Document:

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                                                                    EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

         This Agreement, made as of this 22nd day of March, 2001, by and between
Contour Energy Co., a Delaware corporation (the "Company"), and Rick Lester
("Executive").

                                   WITNESSETH:

         WHEREAS, the Company desires to employ Executive as Executive Vice
President and Chief Financial Officer, on the terms set forth below, and
Executive is willing to accept such employment on such terms.

         NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the parties hereto do hereby agree:

1.       DEFINITIONS

         As used in this Agreement, defined words and phrases have the meaning
         first ascribed to them herein whenever the first letter of each word is
         capitalized. Words used in the masculine apply equally to the feminine,
         and wherever the context dictates, the plural should be read as the
         singular and the singular as the plural. References to Sections are to
         Sections of this Agreement. The headings at the beginning of each
         section are inserted for convenience only and are not intended to
         describe, interpret, define, or limit the scope, extent, or intent of
         this Agreement.

         a.       "Board" means the Company's board of directors.

         b.       "Cause" shall be deemed to exist if, and only if:

                  i.       Executive is convicted in a court of law of any crime
                           (i) that constitutes a felony relating to the Company
                           or any other business endeavor or (ii) that
                           constitutes a felony which involves moral turpitude;
                           or

                  ii.      Executive engages in willful misconduct or any
                           material breach of or willful material failure to
                           perform his duties and responsibilities hereunder,
                           which misconduct, breach, or failure shall continue
                           after the Company, by action of the Board, shall have
                           advised Executive thereof in writing and shall have
                           afforded Executive a reasonable opportunity (which
                           shall be at least 30 days from the date of such
                           written advice or knowledge thereof) to correct the
                           acts or omissions complained of, and which Executive
                           shall have so failed to take action to correct within
                           such period.

         c.       "Disability" means Executive's inability to fully and
                  competently perform the duties hereunder for a period of at
                  least three consecutive months by reason of mental or physical
                  illness or other incapacity. The Company and Executive or his
                  attorney-in-fact shall, based on competent medical advice,
                  determine whether Executive is and continues to be disabled.
                  If the Company and Executive or his attorney-in-fact disagree
                  with the determination of disability, then each of them shall
                  appoint a doctor and the two doctors shall select a third
                  independent doctor whose decision as to whether Executive has
                  been unable to perform the duties of the nature contemplated
                  hereunder for a three-consecutive-month period shall be
                  binding on the parties.

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                  The doctor advising the Company with regard to the Company's
                  initial determination of whether Executive has been disabled
                  within the foregoing meaning and the independent doctor
                  selected by the two doctors designated by the Company and
                  Executive or his attorney-in-fact shall be given full access
                  to Executive's medical records and shall be afforded a
                  reasonable opportunity to examine Executive. The Company
                  agrees to instruct such doctors to maintain all information
                  reflected in Executive's records in full confidence and not to
                  disclose such information to any person (including the
                  Company) except as may be necessary for the determination
                  described above. All references to doctor in this paragraph
                  1.d shall mean a practicing doctor of medicine.

         d.       "Executive Officer" means Executive Vice President and Chief
                  Financial Officer.

         e.       "Fair Market Value" has the meaning given such phrase in
                  Section 4.b hereof.

         f.       "Notice of Termination" means a written notice that sets forth
                  the date of termination and, in the event of termination for
                  Cause or Disability, the facts and circumstances claimed to
                  provide a basis for termination of Executive's employment.

         g.       "Change of Control" means if (i) the Company is merged or
                  consolidated with another corporation and as a result of such
                  merger or consolidation less than 50% of the outstanding
                  voting securities of the surviving or resulting corporation
                  are owned in the aggregate by the former shareholders of the
                  Company; (ii) the Company sells all or substantially all of
                  its assets to another corporation, which is not a wholly-owned
                  subsidiary of the Company; (iii) any person or group within
                  the meaning of the Securities Exchange Act of 1934, as
                  amended, acquires (together with voting securities of the
                  Company held by such person or group) 30% or more of the
                  outstanding voting securities of the Company (whether
                  directly, indirectly, beneficially or of record) pursuant to
                  any transaction or combination of transactions; (iv) there is
                  a change of control of the Company of a nature that would be
                  required to be reported in response to Item 6(e) of Schedule
                  14A of Regulation 14A promulgated under the Securities
                  Exchange Act of 1934,, as amended, whether or not the Company
                  is then subject to such reporting requirements; or (v) the
                  individuals who, at the beginning of any period of twelve
                  consecutive months, constituted the Board of Directors cease,
                  for any reason, to constitute at least a majority thereof,
                  unless the nomination for election or election by the
                  Company's shareholders of each new director of the Company was
                  approved by a vote of at least two-thirds of the directors
                  then still in office who either were directors at the
                  beginning of such period or whose election or nomination for
                  election was previously so approved.

