Document:

Exhibit 10.1 - Richard Smith's Employment Agreement

    Exhibit
      10.1

    
 

    EMPLOYMENT
      AGREEMENT

     

    This
      AGREEMENT (the "Agreement") by and between Carrizo Oil & Gas, Inc., a Texas
      corporation (the "Company") and Richard H. Smith (the "Executive"), to be
      effective as of the 23rd day of August, 2006 (the "Agreement Effective
      Date").

     

    In
      entering into this Agreement, the Board of Directors of the Company (the
      "Board") desires to provide the Executive with substantial incentives to serve
      the Company as one of its senior executives performing at the highest level
      of
      leadership and stewardship, without distraction or concern over minimum
      compensation, benefits or tenure, to manage the Company's future growth and
      development, and maximize the returns to the Company's
      stockholders.

     

    NOW,
      THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

     

    1.  Employment
      Period.
      As of
      the Agreement Effective Date (hereinafter defined), the Company hereby agrees
      to
      employ the Executive and the Executive hereby agrees to accept employment with
      the Company, in accordance with, and subject to, the terms and provisions of
      this Agreement, for the period (the "Employment Period") commencing on the
      Agreement Effective Date and ending on the first anniversary of the Agreement
      Effective Date; provided, on the Agreement Effective Date and on each day
      thereafter, the Employment Period shall automatically be extended for an
      additional one day without any further action by either the Company or the
      Executive, it being the intention of the parties that there shall be
      continuously a remaining term of not less than one year's duration of the
      Employment Period until an event has occurred as described in, or one of the
      parties shall have made an appropriate election and notification pursuant to,
      the provisions of Section 3.

     

    2.  Terms
      of Employment.

     

    (a)  Position
      and Duties.
      As of
      the Agreement Effective Date, the Executive shall become a full time employee
      and company officer with the title and responsibilities of Vice President -
      Land, and during the Employment Period, excluding any periods of vacation and
      sick leave to which the Executive is entitled, the Executive agrees to devote
      full attention and time during normal business hours to the business and affairs
      of the Company and, to the extent necessary to discharge the responsibilities
      assigned to the Executive hereunder, to use the Executive's reasonable best
      efforts to perform faithfully and efficiently such responsibilities. During
      the
      Employment Period, it shall not be a violation of this Agreement for the
      Executive to (A) serve on corporate, civic or charitable boards or committees,
      (B) deliver lectures, fulfill speaking engagements or teach at educational
      institutions and (C) manage personal investments, so long as such activities
      do
      not interfere with the performance of the Executive's responsibilities as an
      employee of the Company in accordance with this Agreement.

     

    (b)  Compensation.

     

    (i)  Base
      Salary.
      Commencing on the Agreement Effective Date and thereafter during his Employment
      Period, the Executive shall receive an annual base salary of $180,000 ("Annual
      Base Salary"), which shall be paid on a semimonthly basis. During the Employment
      Period, the Annual Base Salary shall 

     

    
      
         

      

      
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    be
      reviewed at least annually and shall be increased at any time and from time
      to
      time as shall be substantially consistent with increases in base salary
      generally awarded in the ordinary course of business to executives of the
      Company and its affiliated companies. Any increase in Annual Base Salary shall
      not serve to limit or reduce any other obligation to the Executive under this
      Agreement. As used in this Agreement, the term "affiliated companies" shall
      include, when used with reference to the Company, any company controlled by,
      controlling or under common control with the Company.

     

    (ii)  Annual
      Bonus.
      In
      addition to Annual Base Salary, the Executive may be awarded, for each fiscal
      year or portion thereof during the Employment Period, an Annual Bonus (the
      "Annual Bonus"), in an amount comparable to the Annual Bonus Award to other
      Company executives, taking into account the Executive's position,
      responsibilities, and accomplishments with the Company, prorated for any period
      consisting of less than 12 full months.

     

    (iii)  Incentive,
      Savings and Retirement Plans.
      During
      the Employment Period, the Executive shall be entitled to participate in all
      incentive, savings and retirement plans that are tax-qualified under Section
      401(a) of the Internal Revenue Code of 1986, as amended ("Code"), and all plans
      that are supplemental to any such tax-qualified plans, in each case to the
      extent that such plans are applicable generally to other salaried employees
      of
      the Company and its affiliated companies. 

     

    (iv)  Welfare
      Benefit Plans.
      During
      the Employment Period, the Executive and/or the Executive's family, as the
      case
      may be, shall be eligible for participation in and shall receive all benefits
      under welfare benefit plans, practices, policies and programs provided by the
      Company or its affiliated companies (including, without limitation, medical,
      prescription, dental, vision, disability, salary continuance, group life and
      supplemental group life, accidental death and travel accident insurance plans
      and programs) to the extent applicable generally to other salaried employees
      of
      the Company and its affiliated companies.

     

    (v)  Expenses.
      During
      the Employment Period, the Executive shall be entitled to receive prompt
      reimbursement for all reasonable expenses incurred by the Executive in
      accordance with the policies, practices and procedures of the Company and its
      affiliated companies.

     

    (vi)  Vacation.
      During
      the Employment Period, the Executive shall be entitled to paid vacation in
      accordance with the plans, policies, programs and practices of the Company
      and
      its affiliated companies.

     

    
      
         

      

      
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    3.  Termination
      of Employment.
      

     

    (a)  Death
      or Disability.
      The
      Executive's employment shall terminate automatically upon the Executive's death
      during the Employment Period. If the Company determines in good faith that
      the
      Disability of the Executive has occurred during the Employment Period (pursuant
      to the definition of Disability set forth below), it may give to the Executive
      written notice in accordance with Section 13(d) of this Agreement of its
      intention to terminate the Executive's employment. In such event, the
      Executive's employment with the Company shall terminate effective on the 30th
      day after receipt of such notice by the Executive (the "Disability Effective
      Date"), provided that, within the 30 days after such receipt, the Executive
      shall not have returned to full-time performance of the Executive's duties.
      For
      the purposes of this Agreement, "Disability" shall mean the absence of the
      Executive from the Executive's duties with the Company on a full-time basis
      for
      either (i) 180 consecutive business days or (ii) in any two-year period 270
      nonconsecutive business days as a result of incapacity due to mental or physical
      illness which is determined to be total and permanent by a physician selected
      by
      the Company or its insurers and acceptable to the Executive or the Executive's
      legal representative (such agreement as to acceptability not to be withheld
      unreasonably.)

