beardcagree.htm


    
      

    

    Exhibit
10.1

    CONSULTING
AGREEMENT

    


    


    THIS
AGREEMENT is entered into effective January 1, 2009 (the "Effective Date")
between Stanley S. Beard ("Beard") and Clayton Williams Energy, Inc., a Delaware
corporation ("Company").

    


    Beard has
served as a member of the Board of Directors of Company since September 27,
1991. Beard has resigned his position as a director of
Company.  Company desires to retain the services of Beard as a
consultant so that Beard's knowledge and expertise concerning the operations and
prospects of Company and of the oil and gas industry will continue to be
available to Company management. Beard is willing to provide such services upon
the terms and subject to the conditions of this Agreement.

    


    The
parties agree as follows:

    


    1.           Beard
agrees to provide consulting services to Company described on Schedule A hereto
and such other services as may be mutually agreed to by Beard and
Company.

    


    2.           Beard
is engaged for a term commencing on the Effective Date and continuing until
December 31, 2011 or such later date as the parties may mutually agree. Company
may terminate this Agreement or any or all of the services of Beard under the
Agreement upon breach of this Agreement by Beard by giving written notice to
Beard setting forth the effective date of termination. Beard shall stop work
hereunder to the extent and on the date specified in such notice,

    


    3.           Company
shall pay Beard a consulting fee equal to $8,750 per calendar quarter during the
term of this Agreement, which fee shall be payable in arrears on March 31, 2009
and on each successive June 30, September 30, December 31 and March 31 during
the term of this Agreement (or the next succeeding business day if such day is
not a business day). Company shall also pay Beard a commission as described on
Schedule A
hereto. Company shall reimburse Beard for reasonable out-of-pocket expenses
incurred by Beard in performing his duties under this Agreement provided that
Beard submits appropriate documentation of such expenses to
Company.

    


    4.           In
performing services hereunder, Beard shall not use any information or materials
in which Beard or any third party claims a proprietary interest without the
express prior written consent of Company. Beard will indemnify, defend and hold
Company and its subsidiaries and their respective affiliates, partners,
directors, officers, employees and agents harmless from and against any and all
losses, liabilities, claims, damages, fines, penalties, settlements, judgments,
costs and expenses (including reasonable attorneys' fees) (collectively, "Losses") arising out
of or in connection with a claim that the use of any such information or
materials by Company or its subsidiaries (a) infringes a patent, copyright,
trademark, trade name, service mark, or similar proprietary right, (b)
constitutes misuse or misappropriation of any confidential or proprietary
information or trade secret or (c) violates any other rights of a third party.
Company and its subsidiaries shall have the right to participate in such defense
and negotiations to the extent of its potential liabilities and
responsibilities.

    


    5.           Company
will indemnify, defend and hold Beard harmless from and against any and all
Losses arising out of or in connection with the performance by Beard of his
services under this Agreement, except for (a) such Losses arising out of or in
connection with the gross negligence, recklessness, intentional misconduct or a
knowing violation of law by Beard and (b) such Losses for which Beard is
required to indemnify Company pursuant to this Agreement.


    
      
        
           

           

        

         


      

      
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    COMPANY
AND BEARD INTEND THAT BEARD BE INDEMNIFIED AND HELD HARMLESS FOR BEARD'S OWN
NEGLIGENCE EXCEPT AS EXPRESSLY PROVIDED ABOVE.

    


    6.           During
the term of this Agreement and thereafter, Beard agrees to keep confidential all
information received or obtained by Beard from Company or its subsidiaries,
including without limitation information concerning the financial condition or
results of operation, oil and gas reserves, customers, suppliers, processes,
business and marketing plans, pricing, purchases, products and personnel of
Company or its subsidiaries. Beard will not use or disclose such information
except as authorized in writing by Company. Upon expiration or termination of
this Agreement, Beard shall promptly return to Company all copies (in whatever
form) of confidential information in Beard's possession and, at Company's
request, shall execute and deliver to Company written confirmation that Beard
has complied with this requirement.

