Exhibit 10.1


 


EMPLOYMENT AGREEMENT


 


This AGREEMENT (this “Agreement”) is
made and entered into as of the 24th day of August 2009, by and between
Toreador Resources Corporation, a Delaware corporation (the “Company”),
and Craig McKenzie (“Employee”).


 


W I T N E S S E T H
:


 


WHEREAS, Employee has been employed by the Company
as its Chief Executive Officer since March 27, 2009 (the “Effective
Date”); and


 


WHEREAS, the Company desires to enter into this
Agreement embodying the terms of such employment, and Employee desires to enter
into this Agreement and to accept such employment, subject to the terms and
provisions of this Agreement.


 


NOW, THEREFORE, in consideration of the promises and
mutual covenants contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are mutually acknowledged, the Company and
Employee hereby agree as follows:


 


Section 1.             Definitions.


 


(a)          “Accrued Obligations” shall mean (i) all
accrued but unpaid Base Salary through the date of termination of Employee’s
employment, (ii) any unpaid or unreimbursed expenses incurred in
accordance with Section 7 below, (iii) any benefits provided under
the Company’s employee benefit plans upon a termination of employment, in
accordance with the terms contained therein, (iv) reasonable relocation
costs, to the extent unpaid or unreimbursed, and (v) any allowance payable
to Employee by the Company, in accordance with written Company policy.


 


(b)          “Agreement” shall have the meaning set forth
in the preamble hereto.


 


(c)          “Appointment Date” shall have the meaning set
forth in Section 3(a) below.


 


(d)          “Base Salary” shall mean the salary provided
for in Section 4(a) below or any increased salary granted to Employee
pursuant to Section 4(a).


 


(e)          “Board” shall mean the Board of Directors of
the Company.


 


(f)           “Cause” shall mean (i) Employee’s act(s) of
gross negligence or willful misconduct in the course of Employee’s employment
hereunder that is or could reasonably be expected to be materially injurious to
the Company or any other member of the Company Group, (ii) willful failure
or refusal by Employee to perform in any material respect his duties or
responsibilities, (iii) misappropriation by Employee of any assets or
business opportunities of the Company or any other member of the Company Group,
(iv) embezzlement or fraud committed by Employee, or at his direction, (v) Employee’s
conviction of, or pleading “guilty” or “ no contest” to, (A) a felony
under United States state or federal law, or (B) any other criminal charge
in any jurisdiction that has, or could be reasonably expected to have, a
material adverse impact on the performance of Employee’s duties to the Company
or any other member of the Company Group or otherwise result in material injury
to the reputation or business of the Company or any other member of the Company
Group, (vi) any material violation of a written Company policy, including
but not limited to those relating to sexual harassment or business conduct, and
those otherwise set forth in the manuals or statements of written Company
policy, or (vii) Employee’s breach of Section 9 of this Agreement.


 

















 


EXECUTION VERSION


 


(g)          “Change of Control” shall mean a “change of
control event” within the meaning of Treas. Reg. 1.409A-3(i)(5); provided, that in no event shall the consummation of the
Proposed Transaction constitute a Change in Control for purposes of this
Agreement.


 


(h)          “Change of Control Severance Term” shall mean
the twenty-four (24) month period following Employee’s termination pursuant to Section 8(h) below.


 


(i)           “Code” shall mean the Internal Revenue Code
of 1986, as amended.


 


(j)           “Common Shares” shall have the meaning set
forth in Section 4(c) below.


 


(k)          “Company” shall have the meaning set forth in
the preamble hereto.


 


(l)           “Company Group” shall mean the Company
together with any direct or indirect subsidiaries of the Company.


 


(m)         “Compensation Committee” shall mean the Board
or the committee of the Board designated to make compensation decisions
relating to senior executive officers of the Company Group.


 


(n)          “Competitive Activities” shall mean any
business activities in which the Company or any other member of the Company
Group engages during the Term of Employment.


 


(o)          “Confidential Information” shall mean
confidential or proprietary trade secrets, client lists, client identities and
information, information regarding service providers, investment methodologies,
marketing data or plans, sales plans, management organization information,
operating policies or manuals, business plans or operations or techniques,
financial records or data, or other financial, commercial, business, or
technical information (i) relating to the Company or any other member of
the Company Group or (ii) that the Company or any other member of the
Company Group may receive belonging to suppliers, customers, or others who do
business with the Company or any other member of the Company Group, but shall
exclude any information that is in the public domain or hereafter enters the
public domain, in each case without the breach by Employee of Section 9(a) below.


 


(p)          “Covered Compensation” shall mean
compensation paid or payable to Employee pursuant to this Agreement as Base
Salary, STI Award, LTI Award, and any allowances paid.


 


(q)          “Delay Period” shall have the meaning set
forth in Section 14 below.


 


(r)           “Developments” shall have the meaning set
forth in Section 9(f) below.


 


(s)          “Disability” shall mean any physical or
mental disability or infirmity of the Employee that has prevented the
performance of Employee’s duties for a period of (i) ninety (90)
consecutive days or (ii) one hundred twenty (120) non-consecutive days
during any twelve (12) month period.  Any
question as to the existence, extent, or potentiality of Employee’s Disability
upon which Employee and the Company cannot agree shall be determined by a
qualified, independent physician selected by the Company and approved by
Employee (which approval shall not be unreasonably withheld).  The determination of any such physician shall
be final and conclusive for all purposes of this Agreement.


 


(t)           “Effective Date” shall have the meaning set
forth in the recitals above.


 


(u)          “Employee” shall have the meaning set forth
in the preamble hereto.


 


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(v)          “Good Reason” shall mean, without Employee’s
consent, (i) a diminution in Employee’s title, duties, or
responsibilities, (ii) a reduction in the Covered Compensation, (iii) the
failure of the Company to pay any compensation hereunder when due or to perform
any other obligation of the Company hereunder, (iv) the relocation of
Employee’s principal place of employment to a country other than France, or (v) failure
of the Company to obtain a written agreement from any successor or assign of
the Company to assume the obligations of the Company under this Agreement upon
a Change of Control.


 


(w)         “Interfering Activities” shall mean (i) encouraging,
soliciting, or inducing, or in any manner attempting to encourage, solicit, or
induce, any individual employed by, or individual or entity providing
consulting services to, the Company or any other member of the Company Group to
terminate such employment or consulting services; provided,
that the foregoing shall not be violated by general advertising not targeted at
employees or consultants of the Company or any other member of the Company
Group; (ii) hiring any individual who was employed by the Company or any
other member of the Company Group within the six (6) month period prior to
the date of such hiring; or (iii) encouraging, soliciting, or inducing, or
in any manner attempting to encourage, solicit, or induce, any customer,
supplier, licensee, or other business relation of the Company or any other
member of the Company Group to cease doing business with or materially reduce
the amount of business conducted with the Company or any other member of the
Company Group, or in any way interfering with the relationship between any such
customer, supplier, licensee, or business relation and the Company or any other
member of the Company Group.


