with the Securities and Exchange Commission alleging violation of U.S. or foreignsecurities laws.     (e) **“Change of Control”**shall mean a “Change in Control,” as defined under theIncentive Plan as in effect on the Effective Date.     (f) **“Change of Control Period”**shall mean, with respect to a Change of Control, theone-year period beginning on the date upon which such Change of Control occurs.     (g) **“Code”**shall mean the Internal Revenue Code of 1986, as amended.     (h) **“Compensation Committee”**shall mean the Compensation and Nominating Committee ofthe Board.     (i) **“Disability”**shall mean that, as a result of Executive’s incapacity due to physicalor mental illness, Executive shall have been absent from the full-time performance of hisduties for six consecutive months and shall not have returned to full-time performance ofhis duties within 30 days after written notice of termination is given to Executive byCompany (provided, however, that such notice may not be given prior to 30 days before theexpiration of such six-month period).     (j) **“Effective Date”**shall mean October 1, 2009.     (k) **“Good Reason”**shall mean the occurrence of any one or more of the following:     (i) a material diminution in Executive’s Annual Base Salary not in accordancewith Section 4.1;     (ii) a material diminution in Executive’s authority, duties, orresponsibilities from those applicable to him as of the Effective Date;     (iii) a material change in the geographic location at which Executive mustperform services, which for purposes of this Agreement includes only Companyrequiring Executive to involuntarily relocate the geographic location of Executive’sprincipal place of employment by more than 10 miles from Houston, Texas; or     (iv) a material breach by Company of any provision of this Agreement(including, without limitation, the requirements of paragraphs 2.2, 4.2, or 4.3 ofthis Agreement) .Notwithstanding the foregoing provisions of this Section 1.1(j) or any other provision inthis Agreement to the contrary, any assertion by Executive of a termination of employmentfor “Good Reason” shall not be effective unless all of the following conditions aresatisfied: (1) the condition described in clauses (i) through (iv) of this Section 1.1(j)giving rise to Executive’s termination of employment must have arisen
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without Executive’s consent; (2) Executive must provide written notice to Company of suchcondition in accordance with Section 9.3 within 30 days of the initial existence of thecondition; (3) the condition specified in such notice must remain uncorrected for a periodof 30 days following receipt of such notice by Company; and (4) the date of Executive’stermination of employment must occur within one year following the initial existence of thecondition specified in such notice.     (l) **“Incentive Plan”**shall mean the Company’s 2006 Stock Incentive Plan.     (m) **“Involuntary Termination”**shall mean any termination of Executive’s employment withCompany which:     (i) does not result from a resignation by Executive (other than a resignationpursuant to clause (ii) of this Section 1.1(*l*)); or     (ii) results from a resignation by Executive for Good Reason;provided, however, the term “Involuntary Termination” shall not include atermination for Cause or any termination as a result of death or Disability.     (n) **“Payment Date”**shall mean the later of (i) the date that is 30 days afterExecutive’s termination of employment with Company or (ii) the date upon which the Releasedescribed in Section 5.6 becomes irrevocable by Executive.     **1.2 Interpretations**. In this Agreement, unless a clear contrary intention appears, (a) thewords “herein,” “hereof,” “hereunder,” and other words of similar import refer to this Agreement asa whole and not to any particular Article, Section, or other subdivision, (b) reference to anyArticle or Section means such Article or Section hereof, (c) the word “including” (and withcorrelative meaning, “include”) means including, without limiting the generality of any descriptionpreceding such term, and (d) where any provision of this Agreement refers to action to be taken byeither party, or which such party is prohibited from taking, such provision shall be applicablewhether such action is taken directly or indirectly by such party.**ARTICLE II****EMPLOYMENT AND DUTIES**     **2.1 Employment**. Effective as of the Effective Date and continuing for the period of time setforth in Section 3.1 of this Agreement, Executive’s employment by Company shall be subject to theterms and conditions of this Agreement.     **2.2 Positions**. From and after the Effective Date, Company shall employ Executive in thepositions of Executive Vice President Exploration of the Company or in such other position orpositions as the parties mutually may agree.     **2.3 Duties and Services**. Executive agrees to serve in the positions referred to in Section2.2 and to perform diligently and to the best of his abilities the duties and services
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appertaining to such offices, as well as such additional duties and services appropriate tosuch offices which the parties mutually may agree upon from time to time. Executive also agrees toserve, if elected, as an officer or director of any subsidiary or affiliate of Company so long assuch service is commensurate with Executive’s duties and responsibilities to Company. Executive’semployment shall also be subject to the policies maintained and established by Company that are ofgeneral applicability to Company’s Executives, as such policies may be amended from time to time.     **2.4 Other Interests**. Executive agrees, during the period of his employment by Company, todevote substantially all of his business time, energy, and best efforts to the business and affairsof Company and its affiliates and not to engage, directly or indirectly, in any other business orbusinesses, whether or not similar to that of Company, except with the consent of the Board. Theforegoing notwithstanding, the parties recognize and agree that Executive may engage in passivepersonal investment and charitable activities that do not conflict with the business and affairs ofCompany or interfere with Executive’s performance of his duties hereunder, which shall be at thesole determination of the Board.     **2.5 Duty of Loyalty**. Executive acknowledges and agrees that Executive owes a fiduciary dutyof loyalty to act at all times in the best interests of Company. In keeping with such duty,Executive shall make full disclosure to Company of all business opportunities pertaining toCompany’s business and shall not appropriate for Executive’s own benefit business opportunitiesconcerning Company’s business.     **2.6 Place of Employment**. Executive’s place of employment hereunder shall be at Company’sexecutive offices in the greater Houston, Texas metropolitan area.**ARTICLE III****TERM AND TERMINATION OF EMPLOYMENT**     **3.1 Term**. Unless sooner terminated pursuant to other provisions hereof, Company agrees toemploy Executive for the period beginning on the Effective Date and ending on the third anniversaryof the Effective Date.     **3.2 Company’s Right to Terminate**. Notwithstanding the provisions of Section 3.1, Companyshall have the right to terminate Executive’s employment under this Agreement at any time for anyof the following reasons:     (a) upon Executive’s death;     (b) upon Executive’s Disability;     (c) for Cause; or     (d) at any time, for any other reason whatsoever, in the sole discretion of the Board.
