-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MnnTasxBN9ssz3MZ49LG9CtRP03AzDIZqExSEFrunP8dJHP96U9XavIAo7LiuiNA gRLkwfD6RDK1vZy5ZbSrEg== 0000950129-00-000095.txt : 20000110 0000950129-00-000095.hdr.sgml : 20000110 ACCESSION NUMBER: 0000950129-00-000095 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19991215 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000107 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OCEAN ENERGY INC /TX/ CENTRAL INDEX KEY: 0000320321 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 741764876 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-08094 FILM NUMBER: 502974 BUSINESS ADDRESS: STREET 1: 1001 FANNIN STE 1600 CITY: HOUSTON STATE: TX ZIP: 77002-6714 BUSINESS PHONE: 7132656000 MAIL ADDRESS: STREET 1: 1001 FANNIN, SUITE 1600 CITY: HOUSTON STATE: TX ZIP: 77002-6714 FORMER COMPANY: FORMER CONFORMED NAME: SEAGULL ENERGY CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: SEAGULL PIPELINE CORP DATE OF NAME CHANGE: 19830815 8-K 1 OCEAN ENERGY, INC. - DATED 12/15/99 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): DECEMBER 15, 1999 -------------------- OCEAN ENERGY, INC. (Exact name of registrant as specified in its charter) TEXAS 1-8094 74-1764876 (State or other jurisdiction (Commission File (I.R.S. Employer of incorporation or organization) Number) Identification No.) 1001 FANNIN, SUITE 1600 HOUSTON, TEXAS 77002-6714 (Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (713) 265-6000 ================================================================================ 2 Item 5. Other Events. Ocean Energy, Inc., a Texas corporation (the "Company"), issued a press release on December 15, 1999, announcing that (i) James T. Hackett ("Hackett"), the Company's President and Chief Executive Officer, would assume the additional responsibility of serving as Chairman of the Board of Directors of the Company effective January 1, 2000 and (ii) James C. Flores ("Flores"), the Company's Chairman of the Board, would resign his position as Chairman of the Board of Directors of the Company effective December 31, 1999 but would continue to serve as a Vice Chairman of the Company and a member of its Board of Directors. In connection with these changes, the Company and Hackett have executed an amendment to his Severance Agreement and a second amendment to his Employment Agreement. These amendments are attached hereto as Exhibits 99.1 and 99.2, respectively, and are incorporated herein by reference. In addition, pursuant to a letter agreement dated December 22, 1999, the Company has agreed to provide Flores certain severance benefits in lieu of the benefits that would have been provided to him pursuant to his existing Employment Agreement with the Company. These in lieu severance benefits include (i) a lump sum payment and (ii) vesting of outstanding unvested stock options. In addition, Flores has executed an Employment Agreement relating to his position as Vice Chairman of the Company. The cost associated with the benefits to Flores provided for in the letter agreement will be approximately $5.8 million ($3.7 million after tax) and will be recorded as a reduction in earnings for the quarter ended December 31, 1999. The letter agreement and the Employment Agreement are attached hereto as Exhibit 99.3 and Exhibit 99.4, respectively, and are incorporated herein by reference. The foregoing summary is qualified in its entirety by reference to these exhibits. Item 7. Financial Statements and Exhibits. (c) Exhibits. 99.1 Amendment to Severance Agreement, effective as of December 15, 1999, between the Company and Hackett, amending the Severance Agreement between the Company and Hackett effective as of August 25, 1998. 99.2 Second Amendment to Employment Agreement, effective as of December 15, 1999, between the Company and Hackett, further amending the Employment Agreement between the Company and Hackett effective as of September 16, 1998, as amended on November 24, 1998. 99.3 Letter Agreement between the Company and Flores, dated December 22, 1999. 99.4 Employment Agreement between the Company and Flores, effective as of January 1, 2000. [the remainder of this page is intentionally left blank] 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. OCEAN ENERGY, INC. By: /s/ Robert K. Reeves ------------------------------- Robert K. Reeves Executive Vice President, General Counsel and Secretary Dated: January 7, 2000 4 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION - ----------- ----------- 99.1 Amendment to Severance Agreement, effective as of December 15, 1999, between the Company and Hackett, amending the Severance Agreement between the Company and Hackett effective as of August 25, 1998. 99.2 Second Amendment to Employment Agreement, effective as of December 15, 1999, between the Company and Hackett, further amending the Employment Agreement between the Company and Hackett effective as of September 16, 1998, as amended on November 24, 1998. 99.3 Letter Agreement between the Company and Flores, dated December 22, 1999. 99.4 Employment Agreement between the Company and Flores, effective as of January 1, 2000.
