SEVERANCE AGREEMENT AND RELEASE
BETWEEN ▇▇▇▇▇▇ OIL CORPORATION AND ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
This Separation Agreement and Release ("Agreement") is made
and entered into this 14th day of November, 1995, by and between
▇▇▇▇▇▇ Oil Corporation ("SOCO") and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("Fanning").
Fanning is currently employed by SOCO as its Chief Operating
Officer. SOCO and Fanning have mutually agreed to end Fanning's
employment with SOCO, at which time SOCO wishes to retain Fanning as
an independent consultant.
Accordingly, the parties agree as follows:
1. Effective November 14, 1995, Fanning will resign as an officer
and director of SOCO and its subsidiaries. Fanning's employment by
SOCO will terminate effective the close of business on December 31,
1995 (the "Effective Date"). Between November 14, 1995 and the
Effective Date, Fanning will continue to perform those services at
such times and in such places as requested by the Chairman, but will
otherwise not be required to be present in the offices of SOCO or to
discharge any other duties of a SOCO employee.
2. Upon the Effective Date, SOCO will pay Fanning's salary for
services rendered as an employee by Fanning through and including the
Effective Date. SOCO also agrees to pay on the Effective Date, as a
severance payment, to Fanning a check in the amount of $65,000 plus
payment for any unused vacation days earned by Fanning as of the
Effective Date, net of required withholding.
3. Upon the Effective Date, Fanning will also be entitled to
receive an allocation of SOCO's 1995 contribution to the 401(k)
plan,in accordance with the terms of such plan. Pursuant to the terms
of SOCO's Deferred Compensation Plan for Select Employees a portion
of the Company's contributions allocated to Fanning's account will
become vested on December 31, 1995, the last day of the 1995 Plan
Year. For purposes of clarification, SOCO agrees that it is the
intent of this Agreement that Fanning will be an employee of SOCO on
December 31, 1995 so that amounts allocated to Fanning's account
under such Plan which would become vested on December 31, 1995 will,
in fact, become vested.
4. Upon the Effective Date, SOCO also agrees to reimburse Fanning
for any expense incurred by him through the Effective Date which is
reimbursable to Fanning in accordance with SOCO policy, provided that
Fanning submits the expenses for reimbursement in accordance with
SOCO policy.
5. Fanning recognizes that, after the Effective Date, he will no
longer be eligible to participate as a SOCO employee in any option,
savings, insurance, or other benefit plan except to the extent any
such plan provides otherwise or except as provided herein.
6. Upon the Effective Date, Fanning will be eligible to apply for
the Group Medical and Dental Plan continuation coverage pursuant to
the Consolidated Omnibus Budget Reconciliation Act ("COBRA"). If
Fanning chooses to continue coverage pursuant to COBRA, SOCO agrees
that Fanning's monthly premium for such coverage will not exceed the
amount Fanning would have paid in respect of comparable coverage
under SOCO's employee health benefit plan if Fanning were an
employee. SOCO will pay this amount only for as long as Fanning
receives COBRA continuation coverage. Fanning will be allowed to
convert his current Company paid life insurance at his own expense.
7. Amounts credited to Fanning's account under the Deferred
Compensation Plan for Select Employees which are presently vested or
which become vested under the terms of such plan as of the Effective
Date will, notwithstanding the termination of Fanning's employment,
be retained under such Plan and will be paid in annual sums of
$61,000 per year, or such smaller amount as shall represent the full
balance credited to Fanning under such Plan, on January 5 of such
year beginning in 1996 until the full amount credited to Fanning
under such Plan is paid out. Subject to paragraph 3, amounts
forfeitable under such Plan as the result of the termination of
Fanning's employment will be forfeited as of the Effective Date.
8. The parties recognize that Fanning is the holder of 260,000
options granted under the 1989 Employee Stock Option Plan, of which
135,500 will be vested as of the Effective Date. Not withstanding
the terms of the agreements under which such options were granted,
SOCO agrees to permit Fanning to exercise his vested options in
accordance with such Plan until the close of business on the last
business day in December 1998. SOCO further agrees to permit Fanning
to pay all or any part of the exercise price of any such options
exercised by Fanning in the form of previously-owned common stock of
SOCO as provided by the Plan. The remaining options which will not
be vested as of the Effective Date will expire as provided in such
Plan and the agreements under which the options were granted.