2.       TERM

         This Agreement commences effective as of March 22, 2001 (the
         "Commencement Date"), and shall continue for three (3) years from the
         Commencement Date, unless sooner terminated (the "Employment Term").

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3.       DUTIES

         During the Employment Term the Company will employ Executive in a
         senior executive capacity, with such responsibilities as the Company
         may from time to time determine during the term of this Agreement,
         including the duties attendant to being Executive Officer. Executive
         will comply with all applicable laws, with all corporate documents
         governing the conduct of the Company's business and affairs, and with
         the Company's policies.

         Executive agrees to devote substantially all of his business time to
         the performance of his duties hereunder.

4.       COMPENSATION

         a.       The Company shall pay Executive for all services to be
                  performed hereunder during the term of this Agreement. The
                  Company agrees to pay to Executive an annual salary of
                  $190,000 (the "Base Salary"), payable in semimonthly
                  installments in arrears on the fifteenth and last day of each
                  calendar month, the first such installment to be payable for
                  the period ended March 31, 2001. On the anniversary of this
                  Agreement in each of 2002 and 2003, the Base Salary shall be
                  adjusted upward by the amount necessary, if any, to provide a
                  cost of living adjustment ("COLA"). The annual adjustment
                  shall be determined by reference to the latest available
                  monthly publication (prior to each such anniversary date) by
                  the U.S. Department of Labor of the Consumer Price Index
                  compared to the comparable publication in the preceding year
                  and applying appropriate calculations to arrive at the Base
                  Salary for the ensuing year of the Employment Term.

         b.       With respect to each full fiscal year during the Employment
                  Term, Executive shall be eligible to earn an annual bonus
                  award (an "Annual Bonus") in such amount, if any, as
                  determined in the sole discretion of the Board; provided,
                  however, that, should he remain employed for the full
                  Employment Term, Executive shall be paid a cash lump sum of
                  the lesser of (i) $300,000 and (ii) $300,000 minus an amount
                  equal to "Aggregate Value". "Aggregate Value" shall mean (i)
                  all amounts payable to Executive as Annual Bonuses, plus (ii)
                  a dollar amount equal to 300,000 multiplied by the excess, if
                  any, of (a) the Fair Market Value (as hereinafter defined) of
                  a Share (as hereinafter defined) as of March 21, 2004, over
                  (b) $2.00. For purposes hereof "Fair Market Value" of a Share
                  shall mean the arithmetic average, for the twenty business
                  days preceding March 21, 2004 or, if earlier preceding the
                  date of termination of Executive's employment pursuant to
                  Sections 6b, 6c or 6d hereof, on which Shares could have been
                  traded, of the last reported sale prices regular way or, in
                  case no such reported sale takes place on any such day, the
                  average of the last closing bid and asked prices regular way,
                  in either case on the principal national securities exchange
                  on which the Shares are listed or admitted to trading, or if
                  not listed or admitted to trading on any national securities
                  exchange, (i) the closing sale price for such day reported by
                  the NASDAQ Stock Market, if such security is traded
                  over-the-counter and quoted on the NASDAQ Stock Market, or
                  (ii) if such security is so traded, but no so quoted, the
                  average of the closing reported bid and

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                  asked prices of such security as reported by the NASDAQ Stock
                  Market or any comparable system, or (iii) if such security is
                  not listed on the NASDAQ Stock Market or any comparable
                  system, the average of the closing bid and asked prices as
                  furnished by two members of the National Association of
                  Securities Dealers, Inc. selected from time to time by the
                  Company for that purpose. If such security is not listed and
                  traded in a manner that the quotations referred to above are
                  available for the period required hereunder, the Fair Market
                  Value per Share of such security shall be deemed to be the
                  fair value per share of such security as reasonably determined
                  in good faith by the Board of Directors of the Company.