EX-99.1 2 AMENDMENT TO SEVERANCE AGREEMENT 1 EXHIBIT 99.1 AMENDMENT TO SEVERANCE AGREEMENT WHEREAS, OCEAN ENERGY, INC., a Texas corporation, formerly known as Seagull Energy Corporation (the "Company") and JAMES T. HACKETT ("Executive") have heretofore entered into a Severance Agreement (the "Agreement"), which was effective as of August 25, 1998; and WHEREAS, the Company and Executive previously amended the Agreement in certain respects, contingent on, and effective upon, the merger of Ocean Energy, Inc., a Delaware corporation, with and into Company, which was consummated on March 30, 1999 (the "Merger"); and WHEREAS, in connection with the Merger, Company amended its Articles of Incorporation to change its name to "Ocean Energy, Inc.;" and WHEREAS, the Company and Executive desire to further amend the Agreement; NOW, THEREFORE, the Company and Executive agree that the Agreement shall be amended as follows, effective as of December 15, 1999: 1. References in the Agreement to "Seagull Energy Corporation" shall be deemed to be references to "Ocean Energy, Inc." 2. Paragraph 1(a)(v) of the Agreement shall be deleted and the following shall be substituted therefor: "(v) A termination encompassed by Paragraph 2.3(i) of the Employment Agreement between the Company and Executive dated September 16, 1998, as amended (the 'Employment Agreement')." 3. Paragraph 1(d) of the Agreement shall be deleted and the following shall be substituted therefor: "(d) 'COMPENSATION' shall mean the greater of: (i) Executive's annual salary plus his Targeted Incentive Award immediately prior to the date on which a Change of Control occurs, or (ii) Executive's annual salary plus his Targeted Incentive Award at the time of his Involuntary Termination." 4. Paragraph 1(e) of the Agreement shall be deleted. 2 5. Paragraph 1(h) of the Agreement shall be deleted and the following shall be substituted therefor: "(h) 'SEVERANCE AMOUNT' shall mean an amount equal to 2.99 times Executive's Compensation, reduced by the present value of any salary continuation or bonus amounts payable to Executive under the Employment Agreement or any successor thereto. Such present value shall be determined using the rate of interest referred to in Paragraph 4 hereof as of the last day of Executive's employment with the Company." 6. Paragraph 1(i) of the Agreement shall be deleted and the following shall be substituted therefor: "(i) 'TARGETED INCENTIVE AWARD' shall mean Executive's Incentive Target as set forth in the Employment Agreement, expressed as a dollar amount based on such Executive's annual salary for such year." 7. Paragraph 3(b) of the Agreement shall be deleted and the following shall be substituted therefor: "(b) Further, if Executive's Involuntary Termination occurs on or after the date Executive's annual bonus has been determined in accordance with the Employment Agreement, but prior to the date such annual bonus is paid, Executive shall receive an additional lump sum cash payment in an amount equal to his Targeted Incentive Award." 8. As amended hereby, the Agreement is specifically ratified and reaffirmed. EXECUTED effective as of December 15, 1999. "EXECUTIVE" /s/ JAMES T. HACKETT ----------------------------- JAMES T. HACKETT "COMPANY" OCEAN ENERGY, INC. BY: /s/ WILLIAM L. TRANSIER ----------------------------------------- NAME: William L. Transier TITLE: Executive Vice President and Chief Financial Officer EX-99.2 3 SECOND AMENDMENT TO EMPLOYMENT AGREEMENT - HACKETT 1 EXHIBIT 99.2 SECOND AMENDMENT TO EMPLOYMENT AGREEMENT WHEREAS, OCEAN ENERGY, INC., a Texas corporation, formerly known as Seagull Energy Corporation ("Company") and JAMES T. HACKETT ("Executive") have heretofore entered into an Employment Agreement (the "Agreement"), which was effective as of September 16, 1998; and WHEREAS, Company and Executive previously amended the Agreement in certain respects by a document entitled, "Amendment to Employment Agreement" (the "Amendment"), which was executed on November 24, 1998, but contingent on, and effective upon, the merger of Ocean Energy, Inc., a Delaware corporation, with and into Company, which was consummated on March 30, 1999 (the "Merger"); and WHEREAS, in connection with the Merger, Company amended its Articles of Incorporation to change its name to "Ocean Energy, Inc.;" and WHEREAS, Company and Executive desire to further amend the Agreement; NOW, THEREFORE, Company and Executive agree that the Agreement shall be amended as follows, effective as of December 15, 1999, except as otherwise provided herein: 1. References in the Agreement to "Seagull Energy Corporation" or "Seagull" shall be deemed to be references to "Ocean Energy, Inc." Further, references to Company's "Compensation Committee" shall be deemed to be references to Company's "Organization & Compensation Committee." 