     

    (b)  Cause.
      The
      Company may terminate the Executive's employment during the Employment Period
      for Cause. For purposes of this Agreement, "Cause" shall mean for the Company's
      termination of the Executive's employment for any of the following: (i) the
      Executive's final conviction of a felony crime that enriched the Executive
      at
      the expense of the Company; provided, however, that after indictment, the
      Company may suspend the Executive from the rendition of services, but without
      limiting or modifying in any other way the Company's obligations under this
      Agreement; (ii) a breach by the Executive of a fiduciary duty owed to the
      Company; (iii) a breach by the Executive of any of the covenants made by him
      in
      Sections 8 and 10 hereof; (iv) the willful and gross neglect by the Executive
      of
      the duties specifically and expressly required by this Agreement; or (v) the
      Executive's continuing failure to substantially perform his duties and
      responsibilities hereunder (except by reason of the Executive's incapacity
      due
      to physical or mental illness or injury) for a period of 45 days after the
      Required Board Majority, as defined herein, has delivered to the Executive
      a
      written demand for substantial performance hereunder which specifically
      identifies the bases for the Required Board Majority's determination that the
      Executive has not substantially performed his duties and responsibilities
      hereunder (that period being the "Grace Period"); provided, that for purposes
      of
      this clause (v), the Company shall not have Cause to terminate the Executive's
      employment unless (A) at a meeting of the Board called and held following the
      Grace Period in the city in which the Company's principal executive offices
      are
      located, of which the Executive was given not less than 10 days' prior written
      notice and at which the Executive was afforded the opportunity to be represented
      by counsel, appear and be heard, the Required Board Majority shall adopt a
      written resolution which (1) sets forth the Required Board Majority's
      determination that the failure of the Executive to substantially perform his
      duties and responsibilities hereunder has (except by reason of his incapacity
      due to physical or mental illness or injury)continued past the Grace Period
      and
      (2) specifically identifies the bases for that determination, and (B) the
      Company, at the written direction of the Required Board Majority, shall deliver
      to the Executive a Notice of Termination for Cause to which a copy of that
      resolution, certified as being true and correct by the secretary or any
      assistant secretary of the Company, is attached. "Required Board Majority"
      means
      at any time a majority of the members of the Board at that time which includes
      at least a majority of the 

     

    
      
         

      

      
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    Directors,
      each of whom has not been an employee of the Company or any subsidiary of the
      Company.

     

    (c)  Good
      Reason; Window Period.
      The
      Executive's employment may be terminated during the Employment Period by the
      Executive for Good Reason, or during a Window Period by the Executive without
      any reason. For purposes of this Agreement. "Window Period" shall mean the
      60-day period immediately following elapse of one year after any Change of
      Control as defined in Section 9 of this Agreement. For purposes of this
      Agreement, "Good Reason" shall mean:

     

    (i)  the
      assignment to the Executive of any duties materially inconsistent in any respect
      with the Executive's position (including status, offices, titles and reporting
      requirements), authority, duties or responsibilities as contemplated by
      Section 2 of this Agreement, or any other action by the Company which
      results in a material diminution, in absolute terms, in such position,
      authority, duties or responsibilities, excluding for this purpose an isolated,
      insubstantial and inadvertent action not taken in bad faith and which is
      remedied by the Company promptly after receipt of notice thereof given by the
      Executive;

     

    (ii)  any
      material failure by the Company to comply with any of the provisions 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 the Executive;

     

    (iii)  any
      purported termination by the Company of the Executive's employment otherwise
      than as expressly permitted by this Agreement; 

     

    (iv)  any
      failure by the Company to comply with and satisfy the requirements of Section
      11
      of this Agreement, provided that (A) the successor described in Section 11(c)
      has received, at least 10 days prior to the Date of Termination (as defined
      in
      subparagraph (e) below), written notice from the Company or the Executive of
      the
      requirements of such provision and (B) such failure to be in compliance and
      satisfy the requirements of Section 11 shall continue as of the Date of
      Termination.

     

    Notwithstanding
      any provision to the contrary, in order for any event(s) in subparagraph (i)
      through (iv) above to constitute "Good Reason" for purposes of this Agreement,
      (A) the Executive must notify the Company via Notice of Termination within
      180
      days following the occurrence of the event(s) that the Executive intends to
      terminate his employment with the Company because of the occurrence of Good
      Reason (which event must be described by the Executive in reasonable detail
      in
      the Notice of Termination) and (B) within 60 days after receiving such Notice
      of
      Termination from the Executive, the Company must fail to reinstate the Executive
      to the position he was in, or otherwise cure the circumstances giving rise
      to
      Good Reason.

     

    (d)  Notice
      of Termination.
      Any
      termination by the Company for Cause, or by the Executive for Good Reason or
      without any reason during a Window Period, shall be 

     

    
      
         

      

      
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    communicated
      by Notice of Termination to the other party hereto given in accordance with
      Section 13 of this Agreement. The failure by the Company to set forth in the
      Notice of Termination any fact or circumstance which contributes to a showing
      of
      Cause shall not waive any right of the Company hereunder or preclude the Company
      from asserting such fact or circumstance in enforcing the Company's rights
      hereunder.

     

    (e)  Date
      of Termination.
      For
      purposes of this Agreement, the term "Date of Termination" means (i) if the
      Executive's employment is terminated by the Company for Cause, or by the
      Executive during a Window Period or for Good Reason, the date of receipt of
      the
      Notice of Termination or any later date specified therein, as the case may
      be,
      (ii) if the Executive's employment is terminated by the Company other than
      for
      Cause or Disability, the Date of Termination shall be the date on which the
      Company notifies the Executive of such termination and (iii) if the Executive's
      employment is terminated by reason of death or Disability, the Date of
      Termination shall be the date of death of the Executive or the Disability
      Effective Date, as the case may be.

     

    4.  Obligations
      of the Company upon Termination.

     

    (a)  Disability,
      Good Reason or During a Window Period; Other than for Cause or Death (except
      during a Window Period).
      If,
      during the Employment Period, (x) the Company shall terminate the Executive's
      employment other than for Cause, including a termination by reason of Disability
      (but not by reason of death), or (y) the Executive shall terminate employment
      for Good Reason or (z) his employment shall be terminated during a Window Period
      by the Company for Cause, by the Executive without any reason, or by reason
      of
      death:

     

    (i)  the
      Company shall pay or provide to or in respect of the Executive the following
      amounts and benefits:

     

    A.  in
      a lump
      sum in cash, within 10 days after the Date of Termination, an amount equal
      to
      the sum of (1) the Executive's Annual Base Salary through the Date of
      Termination, (2) any deferred compensation previously awarded to or earned
      by
      the Executive (together with any accrued interest or earnings thereon) and
      (3)
      any compensation for unused vacation time for which the Executive is eligible
      in
      accordance with the plans, policies, programs and practices of the Company
      and
      its affiliated companies, in each case to the extent not theretofore paid (the
      sum of the amounts described in clauses (1), (2) and (3) shall be hereinafter
      referred to as (the "Accrued Obligation");

     

