Exhibit 10.2
SEPARATION AGREEMENT AND
RELEASE
This Separation Agreement and
Release (this “ Agreement ”) is entered
into by Cano Petroleum, Inc., a Delaware corporation (the
“ Company ”), Resaca
Exploitation, Inc., a Texas corporation (“
Resaca ”), and Benjamin L. Daitch
(“ Executive ”) as of September 29,
2009. The Company and Executive are collectively referred to
herein as the “Parties” and Resaca joins
in this Agreement solely for the purposes set forth in
Section 3(b) , Section 7, and
Section 27 and shall not be considered a “
Party ” for any other purpose. This
Agreement cancels and supersedes all prior agreements relating to
Executive’s employment with the Company, except as provided
in this Agreement.
RECITALS
WHEREAS , Executive is employed as the Senior Vice
President and Chief Financial Officer of the Company under an
Employment Agreement, dated June 23, 2008, as amended by the
First Amendment to the Employment Agreement between the Company and
Executive, dated December 31, 2008 (as amended, the “
Employment Agreement ”), under which Executive
and the Company agreed to certain terms and conditions of
Executive’s employment with the Company;
WHEREAS , because of his employment as a Company
employee, Executive has obtained intimate and unique knowledge of
all Company business operations, current and future plans,
financial plans and other confidential and proprietary
information;
WHEREAS , the Company and Resaca anticipate entering
into the Agreement and Plan of Merger by and among the Company,
Resaca and Resaca Acquisition Sub, Inc., a Delaware
corporation and a wholly-owned subsidiary of Resaca (the “
Merger Sub ”), dated of even date
herewith (the “ Merger Agreement ”),
under which the Company will merge with and into the Merger Sub
(the “ Merger ”) and the Company will be
the surviving corporation and subsidiary of Resaca (the “
Surviving Corporation ”) effective as of the
Closing Date (as defined in the Merger Agreement);
WHEREAS , in connection with the Merger, the Parties
have agreed that Executive’s employment with the Company and
all other officer and representative positions, if any, held by
Executive in the Company or any of its subsidiaries or affiliates
will terminate effective as of the Closing Date (which date shall
be referred to herein as the “ Separation Date
”); and
WHEREAS, the Parties desire to finally, fully and
completely resolve all disputes that now or may exist between them,
including, without limitation, those concerning Executive’s
job performance and activities while employed with the Company and
his hiring, employment, and termination from employment with the
Company, and all disputes over benefits and compensation concerning
his Company employment, and without limitation, any disputes
arising from the terms of Executive’s employment as set forth
in the Employment Agreement.
AGREEMENT TERMS
NOW, THEREFORE
, in consideration of the premises
and mutual covenants and agreements set forth in this Agreement,
and for other good and valuable consideration, the receipt and
sufficiency of which the Parties acknowledge, the Parties agree as
follows:
1.
Termination of Executive’s
Employment.
Executive’s employment with the Company is terminated as of
the Separation Date. Executive agrees that this Agreement
supersedes any and all prior agreements with the Company and its
subsidiaries and affiliates (including, without limitation, the
Employment
Agreement), which terminate upon the Separation
Date. Effective as of the Separation Date. Executive shall
and hereby does resign from all corporate, board and other offices
and positions he then holds with the Company and all of its
affiliates. As of the Separation Date, Executive shall incur
a separation from service from the Company and its affiliates
within the meaning of Section 409A of the Internal Revenue
Code of 1986, as amended (“ Section 409A
”). The Parties agree that, as of the Separation Date,
Executive, the Company and its subsidiaries and affiliates shall
have no further liabilities, obligations, or duties under such
prior agreements, including the Employment Agreement, except as
provided in this Agreement. Notwithstanding any other
provision of this Agreement, until the Separation Date,
Executive’s employment with the Company shall continue to be
governed by the terms, conditions and provisions of the Employment
Agreement, which shall continue in full force and effect until the
Separation Date, including without limitation, the provisions
relating to Executive’s terms and conditions of employment,
salary, benefits, insurance (e.g., directors and officers
insurance), authority and responsibilities.
2.
Termination of this
Agreement. Notwithstanding any other provision of
this Agreement, if the Closing Date does not occur and the Merger
Agreement is terminated, this Agreement shall immediately terminate
in full and become null and void, with no Party having any rights
or obligations under this Agreement, and Executive shall retain any
and all claims, rights, legal obligations, authority, or power he
possessed under any prior agreement, including without limitation
the Employment Agreement, bylaw, article of incorporation, statute,
or law prior to the date of this Agreement, or accruing thereafter
under the terms of such agreement, bylaw, article of incorporation,
statute, or law.
3.
Certain Payments and
Benefits.
