Document:

exv10w11

EXHIBIT 10.11

Execution Copy

EMPLOYMENT AGREEMENT

by and between

Crusader Energy Group Inc.

and

David D. Le Norman

 

 

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into effective as of
the closing of the transaction contemplated by the Contribution Agreement (as defined below) (the
“Effective Date”), by and between Crusader Energy Group Inc. (f/k/a Westside Energy
Corporation), a Nevada corporation (the “Company”), and David D. Le Norman (the
“Employee”).

RECITALS:

     A. The Employee possesses valuable skills and knowledge in the field of business of the
Company and desires to be employed by the Company on the terms and conditions set forth in this
Agreement.

     B. The Company desires to employ the Employee on the terms and conditions set forth in this
Agreement.

AGREEMENTS:

     In consideration of the premises and of the mutual covenants and agreements contained herein,
and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

     1. Certain Definitions. As used in this Agreement, the following terms have the
meanings set forth below:

          (a) “Affiliate” means, with respect to any Person, any other Person that directly or
indirectly controls, is controlled by, or is under common control with the Person in question. As
used in this definition of “Affiliate,” the term “control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and policies of a
Person, whether through ownership of Voting Securities, by contract, or otherwise.

          (b) “Beneficial Owner” or “Beneficial Ownership” or “Beneficially
Owns” shall have the meaning ascribed to such terms in, or be interpreted in a manner
consistent with, Rule 13d-3 under the Exchange Act and any successor to such rule.

          (c) “Board” means the Board of Directors of the Company and any committee thereof.

          (d) “Cause” means Employee’s

               (i) commission of an act of fraud, embezzlement, misappropriation, willful misconduct, bad
faith or dishonesty against the Company;

               (ii) material breach of this Agreement which is not remedied within 30 days after receipt of
written notice from the Company specifically identifying the manner in which the Company believes
that Employee has materially breached this Agreement;

 

 

               (iii) conviction, plea of no contest or nolo contendere, deferred adjudication or
unadjudicated probation for any felony or any crime involving moral turpitude; or

               (iv) violation of the Company’s substance abuse policy.

          (e) “Change in Control” means the occurrence of any of the following events:

               (i) Subject to the last paragraph of this definition, the acquisition by any Person or Group
of Beneficial Ownership of forty percent (40%) or more of either (x) the then outstanding shares of
Common Stock (the “Outstanding Company Stock”) or (y) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the election of
directors or similar governing body (the “Outstanding Company Voting Securities” and,
together with the Outstanding Company Stock, the “Company Securities”); or

               (ii) Members of the Incumbent Board cease to constitute at least a majority of the members of
the Board; or

               (iii) Consummation of a reorganization, merger, consolidation, sale or other disposition of
all or substantially all of the assets of the Company or an acquisition of assets of another
company (a “Business Combination”), in each case, unless, following such Business
Combination, (A) all or substantially all of the Persons who were the Beneficial Owners of Company
Securities immediately prior to such Business Combination Beneficially Own, directly or indirectly,
more than fifty percent (50%) of, respectively, the then outstanding shares of common stock or
common equity interests and the combined voting power of the then outstanding Voting Securities, as
the case may be, of the entity resulting from such Business Combination (including without
limitation an entity which as a result of such transaction owns the Company or all or substantially
all of the Company’s assets either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to such Business Combination, of the
Company Securities, (B) no Person or Group (excluding any employee benefit plan (or related trust)
of the Company or the entity resulting from such Business Combination) Beneficially Owns, directly
or indirectly, forty percent (40%) or more of, respectively, the then outstanding shares of common
stock or common equity interests of the entity resulting from such Business Combination or the
combined voting power of the then outstanding Voting Securities of such entity except to the extent
that such ownership results solely from ownership of the Company that existed prior to the Business
Combination, and (C) at least a majority of the members of the board of directors or similar
governing body of the entity resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or

               (iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of
the Company.

Notwithstanding the foregoing clause (i) of this definition: (x) the following acquisitions
(whether the acquiring Person or Group acquires Beneficial Ownership of forty percent (40%) or

2

 

more of the Outstanding Company Stock or Outstanding Company Voting Securities or any such
acquisition results in any other Person or Group (other than the acquiring Person or Group)
Beneficially Owning forty percent (40%) or more of the Outstanding Company Stock or Outstanding
Company Voting Securities) shall not constitute a Change in Control unless, following such
acquisition, any Person or Group (other than the acquiring Person or Group effecting the
acquisition pursuant to the following clauses (A) through (D)) who becomes the Beneficial Owner of
forty percent (40%) or more of the Outstanding Company Stock or Outstanding Company Voting
Securities as a result of one or more of such acquisitions shall thereafter acquire any additional
shares of Company Securities and, following such acquisition, Beneficially Owns forty percent (40%)
or more of either the Outstanding Company Stock or Outstanding Company Voting Securities, in which
case such acquisition shall constitute a Change in Control: (A) any acquisition directly from the
Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any entity controlled by the Company or
(D) any acquisition by any entity pursuant to a transaction which complies with clauses (A), (B)
and (C) of the foregoing clause (iii) of this definition; and (y) the acquisition of Beneficial
Ownership of shares of Common Stock by the Crusader Parent Entities pursuant to the Contribution
Agreement, the corresponding acquisition of Beneficial Ownership of shares of Common Stock by any
other Person or Group deemed to Beneficially Own the Common Stock so acquired by the Crusader
Parent Entities (any such Person and/or Group, collectively with the Crusader Parent Entities and
the Crusader Distributees, the “Crusader Group”) and the acquisition of Beneficial
Ownership of shares of Common Stock as a result of the distribution by a Crusader Parent Entity to
Crusader Distributees of shares of Common Stock acquired pursuant to the Contribution Agreement or
directly from the Company prior to the date of the Contribution Agreement shall not constitute a
Change of Control, provided that if, (1) for so long as the shares of Common Stock Beneficially
Owned by any member of the Crusader Group equals or exceeds forty percent (40%) of the Outstanding
Company Stock or the Outstanding Company Voting Securities, such member of the Crusader Group shall
obtain Beneficial Ownership of shares of Common Stock (other than as a result of any acquisition
described in the foregoing clauses (A) through (D) of this paragraph or pursuant to an award issued
under any equity based compensation plan of the Company, including without limitation the LTIP)
representing one percent (1%) or more of the Outstanding Company Stock or Outstanding Company
Voting Securities or (2) at any time after such member of the Crusader Group shall cease to
Beneficially Own forty percent (40%) or more of the Outstanding Company Stock and Outstanding
Company Voting Securities, such member of the Crusader Group shall obtain Beneficial Ownership of
shares of Common Stock (other than as a result of any acquisition described in the foregoing
clauses (A) through (D) of this paragraph or pursuant to an award issued under any equity based
compensation plan of the Company, including without limitation the LTIP) representing forty percent
(40%) or more of either the Outstanding Company Stock or Outstanding Company Voting Securities,
then in the case of either (1) or (2) a Change of Control shall be deemed to occur.

          (f) “Common Stock” means the Company’s common stock, par value $.01 per share, and
such other securities as may be substituted (or resubstituted) for such Common Stock.

          (g) “Compensation Committee” means the Compensation Committee of the Board.

3

 

          (h) “Contribution Agreement” means the Contribution Agreement among the Company and
Crusader Management Corporation, David D. Le Norman, Knight Energy Management Holding Company, LLC,
Knight Energy Group II Holding Company, LLC, Knight Energy Group I Holding Co., LLC, Crusader
Energy Group Holding Co., LLC, Hawk Energy Fund I Holding Company, LLC, RCH Energy Opportunity Fund
I, L.P., Knight Energy Group, LLC, Knight Energy Group II, LLC, Knight Energy Management, LLC, Hawk
Energy Fund I, LLC, RCH Upland Acquisition, LLC and Crusader Energy Group, LLC dated as of December
31, 2007.

          (i) “Crusader Distributees” means holders of equity interests in any Crusader Parent
Entity who receives a distribution from such Crusader Parent Entity of shares of Common Stock
acquired pursuant to the Contribution Agreement or directly from the Company prior to the date of
the Contribution Agreement.

          (j) “Crusader Parent Entities” has the meaning set forth in the Contribution
Agreement.

          (k) “Disability” means Employee’s inability to perform, with or without reasonable
accommodations, the essential functions of Employee’s position hereunder for a period of 180
consecutive days due to mental or physical incapacity, as determined by mutual agreement of a
physician selected by the Company or its insurers and a physician selected by Employee; provided,
however, that if the opinion of the Company’s physician and Employee’s physician conflict, the
Company’s physician and Employee’s physician shall together agree upon a third physician, whose
opinion shall be binding. The foregoing definition of “Disability” is not intended to and shall
not affect the definition of “disability” or any similar term in any insurance policy the Company
or any of its Subsidiaries may provide. Notwithstanding the foregoing definition of Disability,
the Employee will not be considered to have a Disability under any provision of this Agreement that
would trigger the payment of deferred compensation within the meaning of Section 409A of the Code
unless the Employee’s Disability also meets the Section 409A definition of Disability.

          (l) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

          (m) “Good Reason” means, subject to the terms and provisions of this Agreement, the
occurrence of one or more of the following events :

               (i) any removal of Employee from the offices of President and Chief Executive Officer of the
Company except, in any such case, in connection with the termination of Employee’s employment
hereunder by the Company for Disability or for Cause or by the Employee other than for Good Reason;

               (ii) any termination or material reduction of a material benefit under any Investment Plan or
Welfare Plan in which Employee participates unless (A) there is substituted a comparable benefit
that is economically substantially equivalent to the terminated or reduced benefit prior to such
termination or reduction or (B) benefits under such Investment

4

 

Plan or Welfare Plan are terminated or reduced with respect to all employees previously
granted benefits thereunder;

               (iii) any reduction in Employee’s Annual Base Salary;

               (iv) any failure by the Company to comply with any of the provisions of Section 3(b);

               (v) the relocation or transfer of Employee’s principal office to a location more than 20 miles
from Employee’s work address as of the Effective Date in the city of Oklahoma City, Oklahoma
without Employee’s consent;

               (vi) without limiting the generality of the foregoing, any material breach by the Company of
this Agreement other than an isolated, insubstantial, and inadvertent failure not occurring in bad
faith and which is remedied by the Company promptly after receipt of notice thereof given by
Employee; or

               (vii) a Change in Control,

          (n) “Group” shall have the meaning ascribed to such term in section 13(d)(3) or
14(d)(2) of the Exchange Act.

          (o) “Incumbent Board” shall mean individuals who, as of the Effective Date, constitute
the Board and any other individual who becomes a director of the Company after that date and whose
election or appointment by the Board or nomination for election by the Company’s stockholders was
approved by a vote of at least a majority of the directors then comprising the Incumbent Board.

          (p) “LTIP” means the 2008 Long-Term Incentive Plan of the Company.

          (q) “Person” means any individual, partnership, limited liability partnership, joint
venture, corporation, limited liability company, trust, association, or other entity or
organization.

          (r) “Pro Rata Bonus” means the amount equal to the product of (i) the amount of the
Annual Bonus (as defined in Section 3(b)(ii)), if any, to which Employee would have been
entitled for the calendar year in which Employee’s Date of Termination occurs if Employee’s
employment were not terminated during such calendar year, multiplied by (ii) a fraction,
the numerator of which is the number of days that have elapsed since the beginning of such calendar
year through (but not including) Employee’s Date of Termination, and the denominator of which is
the total number of days in such calendar year. The amount, if any, of the Annual Bonus to which
Employee would have been entitled for the calendar year in which the Date of Termination occurs
shall be determined by the Compensation Committee in its sole reasonable discretion; provided,
however, that for purposes of determining the amount of the Pro Rata Bonus in connection with a
termination of Employee’s employment upon a Change of Control, Employee shall be deemed to have
been entitled to an Annual Bonus of not less than the amount of the last Annual Bonus awarded to
Employee prior to such Change in Control, and provided further however that any determination by
the Compensation Committee as to satisfaction of a

5

 

performance standard shall be made in the same manner as such determination is made for the
other executive officers of the Company.

          (s) “Subsidiary” means, with respect to any Person, any corporation or other entity of
which a majority of the voting power of the voting equity securities or equity interest is owned,
directly or indirectly, by that Person.

          (t) “Voting Securities” means any securities that vote generally in the election of
directors, in the admission of general partners, or in the selection of any other similar governing
body.

          (u) “Without Cause” means a termination by the Company of Employee’s employment during
the Term at the Company’s sole discretion for any reason other than a termination based upon Cause,
death or Disability; provided that, “without Cause” does not include termination of this Agreement
and Employee’ s employment pursuant to Section 2.

     2. Term of Employment; Non-Renewal of Term. Subject to the terms and provisions of
this Agreement, the Company hereby agrees to employ Employee, and Employee hereby agrees to be
employed by the Company, for the period (the “Term”) commencing on the Effective Date and,
unless Employee’s employment hereunder is sooner terminated in accordance with the terms hereof,
expiring at 5:00 p.m., Oklahoma City, Oklahoma time, on December 31, 2011; provided, however, that
on January 1, 2009, and on each January 1 occurring thereafter, the Term shall automatically
(without any action by either party) be extended for one additional calendar year unless, at least
30 days prior to each such January 1, the Company or Employee shall have given written notice (a
“Non-Renewal Notice”) that it or Employee, as applicable, does not wish to extend this
Agreement (a “Non-Renewal”). Either party may elect not to renew this Agreement. The term
“Term,” as utilized in this Agreement, shall refer to the Term as so automatically extended. The
Term shall expire as a result of any Non-Renewal at 5:00 p.m., Oklahoma City, Oklahoma time, on the
last day of the Term during which a Non-Renewal Notice is given, and Employee’s employment shall
terminate at that time.

     3. Terms of Employment.

          (a) Position and Duties.

