SEPARATION AND RELEASE AGREEMENT
Exhibit 10.1
THIS SEPARATION AND RELEASE AGREEMENT (this “Agreement”) is made as of the 5th day of July,
2011, by and between G. Xxxxxxx Xxxxxx (the “Executive”) and Harvest Natural Resources, Inc. (the
“Company”).
WHEREAS, the Executive’s employment as an executive and employee of the Company terminated on
July 5, 2011 (the “Termination Date”);
WHEREAS, pursuant to Section 4(a)(2) of the Employment Agreement by and between the Company
and the Executive dated effective January 1, 2009 (the “Employment Agreement”), the Company has
agreed to pay the Executive certain amounts which are described further in this Agreement; and
WHEREAS, the Executive and the Company are executing this Agreement to evidence the
termination of the Executive’s employment with the Company and all affiliates, the payments and
other obligations of the Company in connection with the termination of the Executive’s employment
and the Executive’s obligations in connection with the termination of the Executive’s employment.
NOW THEREFORE, in consideration of these premises and the mutual promises contained herein,
and intending to be legally bound hereby, the parties agree as follows:
1. Termination Payments and Consideration.
1.1 The Executive and the Company acknowledge and agree that the Executive incurred a
Separation from Service, as that term is defined in Section 4(a)(2) of the Employment Agreement,
from the Company on the Termination Date.
1.2 The Executive acknowledges that: (i) the payments and terms (which are summarized on
Appendix 1 hereto) set forth in Section 4(a)(2) of the Employment Agreement constitute full
settlement of all his rights under the Employment Agreement, (ii) he has no entitlement under any
other severance or similar arrangement maintained by the Company, including the Company’s Policy
for Termination and Separation of Employment and (iii) except as otherwise provided specifically in
this Agreement, the Company does not and will not have any other liability or obligation to the
Executive.
1.3 Prior to the Termination Date, the Company has issued to the Executive (i) a Stock Unit
Award Agreement dated as of June 18, 2009 (the “Stock Unit Award Agreement”) which grants as of
June 18, 2009 to the Executive 12,500 Stock Units (the “Stock Units”) and (ii) a Stock Appreciation
Right Award Agreement dated as of June 18, 2009 (the “SAR Award Agreement”) which grants as of June
18, 2009 to the Executive a stock appreciation right (the “SAR”) with respect to 25,000 shares of
the Company’s common stock, par value $0.01 per share (the “Company’s Common Stock”). The Company
agrees that in consideration for the Executive executing this Agreement that (i) the Stock Unit
Award Agreement has been amended to provide that all of the Forfeiture Restrictions (as that term
is defined in the Stock Unit Award Agreement) to which the Stock Units are subject on the
Termination Date shall lapse effective as of the Termination Date if this Agreement is not
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revoked or rescinded by the Executive and the Company shall pay the amount payable with
respect to the Stock Units on July 15, 2011, and (ii) the SAR Award Agreement has been amended to
provide that all of the vesting restrictions to which the SAR is subject on the Termination Date
shall lapse effective as of the Termination Date if this Agreement is not revoked or rescinded by
the Executive in which case the SAR will become fully vested on the Termination Date and may be
exercised before 5:00 p.m. (Central Time) on July 5, 2012 and otherwise in accordance with the
terms of the SAR Award Agreement. Notwithstanding any other provision of this Agreement, the Stock
Unit Award Agreement or the SAR to the contrary, (i) the Executive will not be paid any amount
under the Stock Unit Award Agreement with respect to any of the Stock Units and the Executive shall
forfeit all rights to any such payment unless the period for revoking this Agreement shall have
expired prior to July 15, 2011 and the Executive has not revoked or rescinded this Agreement prior
to July 15, 2011, (ii) the Executive will not be entitled to exercise the SAR or receive any
payment under the SAR or the SAR Award Agreement during the period that the Executive may revoke or
rescind this Agreement and (iii) if the Executive revokes or rescinds this Agreement the Executive
shall forfeit all rights to exercise the SAR or receive any payment under the SAR or the SAR Award
Agreement and the SAR and the SAR Award Agreement shall terminate effective as of July 5, 2011.