(a)
Accrued
Obligations .
On or within six (6) days following the Closing, the Company
shall pay Executive for all (i) unpaid salary through the
Separation Date, and (ii) any accrued but unused vacation
through the Separation Date. In the next regular payroll date
of the Company immediately following the Separation Date, the
Company shall reimburse Executive for reasonable and necessary
business expenses incurred by Executive in accordance with his
duties and responsibilities through the Separation Date, if any,
provided Executive provides substantiating documentation for such
expenses and such expenses are reimbursable in accordance with the
Company’s policies and procedures. Except as stated in
this Agreement or as required by law, all other compensation and
benefits that relate to Executive’s employment with the
Company, including any benefits set forth in any policy or program,
will cease as of the Separation Date.
(b)
Separation
Payment .
Subject to Executive’s consent to and
fulfillment of Executive’s obligations in this Agreement, and
provided that Executive does not revoke this Agreement under
Section 24, the Company shall pay, or cause to be paid,
Executive severance pay equal to: (i) $500,000 in cash if the
Separation Date occurs on or before December 31, 2009 or
$578,666 in cash if the Separation Date occurs on or after
January 1, 2010; and (ii) the number of whole shares of
common stock, par value $0.01 per share, of Resaca (“
Resaca Common Stock ”) with a Fair Market Value
on the Separation Date equal to $249,999 if the Separation Date
occurs on or before December 31, 2009 or $289,332 if the
Separation Date occurs on or after January 1, 2010
(collectively, subsections (i), and (ii), the “
Separation Payment ”). The Separation
Payment shall be made in one lump sum on the first Business Day
immediately following the date that is six (6) months and one
(1) day following the Separation Date. The Separation Payment
shall not be treated as compensation under the Company’s
401(k) Plan or any other retirement plan. Executive
recognizes and
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agrees that he is not otherwise
entitled to the Separation Payment, that the Separation Payment is
in addition to anything Executive is otherwise entitled to based on
his employment relationship with the Company, and that he will
receive the Separation Payment only as a condition of signing this
Agreement and executing the additional waiver in accordance with
Sections 5 and 6. For purposes of this Section 3(b), “
Fair Market Value ” means, as of a particular
date, the closing sales price per share of Resaca Common Stock on
the AIM Market of the London Stock Exchange, or, if there was no
such sale reported on that date, on the last preceding date on
which such a sale was reported. In addition,
Executive’s options to purchase the Company’s common
stock and restricted shares of the Company’s common stock
shall vest and become nonforfeitable on the Separation Date in
accordance with the terms and conditions of the applicable award
agreement for the same.
(c)
Indemnification
Coverage . To
the fullest extent permitted by applicable law, Executive shall be
entitled to indemnification following the Separation Date on the
same terms as indemnification is provided by the Company to other
employees, officers, and directors through the Company’s
Directors and Officers insurance coverage and/or bylaws. Such
indemnification shall remain effective after the Separation Date
with respect to the actions or omissions of Executive on or before
the Separation Date.
(d)
Waiver of Additional
Compensation or Benefits . Executive’s participation in and
eligibility for any compensation, bonus, or benefits plans or
practices of the Company shall terminate on the Separation
Date. Notwithstanding any other provision in this Agreement,
nothing in this Agreement shall affect (i) Executive’s
vested right, if any, under the terms of such plans or any other
employee benefit plans maintained by the Company or Administaff
Companies II, L.P. or its affiliates (together “
Administaff ”) for the benefit of the
Company’s employees; or (ii) Executive’s right to
continue or convert coverage under such employee benefit plans, in
accordance with the terms of those plans and applicable law,
including without limitation, Executive’s right to elect
continued insurance coverage in accordance with the Consolidated
Omnibus Budget Reconciliation Act (“ COBRA
”). Except as otherwise provided in this Agreement,
Executive shall not be entitled to any additional
compensation, nor shall Executive be entitled to any benefits,
payments or grants under any benefit plan, severance plan or
bonus or incentive program the Company or any of its affiliates has
established. Executive agrees that the release in
Section 5 covers any claims that arise before the date he
signs this Agreement regarding his compensation, bonuses, stock
options or grants and any other benefits Executive may or may not
have received during the course of his employment relationship with
the Company and its subsidiaries and affiliates.
(e)
280G Limitation
. If, at the Closing Date, all
or any portion of the Separation Payment would constitute a
“parachute payment” as defined in Section 280G of
the Internal Revenue Code of 1986, as amended (the “
Code ”), then the Separation Payment shall be
reduced so that it is one dollar ($1.00) less than the amount which
Executive could receive without being considered to have received a
parachute payment. The determination of the amount of any
reduction shall be made by an independent accounting firm selected
by the Company, and such determination shall be conclusive and
binding on the Parties.
