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Exhibit 10.4    
  

 
 

EMPLOYMENT AGREEMENT

        This
Employment Agreement, dated as of February 2, 1994, is by and between Key Production Company, Inc., a Delaware corporation (the "Employer"), and Stephen P. Bell (the
"Employee"). 

 
 

RECITALS

        The
Employer has determined that it is in the best interests of the Employer and its stockholders to employ the Employee as Vice President—Land of the Employer, and the
Employee is willing to accept such employment on the terms and conditions described below. 

 
 

AGREEMENT

        In
consideration of and subject to the agreements, terms and conditions contained herein, the parties hereto agree as follows: 

 
 

ARTICLE I
  EMPLOYMENT    
  

        Section 1.1    Employment of the Employee. The Employer hereby employs the Employee, and the Employee
hereby accepts employment by the Employer, upon the terms and conditions hereinafter set forth. The term "Period of Employment" as used herein shall mean the period from February 2, 1994, until
the first to occur of the end of the term of this Agreement as provided in Section 1.2 or the date of the Employee's termination as provided herein. 

        Section
1.2    Term. The term of this Agreement shall be three years. 

        Section
1.3    Commencement of Employment. Employee shall commence employment with the Employer on February 2, 1994. 

 
 

ARTICLE II
  DUTIES    
  

        Section 2.1    Duties. During the Period of Employment, the Employee shall, subject to the authority of
the President of the Employer, be employed as Vice President—Land of the Employer, with such duties, responsibilities and authority as are consistent with such office, and with such
additional responsibilities and duties as may be reasonably assigned to him by the President, which in each case he shall faithfully and diligently perform. 

        Section
2.2    Time to be Devoted to Employment, Etc. Except for vacations, which in no event shall be less than three paid
weeks each year, and absences due to temporary illness or disability, the Employee shall devote his full time, attention and energies on a full-time basis to the business of the Employer.
Nothing in this Agreement, however, shall preclude the Employee from devoting reasonable periods to (a) engaging in charitable and community activities or (b) managing his personal
investments. 

 
 

ARTICLE III
  COMPENSATION    
  

        Section 3.1    Base Salary. The Employer shall pay to the Employee a base salary equal to
S6,250 monthly or $75,000,00 annually (the "Base Salary"), payable bi-monthly in arrears. The Base Salary may be adjusted as determined by the President, but shall not be decreased
below the Base Salary in existence immediately prior to such adjustment. 

        Section
3.2    Annual Incentive Bonuses. The Employee shall be eligible for incentive bonuses as approved by the Employer's
Board of Directors (the "Board"). 

 

        Section
3.3    Reimbursement for Expenses. The Employer shall reimburse the Employee for all reasonable and necessary travel
expenses and other reasonable disbursements made by him for or on behalf of the Employer in the performance of his duties hereunder on the Employer's business, upon presentation by the Employee to the
Employer of appropriate vouchers. 

        Section
3.4    Incidental Benefits. The Employer shall provide life insurance coverage for the Employee in a face amount equal
to two times his annual salary and a covered parking space. 

        Section
3.5    Employee Benefit Plans. During the Period of Employment, the Employee and his immediate family shall be entitled
to participate in employee benefit plans. The Employer has established, and the Employee shall be eligible to participate in, a health and dental plan, a long-term disability plan and a
401 (k) plan with an Employer matching contribution of at least four percent of the Employee's Base Salary (subject to any limitations on such contributions imposed by the Internal Revenue Code
of 1986 or the Employee Retirement Income Security Act of 1974). 

        Section
3.6    Option Grant. The Board shall grant to the Employee on February 2, 1994, a stock option in the form
adopted by the Employer for options granted under its Employee Stock Option Plan previously approved by the Board, with such option to cover the purchase of 120,000 shares of the Employer's common
stock at an exercise price equal to the fair market value of such common stock on February 2, 1994. Such option is to be exercisable until the earlier of ten years after its grant date or the
termination of the Employee's employment with the Employer. Such option shall vest with respect to one-third of the shares covered by the option after each year of the Employee's
employment with the Employer. 

        Section
3.7    Reimbursement for Moving Expenses. The Employer shall reimburse the Employee for all reasonable and necessary
expenses and disbursements made by him in connection with the physical relocation of his primary residence to Denver, Colorado, upon presentation by the Employee to the Employer of appropriate
vouchers. 