               (i) During the Term, Employee shall serve as President and Chief Executive Officer of the
Company. In so doing, Employee shall have such powers and duties (including holding officer
positions with one or more Subsidiaries of the Company) as may be assigned from time to time by the
Board, so long as such powers and duties are reasonable and customary for president and chief
executive officers of an enterprise comparable to the Company. Employee shall report to the Board,
and shall also be a Board member.

               (ii) During the Term, Employee shall devote his full time, skill, and attention during normal
business hours to the business and affairs of the Company and use his reasonable efforts to
discharge faithfully and efficiently the duties and responsibilities delegated and assigned to
Employee herein or pursuant hereto; provided, however, that Employee may (i) serve on corporate,
civic, or charitable boards or committees, (ii) deliver lectures or fulfill speaking engagements,
and (iii) manage Employee’s personal investments, so long as such

6

 

activities, either individually or in the aggregate, do not significantly interfere with the
performance and fulfillment of Employee’s duties and responsibilities as an employee of the Company
in accordance with this Agreement, and comply with the following. In the case of the activities
described in clause (i) of the proviso in the immediately preceding sentence, Employee shall notify
the Board of any of the positions described in such clause. In the case of the activities
described in clause (iii) of the proviso in the immediately preceding sentence, Employee shall
comply with the Company’s conflicts policy in effect from time to time and shall inform the Board
of any conflicts of interest (whether actual or apparent) with the business of the Company and its
Subsidiaries, including any event reasonably likely to raise the appearance of a conflict.

          (b) Compensation.

               (i) Annual Base Salary. During the Term, Employee shall receive an annual base salary
(“Annual Base Salary”), which shall be paid bi-weekly in accordance with the customary
payroll practices for executive officers of the Company, in the initial amount of $360,000 per
year. At least annually (by no later than January 31 of each year) during the Term, the
Compensation Committee shall review the Annual Base Salary of Employee and may increase (but not
decrease) the Annual Base Salary by such amount as the Compensation Committee shall deem
appropriate. The term “Annual Base Salary” as used in this Agreement shall refer to the Annual
Base Salary as it may be so increased.

               (ii) Annual Bonus. During the Term, Employee shall be eligible to receive, in
addition to the Annual Base Salary, an annual bonus (each, an “Annual Bonus”), subject to
achieving the performance goals established by the Compensation Committee as described below.
Annually (by no later than March 15 of each calendar year during the Term), the Compensation
Committee shall determine the amount (or amount range) of the Annual Bonus that Employee shall be
eligible to receive for the calendar year and the performance goals that must be achieved for
Employee to become entitled to receive the Annual Bonus for such calendar year. For each calendar
year (or partial calendar year) during the Term, the Compensation Committee shall determine in its
reasonable discretion whether the performance goals established for Employee for such calendar year
have been achieved, such determination to be made no later than 10 business days after the date on
which the Company has available to it the information reasonably required to make the
determination. Any Annual Bonus that Employee is entitled to receive shall be paid to Employee
within 10 business days after the determination of the Compensation Committee that the Employee is
entitled to it.

               (iii) Option. The Employee shall be entitled to exercise the option to purchase
shares of common stock, par value $0.01 per share of the Company issued to Employee pursuant to
Section 6(i) of the Company’s 2008 Long Term Incentive Plan (the “Option”). The Option may be
exercised only in the time and manner described in the Option.

               (iv) Incentive, Savings, Stock Option and Retirement Plans. During the Term, Employee
shall be entitled to participate in all incentive, savings, stock option, equity-based, profit
sharing and retirement plans, practices, policies and programs applicable generally to other
executive officers of the Company (“Investment Plans”), subject to all of the terms and
conditions of such Investment Plans.

7

 

               (v) Welfare Benefit Plans. During the Term, Employee and Employee’s family shall be
eligible for participation in and shall receive all benefits under the welfare benefit plans,
practices, policies and programs (“Welfare Plans”) provided by the Company (including,
without limitation, medical, prescription, dental, short-term and long-term disability, salary
continuance, employee life, group life, accidental death and travel accident insurance plans and
programs) to the extent applicable generally to other executives of the Company, subject to all of
the terms and conditions of such Welfare Plans.

               (vi) Perquisites. During the Term, (A) the Company shall provide a new Yukon
automobile or a comparable automobile to Employee for his business and personal use and shall pay
all costs related to the operation of such automobile, including maintenance, repair, gasoline,
insurance and taxes, (B) the Company shall bear all the fees and costs related to Employee’s
country club membership at Gaillardia Country Club in Oklahoma City and at any alternative country
club selected by Employee so long as the costs are comparable and (C) the Employee shall be
entitled to receive (in addition to the benefits described above) such other perquisites and fringe
benefits appertaining to Employee’s position in accordance with any policies, practices, and
procedures established by the Board.

               (vii) Expenses. During the Term, Employee shall be entitled to receive prompt
reimbursement for all reasonable business-related expenses incurred by Employee in the performance
of Employee’s duties in accordance with the Company’s policies, practices and procedures.

               (viii) Vacation and Holidays. During the Term, Employee shall be entitled to not less
than four weeks of annual paid vacation in accordance with the plans, policies, programs and
practices of the Company for its executive officers. In addition, Employee shall be entitled to
sick leave and paid holidays, in accordance with the plans, policies, programs and practices of the
Company for its executive officers.

               (ix) Pro-ration. Any payments or benefits payable to Employee hereunder in respect of
any calendar year during which Employee is employed by the Company for less than the entire year,
unless otherwise provided in the applicable plan or arrangement, shall be pro-rated in accordance
with the number of days in such calendar year during which Employee is so employed.

     4. Termination of Employment.

          (a) Death. Employee’s employment hereunder shall terminate automatically upon
Employee’s death during the Term.

          (b) Disability. If the Disability of Employee has occurred during the Term, the
Company may give to Employee a written Notice of Termination (as defined in Section 6(a))
in accordance with Section 6(a) of its intention to terminate Employee’s employment
hereunder. In such event, Employee’ s employment shall terminate effective on the 30th day after
receipt of such notice by Employee (the “Disability Effective Date”) provided that, within
30 days after receipt of the Notice of Termination, Employee shall not have returned to perform,
with or without reasonable accommodations, the essential functions of Employee’s position on a
full-

8

 

time basis. During any period of Employee’s Disability, the Company may assign Employee’s
duties to any other Employee of the Company or may engage or hire a third party to perform such
duties and any such action shall not be deemed “Good Reason” for Employee to terminate this
Agreement pursuant to Section 4(d)(i) so long as Employee continues to receive the
compensation and benefits under Section 3 during such period.

          (c) Termination by Company. Subject to Section 6(d), the Company may
terminate Employee’s employment at any time during the Term for Cause or without Cause.

          (d) Resignation by Employee. At Employee’s option, Employee may terminate Employee’s
employment hereunder (i) subject to Section 6(c), for Good Reason or (ii) without Good
Reason.

     5. Compensation Upon Termination of Employment. Employee shall be entitled to the
following compensation from the Company upon the termination of Employee’s employment during the
Term. The compensation provided for in this Section 5 shall be in lieu of any other
severance pay to which Employee might otherwise be entitled (whether contractual or under a
severance plan, the WARN Act, any other applicable law, or otherwise) and shall be conditioned on
the execution and delivery of a Release (as defined in Section 6(f)) signed by Employee or
Employee’s legal representative pursuant to Section 6(f). The timing of payments pursuant
to this Section 5 shall also be subject to the requirements of Section 6(g) and
Section 409A of the Code:

          (a) Death or Disability. If Employee’s employment is terminated by reason of
Employee’s death or Disability, the Company shall pay to Employee or Employee’s legal
representatives:

               (i) within 30 days after the Employee’s Date of Termination as defined in Section
6(b), a lump sum in cash equal to the sum of Employee’s Annual Base Salary through the Date of
Termination to the extent not previously paid and any compensation previously deferred by Employee
(together with any accrued interest or earnings thereon) (the “Accrued Obligations”);

               (ii) the amount of any Annual Bonus to which Employee was entitled for the calendar year
ending prior to the Date of Termination to the extent not previously paid and the amount of any Pro
Rata Bonus, each of which amounts shall be paid no later than the later of 30 days after the Date
of Termination or 10 business days after the date on which the Company has available to it the
information reasonably required to determine the amount to be paid;

               (iii) any amounts arising from Employee’s participation in, or benefits under, any Investment
Plan (the “Accrued Investments”), which amounts shall be paid in accordance with the terms
and conditions of such Investment Plan; and

               (iv) any amounts to which Employee or Employee’s spouse, beneficiaries or estate are entitled
from Employee’s participation in, or benefits under, any Welfare Plan (“Accrued Welfare
Benefits”), which amounts shall be paid in accordance with the terms and conditions of such
Welfare Plan.

9

 

     Except as described in this Section 5(a), in the event of Employee’s termination by
reason of Employee’s death or Disability, Employee and Employee’s legal representatives, as
applicable, shall forfeit all rights to any other compensation.

          (b) For Cause; Resignation by Employee Without Good Reason; Non-Renewal Election by
Employee. If the Company shall terminate Employee’s employment for Cause, or if Employee
resigns without Good Reason, or if Employee’s employment is terminated due to a Non-Renewal
election by Employee, the Company shall have no further obligations to Employee other than the
obligation for payment of:

               (i) the Accrued Obligations, which shall be payable within 30 days after the Employee’s Date
of Termination;

               (ii) the amount of any Annual Bonus to which Employee was entitled for the calendar year
ending prior to the Date of Termination to the extent not previously paid, which amount shall be
paid no later than the later of 30 days after the Date of Termination;

               (iii) the Accrued Investments, which amounts shall be paid in accordance with the terms and
conditions of the Investment Plans; and

               (iv) the Accrued Welfare Benefits, which amounts shall be paid in accordance with the terms
and conditions of the Welfare Plans.

     Except as described in this Section 5(b), in the event of Employee’s termination by
the Company for Cause or by Employee without Good Reason or due to a Non-Renewal election by
Employee, Employee shall forfeit all rights to any other compensation.

          (c) Without Cause; Resignation by Employee for Good Reason: Non-Renewal Election by the
Company. If the Company terminates Employee’s employment without Cause (other than by reason
of Employee’s death or Disability or a Non-Renewal by Employee) or Employee resigns for Good Reason
or Employee’s employment is terminated due to a Non- Renewal election by the Company, then the
Company shall pay or provide Employee:

               (i) within 30 days after the Employee’s Date of Termination, a lump sum in cash equal to the
aggregate of the Accrued Obligations;

               (ii) the amount of any Annual Bonus to which Employee was entitled for the calendar year
ending prior to the Date of Termination to the extent not previously paid and any Pro Rata Bonus,
each of which amounts shall be paid no later than the later of 30 days after the Date of
Termination or 10 business days after the date on which the Company has available to it the
information reasonably required to determine the amount to be paid;

               (iii) the Accrued Investments, which amounts shall be paid in accordance with the terms and
conditions of the Investment Plans;

               (iv) the Accrued Welfare Benefits, which amounts shall be paid in accordance with the terms
and conditions of the Welfare Plans;

10

 

               (v) a lump-sum payment within 30 days of the Date of Termination equal to the greater of (A)
the undiscounted amount of Annual Base Salary the Employee would have received for the rest of the
Term based upon the highest Annual Base Salary to which Employee was entitled during the 24-month
period ending on the Date of Termination or (B) two years of the highest Annual Base Salary to
which Employee was entitled during the 24-month period ending on the Date of Termination; and

               (vi) if Employee is entitled on the Date of Termination to coverage under the medical,
prescription, and dental portions of the Welfare Plans, continuation at the Company’s sole cost and
expense of such coverage for Employee and Employee’s dependents for a period ending on the later to
occur of (A) the second anniversary of the Date of Termination or (B) the end of the full Term.
Notwithstanding any provision of the foregoing to the contrary, the continued coverage provided
pursuant to this Section 5(c)(vi) will count towards the depletion of any continued health
care coverage rights that Employee and Employee’s dependents may have pursuant to COBRA, and
Employee’s or Employee’s dependents’ rights to continued health care coverage pursuant to this
Section 5(c)(vi) shall terminate at the time Employee or Employee’s dependents become
covered, as described in COBRA, under another group health plan that does not limit coverage with
respect to any preexisting conditions of Employee or Employee’s dependents, and shall also
terminate as of the date the Company ceases to provide coverage to its senior executives generally
under any such Welfare Plan.

     The parties hereto acknowledge that in the event Employee’s employment is terminated in
connection with a Change in Control, the consideration payable to Employee under Section
5(c)(v) hereof is related to the additional efforts and services that will have been required
of the Employee in connection with such Change in Control transaction and to Employee’s obligations
under Sections 7, 8 and 9 of this Agreement.

     Except as described in this Section 5(c), in the event of Employee’s termination by
the Company without Cause or by Employee for Good Reason or due to a Non-Renewal election by the
Company, Employee shall forfeit all rights to any other compensation.

     6. Other Provisions Relating to Termination.

          (a) Notice of Termination. Any termination by the Company for Cause or without Cause
or by reason of Employee’s Disability, or by Employee’s resignation for Good Reason or without Good
Reason, shall be communicated by Notice of Termination to the other party hereto given in
accordance with Section 10(b). For purposes of this Agreement, a “Notice of
Termination” means a written notice which (i) indicates the specific termination provision in
this Agreement relied upon and (ii) to the extent applicable, sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of Employee’s employment under
the provision so indicated. The failure by the Company or Employee to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Cause or Good Reason shall
not waive any right of the Company or Employee hereunder or preclude the Company or Employee from
asserting such fact or circumstance in enforcing the Company’s or Employee’s rights hereunder.