2. Company and Executive acknowledge that Executive has heretofore been appointed President and Chief Executive Officer of Company and elected a member of the Board of Directors of Company (the "Board of Directors") and that, effective as of January 1, 2000, Executive has also been elected as Chairman of the Board of Directors. Therefore, effective as of January 1, 2000, Paragraph 1 of the Amendment, which amended the second sentence of Paragraph 1.2 of the Agreement, shall be deleted and the second sentence of Paragraph 1.2 of the Agreement shall be restored to read as follows: "Effective as of January 1, 2000, Company shall cause Executive to be elected as Chairman of the Board of Directors." 3. Paragraph 3.3 of the Agreement shall be deleted and the following shall be substituted therefor: 2 "3.3 ANNUAL BONUSES. For the 1999 calendar year and subsequent calendar years ending during the period of this Agreement, Executive shall be eligible to receive an annual cash bonus in an amount determined by the Compensation Committee, based on Executive's individual performance and the performance of Company, with a target (an 'Incentive Target') of 100% of Executive's annual base salary (including any annual base salary that Executive would have received if he had not received an Option in lieu of such annual salary pursuant to paragraph 3.1 and any annual base salary deemed deferred under the SBP), but subject to a maximum of 200% of Executive's annual base salary (including any annual base salary that Executive would have received if he had not received an Option in lieu of such annual salary pursuant to paragraph 3.1 and any annual base salary deemed deferred under the SBP)." 4. Effective as of January 1, 2000, Paragraph 3 of the Amendment, which amended Paragraph 5.2 of the Agreement, shall be deleted and Paragraph 5.2 of the Agreement shall be restored to read as originally written. 5. As amended hereby, the Agreement is specifically ratified and reaffirmed. EXECUTED effective as of December 15, 1999. OCEAN ENERGY, INC. BY: /s/ William L. Transier -------------------------------- NAME: William L. Transier TITLE: Executive Vice President and Chief Financial Officer "COMPANY" /s/ James T. Hackett ------------------------------------- JAMES T. HACKETT "EXECUTIVE" -2- EX-99.3 4 LETTER AGREEMENT - COMPANY & FLORES 1 EXHIBIT 99.3 PRIVILEGED AND CONFIDENTIAL December 22, 1999 Mr. James C. Flores Chairman of the Board Ocean Energy, Inc. 1001 Fannin, Suite 1600 Houston, Texas 77002 Dear Jim: In recognition of your past service to the Company, and in anticipation of certain future actions, the Board of Directors of Ocean Energy, Inc., a Texas corporation ("OEI"), hereby extends to you an opportunity to receive certain in-lieu severance benefits upon your resignation as Chairman of the Board and acceptance of the position of Vice Chairman. Under the terms of this opportunity, you have been granted by OEI an unfunded and unsecured promise to provide certain in-lieu severance benefits which would have otherwise been provided in the event of your "Termination" as Chairman of OEI, as set forth in that certain Employment Agreement entered into effective as of March 27, 1998, by and between OEI and James C. Flores, as amended. Specifically, the in-lieu severance benefits will include (1) a lump sum cash payment of $5.4 million, and (2) vesting of all outstanding and unvested stock options. Your right to the cash payment and option vesting will be completely contingent upon you completing the following actions: 1. Resign as Chairman of the Board of Directors of OEI effective as of December 31, 1999 and accept the position of Vice Chairman of the Board of Directors beginning January 1, 2000. 2. Accomplish an orderly transition of your current duties as Chairman of the Board of Directors of OEI. 3. Execute an Employment Agreement as required by OEI to govern your duties and compensation as Vice Chairman. OEI believes that such actions can be accomplished by January 1, 2000, and the in-lieu severance benefits will therefore vest to you on January 1, 2000, assuming you complete the actions required above. 2 Mr. James C. Flores December 22, 1999 Page 2 If you vest in the in-lieu severance benefits, payment of the cash amount will occur within 15 business days thereafter. In addition, OEI shall on such date cause the options to purchase stock that were granted to you during 1999 and that are outstanding as of such date to be amended to provide that each be fully exercisable on such date and shall continue to be exercisable thereafter, subject to the termination provisions contained therein. Any such amendment will require your acknowledgement and agreement that the acceleration of the exercisability of such outstanding stock options may cause any such options intended to be incentive stock options ("ISO's") within the meaning of Section 422(b) of the Internal Revenue Code of 1986 as amended, to be treated as options that do not constitute ISO's. Any rights that