EXHIBIT 10.4
CONVEST ENERGY CORPORATION
[CONVEST LOGO]
August 31, 1996
Mr. Richard T. Howell
Convest Energy Corporation
2401 Fountainview Drive, Suite 700
Houston, Texas 77057
Dear Dick:
This letter will confirm the terms of your severance arrangement with
Convest Energy Corporation (the "Company"), which are set forth below:
1. Your resignation as an officer and director of the Company will be
effective August 31, 1996, but you will remain an employee until October 22,
1996, during which time you will be entitled to use your existing vacation days.
2. You will be paid (i) a lump sum of $9,709.68 payable on October 22,
1996, (ii) your base annual salary of $250,000 payable in accordance with the
regular payroll procedures of the Company until October 22, 1997 (the
"Continuation Period"), and (iii) a lump sum of $12,000 payable at the end of
the Continuation Period. All such payments shall be less applicable withholding
taxes. Notwithstanding the above, you will have the option, at any time after
January 1, 1997, to elect to have the Company pay your base salary for the
remainder of the Continuation Period, and the $12,000 lump sum, in a lump sum in
cash, less applicable withholding taxes.
During the Continuation Period, the Company will (i) pay the Company's
portion of the cost of continued health and dental coverage under the
Comprehensive Omnibus Budget Reconciliation Act ("COBRA") that would otherwise
be payable by you in order to maintain COBRA coverage for you and your
dependents under the terms of the Company's existing group health and dental
insurance policies, and (ii) convert your coverage under the Company's existing
group life insurance and long term disability insurance to individual policies
and pay the premiums on those policies during the Continuation Period; provided,
however, that the Company has been advised that its long term disability
insurance carrier will only issue an individual long term disability insurance
policy to you with a maximum benefit of $4,000 per month until age 65 (the
"Individual LTD Policy"). You will also continue to participate in Convest's
401(k) plan during the Continuation Period in accordance with the applicable
terms of the plan.
August 31, 1996
Page 2
With respect to long term disability insurance, you are aware that the
Company has spent a considerable amount of time and effort with its insurance
agent and with other insurance agents to try to obtain additional long term
disability insurance coverage for you, but so far has been unable to obtain
additional coverage. Based on your salary, the Company has been advised that the
maximum amount of individual coverage that could be obtained, assuming no
medical history problems, would be a monthly benefit of $8,500 per month. The
Company's insurance agent is continuing to try to obtain the additional benefit
coverage of $4,500 per month with an individual policy and should know by
December 1, 1996 whether any additional coverage can be obtained. If the Company
can obtain the additional coverage with an individual policy providing the
additional benefit of $4,500 per month, this coverage, together with the
Individual LTD Policy, would provide you with a total benefit, if you were
disabled in accordance with the terms of such policies, of $8,500 per month. If
the Company is unable to obtain the additional coverage providing the additional
benefit of $4,500 per month, or the additional coverage provides a monthly
benefit of less than $4,500 per month, the Company agrees that it will
self-insure this disability insurance coverage to the extent that the Company
cannot obtain additional coverage with a monthly benefit of $4,500 per month. In
other words, if you were to become disabled during the Continuation Period in
accordance with the terms of the Individual LTD Policy and the individual
long-term disability insurance policies obtained by the Company for your benefit
provided a monthly benefit of less than $8,500 per month, the Company will pay
the additional benefit (up to a maximum of $4,500 per month) during the period
that the Individual LTD Policy is paying benefits to you up to age 65. In such
event, the terms and provisions of the Individual LTD Policy shall control with
respect to whether you are entitled to receive benefits from the Company and to
what extent. You have agreed that the Individual LTD Policy and the Company's
agreement set forth in this paragraph has fulfilled the Company's obligation to
provide you with disability insurance during the Continuation Period.
During the Continuation Period, the Company also will pay the base
monthly dues of your membership (but no additional charges) at the University
Club, but will not pay for a car allowance, car phone or other similar expenses.
At the end of the Continuation Period, the University Club membership will be
assigned to you (if necessary) without further cost to you.
August 31, 1996
Page 3
3. Your stock options for 133,000 shares will vest in full on October
22, 1996 and will be exercisable for a period of one year ending on October 22,
1997, at which time they will terminate.
4. During the Continuation Period, you will be entitled to either (i)
the services of an outplacement agency with the fee payable by the Company up to
a maximum of $25,000, or (ii) the payment of a lump sum of $25,000 in cash, less
applicable withholding taxes. If you do not make an election prior to the end of
the Continuation Period, the Company will pay you a lump sum of $25,000 in cash,
less applicable withholding taxes. Also, if the outplacement agency fees are
less than $25,000, you can elect to receive the balance in cash, less applicable
withholding taxes.
5. You will be permitted to take the personal computer and printer
currently used by you without cost to you other than any required withholding
taxes based on the estimated fair market value of such equipment.
This severance arrangement shall be in lieu of any severance or other
benefits or obligations of the Company under the Company's existing severance
policy or the Severance Agreement dated April 3, 1995 between you and the
Company.
If the foregoing accurately sets forth our agreement with respect to
your severance arrangement, please evidence your agreement by executing this
letter in the space provided below and returning it to me.
Very truly yours,
CONVEST ENERGY CORPORATION
By:/s/ MICHAEL Y. MCGOVERN
MICHAEL Y. McGOVERN, Chairman
AGREED TO as of the 31st day of August, 1996:
/s/ RICHARD T. HOWELL
RICHARD T. HOWELL