Document:

Exhibit 10.2

 

[DATE]

 

[ADDRESSEE]

 

Re:          Employment Terms and Conditions – [POSITION]

 

Dear [NAME]:

 

You are currently [a party to an [Employment Agreement](1) with Bonanza Creek Energy, Inc., a Delaware corporation (the “Company”) dated [                        ] (the “Employment Agreement”)] OR [employed by the Company pursuant to an offer letter, dated [                              ] (the “Offer Letter”)].  In consideration of the benefits described in this letter (this “Employment Letter”) to which you are not otherwise entitled, you hereby agree to waive any and all rights that you have under and with respect to the [Employment Agreement OR Offer Letter] and understand and agree that from and after the date of this Employment Letter, you shall have no further rights under or with respect to the [Employment Agreement OR Offer Letter] and it shall be terminated in all respects.  You will retain your position as [TITLE] and your annual salary (the “Base Salary”) will remain at the same level as in effect immediately prior to the date of this letter.  In addition to the foregoing and, in summary, your compensation and benefits as of the date of this Employment Letter will be:

 

·                  Participation in the Company’s 2011 Long Term Incentive Program (“LTIP”), subject to the approval and discretion of the Company’s Board of Directors and the other terms and conditions of the LTIP and any award agreement to be entered into thereunder;

·                  Participation in the Company’s Short Term Incentive Program (the “STIP”), in a “target” amount of up to [XX%] of the Base Salary upon the achievement of Company and personal goals specified each year and subject to the other terms and conditions of the STIP;

·                  [[NUMBER OF WEEKS] weeks vacation per year, in accordance with the Company’s benefits policy; [NUMBER OF DAYS] days sick leave annually, after one (1) month introductory period and in accordance with the Company’s benefits policy; eleven (11) paid holidays per year in accordance with the Company’s benefits policy;] OR [Participation in the Company’s No Tracking Vacation Program]

·                  Option to participate or to continue to participate in the Company’s 401(k) Plan, in accordance with such plan; Currently the Company provides matching contributions of 6% of W-2 income, which amount may be amended from time to time in accordance with the terms of the 401(k) Plan;

·                  Option to participate or to continue to participate in the Company’s health insurance plans upon your election subject to the terms and conditions of the plans.

·                  Option to participate or to continue to participate in the Company’s flexible benefit plan (Section 125 Plan); and

·                  Participation in the Company’s Executive Change in Control and Severance Plan (the “Severance Plan”) as a Tier [#] Executive (as such term is defined in the Severance Plan).

 

The Company may modify compensation and benefits from time to time as it deems necessary in accordance with the terms and conditions of the plans set forth above and the Company’s policies.

 

The terms and conditions of employment set forth in this Employment Letter are contingent upon your signing the Company’s Employee Restrictive Covenants, Proprietary Information and Inventions Agreement attached hereto (“PIIA”) attached hereto as Exhibit A.

 

(1)  Confirm agreement name.

 

 

Notwithstanding anything to the contrary, your employment with the Company is AT WILL.  You may terminate your employment with the Company at any time and for any reason whatsoever simply by notifying the Company, subject only to any rights or obligations that may be required by the Severance Plan or PIIA, each as may be amended from time to time.  Likewise, the Company may terminate your employment at any time and for any reason whatsoever, with or without cause or advance notice, subject only to any rights and obligations that may be required by the Severance Plan or PIIA, as each may be amended from time to time.

 

In consideration for the benefits to be provided to you under this Employment Letter to which you are not currently entitled, by executing this Employment Letter, you hereby (a) accept the terms of employment outlined in this Employment Letter, (b) acknowledge and agree that this Employment Letter constitutes the entire agreement between the parties concerning your employment (except as otherwise may be set forth in the LTIP and any agreements entered into thereunder, the STIP, the Severance Plan, the PIIA or any Indemnification Agreement entered into between you and the Company (collectively, the “Remaining Agreements”)), and supersedes and terminates all prior and contemporaneous agreements and understandings, both written and oral, between the parties with respect to its subject matters, except for the Remaining Agreements and (c) acknowledge and agree that any accelerated vesting of your existing LTIP awards that may be provided in the Severance Plan shall be deemed an amendment to the terms and conditions of such existing LTIP awards.  You agree that the Company has not made any promise or representation to you concerning this Employment Letter not expressed in this Employment Letter, and that, in signing this Employment Letter, you are not relying on any prior oral or written statement or representation by the Company, but are instead relying solely on your own judgment and the judgment of your legal and tax advisors, if any.