The Executive acknowledges that the vesting rights described above in this Section 1.3 constitute
good and sufficient consideration of the mutual promises contained in this Agreement.
2. Release and Covenant Not to Xxx.
2.1 The Executive, his heirs and representatives release, waive and forever discharge the
Company, its predecessors and successors, assigns, stockholders, subsidiaries, parents, affiliates,
officers, directors, trustees, current and former employees, agents and attorneys, past and present
and in their respective capacities as such (the Company and each such person or entity is each
referred to as a “Released Person”) from all pending or potential claims, counts, causes of action
and demands of any kind whatsoever or nature for money or anything else, whether such claims are
known or unknown, that arose prior to the Executive’s signing this Agreement or that relate in any
way to the Executive’s employment or termination of employment with the Company. This release
includes, but is not limited to, any and all claims of race discrimination, sexual discrimination,
national origin discrimination, religious discrimination, disability discrimination, age
discrimination and unlawful retaliation and any and all claims under the following: Title VII of
the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq.; Civil Rights Act of 1866, 42
U.S.C. § 1981 et seq.; the Family and Medical Leave Act, as amended, 29 U.S.C. § 2601, et seq.; the
Americans with Disabilities Act, as amended, 42 U.S.C. § 12101, et seq.; the Age Discrimination in
Employment Act, as amended by the Older Workers Benefit Protection Act, 29 U.S.C. § 621, et seq.;
Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. § 1001, et seq.;
Rehabilitation Act of 1973, 29 U.S.C. § 706, et seq.; any state, municipal and other local
anti-discrimination statutes; any and all claims for alleged breach of an express or implied
contract; any and all tort claims including, but not limited to, alleged retaliation for assertion
of workers’ compensation rights; any and all claims under workers’ compensation law; and any and
all claims for attorney’s fees.
2.2 The Executive expressly represents that he has not filed a lawsuit or initiated any other
administrative proceeding against a Released Person and that he has not assigned any claim against
a Released Person. The Executive further promises not to initiate a
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lawsuit or to bring any other claim against any Released Person arising out of or in any way
related to the Executive’s employment by the Company or the termination of that employment. This
Agreement will not prevent the Executive from filing a charge with the Equal Employment Opportunity
Commission (or similar state agency) or participating in any investigation conducted by the Equal
Employment Opportunity Commission (or similar state agency); provided, however, that any claims by
the Executive for personal relief in connection with such a charge or investigation (such as
reinstatement or monetary damages) would be barred. In addition, this release shall not affect the
Executive’s rights under the Older Workers Benefit Protection Act to have a judicial determination
of the validity of this release and waiver.
2.3 The foregoing will not be deemed to release the Company from (a) claims solely to enforce
this Agreement, (b) claims for indemnification under the Company’s By-Laws and/or any applicable
indemnification agreements, and/or (c) claims to continue health care coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended or similar state law. The
foregoing will not be deemed to release any person or entity from claims arising after the date of
this Agreement, whether under this Agreement, under the Employment Agreement or otherwise,
including any additional benefits payable under Section 4.2(a)(3)(t), (y) and (z) if a Change of
Control (as that term is defined in the Employment Agreement) occurs within 240 days after the
Termination Date.
3. Restrictive Covenants. The Executive acknowledges that the restrictive covenants
contained in Section 5 of the Employment Agreement (the “Restrictive Covenants”) will survive the
termination of Executive’s employment. The Executive affirms that the Restrictive Covenants are
reasonable and necessary to protect the legitimate interests of the Company, that he received
adequate consideration in exchange for agreeing to those restrictions and that he will abide by
those restrictions and all provisions of Section 5 of the Employment Agreement.