         c.       The Company acknowledges that the Board (and/or the
                  Compensation Committee thereof) has granted Executive, as of
                  March 22, 2001, under the Company's 2001 Stock Plan, options
                  ("Options") to purchase 300,000 shares ("Shares") of common
                  stock of the Company, at an exercise price of $2.00 per share,
                  subject to adjustment from time to time in accordance with
                  such Plan.

         d.       In addition to the payments and awards set forth in paragraphs
                  a, b, c, and d above:

                  i.       During the term of this Agreement, upon submission of
                           a reasonable accounting, the Company shall reimburse
                           Executive for all reasonable travel, entertainment,
                           and other business expenses that are in compliance
                           with Company policy related to his employment
                           hereunder.

                  ii.      During the term of this Agreement, Executive shall be
                           eligible for the Company's employee benefit programs
                           on the terms on which the same are extended to the
                           Company's executives generally, including but not
                           limited to the Company's Section 401(k) plan, a
                           health care plan, 30 work days (per calendar year)
                           vacation, and reimbursement for reserved parking
                           expenses. To the extent that vacation is not used in
                           any year during the Employment Term, such vacation
                           may be carried forward without limitation. The amount
                           of vacation accrued for the year in which termination
                           of employment occurs shall be prorated for the
                           fraction of the year which has transpired as of the
                           date of termination.

         e.       The Company shall extend for Executive's benefit the existing
                  interest free loan of $50,000 from the Company to Executive,
                  which Executive must repay to the Company on or before the
                  third anniversary of the Commencement Date. In addition, in
                  the event Executive voluntarily terminates his employment with
                  the Company or his employment is terminated by the Company for
                  Cause, the loan must be repaid on demand by the Company.

         The Company shall have the right to deduct from all payments to be made
         under this Agreement any federal, state, or local taxes required by law
         to be withheld from such payments.

5.       NONDISCLOSURE OF CONFIDENTIAL INFORMATION

         Executive agrees that, during his employment by the Company and
         thereafter, he will not use or disclose to others, directly or
         indirectly, any confidential information relating to the business,
         prospects, or plans of the Company or its subsidiaries. Notwithstanding
         the

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         previous sentence, Executive shall not be in violation of this section
         in the event of a disclosure pursuant to a court action or governmental
         rule, regulation or proceeding (hereinafter referred to as an "Ordered
         Disclosure") provided Executive has notified the Company of such
         Ordered Disclosure within five business days of being personally served
         with such Ordered Disclosure. Executive agrees to cooperate in good
         faith with the Company in responding to such Ordered Disclosure in
         order to prevent, limit, or impose restrictions on such Ordered
         Disclosure. In no event, however, shall this section require Executive
         to take action or otherwise cause Executive to be in violation of any
         law or result in contempt of such Ordered Disclosure.

         Upon termination of his employment with the Company, Executive shall
         surrender to the Company any and all work papers, reports, manuals,
         documents, and the like (including all originals and copies thereof and
         all electronic versions thereof) in his possession which contain
         confidential information relating to the business, prospects or plans
         of the Company or its affiliates.

         Executive agrees that following any termination of his employment with
         the Company, he will endorse strategies of the Company, and will not
         disclose or cause to be disclosed any negative, adverse, or derogatory
         comments or information of a substantial nature about the Company or
         its management, or about any product or service provided by the
         Company, or about the Company's prospects for the future. The Company
         may seek the assistance, cooperation, or testimony of Executive
         following any such termination in connection with any investigation,
         litigation, or proceeding arising out of matters within the knowledge
         of Executive and related to his position as an officer or employee of
         the Company, and in any instance, Executive shall provide such
         assistance, cooperation, or testimony and the Company shall pay
         Executive's reasonable costs and expenses in connection therewith. In
         addition, if such assistance, cooperation, or testimony requires more
         than a nominal commitment of Executive's time, the Company will
         compensate Executive for such time at a per diem rate derived from
         Executive's salary from the Company at the time of Executive's
         termination.