11

 

          (b) Date of Termination. “Date of Termination” means (i) if Employee’s
employment is terminated by reason of Employee’s death, the date of Employee’s death; (ii) if
Employee’s employment is terminated by reason of Employee’s Disability, the Disability Effective
Date (provided that Employee shall not have returned to perform, with or without reasonable
accommodation, the essential functions of Employee’s position on a full-time basis during the
30-day period provided for in Section 4(b)); (iii) if Employee’s employment is terminated
by the Company without Cause or by Employee for Good Reason or without Good Reason, then, subject
to Section 6(c), the date specified in the Notice of Termination (which date shall be a
date between the date that the Notice of Termination is given and 30 days thereafter (inclusive));
(iv) if Employee’s employment is terminated by the Company for Cause then, subject to Section
6(d), the date on which the Notice of Termination is given; and (v) if Employee’s employment is
terminated due to a Non-Renewal election by Employee or the Company, the date on which the Term
expires.

          (c) Good Reason. Upon Employee’s learning of the occurrence of any event described in
the definition of Good Reason in Section 1(j), Employee may terminate Employee’s employment
hereunder for Good Reason within 60 days thereafter by giving a Notice of Termination to the
Company to that effect and describing in reasonable detail the facts or circumstances giving rise
to Employee’s right to terminate Employee’s employment for Good Reason. Notwithstanding the
foregoing, the right of Employee to terminate Employee’s employment for Good Reason under
Section 4(d)(i) shall not limit the Company’s right to terminate Employee’s employment for
Cause under Section 4(c) if Cause is determined to exist prior to the time Good Reason is
determined to exist.

          (d) Cause. Upon the Company learning of the occurrence of any event described in
Section 1(c), the Company may terminate Employee’s employment hereunder for Cause within 60
days thereafter by giving Employee a Notice of Termination to that effect and describing in
reasonable detail the facts or circumstances giving rise to the Company’s right to terminate
Employee’s employment for Cause. Notwithstanding the foregoing, the right of the Company to
terminate Employee’s employment for Cause under Section 4(c) shall not limit Employee’s
right to resign for Good Reason under Section 4(d)(i) if Good Reason is determined to exist
prior to the time Cause is determined to exist.

          (e) Full Settlement; Mitigation. In no event shall Employee be obligated to seek
other employment or take any other action by way of mitigation of the amounts payable to Employee
under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not
Employee obtains other employment. The Company shall not be liable to Employee for any damages for
breach of this Agreement in addition to the amounts payable under Section 5 arising out of
the termination of Employee’s employment prior to the end of the Term. The Company shall be
entitled to seek damages from Employee for any breach of Section 8 by Employee.

          (f) Release and Other Agreements. Notwithstanding any other provision in this
Agreement to the contrary, in consideration for receiving the severance benefits described in
Sections 5(c)(v) and 5(c)(vi), Employee hereby agrees to execute (and not revoke) a
Release and Separation Agreement and a Waiver and Release within 60 days of the Date of Termination
in substantially the forms attached hereto as Exhibit A (the “Release”). If
Employee fails to

12

 

properly execute and deliver the Release (or revokes the Release), Employee agrees that
Employee shall not be entitled to receive such severance benefits.

          (g) 409A Compliance. To the extent required by section 409A of the Code, if on
Employee’s Date of Termination he is a “specified employee” within the meaning of section 409A of
the Code, any amounts that are payable to Employee by reason of his termination of employment
pursuant to Section 5 and that are not excluded from application of Section 409A of the
Code by reason of the “short term deferral” exception to Section 409A of the Code will be delayed
for a period of six months following the Date of Termination. Any payments that would have been
paid to Employee pursuant during such six-month period and that are delayed pursuant to this
Section 6(g) shall be paid to him in the form of a lump sum payment at the end of the
six-month period.

     7. Disclosure of, Access to and Entrustment of Confidential Information, Business
Opportunities and Business Goodwill. During the course of Employee’s employment with the
Company, the Company shall disclose to Employee, or place Employee in a position to have access to
or develop, Confidential Information (as defined in Section 8(a)(i)), and/or shall entrust
Employee with business opportunities of the Company, and/or shall place Employee in a position to
develop business goodwill on behalf of the Company. There is a need and desire on the part of the
Company and Employee to specify the parties’ rights and obligations with respect to the ownership
and protection of such Confidential Information, business opportunities and goodwill. Accordingly,
as a material inducement to the Company to enter into this Agreement, in consideration for the
compensation and other benefits payable hereunder to Employee, to protect the Company’s
Confidential Information that has been and will be in the future disclosed or entrusted to Employee
(the disclosure of which by Employee in violation of this Agreement would adversely affect the
business goodwill of the Company), the business goodwill of the Company that has been and will in
the future be developed in Employee and the business opportunities that have been and will in the
future be disclosed or entrusted to Employee by the Company; and for other good and valuable
consideration, Employee agrees to comply with, and be bound by, Section 8 and Section
9. As used in this Section 7 and in Section 8 and Section 9 “Company”
shall include the Company and any of its Subsidiaries.

     8. Confidential Information; Ownership of Property.

          (a) Obligations to Maintain Confidentiality.

               (i) Employee acknowledges that the Company has trade, business and financial secrets and other
confidential and proprietary information regarding the Company and its business, in whatever form,
tangible or intangible (collectively, the “Confidential Information”), and that, during the
course of Employee’s employment with the Company, Employee has received, shall receive or be placed
in a position to have access to or develop Confidential Information. Employee further acknowledges
and agrees that Employee’s use of Confidential Information in the conduct of business on behalf of
a competitor of the Company would constitute unfair competition with the Company and would
adversely affect the business goodwill of the Company. Confidential Information includes sales
materials, technical information, processes and compilations of information, records,
specifications and information concerning customers, prospective customers, customer and
prospective customer lists, and

13

 

information regarding methods of doing business, As defined herein, Confidential Information
shall not include information that is or was (i) obtained by Employee from a source other than the
Company or its Affiliates, which source is not under a duty of non-disclosure in regard to such
information or (ii) becomes generally available to the public other than through disclosure by
Employee in violation of the provisions of this Agreement.

               (ii) Employee is aware of those policies implemented by the Company to keep its Confidential
Information secret, including those policies limiting the disclosure of information on a
need-to-know basis and requiring the keeping of information in secure areas. Employee acknowledges
that the Confidential Information has been or will be developed or acquired by the Company through
the expenditure of substantial time, effort and money and provides or will provide the Company with
an advantage over competitors who do not know or use such Confidential Information.

               (iii) During and following Employee’s employment by the Company, Employee shall hold in
confidence and not directly or indirectly disclose, use (for Employee’s commercial advantage or
otherwise), copy, make lists of, or make available to others any Confidential Information except in
Employee’s good faith performance of Employee’s duties to the Company as an executive of the
Company or to the extent authorized in writing by the Board or required by law or compelled by
legal process. Employee agrees to use reasonable efforts to give the Company notice of any and all
attempts to compel disclosure of any Confidential Information. Employee further agrees not to use
any Confidential Information for the benefit of any person or entity other than the Company.

               (iv) Employee agrees that all Confidential Information and other files, documents, materials,
records, notebooks, customer lists, business proposals, contracts, agreements and other
repositories containing information concerning the Company or the business of the Company, in
whatever form, tangible or intangible (including all copies thereof), that Employee shall prepare,
or use, or be provided with as a result of Employee’s employment with the Company, shall be and
remain the sole property of the Company. Upon termination of Employee’s employment hereunder,
Employee agrees that all Confidential Information and other files, documents, materials, records,
notebooks, customer lists, business proposals, contracts, agreements and other repositories
containing information concerning the Company or the business of the Company (including all copies
thereof) in Employee’s possession, custody or control, whether prepared by Employee or others,
shall remain with or be returned to the Company promptly after the Date of Termination. The
materials required to be returned pursuant to this Section 8(a)(iv) shall not include
personal correspondence or other personal property of Employee that does not relate to the Company
or the business of the Company.

          (b) Ownership of Work Product. Employee acknowledges that all discoveries, concepts,
ideas, inventions, innovations, improvements, developments, methods, processes, programs, designs,
analyses, drawings, reports, patent applications, copyrightable work and all registrations or
applications related thereto, all other proprietary information and all similar or related
information (whether or not patentable) that relate to the Company’s or its Affiliates’ actual or
anticipated business, research and development, or existing or future products or services and that
are conceived, developed, contributed to, made, or reduced to practice by Employee (either solely
or jointly with others) while employed by the Company

14

 

(including any of the foregoing that constitutes any proprietary information or records)
(“Work Product”) belong to the Company or its Affiliates, as applicable, and Employee
hereby assigns, and agrees to assign, all of the above Work Product to the Company or its
Affiliates, as applicable.

     9. Non-Competition and Related Matters.

          (a) Employee agrees that, during the Term and for a period commencing upon the termination of
the Employee’s employment hereunder and ending upon the first anniversary thereof, unless otherwise
extended pursuant to the terms of this Section 9, Employee will not, directly or
indirectly, either as an employee, employer, consultant, agent, principal, partner, shareholder,
corporate officer, director, or in any other individual or representative capacity, engage or
participate in any business or activity in North America that is substantially similar to the
business of the Company. Notwithstanding the foregoing provisions of this Section 9(a),
however, Employee shall have no further obligations under this Section 9(a) in the event of
a termination of Employee’s employment by the Company without Cause or in the event of Employee’s
resignation for Good Reason or if the Employee’s employment is terminated as a result of the
Company’s Non-Renewal election.

          (b) Employee agrees that a breach or violation of this covenant not to compete by Employee
shall entitle the Company, as a matter of right, to an injunction issued by any court of competent
jurisdiction, restraining any further or continued breach or violation of this covenant. Such right
to an injunction shall be cumulative and in addition to, and not in lieu of, any other remedies to
which the Company may show itself justly entitled. Further, during any period in which Employee is
in breach of this covenant not to compete, the time period of this covenant shall be extended for
an amount of time that Employee is in breach hereof.

          (c) Employee agrees that during the Term and for a period commencing upon the termination of
the Employee’s employment for Cause or due to a Non-Renewal election by the Employee or following
the Employee’s resignation without Good Reason and ending upon the first anniversary thereof,
unless otherwise extended pursuant to the terms of this Section 9, Employee will not
solicit, directly or indirectly, in the capacity of employee, consultant, or in any other capacity
whatsoever, one or more of the employees, directors, officer or other persons who, at the time of
solicitation, or in the 180-day period prior thereto, are working full-time or part time for the
Company and will not endeavor, directly or indirectly in any manner whatsoever, to encourage any
such person to leave his or her job with the Company and will not endeavor, directly or indirectly
in any manner whatsoever, to incite or induce any client or customer of the Company to terminate,
in whole or in part, its business relations with the Company except to the extent the solicitation
is made through a public advertisement in a newspaper, trade journal or similar public medium.
Notwithstanding the foregoing provisions of this Section 9(c), Employee shall have no
obligations under this Section 9(c) after the termination of his employment unless under
the circumstances of his termination he also has obligations after the termination of his
employment under Section 9(a).

          (d) The representations and covenants contained in this Section 9 on the part of
Employee will be construed as ancillary to and independent of any other provision of this
Agreement, and the existence of any claim or cause of action of Employee against the Company

15

 

or any officer, director, or shareholder of the Company, whether predicated on this Agreement
or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants of
Employee contained in this Section 9. In addition, the provisions of this Section 9
shall continue to be binding upon Employee in accordance with their terms, notwithstanding the
termination of Employee’s employment hereunder for any reason.

          (e) If Employee violates any covenant contained in this Section 9 and the Company
brings legal action for injunctive or other relief, the Company shall not, as a result of the time
involved in obtaining the relief, be deprived of the benefit of the full period of any such
covenant. Accordingly, the covenants of Employee contained in the Section 9 shall be deemed
to have durations as specified above, which periods shall commence upon the later of (i) the
termination of Employee’s employment hereunder and (ii) the date of entry by a court of competent
jurisdiction of a final judgment enforcing the covenants of Employee in this Section 9.

          (f) The parties to this Agreement agree that the limitations contained in this Section
9 with respect to time, geographical area, and scope of activity are reasonable. However, if
any court shall determine that the time, geographical area, or scope of activity of any restriction
contained in this Section 9 is unenforceable, it is the intention of the parties that such
restrictive covenant set forth herein shall not thereby be terminated but shall be deemed amended
to the extent required to render it valid and enforceable.

          (g) Nothing contained in this Section 9 shall be construed to prohibit Employee from
investing in stock or other securities listed on a national securities exchange or actively traded
in the over-the-counter market of any corporation or other entity engaged in a business or activity
competitive with the business of the Company, provided that Employee and the members of his
immediate family shall not, directly or indirectly, hold more than a total of five percent of all
such shares of stock or other securities issued and outstanding, and provided further that Employee
shall not perform any services on behalf of, or in the operation of the affairs of, such
corporation or other entity.

          (h) The provisions restricting the Employee’s ability to compete or solicit Company employees
shall not apply if a Change in Control occurs after the Effective Date of this Agreement.

     10. Successors; Binding Agreement.

          (a) This Agreement is personal to Employee and shall not be assignable by Employee otherwise
than by will or the by laws of descent and distribution. This Agreement shall inure to the benefit
of and be enforceable by Employee’s personal and legal representatives, executors, administrators,
heirs, distributes, devisees and legatees.

          (b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.

     11. Miscellaneous.

          (a) Construction. This Agreement shall be deemed drafted equally by both the parties.
Its language shall be construed as a whole and according to its fair meaning. Any

16

 

presumption or principle that the language is to be construed against any party shall not
apply. The headings in this Agreement are only for convenience and are not intended to affect
construction or interpretation. Any references to paragraphs, subparagraphs, sections, subsections
or clauses are to those parts of this Agreement, unless the context clearly indicates to the
contrary. Also, unless the context clearly indicates to the contrary, (i) the plural includes the
singular and the singular includes the plural; (ii) “and” and “of’ are each used both conjunctively
and disjunctively; (iii) “any,” “all,” “each,” or “every” means “any and all”, and “each and
every”; (iv) “includes” and “including” are each “without limitation”; (v) “herein,” “hereof”
“hereunder” and other similar compounds of the word “here” refer to the entire Agreement and not to
any particular paragraph, subparagraph, section or subsection; and (vi) all pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural
as the identity of the entities or persons referred to may require.

