Document:

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                                                                   EXHIBIT 10.21

                    RETIREMENT PACKAGE AND RELEASE AGREEMENT

      THIS RETIREMENT PACKAGE AND RELEASE AGREEMENT ("Agreement"), made, entered
into and effective March 9, 2004, is between CALLON PETROLEUM COMPANY, a
Delaware company having its principal offices at 200 North Canal Street, P.O.
Box 1287, Natchez, Mississippi, 39121 AND ALL OF ITS SUBSIDIARIES AND AFFILIATES
("Callon"), and DENNIS W. CHRISTIAN ("Christian"), an individual, residing at
1616 Main St, Natchez, Mississippi.

                                   WITNESSETH:

      WHEREAS, Callon and Christian entered into that certain Severance
Compensation Agreement dated effective January 1, 2002 ("Change of Control
Agreement");

      WHEREAS, the parties have agreed upon certain terms relating to the
retirement of Christian from Callon and his resignation from the Board of
Directors.

      NOW, THEREFORE, for and in consideration of the recitals and covenants
herein set forth, the parties agree as follows:

      1. Employment and Directorship. Christian hereby resigns as an officer and
employee of Callon, and resigns as a member of the Board of Directors of Callon.
Christian's resignation of employment with Callon and his resignation from the
Board of Directors will be effective as of March 9, 2004 ("Retirement Date").

      2. Change of Control Agreement. The Change of Control Agreement and
Christian's employment thereunder are hereby terminated by Christian's
retirement and mutual agreement of the parties, effective as of the Retirement
Date. Except for those provisions and the agreements expressly set forth herein,
neither party shall have any obligation or responsibility of any kind to the
other party after the Retirement Date.

      3. Consideration. In consideration of the premises and his 23 years of
service to Callon, Christian shall receive, on the terms and conditions stated
herein, the following:

      a) $1,500,000, payable as set forth below, less maximum additional 401k
contribution for 2004 and lawful withholdings of federal and state income and
payroll taxes in an amount equal to 33% of the taxable amount;

      b) Callon shall assign to Christian the ownership of his company car,
laptop computer, cell phone; and

      c) Christian shall take certain "memorabilia" as specifically approved by
Fred L. Callon.

      Items 3 a) through c) shall be hereafter referred to as the "Payment".

The cash portion of the Payment set forth in Section 3(a) shall be made by wire
transfer to an account designated in writing by Christian as follows: (i)
$1,350,000 (less taxes as provided for
<PAGE>

above) no later than noon on the eighth day after Christian signs this Agreement
and has not revoked his acceptance of this Agreement ("Initial Payment") and
(ii) $150,000 (less taxes as provided for above) plus an amount equal to 6% per
annum interest thereon from March 9, 2004 to the date of payment on March 9,
2005 ("Final Payment"). The Final Payment shall be placed in escrow with Simon,
Peragine, Smith and Redfearn, L.L.P. contemporaneously with the Initial Payment
and shall be released to Christian on March 9, 2005, including 6% per annum
interest.

      4. Severance Pay. Christian waives, and Callon shall not be required to
pay, any severance pay or severance benefits, except as expressly provided for
in this Agreement, in connection with Christian's retirement. The consideration
and remuneration provided for under this Agreement are in lieu of and take the
place of any other severance pay or severance benefit, which Christian forfeits.
Christian shall promptly deliver into escrow with Simon, Peragine, Smith and
Redfearn, L.L.P. original copies of all option agreements following the payment
of the Initial Payment provided for above. Simon, Peragine, Smith and Redfearn,
L.L.P. shall release the option agreements to Callon along with Christian's full
release of any rights thereto, upon notification from Christian that the payment
set forth in 3 (ii) has been received .

All unvested restricted shares owned by Christian will immediately vest without
restriction upon the execution of the Agreement and the stock certificates for
those net shares, after lawful withholdings of federal and state income and
payroll taxes, will be delivered to Christian concurrent with the Initial
Payment.