6.       TERMINATION

         The Employment Term and Executive's employment hereunder may be
         terminated by either party at any time and for any reason; provided,
         however, that Executive must provide the Company at least sixty days'
         advance written notice of any resignation of Executive's employment.
         Notwithstanding any other provision of this Agreement, the provisions
         of this Section 6 shall exclusively govern Executive's rights upon
         termination of employment with the Company and its affiliates and
         Executive shall have no other rights to any amounts not herein provided
         for, including any other severance or termination benefits or payments.

         a.       By the Company For Cause or By Executive Resignation.

                  i.       The Employment Term and Executive's employment
                           hereunder may be terminated by the Company for Cause.

                  ii.      If Executive's employment is terminated by the
                           Company for Cause, or if Executive resigns, Executive
                           shall be entitled to receive:

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                           (A)      in cash the Base Salary, as the same may be
                                    adjusted for any applicable COLA, through
                                    the date of termination;

                           (B)      in cash any Annual Bonus earned but unpaid
                                    as of the date of termination for any
                                    previously completed fiscal year;

                           (C)      reimbursement in cash for any unreimbursed
                                    business expenses properly incurred by
                                    Executive in accordance with Company policy
                                    prior to the date of Executive's
                                    termination;

                           (D)      such Employee Benefits, if any, as to which
                                    Executive may be entitled under the employee
                                    benefit plans of the Company, including, but
                                    not limited to, the Company's 2000 Unit
                                    Performance Plan and the Company's 2001
                                    Stock Option and Stock Award Plan; and

                           (E)      an amount in cash in respect of all accrued
                                    but unused vacation through the date of
                                    termination based on Executive's Base Salary
                                    then in effect and using a per diem rate of
                                    pay based on such Base Salary calculated by
                                    dividing such Base Salary by 260. The dollar
                                    amount payable to Executive under this
                                    Section 6aii(E) shall be the product of such
                                    per diem rate and the number of days of
                                    accrued but unused vacation (the amounts
                                    described in clauses (A) through (E) hereof
                                    being referred to as the "Accrued Rights").

         Following such termination of Executive's employment by the Company for
         Cause or resignation by Executive, except as set forth in this Section
         6aii, Executive shall have no further rights to any compensation or any
         other benefits under this Agreement.

         b.       Disability or Death.

                  i.       The Employment Term and Executive's employment
                           hereunder shall terminate upon Executive's death and
                           may be terminated by the Company if Executive suffers
                           a Disability.

                  ii.      Upon termination of Executive's employment hereunder
                           for either Disability or death, Executive or
                           Executive's estate (as the case may be) shall be
                           entitled to receive:

                           (A)      the Accrued Rights; and

                           (B)      a cash lump sum equal to (i) the product of
                                    $300,000 multiplied by a fraction the
                                    denominator of which is 1095 and the
                                    numerator of which is the number of days
                                    transpiring from March 22, 2001 to the date
                                    of Executive's death or Disability minus
                                    (ii) the aggregate amount of Annual Bonuses
                                    which have previously become payable to
                                    Executive hereunder and (iii) minus the
                                    amount determined by multiplying (I) the
                                    excess of the Fair Market Value of a Share
                                    as of the date of termination of Executive's
                                    employment over $2.00 by

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                                    (II) the number of Options vested under the
                                    Company's 2001 Stock Option Award Plan as of
                                    such date.

         Following Executive's termination of employment due to death or
         Disability, except as set forth in this Section 6bii, Executive shall
         have no further rights to any compensation or any other benefits under
         this Agreement.

         c.       By the Company Without Cause.

                  i.       The Employment Term and Executive's employment
                           hereunder may be terminated by the Company without
                           Cause.

                  ii.      If Executive's employment is terminated by the
                           Company without Cause, Executive shall be entitled to
                           receive:

                           (A)      the Accrued Rights;

                           (B)      a cash lump sum equal to the greater of the
                                    then current Base Salary for 12 months or
                                    the then current Base Salary prorated for
                                    the remaining Employment Term; and

                           (C)      a cash lump sum equal to the Adjusted
                                    Aggregate Value.

         Following Executive's termination of employment by the Company without
         Cause, except as set forth in this Section 6cii, Executive shall have
         no further rights to any compensation or any other benefits under this
         Agreement.

         d.       Following a Change in Control.

                  i.       The Employment Term and Executive's employment
                           hereunder may be terminated by either party following
                           a Change in Control.

                  ii.      Notwithstanding the foregoing provisions of this
                           Section 6, if Executive's employment is terminated by
                           the Company (or its successor) without Cause, or if
                           Executive resigns for any reason, in each case within
                           ninety days following a Change in Control, Executive
                           shall be entitled to receive, subject to clause iii
                           below:

                           (A)      the Accrued Rights;

                           (B)      a cash lump sum equal to the amount
                                    determined by multiplying the Base Salary in
                                    effect at the date of termination by three
                                    (3); and