          (b) Notices. All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:

	 	 	 
	If to Employee	 	If to the Company
	David D. Le Norman

	 	Crusader Energy Group Inc.
	 
	 	 
	 5333 Wisteria Dr.

	 	4747 Gaillardia Parkway
	 
	 	 
	Oklahoma City, OK 73142-1818

	 	Oklahoma City, OK 73142

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

          (c) Severability. If any provision of this Agreement is held to be illegal, invalid
or unenforceable under present or future laws effective during the term of this Agreement, such
provision shall be fully severable; this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and
the remaining provisions of this Agreement shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance from this
Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be
added automatically as part of this Agreement a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

          (d) Withholding. The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld pursuant to any
applicable law or regulation.

          (e) No Waiver. Except as expressly set forth in this Agreement, no waiver by either
party at any time of any breach by the other party of, or compliance with, any condition or
provision of this Agreement to be performed by the other party shall be deemed a waiver of similar
or dissimilar provisions or conditions at any time.

17

 

          (f) Equitable and Other Relief. Employee acknowledges that money damages would be
both incalculable and an insufficient remedy for a breach of Section 8 or Section 9
by Employee and that any such breach would cause the Company irreparable harm. Accordingly, the
Company, in addition to any other remedies at law or in equity it may have, shall be entitled,
without the requirement of posting of bond or other security, to equitable relief, including
injunctive relief and specific performance, in connection with a breach of Section 8 or
Section 9 by Employee. If the Company files a pleading with a court seeking immediate
injunctive relief and this pleading is challenged by Employee and injunctive relief sought is not
awarded, the Company shall pay all of Employee’s costs and attorneys’ fees. The parties consent to
the exclusive jurisdiction of competent state courts or federal courts in the State of Nevada for
all litigation which may be brought with respect to the terms of; and the transactions and
relationships contemplated by, this Agreement. The parties further consent to the non-exclusive
jurisdiction of any state court located within a district which encompasses assets of a party
against which a judgment has been rendered for the enforcement of such judgment or award against
the assets of such party.

          (g) Entire Agreement. The provisions of this Agreement constitute the entire and
complete understanding and agreement between the parties with respect to the subject matter hereof,
and supersede all prior and contemporaneous oral and written agreements, representations and
understandings of the parties, which are hereby terminated. Employee and the Company acknowledge
and represent that there are no other promises, terms, conditions or representations (or written)
regarding any matter relevant hereto.

          (h) Attorney Fees. The prevailing party in any dispute or controversy under or in
connection with this Agreement shall be entitled to reimbursement from the non-prevailing party for
all costs and reasonable legal fees incurred by such prevailing party.

          (i) Survival. Sections 1 and 4 through 11 of this Agreement
shall survive the termination of this Agreement.

          (j) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEVADA WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS OF NEVADA
OR ANY OTHER JURISDICTION, AND, WHERE APPLICABLE, THE LAWS OF THE UNITED STATES.

          (k) Amendments. This Agreement may not be amended or modified at any time except by a
written instrument approved by the Board and executed by the Company and Employee.

          (l) Employee Acknowledgement. Employee acknowledges that Employee has read and
understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any
representatives or promises made by the Company other than those contained in writing herein, and
has entered into this Agreement freely based on Employee’s own judgment.

18

 

          (m) Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one and the same
instrument. Any counterpart of this Agreement that has attached to it separate signature pages
which together contain the signature of all parties hereto shall for all purposes be deemed a fully
executed original. Facsimile signatures shall constitute original signatures.

[SIGNATURE PAGE FOLLOWS]

19

 

     IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date and year
first above written.

	 	 	 	 	 
	 	COMPANY:

CRUSADER ENERGY GROUP INC.

 	 
	 	By:  	/s/ ROBERT J. RAYMOND
 	 
	 	 	Robert J. Raymond, 	 
	 	 	Chairman of the Board 	 
	 
	 	EMPLOYEE:

 	 
	 	/s/ DAVID D. LE NORMAN
 	 
	 	David D. Le Norman 	 
	 	 	 
	 

SIGNATURE PAGE TO EMPLOYMENT AGREEMENT

 

 

EXHIBIT A

RELEASE AND SEPARATION AGREEMENT

     THIS RELEASE AND SEPARATION AGREEMENT (the “Release Agreement”) made and entered into
effective ___, by and between Crusader Energy Group Inc., a Nevada corporation (the
“Company”) and David D. Le Norman (“Employee”).

W I T N E S S E T H:

     WHEREAS, Employee has been employed by the Company pursuant to the terms of an Employment
Agreement signed and dated
                     (the “Employment Agreement”); and

     WHEREAS, the Company has decided to terminate Employee’s employment without Cause (other than
by reason of Employee’s death or Disability or a Non-Renewal by Employee) or Employee has decided
to resign for Good Reason or Employee’s employment is terminated due to Non-Renewal election by the
Company;

     WHEREAS, as provided in Sections 5 and 6(f) of the Employment Agreement, in exchange for a
release, the parties have agreed that the Company will provide Employee with the severance benefits
described in Sections 5(c)(v) and 5(c)(vi) of the Employment Agreement; and

     WHEREAS, in consideration of the mutual promises contained herein, the parties hereto are
willing to enter into this agreement upon the terms and conditions herein set forth.

     NOW, THEREFORE, in consideration of the premises, the terms and provisions set forth herein,
the mutual benefits to be gained by the performance thereof and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

     1. Separation and Resignation from Officer Positions.

     Effective as of the close of business on
                    , ___, Employee will separate his
service as an employee of the Company (the “Separation Date”). Employee agrees to resign any and
all director, officer, or other positions he holds with the Company or any of its affiliates and/or
subsidiaries.

     2. Special Compensation for Waiver and Release.

     Waiver and Release. Employee shall have up to twenty-one (21) calendar days to
consider whether to sign and return this Release Agreement to the Company by first class mail, by
hand delivery or by scanned document sent via facsimile or electronic mail. In consideration for
Employee’s execution of and compliance with this agreement, including but not limited to the
execution of the Waiver and Release attached hereto as Attachment “I”, the Company shall provide
Employee severance benefits as set forth in Sections 5(c)(v) and 5(c)(vi) of the

1

 

David D. Le Norman

Separation Agreement

Employment Agreement. The value of such severance is in excess of what Employee is otherwise
entitled to. This consideration is provided subject to the binding execution by Employee (without
revocation) of the Waiver and Release. No payment shall be made or other benefit described
hereunder provided until the expiration of the seven-day revocation period described in the Waiver
and Release following employee’s signing of the Waiver and Release (the “Effective Waiver Date”).

     3. Restrictive Covenants. As a material inducement to the Company to enter into the
Release, Employee agrees that the covenants set forth in Sections 7 through 9 of the Employment
Agreement remain in full force and effect in accordance with their terms.

     4. Amendment of Agreement. This Release Agreement may not be modified or amended
except by an instrument in writing signed by the parties hereto.

     5. Waiver. No term or condition of this Release Agreement shall be deemed to have
been waived, nor shall there be an estoppel against the enforcement of any provision of this
agreement, except by written instrument of the party charged with such waiver or estoppel.

     6. Notices. All notices or communications hereunder shall be made in accordance with
Section 11 (b) of the Employment Agreement.

     7. Severability. If any provision of this Release Agreement is held to be invalid,
illegal or unenforceable, in whole or part, such invalidity will not affect any otherwise valid
provision, and all other valid provisions will remain in full force and effect.

     8. Counterparts. This Release may be executed in two or more counterparts, each of
which will be deemed an original, and all of which together will constitute one document.

     9. Titles. The titles and headings preceding the text of the sections and subsections
of this Release Agreement have been inserted solely for convenience of reference and do not
constitute a part of this agreement or affect its meaning, interpretation or effect.

     10. Drafting. The agreements between Employee and Company contained herein shall not
be construed in favor of or against the other party but shall be construed as if all parties
prepared this agreement.

     11. Release Not To Be Used As Evidence. This Release Agreement shall not be
admissible as evidence in any proceeding except one in which a party to this release agreement
seeks to enforce release this agreement or alleges this Release Agreement has been breached, or one
in which a court or administrative agency of competent jurisdiction orders Employee or the Company
to produce this release agreement

     12. Governing Law.

     THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEVADA, UNITED STATES OF AMERICA, WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.

2

 

David D. Le Norman

Separation Agreement

     13. Entire Agreement. The Employment Agreement and the Release Agreement, together
with Attachment I hereto constitute the entire agreement of the parties with respect to the subject
matter hereof.

     14. 409A Compliance. The parties acknowledge that all payments and benefits provided
under this release Agreement are intended to meet the requirements and restrictions of the
nonqualified deferred compensation rules contained in Section 409A of the Internal Revenue Code of
1986, as amended (to the extent applicable thereto).

     IN WITNESS WHEREOF, the parties have executed this Agreement in multiple counterparts, all of
which shall constitute one agreement, effective as of the date and year first above written.

	 	 	 	 	 
	 	COMPANY:

CRUSADER ENERGY GROUP INC.

 	 
	 	By:  	 	 
	 	 	 	 
	 	EMPLOYEE

 	 
	 	
 	 
	 	David D. Le Norman 	 
	 	 	 
	 

3

 

Attachment “I”

CRUSADER ENERGY GROUP INC.

Waiver And Release

     Crusader Energy Group Inc. has offered to pay me certain severance benefits (the “Benefits”)
under the Release and Separation Agreement, dated as of
                     (the “Release Agreement”),
which Release Agreement includes benefits to which I am not otherwise entitled. These Benefits
were offered to me in exchange for my agreement, among other things, to waive all of my claims
against and release Crusader Energy Group Inc. and its predecessors, successors and assigns
(collectively referred to as the “Company”), all of the affiliates (including parents and
subsidiaries) of the Company (collectively referred to as the “Affiliates”) and the Company’s and
Affiliates’ directors and officers, employees and agents, insurers, employee benefit plans and the
fiduciaries and agents of said plans (collectively, with the Company and Affiliates, referred to as
the “Corporate Group”) from any and all claims, demands, actions, liabilities and damages arising
out of or relating in any way to my employment with or separation from the Company or the
Affiliates; provided, however, that this Waiver and Release shall not apply to any claim or cause
of action to enforce or interpret any provision contained in the Release Agreement that may arise
after the date this Waiver and Release is executed. I have read this Waiver and Release and the
Release Agreement. I choose to accept this offer.

     I understand that signing this Waiver and Release is an important legal act. I acknowledge
that the Company has advised me in writing to consult an attorney before signing this Waiver and
Release. I understand that, in order to be eligible for Benefits, I must sign and return to
Crusader Energy Group Inc. this Waiver and Release before 5 p.m. on
                    . I
acknowledge that I have been given sufficient time to consider whether to sign the Release
Agreement and whether to execute this Waiver and Release.

     In exchange for the payment to me of Benefits, which are in addition to any remuneration or
benefits to which I am already entitled, I, among other things, (1) agree not to sue in any local,
state and/or federal court regarding or relating in any way to my employment with or separation
from the Company or the Affiliates, and (2) knowingly and voluntarily waive all claims and release
the Corporate Group from any and all claims, demands, actions, liabilities, and damages, whether
known or unknown, arising out of or relating in any way to my employment with or separation from
the Company or the Affiliates.1 This Waiver and Release includes, but is not limited
to, claims and causes of action under: Title VII of the Civil Rights Act of 1964, as amended
(“Title VII”); the Age Discrimination in Employment Act of 1967, as amended,

 

			
	1	 	Nothing in this Waiver and Release or the Release
Agreement should be construed as a waiver of my rights vested under the terms
of employee benefit plans sponsored by the Company or the Affiliates or with
respect to such rights or claims as may arise after the date this Waiver and
Release is executed or to amounts owed to me pursuant to the terms of my
Employment Agreement with the Company. Additionally, I am not waiving any
rights that I may have under the Family and Medical Leave Act of 1993 or the
Fair Labor Standards Act. Furthermore, although I waive all rights to recovery
of any compensation or benefits that I might be entitled to as a result of
filing charges or claims with the Equal Employment Opportunity Commission and
the National Labor Relations Board, I am not giving up any right that I may
have to file charges or claims with these governmental agencies. Finally, I
am not waiving any rights that cannot by law be released by private agreement.

 

 

including the Older Workers Benefit Protection Act of 1990 (“ADEA”); the Civil Rights Act of
1866, as amended; the Civil Rights Act of 1991; the Americans with Disabilities Act of 1990
(“ADA”); the Energy Reorganization Act, as amended, 42 U.S.C. ss 5851; the Workers Adjustment and
Retraining Notification Act of 1988; the Pregnancy Discrimination Act of 1978; the Employee
Retirement Income Security Act of 1974, as amended; the Occupational Safety and Health Act; claims
in connection with workers’ compensation or “whistle blower” statutes; and/or contract, tort,
defamation, slander, wrongful termination or any other state or federal regulatory, statutory or
common law. Further, I expressly represent that no promise or agreement which is not expressed in
the Release Agreement has been made to me in executing this Waiver and Release, and that I am
relying on my own judgment in executing this Waiver and Release, and that I am not relying on any
statement or representation of the Company, any of the Affiliates or any other member of the
Corporate Group or any of their agents. I agree that this Waiver and Release is valid, fair,
adequate and reasonable, is with my full knowledge and consent, was not procured through fraud,
duress or mistake and has not had the effect of misleading, misinforming or failing to inform me.

