Exhibit 10.1

Execution version

EXECUTIVE EMPLOYMENT AGREEMENT

BETWEEN

VAALCO ENERGY, INC.

AND

STEVEN GUIDRY

(EFFECTIVE AS OF OCTOBER 21, 2013)

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TABLE OF CONTENTS

 

Article 1. EMPLOYMENT AND DUTIES

    1   

1.1 Definitions

    1   

1.2 Employment; Effective Date

    1   

1.3 Positions

    1   

1.4 Duties and Services

    2   

1.5 Other Interests

    2   

1.6 Duty of Loyalty

    2   

Article 2. TERM AND TERMINATION OF EMPLOYMENT

    2   

2.1 Term of Employment

    2   

2.2 Notice of Termination

    3   

2.3 Resignations

    3   

Article 3. COMPENSATION AND BENEFITS

    3   

3.1 Base Salary and Signing Bonus

    3   

3.2 Annual Bonuses

    4   

3.3 Nonqualified Stock Option Awards

    4   

3.4 Restricted Stock Awards

    5   

3.5 Equity Awards after the Effective Date

    5   

3.6 Business and Entertainment Expenses

    5   

3.7 Vacation

    5   

3.8 Employee and Executive Benefits Generally

    6   

3.9 Proration

    6   

Article 4. RIGHTS AND PAYMENTS UPON TERMINATION

    6   

4.1 Rights and Payments upon Termination

    6   

4.2 Limitation on Other Severance Benefits

    8   

4.3 Release Agreement

    8   

4.4 Notice of Termination

    9   

4.5 No Mitigation

    9   

Article 5. CONFIDENTIAL INFORMATION AND RESTRICTIVE COVENANTS

    9   

5.1 Access to Confidential Information and Specialized Training

    9   

5.2 Agreement Not to Use or Disclose Confidential Information

    9   

5.3 Duty to Return Company Documents and Property

    10   

5.4 Further Disclosure

    11   

5.5 Inventions

    11   

5.6 Non-Solicitation Restriction

    12   

5.7 Non-Competition Restriction

    12   

5.8 No-Recruitment Restriction

    12   

5.9 Forfeiture of Severance Payment

    13   

 

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5.10 Tolling

    13   

5.11 Reformation

    13   

5.12 No Previous Restrictive Agreements

    14   

5.13 Conflicts of Interest

    14   

5.14 Remedies

    14   

5.15 No Disparaging Comments

    15   

5.16 Company Documents and Property

    15   

Article 6. GENERAL PROVISIONS

    15   

6.1 Matters Relating to Section 409A of the Code

    15   

6.2 Withholdings; Right of Offset

    17   

6.3 Nonalienation

    17   

6.4 Incompetent or Minor Payees

    17   

6.5 Indemnification

    17   

6.6 Successors and Assigns

    18   

6.7 Notice

    18   

6.8 Mandatory Arbitration of Disputes

    19   

6.9 Severability

    20   

6.10 No Third Party Beneficiaries

    20   

6.11 Waiver of Breach

    21   

6.12 Survival of Certain Provisions

    21   

6.13 Entire Agreement; Amendment and Termination

    21   

6.14 Interpretive Matters

    21   

6.15 Governing Law; Jurisdiction

    22   

6.16 Executive Acknowledgment

    22   

6.17 Counterparts

    22   

6.18 Automatic Termination

    22   

Definitions Appendix

    24   

 

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EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”), is made and entered into
on September 19, 2013, but for all purposes shall be effective as of October 21,
2013 (the “Effective Date”), by and between VAALCO Energy, Inc., a Delaware
corporation (hereafter “Company”) and Steven Guidry (hereafter “Executive”). The
Company and Executive may sometimes hereafter be referred to singularly as a
“Party” or collectively as the “Parties.”

W I T N E S S E T H:

WHEREAS, the Company desires to secure the employment services of Executive
subject to the terms and conditions hereafter set forth; and

WHEREAS, Executive is willing to enter into this Agreement upon the terms and
conditions hereafter set forth;

NOW, THEREFORE, in consideration of Executive’s employment with the Company, and
the mutual promises, covenants and obligations contained herein, the Parties
hereby agree as follows:

Article 1.

EMPLOYMENT AND DUTIES

1.1 Definitions. In addition to the terms defined in the text hereof, terms with
initial capital letters as used herein have the meanings assigned to them, for
all purposes of this Agreement, in the Definitions Appendix hereto, unless the
context reasonably requires a broader, narrower or different meaning. The
Definitions Appendix is part of this Agreement and incorporated herein.

1.2 Employment; Effective Date. Effective as of the Effective Date and
continuing for the Employment Period (as defined in Section 2.1), the
Executive’s employment by the Company shall be subject to the terms and
conditions of this Agreement.

1.3 Positions. As of the Effective Date, the Executive will serve as the Chief
Executive Officer of the Company (“CEO”) and as a member of the Board of
Directors of the Company (the “Board of Directors”). The Company shall maintain
the Executive in the position of CEO of the Company, and/or in such other
positions as the Parties mutually may agree, for the Employment Period. In
addition, the Company shall nominate the Executive for re-election to the Board
of Directors as and when his term expires during the Employment Period, unless
otherwise determined by the Board of Directors.

 

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1.4 Duties and Services. The Executive agrees to serve in the positions referred
to in Section 1.3 and to perform diligently and to the best of his abilities the
duties and services appertaining to such offices, as well as such additional
duties and services appropriate to such offices upon which the Parties mutually
may agree from time to time or, with respect to his duties as CEO, that are
assigned to him by the Board of Directors. The Executive’s employment shall also
be subject to the policies maintained and established by the Company from time
to time, as the same may be amended or otherwise modified.

Executive shall at all times use his best efforts to in good faith comply with
United States and foreign laws applicable to Executive’s actions on behalf of
the Company and its Affiliates. Executive understands and agrees that he may be
required to travel extensively at times for purposes of the Company’s business.

1.5 Other Interests. The Executive agrees that, during the Employment Period, he
will devote his primary business time, energy and best efforts to the business
and affairs of the Company and its Affiliates, and not to engage, directly or
indirectly, in any other business or businesses, whether or not similar to that
of the Company or an Affiliate, except with the consent of the Board of
Directors. The foregoing notwithstanding, the Parties recognize and agree that
the Executive may engage in passive personal investments (such as real estate
investments and rental properties) and other civic and charitable activities
(such as continued service on non-profit and/or educational boards) that do not
conflict with the business and affairs of the Company or interfere with the
Executive’s performance of his duties hereunder without the necessity of
obtaining the consent of the Board of Directors; provided, however, Executive
agrees that if the Compensation Committee of the Board of Directors (the
“Compensation Committee”) determines that continued service with one or more
civic or charitable entities is inconsistent with the Executive’s duties
hereunder and gives written notice to the Executive, he will promptly resign
from such position(s).

1.6 Duty of Loyalty. The Executive acknowledges and agrees that the Executive
owes a fiduciary duty of loyalty, fidelity, and allegiance to use his best
efforts to act at all times in the best interests of the Company and its
Affiliates. In keeping with these duties, the Executive shall make full
disclosure to the Company of all business opportunities pertaining to the
Company’s business, and he shall not appropriate for the Executive’s own benefit
any business opportunity concerning the subject matter of such fiduciary
relationship.

Article 2.

TERM AND TERMINATION OF EMPLOYMENT

2.1 Term of Employment. Unless sooner terminated pursuant to other provisions
hereof, the Company agrees to employ the Executive for the period beginning on
the Effective Date and ending on December 31, 2015 (the “Initial Term of
Employment”). Beginning effective as of December 31, 2015 (the “Initial
Extension Date”), the term of employment hereunder shall be extended
automatically for an additional successive one-year period as of such date and
as of each annual anniversary of the Initial Extension Date that occurs while
this Agreement remains in effect so that the remaining term is one year;
provided, however, if, at any time prior to the date that is sixty (60) days
before the Initial Extension Date or any annual anniversary thereof, either
Party gives Notice of Termination to the other Party that no such automatic
extension shall occur, and then the Executive’s employment hereunder shall
terminate on the last day of the then-current calendar year period.