9. In consideration of the promises of SOCO in this Agreement,
Fanning, for himself and on behalf of any agents, heirs, assigns,
relatives, spouse (if any), and related persons, hereby releases,
acquits, and forever discharges SOCO and its subsidiaries, directors,
officers, employees, agents, representatives, and related persons or
entities from all rights, demands, actions, damages, and claims,
whether known or unknown, arising from or in any way connected with
Fanning's employment with SOCO and the discontinuation thereof. This
release and waiver of all claims and damages includes, but is not
limited to, any claims to salary, vacation, or benefits, or severance
or other payment (other than as expressly provided for in this
Agreement, the Consulting Agreement referenced in paragraph 13 of
this Agreement or any other written plan under which, by its terms,
Fanning has rights after the Effective Date), any rights to be
reinstated as an employee in the future, any tort or claim of
contractual obligation relating to Fanning's employment or
discontinuation thereof, and any and all rights under federal, state,
or local laws prohibiting race, sex, age, religion, national origin,
handicap, disability, or other forms of discrimination, including but
not limited to Title VII of the Civil Rights Act, as amended, and the
Age Discrimination in Employment Act, as amended.
During the seven day period following execution of this
Agreement, Fanning may revoke this Agreement but only to the extent
that it relates to claims of age discrimination under the Age
Discrimination in Employment Act. Upon such partial revocation,
Fanning will immediately cease to be an employee of SOCO and the
promises of SOCO under paragraphs 3, 6, 7 and 8 of this Agreement and
the Consulting Agreement entered into pursuant to paragraph 13 of
this Agreement will be void; in lieu thereof, SOCO will pay Fanning
the amount provided for in SOCO's policy statement 2-7 and all
remaining parts of this Agreement will continue to be in full force
and effect.
If Fanning breaches his agreement as provided in this
paragraph 9 not to file any charge, complaint, or claim against SOCO,
then Fanning shall be liable to SOCO for all expenses, costs, and
attorney's fees incurred in defending such charge, complaint, or
claim, regardless of the merits of the outcome.
10. It is expressly understood and agreed that this Agreement is
not and shall not be construed as an admission of liability on the
part of SOCO, which expressly denies any such liability. Neither
this Agreement nor any part thereof is admissible in any
administrative orjudicial proceeding other than one to enforce the
terms of this Agreement.
11. Fanning represents that before or on the Effective Date, he
will return all SOCO records and property in Fanning's possession
except as permitted by SOCO. SOCO hereby conveys to Fanning the
office computer equipment (not including any Company owned or
licensed software) currently in Fanning's office as well as the
cellular phone used by Fanning in his automobile.
12. SOCO agrees to assist Fanning in procuring outplacement
services. Such assistance shall be limited to reimbursement for such
services in an amount to be mutually agreed to by Fanning and the
Chairman.
13. Subject to Fanning's compliance with paragraph 9 of this
Agreement, SOCO is concomitantly entering into a consulting agreement
(the"Consulting Agreement") with Fanning in substantially the form
attached as Appendix I.
14. This Agreement shall be governed by the laws of the State of
Texas except to the extent applicable federal or state law mandates
otherwise. Any claim under or relating to this Agreement or relating
to Fanning's employment with SOCO or the discontinuance thereof,
shall be filed only in the courts of Tarrant County, Texas.
15. If any part of this Agreement is found to be invalid or not in
accordance with law, then all other parts shall remain in full force
and effect.
16. Any notices, payments, revocations, or demands under this
Agreement shall be made by hand delivery or certified mail as
follows: If to Fanning, at the address set forth on the signature
page hereto. If to SOCO, at the following address:
▇▇▇▇▇▇ Oil Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
17. Fanning represents and warrants that he has been given
adequate time to consider this Agreement before signing it and,
further, that he was advised in writing to consult with an attorney
before signing it. Further, Fanning warrants that he has carefully
read and fully understands all the provisions and effects of this
Agreement and that he has voluntarily executed in the space provided
below.
18. Fanning agrees that he will not make or issue any statement
concerning SOCO which damages or disparages its reputation. SOCO
likewise agrees not to make or issue any statement concerning Fanning
which damages Fanning's business or professional reputation or
prospects. In addition, when inquiries are made as to reasons for
Fanning's termination of employment, the statement set forth in
Appendix II will be given. This paragraph shall survive the end of
the Consulting Period under the Consulting Agreement referred to in
paragraph 13 of this Agreement.
19. This Agreement shall be binding on Fanning and his heirs and
legal representatives, and on SOCO, and its directors and officers.
SOCO understands and agrees in particular that the restrictions set
forth in paragraph 18 hereof apply to all current and future
directors and officers of SOCO and that any violation by any of said
persons at any time shall be deemed a violation by SOCO of this
Agreement.