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(f)
Medical Insurance
Premiums . In the event Executive timely exercises his
right to elect medical benefit continuation under COBRA, the
Company shall reimburse Executive for the difference between the
cost of the COBRA premiums paid by Executive during the first 12
months following the Separation Date and the cost of premium
payments that the Executive otherwise would have been required to
pay during the 12-month period in the event his employment had not
terminated. The Company’s reimbursement of the COBRA
premiums for the first six months of COBRA coverage shall be paid
on a monthly basis unless such monthly reimbursement may not be
made without adverse tax consequences to Executive under
Section 409A, in which case such reimbursement shall be made
in a lump sum on the first Business Day immediately following the
date that is six (6) months and one (1) day following the
Separation Date. Thereafter, the Company shall reimburse Executive
on a monthly basis for the remaining six months during which
Executive maintains coverage under COBRA.
4.
Intentionally
Omitted.
5.
General Release and Waiver by
Executive. In
consideration for the Company’s payments in Section 3
and other valuable consideration specified in this Agreement,
Executive, on behalf of himself, his heirs, executors, successors
and assigns, and all persons or entities acting by, through, under
or in concert with any of them, irrevocably and unconditionally
releases, waives, and forever discharges the Company, Resaca, and
the Surviving Corporation and all of their parents, divisions,
partnerships, joint ventures, subsidiaries, affiliates, and related
companies, and their present and former agents, employees,
officers, directors, partners, members, attorneys, stockholders,
plan fiduciaries, employee benefit committees, successors and
assigns (collectively, “ Company Released
Parties ”), from any and all claims, demands,
actions, causes of action, costs, attorney fees, and all liability
whatsoever, whether known or unknown, fixed or contingent, which
Executive has, had, or may ever have against the Company Released
Parties relating to or arising out of Executive’s employment
or separation from employment with the Company, from the beginning
of time and up to and including the date Executive executes this
Agreement. This Agreement includes, without limitation,
(i) law or equity claims; (ii) contract (express or
implied) or tort claims; (iii) claims for wrongful discharge,
retaliatory discharge, whistle blowing, libel, slander, defamation,
unpaid compensation, intentional infliction of emotional distress,
fraud, public policy contract or tort, and implied covenant of good
faith and fair dealing; (iv) claims arising under any federal,
state, or local laws of any jurisdiction that prohibit age, sex,
race, national origin, color, disability, religion, veteran,
military status, sexual orientation, or any other form of
discrimination, harassment, or retaliation (including, without
limitation, the Age Discrimination in Employment Act, the Americans
with Disabilities Act, the ADA Amendments Act of 2008, Title VII of
the 1964 Civil Rights Act, the Civil Rights Act of 1991, the Civil
Rights Acts of 1866 and/or 1871, 42 U.S.C. Section 1981, the
Rehabilitation Act, the Family and Medical Leave Act, the
Sarbanes-Oxley Act, the Employee Polygraph Protection Act, the
Uniformed Services Employment and Reemployment Rights Act of 1994,
the Equal Pay Act, the Lilly Ledbetter Fair Pay Act, the Texas
Commission on Human Rights Act (and any similarly named statute in
the Texas Labor Code), the Texas Labor Code, or any other federal,
state, or local laws of any jurisdiction), (v) claims arising
under the Employee Retirement Income Security Act, and
(vi) any other statutory or common law claims related to
Executive’s employment with the Company or the separation of
Executive’s employment with the Company. This Agreement
does not affect, waive or release (a) any claim for breach or
enforcement of this Agreement; (b) any claim that may arise
after the date this Agreement is signed by Executive; (c) any
claim for worker’s compensation benefits, or
(d) Executive’s vested rights, if any, under the terms
of any employee benefit plans maintained by the Company or
Administaff for the benefit of Company employees, including without
limitation Executive’s entitlement to the funds contained in
Executive’s 401(k) Plan account with the
Company.
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6.
Additional Waiver and Release of
Claims. Executive
agrees to execute a Waiver and Release of Claims, in the form
attached hereto as Exhibit A (the “
Closing Date Waiver and Release ”), on the
Separation Date, to irrevocably and unconditionally release, waive,
and forever discharge the Company Released Parties from any and all
claims, demands, actions, causes of action, costs, attorney fees,
and all liability whatsoever against the Company Released Parties
relating to or arising out of Executive’s employment or
separation from employment with the Company, from the date of the
execution of this Agreement and up to and including the Separation
Date.
7.