     I acknowledge that payment of Benefits to me by the Company is not an admission by the Company
or any other member of the Corporate Group that they engaged in any wrongful or unlawful act or
that the Company or any member of the Corporate Group violated any federal or state law or
regulation.

     Should any of the provisions set forth in this Waiver and Release be determined to be invalid
by a court, agency or other tribunal of competent jurisdiction, it is agreed that such
determination shall not affect the enforceability of other provisions of this Waiver and Release.
I acknowledge that this Waiver and Release and the Release Agreement set forth the entire
understanding and agreement between me and the Company or any other member of the Corporate Group
concerning the subject matter of this Waiver and Release and supersede any prior or contemporaneous
oral and/or written agreements or representations, if any, between me and the Company or any other
member of the Corporate Group. I understand that for a period of 7 calendar days following the
date that I sign this Waiver and Release, I may revoke my acceptance of the offer, provided that my
written statement of revocation is received on or before that seventh day by Crusader Energy Group
Inc., in which case the Waiver and Release will not become effective. In the event I revoke my
acceptance of this offer, the Company shall have no obligation to provide me Benefits. I
understand that failure to revoke my acceptance of the offer within 7 calendar days from the date I
sign this Waiver and Release will result in this Waiver and Release being permanent and
irrevocable.

     I acknowledge that I have read this Waiver and Release, have had an opportunity to ask
questions and have it explained to me and that I understand that this Waiver and Release will have
the effect of knowingly and voluntarily waiving any action I might pursue, including breach of
contract, personal injury, retaliation, discrimination on the basis of race, age, sex, national
origin, or disability and any other claims arising prior to the date of this Waiver and Release.
By execution of this document, I do not waive or release or otherwise relinquish any legal rights I
may have which are attributable to or arise out of acts, omissions, or events of the Company or any
other member of the Corporate Group which occur after the date of the execution of this Waiver and
Release.

2

 

	 	 	 
	 	 	 
	David D. Le Norman
	 	 
	 
	 	 
	 	 	 
	Employee’s Signature Date
	 	 

3exv10w12

EXHIBIT 10.12

CRUSADER ENERGY GROUP INC.

INDEMNIFICATION AGREEMENT

     This Agreement (“Agreement”) is made and entered into as of the 26th day of June,
2008, by and between Crusader Energy Group Inc., a Nevada corporation (the “Company”), and
Robert J. Raymond (“Indemnitee”).

RECITALS

     A. Highly competent and experienced persons are reluctant to serve corporations as directors,
executive officers or in other capacities unless they are provided with adequate protection through
insurance and indemnification against claims and actions against them arising out of their service
to and activities on behalf of the Company.

     B. The Board of Directors of the Company (the “Board”) has determined that the
inability to attract and retain such persons would be detrimental to the best interests of the
Company and its stockholders and that the Company should act to assure such persons that there will
be increased certainty of such protection in the future.

     C. The Board has also determined that it is reasonable, prudent and necessary for the Company,
in addition to purchasing and maintaining directors’ and officers’ liability insurance (or
otherwise providing for adequate arrangements of self-insurance), contractually to obligate itself
to indemnify such persons to the fullest extent permitted by applicable law so that they will serve
or continue to serve the Company free from undue concern that they will not be adequately
protected.

     D. Indemnitee is willing to serve, continue to serve and to take on additional service for or
on behalf of the Company on the condition that Indemnitee be so indemnified to the fullest extent
permitted by law.

     E. Section 78.751 of the NRS (as hereinafter defined) empowers the Company to indemnify its
officers and directors by agreement and expressly provides that the indemnification provided by NRS
78.751 is not exclusive of other rights of indemnification.

     In consideration of the foregoing and the mutual covenants herein contained, and other good
and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the
parties hereby agree as follows:

ARTICLE I

Certain Definitions

     As used herein, the following words and terms shall have the following respective meanings
(whether singular or plural):

1

 

     “Acquiring Person” means any Person other than (i) the Company, (ii) any of the
Company’s Subsidiaries, (iii) any employee benefit plan of the Company or of a Subsidiary of the
Company or of a Company owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company, or (iv) any trustee
or other fiduciary holding securities under an employee benefit plan of the Company or of a
Subsidiary of the Company or of a Company owned directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of stock of the Company.

     “Beneficial Owner” or “Beneficial Ownership” or “Beneficially Owns”
shall have the meaning ascribed to such terms in, or be interpreted in a manner consistent with,
Rule 13d-3 under the Exchange Act and any successor to such rule.

     “Change in Control” means the occurrence of any of the following events:

          (i) Subject to the last paragraph of this definition, the acquisition by any Person or Group
of Beneficial Ownership of forty percent (40%) or more of either (x) the then outstanding shares of
Common Stock (the “Outstanding Company Stock”) or (y) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the election of
directors or similar governing body (the “Outstanding Company Voting Securities” and,
together with the Outstanding Company Stock, the “Company Securities”); or

          (ii) Members of the Incumbent Board cease to constitute at least a majority of the members of
the Board; or

          (iii) Consummation of a reorganization, merger, consolidation, sale or other disposition of
all or substantially all of the assets of the Company or an acquisition of assets of another
company (a “Business Combination”), in each case, unless, following such Business
Combination, (A) all or substantially all of the Persons who were the Beneficial Owners of Company
Securities immediately prior to such Business Combination Beneficially Own, directly or indirectly,
more than fifty percent (50%) of, respectively, the then outstanding shares of common stock or
common equity interests and the combined voting power of the then outstanding Voting Securities, as
the case may be, of the entity resulting from such Business Combination (including without
limitation an entity which as a result of such transaction owns the Company or all or substantially
all of the Company’s assets either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to such Business Combination, of the
Company Securities, (B) no Person or Group (excluding any employee benefit plan (or related trust)
of the Company or the entity resulting from such Business Combination) Beneficially Owns, directly
or indirectly, forty percent (40%) or more of, respectively, the then outstanding shares of common
stock or common equity interests of the entity resulting from such Business Combination or the
combined voting power of the then outstanding Voting Securities of such entity except to the extent
that such ownership results solely from ownership of the Company that existed prior to the Business
Combination, and (C) at least a majority of the members of the board of directors or similar
governing body of the entity resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or

2

 

          (iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of
the Company.

Notwithstanding the foregoing clause (i) of this definition: (x) the following acquisitions
(whether the acquiring Person or Group acquires Beneficial Ownership of forty percent (40%) or more
of the Outstanding Company Stock or Outstanding Company Voting Securities or any such acquisition
results in any other Person or Group (other than the acquiring Person or Group) Beneficially Owning
forty percent (40%) or more of the Outstanding Company Stock or Outstanding Company Voting
Securities) shall not constitute a Change in Control unless, following such acquisition, any Person
or Group (other than the acquiring Person or Group effecting the acquisition pursuant to the
following clauses (A) through (D)) who becomes the Beneficial Owner of forty percent (40%) or more
of the Outstanding Company Stock or Outstanding Company Voting Securities as a result of one or
more of such acquisitions shall thereafter acquire any additional shares of Company Securities and,
following such acquisition, Beneficially Owns forty percent (40%) or more of either the Outstanding
Company Stock or Outstanding Company Voting Securities, in which case such acquisition shall
constitute a Change in Control: (A) any acquisition directly from the Company, (B) any acquisition
by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any entity controlled by the Company, or (D) any acquisition by any
entity pursuant to a transaction which complies with clauses (A), (B) and (C) of the foregoing
clause (iii) of this definition; and (y) the acquisition of Beneficial Ownership of shares of
Common Stock by the Crusader Parent Entities pursuant to the Contribution Agreement, the
corresponding acquisition of Beneficial Ownership of shares of Common Stock by any other Person or
Group deemed to Beneficially Own the Common Stock so acquired by the Crusader Parent Entities (any
such Person and/or Group, collectively with the Crusader Parent Entities and the Crusader
Distributees, the “Crusader Group”) and the acquisition of Beneficial Ownership of shares
of Common Stock as a result of the distribution by a Crusader Parent Entity to Crusader
Distributees of shares of Common Stock acquired pursuant to the Contribution Agreement or directly
from the Company prior to the date of the Contribution Agreement shall not constitute a Change of
Control, provided that if, (1) for so long as the shares of Common Stock Beneficially Owned by any
member of the Crusader Group equals or exceeds forty percent (40%) of the Outstanding Company Stock
or the Outstanding Company Voting Securities, such member of the Crusader Group shall obtain
Beneficial Ownership of shares of Common Stock (other than as a result of any acquisition described
in the foregoing clauses (A) through (D) of this paragraph or pursuant to an award issued under any
equity based compensation plan of the Company, including without limitation the LTIP) representing
one percent (1%) or more of the Outstanding Company Stock or Outstanding Company Voting Securities
or (2) at any time after such member of the Crusader Group shall cease to Beneficially Own forty
percent (40%) or more of the Outstanding Company Stock and Outstanding Company Voting Securities,
such member of the Crusader Group shall obtain Beneficial Ownership of shares of Common Stock
(other than as a result of any acquisition described in the foregoing clauses (A) through (D) of
this paragraph or pursuant to an award issued under any equity based compensation plan of the
Company, including without limitation the LTIP) representing forty percent (40%) or more of either
the Outstanding Company Stock or Outstanding Company Voting Securities, then in the case of either
(1) or (2) a Change of Control shall be deemed to occur.

3

 

     “Claim” means an actual or threatened claim or request for relief which was, is or may
be made by reason of anything done or not done by Indemnitee in, or by reason of any event or
occurrence related to, Indemnitee’s Corporate Status.

     “Common Stock” means the Company’s common stock, par value $.01 per share, and such
other securities as may be substituted (or resubstituted) for such Common Stock.

     “Contribution Agreement” means the Contribution Agreement among Westside Energy
Corporation (now known as Crusader Energy Group Inc.), Crusader Management Corporation, David D. Le
Norman, Knight Energy Management Holding Company, LLC, Knight Energy Group II Holding Company, LLC,
Knight Energy Group I Holding Co., LLC, Crusader Energy Group Holding Co., LLC, Hawk Energy Fund I
Holding Company, LLC, RCH Energy Opportunity Fund I, L.P., Knight Energy Group, LLC, Knight Energy
Group II, LLC, Knight Energy Management, LLC, Hawk Energy Fund I, LLC, RCH Upland Acquisition, LLC
and Crusader Energy Group, LLC dated as of December 31, 2007, as amended.

     “Corporate Status” means the status of a person who is, becomes or was a director,
officer, employee or agent of the Company or is, becomes or was serving at the request of the
Company as a director, officer, partner, member, manager, venturer, proprietor, trustee, employee,
agent, fiduciary or similar functionary of another foreign or domestic corporation, partnership,
limited liability company, joint venture, sole proprietorship, trust, employee benefit plan or
other enterprise. For purposes of this Agreement, the Company agrees that Indemnitee’s service on
behalf of or with respect to any Subsidiary of the Company shall be deemed to be at the request of
the Company.

     “Crusader Distributees” means holders of equity interests in any Crusader Parent
Entity who receives a distribution from such Crusader Parent Entity of shares of Common Stock
acquired pursuant to the Contribution Agreement or directly from the Company prior to the date of
the Contribution Agreement.

     “Crusader Parent Entities” means Knight Energy Group I Holding Co., LLC, Knight Energy
Group II Holding Company, LLC, Knight Energy Management Holding Company, LLC, Hawk Energy Fund I
Holding Company, LLC, RCH Energy Opportunity Fund I, L.P., David D. Le Norman and Crusader Energy
Group Holding Co., LLC.

     “Disinterested Director” with respect to any request by Indemnitee for indemnification
hereunder, means a director of the Company who at the time of the vote is not a named defendant or
respondent in the Proceeding in respect of which indemnification is sought by Indemnitee.

     “Exchange Act” means the Securities Exchange Act of 1934.

     “Expenses” means all attorneys’ fees and disbursements, retainers, accountant’s fees
and disbursements, private investigator fees and disbursements, court costs, transcript costs, fees
and expenses of experts, witness fees and expenses, travel expenses, duplicating costs, printing
and binding costs, telephone charges, postage, delivery service fees and all other disbursements,
costs or expenses of the types customarily incurred in connection with prosecuting, defending
(including affirmative defenses and counterclaims), preparing to prosecute or defend,

4

 

investigating, being or preparing to be a witness in, or participating in or preparing to
participate in (including on appeal) a Proceeding and all interest or finance charges attributable
to any thereof. Should any payments by the Company under this Agreement be determined to be
subject to any federal, state or local income or excise tax, “Expenses” shall also include such
amounts as are necessary to place Indemnitee in the same after-tax position (after giving effect to
all applicable taxes) as Indemnitee would have been in had no such tax been determined to apply to
such payments.

     “Group” shall have the meaning ascribed to such term in Section 13(d)(3) or 14(d)(2)
of the Exchange Act.

     “Incumbent Board” means the individuals who, as of the date of this Agreement,
constitute the Board and any other individual who becomes a director of the Company after that date
and whose election or appointment by the Board or nomination for election by the Company’s
stockholders was approved by a vote of at least a majority of the directors then comprising the
Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Incumbent Board.

     “Independent Counsel” means a law firm, or a member of a law firm, that is experienced
in matters of corporation law and neither contemporaneously is, nor in the five years theretofore
has been, retained to represent: (a) the Company or Indemnitee in any matter material to either
such party (other than as Independent Counsel under this Agreement or similar agreements), (b) any
other party to the Proceeding giving rise to a claim for indemnification hereunder or (c) the
beneficial owner, directly or indirectly, of securities of the Company representing 5% or more of
the combined voting power of the Company’s then outstanding voting securities (other than, in each
such case, with respect to matters concerning the rights of Indemnitee under this Agreement, or of
other indemnitees under similar indemnification agreements). Notwithstanding the foregoing, the
term “Independent Counsel” shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in representing either the
Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.