 


(x)           “LTI Award” shall have the meaning set forth
in Section 4(c) below.


 


(y)          “Person” shall mean any individual,
corporation, partnership, limited liability company, joint venture,
association, joint-stock company, trust (charitable or non-charitable),
unincorporated organization, or other form of business entity.


 


(z)           “Proposed Transaction” shall mean the
proposed transaction whereby the Company will become a wholly-owned subsidiary
of Toreador Holding SAS, a wholly-owned subsidiary of the Company.


 


(aa)        “Release Expiration Date” shall mean the date
that is twenty-one (21) days following the date upon which the Company timely
delivers Employee the release contemplated in Section 8(h) below, or
in the event that such termination of employment is “in connection with an exit
incentive or other employment termination program” (as such phrase is defined
in the Age Discrimination
in Employment Act of 1967), the date that is forty-five (45) days
following such delivery date.


 


(bb)        “Restricted Area” shall mean France or any other
jurisdiction in which the Company or any other member of the Company Group
engages in business during the Term of Employment, or at the time of a
termination of Employee’s employment was engaged in business.


 


(cc)        “Restricted Period” shall mean the period
commencing on the Effective Date and extending to the twelve (12) month
anniversary of Employee’s termination of employment for any reason.


 


(dd)        “Severance Term” shall mean the twenty-four
(24) month period following Employee’s termination by the Company without Cause
(other than by reason of death or Disability) or by Employee for Good Reason.


 


(ee)        “STI Award” shall have the meaning set forth
in Section 4(a) below.


 


(ff)          “Taxable Cost” shall have the meaning set
forth in Section 8(d)(vi) below.


 


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(gg)        “Term of Employment” shall mean the period
specified in Section 2 below.


 


Section 2.             Acceptance and Term of
Employment.


 


The Company agrees to employ Employee, and
Employee agrees to serve the Company, on the terms and conditions set forth
herein.  The “Term of Employment” shall
mean the period commencing on the Effective Date and, unless terminated sooner
as provided in Section 8 hereof, continuing for a period of two (2) years
from the Effective Date; provided, however, that the Term of Employment shall
be extended automatically at the end of the initial two (2) year term for
a one (1) year term and thereafter for successive one (1) year terms
if neither the Company nor Employee has advised the other in writing in
accordance with Section 19 at least ninety (90) days prior to the end of
the then current term that such term will not be extended for an additional one
(1) year term.


 


Section 3.             Position, Duties, and
Responsibilities; Place of Performance.


 


(a)          During the Term of Employment, Employee shall be
employed and serve as the President and Chief Executive Officer of the Company
and shall have such duties and responsibilities as are commensurate with such
title.  The Employee shall report to the
Board and shall carry out and perform all orders, directions and policies given
to him by the Board consistent with his position and title.  Employee also agrees to serve as an officer
and/or director of any member of the Company Group, in each case without additional
compensation, except as provided herein or in a separate agreement between the
parties.  In addition, at such time that
Employee obtains all required work permits in France, the Company shall cause
Employee to be appointed as Chairman of Toreador Holding SAS (the “Appointment
Date”).  From and after the
Appointment Date, the Company shall expressly be permitted to have all or part
of the Base Salary and STI Award paid to Employee by Toreador Holding SAS.


 


(b)          Employee shall devote his full business time,
attention, skill, and best efforts to the performance of his duties under this
Agreement and shall not engage in any other business or occupation during the
Term of Employment, including, without limitation, any activity that (x) conflicts
with the interests of the Company or any other member of the Company Group, (y) interferes
with the proper and efficient performance of Employee’s duties for the Company,
or (z) interferes with Employee’s exercise of judgment in the Company’s
best interests.  Notwithstanding the
foregoing, nothing herein shall preclude Employee from (i) serving, with
the prior written consent of the Board, as a member of the boards of directors
or advisory boards (or their equivalents in the case of a non-corporate entity)
of non-competing businesses, (ii) engaging in charitable activities and
community affairs, and (iii) managing his personal investments and
affairs; provided, however,
that the activities set out in clauses (i), (ii), and (iii) shall be
limited by Employee so as not to materially interfere, individually or in the
aggregate, with the performance of his duties and responsibilities hereunder.


 


Section 4.             Compensation.  During the Term of Employment, Employee shall
be entitled to the following compensation:


 


(a)          Base Salary.  Employee shall be paid an annualized Base
Salary, payable in accordance with the regular payroll practices of the
Company, of not less than $420,000, with increases, if any, as may be approved
in writing by the Compensation Committee.


 


(b)          Short-Term Incentive Awards.


 


(i)           In his capacity
as President and CEO of the Company, Employee shall be eligible for an annual
cash short-term incentive award determined by the Compensation Committee in
respect of each fiscal year (or partial fiscal year) during the Term of
Employment


 


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(the “STI
Award”) in accordance with this Section 4(b).  The target STI Award for each fiscal year
shall be 100% of Base Salary (or such greater percentage of Base Salary as the
Board or Compensation Committee shall determine, in its sole discretion) and,
if earned, shall be paid by no later than March 31st of each year with
respect to the preceding year.


 


(ii)          The criteria
for achieving the STI Award shall be based upon the level of achievement of
Company and individual performance objectives for such fiscal year, as
determined by the Board or the Compensation Committee and agreed to by
Employee, as evidenced by an Addendum to this Agreement executed by the Company
and Employee by December 1 of each year with respect to the following
year.


 


(iii)         The STI Award
for any partial fiscal year occurring during the Term of Employment shall be
pro rated as and to the extent provided in Section 8.


 


(c)          Long-Term Incentive Awards.


 


(i)           In his capacity
as President and CEO of the Company, Employee shall be eligible for a long-term
incentive award determined by the Compensation Committee in respect of each
fiscal year (or partial fiscal year) during the Term of Employment in
accordance with this Section 4(c) (the “LTI Award”).  The LTI Award for 2009, the performance
criteria for which the Company agrees have been achieved, shall be the grant,
as of the Effective Date, of the number of shares of common stock of the
Company (“Common Shares”) equal to 200% of the Base Salary divided by
the closing price of the Common Shares on the Effective Date.


