs, agents, representatives, attorneys, assigns, executors and/or anyone acting on Employees behalf, and in consideration of the promises and assurances for the Company to pay Employee the benefits set forth in the Separation Agreement, as specified on Appendix A attached hereto in connection with Employees termination from employment with the Company, to which Employee is not automatically entitled, hereby fully releases, the Companys parents, subsidiaries, officers, shareholders, partners, members, individual employees, agents, representatives, directors, employees, attorneys, successors, and anyone acting on its behalf, known or unknown, from all claims and causes of action by reason of any injuries and/or damages or losses, known or unknown, foreseen or unforeseen, patent or latent which Employee has sustained or which may be sustained as a result of any facts and circumstances arising out of or in any way related to Employees employment by the Company or the resignation of that employment, and to any other disputes, claims, disagreements, or controversies between Employee and the Company up to and including the date this Release is signed by Employee. Employees release includes, but is not limited to, any contract benefits, claims for quantum meruit, claims for wages, bonuses, employment benefits, moving expenses, stock options, profits units, or damages of any kind whatsoever, arising out of any contracts, express or implied, any covenant of good faith and fair dealing, express or implied, any theory of unlawful discharge, torts and related damages (including, but not limited to, emotional distress, loss of consortium, and defamation) any legal restriction on the Companys right to terminate Employees employment and/or services, or any federal, state or other governmental statute or ordinance, including, without limitation, Title VII of the Civil Rights Act of 1964 (as amended), the federal Age Discrimination in Employment Act of 1967 (29 U.S.C. § 21, et seq.) (as amended) (ADEA), the federal Americans with Disabilities Act of 1990, any state laws concerning discrimination or harassment including the Fair Employment and Housing Act, or any other legal limitation on contractual or employment relationships, and any and all claims for any loss, cost, damage, or expense with respect to Employees liability for taxes, penalties, interest or additions to tax on or with respect to any amount received from the Company or otherwise includible in Employees gross income, including, but not limited to, any liability for taxes, penalties, interest or additions to tax arising from the failure of this release agreement, or any other employment, severance, profit sharing, bonus, equity incentive or other compensatory plan to which Employee and the Company are or were parties, to comply with, or to be operated in compliance with the Internal Revenue Code of 1986, as amended, including, but not limited to, Section 409A thereof, or any provision of state or local income tax law; provided, however, that notwithstanding the foregoing, the release set forth in this Section shall not extend to: (a) any vested rights under any pension, retirement, profit sharing or similar plan; (b) Employees rights, if any, to indemnification or defense under the Companys certificate of incorporation, bylaws and/or policy or procedure, any indemnification agreement with Employee or under any insurance contract, in connection with Employees acts or omissions within the course and scope of Employees employment with the Company; (c) any claims that cannot be waived as a matter of law; or (d) Employees rights under the Separation Agreement (this Release). Appendix A to this Release sets forth the benefits, payments and obligations to which Employee will be provided as full consideration for this Release if, and only if, this Release is executed, delivered and become
irrevocable by no later than the date specified in Section 2 herein. Employee acknowledges and agrees that he is not entitled to any other termination or severance benefits whether under this Release or otherwise.
2. Employee acknowledges that Employee is knowingly and voluntarily waiving and releasing any rights Employee may have under the ADEA. Employee also acknowledges that the consideration given for the waiver and release hereunder is in addition to anything of value to which Employee is already entitled. Employee further acknowledges that Employee has been advised by this writing, as required by the ADEA, that: (a) Employees waiver and release hereunder do not apply to any rights or claims that may arise after the execution date of this Release; (b) Employee has been advised hereby that Employee has the right to consult with an attorney prior to executing this Release; (c) Employee has twenty-one days to consider this Release (although Employee may choose to voluntarily execute this release earlier); (d) Employee has seven (7) days following the execution of this Release to revoke the portion of this Release applicable to ADEA claims; and (e) the portion of this Release applicable to ADEA claims will not be effective until the date upon which the revocation period has expired, which will be the eighth (8th) day after this Release is executed by Employee (the Effective Date). If Employee revokes the portion of this Release applicable to ADEA claims, he will not be entitled to, and shall not receive, the applicable payments and benefits set forth on Appendix A.
3. Nothing in this Release (including, without limitation, Sections 4, 5 and 6 hereof), the Severance Plan, or any other Company agreement, policy or procedure (this Release, the Severance Plan and such other agreements, policies and procedures, collectively, the Company Arrangements) limits Employees ability to communicate directly with and provide information, including documents, not otherwise protected from disclosure by any applicable law or privilege to the Securities and Exchange Commission (the SEC) or any other federal, state or local governmental agency or commission (each, a Government Agency) regarding possible legal violations, without disclosure to the Company. The Company may not retaliate against Employee for any of these activities, and nothing in the Company Arrangements requires Employee to waive any monetary award or other payment that Employee might become entitled to from the SEC or any other Government Agency.
Further, nothing in the Company Arrangements precludes Employee from filing a charge of discrimination with the Equal Employment Opportunity Commission or a like charge or complaint with a state or local fair employment practice agency. However, once this Release becomes effective, Employee may not receive a monetary award or any other form of personal relief from the Company in connection with any such charge or complaint that Employee filed or is filed on Employees behalf.
Notwithstanding anything to the contrary in the Company Arrangements, as provided for in the Defend Trade Secrets Act of 2016 (18 U.S.C. § 1833(b)), Employee will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Without limiting the foregoing, if Employee files a lawsuit for retaliation by the Company for reporting a suspected violation of law, Employee
may disclose the trade secret to Employees attorney and use the trade secret information in the court proceeding, if Employee (x) files any document containing the trade secret under seal, and (y) does not disclose the trade secret, except pursuant to court order.
4. Employee acknowledges that Employee executed an Employee Restrictive Covenants, Proprietary Information and Inventions Agreement under which Employee assumed certain obligations relating to the Companys confidential and proprietary business information and trade secrets and containing certain covenants relating to competition, solicitation and assignment of invention (Employee Proprietary Information and Inventions Agreement). Employee agrees that, except to the extent it conflicts with Section 3, the Employee Proprietary Information and Inventions Agreement shall by its terms survive the execution of this Release and that the parties rights and duties thereunder shall not in any way be affected by this Release. Employee also warrants and represents that, subject to Section 5 of Appendix A, Employee has returned any and all documents and other property of the Company constituting a trade secret or other confidential research, development or commercial information in Employees possession, custody or control, and represents and warrants that Employee has not retained any copies or originals of any such property of the Company. Employee further warrants and represents that, except as provided by Section 3, Employee has never violated the Employee Proprietary Information and Inventions Agreement, and will not do so in the future.
5. Employee acknowledges that because of Employees position with the Company, Employee may possess information that may be relevant to or discoverable in connection with claims, litigation or judicial, arbitral or investigative proceedings initiated by a private party or by a regulator, governmental entity, or self-regulatory organization, that relates to or arises from matters with which Employee was involved during Employees employment with the Company, or that concern matters of which Employee has information or knowledge (collectively, a Proceeding). Employee agrees that Employee shall testify truthfully in connection with any such Proceeding. Except as provided in Section 3, Employee agrees that Employee shall cooperate with the Company in connection with every such Proceeding, and that Employees duty of cooperation shall include an obligation to meet with the Company representatives and/or counsel concerning all such Proceedings for such purposes, and at such times and places, as the Company reasonably requests on reasonable prior notice and during normal business hours, and to appear for deposition and/or testimony upon the Companys request and without a subpoena. The Company shall reimburse Employee for reasonable out-of-pocket expenses that Employee incurs in honoring Employees obligation of cooperation under this Section.
6. Employee covenants never to disparage or speak ill of the Company or any the Company product or service, or of any past or present employee, officer or director of the Company, except as provided in Section 3. Employee further agrees not to harass or behave unprofessionally toward any past, present or future Company employee, officer or director.
7. Release of Unknown Claims. It is the intention of Employee that this Release is a general release which shall be effective as a bar to each and every claim, demand, or cause of action it releases. Employee recognizes that Employee may have some claim, demand, or cause of action against the Company of which Employee is totally unaware and unsuspecting which Employee is giving up by execution of this release. It is the intention of Employee in executing
this Release that it will deprive Employee of each such claim, demand or cause of action and prevent Employee from asserting it against the released parties.
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RICHARD J. CARTY | |
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By: |
/s/ Richard J. Carty |
APPENDIX A
The Company shall provide Employee with the benefits set forth below in accordance with, and subject to the terms of, the Severance Plan, the Separation Agreement to which this Appendix A is attached, and this Appendix A. Capitalized terms not otherwise defined in the Separation Agreement or this Appendix A shall have the meanings set forth in the Severance Plan.