 

 

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In addition, the Company and Executive shall each have the right to give Notice
of Termination at will, with or without cause, at any time, subject, however, to
the terms and conditions of this Agreement regarding the rights and duties of
the Parties upon termination of employment.

The Initial Term of Employment, and any extension of employment hereunder, shall
be referred to herein as a “Term of Employment.” The entire period from the
Effective Date through the date of Executive’s termination of employment with
the Company, for whatever reason, shall be referred to herein as the “Employment
Period.”

2.2 Notice of Termination. If the Company or the Executive desires to terminate
the Executive’s employment hereunder at any time as of, or prior to, expiration
of the Term of Employment, such Party shall do so by giving written Notice of
Termination to the other Party, provided that no such action shall alter or
amend any other provisions hereof or rights arising hereunder. No further
renewals of the Term of Employment hereunder shall occur pursuant to Section 2.1
after the giving of such Notice of Termination.

2.3 Resignations. Notwithstanding any other provision of this Agreement, upon
the termination of the Executive’s employment hereunder for any reason, unless
otherwise requested by the Compensation Committee, Executive shall immediately
resign from the Board of Directors and from all officer positions and all boards
of directors of any Affiliates of which he may be a member. The Executive hereby
agrees to execute any and all documentation of such resignations upon request by
the Company, but he shall be treated for all purposes as having so resigned upon
termination of his employment, regardless of when or whether he executes any
such documentation.

Article 3.

COMPENSATION AND BENEFITS

3.1 Base Salary and Signing Bonus.

(a) During the Employment Period, the Executive shall receive a minimum annual
base salary of $500,000, which shall be prorated for any period of less than 12
months (the “Base Salary”). The Compensation Committee shall review the
Executive’s Base Salary on an annual basis and may, in its sole discretion,
increase, but not decrease, the Base Salary, and references in this Agreement to
“Base Salary” shall refer to annual Base Salary as so increased. The Base Salary
shall be paid in equal installments in accordance with the Company’s standard
policy regarding payment of compensation to executives, but no less frequently
than monthly.

 

 

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(b) Within thirty days following the Effective Date, the Company will pay to the
Executive a cash bonus of $200,000.00.

3.2 Annual Bonuses. For the 2013 calendar year and subsequent calendar years
during the Employment Period, the Executive shall be eligible to receive an
annual cash bonus (the “Annual Bonus”) under the Company’s annual incentive cash
bonus plan for executives or any successor incentive cash bonus plan (the “Bonus
Plan”), in an amount to be determined by the Compensation Committee, based on
performance goals established by the Compensation Committee, in its discretion,
pursuant to the terms of the Bonus Plan, and with a target percentage (the
“Incentive Target Percentage”) of 100% of the Executive’s annual base salary as
in effect at the beginning of the calendar year and may scale up or down based
on achievement of personal and corporate goals established by the Compensation
Committee. For the 2013 calendar year, the Annual Bonus shall be applied on a
prorata basis by the Compensation Committee.

In the event that the Employment Period ends before the end of the calendar
year, Executive shall be entitled to a prorata portion of the Annual Bonus for
that year (based on the number of days in which he was employed during the year
divided by 365) as determined based on satisfaction of the Incentive Target
Percentage for that period on a prorata basis as determined by the Compensation
Committee, unless Executive was terminated for Cause or resigns without Good
Reason in which event he shall not be entitled to any Annual Bonus for that
year.

3.3 Nonqualified Stock Option Awards. On the Effective Date of this Agreement,
Executive shall be awarded the following grants of nonqualified stock options
(“Options”) under the Company’s 2012 Long-Term Incentive Plan, as amended
(“LTIP”):

(a) Options to purchase 600,000 shares of the Company’s common stock (the
“Common Stock”) with the terms described in this Section 3.3;

(b) 200,000 of the Options will have an exercise price per share of the average
of the high and low trading prices of the Common Stock on the New York Stock
Exchange (“Stock Price”) on the Effective Date (“Tranche 1”); 200,000 of the
Options will have an exercise price per share of $7.50 (“Tranche 2”); and
200,000 of the Options will have an exercise price per share of $9.00 (“Tranche
3”); provided that, for each Tranche, the Stock Price on the Effective Date
cannot exceed the exercise price designated above;

(c) all 600,000 Options shall have a term of five years and be subject to the
other terms and conditions of a separate stock option award agreement for each
Tranche entered into between the Company and Executive (the “Stock Option
Agreement”) that the parties must first execute before the Option grant will be
effective;

 

 

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(d) 20% of the Options granted in each of Tranche 1, Tranche 2 and Tranche 3
shall vest on each annual anniversary of the Effective Date until fully vested;

(e) all Options shall automatically fully vest upon a Change of Control (as
defined in the LTIP); and

(f) all unvested Options shall terminate on the 5-year expiration date, subject
to early termination as provided in the LTIP and the Stock Option Agreement.

3.4 Restricted Stock Awards. On the Effective Date, Executive shall be granted a
number of restricted shares of the Common Stock equal to 100,000 shares, subject
to the following:

(a) certificates representing the restricted shares of common stock shall be
issued in the name of the Executive, subject to (1) forfeiture if the
Executive’s employment is terminated prior to vesting and (2) the other terms
and conditions of a separate restricted stock award agreement entered into
between the Company and Executive (the “RSA Agreement”) that the parties must
first execute before such grant of restricted shares will be effective;

(b) the restricted shares shall vest 20% on each annual anniversary of the
Effective Date until fully vested; and

(c) all restricted shares shall automatically vest upon a Change of Control as
provided in the LTIP and the RSA Agreement.

3.5 Equity Awards after the Effective Date. During the Employment Period, the
Executive shall be eligible for stock options or other incentive awards in
accordance with normal competitive pay practices, on a basis no less favorable
than the process and approach used for the Company’s other senior executives, as
determined by the Compensation Committee in its discretion.

3.6 Business and Entertainment Expenses. Subject to the Company’s standard
policies and procedures with respect to expense reimbursement as applied to its
executives generally, the Company shall reimburse the Executive for, or pay on
behalf of the Executive, the reasonable and appropriate expenses incurred by the
Executive for business related purposes, including dues and fees to industry and
professional organizations and costs of entertainment and business development.

3.7 Vacation. During each full year of the Term of Employment, the Executive
shall be entitled to four (4) weeks of paid vacation in accordance with the
Company’s vacation policy, as in effect from time to time. For the initial
period from the Effective Date through December 31, 2013, Executive shall be
entitled to one (1) week of paid vacation in accordance with such policy.

 

 

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3.8 Employee and Executive Benefits Generally. During the Employment Period, the
Executive shall be eligible for participation in all employee and executive
benefits, including without limitation, qualified and supplemental retirement,
savings and deferred compensation plans, medical and life insurance plans, and
other fringe benefits, as in effect from time to time for the Company’s most
senior executives; provided, however, that the Executive acknowledges and agrees
that he shall not be a participant in, and he hereby waives any right to
participate in, any severance plan (as the same may be amended from time to
time) that generally covers the employees of the Company or its Affiliates such
as to preclude duplicative severance benefits with those provided to Executive
under the terms of this Agreement.

3.9 Proration. Any payments or benefits payable to Executive hereunder in
respect of any calendar year during which Executive is employed by the Company
for less than the entire year, unless otherwise provided in the applicable plan
or arrangement, shall be prorated in accordance with the number of days in such
calendar year during which he is so employed.

Article 4.

RIGHTS AND PAYMENTS UPON TERMINATION.