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     **3.3 Executive’s Right to Terminate**. Notwithstanding the provisions of Section 3.1, Executiveshall have the right to terminate his employment under this Agreement for any of the followingreasons:     (a) for Good Reason; or     (b) at any time for any other reason whatsoever, in the sole discretion of Executive.     **3.4 Notice of Termination**. If Company desires to terminate Executive’s employment hereunderat any time prior to expiration of the term of employment as provided in Section 3.1, it shall doso by giving written notice to Executive that it has elected to terminate Executive’s employmenthereunder and stating the effective date and reason for such termination, provided that no suchaction shall alter or amend any other provisions hereof or rights arising hereunder. If Executivedesires to terminate his employment hereunder at any time prior to expiration of the term ofemployment as provided in Section 3.1, he shall do so by giving a 30-day written notice to Companythat he has elected to terminate his employment hereunder and stating the effective date and reasonfor such termination, provided that no such action shall alter or amend any other provisions hereofor rights arising hereunder.     **3.5 Deemed Resignations**. Unless otherwise agreed to in writing by Company and Executive priorto the termination of Executive’s employment, any termination of Executive’s employment shallconstitute an automatic resignation of Executive as an officer of Company and each affiliate ofCompany and an automatic resignation of Executive from the Board (if applicable) and from the boardof directors or similar governing body of any affiliate of Company and from the board of directorsor similar governing body of any corporation, limited liability entity, or other entity in whichCompany or any affiliate holds an equity interest and with respect to which board or similargoverning body Executive serves as Company’s or such affiliate’s designee or other representative.     **3.6 Meaning of Termination of Employment**. For all purposes of this Agreement, Executive shallbe considered to have terminated employment with Company when Executive incurs a “separation fromservice” with Company within the meaning of Section 409A(a)(2)(A)(i) of the Code and applicableadministrative guidance issued thereunder.**ARTICLE IV****COMPENSATION AND BENEFITS**     **4.1 Base Salary**. During the period of this Agreement, Executive shall receive a minimum basesalary of $180,000 per annum. Executive’s base salary shall be reviewed by the CompensationCommittee on an annual basis, and, in the sole discretion of the Compensation Committee, such basesalary may be increased, but not decreased (except with the prior written consent of Executive),effective as of any date determined by the Compensation Committee. Executive’s base salary shallbe paid in equal installments in accordance with Company’s standard policy regarding payment ofcompensation to Executives but no less frequently than monthly.
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**4.2 Bonuses and Long-Term Incentive**.     (a) **Annual Bonus**. Executive shall be eligible to participate in Company’s annual bonusplan or plans applicable to Executive as approved from time to time by the Board or by theCompensation Committee in amounts to be determined by the Compensation Committee based uponcriteria established by the Compensation Committee.     (b) **Long-Term Incentive Plan**. Subject to the sole discretion of the Board or theCompensation Committee, Executive shall also be eligible for participation in the IncentivePlan or such other long-term incentive arrangement of Company as may from time to time bemade available to other Executives (and such other Executives as may be selected forparticipation by the Board or Compensation Committee) of Company. Any awards made under theIncentive Plan or such other arrangements shall be governed by Section 5.9 herein.**4.3 Other Perquisites**. During his employment hereunder, Executive shall be afforded thefollowing benefits as incidences of his employment:     (a) **Business and Entertainment Expenses**— Subject to Company’s standard policies andprocedures with respect to expense reimbursement as applied to its Executives generally,Company shall reimburse Executive for, or pay on behalf of Executive, reasonable andappropriate expenses incurred by Executive for business-related purposes, including dues andfees to industry and professional organizations and costs of entertainment and businessdevelopment.     (b) **Vacation**— During his employment hereunder, Executive shall be entitled to fourweeks of paid vacation each calendar year (or a pro rata portion of such four-week vacationperiod for any partial year) and to all holidays provided to Executives of Companygenerally.     (c) **Other Company Benefits**— Executive and, to the extent applicable, Executive’sspouse, dependents, and beneficiaries, shall be allowed to participate in all benefits,plans, and programs, including improvements or modifications of the same, which are now, ormay hereafter be, available to other Executives of Company. Such benefits, plans, andprograms shall include, without limitation, any profit sharing plan, thrift plan, healthinsurance or health care plan, life insurance, disability insurance, pension plan,supplemental retirement plan, vacation and sick leave plan, and the like which may bemaintained by Company. Company shall not, however, by reason of this paragraph be obligatedto institute, maintain, or refrain from changing, amending, or discontinuing, any suchbenefit plan or program, so long as such changes are similarly applicable to Executivesgenerally.