1. Effective on the Effective Date of the Release (i.e., the date the Release becomes irrevocable), full acceleration of vesting of the Employees Emergence Grant, which includes 137,814 non-qualified stock options (the Options) granted under the Companys 2017 Long Term Incentive Plan (the LTIP) and 137,814 RSUs (the RSUs) granted under the LTIP. The Company agrees to honor Employees election to have all income and employment taxes required to be withheld in respect of the vesting and settlement of the RSUs and the exercise of the Options, and payment of the exercise price of the Options, to be satisfied via net settlement in accordance with the applicable terms of the LTIP. The parties acknowledge and agree that, except as set forth in Section 3 of this Appendix A, Employee is not entitled to receive any cash severance benefits. If Employee revokes the portion of the Release applicable to ADEA claims, Employee will automatically and without further action forfeit 100% of the RSU portion and 95% of the option portion of the Emergence Grant that would otherwise vest under this Section 1.
2. If and to the extent permitted under applicable law and without additional cost or penalty to the Company or Employee, during the portion, if any, of the 12-month period, commencing as of the date Employee is eligible to elect and timely elects to continue coverage for Employee and Employees eligible dependents under the Companys or an affiliates group health plan pursuant to COBRA or similar state law, the Company (or the affiliate of the Company that is Employees employer immediately prior to the Separation Date) shall reimburse Employee for the difference between the amount Employee pays to effect and continue such coverage and the employee contribution amount that active senior executive employees of the Company or its applicable affiliate pay for the same or similar coverage, with any such reimbursement payable for the 60 day period immediately following the Separation Date being payable on the first business day 60 days following the Change in Control and any other such reimbursement payable being paid on a monthly basis thereafter (the COBRA Benefit).
3. If there is a Change in Control (as defined in the Companys Third Amended and Restated Executive Change in Control and Severance Plan as in effect on June 4, 2017 (the Prior Plan) after June 4, 2017 and on or before June 5, 2018, Employee will receive the following additional payments as additional consideration for the Release (collectively, the CIC Benefits):
a. An amount equal to three (3) years of base salary as of the Separation Date (the Base Salary Severance). For the avoidance of doubt, the amount payable with respect to the Base Salary Severance will be $1,725,000.
b. An amount equal to 300% of the greater of (A) the annual average of any bonuses received by Employee from the Company pursuant to the Companys Short Term
Incentive Program in the two (2) calendar years immediately before the Separation Date and (B) Employees current target bonus amount as of the Separation Date (the greater of A and B, the Bonus Severance). For the avoidance of doubt, the amount payable with respect to the Bonus Severance will be $2,164,845.
c. The COBRA Benefit will be extended to eighteen (18) months.
All CIC Benefits will be subject to applicable taxes and withholdings, and in the case of the Base Salary Severance and Bonus Severance, such amounts will be paid to Employee upon the later of (i) sixty (60) days following the occurrence of a Change in Control or (ii) the date that the Release is effective and no longer revocable (the later of (i) and (ii), the CIC Benefits Commencement Date). With respect to the COBRA Benefit, such payments will commence as of the CIC Benefits Commencement Date.
The CIC Benefits shall not be payable if Employee revokes the portion of the Release applicable to ADEA claims.
For the sake of clarity, all payments and benefits set forth herein shall be subject to the terms of this Appendix A and the Severance Plan (in case of the benefits set forth in Sections 1 and 2) and the Prior Plan (in the case of the benefits set forth in Section 3) that are applicable in the case of a termination of a Tier 1 Executives employment by the Company for a reason other than Cause (as defined in the applicable document).
4. Employee shall be entitled to retain the two laptops and two iPads provided to Employee by the Company after the Company has removed all confidential information from such devices.
5. The Company will pay Employee his base salary through and including June 30, 2017; provided that Employee covenants and agrees to consult with the Company and provide transition services to the Company through June 30, 2017.
Exhibit 10.2
BONANZA CREEK ENERGY, INC.
FOURTH AMENDED AND RESTATED EXECUTIVE CHANGE IN CONTROL
AND SEVERANCE PLAN
1. Purpose and Effective Date. Bonanza Creek Energy, Inc. (the Company) has adopted this Fourth Amended and Restated Executive Change in Control and Severance Benefit Plan (this Plan) to provide for the payment of severance or change in control benefits to Eligible Individuals (as defined below). The Plan was approved by the Board of Directors of the Company (the Board) to be effective as of May 5, 2017 (the Effective Date).
2. Definitions. For purposes of this Plan, the terms listed below will have the meanings specified herein:
(a) Accrued Obligations means (i) payment to an Eligible Individual of all earned but unpaid Base Salary through the Date of Termination prorated for any partial period of employment; (ii) payment to an Eligible Individual, in accordance with the terms of the applicable benefit plan of the Company or its Affiliates or to the extent required by law, of any benefits to which such Eligible Individual has a vested entitlement as of the Date of Termination; (iii) payment to an Eligible Individual of any accrued unused vacation; and (iv) payment to an Eligible Individual of any approved but not yet reimbursed business expenses incurred in accordance with applicable policies of the Company and its Affiliates, including this Plan.
(b) Administrator means the Compensation Committee of the Board or another person or committee appointed by the Board to administer this Plan.
(c) Affiliate means (i) with respect to the Company, any person that directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the Company and any predecessor to any such entity; provided¸ however, that a natural person shall not be considered an Affiliate; and (ii) with respect to an Eligible Individual, any person that directly, or through one or more intermediaries, is controlled by such Eligible Individual or members of such Eligible Individuals immediate family.
(d) Annual Bonus means the greater of (i) the average of the annual bonuses earned by the Eligible Individual pursuant to the STIP for the two calendar years immediately preceding the Date of Termination and (ii) the Eligible Individuals then current target annual bonus amount.
(e) Base Salary means an Eligible Individuals annual base salary as of a Notice of Termination (without regard to any reduction in such Base Salary which constitutes Good Reason).
(f) Cause means any of the following:
(i) an Eligible Individual has failed or refused to substantially perform such Eligible Individuals duties, responsibilities or authorities (other than any such refusal or failure resulting from such Eligible Individuals becoming Disabled);
(ii) any commission by or indictment of by an Eligible Individual of a felony or crime of moral turpitude;
(iii) an Eligible Individual has engaged in material misconduct in the course and scope of such Eligible Individuals employment with the Company, including, but not limited to, gross incompetence, disloyalty, disorderly conduct, insubordination, harassment of other employees or third parties, chronic abuse of alcohol or unprescribed controlled substances, improper disclosure of confidential information, chronic and unexcused absenteeism, improper appropriation of a corporate opportunity or any other material violation of the Companys personnel policies, rules or codes of conduct or any fiduciary duty owed to the Company or its Affiliates, or any applicable law or regulation to which the Company or its Affiliates are subject;
(iv) an Eligible Individual has committed any act of fraud, embezzlement, theft, dishonesty, misrepresentation or falsification of records; or
(v) an Eligible Individual has engaged in any act or omission that is likely to materially damage the Companys business, including, without limitation, damages to the Companys reputation.
(g) Change in Control means:
(i) the acquisition by any individual, entity or group (within the meaning of Sections 13(d)(3) or 14(d)(2) of the Exchange Act) (a Person) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either (A) the then outstanding shares of common stock of the Company (the Outstanding Company Common Stock) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the Outstanding Company Voting Securities); provided, however, that the following acquisitions by a Person shall not constitute a Change in Control: (I) any acquisition directly from the Company; (II) any acquisition by the Company; (III) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; or (IV) any acquisition by any Person pursuant to a Business Combination that does not constitute a Change in Control under Section 2(g)(ii) below;
(ii) the consummation of a reorganization, merger, consolidation of the Company or sale or other disposition of all or substantially all of the assets of the Company (a Business Combination) if, immediately following such Business Combination, all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, less than 50% of, respectively, the then outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors or managers, as the case may be, of the entity resulting from such Business Combination (including, without limitation, any entity which as a result of such transaction owns the Company or all or substantially all of the Companys assets either directly or through one or more subsidiaries); or
(iii) the approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change in Control shall not occur (A) under Section 2(g)(i) if Incumbent Directors (as determined immediately before any such acquisition described therein) constitute 50% or more of the Board immediately following any such acquisition, (B) under Section 2(g)(ii) if Incumbent Directors (as determined immediately before consummation of a Business Combination) constitute 50% or more of the members of the board of directors (or similar body) of the entity resulting from such Business Combination (including, without limitation, any entity that as a result of such transaction owns the Company or all or substantially all of the Companys assets, in either case, either directly or through one or more subsidiaries) or (C) in connection with any transaction approved by a federal bankruptcy court.
(h) CIC Effective Date means the date upon which a Change in Control occurs.
(i) COBRA means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended from time to time.
(j) Code means the Internal Revenue Code of 1986, as amended from time to time.
(k) Date of Termination means (i) if the Eligible Individuals employment with the Company and its Affiliates is terminated by death, the date of such Eligible Individuals death; (ii) if the Eligible Individuals employment is terminated because of the Eligible Individual becoming Disabled, then 30 days after the Notice of Termination is given; or (iii) if (A) the Eligible Individuals employment is terminated by the Company or any of its Affiliates with or without Cause or (B) the Eligible Individuals employment by the Eligible Individual with or without Good Reason, then, in each case, the date specified in the Notice of Termination, which shall comply with the applicable notice requirements set forth herein. Transfer of employment between and among the Company and its Affiliates, by itself, shall not constitute a termination of employment for purposes of this Plan.