      5. Employee Benefit Plans. Callon agrees to continue health and dental
insurance coverage for Christian and his eligible dependents under Callon's
group health insurance plan as it may be amended from time to time until the
earlier of the date Christian becomes eligible for Medicare benefits or the date
Christian obtains new coverage as a result of any future employment, and to pay
Christian and his eligible dependents' portion of the premium while such
coverage is continued. When requested by Christian, Callon will provide any
necessary evidence of continuation of coverage.

      6. Release and Indemnity. By execution of this Agreement, Christian for
himself, his legal and other representatives, claimants, heirs and
beneficiaries, forever waives and releases Callon from all rights, benefits,
payments and claims (including but not limited to statutory, tort or contractual
claims) of any kind and nature to which Christian is now or in the future may be
entitled, and/or arising out of or in connection with Christian's employment
with Callon, and resignation of Christian's employment, including but not
limited to, claims of race, sex, age, color, disability, religion, national
origin, and any other form of discrimination, harassment, or retaliation in
violation of Title VII of the Civil Rights Act, the Americans With Disabilities
Act, the Age Discrimination in Employment Act ("ADEA"), the Family and Medical
Leave Act, the Equal Pay Act, the Employee Retirement Income Security Act of
1974, all as amended, and any other state or federal statute, regulation or the
common law (contract, tort or other), except as may be specifically provided for
under this Agreement or contained in the plan documents or grants of benefits to
which Christian is entitled according to the provisions hereof. It is
specifically agreed that this Agreement, and the consideration Christian will
receive hereunder, constitute a complete settlement and release, and an absolute
bar to any and all claims, known or unknown, Christian has

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or may have against Callon or its respective directors, officers, and employees,
whether or not the same be presently known or suspected to be arising out of or
in any manner connected with Christian's employment thereby or resignation of
employment with Callon, except as may be specifically provided for under this
Agreement or contained in the plan documents or grants of benefits to which
Christian is entitled according to the provisions hereof. THIS SECTION OF THE
AGREEMENT APPLIES TO RIGHTS OR CLAIMS PURSUANT TO THE ADEA ONLY IN EXISTENCE ON
OR BEFORE THE DATE OF PAYMENT OF CONSIDERATION AND REMUNERATION PROVIDED FOR
HEREIN. CHRISTIAN ACKNOWLEDGES AND AGREES, AND REPRESENTS TO CALLON THAT (I) HE
UNDERSTANDS THE EFFECT OF THE PROVISIONS OF THIS PARAGRAPH; (II) HE HAS BEEN
PROVIDED AT LEAST TWENTY-ONE (21) CALENDAR DAYS IN WHICH TO CONSIDER THE EFFECT
OF THE PROVISIONS OF THIS PARAGRAPH; AND (III) HE HAS BEEN ADVISED IN WRITING BY
CALLON TO CONSULT AN ATTORNEY PRIOR TO EXECUTING THIS AGREEMENT. CHRISTIAN MAY
KNOWINGLY AND VOLUNTARILY WAIVE THE REMAINDER OF THE 21-DAY CONSIDERATION
PERIOD, IF ANY, FOLLOWING THE DATE HE SIGNED THIS AGREEMENT. CHRISTIAN
ACKNOWLEDGES: 1) HE HAS NOT BEEN ASKED BY CALLON TO SHORTEN HIS PERIOD FOR
CONSIDERATION OF WHETHER TO SIGN THIS AGREEMENT; 2) CALLON HAS NOT THREATENED TO
WITHDRAW OR ALTER THE BENEFITS DUE PRIOR TO THE EXPIRATION OF THE 21-DAY PERIOD;
OR 3) CALLON HAS NOT PROVIDED DIFFERENT TERMS BECAUSE HE HAS DECIDED TO SIGN THE
AGREEMENT PRIOR TO THE EXPIRATION OF THE 21-DAY CONSIDERATION PERIOD. CHRISTIAN
UNDERSTANDS AND ACKNOWLEDGES THAT HE HAS SEVEN (7) CALENDAR DAYS FOLLOWING HIS
EXECUTION OF THIS AGREEMENT TO REVOKE HIS ACCEPTANCE OF THIS AGREEMENT,
WHEREUPON THIS AGREEMENT SHALL BE RESCINDED IN ITS ENTIRETY AND BECOME NULL AND
VOID. THIS AGREEMENT WILL NOT BECOME EFFECTIVE OR ENFORCEABLE, AND THE PAYMENT
WILL NOT BECOME PAYABLE, UNTIL AFTER THIS REVOCATION PERIOD HAS EXPIRED.