    B.  in
      a lump
      sum cash, discounted at 6%, within 10 days after the Date of Termination, an
      amount equal to 100% of Annual Base Salary that would have been paid annually
      to
      the Executive pursuant to this Agreement for the period (the "Remaining
      Employment Period") beginning on the Date of Termination and ending on the
      latest possible date of termination of the Employment Period in accordance
      with
      the provisions of Section 1 hereof (the "Final Expiration Date") if the

     

    
      
         

      

      
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    Executive's
      employment had not been terminated; (if the termination occurs after the date
      a
      Change of Control occurs the "Remaining Employment Period" will be a minimum
      of
      18 months);

     

    C.  effective
      as of the Date of Termination, (1) immediate vesting and exercisability of,
      and
      termination of any restrictions on sale or transfer (other than any such
      restriction arising by operation of law) with respect to, each and every stock
      option, restricted stock award, restricted stock unit award and other
      equity-based award and performance award (each, a "Compensatory Award") that
      is
      outstanding as of a time immediately prior to the Date of Termination and (2)
      unless a longer post-employment term is provided in the applicable award
      agreement, the extension of the term during which each and every Compensatory
      Award may be exercised by the Executive until the earlier of (x) the first
      anniversary of the Date of Termination or (y) the date upon which the right
      to
      exercise any Compensatory Award would have expired if the Executive had
      continued to be employed by the Company under the terms of this Agreement until
      the Final Expiration Date; and

     

    D.  as
      soon
      as practicable following the calendar year of the date of termination, an amount
      equal to the product of (x) the Annual Bonus that would have been paid to the
      Executive with respect to the year of termination had the Date of Termination
      not occurred and (y) a fraction, the numerator of which is the number of days
      in
      the fiscal year through the Date of Termination and the denominator of which
      is
      365.

     

    Anything
      in this Agreement to the contrary notwithstanding, if a Change of Control occurs
      and if the Executive's employment with the Company is terminated prior to the
      date on which the Change of Control occurs, and if it is reasonably demonstrated
      by the Executive that such termination of employment (x) was at the request
      of a
      third party who has taken steps reasonably calculated to effect the Change
      of
      Control or (y) otherwise arose in connection with or anticipation of the Change
      of Control, then for all purposes of this Agreement, the "date a Change of
      Control occurs" shall mean the date immediately prior to the date of such
      termination of employment. 

     

    (ii)  for
      the
      Remaining Employment Period, or such longer period as any plan, program,
      practice or policy may provide, the Company shall continue benefits to the
      Executive and/or the Executive's family at least equal to those which would
      have
      been provided to them in accordance with the plans, programs, practices and
      policies described in Section 2(b)(iv) of this Agreement if the Executive's
      employment had not been terminated in accordance with the plans, practices,
      programs or policies of the Company and its affiliated companies(such
      continuation of such benefits for the applicable period herein set forth shall
      be hereinafter referred to as "Welfare Benefit Continuation"), but with the
      Company's medical benefits coverages being secondary to any coverages provided
      by another employer. For purposes of determining eligibility of the Executive
      for retiree benefits pursuant to such plans, practices, programs and

     

    
      
         

      

      
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    policies,
      the Executive shall be considered to have remained employed until the Final
      Expiration Date and to have retired on such date.

     

    (b)  Death
      (except during a Window Period).
      If the
      Executive's employment is terminated by reason of the Executive's death during
      the Employment Period and other than during a Window Period in which event
      the
      provisions of Section 4(a) shall govern, this Agreement shall terminate without
      further obligations to the Executive's legal representatives under this
      Agreement, other than (i) the payment of Accrued Obligations (which shall be
      paid to the Executive's estate or beneficiary, as applicable, in a lump sum
      in
      cash within 30 days of the Date of Termination), (ii) the payment of an amount
      equal to the Annual Salary that would have been paid to the Executive pursuant
      to this Agreement during the Remaining Employment Period if the Executive's
      employment had not terminated by reason of death (which shall be paid to the
      Executive's estate or beneficiary, as applicable, in a lump sum in cash within
      30 days of the Date of Termination) reduced by the amount payable in respect
      of
      the Executive's death under any life insurance policy (other than accidental
      death and dismemberment or travel accident policies) but only to the extent
      such
      amounts are attributable to premiums paid by the Company, (iii) during the
      period beginning on the Date of Termination and ending on the first anniversary
      thereof medical benefits coverage determined as if the Executive's employment
      had not terminated by reason of death, (iv) as soon as practicable following
      the
      fiscal year in which death occurs, payment of an amount equal to the product
      of
      (x) the Annual Bonus that would have been paid to the Executive with respect
      to
      the year of termination had the Date of Termination not occurred and (y) a
      fraction, the numerator of which is the number of days in the fiscal year
      through the Date of Termination and the denominator of which is 365 and (v)
      effective as of the Date of Termination, (A) immediate vesting and
      exercisability of, and termination of any restrictions on sale or transfer
      (other than any such restriction arising by operation of law) with respect
      to,
      each and every Compensatory Award outstanding as of a time immediately prior
      to
      the Date of Termination, (B) the extension of the term during which each and
      every Compensatory Award may be exercised or purchased by the Executive until
      the earlier of (1) the first anniversary of the Date of Termination or (2)
      the
      date upon which the right to exercise or purchase any Compensatory Award would
      have expired if the Executive had continued to be employed by the Company under
      the terms of this Agreement until the Final Expiration Date.

     

    (c)  Cause,
      Other than for Disability, Good Reason or During a Window Period.
      If the
      Executive's employment shall be terminated for Cause during the Employment
      Period and other than during a Window Period, in which event the provisions
      of
      Section 4(a) shall govern, this Agreement shall terminate without further
      obligations to the Executive other than for Accrued Obligations. If the
      Executive terminates employment during the Employment Period, excluding a
      termination for any Disability, Good Reason or without any reason during a
      Window Period, in which event the provisions of Section 4(a) shall govern,
      this
      Agreement shall terminate without further obligations to the Executive, other
      than for the payment of Accrued Obligations. In such case, all Accrued
      Obligations shall be paid to the Executive in a lump sum in cash within 30
      days
      of the Date of Termination.

     

    5.  Non-exclusivity
      of Rights.
      Except
      as provided in Section 4 of this Agreement, nothing in this Agreement shall
      prevent or limit the Executive's continuing or future participation in any
      plan,
      program, policy or practice provided by the Company or any of its affiliated
      companies and for which the Executive may qualify, nor shall anything herein
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    affect
      such rights as the Executive may have under any contract or agreement with
      the
      Company or any of its affiliated companies. Amount which are vested benefits
      or
      which the Executive is otherwise entitled to receive under any plan, policy,
      practice or program of or any contract or agreement with the Company or any
      of
      its affiliated companies at or subsequent to the Date of Termination shall
      be
      payable in accordance with such plan, policy, practice or program or contract
      or
      agreement except as such plan, policy, practice or program is superseded by
      this
      Agreement.

