Document:

exv10w1

 

Exhibit 10.1

Employment Agreement

     THIS AGREEMENT is made and entered into this 6th day of February, 2006, by and between
COMMERCIAL METALS COMPANY, a Delaware corporation with offices at 6565 N. MacArthur Boulevard,
Suite 800, Irving, Texas 75039 (“Company”) and Clyde P. Selig, 89 Granburg Circle, San Antonio,
Texas 78218 (“Selig”).

     WHEREAS, Selig has been employed by a subsidiary of the Company for over 43 years, most
recently as Vice President of the Company and President and Chief Executive Officer of the CMC
Steel Group and before relinquishing the duties of each of those positions effective January 26,
2006; and

     WHEREAS, effective as of February 1, 2006 the Company desires to continue the employment of
Selig with the Company as an advisor to provide assistance and consultation with respect to the
operations of the Company’s domestic mills and CMCZ segments and, by mutual agreement, other
segments of the Company; and

     WHEREAS, Selig desires to continue his employment status in such capacity and perform services
for the Company on the terms and conditions as hereinafter set forth;

     NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

	 	1.	 	Status and Duties of Selig.

	 	A.	 	Effective January 27, 2006, Selig shall continue his employment and
report to the Chief Executive Officer (CEO) and the Chief Operating Officer (COO)
of the Company and, upon the request of either the CEO or COO and subject to the
terms hereof, render assistance and advice to the CEO or the COO on such matters
involving the Company’s business as the CEO or COO shall consider appropriate.
Selig’s duties shall include, but shall not be limited to, giving advice with
regard to the Company’s domestic mills and CMCZ segments on such matters as
organization, expansion, acquisitions, operations, dispositions, strategy or
other managerial questions or concerns that may arise from time to time. Among
various assignments, it is contemplated that Selig shall remain a member of the
CMC Zawiercie S.A. Supervisory Board for the term of this Agreement. Selig shall
be a resource for corporate-wide activities in leadership development, safety and
utilities. With the mutual consent of both parties, Selig’s duties may include
similar tasks with other segments of the Company. On all matters relating
directly to the CMC Steel Group, Selig shall report to the President of that
group.
	 
	 	B.	 	Selig shall perform such duties at his residence in San Antonio,
Texas, the Company’s office at the address set forth above, or at such other
place or places as Company and Selig may, by mutual agreement, deem appropriate.

 

 

	 	C.	 	Selig shall be scheduled and available to perform services under
this Agreement for not less than 30 hours per week. Selig shall be entitled to
time off for vacations, holidays, sick leave or other excused absences in
accordance with Company policy. However, it is understood that Selig will do his
utmost to make himself available for meetings, phone or email communications
whenever practical.

	 	2.	 	Compensation.

	 	A.	 	As compensation for rendering the requested services hereunder, the
Company shall pay Selig a base salary of two hundred fifty thousand dollars
($250,000.00) per year to be paid in accordance with the Company’s usual payroll
practices. For fiscal year 2006, Selig shall be eligible to receive a
discretionary bonus with consideration of the pro-rated period of his employment
as President and CEO of the CMC Steel Group during fiscal year 2006 and after
consideration of the financial results of the CMC Steel Group and of the Company
for fiscal year 2006. The amount of such bonus shall be recommended by the
Company’s CEO and subject to approval by the Company’s Board of Directors or
Compensation Committee thereof. Following the 2006 fiscal year, Selig will be
eligible for an annual bonus award based upon business performance, set goals and
the subjective assessment of his value and contributions or such other criteria
as may be established by the Company’s CEO and COO, provided that such bonus
award shall not exceed 100% of his annual base salary.
	 
	 	B.	 	Selig shall be reimbursed for all reasonable expenses including
out-of-pocket travel and living expenses incurred while traveling further than 50
miles distance from the residence address above in connection with the
performance of services under this Agreement. The Company shall promptly
reimburse Selig for such reasonable expenses after receipt of documentation from
Selig as required by the Company’s policy as it may exist from time to time for
expense reporting and accounting.
	 
	 	C.	 	In the event of the death of Selig or disability which renders
Selig unable to perform any duties for more than sixty (60) consecutive days
during the term of this Agreement, his services shall terminate provided that
the Company shall, for the remainder of the term of this Agreement, continue to
pay an amount, equal to Selig’s base salary less all required deductions
including withholding taxes, to the beneficiary designated for his Company life
insurance benefit or, if no such designation has been made, to his estate or,
in the case of his disability, to him or his lawfully appointed guardian.
During the term of this Agreement, Selig shall continue to be eligible to
participate in all customary employee benefits offered employees by the Company
including medical and life insurance on such terms and conditions as are
applicable to all employees.