4.1 Rights and Payments upon Termination. Unless this Agreement terminates as
provided in Section 6.18, Executive’s right to compensation and benefits for
periods after the date on which his employment terminates with the Company and
all Affiliates (the “Termination Date”) shall be determined in accordance with
this Article 4, as follows:

(a) Minimum Payments. Executive shall be entitled to the following minimum
payments under this Section 4.1(a), in addition to any other payments or
benefits to which he is entitled to receive under the terms of this Agreement or
any employee benefit plan or program:

(i) his accrued and unpaid Base Salary through the Termination Date;

(ii) his accrued and unused vacation days through the Termination Date; and

(iii) reimbursement of his reasonable business expenses that were incurred but
unpaid as of the Termination Date.

Such salary and accrued vacation days shall be paid to Executive within five
(5) Business Days following the Termination Date in a cash lump sum less
applicable withholdings. Business expenses shall be reimbursed in accordance
with the Company’s normal policy and procedures.

 

 

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(b) Other Severance Payments. In the event that during the Term of Employment
(i) Executive’s employment is involuntarily terminated by the Company except due
to a No Severance Benefits Event, (ii) Executive’s employment is terminated due
to his death or Disability, or (iii) Executive terminates his own employment
hereunder for Good Reason, then in any such event under clause (i), (ii) or
(iii), the following severance benefits shall be provided to Executive hereunder
or, in the event of his death before receiving all such benefits, to his
Designated Beneficiary following his death:

(i) Additional Payment. The Company shall pay to Executive as additional
compensation (the “Additional Payment”), an amount equal to one (1) times the
sum of:

(A) Executive’s Base Salary as in effect at the Termination Date; plus

(B) an amount equal to the greater of (i) Executive’s highest Annual Bonus paid
or payable to Executive by the Company for any of the two fiscal years of the
Company immediately preceding the fiscal year in which the Termination Date
occurs or (ii) Executive’s Annual Bonus for the full year in which the
Termination Date occurs; provided however, in the event that the Termination
Date occurs before the end of a calendar year, Executive shall be entitled to a
prorata portion of the greater of clauses (i) and (ii), as applicable (based on
the number of days in which he was employed during the year divided by 365).

The Company shall make the Additional Payment to Executive in twenty-four equal
bi-monthly payments following the Termination Date in accordance with the
release requirements under Section 4.3 and the Company’s standard payroll
procedures, but shall delay payments pursuant to Section 6.1 if required to
comply with the requirements of Section 409A.

(ii) Continued Group Health Plan Coverage. The Company and its Affiliates shall
maintain continued group health plan coverage following the Termination Date
under any of the Company’s group health plans that covered Executive immediately
before the Termination Date which are subject to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”) (as codified in Code
Section 4980B and Part 6 of Subtitle B of Title I of ERISA), for Executive and
his eligible spouse and other dependents (together, “Dependents”), for a period
of one (1) year following the Termination Date and at no cost to Executive and
his Dependents.

After the Termination Date, Executive, and his Dependents, if any, must first
elect and maintain any COBRA continuation coverage under such plan or that they
are entitled to receive under the terms of such plan and COBRA law. However,
Executive and his Dependents shall not be required to make any

 

 

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premium payments for the portion of any such COBRA coverage period that does not
extend beyond the maximum one-year period referenced above. In all other
respects, Executive and his Dependents shall be treated the same as other COBRA
qualified beneficiaries under the terms of such plan and the requirements of
COBRA law during the period while COBRA coverage remains in effect.

The continuation coverage described above shall be provided in a manner that is
intended to satisfy an exception to Code Section 409A, and therefore not be
treated as an arrangement providing for nonqualified deferred compensation that
is subject to taxation under Code Section 409A.

4.2 Limitation on Other Severance Benefits.

(a) Limitation on Other Severance Payments. For purposes of clarity, in the
event that (i) Executive voluntarily resigns or otherwise voluntarily terminates
his own employment during the Term of Employment, except for (A) Good Reason or
(B) due to his death or Disability, or (ii) Executive’s employment is terminated
due to a No Severance Benefits Event, then, in either such event under clause
(i) or (ii), the Company shall have no obligation to provide the severance
benefits described in subsections (i) and (ii) (above) of Section 4.1(b), except
to offer COBRA coverage (as required by COBRA law) but not at the discounted
rate as described in Section 4.1(b)(ii). Executive shall still be entitled to
the severance benefits provided under Section 4.1(a).

(b) No Duplication of Severance Benefits. Notwithstanding Section 4.1, if
Executive receives or is entitled to receive any severance benefit under any
change of control policy, or any agreement with, or plan or policy of, the
Company or any Affiliate, the amount payable under Section 4.1(b) to or on
behalf of Executive shall be offset by such other severance benefits received by
Executive, and Executive shall thus be entitled to receive the greater of such
other severance benefits or the benefits provided under this Agreement, and not
any duplicate benefits. The severance payments provided under this Agreement
shall also supersede and replace any duplicative severance benefits under any
severance pay plan or program that the Company or any Affiliate maintains for
employees generally and that otherwise may cover Executive.

4.3 Release Agreement. Notwithstanding any provision of this Agreement to the
contrary, in order to receive the severance benefits provided in Section 4.1(b)
(the “Termination Benefits”), Executive must first execute the Release (on a
form provided by the Company) whereby Executive agrees to release and waive, in
return for such severance benefits, any claims that he may have against the
Company including, without limitation, for unlawful discrimination or
retaliation (e.g., Title VII of the U.S. Civil Rights Act); provided, however,
the Release shall not release any claim by or on behalf of Executive for any
payment or benefit that is due and payable under the terms of this Agreement or
any employee benefit plan prior to the receipt thereof.

 

 

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Executive must return the executed Release within sixty (60) days of the date of
his receipt of the Release on or after the Termination Date. The Company shall
also execute the Release. No Termination Benefits shall be payable or provided
by the Company unless and until the Release has been executed by Executive, has
not been revoked, and is no longer subject to revocation by Executive. The
Termination Benefits shall be paid or provided by the Company at the end of such
60-day period, but only if the Release has been properly executed by Executive
and is not revocable at that time, regardless of the date on which the Release
was actually executed by Executive. If the conditions set forth in the preceding
sentence are not satisfied by Executive, the Termination Benefits hereunder
shall be forfeited hereunder.

4.4 Notice of Termination. Any termination of employment by the Company or
Executive shall be communicated by Notice of Termination to the other Party.

4.5 No Mitigation. Executive shall not be required to mitigate the amount of any
payment or other benefits provided under this Agreement by seeking other
employment.

Article 5.

CONFIDENTIAL INFORMATION AND

RESTRICTIVE COVENANTS

5.1 Access to Confidential Information and Specialized Training. In connection
with his employment and continuing on an ongoing basis during the Employment
Period, the Company and its Affiliates will give Executive access to
Confidential Information, which Executive did not have access to or knowledge of
before the execution of this Agreement. Executive acknowledges and agrees that
all Confidential Information is confidential and a valuable, special and unique
asset of the Company that gives the Company an advantage over its actual and
potential, current and future competitors. Executive further acknowledges and
agrees that Executive owes the Company a fiduciary duty to preserve and protect
all Confidential Information from unauthorized disclosure or unauthorized use,
that certain Confidential Information constitutes “trade secrets” under
applicable laws, and that unauthorized disclosure or unauthorized use of the
Confidential Information would irreparably injure the Company or any Affiliate.

The Company also agrees to provide Executive with Specialized Training, which
Executive does not have access to or knowledge of before the execution of this
Agreement and continuing on an ongoing basis during his employment.