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**ARTICLE V****EFFECT OF TERMINATION ON COMPENSATION; ADDITIONAL PAYMENTS**     **5.1 Termination Other Than an Involuntary Termination**. If Executive’s employment hereundershall terminate upon expiration of the term provided in Section 3.1 hereof or if Executive’semployment hereunder shall terminate for any other reason except those described in Sections 5.2and 5.3, then Company shall continue to provide all compensation and benefits to Executivehereunder until the date of such termination of employment, and such compensation and benefitsshall terminate contemporaneously with such termination of employment.     **5.2 Involuntary Termination Other Than During a Change of Control Period**. Subject to theprovisions of Sections 5.6 and 5.7 hereof, if Executive’s employment by Company or any subsidiarythereof or successor thereto shall be subject to an Involuntary Termination which occurs prior tothe date that Change of Control Period begins or after the expiration of a Change of ControlPeriod, then Company shall, as additional compensation for services rendered to Company (includingits subsidiaries), pay to Executive the following amounts and take the following actions:     (a) Pay Executive a lump sum cash payment in an amount equal to Executive’s Annual BaseSalary on or before the Payment Date.     (b) During the portion, if any, of the 12-month period commencing on the date of suchInvoluntary Termination that Executive is eligible to elect and elects to continue coveragefor himself and his eligible dependents under Company’s or a subsidiary’s group healthplans, as applicable, under the Consolidated Omnibus Budget Reconciliation Act of 1985, asamended, and/or Sections 601 through 608 of the Executive Retirement Income Security Act of1974, as amended, Company shall promptly reimburse Executive on a monthly basis for thedifference between the amount Executive pays to effect and continue such coverage and theExecutive contribution amount that active Executives of Company pay for the same or similarcoverage under such group health plans; provided, however, that such reimbursement shallcease to be effective if and to the extent Executive becomes eligible to receive medicaland/or dental coverage from a subsequent employer (and any such eligibility shall bepromptly reported to Company by Executive).     (c) If Executive’s employment with Company is subject to a termination due toExecutive’s death or Disability, any and all outstanding options to purchase common stock orstock grants of Company held by Executive shall become fully vested and immediatelyexercisable in full as of the Payment Date and shall cause any and all restricted shares ofthe Company’s common stock held by Executive to become immediately nonforfeitable as of thePayment Date.     (d) **Involuntary Termination During a Change of Control Period**. Subject to theprovisions of Sections 5.6 and 5.7, if Executive’s employment by Company or any subsidiarythereof or successor thereto shall be subject to an Involuntary Termination
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during a Change of Control Period, then Company shall, as additional compensation forservices rendered to Company (including its subsidiaries), pay to Executive the followingamounts and take the following actions:     (e) Pay Executive a lump sum cash payment in an amount equal to two times Executive’sAnnual Base Salary on or before the Payment Date.     (f) During the portion, if any, of the 12-month period commencing on the date of suchInvoluntary Termination that Executive is eligible to elect and elects to continue coveragefor himself and his eligible dependents under Company’s or a subsidiary’s group healthplans, as applicable, under the Consolidated Omnibus Budget Reconciliation Act of 1985, asamended, and/or Sections 601 through 608 of the Executive Retirement Income Security Act of1974, as amended, Company shall promptly reimburse Executive on a monthly basis for thedifference between the amount Executive pays to effect and continue such coverage and theExecutive contribution amount that active Executives of Company pay for the same or similarcoverage under such group health plans; provided, however, that such reimbursement shallcease to be effective if and to the extent Executive becomes eligible to receive medicaland/or dental coverage from a subsequent employer (and any such eligibility shall bepromptly reported to Company by Executive).     (g) Cause any and all outstanding options to purchase common stock of Company held byExecutive to be fully vested and to become immediately exercisable in full as of the PaymentDate and cause any and all restricted shares of the Company’s common stock held by Executiveto become immediately nonforfeitable as of the Payment Date.     **5.3 Interest on Late Payments**. If any payment provided for in Section 5.2 or 5.3 hereof isnot made when due (applying the deferred payment date provided for in Section 5.7 as the due date,if applicable) then Company shall pay to Executive interest on the amount payable from the datethat such payment should have been made under such Section until such payment is made, whichinterest shall be calculated at the prime or base rate of interest announced by JPMorgan Chase Bank(or any successor thereto) at its principal office in New York and shall change when and as anysuch change in such prime or base rate shall be announced by such bank.     **5.4 Parachute Payments**. Notwithstanding anything to the contrary in this Agreement, in theevent that any payment, distribution, or provision of a benefit by Company to or for the benefit ofExecutive, whether paid or payable, distributed or distributable, or provided or to be providedpursuant to the terms of this Agreement or otherwise (a “***Payment***”), would be subject to the excisetax imposed by Section 4999 of the Code or any interest or penalties with respect to such excisetax (such excise tax, together with any such interest or penalties, are hereinafter collectivelyreferred to as the “***Excise Tax***”), Company shall pay to Executive on or as soon as administrativelypracticable following the day on which the Excise Tax is remitted by or on behalf of Executive (butno later than the end of the taxable year following the year in which the Excise Tax is remitted)an additional payment (a “***Gross-up Payment***”) in an amount such that after payment by Executive ofall taxes (including any interest or penalties imposed
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with respect to such taxes), including any Excise Tax imposed on any Gross-up Payment,Executive retains an amount of the Gross-up Payment equal to the Excise Tax imposed upon thePayments. Company and Executive shall make an initial determination as to whether a Gross-upPayment is required and the amount of any such Gross-up Payment. Executive shall notify Company inwriting of any claim by the Internal Revenue Service which, if successful, would require Company tomake a Gross-up Payment (or a Gross-up Payment in excess of that, if any, initially determined byCompany and Executive) within ten days of the receipt of such claim. Company shall notifyExecutive in writing at least ten days prior to the due date of any response required with respectto such claim if it plans to contest the claim. If Company decides to contest such claim,Executive shall cooperate fully with Company in such action; provided, however, Company shall bearand pay directly or indirectly all costs and expenses (including additional interest and penalties)incurred in connection with such action and shall indemnify and hold Executive harmless, on anafter-tax basis, for any Excise Tax or income tax, including interest and penalties with respectthereto, imposed as a result of Company’s action. If, as a result of Company’s action with respectto a claim, Executive receives a refund of any amount paid by Company with respect to such claim,Executive shall promptly pay such refund to Company. If Company fails to timely notify Executivewhether it will contest such claim or Company determines not to contest such claim, then Companyshall immediately pay to Executive the portion of such claim, if any, which it has not previouslypaid to Executive.     **5.5 Release and Full Settlement**. As a condition to the receipt of any severance compensationand benefits under this Agreement, Executive must first execute a release and agreement, in a formreasonably satisfactory to Company, which (a) shall release and discharge Company and itsaffiliates, and their officers, directors, Executives, and agents, from any and all claims orcauses of action of any kind or character, including all claims or causes of action arising out ofExecutive’s employment with Company or its affiliates or the termination of such employment, and(b) must be effective and irrevocable within 55 days after the termination of Executive’semployment. If Executive is entitled to and receives the benefits provided hereunder, performanceof the obligations of Company hereunder will constitute full settlement of all claims thatExecutive might otherwise assert against Company on account of Executive’s termination ofemployment.     **5.6 Payments Subject to Section 409A of the Code**. Notwithstanding the foregoing provisions ofthis Article 5, if the payment of any severance compensation or severance benefits under thisAgreement would be subject to additional taxes and interest under Section 409A of the Code becausethe timing of such payment is not delayed as provided in Section 409A(a)(2)(B) of the Code, thenany such payments that Executive (or Executive’s estate) would otherwise be entitled to during thefirst six months following the date of Executive’s termination of employment shall be accumulatedand paid on the date that is six months after the date of Executive’s termination of employment (orif such payment date does not fall on a business day of Company, the next following business day ofCompany), or such earlier date upon which such amount can be paid under Section 409A of the Codewithout being subject to such additional taxes and interest. Executive hereby agrees to be boundby Company’s determination of its “specified Executives” (as such term is defined in Section 409Aof the Code) in accordance with any of the methods permitted under the regulations issued underSection 409A of the Code.
