Exhibit 10.1
Execution Copy
CONSULTING AGREEMENT AND RELEASE OF CLAIMS
     This Consulting Agreement and Release of Claims (“Agreement”) is made and
entered into by and between Gasco Energy, Inc. (“Company”), and Mark A. Erickson
(“Consultant”).
     1. Separation.
          (a) Consultant voluntarily terminated his employment with the Company
and its subsidiaries effective as of January 27, 2010. Consultant voluntarily
resigned his position as a member of the Board of Directors of the Company and
its subsidiaries effective as of January 27, 2010 (the “Separation Date”).
          (b) From the day following Consultant’s signing this Agreement and for
a period of nine (9) months following such date (“Consultation Period”),
Consultant shall provide consulting services necessary for the transition of
Consultant’s duties while he was an employee of the Company, as requested by the
Board or the Chief Executive Officer of the Company.
     2. Definitions.
          (a) “Claims” means all theories of recovery of whatever nature,
whether known or unknown, and now recognized by the law or equity of any
jurisdiction. This term includes causes of action, charges, indebtedness,
losses, claims, liabilities, and demands, whether arising in equity or under the
common law or under any contract or statute. This term includes any claim for
salary, benefits or other compensation. This term includes any claims of
discrimination, harassment, retaliation, retaliatory discharge, or wrongful
discharge, and any other claim that is alleged or that could be alleged by
Consultant, or on Consultant’s behalf, in any lawsuit or other proceeding. This
term includes any claims and rights arising under the Age Discrimination in
Employment Act, Title VII of the Civil Rights Act of 1964, the Employee
Retirement Income Security Act, the Americans with Disabilities Act, the Family
and Medical Leave Act, and any and all state law counter-parts to such federal
statutes.
          (b) “Damages” means all elements of relief or recovery of whatever
nature, whether known or unknown, which are recognized by the law or equity of
any jurisdiction that is sought or that could be sought by Consultant, or on
Consultant’s behalf, in any lawsuit or other proceeding. This term includes
actual, incidental, indirect, consequential, compensatory, exemplary, liquidated
and punitive damages; rescission; attorneys’ fees; interest; costs; equitable
relief; and expenses.
          (c) “Consultant” means and includes Consultant acting individually; in
any corporate or other representative capacity; and on behalf of Consultant’s
heirs, executors, administrators, legal representatives, successors,
beneficiaries, and assigns.
          (d) “Released Parties” means and includes the Company, and its past,
present and future owners, parents, subsidiaries, affiliates, contractors, and
related entities, and all of the foregoing entities’ and persons’ past, present
and future directors, officers, employees, shareholders, partners, joint
venturers, agents, benefit plans (and each such plan’s fiduciaries,
administrators, committees, trustees, sponsors and representatives), insurance
carriers, reinsurers,

             
  
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underwriters, predecessors, successors, assigns, executors, administrators, and
representatives, in both their representative and individual capacities. Each of
the Released Parties is an intended beneficiary of this Agreement.
     3. Consideration.
          (a) In consideration for Consultant’s promises herein and provided
that the Consultant executes and delivers this Agreement to the Company on or
before January 29, 2010 (and does not subsequently revoke this Agreement
pursuant to Section 14) and continues to comply with the restrictive covenants
set forth in Section 9 of the Employment Agreement by and between Consultant the
Company on February 14, 2003, as amended (the “Employment Agreement”), the
Company shall:
               (i) Pay Consultant $25,000 for each month of the nine (9) month
Consultation Period (the “Consulting Fee”), on the last regular pay date of each
calendar month beginning in February 2010 and ending in October 2010. The
Company will not withhold from the Consultation Fee any sums for income tax,
unemployment insurance, social security, or any other withholding pursuant to
any law, nor will the Company make available to Consultant any of the benefits
afforded to employees of the Company; provided the Company may withhold from any
compensation or amounts payable under this Agreement all federal, state, city,
or other taxes as may be required pursuant to any law or governmental regulation
or ruling. Consultant expressly acknowledges and agrees that Consultant is
solely responsible for the payment of all income and other taxes earned by
Consultant pursuant to this Agreement.
               (ii) Pay Consultant an amount equal to $600,000 in a single lump
sum payment no later than 60 days following the Separation Date, plus
Consultant’s accrued but unused vacation during his employment with the Company
in an amount equal to $15,919.62.
               (iii) Pay Consultant an amount equal to $325,000 in a single lump
sum on March 1, 2011.
               (iv) Convey to Consultant certain overriding royalty interests
out of the properties set forth on Schedule 1 of Termination and Settlement
Agreement entered into by and among the Company, Marc A. Bruner and Consultant
(the “Termination and Settlement Agreement”) in the percentage interests set
forth under Consultant’s name on Schedule 1 of the Termination and Settlement
Agreement. Such conveyance will be pursuant to the terms and conditions of the
Termination and Settlement Agreement, on the first business day occurring after
the six month period beginning on the date of Consultant’s “separation from
service” (within the meaning of Treasury Regulation 1.409A-1(h)) with the
Company (or, if earlier, the date of Consultant’s death). This Agreement shall
be deemed to amend the Termination and Settlement Agreement with respect to the
timing of the conveyance. If the Consultant determines that additional
amendments to the Termination and Settlement Agreement are necessary to
effectuate the purposes of this paragraph, the Company shall cooperate and
assist with the process of making such amendments. On the first business day
occurring after the six month period referenced herein, the Company and/or its
successor or assigns, shall also pay Consultant all royalty payments accrued in
connection with the overriding royalty interests conveyed to Consultant, for
each month from February 1, 2010 up to the date of the conveyance.