5.2 Agreement Not to Use or Disclose Confidential Information. Both during the
term of Executive’s employment and after his termination of employment for any
reason (including wrongful termination), Executive shall hold all Confidential
Information in strict confidence, and shall not use any Confidential Information
except for the benefit of the Company or its Affiliates, in accordance with the
duties assigned to Executive. Executive shall not, at any time (either during or
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Confidential Information to any Person (except other Persons who have a need to
know the information in connection with the performance of services for the
Company or an Affiliate), or copy, reproduce, modify, decompile or reverse
engineer any Confidential Information, or remove any Confidential Information
from the Company’s premises, without the prior written consent of the
Compensation Committee, or permit any other Person to do so. Executive shall
take reasonable precautions to protect the physical security of all documents
and other material containing Confidential Information (regardless of the medium
on which the Confidential Information is stored). This agreement and covenant
applies to all Confidential Information, whether now known or later to become
known to Executive.

The Executive shall hold in a fiduciary capacity for the benefit of the Company
all Confidential Information relating to the Company or any of its Affiliates,
and their respective businesses, that has been obtained by the Executive during
the Executive’s employment by the Company and which is not public knowledge
(other than by acts of the Executive or representatives of the Executive in
violation of this Agreement).

Following the termination of the Executive’s employment with the Company for any
reason, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such Confidential Information to any Person other than the Company
and those designated by it.

The Company has and will disclose to the Executive, or place the Executive in a
position to have access to or develop, trade secrets and Confidential
Information of the Company or its Affiliates; and/or has and will place the
Executive in a position to develop business goodwill on behalf of the Company or
its Affiliates; and/or has and will entrust the Executive with business
opportunities of the Company or its Affiliates. As part of the consideration for
the compensation and benefits to be paid to the Executive hereunder; to protect
the trade secrets and Confidential Information of the Company and its Affiliates
that have been and will in the future be disclosed or entrusted to the
Executive, the business goodwill of the Company and its Affiliates that has been
and will in the future be developed in the Executive, or the business
opportunities that have been and will in the future be disclosed or entrusted to
the Executive; and as an additional incentive for the Company to enter into this
Agreement, the Company and the Executive agree to the noncompetition and the
nonsolicitation obligations set forth in this Agreement.

5.3 Duty to Return Company Documents and Property. Upon the termination of
Executive’s employment with the Company and its Affiliates, for whatever reason,
Executive shall immediately return and deliver to the Company any and all
papers, books, records, documents, memoranda and manuals, e-mail, electronic or
magnetic recordings or data, including all copies thereof, belonging to the
Company or an Affiliate or relating to their businesses, in Executive’s
possession or under his control, and regardless of, whether prepared by
Executive or others. If at any time after the Employment Period, Executive
determines that he has any Confidential Information in his possession or under
his control, Executive shall immediately return to the Company all such
Confidential Information, including all copies (including electronic versions)
and portions thereof.

 

 

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Within one (1) day after the end of the Employment Period for any reason, the
Executive shall return to Company all Confidential Information which is in his
possession, custody or control.

5.4 Further Disclosure. Executive shall promptly disclose to the Company all
ideas, inventions, computer programs, and discoveries, whether or not patentable
or copyrightable, which he may conceive or make, alone or with others, during
the Employment Period, whether or not during working hours, and which directly
or indirectly:

(a) relate to matters within the scope, field, duties or responsibility of
Executive’s employment with the Company; or

(b) are based on any knowledge of the actual or anticipated business or interest
of the Company; or

(c) are aided by the use of time, materials, facilities or information of the
Company.

Executive assigns to the Company, without further compensation, all rights,
titles and interest in all such ideas, inventions, computer programs and
discoveries in all countries of the world. Executive recognizes that all ideas,
inventions, computer programs and discoveries of the type described above,
conceived or made by Executive alone or with others within six (6) months after
termination of employment (voluntary or otherwise), are likely to have been
conceived in significant part either while employed by the Company or as a
direct result of knowledge Executive had of Confidential Information.
Accordingly, Executive agrees that such ideas, inventions or discoveries shall
be presumed to have been conceived during his employment with the Company,
unless and until the contrary is clearly established by Executive.

5.5 Inventions. Any and all writings, computer software, inventions,
improvements, processes, procedures and/or techniques which Executive may make,
conceive, discover, or develop, either solely or jointly with any other Person,
at any time during the Employment Period, whether at the request or upon the
suggestion of the Company or otherwise, which relate to or are useful in
connection with any business now or hereafter carried on or contemplated by the
Company or an Affiliate, including developments or expansions of its present
fields of operations, shall be the sole and exclusive property of the Company.
Executive shall take all actions necessary so that the Company can prepare and
present applications for copyright or Letters Patent therefor, and can secure
such copyright or Letters Patent wherever possible, as well as reissue renewals,
and extensions thereof, and can obtain the record title to such copyright or
patents. Executive shall not be entitled to any additional or special
compensation or reimbursement regarding any such writings, computer software,
inventions, improvements,

 

 

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processes, procedures and techniques. Executive acknowledges that the Company
from time to time may have agreements with other Persons which impose
obligations or restrictions on the Company or an Affiliate regarding inventions
made during the course of work thereunder or regarding the confidential nature
of such work. Executive agrees to be bound by all such obligations and
restrictions and to take all reasonable action which is necessary to discharge
the obligations of the Company or an Affiliate with respect thereto.

5.6 Non-Solicitation Restriction. To protect the Confidential Information, and
in the event of Executive’s termination of employment for any reason, it is
necessary to enter into the following restrictive covenants which are ancillary
to the enforceable promises between the Company and Executive in this Agreement.
Executive hereby covenants and agrees that he will not, directly or indirectly,
either individually or as a principal, owner, partner, agent, consultant,
contractor, employee, or as a director or officer of any corporation or other
association, or in any other manner or capacity whatsoever, except on behalf of
the Company or an Affiliate, solicit business, or attempt to solicit business,
in products or services competitive with any products or services provided by
the Company or any Affiliate, from the Company’s or Affiliate’s partners or
clients (or any prospective partner or client) as of the Termination Date, or
any other Person with whom the Company or Affiliate did business, or had a
business relationship with, within the one (1) year period immediately preceding
the Termination Date.

5.7 Non-Competition Restriction. The Executive shall not, directly or indirectly
for himself or for any other Person, in any geographic area or market where
(a) the Company or any Affiliate is conducting any business or actively
reviewing prospects or (b) the Company or an Affiliate has conducted any
business during the previous 12-month period:

(i) engage in any business competitive with the oil and gas exploration and
production business activity conducted by the Company and its Affiliates (the
“Business”); or

(ii) render advice or services to, or otherwise assist, any Person who is
engaged, directly or indirectly, in any business that is competitive with the
Business.

For these purposes, if less than five percent (5%) of the revenues of any
business are derived from activities competitive with the Business, then the
first business shall not be considered to be competitive with the Business.
These noncompetition obligations shall apply (a) during the period that the
Executive is employed by the Company and (b) for a period of one (1) year after
the Termination Date for whatever reason.

5.8 No-Recruitment Restriction. Executive agrees that during the Employment
Period, and for a period of two (2) years from the end of the Employment Period
for whatever reason, Executive will not, directly or indirectly, or by acting in
concert with others, solicit or influence any employee of the Company or any
Affiliate, or any other service provider thereto, to terminate or reduce such
Person’s employment or other relationship with the Company or any Affiliate.

 

 

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The Executive shall not, directly or indirectly, for the Executive or for any
other Person, in any geographic area or market where the Company or any of its
Affiliates is conducting any business or has during the previous twelve
(12) months conducted such business, induce any employee of the Company of any
of its Affiliates to terminate his or her employment with the Company or such
Affiliates, or hire or assist in the hiring of any such employee by any Person
not affiliated with the Company, unless such employee has terminated employment
with the Company and its Affiliates for at least thirty (30) days before such
initial solicitation. These nonsoliciation obligations shall apply during the
period that the Executive is employed by the Company and during the two-year
period commencing on the Termination Date. Notwithstanding the foregoing, the
provisions of this Section 5.8 shall not restrict the ability of the Company or
its Affiliates to take any action with respect to the employment or the
termination of employment of any of its employees, or for the Executive to
participate in his capacity as an officer of the Company.