     

    6.  Full
      Settlement; Resolution of Disputes.

     

    (a)  The
      Company's obligation to make payments provided for in this Agreement and
      otherwise to perform its obligations hereunder shall not be affected by any
      setoff, counterclaim, recoupment, defense, mitigation or other claim, right
      or
      action which the Company may have against the Executive or others. In the event
      (i) prior to a Change in Control, the Executive's employment is terminated
      for
      any reason other than Executive's voluntary termination (with or without Good
      Reason), or (ii) within two years after a Change in Control, the Executive's
      employment is terminated by the Company or the Executive for any reason, the
      Company agrees to pay promptly as incurred, to the full extent permitted by
      law,
      all legal fees and expenses which the Executive may reasonably incur as a result
      of any arbitration pursuant to Section 6(b) (regardless of the outcome thereof)
      initiated by the Company, the Executive or others regarding the validity or
      enforceability of, or liability under, any provision of this Agreement or any
      guarantee of performance thereof (including as a result of any contest by the
      Executive about the amount of any such payment pursuant to this Agreement),
      plus
      in each case interest on any delayed payment at the annual percentage rate
      which
      is three percentage points above the interest rate shown as the Prime Rate
      in
      the Money Rates column in the then most recently published edition of The Wall
      Street Journal (Southwest Edition), or, if such rate is not then so published
      on
      at least a weekly basis, the interest rate announced by Chase Manhattan Bank
      (or
      its successor), from time to time, as its Base Rate (or prime lending rate),
      from the date those amounts were required to have been paid or reimbursed to
      the
      Employee until those amounts are finally and fully paid or reimbursed; provided,
      however, that in no event shall the amount of interest contracted for, charged
      or received hereunder exceed the maximum non-usurious amount of interest allowed
      by applicable law; provided, further, that if the Executive is not the
      prevailing party in any such arbitration, then he shall, upon the conclusion
      thereof, repay to the Company any amounts that were previously advanced pursuant
      to this sentence by the Company as payment of legal fees and
      expenses.

     

    (b)  Any
      dispute arising out of or relating to this Agreement, including the breach,
      termination or validity thereof, shall be finally resolved by arbitration in
      accordance with the CPR Institute for Dispute Resolution Rules for
      Non-Administered Arbitration in effect on the date of this Agreement by a single
      arbitrator selected in accordance with the CPR Rules. The arbitration shall
      be
      governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16, and judgment on the
      award rendered by the arbitrator may be entered by any court having jurisdiction
      thereof. The place of arbitration shall be in Harris County, Texas. The
      arbitrator's decision must be based on the provisions of this Agreement and
      the
      relevant facts, and the arbitrator's reasoned decision and award shall be
      binding on both parties. Nothing herein is or shall be deemed to preclude the
      company's resort to the injunctive relief prescribed in this Agreement,
      including any injunctive relief implemented by the arbitrator pursuant to this
      Section 6(b). The parties will each bear 

     

    
      
         

      

      
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    their
      own
      attorneys' fees and costs in connection with any dispute, except in the
      circumstances in which the Company is required to advance the Executive's
      attorneys' fees in accordance with Section 6(a).

     

    (c)  If,
      upon
      a termination within two years following a Change in Control, there shall be
      any
      dispute between the Company and the Executive concerning (i) in the event of
      any
      termination of the Executive's employment by the Company, whether such
      termination was for Cause or Disability, or (ii) in the event of any termination
      of employment by the Executive, whether Good Reason existed or whether such
      termination occurred during a Window Period, then, unless and until there is
      a
      final, determination by an arbitrator declaring that such termination was for
      Cause or not for Disability or that the determination by the Executive of the
      existence of Good Reason was not made in good faith or that the termination
      by
      the Executive did not occur during a Window Period, the Company shall pay all
      amounts, and provide all benefits, to the Executive and/or the Executive's
      family or other beneficiaries, as the case may be, that the Company would be
      required to pay or provide pursuant to Section 4(a) hereof as though such
      termination were by the Company without Cause or by the Executive with Good
      Reason or during a Window Period; provided, however, that the Company shall
      not
      be required to pay any disputed amounts pursuant to this paragraph except upon
      receipt of an undertaking by or on behalf of the Executive to repay all such
      amounts to which the Executive is ultimately adjudged by such arbitrator not
      to
      be entitled.

     

    (d)  Notwithstanding
      any provision of Section 4, except in the case of a termination of employment
      within two years following a Change in Control, the Company's obligation to
      pay
      the amounts due on any termination of employment under Section 4 (other than
      the
      Accrued Obligations) are conditioned on the Executive's execution (without
      revocation during any applicable statutory revocation period) of a waiver and
      release of any and all claims against the Company and its affiliates in such
      form as may be prescribed by the Company.

     

    7.  Certain
      Additional Payments by the Company.
      

     

    (a)  Anything
      in this Agreement to the contrary notwithstanding and except as set forth below,
      in the event it shall be determined that any payment or distribution in the
      nature of compensation (within the meaning of Section 280G(b)(2) of the Code)
      to
      or for the benefit of the Executive, whether paid or payable or distributed
      or
      distributable pursuant to the terms of this Agreement or otherwise, but
      determined without regard to any additional payments required under this Section
      7 (a "Payment"), would be subject to the excise tax imposed by Section 4999
      of
      the Code, together with any interest or penalties imposed with respect to such
      excise tax ("Excise Tax"), then the Executive shall be entitled to receive
      an
      additional payment (a "Gross Up Payment") in an amount such that, after payment
      (whether through withholding at the source or otherwise) by the Executive of
      all
      taxes (including any interest or penalties imposed with respect to such taxes),
      including, without limitation, any income taxes (and any interest and penalties
      imposed with respect thereto), employment taxes and Excise Tax imposed upon
      the
      Gross Up Payment, the Executive retains an amount of the Gross Up Payment equal
      to the Excise Tax imposed upon the Payments.