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     **5.7 Liquidated Damages**. In light of the difficulties in estimating the damages for an earlytermination of Executive’s employment under this Agreement, Company and Executive hereby agree thatthe payments, if any, to be received by Executive pursuant to this Article 5 shall be received byExecutive as liquidated damages.     **5.8 Other Benefits**. This Agreement governs the rights and obligations of Executive andCompany with respect to Executive’s base salary and certain perquisites of employment. Except asexpressly provided herein, Executive’s rights and obligations both during the term of hisemployment and thereafter with respect to stock options, restricted stock, incentive and deferredcompensation, life insurance policies insuring the life of Executive, and other benefits under theplans and programs maintained by Company shall be governed by the separate agreements, plans andother documents and instruments governing such matters.**ARTICLE VI****PROTECTION OF CONFIDENTIAL INFORMATION****6.1 Disclosure to and Property of Company**.     (a) **Confidential Information**. All information, designs, ideas, concepts, improvements,product developments, discoveries, and inventions, whether patentable or not, that areconceived, made, developed, or acquired by Executive, individually or in conjunction withothers, during the period of Executive’s employment by Company (whether during businesshours or otherwise and whether on Company’s premises or otherwise) that relate to Company’s(or any of its affiliates’) business, trade secrets, products, or services (including,without limitation, all such information relating to corporate opportunities, productspecification, compositions, manufacturing and distribution methods and processes, research,forms, policies, procedures, financial and sales data, pricing terms, costs, evaluations,opinions, interpretations, acquisition prospects, Executive lists, property lists, theidentity of customers or their requirements, the identity of key contacts within thecustomer’s organizations or within the organization of acquisition prospects, marketing andmerchandising techniques, business plans, negotiation and documentation strategies, computersoftware or programs, computer software and database technologies, prospective names, andmarks (collectively, ***“Confidential Information”***) shall be disclosed to Company and are andshall be the sole and exclusive property of Company (or its affiliates).     (b) **Work Product**. Moreover, all documents, videotapes, written presentations,brochures, drawings, memoranda, notes, records, files, correspondence, manuals, models,specifications, computer programs, E-mail, voice mail, electronic databases, maps, drawings,architectural renditions, proposals, and all other writings or materials of any typeembodying any of such information, ideas, concepts, improvements, discoveries, inventions,and other similar forms of expression (including but not limited to (i) maps, data, andreports that relate to results of exploration, drilling, drill cores, cuttings, and othersamples relating to the production and operation of Company’s oil and gas properties(whether owned or prospective) and (ii) title opinions; abstracts of title; land,accounting, production, or operating expense records; engineering,
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geological, or geophysical data; development plans and permits; or any other materialor writing of whatever kind embodying any other information relating to the production andoperation of Company’s oil and gas properties (whether owned or prospective)) (collectively,***“Work Product”***) are and shall be the sole and exclusive property of Company (or itsaffiliates).     Upon Executive’s termination of employment with Company, for any reason, Executive promptlyshall deliver such Confidential Information and Work Product, and all copies thereof, to Company.     **6.2 Disclosure to Executive**. Company has and will disclose to Executive, or place Executivein a position to have access to or develop, Confidential Information and Work Product of Company(or its affiliates); and/or has and will entrust Executive with business opportunities of Company(or its affiliates); and/or has and will place Executive in a position to develop business goodwill on behalf of Company (or its affiliates). Executive agrees to preserve and protect theconfidentiality of all Confidential Information or Work Product of Company (or its affiliates).     **6.3 No Unauthorized Use or Disclosure**. Executive agrees that he will not, at any time duringor after Executive’s employment by Company, make any unauthorized disclosure of, and will preventthe removal from Company premises of, Confidential Information or Work Product of Company (or itsaffiliates), or will not make any use thereof, except in the carrying out of Executive’sresponsibilities during the course of Executive’s employment with Company. Executive shall usecommercially reasonable efforts to cause all persons or entities to which any ConfidentialInformation shall be disclosed by him hereunder to observe the terms and conditions set forthherein as though each such person or entity was bound hereby. Executive shall have no obligationhereunder to keep confidential any Confidential Information if and to the extent disclosure thereofis specifically required by law; provided, however, that in the event disclosure is required byapplicable law, Executive shall provide Company with prompt notice of such requirement prior tomaking any such disclosure, so that Company may seek an appropriate protective order. At therequest of Company at any time, Executive agrees to deliver to Company all Confidential Informationthat he may possess or control. Executive agrees that all Confidential Information of Company(whether now or hereafter existing) conceived, discovered, or made by him during the period ofExecutive’s employment by Company exclusively belongs to Company (and not to Executive), andExecutive will promptly disclose such Confidential Information to Company and perform all actionsreasonably requested by Company to establish and confirm such exclusive ownership. Affiliates ofCompany shall be third party beneficiaries of Executive’s obligations under this Article 6. As aresult of Executive’s employment by Company, Executive may also from time to time have access to,or knowledge of, Confidential Information or Work Product of third parties, such as customers,suppliers, partners, joint venturers, and the like, of Company and its affiliates. Executive alsoagrees to preserve and protect the confidentiality of such third party Confidential Information andWork Product to the same extent, and on the same basis, as Company’s Confidential Information andWork Product.     **6.4 Ownership by Company**. If, during Executive’s employment by Company, Executive creates anywork of authorship fixed in any tangible medium of expression that is the
