Document:

exhibit10-174.htm

  

  

Exhibit 10.174  

GENERAL COMMUNICATION, INC.

NOMINATING AND CORPORATE GOVERNANCE

COMMITTEE CHARTER*

Purpose

The purpose of the Nominating and Corporate Governance Committee ("Committee") is to act on behalf of the board of directors ("Board") of General Communication, Inc. ("Company") and generally to carry out the following and as further described in this charter:

	
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Nominations – Identify and recommend nominees for the Board and its committees.

	
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Corporate Governance – Review and recommend to the Board, or independently take, action on various Company corporate governance issues.

	
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Complaints – Receive and respond to certain complaints ("Complaints") raised by Company employees regarding alleged illegal acts or behavior-related conduct by Board members in violation of the Company's Code of Business Conduct and Ethics ("Ethics Code").

	
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Supervision – Supervise the Company's Chief Financial Officer ("Chief Financial Officer") in the context of the Ethics Code.

	
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Other – Carry-out other assignments as designated by the Board.

Membership

The following are prerequisites for, and conditions on, membership on the Committee:

	
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Number, Qualifications – The Committee shall consist of at least three, and no more than eleven, Board members meeting the following qualifications:

	
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Independent – Each member of the Committee must be an independent director as the term is defined in this charter ("Independent Director").

	
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Term – Subject to the terms of this charter –

	
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Member Appointment – Members of the Committee shall be appointed by the Board and shall serve at the pleasure of the Board for such term as the Board may determine, taking into account the recommendations of the Committee.

	
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Chair Selection – The Committee chair shall be selected by the Committee members or, if the Board directs, by the Board, taking into account the recommendations of the Committee.

	
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Independent Director – An Independent Director is a person that meets the definition of an "Independent Director" as prescribed by the Nasdaq Stock Market LLC ("Nasdaq") under the Nasdaq Listing Rules, i.e., Rule 5605(a)(2) ("Nasdaq Independence Rule"), which reads as follows –

*As revised by the board of directors of General Communication, Inc., effective as of January 1, 2010.

  

  

  

"means a person other than an Executive Officer or employee of the Company or any other individual having a relationship which, in the opinion of the Company's board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.  For purposes of this rule, "Family Member" means a person's spouse, parents, children and siblings, whether by blood, marriage or adoption, or anyone residing in such person's home.  The following persons shall not be considered independent:

(A) a director who is, or at any time during the past three years was, employed by the Company;

(B) a director who accepted or who has a Family Member who accepted any compensation from the Company in excess of $120,000 during any period of twelve consecutive months within the three years preceding the determination of independence, other than the following:

	
  

	
(i) compensation for board or board committee service;

	
  

	
(ii) compensation paid to a Family Member who is an employee (other than an Executive Officer) of the Company; or

	
  

	
(iii) benefits under a tax-qualified retirement plan, or non-discretionary compensation.

	
  

	
Provided, however, that in addition to the requirements contained in this paragraph (B), audit committee members are also subject to additional, more stringent requirements under [Nasdaq Listing] Rule 5605(c)(2).

(C) a director who is a Family Member of an individual who is, or at any time during the past three years was, employed by the Company as an Executive Officer;

(D) a director who is, or has a Family Member who is, a partner in, or a controlling Shareholder or an Executive Officer of, any organization to which the Company made, or from which the Company received, payments for property or services in the current or any of the past three fiscal years that exceed 5% of the recipient's consolidated gross revenues for that year, or $200,000, whichever is more, other than the following:

(i) payments arising solely from investments in the Company's securities; or

(ii) payments under non-discretionary charitable contribution matching programs.

(E) a director of the Company who is, or has a Family Member who is, employed as an Executive Officer of another entity where at any time during the past three years any of the Executive Officers of the Company serve on the compensation committee of such other entity;

(F) a director who is, or has a Family Member who is, a current partner of the Company's outside auditor, or was a partner or employee of the Company's outside auditor who worked on the Company's audit at any time during any of the past three years; or

(G) in the case of an investment company, in lieu of paragraphs (A)-(F), a director who is an "interested person" of the Company as defined in section 2(a)(19) of the Investment Company Act of 1940, other than in his or her capacity as a member of the board of directors or any board committee."

	
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Company Includes – When used in the Nasdaq Independence Rule, "Company" includes any parent or subsidiary of the Company.  The term "parent or subsidiary" is intended to cover entities the Company controls and consolidates with the Company's financial statements as filed with the Commission [SEC] (but not if the Company reflects such entity solely as an investment in its financial statements).

 

  

  

  

 

	
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Executive Officer includes – When used in the Nasdaq Independence Rule, "Executive Officer" means an officer covered in Rule 16a-1(f) under the Securities Exchange Act of 1934.

	
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Lack of Independence – The Company shall in addition to the provisions of this charter also follow the interpretation by Nasdaq as to Director Independence as set forth in its Nasdaq Listing Rules.

	
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Executive Officer Interim Service – The following conditions shall apply to employment of a director as an Executive Officer of the Company on an interim basis ("Interim Service") – 

	
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No Disqualification for Short Term – In interpreting (A) of the definition of Independent Director, Interim Service shall not disqualify the director from being considered an Independent Director following that Interim Service so long as the Interim Service shall not have lasted longer than one year.

	
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Status During Interim Service – A director shall not be considered an Independent Director while providing Interim Service.

	
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Compensation Received During Interim Service – In interpreting (B) of the definition of Independent Director, compensation received by a director for former Interim Service shall not be considered as compensation in determining whether the director is an Independent Director after that Interim Service so long as the Interim Service shall not have lasted longer than one year.

	
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Board Determination on Independent Judgment – In the event of a director's former Interim Service, the Board shall consider whether such former Interim Service and any compensation received for it shall interfere with that director's exercise of independent judgment in carrying out responsibilities of a director.

	
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Preparation of Financial Statements – In the event a director who shall have provided Interim Service shall have participated in the preparation of the Company's financial statements while providing that Interim Service, the director shall be precluded from service on the Audit Committee for three years.

	
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Removal and Replacement – Subject to Alaska law, a Committee member may be removed or replaced by, and any vacancies on the Committee may be filled by, the Board, taking into account recommendations of the Committee.

Operating Principles

The Committee shall fulfill its responsibilities within the context of the following overriding principles:

	
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Meetings – The Chair of the Committee, in consultation with Committee members, shall determine the frequency and schedule of Committee meetings, provided the Committee will meet at least two times per year.  Committee meetings and matters relating to them are subject to the provisions of the Company's Bylaws ("Bylaws").  The Committee may ask members of management or others whose advice and counsel are relevant to the issues then being considered by the Committee to attend any meetings and to provide such information as the Committee may request.

 

  

  

  

 

	
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Agenda – The Chair of the Committee shall develop the Committee's agenda, in consultation with other Committee members.  Each member of the Board and members of management are free to suggest the inclusion of items on the agenda.  The agenda and information concerning the business which shall be conducted at each Committee meeting shall, to the extent practicable, be distributed to Committee members sufficiently in advance of each meeting to permit meaningful review.

	
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Quorum – A majority of the authorized number of Committee members, regardless of possible vacancies, shall constitute a quorum.  The Committee may act by a majority of the members present at a meeting of the Committee at which at least a quorum is present.

	
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Delegation – The Chair of the Committee may, through the Committee by resolution, delegate authority to act on behalf of the Chair.  The Committee may, by resolution, delegate authority to subcommittees or individual members of the Committee as it deems appropriate.

	
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Communications – The chair and others on the Committee shall, to the extent appropriate, have contact throughout the year with senior management, other committee chairs, other key committee advisors, the External Auditor, etc., as applicable, to strengthen the Committee's knowledge of relevant current and prospective business issues.

	
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Committee Meeting Attendees – The Committee shall request members of management, counsel, and the External Auditor, as applicable, to participate in Committee meetings, as necessary to carry out Committee responsibilities.  The External Auditor or counsel may, at any time, request a meeting with the Committee or its chair, with or without management in attendance.

	
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Reporting to the Board of Directors – The Committee, through the Committee chair, shall report periodically, as deemed necessary, but at least annually, to the full Board.  In addition, summarized minutes from Committee meetings shall be available to each Board member at least one week prior to the subsequent meeting of the Board.

	
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Resource and Authority – The Committee shall have the resources and authority to discharge its duties and responsibilities, including the authority to retain counsel and other experts or consultants.  The Committee shall have the sole authority to select and retain a consultant or search firm to identify director candidates, to terminate any such consultant or search firm retained by it, and to approve the consultant or search firm's fees and other retention terms.

Primary Responsibilities

The Committee shall have primary responsibility for the following:

	
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Nominating Matters – Addressing nominating matters.

