AMENDED AND
RESTATED
EMPLOYMENT
AGREEMENT
This Amended and Restated Employment
Agreement (this “ AGREEMENT ”) is made and
entered into on December 30, 2008 (the “ EFFECTIVE
DATE ”) by and between Allan D. Keel (“
EXECUTIVE ”) and Crimson Exploration Inc. (the “
COMPANY ”).
WHEREAS , the Company’s predecessor, GulfWest
Energy Inc., a Texas corporation, and Executive entered into an
Employment Agreement (the “ EMPLOYMENT AGREEMENT
”) on the Effective Date in connection with Executive’s
employment with the Company as President and Chief Executive
Officer, whereby the Company agreed to employ Executive and
Executive accepted such employment upon the terms and conditions
set forth in the Employment Agreement; and
WHEREAS , each party desires to amend and restate in its
entirety the Employment Agreement.
NOW, THEREFORE
, in consideration of the mutual
covenants and obligations contained herein:
ARTICLE 1
EMPLOYMENT; RESPONSIBILITIES;
COMPENSATION
Section 1.1
EMPLOYMENT . Subject to
ARTICLE 3 , the Company hereby agrees to employ Executive
and Executive hereby agrees to be employed by the Company, in
accordance with this Agreement, for the period commencing as of the
Effective Date and ending on the third anniversary of the Effective
Date (“ INITIAL TERM ”); PROVIDED,
HOWEVER , that beginning on the day immediately preceding the
third anniversary of the Effective Date of this Agreement and on
the day immediately preceding each anniversary of this Agreement
thereafter, the Initial Term shall automatically be extended one
additional year unless either party gives written notice to the
other party between 90 and 120 days prior to the next anniversary
of this Agreement that it or he, as applicable, does not wish to
extend this Agreement. Executive’s continued employment after
the expiration of the Initial Term shall be in accordance with and
governed by this Agreement, unless modified by the parties to this
Agreement in writing.
Section 1.2
RESPONSIBILITIES;
LOYALTY.
(a) Subject to the terms of this
Agreement, Executive is employed in the position of President and
Chief Executive Officer, and shall perform the functions and
responsibilities of that position. Additional or different duties
may be assigned by the Company. Executive’s position, job
descriptions, duties and responsibilities may be modified from time
to time in the sole discretion of the Company.
(b) Executive shall devote the whole
of Executive’s professional time, attention and energies to
the performance of Executive’s work responsibilities and
shall not, either directly or indirectly, alone or in partnership,
consult with, advise, work for or have any interest in any other
similar business or pursuit during Executive’s employment
under this Agreement. During the term of Executive’s
employment with the Company, it shall not be a violation of this
Agreement for Executive to (i) serve on corporate, civic or
charitable boards or committees; (ii) deliver lectures or fulfill
speaking engagements; and (iii) subject to SECTION 2.3 ,
manage personal investments, in each case, so long as such
activities do not materially interfere with the performance of
Executive’s responsibilities as an Executive of the Company
in accordance with this Agreement. Executive further agrees to
comply with all policies of the Company in effect from time to
time, and to comply with all laws, rules and regulations, including
those applicable to the Company
Section 1.3
COMPENSATION. As
consideration for the services and covenants described in this
Agreement, the Company agrees to compensate Executive in the
following manner:
(a) The Company will pay Executive a
base salary of $370,000 per year (“ BASE SALARY
”), as may be increased from time to time by action of the
Board of Directors of the Company (the “ BOARD
”) or the Compensation Committee of the Board.
(b) Executive shall be entitled to
employment benefits including holidays, leaves of absence, health
insurance, dental insurance, 401(k) plan participation, etc., if
any, available to employees of the Company generally, in accordance
with any policies, procedures or benefit plans adopted by the
Company from time to time during the existence of this Agreement.
In addition, Executive shall be entitled to vacation in accordance
with the Company’s vacation policy as adopted from time to
time. Executive’s rights or those of Executive’s
dependents under any such benefits policies or plans shall be
governed solely by the terms of such policies or plans. The Company
reserves to itself, or its designated administrators, exclusive
authority and discretion to determine all issues of eligibility,
interpretation and administration of each such benefit plan or
policy. The Company’s employment benefits, and policies
related thereto, are subject to termination, modification or
limitation at the Company’s sole discretion.