you possess in this in-lieu severance opportunity shall not be subject to any restrictions other than those indicated in this letter. It is our intention that this in-lieu severance opportunity will facilitate the smooth transition of your role at the Company and assure your continued participation as Vice Chairman and a member of the Board of Directors. Please execute the acknowledgement below to indicate your acceptance of this proposal. Sincerely, /s/ James T. Hackett James T. Hackett President and Chief Executive Officer (on Behalf of the Board of Directors of Ocean Energy, Inc., a Texas corporation) ACKNOWLEDGED AND ACCEPTED this 28th day of December, 1999. By: /s/ James C. Flores --------------------- James C. Flores EX-99.4 5 EMPLOYMENT AGREEMENT - FLORES 1 EXHIBIT 99.4 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT ("Agreement"), effective as of January 1, 2000 (the "Effective Date"), is made by and between OCEAN ENERGY, INC., a Texas corporation ("Company"), and JAMES C. FLORES, an individual who resides in Houston, Texas ("Executive"). W I T N E S S E T H: WHEREAS, Executive is currently employed by Company and serves as Chairman of the Board of Directors of Company (the "Board of Directors"); and WHEREAS, Company and Executive entered into an Employment Agreement dated March 27, 1998, which has been previously amended in certain respects and is currently in effect (the "Employment Agreement"); and WHEREAS, Company and Executive desire to enter into an agreement that replaces the Employment Agreement and that reflects their desire for Executive to serve as Vice Chairman of the Board of Directors while employed by the Company on and after the Effective Date; NOW THEREFORE, the parties, in consideration of the mutual promises, covenants and obligations contained herein, do hereby agree as follows: 1. EFFECT OF AGREEMENT. Effective as of the Effective Date, this Agreement supersedes and replaces the Employment Agreement in its entirety and the Employment Agreement shall be null and void and of no further force and effect. 2. RESIGNATIONS. Executive has resigned (a) as Chairman of the Board of Directors effective as of December 31, 1999, (b) as a member of the Executive Management Committee and its Chairman, effective as of December 31, 1999, (c) as a member of any other committee of Company on which Executive serves, effective as of December 31, 1999, and (d) from any other office, trusteeship or position that Executive holds with Company (other than as a director or employee of Company) or any subsidiary or division of Company or any employee benefit plan (other than as a participant or beneficiary of any employee benefit plan) relating to Company, in each case effective as of December 31, 1999. 3. VICE CHAIRMAN. Effective as of the Effective Date, the Board of Directors has elected Executive to serve as Vice Chairman of the Board of Directors. As Vice Chairman, Executive shall have such powers and duties as designated in Company's bylaws and as from time to time may be assigned to him by the Chief Executive Officer of Company (the "CEO"), including, but not limited to, advising the CEO on strategy development, equity/debt structuring, strategic combinations, as well as acquisitions and divestitures. The designation of Vice Chairman shall continue through the remainder of the Term of this Agreement pursuant to Paragraph 6. -1- 2 4. DIRECTORSHIP. Executive shall serve the remainder of his current term as a director of Company. Any renomination of Executive for a subsequent term as a director of Company shall be considered in the same manner as other directors of Company. 5. COMPENSATION AND BENEFITS. During the Term of this Agreement, Company shall provide to Executive the following compensation and benefits: (A) BASE SALARY. Company shall pay to Executive a base salary of $8,333.33 per month ($100,000 annual rate) in accordance with Company's standard policy regarding payment of compensation to executives, but no less frequently than monthly. (B) ANNUAL BONUS. For each year during the Term of this Agreement, Executive shall be eligible to receive an annual bonus in such amount, if any, as may be determined in the sole discretion of the Board of Directors. (C) STOCK OPTION GRANTS. Executive shall be eligible to receive such grants of options to purchase common stock of the Company ("Stock") as may be determined in the sole discretion of the Board of Directors. (D) COMPANY BENEFIT PLANS. Executive and, to the extent applicable, Executive's spouse, dependents and beneficiaries, shall be allowed to participate 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. Such benefits, plans and programs shall include, without limitation, any thrift plan, employee stock ownership plan, health insurance or health care plan, life insurance, disability insurance, vacation and sick leave plan, and the like that may be maintained by Company. 