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subject matter of copyright (such as videotapes, written presentations, or acquisitions,computer programs, E-mail, voice mail, electronic databases, drawings, maps, architecturalrenditions, models, manuals, brochures, or the like) relating to Company’s business, products, orservices, whether such work is created solely by Executive or jointly with others (whether duringbusiness hours or otherwise and whether on Company’s premises or otherwise), including any WorkProduct, Company shall be deemed the author of such work if the work is prepared by Executive inthe scope of Executive’s employment; or, if the work is not prepared by Executive within the scopeof Executive’s employment but is specially ordered by Company as a contribution to a collectivework, as a part of a motion picture or other audiovisual work, as a translation, as a supplementarywork, as a compilation, or as an instructional text, then the work shall be considered to be workmade for hire and Company shall be the author of the work. If such work is neither prepared byExecutive within the scope of Executive’s employment nor a work specially ordered that is deemed tobe a work made for hire, then Executive hereby agrees to assign, and by these presents does assign,to Company all of Executive’s worldwide right, title, and interest in and to such work and allrights of copyright therein.     **6.5 Assistance by Executive**. During the period of Executive’s employment by Company andthereafter, Executive shall assist Company and its nominee, at any time, in the protection ofCompany’s (or its affiliates’) worldwide right, title, and interest in and to Work Product and theexecution of all formal assignment documents requested by Company or its nominee and the executionof all lawful oaths and applications for patents and registration of copyright in the United Statesand foreign countries.     **6.6 Remedies**. Executive acknowledges that money damages would not be sufficient remedy forany breach of this Article 6 by Executive, and Company or its affiliates shall be entitled toenforce the provisions of this Article 6 by terminating payments then owing to Executive under thisAgreement or otherwise and to specific performance and injunctive relief as remedies for suchbreach or any threatened breach. Such remedies shall not be deemed the exclusive remedies for abreach of this Article 6 but shall be in addition to all remedies available at law or in equity,including the recovery of damages from Executive and his agents.**ARTICLE VII****NON-COMPETITION AND NON-SOLICITATION OBLIGATIONS**     **7.1 General**. As part of the consideration for Company’s employment of Executive and thecompensation and benefits that may be paid to Executive hereunder; to protect the trade secrets andConfidential Information of Company and its affiliates that will in the future be disclosed orentrusted to Executive, the business good will of Company and its affiliates that will in thefuture be developed in Executive, or the business opportunities that will in the future bedisclosed or entrusted to Executive by Company or its affiliates; and as an additional incentivefor Company to enter into this Agreement, Company and Executive agree to the provisions of thisArticle 7. Executive agrees that during his employment with Company and for a period of one yearfollowing the termination of Executive’s employment with Company for any reason (the “**Non-CompetePeriod**”), Executive shall not, without the prior written consent of Company:
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     (a) directly or indirectly participate in the ownership, management, operation, orcontrol of, or be connected as an officer, Executive, partner, director, consultant,contractor, or otherwise with, or have any financial interest in or aid or assist anyoneelse in the conduct of, any oil and gas exploration or production business in any of theBusiness Territories of the Company (a “**Competitive Operation**”); provided, however, thatthis provision shall not preclude Executive after the termination of his employment withCompany from owning less than 2% of the equity securities of any publicly held CompetitiveOperation so long as Executive does not serve as an Executive, officer, director, orconsultant to such business;     (b) call upon any prospective acquisition candidate on Executive’s own behalf or onbehalf of any Competitive Operation, which candidate is a Competitive Operation or whichcandidate was, to Executive’s knowledge after due inquiry, either called upon by Company oran affiliate or for which Company or an affiliate made an acquisition analysis, for thepurpose of acquiring such entity; or     (c) directly or indirectly, either as principal, agent, independent contractor,consultant, director, officer, Executive, employer, advisor, member, stockholder, partner,or in any other individual or representative capacity whatsoever, either for his own benefitor for the benefit of any other person or entity either (i) hire, contract, or solicit orattempt any of the foregoing with respect to hiring any then present Executive (or personwho was an Executive at any time during the six-month period prior to termination ofExecutive’s employment) of Company or any affiliate, or (ii) induce or otherwise counsel,advise, or encourage any Executive of Company or any affiliate to leave the employment ofCompany or any affiliate.     **7.2 Non-Disparagement**. During Executive’s employment with Company and following anytermination of employment with Company, Executive and Company agree not to disparage, either orallyor in writing, Executive, Company, or any of affiliates’ business, products, services, orpractices, or any of Company’s or its affiliates’ directors, officers, agents, representatives,stockholders, partners, members, Executives, or affiliates.     **7.3 New Employer**. Executive agrees that prior to accepting any new employment during theNon-Compete Period, Executive shall advise Company of the identity of the potential new employer.Company may serve such new employer with notice of the non-competition restrictions set forth inthis Article 7 and may furnish such employer with a copy of this Agreement or the relevant portionsthereof.     **7.4 Remedies**. Executive acknowledges that money damages would not be sufficient remedy forany breach of this Article 7 by Executive, and Company or its affiliates shall be entitled toenforce the provisions of this Article 7 by terminating payments then owing to Executive under thisAgreement or otherwise and to specific performance and injunctive relief as remedies for suchbreach or any threatened breach. Such remedies shall not be deemed the exclusive remedies for abreach of this Article 7 but shall be in addition to all remedies available at law or in equity,including the recovery of damages from Executive and his agents.
