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EXHIBIT 10.16
[NATIONAL ENERGY GROUP, INC. LETTERHEAD]
May 6, 1997
VIA HAND DELIVERY
Mr. X. Xxxxxx Xxxxxxx, Xx.
000 Xxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Re: Separation Agreement
Dear Xx. Xxxxxxx:
National Energy Group, Inc. (the "Company") recognizes your service to the
Company. This letter confirms the discussions we have held concerning the
termination of your employment with the Company, and the Company's offer and
your acceptance of this proposed separation agreement (this "Separation
Agreement") on the terms set forth below.
1. Termination of Employment. Your employment with the Company, where
you have been employed as a Senior Vice President, is terminated
effective May 6, 1997 (hereinafter the "Separation Date"), at which
time your Employment Agreement dated January 1, 1996 (the "Employment
Agreement") shall also terminate.
2. Salary and Benefits. In accordance with the Company's existing
policies, you have received, will receive, or are receiving with this
letter the following payments and benefits pursuant to your employment
with the Company and your participation in the Company's benefit
plans:
(a) Payment of your regular base salary through May 15, 1997, less
all legal deductions; and
(b) Payment of accrued and unused vacation leave, if any, through
the Separation Date, less all legal deductions.
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Mr. X. Xxxxxx Xxxxxxx, Xx.
May 6, 1997
Page Two
The amounts paid in accordance with subparagraphs (a) and (b) of this
Paragraph are gross amounts, subject to lawful deductions, including
any deductions you have previously authorized.
Your paid group health insurance benefits continue through May 31,
1997. After the Separation Date, you are entitled at your option to
continue your group health insurance coverage at your expense (but
subject to the provisions of Paragraph 3 (b) below), in accordance
with applicable law. Please complete the COBRA election form, which
will be furnished to you, and return it to Ms. Xxxxx Xxxxx-Xxxxxxxxx
at your earliest convenience, if you elect to continue such insurance
coverage.
Payment of any benefits to which you have vested entitlement under the
terms of the employee benefit plans established by the Company,
including but not limited to the Company 401(k) Plan, shall be paid to
you in accordance with the provisions of such plans.
The Company will settle promptly all authorized reimbursable business
expenses, if any, when you have submitted appropriate expense reports
along with the required receipts and documenting information. These
must be submitted by the close of business on or before May 31, 1997.
3. Special Separation Benefits. In consideration of the General Release,
the Confidentiality of Separation Agreement and Nondisparagement
provision, and the Agreement Regarding Solicitation of Employees and
Consultants set forth in this Agreement, and contingent upon your
acceptance of the terms of this Agreement, the Company offers you the
following Special Separation Benefits, in addition to the benefits you
will receive pursuant to Paragraph 2:
(a) Termination Allowance. A termination allowance in the amount
of $82,500, which is equivalent to your base salary for six
(6) months payable concurrently with the regularly scheduled
pay periods of the Company in twelve (12) equal installments
of $6,875 through November 15, 1997; provided that the first
installment for payment through May 31, 1997 shall be paid
upon execution and delivery of this Separation Agreement.
(b) Extension of Health Care Benefits. Reimbursement to you of
eighty-five percent (85%) of the cost of your COBRA premium
for group health insurance coverage for a period of six (6)
months up until and including November 30, 1997, if you elect
to continue and/or convert for that period under the Company's
group health insurance policy.
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Mr. X. Xxxxxx Xxxxxxx, Xx.
May 6, 1997
Page Three
(c) Forfeiture. In the event you accept other employment or
become eligible or participate in a health coverage insurance
plan offered by another employer, you acknowledge and agree
that such Special Separation Benefits shall cease and no
longer be an obligation of the Company.
By execution of this Separation Agreement, you acknowledge and agree
that for purposes of unemployment compensation benefits, the amounts
to be paid as specified in this Paragraph constitute wages in lieu of
notice for the period from the Separation Date through November 15,
1997. Accordingly, you may not be eligible to receive unemployment
compensation benefits during this time period.