     “Independent Directors” means the directors on the Board that are independent
directors as defined in Section 803A of the American Stock Exchange Company Guide or successor
provision, or, if the Company’s common stock is not then quoted on the AMEX, that qualify as
independent, disinterested, or a similar term as defined in the rules of the principal securities
exchange or inter-dealer quotation system on which the Company’s common stock is then listed or
quoted.

     “LTIP” means the 2008 Long-Term Incentive Plan of the Company.

     “NRS” means the Nevada Revised Statues and any successor statute thereto, as either of
them may from time to time be amended.

5

 

     “Person” means any individual, entity or group (within the meaning of Sections
13(d)(3) and 14(d)(2) of the Exchange Act).

     “Potential Change in Control” shall be deemed to have occurred if (i) any Person shall
have announced publicly an intention to effect a Change in Control, or commenced any action (such
as the commencement of a tender offer for the Company’s Common Stock or the solicitation of proxies
for the election of any of the Company’s directors) that, if successful, could reasonably be
expected to result in the occurrence of a Change in Control; (ii) the Company enters into an
agreement, the consummation of which would constitute a Change in Control; or (iii) any other event
occurs which the Board declares to be a Potential Change of Control.

     “Proceeding” means any threatened, pending or completed action, suit, arbitration,
investigation, inquiry, alternate dispute resolution mechanism, administrative or legislative
hearing, or any other proceeding (including, without limitation, any securities laws action, suit,
arbitration, alternative dispute resolution mechanism, hearing or procedure) whether civil,
criminal, administrative, arbitrative or investigative and whether or not based upon events
occurring, or actions taken, before the date hereof, and any appeal in or related to any such
action, suit, arbitration, investigation, hearing or proceeding and any inquiry or investigation
(including discovery), whether conducted by or in the right of the Company or any other Person,
that Indemnitee in good faith believes could lead to any such action, suit, arbitration,
alternative dispute resolution mechanism, hearing or other proceeding or appeal thereof.

     “Subsidiary” means, with respect to any Person, any corporation or other entity of
which a majority of the voting power of the voting equity securities or equity interest is owned,
directly or indirectly, by that Person.

     “Voting Securities” means any securities that vote generally in the election of
directors, in the admission of general partners, or in the selection of any other similar governing
body.

ARTICLE II

Services by Indemnitee

     Indemnitee is serving as a director of the Company. Indemnitee may from time to time also
agree to serve, as the Company may request from time to time, in another capacity for the Company
(including another officer or director position) or as a director, officer, partner, member,
venturer, proprietor, trustee, employee, agent, fiduciary or similar functionary of another foreign
or domestic corporation, partnership, joint venture, limited liability company, sole
proprietorship, trust, employee benefit plan or other enterprise. Indemnitee and the Company each
acknowledge that they have entered into this Agreement as a means of inducing Indemnitee to serve,
or continue to serve, the Company in such capacities. Indemnitee may at any time and for any
reason resign from such position or positions (subject to any other contractual obligation or any
obligation imposed by operation of law). The Company shall have no obligation under this Agreement
to continue Indemnitee in any such position or positions.

6

 

ARTICLE III

Indemnification

     Section 3.1 General. Subject to the provisions set forth in Article IV, the Company
shall indemnify, and advance Expenses to, Indemnitee to the fullest extent permitted by applicable
Nevada law in effect on the date hereof and to such greater extent as applicable Nevada law may
hereafter from time to time permit. The other provisions set forth in this Agreement are provided
in addition to and as a means of furtherance and implementation of, and not in limitation of, the
obligations expressed in this Article III. No requirement, condition to or limitation of any right
to indemnification or to advancement of Expenses under this Article III shall in any way limit the
rights of Indemnitee under Article VII.

     Section 3.2 Additional Indemnity of the Company. Indemnitee shall be entitled to
indemnification pursuant to this Section 3.2 if, by reason of anything done or not done by
Indemnitee in, or by reason of any event or occurrence related to, Indemnitee’s Corporate Status,
Indemnitee is, was or becomes, or is threatened to be made, a party to, or witness or other
participant in any Proceeding. Pursuant to this Section 3.2, Indemnitee shall be indemnified
against any and all Expenses, judgments, penalties (including excise or similar taxes), fines and
amounts paid in settlement (including all interest, assessments and other charges paid or payable
in connection with or in respect of any such Expenses, judgments, penalties, fines and amounts paid
in settlement) actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in
connection with such Proceeding or any Claim, issue or matter therein. Notwithstanding the
foregoing, the obligations of the Company under this Section 3.2 shall be subject to the condition
that no determination (which, in any case in which Independent Counsel is involved, shall be in a
form of a written opinion) shall have been made pursuant to Article IV that Indemnitee would not be
permitted to be indemnified under applicable Nevada law. Nothing in this Section 3.2 shall limit
the benefits of Section 3.1, Section 3.3 or any other Section hereunder.

     Section 3.3 Advancement of Expenses. The Company shall pay all Expenses reasonably
incurred by, or in the case of retainers to be incurred by, or on behalf of Indemnitee (or, if
applicable, reimburse Indemnitee for any and all Expenses reasonably incurred by Indemnitee and
previously paid by Indemnitee) in connection with any Claim or Proceeding, whether brought by the
Company or otherwise, in advance of any determination respecting entitlement to indemnification
pursuant to Article IV hereof (and shall continue to pay such Expenses after such determination and
until it shall ultimately be determined (in a final adjudication by a court from which there is no
further right of appeal or in a final adjudication of an arbitration pursuant to Section 5.1 if
Indemnitee elects to seek such arbitration) that Indemnitee is not entitled to be indemnified by
the Company against such Expenses) within 10 days after the receipt by the Company of (a) a
written request from Indemnitee requesting such payment or payments from time to time, whether
prior to or after final disposition of such Proceeding, and (b) a written affirmation from
Indemnitee of Indemnitee’s good faith belief that Indemnitee has met the standard of conduct
necessary for Indemnitee to be permitted to be indemnified under applicable law. Any such payment
by the Company is referred to in this Agreement as an “Expense Advance.” In connection with any
request for an Expense Advance, if requested by the Company, Indemnitee or Indemnitee’s counsel
shall also submit an affidavit stating that the Expenses incurred were, or in the case of retainers
to be incurred are, reasonably

7

 

incurred. Any dispute as to the reasonableness of the incurrence of any Expense shall not
delay an Expense Advance by the Company, and the Company agrees that any such dispute shall be
resolved only upon the disposition or conclusion of the underlying Claim against Indemnitee.
Indemnitee hereby undertakes and agrees that Indemnitee will reimburse and repay the Company
without interest for any Expense Advances to the extent that it shall ultimately be determined (in
a final adjudication by a court from which there is no further right of appeal or in a final
adjudication of an arbitration pursuant to Section 5.1 if Indemnitee elects to seek such
arbitration) that Indemnitee is not entitled to be indemnified by the Company against such
Expenses. Indemnitee shall not be required to provide collateral or otherwise secure the
undertaking and agreement described in the prior sentence.

     Section 3.4 Indemnification for Additional Expenses. The Company shall indemnify
Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within two business
days of that request) advance those Expenses to Indemnitee, that are incurred by Indemnitee in
connection with any claim asserted against, or action brought by, Indemnitee for (i)
indemnification or an Expense Advance by the Company under this Agreement or any other agreement or
provision of the Amended and Restated Articles of Incorporation of the Company (the “Articles
of Incorporation”) or the Second Amended and Restated Bylaws of the Company, as amended by the
First Amendment to Second Amended and Restated Bylaws (collectively, the “Bylaws”) now or
hereafter in effect relating to any Claim or Proceeding, (ii) recovery under any directors’ and
officers’ liability insurance policies maintained by the Company, or (iii) enforcement of, or
claims for breaches of, any provision of this Agreement, in each of the foregoing situations
regardless of whether Indemnitee ultimately is determined to be entitled to that indemnification,
advance expense payment, insurance recovery, enforcement, or damage claim, as the case may be and
regardless of whether the nature of the proceeding with respect to such matters is judicial, by
arbitration, or otherwise.

     Section 3.5 Partial Indemnity. If Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of the Expenses, judgments,
fines, penalties, and amounts paid in settlement of a Claim or Proceeding but not, however, for all
of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion
thereof to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this
Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense
of any or all Claims or Proceedings, or in defense of any issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified against all Expenses incurred in
connection therewith.

ARTICLE IV

Procedure for Determination of Entitlement

to Indemnification

     Section 4.1 Request by Indemnitee. To obtain indemnification under this Agreement,
Indemnitee shall submit to the Company a written request, including therein or therewith such
documentation and information as is reasonably available to Indemnitee and is reasonably necessary
to determine whether and to what extent Indemnitee is entitled to indemnification. The Secretary
or an Assistant Secretary of the Company shall, promptly upon receipt of such a

8

 

request for indemnification, advise the Board in writing that Indemnitee has requested
indemnification.

     Section 4.2 Determination of Request. Upon written request by Indemnitee for
indemnification pursuant to the first sentence of Section 4.1 hereof, a determination, if required
by applicable law, with respect to whether Indemnitee is permitted under applicable law to be
indemnified shall be made in accordance with the terms of Section 4.5, in the specific case as
follows:

     (a) If a Potential Change in Control or a Change in Control shall have occurred, by
Independent Counsel (selected in accordance with Section 4.3) in a written opinion to the
Board and Indemnitee, unless Indemnitee shall request that such determination be made by the
Board, or a committee of the Board, in which case by the person or persons or in the manner
provided for in clause (i) or (ii) of paragraph (b) below; or

     (b) If a Potential Change in Control or a Change in Control shall not have occurred,
(i) by the Board by a majority vote of the Disinterested Directors even though less than a
quorum of the Board, or (ii) by a majority vote of a committee solely of two or more
Disinterested Directors designated to act in the matter by a majority vote of all
Disinterested Directors even though less than a quorum of the Board, or (iii) by Independent
Counsel selected by the Board or a committee of the Board by a vote as set forth in clauses
(i) or (ii) of this paragraph (b), or if such vote is not obtainable or such a committee
cannot be established, by a majority vote of all directors, or (iv) if Indemnitee and the
Company agree, by the stockholders of the Company in a vote that excludes the shares held by
directors who are not Disinterested Directors.

If it is so determined that Indemnitee is permitted to be indemnified under applicable law, payment
to Indemnitee shall be made within 10 days after such determination. Nothing contained in this
Agreement shall require that any determination be made under this Section 4.2 prior to the
disposition or conclusion of a Claim or Proceeding against Indemnitee; provided, however, that
Expense Advances shall continue to be made by the Company pursuant to, and to the extent required
by, the provisions of Article III. Indemnitee shall cooperate with the person or persons making
such determination with respect to Indemnitee’s entitlement to indemnification, including providing
to such person upon reasonable advance request any documentation or information that is not
privileged or otherwise protected from disclosure and that is reasonably available to Indemnitee
and reasonably necessary to such determination. Any costs or expenses (including attorneys’ fees
and disbursements) incurred by Indemnitee in so cooperating with the person or persons making such
determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s
entitlement to indemnification), and the Company shall indemnify and hold harmless Indemnitee
therefrom.

     Section 4.3 Independent Counsel. If a Potential Change in Control or a Change in
Control shall not have occurred and the determination of entitlement to indemnification is to be
made by Independent Counsel, the Independent Counsel shall be selected by (a) a majority vote of
the Disinterested Directors, even though less than a quorum of the Board or (b) if there are no
Disinterested Directors, by a majority vote of the Board, and the Company shall give written

9

 

notice to Indemnitee, within 10 days after receipt by the Company of Indemnitee’s request for
indemnification, specifying the identity and address of the Independent Counsel so selected. If a
Potential Change in Control or a Change in Control shall have occurred and the determination of
entitlement to indemnification is to be made by Independent Counsel, the Independent Counsel shall
be selected by Indemnitee, and Indemnitee shall give written notice to the Company, within 10 days
after submission of Indemnitee’s request for indemnification, specifying the identity and address
of the Independent Counsel so selected (unless Indemnitee shall request that such selection be made
by the Disinterested Directors or a committee of the Board, in which event the Company shall give
written notice to Indemnitee within 10 days after receipt of Indemnitee’s request for the Board or
a committee of the Disinterested Directors to make such selection, specifying the identity and
address of the Independent Counsel so selected). In either event, (i) such notice to Indemnitee or
the Company, as the case may be, shall be accompanied by a written affirmation of the Independent
Counsel so selected that it satisfies the requirements of the definition of “Independent Counsel”
in Article I and that it agrees to serve in such capacity and (ii) Indemnitee or the Company, as
the case may be, may, within seven days after such written notice of selection shall have been
given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such
selection. Any objection to the selection of Independent Counsel pursuant to this Section 4.3 may
be asserted only on the ground that the Independent Counsel so selected does not meet the
requirements of the definition of “Independent Counsel” in Article I, and the objection shall set
forth with particularity the factual basis of such assertion. If such written objection is timely
made, the Independent Counsel so selected may not serve as Independent Counsel unless and until a
court of competent jurisdiction (the “Court”) has determined that such objection is without
merit. In the event of a timely written objection to a choice of Independent Counsel, the party
originally selecting the Independent Counsel shall have seven days to make an alternate selection
of Independent Counsel and to give written notice of such selection to the other party, after which
time such other party shall have five days to make a written objection to such alternate selection.
If, within 30 days after submission of Indemnitee’s request for indemnification pursuant to
Section 4.1, no Independent Counsel shall have been selected and not objected to, either the
Company or Indemnitee may petition the Court for resolution of any objection that shall have been
made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the
appointment as Independent Counsel of a person selected by the Court or by such other person as the
Court shall designate, and the person with respect to whom an objection is so resolved or the
person so appointed shall act as Independent Counsel under Section 4.2. The Company shall pay any
and all fees and expenses reasonably incurred by such Independent Counsel in connection with acting
pursuant to Section 4.2, and the Company shall pay all fees and expenses reasonably incurred
incident to the procedures of this Section 4.3, regardless of the manner in which such Independent
Counsel was selected or appointed. Upon the due commencement of any judicial proceeding or
arbitration pursuant to Section 5.1, Independent Counsel shall be discharged and relieved of any
further responsibility in such capacity (subject to the applicable standards of professional
conduct then prevailing).

