Exhibit 10.1
EMPLOYMENT
AGREEMENT
EMPLOYMENT AGREEMENT
(this “ Agreement
”), dated effective as of November 14, 2006, by and between
Warren E&P, Inc., a New Mexico corporation (the “
Company ”), and Bruce Berwager (the “
Employee ”).
W I T N E S S E T
H :
WHEREAS, the Company desires to employ the Employee upon
the terms and conditions set forth in this Agreement;
and
WHEREAS, the Employee desires to accept an offer of
employment with the Company upon the terms and conditions set forth
herein;
NOW, THEREFORE
, in consideration of the premises
and the respective covenants and agreements of the parties herein
contained, and intending to be legally bound hereby, the parties
hereto agree as follows:
1.
Employment . The Company hereby agrees to
employ the Employee, and the Employee hereby agrees to serve the
Company, on the terms and conditions hereinafter set forth in this
Agreement.
2.
Term . This Agreement, and the employment of
the Employee by the Company hereunder, will commence on the date
hereof (the “ Effective Date ”) and terminate on
December 31, 2008 (the “Initial Term”), subject to
termination as set forth herein (the “ Employment
Period ”). As used herein, the term “
Employment Year ” shall mean each consecutive twelve
(12) month period during the Employment Period commencing on the
Effective Date, or the yearly anniversary thereof, as the case may
be. Effective on the second anniversary of the Effective Date, and
each subsequent anniversary date thereafter, the term of this
Agreement as then in effect shall be automatically extended for an
additional one (1) year term unless, at least three (3) months
prior to such anniversary date, the Company or the Employee shall
give written notice to the other party that it or he, as the case
may be, in its or his sole discretion, does not wish to so extend
the term of this Agreement.
3.
Position and Duties . Subject to the provisions
of this Section 3, during the Employment Period, the Employee
shall serve as the Senior Vice President and General Manager -
California of the Company, and shall faithfully perform the duties
and responsibilities normally associated with such positions,
subject to the oversight and direction of the Chief Executive
Officer of the Company and the Board of Directors of the
Company.
4.
Place of Employment . Generally, the Employee
will fulfill all duties and responsibilities to the Company as set
forth herein from the current place of business of the Company in
California, located at 301 East Ocean Boulevard, Long Beach,
California and at its nearby Wilmington Townlot Unit and North
Wilmington Unit oil and gas field operations in Wilmington,
California, or to any other place where the principal place of
business the Company may be relocated within a 120 mile radius of
Santa Barbara County, California, unless otherwise agreed to by the
Employee.
5.
Best Efforts . The Employee’s
employment with the Company shall be his full business time and
Employee shall devote his best efforts exclusively to the
performance of his duties and responsibilities as set forth in this
Agreement, which duties and responsibilities shall be performed
competently, carefully and faithfully. Except as provided
below, the Employee shall not, while an employee of the Company and
without the prior written consent of the Company, engage in any
other gainful occupation or activity which conflicts with or
impinges upon the full and faithful performance of the
Employee’s duties, or otherwise violates any other term or
provision of this Agreement. It is expressly understood and
agreed, however, that the provisions of this Section 5 shall
not be construed to prevent the Employee from pursuing any other
activity or profession in his own personal time not devoted to the
Company, including investing for his own account or pursuing
charitable or civic activities; provided , that such
activities do not impair the performance by the Employee of his
duties and responsibilities hereunder, or otherwise violate any
provision of this Agreement, and that Employee shall not become
employed by or affiliated with another company in the oil and gas
industry.
6.
The Employee’s Compensation .
(a)
Salary . During the Employment Period, for the
services described herein the Company shall pay to the Employee an
annual base salary of not less than $265,000 (as adjusted pursuant
to the terms hereof, the “ Base Compensation ”),
which shall be paid in 26 equal installments in accordance with
Employer’s standard payroll practice. Commencing after one
full year of employment, the Base Compensation shall be increased
on each January 1st of this Agreement by any increases in the cost
of living based on the changes in the “Consumer Price
Index” as published from time to time by the U.S. Department
of Commerce for the Los Angeles, California metropolitan area. The
Base Compensation will be paid to the Employee in accordance with
the normal payroll practices of the Company in effect from time to
time, less all required withholdings for benefits, federal, state
and local taxes, if any. The amount of the Base Compensation
may, in the Company’s discretion, be increased by the Company
on an annual basis during the Employment Period. All
increases to the Base Compensation, if any, shall be based on the
condition of the Company’s business and results of operations
and the Company’s evaluation of the Employee’s
individual performance for the relevant period. Any increases
made to the Base Compensation shall be in the discretion of the
Company.
