EMPLOYMENT AGREEMENT
     This Employment Agreement (“Agreement”) between Michael D. Watford
(“Watford”), Ultra Petroleum Corp. (the “Company”), a Yukon Territories
Corporation and each of the Company’s subsidiaries: UP Energy Corporation, Ultra
Resources, Inc. and Sino-American Energy Corporation, all having their principal
place of business at 363 N. Sam Houston Parkway East, Suite 1200, Houston, Texas
77060, is effective as of February 1, 2007.
WHEREAS, Watford and the Company have previously entered into an Employment
Agreement dated effective as of February 1, 2004 (the “2004 Agreement”);
WHEREAS, Watford and the Company desire that this Agreement will supersede the
2004 Agreement and the 2004 Agreement shall no longer be in force and effect;
WHEREAS, Watford is being employed as Chairman, Chief Executive Officer (“CEO”)
and President of the Company and each of the Company’s subsidiaries;
WHEREAS, the Company believes it to be to their advantage to ensure Watford
continues to render services as hereinafter provided for the Company;
NOW, THEREFORE, in consideration of the mutual covenants and obligations herein
contained, it is mutually agreed between the parties hereto as follows:

1.   Employment and Term. The Company hereby agrees to continue to employ
Watford and Watford hereby agrees to serve as the Chairman, CEO and President of
the Company and each of the Company’s subsidiaries. The term of this Employment
Agreement shall be effective as of the date first above written and shall
terminate three (3) years from such date (the “Initial Term”), unless earlier
terminated as hereinafter provided. After the Initial Term of Watford’s
employment, such employment shall be automatically extended for successive
one-year periods, unless earlier terminated as hereinafter provided or upon
ninety (90) days advance notice by the Board of Directors of the Company (the
“Company Board”) to Watford of its intention to not renew. For each such
extension, the terms of employment shall be subject to approval by the Company
Board and agreed to by Watford. If agreement cannot be reached, or in the event
that the Company elects not to renew this Employment Agreement, Ultra Resources,
Inc. (“Resources”) shall pay Watford in accordance with the provisions of
Section 4.   2.   Position and Responsibilities. Watford shall serve as
Chairman, CEO and President of the Company and each of the Company’s
subsidiaries. Watford shall have the authority, power and duty to manage the
business and affairs of the Company (subject to the provisions of applicable
law) and shall have such other obligations, duties, authority and power to do
all acts and things as are customarily done by a person holding the same or
equivalent position or performing duties similar to those to be performed by
Watford in corporations of similar size as the Company and shall perform such
managerial duties and responsibilities for the Company as may be assigned to him
by the Company Board

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    and, at no additional remuneration, shall serve in such other comparable
positions with affiliates and associates of the Company as the Company Board may
from time to time designate.   3.   Compensation.

  A.   In consideration of the services to be provided by Watford, the Company
and each of the Company’s subsidiaries will pay Watford a salary of $600,000 per
annum. Such salary shall be payable in conformity with the Company’s prevailing
practice for executives’ compensation as such practice shall be established or
modified from time to time. This salary shall be reviewed annually by the
Compensation Committee of the Company Board, who will recommend appropriate
increases, if any, to the Company Board for approval. Such increases shall be
based on Watford’s performance and then-current market conditions for comparable
positions.     B.   Salary payments shall be subject to all applicable
withholding, payroll and other taxes.     C.   Reference is hereby made to that
certain Long-Term Incentive Plan adopted by the Company and currently in effect
under which key employees, including Watford, are given the opportunity to share
in the long-term performance of the company. Any long-term incentive plan
adopted by the Company in the future shall be at least as beneficial to Watford
as is the current Long-Term Incentive Plan. The applicable performance targets,
goals and reward levels of any incentive compensation plans to be adopted by the
Company shall be proposed by Watford to the Compensation Committee for their
review and recommendation to the Company Board for approval. All incentive
compensation awards shall be subject to all applicable federal and state
withholding, payroll and other taxes.     D.   Resources will provide Watford
with an automobile (the “Automobile”) for use by Watford in connection with his
performance of his duties under this Agreement. Watford may also use the
Automobile for reasonable personal use. Watford agrees to pay all operating
costs of the Automobile, and the Company agrees to reimburse to Watford the
actual operating costs (including without limitation costs of insurance and
registration) of the Automobile upon the submission by Watford to the Company of
receipts evidencing such operating costs. Watford shall be provided with a new
Automobile every two years.     E.   Watford shall be entitled to reimbursement
of reasonable business expenses incurred while performing his duties for the
Company.     F.   Watford shall be entitled to participate in and to receive all
rights and benefits under any life insurance, disability, medical and dental,
health and accident plans or plans as may be implemented by Resources under the
terms of this Agreement.