(l) Disability or Disabled as it relates to an Eligible Individual means when such Eligible Individual (i) receives disability benefits under either Social Security or the applicable long- term disability plan of the Company or its Affiliates, if any, or (ii) the Administrator, upon the written report of a qualified physician designated by the Administrator or the insurer of the applicable long-term disability plan of the Company or its Affiliates, shall have determined (after a complete physical examination of the Eligible Individual at any time after he has been absent from employment with the Company or its Affiliates for 90 or more consecutive calendar days) that such Eligible Individual has become physically and/or mentally incapable of performing such Eligible Individuals essential job functions with or without reasonable accommodation as required by law due to injury, illness, or other incapacity (physical or mental).
(m) Emergence Grants has the meaning assigned to it in the Restructuring Support Agreement.
(n) Employee Restrictive Covenants, Proprietary Information and Inventions Agreement means that certain Employee Restrictive Covenants, Proprietary Information and Inventions Agreement or, with respect to a Tier 5 Key Employee, that certain Employee Proprietary Information and Inventions Agreement, as applicable, executed by an Eligible Individual.
(o) Exchange Act means the Securities Exchange Act of 1934, as amended.
(p) Good Reason shall exist in the event any of the following actions are taken without an Eligible Individuals consent:
(i) such Eligible Individuals authority with Company or its Affiliates is, or such Eligible Individuals duties or responsibilities based on such Eligible Individuals job title or job description are, materially diminished relative to such Eligible Individuals authority, duties and responsibilities as in effect immediately prior to such change, provided, however, that in no event shall removal of such Eligible Individual from the position of manager, director or officer of any direct or indirect Affiliate of the Company in connection with any corporate restructuring constitute Good Reason;
(ii) a reduction in such Eligible Individuals annual base salary as in effect immediately prior to reduction in an amount of 10% or more;
(iii) a relocation of such Eligible Individuals primary work location more than 50 miles away from the then-current primary work location; or
(iv) any material breach by the Company of any provision of this Plan or other material agreement between the Company and the Eligible Individual.
(q) Incumbent Directors means the members of the Board as determined immediately prior to the relevant transaction or event described in Section 2(g).
(r) LTIP means the Companys 2017 Long Term Incentive Plan or any successor equity incentive plan maintained by the Company.
(s) Notice of Termination means a notice that indicates the specific termination provision in this Plan relied upon and sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated; provided, however, that any failure to provide such detail shall not delay the effectiveness of the termination.
(t) Post-Termination Obligations means any obligations owed by an Eligible Individual to the Company or any of its Affiliates which survive such Eligible Individuals employment with the Company or its Affiliates, including, without limitation, those obligations and restrictive covenants (including covenants not to compete and not to solicit) set forth in such Eligible Individuals Employee Restrictive Covenants, Proprietary Information and Invention Agreement.
(u) Restructuring has the meaning assigned to it in the Restructuring Support Agreement.
(v) Restructuring Support Agreement means the Restructuring Support and Lock-Up Agreement, dated as of December 23, 2016, as amended, by and among the Company and each of its subsidiaries, certain holders of the Companys 5.75% Senior Notes due 2023 and 6.75% Senior Notes due 2021, NGL Energy Partners LP, and NGL Crude Logistics, LLC.
(w) Section 409A means Section 409A of the Code and the regulations and administrative guidance issued thereunder.
(x) Section 4999 means Section 4999 of the Code.
(y) Separation from Service means a separation from service as such term is defined for purposes of Section 409A.
(z) Severance Obligations means the Severance Obligations identified in Section 5(b) and 5(c) of this Plan, as applicable.
(aa) Severance Obligation Period means (i) in the case of a Tier 1, Tier 2, Tier 3 or Tier 4 Executive, the period beginning on the Date of Termination ending one (1) year thereafter; and (ii) in the case of a Tier 5 Key Employee, the number of months (up to a maximum of 12) equal to the sum of three (3) plus the number of full years of service of the Tier 5 Key Employee with the Company.
(bb) STIP means the Companys Short Term Incentive Program (or any successor thereto).
(cc) Tier 1 Executive means an Eligible Individual identified as a Tier 1 Executive in accordance with Exhibit A attached hereto.
(dd) Tier 2 Executive means an Eligible Individual identified as a Tier 2 Executive in accordance with Exhibit A attached hereto.
(ee) Tier 3 Executive means an Eligible Individual identified as a Tier 3 Executive in accordance with Exhibit A attached hereto.
(ff) Tier 4 Executive means an Eligible Individual identified as a Tier 4 Executive in accordance with Exhibit A attached hereto.
(gg) Tier 5 Key Employee means an Eligible Individual identified as a Tier 5 Key Employee in accordance with Exhibit A attached hereto.
(hh) Tier means the level at which an Eligible Individual is identified immediately prior to the Eligible Individuals termination of employment (without regard to any reduction in such Tier that constitutes Good Reason).
3. Administration of the Plan.
(a) Authority of the Administrator. This Plan will be administered by the Administrator. Subject to the express provisions of this Plan and applicable law, the Administrator will have the authority, in its sole and absolute discretion, to: (i) adopt, amend, and rescind administrative and interpretive rules and regulations related to this Plan, (ii) delegate its duties under this Plan to such agents as it may appoint from time to time, and (iii) make all other determinations, perform all other acts and exercise all other powers and authority necessary or advisable for administering this Plan, including the delegation of those ministerial acts and responsibilities as the Administrator deems appropriate. The Administrator shall have complete discretion and authority with respect to this Plan and its application except to the extent that discretion is expressly limited by this Plan. The Administrator may correct any defect, supply any omission, or reconcile any inconsistency in this Plan in any manner and to the extent it deems necessary or desirable to carry this Plan into effect, and the Administrator will be the sole and final judge of that necessity or desirability. The determinations of the Administrator on the matters referred to in this Section 3(a) or otherwise arising under this Plan will be final and conclusive.
(b) Manner of Exercise of Authority. Any action of, or determination by, the Administrator will be final, conclusive and binding on all persons, including the Company, the Companys Affiliates, the Board, the stockholders of the Company, each Eligible Individual, or other persons claiming rights from or through an Eligible Individual. The express grant of any specific power to the Administrator, and the taking of any action by the Administrator, will not be construed as limiting any power or authority of the Administrator. The Administrator may delegate to officers of the Company, or committees thereof, the authority, subject to such terms as the Administrator will determine, to perform such functions, including administrative functions, as the Administrator may determine. The Administrator may appoint agents to assist it in administering this Plan.
(c) Limitation of Liability. The Administrator will be entitled to, in good faith, rely or act upon any report or other information furnished to the Administrator by any officer or employee of the Company or any of its Affiliates, the Companys legal counsel, independent auditors, consultants or any other agents assisting in the administration of this Plan. The Administrator and any officer or employee of the Company or any of its Affiliates acting at the direction or on behalf of the Administrator will not be personally liable for any action or determination taken or made in good faith with respect to the Plan and will, to the fullest extent permitted by law, be indemnified and held harmless by the Company with respect to any such action or determination.
4. Eligibility. Each employee of the Company or any of its Affiliates eligible to receive the benefits described in this Plan as designated by the Administrator (collectively the Eligible Individuals and each an Eligible Individual); provided, that any individual who is entitled to severance or change in control benefits pursuant to a separate written agreement between the Company (or one of its Affiliates) and the individual shall not be an Eligible Individual.
5. Plan Benefits.
(a) Payment of Accrued Obligations. In the event an Eligible Individuals Date of Termination occurs for any reason, such Eligible Individual shall be entitled to receive the Accrued Obligations. Participation in all benefit plans of the Company and its Affiliates will terminate upon an Eligible Individuals Date of Termination except as otherwise specifically provided in the applicable plan.
(b) Severance Obligations. In the event an Eligible Individuals employment with the Company and its Affiliates is terminated by the Company or one of its Affiliates without Cause or by such Eligible Individual resigning such Eligible Individuals employment for Good Reason other than during the one (1) year period following the CIC Effective Date, the Company (or the Affiliate of the Company that is the employer of the Eligible Individual immediately prior to termination) shall provide Severance Obligations set forth below, provided that the conditions of Sections 5(d) and 8 of this Plan have been fulfilled.
(i) Tier 1 through Tier 4 Executives. The Severance Obligations to a Tier 1, Tier 2, Tier 3 and Tier 4 Executive shall be as follows:
(1) subject to the potential reduction set forth in Section 6(b), payment of an amount equal to the sum of such Executives Base Salary as in effect on the applicable Date of Termination and 50% of such Executives Annual Bonus;
(2) subject to Section 6, all equity incentives then held by such Executive pursuant to the LTIP or otherwise will be governed by the award agreement applicable to the equity incentive award;
(3) the Emergence Grant Acceleration, if any; and
(4) if and to the extent permitted under applicable law and without additional cost or penalty to the Company or the Executive, during the portion, if any, of the 12-month period, commencing as of the date such Executive is eligible to elect and timely elects to continue coverage for such Executive and such Executives eligible dependents under the Companys or an Affiliates group health plan pursuant to COBRA or similar state law, the Company (or the Affiliate of the Company that is the Eligible Individuals employer immediately prior to termination) shall reimburse such Executive for the difference between the amount such Executive pays to effect and continue such coverage and the employee contribution amount that active senior executive employees of the Company or its applicable Affiliate pay for the same or similar coverage, with any such reimbursement payable for the 60 day period immediately following the Date of Termination being payable on the first business day 60 days following the Date of Termination and any other such reimbursement payable being paid on a monthly basis thereafter.