      In consideration of the payments and promises contained in this Agreement,
Callon and all its subsidiaries, affiliates and related companies hereby
release, discharge, forever holds harmless and Callon agrees to indemnify and
defend Christian from any and all claims, demands or suits, whether civil or
criminal, at law or in equity, known or unknown, fixed or contingent, liquidated
or unliquidated, asserted or unasserted, arising or existing on or at any time
prior to the Retirement Date. This Release includes, but is not limited to, any
claims relating to or arising out of Christian's employment with Callon, its
subsidiaries, affiliates and/or related companies and/or his separation and
retirement therefrom.

      7. Knowingly and Voluntary. Christian understands that it is his choice
whether or not to enter into this Agreement and that his decision to do so is
voluntary and is made knowingly.

      8. Post Employment Obligations.

      8.1 Post Employment Confidentiality Obligations. The terms of this
Agreement and the content of the discussions pertaining to this Agreement shall
be considered and treated as confidential and Christian shall not discuss or
otherwise disclose, in any manner, the amount paid under this Agreement, and/or
the substance or content of discussions involved in reaching this Agreement to
any person other than Christian's attorney, spouse, family and tax/financial
advisors and as required by appropriate taxing or other legal authorities.
Further, Christian acknowledges and agrees to continue to abide by any and all
Callon's confidentiality policies and procedures for a period of two years.

                                       3
<PAGE>

      The terms of this Agreement and the content of the discussions pertaining
to this Agreement shall be considered and treated as confidential and Callon
shall not discuss or otherwise disclose, in any manner, the amount paid under
this Agreement, and/or the substance or content of discussions involved in
reaching this Agreement to any third party except as required by law.

      8.2 Cooperation. Christian agrees that he will promptly return any and all
Callon property, including copies thereof, to Callon. Christian agrees that for
a period of 60 days he shall cooperate with, and make himself available for, any
and all requests by Callon for information regarding his job functions with
Callon and events, circumstances, and transactions with which he became familiar
during the course of his employment with Callon. With respect to any litigation,
charges, investigations, or subpoenas initiated by governmental or private
parties, such cooperation shall include, but not be limited to, assisting Callon
with preparing responses to subpoenas and other forms of discovery and making
himself available to provide testimony for depositions, hearings or trials.
Callon agrees to compensate Christian for any significant or lengthy assistance
at the rate of $500 per hour and to reimburse him for all reasonable expenses
incurred in so doing.

      8.3 Recommendations; Malignment. Callon acknowledges that Christian's
retirement from the company was in no way related to any improper activities.
Callon agrees that it will honestly and freely answer any questions from
prospective employers in a manner that would support Christian's efforts to
obtain another job either in the oil and gas business or otherwise. Christian
and Callon agree that neither party will engage in any behavior nor act in any
manner to malign the other party in any way to any third party, the oil and gas
community, government agencies, the media or the public.

      8.4 Re-Employment. Christian agrees to relinquish and hereby does
relinquish any and all rights he may have to re-employment with Callon.
Christian further agrees that he will not knowingly seek, accept, or otherwise
pursue employment with Callon, except that this paragraph will not apply if
Christian's then-current employer becomes part of Callon as a result of a merger
or acquisition. Similarly this paragraph will not apply if Christian is part of
a consulting team hired by Callon or its partners.