4. Return of Property. Whether or not you accept the terms of this
Separation Agreement, you must return to the Company any and all items
of its property, including without limitation, office keys, security
access cards, computers, equipment, credit cards, forms, files,
manuals, correspondence, business records, personnel data, lists of
employees, salary and benefits information, work product, maps, data
and files relating to xxxxx, leases, partners and/or contractors,
seismic data and files, contracts, contract information, Prospect
information and plans for future Prospects, brochures, catalogs,
computer tapes and diskettes, and data processing reports, and any and
all other documents or property which you have had possession of or
control over during the course of your employment, and which you have
not already returned to the Company. You agree that you will return
such property to the Company by no later than the close of business on
or before May 6, 1997, or as soon thereafter as is possible with
respect to any items not then immediately available or which you later
find in your possession. The provisions of this Paragraph 4 do not
prohibit the maintenance by you of copies of any non-confidential,
non-proprietary information, such as reading files, work papers,
calculations, flowcharts and other similar information reflecting the
performance of your job duties and responsibilities.
5. Use of Confidential Information. You acknowledge and agree that,
except for your knowledge and training to compete in the marketplace,
all of the non-public documents and information to which you have had
access during your employment, including but not limited to all
information pertaining to any specific business transactions in which
the Company or any other Released Parties (as defined in Paragraph 6
below) were, are, or may be involved, all information concerning
salary and benefits paid to employees of the Company or any of the
other Released Parties, all personnel information relating in any way
to current or former employees of the Company or any of the other
Released Parties, all non-public information obtained in the course of
employment pertaining to acquisitions, divestitures, xxxxx, Prospects
and development plans of the Company or any of the other Released
Parties, lease holdings and lease block bid information and
strategies, all financial
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Mr. X. Xxxxxx Xxxxxxx, Xx.
May 6, 1997
Page Four
budgetary information, all other information specified in Paragraph 4
above, and in general, the business and operations of the Company or
any of the other Released Parties in addition to any other work
product, calculations, files, maps, logs, flowcharts and other related
and/or similar information to which you had access through the
Company, its partners or consultants (and in particular, Xxxxxxxx Oil
and Gas Company, Xxxxxx X. Xxxxxxx and X. Xxxxx Xxxxxx) are considered
confidential and are not to be disseminated or disclosed by you to any
other parties, except as may be required by law or judicial process.
You further agree that in the event it appears that you will be
compelled by law or judicial process to disclose such confidential
information, you will notify Xx. Xxxxxx X. Xxxxxx, General Counsel, in
writing at 0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx, 00000,
immediately upon your receipt of any such notice, a subpoena or other
legal process.
6. General Release.
(a) Except for the undertakings of the Company to be performed
hereunder and in consideration of the Special Separation
Benefits described above, you and your family members, heirs,
successors, and assigns (collectively, the "Releasing
Parties") hereby release, acquit, and forever discharge any
and all claims and demands of whatever kind or character,
whether vicarious, derivative, or direct, that you or they,
individually, collectively, or otherwise, may have or assert
against (i) National Energy Group, Inc. or (ii) any officer,
director, stockholder, fiduciary, agent, employee,
representative, insurer, attorney, or any successors and
assigns of National Energy Group, Inc. or the individuals
referenced in (ii) above (collectively, the "Released
Parties"). This Separation Agreement includes but is not
limited to any claim or demand based on any federal, state, or
local statutory or common law that applies or is asserted to
apply, directly or indirectly, to the formation of your
employment relationship, your employment relationship, or the
termination of your employment relationship with the Company.
Thus, you and the other Releasing Parties agree not to make
any claims or demands against the Company or any of the other
Released Parties such as for wrongful discharge; unlawful
employment discrimination; retaliation; breach of contract
(express or implied); breach of the duty of good faith and
fair dealing; violation of the public policy of the United
States, the State of Texas, or any other state; intentional or
negligent infliction of emotional distress; tortious
interference with contract; promissory estoppel; detrimental
reliance; defamation of character; duress; negligent
misrepresentation; intentional misrepresentation or fraud;
invasion of privacy; loss of consortium; assault; battery;
conspiracy; bad faith; negligent hiring or supervision; any
intentional or negligent act of personal injury; any alleged
act of harassment or intimidation; or any other intentional or
negligent tort; or any alleged violation of the Age
Discrimination in Employment Act of 1967; Title VII of the
Civil Rights Act of 1964; the Americans with Disabilities Act
of 1990; the Employee Retirement Income Security Act of 1974;
the Fair Labor Standards Act; the Fair Credit Reporting Act;
the Texas Commission on Human Rights Act; or the Texas Wage
Payment Statute, Tex. Rev. Civ. Stat. Xxx. art. 5155.
