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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made by and between LARIAT
PETROLEUM, INC. ("Company") and RAYMOND A. FOUTCH ("Executive").
WITNESSETH:
WHEREAS, Company is desirous of employing Executive in an executive
capacity on the terms and conditions, and for the consideration, hereinafter set
forth and Executive is desirous of being employed by Company on such terms and
conditions and for such consideration;
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein, Company and Executive agree as
follows:
ARTICLE 1: EMPLOYMENT AND DUTIES
1.1 EMPLOYMENT; EFFECTIVE DATE. Company agrees to employ Executive and
Executive agrees to be employed by Company, beginning as of the Effective Date
(as hereinafter defined) and continuing for the period of time set forth in
Article 2 of this Agreement, subject to the terms and conditions of this
Agreement. For purposes of this Agreement, the "Effective Date" shall be April
1, 1997.
1.2 POSITION. From and after the Effective Date, Company shall employ
Executive in the position of President and Chairman of the Board of Company, or
in such other positions as the parties mutually may agree.
1.3 DUTIES AND SERVICES. Executive agrees to serve in the position
referred to in paragraph 1.2 and to perform diligently and to the best of his
abilities the duties and services appertaining to such office, as well as such
additional duties and services appropriate to such office which the parties
mutually may agree upon from time to time. Executive's employment shall also be
subject to the policies maintained and established by Company, as the same may
be amended from time to time.
1.4 OTHER INTERESTS. Executive agrees, during the period of his
employment by Company, to devote his primary business time, energy and best
efforts to the business and affairs of Company and its affiliates and not to
engage, directly or indirectly, in any other business or businesses, whether or
not similar to that of Company, except with the consent of the Board of
Directors of Company (the "Board of Directors"). The foregoing notwithstanding,
the parties recognize and agree that Executive may engage or participate in
charitable activities, industry associations and passive personal investments
(in which he does not have a management or operational role) that do not
conflict with the business and affairs of Company or interfere with Executive's
performance of his duties hereunder. The Company shall be the only entity
through which Executive or any of his affiliates participates in the North
American oil and gas exploration
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and production industry with the exception of passive investments in which
Executive does not have a management or operational role.
1.5 DUTY OF LOYALTY. Executive acknowledges and agrees that Executive
owes a fiduciary duty of loyalty, fidelity and allegiance to act at all times in
the best interests of Company and to do no act which would injure the business,
interests, or reputation of Company or any of its subsidiaries or affiliates. In
keeping with these duties, Executive shall make full disclosure to Company of
all business opportunities pertaining to Company's business and shall not
appropriate for Executive's own benefit business opportunities concerning the
subject matter of the fiduciary relationship.
ARTICLE 2: TERM AND TERMINATION OF EMPLOYMENT
2.1 TERM. Unless sooner terminated pursuant to other provisions hereof,
Company agrees to employ Executive for the period beginning on the Effective
Date and ending on the first anniversary of the Effective Date. Said term of
employment shall be extended automatically from day to day (commencing on the
second day of employment hereunder) until such time as either party shall give
written notice to the other that no such automatic extension shall occur, in
which event Executive's employment shall terminate on the first anniversary date
of the date such notice is given.
2.2 COMPANY'S RIGHT TO TERMINATE. Notwithstanding the provisions of
paragraph 2.1, Company shall have the right to terminate Executive's employment
under this Agreement at any time for any of the following reasons:
(i) upon Executive's death;
(ii) upon Executive's becoming incapacitated by accident,
sickness or other circumstance which renders him mentally or physically
incapable of performing the duties and services required of him
hereunder on a full-time basis for a period of at least 120 days during
any 12-month period;
(iii) for cause, which for purposes of this Agreement shall
mean Executive (A) has engaged in gross negligence or willful
misconduct in the performance of the duties required of him hereunder,
(B) has been convicted of a felony or a misdemeanor involving moral
turpitude, (C) has willfully refused, after five days' written notice
from the Board of Directors and without proper legal reason, to perform
the duties and responsibilities required of him hereunder, (D) has
willfully and materially breached any corporate policy or code of
conduct established by Company, or (E) has willfully engaged in conduct
that he knows or should know is materially injurious to Company or any
of its affiliates;
(iv) for Executive's material breach of any material provision
of this Agreement which, if correctable, remains uncorrected for 30
days following written notice to Executive by Company of such breach;
or
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(v) for any other reason whatsoever, in the sole discretion of
the Board of Directors.
