Exhibit 10.1
GENERAL RELEASE AND
SEVERANCE AGREEMENT
This GENERAL RELEASE AND
SEVERANCE AGREEMENT (the “Agreement”) is entered
into on and as of December 22, 2008 (the “Execution
Date”); however, the same shall be effective, as more
particularly provided for herein, on and as of January 1,
2009 (the “Effective Date”), by and between:
(1) LLOYD G. DAVIES (“Davies” or
“Employee”); and (2) WARREN RESOURCES, INC.
(“WRI”), WARREN E&P, INC.
(“WEP”) and WARREN RESOURCES OF CALIFORNIA, INC.
(“WRC”), as their respective interests in the subject
matter hereof appear. WRI, WEP and WRC may be referred to
herein collectively as the “Company” or
“Warren”. Davies, Employee, WRI, WEP, WRC,
Company and Warren may be referred to herein individually as a
“Party” and collectively as the
“Parties.”
RECITALS
:
WHEREAS , Employee has been and currently is an Officer
and Director of the Company and has been employed by the Company
since March 1, 2004 pursuant to the terms, conditions and
provisions contained in that certain Employment Agreement dated
March 1, 2004 and that certain Employment Agreement dated
July 1, 2005 (collectively the “Employment
Agreement”) between Davies and Warren, and in accordance with
Warren’s Employee Handbook, a copy of which Employee has
received and executed (the “Handbook”).
WHEREAS , as provided below, the Company and Davies have
mutually agreed to: (A) revise and restructure
Davies’ relationship as on Officer and Director of the
Company; (B) terminate the employment relationship; and
(C) release and hold each other harmless from any and all
claims arising from or related to such employment and corporate
relationship.
WHEREAS, Employee has been
afforded up to twenty-one (21) days from and after the date of
receipt of this Agreement (the same being December 12, 2008),
if desired, to consider the meaning and effect of this Agreement;
will execute this Agreement and EXHIBIT “A” attached
hereto; and will send same to the Company within twenty-four (24)
hours after complete execution hereof. The twenty-one (21)
day period provided for above shall be calculated from
December 12, 2008. Any subsequent modifications of,
revisions to or versions of this Agreement shall not extend or
restart the twenty-one (21) day period.
WHEREAS, Employee understands
that he may revoke this Agreement within seven (7) business
days following the day he executes the same. Any revocation
within such period must be submitted, in writing, to the Company
and state: “I hereby revoke my acceptance of our
Separation and Severance Agreement and Mutual Release.”
Said revocation must be personally delivered or mailed to the
Company and postmarked within seven (7) business days after
his execution of this Agreement. Employee will advise the
Company in writing if he has chosen not to revoke this Agreement by
executing EXHIBIT “B” attached hereto and sending same
to the Company.
NOW, THEREFORE
, in consideration of the mutual
promises and agreements contained herein, the Company and Employee
hereby agree as follows:
1. STATUS AS OFFICER AND
DIRECTOR, AND TERMINATION OF EMPLOYMENT
.
A.
Current Status.
The Parties acknowledge that Davies is currently
an employee of the Company, and is currently serving in various
corporate capacities as: (1) a Director of WRI;
(2) an Executive Vice President of WRI;
(3) a Director and the Chairman of the Board of
Directors of WEP; (4) the Chief Executive Officer of
WEP; (5) a Director of WRC; and (6) the
President of WRC.
B.
Resignations as Officer and
Director. On
and as of the Execution Date, Davies agrees to and shall resign
as: (1) an Executive Vice President of WRI;
(2) a Director and as the Chairman of the Board of
Directors of WEP; (3) the Chief Executive Officer of
WEP; (4) a Director of WRC; and (5) the
President of WRC. Such resignations shall be deemed effective
at such time as and upon execution of this Agreement by Davies, and
without the necessity of the preparation or execution of any other
or separate instrument, letter, agreement or form of
resignation. Davies shall continue as a Director of WRI in
accordance with paragraph D below. Subject to paragraph D
below, Davies also agrees to resign from any other position as a
corporate Officer and/or Director of
any other subsidiary of WRI effective on and as
of the Execution Date. Effective with such resignation,
Davies will no longer be a member of any internal board or
management committee of the Company or any subsidiary, and will
have no authority to take any action on behalf of or otherwise bind
the Company in the capacities provided for above.
C.
Status of
Employment.
The Parties acknowledge and agree that Davies shall continue as an
employee of the Company from the Execution Date up to and through
December 31, 2008. The Parties also mutually acknowledge
and agree to terminate the Employment Agreement without cause
pursuant to Section 8(b) thereof on and as of the
Effective Date, and the employment relationship between the Company
and the Employee will cease on and as of the Effective
Date.
D.
Future Expiration of
Director’s Term. The Parties agree that Davies shall continue as
a Director of WRI for the remaining unexpired term of such
position, and shall serve at the pleasure of the Shareholders in
accordance with corporate organizational documents of WRI.
The Parties also acknowledge that Davies’ current term as a
Director of WRI expires on or about May 20, 2009, or on the
date the Annual Meeting of Shareholders of WRI is held in 2009,
whichever occurs first. As upon the expiration of such term,
Davies will cease being and will no longer serve as a Director of
WRI or a member of any internal board or management committee of
WRI, and will have no authority to take any action on behalf of or
otherwise bind the Company in the capacity as a director of
WRI.