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      Watford shall also be entitled to participate in and to receive all rights
and benefits under any program adopted by Resources or the Company for any group
of senior employees of the Company, including without limitation, the rights and
benefits under the directors’ and officers’ liability insurance currently in
place under the Company’s insurance program for the directors and officers of
the Company.     G.   Watford shall be entitled to paid vacation during each
full year of his employment hereunder in accordance with the vacation policy
adopted by the Company, but shall not take more than ten (10) consecutive
business days at any given time. Such vacations shall be taken at such times as
are consistent with the reasonable business needs of the Company.

4.   Termination. The company shall be entitled to terminate this Agreement and
Watford’s employment with the Company, subject to Sections 4.B, 4.C, 4.D, 4.E,
4.G and 4.H, at any time and for whatever reason; or at any time for just cause
by written notice to Watford. Termination of Watford’s employment by the Company
shall be deemed to have been for “just cause” if such Termination is for one or
more of the following reasons: (i) the willful failure or refusal of Watford to
render services to the Company in accordance with his obligations under this
Employment Agreement, which failure or refusal remains uncured and continuing
for a period of not less than 30 days after written notice detailing the
situation is given by the Company to Watford; (ii) the commission by Watford of
an act of fraud or embezzlement against the Company or the commission by Watford
of any other action which is materially and demonstrably injurious to the
Company; or (iii) Watford has been convicted of a felony. In the event that
Watford’s employment is terminated for any such reason, Watford shall be
entitled to no severance or other termination benefit.

  A.   Watford shall be entitled to terminate this Agreement and his employment
with the Company within, but not after two years following, any of the following
events (a “Terminating Event”, or collectively, the “Terminating Events”):
(i) Watford is assigned any responsibilities or duties materially inconsistent
with his position, duties, responsibilities and status with the Company as of
the date of this Agreement, as the same may be augmented pursuant to Section 2
hereof, or his title or offices as of the date of this Agreement, as the same
may be augmented pursuant to Section 2 hereof, are materially changed;
(ii) there is a Change of Control of the Company; (iii) the Company fails to
continue to provide Watford with the level of compensation to which he is
entitled as of the date of this Agreement, or with any benefit, bonus, profit
sharing, incentive, remuneration or compensation plan, stock ownership or
purchase plan in which Watford was entitled to participate as of the date of
this Agreement, or the Company takes any action which does or may adversely
affect Watford’s participation in, or materially reduce his rights or benefits
under or pursuant to any such plan, or the failure by the Company to increase or
improve such rights or benefits on a basis consistent with practices in effect
prior to the date of this Agreement with respect

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      to the senior executives of the Company generally, whichever is more
favorable to Watford; (iv) the Company requires Watford to relocate to any city
or community other than the City of Houston, Texas, except for required travel
on the Company’s business to an extent substantially consistent with Watford’s
business obligations under this agreement; or (v) there is any material breach
by the Company of any provision in this Agreement.

      “Change in Control” shall mean any of the following:

  (1)   any consolidation or merger of the Company in which the Company is not
the continuing or surviving corporation or pursuant to which shares of the
common stock of the Company would be converted into cash, securities, or other
property, other than a merger of the Company in which the holders of the common
stock immediately prior to the merger have the same proportionate ownership of
common stock of the surviving corporation immediately after the merger;     (2)
  any sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all of the assets of the Company;
    (3)   any approval by the stockholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company;     (4)   the
cessation of control (by virtue of their not constituting a majority of
directors) of the Company Board by the individuals (the “Continuing Directors”)
who (x) at the date of this Agreement were directors or (y) become directors
after the date of this Agreement and whose election or nomination for election
by the Company’s stockholders was approved by a vote of at least two-thirds of
the directors then in office who were directors at the date of this Agreement or
whose election or nomination for election was previously so approved; or     (5)
  (A) the acquisition of beneficial ownership (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934, as amended (“Beneficial Ownership”))
of an aggregate of 20% of the voting power of the Company’s outstanding voting
securities by any person or group (as such term is used in Rule 13d-5 under such
Act) who Beneficially Owned less than 10% of the voting power of the Company’s
outstanding voting securities on the date hereof, (B) the acquisition of
Beneficial Ownership of an additional 5% of the voting power of the Company’s
outstanding voting securities by any person or group who Beneficially Owned at
least 10% of the voting power of the Company’s outstanding voting securities on
the date hereof, or (C) the execution by the Company and a stockholder of a
contract that by its terms grants such stockholder (in its, her or his

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      capacity as a stockholder) or such stockholder’s Affiliate (as defined in
Rule 405 promulgated under the Securities Act of 1933 (an “Affiliate”))
including, without limitation, such stockholder’s nominee to the Board of
Directors (in its, her or his capacity as an Affiliate of such stockholder), the
right to veto or block decisions or actions of the Board of Directors; provided,
however, that notwithstanding the foregoing, the events described in items
(A) or (B) above shall not constitute a Change in Control hereunder if the
security holder is any other person whose acquisition of shares of voting
securities is approved in advance by a majority of the Continuing Directors.    
(6)   subject to applicable law, in a Chapter 11 bankruptcy proceeding, the
appointment of a trustee or the conversion of a case involving the Company to a
case under Chapter 7.

  B.   Subject to Sections 4.G and 4.H, if an agreement cannot be reached as to
the terms of any extension of this Agreement, or in the event that the Company
elects not to renew this Employment Agreement at the end of the Initial Term or
any extended term, Watford shall be entitled to receive from the Company, within
30 days after the date of termination, a one-time severance payment equal to the
sum of the following: (i) 100% of Watford’s salary for the 12 months immediately
preceding the termination, plus (ii) an amount equal to the most recent annual
bonus paid to Watford, less any withholdings or deductions required by law.    
C.   Subject to Sections 4.G and 4.H, the termination by the Company of this
Agreement and Watford’s employment with the Company other than for just cause,
or the termination by Watford of this Agreement and Watford’s employment for any
Terminating Event other than a Change of Control, shall entitle Watford to
receive from the Company, within 30 days after the date of termination, a
one-time severance payment equal to the sum of the following (i) 100% of
Watford’s salary for the 12 months immediately preceding the termination, plus
(ii) an amount equal to the most recent annual bonus paid to Watford, less any
withholdings or deductions required by law.     D.   Subject to Sections 4.G and
4.H, the termination by either Watford or the Company of this Agreement and
Watford’s employment with the Company following a Change of Control shall
entitle Watford to receive from the Company, within 30 days after the date of
termination, a one-time severance payment equal to two and a half (2.5) times
the sum of the following: (i) 100% of Watford’s salary for the 12 months
immediately preceding the termination, plus (ii) an amount equal to the most
recent annual bonus paid to Watford, less any withholdings or deductions
required by law.