2.3 EXECUTIVE'S RIGHT TO TERMINATE. Notwithstanding the provisions of
paragraph 2.1, Executive shall have the right to terminate his employment under
this Agreement at any time for any of the following reasons:
(i) (A) a material breach by Company of any material provision
of this Agreement which, if correctable, remains uncorrected for 30
days following written notice of such breach by Executive to Company;
(B) Executive's office is relocated outside Tulsa County, Oklahoma
without Executive's consent; (C) a Change in Control (as that term is
defined in the Stockholders Agreement dated as of April 1, 1997 among
the Company and the other parties thereto (the "Stockholders
Agreement")) has occurred within the prior 60 days; or (D) the WPV
Group Holders (as defined in the Stockholders Agreement) or the
Company's Board of Directors undertake a pattern of actions which are
unreasonable, arbitrary, deceitful, or oppressive with respect to the
Executive or the business or management of the Company including
unreasonably or arbitrarily withholding approval of exploration or
exploitation projects or acquisitions of oil and natural gas interest
proposed by Executive within the Anadarko Basin region which the
Company has the financial resources to fund, provided such project
recommendations represent Executive's good faith assumptions based upon
reasonable and supportable criteria including, but not limited to,
natural gas geological findings or reasonable projections and
assumptions drawn therefrom; and provided further, that Executive has
previously notified the Board of Directors in writing of Executive's
concerns and the Board and Executive fail to resolve their differences
after discussions held in good faith over at least 60 days.
(ii) for any other reason whatsoever, in the sole discretion
of Executive.
2.4 NOTICE OF TERMINATION. If Company or Executive desires to terminate
Executive's employment hereunder at any time prior to expiration of the term of
employment as provided in paragraph 2.1, it or he shall do so by giving written
notice to the other party that it or he has elected to terminate Executive's
employment hereunder and stating the effective date and reason for such
termination, provided that no such action shall alter or amend any other
provisions hereof or rights arising hereunder, including, without limitation,
the provisions of Articles 4 and 5 hereof.
ARTICLE 3: COMPENSATION AND BENEFITS
3.1 BASE SALARY. During the period of this Agreement, Executive shall
receive a minimum annual base salary equal to the greater of (i) $175,000 or
(ii) such greater amount as the parties mutually may agree upon from time to
time. Executive's annual base salary shall be paid in equal installments in
accordance with the Company's standard policy regarding payment of compensation
to executives but no less frequently than monthly.
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3.2 BONUSES. Executive shall receive such bonuses, if any, as Company
shall determine in its sole discretion.
3.3 OTHER PERQUISITES. During his employment hereunder, Executive shall
be afforded the following benefits as incidences of his employment:
(i) INSURANCE - During Executive's employment, Company will
pay the premiums on the life insurance and disability policy described
on Schedule A hereto (which includes a description of the premiums
required to be paid during next five years). During Executive's
employment, Company also agrees to use reasonable efforts to obtain and
pay for a $1,000,000 term life insurance policy and a $1,000,000
permanent disability insurance policy on Executive, the proceeds of
which would be used in accordance with Section 5.5 of the Stockholders
Agreement. Executive agrees to cooperate and take such reasonable steps
as are necessary for Warburg, Pincus Ventures, L.P. to acquire term
life and permanent disability insurance policies on Executive in the
amount of $2,000,000.