      8.5 No Impediment. Callon agrees not to impede the hiring of Dennis
Christian by any other entity, including Callon's existing partners, as either
an employee or a consultant.

      9. Miscellaneous.

      9.1 Applicable Law. This contract is entered into under, and shall be
governed for all purposes by, the laws of the State of Mississippi.

      9.2 No Waiver. No failure by either party hereto at any time to give
notice of any breach by the other party of, or to require compliance with, any
condition or provision of this Agreement shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.

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<PAGE>

      9.3 Remedy for Breach of Contract. The parties agree that in the event
there is any breach or asserted breach of the terms, covenants or conditions of
this Agreement, the remedy of the parties hereto shall be in both law and in
equity, including injunctive relief for the enforcement of or relief from any
provisions of this Agreement.

      9.4 Severability. It is the desire and intent of the parties that the
terms, provisions, covenants and remedies contained in this Agreement shall be
enforceable to the fullest extent permitted by law. If any such term, provision,
covenant or remedy of this Agreement or the application thereof to any person or
circumstances shall, to any extent, be construed to be invalid or unenforceable
in whole or in part, then such term, provision, covenant or remedy shall be
construed in a manner so as to permit its enforceability under the applicable
law to the fullest extent permitted by law. In any case, the remaining
provisions of this Agreement or the application thereof to any person or
circumstances other than those to which they have been held invalid or
unenforceable, shall remain in full force and effect. It is further the desire
and intent of the parties that in the event of any breach of any portion of this
Agreement, the remainder of this Agreement shall remain in effect as written and
enforceable to the fullest extent permitted by law.

      9.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.

      9.6 Withholding of Taxes. Callon may withhold from any benefits or
remuneration payable under this Agreement all federal, state, city or other
taxes as may be required pursuant to any law or governmental regulation or
ruling.

      9.7 Headings. The paragraph headings have been inserted for purposes of
convenience and shall not be used for interpretive purposes.

      9.8 Assignability.

          A.    By Callon:

                Callon's obligations under this Agreement are not transferable
          or assignable by Callon and shall be considered a liability of
          Callon in any sale or transfer of substantially all of its business
          or assets by any means whether direct or indirect, by purchase,
          merger, consolidation or otherwise.

          B.    By Christian:

                With respect to Christian's rights and obligations, his rights
          and obligations hereunder are personal and neither this Agreement,
          nor any right, benefit or obligation of Christian, shall be subject
          to voluntary or involuntary assignment, alienation or transfer,
          whether by operation of law or otherwise, without the prior written
          consent of Callon. This Agreement and all payments hereunder shall
          inure

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<PAGE>

          to the benefit of and be enforceable by and against Christian's
          personal or legal representatives, executors, administrators, heirs,
          distributees, devisees and legatees.

      9.9 Entire Agreement: Modification. This Agreement constitutes the entire
agreement of the parties with regard to the resignation of employment of
Christian, supersedes any and all prior written agreements between the parties,
and contains all of the covenants, promises, representations and agreements
between the parties with respect to the resignation of employment of Christian
with Callon. Each party to this Agreement acknowledges that no representation,
inducement, promise or agreement, oral or written, has been made by either
party, which is not embodied herein, or referred to hereby and that no
agreement, statement or promise relating to the employment or resignation of
employment of Christian with Callon that is not contained or provided for,
identified or referred to in this Agreement, shall be valid or binding. Any
modification of this Agreement will be effective only if it is in writing and
signed by both parties.

              PLEASE READ THIS DOCUMENT CAREFULLY AS IT INCLUDES A
                               RELEASE OF CLAIMS.

      IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.