 


(ii)          The target LTI
Award for each subsequent fiscal year shall be a number of Common Shares equal
to 200% of Base Salary divided by the January Representative Value (as
defined in Exhibit A, annexed hereto) of the Company’s Common Shares and,
if earned, shall be granted by no later than March 31st of the following
year.  The actual LTI Award payable shall
be based upon the level of achievement of the annual performance objectives for
such fiscal year, as described in Exhibit A annexed hereto.


 


(iii)         The LTI Award
for any year shall vest in three equal installments, with the first 1/3 vesting
on the first anniversary of the grant of the LTI Award , the second 1/3 vesting
on the second anniversary of the grant of the LTI Award, and the remaining 1/3
vesting on the third anniversary of the grant of the LTI Award, and shall be
subject to such restriction on written transfer policies as the Company may
adopt from time to time and which are applicable to all officers, directors and
other management personnel of the Company.


 


Section 5.             Employee
Benefits.


 


(a)          General.  During the Term of Employment, Employee shall
be entitled to participate in health insurance, retirement, and other benefits
provided to other senior executives of the Company.


 


(b)          Vacation and Time Off.  During each calendar year of the Term of
Employment, Employee shall be eligible for thirty (30) days paid vacation, as
well as sick pay and other paid and unpaid time off in accordance with the
policies and practices of the Company.


 


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Section 6.             Key-Man Insurance.


 


At any time during the Term of
Employment, the Company shall have the right to insure the life of Employee for
the sole benefit of the Company, in such amounts, and with such terms, as it
may determine.  All premiums payable
thereon shall be the obligation of the Company. 
Employee shall have no interest in any such policy, but agrees to
cooperate with the Company in procuring such insurance by submitting to
physical examinations, supplying all information required by the insurance
company, and executing all necessary documents, provided that no financial
obligation is imposed on Employee by any such documents.


 


Section 7.             Reimbursement of Business
Expenses.


 


Employee is authorized to incur reasonable business
expenses in carrying out his duties and responsibilities under this Agreement,
and the Company shall promptly reimburse him for all such reasonable business
expenses, subject to documentation in accordance with written Company policy,
as in effect from time to time.


 


Section 8.             Termination of Employment.


 


(a)          General.  The Term of Employment shall terminate
earlier than as provided in Section 2 hereof upon the earliest to occur of
(i) Employee’s death, (ii) a termination by reason of a Disability, (iii) a
termination by the Company with or without Cause, and (iv) a termination
by Employee with or without Good Reason. 
Upon any termination of Employee’s employment for any reason, except as
may otherwise be requested by the Company in writing and agreed upon in writing
by Employee, Employee shall resign from any and all directorships, committee
memberships, and any other positions Employee holds with the Company or any
other member of the Company Group. 
Notwithstanding anything herein to the contrary, the payment (or
commencement of a series of payments) hereunder of any nonqualified deferred
compensation (within the meaning of Section 409A of the Code) upon a
termination of employment shall be delayed until such time as Employee has also
undergone a “separation from service” as defined in Treas.
Reg. 1.409A-1(h), at which time such nonqualified deferred compensation
(calculated as of the date of Employee’s termination of employment hereunder)
shall be paid (or commence to be paid) to Employee on the schedule set forth in
this Section 8 as if Employee had undergone such termination of employment
(under the same circumstances) on the date of his ultimate “separation from
service.”


 


(b)          Termination Due to Death or Disability.  Employee’s employment shall terminate
automatically upon his death.  The
Company may terminate Employee’s employment immediately upon the occurrence of
a Disability, such termination to be effective upon Employee’s receipt of
written notice of such termination.  In
the event Employee’s employment is terminated due to his death or Disability,
Employee or his estate or his beneficiaries, as the case may be, shall be
entitled to:


 


(i)           The Accrued Obligations; and


 


(ii)          Any unpaid STI Award in
respect of any completed fiscal year that has ended prior to the date of such
termination, which amount shall be paid within sixty (60) days from the date of
such; and


 


(iii)         Any STI Award that would
have been payable with respect to the year of termination in the absence of the
Employee’s death or Disability, pro-rated for the period the Employee worked
prior to his death or Disability, which amount shall be paid at such time STI
Awards are paid to other senior executives of the Company, but in no event
later than one day 


 


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prior to the date that is 2
1/2 months following the last day of the fiscal year in which such termination
occurs; and


 


(iv)         Immediate pro-rata vesting
of any Common Shares previously awarded to the Employee based on the number of
months the Employee has worked for the Company from the date of grant as a
percentage of the total number of months required for complete vesting in absence
of a termination of employment, and cancellation of any remaining Common Shares
not so vested; and


 


(v)          The rights to the same
compensation and benefits as provided in Section 8(d) below, in lieu
of clauses (i) through (iv), if the termination of Employee’s employment
is by reason of death or Disability while the Employee is traveling on official
Company business.


 


Following such termination of Employee’s
employment by reason of death or Disability, except as set forth in this Section 8(b),
Employee shall have no further rights to any compensation or any other benefits
under this Agreement.


 


(c)          Termination by the Company
for Cause.


 


(i)           The Company may terminate
Employee’s employment at any time for Cause, effective upon Employee’s receipt
of written notice of such termination; provided, however, that with respect to any Cause of termination
relying on clause (ii) or (vi) of the definition of Cause set forth
in Section 1(f) hereof, to the extent such act or acts are curable,
Employee shall be given not less than twenty (20) days’ written notice by the
Board of the Company’s intention to terminate him for Cause, such notice to
state in detail the particular act or acts or failure or failures to act that
constitute the grounds on which the proposed termination for Cause is based,
and such termination shall be effective at the expiration of such twenty (20)
day notice period unless Employee has substantially cured such act or acts or
failure or failures to act that give rise to Cause during such period.


 


(ii)          In the event the Company
terminates Employee’s employment for Cause, he shall be entitled only to the
Accrued Obligations, and any previously awarded Common Shares which are not
vested as of the date of termination shall be cancelled.  Following such termination of Employee’s
employment for Cause, except as set forth in this Section 8(c)(ii),
Employee shall have no further rights to any compensation or any other benefits
under this Agreement.