 

 

	 	3.	 	Term of Agreement.

	 	A.	 	The duration of employment pursuant to this Agreement shall
commence February 1, 2006 and shall end August 31, 2007, unless earlier
terminated for cause as hereinafter set forth. This Agreement can be extended
by mutual agreement upon the end of the contract period.
	 
	 	B.	 	The Company may terminate Selig for cause at any time, and from
that date forward no further obligations shall exist on the part of Company to
Selig. Termination for cause shall mean termination based on the following
events or conditions of which the Company has reasonably persuasive evidence:

	 	1.	 	Overt and willful disobedience of orders or
directives issued to Selig and within the scope of Selig’s duties to
the Company.
	 
	 	2.	 	Conviction of Selig of the commission of
deliberate, illegal acts in connection with the performance of duties
under this Agreement.
	 
	 	3.	 	Violation by Selig of the Company’s rules and
policies concerning business conduct, conflicts of interest, or the
non-competition or confidentiality obligations of this Agreement.
	 
	 	4.	 	The immoderate use of alcoholic drinks or
illegal narcotics which renders Selig incapable of performing services
to a normal extent.

	 	4.	 	Non-Competition Agreement.

	 	A.	 	In consideration of the payments to be made by the Company to
Selig under this Agreement, Selig agrees and covenants with the Company that
during the duration of this Agreement, any renewals or extensions thereof, and
for a period of twelve months following the termination of this Agreement for
any reason (including normal expiration on August 31, 2007 or termination for
cause), Selig will not either, directly or indirectly, (i) provide any
individual, corporation (including any non-profit corporation), general or
limited partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union, governmental or quasi-governmental
authority of any nature, or other entity (collectively, a “Person”) who is
engaged in or is considering engaging in the manufacture, purchase, processing
or sale of Restricted Products as herein defined, any consulting services or
advice, or (ii) own, manage, operate, join, control or participate in the
ownership, management, operation or control of, or be

 

 

	 	 	 	employed by any Person who is engaged in or is considering engaging in the
purchase, processing or sale of Restricted Products. Restricted Products
means any steel products or materials including all forms of semi-finished,
finished or fabricated steel products and ferrous and non-ferrous metals,
including scrap metal, manufactured, purchased, processed or sold by the
Company or any of its segments, including the CMC Steel Group and CMCZ,
during the period of Selig’s employment with the Company and its
subsidiaries prior to the date of this Agreement or during the term of this
Agreement. This restriction shall apply to those activities of Selig
described in (i) or (ii) above on behalf of any Person who is engaged in or
is considering engaging in the purchase, processing or sale of Restricted
Products within in the United States or Poland as well as any Person located
outside of the United States or Poland who purchases or sells Restricted
Products for import to or export from the United States or Poland.
	 
	 	B.	 	Notwithstanding the foregoing restrictions, nothing in this
Agreement and this covenant not to compete shall be construed to restrict or
prohibit ownership by Selig of stock of any company in competition with the
Company listed on the New York or American Stock Exchanges or traded as a
NASDAQ National Market Issue provided Selig’s combined ownership interest is
not five (5) percent or more of the outstanding voting shares of the company.
	 
	 	C.	 	The Company and Selig agree that in the case of a breach by
Selig of any of the foregoing covenants, damages would be difficult, if not
impossible, to prove, and the Company shall be entitled to injunctive relief as
its primary but not exclusive remedy against Selig. If Selig is found to have
violated any of the foregoing covenants, the parties agree that the duration of
the non-competition period set forth above shall be automatically extended by
the same period of time that Selig is determined to be in violation of the
foregoing covenants. The parties hereby further agree that the restrictions
and obligations herein set forth including the duration of the non-competition
obligation and territory covered by the obligations are reasonable in view of
the substantial compensation being paid Selig under this Agreement, the
nationwide reach of the Company’s operations and the worldwide sales and
purchasing activities of the Company over the 43 years Selig has been employed
by the Company. If any of the foregoing restrictions should be finally
determined by any court to be unenforceable in any particular area or
jurisdiction or enforceable in such area or jurisdiction only if modified in
duration or scope, then the parties agree that this Agreement shall be amended
and modified so as to eliminate there from the particular area or jurisdiction
as to which such restriction is so held to be unenforceable or deemed amended
or modified in duration or scope to comply with such court order; and as to all
other areas and jurisdictions and terms and provisions hereof shall remain in

 

 

	 	 	 	full force and effect as originally written. The provisions of this
paragraph and the rights and remedies to enforce such provisions shall be
assignable in favor of any successor of the Company.

