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EXHIBIT 10(aa)
CANCELLATION AND SEVERANCE AGREEMENT
THIS CANCELLATION AGREEMENT (the "Cancellation Agreement") dated this
19th day of September, 1994 by and between AMERICAN NATURAL ENERGY CORPORATION,
an Oklahoma corporation ("American") and MICHAEL PAULK ("Paulk"), an
individual.
WITNESSETH:
WHEREAS, American and Paulk entered into an Employment and Option
Agreement dated July 1, 1990 as amended by Amendment Number 1 dated May 1, 1993
(herein collectively referred to as the "Employment Agreement"); and
WHEREAS, the Employment Agreement terminates on June 30, 1995, but
Paulk is desirous of terminating his relationship with American in accordance
with the terms and provisions of this Cancellation Agreement; and
WHEREAS, American has been acquired by Alexander Energy Corporation
("Alexander") pursuant to that certain Agreement and Plan of Merger (the
"Merger Agreement"); and
WHEREAS, the closing (the "Closing") of the transaction described in
this Cancellation Agreement will be September 19, 1994 or at a subsequent date
mutually agreed to by the parties.
NOW, THEREFORE, in consideration of the promises herein and other
valuable consideration the receipt of which is hereby acknowledged by Paulk,
the parties hereto agree as follows:
1. Aqreement of Cancellation. Effective September 1, 1994, the
Employment Agreement is hereby mutually cancelled by American and Paulk and all
the terms and provisions thereof are hereby terminated with neither party
bearing any liability or responsibility to the other party under the Employment
Agreement from the date hereof.
2. Payments to Paulk. In consideration of Paulk terminating the
Employment Agreement and his relationship with American, its parent and its
subsidiaries, American agrees to pay to Paulk at Closing a cash payment of
$120,000 in settlement of American's obligations under the Employment
Agreement.
3. Tulsa Office Expenses. Commencing not later than November 1,
1994, Paulk shall assume all expenses of the Tulsa, Oklahoma office of
American, including without limitation, (a) all obligations and liabilities
with respect to the remaining American employees (Kim Ward, Gordia Cosby and
Linda Elsey) in Tulsa for severance pay or otherwise and (b) all obligations
and liabilities pursuant to the Lease Agreement between American and Planet
Pacific, Inc. ("Planet") for the leased premises at One Summit
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Plaza (the "Tulsa Lease"). Paulk covenants and agrees to indemnify and hold
American and Alexander harmless from any and all such costs, expenses and
liabilities. Upon Paulk providing evidence satisfactory to Alexander that
Planet has released, without condition, American from any and all obligations
or liabilities under or pursuant to the Tulsa Lease, American shall pay Paulk,
but not earlier than January 1, 1995, the sum of $125,000 less the aggregate of
(i) amounts owed by Paulk to American on such date as reflected by the books
and records of American and (ii) interest on the outstanding amounts owed
American by Paulk from September 1, 1994 through the date of payment by
American, at a rate per annum equal to the rate charged to Alexander by its
principal lending bank.
4. Automobile Lease. At Closing, Paulk shall assume American's
lease of the automobile identified on Exhibit A hereto and hereby covenants and
agrees to hold American harmless for any and all costs, liabilities or expenses
with respect thereto from and after September 1, 1994; provided American will
continue the liability coverage, if permitted by the insurer, on such
automobile until November 1, 1994.
5. Resignation of Paulk. Effective upon the Closing, Paulk hereby
submits and American and Alexander hereby accept Paulk's resignation as an
employee, director or officer of American and Alexander, and any subsidiaries
of American and Alexander.