 


(d)          Termination by the Company without Cause.  The Company may terminate Employee’s
employment at any time without Cause, effective upon Employee’s receipt of
written notice of such termination.  In
the event Employee’s employment is terminated by the Company without Cause
(other than due to death or Disability), Employee shall be entitled to:


 


(i)           The Accrued Obligations;


 


(ii)          Any unpaid STI Award in
respect of any completed fiscal year that has ended prior to the date of such
termination, which amount shall be paid at such time STI Awards are paid to
other senior executives of the Company, but in no event later than one day
prior to the date that is 21⁄2 months following the last day of the fiscal year
in which such termination occurred; and


 


(iii)         The target STI Award for the
year in which termination occurs, pro-rated for the period the Employee worked
prior to such termination, which amount shall be paid at such 


 


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time STI Awards are paid to
other senior executives of the Company, but in no event later than one day prior
to the date that is 2 1/2 months following the last day of the fiscal year in
which such termination occurs; and


 


(iv)         Immediate vesting of any
Common Shares, including LTI Awards, previously awarded to the Employee; and


 


(v)          Continuation of payment of
Base Salary and Target STI Award during the Severance Term, payable in
accordance with the Company’s regular payroll practices; and


 


(vi)         Continuation, during the
Severance Term, of the health benefits provided to Employee and his covered
dependants under the Company’s health plans, it being understood and agreed
that the Company’s obligation to provide such continuation of benefits shall
terminate prior to the expiration of the Severance Term in the event that
Employee becomes eligible to receive any health benefits while employed by or
providing service to, in any capacity, any other business or entity during the
Severance Term; provided, however,
that as a condition of the Company’s providing the continuation of health
benefits described herein, the Company may require Employee to elect
continuation coverage under COBRA. 
Notwithstanding the forgoing, if such health benefits are provided to
employees of the Company generally through a self-insured arrangement, and Employee
qualifies as a “highly compensated individual” (within the meaning of Section 105(h) of
the Code), (i) such continuation of benefits shall be provided on a fully
taxable basis, based on 100% of the monthly premium cost of participation in
the self-insured plan less any portion required to be paid by Employee pursuant
to clause (A) above (the “Taxable Cost”), and, as such, Employee’s
W-2 shall include the after-tax value of the Taxable Cost for each month during
the applicable benefit continuation period, and (ii) on the last payroll
date of each calendar month during which any health benefits are provided
pursuant to this Section 8(d)(vi), Employee shall receive an additional
payment, such that, after payment by the Employee of all federal, state, local
and employment taxes imposed on Employee as a result of the inclusion of the
portion of the Taxable Cost in income during such calendar month, Employee
retains (or has had paid to the Internal Revenue Service on his behalf) an
amount equal to such taxes as Employee is required to pay as a result of the
inclusion of the Taxable Cost in income during such calendar month.


 


Following such termination of Employee’s
employment by the Company without Cause, except as set forth in this Section 8(d),
Employee shall have no further rights to any compensation or any other benefits
under this Agreement.


 


(e)          Termination by Employee with Good Reason.  Employee may terminate his employment with
Good Reason by providing the Company twenty (20) days’ written notice setting
forth in reasonable specificity the event that constitutes Good Reason.  During such twenty (20) day notice period,
the Company shall have a cure right (if curable), and if not cured within such
period, Employee’s termination will be effective upon the expiration of such
cure period, and Employee shall be entitled to the same payments and benefits
as provided in Section 8(d) above for a termination by the Company
without Cause, subject to the same conditions on payment and benefits as
described in Section 8(d) above. 
Following such termination of Employee’s employment by Employee with
Good Reason, except as set forth in this Section 8(e), Employee shall have
no further rights to any compensation or any other benefits under this
Agreement.


 


(f)           Termination by Employee without Good Reason.  Employee may terminate his employment without
Good Reason by providing the Company thirty (30) days’ written notice of such
termination.  In the event of a
termination of employment by Employee under this Section 8(f), except as 


 


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provided in Section 8(h), Employee shall be entitled only to the
Accrued Obligations, and any previously awarded Common Shares which are not
vested as of the date of termination shall be cancelled.  In the event of termination of Employee’s
employment under this Section 8(f), the Company may, in its sole and
absolute discretion, by written notice accelerate such date of termination
without changing the characterization of such termination as a termination by
Employee without Good Reason.  Following
such termination of Employee’s employment by Employee without Good Reason,
except as set forth in this Section 8(f) or Section 8(h),
Employee shall have no further rights to any compensation or any other benefits
under this Agreement.


 


(g)          Non-Extension of the Term of Employment.  Employee’s employment hereunder shall
terminate upon the close of business of the last day of the then current term
if either the Company or Employee gives timely notice of its intention not to
extend the then current term of employment, as provided in Section 2.  Upon such termination of the Term of
Employment, Employee shall be entitled to:


 


(i)           The Accrued Obligations; and


 


(ii)          Any unpaid STI Award in
respect of any completed fiscal year that has ended prior to the date of such
termination, which amount shall be paid at such time STI Awards are paid to
other senior executives of the Company, but in no event later than one day
prior to the date that is 21⁄2 months following the last day of the fiscal year
in which such termination occurred.


 


In the event that Employee’s employment
hereunder is terminated by reason of the Company giving notice of its intention
not to extend any Term of Employment under Section 2, in addition to the
above, Employee shall be entitled to the following benefits:


 


(iii)         Any STI Award that would
have been payable with respect to the year of termination in the absence of the
Employee’s termination, pro-rated for the period the Employee worked prior to
such termination, which amount shall be paid at such time STI Awards are paid
to other senior executives of the Company, but in no event later than one day
prior to the date that is 21⁄2 months following the last day of the fiscal year
in which such termination occurred; and


 


(iv)         Immediate vesting of any
Common Shares, including LTI Awards, previously awarded to the Employee;


 


(v)          Continuation of
payment of Base Salary for a period of twenty-four (24) months, payable in
accordance with the Company’s regular payroll practices; and


 


(vi)         Continuation,
for a period of twenty-four (24) months, of the health benefits provided to
Employee and his covered dependants under the Company’s health plans, subject
to the terms and conditions set forth in Section 8(d)(vi) above.


 


Following such termination of Employee’s
employment pursuant to Section 2, except as set forth in this Section 8(g),
Employee shall have no further rights to any compensation or any other benefits
under this Agreement.  In the event that
Employee’s employment hereunder is terminated by reason of the Employee giving
notice of his intention not to extend any Term of Employment under Section 2,
then any previously awarded Common Shares which are not vested as of the date
of termination shall be cancelled.