	 	5.	 	Confidentiality.

	 	A.	 	Selig acknowledges that he has occupied a position of trust and
confidence with the Company as a key employee of over 43 years and during that
period and during the performance of his duties under this Agreement, has had
and will have the opportunity to become familiar with the following, any and
all of which constitute confidential information of the Company (collectively,
“Confidential Information”): (i) any and all trade secrets and proprietary
technology concerning the business and affairs of the Company, manufacturing
processes, product pricing, contract terms, hedging practices, data, know-how,
formulae, compositions, processes, samples, inventions and ideas, past, current
and planned product and steel mill expansion and development, supplier lists,
customer lists, current and anticipated customer requirements, price lists,
market studies, marketing plans and strategies, supply or sourcing information,
business plans and computer software and programs of the Company and any other
information, whether or not documented in any manner, of the Company that is a
trade secret within the meaning of applicable trade secret law; (ii) any and
all information concerning the businesses and affairs of the Company (which
includes historical financial statements, financial projections and budgets,
historical and projected sales, capital spending budgets and plans, new product
development information, supplier or customer information, the names and
backgrounds of key personnel, personnel training and techniques and materials),
however documented; and (iii) any and all notes, analyses, compilations,
studies, summaries, and other material prepared by or for the Company
containing or based, in whole or in part, on any information included in the
foregoing.
	 
	 	B.	 	Selig acknowledges and agrees that all Confidential Information
known or obtained by Selig, whether before or after the date hereof, is the
property of the Company. Therefore, Selig agrees that he shall not, at any
time, other than as may be required and permitted by the Company in the course
and scope of the services to be provided under this Agreement, use or disclose
to any unauthorized Person or use for his own account or for the benefit of any
third party any Confidential Information, whether Selig has such information in
his memory or embodied in writing or other physical form, without the Company’s
prior written consent, unless and to the extent that the Confidential
Information is or becomes generally known to and available for use by the
public other than as a result of the Selig’s actions or the actions of any
other Person bound by a duty of confidentiality to the Company or one of its
affiliates.

 

 

	 	 	 	If Selig becomes legally compelled by deposition, subpoena or other court or
governmental action to disclose any of the Confidential Information, then
Selig will give the Company prompt notice to that effect, and will cooperate
with the Company if the Company seeks to obtain a protective order
concerning the Confidential Information. Selig will disclose only such
Confidential Information as his counsel shall advise is legally required.
Selig agrees to deliver to the Company, at any time the Company may request,
all documents, memoranda, notes, plans, records, reports, and other
documentation, models, components, devices, or computer software, whether
embodied in a disk or in other form (and all copies of all of the
foregoing), relating to the businesses, operations, or affairs of the
Company or any of its affiliates and any other Confidential Information that
Selig may then possess or have under his control.

	 	6.	 	Notices.

     Any notice required to be given pursuant to this Agreement shall be in writing and shall be
deemed given upon receipt if delivered by hand or if sent by mail (registered or certified mail,
postage prepaid, return receipt requested) or on the next business day following the day of timely
deposit for next day delivery if sent by a recognized overnight delivery service addressed to the
respective address shown above.

	 	7.	 	Modification.

     This Agreement may be modified only by the written consent of both of the parties hereto.

 

 

EXECUTED the day and year first above written.

	 	 	 	 	 
	 	COMMERCIAL METALS COMPANY

 	 
	 	By:  	   /s/ Stanley A. Rabin
 	 
	 	 	   STANLEY A. RABIN 	 
	 	 	   President and
 Chief Executive Officer 	 

	 	 	 	 	 
	 	By:  	   /s/
Clyde P. Selig	 
	 	 	   CLYDE P. SELIGexv10w1

 

National Energy Group, Inc.

Management Incentive Plan

	I.	 	PURPOSE
	 
	 	 	The National Energy Group, Inc. Management Incentive Plan has been established to provide
additional compensation to Participants for their contribution to the achievement of the
objectives of the Company, encouraging and stimulating superior performance by such
personnel, and assisting in attracting and retaining highly qualified key employees.