 
 

ARTICLE IV
  DISABILITY OR DEATH OF THE EMPLOYEE    
  

        Section 4.1    Disability. If the Employee is incapacitated or disabled by accident, sickness or
otherwise so as to render him mentally or physically incapable of performing the services required to be performed by him under this Agreement for a period of 90 consecutive days or for a total of
120 days in any twelve-month period, the Employer may, at its option, if payments to the Employee have commenced under the Employer's long-term disability plan, at that time or any
time thereafter, terminate the Period of Employment immediately (provided that both such disability and payments under the Employer's
long-term disability plan shall have continued to the time of termination) upon giving him notice to that effect. Until the Employer shall have terminated the Employee's employment in
accordance with the foregoing, the Employee shall be entitled to receive his compensation, pursuant to Article III notwithstanding any such physical or mental disability. Nothing herein shall
limit the Employee's right to receive any amounts to be paid to the Employee under any disability or employee benefit plan of the Employer, if any, or under any other disability insurance policy or
plan covering the Employee. 

        Section
4.2    Death. If the Employee dies during the Period of Employment, his employment, his employment hereunder and the
Period of Employment shall terminate on the date of his death. 

2

 

 
 

ARTICLE V
  TERMINATION FOR CAUSE    
  

        Section 5.1    Termination for Cause. The Employer may, by summary notice in writing, terminate the
Period of Employment for cause. For the purposes of this Agreement, the term "cause" shall mean: 

        (a)  a
serious breach or any continued default by the Employee in the substantial performance of his duties under this Agreement (other than resulting from his disability)
for a 30-day period after a demand for substantial performance is delivered to the Employee by the Employer, which demand specifies and identifies the manner in which the Employee has not
substantially performed his duties. 

        (b)  misconduct
by the Employee which is injurious to himself or the Employer, provided that conduct will not be deemed misconduct if it was engaged in by the Employee in
good faith in the belief that it was in, or not opposed to, the interests of the Employer, or was engaged in at the direction of the President or the Board; or 

        (c)  the
intentional commission by the Employee of either: 

        (i)    a
business crime the intended purpose of which was to enrich the Employee at the expenses of the Employer; or 

        (ii)  a
felony of which the Employee is convicted or to which he pleads guilty or nolo contendere. 

 
 

ARTICLE VI
  TERMINATION WITHOUT CAUSE    
  

        Section 6.1    Employer Termination. The Employer may terminate the Period of Employment without cause
at any time by giving the Employee 30 days prior written notice. Upon the expiration of such 30-day period, the Period of Employment shall terminate. 

        Section
6.2    Employee Termination. For purposes of this Agreement, the Period of Employment shall be deemed to have been
terminated without cause if the Employee resigns under any of the following conditions: 

        (a)  upon
the continued default (including a material reduction in the duties, responsibilities and authority of the Employee as set forth in Article II) by the
Employer in the substantial performance of its obligations hereunder for a 30-day period after a demand for substantial performance is delivered to the Employer by the Employee, which
demand specifies and identifies the manner in which the Employer has not substantially performed its obligations; or 

        (b)  upon
the Employee being directed by the President or the Board to engage in any activity which the Employee, based upon written advice of competent legal counsel,
believes would constitute criminal activity, provided that the Employee gives notice to the Employer providing it with a copy of the written advice of his legal counsel and the Employer does not,
within five business days after its receipt of such notice, withdraw its request that the Employee engage in the activity in question. 

 
 

ARTICLE VII
  EFFECT OF TERMINATION OF PERIOD OF EMPLOYMENT    
  

        Section 7.1    Termination for Cause or Voluntarily. Upon termination of the Period of Employment
pursuant to Article V, or by the Employee (except under the conditions set forth in Section 6.2), 

3

 

neither the Employee nor his beneficiaries or estate shall have any further rights or claims against the Employer under this Agreement except to receive: 

        (a)  the
unpaid portion of the Employee's Base Salary provided for in Section 3.1, computed on a pro-rata basis to the date of termination; 

        (b)  reimbursement
for any expenses for which the Employee shall not have theretofore been reimbursed as provided in Section 3.3; and 

        (c)  any
benefits, including the right to continued coverage under the Employer's health plans, which are mandated by law for terminated employees. 

        Section
7.2    Termination for Death, Disability or Without Cause. Upon the termination of the Period of Employment pursuant to
Articles IV or VI, neither the Employee nor his beneficiaries or estate shall have any further rights or claims against the Employer under this Agreement except to receive: 

        (a)  compensation
at the then applicable Base Salary rate through the term of this Agreement as provided in Section 1.2, provided that any payments described in this
paragraph (a) shall be reduced by any payments to the Employee under the Employer's long term disability plan; 

        (b)  reimbursement
for any expenses for which the Employee shall not have theretofore been reimbursed as provided in Section 3.3; and 

        (c)  any
benefits, including the right to continued coverage under the Employer's health plans, which are mandated by law for terminated employees. 