(ii) OTHER COMPANY BENEFITS - Executive and, to the extent
applicable, Executive's spouse, dependents and beneficiaries, shall be
allowed to participate on at least the same basis in all benefits,
plans and programs, including improvements or modifications of the
same, which are now, or may hereafter be, available to other executive
employees of Company, and have been approved of by the Board of
Directors of the Company. Executive will be entitled to vacation
consistent with that provided to other employees of the Company.
Executive shall be entitled to be reimbursed by the Company for all
reasonable out-of-pocket expenses which Executive may incur in
connection with his duties hereunder. Executive will be entitled to
indemnification from the Company as currently provided by Article VI of
the Company's Bylaws. Executive is expected to continue to have the use
of a company car consistent with the Company's current policy. Company
shall not, however, by reason of this paragraph be obligated to
institute, maintain, or refrain from changing, amending, or
discontinuing, any such benefit plan or program, so long as such
changes are similarly applicable to similarly situated executive
employees generally.
ARTICLE 4: PROTECTION OF INFORMATION
4.1 DISCLOSURE TO EXECUTIVE. Company expects that it is likely that it
will disclose to Executive, or place Executive in a position to have access to
or develop, trade secrets or confidential information of Company or its
affiliates; and/or shall entrust Executive with business opportunities of
Company or its affiliates; and/or shall place Executive in a position to develop
business good will on behalf of Company or its affiliates.
4.2 DISCLOSURE TO AND PROPERTY OF COMPANY. All information, ideas,
concepts, improvements, discoveries, and inventions, whether patentable or not,
which are conceived, made, developed, or acquired by Executive, individually or
in conjunction with others, during Executive's employment by Company (whether
during business hours or otherwise and whether on Company's premises or
otherwise) which relate to Company's business, products, or services (including,
without
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limitation, all such information relating to corporate opportunities, research,
prospective names, and marks) shall be disclosed to Company and are and shall be
the sole and exclusive property of Company. Moreover, all documents, drawings,
memoranda, notes, records, files, correspondence, manuals, models,
specifications, computer programs, E-mail, voice mail, electronic databases,
maps, and all other writings or materials of any type embodying any of such
information, ideas, concepts, improvements, discoveries, and inventions are and
shall be the sole and exclusive property of Company. Upon termination of
Executive's employment by Company, for any reason, Executive promptly shall
deliver the same, and all copies thereof, to Company.
4.3 NO UNAUTHORIZED USE OR DISCLOSURE. Executive will not, at any time
during or after Executive's employment by Company, make any unauthorized
disclosure of any confidential business information or trade secrets of Company
or its affiliates, or make any use thereof, except in the carrying out of
Executive's employment responsibilities hereunder. Affiliates of the Company
shall be third party beneficiaries of Executive's obligations under this
paragraph. As a result of Executive's employment by Company, Executive may also
from time to time have access to, or knowledge of, confidential business
information or trade secrets of third parties, such as customers, suppliers,
partners, joint venturers, and the like, of Company and its affiliates.
Executive also agrees to preserve and protect the confidentiality of such third
party confidential information and trade secrets to the same extent, and on the
same basis, as Company's confidential business information and trade secrets.
4.4 OWNERSHIP BY COMPANY. If, during Executive's employment by Company,
Executive creates any work of authorship fixed in any tangible medium of
expression which is the subject matter of copyright relating to Company's
business, products, or services, whether such work is created solely by
Executive or jointly with others, Company shall be deemed the author of such
work if the work is prepared by Executive in the scope of Executive's
employment; or, if the work is not prepared by Executive within the scope of
Executive's employment but is specially ordered by Company as a contribution to
a collective work, as a translation, as a supplementary work, as a compilation,
or as an instructional text, then the work shall be considered to be work made
for hire and Company shall be the author of the work.