(c) Executive shall participate in
the Company’s Annual Cash Incentive Bonus Plan (or successor
plan), for each calendar year in which Executive is employed by the
Company hereunder, with Minimum, Target and Maximum Award levels of
no less than 50%, 85% and 120%, respectively, of Base Salary,
contingent upon attainment of annual personal and corporate goals
established by the Board or a duly authorized committee thereof in
its sole discretion (“ ANNUAL CASH INCENTIVE BONUS
”) in accordance with the terms of the Annual Cash Incentive
Bonus Plan (or successor plan).
(d) Executive shall participate in
the Company’s Annual Long-Term Incentive Equity Plan (or
successor plan) for each calendar year in which Executive is
employed by the Company hereunder, with Minimum, Target and Maximum
Award levels of no less
than 75%, 225% and 450%,
respectively, of Base Salary, 50% of which will be payable with
respect to a performance period in shares of the Company’s
common stock, par value $0.001 per share (the “ COMMON
STOCK ”), pursuant to a Restricted Stock Award Agreement
(substantially in the form of Exhibit 10.22 to the Company’s
Annual Report on Form 10-K for the year ended December 31, 2007)
and 50% of which will be payable with respect to a performance
period in options to purchase Common Stock pursuant to a Stock
Option Agreement (substantially in the form of Exhibit 10.6 to the
Company’s Annual Report on Form 10-K for the year ended
December 31, 2007), contingent upon attainment of annual personal
and corporate goals established by the Board or a duly authorized
committee thereof in its sole discretion (“ ANNUAL
LONG-TERM INCENTIVE EQUITY PLAN ”) in accordance with the
terms of the Annual Long-Term Incentive Equity Plan (or successor
plan).
(e) Payment of all compensation to
Executive shall be made in accordance with the terms of this
Agreement, applicable state or federal law, and applicable Company
policies in effect from time to time, including normal payroll
practices, and shall be subject to all applicable withholdings and
taxes.
Section 1.4
BUSINESS EXPENSES. The
Company shall reimburse Executive for all business expenses that
are reasonable and necessary and incurred by Executive while
performing his duties under this Agreement, upon presentation of
expense statements, receipts and/or vouchers or such other
information and documentation as the Company may reasonably
require. Executive will be subject to the same business expense
policy applicable to other Company employees generally.
ARTICLE 2
CONFIDENTIAL INFORMATION;
POST-EMPLOYMENT
OBLIGATIONS; COMPANY
PROPERTY
Section 2.1
COMPANY PROPERTY. All written
materials, records, data and other documents prepared or possessed
by Executive during Executive’s employment by the Company are
the Company’s property. All information, ideas, concepts,
improvements, discoveries and inventions that are conceived, made,
developed or acquired by Executive individually or in conjunction
with others during Executive’s employment (whether during
business hours and whether on Company’s premises or
otherwise) that relate to Company business, products or services
are the Company’s sole and exclusive property. All memoranda,
notes, records, files, correspondence, drawings, manuals, models,
specifications, computer programs, maps and all other documents,
data or materials of any type embodying such information, ideas,
concepts, improvements, discoveries and inventions are Company
property. At the termination of Executive’s employment with
the Company for any reason, Executive shall return all of the
Company’s documents, data or other Company property to the
Company.
Section 2.2
CONFIDENTIAL INFORMATION;
NON-DISCLOSURE.
(a) Executive acknowledges that the
business of the Company is highly competitive and that the Company
will provide Executive with access to Confidential Information
relating to the business of the Company. Executive acknowledges
that this Confidential Information constitutes a valuable, special
and unique asset used by the Company in its business to obtain a
competitive advantage over competitors. Executive further
acknowledges that protection of such Confidential Information
against unauthorized disclosure and use is of critical importance
to the Company in maintaining its competitive position. Executive
agrees that Executive will not, at any time during or after
Executive’s employment with the Company, make any
unauthorized disclosure of any Confidential Information of the
Company, or make any use thereof, except in the carrying out of
Executive’s employment responsibilities to the Company.
Executive also agrees to preserve and protect the confidentiality
of third party Confidential Information to the same extent, and on
the same basis, as the Company’s Confidential
Information.