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  E.   Notwithstanding any contrary provision herein or in any benefit plan then
in effect, upon the termination by the Company of this Agreement and Watford’s
employment with the Company for any reason other than for just cause, or upon
the termination by Watford of this Agreement and Watford’s employment for a
Terminating Event, all stock options theretofore awarded to Watford which have
not previously vested shall vest immediately in full; provided, however, that
upon a Change in Control, all outstanding Best In Class stock awards shall
become 150% vested, and awards payable under the Long-Term Incentive Plan shall
vest and be payable at the maximum award level.     F.   The parties agree that,
because there can be no exact measure of the damages which would occur to
Watford as a result of the termination of his employment, such payments which
are contemplated in Section 4.B, 4.C and 4.D shall be deemed to constitute
liquidated damages and not a penalty and the Company agrees that Watford shall
not be required to mitigate his damages.     G.   In addition to the payments
required to be made pursuant to Section 4.B, 4.C and 4.D., upon termination of
this Agreement by the Company pursuant to Section 4 or by Watford pursuant to
Section 4.A or 4.I, the salary otherwise payable to and earned by Watford shall
be prorated to the date of termination and shall become due and payable within
30 days after the date of termination and all other forms of compensation
payable to Watford pursuant to Section 3 shall, except as expressly provided
herein, in any Schedule hereto or in any benefit plan, terminate on the date of
the termination. As expeditiously as possible after the termination, the Company
shall pay or reimburse Watford for all reasonable business expenses incurred
prior to the termination. Notwithstanding any contrary provision herein or in
any benefit plan then in effect, unless his employment is terminated for just
cause, Watford shall have a period of one year from the date of termination to
exercise any stock options that have been awarded and vested to him as of the
date of termination, provided that in the event all outstanding options of the
Company are cancelled in connection with an extraordinary corporate transaction,
Watford shall be given the same opportunity to exercise his stock options as is
given to each other option holder prior to cancellation of his options; and
further provided that the Company shall continue to make available to Watford
the benefits set forth in Section 3.F. herein for a period of not less than 24
months, provided that such benefits shall cease upon Watford obtaining
re-employment with group benefits at least as favorable to Watford; and further
provided that the Company shall, within thirty (30) days of the date of
termination, transfer title ownership of the Automobile, free and clear of any
liens thereon, with the understanding that Watford shall be responsible for
ongoing operating expenses for said Automobile thereafter. The Company shall
also pay all indemnity payments as set forth in this Agreement, and all legal
fees and expenses incurred by Watford as a result of such termination (including
all such fees and expenses, if any, incurred in contesting or disputing such
termination or in seeking to obtain or enforce any right or benefit provided by
this Agreement).

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  H.   Limitation on Payments.

  (1)   If any of the payments or benefits received or to be received by Watford
in connection with a Change of Control or Watford’s termination of employment
(whether pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with the Company, any person whose actions result in a Change of
Control or any person affiliated with the Company or such person) (such payments
or benefits, excluding the Gross-Up Payment, being hereinafter referred to as
the “Total Payments”) of the Internal Revenue Code of 1986 (the “Code”), the
Company shall pay to Watford an additional amount (the “Gross-up Payment”) such
that the net amount retained by Watford, after deduction of any Excise Tax on
the Total Payments and any federal, state and local income and employment taxes
and Excise Tax upon the Gross-up Payment, shall be equal to the Total Payments.
For purposes of determining the amount of the Gross-Up Payment, Watford shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment is to be made
and state and local income taxes at the highest marginal rates of taxation in
the state and locality of the residence of Watford on the date of the
termination of Watford’s employment, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes.     (2)   All determinations required to be made under this Section 4.H,
including whether a Gross-Up Payment is required and the amount of such Gross-Up
Payment, shall be made by the independent accounting firm which the Change or
Control, Watford may appoint another nationally recognized public accounting
firm to make the determinations required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder), by giving written notice
of such appointment to the Company within five (5) business days after the date
of the termination of Watford’s employment. All fees and expense of the
Accounting Firm shall be borne solely by the Company and it shall be the
Company’s obligation to cause the Accounting Firm to take actions required
hereby.         If the Accounting Firm determines that no Excise Tax is payable
by Watford, it shall furnish Watford with an opinion that he has substantial
authority not to report any Excise Tax on his federal income tax return. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that a Gross-Up Payment which will not have been made by the Company
should have been made (“Underpayment”),

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      consistent with the calculations required to be made hereunder. In the
event that the Company exhausts its remedies pursuant to Section 4.H(3) and
Watford thereafter is required to make a Payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of Watford.     (3)   Watford shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than ten (10) business days after Watford
knows of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is required to be paid. Watford shall not pay
such claim prior to the expiration of the thirty (30) day period following the
date on which he gives such notice to the Company (or such shorter period ending
on the date that any payment of taxes with respect to such claim is due). If the
Company notifies Watford in writing prior to the expiration of such period that
it desires to contest such claim, Watford shall:     (i)   give the Company any
information reasonably requested by the Company relating to such claim,     (ii)
  take such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company,     (iii)   cooperate with the Company in
good faith in order to effectively contest such claim, and     (iv)   permit the
Company to participate in any proceedings relating to such claim,        
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Watford harmless on an after-tax
basis, for any Excise Tax or income tax, including interest and penalties with
respect thereto, imposed as a result of such representation and payment of cost
and expenses. Without limitation on the foregoing provisions of this
Section 4.H(3), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
Watford to pay the