4.5 ASSISTANCE BY EXECUTIVE. Both during the period of Executive's
employment by Company and thereafter, Executive shall assist Company and its
nominee, at any time, in the protection of Company's worldwide right, title, and
interest in and to information, ideas, concepts, improvements, discoveries, and
inventions, and its copyrighted works, including without limitation, the
execution of all formal assignment documents requested by Company or its nominee
and the execution of all lawful oaths and applications for patents and
registration of copyright in the United States and foreign countries.
4.6 REMEDIES. Executive acknowledges that money damages would not be
sufficient remedy for any breach of this Article by Executive, and Company shall
be entitled to enforce the provisions of this Article by terminating payments
then owing to Executive under this Agreement and/or to specific performance and
injunctive relief as remedies for such breach or any threatened breach. Such
remedies shall not be deemed the exclusive remedies for a breach of this
Article, but
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shall be in addition to all remedies available at law or in equity to Company,
including the recovery of damages from Executive and his agents involved in such
breach and remedies available to Company pursuant to other agreements with
Executive.
ARTICLE 5: NONCOMPETITION OBLIGATIONS
5.1 IN GENERAL. As part of the consideration for the compensation and
benefits to be paid to Executive hereunder; to protect the trade secrets and
confidential information of Company and its affiliates that have been and will
in the future be disclosed or entrusted to Executive, the business good will of
Company and its affiliates that has been and will in the future be developed in
Executive, or the business opportunities that have been and will in the future
be disclosed or entrusted to Executive by Company and its affiliates; and as an
additional incentive for Company to enter into this Agreement, Company and
Executive agree to the noncompetition obligations hereunder. Executive shall
not, directly or indirectly for Executive or for others:
(i) engage in the Anadarko Basin region in any business
competitive with the business conducted by Company;
(ii) render advice or services to, or otherwise assist, any
other person, association, or entity who is engaged, directly or
indirectly, in the Anadarko Basin region in any business competitive
with the business conducted by Company with respect to such competitive
business other than rendering advice to professional associations; or
(iii) induce any employee of Company or any of its affiliates
to terminate his or her employment with Company or such affiliates, or
hire or assist in the hiring of any such employee by any person,
association, or entity not affiliated with Company.
These noncompetition obligations shall apply during the period that Executive is
employed by Company and, (i) if Executive is entitled to receive payments from
Company pursuant to Article 7, then such obligations shall continue for such
period as Executive is entitled to receive payments thereunder, but in no event
more than one year after termination of the employment relationship and (ii) if
Executive's employment is terminated pursuant to Sections 2.2(iii), 2.2(iv) or
2.3(ii), then such obligations shall continue until the first anniversary of the
termination of Executive's employment; provided, however, that such
noncompetition obligations shall not apply at any time after termination of the
employment relationship if WPV (as defined in the Stockholders Agreement) has
acquired (whether before or after such termination of employment) or acquires
voting equity securities in a Competitive E&P Company (as defined in the
Stockholders Agreement) without the written approval of RAF.
5.2 ENFORCEMENT AND REMEDIES. Executive understands that the
restrictions set forth in paragraph 5.1 may limit Executive's ability to engage
in certain businesses anywhere in the Anadarko Basin region during the period
provided for above, but acknowledges that Executive will receive sufficiently
high remuneration and other benefits under this Agreement to justify such
restriction. Executive acknowledges that money damages would not be sufficient
remedy for any breach of this Article by Executive, and Company shall be
entitled to enforce the provisions of this
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Article by terminating any payments then owing to Executive under this Agreement
and/or to specific performance and injunctive relief as remedies for such breach
or any threatened breach. Such remedies shall not be deemed the exclusive
remedies for a breach of this Article, but shall be in addition to all remedies
available at law or in equity to Company, including without limitation, the
recovery of damages from Executive and Executive's agents involved in such
breach and remedies available to Company pursuant to other agreements with
Executive.
5.3 REFORMATION. It is expressly understood and agreed that Company and
Executive consider the restrictions contained in this Article to be reasonable
and necessary to protect the proprietary information of Company. Nevertheless,
if any of the aforesaid restrictions are found by a court having jurisdiction to
be unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by such court so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced.