(b) For purposes hereof, “
CONFIDENTIAL INFORMATION ” includes business
operations and methods, existing and proposed investments and
investment strategies, seismic, well-log and other geologic and oil
and gas operating and exploratory data, financial performance,
compensation arrangements and amounts (whether relating to the
Company or to any of its employees), contractual relationships,
business partners and relationships (including customers and
suppliers), marketing strategies and other confidential information
that is regularly used in the operation, technology and business
dealings of the Company, regardless of the medium in which any of
the foregoing information is contained, so long as such information
is actually confidential and proprietary to the Company.
Section 2.3
NON-COMPETITION
OBLIGATIONS.
(a) Executive acknowledges and
agrees that as an employee and representative of the Company,
Executive will be responsible for building and maintaining business
relationships and goodwill with current and future operating
partners, investors, partners and prospects on a personal level.
Executive acknowledges and agrees that this responsibility creates
a special relationship of trust and confidence between the Company,
Executive and these persons or entities. Executive also
acknowledges that this creates a high risk and opportunity for
Executive to misappropriate these relationships and the goodwill
existing between the Company and such persons. Executive
acknowledges and agrees that it is fair and reasonable for the
Company to take steps to protect itself from the risk of such
misappropriation.
(b) Executive acknowledges and
agrees that, in exchange for his agreement in SECTION 2.3(c)
below, he will receive substantial, valuable consideration from the
Company upon the execution of this Agreement and during the course
of this Agreement, including, (i) Confidential Information and
access to Confidential Information, (ii) compensation and other
benefits and (c) access to the Company’s
prospects.
(c) During the Non-Compete Term and
provided that the Company has made all severance payments provided
for herein, Executive will not, directly or indirectly,
provide the same or substantially
the same services that he provides to the Company or any of its
subsidiaries to any Business Enterprise in the Market Area (as
defined below). This includes working as an agent, consultant,
employee, officer, director, partner or independent contractor or
being a shareholder, member, joint venturer or equity owner in, any
such Business Enterprise; PROVIDED, HOWEVER , that the
foregoing shall not restrict Executive from holding up to 5% of the
voting power or equity of one or more Business
Enterprises.
(d) For purposes of
hereof:
(i) “ BUSINESS
ENTERPRISE ” means any corporation, partnership, limited
liability company, sole proprietorship, joint venture or other
business association or entity engaged in the business of exploring
for, developing, operating or acquiring oil and gas
properties;
(ii) “ MARKET AREA
” means any geographic or market area in which the Company is
conducting or has conducted any material amount of oil and gas
exploration and production activities during the Initial Term, as
extended; and
(iii) “ NON-COMPETE
TERM ” means the period from the date of
Executive’s employment to the date ending: (A) on the date of
termination if terminated by the Company for Cause, or (B) in all
other cases of termination, at the end of a period of consecutive
months following the date of termination equivalent to 50% of the
number of months for which the Executive is entitled to receive
severance benefits assuming (if applicable) Executive will give
notice of his intent to comply with SECTIONS 2.3(c) and
SECTION 2.4 pursuant to SECTION 3.2 .
Section 2.4
NON-SOLICITATION OF
EXECUTIVES. During the Non-Compete Term, Executive will not,
either directly or indirectly, call on, solicit or induce any other
executive or officer of the Company or its affiliates with whom
Executive had contact with, knowledge of, or association with in
the course of employment with the Company to terminate his
employment, and will not assist any other person or entity in such
a solicitation; PROVIDED, HOWEVER , that with respect to
soliciting any executive or officer whose employment was terminated
by the Company or its affiliates, the foregoing restriction shall
not apply.
Section 2.5
ACKNOWLEDGEMENT. Executive
acknowledges that the Confidential Information provided to
Executive pursuant to this Agreement, and the Company’s need
to protect its goodwill, gives rise to the Company’s interest
in these restrictive covenants, and that any limitations as to
time, geographic scope and scope of activity to be restrained
defined herein are reasonable and do not impose a greater restraint
than is necessary to protect the goodwill or other business
interest of the Company. Executive further agrees that if, at some
later date, a court of competent jurisdiction determines that
certain covenants do not meet the criteria set forth in Tex. Bus.