	II.	 	DEFINITIONS

	 	A.	 	“Base Salary” equals the base annual salary effective December
31st for which the award is calculated.
	 
	 	B.	 	“Board of Directors” means the Board of Directors for National Energy Group,
Inc.
	 
	 	C.	 	“Company” means National Energy Group, Inc. and its subsidiaries and its
successors and assigns.
	 
	 	D.	 	“Fiscal Year” means the Company’s Fiscal Year beginning January 1 and ending
the last day of December.
	 
	 	E.	 	“Plan” means the National Energy Group, Inc. Management Incentive Plan, as
from time to time amended.
	 
	 	F.	 	“Chief Executive Officer” means the Chief Executive Officer of National
Energy Group, Inc.
	 
	 	G.	 	“Financial Targets” are the financial goal(s) of the Company identified in
exhibit B as applied to Participants in the position levels outlined in Exhibit C.
	 
	 	H.	 	“Personal Goals” refer to the personal goals and objectives set by each
Participant and his/her supervisor prior to April
1st of each Fiscal Year, against which performance is measured under Section V
below.

	 	 	 
	

	 	Page 1 of 13

 

 

	 	I.	 	“Change in Control” means the consummation of any transaction (including,
without limitation, any merger or consolidation), the result of which is that any
Person, other than Carl Icahn or the Related Parties, becomes the Beneficial Owner,
directly or indirectly, of more than 50% of the Voting Stock of the Company, measured
by voting power rather than number of shares.

For purposes of the definition of Change in Control, the following
capitalized terms will have the following meaning:

   “Beneficial Owner” has the meaning assigned to such term in Rule
13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating
the beneficial ownership of any particular “person” (as that term is used
in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to
have beneficial ownership of all securities that such “person” has the
right to acquire by conversion or exercise of other securities, whether
such right is currently exercisable or is exercisable only after the
passage of time. The terms “Beneficially Owns” and “Beneficially Owned”
have a corresponding meaning.

   “Control” and “Controlled” means the right, power or ability of one
Person, whether or not exercised, to direct or influence the management,
policies or decisions of another person.

   “Exchange Act” means the Securities Exchange Act of 1934, as amended,
and any successor thereto.

   “Person” means any individual, entity or group within the meaning of
Section 13(d)(3) of the Exchange Act, other than employee benefit plans
sponsored or maintained by the Company or by entities controlled by the
Company.

   “Related Parties” means: (1) Carl Icahn, any spouse and any child,
stepchild, sibling or descendant of Carl
Icahn; (2) any estate of Carl Icahn or of any person under clause
(1); (3) any person who receives a

	 	 	 
	

	 	Page 2 of 13

 

 

   beneficial interest in any estate under
clause (2) to the extent of such interest; (4) any executor, personal
administrator or trustee who holds such beneficial interest in the Company
for the benefit of, or as fiduciary for, any person under clauses (1),
(2), or (3) to the extent of such interest; (5) any corporation,
partnership, limited liability Partnership, trust, or similar entity,
directly or indirectly owned or controlled by Carl Icahn or any other
person or persons identified in clauses (1), (2), (3) or (4) and (6) any
not-for-profit entity not subject to taxation pursuant to Section
501(c)(3) of the Internal Revenue Code or any successor provision to which
Carl Icahn or any person identified in clauses (1), (2), or (3) above
contributes his beneficial interest in the Company or to which such
beneficial interest passes pursuant to such person’s will.

   “Voting Stock” means, with respect to any Person that is (a) a
corporation, any class or series of capital stock of such Person that is
ordinarily entitled to vote in the election of directors thereof at a
meeting of stockholders called for such purpose, without the occurrence of
any additional event or contingency, (b) a limited liability company,
membership interests entitled to manage, or to elect or appoint the
Persons that will manage the operations or business of the limited
liability company, or (c) a partnership, partnership interests entitled to
elect or replace the general partner thereof.

	 	J.	 	Reserve Replacement” shall be deemed to mean total capital
expenditures for drilling and exploration for the Plan year divided by a finding
cost target, compared to the reserve additions for the Plan year. Reserve
additions shall be calculated as the sum of extensions, discoveries and revisions,
plus any PUDs moved to the PDNP and/or PDP, in addition to any PDNP’s moved to
PDP. The finding cost target shall be determined annually, together with the other
Financial Targets for each Plan year.

	 	 	 
	 

	 	Page 3 of 13

 

 

	III.	 	EMPLOYEES COVERED BY THIS PLAN
	 
	 	 	Those employees whose position levels are listed on Exhibit C (each a “Participant”) shall
be eligible to participate in this Plan.
	 