(ii) Tier 5 Key Employees. The Severance Obligations to a Tier 5 Key Employee shall be as follows:
(1) subject to the potential reduction set forth in Section 6(b), payment of an amount equal to A x B, where A equals the sum of such Key Employees Base Salary as in effect on the applicable Date of Termination and 50% of such Key Employees Annual Bonus and B equals a fraction (which cannot exceed one (1)), the numerator of which is three (3) PLUS the number of full years of service of the Tier 5 Key Employee with the Company (up to a maximum numerator of 12) and the denominator of which is 12;
(2) subject to Section 6, all equity incentives then held by such Key Employee pursuant to the LTIP or otherwise will be governed by the award agreement applicable to the equity incentive award;
(3) the Emergence Grant Acceleration, if any; and
(4) if and to the extent permitted under applicable law and without additional cost or penalty to the Company or the Key Employee, during the portion, if any, of the COBRA Period, commencing as of the date such Key Employee is eligible to elect and timely elects to continue coverage for such Key Employee and such Key Employees eligible dependents under the Companys or an Affiliates group health plan pursuant to COBRA or similar state law, the Company (or the Affiliate of the Company that is the Eligible Individuals employer immediately prior to termination) shall reimburse such Key Employee for the difference between the amount such Key Employee pays to effect and continue such coverage and the employee contribution amount that active senior executive employees of the Company or its applicable Affiliate pay for the same or similar coverage, with any such reimbursement payable for the 60 day period immediately following the Date of Termination being payable on the first business day 60 days following the Date of Termination and any other such reimbursement payable being paid on a monthly basis thereafter.
For purposes of this Section 5, the COBRA Period shall be a number of months (up to a maximum of 12) equal to equal to the sum of three (3) plus the number of full years of service of the Tier 5 Key Employee with the Company.
Provided that the conditions of Sections 5(d) and 8 of this Plan have been fulfilled, an Eligible Individuals cash Severance Obligations will be paid in ratable installments in accordance with the Companys normal payroll process during the Eligible Individuals Severance Obligation Period, with the first payment being made on the first payroll payment date occurring at least 60 days after such Eligible Individuals Date of Termination and including all payments that would otherwise have been made during such 60 day period.
(c) Severance Obligations - Change in Control. In the event an Eligible Individual is employed by the Company or one of its Affiliates on the CIC Effective Date and such Eligible Individual (i) resigns such Eligible Individuals employment with the Company and its Affiliates for Good Reason, if applicable, or (ii) is terminated by the Company and its Affiliates without Cause, in each case, at any time within the twelve (12)-month period following the CIC Effective Date, then, the Company (or the Affiliate of the Company that is the employer of the Eligible Individual immediately prior to termination) shall provide Severance Obligations
set forth below, provided that the conditions of Sections 5(d) and 8 of this Plan have been fulfilled. Notwithstanding the foregoing, in the event that an Eligible Individuals Date of Termination occurs by reason of the Eligible Individuals refusal to accept an offer of employment (including continued employment with the Company or any of its Affiliates) in connection with a Change in Control or other corporate transaction and if such offer of employment would not constitute a basis for a Good Reason termination, then the Eligible Individual shall not be entitled to Severance Obligations under the Plan.
(i) Tier 1 through Tier 3 Executives. The Severance Obligations to a Tier 1, Tier 2, and Tier 3 Executive shall be as follows:
(1) on the first business day 60 days after the Date of Termination, payment of a lump sum cash payment equal to 200% of the sum of (A) such Executives then current Base Salary as of the Date of Termination and (B) 50% of such Executives Annual Bonus;
(2) all equity incentives then held by such Executive pursuant to the LTIP or otherwise (other than the Emergence Grants) will be governed by the award agreement applicable to the equity incentive award;
(3) the Emergence Grant Acceleration, if any; and
(4) if and to the extent permitted under applicable law and without additional cost or penalty to the Company or the Executive, during the portion, if any, of the 18-month period, commencing as of the date such Executive is eligible to elect and timely elects to continue coverage for such Executive and such Executives eligible dependents under the Companys or an Affiliates group health plan pursuant to COBRA or similar state law, the Company (or the Affiliate of the Company that is the Eligible Individuals employer immediately prior to termination) shall reimburse such Executive for the difference between the amount such Executive pays to effect and continue such coverage and the employee contribution amount that active senior executive employees of the Company or its applicable Affiliate pay for the same or similar coverage, with any such reimbursement payable for the 60 day period immediately following the Date of Termination being payable on the first business day 60 days following the Date of Termination and any other such reimbursement payable being paid on a monthly basis thereafter.
(ii) Tier 4 Executives. The Severance Obligations to a Tier 4 Executive shall be as follows:
(1) on the first business day 60 days after the Date of Termination, payment of a lump sum cash payment equal to the sum of (A) such Executives then current Base Salary as of the Date of Termination plus (B) 50% such Executives Annual Bonus;
(2) all equity incentives then held by such Executive pursuant to the LTIP or otherwise (other than the Emergence Grants) will be governed by the award agreement applicable to the equity incentive award;
(3) the Emergence Grant Acceleration, if any; and
(4) if and to the extent permitted under applicable law and without additional cost or penalty to the Company or the Executive, during the portion, if any, of the 12-month period, commencing as of the date such Executive is eligible to elect and timely elects to continue coverage for such Executive and such Executives eligible dependents under the Companys or an Affiliates group health plan pursuant to COBRA or similar state law, the Company (or the Affiliate of the Company that is the Eligible Individuals employer immediately prior to termination) shall reimburse such Executive for the difference between the amount such Executive pays to effect and continue such coverage and the employee contribution amount that active senior executive employees of the Company or its applicable Affiliate pay for the same or similar coverage, with any such reimbursement payable for the 60 day period immediately following the Date of Termination being payable on the first business day 60 days following the Date of Termination and any other such reimbursement payable being paid on a monthly basis thereafter.
(iii) Tier 5 Key Employees. The Severance Obligations to a Tier 5 Key Employee shall be as follows:
(1) on the first business day 60 days after the Date of Termination, payment of a lump sum cash payment equal to A x B, where A equals the sum of such Key Employees Base Salary as in effect on the applicable Date of Termination and 50% of such Key Employees Annual Bonus and B equals a fraction (which cannot exceed one (1)), the numerator of which is three (3) PLUS the number of full years of service of the Tier 5 Key Employee with the Company (up to a maximum numerator of 12) and the denominator of which is 12;
(2) all equity incentives then held by such Key Employee pursuant to the LTIP or otherwise (other than the Emergence Grants) will be governed by the award agreement applicable to the equity incentive award;
(3) the Emergence Grant Acceleration, if any; and
(4) if and to the extent permitted under applicable law and without additional cost or penalty to the Company or the Tier 5 Key Employee, during the portion, if any, of the COBRA Period, commencing as of the date such Tier 5 Key Employee is eligible to elect and timely elects to continue coverage for the Tier 5 Key Employee and such Tier 5 Key Employees eligible dependents under the Companys or an Affiliates group health plan pursuant to COBRA or similar state law, the Company (or the Affiliate of the Company that is the Eligible Individuals employer immediately prior to termination) shall reimburse such Tier 5 Key Employee on a monthly basis for the difference between the amount such Tier 5 Key Employee pays to effect and continue such coverage and the employee contribution amount that active senior executive employees of the Company or its applicable Affiliate pay for the same or similar coverage, with any such reimbursement payable for the 60 day period immediately following the Date of Termination being payable on the first business day 60 days
following the Date of Termination and any other such reimbursement payable being paid on a monthly basis thereafter.
(d) Conditions to Severance Obligations. Notwithstanding Section 5(b), Section 5(c) or Section 6 of this Plan, in no event shall an Eligible Individual be entitled to the Severance Obligations unless such Eligible Individual (i) tenders his or her resignation as a member of the Board and of the board of directors of any Affiliate (in each case, to the extent applicable) effective as of the Date of Termination (the Resignation), and (ii) executes a General Release in a form and substance approved by the Administrator (the Release) substantially similar to the Release attached hereto as Exhibit B, with any additional customary terms as the Administrator may deem appropriate in the circumstances, and such Release is not revoked. The Eligible Individual shall be eligible for the Severance Obligations only if the executed Release is returned to the Company and becomes irrevocable within 60 days after the Date of Termination. Until the Release has become irrevocable, any such Severance Obligations shall not be provided by the Company or any of its Affiliates. If an Eligible Individual fails to return the Resignation so that it would, if accepted, be effective upon the Date of Termination, or fails to return the Release to the Company in sufficient time so that the Release becomes irrevocable within 60 days after the Date of Termination, such Eligible Individuals rights to Severance Obligations shall be forfeited.