5.9 Forfeiture of Severance Payment. A “Forfeiture Event” for purposes of this
Agreement will occur if (a) Executive violates any of the covenants or
restrictions contained in Sections 5.1 through 5.8, or (b) the Company learns of
facts within one (1) year following Executive’s Termination Date that, if such
facts had been known by the Company as of the Termination Date, would have
resulted in the termination of Executive’s employment hereunder for Cause, as
determined by the Compensation Committee. In the event of a Forfeiture Event,
within thirty (30) days of being notified by the Company in writing of the
Forfeiture Event, Executive shall pay to the Company the full the amount of the
Additional Payment received by Executive pursuant to Section 4.1(b), net of any
tax withholdings that were previously withheld from such payment. Executive
specifically recognizes and affirms that this Section 5.9 is a material part of
this Agreement without which the Company would not have entered into this
Agreement. Executive further covenants and agrees that should all or any part or
application of this Section 5.9 be held or found invalid or unenforceable for
any reason whatsoever by a court of competent jurisdiction or arbitrator in an
action between Executive and the Company, then Executive shall promptly pay to
the Company the amount of the Additional Payment, or such lesser amount as shall
be determined to be the maximum reasonable and enforceable amount by a court or
arbitrator, as applicable.

5.10 Tolling. If Executive violates any of the restrictions contained in
Sections 5.1 through 5.8, the restrictive period will be suspended and will not
run in favor of Executive from the time of the commencement of any violation
until the time when Executive cures the violation to the Company’s reasonable
satisfaction.

5.11 Reformation. It is expressly understood and agreed that the Company and the
Executive consider the restrictions contained in this Article 5 to be reasonable
and necessary to protect the Confidential Information and reasonable business
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Affiliates. Nevertheless, if any of the aforesaid restrictions are found by a
court having jurisdiction to be unreasonable, or overly broad as to geographic
area or time, or otherwise unenforceable, the Parties intend for the
restrictions therein set forth to be modified by such court or arbitrator so as
to be reasonable and enforceable and, as so modified, to be fully enforced in
the geographic area and for the time period to the full extent permitted by law.

5.12 No Previous Restrictive Agreements. Executive represents that, except for
agreements he signed with Marathon Oil Corporation (copies of which have been
provided to the Company), or as otherwise disclosed in writing to the Company,
he is not bound by the terms of any agreement with any previous employer or
other Person to (a) refrain from using or disclosing any trade secret or
confidential or proprietary information in the course of Executive’s employment
by the Company or (b) refrain from competing, directly or indirectly, with the
business of such previous employer or any other Person. Executive further
represents that his performance of all the terms of this Agreement and his work
duties for the Company does not, and will not, breach any agreement to keep in
confidence proprietary information, knowledge or data acquired by Executive in
confidence or in trust prior to Executive’s employment with the Company, and
Executive will not disclose to the Company or induce the Company to use any
confidential or proprietary information or material belonging to any previous
employer or other Person.

5.13 Conflicts of Interest. In keeping with his fiduciary duties to Company,
Executive hereby agrees that he shall not become involved in a conflict of
interest, or upon discovery thereof, allow such a conflict to continue at any
time during the Employment Period. Moreover, Executive agrees that he shall
abide by the Company’s Code of Conduct, as it may be amended from time to time,
and immediately disclose to the Board of Directors any known facts which might
involve a conflict of interest of which the Board of Directors was not aware.

5.14 Remedies. Executive acknowledges that the restrictions contained in this
Article 5, in view of the nature of the Company’s business, are reasonable and
necessary to protect the Company’s legitimate business interests, and that any
violation of this Agreement would result in irreparable injury to the Company.
In the event of a breach or a threatened breach by Executive of any provision of
Article 5, the Company shall be entitled to a temporary restraining order and
injunctive relief restraining Executive from the commission of any breach, and
to recover the Company’s attorneys’ fees, costs and expenses related to the
breach or threatened breach. Nothing contained in this Agreement shall be
construed as prohibiting the Company from pursuing any other remedies available
to it for any such breach or threatened breach, including, without limitation,
the recovery of money damages, attorneys’ fees, and costs. These covenants and
disclosures shall each be construed as independent of any other provisions in
this Agreement, and the existence of any claim or cause of action by Executive
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of such covenants and
agreements.

 

 

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The Executive acknowledges that money damages would not be sufficient remedy for
any breach of Article 5 by the Executive, and the Company shall also be entitled
to specific performance as an available remedy for any such breach or any
threatened breach. The remedies provided in this Section 5.14 shall not be
deemed the exclusive remedies for a breach of Article 5, but shall be in
addition to all remedies available at law or in equity.

5.15 No Disparaging Comments. Executive and the Company shall refrain from any
criticisms or disparaging comments about each other or in any way relating to
Executive’s employment or separation from employment; provided, however, that
nothing in this Agreement shall apply to or restrict in any way the
communication of information by the Company or any of its Affiliates or by the
Executive to any state or federal law enforcement agency. The Company and
Executive will not be in breach of this covenant solely by reason of testimony
or disclosure that is required for compliance with applicable law or regulation
or by compulsion of law. A violation or threatened violation of this prohibition
may be enjoined by a court of competent jurisdiction. The rights under this
provision are in addition to any and all rights and remedies otherwise afforded
by law to the Parties.

5.16 Company Documents and Property. All writings, records, and other documents
and things comprising, containing, describing, discussing, explaining, or
evidencing any Confidential Information, and all equipment, components, parts,
tools, and the like in Executive’s custody, possession or control that have been
obtained or prepared in the course of Executive’s employment with the Company
shall be the exclusive property of the Company, shall not be copied and/or
removed from the premises of the Company, except in pursuit of the business of
the Company, and shall be delivered to the Company, without Executive retaining
any copies, upon notification of the termination of Executive’s employment or at
any other time requested by the Company. The Company shall have the right to
retain, access, and inspect all property of any kind in the office or premises
of the Company.

Article 6.

GENERAL PROVISIONS

6.1 Matters Relating to Section 409A of the Code. Notwithstanding any provision
in this Agreement to the contrary, if the payment of any compensation or benefit
provided hereunder (including, without limitation, any Termination Benefits)
would be subject to additional taxes and interest under Section 409A of the Code
(“Section 409A”), then the following provisions shall apply:

(a) Notwithstanding anything to the contrary in this Agreement, with respect to
any amounts payable to Executive under this Agreement in connection with a
termination of Executive’s employment that would be considered “non-qualified
deferred compensation” that is subject to, and not exempt under, Section 409A, a
termination of employment shall not be considered to have occurred under this
Agreement unless and until such termination constitutes Executive’s “separation
from service” with the Company and its Affiliates, as such term is defined under
Section 409A (“Separation from Service”).

 

 

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(b) Notwithstanding anything to the contrary in this Agreement, to the maximum
extent permitted by applicable law, the severance payment payable to Executive
pursuant to this Agreement shall be made in reliance upon Treasury Regulation
Section 1.409A-1(b)(9)(iii) (relating to separation pay plans) or Treasury
Regulation Section 1.409A-1(b)(4) (relating to short-term deferrals). However,
to the extent any such payments are treated as “non-qualified deferred
compensation” subject to Section 409A, and if Executive is deemed at the time of
his Separation from Service to be a “specified employee” for purposes of
Section 409A, then to the extent delayed payment of the Termination Benefits to
which Executive is entitled under this Agreement is required in order to avoid a
prohibited payment under Section 409A, such severance payment shall not be made
to Executive before the earlier of (1) the expiration of the six-month period
measured from the date Executive’s Separation from Service or (2) the date of
Executive’s death. Upon the earlier of such dates, all payments deferred
pursuant to this Section 6.1 shall be paid in a lump sum to Executive (or to
Executive’s Designated Beneficiary in the event of his death).