	IV.	 	FINANCIAL AWARD
	 
	 	 	A Participant in the Plan shall be entitled to a Financial Award computed as the product
of:

	 	 	 	 	 	 	 
	Participants

Base Salary

 ́

	 	Bonus as a % of salary
(Determined by Performance
as a % of target)  ́
	 	Individual Performance
Rating on a percentage
scale of 0 -100%
	 	= Participants

Financial Award
	 

	 	 
	 	 
	 	 

	 	A.	 	“Participant’s Base Salary” shall be the salary as defined in Section II-A in
effect during applicable period.
	 
	 	B.	 	“Bonus as % of Salary” shall be as set forth in Exhibit A, Table I based upon
position level of each Participant.
	 
	 	C.	 	“Performance as a % of Target” shall be determined in accordance with the
schedule set forth in Exhibit A, Table II based on the attainment of the Company’s
financial target as identified in Exhibit B for the applicable period and as measured
in performance percentages by target for Participants in the position levels outlined
per Exhibit C.
	 
	 	D.	 	“Individual Performance Rating” shall be based on an individual performance
evaluation in accordance with Section V below.
	 
	 	E.	 	“Participant’s Financial Award” shall be the total bonus amount that includes
both a cash award and a banked bonus award.
	 
	 	F.	 	“Cash Award” refers to the Participant Financial Award amount disbursed in
the form of a cash payment. Each Position Level has a minimum and a maximum cash
disbursement award limit as indicated in Exhibit A, Table II. Cash Awards will be
distributed as applicable by April 15th of the year following the year for which the
award is payable.
	 
	 	G.	 	“Banked Bonus Award” refers to the portion of the Participant Financial Award
that is paid out over a period of

	 	 	 
	 

	 	Page 4 of 13

 

 

four (4) years, as it vests. Vesting rights will
begin at the end of the first (1st) year with 25% vesting at the end of that year and
each subsequent year up to a 100% vesting after four (4) years. Each Position Level
has a minimum and a maximum banked bonus award limit as indicated in Exhibit A, Table
II. Vested Banked Awards will be paid at the same time as the current year Cash Award
payment.

If a Participant was in more than one management level during a Fiscal Year, a
separate computation shall be made for each level applicable to the Participant
during such Fiscal Year; the sum of the separate computations shall be the
Participant’s Financial Award.

	V.	 	PERSONAL PERFORMANCE RATING
	 
	 	 	Personal goals for each Participant are to be developed jointly by the Participant and
his/her supervisor for the Fiscal Year. Attainment of such goals and other performance
criteria, both quantifiable and non-quantifiable, may be used to arrive at an overall
individual performance rating from 0% to 100%. Such criteria shall be applied consistently
to Participants with similar duties pursuant to an evaluation process to be reviewed and
approved by the Chief Executive Officer and the Vice President, General Counsel. Criteria
that may be weighed in arriving at an individual performance rating include,

without limitation:

	 	•	 	Achievement of income goals by business unit
	 
	 	•	 	Development of subordinates
	 
	 	•	 	Successful development of new products/processes
	 
	 	•	 	Improvement in products or production
	 
	 	•	 	Attainment of self-development objectives
	 
	 	•	 	Control or reduction of operating expenses by business unit
	 
	 	•	 	Safety record of Facility or Facilities

The supervisor will assign a Personal Performance %, from 0% to 100%, reflecting the
Participant’s performance during such Fiscal

	 	 	 
	 

	 	Page 5 of 13

 

 

Year. The Personal Performance %
recommendation of the supervisor shall be reviewed by the department executive, who shall
recommend an appropriate Personal Performance % to the Chief Executive Officer who shall
approve the final Personal Performance % for each Participant. Personal Performance
recommendations are due to the Chief Executive Officer prior to March 15th of
the year following the fiscal year for which the performance is being measured. The Chief
Executive Officer reserves the right, in his sole discretion, to accept the Personal
Performance % recommendation for each Participant or to modify any Personal Performance %
for any Participant to achieve such dispersion of performance ratings as the Chief
Executive Office deems appropriate. Notwithstanding the previous sentence, in no event may
a Participant’s Individual Performance Factor be modified upward or downward by more than
50%.