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 executive employees generally. (E) OTHER BENEFITS. Company shall continue to provide Executive with such other benefits as are appropriate for his position,including, without limitation, automobile expenses, an office, secretarial assistance, convenient parking, and existing social/business club membership fees, dues and assessments. (F) BUSINESS AND ENTERTAINMENT EXPENSES. Company will reimburse Executive for, or pay on behalf of Executive, reasonable and appropriate expenses incurred and properly accounted for by Executive for Company business related purposes, including dues and fees to industry and professional organizations, costs of entertainment and business development. -2- 3 Executive acknowledges and hereby agrees that the compensation payable pursuant to this Paragraph is for his employment under this Agreement and that he shall receive no separate fees or other compensation or benefits with respect to his services as a director or any other offices of Company. 6. TERM AND TERMINATION OF AGREEMENT. Company agrees to employ Executive and Executive agrees to be employed by Company pursuant to this Agreement for a term of beginning on the Effective Date and ending on the second anniversary of the Effective Date (the "Term"), subject to earlier termination as provided below. Notwithstanding the foregoing, the parties hereto may terminate Executive's employment prior to the end of such Term pursuant to Paragraphs (a) or (b) below. Further, with the consent of Company, Executive may continue to be employed by Company following the Term of this Agreement; provided, however, that any such employment shall be as an "at-will" employee of Company, unless another employment agreement is mutually agreed upon. (a) 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 with reasonable accommodation for a period of at least 120 consecutive days or for a period of 180 business days during any twelve-month period; (iii) For cause, which for purposes of this Agreement shall mean a finding by the Board of Directors of Executive's gross negligence or wilful misconduct in the rendering of services required of him pursuant to this Agreement or Executive's final conviction of a felony or of a misdemeanor involving moral turpitude, excluding misdemeanor convictions relating to the operation of a motor vehicle; (iv) For Executive's material breach of any material provision of this Agreement, which, if correctable, remains uncorrected for 30 days following written notice of such breach to Executive by Company; or (v) For any other reason whatsoever in the sole discretion of the Board of Directors. -3- 4 (b) Executive shall have the right to terminate his employment under this Agreement at any time for any of the following reasons: (i) For Company's material breach of any material provision of this Agreement, which, if correctable, remains uncorrected for 30 days following written notice of such breach to Company by Executive; or (ii) For any other reason whatsoever in the sole discretion of Executive. (c) If Company or Executive desires to terminate Executive's employment hereunder at any time prior to the expiration of the Term of this Agreement, 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. (d) In the event that Executive's employment is terminated by Companyas provided in (a) above prior to the expiration of the Term of this Agreement, then, upon such termination, the compensation and benefits payable pursuant to Paragraph 5 shall terminate contemporaneously with the termination of such employment, except that if such termination shall be pursuant to (a)(i), (a)(ii) or (a)(v), Company shall pay to Executive within fifteen days following the date of such termination a lump sum cash payment in an amount equal to the sum of (I) Executive's Base Salary for the remainder of the Term of this Agreement and (II) the economic value of participation in Company's benefit plans (based on an annual salary rate of $100,000) for the remainder of the Term of this Agreement. (e) In the event that Executive's employment is terminated by Executive as provided in (b) above prior to the expiration of the Term of this Agreement, then, upon such termination, the compensation and benefits payable pursuant to Paragraph 5 shall terminate contemporaneously with the termination of such employment, except that if such termination shall be pursuant to (b)(i), Company shall pay to Executive within fifteen days following the date of such termination a lump sum cash payment in an amount equal to the sum of (I) Executive's Base Salary for the remainder of the Term of this Agreement and (II) the economic value of participation in Company's benefit plans (based on an annual salary rate of $100,000) for the remainder of the Term of this Agreement. (f) Upon the expiration of the two year Term of this Agreement, and upon the date of any earlier termination of Executive's employment pursuant to 6(a)(i), 6(a)(ii), 6(a)(v) or 6(b)(i) above, Executive's outstanding restricted stock -4- 5 grants shall no longer contain any restrictions, and Executive's outstanding stock options shall be deemed fully vested and exercisable on such date and shall continue to be fully exercisable for the remaining term of each option grant. OEI and Executive shall on such date enter into appropriate amendments to each option grant to provide for the vesting and extension of exercisability, which shall include Executive's acknowledgement and agreement that the acceleration of the vesting and exercisability of such outstanding stock options may cause any such options intended to be incentive stock options ("ISO's"), within the meaning of Section 422(b) of the Internal Revenue Code of 1986, as amended, to be treated as options that do not constitute ISO's. This Paragraph 6(f) shall not be applicable if Executive's employment is terminated prior to the end of the two year Term pursuant to 6(a)(iii), 6(a)(iv) or 6(b)(ii). 7. PROTECTION OF INFORMATION. Executive acknowledges that Company's business is highly competitive and that Company's methods, strategies, books, records, and documents, Company's technical information concerning its products, equipment, services, and processes, procurement procedures and pricing techniques, and the names of and other information (such as credit and financial data) concerning Company's customers, business affiliates, affairs, and operations all comprise confidential business information and/or trade secrets ("Confidential Information") of Company which are valuable, special, and unique assets of Company which Company uses in its business to obtain a competitive advantage over its competitors which do not know or use this information. Executive further acknowledges that protection of Company's Confidential Information against unauthorized disclosure and use is of critical importance to Company in maintaining its competitive position. Accordingly, Executive hereby agrees that, notwithstanding any other provisions of this Agreement other than those contained in the following sentences, he will not at any time during the Term of this Agreement and for an additional period of twenty-four months thereafter make any unauthorized disclosure of any Confidential Information of Company or make any unauthorized use thereof. However, Executive's obligations under this paragraph shall not extend to: (a) Information which is or becomes a part of the public domain or is available to the public by publication or otherwise without disclosure by Executive; (b) Information which was within Executive's knowledge or in his possession prior to his initial employment by Company; (c) Information which, either prior or subsequent to Company's disclosure to Executive, was disclosed to Executive, without an obligation of confidentiality, by a third party who did not acquire such information, directly or indirectly from Executive, Company, or from any third party who is under an obligation of confidentiality; or -5- 6 (d) Any disclosure of Confidential Information by Executive which is required by law, including deposition or trial testimony by Executive pursuant to subpoena. If Executive is requested or required (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand, or similar process) to disclose any Confidential Information, Executive will promptly notify Company of such request or requirements so that Company may seek an appropriate protective order or waive compliance with the provisions of this Agreement. Executive acknowledges and agrees that money damages would not be sufficient remedy for any breach of this Paragraph concerning Confidential Information by Executive, and Company shall be entitled to seek specific performance and injunctive relief as remedies for such breach or threatened breach, as well as reasonable and necessary attorneys' fees, experts' fees, and costs incurred in the connection with such breach or threatened breach. Such remedies shall not be deemed the exclusive remedies for such a breach by Executive but shall be in addition to all remedies available at law or in equity to Company, including the recovery of damages from Executive. For purposes of this Paragraph, Company shall be construed to include any parent, subsidiary, or other affiliate of Company. 8. OWNERSHIP BY COMPANY. Company shall, without further remuneration to Executive, own, be entitled to possession of, and have the right to use, publish, and disclose any results, reports, product, or data developed by Executive during the course of his employment hereunder, but identification of Executive with such results, reports, or data shall not be made without Executive's express consent. 