EXHIBIT 10.1
SEPARATION AGREEMENT,
GENERAL RELEASE AND COVENANT NOT TO SUE
This Separation Agreement, General Release and
Covenant Not to Sue (“Agreement”) is entered into as of
the 22nd day of May, 2007, by and between James K. Teringo,
Jr. (“Employee”) and Cano Petroleum,
Inc. (“Cano”), hereinafter collectively referred to
as the “parties” or individually as
“party.” The “Effective Date” of this
Agreement shall be on the eighth (8 th ) day
after this Agreement has been signed by Employee and so long as he
has not exercised his right of revocation during the period
provided for same herein.
RECITALS
WHEREAS, Employee
has been employed by Cano as Senior Vice President, General Counsel
and Corporate Secretary;
WHEREAS, Employee
and Cano executed an Employment Agreement on July 11, 2005, which
covered the terms and conditions of Employee’s employment
with Cano, as amended by First Amendment to Employment Agreement on
January 1, 2006, and Second Amendment to Employment Agreement on
June 1, 2006 (as amended, the “Employment
Agreement”);
WHEREAS, Employee
and Cano desire to mutually terminate Employee’s employment
with Cano as Senior Vice President, General Counsel and Corporate
Secretary, effective May 22, 2007 (the “Termination
Date”); and
WHEREAS, the
parties desire to settle fully and finally, in the manner set forth
herein, all differences between them which have arisen, or which
may arise, prior to, or at the time of the execution of this
Agreement, including, but in no way limited to, any and all claims
and controversies arising out of the employment relationship
between Employee and Cano, including, but not limited to, the
Employment Agreement, Employee Restricted Stock Award, two (2)
Nonqualified Stock Option Agreements, and Employee’s and
Cano’s mutual termination of Employee’s employment with
Cano;
NOW, THEREFORE, in
consideration of the Recitals and the mutual promises, covenants
and agreements set forth herein, the parties covenant and agree as
follows:
1.
Except as otherwise provided herein, Employee, for himself and on
behalf of his attorneys, heirs, assigns, successors, executors, and
administrators IRREVOCABLY AND UNCONDITIONALLY RELEASES, ACQUITS,
AND FOREVER DISCHARGES Cano, its current and former parent,
subsidiaries, affiliated, and related corporations, firms,
associations, partnerships, and entities, their successors and
assigns, and the current and former owners, shareholders,
directors, officers, employees, agents, attorneys and
representatives of said corporations, firms, associations,
partnerships, and entities, and their guardians, successors,
assigns, heirs, executors, and administrators (hereinafter
collectively referred to as the “Releasees”) from any
and all claims, complaints, grievances, liabilities, obligations,
promises, agreements, damages, causes of action, rights, debts,
demands, controversies, costs, losses, and
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expenses (including
attorneys’ fees and expenses) whatsoever, other than any
arising under this Agreement, and other than attributable to claims
arising out of fraud or illegal activity, under any municipal,
local, state, or federal law, common or statutory —
including, but in no way limited to, claims arising under the
Employment Agreement between the parties, the Age Discrimination in
Employment Act of 1967, 29 U.S.C. § 621, et. seq. ;
Title VII of the Civil Rights Act of 1964, 42 U.S.C. §2000e
et seq. , as amended; and, the Texas Commission on Human
Rights Act , Tex. Labor Code §21.001, et seq.
— for any actions or omissions whatsoever, whether known
or unknown and whether connected with the employment of Employee by
Cano, or the mutual termination therefrom, or not, which existed or
may have existed prior to, or contemporaneously with, the execution
of this Agreement.
2.
Cano, for itself and on behalf of its current and former parent,
subsidiaries, affiliated and related corporations, firms,
associations, partnerships, and entities, their successors and
assigns, and the current and former owners, shareholders,
directors, officers, employees, agents, attorneys, representatives,
and insurers of said corporations, firms, associations,
partnerships, and entities, and their guardians, successors,
assigns, heirs, executors, and administrators hereby IRREVOCABLY
AND UNCONDITIONALLY RELEASES, ACQUITS, AND FOREVER DISCHARGES
Employee, from any and all claims, complaints, grievances,
liabilities, obligations, promises, agreements, damages, causes of
action, rights, debts, demands, controversies, costs, losses, and
expenses (including attorneys’ fees and expenses) whatsoever,
other than any arising under this Agreement and other than
attributable to claims arising out of fraud or illegal activity,
under any municipal, local, state, or federal law, common or
statutory — including, but in no way limited to, claims
arising under the Employment Agreement between the parties —
for any actions or omissions whatsoever, whether known or unknown
and whether connected with the employment of Employee by Cano, or
the mutual termination therefrom, or not, which existed or may have
existed prior to, or contemporaneously with, the execution of this
Agreement.
3.
Employee, for himself and on behalf of his attorneys, heirs,
assigns, successors, executors, and administrators, COVENANTS NOT
TO SUE, OR OTHERWISE CONSENT TO PARTICIPATE IN ANY ACTION AGAINST
any of the Releasees, based upon any of the claims released in
paragraph 1 of this Agreement.
4.
Cano, for itself and on behalf of all Releasees, COVENANTS NOT TO
SUE, OR OTHERWISE CONSENT TO PARTICIPATE IN ANY ACTION AGAINST
Employee, based upon any of the claims released in paragraph 2 of
this Agreement.
5.
While the parties acknowledge that this Agreement may be filed as
public record pursuant to applicable law, rule and regulation, if
asked about the Agreement, the parties agree that their response
will be that they do not care to discuss any of such matters or
indicate no comment to any such inquiry unless requested or
required by the Securities and Exchange Commission
(“SEC”) or other governmental agency.
6.
Employee waives and releases forever any right or rights he might
have to employment, reemployment, or reinstatement with Cano or any
of the other Releasees.
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7.
Employee agrees that in addition to resigning as Senior Vice
President, General Counsel and Corporate Secretary of Cano, he
shall also resign, effective May 22, 2007 from any other positions
he holds as a director or officer with any of the Releasees,
including, but not limited to, any membership on the Board of
Directors of Cano. Employee agrees that the effectiveness of
this Agreement constitutes his written resignation from any such
positions. Employee and Cano agree that the last day of
Employee’s employment as a salaried employee of Cano will be
May 22, 2007.
8.
Employee and Cano specifically agree that following the Effective
Date of this Agreement, neither party shall be bound by any of the
terms of the Employment Agreement. However, if facts are
discovered after the execution of this Agreement that would
constitute “cause” for termination — specifically
for fraud or illegal activity — under the previously executed
Employment Agreement or fraud or illegal activity on the part of
Cano, then the matter will be immediately subject to arbitration
for equitable adjustment to the future obligations under the terms
of this Agreement..
9.
Upon the Effective Date, the parties agree as follows:
(a)
Cano agrees to pay Employee (or Employee’s estate in the
event of Employee’s death) a payment of $250,000.00
(“Severance Payment”), less any agreed deductions and
less withholdings, taxes and deductions required by law, in
consideration for the promises, covenants, agreements, and releases
set forth herein. The Severance Payment described in this
paragraph shall be paid to Employee in twelve (12) monthly
installments until paid, with a first monthly installment of
$66,666.66 paid on or before the third (3 rd )
day following the Effective Date and the remaining eleven monthly
installments of $16,666.66 paid on the first day of each month
thereafter until the Severance Payment has been fully paid.
(b)
Cano agrees to provide a pos