        Section
7.3    Other Employer Obligations. The provisions of this Article VII shall in no way limit any rights or claims
which the Employee may have by virtue of any other agreements entered into with Employer. 

 
 

ARTICLE VIII
  CHANGE OF CONTROL    
  

        Section 8.1    Change of Control. If the Employee continues as an employee of the Employer after the
term of this Agreement, as provided in Section 1.2, and if during the period of such extended employment the Employee is terminated without cause following a "Change in Control" (as defined
below), the Employee shall be entitled to immediate payment of an amount equal to twice the Employee's annual salary at the rate in effect when the Change in Control Occurs. The term "Change in
Control" as used herein means the occurrence, after the date of this Agreement, of any of the following: 

        (a)  the
acquisition by any person or group of beneficial ownership of securities (including securities convertible into or exchangeable for or options or other rights to
acquire securities) of the Employer,
representing in the aggregate 25% or more of the combined voting power of all securities of the Employer entitled to vote in the election of directors, without the prior approval of the acquisition
resulting in such person or group acquiring such percentage by at least two-thirds of the directors of the Employer who are not affiliates or associates of such person or group; 

        (b)  during
any period of up to 24 consecutive months, commencing after the date of this Agreement, individuals who at the beginning of such 24-month period were
directors of the Employer ceasing for any reason to constitute two-thirds of the total number of directors of the Employer unless the individuals serving as new or replacement directors
were nominated by at least a majority of the directors of the Employer in office immediately prior to such period; 

        (c)  the
adoption of any plan or proposal to liquidate or dissolve the Employer; 

4

 

or

        (d)  any
merger or consolidation of the Employer unless thereafter (i) directors of the Employer immediately prior thereto continue to constitute at least
two-thirds of the directors of the surviving entity or transferee or (ii) the Employer's securities continue to represent or are converted into securities that represent more than
80% of the combined voting power of the surviving entity or transferee. 

        As
applicable, all terms used in this definition of "Change of Control" shall be given their meanings as used in Section 13(d) of the Securities Exchange Act of 1934 as in effect
on the date of this Agreement or Rule 13d-3 or Rule 12b-2 issued thereunder as in effect on the date of this Agreement. 

 
 

ARTICLE IX
  CONFIDENTIALITY    
  

        Section 9.1    Confidentiality. The Employee shall not make use of or otherwise reveal any trade secret
or confidence of the Employer, including any information about the Employer or its business which is not generally available to the public including, but not limited to, any such information involving
planning, analysis or strategy, or any investor, financial, legal, geological, geophysical or other proprietary information. Upon termination of employment, the Employee shall promptly surrender all
documents, maps, records, data and other information representing, reflecting or containing trade secrets or confidences. The provisions of this Article IX shall survive for a period of three
years after the end of the Period of Employment. 

5

  

 
 

ARTICLE X
  ARBITRATION    
  

        Section 10.1    Arbitration. If a dispute arises between the Employer and the Employee as to the
interpretation of this Agreement, the Employer and the Employee agree to submit the matter to binding arbitration in accordance with the Center for Public Resources Rules for
Non-Administered Arbitration of Business Disputes, as modified herein, by a sole arbitrator, in Denver, Colorado, selected in accordance with the provisions of Section 11.2. The
arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. § 1-16, and judgment upon the award rendered by the arbitrator may be entered by any court having
jurisdiction thereof. 

        Section
10.2    Selection of Arbitrator. The parties shall have 10 days from the date when written notice is provided to
either party by the other party of a request for arbitration to agree upon a mutually acceptable neutral person not affiliated with either of the parties to act as arbitrator. If no arbitrator has
been selected within such time, the parties agree jointly to request the Center for Public Resources or another mutually agreed-upon organization to supply within 10 days a list of
potential arbitrators with qualifications as specified by the parties in the joint request. Within five days of receipt of the list, the parties shall independently rank the proposed candidates, shall
simultaneously exchange rankings, and shall select as the arbitrator the individual receiving the highest combined ranking who is available to serve. 

        Section
10.3    Cost of Arbitration. The costs of arbitration shall be apportioned between the Employer and the Employee as
determined by the arbitrator in such manner as the arbitrator deems reasonable taking into account the circumstances of the case, the conduct of the parties during the proceeding and the result of the
arbitration. 

 
 

ARTICLE XI
  MISCELLANEOUS    
  

        Section 11.1    Necessary Acts. All parties to this Agreement shall perform any and all acts as well as
execute any and all documents that may be reasonably necessary to fully carry out the provisions and intent of this Agreement. 