▇▇▇▇▇▇ OIL CORPORATION
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Date Executed: BY:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman of the Board
Address
921 Hillcrest Date Executed:
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
APPENDIX I
to Severance Agreement and Release
Between ▇▇▇▇▇▇ Oil Corporation and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
CONSULTING AGREEMENT BETWEEN
▇▇▇▇▇▇ OIL CORPORATION AND ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
This Consulting Agreement is made and entered into this 14 th
day of November, 1995, by and between ▇▇▇▇▇▇ OIL CORPORATION
("SOCO")
and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("Fanning").
Fanning's employment with SOCO is due to terminate on December
31, 1995. However, SOCO desires to avail itself of the services,
experience, sources of information, advice, and assistance of
Fanning, and Fanning is willing to make such services, experience,
sources of information, advice and assistance available to SOCO.
Accordingly, the parties agree as follows:
1. SOCO agrees to retain Fanning to perform certain consulting
services (the "Consulting Services"). The Consulting Services
shall
include management and organizational advisory services as
requested
by the Chairman, but only to the extent Fanning in his sole
judgment
has time available to render such services. Consulting Services
shall also include litigation assistance on behalf of SOCO.
Notwithstanding any other language in this paragraph, Fanning
agrees
to make himself reasonably available to assist SOCO and its counsel
in connection with any current or future litigation to which SOCO
or
any of its subsidiaries is or may be a party. Such assistance
shall
include but will not be limited to consultation interviews,
preparation for attendance at depositions, and preparation for
presentation of testimony at any trials or hearings. During the
term
of this Agreement, Fanning agrees to provide such services without
further remuneration except as to reasonable out-of-pocket expenses
as specified in paragraph 4. After the term of this Agreement
expires, Fanning also agrees to furnish such litigation assistance
services as reasonably requested by SOCO, provided that SOCO agrees
to pay Fanning a fee for such services. The parties agree to
negotiate a reasonable rate for such a fee.
2. Fanning shall perform the Consulting Services for a period of
time (the "Consulting Period") commencing on January 1, 1996, and
continuing until September 30, 1997.
3. In consideration for the Consulting Services, SOCO agrees to
pay
Fanning during the Consulting Period a fee of FOUR HUNDRED
FIFTY-FIVE
THOUSAND AND NO/100THS DOLLARS ($455,000.00). Such fee shall be
paid
to Fanning in 42 equal semi-monthly installments in an amount of
TEN
THOUSAND EIGHT HUNDRED THIRTY-THREE AND 33/100THS DOLLARS
($10.833.33) per installment. SOCO shall remit each installment to
Fanning on the fifteenth and last day of each month. Each such
payment will be made regardless of Fanning's availability to
perform
Consulting Services. In the event of Fanning's death, each such
payment will be made to Fanning's estate.
4. SOCO will also reimburse Fanning for all reasonable out-of-
pocket expenses incurred by Fanning in the course of providing any
Consulting Services hereunder, provided that Fanning promptly
submits
vouchers to SOCO for any such out-of-pocket expenses and receives
advance approval from the Chairman of expenditures exceeding $500.
5. Fanning acknowledges that while performing any Consulting
Services under this Agreement, he will be acting as an independent
contractor and not as a SOCO employee or as an agent with authority
to bind SOCO in any respect. Fanning further acknowledges and
agrees that, except as provided in this Agreement, he shall be solely
responsible for all expenses, taxes, insurance, and other
obligations incurred by Fanning while performing the Consulting
Services.
6. Fanning acknowledges that he has obtained as an employee and
may obtain as a consultant certain proprietary information relating
to SOCO's operations ("Confidential Information"). Confidential
Information means information relating to SOCO's exploration plans,
acquisition plans, development plans, its future financial plans,
and its technology and associated trade secrets. Fanning agrees he
shall not directly or indirectly disclose any such Confidential
Information to any party or entity except as explicitly permitted by
SOCO in writing. This paragraph shall survive the end of the
Consulting Period.