9. NONCOMPETITION PROVISIONS. As part of the consideration for the compensation and benefits to be paid to Executive pursuant to Paragraph 5 hereunder and as part of the consideration for the option vesting and exercisability pursuant to Paragraph 6(e) 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, in any geographic area or market where Company or any of its affiliates are conducting any business as of the Effective Date or have during the previous twelve months conducted such business: (a) engage in any business competitive with the business conducted by Company; (b) render advice or services to, or otherwise assist, any other person, association, or entity who is engaged, directly or indirectly, in any business -6- 7 competitive with the business conducted by Company with respect to such competitive business; or (c) 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 Term of this Agreement. Executive understands that the restrictions set forth in this Paragraph may limit Executive's ability to engage in certain businesses anywhere in the world during the period provided for above, but acknowledges that Executive will receive sufficiently high remuneration under this Agreement to justify such restriction. Executive acknowledges that money damages would not be sufficient remedy for any breach of this Paragraph by Executive, and Company shall be entitled to enforce the provisions of this Paragraph 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; provided, however, that payments then owing to Executive may not be terminated unless the Board of Directors determines that such breach by Executive has directly resulted or could reasonably be expected to result in a material adverse economic impact on Company's business. Such remedies shall not be deemed the exclusive remedies for a breach of this Paragraph, 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. It is expressly understood and agreed that Company and Executive consider the restrictions contained in this Paragraph 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. 10. RELEASE. As part of the consideration for the compensation and benefits to be paid to Executive pursuant to Paragraph 5 and as an additional incentive for Company to enter into this Agreement, Executive hereby agrees to execute a release, at the time and in the form established by Company, releasing Company, its shareholders, partners, officers, directors, employees and agents from any and all claims and from any and all causes of action of any kind or character, including but not limited to all claims or causes of action arising out of Executive's employment with Company or his separation therefrom, other than claims or causes of action arising out of the provisions of this Agreement. 11. 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. -7- 8 12. 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 delivered or when mailed by United States, registered or certified mail, return receipt requested, postage prepaid, if addressed as follows: If to Company, to: Ocean Energy, Inc. 1001 Fannin, Suite 1600 Houston, Texas 77002-6794 Attention: Chairman of the Board If to Executive, to: Mr. James C. Flores P.O. Box 1083 Houston, Texas 77251 or such other addresses as either party may furnish to the other in writing, in accordance herewith, except that notices of changes of address shall be effective only upon receipt. 13. 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. 14. GOVERNING LAW. This Agreement is entered into under and shall be governed for all purposes by the laws of the State of Texas. 15. 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 time or at any prior or subsequent time. 16. 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. 17. ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of Company and any successor of Company, by merger or otherwise. Further, this Agreement shall be binding and inure to the benefit of Executive, his spouse, and his estate. If Executive shall die prior to full payment of amounts due pursuant to this Agreement, such amounts shall be payable pursuant to the terms of this Agreement to his spouse, if then living, or if his spouse is not then living, to his estate. Except as provided in the preceding sentences, this Agreement and the rights and obligations of the parties hereunder are personal, and neither this Agreement nor any right, benefit, or obligation -8- 9 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. 18. ENTIRE AGREEMENT. Except as provided in the written benefit plans and programs referenced in Paragraph 5, this Agreement represents the entire agreement between the parties hereto with respect to the matters covered herein and may not be changed, altered, or modified in any respect except by an instrument in writing signed by both the parties hereto. IN WITNESS WHEREOF, Company has caused this Agreement to be duly executed by one of its officers thereunto duly authorized and Executive has executed this Agreement, this 29th day of December, 1999, to be effective as of the Effective Date. OCEAN ENERGY, INC. BY: /s/ James T. Hacket ---------------------------------------------- Name: James T. Hackett Title: President and Chief Executive Officer /s/ James C. Flores -------------------- JAMES C. FLORES -9- -----END PRIVACY-ENHANCED MESSAGE-----