    


    7.           During
the term of this Agreement and thereafter, Beard, individually or in a capacity
as a representative of another entity, shall not (a) hire or solicit any
existing or former employee of Company or its subsidiaries to terminate his
employment with Company or its subsidiaries (an employee of Company or it
subsidiaries shall cease to be considered a former employee if his employment
with Company or its subsidiaries terminated more than 12 months prior to the
conduct in question) or (b) solicit any existing or former customer or supplier
of Company or it subsidiaries to terminate his or its relationship with Company
or its subsidiaries or become a customer or supplier of another entity if such
other entity offers products or services which are or may be competitive with
those offered by Company or its subsidiaries.

    


    8.           Beard
shall be an independent contractor and not an agent or employee of Company or
its subsidiaries. Beard shall indemnify, defend and hold Company and its
subsidiaries and their respective affiliates, partners, directors, officers,
employees and agents harmless, from and against any and all Losses (a) arising
out of or in connection with any personal injury, death or property damage
caused by or arising from any acts or omissions of Beard while performing
services hereunder and (b) arising out of or in connection with any breach of
this Agreement by Beard. Beard hereby expressly waives for itself and its
successors and assigns any and all claims to receive any benefits under benefit
plans of Company or its subsidiaries, including, without limitation, vacation,
disability, life insurance, bonus, leave, pension and annuity, accidental death
and dismemberment, hospital, surgical or medical benefits.

    


    9.           Company
will not make deductions from any payments to Beard hereunder for withholding or
other taxes, unless otherwise required to do so by law or governmental
regulation. Beard shall be responsible for and shall withhold or pay any
federal, state or local tax with respect to compensation, wages or other
remuneration for any services performed pursuant to this Agreement and shall
indemnify, defend and hold Company and its subsidiaries and their respective
affiliates, partners, directors, officers, employees and agents harmless from
and against all such taxes and shall comply with all governmental regulations
with respect thereto, including the filing of all necessary reports and
returns.

    


    10.           Beard
agrees that he will use reasonable efforts to not intentionally make any
derogatory or disparaging statements about Company, its subsidiaries, or its or
their past, present and future affiliates, partners, directors, officers,
employees and agents that may adversely affect their current or potential
business reputation. Company agrees that it will not, and will use reasonable
efforts to cause its officers, directors and senior managers to not
intentionally make any derogatory or disparaging statements with respect to
Beard or Beard's service as a director of Company that may adversely affect his
current or potential business reputation (including informing its officers,
directors and senior managers that they shall not intentionally make such
statements).

    


    


    
      
        
           

        

      

      
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    11.           Beard
acknowledges that he is aware of the restrictions imposed by the United States
securities laws on the purchase or sale of a security of any issuer on the basis
of material, non-public information about that security or issuer in breach of a
duty of trust or confidence that is owed directly, indirectly or derivatively to
that issuer or the shareholders of that issuer or to any other person who is the
source of the material, non-public information.  Beard agrees not to
trade, and not to allow any of his representatives to trade, in Company's
securities when he is prohibited from trading in Company's securities under
applicable securities laws.  Company will cooperate with Beard in the
filing of documents required by the Securities and Exchange Commission relating
to his resignation as a member of the Board of Directors of Company and/or the
sale of Company securities made in accordance with this paragraph
11.

    


    12.           This
Agreement shall not be assigned by Beard nor shall Beard subcontract any
services to be performed under this Agreement without Company's prior written
consent.

    


    13.           Any
notice required hereunder shall be hand delivered or be sent by U.S. Certified
Mail, Return Receipt Requested to the parties as follows:

    


    
      	
              Clayton
      Williams Energy, Inc.

            
	
              Attn:
      L. Paul Latham

            
	
              6
      Desta Drive, Suite 6500

            
	
              Midland,
      Texas 79705

            
	 
      
	
              Stanley
      Beard

            
	
              500
      W. Texas Avenue, Suite 705

            
	
              Midland,
      Texas 79701

            


    

    


    14.           This
Agreement shall be governed by the laws of the State of 'Texas without regard to
the conflicts of law provisions thereof. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof. The
prevailing party in any action to enforce this Agreement shall be entitled to
costs and attorneys' fees. No waiver or modification of this Agreement will be
binding upon either party unless made in writing and signed by a duly authorized
representative of such party and no failure or delay in enforcing any right will
be deemed a waiver. This Agreement shall be construed as to its fair meaning and
not strictly for or against either party.