 

If you have any questions or need additional information, please feel free to contact me.

 

	
 
    	
Sincerely,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[NAME]
    
	
 
    	
[Title]
    

 

Accepted and agreed:

 

 

	
 
    	
 
    
	
 
    	
 
    
	
[NAME]
    	
 
    
	
[DATE]Exhibit 10.3

 

PERFORMANCE SHARE AGREEMENT

 

THIS PERFORMANCE SHARE AGREEMENT (this “Agreement”), is entered into as of the Grant Date (as defined below), by and between Grantee (as defined below) and Bonanza Creek Energy, Inc., a Delaware corporation (the “Company”).

 

WHEREAS, the Company maintains the Bonanza Creek Energy, Inc. 2011 Long Term Incentive Plan (the “Plan”), which is incorporated into and forms a part of this Agreement, and Grantee has been selected by the board of directors of the Company (the “Board”) or the compensation committee of the Board (the “Committee”) to receive performance shares (the “Award”) under the Plan and as set forth in this Agreement;

 

NOW, THEREFORE, IT IS AGREED, by and between the Company and Grantee, as follows:

 

1.  Definitions.  The following terms used in this Agreement shall have the meanings set forth in this paragraph 1:

 

(a)                     “Cause” shall have the meaning set forth in any applicable agreement between the Company and Grantee regarding Grantee’s Service with the Company and, if “Cause” is not so defined, shall mean any of the following: (i) Grantee has failed or refused to substantially perform Grantee’s duties, responsibilities, or authorities (other than any such refusal or failure resulting from Grantee’s becoming Disabled); (ii) any commission by or indictment of Grantee of a felony or other crime of moral turpitude; (iii) Grantee has engaged in material misconduct in the course and scope of Grantee’s Service 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 Company’s 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) Grantee has committed any act of fraud, embezzlement, theft, dishonesty, misrepresentation or falsification of records; or (v) Grantee has engaged in any act or omission that is likely to materially damage the Company’s business, including, without limitation, damages to the Company’s reputation.

 

(b)                     “Date of Termination” means the date on which Grantee’s Service with the Company or an Affiliate terminates for any reason, provided, that a Date of Termination shall not be deemed to occur by reason of a Grantee’s transfer of Service between the Company and an Affiliate; further provided that a Grantee’s Service shall not be considered terminated while Grantee is on a leave of absence from the Company or an Affiliate approved by the Company or such Affiliate.

 

(c)                      “Designated Beneficiary” means the beneficiary or beneficiaries designated by Grantee in a writing filed with the Company in the form attached hereto as Exhibit A.

 

(d)                     “Disabled” as it relates to Grantee shall have the meaning of “Disabled” or such similar term set forth in any applicable agreement between the Company and Grantee regarding Grantee’s Service with the Company and, if “Disabled” or such similar term is not so defined, shall mean when (i) Grantee receives disability benefits under either

 

 

social security or the Company’s long-term disability plan, if any, or (ii) the Company, upon the written report of a qualified physician designated by the Company’s insurers, shall have determined (after a complete physical examination of Grantee at any time after Grantee has been absent from the Company for 90 or more consecutive calendar days) that Grantee has become physically and/or mentally incapable of performing Grantee’s essential job functions with or without reasonable accommodation as required by law due to injury, illness, or other incapacity (physical or mental).