	VI.	 	DEFERRED COMPENSATION OR BANKED BONUS AWARD
	 
	 	 	The deferred, or banked part of a Participant’s Financial Award is calculated as a function
of Company Financial Performance as outlined in Exhibit A, Tables I and II. The
participants’ Banked Bonus Award begins to vest at the end of the first (1st)
year after the original Banked Bonus Award is made. By way of example, banked amounts will
be 25% vested after one (1) year, 50% vested after two (2) years, 75% vested after three
(3) years, and 100% fully vested at the end of the fourth (4th) year, at the
same time and under the same guidelines as the then current cash portion of the Plan.
	 
	 	 	The Banked Bonus Award portion of a Participant’s Award accumulates investment growth,
compounded annually at the same rate as the guaranteed investment vehicle used within the
Company’s 401k Plan for that Fiscal Year.
	 
	VII.	 	The financial performance measures, targets and payout ranges used for incentive purposes
shall be approved by the Chief Executive Officer and the Board of Directors. The performance
measures, targets and payout ranges are defined in Exhibit A and B.
	 
	VIII.	 	PARTICIPANT BONUS COMPOSITION
	 
	 	 	The composition of the bonuses are established at the executive level and communicated
individually to each Participant.

	 	 	 
	 

	 	Page 6 of 13

 

 

	IX.	 	COMPUTATION AND DISBURSEMENT OF FUNDS
	 
	 	 	As soon as practicable after the close of the Fiscal Year, but no later than March
15th, the Executive of each department will recommend a Personal Performance %
for each Participant in his/her department to the Chief Executive Officer. In addition,
the Chief Financial Officer of the Company shall calculate the financial performance
measure and the proposed payout under the Plan based upon the Chief Executive Officer’s
determination of each Participant’s Personal Performance % and the achievement of the
financial performance measure. The proposed payout shall be presented to the Chief
Executive Officer and the Board of Directors for final approval. Once approved, payment of
the Financial Awards shall be made as soon as practicable after the completion of the
annual audit but no later than April 15th.
	 
	 	 	Notwithstanding anything to the contrary, the Company may, at its election, accelerate the
vesting of and cause the payment of all Banked Bonus Award amounts with respect to any
particular Participant: (1) in the event such participant retires on or after obtainment of
the then current federal retirement age; or (2) immediately prior to a Company Change of
Control.
	 
	 	 	If the Participant dies before receiving his/her award, the amount due will be paid to the
designated beneficiaries on file with the Company and, in the absence of such designation,
to the Participant’s estate.
	 
	 	 	All payment awards shall be reduced by amounts required to be withheld for taxes at the
time payments are made.
	 
	X.	 	CHANGES TO TARGET
	 
	 	 	The Board of Directors, at any time prior to the final determination of awards, may
consider changes to the performance measures, targets, and payout ranges used for incentive
purposes, such that if, in the judgment of the Board of Directors, such change(s) is/are
desirable in the interests of equitable treatment of the Participants and the Company as a
result of extraordinary or non-recurring events, changes in applicable accounting rules or
principles, changes in the Company’s methods of accounting, changes in
applicable law, changes due to consolidation, acquisitions, or

	 	 	 
	 

	 	Page 7 of 13

 

 

reorganization. The Chief
Executive Officer shall implement such changes(s) for immediate incorporation into the
Plan.

	XI.	 	A Participant shall be entitled to payment of a partial Financial Award if, prior to
the end of such Fiscal Year, a Participant:

	 	•	 	Dies
	 
	 	•	 	Becomes permanently disabled
	 
	 	•	 	Transfers to a position with a salary grade not eligible for
participation in the Plan
	 
	 	•	 	Enters military service
	 
	 	•	 	Takes an approved leave of absence
	 
	 	•	 	Is appointed or elected to public office
	 
	 	•	 	Is terminated due to position elimination

provided that the Participant was an active employee for a minimum of 90 consecutive
calendar days during such Fiscal Year. Such partial awards shall be paid at the time when
payments of awards for such Fiscal Year are made to active Participants.

Participants hired, or who otherwise become eligible to participate hereunder, during the
course of a Fiscal Year and who are employed through the end of such Fiscal Year shall be
eligible for a pro-rated award based on their Base Salary during such Fiscal Year and
length of eligible service prior to the end of the Fiscal Year so long as the Participant
was in a bonus eligible position for at least 90 days.

	XII.	 	FORFEITURE OF BONUS
	 
	 	 	Except as provided in Section X, no Participant who ceases to be an employee of the Company
prior to the payment date of the award shall be entitled to any Financial Award under this
Plan for such Fiscal Year unless the Chief Executive Officer in consultation with the Board
of Directors determines otherwise.
	 