ARTICLE 6: STATEMENTS CONCERNING COMPANY
6.1 IN GENERAL. Executive shall refrain, both during the employment
relationship and after the employment relationship terminates, from publishing
any oral or written statements about Company, any of its affiliates,
shareholders or any of such entities' officers, employees, agents or
representatives that are slanderous, libelous, or defamatory; or that disclose
private or confidential information about Company, any of its affiliates, or any
of such entities' business affairs, officers, employees, agents, or
representatives; or that constitute an intrusion into the seclusion or private
lives of Company, any of its affiliates, or any of such entities' officers,
employees, agents, or representatives; or that give rise to unreasonable
publicity about the private lives of Company, any of its affiliates, or any of
such entities' officers, employees, agents, or representatives; or that place
Company, any of its affiliates, or any of such entities' officers, employees,
agents, or representatives in a false light before the public; or that
constitute a misappropriation of the name or likeness of Company, any of its
affiliates, or any of such entities' officers, employees, agents, or
representatives. A violation or threatened violation of this prohibition may be
enjoined by the courts. The rights afforded Company and its affiliates under
this provision are in addition to any and all rights and remedies otherwise
afforded by law.
ARTICLE 7: EFFECT OF TERMINATION ON COMPENSATION
7.1 BY EXPIRATION. If Executive's employment hereunder shall terminate
upon expiration of the term provided in paragraph 2.1 hereof, then all
compensation and all benefits to Executive hereunder shall terminate
contemporaneously with termination of his employment; provided, however, that if
such employment terminates as a result of the Company giving notice pursuant to
paragraph 2.1 that the term of employment shall not be extended automatically,
then Company shall continue to pay to Executive his then current base salary
pursuant to paragraph 3.1 until the first anniversary of the date of such
termination.
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7.2 BY COMPANY. If Executive's employment hereunder shall be terminated
by Company prior to expiration of the term provided in paragraph 2.1, then, upon
such termination, regardless of the reason therefor, all compensation and
benefits to Executive hereunder shall terminate contemporaneously with the
termination of such employment; provided, however, that if such termination
shall be for any reason other than those encompassed by paragraphs 2.2(i), (ii),
(iii), or (iv), then Company shall continue to pay to Executive his then current
base salary pursuant to paragraph 3.1 until the first anniversary of the date of
such termination; provided further, however, that if such termination shall be
for the reason encompassed by paragraph 2.2(i), then Company shall pay
Executive's surviving spouse Executive's base salary as of such termination date
until the 90th day following such termination.
7.3 BY EXECUTIVE. If Executive's employment hereunder shall be
terminated by Executive prior to expiration of the term provided in paragraph
2.1, then, upon such termination, regardless of the reason therefor, all
compensation and benefits to Executive hereunder shall terminate
contemporaneously with the termination of such employment; provided, however,
that if such termination shall be pursuant to paragraph 2.3(i), then Company
shall continue to pay to Executive his then current base salary pursuant to
paragraph 3.1 until the first anniversary of the date of such termination.
7.4 NO DUTY TO MITIGATE LOSSES. Executive shall have no duty to find
new employment following the termination of his employment under circumstances
which require Company to pay any amount to Executive pursuant to this Article 7.
Any salary or remuneration received by Executive from a third party for the
providing of personal services (whether by employment or by functioning as an
independent contractor) following the termination of his employment under
circumstances pursuant to which this Article 7 apply shall not reduce Company's
obligation to make a payment to Executive (or the amount of such payment)
pursuant to the terms of this Article 7.
7.5 LIQUIDATED DAMAGES. In light of the difficulties in estimating the
damages for an early termination of this Agreement, Company and Executive hereby
agree that the payments, if any, to be received by Executive pursuant to this
Article 7 shall be received by Executive as liquidated damages.