 


(h)          Termination Following Change of Control.  If, upon a Change of Control of the Company
or during the one (1) year period following such Change of Control,
Employee is terminated by the Company without Cause or Employee terminates his
employment with or without Good Reason, in 


 


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lieu of the benefits payable pursuant to Sections 8(d) or 8(e) or
8(f) hereof, as applicable, Employee shall be entitled to:


 


(i)           The Accrued Obligations;


 


(ii)          Any unpaid STI Award in
respect of any completed fiscal year that has ended prior to the date of such
termination, which amount shall be paid at such time STI Awards are paid to
other senior executives of the Company, but in no event later than one day
prior to the date that is 21⁄2 months following the last day of the fiscal year
in which such termination occurred;


 


(iii)         The target STI
Award for the year in which termination occurs, pro-rated for the period the
Employee worked prior to such termination, which amount shall be paid at such
time STI Awards are paid to other senior executives of the Company, but in no
event later than one day prior to the date that is 2 1/2 months following the
last day of the fiscal year in which such termination occurs;


 


(iv)         A lump-sum cash
payment equal to two (2) times the sum of (A) Base Salary and (B) target
STI Award, which amount shall be paid in a lump sum within ten (10) business
days following the closing of such Change of Control;


 


(v)          Immediate
vesting of all Common Shares, including LTI Awards, previously issued; and


 


(vi)         Continuation,
during the Change of Control Severance Term, of the health benefits provided to
Employee and his covered dependants under the Company’s health plans, subject
to the terms and conditions set forth in Section 8(d)(vi) above.


 


Following such termination
of Employee’s employment following a Change of Control, except as set forth in
this Section 8(g), Employee shall have no further rights to any
compensation or any other benefits under this Agreement.


 


(i)           Release.  Notwithstanding any provision herein to the
contrary, the Company may require that, prior to payment of any amount or
provision of any benefit pursuant to subsection (d), (e), or (h) or
pursuant to clauses (iii) through (v) of subsection (g) of this Section 8
(other than the Accrued Obligations), Employee shall have executed, on or prior
to the Release Expiration Date, a customary general release in favor of the
Company Group in such form as is reasonably required by the Company, and any
waiting periods contained in such release shall have expired.  To the extent that the Company requires
execution of such release, the Company shall deliver such release to Employee
within ten (10) business days following the termination of Employee’s
employment hereunder, and the Company’s failure to deliver such release prior
to the expiration of such ten (10) business day period shall constitute a
waiver of any requirement to execute such release.  Assuming a timely delivery of the release by
the Company, if Employee fails to execute such release on or prior to the
Release Expiration Date or timely revokes his acceptance of such release
thereafter, Employee shall not be entitled to any payments or benefits pursuant
to subsection (d), (e), or (h) or pursuant to clauses (iii) through (v) of
subsection (g) of this Section 8 (other than the Accrued
Obligations).  Notwithstanding anything
herein to the contrary, in any case where the date of termination and the
Release Expiration Date fall in two separate taxable years, any payments required
to be made to Employee that are treated as deferred compensation for purposes
of Section 409A of the Code shall be made in the later taxable year.


 


10
















 


Section 9.             Restrictive
Covenants.  Employee
acknowledges and agrees that (A) the agreements and covenants contained in
this Section 9 are (i) reasonable and valid in geographical and
temporal scope and in all other respects and (ii) essential to protect the
value of the business and assets of the Company Group, and (B) by his
employment with the Company, Employee has obtained and will obtain knowledge,
contacts, know-how, training, and experience, and there is a substantial
probability that such knowledge, contacts, know-how, training, and experience
could be used to the substantial advantage of a competitor of the Company Group
and to the substantial detriment of the Company Group.


 


(a)          Confidential
Information.  At any time during and
after the end of the Term of Employment, without the prior written consent of
the Board, Employee shall not disclose to or use for the benefit of any third
party any Confidential Information, except to the extent required by an order
of a court having jurisdiction or under subpoena from an appropriate government
agency, in which event, Employee shall use his best efforts to consult with the
Board prior to responding to any such order or subpoena, and except as required
in the performance of his duties hereunder.


 


(b)          Non-Competition.  Employee
covenants and agrees that during the Restricted Period, Employee shall not,
directly or indirectly, individually or jointly, own any interest in, operate,
join, control, participate as a partner, director, principal, officer, or agent
of, enter into the employment of, act as a consultant to, or perform any
services for, any Person (other than the Company or any other member of the
Company Group), that engages in any Competitive Activities within the
Restricted Area.  Notwithstanding anything
herein to the contrary, this Section 9(b) shall not prevent Employee
from acquiring as an investment securities representing not more than three
percent (3%) of the outstanding voting securities of any publicly held
corporation.


 


(c)          Non-Interference.  During the Restricted Period, Employee shall
not, directly or indirectly, for his own account or for the account of any
other Person, engage in Interfering Activities.


 


(d)          Non-Disparagement.  During the Term of Employment, and during the
Restricted Period, Employee shall not make any disparaging or defamatory
comments regarding any member of the Company Group or their respective current
or former directors, officers, or employees in any respect or make any comments
concerning any aspect of Employee’s relationship with any member of the Company
Group or any conduct or events that precipitated any termination of employment
from any member of the Company Group. 
Employee’s obligations under this subsection (d) shall not apply to
disclosures required by applicable law, regulation, or order of a court or
governmental agency.


 


(e)          Return
of Documents.  In the event of the
termination of Employee’s employment for any reason, Employee shall deliver to
the Company all of (i) the property of the Company and any other member of
the Company Group and (ii) the documents and data of any nature and in
whatever medium of the Company and any other member of the Company Group, and
he shall not take with him any such property, documents, or data, or any
reproduction thereof, or any documents containing or pertaining to any
Confidential Information.


 


(f)           Works
for Hire.  Employee agrees that the
Company shall own all right, title, and interest throughout the world in and to
any and all inventions, original works of authorship, developments, concepts,
know-how, improvements, and trade secrets, whether or not patentable or
registrable under copyright or similar laws, that Employee may solely or
jointly conceive or develop or reduce to practice, or cause to be conceived or
developed or reduced to practice during the Term of Employment, whether or not
during regular working hours, provided they either (i) relate at the time
of conception or development to the actual or demonstrably proposed business or
research and development activities of any member of the Company Group; (ii) result
from or relate to any work performed for the Company or any member of the
Company Group; or (iii) are developed through the use of Confidential 


 


11

















 


Information and/or Company resources or in consultation with any
personnel of the Company or any other member of the Company Group (collectively
referred to as “Developments”). 
Employee hereby assigns to the Company all right, title, and interest in
and to any and all of these Developments. 
Employee agrees to assist the Company, at the Company’s expense, to
further evidence, record, and perfect such assignments, and to perfect, obtain,
maintain, enforce, and defend any rights specified to be so owned or assigned.  Employee hereby irrevocably designates and
appoints the Company and its agents as attorneys-in-fact to act for Employee
and on his behalf to execute and file any document and to do all other lawfully
permitted acts to further the purposes of the foregoing with the same legal
force and effect as if executed by Employee. 
In addition, and not in contravention of any of the foregoing, Employee
acknowledges that all original works of authorship that are made by him (solely
or jointly with others) within the scope of employment and that are protectable
by copyright are “works made for hire,” as that term is defined in the United
States Copyright Act (17 USC § 101).  To
the extent allowed by law, this includes all rights of paternity, integrity,
disclosure, and withdrawal, and any other rights that may be known or referred
to as “moral rights.”  To the extent
Employee retains any such moral rights under applicable law, Employee hereby
waives such moral rights and consents to any action consistent with the terms
of this Agreement with respect to such moral rights, in each case, to the full
extent of such applicable law.  Employee
will confirm any such waivers and consents from time to time as requested by
the Company.