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      tax claimed and sue for a refund, or contest the claim in any permissible
manner, and Watford agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided, however, that
if the Company directs Watford to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to Watford, on an interest-free
basis and shall indemnify and hold Watford harmless, on an after-tax basis, from
any Excise Tax or income tax, including interest or penalties with respect
thereto, imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that any extension of
the statute of limitations relating to payment of taxes for the taxable year of
Watford with respect to such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company’s control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and Watford shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.

  (4)   If, after the receipt by Watford of an amount advanced by the Company
pursuant to Section 4.H.(3), Watford becomes entitled to receive any refund with
respect to such claim, Watford shall (subject to the Company’s complying with
the requirements of Section 4.H.(3)) promptly pay to the Company the amount of
such refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by Watford of an amount advanced by
the Company pursuant to Section 4.H.(3), a determination is made that Watford
shall not be entitled to any refund with respect to such claim and the Company
does not notify Watford in writing of its intent to contest such denial of
refund prior to the expiration of thirty days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.

  I.   Notwithstanding anything to the contrary herein, Watford shall be
entitled to terminate this Agreement and his employment with the Company at his
pleasure upon sixty (60) days written notice to such effect. In such event,
Watford shall not be entitled to any further compensation except as set forth in
Section 4.G. The Company acknowledges and agrees that the Company shall have no
remedy against Watford, in law or otherwise, upon the termination of this
Agreement and Watford’s employment with the Company in accordance with this
Section 4.I.

  J.   In the event that Watford’s employment with the Company as described
herein is terminated for whatever reason, Watford will also resign from the
Company Board and the Boards of all its subsidiaries, effective on the date of
termination.

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  K.   Notwithstanding the termination of this Agreement under Section 4, the
provisions of Sections 4, 10, 11 and 12 shall survive such termination and be
continuing thereafter, as shall all other provisions hereof which by their terms
are to be performed following termination hereof.

6.   Confidentiality and Non-Solicitation.

  A.   Acknowledgment. Watford agrees and acknowledges that in the course of
rendering services to the Company and its subsidiaries he will have access to
and will become acquainted with confidential information about the professional,
business and financial affairs of the Company, the Company’s direct or indirect
subsidiaries (for purpose of Section 6, herein, the term Company shall include
any of the Company’s direct or indirect subsidiaries), and the Company’s
strategy and procedures, and may have contributed to or may in the future
contribute to such information. Watford further recognizes that he is employed
as a key employee, the Company is engaged in a highly competitive business, and
that the success of the Company in the marketplace depends upon its good will
and reputation, its innovative, aggressive, cutting-edge and/or novel methods of
exploiting oil and gas reserves, and the marketing of such oil and gas. Watford
recognizes that in order to guard the legitimate interest of the Company it is
necessary for the Company to protect all such confidential information, good
will and reputation.     B.   Proprietary Information. In the course of his
service to the Company, Watford may have access to and may help create
confidential information, including, but not limited to: the identity of
proposed transactions or the parties thereto, the status of negotiations
concerning proposed transactions, results of drilling or exploration, forecasts,
budgets, pricing information, Company developed methods of operation, oil and
gas marketing and risk management strategies and procedures, specialized
know-how developed by the Company, business documents or information, marketing
data, trade secrets, personnel roster, including the identity, qualifications
and/or salary scale of any consultant or other Company employee, and other
information generated by the Company or arising in connection with the Company’s
business the disclosure of which would give an advantage to the Company’s
competitors. Such information shall hereinafter be called “Proprietary
Information” and shall include any and all items enumerated in the preceding
sentence which come within the scope of the business activities of the Company
as to which Watford has had or may have access, whether previously existing, now
existing or arising hereafter, whether or not conceived or developed by others
or by Watford alone or with others during the period of his service to the
Company, and whether or not conceived or developed during regular working hours.
“Proprietary Information” shall not include (a) any information which is in the
public domain during the period of service by Watford, provided such information
is not in the public domain as a consequence