     Section 4.4 Establishment of a Trust. In the event of a Potential Change in Control
or a Change in Control, the Company shall, upon written request by Indemnitee, create a trust for
the benefit of Indemnitee (the “Trust”) and from time to time upon written request of
Indemnitee shall fund the Trust in an amount sufficient to satisfy any and all Expenses reasonably
anticipated at the time of each such request to be incurred in connection with investigating,

10

 

preparing for, and defending any Claim, and any and all judgments, fines, penalties, and
settlement amounts of any and all Claims from time to time actually paid or claimed, reasonably
anticipated, or proposed to be paid. The amount to be deposited in the Trust pursuant to the
foregoing funding obligation shall be determined by the Independent Counsel (or other person(s)
making the determination of whether Indemnitee is permitted to be indemnified by applicable law).
The terms of the Trust shall provide that, upon a Change in Control, (i) the Trust shall not be
revoked or the principal thereof invaded, without the written consent of Indemnitee; (ii) the
trustee of the Trust shall advance, within ten business days of a request by Indemnitee, any and
all Expenses reasonably incurred to Indemnitee, any required determination concerning the
reasonableness of the Expenses to be made by the Independent Counsel (and Indemnitee hereby agrees
to reimburse the Trust under the circumstances in which Indemnitee would be required to reimburse
the Company for Expenses Advances under Section 3.3 of this Agreement); (iii) the Trust shall
continue to be funded by the Company in accordance with the funding obligation set forth above;
(iv) the trustee of the Trust shall promptly pay to Indemnitee all amounts for which Indemnitee
shall be entitled to indemnification pursuant to this Agreement; and (v) all unexpended funds in
the Trust shall revert to the Company upon a final determination by the Independent Counsel or a
court of competent jurisdiction, as the case may be, that Indemnitee has been fully indemnified
under the terms of this Agreement. The trustee of the Trust shall be chosen by Indemnitee and
shall be an institution that is not affiliated with Indemnitee. Nothing in this Section 4.4 shall
relieve the Company of any of its obligations under this Agreement.

     Section 4.5 Presumptions and Effect of Certain Proceedings.

     (a) Indemnitee shall be presumed to be entitled to indemnification under this Agreement
upon submission of a request for indemnification under Section 4.1, and the Company shall
have the burden of proof in overcoming that presumption in reaching a determination contrary
to that presumption. Such presumption shall be used by Independent Counsel (or other person
or persons determining entitlement to indemnification) as a basis for a determination of
entitlement to indemnification unless the Company provides information sufficient to
overcome such presumption by clear and convincing evidence or unless the investigation,
review and analysis of Independent Counsel (or such other person or persons) convinces
Independent Counsel by clear and convincing evidence that the presumption should not apply.

     (b) If the person or persons empowered or selected under Article IV of this Agreement
to determine whether Indemnitee is entitled to indemnification shall not have made a
determination within 60 days after receipt by the Company of the request by Indemnitee
therefor, the determination of entitlement to indemnification shall be deemed to have been
made and Indemnitee shall be entitled to such indemnification; provided, however, that such
60-day period may be extended for a reasonable time, not to exceed an additional 30 days, if
the person making the determination with respect to entitlement to indemnification in good
faith requires such additional time for the obtaining or evaluating of documentation and/or
information relating to such determination; and provided, further, that the 60-day
limitation set forth in this Section 4.5(b) shall not apply and such period shall be
extended as necessary (i) if within 30 days after receipt by the Company of the request for
indemnification under Section 4.1 Indemnitee and the Company have agreed, and the Board has
resolved to submit such determination to the

11

 

stockholders of the Company pursuant to Section 4.2(b) for their consideration at an
annual meeting of stockholders to be held within 90 days after such agreement and such
determination is made thereat, or a special meeting of stockholders is called within 30 days
after such receipt for the purpose of making such determination, such meeting is held for
such purpose within 60 days after having been so called and such determination is made
thereat, or (ii) if the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 4.2(a) of this Agreement, in which case the
applicable period shall be as set forth in Section 5.1(c).

     (c) The termination of any Proceeding or of any Claim, issue or matter by judgment,
order, settlement (whether with or without court approval) or conviction, or upon a plea of
nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this
Agreement) by itself adversely affect the rights of Indemnitee to indemnification or create
a presumption that Indemnitee failed to meet any particular standard of conduct, that
Indemnitee had any particular belief, or that a court has determined that indemnification is
not permitted by applicable law. Indemnitee shall be deemed to have been found liable in
respect of any Claim, issue or matter only after Indemnitee shall have been so adjudged by
the Court after exhaustion of all appeals therefrom.

ARTICLE V

Certain Remedies of Indemnitee

     Section 5.1 Indemnitee Entitled to Adjudication in an Appropriate Court. If (a) a
determination is made pursuant to Article IV that Indemnitee is not entitled to indemnification
under this Agreement; (b) there has been any failure by the Company to make timely payment or
advancement of any amounts due hereunder (including, without limitation, any Expense Advances); or
(c) the determination of entitlement to indemnification is to be made by Independent Counsel
pursuant to Section 4.2 and such determination shall not have been made and delivered in a written
opinion within 90 days after the latest of (i) such Independent Counsel’s being appointed, (ii) the
overruling by the Court of objections to such counsel’s selection, or (iii) expiration of all
periods for the Company or Indemnitee to object to such counsel’s selection, Indemnitee shall be
entitled to commence an action seeking an adjudication in the Court of Indemnitee’s entitlement to
such indemnification or advancements due hereunder, including, without limitation, Expense
Advances. Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in arbitration to
be conducted by a single arbitrator pursuant to the commercial arbitration rules of the American
Arbitration Association. Indemnitee shall commence such action seeking an adjudication or an award
in arbitration within 180 days following the date on which Indemnitee first has the right to
commence such action pursuant to this Section 5.1, or such right shall expire. The Company agrees
not to oppose Indemnitee’s right to seek any such adjudication or award in arbitration and it shall
continue to pay Expense Advances pursuant to Section 3.3 until it shall ultimately be determined
(in a final adjudication by a court from which there is no further right of appeal or in a final
adjudication of an arbitration pursuant to this Section 5.1 if Indemnitee elects to seek such
arbitration) that Indemnitee is not entitled to be indemnified by the Company against such
Expenses.

12

 

     Section 5.2 Adverse Determination Not to Affect any Judicial Proceeding. If a
determination shall have been made pursuant to Article IV that Indemnitee is not entitled to
indemnification under this Agreement, any judicial proceeding or arbitration commenced pursuant to
this Agreement shall be conducted in all respects as a de novo trial or arbitration on the merits,
and Indemnitee shall not be prejudiced by reason of such initial adverse determination. In any
judicial proceeding or arbitration commenced pursuant to this Agreement, Indemnitee shall be
presumed to be entitled to indemnification or advancement of Expenses, as the case may be, under
this Agreement and the Company shall have the burden of proof in overcoming such presumption and to
show by clear and convincing evidence that Indemnitee is not entitled to indemnification or
advancement of Expenses, as the case may be.

     Section 5.3 Company Bound by Determination Favorable to Indemnitee in any Judicial
Proceeding or Arbitration. If a determination shall have been made or deemed to have been made
pursuant to Article IV that Indemnitee is entitled to indemnification, the Company shall be
irrevocably bound by such determination in any judicial proceeding or arbitration commenced
pursuant to this Article V, and shall be precluded from asserting that such determination has not
been made or that the procedure by which such determination was made is not valid, binding and
enforceable.

     Section 5.4 Company Bound by the Agreement. The Company shall be precluded from
asserting in any judicial proceeding or arbitration commenced pursuant to this Article V that the
procedures and presumptions of this Agreement are not valid, binding and enforceable and shall
stipulate in any such court or before any such arbitrator that the Company is bound by all the
provisions of this Agreement.

ARTICLE VI

Contribution

     Section 6.1 Contribution Payment. To the extent the indemnification provided for
under any provision of this Agreement is determined (in the manner hereinabove provided) not to be
permitted under applicable law, then in the event Indemnitee was, is, or becomes a party to or
witness or other participant in, or is threatened to be made a party to or witness or other
participant in, a Proceeding by reason of (or arising in part out of) Indemnitee’s Corporate
Status, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount of any and
all Expenses, judgments, fines, or penalties assessed against or incurred or paid by Indemnitee on
account of such Proceeding and any and all amounts paid in settlement of that Proceeding (including
all interest, assessments, and other charges paid or payable in connection with or in respect of
such Expenses, judgments, fines, penalties, or amounts paid in settlement) for which such
indemnification is not permitted (“Contribution Amounts”), in such proportion as is
appropriate to reflect the relative fault with respect to the subject matter of the Proceeding
giving rise to the Contribution Amounts of Indemnitee, on the one hand, and of the Company and any
and all other parties (including officers and directors of the Company other than Indemnitee) who
may be at fault with respect to such matter (collectively, including the Company, the “Third
Parties”) on the other hand.

13

 

     Section 6.2 Relative Fault. The relative fault of the Third Parties and Indemnitee
shall be determined (i) by reference to the relative fault of Indemnitee as determined by the court
or other governmental agency assessing the Contribution Amounts or (ii) to the extent such court or
other governmental agency does not apportion relative fault, by the Independent Counsel (or such
other party which makes a determination under Article IV) after giving effect to, among other
things, the relative intent, knowledge, access to information, and opportunity to prevent or
correct the subject matter of the Proceedings and other relevant equitable considerations of each
party. The Company and Indemnitee agree that it would not be just and equitable if contribution
pursuant to this Section 6.2 were determined by pro rata allocation or by any other method of
allocation which does take account of the equitable considerations referred to in this Section 6.2.

ARTICLE VII

Miscellaneous

     Section 7.1 Non-Exclusivity. The rights of Indemnitee to receive indemnification and
advancement of Expenses under this Agreement shall be in addition to, and shall not be deemed
exclusive of, any other rights Indemnitee shall under the NRS or other applicable law, the articles
of incorporation or bylaws of the Company, any other agreement, vote of stockholders or a
resolution of directors, or otherwise. No amendment or alteration of the articles of incorporation
or bylaws of the Company or any provision thereof shall adversely affect Indemnitee’s rights
hereunder and such rights shall be in addition to any rights Indemnitee may have under the articles
of incorporation, bylaws and the NRS or other applicable law. To the extent that there is a change
in the NRS or other applicable law (whether by statute or judicial decision) that allows greater
indemnification by agreement than would be afforded currently under the Company’s articles of
incorporation or bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee
shall enjoy by virtue of this Agreement the greater benefit so afforded by such change. Any
amendment, alteration or repeal of the NRS that adversely affects any right of Indemnitee shall be
prospective only and shall not limit or eliminate any such right with respect to any Proceeding
involving any occurrence or alleged occurrence of any action or omission to act that took place
before such amendment or repeal.

     Section 7.2 Insurance and Subrogation.

     (a) To the extent that the Company maintains an insurance policy or policies providing
liability insurance for directors, officers, employees or agents of the Company or for
individuals serving at the request of the Company as directors, officers, partners, members,
venturers, proprietors, trustees, employees, agents, fiduciaries or similar functionaries of
another foreign or domestic corporation, partnership, limited liability company, joint
venture, sole proprietorship, trust, employee benefit plan or other enterprise, Indemnitee
shall be covered by such policy or policies in accordance with its or their terms to the
maximum extent of the coverage available for any such director, officer, employee, agent or
fiduciary under such policy or policies.

     (b) In the event of any payment by the Company under this Agreement for which
reimbursement is available under any insurance policy or policies obtained by the Company,
the Company shall be subrogated to the extent of such payment to all of the

14

 

rights of recovery of Indemnitee under such insurance policy or policies, who shall
execute all papers required and take all action necessary to secure such rights, including
execution of such documents as are necessary to enable the Company to bring suit to enforce
such rights, provided that all Expenses relating to such action shall be borne by the
Company.

     (c) The Company shall not be liable under this Agreement to make any payment of amounts
otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise
actually received such payment under the Company’s articles of incorporation or bylaws or
any insurance policy, contract, agreement or otherwise.

     (d) If Indemnitee is a director of the Company, the Company will advise the Board of
any proposed material reduction in the coverage for Indemnitee to be provided by the
Company’s directors’ and officers’ liability insurance policy and will not effect such a
reduction with respect to Indemnitee without the prior approval of at least 80% of the
Independent Directors of the Company.

     (e) If Indemnitee is a director of the Company during the term of this Agreement and if
Indemnitee ceases to be a director of the Company for any reason, the Company shall procure
a run-off directors’ and officers’ liability insurance policy with respect to claims arising
from facts or events that occurred before the time Indemnitee ceased to be a director of the
Company and covering Indemnitee, which policy, without any lapse in coverage, will provide
coverage for a period of six years after the time Indemnitee ceased to be a director of the
Company and will provide coverage (including amount and type of coverage and size of
deductibles) that are substantially comparable to the Company’s directors’ and officers’
liability insurance policy that was most protective of Indemnitee in the 12 months preceding
the time Indemnitee ceased to be a director of the Company; provided, however, that:

     (i) this obligation shall be suspended during the period immediately following
the time Indemnitee ceases to be a director of the Company if and only so long as
the Company has a directors’ and officers’ liability insurance policy in effect
covering Indemnitee for such claims that, if it were a run-off policy, would meet or
exceed the foregoing standards, but in any event this suspension period shall end
when a Change in Control occurs; and

     (ii) no later than the end of the suspension period provided in the preceding
clause (i) (whether because of failure to have a policy meeting the foregoing
standards or because a Change in Control occurs), the Company shall procure a
run-off directors’ and officers’ liability insurance policy meeting the foregoing
standards and lasting for the remainder of the six-year period.