	
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Corporate Governance Matters – Addressing corporate governance matters.

	
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Complaints – Addressing Complaints on certain alleged illegal acts and unethical behavior-related conduct by Board members in violation of the Ethics Code

 

  

  

  

 

	
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Chief Financial Officer – Supervising Chief Financial Officer on Ethics Code.

	
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Performance Evaluation – Conducting Committee performance evaluation ("Committee Performance Evaluation").

Addressing Nominating Matters

The Committee shall have the following nominating responsibilities:

	
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Seek Out Prospective Board Members – The Committee shall, from time to time, seek out candidates as prospective Board members through the efforts of its individual members and, in the Committee's discretion, through consultants as otherwise provided in this charter.

	
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Management Recommendations – The Committee may, but is not required to do so, consider recommendations for candidates proposed by Company management.

	
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Shareholder Recommendations – The Committee may consider certain Company shareholder recommendations ("Shareholder Recommendations").

	
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Board Skills and Characteristics – The basic skills and characteristics required as prerequisites for each member, unless otherwise specified, on the Board ("Board Skills and Characteristics") are as follows –

	
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Knowledge, Skills and Experience – Knowledge, skills and experience in at least one of the primary industries in which the Company operates.

	
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Fundamental Financial Statements – Ability to read and understand fundamental financial statements, including the Company's balance sheet, income statement, and cash flow statement, and at least familiarity with the underlying accounting rules and practice.

	
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Business and Financial Risks – Ability to understand key business and financial risks of the Company.

	
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Changing Needs of Society – Appreciation of the relationship of the Company's business to the changing needs of society.

	
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Financial Sophistication – With respect to at least one Board member, skills, attributes, and financial sophistication of an Audit Committee Financial Expert as the term is defined in the Company's Audit Committee Charter.

	
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Independent Director – With respect to at least a simple majority of the authorized members of the Board, each an Independent Director.

	
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Other Specifications – Other skills and characteristics specifically identified and approved by the Committee.

	
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Review Board Skills and Characteristics – As a part of the Company's assessment of strategic direction, review with the Board on at least an annual basis the Board Skills and Characteristics and recommend appropriate amendments to, or changes of, them.

 

  

  

  

 

	
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Recommend Existing Board Members – In the sole discretion of the Committee, recommend to the Board for renomination one or more of those existing Board members whose positions are up for election after considering all of the following criteria as applied to each such member –

	
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Board Size – Appropriate size of the Board.

	
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Minimum Qualifications – Minimum Qualifications to be a Board member as set forth in Article IV, Section 2(a) of the Bylaws.

	
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Skills and Characteristics – Level of Board Skills and Characteristics.

	
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Company Strategic Direction – Committee's understanding of the strategic direction requirements of the Company.

	
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Board Compositional Needs – Specific compositional needs of the Board, including, but not limited to, specific talents and experience involving technology, business, finance, administration or public service, in light of prevailing business conditions and the Board Skills and Characteristics already possessed by other members of the Board.

	
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Annual Evaluation – Results of annual evaluation.

	
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Personal Preference – Wishes of affected existing Board member to be re-nominated.

	
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Identify and Recommend Proposed Board Member Vacancies – Identify, from time to time, one or more individuals satisfying all of the following criteria as applied to the individual and recommend that the Board select the individual as a nominee to stand for election to the Board by the shareholders or, in the case of a vacancy on the Board, recommend that the Board fill the vacancy with that individual, subject to the individual's standing for election by the shareholders at the then next shareholder meeting:

	
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Board Size – Appropriate size of the Board.

	
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Minimum Qualifications – Minimum Qualifications to be a Board member as set forth in Article IV, Section 2(a) of the Bylaws.

	
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Skills and Characteristics – Level of Board Skills and Characteristics.

	
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Company Strategic Direction – Committee's understanding of the strategic direction requirements of the Company.

	
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Board Compositional Needs – Specific compositional needs of the Board, including, but not limited to, specific talents and experience involving technology, business, finance, administration or public service, in light of prevailing business conditions and the Board Skills and Characteristics already possessed by other members of the Board.

	
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Recommend Proposed Committee Members – Identify and recommend for appointment by the Board, Board members qualified to fill vacancies on any committee of the Board, including the Committee.  In nominating a candidate for a committee membership, the Committee shall take into consideration the factors set forth in the charter for that committee, if any, or as required by law or regulation, as well as any other factors it deems appropriate, including but not limited to, experience, skill and background.

 

  

  

  

 

	
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Issue Committee Reports – Report to the Board periodically on the status of the Committee's efforts on Board and committee nominations.

	
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Invite Prospective Board Member – Chair of the Committee, in conjunction with the Company's Chief Executive Officer ("Chief Executive Officer"), Chairman of the Board and the Board, generally, shall extend an invitation to the selected candidate to join the Board.

	
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Review Significant Change in Director Status – Upon a significant change in a director's personal circumstances, including a change of principal occupation, or in the event a significant ongoing time commitment arising which may be inconsistent with a director's service on the Board, review, as appropriate and, in light of the then-current Board policies, the continued Board membership of that director and make an appropriate recommendation to the Board.

	
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Consider Shareholder Recommendations – A shareholder having at least the minimum requisite ownership in the Company ("Recommending Shareholder") may make a Shareholder Recommendation, i.e., recommend to the Committee a candidate for nomination and election to the Board at a Company annual shareholder meeting.  The Committee shall consider that Shareholder Recommendation, subject to the following –

	
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Timely Receipt of Recommendation Statement – The Shareholder Recommendation must be received by the Committee, timely, along with a statement in support of the recommendation ("Recommendation Statement") to ensure the Committee's consideration of it.

	
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A Shareholder Recommendation, including the Recommendation Statement, to be "received by the Committee" must be delivered to the following address:

ATTN: Chair, Nominating and Corporate Governance Committee

(______ [Year of Meeting] Annual Meeting Recommendation)

General Communication, Inc.

2500 Denali Street, Suite 1000

Anchorage, Alaska  99503

	
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To be "timely," the Committee must receive the Shareholder Recommendation not earlier than, and not later than the dates as prescribed in the Company's Bylaws (Article III, Section 14) pertaining to submission of a shareholder proposal in conjunction with an annual meeting.

	
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A Recommending Shareholder is a shareholder who, as of the date of the Shareholder Recommendation and the record date for the annual meeting, is a beneficial owner of at least one share of voting securities of the Company, i.e., one share of Class A common stock, one share of Class B common stock or one share of preferred stock which either has voting rights directly or indirectly on an equivalent as-converted basis in common stock of the Company.

 

  

  

  

 

	
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Content of Recommendation Statement – The Recommendation Statement must set forth the following –

	
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For each candidate recommended –

	
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The candidate's name, age, business and residential address and principal occupation or employment.

	
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The class and number of shares of Company capital stock beneficially owned by the Recommending Shareholder on the date of the Shareholder Recommendation.

	
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A description of all arrangements or understandings between the Recommending Shareholder and the candidate and the name of any other person pursuant to which the recommendation is to be made.

	
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All other information relating to the candidate that is required to be disclosed in solicitation of proxies for election of directors or is otherwise required in each case pursuant to Regulation 14A adopted pursuant to the Exchange Act.

	
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Written consent of the candidate to being recommended as a candidate and nominee, in the event the Committee and the Board should accept the recommendation, in the Company's proxy statement and to serve as a director if so elected.

	
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As to the Recommending Shareholder (and the beneficial owner if different from the registered holder of the underlying Company voting common stock) –

	
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The Recommending Shareholder's name and address as appears on the Company's books (and also that of that beneficial owner).

	
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The class and number of shares of Company capital stock owned beneficially and of record by the Recommending Shareholder (and also that of that beneficial owner).

	
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Other information as may be requested by the Committee on the Recommending Shareholder or the Recommended Candidate.

	
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Review and Evaluation – A Shareholder Recommendation shall be reviewed and evaluated by the Committee, and the Committee's determination on that recommendation shall be subject to the application of the same criteria as shall be the case for a determination by the Committee on existing Board members standing for re-election.

	
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Significant Shareholder Recommendation – In the event the Committee shall have received, by a date (month, day) not later than the 120th calendar day before the date (month, day) of the Company's proxy statement released to its shareholders in connection with the previous year's annual meeting, a Shareholder Recommendation from a significant Recommending Shareholder –

 

  

  

  

 

	
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The Committee shall identify in the Company's management  proxy statement for the anticipated annual meeting the candidate who is the subject of the Shareholder Recommendation and the significant Recommending Shareholder and shall disclose whether the Committee chose to nominate the candidate –

	
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However, no such identification or disclosure is required without submission to the Committee of written consents by both the significant Recommending Shareholder and the candidate.