6. Certain Terms Applicable to Emergence Grants.
(a) General. Notwithstanding anything to the contrary that may be set forth in the LTIP or in any grant agreement thereunder and provided that the conditions of Sections 5(d) and 8 of this Plan have been fulfilled, in the event an Eligible Individuals employment is terminated by death, for Disability, by the Company or one of its Affiliates without Cause or by such Eligible Individual resigning such Eligible Individuals employment for Good Reason, immediately prior to the Date of Termination, all Emergence Grants then held by such Eligible Individual pursuant to the LTIP or otherwise will immediately vest, with payment of such Emergence Grants payable in accordance with the applicable award agreement (the Emergence Grant Acceleration).
(b) Severance Offset. In the event of any termination of employment that qualifies for the Emergence Grant Acceleration, the amount of cash severance otherwise payable to an Eligible Individual under Section 5(b)(i)(1) or Section 5(b)(ii)(1) will reduced on a dollar-for-dollar basis (but not below $0) by the Intrinsic Value of the Eligible Individuals Emergence Grant Acceleration. For this purpose, the Intrinsic Value of Emergence Awards means the aggregate spread value of unvested options and the value of unvested restricted stock units, in each case, included within the Eligible Individuals Emergence Award, as determined by the Administrator in good faith using the closing price of the Companys common stock on last trading day before the Eligible Individuals Date of Termination
7. Parachute Payment Limitations. Notwithstanding any contrary provision in this Plan, if an Eligible Individual is a disqualified individual (as defined in Section 280G of the Code), and the Severance Obligations that would otherwise be paid to such Eligible Individual under this Plan together with any other payments or benefits that such Eligible Individual has a right to receive from the Company (and affiliated entities required to be
aggregated in accordance with Q/A-10 and Q/A-46 of Treas. Reg. §1.280G-1) (collectively, the Payments) would constitute a parachute payment (as defined in Section 280G of the Code), the Payments shall be either (a) reduced (but not below zero) so that the aggregate present value of such Payments and benefits received by the Eligible Individual from the Company and its Affiliates shall be $1.00 less than three times such Eligible Individuals base amount (as defined in Section 280G of the Code) (the Safe Harbor Amount) and so that no portion of such Payments received by such Eligible Individual shall be subject to the excise tax imposed by Section 4999; or (b) paid in full, whichever produces the better net after-tax result for such Eligible Individual (taking into account any applicable excise tax under Section 4999 and any applicable federal, state and local income and employment taxes). The determination as to whether any such reduction in the amount of the Payments is necessary shall be made by the Company in good faith and such determination shall be conclusive and binding on such Eligible Individual. If reduced Payments are made to the Eligible Individual pursuant to this Section 7 and through error or otherwise those Payments exceed the Safe Harbor Amount, the Eligible Individual shall immediately repay such excess to the Company or its applicable Affiliate upon notification that an overpayment has been made.
The reduction of Payments, if applicable, shall be made by reducing, first, Severance Obligations to be paid in cash hereunder in the order in which such payments would be paid or provided (beginning with such payment or benefit that would be made last in time and continuing, to the extent necessary, through to such payment or benefit that would be made first in time) and second, by reducing any other cash payments that would be payable to the Eligible Individual outside of this Plan which are valued in full for purposes of Code Section 280G in a similar order (last to first), any third, by reducing any equity acceleration hereunder of awards which are valued in full for purposes of Section 280G of the Code in a similar order (last to first), and finally, by reducing any other payments or benefit provided hereunder in a similar order (last to first).
8. Conditions to Receipt of Severance Obligations.
(a) Compliance with Post-Termination Obligations. Notwithstanding anything contained in this Plan to the contrary, the Company and its Affiliates shall have the right to cease providing any part of the Severance Obligations, and the Eligible Individual shall be required to immediately repay the Company and its Affiliates for any Severance Obligations already provided, but all other provisions of this Plan shall remain in full force and effect, if such Eligible Individual has been determined, pursuant to the dispute resolution provisions hereof, not to have fully complied with such Eligible Individuals Post-Termination Obligations during the Severance Obligation Period or longer, as may be the case.
(b) Separation from Service Required. Notwithstanding anything contained in this Plan to the contrary, the Eligible Individual shall be entitled to Severance Obligations only if such Eligible Individuals termination of employment constitutes a Separation from Service.
9. Termination.
(a) Notice of Termination. Any termination of an Eligible Individuals employment with the Company and its Affiliates (other than termination as a result of death)
shall be communicated by written Notice of Termination to, (i) in the case of termination by an Eligible Individual, the Company or one of its Affiliates and (ii) in the case of termination by the Company and its Affiliates, the Eligible Individual.
(b) Death. An Eligible Individuals employment with the Company and its Affiliates shall terminate immediately upon such Eligible Individuals death.
(c) Disability. An Eligible Individuals employment with the Company and its Affiliates shall terminate 30 days after Notice of Termination is given by the Company or its Affiliates.
(d) For Cause.
(i) Subject to Section 9(d)(ii), the Company and its Affiliates shall be entitled to terminate an Eligible Individuals employment with the Company and its Affiliates immediately for any Cause.
(ii) If the Administrator determines, in its sole discretion, that a cure is possible and appropriate, the Company or the applicable Affiliate will give an Eligible Individual being terminated for Cause written notice of the acts or omissions constituting Cause and no termination of such Eligible Individuals employment with the Company and its Affiliates for Cause shall occur unless and until such Eligible Individual fails to cure such acts or omissions within 10 days following the receipt of such written notice. If the Administrator determines, in its sole discretion, that a cure is not possible or appropriate, an Eligible Individual being terminated for Cause shall have no notice or cure rights before such Eligible Individuals employment with the Company and its Affiliates is terminated for Cause.
(e) Without Cause. The Company and its Affiliates shall be entitled to terminate an Eligible Individuals employment with the Company for any reason, at any time by providing written notice to such Eligible Individual that the Company and its Affiliates is terminating such Eligible Individuals employment with the Company and its Affiliates without Cause.
(f) With Good Reason.
(i) Subject to Section 9(f)(ii), an Eligible Individual shall be permitted to terminate such Eligible Individuals employment with the Company and its Affiliates for any Good Reason.
(ii) To exercise an Eligible Individuals right to terminate such Eligible Individuals employment for Good Reason, such Eligible Individual must provide written notice to the Company or one of its Affiliates of such Eligible Individuals belief that Good Reason exists within 90 days of the initial existence of the condition(s) giving rise to such Good Reason, and such notice shall describe the conditions believed to constitute Good Reason. The Company and its Affiliates shall have 30 days to remedy the Good Reason condition(s) (the Cure Period). If the condition(s) are not remedied during such Cure Period, such Eligible Individual may terminate such Eligible Individuals employment with the Company and its Affiliates for Good Reason by delivering a Notice of Termination to the Company; provided,
however, that such termination must occur no later than 5 days after the conclusion of the Cure Period (or, in the case of a termination yielding the benefits provided in Section 6 hereof, 180 days after the date of the initial existence of the condition(s) giving rise to such Good Reason); otherwise, such Eligible Individual is deemed to have accepted the condition(s), or the Companys and its Affiliates correction of such condition(s), that may have given rise to the existence of such Good Reason.
(g) Without Good Reason. An Eligible Individual shall be entitled to terminate such Eligible Individuals employment with the Company and its Affiliates at any time by providing 30 days written Notice of Termination to the Company or one of its Affiliates and stating that such termination is without Good Reason, provided, however, that notwithstanding anything to the contrary contained herein, the Company and its Affiliates shall be under no obligation to continue to employ such Eligible Individual for such 30 day period.
(h) Suspension of Duties. Notwithstanding the foregoing provisions of this Section 9, the Company and its Affiliates may, to the extent doing so would not result in the Eligible Individuals Separation from Service, suspend an Eligible Individual from performing such Eligible Individuals duties, responsibilities, and authorities (including, without limitation, such Eligible Individuals duties, responsibilities and authorities as a member of the Board or the board of directors of any Affiliate) following the delivery by such Eligible Individual of a Notice of Termination providing for such Eligible Individuals resignation, or following delivery by the Company or one of its Affiliates of a Notice of Termination providing for the termination of such Eligible Individuals employment for any reason; provided, however, that during the period of suspension (which shall end on or before the Date of Termination), and subject to the legal rules applicable to any Company benefit plans under Section 401(a) of the Code and the rules applicable to nonqualified deferred compensation plans under Section 409A, such Eligible Individual shall continue to be treated as employed by the Company and its Affiliates for other purposes, and such Eligible Individuals rights to compensation or benefits shall not be reduced by reason of the suspension; and provided, further, that any such suspension shall not serve as a basis for Good Reason and shall not affect the determination of whether the resignation was for Good Reason or without Good Reason or whether the termination was for Cause or without Cause. The Company and its Affiliates may suspend an Eligible Individual with pay pending an investigation authorized by the Company or any of its Affiliates or a governmental authority in order to determine whether such Eligible Individual has engaged in acts or omissions constituting Cause, and in such case the paid suspension shall not constitute a termination of such Eligible Individuals employment with the Company and its Affiliates; provided, however, that such suspension shall not continue past the time that the Eligible Individual would incur a Separation from Service (at such point, the Company shall either terminate the Eligible Individual in accordance with this Plan or have the Eligible Individual return to active employment).