     (f) Notwithstanding the preceding clause (e) including the suspension provisions
therein, if Indemnitee ceases to be an officer or a director of the Company in connection
with a Change in Control or at or during the one-year period following the occurrence of a
Change in Control, the Company shall procure a run-off directors’ and officers’ liability
insurance policy covering Indemnitee and meeting the foregoing

15

 

standards in clause (e) and lasting for a six-year period upon the Indemnitee’s ceasing
to be an officer or a director of the Company in such circumstances.

     Section 7.3 Self Insurance of the Company; Other Arrangements. The parties hereto
recognize that the Company may, but except as provided in Section 7.2(d), Section 7.2(e), and
Section 7.2(f) is not required to, procure or maintain insurance or other similar arrangements, at
its expense, to protect itself and any person, including Indemnitee, who is or was a director,
officer, employee, agent or fiduciary of the Company or who is or was serving at the request of the
Company as a director, officer, partner, member, venturer, proprietor, trustee, employee, agent,
fiduciary or similar functionary of another foreign or domestic corporation, partnership, limited
liability company, joint venture, sole proprietorship, trust, employee benefit plan or other
enterprise against any expense, liability or loss asserted against or incurred by such person, in
such a capacity or arising out of the person’s status as such a person, whether or not the Company
would have the power to indemnify such person against such expense or liability or loss.

     Except as provided in Section 7.2(d), Section 7.2(e) and Section 7.2(f), in considering the
cost and availability of such insurance, the Company (through the exercise of the business judgment
of its directors and officers) may, from time to time, purchase insurance which provides for
certain (i) deductibles, (ii) limits on payments required to be made by the insurer, or (iii)
coverage which may not be as comprehensive as that previously included in insurance purchased by
the Company or its predecessors. The purchase of insurance with deductibles, limits on payments
and coverage exclusions, even if in the best interest of the Company, may not be in the best
interest of Indemnitee. As to the Company, purchasing insurance with deductibles, limits on
payments and coverage exclusions is similar to the Company’s practice of self-insurance in other
areas. In order to protect Indemnitee who would otherwise be more fully or entirely covered under
such policies, the Company shall, to the maximum extent permitted by applicable law, indemnify and
hold Indemnitee harmless to the extent (i) of such deductibles, (ii) of amounts exceeding payments
required to be made by an insurer, or (iii) of amounts that prior policies of directors’ and
officers’ liability insurance held by the Company or its predecessors have provided for payment to
Indemnitee, if by reason of Indemnitee’s Corporate Status Indemnitee is or is threatened to be made
a party to any Proceeding. The obligation of the Company in the preceding sentence shall be
without regard to whether the Company would otherwise be required to indemnify such officer or
director under the other provisions of this Agreement, or under any law, agreement, vote of
stockholders or directors or other arrangement. Without limiting the generality of any provision
of this Agreement, the procedures in Article IV hereof shall, to the extent applicable, be used for
determining entitlement to indemnification under this Section 7.3.

     Section 7.4 Certain Settlement Provisions. The Company shall have no obligation to
indemnify Indemnitee under this Agreement for amounts paid in settlement of a Proceeding or Claim
without the Company’s prior written consent. The Company shall not settle any Proceeding or Claim
in any manner that would impose any fine or other obligation on Indemnitee without Indemnitee’s
prior written consent. Neither the Company nor Indemnitee shall unreasonably withhold their
consent to any proposed settlement.

16

 

     Section 7.5 Duration of Agreement. This Agreement shall continue for so long as
Indemnitee serves as a director, officer, employee or agent of the Company or, at the request of
the Company, as a director, officer, partner, member, venturer, proprietor, trustee, employee,
agent, fiduciary or similar functionary of another foreign or domestic corporation, partnership,
limited liability company, joint venture, sole proprietorship, trust, employee benefit plan or
other enterprise, and thereafter shall survive until and terminate upon the later to occur of: (a)
the expiration of 20 years after the latest date that Indemnitee shall have ceased to serve in any
such capacity; (b) the final termination of all pending Proceedings in respect of which Indemnitee
is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding
commenced by Indemnitee pursuant to Article IV relating thereto; or (c) the expiration of all
statutes of limitation applicable to possible Claims arising out of Indemnitee’s Corporate Status.

     Section 7.6 Notice by Each Party. Indemnitee shall promptly notify the Company in
writing upon being served with any summons, citation, subpoena, complaint, indictment, information
or other document or communication relating to any Proceeding or Claim for which Indemnitee may be
entitled to indemnification or advancement of Expenses hereunder; provided, however, that any
failure of Indemnitee to so notify the Company shall not adversely affect Indemnitee’s rights under
this Agreement except to the extent the Company shall have been materially prejudiced as a direct
result of such failure. The Company shall promptly notify Indemnitee in writing as to the pendency
of any Proceeding or Claim that may involve a claim against Indemnitee for which Indemnitee may be
entitled to indemnification or advancement of Expenses hereunder.

     Section 7.7 Amendment. This Agreement may not be modified or amended except by a
written instrument executed by or on behalf of each of the parties hereto.

     Section 7.8 Waivers. The observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or prospectively) by the
party entitled to enforce such term only by a writing signed by the party against which such waiver
is to be asserted. Unless otherwise expressly provided herein, no delay on the part of any party
hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any waiver on the part of any party hereto of any right, power or privilege hereunder operate
as a waiver of any other right, power or privilege hereunder nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege hereunder.

     Section 7.9 Entire Agreement. This Agreement and the documents expressly referred to
herein constitute the entire agreement between the parties hereto with respect to the matters
covered hereby, and any other prior or contemporaneous oral or written understandings or agreements
with respect to the matters covered hereby, including without limitation any prior indemnification
agreements, are expressly superseded by this Agreement.

     Section 7.10 Severability. If any provision of this Agreement (including any
provision within a single section, paragraph or sentence) or the application of such provision to
any Person or circumstance, shall be judicially declared to be invalid, unenforceable or void, such
decision will not have the effect of invalidating or voiding the remainder of this Agreement or
affect the application of such provision to other Persons or circumstances, it being the intent and
agreement

17

 

of the parties that this Agreement shall be deemed amended by modifying such provision to the
extent necessary to render it valid, legal and enforceable while preserving its intent, or if such
modification is not possible, by substituting therefor another provision that is valid, legal and
unenforceable and that achieves the same objective. Any such finding of invalidity or
unenforceability shall not prevent the enforcement of such provision in any other jurisdiction to
the maximum extent permitted by applicable law.

     Section 7.11 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given upon (a) transmitter’s confirmation of a receipt of a facsimile
transmission if during normal business hours of the recipient, otherwise on the next business day,
(b) confirmed delivery of a standard overnight courier or when delivered by hand or (c) the
expiration of five business days after the date mailed by certified or registered mail (return
receipt requested), postage prepaid, to the parties at the following addresses (or at such other
addresses for a party as shall be specified by like notice):

If to the Company, to it at:

Crusader Energy Group Inc.

4747 Gaillardia Parkway

Oklahoma City, Oklahoma 73142

Attention: General Counsel

If to Indemnitee, to Indemnitee at:

Robert J. Raymond

RR Advisors, LLC

200 Crescent Court, Suite 1060

Dallas, Texas 75201

or to such other address or to such other individuals as any party shall have last designated by
notice to the other parties. All notices and other communications given to any party in accordance
with the provisions of this Agreement shall be deemed to have been given when delivered or sent to
the intended recipient thereof in accordance with and as provided in the provisions of this Section
7.11.

     Section 7.12 Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Nevada without regard to the principles of conflict of laws.

     Section 7.13 Certain Construction Rules.

     (a) The article and section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of this
Agreement. As used in this Agreement, unless otherwise provided to the contrary, (1) all
references to days shall be deemed references to calendar days and (2) any reference to a
“Section” or “Article” shall be deemed to refer to a section or article of this Agreement.
The words “hereof,” “herein” and “hereunder” and words of similar import

18

 

referring to this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. Whenever the words “include,” “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by the words
“without limitation.” Unless otherwise specifically provided for herein, the term “or”
shall not be deemed to be exclusive. Whenever the context may require, any pronoun used in
this Agreement shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice versa.

     (b) For purposes of this Agreement, references to “other enterprises” shall include
employee benefit plans; references to “fines” shall include any excise taxes assessed on a
person with respect to any employee benefit plan; references to “serving at the request of
the Company” shall include any service as a director, officer, employee or agent of the
Company which imposes duties on, or involves services by, such director, nominee, officer,
employee or agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner the person reasonably
believed to be in the interests of the participants and beneficiaries of an employee benefit
plan shall be deemed to have acted in a manner “not opposed to the best interest of the
Company” for purposes of this Agreement and the NRS.

     Section 7.14 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument, notwithstanding that both parties are not signatories to
the original or same counterpart.

     Section 7.15 Certain Persons Not Entitled to Indemnification. The Company shall not
be obligated pursuant to the terms of this Agreement:

     (a) To indemnify Indemnitee if (and to the extent that) a final decision by a court or
arbitration body having jurisdiction in the matter shall determine that such indemnification
is not lawful; or

     (b) To indemnify Indemnitee for the payment to the Company of profits pursuant to
Section 16(b) of the Exchange Act, or Expenses incurred by Indemnitee for Proceedings in
connection with such payment under Section 16(b) of the Exchange Act.

     Section 7.16 Indemnification for Negligence, Gross Negligence, etc. Without limiting
the generality of any other provision hereunder, it is the express intent of this Agreement that
Indemnitee be indemnified and Expenses be advanced regardless of Indemnitee’s acts of negligence,
gross negligence, intentional or willful misconduct to the extent that indemnification and
advancement of Expenses is allowed pursuant to the terms of this Agreement and under applicable
Nevada law.

     Section 7.17 Mutual Acknowledgments. Both the Company and Indemnitee acknowledge that
in certain instances, applicable law (including applicable federal law that may preempt or override
applicable state law) or public policy may prohibit the Company from indemnifying the directors,
officers, employees or agents of the Company under this Agreement or otherwise. For example, the
Company and Indemnitee acknowledge that the U.S. Securities

19

 

and Exchange Commission has taken the position that indemnification of directors, officers and
controlling Persons of the Company for liabilities arising under federal securities laws is against
public policy and, therefore, unenforceable. Indemnitee understands and acknowledges that the
Company has undertaken or may be required in the future to undertake with the Securities and
Exchange Commission to submit the question of indemnification to a court in certain circumstances
for a determination of the Company’s right under public policy to indemnify Indemnitee. In
addition, the Company and Indemnitee acknowledge that federal law prohibits indemnifications for
certain violations of the Employee Retirement Income Security Act of 1974, as amended.

     Section 7.18 Enforcement. The Company agrees that its execution of this Agreement
shall constitute a stipulation by which it shall be irrevocably bound in any court or arbitration
in which a proceeding by Indemnitee for enforcement of Indemnitee’s rights hereunder shall have
been commenced, continued or appealed, that its obligations set forth in this Agreement are unique
and special, and that failure of the Company to comply with the provisions of this Agreement will
cause irreparable and irremediable injury to Indemnitee, for which a remedy at law will be
inadequate. As a result, in addition to any other right or remedy Indemnitee may have at law or in
equity with respect to breach of this Agreement, Indemnitee shall be entitled to injunctive or
mandatory relief directing specific performance by the Company of its obligations under this
Agreement. The Company agrees not to seek, and agrees to waive any requirement for the securing or
posting of, a bond in connection with Indemnitee’s seeking or obtaining such relief.

     Section 7.19 Successors and Assigns. All of the terms and provisions of this Agreement
shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto
and their respective successors, assigns, heirs, executors, administrators, legal representatives.

     Section 7.20 Period of Limitations. No legal action shall be brought and no cause of
action shall be asserted by or on behalf of the Company or any affiliate of the Company against
Indemnitee or Indemnitee’s spouse, heirs, executors, or personal or legal representatives after the
expiration of one year from the date of accrual of that cause of action, and any claim or cause of
action of the Company or its affiliate shall be extinguished and deemed released unless asserted by
the timely filing of a legal action within that one-year period; provided, however, that for any
claim based on Indemnitee’s breach of fiduciary duties to the Company or its stockholders, the
period set forth in the preceding sentence shall be three years instead of one year; and provided,
further, that, if any shorter period of limitations is otherwise applicable to any such cause of
action, the shorter period shall govern.

[SIGNATURES ON FOLLOWING PAGE]

20

 

     IN WITNESS WHEREOF, this Agreement has been duly executed and delivered to be effective as of
the date first above written.

	 	 	 	 	 
	 	COMPANY:	 
	 
	 	 
	 	CRUSADER ENERGY GROUP INC., a Nevada corporation

 	 
	 	By:  	/s/ DAVID D. LE NORMAN
 	 
	 	 	David D. Le Norman 	 
	 	 	President and Chief Executive Officer 	 
	 
	 	INDEMNITEE:

 	 
	 	/s/ ROBERT J. RAYMOND
 	 
	 	Robert J. Raymond 	 
	 	 	 
	 

21

 

Schedule I

David D. Le Norman

John G. Heinen

Paul E. Legg

Charles L. Mullens, Jr.

Roy A. Fletcher

Joe Colonnetta

James C. Crain

Phillip D. Kramer

Robert H. Niehaus

Shirley A. Ogden

22

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}]]