(c) The determination of whether Executive is a “specified employee” for
purposes of Section 409A at the time of his Separation from Service shall be
made by the Company in accordance with the requirements of Section 409A.

(d) Notwithstanding anything to the contrary in this Agreement or in any
separate Company policy with respect to such payments, any in-kind benefits and
reimbursements provided under this Agreement during any tax year of Executive
shall not affect in-kind benefits or reimbursements to be provided in any other
tax year of Executive and are not subject to liquidation or exchange for another
benefit. Reimbursement requests must be timely submitted by Executive, and if
timely submitted, reimbursement payments shall be made to Executive as soon as
administratively practicable following such submission in accordance with the
Company’s policy regarding reimbursements, but in no event later than the last
day of Executive’s taxable year following the taxable year in which the expense
was incurred. This Section 6.1 shall only apply to in-kind benefits and
reimbursements that would result in taxable compensation income to Executive.

(e) This Agreement is intended to be written, administered, interpreted and
construed in a manner such that no payment under this Agreement becomes subject
to (1) the gross income inclusion under Section 409A or (2) the interest and
additional tax under Section 409A (collectively, “Section 409A Penalties”),
including, where appropriate, the construction of defined terms to have meanings
that would not cause the imposition of the Section 409A Penalties. For purposes
of Section 409A, each payment that Executive may be eligible to receive under
this Agreement shall be treated as a separate and distinct payment and shall not
collectively be treated as a single payment.

 

 

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(f) This Agreement is intended to comply with Section 409A and any ambiguous
provision will be construed in a manner that is compliant with, or exempt from,
the application of Section 409A. If any provision of this Agreement would cause
Executive to incur the Section 409A Penalties, the Company may, after consulting
with Executive, reform such provision to comply with Section 409A or to preclude
taxation thereunder, to the full extent permitted under Section 409A.

6.2 Withholdings; Right of Offset. The Company may withhold and deduct from any
benefits and payments made or to be made pursuant to this Agreement (a) all
federal, state, local, foreign, and other taxes as may be required pursuant to
any law or governmental regulation or ruling, (b) all other normal employee
deductions made with respect to Company’s employees generally, and (c) any
advances made to Executive and owed to Company.

6.3 Nonalienation. The right to receive payments under this Agreement shall not
be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge or encumbrance by Executive, his dependents or beneficiaries,
or to any other Person who is or may become entitled to receive such payments
hereunder. The right to receive payments hereunder shall not be subject to or
liable for the debts, contracts, liabilities, engagements or torts of any Person
who is or may become entitled to receive such payments, nor may the same be
subject to attachment or seizure by any creditor of such Person under any
circumstances, and any such attempted attachment or seizure shall be void and of
no force and effect.

6.4 Incompetent or Minor Payees. Should the Compensation Committee determine, in
its discretion, that any Person to whom any payment is payable under this
Agreement has been determined to be legally incompetent or is a minor, any
payment due hereunder, notwithstanding any other provision of this Agreement to
the contrary, may be made in any one or more of the following ways: (a) directly
to such Person; (b) to the legal guardian or other duly appointed personal
representative of the individual or the estate of such Person; or (c) to such
adult or adults as have, in the good faith knowledge of the Compensation
Committee, assumed custody and support of such Person; and any payment so made
shall constitute full and complete discharge of any liability under this
Agreement in respect to the amount paid.

6.5 Indemnification. The Company agrees to indemnify the Executive with respect
to any acts or omissions he may commit during the period during which he is an
officer, director and/or employee of the Company or any Affiliate, and to
provide him with coverage under any directors’ and officers’ liability insurance
policies, in each case on terms not less favorable than those provided to any of
its other directors and officers as in effect from time to time.

 

 

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6.6 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Company and any successor of the Company (whether direct or
indirect, by purchase, merger, consolidation or otherwise), and this Agreement
shall inure to the benefit of and be enforceable by Executive’s legal
representatives. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, “Company” shall mean the Company as
previously defined and any successor by operation of law or otherwise, as well
as any successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement. Except as provided in the preceding provisions
of this Section 6.6, this Agreement, and the rights and obligations of the
Parties hereunder, are personal in nature and neither this Agreement, nor any
right, benefit, or obligation of either Party hereto, shall be subject to
voluntary or involuntary assignment, alienation or transfer, whether by
operation of law or otherwise, without the written consent of the other Party.

6.7 Notice. Each Notice or other communication required or permitted under this
Agreement shall be in writing and transmitted, delivered, or sent by personal
delivery, prepaid courier or messenger service (whether overnight or same-day),
or prepaid certified United States mail (with return receipt requested),
addressed (in any case) to the other Party at the address for that Party set
forth below or under that Party’s signature on this Agreement, or at such other
address as the recipient has designated by Notice to the other Party.

 

To the Company:                   

VAALCO Energy, Inc.

4600 Post Oak Place

Suite 309

Houston, Texas 77027

Attention: Robert L. Gerry, Chairman of the Board of Directors

e-mail cc: rgerry@vaalco.com

To Executive:   

Steven Guidry

 

(as set forth below his signature)

Each Notice or communication so transmitted, delivered, or sent (a) in person,
by courier or messenger service, or by certified United States mail (return
receipt requested) shall be deemed given, received, and effective on the date
delivered to or refused by the intended recipient (with the return receipt, or
the equivalent record of the courier or messenger, being deemed conclusive
evidence of delivery or refusal), or (b) by telecopy or facsimile shall be
deemed given, received, and effective on the date of actual receipt (with the
confirmation of transmission being deemed conclusive evidence of receipt, except
where the intended recipient has promptly Notified the other Party that the
transmission is illegible). Nevertheless, if the date of delivery or
transmission is not a Business Day, or if the delivery or transmission is after
4:00 p.m. (local time at the recipient) on a Business Day, the Notice or other
communication shall be deemed given, received, and effective on the next
Business Day.

 

 

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6.8 Mandatory Arbitration of Disputes. Except as provided in subsection (h) of
this Section 6.8, any Dispute must be resolved by binding arbitration in
accordance with the following:

(a) Either Party may begin arbitration by filing a demand for arbitration in
accordance with the Arbitration Rules and concurrently Notifying the other Party
of that demand. If the Parties are unable to agree upon the choice of an
arbitrator within twenty (20) Business Days after the demand for arbitration was
filed (and do not agree to an extension of that 20-day period), either Party may
request the Houston, Texas, office of the American Arbitration Association
(“AAA”) to appoint the arbitrator in accordance with the Arbitration Rules. The
arbitrator, as so appointed hereunder, is referred to herein as the
“Arbitrator”.

(b) The arbitration shall be conducted in Houston, Texas, at a place and time
agreed upon by the Parties with the Arbitrator, or if the Parties cannot agree,
as designated by the Arbitrator. The Arbitrator may, however, call and conduct
hearings and meetings at such other places as the Parties may mutually agree or
as the Arbitrator may, on the motion of one Party, determine to be necessary to
obtain significant testimony or evidence.

(c) The Arbitrator may authorize any and all forms of discovery upon a Party’s
showing of need that the requested discovery is likely to lead to material
evidence needed to resolve the Dispute and is not excessive in scope, timing, or
cost.

(d) The arbitration shall be subject to the Federal Arbitration Act and
conducted in accordance with the Arbitration Rules to the extent that they do
not conflict with this Section 6.8. The Parties and the Arbitrator may, however,
agree to vary to provisions of this Section 6.8 or the matters otherwise
governed by the Arbitration Rules.