10. General Provisions.
(a) Taxes. The Company and its Affiliates are authorized to withhold from any payments made hereunder amounts of withholding and other taxes due or potentially payable in connection therewith, and to take such other action as the Company and its Affiliates may deem advisable to enable the Company, its Affiliates and Eligible Individuals to satisfy
obligations for the payment of withholding taxes and other tax obligations relating to any payments made under this Plan.
(b) Offsets and Substitutions. Pursuant to Reg. § 1.409A-3(j)(4)(xiii), the Company and its Affiliates may set off against, and each Eligible Individual authorizes the Company and its Affiliates to deduct from, any payments due to such Eligible Individual, or to such Eligible Individuals estate, heirs, legal representatives or successors, any amounts which may be due and owing to the Company or an Affiliate by such Eligible Individual, arising in the ordinary course of business whether under this Plan or otherwise. To the extent that any amounts would otherwise be payable (or benefits would otherwise be provided) to an Eligible Individual under another plan of the Company or its Affiliates or an agreement with the Eligible Individual and the Company or its Affiliates, including a change in control plan or agreement, an offer letter or letter agreement, or to the extent that an Eligible Individual moves between Tiers, and to the extent that such other payments or benefits or the Severance Obligations provided under this Plan are subject to Section 409A, the Plan shall be administered to ensure that no payment or benefit under the Plan will be (i) accelerated in violation of Section 409A or (ii) further deferred in violation of Section 409A.
(c) Term of this Plan; Amendment and Termination.
(i) Prior to a Change in Control, this Plan may be amended or modified in any respect, and may be terminated, in any such case, by resolution adopted by the Administrator and a majority of the Board; provided, however, that no such amendment, modification or termination that is the Administrator determines in its sole discretion is required to be adopted as a condition to the consummation of Change in Control pursuant to the request of a third party who effectuates a Change in Control that would adversely affect the benefits or protections hereunder of any Eligible Individual as of the date such amendment, modification or termination is adopted shall be effective as it relates to such Eligible Individual. For a period of one (1) year following the occurrence of a Change in Control, this Plan may not be amended or modified in any manner that would in any way adversely affect the benefits or protections provided hereunder to any Eligible Individual under this Plan on the date the Change in Control occurs.
(ii) Notwithstanding the provisions of paragraph (i), the Company may terminate and liquidate the Plan in accordance with the provisions of Section 409A.
(iii) Notwithstanding the foregoing, no amendment, modification or termination of this Plan shall adversely affect any Eligible Individuals entitlement to payments under this Plan for qualifying terminations of employment occurring prior to such amendment, modification or termination (other than as required to permit termination of the Plan in accordance with Section 409A), nor shall such amendment, modification or termination relieve the Company of its obligation to pay vested benefits to Eligible Individuals who experienced a qualifying termination of employment prior to the date of such amendment, modification or termination as otherwise set forth herein, except as otherwise consented to by such Eligible Individual.
(iv) Notwithstanding the foregoing or any other provision of this Plan, (A) the Restructuring and any associated organizational changes that occurred prior to the Effective Date shall not constitute a Change in Control or serve as a basis to trigger payments under this Plan, and (B) this Plan (including without limitation Sections 2(e), 2(f), 2(o), 5(b)(i)(3), 5(b)(ii)(3), 5(b)(iii)(3), 5(b)(iv)(3) or 5(b)(v)(3) as such were in effect on April 28, 2017 and solely to the extent such Sections relate to the Emergence Grants), may not be amended or modified in any manner that would impair vesting (including accelerated vesting) of the Emergence Grants.
(d) Successors. This Plan shall bind and inure to the benefit of and be enforceable by any Eligible Individual and the Company and their respective successors, permitted assigns, heirs and personal representatives and estates, as the case may be. Neither this Plan nor any right or obligation hereunder of the Company, any of its Affiliates or any Eligible Individual may be assigned or delegated without the prior written consent of the other party; provided, however, that the Company may assign this Plan to any of its Affiliates and an Eligible Individual may direct payment of any benefits that will accrue upon death. An Eligible Individual shall not have any right to pledge, hypothecate, anticipate or in any way create a lien upon any payments or other benefits provided under this Plan; and no benefits payable under this Plan shall be assignable in anticipation of payment either by voluntary or involuntary acts, or by operation of law, except by will or pursuant to the laws of descent and distribution. This Plan shall not confer any rights or remedies upon any person or legal entity other than the Company, its Affiliates and Eligible Individuals and their respective successors and permitted assigns.
(e) Unfunded Obligation. All benefits due an Eligible Individual under this Plan are unfunded and unsecured and are payable out of the general funds of the Company and its Affiliates.
(f) Directed Payments. If any Eligible Individual is determined by the Administrator to be Disabled, the Administrator may cause the payment or payments becoming due to such Eligible Individual to be made to another person for such persons benefit without responsibility on the part of the Administrator or the Company and its Affiliates to follow the application of such funds.
(g) Limitation on Rights Conferred Under Plan. Neither this Plan nor any action taken hereunder will be construed as (i) giving an Eligible Individual the right to continue in the employ or service of the Company or any Affiliate; (ii) interfering in any way with the right of the Company or any Affiliate to terminate an Eligible Individuals employment or service at any time; or (iii) giving an Eligible Individual any claim to be treated uniformly with other employees of the Company or any of its Affiliates. The provisions of this document supersede any oral statements made by any employee, officer, or Board member of the Company or any of its Affiliates regarding eligibility, severance payments and benefits.
(h) Governing Law. All questions arising with respect to the provisions of the Plan and payments due hereunder will be determined by application of the laws of the State of Colorado, without giving effect to any conflict of law provisions thereof, except to the extent Colorado law is preempted by federal law.
(i) Dispute Resolution. Any and all disputes, claims or controversies arising out of or relating to this Plan (A) shall be brought by an Eligible Individual in such Eligible Individuals individual capacity, and not as a plaintiff or class member in any purported class or representative proceeding, and (B) shall be resolved only in the courts of the State of Colorado or the United States District Court for the District of Colorado and the appellate courts having jurisdiction of appeals in such courts. Any proceeding relating to this Plan or any Eligible Individuals benefits hereunder, or for the recognition and enforcement of any judgment in respect thereof (a Proceeding), to the exclusive jurisdiction of the courts of the State of Colorado, the court of the United States of America for the District of Colorado, and appellate courts having jurisdiction of appeals from any of the foregoing, and agrees that all claims in respect of any such Proceeding shall be heard and determined in such Colorado State court or, to the extent permitted by law, in such federal court, (b) consents that any such Proceeding may and shall be brought in such courts and waives any objection that the Eligible Individual or the Company may now or thereafter have to the venue or jurisdiction of any such Proceeding in any such court or that such Proceeding was brought in an inconvenient court and agrees not to plead or claim the same, (c) waives all right to trial by jury in any Proceeding (whether based on contract, tort or otherwise) arising out of or relating to this Plan or the Eligible Individuals employment by the Company or any affiliate of the Company, or the Eligible Individuals or the Companys performance under, or the enforcement of, this Plan, (d) agrees that service of process in any such Proceeding may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at the Eligible Individuals or the Companys address on record with the Company and (e) agrees that nothing in this Plan shall affect the right to effect service of process in any other manner permitted by the laws of the State of Colorado. The parties acknowledge and agree that in connection with any dispute hereunder, the non-prevailing party shall be responsible for the payment of the prevailing partys costs and expenses, including, without limitation, the prevailing partys legal fees and expenses; provided that if the dispute solely involves a dispute as to whether Cause or Good Reason exists, each party shall bear its own costs and expense, regardless of the outcome of such dispute.
(j) Severability. The invalidity or unenforceability of any provision of the Plan will not affect the validity or enforceability of any other provision of the Plan, which will remain in full force and effect, and any prohibition or unenforceability in any jurisdiction will not invalidate that provision, or render it unenforceable, in any other jurisdiction.
(k) Section 409A.
(i) This Plan is intended to comply with Section 409A and shall be construed and operated accordingly. The Company may amend this Plan at any time to the extent necessary to comply with Section 409A. Any Eligible Employee shall perform any act, or refrain from performing any act, as reasonably requested by the Company to comply with any correction procedure promulgated pursuant to Section 409A.
(ii) To the extent required to avoid the imposition of penalties or interest under Section 409A, any payment or benefit to be paid or provided on account of an Eligible Individuals Separation from Service to an Eligible Individual who is a specified employee (within the meaning of Section 409A(a)(2)(B) of the Code) that would be paid or
provided prior to the first day of the seventh month following the Eligible Individuals Separation from Service shall be paid or provided on the first day of the seventh month following the Eligible Individuals Separation from Service or, if earlier, the date of the Eligible Individuals death.