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     **7.5 Reformation**. Company and Executive agree that the foregoing restrictions are reasonableunder the circumstances and that any breach of the covenants contained in this Article 7 wouldcause irreparable injury to Company. Executive understands that the foregoing restrictions maylimit Executive’s ability to engage in certain businesses anywhere in the United States during theNon-Compete Period but acknowledges that Executive will receive sufficiently high remuneration andother benefits from Company to justify such restriction. Further, Executive acknowledges that hisskills are such that he can be gainfully employed in non-competitive employment and that theagreement not to compete will in no way prevent him from earning a living. Nevertheless, if any ofthe aforesaid restrictions are found by a court of competent jurisdiction to be unreasonable, oroverly broad as to geographic area or time, or otherwise unenforceable, the parties intend for therestrictions therein set forth to be modified by the court making such determination so as to bereasonable and enforceable and, as so modified, to be fully enforced. By agreeing to thiscontractual modification prospectively at this time, Company and Executive intend to make thisprovision enforceable under the law or laws of all applicable States so that the entire agreementnot to compete and this Agreement as prospectively modified shall remain in full force and effectand shall not be rendered void or illegal. Such modification shall not affect the payments made toExecutive under this Agreement.**ARTICLE VIII****DISPUTE RESOLUTION**     **8.1 General**. Executive and the Company explicitly recognize that no provision of this ArticleVIII shall prevent either party from seeking to resolve any dispute relating to Article VI orArticle VII or this Agreement in a court of law.     **8.2 Negotiation**. The parties shall attempt in good faith to resolve any dispute arising outof or relating to this Agreement promptly by negotiations between Executive and an executiveofficer of Company who has authority to settle the controversy. Any party may give the other partywritten notice of any dispute not resolved in the normal course of business. Within ten days afterthe effective date of such notice, Executive and an executive officer of Company shall meet at amutually acceptable time and place within the Houston, Texas metropolitan area, and thereafter asoften as they reasonably deem necessary, to exchange relevant information and to attempt to resolvethe dispute. If the matter has not been resolved within 30 days of the disputing party’s notice,or if the parties fail to meet within ten days, either party may initiate arbitration of thecontroversy or claim as provided in Section 8.3 below. If a negotiator intends to be accompaniedat a meeting by an attorney, the other negotiator shall be given at least three business days’notice of such intention and may also be accompanied by an attorney. All negotiations pursuant tothis Section 8.2 shall be treated as compromise and settlement negotiations for the purposes of thefederal and state rules of evidence and procedure.     **8.3 Arbitration**. Company and Executive agree that after efforts to negotiate any dispute inaccordance with Section 8.2 have failed, then either party may by written notice (the ***“Notice”***)demand arbitration of the dispute as set out below, and each party hereto expressly agrees tosubmit to, and be bound by, such arbitration.
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     (a) Each party will, within ten business days of the Notice, nominate an arbitrator,who shall be a non-neutral arbitrator. Each nominated arbitrator must be someone experiencedin dispute resolution and of good character without moral turpitude and not within theemploy or direct or indirect influence of the nominating party. The two nominatedarbitrators will, within ten business days of nomination, agree upon a third arbitrator, whoshall be neutral. If the two appointed arbitrators cannot agree on a third arbitrator withinsuch period, the parties may seek such an appointment through any permitted court proceedingor by the American Arbitration Association (“***AAA***”). The three arbitrators will set therules and timing of the arbitration, but will generally follow the rules of the AAA and thisAgreement where same are applicable and shall provide for a reasoned opinion.     (b) The arbitration hearing will in no event take place more than 180 days after theappointment of the third arbitrator.     (c) The arbitration will take place in Houston, Texas unless otherwise unanimouslyagreed to by the parties.     (d) The results of the arbitration and the decision of the arbitrators will be finaland binding on the parties, and each party agrees and acknowledges that these results shallbe enforceable in a court of law.     (e) All administrative costs and expenses of the mediation and arbitration shall beborne equally by the Company and Executive during the pendency of the proceedings. Suchcosts and expenses do not include attorney’s fees, expert witness fees or other partygenerated expenses. Upon the conclusion of the proceedings, the prevailing party shall beentitled to recover reasonable and necessary attorneys’ fees, expert witness fees, and costsand expenses of arbitration.**ARTICLE IX****MISCELLANEOUS**     **9.1 Indemnification**. Company agrees that, in the event Executive’s employment by Company orany subsidiary thereof or successor thereto shall be subject to an Involuntary Termination, Companyshall continue to indemnify Executive following such Involuntary Termination to the fullest extentpermitted by applicable law consistent with the Articles of Incorporation and By-Laws of Company ineffect as of the date of the Involuntary Termination with respect to Executive’s sole, joint, orconcurrent negligence and any acts of or omissions he may have committed during the period duringwhich he was an officer, director, and/or Executive of (a) Company, (b) any subsidiary thereof forwhich he served as an officer, director, or Executive at the request of Company, or (c) anysuccessor thereto. Any reimbursement of reasonable attorneys’ fees and disbursements requiredunder this Section 9.1 shall be made not later than the close of Executive’s taxable year followingthe taxable year in which Executive incurs the expense; provided, however, that, upon Executive’stermination of employment with Company, in no event shall any additional reimbursement be madeprior to the date that is six months after the date of Executive’s termination of employment to theextent such payment