                           (C)      a cash lump sum equal to the Adjusted
                                    Aggregate Value.

                  iii.     If all or any portion of the amount of any payment
                           made on account of this Section 6d or otherwise (a
                           "Change in Control Payment") would not be deductible
                           for federal income tax purposes by a Tax Affiliate
                           (or other person who made or is required to make such
                           Change in Control Payment) by reason of the
                           application of Section 280G of the Internal Revenue
                           Code of 1984 (the "Code"), the aggregate amount of
                           such payment shall be reduced until (A) no portion of
                           the total amount of all Change in Control

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                           Payments is not deductible by a Tax Affiliate (or
                           other person who made or is required to make such
                           Change in Control Payment) by reason of the
                           application of that section or (B) the aggregate
                           amount of such payment is reduced to zero. For
                           purposes of determining whether all or any portion of
                           the amount of any Change in Control Payment would not
                           be deductible for federal income tax purposes by a
                           Tax Affiliate (or other person who made or is
                           required to make such Change in Control Payment) by
                           reason of the application of that section,

                           (A)      no portion of the total amount of all Change
                                    in Control Payments the receipt or enjoyment
                                    of which the Employee shall have effectively
                                    waived, for purposes of section 280G of the
                                    Code, before the date of payment of the
                                    payments required under Section 6d shall be
                                    taken into account;

                           (B)      no portion of the total amount of all Change
                                    in Control Payments shall be taken into
                                    account that, in the opinion of tax counsel
                                    selected by the Company's independent
                                    accountants and reasonably acceptable to
                                    Executive (the "Tax Counsel"), does not
                                    constitute a "parachute payment" within the
                                    meaning of section 280G(b)(2) of the Code;

                           (C)      no portion of the total amount of all Change
                                    in Control Payments shall be taken into
                                    account that, in the opinion of Tax Counsel,
                                    (x) constitutes reasonable compensation for
                                    services rendered within the meaning of
                                    section 280G(B)(4) of the Code and (y) is
                                    not considered in the calculation of a
                                    "parachute payment"; and

                           (D)      the value of any noncash benefit or any
                                    deferred payment or benefit included in the
                                    total amount of all Change in Control
                                    Payments shall be determined by the
                                    Company's independent accountants, subject
                                    to review and comment by Executive, in
                                    accordance with sections 280G(d)(3) and
                                    280G(d)(4) of the Code.

                  Notwithstanding the foregoing, it is the intention of the
                  Company and the Executive to give effect to the full amount of
                  the payments contemplated by Section 6dii above, and the
                  Company agrees to use commercially reasonable efforts to
                  structure such payments in such a manner as to achieve the
                  fullest deductibility as is practicable and consistent with
                  legal requirements. Such structural features may include,
                  without limitation, reasonable allocations of portions of the
                  payments as consideration for surviving covenants of Executive
                  hereunder, deferral of portions of such payments or other
                  appropriate changes with respect to such payments.

         e.       Definition of Adjusted Aggregate Value. "Adjusted Aggregate
                  Value" at any date with reference to the termination of
                  Executive's employment under Sections 6c and 6d hereof shall
                  mean the lesser of (i) $300,000 and (ii) an amount equal to
                  $300,000 minus the aggregate amount of Annual Bonuses which
                  have previously

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                  become payable to Executive hereunder and minus the amount
                  determined by multiplying (I) the excess of the Fair Market
                  Value of a Share as of the date of termination of Executive's
                  employment over $2.00 by (II) the number of Options vested
                  under the Company's 2001 Stock Option Award Plan as of such
                  date.

         f.       Prompt Payment. Amounts payable in cash under this Section 6
                  shall be paid promptly upon termination of employment but in
                  any event within 30 days thereafter.

         g.       Continued Employment Beyond the Expiration of the Employment
                  Term. Unless the parties otherwise agree in writing,
                  continuation of Executive's employment with the Company beyond
                  the expiration of the Employment Term shall be deemed an
                  employment at-will and shall not be deemed to extend any of
                  the provisions of this Agreement and Executive's employment
                  may thereafter be terminated at will by either Executive or
                  the Company; provided that the provisions Sections 5, 7, and 9
                  of this Agreement shall survive any termination of this
                  Agreement or Executive's termination of employment hereunder.

         h.       Notice of Termination. Any purported termination of employment
                  by the Company or by Executive (other than due to Executive's
                  death) shall be communicated by Notice of Termination to the
                  other party hereto in accordance with Section 15.

         i.       Board Resignation. Upon termination of Executive's employment
                  for any reason, Executive shall resign, as of the date of such
                  termination and to the extent applicable, from the Board and
                  the board of directors of any of the Company's affiliates.

         j.       Loan Offset. The amounts payable to Executive upon termination
                  of Executive's employment may be reduced, at the Company's
                  sole discretion, by an amount not to exceed the then existing
                  principal balance, if any, of the loan contemplated by Section
                  4d hereof, and the amount owing on such loan shall be reduced
                  accordingly.