	XII.	 	ADMINISTRATION

	 	 	 
	 

	 	Page 8 of 13

 

 

This Plan shall be administered by the Vice President, General Counsel of National Energy
Group, Inc., subject to the control and supervision of the Chief Executive Officer and the
Board of Directors of National Energy Group, Inc.

In the event of a claim or dispute brought forth by a Participant, the decision of the
Chief Executive Officer as to the facts in the case and the meaning and intent of any
provision of the Plan, or its application, shall be final and conclusive.

	XIII.	 	NO EMPLOYMENT CONTRACT; FUTURE PLANS
	 
	 	 	Participation in this Plan shall not confer upon any Participant any right to continue in
the employ of the Company nor interfere in any way with the right of the Company to
terminate any Participant’s employment at any time. The Company is under no obligation to
continue the Plan in future Fiscal Years.
	 
	XIV.	 	AMENDMENT OR TERMINATION
	 
	 	 	The Board of Directors of the Company may at any time, or from time to time, (a) amend,
alter or modify the provisions of this Plan, (b) terminate this Plan, or (c) terminate the
participation of an employee or group of employees in this Plan; provided, however, that in
the event of the termination of this Plan or a termination of participation, the Company
shall provide notification to the affected participants, as soon as practicable, outlining
the extent of the Plan termination or Participant termination in the Plan and the
calculation of the partial awards to be granted to the affected Participant(s) for the
portion of the Fiscal Year during which such employee(s) were Participants in this Plan, in
a manner in which the Company, in its sole judgment, determines to be equitable to such
Participants and the Board of Directors of the Company.
	 
	XV.	 	GENERAL PROVISIONS

	 	A.	 	No right under the Plan shall be assignable, either voluntarily or
involuntarily by way of encumbrance, pledge, attachment, level or charge of any nature
(except as may be required by state or federal law).
	 
	 	B.	 	Nothing in the Plan shall require the Company to segregate or set aside any
funds or other property for the purpose of paying any portion of an award. No Participant, beneficiary or other

	 	 	 
	 

	 	Page 9 of 13

 

 

person shall have any
right, title or interest in any amount awarded under the Plan prior to the close of
the Fiscal Year, or in any property of the company or its subsidiaries.

	 	 	 
	February 1, 2006

	 	/s/ Bob G. Alexander
	 	 	 
	Final Approval Date

	 	Chief Executive Officer

	 	 	 
	 

	 	Page 10 of 13

 

 

Exhibit A

Management Incentive Plan

Computation of MIP Amounts

	 	 	The Position Level shall determine the potential bonus (both cash and
banked.) Table I below provides the bonus award limits for each position
level.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Bonus	 	 	 	 	 	 	 	 	 	Bonus	 	 
	 	 	Bonus Award at	 	Award at	 	Target Bonus (Plan +	 	Award at	 	Bonus at Plan + 50% or
	TABLE I	 	Plan	 	Plan +	 	15%)	 	Plan +	 	more
	 	 	Cash	 	Bank	 	(5-14%)	 	Cash	 	Bank	 	(16-49%)	 	Cash	 	Bank
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Position Level I.
	 	 	27.5	%	 	 	13.75	%	 	 	 	 	 	 	40	%	 	 	20	%	 	 	 	 	 	 	66	%	 	 	33	%
	Position Level II.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	II-A
	 	 	18	%	 	 	9	%	 	(See Table II)	 	 	30	%	 	 	15	%	 	(See Table II)	 	 	49	%	 	 	24.5	%
	II-B
	 	 	15	%	 	 	7.5	%	 	 	 	 	 	 	25	%	 	 	12.5	%	 	 	 	 	 	 	41	%	 	 	20.5	%
	Position Level III.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	III-A
	 	 	15	%	 	 	7.5	%	 	 	 	 	 	 	25	%	 	 	12.5	%	 	 	 	 	 	 	41	%	 	 	20.5	%
	III-B
	 	 	10	%	 	 	5	%	 	 	 	 	 	 	16	%	 	 	8	%	 	 	 	 	 	 	25	%	 	 	12.5	%

