Factbox: Tom Ward's revised employment agreement

NEW YORK Wed Feb 6, 2013 6:04am EST

NEW YORK (Reuters) - SandRidge Energy Inc has lifted most restrictions on CEO Tom Ward's ability to sell mineral rights or drill wells, through little-noticed changes to his employment agreement in 2011.

Before the changes, Ward was permitted to receive royalties from SandRidge, or jointly own wells with it, on land he had owned before joining the company in 2006. The 2011 agreement allows him to do deals with SandRidge competitors in the oil and gas business, and to do business with SandRidge on any land that he owns or acquires.

The pertinent sections of the two employment agreements follow.

From Ward's 2006 employment agreement:

3. Other Activities. Except for the activities (the "Permitted Activities") permitted under paragraphs 3.1, 3.2 and 3.3 of this Agreement or approved by the Board of Directors, during the period of Executive's employment, the Executive will not: (a) engage in activities which require such substantial services on the part of the Executive that the Executive is unable to perform the duties assigned to the Executive in accordance with this Agreement; (b) serve as an officer or director of any publicly held entity; or (c) directly or indirectly invest in, participate in or acquire an interest in any oil and gas business, including, without limitation, (i) producing oil and gas, (ii) drilling, owning or operating oil and gas leases or wells, (iii) providing services or materials to the oil and gas industry, (iv) marketing or refining oil or gas, or (v) owning any interest in any corporation, partnership, company or entity which conducts any of the foregoing activities. The limitations in this paragraph 3 will not prohibit an investment by the Executive in publicly traded securities. The Executive is not restricted from maintaining or making investments, or engaging in other businesses, enterprises or civic, charitable or public service functions if such activities, investments, businesses or enterprises do not result in a violation of clauses (a) through (c) of this paragraph 3. Notwithstanding the foregoing, the Executive will be permitted to participate in the following activities that will be deemed to be approved by the Company, if such activities are undertaken in strict compliance with this Agreement.

3.1 Royalty Interests and Gifts. The foregoing restriction in clause (c) will not prohibit the ownership of royalty interests where the Executive owns or previously owned the surface of the land covered by the royalty interest and the ownership of the royalty interest is incidental to the ownership of the surface estate or the ownership of royalty, overriding royalty or working interests that are received by gift or inheritance.

3.2 Existing Interests. The Executive has in the past conducted oil and gas activities individually and through TLW Investments, Inc., an Oklahoma corporation, and other entities owned or controlled by the Executive (collectively, the "Executive Affiliates"). The Executive also has a pre-existing right to participate in the drilling of oil and gas wells through the Chesapeake Energy Corporation Founder Well Participation Program ("CHK Program") until August 10, 2006. The Executive will be permitted to continue to conduct oil and gas activities (including participation in new wells) through the CHK Program; or otherwise directly or through the Executive Affiliates, but only to the extent such activities are conducted on oil and gas leases or interests which the Executive or Executive Affiliates owned or had the right to acquire as of the date of this Agreement or which Executive or Executive affiliates acquires through the CHK Program (the "Prior Interests").

3.3 Company's Activities. The Executive or the designated Executive Affiliate will be permitted to participate in the WP Program. The WP Program may not be amended or modified without the prior written consent of the Board of Directors and the Executive.

From the 2011 employment agreement:

3. Other Activities. The Executive shall not engage in any business activity that, in the judgment of the Board, conflicts with the Executive's duties hereunder, whether or not such activity is pursued for gain, profit or other pecuniary advantage. In addition, except for the activities permitted under paragraph 3.1 of this Agreement or approved by the Board in writing, the Executive will not: (a) engage in activities that require such substantial services on the part of the Executive that the Executive is unable to perform the duties assigned to the Executive in accordance with this Agreement; (b) serve as an officer or director of any publicly held entity; or (c) directly or indirectly invest in, participate in or acquire an interest in any oil and gas business, including, without limitation, businesses (i) producing oil and gas, (ii) drilling, owning or operating oil and gas leases or wells, (iii) providing services or materials to the oil and gas industry, or (iv) marketing or refining oil or gas. The limitations in this paragraph 3 will not prohibit an investment by the Executive in publicly traded securities or the maintenance of investment interests owned prior to the Effective Date. Notwithstanding the foregoing, the Executive is not restricted from maintaining or making investments, or engaging in other businesses, enterprises or civic, charitable or public service functions if such activities, investments, businesses or enterprises do not result in a violation of clauses (a) through (c) of this paragraph 3, and the Executive is permitted to participate in the activities set forth in paragraph 3.1, if such activities are undertaken in strict compliance with this Agreement.

3.1 Royalty Interests and Gifts, Outside Oil and Gas Drilling, and Certain Other Drilling Units. The foregoing restriction in clause (c) will not prohibit, in areas not being pursued by the Company: (a) the ownership of royalty interests where the Executive owns, previously owned or acquires the surface of the land covered by the royalty interest and the ownership of the royalty interest is incidental to the ownership of the surface estate, or the ownership of royalty, overriding royalty or working interests that are received by gift or inheritance subject to disclosure by the Executive to the Company in writing; (b) the Executive's participation in outside operated oil and gas drilling; or (c) the Executive's participation as a working interest owner in properties operated by the Company where wells are proposed in drilling units with respect to which the surface or royalty ownership rights are held by TLW Holdings, L.L.C., an Oklahoma limited liability company, 192 Investments, L.L.C., an Oklahoma limited liability company, and entities owned or controlled by the Executive.

(Reporting By Michael Erman)

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