7. In consideration of both the benefits made to Fanning under
this Agreement and of the Confidential Information imparted to
Fanning, Fanning agrees not to engage in certain business activities
in competition with SOCO (the "Restricted Activities"). Fanning also
agrees not to associate either directly or indirectly as an
employee, contractor, investor, officer, partner, or agent of any
person or entity involved in Restricted Activities. Restricted
Activities in this paragraph shall mean any business activity
relating to the sale, purchase, leasing, exploration, or development
of any oil, gas, or mineral interest located within the area of any
existing or prospective oil, gas, or mineral interest or other
property owned, leased, or otherwise possessed by SOCO or about which
Fanning was provided Confidential Information by SOCO, all as
specifically described in Exhibit A attached hereto and made a part
hereof. The parties understand and agree that from time to time
during the Consulting Period SOCO may propose to add additional
properties, interests or prospects to Exhibit A by delivering to
Fanning a written description of the proposed addition. If within 15
days of receipt of a proposed addition Fanning notifies SOCO in
writing that if said addition were added to Exhibit A he would be in
violation of this paragraph 7, then said proposed addition shall not
become a part of Exhibit A. If within said 15-day period, Fanning
does not notify SOCO that he would be in violation of this paragraph
7 if such addition was added to Exhibit A, then, at the end of said
15-day period said proposed addition shall become a part of Exhibit
A, and the restrictions herein shall thereafter apply to said
addition. The restrictions on Fanning's future business activities as
described in this paragraph will continue until June 30, 1998. The
parties further agree, however, that Fanning may be permitted by SOCO
to engage in such Restricted Activities in the Chairman's sole
discretion provided that Fanning obtains the Chairman's written
authorization before engaging in such Restricted Activities. If
Fanning breaches any obligation under this paragraph, SOCO can seek
injunctive relief and, at SOCO's option, may cancel any remaining
installments due Fanning pursuant to paragraph 3 of this Agreement or
may reduce the amount of such remaining installments to $2,000.00 per
monthly installment. Further, if Fanning breaches any obligation
under this paragraph, then SOCO may, at its election, cancel any
remaining stock options held by Fanning as set forth in paragraph 8
of the Severance Agreement and Release expressly incorporated herein.
Fanning acknowledges that Exhibit A contains Confidential
Information of SOCO and agrees, except as may be authorized in
writing by SOCO, to keep the contents of such Exhibit confidential to
the same extent Fanning is required to maintain the confidentiality
of other Confidential Information imparted to him by SOCO by virtue
of Fanning's having served as an officer of SOCO.
8. During the Consulting Period, Fanning agrees to notify SOCO in
writing promptly of any activities or investments he proposes to make
which he believes may constitute a violation of paragraph 7. Within
10 days after SOCO receives said written notice, SOCO will deliver a
written reply to Fanning indicating whether it believes said proposed
activity or investment would be deemed by SOCO a violation of
paragraph 7 and whether or not SOCO's Chairman is authorizing
Fanning's engagement in such activity or investment as permitted
under paragraph 7 of this Agreement. If SOCO does not deliver such
written reply to Fanning within said 10 days, Fanning shall be free
to undertake such activity or investment, and it shall not be a
violation of paragraph 7.
9. This Agreement and the rights, interests, and benefits of
Fanning hereunder may not be assigned or transferred in any way by
Fanning, without the express written consent of SOCO. Fanning may
not assign or delegate any of the duties hereunder without the
express written consent of SOCO. Any assignment or transfer contrary
to the foregoing provisions shall be void.
10. Any notices, payments, revocations, or demands under this
Agreement shall be made by hand-delivery or certified mail as
follows: If to Fanning, at the address set forth on the signature
page hereunder; if to SOCO, at the following address:
▇▇▇▇▇▇ Oil Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
11. This Agreement shall be governed by the laws of the State of
Texas. Any claim under or relating to this Agreement shall be filed
only in the courts of Tarrant County, Texas.
12. This Agreement shall be fairly interpreted according to its
language and without regard to the drafter.
13. If any provision of this Agreement shall be held to be
unenforceable or invalid, then such provision, or the invalidity or
unenforceability thereof, shall in no way affect the validity of any
other provisions hereof. This Agreement contains the entire
agreement of the parties with respect to the subject matter hereof,
and supersedes any prior agreements, written or oral, between the
parties with respect to such subject matter. This Agreement may be
amended only in writing signed by both parties.
▇▇▇▇▇▇ OIL CORPORATION
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Date Executed: BY:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman of the Board
Address:
921 Hillcrest Date Executed:
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
EXHIBIT A
to Consulting Agreement between
▇▇▇▇▇▇ Oil Corporation and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Exhibit A consists of this page and seven pages of maps, each of
which has been initialled by the parties for purposes of
identification.
APPENDIX II
to Severance Agreement and Release
Between ▇▇▇▇▇▇ Oil Corporation and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ left the employment of ▇▇▇▇▇▇ Oil as part of are
structuring of the Company. Since January 1, 1995, we have sold or
plan to sell a significant number of assets and reduced employment by
35% to 40%. As a result, we have organized into a smaller, more
focused organization and reduced the number of reporting
relationships. Therefore, the position of Chief Operating Officer
has been eliminated and ▇▇▇▇ elected to resign.