        Section
11.2    Notices. All notices, demands, requests or other communications required or permitted by this Agreement or by
law to be served on, given to or delivered to any party hereto by any other party to this Agreement shall be in writing and shall be deemed duly served, given, received and delivered (a) on the
date of service if served personally on the party to whom notice is given, (b) on the day of transmission if sent via facsimile transmission to the facsimile number given below, provided
telephone confirmation of receipt is obtained promptly after completion of transmission, (c) on the business day after delivery to an overnight courier service or the Express Mail service
maintained by the United States Postal Service, provided receipt of delivery has been confirmed, or (d) five days after being sent by registered or certified mail, provided receipt of delivery
is confirmed, first-class postage prepaid, properly address to the respective parties as follows: 

	

If to the Employer:	
 	

One Norwest Center

20th Floor

1700 Lincoln

Denver, CO 80203
	

If to the Employee:	
 	

One Norwest Center

20th Floor

1700 Lincoln

Denver, CO 80203

6

 

or
to such other address as may be designated by any such addressees by a notice given in conformity herewith. 

        Section
11.3    Binding on Successors. This Agreement shall inure to the benefit of and be binding on the parties hereto and on
ea -h of their respective heirs, executors, administrators, personal representatives, successors and assignees. 

        Section
11.4    Choice of Law and Forum. This Agreement shall be construed and governed by the laws, commercial usages and
customs of the State of Colorado, without giving effect to the principles of conflict of laws thereof. In the event that any dispute, action, proceeding or litigation arises between the parties based
on or arising out of this Agreement, or any agreement or instrument delivered pursuant to this Agreement, subject to the arbitration provisions of Article X the parties agree to submit
themselves to and irrevocably consent to the jurisdiction of the courts of the State of Colorado, and any federal court located in the State of Colorado. 

        Section
11.5    Headings. The headings of the articles and sections of this Agreement have been inserted solely for convenience
of reference and shall in no way restrict or modify any of the terms or provisions hereof. 

        Section
11.6    Sole and Only Agreement. This Agreement and the agreements referred to herein constitute the only agreements of
the parties hereto relating to the subject matter hereof. Any prior agreements, promises, negotiations or representations concerning the subject matter of this Agreement not expressly set forth in
this Agreement shall have no force or effect. 

        Section
11.7    Amendment and Extension. This Agreement may not be amended or extended except by an instrument in writing Signed
on behalf of each of the parties hereto. 

        Section
11.8    Severability. Should any provision or portion of this Agreement be held unenforceable or invalid for any reason,
the remaining provisions and portions of this Agreement shall be unaffected by such holding, unless to do so would alter substantially the intended effect of this Agreement or cause a substantial
hardship for any party hereto. 

        Section
11.9    Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all
of which taken together shall constitute one and the same agreement. 

        The
parties have duly executed this Agreement as of the date first written above. 

	

 	
 	

EMPLOYER:
	

 	
 	

KEY PRODUCTION COMPANY, INC.
	

 	
 	

By:	

/s/ Francis H. Merelli
	 	 	 	
 Francis H. Merelli

President and Chief Executive Officer
	

 	
 	

EMPLOYEE:
	

 	
 	

/s/ STEPHEN P. BELL
 STEPHEN P. BELL

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QuickLinks

Exhibit 10.4

EMPLOYMENT AGREEMENT

RECITALS

AGREEMENT

ARTICLE I EMPLOYMENT

ARTICLE II DUTIES

ARTICLE III COMPENSATION

ARTICLE IV DISABILITY OR DEATH OF THE EMPLOYEE

ARTICLE V TERMINATION FOR CAUSE

ARTICLE VI TERMINATION WITHOUT CAUSE

ARTICLE VII EFFECT OF TERMINATION OF PERIOD OF EMPLOYMENT

ARTICLE VIII CHANGE OF CONTROL

ARTICLE IX CONFIDENTIALITY

ARTICLE X ARBITRATION

ARTICLE XI MISCELLANEOUSQuickLinks
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Exhibit 10.5    
  

 
 

EMPLOYMENT AGREEMENT

        This
Employment Agreement, dated as of March 11, 1994, is by and between Key Production Company, Inc., a Delaware corporation (the "Employer"), and Joseph R. Albi (the
"Employee"). 

 
 

RECITALS

        The
Employer has determined that it is in the best interests of the Employer and its stockholders to employ the Employee as Manager of Engineering of the Employer, and the Employee is
willing to accept such employment on the terms and conditions described below. 