(e) The arbitration hearing shall be held within sixty (60) days after the
appointment of the Arbitrator. The Arbitrator’s final decision or award shall be
made within thirty (30) days after the hearing. That final decision or award by
the Arbitrator shall be deemed issued at the place of arbitration. The
Arbitrator’s final decision or award shall be based on this Agreement and
applicable law.

(f) The Arbitrator’s final decision or award may include injunctive relief in
response to any actual or impending breach of this Agreement or any other actual
or impending action or omission by a Party in connection with this Agreement.

(g) The Arbitrator’s final decision or award shall be final and binding upon the
Parties, and judgment upon that decision or award may be entered in any court
having jurisdiction. The Parties shall have any appeal rights afforded to them
under the Federal Arbitration Act.

 

 

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(h) Nothing in this Section 6.8 shall limit the right of either Party to apply
to a court having jurisdiction to: (1) enforce the agreement to arbitrate in
accordance with this Section 6.8; (2) seek provisional or temporary injunctive
relief in response to an actual or impending breach of the Agreement or
otherwise so as to avoid an irreparable damage or maintain the status quo, until
a final arbitration decision or award is rendered or the Dispute is otherwise
resolved; or (3) challenge or vacate any final Arbitrator’s decision or award
that does not comply with this Section 6.8. In addition, nothing in this Section
6.8 prohibits the Parties from resolving any Dispute (in whole or in part) by
mutual agreement at any time, including, without limitation, through the use of
mediation.

(i) The Arbitrator may proceed to an award notwithstanding the failure of any
Party to participate in such proceedings. The prevailing Party in the
arbitration proceeding may be entitled to an award of reasonable attorneys’ fees
incurred in connection with the arbitration in such amount, if any, as
determined by the Arbitrator in his discretion. The costs of the arbitration
shall be borne equally by the Parties unless otherwise determined by the
Arbitrator in the award.

(j) The Arbitrator shall be empowered to impose sanctions and to take such other
actions as it deems necessary to the same extent a judge could impose sanctions
or take such other actions pursuant to the Federal Rules of Civil Procedure and
applicable law. Each Party agrees to keep all Disputes and arbitration
proceedings strictly confidential except for the disclosure of information
required by applicable law.

(k) Executive acknowledges that by agreeing to this provision, he knowingly and
voluntarily waives any right he may have to a jury trial based on any claims he
has, had, or may have against the Company or an Affiliate, including any right
to a jury trial under any local, municipal, state or federal law.

6.9 Severability. It is the desire of the Parties hereto that this Agreement be
enforced to the maximum extent permitted by law, and should any provision
contained herein be held unenforceable by a court of competent jurisdiction or
arbitrator (pursuant to Section 6.8), the Parties hereby agree and consent that
such provision shall be reformed to create a valid and enforceable provision to
the maximum extent permitted by law; provided, however, if such provision cannot
be reformed, it shall be deemed ineffective and deleted herefrom without
affecting any other provision of this Agreement. This Agreement should be
construed by limiting and reducing it only to the minimum extent necessary to be
enforceable under then applicable law.

6.10 No Third Party Beneficiaries. This Agreement shall be binding upon and
inure to the benefit of the Parties hereto, and to their respective successors
and permitted assigns hereunder, but otherwise this Agreement shall not be for
the benefit of any third parties.

 

 

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6.11 Waiver of Breach. No waiver by either Party of a breach of any provision of
this Agreement by the other Party, or of compliance with any condition or
provision of this Agreement to be performed by the other Party, will operate or
be construed as a waiver of any subsequent breach by the other Party or any
similar or dissimilar provision or condition at the same or any subsequent time.
The failure of either Party to take any action by reason of any breach will not
deprive such Party of the right to take action at any time while such breach
continues.

6.12 Survival of Certain Provisions. Wherever appropriate to the intention of
the Parties, the respective rights and obligations of the Parties hereunder
shall survive any termination or expiration of this Agreement or the termination
of Executive’s employment.

6.13 Entire Agreement; Amendment and Termination. This Agreement contains the
entire agreement of the Parties with respect to the matters covered herein;
moreover, this Agreement supersedes all prior and contemporaneous agreements and
understandings, oral or written, between the Parties concerning the subject
matter hereof. This Agreement may be amended, waived or terminated only by a
written instrument that is identified as an amendment, waiver or termination
hereto and that is executed by or on behalf of each Party.

6.14 Interpretive Matters. In the interpretation of the Agreement, except where
the context otherwise requires:

(a) Headings. The Agreement headings are for reference purposes only and will
not affect in any way the meaning or interpretation of this Agreement.

(b) The terms “including” and “include” do not denote or imply any limitation.

(c) The conjunction “or” has the inclusive meaning “and/or”.

(d) Plurals and Genders. The singular includes the plural, and vice versa, and
each gender includes each of the others.

(e) Months. The term “month” refers to a calendar month.

(f) References to Statutes. Reference to any statute, rule, or regulation
includes any amendment thereto or any statute, rule, or regulation enacted or
promulgated in replacement thereof.

(g) The words “herein”, “hereof”, “hereunder” and other compounds of the word
“here” shall refer to the entire Agreement and not to any particular provision;

(h) All amounts referenced herein are in U.S. dollars.

 

 

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6.15 Governing Law; Jurisdiction. All matters or issues relating to the
interpretation, construction, validity, and enforcement of this Agreement shall
be governed by the laws of the State of Texas, without giving effect to any
choice-of-law principle that would cause the application of the laws of any
jurisdiction other than Texas. Jurisdiction and venue of any action or
proceeding relating to this Agreement or any Dispute (to the extent arbitration
is not required under Section 6.8) shall be exclusively in the federal and state
courts of competent jurisdiction in the Houston, Texas metropolitan area.

6.16 Executive Acknowledgment. Executive acknowledges that (a) he is
knowledgeable and sophisticated as to business matters, including the subject
matter of this Agreement, (b) he has read this Agreement and understands its
terms and conditions, (c) he has had ample opportunity to discuss this Agreement
with his legal counsel prior to execution, and (d) no strict rules of
construction shall apply for or against the drafter or any other Party.
Executive represents that he is free to enter into this Agreement including,
without limitation, that he is not subject to any covenant not to compete or
other restrictive covenant that would conflict with his employment duties and
covenants under this Agreement.

6.17 Counterparts. This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument. Each
counterpart may consist of a copy hereof containing multiple signature pages,
each signed by one Party hereto, but together signed by both Parties.

6.18 Automatic Termination. This Agreement will automatically terminate and be
null and void and no Party hereto shall have any rights, liabilities or
obligations under this Agreement if, for any reason, the Executive does not
report for full-time active discharge of his responsibilities under this
Agreement during normal business hours on the Effective Date or an a Business
Day within five Business Days following the Effective Date.

[Signature page follows.]

 

   SPG    Initials    RLG    Initials

 

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IN WITNESS WHEREOF, Executive has hereunto set his hand and Company has caused
this Agreement to be executed in its name and on its behalf by its duly
authorized officer, to be effective as of the Effective Date.

 

WITNESS:     EXECUTIVE: Signature:   /s/ Gayla M. Cutrer     Signature:   /s/
Steven Guidry Name:   Gayla M. Cutrer     Name:   Steven Guidry Date:  
September 19, 2013     Date:   September 19, 2013

Executive’s Address for Notices:

 

Steven P. Guidry

3526 Louvre Lane

Houston, Texas 77082

     

 

ATTEST:    

COMPANY:

 

VAALCO Energy, Inc.

By:   /s/ Gayla M. Cutrer     By:   /s/ Robert L. Gerry III Title:   Executive
Vice President     Title:   Chairman of the Board Name:   Gayla M. Cutrer    
Name:   Robert L. Gerry III Date:   September 19, 2013     Date:   September 19,
2013

 

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Definitions Appendix

1. “Affiliate” (a) has the same meaning ascribed to such term in Rule 12b-2
under the Securities Exchange Act of 1934, as amended from time to time.