 

(e)                      “Good Reason” shall have the meaning set forth in any applicable agreement between the Company and Grantee regarding Grantee’s Service with the Company and, if “Good Reason” is not so defined, shall exist in the event any of the following actions are taken without Grantee’s consent: (i) Grantee’s authority with the Company is, or Grantee’s duties or responsibilities based on Grantee’s position with the Company or any employment agreement or arrangement between Grantee and the Company are, materially diminished relative to Grantee’s authority, duties and responsibilities as in effect immediately prior to such change; provided, however, that in no event shall removal of Grantee 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 material diminution in Grantee’s base salary or retainer compensation as in effect immediately prior to such diminution; provided, that, an across-the-board reduction in the base compensation and benefits of all Service Providers of the Company by the same percentage amount (or under the same terms and conditions) as part of a general base compensation reduction and/or benefit reduction shall not constitute such a qualifying material diminution; (iii) a material relocation of Grantee’s primary work location more than 75 miles away from the then-current primary work location; or (iv) any material breach by the Company of any provision of this Agreement or any employment agreement or arrangement between Grantee and the Company.

 

(f)                       “Grantee” means the employee of the Company specified in the grant notice issued by the Company on or about the Grant Date (the “Grant Notice”).

 

(g)                     “Grant Date” means the date on which this Award was granted, as set forth in the Grant Notice.

 

(h)                     “Performance Shares” means performance-based Stock Units (as defined in the Plan) granted under this Agreement and subject to the terms of this Agreement and the Plan.  The target number of “Performance Shares” (the “Target”) granted under this Agreement is the number specified in the Grant Notice, with the actual number of Performance Shares earned to be 0% - 200% of the Target, based on Grantee’s continued provision of Services to the Company and the level of attainment of the performance goals set forth in Exhibit B.

 

Capitalized terms used herein without definition have the meanings ascribed to such terms in the Plan.  Except where the context clearly implies or indicates the contrary, a word, term, or phrase used in the Plan is similarly used in this Agreement.

 

2.  Award.  Grantee is hereby granted a Performance Share award covering the Target number of Performance Shares set forth in the Grant Notice, with the Grantee being able to earn between 0% and 200% of such Target amount based on the terms and conditions of this Agreement.

 

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3.  Performance Goals.  Except as set forth in Section 4 below, the Performance Shares shall be earned solely in accordance with the attainment of certain performance goals, as set forth in Exhibit B.

 

4.  Termination of Services.  Except as may otherwise be provided below, Grantee shall forfeit the right to earn any Performance Shares that have not been earned in accordance with Section 3 and Exhibit B as of a Date of Termination.  Notwithstanding the foregoing,

 

(a)                     In the event Grantee would be entitled to severance under the Bonanza Creek Energy, Inc. Executive Change in Control Severance Plan (the “CIC Severance Plan”) as a result of the circumstances giving rise to the Date of Termination, then Grantee shall retain the right to earn any Performance Shares in accordance with Section 3 upon satisfaction of the performance goals set forth in Exhibit B; and

 

(b)                     In the event that Grantee’s Date of Termination occurs within the eighteen (18) month period following a Change in Control on account of (i) Grantee’s termination of Service by the Company without Cause or (ii) Grantee’s resignation from the Company for Good Reason, then Grantee shall be deemed to have earned the maximum number of Performance Shares potentially issuable hereunder immediately prior to such Date of Termination.

 

5.  Payment.  Payment in respect of earned Performance Shares shall be made by the Company following the Committee’s review and certification of the attainment of the performance goals set forth in Exhibit B, or following the Grantee’s Date of Termination pursuant to Section 4(b), as applicable, but in all events within 74 days of the date the Performance Shares are earned.  The Company shall settle earned Performance Shares by issuing the Grantee a number of shares of Stock equal to the number of Performance Shares earned.

 

6.  Withholding.  The issuance of Stock and the payment of any cash under this Agreement are subject to withholding of all applicable taxes.  At the election of Grantee, and subject to such rules and limitations as may be established by the Board  from time to time, such withholding obligations may be satisfied through the surrender of shares of Stock (a) which Grantee already owns, or (b) to which Grantee is otherwise entitled under the Plan; provided, however, that shares described in this clause (b) may be used to satisfy not more than the Company’s minimum statutory withholding obligation (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such taxable income).