 
 

AGREEMENT

        In
consideration of and subject to the agreements, terms and conditions contained herein, the parties hereto agree as follows: 

 
 

ARTICLE I
  EMPLOYMENT    
  

        Section 1.1    Employment of the Employee. The Employer hereby employs the Employee, and the Employee
hereby accepts employment by the Employer, upon the terms and conditions hereinafter set forth. The term "Period of Employment" as used herein shall mean the period from the actual date in
July, 1994, upon which Employee commences employment until the first to occur of the end of the term of this Agreement as provided in Section 1.2 or the date of the Employee's termination as
provided herein. 

        Section
1.2    Term. The term of this Agreement shall be from the date of this Agreement until three years following the date
Employee commences employment with Employer. 

        Section
1.3    Commencement of Employment. Employee shall commence employment with the Employer during July, 1994. 

 
 

ARTICLE II
  DUTIES    
  

        Section 2.1    Duties. During the Period of Employment, the Employee shall, subject to the authority of
the Senior Vice President of the Employer, be employed as Manager of Engineering of the Employer, with such duties, responsibilities and authority as are consistent with such office, and with such
additional responsibilities and duties as may be reasonably assigned to him by the Senior Vice President, which in each case he shall faithfully and diligently perform. 

        Section
2.2    Time to be Devoted to Employment, Etc. Except for vacations, which in no event shall be less than three paid
weeks each year, and absences due to temporary illness or disability, the Employee shall devote his full time, attention and energies on a full-time basis to the business of the Employer.
Nothing in this Agreement, however, shall preclude the Employee from devoting reasonable periods to (a) engaging in charitable and community activities or (b) managing his personal
investments (which shall include activity relating to any oil and/or gas property(ies) in which Employee owns a direct or indirect interest position, as long as such activity does not interfere or
conflict with the business activities of the Employer and/or Employee's confidentiality obligations to Employer or ability to perform the duties specified in Section 2.1 of this Agreement) or
(c) tending to personal and/or family related matters requiring Employee's attention. 

1

 

 
 

ARTICLE III
  COMPENSATION    
  

        Section 3.1    Base Salary. During the period of employment, the Employer shall pay to the Employee a
base salary equal to $6,666.66 monthly or $80,000.00 annually (the "Base Salary"), payable semi-monthly
in arrears. The Base Salary may be adjusted as determined by the Senior Vice President, but shall not be decreased below the Base Salary in existence immediately prior to such adjustment. 

        Section
3.2    Annual Incentive Bonuses. The Employee shall be eligible for incentive bonuses as approved by the Employer's
Board of Directors (the "Board"). 

        Section
3.3    Reimbursement for Expenses. The Employer shall reimburse the Employee for all reasonable and necessary travel
expenses and other reasonable disbursements made by him for or on behalf of the Employer in the performance of his duties hereunder on the Employer's business, upon presentation by the Employee to the
Employer of appropriate vouchers. 

        Section
3.4    Incidental Benefits. The Employer shall provide life insurance coverage for the Employee in a face amount equal
to two times his annual salary and a covered parking space. 

        Section
3.5    Employee Benefit Plans. During the Period of Employment, the Employee and his immediate family shall be entitled
to participate in employee benefit plans. 

        The
Employer has established, and the Employee shall be eligible to participate in, a health and dental plan, a long-term disability plan and a 401(k) plan with an Employer
matching contribution of at least four percent of the Employee's Base Salary (subject to any limitations on such contributions imposed by the Internal Revenue Code of 1986 or the Employee Retirement
Income Security Act of 1974). 

        Section
3.6    Option Grant. The Board shall grant to the Employee on the actual date during July, 1994, upon which Employee
commences employment, a stock option in the form adopted by the Employer for options granted under its Employee Stock Option Plan previously approved by the Board, with such option to cover the
purchase of 80,000 shares of the Employer's common stock at an exercise price equal to the fair market value of such common stock on the actual date during July, 1994, upon which Employee commences
employment. Such option is to be exercisable until the earlier of ten years after its grant date or the termination of the Employee's employment with the Employer in accordance with Section 6
of the Non-Qualified Stock Option Agreement to be executed pursuant to this section. Such option shall vest with respect to one-third of the shares covered by the option after
each year of the Employee's employment with the Employer. 