             
  
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The Company’s obligations and Consultant’s rights under this paragraph shall not
be subject to forfeiture under any circumstances, including any claimed breach
of this or any other agreement.
               (v) Provide for the accelerated vesting of any options held by
the Consultant to purchase the common stock of the Company granted under the
Company’s compensatory stock option plans (the “Stock Options”) and the
extension of the exercise period of the Stock Options for a period ending on the
first anniversary of the Separation Date; provided, however the options to
purchase 1,000,000 shares of the Company’s common stock with an expiration date
of January 2, 2011 will expire on January 2, 2011.
          (b) The Company will withhold from any amounts payable to the
Consultant pursuant to Sections 3(a)(ii), (iii) and (iv) any federal, state or
local taxes as the Company is required to withhold pursuant to any law or
government regulation or ruling.
          (c) The consideration set forth in this Section 3 is referred to as
“Consideration.”
     4. Release.
          (a) Consultant releases and discharges the Released Parties from all
Claims and Damages, including those related to, arising from or attributed to
(i) Consultant’s employment with Company and the Employment Agreement
(identified in Section 3(a)) and the Termination and Settlement Agreement
(identified in Section 3(a)(iv)), (ii) the termination of such employment, and
(iii) all other acts or omissions related to any matter at any time prior to and
including the date of Consultant’s execution of this Agreement. This Release
does not apply to Consultant’s benefit entitlement in accordance with the terms
of the Company’s 401(k) plan as a result of his employment with the Company. Nor
shall the release apply to Consultant’s rights to continue health insurance
coverage under COBRA.
          (b) The Company releases and discharges Consultant from all Claims and
Damages, including those related to, arising from or attributed to
(i) Consultant’s employment with Company and the Employment Agreement
(identified in Section 3(a)) and the Termination and Settlement Agreement
(identified in Section 3(a)(iv)), (ii) the termination of such employment, and
(iii) all other acts or omissions related to any matter at any time prior to and
including the date of the Company’s execution of this Agreement.
          (c) Consultant and the Company understand and expressly agree that,
unless expressly excepted, the release in Section 4(a) extends to all Claims of
every nature and kind, known or unknown, suspected or unsuspected, past, present
or future, which Claims are arising from, attributable to, or related to
Consultant’s employment with the Company, the termination of such employment, or
any alleged action or inaction of the Consultant or Released Parties prior to
and including the date of the parties’ execution of this Agreement, and that all
such Claims are hereby expressly settled or waived.
          (d) Neither the Company nor Consultant shall disparage or make
negative comments about the other party; provided that this Section 5(d) shall
not apply to comments made to any governmental entity or as required by law.