(iii) Each payment to be made under this Plan is a separately identifiable or designated amount for purposes of Section 409A.
(l) PHSA § 2716. Notwithstanding anything to the contrary in this Plan, in the event that the Company or any of its Affiliates is subject to the sanctions imposed pursuant to § 2716 of the Public Health Service Act by reason of this Plan, the Company may amend this Plan at any time with the goal of giving Employee the economic benefits described herein in a manner that does not result in such sanctions being imposed.
[Signature Page Follows]
IN WITNESS WHEREOF, the Company has adopted this Amended and Restated Executive Change in Control and Severance Plan as of the Effective Date.
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BONANZA CREEK ENERGY, INC. | |
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By: |
/s/ Jack E. Vaughn |
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Name: |
Jack E. Vaughn |
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Title: |
Chairman of the Board |
[SIGNATURE PAGE TO AMENDED AND RESTATED EXECUTIVE CHANGE IN CONTROL AND SEVERANCE PLAN]
EXHIBIT A
EXECUTIVE AND KEY EMPLOYEE TIERS
Tier |
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Position |
Tier 1 |
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President and Chief Executive Officer |
Tier 2 |
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Executive Vice President |
Tier 3 |
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Senior Vice President |
Tier 4 |
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Vice President |
Tier 5 |
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Director, Senior Manager, Manager, and other key employee designated by the Administrator |
EXHIBIT B
FORM OF GENERAL RELEASE
1. The undersigned (Employee), on Employees own behalf and on behalf of Employees heirs, agents, representatives, attorneys, assigns, executors and/or anyone acting on Employees behalf, and in consideration of the promises, assurances, and covenants set forth in the Fourth Amended and Restated Executive Change In Control And Severance Plan, as in effect on of May , 2017 (the Plan), under which Employee is an Eligible Individual, but to which Employee is not automatically entitled, including, but not limited to, the payment of any severance thereunder, hereby fully releases Bonanza Creek Energy, Inc. and its successors or affiliates (the Company), its parents, subsidiaries, officers, shareholders, partners, members, individual employees, agents, representatives, directors, employees, attorneys, successors, and anyone acting on its behalf, known or unknown, from all claims and causes of action by reason of any injuries and/or damages or losses, known or unknown, foreseen or unforeseen, patent or latent which Employee has sustained or which may be sustained as a result of any facts and circumstances arising out of or in any way related to Employees employment by the Company or the termination of that employment, and to any other disputes, claims, disagreements, or controversies between Employee and the Company up to and including the date this release is signed by Employee. Employees release includes, but is not limited to, any contract benefits, claims for quantum meruit, claims for wages, bonuses, employment benefits, moving expenses, stock options, profits units, or damages of any kind whatsoever, arising out of any contracts, express or implied, any covenant of good faith and fair dealing, express or implied, any theory of unlawful discharge, torts and related damages (including, but not limited to, emotional distress, loss of consortium, and defamation) any legal restriction on the Companys right to terminate Employees employment and/or services, or any federal, state or other governmental statute or ordinance, including, without limitation, Title VII of the Civil Rights Act of 1964 (as amended), the federal Age Discrimination in Employment Act of 1967 (29 U.S.C. § 21, et seq.) (as amended) (ADEA), the federal Americans with Disabilities Act of 1990, any state laws concerning discrimination or harassment including the Fair Employment and Housing Act, or any other legal limitation on contractual or employment relationships, and any and all claims for any loss, cost, damage, or expense with respect to Employees liability for taxes, penalties, interest or additions to tax on or with respect to any amount received from the Company or otherwise includible in Employees gross income, including, but not limited to, any liability for taxes, penalties, interest or additions to tax arising from the failure of this Agreement, or any other employment, severance, profit sharing, bonus, equity incentive or other compensatory plan to which Employee and the Company are or were parties, to comply with, or to be operated in compliance with the Internal Revenue Code of 1986, as amended, including, but not limited to, Section 409A thereof, or any provision of state or local income tax law; provided, however, that notwithstanding the foregoing, the release set forth in this Section shall not extend to: (a) any vested rights under any pension, retirement, profit sharing or similar plan; or (b) Employees rights, if any, to indemnification or defense under the Companys certificate of incorporation, bylaws and/or policy or procedure, any indemnification agreement with Employee or under any insurance contract, in connection with Employees acts or omissions within the course and scope of Employees employment with the Company (this Release). Appendix A to this Release sets forth the benefits, payments and obligations to which Employee is entitled under the Plan if, and only if, this Release is executed, delivered and become irrevocable by no later than , which is
60 days after the Employees Date of Termination. Employee acknowledges and agrees that he is not entitled to any other termination or severance benefits whether under the Plan or otherwise.
2. [Employee acknowledges that Employee is knowingly and voluntarily waiving and releasing any rights Employee may have under the ADEA. Employee also acknowledges that the consideration given for the waiver and release hereunder is in addition to anything of value to which Employee is already entitled. Employee further acknowledges that Employee has been advised by this writing, as required by the ADEA, that: (a) Employees waiver and release hereunder do not apply to any rights or claims that may arise after the execution date of this release; (b) Employee has been advised hereby that Employee has the right to consult with an attorney prior to executing this release; (c) Employee has [twenty-one (21) days][forty-five (45) days] to consider this release (although Employee may choose to voluntarily execute this release earlier); (d) Employee has seven (7) days following the execution of this Release to revoke this Release; and (e) this Release will not be effective until the date upon which the revocation period has expired, which will be the eighth (8th) day after this Release is executed by Employee (the Effective Date).]
3. Nothing in this Release (including, without limitation, Sections 4, 5 and 7 hereof), the Plan or any other Company agreement, policy or procedure (this Release, the Plan and such other agreements, policies and procedures, collectively, the Company Arrangements) limits your ability to communicate directly with and provide information, including documents, not otherwise protected from disclosure by any applicable law or privilege to the Securities and Exchange Commission (the SEC) or any other federal, state or local governmental agency or commission (each, a Government Agency) regarding possible legal violations, without disclosure to the Company. The Company may not retaliate against you for any of these activities, and nothing in the Company Arrangements requires you to waive any monetary award or other payment that you might become entitled to from the SEC or any other Government Agency.
Further, nothing in the Company Arrangements precludes you from filing a charge of discrimination with the Equal Employment Opportunity Commission or a like charge or complaint with a state or local fair employment practice agency. However, once this Release becomes effective, you may not receive a monetary award or any other form of personal relief from the Company in connection with any such charge or complaint that you filed or is filed on your behalf.
Notwithstanding anything to the contrary in the Company Arrangements, as provided for in the Defend Trade Secrets Act of 2016 (18 U.S.C. § 1833(b)), you will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Without limiting the foregoing, if you file a lawsuit for retaliation by the Company for reporting a suspected violation of law, you may disclose the trade secret to your attorney and use the trade secret information in the court proceeding, if you (x) file any document containing the trade secret under seal, and (y) do not disclose the trade secret, except pursuant to court order.
4. Employee acknowledges that Employee executed an [Employee Restrictive Covenants, Proprietary Information and Inventions Agreement] or [Employee Proprietary Information and Inventions Agreement] under which Employee assumed certain obligations relating to the Companys confidential and proprietary business information and trade secrets and containing certain covenants relating to competition, solicitation and assignment of invention (Employee Proprietary Information and Inventions Agreement). Employee agrees that, except to the extent it conflicts with Section 3, the Employee Proprietary Information and Inventions Agreement shall by its terms survive the execution of this Release and that the parties rights and duties thereunder shall not in any way be affected by this Release. Employee also warrants and represents that Employee has returned any and all documents and other property of the Company constituting a trade secret or other confidential research, development or commercial information in Employees possession, custody or control, and represents and warrants that Employee has not retained any copies or originals of any such property of the Company. Employee further warrants and represents that, except as provided by Section 3, Employee has never violated the Employee Proprietary Information and Inventions Agreement, and will not do so in the future.
5. Employee acknowledges that because of Employees position with the Company, Employee may possess information that may be relevant to or discoverable in connection with claims, litigation or judicial, arbitral or investigative proceedings initiated by a private party or by a regulator, governmental entity, or self-regulatory organization, that relates to or arises from matters with which Employee was involved during Employees employment with the Company, or that concern matters of which Employee has information or knowledge (collectively, a Proceeding). Employee agrees that Employee shall testify truthfully in connection with any such Proceeding. Except as provided in Section 3, Employee agrees that Employee shall cooperate with the Company in connection with every such Proceeding, and that Employees duty of cooperation shall include an obligation to meet with the Company representatives and/or counsel concerning all such Proceedings for such purposes, and at such times and places, as the Company reasonably requests, and to appear for deposition and/or testimony upon the Companys request and without a subpoena. The Company shall reimburse Employee for reasonable out-of-pocket expenses that Employee incurs in honoring Employees obligation of cooperation under this Section.