 
 

ARTICLE IV
  DISABILITY OR DEATH OF THE EMPLOYEE    
  

        Section 4.1    Disability. If the Employee is incapacitated or disabled by accident, sickness or
otherwise so as to render him mentally or physically incapable of performing the services required to be performed
by him under this Agreement for a period of 90 consecutive days or for a total of 120 days in any twelve-month period, the Employer may, at its option, if payments to the Employee have
commenced under the Employer's long-term disability plan, at that time or any time thereafter, terminate the Period of Employment immediately (provided that both such disability and
payments under the Employer's long-term disability plan shall have continued to the time of termination) upon giving him notice to that effect. Until the Employer shall have terminated the
Employee's employment in accordance with the foregoing, the Employee shall be entitled to receive his compensation, pursuant to Article III notwithstanding any such physical or mental
disability. Nothing herein shall limit the Employee's right to receive any amounts to be paid to the Employee under any disability or employee benefit plan of the Employer, if any, or under any other
disability insurance policy or plan covering the Employee. 

2

 

        Section
4.2    Death. If the Employee dies during the Period of Employment, his employment hereunder and the Period of
Employment shall terminate on the date of his death. 

 
 

ARTICLE V
  TERMINATION FOR CAUSE    
  

        Section 5.1    Termination for Cause. The Employer may, by summary notice in writing, terminate the
Period of Employment for cause. For the purposes of this Agreement, the term "cause" shall mean: 

        (a)  a
serious breach or any continued default by the Employee in the substantial performance of his duties under this Agreement (other than resulting from his disability)
for a 30-day period after a demand for substantial performance is delivered to the Employee by the Employer, which demand specifies and identifies the manner in which the Employee has not
substantially performed his duties. 

        (b)  misconduct
by the Employee which is injurious to himself or the Employer, provided that conduct will not be deemed misconduct if it was engaged in by the Employee in
good faith in the belief that it was in, or not opposed to, the interests of the Employer, or was engaged in at the direction of the Senior Vice President or President; or 

        (c)  the
intentional commission by the Employee of either: 

        (i)    a
business crime the intended purpose of which was to enrich the Employee at the expenses of the Employer; or 

        (ii)  a
felony of which the Employee is convicted or to which he pleads guilty or nolo contendere. 

 
 

ARTICLE VI
  TERMINATION WITHOUT CAUSE    
  

        Section 6.1    Employer Termination. The Employer may terminate the Period of Employment without cause
at any time by giving the Employee 30 days prior written notice. Upon the expiration of such 30-day period, the Period of Employment shall terminate. 

        Section
6.2    Employee Termination. For purposes of this Agreement, the Period of Employment shall be deemed to have been
terminated without cause if the Employee resigns under any of the following conditions: 

        (a)  upon
the continued default (including a material reduction in the duties, responsibilities and authority of the Employee as set forth in Article II) by the
Employer in the substantial performance of its obligations hereunder for a 30-day period after a demand for substantial performance is delivered to the Employer by the Employee, which
demand specifies and identifies the manner in which the Employer has not substantially performed its obligations; or 

        (b)  upon
the Employee being directed by the Senior Vice President or the President to engage in any activity which the Employee, based upon written advice of competent legal
counsel, believes would constitute criminal activity, provided that the Employee gives notice to the Employer providing it with a copy of the written advice of his legal counsel and the Employer does
not, within five business days after its receipt of such notice, withdraw its request that the Employee engage in the activity in question. 

3

 

 
 

ARTICLE VII
  EFFECT OF TERMINATION OF PERIOD OF EMPLOYMENT    
  

        Section 7.1    Termination for Cause or Voluntarily. Upon termination of the Period of Employment
pursuant to Article V, or by the Employee (except under the conditions set forth in Section 6.2), neither the Employee nor his beneficiaries or estate shall have any further rights or
claims against the Employer under this Agreement except to receive: 

        (a)  the
unpaid portion of the Employee's Base Salary provided for in Section 3.1, computed on a pro-rata basis to the date of termination; 

        (b)  reimbursement
for any expenses for which the Employee shall not have theretofore been reimbursed as provided in Section 3.3; 

        (c)  any
benefits, including the right to continued coverage under the Employer's health plans, which are mandated by law for terminated employees; and 

        (d)  the
right to exercise any vested stock options in accordance with the provisions of the Non-Qualified Stock Option Agreement to be executed pursuant to
Section 3.6. 

        Section
7.2    Termination for Death, Disability or Without Cause. Upon the termination of the Period of Employment pursuant to
Articles IV or VI, neither the Employee nor his beneficiaries or estate shall have any further rights or claims against the Employer under this Agreement except to receive: 

        (a)  compensation
at the then applicable Base Salary rate through the term of this Agreement as provided in Section 1.2, provided that any payments described in this
paragraph (a) shall be reduced by any payments to the Employee under the Employer's long term disability plan; 

        (b)  reimbursement
for any expenses for which the Employee shall not have theretofore been reimbursed as provided in Section 3.3; 

        (c)  any
benefits, including the right to continued coverage under the Employer's health plans, which are mandated by law for terminated employees; and 

        (d)  the
right to exercise any vested stock options in accordance with the provisions of the Non-Qualified Stock Option Agreement to be executed pursuant to
Section 3.6. 