	
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Here, "significant Recommending Shareholder" means a shareholder of the Company who has been a beneficial owner of more than 5% of the Company's voting common stock (combined Class A and Class B common stock outstanding, and voting equivalent shares, if any, from the issuance of preferred stock) for at least one year as of the date the Shareholder Recommendation was made, or was a group of such shareholders that beneficially owned in the aggregate more than 5% of that Company voting common stock with each of the securities used to calculate that ownership held for at least one year from that date.

	
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As an example of the chronology, a Shareholder Recommendation from a significant Recommending Shareholder meeting the deadline for receipt by the Committee would include a recommendation for the Company's 2005 annual shareholder meeting which is received on December 1, 2004 where the 120th calendar day before the release on April 30, 2004 of proxy materials for the 2004 annual meeting was January 1, 2004.

	
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In the event the date of the anticipated annual meeting shall have been changed by more than 30 days from the date of the previous year's annual meeting, the Company's obligation to consider a Shareholder Recommendation will arise where the Company shall receive the Shareholder Recommendation a reasonable time before the Company shall have begun to print and mail its proxy materials.

	
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Report of Categories – In the event the Committee shall approve a Shareholder Recommendation for inclusion on the Company's management proxy  card (other than nominees who are directors standing for re-election), the Committee shall report in the proxy statement accompanying that card which one or more of the following categories of persons or entities recommended that candidate: security holder, non-management director, Chief Executive Officer, other Executive Officer, third-party search firm, or other specified source.

	
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Consultant Fee – In the event the Company shall pay a fee to a third party to identify or evaluate, or to assist in identifying or evaluating potential nominees, the function performed by each such party shall be disclosed in the corresponding Company management proxy statement describing that nominee for election as a director.

	
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Other Duties – Carry out other duties or responsibilities expressly delegated, from time to time, to the Committee by the Board relating to nomination of Board and committee members.

Addressing Corporate Governance Matters

  

  

  

The Committee shall have the following corporate governance responsibilities:

	
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Review and Recommend Changes To Ethics Code – Review and make recommendations at least once a year to the Board regarding the content, structure and scope of, and compliance with, the Ethics Code.

	
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Develop Corporate Governance Principles – Develop and recommend to the Board a set of corporate governance principles applicable to the Company ("Corporate Governance Principles"), and review those principles at least once a year.  The Corporate Governance Principles shall include, but not be limited to –

	
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Standards – Director qualification standards.

	
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Responsibilities – Director responsibilities.

	
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Access To Management – Director access to management and, as necessary and appropriate, independent advisors.

	
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Compensation – Director compensation.

	
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Continuing Education – Director orientation and continuing education.

	
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Succession – Management succession.

	
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Performance Evaluation – Annual performance evaluation of the Board.

	
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Advise on Legal Developments – Advise the Board periodically with respect to significant developments in the law and practice of corporate governance as well as the Company's compliance with the Corporate Governance Principles and applicable laws and regulations.

	
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Recommend Corporate Governance Action – Make recommendations to the Board, from time to time, on all matters of corporate governance and corrective action to be taken as the Committee deems appropriate.

	
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Review Structure of Board Committees – Review on an annual basis the Board's committee structure and recommend to the Board for its approval directors to serve as members of each committee.

	
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Establish Criteria for Annual Performance Self-Evaluation – Establish criteria and process for, and lead the Board and each Board committee in, its annual performance self-evaluation.  Each such evaluation will be discussed with the full Board following the end of each calendar year, will focus on contributions to the Company by the Board and each Board committee, and will specifically focus on areas in which a better contribution could be made.

	
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Review Director Compensation – Review annually director compensation and benefits and make recommendations to the Board.

	
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Review Chief Executive Officer Compensation – Work with the Chair of the Compensation Committee on issues of management objectives, Chief Executive Officer evaluation, and management development and succession.

 

  

  

  

 

	
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Carry Out Other Duties – Carry out other duties or responsibilities expressly delegated, from time to time, to the Committee by the Board relating to corporate governance.

Addressing Complaints on Certain Alleged Illegal Acts, Unethical Behavior, Other Matters

The Committee shall have the following special duties:

	
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Complaints – The Committee, from time to time, when it shall receive a Complaint, i.e., an inquiry or complaint or when the Committee independently shall decide in accordance with this charter, shall review and make a determination and recommend appropriate action to be taken by the Board on the Complaint, subject to the following –

	
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Specific Meaning – In this context, "Complaint" shall mean, unless the context otherwise requires, a matter pertaining to alleged illegal activity involving a person or unethical behavior-related violation of the Ethics Code by a person ("Unethical Conduct"), where the person is a director on the board of directors of the Company or of any its directly or indirectly wholly-owned subsidiaries ("Director"), or other matters as designated by the Board.

	
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Other Complaints – In the event the Complaint shall relate to an allegation of illegal activity or unethical behavior-related violation of the Ethics Code by an officer, director, or employee of the Company or any of its directly or indirectly wholly-owned subsidiaries ("Employee") pertaining to Company accounting, internal controls on accounting, or audit matters ("Accounting Violation") or to confidential, anonymous or other submission by an Employee of concern regarding an alleged Company questionable accounting or audit practice ("Questionable Accounting Practice"), the Complaint shall be handled separate from the Committee as set forth in this section.

	
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Other Complaint-Related Matters – The Committee shall address other Complaint-related matters as designated by the Board.

	
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Procedure – The following shall constitute the Company’s procedure for receipt, retention and treatment of Complaints regarding Accounting Violations and Questionable Accounting Practices by an Employee, and Unethical Conduct by a Director or by an Employee who is not a Director –

	
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Specific Allegations – Topics that may be addressed in Complaints must relate to specific alleged Accounting Violations, Questionable Accounting Practices, or Unethical Conduct.

	
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Accounting Violations and Questionable Accounting Practices – A Complaint regarding Accounting Violations or Questionable Accounting Practices must be directed to the Audit Committee for response or investigation.  Topics that may be addressed in such Complaints include, but are not limited to the following –

	
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Allegations of fraud or deliberate error in the preparation of the Company financial statements.

	
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Allegations of fraud or deliberate error in the review or audit of Company financial statements.

 

  

  

  

 

	
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Allegations of fraud or deliberate error in maintaining Company financial records.

	
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Deficiencies in internal control, or violations of internal control policies.

	
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False statements by a senior officer or accountant regarding matters included in financial reports or records.

	
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False statements made to independent auditors.

	
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Other information that can have a material impact on the fairness of the Company's financial statements.

 

 

	
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Director Unethical Conduct Complaint – A Complaint regarding Unethical Conduct by a Director must be directed to the following committee for response and investigation, if any, as conditioned –

	
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Audit Committee, should the Complaint relate to an Accounting Violation by an Employee, with a copy of the Complaint delivered to the chair of the Nominating and Corporate Governance Committee.

	
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Nominating and Corporate Governance Committee, should the Complaint relate to Unethical Conduct by a Director which does not involve an Accounting Violation, with a copy of the Complaint delivered to the chair of the Audit Committee.

	
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Audit Committee and Nominating and Corporate Governance Committees, should the Complaint relate to both an Accounting Violation by an Employee, and Unethical Conduct by the Director which does not involve an Accounting Violation.

	
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Employee (Not Director) Unethical Conduct – A Complaint regarding Unethical Conduct by an Employee who is not a Director must be directed to the Employee’s supervisor or the Chief Financial Officer for response or investigation.  Should the Complaint be submitted to the Employee’s supervisor, a copy must be directed to the Chief Financial Officer, unless the Complaint pertains to that officer, in which case the copy must be directed to the Chief Executive Officer.

	
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Written Complaint – A Complaint must be in writing and contain sufficient detail to provide a basis for the investigator to make an independent determination as to whether an Accounting Violation, Questionable Accounting Practice or Unethical Conduct has occurred.

	
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Signature, Date – A Complaint must be signed and dated by the complainant–Employee in the case of an Accounting Violation- or Unethical Conduct-related Complaint.

	
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Signature Not Required on Confidential or Anonymous Questionable Accounting Practice Complaint – A Questionable Accounting Practice-related Complaint need not be signed, should the complainant be seeking confidential or anonymous treatment of the Complaint.  However, it must be dated.

	
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Delivery of Complaint To a Committee – A Complaint directed to the Audit Committee or the Nominating and Corporate Governance Committee must be addressed and mailed or otherwise delivered to the chair of the appropriate committee at the Company’s corporate offices as follows –

  

  

  

CONFIDENTIAL                                                                                                      CONFIDENTIAL

ATTN: Chair, Audit Committee                                               or                                ATTN: Chair, Nominating and

(Complaint)                                                                                                             Corporate Governance Committee

General Communication, Inc.                                                                                   (Complaint)

2500 Denali Street, Suite 1000                                                                                 General Communication, Inc.