     

    (b)  Subject
      to the provisions of this Section 7, all determinations required to be made
      under this Section 7, including whether and when a Gross Up Payment is required
      and 

     

    
      
         

      

      
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    the
      amount of such Gross Up Payment and the assumptions to be utilized in arriving
      at such determination, shall be made by Pannell Kerr Forster of Texas, P.C.
      (or
      such other nationally recognized certified public accounting firm that is
      providing audit services for the Company immediately prior to the date of a
      Change of Control in replacement of Pannell Kerr Forster of Texas, P.C.) (the
      "Accounting Firm") which shall provide detailed supporting calculations both
      to
      the Company and the Executive within 15 business days of the receipt of notice
      from the Executive that there has been a Payment, or such earlier time as is
      requested by the Company. In the event that the Accounting Firm is serving
      as
      accountant or auditor for the individual, entity or group effecting the Change
      of Control or the Accounting Firm declines or is unable to serve, the Executive
      shall appoint another nationally recognized certified public accounting firm
      to
      make the determinations required hereunder (which accounting firm shall then
      be
      referred to as the Accounting Firm hereunder). All fees and expenses of the
      Accounting Firm shall be borne solely by the Company. Any Gross Up Payment,
      as
      determined pursuant to this Section 7, shall be paid by the Company to the
      Executive within five days of the receipt of the Accounting Firm's
      determination. If the Accounting Firm determines that no Excise Tax is payable
      by the Executive, it shall furnish the Executive with a written opinion that
      failure to report the Excise Tax on the Executive's applicable federal income
      tax return would not result in the imposition of negligence or similar penalty.
      Any determination by the Accounting Firm shall be binding upon the Company
      and
      the Executive. As a result of the uncertainty in the application of Section
      4999
      of the Code at the time of the initial determination by the Accounting Firm
      hereunder, it is possible that Gross Up Payments which will not have been made
      by the Company should have been made ("Underpayment"), consistent with the
      calculations required to be made hereunder. In the event that the Company
      exhausts its remedies pursuant to the following provisions of this Section
      7 and
      the Executive thereafter is required to make a payment of any Excise Tax, the
      Accounting Firm shall determine the amount of the Underpayment that has occurred
      and any such Underpayment shall be promptly paid by the Company to or for the
      benefit of the Executive.

     

    (c)  The
      Executive shall notify the Company in writing of any claim by the Internal
      Revenue Service that, if successful, would require the payment by the Company
      of
      the Gross Up Payment. Such notification shall be given as soon as practicable
      but no later than 10 business days after the Executive is informed in writing
      of
      such claim and shall apprise the Company of the nature of such claim and the
      date on which such claim is requested to be paid. The Executive shall not pay
      such claim prior to the expiration of the 30 day period following the date
      on
      which it gives such notice to the Company (or such shorter period ending on
      the
      date that any payment of taxes with respect to such claim is due). If the
      Company notifies the Executive in writing prior to the expiration of such period
      that it desires to contest such claim, the Executive shall:

     

    (i)  give
      the
      Company any information reasonably requested by the Company relating to such
      claim;

     

    (ii)  take
      such
      action in connection with contesting such claim as the Company shall reasonably
      request in writing from time to time, including, without limitation, accepting
      legal representation with respect to such claim by an attorney reasonably
      selected by the Company;

     

    
      
         

      

      
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    (iii)  cooperate
      with the Company in good faith in order to effectively contest such claim;
      and

     

    (iv)  permit
      the Company to participate in any proceedings relating to such
      claim;

     

    provided,
      however, that the Company shall bear and pay directly all costs and expenses
      (including additional interest and penalties) incurred in connection with such
      contest and shall indemnify and hold the Executive harmless, on an after tax
      basis, for any Excise Tax, employment tax or income tax (including interest
      and
      penalties with respect thereto) imposed as a result of such representation
      and
      payment of costs and expenses. Without limitation of the foregoing provisions
      of
      this Section 7, the Company shall control all proceedings taken in connection
      with such contest and, at its sole option, may pursue or forgo any and all
      administrative appeals, proceedings, hearings and conferences with the taxing
      authority in respect of such claim and may, at its sole option, either direct
      the Executive to pay the tax claimed and sue for a refund or contest the claim
      in any permissible manner, and the Executive agrees to prosecute such contest
      to
      a determination before any administrative tribunal, in a court of initial
      jurisdiction and in one or more appellate courts, as the Company shall
      determine; provided, however, that if the Company directs the Executive to
      pay
      such claim and sue for a refund, the Company shall provide the amount of such
      payment to the Executive as an additional payment ("Supplemental Payment")
      (subject to possible repayment as provided in the next paragraph) and shall
      indemnify and hold the Executive harmless, on an after tax basis, from any
      Excise Tax, employment tax or income tax (including interest or penalties with
      respect thereto) imposed with respect to such payment or with respect to any
      imputed income with respect thereto; and further provided that any extension
      of
      the statute of limitations relating to payment of taxes for the taxable year
      of
      the Executive with respect to which such contested amount is claimed to be
      due
      is limited solely to such contested amount. Furthermore, the Company's control
      of the contest shall be limited to issues with respect to which a Gross Up
      Payment or Supplemental Payment would be payable hereunder and the Executive
      shall be entitled to settle or contest, as the case may be, any other issue
      raised by the Internal Revenue Service or any other taxing
      authority.

     

    (d)  If,
      after
      the receipt by the Executive of an amount provided by the Company pursuant
      to
      the foregoing provisions of this Section 7, the Executive becomes entitled
      to
      receive any refund with respect to such claim, the Executive shall (subject
      to
      the Company complying with the requirements of this Section 7) promptly pay
      to
      the Company the amount of such refund (together with any interest paid or
      credited thereon after taxes applicable thereto).

     

    8.  Confidential
      Information.
      The
      Executive shall hold in a fiduciary capacity for the benefit of the Company
      all
      secret or confidential information, knowledge or data relating to the Company
      or
      any of its affiliated companies, and their respective businesses, which shall
      have been obtained by the Executive during the Executive's employment by the
      Company or any of its affiliated companies and which shall not be or become
      public knowledge (other than by acts by the Executive or representatives of
      the
      Executive in violation of this Agreement) (referred to herein as "Confidential
      Information"). After termination of the Executive's employment with the Company,
      the Executive shall not, without the prior written consent of the Company or
      as
      may otherwise be required by law or legal process, communicate or divulge any
      such information, 

     

    
      
         

      

      
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    knowledge
      or data to anyone other than the Company and those designated by it. In no
      event
      shall an asserted violation of the provisions of this Section 8 constitute
      a
      basis for deferring or withholding any amounts otherwise payable to the
      Executive under this Agreement. Also, within 14 days of the termination of
      the
      Executive's employment for any reason, the Executive shall return to Company
      all
      documents and other tangible items of or containing Company information which
      are in the Executive's possession, custody or control.

     

    9.  Change
      of Control.
      

     

    As
      used
      in this Agreement, the terms set forth below shall have the following respective
      meanings:

     

    "Affiliate"
      shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules
      and Regulations under the Exchange Act, as in effect on the date of this
      Agreement.

     

    "Associate"
      shall mean, with reference to any Person, (a) any corporation, firm,
      partnership, association, unincorporated organization or other entity (other
      than the Company or a subsidiary of the Company) of which such Person is an
      officer or general partner (or officer or general partner of a general partner)
      or is, directly or indirectly, the Beneficial Owner of 10% or more of any class
      of equity securities, (b) any trust or other estate in which such Person has
      a
      substantial beneficial interest or as to which such Person serves as trustee
      or
      in a similar fiduciary capacity and (c) any relative or spouse of such Person,
      or any relative of such spouse, who has the same home as such
      Person.