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delay is required under Section 409A(a)(2)(B)(i) of the Code. In no event shall anyreimbursement be made to Executive for such fees and disbursements incurred after the later of (1)Executive’s death or (2) the date that is ten years after the date of Executive’s termination ofemployment with Company.     **9.2 Payment Obligations Absolute**. Except as specifically provided in Sections 6.6 and 7.4,Company’s obligation to pay (or cause one of its subsidiaries to pay) Executive the amounts and tomake the arrangements provided herein shall be absolute and unconditional and shall not be affectedby any circumstances, including, without limitation, any set-off, counterclaim, recoupment,defense, or other right which Company (including its subsidiaries) may have against Executive oranyone else. All amounts payable by Company (including its subsidiaries hereunder) shall be paidwithout notice or demand. Executive shall not be obligated to seek other employment in mitigationof the amounts payable or arrangements made under any provision of this Agreement, and, except asprovided in Sections 5.2(b) and 5.3(b) hereof, the obtaining of any such other employment shall inno event effect any reduction of Company’s obligations to make (or cause to be made) the paymentsand arrangements required to be made under this Agreement.     **9.3 Notices**. For purposes of this Agreement, notices and all other communications providedfor herein shall be in writing and shall be deemed to have been duly given when personallydelivered or when mailed by United States registered or certified mail, return receipt requested,postage prepaid, addressed as follows:       **If to Company to:** Magnum Hunter Resources Corporation777 Post Oak Blvd.Suite 910Houston, Texas 77056Attention: Chairman       **If to Executive to:** **H.C. “Kip” Ferguson**6266 Burgoyne DriveHouston, TX 77057or to such other address as either party may furnish to the other in writing in accordanceherewith, except that notices or changes of address shall be effective only upon receipt.     **9.4 Applicable Law; Submission to Jurisdiction**.     (a) This Agreement is entered into under, and shall be governed for all purposes by,the laws of the State of Texas, without regard to conflict of law principals thereof.     (b) With respect to any claim or dispute related to or arising under this Agreement,the parties hereto hereby consent to the exclusive jurisdiction, forum, and venue of thestate or federal (to the extent federal jurisdiction exists) courts located in Harris Countyin the State of Texas.
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     **9.5 No Waiver**. No failure by either party hereto at any time to give notice of any breach bythe other party of or to require compliance with, any condition or provision of this Agreementshall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at anyprior or subsequent time.     **9.6 Severability**. Any provision in this Agreement which is prohibited or unenforceable in anyjurisdiction by reason of applicable law shall, as to such jurisdiction, be ineffective only to theextent of such prohibition or unenforceability without invalidating or affecting the remainingprovisions hereof, and any such prohibition or unenforceability in any jurisdiction shall notinvalidate or render unenforceable such provision in any other jurisdiction.     **9.7 Counterparts**. This Agreement may be executed in one or more counterparts, each of whichshall be deemed to be an original, but all of which together will constitute one and the sameAgreement.     **9.8 Withholding of Taxes and Other Executive Deductions**. Company may withhold from anybenefits and payments made pursuant to this Agreement all federal, state, city, and other taxes asmay be required pursuant to any law or governmental regulation or ruling and all other customaryExecutive deductions made with respect to Company’s Executives generally.     **9.9 Headings**. The Section headings have been inserted for purposes of convenience and shallnot be used for interpretive purposes.     **9.10 Gender and Plurals**. Wherever the context so requires, the masculine gender includes thefeminine or neuter, and the singular number includes the plural and conversely.     **9.11 Assignment**. This Agreement shall be binding upon and inure to the benefit of Company andany successor of Company, by merger or otherwise. This Agreement shall also be binding upon andinure to the benefit of Executive and his estate. If Executive shall die prior to full payment ofamounts due pursuant to this Agreement, such amounts shall be payable pursuant to the terms of thisAgreement to his estate. Executive shall not have any right to pledge, hypothecate, anticipate, orassign this Agreement or the rights hereunder, except by will or the laws of descent anddistribution.     **9.12 Term**. This Agreement has a term co-extensive with the term of employment provided inSection 3.1. Termination of this Agreement shall not affect any right or obligation of any partywhich is accrued or vested prior to such termination. The provisions of Section 3.5 and Articles 6and 7 shall survive the termination of this Agreement and shall be binding upon Executive and hisor her legal representatives, successors, and assigns following such termination.     **9.13 Entire Agreement**. This Agreement constitutes the entire agreement of the parties withregard to the subject matter hereof and contains all the covenants, promises, representations,warranties, and agreements between the parties with respect to such subject matter. Withoutlimiting the scope of the preceding sentence, all understandings and agreements preceding the dateof execution of this Agreement and relating to the subject matter hereof are hereby null and voidand of no further force and effect, including, without limitation, all prior
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employment and severance agreements, if any, by and between Company and Executive. Anymodification of this Agreement will be effective only if it is in writing and signed by the partyto be charged.[Signatures begin on next page.]
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     **IN WITNESS WHEREOF,**the parties hereto have executed this Agreement on the _____ day ofOctober 2009, to be effective as of the Effective Date.       **Company**         **Magnum Hunter Resources Corporation**          Gary C. Evans    Chairman         **Executive**         **/s/  H.C. “Kip” Ferguson**              **H.C. “Kip” Ferguson**  
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