                                             ___________________________________
                                             Dennis W. Christian

                                             Callon Petroleum Company

                                             By:  ______________________________
                                             Name:  ____________________________
                                             Title:  ___________________________

                                       6<PAGE>
                                                                   EXHIBIT 10.22

                    RETIREMENT PACKAGE AND RELEASE AGREEMENT

      THIS RETIREMENT PACKAGE AND RELEASE AGREEMENT ("Agreement"), made, entered
into and effective March 9, 2004, is between CALLON PETROLEUM COMPANY, a
Delaware company having its principal offices at 200 North Canal Street, P.O.
Box 1287, Natchez, Mississippi, 39121, AND ALL OF ITS SUBSIDIARIES AND
AFFILIATES ("CALLON") and KATHY G. TILLEY ("Tilley"), an individual, residing at
P.O. Drawer N, Natchez, Ms. 39121.

                                   WITNESSETH:

      WHEREAS, the parties have agreed upon certain terms relating to the
retirement of Tilley from Callon.

      NOW, THEREFORE, for and in consideration of the recitals and covenants
herein set forth, the parties agree as follows:

      1. Employment. Tilley hereby resigns as an officer and employee of Callon
effective as of March 9, 2004 ("Retirement Date").

      2. Change of Control Agreement. Tilley's employment is hereby terminated
by Tilley's retirement and mutual agreement of the parties, effective as of the
Retirement Date. Except for those provisions and the agreements expressly set
forth herein, neither party shall have any obligation or responsibility of any
kind to the other party after the Retirement Date.

      3. Consideration. In consideration of the premises and her 23 years of
service to Callon, Tilley shall receive, on the terms and conditions stated
herein, the following:

      a) $1,000,000, payable as set forth below, less maximum additional 401k
contribution for 2004 and lawful withholdings of federal and state income and
payroll taxes in an amount equal to 33% of the taxable amount;

      b) Callon shall assign to Tilley the ownership of her company car, laptop
computer, cell phone; and

      c) Tilley shall take certain "memorabilia" as specifically approved by
Fred L. Callon.

      Items 3 a) through c) shall be hereafter referred to as the "Payment".

The cash portion of the Payment set forth in Section 3(a) shall be made by wire
transfer to an account designated in writing by Tilley as follows: (i) $ 900,000
(Nine Hundred Thousand Dollars) (less taxes as provided for above) no later than
noon on the eighth day after Tilley signs this Agreement and has not revoked her
acceptance of the Agreement ("Initial Payment"), and (ii) $100,000 (One Hundred
Thousand Dollars) (less taxes as provided for above) plus an amount equal to 6%
per annum interest thereon from March 9, 2004 to the date of payment on March 9,
2005 ("Final Payment"). The Final Payment shall be placed in escrow with Simon,
Peragine, Smith and

                                       6
<PAGE>

Redfearn, L.L.P. contemporaneously with the Initial Payment and shall be
released to Tilley on March 9, 2005, including 6% per annum interest.

      4. Severance Pay. Tilley waives, and Callon shall not be required to pay
any severance pay or severance benefits, except as expressly provided for in
this Agreement, in connection with Tilley's retirement. The consideration and
remuneration provided for under this Agreement are in lieu of and take the place
of any other severance pay or severance benefit, which Tilley forfeits. Tilley
shall promptly deliver into escrow with Simon, Peragine, Smith and Redfearn,
L.L.P. original copies of all option agreements following the payment of the
Initial Payment provided for above. Simon, Peragine, Smith and Redfearn, L.L.P.
shall release the option agreements upon notification from Tilley that the
payment set forth in 3 (ii) has been received.

All unvested restricted shares owned by Tilley will immediately vest without
restriction upon the execution of the Agreement and the stock certificates for
those net shares, after lawful withholdings of federal and state income and
payroll taxes will be delivered to Tilley concurrent with the Initial Payment.