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(b)
Signing Bonus . As of the Effective Date, the Company
grants Employee, as a signing bonus (the “Signing
Bonus”), the amount of $75,000. In the event that Employee
leaves the employ of the Company voluntarily during the first six
months of employment, Employee will be required to repay all of the
Signing Bonus, including the taxes paid by the Company. In the
event that Employee leaves the employ of Warren voluntarily during
the eighteen months following the first six months of employment,
Employee will be required to repay a pro-rated amount of the
Signing Bonus, including the taxes paid by the Company on
Employee’s behalf. The repayment amount will be calculated by
dividing the total amount of Employee’s Signing Bonus by 18
months and multiplying that number by the number of months left
until the two-year anniversary of the Effective Date. After two
years, Employee would have no obligation to repay the Signing Bonus
if Employee leaves the Company voluntarily.
(c)
Incentive Bonus Compensation . In addition to
the Base Compensation to which the Employee is entitled under
Section 6(a), the Employee shall be eligible to be awarded
incentive bonus compensation (the “Bonus Compensation”)
with respect to each calendar year or portion thereof during which
the Employee was employed by the Company hereunder equal to up to
and including 75% of the Employee’s Base Compensation.
The criteria for determining the amount of the Bonus Compensation
shall be determined by mutual agreement between the Employee and
the Chief Executive Officer of the Company and shall by approved by
the Compensation Committee of the Board of Directors. Incentive
Bonus Compensation shall be deemed earned at the end of each
Employment Year and paid within 90 days following the end of
the calendar year.
(d)
Stock Options . Employee shall be entitled to
participate in the 2000 Equity Incentive Plan for the Employees of
Warren E&P, Inc. (the “Equity Incentive Plan”),
established by its parent corporation Warren Resources,
Inc.(“Warren”), and will be awarded upon execution
hereof 50,000 stock options exercisable for Warren common stock at
the price per share equal to the closing market price of
Warren’s publicly traded common stock as reported by the
NASDAQ Stock Market on the Employee’s actual first day of
employment and exercisable for a period ending five years after the
date of grant of the option (the “Options”). The
Options vest equally over a three-year period, meaning that
Employee shall have the vested right to exercise 1/3
rd of the Options after the first year of
employment, 1/3 rd
of the Options shall become
vested after the second year and 1/3 rd of
the Options become vested after the third year. The grant of such
Options shall be documented with a formal award letter from the
Company to the Employee setting forth the terms and conditions of
Employee’s Options. Also, Employee will be eligible for
annual stock option awards during the first quarter of each year in
an amount which shall be determined by the Compensation Committee
of the Board of Directors and, again, adjusted for performance and
time employed during the first year.
(e)
Temporary Housing . During the term of this
Agreement, as an accommodation to the Company to have Employee
located near the operations of the Company in Wilmington,
California, Employee shall be provided housing adjacent to
the
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Wilmington
Townlot Unit in a 2-bedroom duplex apartment (the
“Apartment”) owned by the Company at no rental expense
to the Employee; provided, however, Employee shall be responsible
for utilities and other incidental costs of occupying the
Apartment.
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.
The Employee’s Benefits . As an employee of the
Company, the Employee shall be entitled to receive and enjoy the
following benefits during the Employment Period:
(a)
Participation in Company Benefit Plans . The Employee shall
be entitled to participate in and to receive benefits generally
available to senior executives under those certain employee benefit
plans and arrangements which may be offered by the Company from
time to time during the Employment Period, subject to and on a
basis consistent with the terms, conditions and overall
administration of such plans and arrangements by the Company.
The Company shall provide the same full medical, hospitalization
and dental HMO insurance coverage for the Employee as provided to
other senior executives from time to time. Employee shall be
eligible to participate in the Company’s 401(k) retirement
plan, and the Company shall match 100% of Employee’s
contributions up to the maximum annual limit allowed by applicable
ERISA and Internal Revenue Code law and regulations.