7.6 INCENTIVE AND DEFERRED COMPENSATION. This Agreement governs the
rights and obligations of Executive and Company with respect to Executive's base
salary and certain perquisites of employment. Executive's rights and obligations
both during the term of his employment and thereafter with respect to stock
options, and other benefits under the plans and programs maintained by Company
shall be governed by the separate agreements, plans and other documents and
instruments governing such matters.
ARTICLE 8: MISCELLANEOUS
8.1 NOTICES. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally
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delivered or when mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
IF TO COMPANY TO: Lariat Petroleum, Inc.
15 West 6th Street, Suite 1302
Tulsa, Oklahoma 74119
Attention: Chairman of the Board
IF TO EXECUTIVE TO: Raymond A. Foutch
10901 S. 33rd W. Avenue
Sapulpa, Oklahoma 74066
or to such other address as either party may furnish to the other in writing in
accordance herewith, except that notices or changes of address shall be
effective only upon receipt.
8.2 APPLICABLE LAW. This Agreement is entered into under, and shall be
governed for all purposes by, the laws of the State of Oklahoma.
8.3 NO WAIVER. No failure by either party hereto at any time to give
notice of any breach by the other party of, or to require compliance with, any
condition or provision of this Agreement shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
8.4 SEVERABILITY. If a court of competent jurisdiction determines that
any provision of this Agreement is invalid or unenforceable, then the invalidity
or unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement, and all other
provisions shall remain in full force and effect.
8.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
8.6 WITHHOLDING OF TAXES AND OTHER EMPLOYEE DEDUCTIONS. Company may
withhold from any benefits and payments made pursuant to this Agreement all
federal, state, city and other taxes as may be required pursuant to any law or
governmental regulation or ruling and all other normal employee deductions made
with respect to Company's employees generally.
8.7 HEADINGS. The paragraph headings have been inserted for purposes of
convenience and shall not be used for interpretive purposes.
8.8 GENDER AND PLURALS. Wherever the context so requires, the masculine
gender includes the feminine or neuter, and the singular number includes the
plural and conversely.
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8.9 AFFILIATE. As used in this Agreement, the term "affiliate" shall
mean any entity which owns or controls, is owned or controlled by, or is under
common ownership or control with, Company.
8.10 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of Company and any successor of Company, by merger or otherwise. Except
as provided in the preceding sentence, this Agreement, and the rights and
obligations of the parties hereunder, are personal and neither this Agreement,
nor any right, benefit, or obligation of either party hereto, shall be subject
to voluntary or involuntary assignment, alienation or transfer, whether by
operation of law or otherwise, without the prior written consent of the other
party.
8.11 TERM. This Agreement has a term co-extensive with the term of
employment provided in paragraph 2.1. Termination shall not affect any right or
obligation of any party which is accrued or vested prior to such termination.
Without limiting the scope of the preceding sentence, the provisions of Articles
4, 5, and 6 shall survive any termination of the employment relationship and/or
of this Agreement.
8.12 ENTIRE AGREEMENT. Except as provided in the written benefit plans
and programs referenced in paragraph 3.3 and any signed written agreement
contemporaneously or hereafter executed by Company and Executive, this Agreement
constitutes the entire agreement of the parties with regard to the subject
matter hereof, and contains all the covenants, promises, representations,
warranties and agreements between the parties with respect to employment of
Executive by Company. Without limiting the scope of the preceding sentence, all
prior understandings and agreements among the parties hereto relating to the
subject matter hereof are hereby null and void and of no further force and
effect. Any modification of this Agreement will be effective only if it is in
writing and signed by the party to be charged.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the 1st day of April, 1997, to be effective as of the Effective Date.
LARIAT PETROLEUM, INC.
BY: /s/ Raymond A. Foutch
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NAME: Raymond A. Foutch
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TITLE: President
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"COMPANY"
/s/ Raymond A. Foutch
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Raymond A. Foutch
"EXECUTIVE"
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