Anchorage, Alaska 99503                                                                                        2500 Denali Street, Suite 1000

                           Anchorage, Alaska 99503

	
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Delivery of Complaint To the Chief Financial Officer – A Complaint directed to the Chief Financial Officer must be addressed and mailed or otherwise delivered to that officer at the Company's corporate offices as follows –

CONFIDENTIAL

ATTN:  Chief Financial Officer (Complaint)

General Communication, Inc.

2500 Denali Street, Suite 1000

Anchorage, Alaska 99503

	
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Other Forms of Delivery – The Chief Financial Officer, in conjunction with the chairs of the Audit Committee and the Nominating and Corporate Governance Committee, shall review and, in the event they shall reach consensus, recommend to the Board other possible means by which a complainant shall deliver a Complaint to the Company, including, but not limited to, an internet address or a toll-free telephone number.

	
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Complaint Filing System – The Chief Financial Officer, in conjunction with the chairs of the Audit Committee and the Nominating and Corporate Governance Committee, shall establish a procedure compatible with the charters of both committees and the Ethics Code and providing for the corresponding investigator of a Complaint, or complaint relating to an Accounting Matter or to a Questionable Accounting Practice (for purposes of describing these procedures further in this charter and unless the context otherwise requires, "Complaint" refers to all such complaints), to log the Complaint into a filing system specifically established to retain, process, and otherwise provide for the treatment of Complaints ("Complaint Filing System").

	
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The Complaint Filing System will be used by each of these three investigators in the separate duties of each in addressing a Complaint.

	
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Processing of a Complaint – The recipient (investigator) of a Complaint will log the Complaint into the Complaint Filing System, subject to the following –

	
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Should the Complaint be in the nature of an allegation of an  Accounting Violation, a Questionable Accounting Practice or Unethical Conduct, the investigator must –

	
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Determine, based upon the information provided in the Complaint and independent investigation which the investigator, in the investigator's sole discretion, deems appropriate given the nature of the Complaint, whether there is a reasonable basis for the allegation made in the Complaint.

 

  

  

  

 

	
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Investigate the Complaint.

	
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Decide whether to hold a hearing on the matter and, should the investigator choose to hold such a hearing, give notice of, and hold the hearing on, the Complaint, request witnesses to appear at the hearing, and otherwise gather evidence necessary for the investigator to render a determination on the Complaint.

	
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Submit a written determination to, and recommend appropriate action by, the Board.

	
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Should the Complaint be in the nature of a Questionable Accounting Practice where the Complaint is unsigned or where the Complainant has otherwise indicated the Complaint is presented as a confidential, anonymous submission to the investigator, the investigator must –

	
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Determine, based upon the information provided in the Complaint and independent investigation which the investigator, in the investigator's sole discretion, deems appropriate given the nature of the Complaint, whether there is a reasonable basis for the allegation made in the Complaint.

	
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Render a written determination on the Complaint.

	
□  

	
Submit the written determination to, and recommend appropriate action by, the Board.

	
§  

	
Should the Complaint be in the nature of an inquiry without allegation of an Accounting Violation, Questionable Accounting Practice or Unethical Conduct, the recipient may in the recipient's sole discretion do either of the following –

	
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Respond directly to the complainant.

	
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Recommend to the Board appropriate action.

	
§  

	
The investigator will, regardless of the nature of the Complaint, seek to process it in a timely manner.

	
§  

	
The investigator shall be informed of the receipt of Complaints at least on a weekly basis.  In the event the Complaint shall be directed to a committee, the chair of the committee shall be informed of the receipt of the Complaint within not more than two business days.

	
§  

	
A Complaint pertaining to one or more executive officers or Directors must receive especially timely review by the corresponding investigator.

	
§  

	
Each investigator will decide, upon initial review of a Complaint, whether a formal investigation shall be initiated and the extent of it, including who shall carry out the investigation, and the resources which shall be deemed necessary to carry it out.

	
§  

	
All signed Complaints will be acknowledged as received by the investigator.  In the event the signed Complaint shall be directed to a committee, the chair of the committee, or the chair's designee, shall acknowledge receipt of the Complaint.

 

  

  

  

 

	
§  

	
In the event the investigator shall conclude a Complaint as not one subject to the scope of the investigator's responsibilities under a committee charter or otherwise but as one raising legitimate issues, the investigator shall forward the matter to the Chief Financial Officer for direct action or referral to the appropriate person for review and action.

	
o  

	
Annual Status Reports – The Audit Committee, the Nominating and Corporate Governance Committee, and the Chief Financial Officer, as investigators of Complaints, will at least annually each provide reports to the Board on the status of Complaints received, including, but not limited to –

	
§  

	
A brief description of each.

	
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The status of each.

	
§  

	
Recommended action, if any, on each by the Board which may take the form any of the following –

	
□  

	
Affirmative relief.

	
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Dismissal of the Complaint.

	
□  

	
Closure of the file on the Complaint for which the investigator has not received additional requested information from the complainant within a reasonable time which the investigator deems necessary to make a determination in the matter.

	
o  

	
Retention of Closed File – A Complaint file, once closed, will be retained for a time period of 10 years and in accordance with the Company's appropriate records retention policy, after which the file will be destroyed.  Unless specifically provided otherwise in that policy, the Chief Financial Officer or that officer's designee is the custodian of a closed Complaint file.

	
o  

	
Confidential Treatment – An investigator will be particularly sensitive to the confidential nature of Complaints, especially ones where the complainant has made the Complaint through a confidential or anonymous submission.  Complaint files will not be available generally to Employees except with the permission of the investigator and only in accordance with the Company's policy on confidential records, if any, pertaining to the subject matter of the Complaint.

	
o  

	
Committee Review – In the event the investigator shall be the Audit Committee or the Nominating and Corporate Governance Committee, a Complaint shall be reviewed initially by the committee's chair, or the chair's designee, and an initial analysis submitted to the committee.  Any formal action taken by the committee on the Complaint must be at a duly scheduled meeting at which at least a quorum of its members is present, and a determination on the Complaint must be by vote of at least a majority of the committee present, subject further to the procedural requirements of the Bylaws.

	
o  

	
Other Procedures – The Committee shall adopt such other procedures, subject to prior Board approval, as may be necessary to carry out the Committee's responsibilities in addressing Complaints and other matters addressed in this section.

  

  

  

Supervising Chief Financial Officer on Ethics Code

The Committee shall supervise the Chief Financial Officer in the context of the Ethics Code.  However, the Chief Financial Officer shall have primary authority and responsibility for enforcement of the Ethics Code, except as expressly provided in the Ethics Code.

Conducting Committee Performance Evaluation

The Committee shall each year conduct a Committee Performance Evaluation, i.e., it shall review, discuss, and assess its own performance, as well as the Committee's purpose and responsibilities, seeking responses from senior management, the full Board, and others.  Changes, if any, in the Committee's purpose or responsibilities, or, generally, changes to this charter shall be recommended to the full Board for approval.

Other Matters

The foregoing provisions of this charter are not intended to be exhaustive.  The Committee may, in addition, perform such other functions as may be necessary or appropriate for the performance of its purposes and responsibilities.

Nothing in this charter is intended to, and must not be construed as, creating any responsibility or liability of the members of the Committee except to the extent otherwise provided under applicable Alaska law which continues to set the legal standard for the conduct of the Committee members.

 

ADOPTED by the board of directors of General Communication, Inc. as of the 1st day of January, 2010.

 

 

Date: June 15, 2010                                                   /s/ John M. Lowber___________

John M. Lowber

Secretaryex10_2.htm

  

EXHIBIT 10.2

EMPLOYMENT AGREEMENT

This Employment Agreement (this "AGREEMENT") is made and entered into on May 10, 2010 (the "EFFECTIVE DATE") by and between Carl Isaac ("EXECUTIVE") and Crimson Exploration Inc. (the "COMPANY").

WHEREAS, the Company desires to employ Executive as Senior Vice President - Operations, and Executive desires to be employed by the Company in said capacity; and

WHEREAS, each party desires to set forth in writing the terms and conditions of their understandings and agreements.

