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Severance Agreement

This is an actual contract by American Exploration.

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Sectors: Energy
Governing Law: Texas, View Texas State Laws
Effective Date: November 30, 1995
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CONFIDENTIAL AND LEGALLY PRIVILEGED


SEVERANCE AGREEMENT


between


AMERICAN EXPLORATION COMPANY


and


ELLIOTT PEW


SEVERANCE AGREEMENT


THIS SEVERANCE AGREEMENT, effective as of the ____ day of April, 1997 (the "Effective Date"), by and between AMERICAN EXPLORATION COMPANY, a Delaware corporation having its principal place of business at 1331 Lamar, Suite 900, Houston, Texas 77010 (the "Corporation") and Elliott Pew, an individual residing at 4 Wellington Lane, Conroe, Texas 77304 (the "Executive"),


WITNESSETH THAT:


WHEREAS, the Executive has been employed by the Corporation continuously since October, 1992;


WHEREAS, the Executive currently is the Senior Vice President-Exploration of the Corporation;


WHEREAS, certain terms and conditions of the Executive's rights upon termination of employment by the Corporation are set forth in that certain Severance Agreement, dated as of November 30, 1995 (the "Prior Severance Agreement");


WHEREAS, the terms of this Agreement were duly approved and authorized for and on behalf of the Corporation by the Board of Directors of the Corporation and the Compensation Committee thereof at meetings held on March 25, 1997, at which meetings quorum was present and voted;


NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree, effective upon the Effective Date, to substitute the provisions of this Agreement


for the provisions of the Prior Severance Agreement;


ARTICLE . Termination of Employment


Section . Events of Termination


() Death. The Executive's employment shall terminate automatically upon the Executive's death.


() Disability. If the Corporation determines in good faith that the Executive is unable to perform the Executive's duties because of a Disability (as defined below) that has occurred while the Executive is employed by the Corporation, it may give the Executive written notice in accordance with Section 2.6 of this Agreement of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Corporation shall terminate effective on the 30th day after receipt of such notice by the Executive, provided that, within thirty (30) days after such receipt, the Executive shall not have returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" shall mean the absence of the Executive from the Executive's duties with the Corporation as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Corporation or its insurers and acceptable to the Executive or the Executive's legal representative.


() Without Cause. Notwithstanding any other provision hereunder, the Corporation shall have the right to terminate the Executive's employment hereunder without "Cause" (as defined in Section 1.1(d)) at any time for any reason in the sole discretion of the Corporation upon not less than thirty (30) days' prior written notice to the Executive.


() Cause. The Corporation may terminate the Executive's employment for Cause. For purposes of this Agreement, "Cause" shall mean:


() The willful and continued failure of the Executive to perform substantially the Executive's duties with the Corporation (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive, which demand shall specifically identify the manner in which the Corporation believes that the Executive has not substantially performed the Executive's duties, or


() The willful engaging by the Executive in illegal conduct or gross misconduct in connection with the performance of his duties hereunder which is materially injurious to the Corporation.


For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Corporation. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of any senior officer of the Corporation or based upon the advice of counsel for the Corporation shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Corporation.


() Good Reason. The Executive may terminate his employment by the Corporation for Good Reason at any time within two (2) years after a Change of Control (as hereinafter defined). For purposes of this Agreement, "Good Reason" shall mean the occurrence, without the Executive's express written consent, of any one or more of the following events:


() The assignment to the Executive of any duties inconsistent with


the Executive's positions, duties, responsibilities and status with the Corporation as of the time immediately prior to the Change of Control or a change in the Executive's reporting responsibilities, titles or offices in effect as of the time immediately prior to the Change of Control or any removal of the Executive from or any failure to re-elect the Executive to any of such positions, except with the Executive's written consent.


() A reduction in the Executive's Basic Compensation or the failure by the Corporation to increase such compensation each year by an amount which at least equals, on a percentage basis, the mean average percentage increase in base salary for all officers of the Corporation (other than the Executive) during such year or the failure by the Corporation to continue to provide prompt payment (or reimbursement to the Executive) of all reasonable expenses incurred by the Executive in connection with the Executive's professional and business activities;


() A failure by the Corporation to waive any and all restrictions that might exist on the exercise of any stock options or with respect to any awards of restricted stock or other benefits held by the Executive under the Stock Compensation Plans (as defined below) as of the date of a Change of Control;


() The Corporation requiring the Executive to be based anywhere other than Houston, Texas ("Office"), except for travel on business to an extent reasonably required in the performance of the Executive's duties hereunder or, in the event the Executive consents to any relocation of his Office, the failure by the Corporation to pay (or reimburse the Executive for) all reasonable moving expenses (including all costs, fees and transfer taxes incurred in selling his principal residence) incurred by the Executive relating to a change of the Executive's principal residence in connection with such relocation and to indemnify the


Executive against, and reimburse him for, any loss (defined as the difference between the actual sales price of such residence and the higher of (a) the Executive's aggregate investment in such residence or (b) the fair market value of such residence as determined, at the Corporation's expense, by an independent real estate appraiser designated by the Executive (and reasonably satisfactory to the Corporation)), together with an amount equal to the federal, state and local taxes payable by the Executive in respect of all of the amounts payable to the Executive as contemplated under this paragraph.


() The failure by the Corporation to include the Executive as a participant in any benefit or compensation plan or arrangement generally available to executives of comparable level or the failure by the Corporation to provide the Executive with the number of paid vacation days, holidays and personal days to which the Executive is entitled in accordance with the Corporation's normal leave policy in effect as of the time immediately prior to the Change of Control;


() The failure of the Corporation to obtain the assumption of this Agreement, without limitation or reduction, by any successor to the Corporation;


() The failure of the Corporation to maintain for the benefit and use by the Executive of an office and support staff as of the time immediately prior to the Change of Control, except with consent of the Executive;


() The failure of the Corporation to pay or reimburse the Executive for any expenses incurred by the Executive as provided by the Corporation's reimbursement of business expense policy in effect as of the time immediately prior to the Change of Control; or


() The filing of a voluntary or involuntary petition of bankruptcy


by or against the Corporation or the insolvency of the Corporation.


For purposes of this Section 1.1(e), any good faith determination of "Good Reason" made by the Executive shall be conclusive.


() Retirement The Executive may terminate his employment by reason of "Retirement" at the end of the fiscal year of the Corporation in which the Executive attains the age of 65 or such later date as the Board shall set with the consent of the Executive.


() Voluntary Termination. The Executive shall have the right at any time to voluntarily terminate his employment by the Corporation (a "Voluntary Termination") for any reason in the sole discretion of the Executive by not less than thirty (30) days' prior written notice to the Corporation; provided however, a termination without Cause, by reason of Death, Disability or Retirement, or Good Reason shall not be treated for any purpose hereunder as a Voluntary Termination.


Section . Certain Definitions


() Change of Control. A "Change of Control" shall have occurred if:


() twenty percent (20%) or more of the outstanding common stock of the Corporation has been acquired by any person (as defined by Section 3(a)(9) of
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