        Section
7.3    Other Employer Obligations. The provisions of this Article VII shall in no way limit any rights or claims
which the Employee may have by virtue of any other agreements entered into with Employer. 

 
 

ARTICLE VIII
  CHANGE OF CONTROL    
  

        Section 8.1    Change of Control. If the Employee continues as an employee of the Employer after the
term of this Agreement, as provided in Section 1.2, and if during the period of such extended employment the Employee is terminated without cause following a "Change in Control" (as defined
below), the Employee shall be entitled to immediate payment of an amount equal to twice the Employee's annual salary at the rate in effect when the Change in Control occurs, as well as to all rights
to exercise his Stock Option as so defined in the Non-Qualified Stock Option Agreement to be executed pursuant to Section 3.6. The term "Change in Control" as used herein means the
occurrence, after the date of this Agreement, of any of the following: 

        (a)  the
acquisition by any person or group of beneficial ownership of securities (including securities convertible into or exchangeable for or options or other rights to
acquire securities) of the Employer, representing in the aggregate 25% or more of the combined voting power of all 

4

 

securities of the Employer entitled to vote in the election of directors, without the prior approval of the acquisition resulting in such person or group acquiring such percentage by at least
two-thirds of the directors of the Employer who are not affiliates or associates of such person or group; 

        (b)  during
any period of up to 24 consecutive months, commencing after the date of this Agreement, individuals who at the beginning of such 24-month period were
directors of the Employer ceasing for any reason to constitute two-thirds of the total number of directors of the Employer unless the individuals serving as new or replacement directors
were nominated by at least a majority of the directors of the Employer in office immediately prior to such period; 

        (c)  the
adoption of any plan or proposal to liquidate or dissolve the Employer; or 

        (d)  any
merger or consolidation of the Employer unless thereafter (i) directors of the Employer immediately prior thereto continue to constitute at least
two-thirds of the directors of the surviving entity or transferee or (ii) the Employer's securities continue to represent or are converted into securities that represent more than
80% of the combined voting power of the surviving entity or transferee. 

        As
applicable, all terms used in this definition of "Change of Control" shall be given their meanings as used in Section 13(d) of the Securities Exchange Act of 1934 as in effect
on the date of this Agreement or Rule 13d-3 or Rule 12b-2 issued thereunder as in effect on the date of this Agreement. 

 
 

ARTICLE IX
  CONFIDENTIALITY    
  

        Section 9.1    Confidentiality. The Employee shall not make use of or otherwise reveal any trade secret
or confidence of the Employer, including any information about the Employer or its business which is not generally available to the public including, but not limited to, any such information involving
planning, analysis or strategy, or any investor, financial, legal, geological, geophysical or other proprietary information. Upon termination of employment, the Employee shall promptly surrender all
documents, maps, records, data and other information representing, reflecting or containing trade secrets or confidences. The provisions of this Article IX shall survive for a period of two
years after the end of the Period of Employment. 

 
 

ARTICLE X
  ARBITRATION    
  

        Section 10.1    Arbitration. If a dispute arises between the Employer and the Employee as to the
interpretation of this Agreement, the Employer and the Employee agree to submit the matter to binding arbitration in accordance with the Center for Public Resources Rules for Non Administered
Arbitration of Business Disputes, as modified herein, by a sole arbitrator, in Denver, Colorado, selected in accordance with the provisions of Section 11.2. The arbitration shall be governed by
the United States Arbitration Act, 9 U.S.C. § 1-16, and judgment upon the award rendered by the arbitrator may be entered by any court having jurisdiction thereof. 

        Section
10.2    Selection of Arbitrator. The parties shall have 10 days from the date when written notice is provided to
either party by the other party of a request for arbitration to agree upon a mutually acceptable neutral person not affiliated with either of the parties to act as arbitrator. If no arbitrator has
been selected within such time, the parties agree jointly to request the Center for Public Resources or another mutually agreed-upon organization to supply within 10 days a list of
potential arbitrators with qualifications as specified by the parties in the joint request. Within five days of receipt of the list, the parties shall independently rank the proposed candidates, shall
simultaneously exchange 

5

 

rankings, and shall select as the arbitrator the individual receiving the highest combined ranking who is available to serve. 