2. “Business Day” means any Monday through Friday, excluding any such day on
which banks are authorized to be closed in Texas.

3. “Cause” shall mean the termination by the Company of the Executive’s
employment with the Company by reason of (a) the conviction of the Executive by
a court of competent jurisdiction as to which no further appeal can be taken of
a crime involving moral turpitude or a felony; (b) the commission by the
Executive of a material act of fraud upon the Company or any Subsidiary, or any
customer or supplier thereof; (c) the misappropriation of any funds or property
of the Company or any Subsidiary, or any customer or supplier thereof, by the
Executive; (d) the willful and continued failure by the Executive to perform the
material duties assigned to him that is not cured to the reasonable satisfaction
of the Company within 30 days after written notice of such failure is provided
to Executive by the Board or the Compensation Committee (or by an officer of the
Company who has been designated by the Board or the Compensation Committee for
such purpose); (e) the engagement by the Executive in any direct and material
conflict of interest with the Company or any Subsidiary without compliance with
the Company’s or Subsidiary’s conflict of interest policy, if any, then in
effect; or (f) the engagement by the Executive, without the written approval of
the Board or the Compensation Committee, in any material activity which competes
with the business of the Company or any Subsidiary or which would result in a
material injury to the business, reputation or goodwill of the Company or any
Subsidiary.

4. “Change in Control” has the meaning set forth in the Company’s 2012 Long Term
Incentive Plan, as it may be amended from time to time.

5. “Code” means the Internal Revenue Code of 1986, as amended, or its successor.
References herein to any Section of the Code shall include any successor
provisions of the Code.

6. “Confidential Information” means any information or material known to, or
used by or for, the Company or an Affiliate (whether or not owned or developed
by the Company or an Affiliate and whether or not developed by Executive) that
is not generally known by other Persons in the Business. For all purposes of the
Agreement, Confidential Information includes, but is not limited to, the
following: all trade secrets of the Company or an Affiliate; all non-public
information that the Company or an Affiliate has marked as confidential or has
otherwise described to Executive (either in writing or orally) as confidential;
all non-public information concerning the Company’s or Affiliate’s products,
services, prospective products or services, research, prospects, leases,
surveys, seismic data, drilling data, designs, prices, costs, marketing plans,
marketing techniques, studies, test data, leasehold and royalty owners,
investors, suppliers and contracts; all business records and plans; all
personnel files; all financial information of or concerning the Company or an
Affiliate; all information relating to the Company’s operating system software,
application software, software and system methodology, hardware platforms,
technical information, inventions, computer programs and listings, source codes,
object codes, copyrights and other intellectual property; all technical
specifications; any proprietary

 

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information belonging to the Company or an Affiliate; all computer hardware or
software manuals of the Company or an Affiliate; all Company or Affiliate
training or instruction manuals; all Company or Affiliate electronic data; and
all computer system passwords and user codes.

7. “Designated Beneficiary” means Executive’s surviving spouse, if any. If there
is no such surviving spouse at the time of Executive’s death, then the
Designated Beneficiary shall be Executive’s estate.

8. “Disability” shall mean that Executive is entitled to receive long-term
disability (“LTD”) income benefits under the LTD plan or policy maintained by
the Company or an Affiliate that covers Executive. If, for any reason, Executive
is not covered under such LTD plan or policy, then “Disability” shall mean a
“permanent and total disability” as defined in Code Section 22(e)(3) and
Treasury regulations thereunder. Evidence of such Disability shall be certified
by a physician acceptable to both the Company and Executive. In the event that
the Parties are not able to agree on the choice of a physician, each shall
select one physician who, in turn, shall select a third physician to render such
certification. All costs relating to the determination of whether Executive has
incurred a Disability shall be paid by the Company. Executive agrees to submit
to any examinations that are reasonably required by the attending physician or
other healthcare service providers to determine whether he has a Disability.

9. “Dispute” means any dispute, disagreement, controversy, claim, or cause of
action arising in connection with or relating to this Agreement or Executive’s
employment or termination of employment hereunder, or the validity,
interpretation, performance, breach, modification or termination of this
Agreement.

10. “Good Reason” means, with respect to Executive, the occurrence of any one or
more of the following events which first occurs during the Employment Period,
except as a result of actions taken in connection with termination of
Executive’s employment for Cause or Disability, and without Executive’s specific
written consent:

(a) The assignment to Executive of any duties that are materially inconsistent
with Executive’s executive position, which in this definition includes status,
reporting relationship to the Board of Directors, office, title, scope of
responsibility over corporate level staff or operations functions, or
responsibilities as an officer of the Company, or any other material diminution
in Executive’s position, authority, duties, or responsibilities, other than (in
any case or circumstance) an isolated and inadvertent action not taken in bad
faith that is remedied by the Company within thirty (30) Business Days after
Notice thereof to the Company by Executive; or

(b) The Company requires Executive to be based at any office or location that is
farther than forty (40) miles from Executive’s principal office location located
in the Houston, Texas metropolitan area, except for required business travel; or

(c) Any failure by the Company to obtain an assumption of this Agreement by its
successor in interest, or any action or inaction that constitutes a material
breach by the Company of this Agreement.

 

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Notwithstanding the foregoing definition of “Good Reason”, Executive cannot
terminate his employment under the Agreement for Good Reason unless Executive
(1) first provides written Notice to the Compensation Committee of the event (or
events) that Executive believes constitutes a Good Reason event (above) within
sixty (60) days from the first occurrence date of such event, and (2) provides
the Company with at least thirty (30) Business Days to cure, correct or mitigate
the Good Reason event so that it either (A) does not constitute a Good Reason
event hereunder or (B) Executive specifically agrees, in writing, that after any
such modification or accommodation by the Company, such event does not
constitute a Good Reason event hereunder.

11. “Notice of Termination” means a written Notice which (a) indicates the
specific termination provision in the Agreement that is being relied upon,
(b) to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive’s
employment under the provision so indicated, and (c) if the Termination Date is
other than the date of receipt of such Notice, specifies the termination date
(which date shall be not more than sixty (60) days after the giving of such
Notice). Any termination of Executive by the Company for Cause, or by Executive
for Good Reason, shall be communicated by Notice of Termination to the other
Party. The failure by Executive or the Company to set forth in the Notice of
Termination any fact or circumstance that contributes to a showing of Good
Reason or Cause shall not waive any right of such Party, or preclude such Party
from asserting, such fact or circumstance in enforcing such Party’s rights.

12. “No Severance Benefits Event” means termination of Executive’s employment
under the Agreement for Cause.

13. “Notice” means a written communication complying with Section 6.7 (“Notify”
has the correlative meaning).

14. “Person” means any individual, firm, corporation, partnership, limited
liability company, trust, or other entity, including any successor (by merger or
otherwise) of such entity.

15. “Release” means a release agreement, in such form as is prepared and
delivered by the Company to Executive. The Release shall not release any claim
by or on behalf of Executive for any payment or other benefit that is required
under this Agreement prior to the receipt thereof, except as may otherwise be
agreed to by Executive.

16. “Specialized Training” includes the training the Company provides to
Executive that is unique to its business and enhances Executive’s ability to
perform his job duties effectively, which includes, without limitation,
orientation training, operation methods training, and computer and systems
training.

17. “Subsidiary” means a corporation or other entity, whether incorporated or
unincorporated, of which at least a majority of the voting securities is owned,
directly or indirectly, by the Company.

18. “Termination Date” means the date on which Executive’s employment terminates
with the Company and all Affiliates. Notwithstanding anything herein to the
contrary, the date on which a “separation from service” under Code Section 409A
is effective shall be the Termination Date with respect to any payment or
benefit to or on behalf of Executive that constitutes deferred compensation that
is subject to, and not exempt from or excepted under, Code Section 409A

 

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