      5. Employee Benefit Plans. Callon agrees to continue health and dental
insurance coverage for Tilley and her eligible dependents under Callon's group
health insurance plan as it may be amended from time to time until the earlier
of the date Tilley becomes eligible for Medicare benefits or the date Tilley
obtains new coverage as a result of any future employment, and to pay Tilley and
her eligible dependents' portion of the premium while such coverage is
continued. When requested by Tilley, Callon will provide any necessary evidence
of continuation of coverage.

      6. Release and Indemnity. By execution of this Agreement, Tilley for
herself, her legal and other representatives, claimants, heirs and
beneficiaries, forever waives and releases Callon from all rights, benefits,
payments and claims (including but not limited to statutory, tort or contractual
claims) of any kind and nature to which Tilley is now or in the future may be
entitled, and/or arising out of or in connection with Tilley's employment with
Callon, and resignation of Tilley's employment, including but not limited to,
claims of race, sex, age, color, disability, religion, national origin, and any
other form of discrimination, harassment, or retaliation in violation of Title
VII of the Civil Rights Act, the Americans With Disabilities Act, the Age
Discrimination in Employment Act ("ADEA"), the Family and Medical Leave Act, the
Equal Pay Act, the Employee Retirement Income Security Act of 1974, all as
amended, and any other state or federal statute, regulation or the common law
(contract, tort or other), except as may be specifically provided for under this
Agreement or contained in the plan documents or grants of benefits to which
Tilley is entitled according to the provisions hereof. It is specifically agreed
that this Agreement, and the consideration Tilley will receive hereunder,
constitute a complete settlement and release, and an absolute bar to any and all
claims, known or unknown, Tilley has or may have against Callon or its
respective directors, officers, and employees, whether or not the same be
presently known or suspected to be arising out of or in any manner connected
with Tilley's employment thereby or resignation of employment with Callon,
except as may be specifically provided for under this Agreement or contained in
the plan documents or grants of benefits to which Tilley is entitled according
to the provisions hereof. THIS SECTION OF THE AGREEMENT APPLIES TO RIGHTS OR
CLAIMS PURSUANT TO THE ADEA ONLY IN EXISTENCE ON OR BEFORE THE DATE OF PAYMENT
OF CONSIDERATION AND REMUNERATION PROVIDED FOR HEREIN. TILLEY ACKNOWLEDGES AND
AGREES, AND

                                       2
<PAGE>

REPRESENTS TO CALLON THAT (i) SHE UNDERSTANDS THE EFFECT OF THE PROVISIONS OF
THIS PARAGRAPH; (ii) SHE HAS BEEN PROVIDED AT LEAST TWENTY-ONE (21) CALENDAR
DAYS IN WHICH TO CONSIDER THE EFFECT OF THE PROVISIONS OF THIS PARAGRAPH; AND
(iii) SHE HAS BEEN ADVISED IN WRITING BY CALLON TO CONSULT AN ATTORNEY PRIOR TO
EXECUTING THIS AGREEMENT. TILLEY MAY KNOWINGLY AND VOLUNTARILY WAIVE THE
REMAINDER OF THE 21-DAY CONSIDERATION PERIOD, IF ANY, FOLLOWING THE DATE SHE
SIGNED THIS AGREEMENT. TILLEY ACKNOWLEDGES: 1) SHE HAS NOT BEEN ASKED BY CALLON
TO SHORTEN HER PERIOD FOR CONSIDERATION OF WHETHER TO SIGN THIS AGREEMENT; 2)
CALLON HAS NOT THREATENED TO WITHDRAW OR ALTER THE BENEFITS DUE PRIOR TO THE
EXPIRATION OF THE 21-DAY PERIOD; OR 3) CALLON HAS NOT PROVIDED DIFFERENT TERMS
BECAUSE SHE HAS DECIDED TO SIGN THE AGREEMENT PRIOR TO THE EXPIRATION OF THE
21-DAY CONSIDERATION PERIOD. TILLEY UNDERSTANDS AND ACKNOWLEDGES THAT SHE HAS
SEVEN (7) CALENDAR DAYS FOLLOWING HER EXECUTION OF THIS AGREEMENT TO REVOKE HER
ACCEPTANCE OF THIS AGREEMENT, WHEREUPON THIS AGREEMENT SHALL BE RESCINDED IN ITS
ENTIRETY AND BECOME NULL AND VOID. THIS AGREEMENT WILL NOT BECOME EFFECTIVE OR
ENFORCEABLE, AND THE PAYMENT WILL NOT BECOME PAYABLE, UNTIL AFTER THIS
REVOCATION PERIOD HAS EXPIRED.