General Release and Waiver by the
Company and Resaca. In consideration for Executive’s release
and waiver, as set forth in the preceding Sections 5 and 6, and
other good and valuable consideration provided for in this
Agreement, the Company, Resaca and the Surviving Corporation (as
defined in the Merger Agreement), on behalf of itself and
themselves and its and their affiliated, related, subsidiary,
predecessor or successor corporation or businesses
(collectively “ Company Releasing Parties
”) hereby release, waive and fully discharge Executive and
his agents, attorneys, heirs, successors and assigns (collectively
“ Executive Released Parties ”) from any
and all claims, rights, demands, actions, obligations, liabilities,
and causes of action of any and every kind, nature, and character
whatsoever, known or unknown, that the Company Releasing Parties or
any of them, may now have, may ever have had, or may ever believe
it has against the Executive Released Parties or any of them, based
upon any act or omission by the Executive Released Parties, or any
of them, prior to the date of execution of this Agreement by
Executive, including, but not limited to, any and all claims
arising from or in any way related to Executive’s employment
by Company, the termination thereof, or any claims that were
raised, or could have been raised, prior to the execution of the
Agreement, whether based on tort, contract (express or implied), or
any federal, state or local law, statute or regulation. This
Agreement does not affect, waive or release (a) any claim for
breach or enforcement of this Agreement; (b) any claim that
may arise after the date this Agreement is signed by the Company
and Resaca; and (c) any claim for fraud, gross negligence, or
intentional misconduct by the Executive.
8.
No Admission of
Liability. This
Agreement shall not in any way be construed as an admission by the
Company or any of its subsidiaries or affiliates or Executive of
any acts of wrongdoing or violation of any statute, law, or legal
right.
9.
Non-Disclosure and
Confidentiality. Executive agrees to abide by the
Company’s confidentiality policies and any agreement
regarding confidentiality that Executive has with the Company as of
the date hereof and through the Separation Date, including without
limitation Section 9 (Confidential Information) of the
Employment Agreement. Executive further acknowledges and
agrees that during his Company employment, the Company and its
subsidiaries and affiliates (the “ Company
Group ”) disclosed to Executive the Company
Group’s unique concepts, sales presentations, marketing
programs, marketing strategies, business practices, methods of
operation, pricing information, cost information, trademarks,
licenses, technical information, proprietary information, computer
software programs, tapes and disks concerning its operations
systems, customer lists, customer names, account information,
customer leads, documents identifying past, present and future
customers, customer profile and preference data, electronically
stored information, hiring and training methods, investment
policies, financial and other confidential, proprietary and/or
trade secret information concerning its operations and expansion
plans (“ Confidential Information
”). The Confidential Information includes, without
limitation, information about the Company Group’s business,
proprietary, and technical information not known to others that
could have economic value to others if improperly disclosed.
Confidential Information also means any information the Company
Group discloses to Executive, either directly or indirectly, in
writing, orally or by inspection of tangible objects, including,
without limitation, information and technical data contained in the
Company Group’s manuals, booklets, publications and
materials, equipment of every kind and character, as well as
documents, prototypes, samples, prospects, inventions, product
ideas, know-how, processes, plans (including, without limitation,
market plans and
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strategies), specifications, designs,
techniques, technology formulas, software, improvements, forecasts,
and research.
Confidential Information shall not
include any information (a) in the public domain, through no
disclosure or wrongful act of Executive, to such an extent as to be
readily available to competitors; or (b) required to be
disclosed by Executive pursuant to applicable law or valid legal
process (in which case, Executive agrees to provide notice to the
Company of such required disclosure, if possible, before such
disclosure, or if notice before such disclosure is not possible,
immediately following such disclosure).
Executive agrees that he will not at
any time disclose to anyone, including, without limitation, any
person, firm, corporation, or other entity, or publish, or use for
any purpose, any Confidential Information, except as the Company
directs and authorizes. Executive agrees that he shall take
all reasonable measures to protect the secrecy of and avoid
disclosure and unauthorized use of the Confidential Information and
agrees to immediately notify the Company in the event of any
unauthorized use or disclosure of the Confidential
Information. Additionally, if Executive is required to
disclose any Confidential Information by a court order, subpoena,
or government directive, Executive shall immediately notify the
Company no later than two (2) days after Executive receives
notice of the court order, subpoena or government directive to
allow the Company to seek a protective order.
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10.
Non-Disparagement.
(a)
Executive agrees that he will not,
and he will use reasonable efforts to cause his family members not
to, directly or indirectly, disclose, communicate, or publish any
disparaging or defamatory information, written communications, oral
communications, electronic or magnetic communications, writings,
oral or written statements, comments, opinions, facts, or remarks,
of any kind or nature whatsoever (collectively, “
Disparaging Information ”), concerning or
regarding the Company Group, Resaca or any subsidiary of Resaca (or
any of their respective current or former officers, directors, or
employees). Executive understands and acknowledge