 


(g)          Blue
Pencil.  If any court of competent
jurisdiction shall at any time deem the duration or the geographic scope of any
of the provisions of this Section 9 unenforceable, the other provisions of
this Section 9 shall nevertheless stand, and the duration and/or
geographic scope set forth herein shall be deemed to be the longest period
and/or greatest size permissible by law under the circumstances, and the
parties hereto agree that such court shall reduce the time period and/or
geographic scope to permissible duration or size.


 


Section 10.           Injunctive Relief.


 


Without limiting the remedies available to members
of the Company Group, Employee acknowledges that a breach of any of the
covenants contained in Section 9 hereof may result in material irreparable
injury to the Company Group (or a member thereof) for which there is no
adequate remedy at law, that it will not be possible to measure damages for
such injuries precisely and that, in the event of such a breach or threat
thereof, the Company (or any other member of the Company Group) shall be entitled
to obtain a temporary restraining order and/or a preliminary or permanent
injunction, without the necessity of proving irreparable harm or injury as a
result of such breach or threatened breach of Section 9 hereof,
restraining Employee from engaging in activities prohibited by Section 9
hereof or such other relief as may be required specifically to enforce any of
the covenants in Section 9 hereof. 
Notwithstanding any other provision to the contrary, the Restricted
Period shall be tolled during any period of violation of any of the covenants
in Section 9(b) or (c) hereof and during any other period
required for litigation during which the Company (or any other member of the
Company Group) seeks to enforce such covenants against Employee if it is
ultimately determined that Employee was in breach of such covenants.


 


Section 11.           Representations and
Warranties of Employee.


 


Employee represents and warrants to the Company
that—


 


(a)          Employee
is entering into this Agreement voluntarily and that his employment hereunder
and compliance with the terms and conditions hereof will not conflict with or
result in the breach by him of any agreement to which he is a party or by which
he may be bound;


 


12

















 


(b)          Employee
has not violated, and in connection with his employment with the Company will
not violate, any non-solicitation, non-competition, or other similar covenant
or agreement of a prior employer by which he is or may be bound; and


 


(c)          in
connection with his employment with the Company, Employee will not use any
confidential or proprietary information he may have obtained in connection with
employment with any prior employer.


 


Section 12.           Taxes.


 


(a)          Withholding. 
The Company may withhold from any payments made under this Agreement all
applicable taxes, including but not limited to income, employment, and social
insurance taxes, as shall be required by applicable law.  Employee acknowledges and represents that the
Company has not provided any tax advice to him in connection with this
Agreement and that he has been advised by the Company to seek tax advice from
his own tax advisors regarding this Agreement and payments that may be made to
him pursuant to this Agreement, including specifically, the application of the
provisions of Section 409A of the Code to such payments.


 


(b)          Tax
Equalization.  The purpose of the tax
equalization payment described in this subsection (b) is to ensure that
the Employee pays approximately no more or less taxes (including employment
taxes) on Covered Compensation than he would have paid had the Covered
Compensation payable hereunder been subject only to U.S. federal, state and
local income and employment taxes, in the event such Covered Compensation is
subject to taxation in the France as a result of the performance of services
hereunder.  In the event that the Covered
Compensation provided to Employee under this Agreement becomes subject to
taxation in France, the Company shall pay Employee an additional amount (after
all taxes, including but not limited to social taxes, interest and penalties
are taken into account with respect to the Covered Compensation paid in
connection with Employee’s employment with the Company) as is necessary to put
Employee in the same after-tax position as Employee would have been in had the
Covered Compensation paid or provided pursuant to this Agreement not been
subject to taxation in France.


 


Section 13.           Set Off; Mitigation.


 


The Company’s obligation to pay Employee the amounts
provided and to make the arrangements provided hereunder shall be subject to
set-off, counterclaim, or recoupment of amounts owed by Employee to the Company
or its affiliates; provided, however, that to the extent any amount so subject to
set-off, counterclaim, or recoupment is payable in installments hereunder, such
set-off, counterclaim, or recoupment shall not modify the applicable payment
date of any installment, and to the extent an obligation cannot be satisfied by
reduction of a single installment payment, any portion not satisfied shall
remain an outstanding obligation of Employee and shall be applied to the next
installment only at such time the installment is otherwise payable pursuant to
the specified payment schedule.  Employee
shall not be required to mitigate the amount of any payment provided for
pursuant to this Agreement by seeking other employment or otherwise, and except
as provided in Section 8(d)(vi) hereof, the amount of any payment
provided for pursuant to this Agreement shall not be reduced by any
compensation earned as a result of Employee’s other employment or otherwise.


 


Section 14.           Additional Section 409A
Provisions.


 


Notwithstanding any provision in this Agreement to
the contrary—


 


13

















 


(a)          Any
payment otherwise required to be made hereunder to the Employee at any date as
a result of the termination of Employee’s employment shall be delayed for such
period of time as may be necessary to meet the requirements of Section 409A(a)(2)(B)(i) of
the Code (the “Delay Period”).  On
the first business day following the expiration of the Delay Period, Employee
shall be paid, in a single cash lump sum, an amount equal to the aggregate
amount of all payments delayed pursuant to the preceding sentence, and any
remaining payments not so delayed shall continue to be paid pursuant to the
payment schedule set forth herein.


 


(b)          Each
payment in a series of payments hereunder shall be deemed to be a separate
payment for purposes of Section 409A of the Code.


 


(c)          To
the extent that any right to reimbursement of expenses or payment of any
benefit in-kind under this Agreement constitutes nonqualified deferred
compensation (within the meaning of Section 409A of the Code), (i) any
such expense reimbursement shall be made by the Company no later than the last
day of the taxable year following the taxable year in which such expense was
incurred by Employee, (ii) the right to reimbursement or in-kind benefits
shall not be subject to liquidation or exchange for another benefit, and (iii) the
amount of expenses eligible for reimbursement or in-kind benefits provided
during any taxable year shall not affect the expenses eligible for
reimbursement or in-kind benefits to be provided in any other taxable year; provided,  that the
foregoing clause shall not be violated with regard to expenses reimbursed under
any arrangement covered by Section 105(b) of the Code solely because
such expenses are subject to a limit related to the period the arrangement is
in effect


 


Section 15.           Successors and Assigns;
No Third-Party Beneficiaries.