             
  
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          (e) Consultant and the Company agree to re-affirm this Agreement upon
the termination of the Consultation Period by again signing this Agreement as
provided below and returning a re-affirmed copy of this Agreement to the other
party.
     5. Continuing Post-Employment Obligations.
          (a) Consultant acknowledges Consultant’s continuing obligations under
Section 9 of the Employment Agreement. Consultant agrees that his obligations
under Section 9 remain in full force and effect following the Separation Date.
Company acknowledges Company’s continuing obligations under Section 23 of the
Employment Agreement. Company agrees that its obligations under Section 23
remain in full force and effect for the period of Consultant’s employment with
the Company and following the Separation Date.
          (b) Consultant agrees not to voluntarily disclose to any third person,
apart from Consultant’s attorney, tax advisors, financial advisors and
institutions, and immediate family, the existence, terms or conditions of this
Agreement or to cause any third person to disclose the existence, terms or
conditions of this Agreement, except as required by law or compelled by any
governmental authority, and shall require all such attorneys, tax advisors and
family members to whom disclosure is made by Consultant to comply with the
confidentiality provision of this Agreement.
          (c) Consultant agrees to give the Company, through its Chief Executive
Officer, notice of Consultant’s intent to disclose the existence, terms or
conditions of any Confidential Information (as defined in Section 9.1 of the
Employment Agreement) or of this Agreement, within three business days of
learning that disclosure will be or has been required by law or compelled by a
governmental authority.
          (d) During and following the Consultation Period, Consultant will
cooperate with, and assist, the Company in defense of any claim, litigation or
administrative proceeding brought against the Company or any other Released
Parties, as reasonably requested by the Company. Such cooperation and assistance
shall include, but not be limited to, (i) interviews of Consultant by legal
counsel for the Company as reasonably requested by such counsel, (ii) Consultant
providing documents (or copies thereof) and executing affidavits as reasonably
requested by such counsel, (iii) Consultant appearing for depositions, trials,
and other proceedings as reasonably requested by such counsel, and
(iv) Consultant communicating with any party adverse to the Company, or with a
representative, agent or legal counsel for any such party, concerning any
pending or future claims or litigation or administrative proceeding solely
through legal counsel for the Company. The Company will pay all reasonable
out-of-pocket expenses incurred by Consultant in providing such cooperation and
assistance, provided such expenses have been pre-approved by the Company.
Nothing in this paragraph 5(f) is intended to cause Consultant to testify other
than truthfully in any proceeding or affidavit.
          (e) During and following the Consultation Period, the Company will
cooperate with, and assist, the Consultant in defense of any claim, litigation
or administrative proceeding brought against the Consultant regarding the nature
of Consultant’s separation from employment as set forth in Paragraph 1(a), as
reasonably requested by the Consultant.

             
  
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          (f) The parties shall execute such documents and take such other
action as is necessary or appropriate to effectuate the provisions of this
Agreement.
     6. Warranties and Other Obligations of Consultant. Consultant agrees,
represents and warrants that:
          (a) The Consideration is not something to which Consultant is
otherwise indisputably entitled, is good and sufficient consideration for
Consultant’s execution and non-revocation of this Agreement, and is paid by or
on behalf of the Released Parties in full satisfaction and settlement of any
Claims and Damages.
          (b) Consultant is legally and mentally competent to sign this
Agreement.
          (c) Consultant is the sole owner of any Claims that have been or could
have been asserted, Consultant has the requisite capacity and authority to make
this Agreement, and no portion of any existing or potential Claims has been
sold, assigned, pledged or hypothecated by Consultant to any third party.
          (d) Consultant presently possesses the exclusive right to receive all
of the Consideration paid in exchange for this Agreement.
          (e) Consultant does not possess any rights or claims to future
employment with the Company after the Separation Date, and agrees not to seek
employment with the Company. As used in this Section 6(e), “Company” shall
include any of its affiliates.
     7. Choice of Law. This Agreement shall be interpreted and construed in
accordance with and shall be governed by the laws of the State of Colorado
(without regard to any conflicts of law principle which would require the
application of some other state law) and, when applicable, the laws of the
United States.
     8. Entire Agreement. This Agreement constitutes the entire agreement of the
parties relating to the subject matter hereof. Any previous agreements with
respect to this subject matter are superseded by this Agreement and are of no
further force or effect, provided that Consultant’s continuing obligations under
the Employment Agreement shall remain in full force and effect according to its
terms. No term, provision or condition of this Agreement may be modified in any
respect except by a writing executed by both Consultant and the Company. No
person has any authority to make any representation or promise on behalf of any
of the parties not set forth in this Agreement. This Agreement has not been
executed in reliance upon any representation or promise except those contained
herein.
     9. Acknowledgment of Terms. Consultant acknowledges that Consultant has
carefully read this Agreement; that Consultant has had the opportunity for
review of it by Consultant’s attorney; that Consultant fully understands its
final and binding effect; that the Company admits to no wrongdoing in connection
with Consultant’s employment, the termination of such employment, or any other
matter covered by the release in Section 4(a); that this Agreement is intended
as a compromise of all Claims which Consultant has alleged or may allege against
any of the Released Parties; that the only promises or representations made to