4. Return of Company Property. The Executive represents and warrants that he has
returned all property belonging to the Company, including, but not limited to, all keys, access
cards, office equipment, computers, cellular telephones, notebooks, documents, records, files,
written materials, electronic information, credit cards bearing the Company’s name, and other
Company property (originals or copies in whatever form) in the Executive’s possession or under the
Executive’s control.
5. Cooperation. The Executive further agrees that, subject to reimbursement of his
reasonable expenses, he will cooperate fully with the Company and its counsel with respect to any
matter (including litigation, investigations, or governmental proceedings) in which the Executive
was in any way involved during his employment with the Company; provided that such cooperation
shall not unreasonably interfere with Executive’s employment with another employer after
termination of his employment with the Company. The Executive shall render such cooperation in a
timely manner on reasonable notice from the Company.
6. Rescission Right. The Executive expressly acknowledges and recites that (a) he has
read and understands the terms of this Agreement in its entirety; (b) he has entered into this
Agreement knowingly and voluntarily, without any duress or coercion; (c) he has been advised orally
and is hereby advised in writing to consult with an attorney with respect to this Agreement before
signing it; (d) he was provided twenty-one (21)
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calendar days after receipt of the Agreement to consider its terms before signing it; and (e) he is
provided seven (7) calendar days from the date of signing to terminate and revoke this Agreement,
in which case this Agreement shall be unenforceable, null and void. The Executive may revoke this
Agreement during those seven (7) days by providing written notice of revocation to the Vice
President of Human Resources and Administration of the Company.
7. Challenge. If the Executive violates or challenges the enforceability of any
provisions of the Restrictive Covenants or this Agreement, no further payments, rights or benefits
under Section 4(a)(2) of the Employment Agreement will be due to the Executive.
8. Miscellaneous.
8.1 No Admission of Liability. This Agreement is not to be construed as an admission
of any violation of any federal, state or local statute, ordinance or regulation or of any duty
owed by the Company to the Executive. There have been no such violations, and the Company
specifically denies any such violations.
8.2 Arbitration. The parties agree that Section 6(c) of the Employment Agreement
shall survive and be applicable to this Agreement.
8.3 No Reinstatement. The Executive agrees that he will not without the consent of the
Company apply for reinstatement with the Company or seek in any way to be reinstated, re-employed
or hired by the Company in the future.
8.4 Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the Company and the Executive and their respective successors, permitted assigns,
executors, administrators and heirs. The Executive may not make any assignment of this Agreement or
any interest herein, by operation of law or otherwise. The Company may assign this Agreement to any
successor to all or substantially all of its assets and business by means of liquidation,
dissolution, merger, consolidation, transfer of assets, or otherwise.
8.5 Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law. However, if any
provision of this Agreement is held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability will not affect any other provision, and this Agreement
will be reformed, construed and enforced as though the invalid, illegal or unenforceable provision
had never been herein contained.
8.6 Entire Agreement; Amendments. Except as otherwise provided herein, this Agreement
contains the entire agreement and understanding of the parties hereto relating to the subject
matter hereof, and merges and supersedes all prior and contemporaneous discussions, agreements and
understandings of every nature relating to the subject matter hereof. This Agreement may not be
changed or modified, except by an agreement in writing signed by each of the parties hereto.
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8.7 Governing Law. This Agreement shall be governed by, and enforced in accordance
with, the laws of the State of Texas, without regard to the application of the principles of
conflicts of laws.