 


(a)          The
Company.  This Agreement shall inure
to the benefit of the Company and its respective successors and assigns.  Neither this Agreement nor any of the rights,
obligations, or interests arising hereunder may be assigned by the Company to a
Person (other than another member of the Company Group, or its or their
respective successors) without Employee’s prior written consent; provided, however, that
in the event of the merger or consolidation, or transfer or sale of all or
substantially all of the assets, of the Company with or to any other individual
or entity, this Agreement shall, subject to the provisions hereof, be binding
upon and inure to the benefit of such successor, and such successor shall
discharge and perform all the promises, covenants, duties, and obligations of
the Company hereunder, it being agreed that in such circumstances, the consent
of Employee shall not be required in connection therewith.


 


(b)          Employee.  Employee’s rights and obligations under this
Agreement shall not be transferable by Employee by assignment or otherwise,
without the prior written consent of the Company; provided,
however, that if Employee shall die, all
amounts then payable to Employee hereunder shall be paid in accordance with the
terms of this Agreement to Employee’s devisee, legatee, or other designee, or
if there be no such designee, to Employee’s estate.


 


(c)          No
Third-Party Beneficiaries.  Except as otherwise set forth in Section 8(b) or
Section 15(b) hereof, nothing expressed or referred to in this
Agreement will be construed to give any Person other than the Company, the
other members of the Company Group, and Employee any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement.


 


Section 16.           Waiver and Amendments.


 


Any waiver, alteration, amendment, or modification
of any of the terms of this Agreement shall be valid only if made in writing
and signed by each of the parties hereto; provided, 


 


14

















 


however, that any such
waiver, alteration, amendment, or modification is consented to on the Company’s
behalf by the Board.  No waiver by either
of the parties hereto of their rights hereunder shall be deemed to constitute a
waiver with respect to any subsequent occurrences or transactions hereunder
unless such waiver specifically states that it is to be construed as a
continuing waiver.


 


Section 17.           Severability.


 


If any covenants or such other provisions of this
Agreement are found to be invalid or unenforceable by a final determination of
a court of competent jurisdiction, (a) the remaining terms and provisions
hereof shall be unimpaired, and (b) the invalid or unenforceable term or
provision hereof shall be deemed replaced by a term or provision that is valid
and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision hereof.


 


Section 18.           Governing Law and
Jurisdiction.


 


In the event of any dispute under this Agreement or
relating or arising under the employment relationship (a “Dispute”), the
parties agree first to engage in good faith negotiations to try to resolve the
Dispute.  If the Dispute is not resolved
through such negotiations, the parties agree to engage in mediation using the
services of an agreed upon mediator.  If
the parties fail to agree on a mediator, they shall proceed under the rules and
administration of JAMS in New York City. 
If the Dispute is not resolved through such mediation, the parties agree
to submit the Dispute to binding arbitration. 
Each party expressly waives any right, whether pursuant to any
applicable federal, state, or local statute, to a jury trial and/or to have a
court of law determine rights and award damages with respect to any such
dispute.  The party invoking arbitration
shall notify the other party in writing (the “Written Notice”). The
parties shall exercise their best efforts, in good faith, to agree upon
selection of a single arbitrator.  If the
parties are unable to agree upon selection of a single arbitrator, they shall
so notify the American Arbitration Association (“AAA”) or another agreed upon
arbitration administrator and request that the arbitration provider work with
the parties to select a single arbitrator. 
The arbitration shall be (a) conducted in accordance with the
American Arbitration Association’s National Rules for the Resolution of
Employment Disputes, (b) held at a location in New York City, and (c) completed
within six months (or within such other time as the parties may mutually agree)
of the receipt of Written Notice by the party being notified.  The arbitrator shall have no authority to
assess punitive or exemplary damages as to any dispute arising out of or
concerning the provisions of this Agreement or otherwise arising out of the
employment relationship, except as and unless such damages are expressly
authorized by otherwise applicable and controlling statutes.  The arbitrator’s decision shall be final and
binding and enforceable in any court of competent jurisdiction.  Each party shall bear its own costs,
including attorneys’ fees, and share all costs of the arbitration equally,
subject to the following:  (i) nothing
provided herein shall interfere with either party’s right to seek or receive
damages or costs as may be allowed by applicable statutory law (such as, but
not necessarily limited to, reasonable attorneys’ fees and dispute resolution
related costs and expenses, if allowed by applicable statutory law), and (ii) the
arbitrator shall have the authority to award reasonable attorneys’ fees, costs,
and expenses to the party that substantially prevails.


 


Section 19.           Notices.


 


(a)          Every
notice or other communication relating to this Agreement shall be in writing,
and shall be mailed to or delivered to the party for whom or which it is
intended at such address as may from time to time be designated by it in a
notice mailed or delivered to the other party as herein provided; provided, that unless and until some other address be so
designated, all notices and communications by Employee to the Company shall be
mailed or delivered to the Company at its principal executive office, and all
notices and communications by the Company to Employee may be 


 


15

















 


given to Employee personally or may be mailed to Employee at Employee’s
last known address, as reflected in the Company’s records.


 


(b)          Any
notice so addressed shall be deemed to be given (i) if delivered by hand,
on the date of such delivery, (ii) if mailed by courier or by overnight
mail, on the first business day following the date of such mailing, and (iii) if
mailed by registered or certified mail, on the third business day after the
date of such mailing.


 


Section 20.           Section Headings;
Mutual Drafting.


 


(a)          The headings of the sections and subsections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof or affect the meaning or interpretation of this
Agreement or of any term or provision hereof.


 


(b)      
The parties are sophisticated and have been represented (or have had the
opportunity to be represented) by their separate attorneys throughout the
transactions contemplated by this Agreement in connection with the negotiation
and drafting of this Agreement and any agreements and instruments executed in
connection herewith.  As a consequence,
the parties do not intend that the presumptions of laws or rules relating
to the interpretation of contracts against the drafter of any particular clause
should be applied to this Agreement or any document or instrument executed in
connection herewith, and therefore waive their effects.


 


Section 21.           Entire Agreement.


 


This Agreement, together with any exhibits attached
hereto, constitutes the entire understanding and agreement of the parties
hereto regarding the employment of Employee. 
This Agreement supersedes all prior negotiations, discussions,
correspondence, communications, understandings, and agreements between the
parties relating to the subject matter of this Agreement.


 


Section 22.           Survival of Operative
Sections.