2. SEPARATION
BENEFITS .
A.
Monetary
Consideration .
As consideration and in exchange for the execution of this
Agreement, the release of claims set forth below, the promises,
waivers, covenants, terms and other obligations under this
Agreement, and subject to and contingent upon Employee’s full
and complete execution of EXHIBIT “B” attached
hereto; and provided that Employee remains in full compliance
with the duties, responsibilities and obligations to the Company
under this Agreement, the Company agrees to provide the
following-described separation benefits to Employee:
(1) .
The Company will continue to pay and
has paid the gross amount of the Employee’s currently
existing salary from the Execution Date through December 31,
2008, less applicable taxes, withholdings and deductions, in
accordance with the Company’s regular, automatic payroll
system and practices.
(2).
The Parties acknowledge that
Section 8(b) of the Employment Agreement specifically
provides that the Company may terminate the employment relationship
and the Employment Agreement at any time without cause, and the
Company and the Employee hereby mutually agree to and shall
terminate the employment relationship effective on and as of the
Effective Date. The Parties also acknowledge that
Section 8(b) provides that, upon termination without
cause, the Company will pay to 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 of the Employment Agreement; or (ii) 90 days of
Employee’s annual Base Compensation then in effect, and such
amount will be payable upon execution and delivery of this
Agreement, which serves as the release referred to in
Section 8(b). In accordance with and as required by
Section 8(b), the Company agrees to pay to the Employee the
remaining amount of annual Base Compensation for the balance of the
term of the Employment Agreement, or six (6) months, in the
amount of $139,731.15 as severance pay, less applicable taxes,
withholdings and deductions. Such payment shall be made on or
within five (5) days after the date of execution of EXHIBIT
“B” attached to this Agreement.
B.
Vacation Pay
. The Parties acknowledge and
agree that the Employee is entitled to four (4) weeks (or 20
business days) of vacation during each full year of employment, and
that the Employee has been employed from the anniversary date of
the Employment Agreement (the same being March 1, 2008)
through the Effective Date. The Parties also acknowledge and
agree that the Employee has earned and is entitled to vacation pay
for three (3) unused vacation days. The Parties
acknowledge that Employee will receive payment in full for three
(3) accrued but unused vacation days in the total amount of
$3,224.58, or $1,074.86 per day, less applicable taxes,
deductions and withholdings, earned by Employee prior to the
Effective Date. In no event shall the vacation pay provided
for
2
above be subject to, contingent upon or
otherwise payable in connection with or based upon Employee’s
execution of this Agreement, and such vacation pay shall not serve
as consideration for or be required in connection with any of the
release provisions contained herein. Such payment shall be
made on or within five (5) days after the date of execution of
EXHIBIT “B” attached to this
Agreement.
C.
Severance, Incentive
Compensation and Retirement Bonuses. As a result of various discussions and
conversations between the Company and the Employee, the Parties
specifically acknowledge and agree that the Employee shall not be
entitled to and shall not receive, and the Company shall not be
obligated to pay, any incentive bonus compensation or retirement
compensation, as provided in Section 6(b) and
Section 8(c), respectively, of the Employment Agreement.
In addition, the Parties also specifically acknowledge and agree
that the Employee shall not be entitled to receive, and the Company
shall not be obligated to pay, any other form of severance bonus or
compensation to the Employee of any kind or type under or pursuant
to the Employment Agreement, including the two sections referred to
above, this Agreement or otherwise.
D.
Insurance
Matters .
Employee acknowledges and agrees that he has elected to be covered
by his former employer’s health insurance policy and is not
covered by or included in the Company’s health and medical
insurance policy, coverage and plan for its employees.
Employee acknowledges that he is not entitled to any health
insurance benefits under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”),
insofar as the same applies to the Company’s health and
medical insurance plan.
E.
Retirement Plan
. Employee’s
401(k) Retirement Plan (the “401(k) Plan”)
contributions have been or will be made by the Company and Employee
for the period from January 1, 2008 through December 1,
2008. As required by applicable ERISA and the
401(k) Plan rules and regulations, the Company’s
matching and the Employee’s participation in the
Company’s 401(k) Plan will cease on and as of
December 31, 2008, and no 401(k) Plan deductions or
contributions will be withheld from the lump sum severance payment
provided for in Paragraph A(2) above. Nothing in this
Agreement is intended to alter or modify the Employee’s right
to any benefit to which he is entitled under the
401(k) Plan. All such contributions are and shall remain
subject to the terms of the 401(k) Plan and the
Employee’s rights thereunder, as well as all applicable ERISA
and Internal Revenue Service statutes, rules and
regulations.
F.
Other Matters
. Other than as specifically
provided for in this Agreement, Employee represents, warrants and
acknowledges that the Company owes Employee no wages, salaries,
commissions, bonuses, sick pay, personal leave pay, severance pay,
vacation pay or any other compensation, benefits, payments or
remuneration of any kind or nature.
3. STOCK OPTION
INTERESTS.
A.
Stock Options
. The Parties acknowledge
that, as of the Effective Date, the Employee has or may have
certain vested and unexercised employee stock options exercisable
at various prices and amounts per share, and certain unvested
employee stock options; all as more particularly provided in the
stock option plan and grant agreement or notices under and pursuant
to which the same were originally granted to the Employee. In
accordance with and as required by Sect