      In consideration of the payments and promises contained in this Agreement,
Callon and all its subsidiaries, affiliates and related companies hereby
release, discharge, forever hold harmless and Callon agrees to indemnify and
defend Tilley from any and all claims, demands or suits, whether civil or
criminal, at law or in equity, known or unknown, fixed or contingent, liquidated
or unliquidated, asserted or unasserted, arising or existing on or at any time
prior to the Retirement Date. This Release includes, but is not limited to, any
claims relating to or arising out of Tilley's employment with Callon, its
subsidiaries, affiliates and/or related companies and/or her separation and
retirement therefrom.

      7. Knowingly and Voluntary. Tilley understands that it is her choice
whether or not to enter into this Agreement and that her decision to do so is
voluntary and is made knowingly.

      8. Post Employment Obligations.

      8.1 Post Employment Confidentiality Obligations. The terms of this
Agreement and the content of the discussions pertaining to this Agreement shall
be considered and treated as confidential and Tilley shall not discuss or
otherwise disclose, in any manner, the amount paid under this Agreement, and/or
the substance or content of discussions involved in reaching this Agreement to
any person other than Tilley's attorney, family, and tax/financial advisors and
as required by appropriate taxing or other legal authorities. Further, Tilley
acknowledges and agrees to continue to abide by any and all Callon's
confidentiality policies and procedures for a period of two years.

      The terms of this Agreement and the content of the discussions pertaining
to this Agreement shall be considered and treated as confidential and Callon
shall not discuss or otherwise disclose, in any manner, the amount paid under
this Agreement, and/or the substance or content of discussions involved in
reaching this Agreement to any third party except as required by law.

      8.2 Cooperation. Tilley agrees that she will promptly return any and all
Callon property, including copies thereof, to Callon. Tilley agrees that for a
period of 60 days she shall

                                       3
<PAGE>

cooperate with, and make herself available for, any and all requests by Callon
for information regarding her job functions with Callon and events,
circumstances, and transactions with which she became familiar during the course
of her employment. With respect to any litigation, charges, investigations, or
subpoenas initiated by governmental or private parties, such cooperation shall
include, but not be limited to, assisting Callon with preparing responses to
subpoenas and other forms of discovery and making herself available to provide
testimony for depositions, hearings or trials. Callon agrees to compensate
Tilley for any significant or lengthy assistance at the rate of $250 per hour
and to reimburse her for all reasonable expenses incurred in so doing.

      8.3 Recommendations; Malignment: Callon acknowledges that Tilley'
retirement from the company was in no way related to any improper activities.
Callon agrees that it will honestly and freely answer any questions from
prospective employers in a manner that would support Tilley's efforts to obtain
another job either in the oil and gas business or otherwise. Tilley and Callon
agree that neither party will engage in any behavior nor act in any manner to
malign the other party in any way to any third party, the oil and gas community,
government agencies, the media or the public.

      8.4 Re-Employment. Tilley agrees to relinquish and hereby does relinquish
any and all rights she may have to re-employment with Callon. Tilley further
agrees that she will not knowingly seek, accept, or otherwise pursue employment
with Callon, except that this paragraph will not apply if Tilley's then-current
employer becomes part of Callon as a result of a merger or acquisition.
Similarly this paragraph will not apply if Tilley is part of a consulting team
hired by Callon or its partners.