(b)
Vacations . The Employee shall be
entitled four (4) weeks of paid vacation per Employment Year,
provided that any vacations are to be taken at times mutually
agreeable to the Company and the Employee. In addition to the
foregoing, the Employee shall be entitled to receive all paid
holidays given by the Company to its employees generally. Any
accrued but unused vacation days in an Employment Year shall be
reimbursed in cash to Employee upon a termination of his
employment, hereunder and based prorate upon the actual number of
days lapsed during the Employment year divided by 365 days,
provided that at any time Employee may not have more than 4 weeks
vacation accrued.
(c)
Business Expense Reimbursement . The Company
shall promptly reimburse or pay the Employee for all reasonable and
necessary business expenses paid or incurred by the Employee in
performing his duties and responsibilities hereunder, including,
but not limited to, travel, entertainment, subscription and dues
associated with Employee’s membership in professional,
business and civic organizations; provided , that ,
the Employee shall have (i) submitted such reasonable documentation
as may be requested by the Company in accordance with the
reimbursement policies of the Company in effect from time to time
and (ii) obtained the prior approval of the Company for all charges
in excess of $5,000.
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.
Termination of Employment . The Employee’s
employment with the Company may be terminated as
follows:
(a)
With Cause . The Employee’s
employment with the Company may be terminated by the Company at any
time for “Cause.” As used herein, the
term
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“
Cause ” shall refer to the following: (i) theft,
fraud, dishonesty, gross negligence or willful malfeasance by the
Employee in connection with the performance of his duties hereunder
(collectively, “Theft Events”); (ii) a material breach
or failure to fulfill and perform the Employee’s duties
hereunder, which breach or failure is not cured to the reasonable
satisfaction of the Company within forty-five (45) days after
written demand from the Company (if such breach is at all curable
during such time in the reasonable determination of the Company;
failing such determination, “Cause” shall have occurred
upon the occurrence of such breach or failure); (iii) conviction of
a felony or a crime involving moral turpitude; (iv) habitual
neglect of duties or misconduct in the performance of the
Employee’s duties and responsibilities hereunder following an
initial notice of warning from the Company with respect thereto; or
(v) a repeated or ongoing failure to comply with the reasonable
directions and instructions of management of the Company in
connection with the performance of the Employee’s duties and
responsibilities hereunder following an initial notice of warning
from the Company with respect thereto. Upon termination for
Cause, all rights of the Employee under this Agreement shall
immediately terminate and the Company shall have no further
obligations. Except with respect to an election to not renew
the Agreement timely made within ninety (90) days before the end of
the Initial Term or an extension thereof, or a termination made by
the Company Without Cause, a termination of the Employee’s
Employment made by the Employee upon his voluntary resignation or
voluntary retirement shall be treated as a termination for Cause.
Upon a termination for Cause, Employee shall receive in full
satisfaction of all amounts due to him an amount equal to the
remainder of Base Compensation through date of termination.
Notwithstanding any of the foregoing, in the event that the Company
has terminated Employee’s employment on account of a Theft
Event, the Company shall be entitled to withhold from any amounts
otherwise due to Employee under this Subsection 8(a) the
amount of monetary damages incurred by the Company from such Theft
Event which shall be quantified and determined in writing by the
Company within 90 days after the date of termination. The Employee
agrees that his eligibility to receive any and all amounts
described in this Section 8(a) shall be subject to and
contingent upon the Employee’s execution of a full and
complete general release in favor of the Company and its affiliated
persons and entities, satisfactory to the Company in its sole
discretion.
(b)
Without Cause . The Employee’s
employment with the Company may be terminated by the Company at any
time without Cause, but in the event of any such termination
pursuant to this Section 8(b), the Company will pay, in
addition to any other amounts due hereunder, the Employee severance
pay in an amount equal to the greater of (i) Employee’s
remaining Base Compensation then in effect for the balance of the
term, or (ii) Fifty (50%) percent of Employee’s annual Base
Compensation then in effect, with such amounts to be payable upon
execution and delivery of the release described below, less all
required withholdings and in accordance with then current payroll
practices of the Company and applicable law or regulation.
Additionally, in the event of termination without Cause, Employee
will be immediately vested in all stock options granted and will be
under no obligation to repay any of the Signing Bonus.
Notwithstanding the foregoing, in the event of a termination by the
Company without Cause in connection with a “Change of Control
Event”, as defined under Section 8(d)
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below, then the
compensation to Employee provided under Section 8(d) shall govern.
In addition, Employee shall receive any accrued but unpaid vacation
time for the current Employment Year. The Employee agrees that his
eligibility to receive all amounts described in this
Section 8(b) shall be subject to and contingent upon the
Employee