 


Upon any termination of Employee’s employment, the
provisions of Section 8 through 23 of this Agreement (together with any
related definitions set forth in Section 1 hereof) shall survive to the
extent necessary to give effect to the provisions thereof.


 


Section 23.           Counterparts.


 


This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.  The execution of this Agreement may be by
actual or facsimile signature.


 


*             *             *


[Signatures
to appear on the following page.]


 


16

















 


IN WITNESS WHEREOF, the undersigned have executed
this Agreement as of the date first above written.


 


	
   

  	
  TOREADOR RESOURCES CORPORATION

  
	
   

  	
   

  
	
   

  	
  /s/ Peter J. Hill

  
	
   

  	
  By: PETER J. HILL

  
	
   

  	
  Title: CHAIRMAN

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
  /s/ Craig McKenzie

  
	
   

  	
  CRAIG McKENZIE

  



 


17

















 


EXHIBIT A


 


LONG-TERM INCENTIVE AWARD


 


The performance objectives for achieving the target LTI for the fiscal
year ending December 31, 2010 and each fiscal year thereafter during the
Term of Employment, shall be as follows (the fiscal year for which the
calculation is being made shall be referred to herein as the ‘Award Year’):


 


1.               The Compensation
Committee shall calculate the January Representative Value (as defined
below) for Toreador’s common stock and for the common stock of each member of
the Comptetitor Set (as defined below) for January of the Award Year and
for January of the immediately following year.


 


2.               Next, the
Compensation Committee shall calculate the year-over-year change in the January Representative
Value for Toreador’s common stock and for the common stock of each member of
the Comptetitor Set, and shall rank Toreador and all such companies in order of
stock appreciation performance (without regard for either cash dividends paid
or share repurchases) from January of the Award Year to the following
January.


 


The Employee shall be entitled to an LTI Award, based on the above
ranking of Toreador’s stock appreciation performance, as follows :


 


	
  Toreador’s ranking

  	
   

  	
  LTI
  Award

  
	
   

  	
   

  	
   

  
	
  Below the 50th percentile

  	
   

  	
  0

  
	
  50th percentile

  	
   

  	
  1 X Base Salary

  
	
  75th percentile

  	
   

  	
  2 X Base Salary

  
	
  100th percentile

  	
   

  	
  3 X Base Salary

  



 


In the event Toreador’s ranking is between the 50th and 75th percentile
or between the 75th and 100th percentile, the amount of the LTI Award shall be
determined by linear interpolation.  For
example, if Toreador’s ranking is in the 60th percentile, the LTI Award shall
be 1.4 times Base Salary.


 


The LTI Award for each Award Year shall be the grant of a number of
Toreador Common Shares equal to the above multiple of Base Salary (for such
Award Year) divided by the January Representative Value of Toreador’s
Common Shares for the January immediately following the Award Year.  If earned, the LTI Award shall be granted by
no later than March 1st of the year immediately following the Award
Year.  The Common Shares shall be subject
to the vesting schedule and Company restrictions described in Section 4(d) of
the Agreement.


 


For purposes hereof, the following terms shall have the meanings set
forth below:


 


‘January Representative Value’ of a company’s common stock shall
mean the average closing price of such company’s common stock on the principal
U.S. stock exchange in which such company’s common stock is listed or traded
during the last fifteen (15) trading days of January, as determined by the
Compensation Committee.


 


‘Competitor Set’ shall mean the group of five to
fifteen publicly-traded companies determined by the Compensation Committee, in
consultation with the Employee. Such determination shall be made no later than March 1st
2010 and shall be applicable to that calendar year. The Competitor Set for each
year shall continue in effect for subsequent years unless and until the
Compensation Committee shall make a determination, in consultation with the
Employee, to change the companies in the group.


 


18

















 


ADDENDUM TO EMPLOYMENT AGREEMENT


[SHORT-TERM INCENTIVE AWARD]


 


This Addendum to Employment Agreement is made and
entered into as of the 24th day of August 2009 by and between Toreador
Resources Corporation (the “Company”) and Craig McKenzie (“Employee”) pursuant
to Section 4(c) of the Employment agreement effective March 27,
2009 (the “Agreement”) pursuant to which Employee is employed as Chief
Executive Officer of the Company.  
Capitalized terms defined in the Agreement shall have the same meaning
when used herein, unless the context otherwise requires.


 


The Company and Employee hereby agree as follows:


 


1.  The
performance objectives to be achieved in 2009 as a condition for Employee’s
entitlement to some or all of the target STI Award (being 100% of Base Salary,
or $420,000, at target) for the fiscal year ending December 31, 2009,
shall be as follows:


 


(a)  Platform (10%)


 


·                  deliver a G&A run rate of USD 6 .4 mm by
2009 year-end


·                  complete hedge against 50% of 2nd half 2009 production


·                  hire CFO &
Commercial Director


 


(b)   Unlock
Value (75%)


 


·                  complete exit from Hungary (target USD 5mm)


·                  fully monetise Turkey (target USD 15mm)


·                  secure on-time Petrol Offisi payment (target USD 5mm)


·                  secure new funding (target USD 25mm)


 


(c)          Steady
Growth (10%)


 


·                  spud La
Garenne well


 


(d)         Step
Change (5%)


 


·                  Develop  France Shale Oil Phase 1 programme


 


(e)          Stretch (50%)


 


·                  eliminate 2010
bondholder put


 


2.               The percentage set forth at the beginning of each subsection of Section 1
above represents the percentage of the target STI Award to be paid to Employee
for achievement, on or before December 31, 2009, of the performance
objective(s) set forth in such subsection. 
As indicated above, if all of the performance objectives set forth in Section 1
are achieved in 2009, Employee shall be entitled to an STI Award equal to 150%
of Base Salary.


 


3.               If some, but not all, of the performance objectives contained in
subsection 1(a) above   are achieved
in 2009, Employee shall be entitled to 1/3 of the amount of the STI Award
allocated to such subsection (i.e., 1/3 of 10% or 3.33%) for each performance
objective achieved.


 


19

















 


4.               If some, but not all, of the performance objectives contained in
subsection 1(b) above are achieved in 2009, Employee shall be entitled to
a pro rata portion of the amount of the STI Award allocated to such subsection
based on the aggregate dollar value unlocked in 2009 as a percentage of the
aggregate dollar objective (USD $50mm). 
For example, if the aggregate amount received by the Company in 2009
from any or all of the objectives described in subsection 1(b) is USD $40
million, Employee will be entitled to receive 80% (i.e., $40mm/$50mm) of the
75% of the STI Award allocated to such subsection.


 


5.               This Addendum is and shall be construed as a part of the Agreement,
which remains in full force and effect, and which shall govern the construction
and application of the terms of this Addendum.


 


20