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      of disclosure by Watford in violation of this Agreement or by any other
person who was contractually obligated not to disclose such information and
(b) any information not considered confidential information by similar
enterprises operating in the oil and gas industry.     C.   Fiduciary
Obligations. Watford agrees and acknowledges that Proprietary Information
belongs solely to the Company and is of critical importance to the Company and
that a use or disclosure of the Proprietary Information in violation of this
Section 6 may seriously and irreparably impair and damage the Company’s
businesses. Watford therefore agrees, while he is an employee of the Company and
at all times thereafter, (a) to keep all Proprietary Information in a fiduciary
capacity for the sole benefit of the Company and (b) not to use the Proprietary
Information for the benefit of Watford or any other person or entity.     D.  
Non-Disclosure. Watford shall not disclose, directly or indirectly (except as
required by law), any Proprietary Information to any person other than (a) the
Company, (b) employees of the Company that Watford reasonably believes have been
authorized to receive such information, (c) such other persons to whom Watford
has been instructed to make disclosure by the Company Board, or (d) Watford’s
counsel so long as such counsel agrees to keep all Proprietary Information
confidential (in the case of clause (b) only to the extent required in the
course of Watford’s service to the Company). At the termination of employment
hereunder, Watford shall deliver to the Company all notes, letters, documents
and records which may contain Proprietary Information which are then in his
possession or control and shall not retain or use any copies or summaries
thereof.     E.   Non-Solicitation of Employees. Watford further agrees that
during the period commencing on the date hereof and continuing until the first
anniversary of the termination of Watford’s employment by the Company, he will
not directly or indirectly, solicit the employment or engagement as a consultant
of any person who was an employee of or a consultant to the Company at any time
during the last twelve months of Watford’s employment with the Company, or hire
such employee or engage as a consultant any such person, unless in each case
Watford obtains the prior written consent of the Company.

7.   Consent and Waivers by Third Parties. Watford hereby represents and
warrants that he has obtained all necessary waivers and/or consents from third
parties as to enable him to accept employment with the Company on the terms and
conditions set forth herein and to execute and perform this Employment Agreement
without being in conflict with any agreement, obligations or understanding with
any such third party.

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8.   Waivers and Modifications. This Employment Agreement may be modified, and
the rights and remedies of any provision hereof may be waived, only in
accordance with this Section 8. No modification or waiver by the Company shall
be effective without the consent of at least a majority of the Compensation
Committee of the Company Board then in office at the time of such modification
waiver. No waiver by either party of any breach by the other or any provision
hereof shall be deemed to be a waiver of any later or other breach thereof or as
a waiver of any other provision of this Employment Agreement. This Employment
Agreement sets forth all of the terms of the understandings between the parties
with reference to the subject matter set forth herein and may not be waived,
changed, discharged or terminated orally or by any course of dealing between the
parties, but only by an instrument in writing signed by the party against whom
any waiver, change, discharge or termination is sought.   9.   Governing Law.
This Employment Agreement shall be construed in accordance with the laws of the
State of Texas.   10.   Severability. In case any one or more of the provisions
contained in this Employment Agreement for any reason shall be held to be
invalid, illegal or unenforceable in any respect, such an invalidity or
unenforceability shall not affect any other provision of this Employment
Agreement, but the Employment Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein.   11.  
Intellectual Property. Watford shall hold in trust for the benefit of the
Company, and shall disclose promptly and fully to the Company in writing, and
hereby assigns, and binds his heirs, executors, and administrators to assign, to
the Company any and all inventions, discoveries, ideas, concepts, improvements,
copyrightable works, and other developments (the “Developments”) conceived,
made, discovered or developed by him, solely or jointly with others, during the
term of his employment by the Company, whether during or outside of usual
working hours and whether on the Company’s premises or not, that relate in any
manner to the past, present or anticipated business of the Company or any
subsidiary. All works of authorship created by Watford, solely or jointly with
others, shall be considered works made for hire under the Copyright Act of 1976,
as amended, and shall be owned entirely by the Company. Any and all such
Developments shall be the sole and exclusive property of the Company, whether
patentable, copyrightable, or neither, and Watford shall assist and fully
cooperate in every way, at the Company’s expense, in securing, maintaining, and
enforcing, for the benefit of the Company or its designee, patents, copyrights
or other types of proprietary or intellectual property protection for such
Developments in any and all countries. Within one year following the term of
this Agreement and without limiting the generality of the foregoing, any
Development of Watford relating to any subject matter on which Watford worked or
was informed during this employment by the Company shall be conclusively
presumed to have been conceived and made prior to the termination of his
employment (unless Watford clearly proves that such Development was conceived
and made following the termination of his employment), and shall accordingly
belong and be assigned to the Company and shall be subject to this Agreement.