NOW, THEREFORE, in consideration of the mutual covenants and obligations contained herein, the Company hereby agrees to employ Executive and Executive hereby accepts such employment upon the terms and conditions set forth in this Agreement:

ARTICLE 1

EMPLOYMENT; RESPONSIBILITIES; COMPENSATION

Section 1.1 EMPLOYMENT. Subject to ARTICLE 3, the Company hereby agrees to employ Executive and Executive hereby agrees to be employed by the Company, in accordance with this Agreement, for the period commencing as of the Effective Date and ending on the second anniversary of the Effective Date ("INITIAL TERM"); PROVIDED, HOWEVER, that beginning on the day immediately preceding the second anniversary of this Agreement and on the day immediately preceding each anniversary of this Agreement thereafter, the Initial Term shall automatically be extended one additional year unless either party gives written notice to the other party between 90 and 120 days prior to the next anniversary of this Agreement that it or he, as applicable, does not wish to extend this Agreement. Executive's continued employment after the expiration of the Initial Term shall be in accordance with and governed by this Agreement, unless modified by the parties to this Agreement in writing.

Section 1.2 RESPONSIBILITIES; LOYALTY.

(a) Subject to the terms of this Agreement, Executive is employed in the position of Senior Vice President-Operations, and shall perform the functions and responsibilities of that position. Additional or different duties may be assigned by the Company. Executive's position, job descriptions, duties and responsibilities may be modified from time to time in the sole discretion of the Company.

(b) Executive shall devote the whole of Executive's professional time, attention and energies to the performance of Executive's work responsibilities and shall not, either directly or indirectly, alone or in partnership, consult with, advise, work for or have any

 

  

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interest in any other similar business or pursuit during Executive's employment under this Agreement. During the term of Executive's employment with the Company, it shall not be a violation of this Agreement for Executive to (i) serve on corporate, civic or charitable boards or committees; (ii) deliver lectures or fulfill speaking engagements; and (iii) subject to SECTION 2.3, manage personal investments, in each case, so long as such activities do not materially interfere with the performance of Executive's responsibilities as an Executive of the Company in accordance with this Agreement. Executive further agrees to comply with all policies of the Company in effect from time to time, and to comply with all laws, rules and regulations, including those applicable to the Company

Section 1.3 COMPENSATION. As consideration for the services and covenants described in this Agreement, the Company agrees to compensate Executive in the following manner:

(a) The Company will pay Executive a base salary of $230,000.00 per year ("BASE SALARY"), as may be increased from time to time by action of the Compensation Committee of the Board of Directors.

(b) Executive shall be entitled to employment benefits including holidays, leaves of absence, health insurance, dental insurance, 401(k) plan participation, etc., if any, available to Executives of the Company generally, in accordance with any policies, procedures or benefit plans adopted by the Company from time to time during the existence of this Agreement. In addition, Executive shall be entitled to vacation in accordance with the Company's vacation policy as adopted from time to time. Executive's rights or those of Executive's dependents under any such benefits policies or plans shall be governed solely by the terms of such policies or plans. The Company reserves to itself, or its designated administrators, exclusive authority and discretion to determine all issues of eligibility, interpretation and administration of each such benefit plan or policy. The Company's employment benefits, and policies related thereto, are subject to termination, modification or limitation at the Company's sole discretion.

(c) Executive shall participate in the Company’s Annual Cash Incentive Bonus Plan, for each calendar year in which the Plan is active and Executive is employed by the Company hereunder, which currently provides for Minimum, Target and Maximum Award levels of 40%, 70% and 100%, respectively, of Base Salary, contingent upon attainment of annual personal and corporate goals established by the Board of Directors of the Company or a duly authorized committee thereof (the "BOARD") in its sole discretion ("Annual Cash Incentive Bonus”) in accordance with the terms of the Annual Cash Incentive Bonus Plan (or successor plan).

(d) Executive shall participate in the Company’s Annual Long-Term Incentive Equity Plan for each calendar year in which the Plan is active and Executive is employed by the Company hereunder, which currently provides for Minimum, Target and Maximum Award levels of 50%, 150% and 300%, respectively, of Base Salary, which will be payable with respect to a performance period in the form of 50% in restricted common stock (to be issued pursuant to a Restricted Stock Award Agreement) and 50%

 

  

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in the form of employee stock options (to be issued pursuant to a Stock Option Agreement), contingent upon attainment of annual personal and corporate goals established by the Board of Directors of the Company or a duly authorized committee thereof (the "BOARD") in its sole discretion ("Annual Long-Term Incentive Equity Plan”)  in accordance with the terms of the Annual Long-Term Incentive Equity Plan (or successor plan).

(e) Payment of all compensation to Executive shall be made in accordance with the terms of this Agreement, applicable state or federal law, and applicable Company policies in effect from time to time, including normal payroll practices, and shall be subject to all applicable withholdings and taxes.

Section 1.4 BUSINESS EXPENSES. The Company shall reimburse Executive for all business expenses that are reasonable and necessary and incurred by Executive while performing his duties under this Agreement, upon presentation of expense statements, receipts and/or vouchers or such other information and documentation as the Company may reasonably require.

ARTICLE 2

CONFIDENTIAL INFORMATION; POST-EMPLOYMENT

OBLIGATIONS; COMPANY PROPERTY

Section 2.1 COMPANY PROPERTY. All written materials, records, data and other documents prepared or possessed by Executive during Executive's employment by the Company are the Company's property. All information, ideas, concepts, improvements, discoveries and inventions that are conceived, made, developed or acquired by Executive individually or in conjunction with others during Executive's employment (whether during business hours and whether on Company's premises or otherwise) that relate to Company business, products or services are the Company's sole and exclusive property. All memoranda, notes, records, files, correspondence, drawings, manuals, models, specifications, computer programs, maps and all other documents, data or materials of any type embodying such information, ideas, concepts, improvements, discoveries and inventions are Company property. At the termination of Executive's employment with the Company for any reason, Executive shall return all of the Company's documents, data or other Company property to the Company.

Section 2.2 CONFIDENTIAL INFORMATION; NON-DISCLOSURE.

(a) Executive acknowledges that the business of the Company is highly competitive and that the Company will provide Executive with access to Confidential Information relating to the business of the Company. Executive acknowledges that this Confidential Information constitutes a valuable, special and unique asset used by the Company in its business to obtain a competitive advantage over competitors.  Executive

 

  

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further acknowledges that protection of such Confidential Information against unauthorized disclosure and use is of critical importance to the Company in maintaining its competitive position.  Executive agrees that Executive will not, at any time during or after Executive's employment with the Company, make any unauthorized disclosure of any Confidential Information of the Company, or make any use thereof, except in the carrying out of Executive's employment responsibilities to the Company. Executive also agrees to preserve and protect the confidentiality of third party Confidential Information to the same extent, and on the same basis, as the Company's Confidential Information.

(b) For purposes hereof, "CONFIDENTIAL INFORMATION" includes  business operations and methods, existing and proposed investments and investment strategies, seismic, well-log and other geologic and oil and gas operating and exploratory data, financial performance, compensation arrangements and amounts (whether relating to the Company or to any of its Executives), contractual relationships, business partners and relationships (including customers and suppliers), marketing strategies and other confidential information that is regularly used in the operation, technology and business dealings of the Company, regardless of the medium in which any of the foregoing information is contained, so long as such information is actually confidential and proprietary to the Company.

Section 2.3 NON-COMPETITION OBLIGATIONS.

(a) Executive acknowledges and agrees that as an Executive and representative of the Company, Executive will be responsible for building and maintaining business relationships and goodwill with current and future operating partners, investors, partners and prospects on a personal level. Executive acknowledges and agrees that this responsibility creates a special relationship of trust and confidence between the Company, Executive and these persons or entities.  Executive also acknowledges that this creates a high risk and opportunity for Executive to misappropriate these relationships and the goodwill existing between the Company and such persons. Executive acknowledges and agrees that it is fair and reasonable for the Company to take steps to protect itself from the risk of such misappropriation.

(b) Executive acknowledges and agrees that, in exchange for his agreement in SECTION 2.3(C) below, he will receive substantial, valuable consideration from the Company immediately upon the execution of this Agreement, including, (i) Confidential Information and access to Confidential Information, (ii) compensation and other benefits and (c) access to the Company's prospects.

(c) During the Non-Compete Term and provided that the Company has made all severance payments provided for herein, Executive will not, directly or indirectly, provide the same or substantially the same services that he provides to the Company or any of its subsidiaries to any Business Enterprise in the Market Area (as defined below). This includes working as an agent, consultant, Executive, officer, director, partner or independent contractor or being a major shareholder, member, joint venturer or equity owner in, any such Business Enterprise.

 

  

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(d) For purposes of hereof:

(i) "BUSINESS ENTERPRISE" means any corporation, partnership, limited liability company, sole proprietorship, joint venture or other business association or entity engaged in the business of exploring for, developing, operating or acquiring oil and gas properties;

(ii) "MARKET AREA" means any area in which the Company is active in a meaningful way at the time of termination; and

(iii) "NON-COMPETE TERM" means the period from the date of Executive's employment to the date ending: (A) on the date of termination if terminated by the Company for Cause, or (B) in all other cases of termination, at the end of a period of consecutive months following the date of termination equivalent to 50% of the number of months for which the Executive receives severance benefits assuming (if applicable) Executive gives notice of his intent to comply with Sections 2.3(c) and Section 2.4 pursuant to Section 3.2.