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Mr. X. Xxxxxx Xxxxxxx, Xx.
May 6, 1997
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(b) Except for your undertakings to be performed hereunder, the
Company and the other Released Parties hereby release, acquit,
and forever discharge any and all claims and demands of
whatever kind or character, whether vicarious, derivative, or
direct, that it or they, individually, collectively, or
otherwise may have or assert against you or any of the other
Releasing Parties. This Separation Agreement includes, but is
not limited to, any claim or demand based on any federal,
state, or local statutory or common law that applies or is
asserted to apply, directly or indirectly, to the formation of
your employment relationship, your employment, or the
termination of your employment relationship with the Company.
(c) Except as otherwise provided herein, the effect of the
Severance Agreement is to mutually release, acquit, and
forever discharge any and all claims and demands of whatever
kind or character, that either party, the Releasing Parties,
or the Released Parties may now have, or hereafter have or
assert against each other arising out of the employment
relationship (including the formation and termination thereof)
which has existed between you and the Company. This mutual
general release does not include: (i) the executory
obligations of either party yet to be performed, or (ii) any
rights, claims or obligations which may accrue as between the
parties after the date of this Separation Agreement.
7. Confidentiality of this Separation Agreement and Nondisparagement. In
consideration of the Special Separation Benefits described above, you
agree that the terms of this Separation Agreement shall be and remain
confidential, and shall not be disclosed by you to any party other
than your spouse, attorney, accountant or tax return preparer;
provided such persons have agreed to keep such information
confidential, and except as may be required by law or judicial
process. You further agree, except as requested by the Company or as
compelled by law or judicial process, not to cooperate or supply
information of any kind in any proceeding, investigation, or inquiring
raising issues under the Age Discrimination in Employment Act of 1967,
Title VII of the Civil Rights Act of 1964, the Americans with
Disabilities Act of 1990, the Employee Retirement Income Security Act
of 1974, the Fair Labor Standards Act, the Fair Credit Reporting Act,
the Texas Commission on Human Rights Act, ro the Texas Wage Payment
Statute, Tex. Rev. Civ. Stat. Xxx. art. 5155, or any other federal,
state, or local law, involving the formation of your employment
relationship, your employment relationship, the termination of your
employment relationship, or the employment of other persons by the
Company or any of the Released Parties.
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Mr. X. Xxxxxx Xxxxxxx, Xx.
May 6, 1997
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You further agree not to make any statement, oral or written, which
directly or indirectly impugns the quality or integrity of the
Company's or any of the other Released Parties' business practices, or
to make any other disparaging or derogatory remarks about the Company
or any of the other Released Parties, their officers, directors,
stockholders, managerial personnel, or other employees or their
partners and consultants to any other parties. You further agree and
acknowledge that should you breach this obligation, in addition to any
other remedy the Company may have at law or in equity, you may be
required to repay the Special Separation Benefits provided to you by
this Separation Agreement, but all other provisions of this Separation
Agreement shall remain in full force and effect.
In consideration of the General Release, the Confidentiality of
Separation Agreement and Nondisparagement provision, and the Agreement
Regarding Solicitation of Employees and Consultants, set forth herein,
the Company agrees that is shall instruct its officers, directors,
managerial personnel, or other employees not to make any disparaging
or derogatory remarks about you.
8. Agreement Regarding Solicitation of Employees. In consideration of
the monetary payments and other benefits provided to you or on your
behalf by the Company in this Separation Agreement, you acknowledge
and agree that for a period of two (2) years following the termination
of your employment with the Company, you will not, directly or
indirectly, for your own account or for the benefit of any other
person or party, solicit, induce, entice, or attempt to entice any
employee, or independent contractor of the Company to terminate his or
her employment relationship, agreements or contracts with the Company.
You acknowledge and agree that the Company has an exclusive agreement
with Xxxxxxxx Oil and Gas Company et al. dated January 1, 1996 (the
"SOG Agreement") as amended April 15, 1997, and that the provisions of
this Paragraph 8 shall specifically apply to the SOG Agreement and the
services of Xx. Xxxxxx X. Xxxxxxx and Mr. X. Xxxxx Xxxxxx.