      8.5 No Impediment. Callon agrees not to impede the hiring of Tilley by any
other entity, including Callon's existing partners, as either an employee or a
consultant.

      9. Miscellaneous.

      9.1 Applicable Law. This contract is entered into under, and shall be
governed for all purposes by, the laws of the State of Mississippi.

      9.2 No Waiver. No failure by either party hereto at any time to give
notice of any breach by the other party of, or to require compliance with, any
condition or provision of this Agreement shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.

      9.3 Remedy for Breach of Contract. The parties agree that in the event
there is any breach or asserted breach of the terms, covenants or conditions of
this Agreement, the remedy of the parties hereto shall be in both law and in
equity, including injunctive relief for the enforcement of or relief from any
provisions of this Agreement.

      9.4 Severability. It is the desire and intent of the parties that the
terms, provisions, covenants and remedies contained in this Agreement shall be
enforceable to the fullest extent permitted by law. If any such term, provision,
covenant or remedy of this Agreement or the

                                       4
<PAGE>

application thereof to any person or circumstances shall, to any extent, be
construed to be invalid or unenforceable in whole or in part, then such term,
provision, covenant or remedy shall be construed in a manner so as to permit its
enforceability under the applicable law to the fullest extent permitted by law.
In any case, the remaining provisions of this Agreement or the application
thereof to any person or circumstances other than those to which they have been
held invalid or unenforceable, shall remain in full force and effect. It is
further the desire and intent of the parties that in the event of any breach of
any portion of this Agreement, the remainder of this Agreement shall remain in
effect as written and enforceable to the fullest extent permitted by law.

      9.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.

      9.6 Withholding of Taxes. Callon may withhold from any benefits or
remuneration payable under this Agreement all federal, state, city or other
taxes as may be required pursuant to any law or governmental regulation or
ruling.

      9.7 Headings. The paragraph headings have been inserted for purposes of
convenience and shall not be used for interpretive purposes.

      9.8 Assignability.

          A.    By Callon:

                      Callon's obligations under this Agreement are not
                transferable or assignable by Callon and shall be considered a
                liability of Callon in any sale or transfer of substantially
                all of its business or assets by any means whether direct or
                indirect, by purchase, merger, consolidation or otherwise.

          B.    By Tilley:

                      With respect to Tilley's rights and obligations, her
                rights and obligations hereunder are personal and neither this
                Agreement, nor any right, benefit or obligation of Tilley,
                shall be subject to voluntary or involuntary assignment,
                alienation or transfer, whether by operation of law or
                otherwise, without the prior written consent of Callon. This
                Agreement and all payments hereunder shall inure to the
                benefit of and be enforceable by and against Tilley's personal
                or legal representatives, executors, administrators, heirs,
                distributees, devisees and legatees.

      9.9 Entire Agreement: Modification. This Agreement constitutes the entire
agreement of the parties with regard to the resignation of employment of Tilley,
supersedes any and all prior written agreements between the parties, and
contains all of the covenants, promises, representations and agreements between
the parties with respect to the resignation of employment of Tilley with Callon.
Each party to this Agreement acknowledges that no representation, inducement,
promise or agreement, oral or written, has been made by either party, which is
not

                                       5
<PAGE>

embodied herein, or referred to hereby and that no agreement, statement or
promise relating to the employment or resignation of employment of Tilley with
Callon that is not contained or provided for, identified or referred to in this
Agreement, shall be valid or binding. Any modification of this Agreement will be
effective only if it is in writing and signed by both parties.

              PLEASE READ THIS DOCUMENT CAREFULLY AS IT INCLUDES A
                               RELEASE OF CLAIMS.

      IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.

                                              __________________________________
                                              Kathy G. Tilley

                                              Callon Petroleum Company

                                              By:  _____________________________
                                              Name:  ___________________________
                                              Title:  __________________________

                                       6

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