Section 2.4 NON-SOLICITATION. During the Non-Compete Term, Executive will not, either directly or indirectly, call on, solicit or induce any other Executive, officer or other employee of the Company or its affiliates with whom Executive had contact with, knowledge of, or association with in the course of employment with the Company to terminate his employment, and will not assist any other person or entity in such a solicitation; provided, however, that with respect to soliciting any Executive, officer or other employee whose employment was terminated by the Company or its affiliates, the foregoing restriction shall not apply.

Section 2.5 ACKNOWLEDGEMENT. Executive acknowledges that the Confidential Information provided to Executive pursuant to this Agreement, and the Company's need to protect its goodwill, gives rise to the Company's interest in these restrictive covenants, and that any limitations as to time, geographic scope and scope of activity to be restrained defined herein are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other business interest of the Company. Executive further agrees that if, at some later date, a court of competent jurisdiction determines that certain covenants do not meet the criteria set forth in Tex. Bus. & Com. Code §. 15.50(2), those covenants shall be reformed by the court, pursuant to Tex. Bus. & Com. Code §. 15.51(c), to the least extent necessary to make them enforceable. Executive acknowledges and recognizes that the enforcement of any of the provisions in this Agreement by the Company will not interfere with Executive's ability to pursue a proper livelihood.

Section 2.6 EARLY RESOLUTION CONFERENCE. The parties are entering into this Agreement with the express understanding that this Agreement is clear and fully enforceable as written. If Executive ever decides later to contend that any restriction on activities imposed by this Agreement no longer is enforceable as written or does not

 

  

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apply to an activity in which Executive intends to engage, Executive first will notify the Company in writing and meet with a company representative at least 14 days before engaging in any activity that foreseeably could fall within the questioned restriction to discuss resolution of such claims.

Section 2.7 EQUITABLE OTHER RELIEF. Executive understands and agrees that, if Executive breaches this Agreement, the Company will suffer immediate and irreparable harm which cannot be accurately calculated in monetary damages. Consequently, the Company shall be entitled to immediate injunctive relief, either by temporary or permanent injunction, to prevent such violation. This injunctive relief shall be in addition to any other legal or equitable relief to which the Company would be entitled. If a bond is required to be posted for the Company to secure an injunction or other equitable remedy, threatened or actual, Executive agrees that the bond need not be more than a nominal sum. The Company shall be entitled to recover its attorneys' fees and costs from Executive should a court determine that Executive has breached this Agreement.  Similarly, the Executive shall be entitled to recover his attorneys’ fees and costs from the Company should a court determine that the Company has breached this Agreement.  In addition, in the event of an alleged breach or violation of this Agreement, the time periods set forth above will be tolled until such breach or violation has been cured.

ARTICLE 3

TERMINATION OF EMPLOYMENT

Section 3.1 TERMINATION OF EMPLOYMENT.

(a) Executive's employment with Company shall be terminated (i) immediately upon the death of Executive without further action by the Company, (ii) upon Executive's Permanent Disability without further action by the Company, (iii) by the Company for Cause, (iv) by Executive for Good Reason, (v) by the Company without Cause or by Executive without Good Reason PROVIDED that the terminating party must give at least 30 days' advance written notice of such termination.

(b) For purposes hereof:

(i) "PERMANENT DISABILITY" shall mean Executive's physical or mental incapacity to perform his usual duties with such condition likely to remain continuously and permanently as determined by the Board.

(ii) "GOOD REASON" shall mean (A) a material breach by the Company of any provision of this Agreement that remains uncorrected for 10 days following written notice of such breach by Executive to the Company identifying the provision of this Agreement that Executive determined has been breached; (B) assignment by the Board to Executive of any duties that materially and adversely

 

  

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alter the nature or status of Executive's position, job descriptions, duties, title or responsibilities from those of a Chief Financial Officer, or eligibility for Company compensation plans; (C) requirement by the Company for Executive to relocate anywhere other than the greater Houston, Texas metropolitan area, except for required travel on Company business to an extent substantially consistent with Executive's obligations under this Agreement; (D) reduction in Executive's Base Salary in effect at the relevant time; or (E) exclusion of the Executive from eligibility for the Company's active bonus or benefits plans as described above.

(iii) "CAUSE" shall include (A) continued failure by Executive to perform substantially Executive's duties and responsibilities (other than a failure resulting from Permanent Disability) that is materially injurious to the Company and that remains uncorrected for ten days after receipt of appropriate written notice from the Board; (B) confirmed, documented evidence of engagement by Executive in willful, reckless or grossly negligent misconduct that is materially injurious to Company or any of its affiliates, monetarily or otherwise; (C) except as provided by (D), the indictment of Executive with a crime involving moral turpitude or a felony, provided that if the criminal charge is dismissed with prejudice or if Executive is acquitted at trial or on appeal, Executive will be deemed to have been terminated without Cause; (D) the indictment of Executive with an act of criminal fraud, misappropriation or personal dishonesty, provided that if the criminal charge is subsequently dismissed with prejudice or the Executive is acquitted at trial or on appeal then the Executive will be deemed to have been terminated without Cause; or (E) a material breach by Executive of any provision of this Agreement that is materially injurious to the Company and that remains uncorrected for 10 days following written notice of such breach by the Company to Executive identifying the provision of this Agreement that Company determined has been breached.

(c) If Executive's employment is terminated under any of the foregoing circumstances, all future compensation to which Executive is otherwise entitled and all future benefits for which Executive is eligible, other than that already earned but which is unpaid, shall cease and terminate as of the date of termination, except as specifically provided in this SECTION 3.  Any other payments or benefits by or on behalf of Company are limited to those which may be payable pursuant to the terms of Company's Executive benefit plans or required by any applicable federal, state or local law.

Section 3.2 SEVERANCE.

(a)

(i) If Executive's employment is terminated by the Company without Cause or by Executive for Good Reason, and subject to Executive's compliance with the conditions set forth in SECTION 3.3, Executive shall, subject to the provisions of this SECTION 3.2, be entitled to a severance payment consisting of (A) a cash amount equal to two times the sum of the current calendar year's Base

 

  

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Salary and the prior year's Annual Cash Incentive Bonus, (B) health insurance benefits for two years from the termination date at no charge to Executive, and (C) acceleration to 100% vested status for all stock, stock option and other equity awards to the extent such awards (other than stock options and stock appreciation rights) are not subject to performance-based vesting for purposes of qualifying as “performance-based compensation” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “CODE”).  If no Annual Cash Incentive Bonus was paid for the year before the year in which termination occurs, for purposes of the bonus component of the severance payable under (A) of the preceding sentence, Executive shall be entitled to two times the amount of discretionary bonuses paid to Executive within the 12 month period preceding termination.

(ii) If the severance payment is to be made as result of termination by the Company without Cause or by Executive for Good Reason within 90 days before or 12 months after a Change of Control, payment of the entire cash severance amount will be made in a lump sum on the earlier of (i) the date on which the Change of Control occurs and (ii) Executive's effective date of termination. If the Company otherwise terminates Executive without Cause or Executive terminates his employment for Good Reason, Executive shall receive half of the cash severance amount in a lump sum within 15 days of termination and half the number of months of benefit continuation.  Executive shall not be entitled to the remainder of the cash severance payment, or the second half of health insurance benefits continuation, unless Executive gives notice to the Company within 30 days of the conclusion of 50% of the Non-Compete Term that he agrees to comply with SECTION 2.3(C) and SECTION 2.4 for the remainder of the Non-Compete Term and, in consideration therefor, desires to receive the remainder of the severance payment and an extension of health insurance benefits, in which event Executive shall be entitled to the additional health insurance benefits and the remainder of the cash severance payment, payable in a lump sum on the date that the Executive gives notice of his intent to comply with Sections 2.3 (C) and 2.4.

(iii) Executive shall not be under any duty or obligation to seek or accept other employment following a termination of employment pursuant to which a severance payment under this SECTION 3.2 is payable and the amounts due Executive pursuant to this SECTION 3.2 shall not be reduced or suspended if Executive accepts subsequent employment or earns any amounts as a self-employed individual.