     

    "Beneficial
      Owner" shall mean, with reference to any securities, any Person if:

     

    (a)  such
      Person or any of such Person's Affiliates and Associates, directly or
      indirectly, is the "beneficial owner" of (as determined pursuant to Rule 13d-3
      of the General Rules and Regulations under the Exchange Act, as in effect on
      the
      date of this Agreement) such securities or otherwise has the right to vote
      or
      dispose of such securities, including pursuant to any agreement, arrangement
      or
      understanding (whether or not in writing); provided, however, that a Person
      shall not be deemed the "Beneficial Owner" of, or to "beneficially own," any
      security under this subsection (a) as a result of an agreement, arrangement
      or
      understanding to vote such security if such agreement, arrangement or
      understanding: (i) arises solely from a revocable proxy or consent given in
      response to a public (i.e., not including a solicitation exempted by Rule
      14a-2(b)(2) of the General Rules and Regulations under the Exchange Act) proxy
      or consent solicitation made pursuant to, and in accordance with, the applicable
      provisions of the General Rules and Regulations under the Exchange Act and
      (ii)
      is not then reportable by such Person on Schedule 13D under the Exchange Act
      (or
      any comparable or successor report);

     

    (b)  such
      Person or any of such Person's Affiliates and Associates, directly or
      indirectly, has the right or obligation to acquire such securities (whether
      such
      right or obligation is exercisable or effective immediately or only after the
      passage of time or the occurrence of an event) pursuant to any agreement,
      arrangement or understanding (whether or not in writing) or upon the exercise
      of
      conversion rights, exchange rights, other rights, warrants or options, or
      otherwise; provided, however, that a Person shall not be deemed the Beneficial
      Owner of, or to 

     

    
      
         

      

      
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    "beneficially
      own," (i) securities tendered pursuant to a tender or exchange offer made by
      such Person or any of such Person's Affiliates or Associates until such tendered
      securities are accepted for purchase or exchange or (ii) securities issuable
      upon exercise of Exempt Rights; or

     

    (c)  such
      Person or any such Person's Affiliates or Associates (i) has any agreement,
      arrangement or understanding (whether or not in writing) with any other Person
      (or any Affiliate or Associate thereof) that beneficially owns such securities
      for the purpose of acquiring, holding, voting (except as set forth in the
      proviso to subsection (a) of this definition) or disposing of such securities
      or
      (ii) is a member of a group (as that term is used in Rule 13d-5(b) of the
      General Rules and Regulations under the Exchange Act) that includes any other
      Person that beneficially owns such securities; 

     

    provided,
      however, that nothing in this definition shall cause a Person engaged in
      business as an underwriter of securities to be the Beneficial Owner of, or
      to
      "beneficially own," any securities acquired through such Person's participation
      in good faith in a firm commitment underwriting until the expiration of 40
      days
      after the date of such acquisition. For purposes hereof, "voting" a security
      shall include voting, granting a proxy, consenting or making a request or demand
      relating to corporate action (including, without limitation, a demand for
      stockholder list, to call a stockholder meeting or to inspect corporate books
      and records) or otherwise giving an authorization (within the meaning of Section
      14(a) of the Exchange Act) in respect of such security.

     

    The
      terms
      "beneficially own" and "beneficially owning" shall have meanings that are
      correlative to this definition of the term "Beneficial Owner".

     

    "Change
      of Control" shall mean any of the following:

     

    (a)  any
      Person (other than an Exempt Person) shall become the Beneficial Owner of 40%
      or
      more of the shares of Common Stock then outstanding or 40% or more of the
      combined voting power of the Voting Stock of the Company then outstanding;
      provided, however, that no Change of Control shall be deemed to occur for
      purposes of this subsection (a) if such Person shall become a Beneficial Owner
      of 40% or more of the shares of Common Stock or 40% or more of the combined
      voting power of the Voting Stock of the Company solely as a result of (i) an
      Exempt Transaction or (ii) an acquisition by a Person pursuant to a
      reorganization, merger or consolidation, if, following such reorganization,
      merger or consolidation, the conditions described in clauses (i), (ii) and
      (iii)
      of subsection (c) of this definition are satisfied; or 

     

    (b)  individuals
      who, as of the Agreement Effective Date, constitute the Board (the "Incumbent
      Board") cease for any reason to constitute at least a majority of the Board;
      provided, however, that any individual becoming a director subsequent to the
      Agreement Effective Date whose election, or nomination for election by the
      Company's shareholders, was approved by a vote of at least a majority of the
      directors then comprising the Incumbent Board shall be considered as though
      such
      individual were a member of the Incumbent Board; provided, further, that there
      shall be excluded, for this purpose, any such individual whose initial
      assumption of office occurs as a result of any actual or threatened election
      contest that is subject to the provisions of Rule 14a-11 under the Exchange
      Act;
      or

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    (c)  the
      Company engages in and completes a reorganization, merger or consolidation,
      in
      each case, unless, following such reorganization, merger or consolidation,
      (i)
      more than 85% of the then outstanding shares of common stock of the corporation
      resulting from such reorganization, merger or consolidation and the combined
      voting power of the then outstanding Voting Stock of such corporation
      beneficially owned, directly or indirectly, by all or substantially all of
      the
      Persons who were the Beneficial Owners of the outstanding Common Stock
      immediately prior to such reorganization, merger, or consolidation is in
      substantially the same proportions as their ownership, immediately prior to
      such
      reorganization, merger or consolidation, of the outstanding Common Stock, (ii)
      no Person (excluding any Exempt Person or any Person beneficially owning,
      immediately prior to such reorganization, merger or consolidation, directly
      or
      indirectly, 40% or more of the Common Stock then outstanding or 40% or more
      of
      the combined voting power of the Voting Stock of the Company then outstanding)
      beneficially owns, directly or indirectly, 40% or more of the then outstanding
      shares of common stock of the corporation resulting from such reorganization,
      merger or consolidation or the combined voting power of the then outstanding
      Voting Stock of such corporation and (iii) at least a majority of the members
      of
      the board of directors of the corporation resulting from such reorganization,
      merger or consolidation were members of the Incumbent Board at the time of
      the
      execution of the initial agreement or initial action by the Board providing
      for
      such reorganization, merger or consolidation; or

     

    (d)  the
      Company engages in and completes (i) a complete liquidation or dissolution
      of
      the Company unless such liquidation or dissolution is approved a part of a
      plan
      of liquidation and dissolution involving a sale or disposition of all or
      substantially all of the assets of the Company to a corporation with respect
      to
      which, following such sale or other disposition, all of the requirements of
      clauses (ii) (A), (B) and (C) of this subsection (d) are satisfied, or (ii)
      the
      sale or other disposition of all or substantially all of the assets of the
      Company, other than to a corporation, with respect to which, following such
      sale
      or other disposition, (A) more than 85% of the then outstanding shares of common
      stock or such corporation and the combined voting power of the Voting Stock
      of
      such corporation is then beneficially owned, directly or indirectly, by all
      or
      substantially all of the Persons who were the Beneficial Owners of the
      outstanding Common Stock immediately prior to such sale or other disposition
      in
      substantially the same proportion as their ownership, immediately prior to
      such
      sale or other disposition, of the outstanding Common Stock, (B) no Person
      (excluding any Exempt Person and any Person beneficially owning, immediately
      prior to such sale or other disposition, directly or indirectly, 40% or more
      of
      the Common Stock then outstanding or 40% or more of the combined voting power
      of
      the Voting Stock of the Company then outstanding) beneficially owns, directly
      or
      indirectly, 40% or more of the then outstanding shares of common stock of such
      corporation and the combined voting power of the then outstanding Voting Stock
      of such corporation and (C) at least a majority of the members of the board
      of
      directors of such corporation were members of the Incumbent Board at the time
      of
      the execution of the initial agreement or initial action of the Board providing
      for such sale or other disposition of assets of the Company.