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12.   Indemnification.

  (a)   Indemnity. If Watford was, is or becomes a party to or a witness or
other participant in, or is threatened to be made a party to or witness or other
participant in, a Claim (defined below) by reason of (or arising in part out of)
an Indemnifiable Event (defined below), the Company shall indemnify Watford to
the fullest extent permitted by law, as soon as practicable but in any event not
later than thirty days after written demand is presented to the Company, against
any and all Expenses (defined below), judgments, fines, penalties and amounts
paid in settlement (including all interest, assessments and other charges
actually incurred and paid or payable in connection with or in respect of such
Expenses, judgments, fines, penalties or amounts paid in settlement) of such
Claim. If so requested by Watford, the Company shall advance (within two
business days of such request) any and all expense to Watford (an “Expense
Advance”); provided, however, that the Company may require Watford first to
deliver to the Company an undertaking by or on behalf of Watford to repay such
Expense Advance if it shall ultimately be determined that he is not entitled to
be indemnified by the Company.     (b)   Conditions. Notwithstanding the
foregoing, (i) the obligations of the Company under Section 12(a) shall be
subject to the condition that the Reviewing Party (defined below) shall not have
determined (in a written opinion, in any case in which the special, independent
counsel referred to in Section 12(c) hereof is involved) that Watford would not
be permitted to be indemnified under applicable law, and (ii) the obligation of
the Company to make an Expense Advance pursuant to Section 12(a) shall be
subject to the condition that, if, when and to the extent that the Reviewing
Party determined that Watford would not be permitted to be so indemnified under
applicable law, the Company shall be entitled to be reimbursed by Watford (who
hereby agrees to reimburse the Company) for all such amounts theretofore paid;
provided, however, that if Watford commences legal proceedings in a court of
competent jurisdiction to secure a determination that Watford should be
indemnified under applicable law, any determination made by the Reviewing Party
that Watford would not be permitted to be indemnified under applicable law shall
not be binding and Watford shall not be required to reimburse the Company of any
Expense Advance until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been exhausted or
lapsed). If there has been no determination by the Reviewing Party, or if the
Reviewing Party determines that Watford substantively would not be permitted to
be indemnified in whole or in part under applicable law, Watford shall have the
right to commence litigation in any court in the State of Texas having subject
mater jurisdiction thereof and in which venue is proper seeking an initial
determination by the court to challenge any such determination by the Reviewing
Party or any aspect thereof, and the Company