(b) If Executive's employment is terminated because of death or Permanent Disability, (i) Executive, in the case of Permanent Disability or his estate in the case of Executive's death, shall be entitled to his Prorata Base Salary and Prorata Target Annual Cash Bonus through the date of termination for the year in which the termination occurs, plus the greater of: 1) the remainder of the Base Salary that would have been earned by

 

  

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Executive under this Agreement between the time of his Death or Permanent Disability and the expiration of this Agreement; or 2) twelve months of Base Salary, plus his Target Annual Cash Bonus for the year of termination, and 3) full acceleration of vesting for all stock and stock option awards;  (ii) Executive's family members covered by the Company group health plan shall be reimbursed for group health plan continuation coverage they elect to receive under the Consolidated Omnibus Budget Reconciliation Act (COBRA) for up to 24 months, provided a member of Executive's family provides timely notice to the health plan administrator of Executive's death or Permanent Disability.

(c) Additional Payments.

(i) Anything in this Agreement to the contrary notwithstanding, if it is determined that any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) by the Company or any entity which effectuates a change in control (or other change in ownership) to or for the benefit of Executive would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the "CODE") ("EXCESS PARACHUTE PAYMENTS"), or any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "EXCISE TAX"), then the Company shall pay to Executive an additional payment (a "GROSS-UP PAYMENT") in an amount equal to that required to result in Executive receiving, after application of the Excise Tax, a net amount that would have been received hereunder had the Excise Tax not applied.

(ii) Subject to clause (i), all determinations required to be made under this Section, including whether and when a Gross-Up Payment is required, the amount of such Gross-Up Payment and the assumptions to be used in arriving at such determinations, shall be made by a public accounting firm that is selected by the Board (the "ACCOUNTING FIRM") which shall provide detailed supporting calculations both to the Company and Executive within 15 business days of the receipt of notice from the Company or Executive that there has been a Excess Parachute Payment, or such earlier time as is requested by the Company or Executive (collectively, the "DETERMINATION"). All fees and expenses of the Accounting Firm shall be borne solely by the Company and the Company shall enter into any agreement requested by the Accounting Firm in connection with the performance of the services hereunder.  The Gross-Up Payment under this Section with respect to any Excess Parachute Payments made to Executive shall be made no later than 30 days following such Excess Parachute Payment.

(iii) As a result of the uncertainty in the application of Section 4999 of the Code at the time of the Determination, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("UNDERPAYMENT") or Gross-Up Payments will be made by the Company which should not have been made ("OVERPAYMENT"), consistent with the

 

  

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calculations required to be made hereunder. If Executive thereafter is required to make payment of any Excise Tax or additional Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid by the Company to or for the benefit of Executive. If the amount of the Gross-Up Payment exceeds the amount necessary to reimburse Executive for his Excise Tax, the Accounting Firm shall determine the amount of the Overpayment that has been made and any such Overpayment (together with interest at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid by Executive to or for the benefit of the Company. Executive shall cooperate, to the extent his expenses are reimbursed by the Company, with any reasonable requests by the Company in connection with any contest or disputes with the Internal Revenue Service in connection with the Excise Tax.

(d) "CHANGE OF CONTROL" means the occurrence of any one or more of the following events:

(i) The Company shall not be the surviving entity in any merger, consolidation or other reorganization (or survives only as a subsidiary of any entity other than a previously wholly-owned subsidiary of the Company), or except in the case of a reverse merger in which Company management and the Executive assume control of the surviving entity;

(ii) The Company sells, leases or exchanges all or substantially all of its assets to any other person or entity (other than a previously wholly-owned subsidiary of the Company);

(iii) The Company is to be dissolved and liquidated;

(iv) Any person or entity, including a “group” as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, other than Oaktree Capital Management, L.P. or its affiliates, or any other person, entity or group that is considered to own more than 50% of the outstanding shares of the Company’s voting stock (based upon voting power), acquires or gains ownership or control (including, without limitation, power to vote) of more than 50% of the outstanding shares of the Company’s voting stock (based upon voting power); or

(v) As a result of or in connection with a contested election of directors, a majority of members of the Board is replaced by directors whose election is not endorsed by a majority of members of the Board before the date of the election.

(e)           SECTION 3.2 and this Agreement shall be administered and interpreted to maximize the short-term deferral exception to Code Section 409A, and Executive shall not, directly or indirectly, designate the taxable year of a payment made under this Agreement.  The portion of any payment under this Agreement that is paid within the

 

  

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short-term deferral period (within the meaning of Code Section 409A and Treas. Reg. § 1.409A-1(b)(4)) will be treated as a short term deferral and not aggregated with other plans or payments.  Any other portion of the payment that does not meet the short-term deferral requirement will, to the maximum extent possible, be deemed to satisfy the exception from Code Section 409A under Treas. Reg. § 1.409A-1(b)(9)(iii)(A) for involuntary separation pay and shall not be aggregated with any other payment.  Any right to a series of installment payments pursuant to this Agreement is to be treated as a right to a series of separate payments.  Any amount that is paid as a short-term deferral within the meaning of Treas. Reg. § 1.409A-1(b)(4) or within the involuntary separation pay limit under Treas. Reg. § 1.409A-1(b)(9)(iii)(A) will be treated as a separate payment.  Payment dates provided for in this Agreement are deemed to incorporate “grace periods” within the meaning of Code Section 409A and the regulations thereunder.  Notwithstanding anything herein to the contrary, if Executive is, as of the date of termination, a “specified employee” for purposes of Code Section 409A and Treas. Reg. § 1.409A-1(i), then any amount payable to Executive pursuant to SECTION 3.2(a)(i)(A) or 3.2(c) that is neither a short-term deferral within the meaning of Treas. Reg. § 1.409A-1(b)(4) nor within the involuntary separation pay limit under Treas. Reg. § 1.409A-1(b)(9)(iii)(A) will not be paid before the date that is six months after the date of termination, or if earlier, the date of Executive’s death.  Any payments to which Executive would otherwise be entitled during such non-payment period will be accumulated and paid or otherwise provided to Executive on the first day of the seventh month following such date of termination, or if earlier, within 30 days of Executive’s death to his surviving spouse (or to his estate if Executive’s spouse does not survive him).

(f) If Executive terminates his employment without Good Reason or is terminated for Cause, he shall not be entitled to the severance payments provided for in this Agreement.

Section 3.3 CONDITIONS FOR SEVERANCE.

(a) The severance payment payable to Executive pursuant to Section 3.2 shall be in consideration of Executive's continuing obligations hereunder after such termination, including Executive's obligations under ARTICLE 2.

(b) As a condition to the receipt of any severance payment, Executive agrees to execute and deliver a reasonable severance and release agreement, including a waiver of all claims except for any claims relating to benefits due under the plans described in SECTION 1.3(B) and any future amount which may be payable as a deferred bonus. The severance and release agreement shall be in a form reasonably acceptable to the Board and shall be delivered to the Executive at the time of termination; provided that such release shall not provide for a release of Executive's right to indemnification under the Company's organizational documents or directors and officers insurance against third party claims.

(c) As a condition to the receipt of any severance payment, Executive agrees that any and all claims and any and all causes of action of any kind or character, including all

 

  

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claims and causes of action arising out of Executive's employment with the Company, the termination of such employment, any claims or demands against the Company based upon Executive's employment for any monies other than those specified in SECTION 3.2, and the actions by the officers, directors, Executives and agents of Company shall be resolved through a dispute resolution process as provided in SECTION 4.11; PROVIDED, HOWEVER, that any determination as to whether and as of what date Executive has suffered a Permanent Disability are delegated to the Board and any objection by Executive with any such determination shall be limited to whether the Board reached such decision in good faith.

(d) Except as expressly provided herein, Executive shall not be entitled to any other severance payment.  The severance payments provided for herein are Executive’s sole remedy for termination of his employment at the Company.

Section 3.4 TRANSITION PERIOD. Upon termination of this Agreement, and for 90 consecutive calendar days thereafter (the "TRANSITION PERIOD"), Executive agrees to make himself available to assist the Company with transition projects assigned to him by the Board. Executive will be paid at a reasonable, agreed upon hourly rate for any work performed for the Company during the Transition Period.

Section 3.5 CONTINUING OBLIGATIONS OF EXECUTIVE. Termination of the employment relationship does not terminate those obligations of Executive imposed by ARTICLES 2 and SECTIONS 3.4 through 3.5, which are continuing obligations.

 

  

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ARTICLE 4

MISCELLANEOUS

Section 4.1 NOTICES. All notices and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, mailed by certified mail (return receipt requested) or sent by overnight delivery service, or electronic mail, or facsimile transmission (with electronic confirmation of successful transmission) to the parties at the following addresses or at such other addresses as shall be specified by the parties by like notice, in order of preference of the recipient:

To the Company:

Crimson Exploration Inc.