	 	 	Table II

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Company	 	 	 	 	 	 	 	 
	Goals	 	Position Level I	 	Position Level II-A	 	Position Level II-B & Level III - A	 	Position Level III-B
	Achieved	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	TOTAL	 	CASH	 	BANK	 	TOTAL	 	CASH	 	BANK	 	TOTAL	 	CASH	 	BANK	 	TOTAL	 	CASH	 	BANK
	95%—104.99%
	 	 	41.25	%	 	 	27.50	%	 	 	13.75	%	 	 	27.00	%	 	 	18.00	%	 	 	9.00	%	 	 	22.50	%	 	 	15.00	%	 	 	7.50	%	 	 	15	%	 	 	10	%	 	 	5	%
	105—
109.99
	 	 	48.00	%	 	 	32.00	%	 	 	16.00	%	 	 	32.00	%	 	 	21.00	%	 	 	11.00	%	 	 	27.00	%	 	 	18.00	%	 	 	9.00	%	 	 	18	%	 	 	12	%	 	 	6	%
	110—
114.99
	 	 	55.50	%	 	 	37.00	%	 	 	18.50	%	 	 	38.00	%	 	 	25.00	%	 	 	13.00	%	 	 	33.00	%	 	 	22.00	%	 	 	11.00	%	 	 	21	%	 	 	14	%	 	 	7	%
	115—119.99
	 	 	60.00	%	 	 	40.00	%	 	 	20.00	%	 	 	45.00	%	 	 	30.00	%	 	 	15.00	%	 	 	37.50	%	 	 	25.00	%	 	 	12.50	%	 	 	24	%	 	 	16	%	 	 	8	%
	120—124.99
	 	 	64.50	%	 	 	43.00	%	 	 	21.50	%	 	 	48.00	%	 	 	32.00	%	 	 	16.00	%	 	 	40.00	%	 	 	27.00	%	 	 	13.00	%	 	 	25.5	%	 	 	17	%	 	 	8.5	%
	125—129.99
	 	 	69.00	%	 	 	46.00	%	 	 	23.00	%	 	 	52.00	%	 	 	34.50	%	 	 	17.50	%	 	 	43.00	%	 	 	29.00	%	 	 	14.00	%	 	 	28.5	%	 	 	19	%	 	 	9.5	%
	130—134.99
	 	 	73.50	%	 	 	49.00	%	 	 	24.50	%	 	 	56.00	%	 	 	37.00	%	 	 	19.00	%	 	 	46.00	%	 	 	31.00	%	 	 	15.00	%	 	 	30	%	 	 	20	%	 	 	10	%
	135—139.99
	 	 	79.50	%	 	 	53.00	%	 	 	26.50	%	 	 	60.00	%	 	 	40.00	%	 	 	20.00	%	 	 	50.00	%	 	 	33.00	%	 	 	17.00	%	 	 	31.5	%	 	 	21	%	 	 	10.5	%
	140—144.99
	 	 	85.50	%	 	 	57.00	%	 	 	28.50	%	 	 	64.00	%	 	 	43.00	%	 	 	21.00	%	 	 	54.00	%	 	 	35.00	%	 	 	19.00	%	 	 	33	%	 	 	22	%	 	 	11	%
	145—149.99
	 	 	91.50	%	 	 	61.00	%	 	 	30.50	%	 	 	68.50	%	 	 	46.00	%	 	 	22.50	%	 	 	58.00	%	 	 	38.00	%	 	 	20.00	%	 	 	36	%	 	 	24	%	 	 	12	%
	150%
	 	 	99.00	%	 	 	66.00	%	 	 	33.00	%	 	 	73.50	%	 	 	49.00	%	 	 	24.50	%	 	 	62.50	%	 	 	41	%	 	 	20.5	%	 	 	37.5	%	 	 	25	%	 	 	12.5	%
	 	 	 	 	 	 	99.0%
	 	 	 	 	 	73.5%
	 	 	 	 	 	61.5%
	 	 	 	 	 	37.5%

					
	 	 	 	 	 
	 	 	Page 11 of 13
	 	 

 

 

Exhibit B

Company’s Financial Targets

Each year the Company in conjunction with the Board of Directors will determine the goals for
each of the following Financial Target areas:

	 	•	 	EBITDA
	 
	 	•	 	Lease Operating Expense
	 
	 	•	 	Production
	 
	 	•	 	Reserve Replacement

	 	 	 
	 

	 	Page 12 of 13

 

 

Exhibit C

Position Levels:

Level I: Executives

Level II: Technical/Field

Level II — A — Sr. Level Managers/Technicians

Level II — B — Technicians

Level III: Professional/Administrative

Level III — A — Director/Manager

Level III — B — Professional/Exempt

	 	 	 
	 

	 	Page 13 of 13

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}]]