    


    


    [SIGNATURE
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    The
parties have executed this Agreement on December 1, 2008 to be effective on the
Effective Date.

    


    
      	 
      	 
      	
              BEARD:

            
	 
      	 
      	 
      
	 
      	 
      	
              By: 
      /s/ Stanley S. Beard

            
	 
      	 
      	
              Stanley
      S. Beard

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	
              COMPANY:

            
	 
      	 
      	 
      
	 
      	 
      	
              CLAYTON
      WILLIAMS ENERGY, INC.

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	
              By: 
      /s/ L. Paul Latham

            
	 
      	 
      	
              L.
      Paul Latham

            
	 
      	 
      	
              Executive
      Vice President

            


    

    


    



    
      
        
          Clayton
Williams Energy, Inc.

          Consulting
Agreement

           

        

         


      

      
         


        
          

        

      

      
         


      

    


    SCHEDULE
A

    


    


    


    
      	
               
      

            	
              Provision of Advice
      and Expertise.

            


    

    


    Beard
shall be available from time to time to consult with officers of the Company as
to financing, drilling programs, strategy and related issues associated with
building values for the shareholders of the Company.

    


    
      	
               
      

            	
              Presentation of
      Prospects.

            


    

     

    Beard
shall identify in writing to Company any prospective production, drilling or
acreage block prospect (“Prospect”) which Beard develops prior to providing any
information as to a Prospect to any other party.  Said Prospect
information shall be delivered to L. Paul Latham, or his designee, in
writing.  The Prospect information shall include the owner, location,
pro-forma budget and brief analysis of the Prospect.  Unless Company
has already identified such Prospect, Company will acknowledge in writing to
Beard within ten (10) days of receipt of Beard’s presentation of the Prospect
that Beard has identified that Prospect.  Should Company have already
identified the Prospect, Company shall notify Beard in writing within five (5)
days after receipt of Beard’s presentation of the Prospect and advise Beard if
the Company has already been approached on the Prospect or has the Prospect
under consideration.  In such event, Beard will not be entitled to
register or receive a commission for that Prospect, and such Prospect shall not
be subject to this agreement.

    


    Company
will have sixty (60) days from the date of receipt of Beard’s presentation of a
Prospect to elect to participate in such Prospect. If Company does not elect, in
writing, to participate in such Prospect within the sixty (60) day period,
Company will be deemed to have elected not to participate in such Prospect and
such Prospect shall not be subject to this agreement.

    


    During
the sixty (60) day review period and thereafter if Company elects to participate
in a Prospect, all information related to such Prospect shall be confidential
information, subject to the provisions of paragraph 6 of the
Agreement.  Company agrees that should it make a final determination
not to participate in the Prospect prior to the end of the sixty (60) day
period, it will notify Beard of such decision, and such Prospect shall not be
subject to this agreement.

    


    
      	
               
      

            	
              As
      to each Prospect in which Company elects to participate (whether by
      drilling, purchase, merger, acquisition or otherwise), Company will pay
      Beard a commission as set forth
below:

            


    

    


    
      	 
      	
              Drilling
      deal - $10,000 per well drilled, plus 1% ORR

            
	 
      	
              Acreage
      block purchase (no well commitment) —5% commission and 1%
    ORR

            
	 
      	
              Production
      Acquisition                  
      First $0 to 10 mm — 3%

            
	 
      	
              Next $10+ to 25 mm —
      2%

            
	 
      	
              Next $25 to 50mm —
      1.5%

            
	 
      	
              Next $50 to 100 mm —
      1%

            
	 
      	
              All over $100 mm
      —.5%

            


    

    


    No commission will be payable unless
Company actually closes and funds the transaction.


    Clayton
Williams Energy, Inc.

    Schedule
A