717 Texas Avenue

Suite 2900

Houston, Texas 77002

Attention:

Facsimile: (713) 236-4424

Telephone: (713) 236-7400

To Executive:

Carl Isaac

c/o Crimson Exploration Inc.

717 Texas Avenue

Suite 2900

Houston, Texas 77002

Facsimile: (713) 236-4424

Telephone: (713) 236-7400

Notice so given shall, in the case of mail, be deemed to be given and received on the fifth calendar day after posting, in the case overnight delivery service, on the date of actual delivery and, in the case of facsimile transmission, telex or personal delivery, on the date of actual transmission or, as the case may be, personal delivery. Any such notice or communication shall be delivered by hand or by courier or sent certified or registered mail, return receipt requested, postage prepaid, addressed as above (or to such other address as such party may designate in a notice duly delivered as described above), and the third business day after the actual date of mailing (or, if earlier, the actual date of receipt) shall constitute the time at which notice was given.

Section 4.2 SEVERABILITY AND REFORMATION. If any one or more of the terms, provisions, covenants or restrictions of this Agreement shall be determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions shall remain in full force and effect, and the

 

  

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invalid, void or unenforceable provisions shall be deemed severable. Moreover, if any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, it shall be reformed by limiting and reducing it to the minimum extent necessary, so as to be enforceable to the extent compatible with the applicable law as it shall then appear.

Section 4.3 ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the heirs and legal representatives of Executive and the permitted assigns and successors of the Company, but neither this Agreement nor any rights or obligations hereunder shall be assignable or otherwise subject to hypothecation by Executive (except by will or by operation of the laws of intestate succession) or by the Company, except that the Company may assign this Agreement to any successor (whether by merger, purchase or otherwise), if such successor expressly agrees to assume the obligations of the Company hereunder.

Section 4.4 AMENDMENT. This Agreement may be amended only by writing signed by Executive and by a duly authorized representative of the Company (other than Executive).

Section 4.5 ASSISTANCE IN LITIGATION. Executive shall reasonably cooperate with the Company in the defense or prosecution of any claims or actions now in existence or that may be brought in the future against or on behalf of the Company that relate to events or occurrences that transpired while Executive was employed by the Company. Executive's cooperation in connection with such claims or actions shall include being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of the Company at mutually convenient times. Executive also shall cooperate fully with the Company in connection with any investigation or review by any federal, state or local regulatory authority as any such investigation or review relates, to events or occurrences that transpired while Executive was employed by the Company. The Company will pay Executive an agreed upon reasonably hourly rate for Executive's cooperation pursuant to this Section.

Section 4.6 BENEFICIARIES; REFERENCES. Executive shall be entitled to select (and change, to the extent permitted under any applicable law) a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following Executive's death, and may change such election, in either case by giving the Company written notice thereof. In the event of Executive's death or a judicial determination of his incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative. Any reference to the masculine gender in this Agreement shall include, where appropriate, the feminine.

Section 4.7 USE OF NAME; LIKENESS AND BIOGRAPHY. The Company may use, publish and broadcast, and to authorize others to do so, the name, approved likeness and approved biographical material of Executive to advertise, publicize and promote the business of the Company and its affiliates, but not for the purposes of direct endorsement without Executive's consent. This right shall terminate upon the termination

 

  

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of this Agreement. An "approved likeness" and "approved biographical material" shall be, respectively, any photograph or other depiction of Executive, or any biographical information or life story concerning the professional career of Executive.

Section 4.8 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND GOVERNED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO RULES RELATING TO CONFLICTS OF LAW.

Section 4.9 ENTIRE AGREEMENT. This Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof and supersedes in all respects any prior or other agreement or understanding, written or oral, between the Company or any affiliate of the Company and Executive with respect to such subject matter.

Section 4.10 COUNTERPARTS; NO ELECTRONIC SIGNATURES. This Agreement may be executed in two or more counterparts, each of which will be deemed an original.  For purposes of determining whether a party has signed this Agreement or any document contemplated hereby or any amendment or waiver hereof, only a handwritten signature on a paper document or a facsimile transmission of a handwritten original signature will constitute a signature, notwithstanding any law relating to or enabling the creation, execution or delivery of any contract or signature by electronic means.

Section 4.11 ARBITRATION. Other than as provided in ARTICLE 3, the parties agree that any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be resolved by arbitration administered by the American Arbitration Association ("AAA") under its Commercial Arbitration Rules. All disputes shall be resolved by one arbitrator within 120 days of the date arbitration is initiated. The arbitrator will have the authority to award the same remedies, damages and costs that a court could award, and will have the additional authority to award those remedies set forth in ARTICLE 3. The arbitrator shall issue a reasoned award explaining the decision, the reasons for the decision and any damages awarded, including those set forth in ARTICLE 2.7, where the arbitrator finds either party violated ARTICLES 2 or 3. The arbitrator's decision will be final and binding. The judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The arbitration proceedings, any record of the same, and the award shall be considered Confidential Information under this Agreement. This provision can be enforced under the Federal Arbitration Act.

Section 4.12 NON-WAIVER. The failure by either party to insist upon the performance of any one or more terms, covenants or conditions of this Agreement shall not be construed as a waiver or relinquishment of any right granted hereunder or of any future performance of any such term, covenant or condition, and the obligation of either party with respect hereto shall continue in full force and effect, unless such waiver shall be in writing signed by the Company (other than Executive) and Executive.

 

  

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Section 4.13 ANNOUNCEMENT. The Company may make public announcements concerning the execution of this Agreement and the terms contained herein, at the Company's discretion.

Section 4.14 CONSTRUCTION. The headings and captions of this Agreement are provided for convenience only and are intended to have no effect in construing or interpreting this Agreement. The language in all parts of this Agreement shall be in all cases construed in accordance to its fair meaning and not strictly for or against the Company or Executive. The words "include," "includes," and "including" will be deemed to be followed by "without limitation."

Section 4.15 RIGHT TO INSURE. The Company shall have the right to secure, in its own name or otherwise, and at its own expense, life, health, accident or other insurance covering Executive, and Executive shall have no right, title or interest in and to such insurance. Executive shall assist the Company in procuring such insurance by submitting to examinations and by signing such applications and other instruments as may be required by the insurance carriers to which application is made for any such insurance.

Section 4.16 NO INCONSISTENT OBLIGATIONS. Executive represents and warrants that to his knowledge he has no obligations, legal, in contract or otherwise, inconsistent with the terms of this Agreement or with his undertaking employment with the Company to perform the duties described herein. Executive will not disclose to the Company, or use or induce the Company to use, any confidential, proprietary or trade secret information of others. Executive represents and warrants that to his knowledge he has returned all property and confidential information belonging to all prior employers, if he is obligated to do so.

Section 4.17 VOLUNTARY AGREEMENT. Each party to this Agreement has read and fully understands the terms and provisions hereof, has reviewed this Agreement with legal counsel, has executed this Agreement based upon such party's own judgment and advice of counsel, and knowingly, voluntarily, and without duress, agrees to all of the terms set forth in this Agreement. The parties have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties and no presumption or burden of proof will arise favoring or disfavoring any party because of authorship of any provision of this Agreement. Except as expressly set forth in this Agreement, neither the parties nor their affiliates, advisors and/or their attorneys have made any representation or warranty, express or implied, at law or in equity with respect of the subject matter contained herein. Without limiting the generality of the previous sentence, the Company, its affiliates, advisors and/or attorneys have made no representation or warranty to Executive concerning the state or federal tax consequences to Executive regarding the transactions contemplated by this Agreement.

 

  

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        Section 4.18 LEGAL FEES AND EXPENSES.  The Company agrees to pay as incurred, to the full extent permitted by law, all reasonable legal fees which Executive may reasonably incur as a result of any contest by the Company, the Executive or others of the validity or enforceability of, or liability or entitlement under, any provision of this Agreement or any guarantee of performance thereof (whether such contest is between the Company and Executive or between either of them and any third party, and including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code. The Company’s obligations under this SECTION 4.18 shall apply without regard to the outcome of any such contest; PROVIDED, HOWEVER, that if such contest relates to a payment, act or omission that occurred prior to a Change of Control, then the Company’s obligations under this SECTION 4.18 shall apply only if Executive obtains any money judgment or otherwise prevails with respect to any such contest.

[SIGNATURE PAGE FOLLOWS]

 

  

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Signature Page to Carl Isaac Employment Agreement

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first written above:

	  	
CRIMSON EXPLORATION INC.

	  	  
	  	
By:/s/ Allan Keel

	  	
Name: Allan Keel

	  	
Title: Chief Executive Officer and President

	  	  
	  	  
	  	  
	  	
/s/ Carl Isaac

	  	
Carl Isaac

	  	  

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