             
  
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Consultant to sign this Agreement are those stated herein; and that Consultant
is signing this Agreement voluntarily.
     10. Waiver. The failure of either party to enforce or to require timely
compliance with any term or provision of this Agreement shall not be deemed to
be a waiver or relinquishment of rights or obligations arising hereunder, nor
shall this failure preclude the enforcement of any term or provision or avoid
the liability for any breach of this Agreement.
     11. Severability. Each part, term or provision of this Agreement is
severable from the others. Notwithstanding any possible future finding by a duly
constituted authority that a particular part, term or provision is invalid, void
or unenforceable, this Agreement has been made with the clear intention that the
validity and enforceability of the remaining parts, terms and provisions shall
not be affected thereby.
     12. Construction. This Agreement shall be deemed drafted equally by all the
parties. Its language shall be construed as a whole and according to its fair
meaning. Any presumption or principle that the language is to be construed
against any party shall not apply. The headings in this Agreement are only for
convenience and are not intended to affect construction or interpretation. This
Agreement represents a compromise of disputed Claims and is not to be construed
as an admission, direct or indirect, against any interest of the parties. The
plural includes the singular and the singular includes the plural; “and” and
“or” are each used both conjunctively and disjunctively; “any,” “all,” “each,”
or “every” means “any and all, and each and every;” “including” and “includes”
are each “without limitation;” and “herein,” “hereof,” “hereunder” and other
similar compounds of the word “here” refer to the entire Agreement and not to
any particular paragraph, subparagraph, section or subsection.
     13. Timing. Consultant acknowledges and agrees Consultant has had a
reasonable time to consider this Agreement before executing it. Consultant
understands and agrees that payment of the Consideration is contingent upon
returning and executed copy of this Agreement to the Company on or before
January 29, 2010.
     14. Advice to Consult Counsel. The Company hereby advises Consultant to
consult with an attorney prior to executing this Agreement.
     15. Survival. The respective rights and obligations of the parties
hereunder (including those contained in Section 9 of the Employment Agreement)
shall survive any termination of this Agreement to the extent necessary to the
intended preservation of such rights and obligations. The provisions of this
Section are in addition to the survivorship provisions of any other section of
this Agreement.
     16. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement. Signatures delivered by facsimile shall
be deemed effective for all purposes.
     17. Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, or by facsimile,
as follows:

             
  
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  If to Consultant:   Mark A. Erickson
 
      1135 E. Kistler Court
 
      Highlands Ranch, CO 80126
 
      303.346.0772 (H)
 
       
 
  If to the Company:   Gasco Energy, Inc.
 
      8 Inverness Drive East, Suite 100
 
      Englewood, CO 80112
 
      Fax: (303) 483-0011
 
      Attn: W. King Grant

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

             
  
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            MARK A. ERICKSON
        /s/ Mark A. Erickson       Date: 1/29/10              GASCO ENERGY, INC.
        By:   /s/ W. King Grant         Name:   W. King Grant        Title:  
EVP & CFO       Date:   January 29, 2010     

ACKNOWLEDGMENT

     
STATE OF COLORADO
  )
 
  )
COUNTY OF ARAPAHOE
  )

     This instrument was signed before me by Mark A. Erickson on this 29th day
of January, 2010.

         
 
       
 
  Notary Public in and for    
 
  The State of Colorado    
 
       
 
  My Commission Expires:    

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RE-AFFIRMATION
     Consultant hereby re-affirms this Agreement and the release contained in
this Agreement and, as part of such re-affirmation, acknowledges that the
release in Section 4(a) applies to all Claims and Damages arising on or before
the date Consultant signs this re-affirmation.

            CONSULTANT:

        Mark A. Erickson         Date           

RE-AFFIRMATION
     The Company hereby re-affirms this Agreement and the release contained in
this Agreement and, as part of such re-affirmation, acknowledges that the
release in Section 4(a) applies to all Claims and Damages arising on or before
the date the Company signs this re-affirmation.

            GASCO ENERGY, INC.
        By:           Name:           Title:           Date:        

Exhibit A - 1