        Section
10.3    Cost of Arbitration. The costs of arbitration shall be apportioned between the Employer and the Employee as
determined by the arbitrator in such manner as the arbitrator deems reasonable taking into account the circumstances of the case, the conduct of the parties during the proceeding and the result of the
arbitration. 

 
 

ARTICLE XI
  MISCELLANEOUS    
  

        Section 11.1    Necessary Acts. All parties to this Agreement shall perform any and all acts as well as
execute any and all documents that may be reasonably necessary to fully carry out the provisions and intent of this Agreement. 

        Section
11.2    Notices. All notices, demands, requests or other communications required or permitted by this Agreement or by
law to be served on, given to or delivered to any party hereto by any other party to this Agreement shall be in writing and shall be deemed duly served, given, received and delivered (a) on the
date of service if served personally on the party to whom notice is given, (b) on the day of transmission if sent via facsimile transmission to the facsimile number given below, provided
telephone confirmation of receipt is obtained promptly after completion of transmission, (c) on the business day after delivery to an overnight courier service or the Express Mail service
maintained by the United States Postal Service, provided receipt of delivery has been confirmed, or (d) five days after being sent by registered or certified mail, provided receipt of delivery
is confirmed, first-class postage prepaid, properly address to the respective parties as follows: 

	

If to the Employer:	
 	

One Norwest Center

20th Floor

1700 Lincoln

Denver, CO 80203
	

If to the Employee:	
 	

One Norwest Center

20th Floors

1700 Lincoln

Denver, CO 80203

or
to such other address as may be designated by any such addressees by a notice given in conformity herewith. 

6

   
        Section 11.3    Binding on Successors. This Agreement shall inure to the benefit of and be binding on the parties hereto and on
each of their respective heirs, executors, administrators, personal representatives, successors and assignees. 

        Section
11.4    Choice of Law and Forum. This Agreement shall be construed and governed by the laws, commercial usages and
customs of the State of Colorado, without giving effect to the principles of conflict of laws thereof. In the event that any dispute, action, proceeding or litigation arises between the parties based
on or arising out of this Agreement, or any agreement or instrument delivered pursuant to this Agreement, subject to the arbitration provisions of Article X the parties agree to submit
themselves to and irrevocably consent to the jurisdiction of the courts of the State of Colorado, and any federal court located in the State of Colorado. 

        Section
11.5    Heading. The headings of the articles and sections of this Agreement have been inserted solely for convenience
of reference and shall in no way restrict or modify any of the terms or provisions hereof. 

        Section
11.6    Sole and Only Agreement. This Agreement and the agreements referred to herein constitute the only agreements of
the parties hereto relating to the subject matter hereof. Any prior agreements, promises, negotiations or representations concerning the subject matter of this Agreement not expressly set forth in
this Agreement shall have no force or effect. 

        Section
11.7    Amendment and Extension. This Agreement may not be amended or extended except by an instrument in writing signed
on behalf of each of the parties hereto. 

        Section
11.8    Severability. Should any provision or portion of this Agreement be held unenforceable or invalid for any reason,
the remaining provisions and portions of this Agreement shall be unaffected by such holding, unless to do so would alter substantially the intended effect of this Agreement or cause a substantial
hardship for any party hereto. 

        Section
11.9    Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all
of which taken together shall constitute one and the same agreement. 

        The
parties have duly executed this Agreement as of the date first written above. 

	

 	
 	

EMPLOYER:
	

 	
 	

KEY PRODUCTION COMPANY, INC.
	

 	
 	

BY:	

/s/  MONROE W. ROBERTSON      
	 	 	 	
 MONROE W. ROBERTSON

SENIOR VICE PRESIDENT
	

 	
 	

EMPLOYEE:
	

 	
 	

BY:	

/s/  JOSEPH R. ALBI      
	 	 	 	
 JOSEPH R. ALBI

7

QuickLinks

Exhibit 10.5

EMPLOYMENT AGREEMENT

RECITALS

AGREEMENT

ARTICLE I EMPLOYMENT

ARTICLE II DUTIES

ARTICLE III COMPENSATION

ARTICLE IV DISABILITY OR DEATH OF THE EMPLOYEE

ARTICLE V TERMINATION FOR CAUSE

ARTICLE VI TERMINATION WITHOUT CAUSE

ARTICLE VII EFFECT OF TERMINATION OF PERIOD OF EMPLOYMENT

ARTICLE VIII CHANGE OF CONTROL

ARTICLE IX CONFIDENTIALITY

ARTICLE X ARBITRATION

ARTICLE XI MISCELLANEOUS

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