9. Nonadmission of Liability and Wrongdoing. It is acknowledged that
this Separation Agreement does not in any manner constitute an
admission of liability or wrongdoing on the part of the Executive and
the other Released Parties, but that Executive and the other Released
Parties expressly deny any such liability or wrongdoing, and enter
into this Separation Agreement for the sole purpose of avoiding
further trouble and expense; and that, except to the extent necessary
to enforce this Separation Agreement, neither this Separation
Agreement, nor any part of it may be construed, used, or admitted into
evidence in any judicial, administrative, or arbitral proceedings as
an admission of any kind by the Company or any of the other Released
Parties.
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Mr. X. Xxxxxx Xxxxxxx, Xx.
May 6, 1997
Page Seven
10. Authority to Execute. You represent and warrant that you have the
authority to execute this Separation Agreement on behalf of all the
Releasing Parties. You further agree to indemnify fully and hold
harmless the Company and any of the other Released Parties from any
and all claims brought by the Releasing Parties or derivative of your
own, including the amount of any such claims the Company or any of the
other Released Parties are compelled to pay, and the costs and
attorney's fees incurred in defending against all such claims.
11. GOVERNING LAW AND INTERPRETATION. THIS SEPARATION AGREEMENT AND THE
RIGHTS AND DUTIES OF THE PARTIES UNDER IT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. If any
provision of this Separation Agreement is held to be unenforceable,
such provision shall be considered separate, distinct, and severable
from the other remaining provisions and shall not affect the validity
or enforceability of such other remaining provisions, and that, in all
other respects, this Separation Agreement shall remain in full force
and effect. If any provision of this Separation Agreement is held to
be unenforceable as written by may be made to be enforceable by
limitation thereof, then such provision shall be enforceable to the
maximum extent permitted by applicable law. The language of all
parts of this Separation Agreement shall in all cases be construed as
a whole, according to its fair meaning, and not strictly for or
against any of the parties.
12. Expiration of Offer. The Company's offer of the proposed Special
Separation Benefits will expire at midnight on the tenth day (the
"Expiration of Offer") following the date of this correspondence,
i.e., on May 16, 1997. You may accept this offer at any time before
the Expiration of Offer by executing this Separation Agreement and
returning it to the designated representative of the Company. Whether
or not you execute this Separation Agreement, you will receive the
items set forth in Paragraph 2 (a) and (b) and are required to follow
the obligations set forth in Paragraphs 4 and 5 hereof.
13. The Effective Date. This Separation Agreement will become effective
and enforceable seven (7) days after your execution hereof (the
"Effective Date"). At any time before the Effective Date, you may
revoke your acceptance. You further agree to execute and deliver to
the Company within seven (7) days of the execution of this Separation
Agreement, the Reaffirmation of this Separation Agreement, attached
hereto as Exhibit "A".
14. Consultation With Counsel. You have the right to consult, and are
encouraged to consult, an attorney before executing this Separation
Agreement.
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Mr. X. Xxxxxx Xxxxxxx, Xx.
May 6, 1997
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15. Voluntary Agreement. You acknowledge that execution of this
Separation Agreement is knowing and voluntary on your part, that you
have had reasonable time to deliberate regarding its terms, and that
you have had the right to consult with an attorney if you so desire.
16. Entire Agreement. This Separation Agreement contains and constitutes
the entire understanding and agreement between you and the Company and
may be modified only by a writing of contemporaneous or subsequent
date executed by both you and an authorized officer of the Company.
If you are in agreement with the foregoing provisions, please execute the
attached duplicate copy of this letter in the space provided below. This
Separation Agreement shall then constitute a valid and binding agreement by and
between the Company and you, effective as of seven (7) days after the date of
your execution hereof and delivery to the Company.
Sincerely,
National Energy Group, Inc. ACCEPTED AND AGREED THIS
13TH DAY OF MAY, 1997.
By: /s/ XXXXX X. XXXXXX /s/ X. XXXXXX XXXXXXX, XX.
---------------------------- --------------------------------------
Name: Xxxxx X. Xxxxxx Name: Mr. X. Xxxxxx Xxxxxxx, Xx.,
Title: President and CEO an Individual