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      hereby consents to service of process and to appear in any such
proceeding. Any determination by the Reviewing Party otherwise shall be
conclusive and binding on the Company and Watford.     (c)   Independent
Counsel. If the determination of entitlement to indemnification is to be made by
Independent Counsel (defined below), the Independent Counsel shall be selected
as provided in this Section 12(c). The Independent Counsel shall be selected by
the majority vote of a quorum of Disinterested Directors (defined below), and
the Company shall give written notice to Watford advising him of the identity of
the Independent Counsel so selected. Watford may, within seven days after
receipt of the written notice, deliver to the Company a written objection to the
selection. His objection may be asserted only on the grounds that the
Independent Counsel so selected does not meet the requirements of Independent
Counsel as defined in Section 12(h) below, and the objection shall set forth
with particularity the factual basis of the assertion. If written objection is
made, the Independent Counsel so selected shall be disqualified. If within
twenty (20) days after submission by Watford of a demand for indemnification
pursuant to Section 12(a) of this Agreement, no Independent Counsel shall have
been selected, or if selected shall have been objected to, in accordance with
this Section 12(c), either the Company or Watford may petition a court of
competent jurisdiction in the State of Texas for the appointment as Independent
Counsel of a person selected by the court or by any other person that court
shall designate, and the person so appointed shall act as Independent Counsel.
The Company shall pay all reasonable fees and expense incident to the procedures
of this Section 12(c), regardless of the manner in which the Independent Counsel
was selected or appointed. The Company shall pay the reasonable fees and
expenses of the Independent Counsel and shall indemnify fully the Independent
Counsel against any and all expenses (including attorneys’ fees) claims,
liabilities and damages arising out of or relating to this Agreement or its
engagement pursuant hereto.     (d)   Claim. “Claim” shall mean any threatened,
pending or completed action, suit or proceeding, any inquiry or investigation,
or any appeal therefrom whether conducted by the Company or any other party,
that Watford in good faith believes might lead to the institution of any such
action, suit or proceeding, whether civil, criminal, administrative,
investigative or other.     (e)   Indemnifiable Event. “Indemnifiable Event”
shall mean any event or occurrence related to the fact that Watford is or was
serving the Company in some capacity, including, without limitation, as a
director, officer, employee, agent (including trustee) or fiduciary of the
Company or of another corporation, partnership, joint venture, trust or other
enterprise, or by reason of anything done or not done by Watford in any such
capacity.     (f)   Expenses. “Expenses” shall include attorneys’ fees and all
other costs, expenses and obligations actually incurred and paid in connection
with investigating,

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      defending, being a witness in or participating in (including on appeal),
or preparing to defend, be a witness in or participate in any Claim relating to
any Indemnifiable Event.     (g)   Reviewing Party. “Reviewing Party” shall mean
a quorum of the Board of Directors consisting of Disinterested Directors or, if
such a quorum is not obtainable or if such a quorum so directs, Independent
Counsel. Any decision by such a quorum must be by a majority vote of the quorum.
    (h)   Independent Counsel. “Independent Counsel” shall mean a law firm, or a
member of a law firm, that is experienced in matters of Delaware corporate law
and neither is, nor in the past five years has been, retained to represent the
Company or Watford in any matter material to either such party or any other
party to the Claim relating to an Indemnifiable Event. Notwithstanding the
foregoing, the term “Independent Counsel” shall not include any person who,
under the applicable standards of professional conduct then prevailing, would
have a conflict of interest in representing either the Company or Watford in an
action to determine Watford’s rights under this Agreement.     (i)  
Disinterested Director. “Disinterested Director” shall mean a director of the
Company who is not and was not at any time a party to a Claim relating to an
Indemnifiable Event.

13.   Compliance with IRC Section 409A. Notwithstanding anything herein to the
contrary, (i) if at the time of Watford’s termination of employment with the
Company Watford is a “specified employee” as defined in Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), and the deferral of the
commencement of any payments or benefits otherwise payable hereunder as a result
of such termination of employment is necessary in order to prevent any
accelerated or additional tax under Section 409A of the Code, then the Company
will defer the commencement of the payment of any such payments or benefits
hereunder (without any reduction in such payments or benefits ultimately paid or
provided to Watford) until the date that is six months following Watford’s
termination of employment with the Company (or the earliest date as is permitted
under Section 409A of the Code) and (ii) if any other payments of money or other
benefits due to Watford hereunder could cause the application of an accelerated
or additional tax under Section 409A of the Code, such payments or other
benefits shall be deferred if deferral will make such payment or other benefits
compliant under Section 409A of the Code, or otherwise such payment or other
benefits shall be restructured, to the extent possible, in a manner, determined
by the Company’s Board of Directors, that does not cause such an accelerated or
additional tax.

14.   Guaranty. The Company hereby absolutely and unconditionally guarantees the
prompt and punctual payment and performance when due by Resources of all
Resources’ obligations hereunder.

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          IN WITNESS WHEREOF, each of the parties hereto has executed this
Employment Agreement under seal as of the date and year first above written.

            Ultra Petroleum Corp., and its Subsidiaries
For the Company Board
    Witness:
 
        By:  /s/ Rebecca Townsend              By:   /s/ Dr. Charles Helton    
          Dr. Wm. Charles Helton              Title:   Chairman, Compensation
Committee              By:   /s/ Michael D. Watford               Michael D.
Watford             

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