     

    "Exchange
      Act" shall mean the Securities Exchange Act of 1934, as amended.

     

    "Exempt
      Person" shall mean the Company, any subsidiary of the Company, any employee
      benefit plan of the Company or any subsidiary of the Company, and any Person
      

     

    
      
         

      

      
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    organized,
      appointed or established by the Company for or pursuant to the terms of any
      such
      plan.

     

    "Exempt
      Rights" shall mean any rights to purchase shares of Common Stock or other Voting
      Stock of the Company if at the time of the issuance thereof such rights are
      not
      separable from such Common Stock or other Voting Stock (i.e., are not
      transferable otherwise than in connection with a transfer of the underlying
      Common Stock or other Voting Stock) except upon the occurrence of a contingency,
      whether such rights exist as of the Agreement Effective Date or are thereafter
      issued by the Company as a dividend on shares of Common Stock or other Voting
      Securities or otherwise.

     

    "Exempt
      Transaction" shall mean an increase in the percentage of the outstanding shares
      of Common Stock or the percentage of the combined voting power of the
      outstanding Voting Stock of the Company beneficially owned by any Person solely
      as a result of a reduction in the number of shares of Common Stock then
      outstanding due to the repurchase of Common Stock or Voting Stock by the
      Company, unless and until such time as (a) such Person or any Affiliate or
      Associate of such Person shall purchase or otherwise become the Beneficial
      Owner
      of additional shares of Common Stock constituting 1% or more of the then
      outstanding shares of Common Stock or additional Voting Stock representing
      1% or
      more of the combined voting power of the then outstanding Voting Stock, or
      (b)
      any other Person (or Persons) who is (or collectively are) the Beneficial Owner
      of shares of Common Stock constituting 1% or more of the then outstanding shares
      of Common Stock or Voting Stock representing 1% or more of the combined voting
      power of the then outstanding Voting Stock shall become an Affiliate or
      Associate of such Person.

     

    "Person"
      shall mean any individual, firm, corporation, partnership, association, trust,
      unincorporated organization or other entity.

     

    "Voting
      Stock" shall mean, with respect to a corporation, all securities of such
      corporation of any class or series that are entitled to vote generally in the
      election of directors of such corporation (excluding any class or series that
      would be entitled so to vote by reason of the occurrence of any contingency,
      so
      long as such contingency has not occurred).

     

    10.  Non-Compete
      and Non-Solicitation.

     

    (a)  The
      Executive recognizes that in each of the highly competitive businesses in which
      the Company is engaged, personal contact is of primary importance in securing
      new customers and in retaining the accounts and goodwill of present customers
      and protecting the business of the Company. The Executive, therefore, agrees
      that during the Employment Period and, if the Date of Termination occurs by
      reason of the Executive terminating his employment for reasons other than
      Disability or Good Reason and other than during a Window Period, for a period
      of
      one year after the Date of Termination, he will not either within 20 miles
      of
      any geographic location of any Shale play with respect to which he has devoted
      substantial attention to the material business interests of the Company or
      any
      of its affiliated companies or with respect to any immediate geologic trends
      in
      any non-Shale plays in which the Company or any of its affiliated companies
      is
      active as of the Date of Termination, without regard, in either case, to whether
      the Executive has worked at such location (the "Relevant Geographic Area"),
      (i)
      accept employment or render service to 

     

    
      
         

      

      
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    any
      person that is engaged in a business directly competitive with the business
      then
      engaged in by the Company or any of its affiliated companies, (ii) enter into
      or
      take part in or lend his name, counsel or assistance to any business, either
      as
      proprietor, principal, investor, partner, director, officer, executive,
      consultant, advisor, agent, independent contractor, or in any other capacity
      whatsoever, for any purpose that would be competitive with the business of
      the
      Company or any of its affiliated companies or (iii) regardless of geographic
      area, directly or indirectly, either as principal, agent, independent
      contractor, consultant, director, officer, employee, employer, advisor,
      stockholder, partner or in any other individual or representative capacity
      whatsoever, either for his own benefit or for the benefit of any other person
      or
      entity either (A) hire, contract or solicit, or attempt any of the foregoing,
      with respect to hiring any employee of the Company or its affiliated companies,
      or (B) induce or otherwise counsel, advise or encourage any employee of the
      Company or its affiliated companies to leave the employment of the Company
      or
      its affiliated companies (all of the foregoing activities described in (i),
      (ii)
      and (iii) are collectively referred to as the "Prohibited Activity").
      Notwithstanding anything contained in this Section 10 to the contrary, the
      Prohibited Activity shall not be applicable to the state or federal waters
      of
      the Gulf of Mexico except as to the area covered by any state or federal oil
      and
      gas lease in which Company owns a working interest which was acquired by Company
      prior to or during the Employment Period and further limited to the depths
      in
      which Company owns such working or operating rights interest. For the avoidance
      of doubt, the provisions of this Section 10 will not apply following a
      termination of the Executive's employment by the Company with or without Cause,
      by the Executive due to Disability or Good Reason or by the Executive during
      a
      Window Period.

     

    (b)  In
      addition to all other remedies at law or in equity which the Company may have
      for breach of a provision of this Section 10 by the Executive, it is agreed
      that
      in the event of any breach or attempted or threatened breach of any such
      provision, the Company shall be entitled, upon application to any court of
      proper jurisdiction, to a temporary restraining order or preliminary injunction
      (without the necessity of (i) proving irreparable harm, (ii) establishing that
      monetary damages are inadequate or (iii) posting any bond with respect thereto)
      against the Executive prohibiting such breach or attempted or threatened breach
      by proving only the existence of such breach or attempted or threatened breach.
      If the provisions of this Section 10 should ever be deemed to exceed the time,
      geographic or occupational limitations permitted by the applicable law, the
      Executive and the Company agree that such provisions shall be and are hereby
      reformed to the maximum time, geographic or occupational limitations permitted
      by the applicable law.