& Com. Code § 15.50(2), those covenants shall be
reformed by the court, pursuant
to Tex. Bus. & Com. Code
§ 15.51(c), to the least extent necessary to make them
enforceable. Executive acknowledges and recognizes that the
enforcement of any of the provisions in this Agreement by the
Company will not interfere with Executive’s ability to pursue
a proper livelihood.
Section 2.6
EARLY RESOLUTION CONFERENCE.
The parties are entering into this Agreement with the express
understanding that this Agreement is clear and fully enforceable as
written. If Executive ever decides later to contend that any
restriction on activities imposed by this Agreement no longer is
enforceable as written or does not apply to an activity in which
Executive intends to engage, Executive first will notify the
Company in writing and meet with a company representative at least
14 days before engaging in any activity that foreseeably could fall
within the questioned restriction to discuss resolution of such
claims.
Section 2.7
EQUITABLE OTHER RELIEF.
Executive understands and agrees that, if Executive breaches this
Agreement, the Company will suffer immediate and irreparable harm
which cannot be accurately calculated in monetary damages.
Consequently, the Company shall be entitled to immediate injunctive
relief, either by temporary or permanent injunction, to prevent
such violation. This injunctive relief shall be in addition to any
other legal or equitable relief to which the Company would be
entitled. If a bond is required to be posted for the Company to
secure an injunction or other equitable remedy, threatened or
actual, Executive agrees that the bond need not be more than a
nominal sum. The Company shall be entitled to recover its
attorneys’ fees and costs from Executive should a court
determine that Executive has breached this Agreement. In addition,
in the event of an alleged breach or violation of this Agreement,
the time periods set forth above will be tolled until such breach
or violation has been cured.
ARTICLE 3
TERMINATION OF
EMPLOYMENT
Section 3.1
TERMINATION OF
EMPLOYMENT.
(a) Executive’s employment
with Company shall be terminated (i) immediately upon the death of
Executive without further action by the Company, (ii) upon
Executive’s Permanent Disability without further action by
the Company, (iii) by the Company for Cause, (iv) by Executive for
Good Reason, (v) by the Company without Cause or by Executive
without Good Reason PROVIDED that the terminating party must
(in the case of clause (v)) give at least 30 days’ advance
written notice of such termination. For purposes of this ARTICLE
3 , “date of termination” means the date of
Executive’s death, the date of Executive’s Permanent
Disability, or the date of Executive’s “separation from
service” (as defined in Code Section 409A and Treas. Reg.
§ 1.409A-1(h)) with the Company, as
applicable.
(b) For purposes hereof:
(i) “ PERMANENT
DISABILITY ” shall mean either (A) Executive’s
inability to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment that
can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, or (B) by reason of
any medically determinable physical or mental impairment that can
be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, Executive’s
receiving income replacement benefits for a period of not less than
three months under an accident and health plan covering the
Company’s employees. Executive will be deemed permanently
disabled if determined to be totally disabled by the Social
Security Administration or if determined to be disabled in
accordance with a disability insurance program that applies a
definition of disability that complies with the requirements of
this paragraph.
(ii) “ GOOD REASON
” shall mean one or more of the following conditions arising
not more than six months before Executive’s termination date
without Executive’s consent: (A) a material breach by the
Company of any provision of this Agreement; (B) assignment by the
Board or a duly authorized committee thereof to Executive of any
duties that materially and adversely alter the nature or status of
Executive’s position, job descriptions, duties, title or
responsibilities from those of a President and Chief Executive
Officer, or eligibility for Company compensation plans; (C)
requirement by the Company for Executive to relocate anywhere other
than the greater Houston, Texas metropolitan area, except for
required travel on Company business to an extent substantially
consistent with Executive’s obligations under this Agreement;
(D) a material reduction in Executive’s Base Salary in effect
at the relevant time; or (E) exclusion of the Executive from
eligibility for the Company’s active bonus or benefits plans
as described above. Notwithstanding anything herein to the
contrary, Good Reason will exist only if Executive provides notice
to the Company of the existence of the condition otherwise
constituting Good Reason within 90 days of the initial existence of
the condition, and the Company fails to remedy the condition on or
before the 30th day following its receipt of such
notice.
(iii) “ CAUSE ”
shall include (A) continued failure by Executive to perform
substantially Executive’s duties and responsibilities (other
than a failure resulting from Permanent Disability) that is
materially injurious to the Company and that remains uncorrected
for 10 days after receipt of appropriat