6. Employee and the Company understand and agree that it is in their mutual best interest to minimize the effect of Employees separation upon the Companys business and upon Employees professional reputation. Accordingly, Employee agrees to take all actions reasonably requested of Employee by the Company in order to accomplish that objective. To this end, Employee shall consult with the Company concerning business matters on an as-needed and as-requested basis, the Company shall exercise reasonable efforts to avoid conflicts between such consulting and Employees personal and other business commitments, and Employee shall exercise reasonable efforts to fulfill the Companys consulting requests in a timely manner.
7. Employee covenants never to disparage or speak ill of the Company or any the Company product or service, or of any past or present employee, officer or director of the Company, except as provided in Section 3. Employee further agrees not to harass or behave unprofessionally toward any past, present or future Company employee, officer or director.
8. Release of Unknown Claims. It is the intention of Employee that this Release is a general release which shall be effective as a bar to each and every claim, demand, or cause of action it releases. Employee recognizes that Employee may have some claim, demand, or cause of action against the Company of which Employee is totally unaware and unsuspecting which Employee is giving up by execution of this release. It is the intention of Employee in executing this Release that it will deprive Employee of each such claim, demand or cause of action and prevent Employee from asserting it against the released parties.
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[EMPLOYEE NAME] | |
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By: |
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Exhibit 99.1
NEWS RELEASE
Bonanza Creek Energy Announces Leadership Changes and its 2017 Capital Program and
Production Guidance
DENVER, Colorado June 12, 2017 /Globe Newswire/ Bonanza Creek Energy, Inc. (NYSE: BCEI) (Bonanza Creek or the Company) today announces that, in connection with leadership changes at the Company, Mr. Richard J. Carty has resigned as President and Chief Executive Officer and as a member of the Board of Directors and Mr. R. Seth Bullock has been appointed as Interim Chief Executive Officer. The Company also today announces that the Board of Directors has approved the Companys 2017 capital program.
Bullock Appointed as Interim Chief Executive Officer Upon Resignation of Carty
Mr. Richard J. Carty has resigned as President and Chief Executive Officer of the Company and as a member of the Board of Directors. Effective immediately, the Board of Directors has retained Mr. R. Seth Bullock, a managing director of Alvarez & Marshal, LLC (A&M), as Interim Chief Executive Officer.
Seth Bullock, age 43, is a Managing Director with A&M and has been with the firm since 2014. Mr. Bullock brings over 20 years of experience in the energy industry. Prior to joining A&M, Mr. Bullock worked with several restructuring and investment advisory firms. Mr. Bullock earned a bachelors degree in Finance from Loyola University, New Orleans. Additionally, Mr. Bullock led A&Ms recent efforts in assisting the Company through its restructuring.
On behalf of the Board of Directors, we are pleased to announce that we have retained Seth Bullock as Interim Chief Executive Officer to assist in the management transition and quickly deliver on our resumed drilling initiatives while working to strengthen our Company, drive cash flow and create value for our shareholders, employees and community. Seth brings exceptional expertise in areas of near-term focus for the Company, and we are excited to welcome him back at Bonanza Creek, said Mr. Jack E. Vaughn, Chairman of Bonanza Creek. On behalf of the Board of Directors, I would also like to wish Rich the best in his future endeavors. With the capital plan approved and transitional leadership in place, the Board will now focus on securing long-term leadership for the Company.
2017 Capital Program and Production Guidance
The Board of Directors has approved the Companys 2017 capital program of approximately $130 million. Mr. Vaughn commented, We are very pleased to recommence development activities with a 1-rig drilling and completion program that focuses on sustainable value creation for stockholders. With the benefit of a debt-free balance sheet, liquidity of approximately $250 million, and improvements in well performance, the
Company is in an advantaged position to focus on profitable growth and productivity initiatives that drive competitive long-term field development returns in our core Wattenberg asset. Additionally, over $200 million of new equity was invested last month by our shareholders, signaling their confidence in our business.
Bonanza Creek plans to commence its drilling and completion program around July 1, 2017. The plan will utilize one drilling rig in its Rockies program to drill approximately 24 wells, nine of which will be XRLs. In addition to the drilling program, the Company is in the process of completing its six drilled but uncompleted wells and expects to complete 18 of its new wells, totaling 24 completions for the year, five of which will be XRLs. From a geographical standpoint, Bonanza Creeks operated development program for 2017 will focus primarily on its western legacy acreage and strategic appraisal of its southern (French Lake) acreage. The Company will also participate in non-operated wells in the Wattenberg, and invest in Mid-Continent recompletions. To support current and future development, Bonanza Creek has allocated approximately $25 million toward infrastructure and other items, which will include new gathering facilities in our Rocky Mountain Infrastructure, LLC (RMI) system, pumping unit installations, power and telemetry infrastructure, and key leasehold expansion. These investments will provide long-term value by minimizing surface infrastructure bottlenecks, reducing operating costs, and enhancing the Companys leasehold position. The table below details the Companys capital allocation and production guidance for 2017.
2017 Capital Program
Drilling and Completion |
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Rockies |
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$ |
80 |
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Mid-Continent |
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3 |
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Non-Operated |
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23 |
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Total Drilling and Completion |
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$ |
106 |
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Infrastructure/Other |
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24 |
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Total Capital |
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$ |
130 |
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2017 Production Guidance
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Three Months Ended |
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Twelve Months Ended |
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Production (MBoe/d) |
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15.8 16.2 |
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16.0 17.0 |
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The Company expects its first drilled uncompleted wells to commence production in the third quarter and the remainder of its completion program to commence production in the fourth quarter. The Company expects its 2017 Rocky Mountain oil differentials to be $4.25 off of WTI pricing, per the terms of its previously announced renegotiated oil transportation agreement.
For the remainder of 2017, the Company will focus its efforts on initiatives aimed at maximizing project level economics and retaining and delineating the opportunity set in French Lake. Due to the late commencement of the 2017 capital program, production contribution from this years drilling and completions will predominantly occur in 2018.
With regard to maximizing project economics, the Company will focus its entire 2017 program on enhancing well productivity by testing higher completion intensity and enhanced recovery flow back (ERF). The Company will test designs of up to 2,000 pounds of sand per lateral foot, stage spacing down to 100 feet, and other completions innovations. In addition to these operated tests, the Companys program contemplates participation in approximately 25 non-operated wells that will also test various enhanced completion designs. The information received from both the operated and non-operated programs in 2017 will be critical to understanding how to best develop our Wattenberg acreage in 2018 and beyond by maximizing NPV per section in various commodity price environments.
In an effort to retain and delineate its French Lake acreage, Bonanza Creek plans to drill eight and complete two XRLs in the French Lake area in 2017. Data received from these appraisal wells will be key to identifying the potential of this largely undeveloped portion of the Companys acreage. In addition, these appraisal wells will both hold the French Lake acreage by production and will effectively eliminate expiry risk within the Companys Wattenberg acreage position.
As field activity commences and new production comes online, the Company plans to re-initiate its commodity price hedging program to lock in a portion of its cash flows and protect project returns.
About Bonanza Creek Energy, Inc.
Bonanza Creek Energy, Inc. is an independent oil and natural gas company engaged in the acquisition, exploration, development and production of onshore oil and associated liquids-rich natural gas in the United States. The Companys assets and operations are concentrated primarily in the Rocky Mountain region in the Wattenberg Field, focused on the Niobrara and Codell formations, and in southern Arkansas, focused on oily Cotton Valley sands. The Companys common shares are listed for trading on the NYSE under the symbol: BCEI. For more information about the Company, please visit www.bonanzacrk.com. Please note that the Company routinely posts important information about the Company under the Investor Relations section of its website.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made by the Company based on managements experience, perception of historical trends and technical analyses, current conditions, anticipated future developments and other factors believed to be appropriate and reasonable by management. When used in this press release, the words will, potential, believe, estimate, intend, expect, may, should, anticipate, could, plan, predict, project, profile, model or their negatives, other similar expressions or the statements that include those words, are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These statements include statements regarding development and completion expectations and strategy; decreasing operating and capital costs; impact of the Companys reorganization; and updated 2017 guidance. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, that may cause actual results to differ materially from those implied or expressed by the forward-looking
statements, including the following: changes in natural gas, oil and NGL prices; general economic conditions, including the performance of financial markets and interest rates; drilling results; shortages of oilfield equipment, services and personnel; operating risks such as unexpected drilling conditions; ability to acquire adequate supplies of water; risks related to derivative instruments; access to adequate gathering systems and pipeline take-away capacity; and pipeline and refining capacity constraints. Further information on such assumptions, risks and uncertainties is available in the Companys SEC filings. We refer you to the discussion of risk factors in our Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 16, 2017, and other filings submitted by us to the Securities Exchange Commission. The Companys SEC filings are available on the Companys website at www.bonanzacrk.com and on the SECs website at www.sec.gov. All of the forward-looking statements made in this press release are qualified by these cautionary statements. Any forward-looking statement speaks only as of the date on which such statement is made, including guidance, and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.
For further information, please contact:
James R. Edwards
Director - Investor Relations
720-440-6136
jedwards@bonanzacrk.com