     

    (c)  The
      covenants of the Executive set forth in this Section 10 are independent of
      and
      severable from every other provision of this Agreement; and the breach of any
      other provision of this Agreement by the Company or the breach by the Company
      of
      any other agreement between the Company and the Executive shall not affect
      the
      validity of the provisions of this Section 10 or constitute a defense of the
      Executive in any suit or action brought by the Company to enforce any of the
      provisions of this Section 10 or seek any relief for the breach thereof by
      the
      Executive.

     

    (d)  The
      Executive acknowledges, agrees and stipulates that: (i) the terms and provisions
      of this Agreement are reasonable and constitute an otherwise enforceable
      agreement to which the terms and provisions of this Section 10 are ancillary
      or
      a part of as contemplated by 

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    TEX.
      BUS.
& COM. CODE ANN. Sections 15.50-15.52; (ii) the consideration provided by
      the Company under this Agreement is not illusory; and (iii) the consideration
      given by the Company under this Agreement, including, without limitation, the
      provision by the Company of Confidential Information to the Executive as
      contemplated by Section 8, gives rise to the Company's interest in restraining
      and prohibiting the Executive from engaging in the Prohibited Activity within
      the Relevant Geographic Area as provided under this Section 10, and the
      Executive's covenant not to engage in the Prohibited Activity within the
      Relevant Geographic Area pursuant to this Section 10 is designed to enforce
      the
      Executive's consideration (or return promises), including, without limitation,
      the Executive's promise to not disclose Confidential Information under this
      Agreement.

     

    11.  Successors.

     

    (a)  This
      Agreement is personal to the Executive and without the prior written consent
      of
      the Company shall not be assignable by the Executive otherwise than by will
      or
      the laws of descent and distribution. This Agreement shall inure to the benefit
      of and be enforceable by the Executive's heirs, executors and other legal
      representatives.

     

    (b)  This
      Agreement shall inure to the benefit of and be binding upon he Company and
      may
      only be assigned to a successor described in Section 11(c).

     

    (c)  The
      Company will require any successor (whether direct or indirect, y purchase,
      merger, consolidation or otherwise) to all or substantially all of the business
      and/or assets of the Company to assume expressly and agree to perform this
      Agreement in the same manner and to the same extent that the Company would
      be
      required to perform it if no such succession had taken place. As used in this
      Agreement, "Company" shall mean the Company as hereinbefore defined and any
      successor to its business and/or assets as aforesaid which assumes and agrees
      to
      perform this Agreement by operation of law, or otherwise.

     

    12.  Section
      409A.
      If any
      provision provided herein results in the imposition of an excise tax under
      the
      provisions of Section 409A of the Internal Revenue Code and related regulations
      and Treasury pronouncements ("Section 409A"), the Executive and the Company
      agree that any such provision will be reformed to avoid imposition of any such
      excise tax in the manner that the Executive and the Company determine are
      appropriate to comply with Section 409A.

     

    13.  Miscellaneous.

     

    (a)  This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Texas, without reference to principles of conflict of laws that would
      require the application of the laws of any other state or
      jurisdiction.

     

    (b)  The
      captions of this Agreement are not part of the provisions hereof and shall
      have
      no force or effect.

     

    (c)  This
      Agreement may not be amended or modified otherwise than by a written agreement
      executed by the parties hereto or their respective successors and heirs,
      executors and other legal representatives. 

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    (d)  All
      notices and other communications hereunder shall be in writing and shall be
      given, if by the Executive to the Company, by telecopy or facsimile transmission
      at the telecommunications number set forth below and, if by either the Company
      or the Executive, either by hand delivery to the other party or by registered
      or
      certified mail, return receipt requested, postage prepaid, addressed as
      follows:

     

    If
      to the
      Executive:

     

    Name: Richard
      H. Smith

    1110
      Joshua Lane

    Houston,
      TX
      77055  

    

     

    If
      to the
      Company:

     

    Carrizo
      Oil & Gas, Inc.

    1000
      Louisiana Street , Suite 1500

    Houston,
      Texas 77002 

    Fax
      Number: (713) 358-6473

    Telephone
      Number: (713) 328-1000

    Attention:
      Corporate Secretary

    

     

    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.

     

    (e)  The
      invalidity or unenforceability of any provision of this Agreement shall not
      affect the validity or enforceability of any other provision of this
      Agreement.

     

    (f)  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.

     

    (g)  The
      Executive's or the Company's failure to insist upon strict compliance with
      any
      provision hereof or any other provision of this Agreement or the failure to
      assert any right the Executive or the Company may have hereunder shall not
      be
      deemed to be a waiver of such provision or right or any other provision or
      right
      of this Agreement; provided, however, that any claim for "Good Reason"
      termination must be raised within 180 days following the occurrence of the
      event
      giving rise to the right to terminate for "Good Reason" as set forth in Section
      3(c) hereof.

     

    (h)  This
      Agreement contains the complete and total understanding of the parties
      concerning the subject matter hereof and expressly supersedes any previous
      agreement between the parties relating to the subject matter
      hereof.

     

    [REMAINDER
      OF THIS PAGE INTENTIONALLY LEFT BLANK]

    

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

    

    IN
      WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant to the
      authorization from its Board of Directors, the Company has caused these presents
      to be executed in its name on its behalf, all to be effective as of the
      Agreement Effective Date.

    

    CARRIZO
      OIL & GAS, INC.

    

    

    By: /s/S.P.
      Johnson IV    

    Name: S.P.
      Johnson IV    

    Title: 
      President and Chief
      Executive Officer

    

    

    

    EXECUTIVE

    

    

    /s/Richard
      H. Smith

    Richard
      H. Smith

     

     

    
      
         

      

      
        19<Page>

                              [acme packet logo]
         NUMBER                                          SHARES

    AP                         Acme Packet, Inc.

INCORPORATED UNDER THE LAWS                         CUSIP 004764 10 6
 OF THE STATE OF DELAWARE                  SEE REVERSE FOR CERTAIN DEFINITIONS

------------------------------------------------------------------------------
THIS CERTIFIES THAT

is the owner of
------------------------------------------------------------------------------

FULL PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE $0.001 PER
                                    SHARE OF

--------------------------------Acme Packet, Inc.-----------------------------

transferable on the books of the Corporation by the holder hereof in person
or by duly authorized Attorney, upon surrender of this Certificate, properly
endorsed.
     This certificate is not valid until countersigned and registered by the
Transfer Agent and Registrar.
     WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.

Dated:

                                Acme Packet, Inc.
                                    CORPORATE
                                      SEAL
    PRESIDENT                         2000                        TREASURER
                                    DELAWARE

COUNTERSIGNED AND REGISTERED:

BY                                                              TRANSFER AGENT
                                                                 AND REGISTRAR

                                                            AUTHORIZED OFFICER

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}]]