 

7.  No Stockholder Rights.  Grantee shall have no voting, dividend, or other stockholder rights in respect of the Performance Shares granted hereunder.  Upon the issuance of shares of Stock as payment under this Agreement, Grantee shall have all of the rights of a stockholder with respect to such shares of Stock as of the date Grantee becomes the record owner of such shares.

 

8.  Dividend Equivalent Right.  Grantee shall be entitled to a Dividend Equivalent Right entitling Grantee, with respect to each Performance Share actually earned under this Agreement, to receive a cash payment based on the regular cash dividends that would have been paid on an equivalent number of shares of Stock during the period between the Grant Date of the Performance Shares and the date the Performance Shares are paid pursuant to Section 5.  All amounts payable as a result of such Dividend Equivalent Right shall be accumulated and paid to Grantee in cash on the date that payment is made in respect of the related Performance Shares in accordance with Section 5, above.

 

9.  Heirs and Successors.  This Agreement shall be binding upon, and inure to the benefit of, the Company and its successors and assigns, and upon any person acquiring, whether by merger,

 

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consolidation, purchase of assets or otherwise, all or substantially all of the Company’s assets and business.  If any rights of Grantee or benefits distributable to Grantee under this Agreement have not been exercised or distributed, respectively, at the time of Grantee’s death, such rights shall be exercisable by the Designated Beneficiary, and such benefits shall be distributed to the Designated Beneficiary, in accordance with the provisions of this Agreement and the Plan.  If a deceased Grantee fails to designate a beneficiary, or if the Designated Beneficiary does not survive Grantee, any rights that would have been exercisable by Grantee and any benefits distributable to Grantee shall be exercised by or distributed to the legal representative of the estate of Grantee.  If a deceased Grantee designates a beneficiary and the Designated Beneficiary survives Grantee but dies before the Designated Beneficiary’s exercise of all rights under this Agreement or before the complete distribution of benefits to the Designated Beneficiary under this Agreement, then any rights that would have been exercisable by the Designated Beneficiary shall be exercised by the legal representative of the estate of the Designated Beneficiary, and any benefits distributable to the Designated Beneficiary shall be distributed to the legal representative of the estate of the Designated Beneficiary.

 

10.  Administration.  The authority to manage and control the operation and administration of this Agreement shall be vested in the Board or the Committee, and the Board or the Committee shall have all powers with respect to this Agreement as it has with respect to the Plan.  Any interpretation of the Agreement by the Board or the Committee and any decision made by it with respect to the Agreement is final and binding on all persons.

 

11.  Plan Governs.  Notwithstanding anything in this Agreement to the contrary, the terms of this Agreement shall be subject to the terms of the Plan, a copy of which may be obtained by Grantee from the office of the Secretary of the Company; and this Agreement is subject to all interpretations, amendments, rules and regulations promulgated by the Board or the Committee from time to time pursuant to the Plan.

 

12.  Fractional Shares.  In lieu of issuing a fraction of a share of Stock resulting from an adjustment of the Award pursuant to Section 17.4 of the Plan or otherwise, the Company will be entitled to pay to Grantee an amount equal to the fair market value of such fractional share.

 

13.  Not An Employment Contract.  The Award will not confer on Grantee any right with respect to continuance of employment or other service with the Company or any Subsidiary, nor will it interfere in any way with any right the Company or any Subsidiary would otherwise have to terminate or modify the terms of such Grantee’s Service at any time.

 

14.  Notices.  Any written notices provided for in this Agreement or the Plan shall be in writing and shall be deemed sufficiently given if either hand delivered or if sent by fax or overnight courier, or by postage paid first class mail.  Notices sent by mail shall be deemed received three business days after mailing but in no event later than the date of actual receipt.  Notices shall be directed, if to Grantee, at Grantee’s address indicated by the Company’s records, or if to the Company, at the Company’s principal executive office.

 

15.  Amendment.  This Agreement may be amended in accordance with the provisions of the Plan, and may otherwise be amended by written agreement of Grantee and the Company without the consent of any other person.

 

16.  409A Savings Clause.  All amounts payable hereunder are intended to be exempt from the requirements of Code Section 409A as “short-term deferrals,” and this Agreement shall be interpreted accordingly.

 

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