8.8 Counterparts and Facsimiles. This Agreement may be executed, including execution
by facsimile signature, in multiple counterparts, each of which shall be deemed an original, and
all of which together shall be deemed to be one and the same instrument.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized officer, and the Executive has executed this Agreement, in each case effective as of the
date first above written.
| EMPLOYEE: | ||||||
| G. Xxxxxxx Xxxxxx | ||||||
| Date: , 2011 | ||||||
| COMPANY: | ||||||
| HARVEST NATURAL RESOURCES, INC. | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| Date: , 0000 | ||||||
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XXXXXXXX 1 TO
SEPARATION AND RELEASE AGREEMENT
SEPARATION AND RELEASE AGREEMENT
Payments
Pursuant to Section 4(a)(2) of the Employment Agreement, the Executive is entitled to the following
payments upon termination of his employment by the Company pursuant to Section 4(a)(1):
| Amount of | Date Amount to be | |||||||
| Description of Payment | Payment | Paid | ||||||
An amount equal to 24 months of the
Executive’s $25,500 monthly base salary,
which shall be paid on the date that is
six months following the Termination Date |
$ | 612,000 | January 2, 2012 | |||||
An amount equal to 24 months of the
maximum contribution the Company may make
for the Executive under the Company’s
401(k) profit sharing plan, which shall
be paid on the date that is six months
following the Termination Date |
$ | 19,600 | January 2, 2012 | |||||
Vesting of Stock Option and Restricted Stock Awards
Below is a list of the stock options granted by the Company to the Executive that are outstanding
as of the Termination Date (the “Stock Options”). Pursuant to Section 4(a)(2) of the Employment
Agreement, the Stock Options became fully vested on the Termination Date and are exercisable before
5:00 p.m. (Central Time) on July 5, 2012, in accordance with the terms of the applicable award
agreements for the Stock Options:
| Number of | Number of Shares | |||||||||
| Title of Applicable Award | Shares Subject | Not Vested as of | ||||||||
| Grant Date | Agreement | to Award | Termination Date | |||||||
May 19, 2008
|
Harvest Natural Resources Stock Option Agreement |
100,000 | 0 | |||||||
June 18, 2009
|
Harvest Natural Resources 2006 Long Term Incentive Plan Stock Option Agreement |
13,000 | 8,667 | |||||||
May 20, 2010
|
Harvest Natural Resources 2010 Long Term Incentive Plan Stock Option Award Agreement |
12,000 | 8,000 | |||||||
Appendix 1 — Page 1
Below is a list of the awards of restricted shares of the Company’s Common Stock granted by the
Company to the Executive that are outstanding as of the Termination Date (the “Restricted Stock
Awards”). Pursuant to Section 4(a)(2) of the Employment Agreement, the restriction period for each
of the Restricted Stock Awards lapsed and the Restricted Stock Awards became fully vested on the
Termination Date. On or before August 4, 2011, the Company will deliver to the Executive
certificates representing the shares of the Company’s Common Stock to be delivered to the Executive
under and in accordance with the Restricted Stock Awards.
| Number of | Number of Shares | |||||||||
| Title of Applicable Award | Shares Subject | Not Vested as of | ||||||||
| Grant Date | Agreement | to Award | Termination Date | |||||||
June 18, 2009
|
Harvest Natural Resources 2004 Long Term Incentive Plan Employee Restricted Stock Agreement |
12,500 | 12,500 | |||||||
May 20, 2010
|
Harvest Natural Resources 2010 Long Term Incentive Plan Employee Restricted Stock Award Agreement |
4,400 | 4,400 | |||||||
Reimbursements
Pursuant to Section 4(a)(2) of the Employment Agreement, the Executive shall be reimbursed by the
Company for up to $20,000 of outplacement services with an outplacement service approved by the
Vice President of Human Resources and Administration of the Company provided that the expenses for
the outplacement services are reasonable and are incurred no later than December 31, 2013.
Additional Benefits — Consideration for Annual Performance Bonus
The Employee will be evaluated as part of the Company’s discretionary annual performance bonus
program for the year 2011 and may receive a prorated amount of the annual performance bonus for the
year 2011 the Employee could have received under the program if he had remained an employee of the
Company, as determined in the sole discretion of the Company and payable at the time determined by
Company.
Appendix 1 — Page 2