6. Release. In consideration of the mutual provisions herein
contained each party hereto, on his or its behalf and on behalf all others who
might assert claims based on any of their respective rights, does hereby
release and discharge the other party hereto and, in the case of American, its
parent, successors, affiliates, subsidiaries, partners, employees, officers,
directors and agents (hereinafter sometimes referred to collectively as the
"Company"), from all claims, liabilities, demands, and causes of action known
or unknown, fixed or contingent, which such party may have or claim to have
against the other party as a result of Paulk's past employment and the
severance of that relationship and Paulk's decision to resign from the Company
and does hereby covenant not to file a lawsuit to assert such claims under any
such agreements, plans, programs or arrangements which shall include by example
and not by limitation the Employment Agreement and claims arising under
federal, state, or local laws prohibiting employment discrimination (including
age discrimination) or growing out of any legal restriction on the Company's
right not to continue an employment relationship with its employees. Paulk
acknowledges that he may have rights under the Older Workers Benefit Protection
Act (the "Act") which he hereby agrees to waive, including any statutory rights
which he may have to timing for review and/or revocation of any release. Paulk
further represents that he understands the nature of the waiver of his rights
under the Act, and that he has had sufficient opportunity to be advised by
counsel
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of his rights and the nature of this release. Notwithstanding the foregoing,
any rights of indemnification which Paulk has as a result of the Oklahoma
General Corporation Act or the Bylaws or Certificate of Incorporation of
American shall not be impaired as a result of the foregoing.
7. Confidentiality. Except as otherwise agreed to by American,
for a term of two (2) years from the date of the Closing, Paulk shall not
disclose or furnish to any other party any confidential information obtained by
him as a result of his employment relating to American's or Alexander's
business affairs, finances, or other confidential information without, in each
case, the written consent of Alexander.
8. Applicable Taxes. All amounts which will be paid, transferred
or delivered to Paulk in accordance with the terms of this Agreement, except
the payment provided for in Section 3 hereof, will be considered as additional
compensation and subject to all appropriate withholding and employment taxes.
9. Limitation on Health Benefits. Paulk agrees that in
consideration of the payments provided for herein, he will not elect to
continue coverage under COBRA with respect to any health plan (the "Plan") in
which Paulk has been a participant; and if Paulk does elect such coverage, and
if any claims are made in accordance with the terms and provisions of the Plan,
American shall have a right for reimbursement from Paulk for any payments so
made under the Plan.
10. Entire Agreement. This Cancellation Agreement contains the
entire understanding of the parties with respect to its subject matter. This
Cancellation Agreement supersedes all prior agreements and understandings
between the parties with respect to its subject matter.
11. Headings. The headings contained in this Cancellation
Agreement are for reference purposes only and will not affect in any way the
meaning or interpretation of this Cancellation Agreement.
12. Specific Performance. Paulk acknowledges that American may not
have an adequate remedy at law for money damages in the event that this
Cancellation Agreement is not performed in accordance with its terms, and
therefore agrees that American shall be entitled to specific enforcement of the
terms hereof in addition to any other remedy to which it may be entitled, at
law or in equity.
13. Severability. If any term, provision, covenant or restriction
of this Cancellation Agreement is held by a court of competent jurisdiction to
be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of
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this Cancellation Agreement shall remain in full force and effect and shall in
no way be effected, impaired or invalidated.
14. Closinq of Aqreement. Execution of this Agreement and delivery
of all amounts and the performance by the parties hereunder of their
respective obligations is contingent and conditioned upon the Closing. In the
event that the Closing does not occur, then, the parties under this Agreement
shall have no duty to perform the required obligations under this Agreement and
all prior obligations of American to Paulk, including the obligations of
American to Paulk under the Employment Agreement, will continue in full force
and effect.
15. Miscellaneous. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by Paulk and the president or vice president of
American. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with any condition or provision of this
Cancellation Agreement to be performed by such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Cancellation Agreement.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Oklahoma.
This Cancellation Agreement is effective as to the date first above
written.
"AMERICAN" AMERICAN NATURAL ENERGY CORPORATION
By /s/ BOB G. ALEXANDER
Bob G. Alexander, President
"ALEXANDER" ALEXANDER ENERGY CORPORATION
By /s/ BOB G. ALEXANDER
Bob G. Alexander, President
"PAULK" /s/ MICHAEL PAULK
Michael Paulk
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