7.       RESTRICTIVE COVENANT

         a.       Executive acknowledges and recognizes the highly competitive
                  nature of the businesses of the Company and its affiliates and
                  accordingly agrees as follows:

                  i.       During the period commencing on March 22, 2001, and
                           terminating on March 21, 2004, or, if a shorter
                           period, one (1) year after termination of employment
                           by the Company without Cause under Section 6c hereof
                           or following a Change in Control under Section 6d
                           hereof (the "Restricted Period"), Executive will not
                           directly or indirectly:

                           (A)      engage in any business that competes with
                                    the business of the Company or its
                                    affiliates (a "Competitive Business");

                           (B)      enter the employ of, or render any services
                                    to, any person or entity (or any division of
                                    any person or entity) who or which engages
                                    in a Competitive Business, including any
                                    person or entity who or which

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                                    derives more than 10% of its annual revenues
                                    from any Competitive Business (or which is
                                    part of a controlled group of corporations
                                    which derives more than 10% of its annual
                                    revenues from any Competitive Business).

                           (C)      acquire a financial interest in, or
                                    otherwise become actively involved with, any
                                    Competitive Business, directly or
                                    indirectly, as an individual, partner,
                                    shareholder, officer, director, principal,
                                    agent, trustee or consultant; or

                           (D)      interfere with, or attempt to interfere
                                    with, business relationships (whether formed
                                    before, on, or after the date of this
                                    Agreement) between the Company or any of its
                                    affiliates and employees, customers, or
                                    suppliers of the Company or its affiliates.

                  ii.      Notwithstanding anything to the contrary in this
                           Agreement, Executive may directly or indirectly own,
                           solely as an investment, securities of any person
                           engaged in the business of the Company or its
                           affiliates which are publicly traded on a national or
                           regional stock exchange (including the NASDAQ Stock
                           Market as an exchange for this purpose) or on the
                           over-the-counter market if Executive (A) is not a
                           controlling person of, or a member of a group which
                           controls, such person and (B) does not, directly or
                           indirectly, own 3% or more of any class of securities
                           of such person.

                  iii.     During the period of one (1) year following the date
                           Executive ceases to be employed by the Company,
                           whether at the end of the Employment Term or sooner
                           (the "Special Restricted Period"), Executive will
                           not, whether on Executive's own behalf or on behalf
                           of or in conjunction with any person, company,
                           business entity or other organization whatsoever,
                           directly or indirectly:

                           (A)      solicit or encourage any employee of the
                                    Company or its affiliates to leave the
                                    employment of the Company or its affiliates;

                           (B)      hire any such employee who was employed by
                                    the Company or its affiliates as of the date
                                    of Executive's termination of employment
                                    with the Company or who left the employment
                                    of the Company or its affiliates coincident
                                    with, or within one year prior to or after,
                                    the termination of Executive's employment
                                    with the Company; or

                           (C)      directly or indirectly divert or attempt to
                                    divert from the Company any property
                                    acquisition or geological concept as to
                                    which the Company has been actively engaged
                                    during the term hereof.

                  iv.      During the Special Restricted Period, Executive will
                           not, directly or indirectly, solicit or encourage to
                           cease to work with the Company or its

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                           affiliates any consultant then under contract with
                           the Company or its affiliates.

         b.       It is expressly understood that although Executive and the
                  company consider the restrictions contained in this Section 7
                  to be reasonable, if a final judicial determination is made by
                  a court of competent jurisdiction that the time or territory
                  or any other restriction contained in this Agreement is an
                  unenforceable restriction against Executive, the provisions of
                  this Agreement shall not be rendered void but shall be deemed
                  amended to apply as to such maximum time and territory and to
                  such maximum extent as such court may judicially determine or
                  indicate to be enforceable. Alternatively, if any court of
                  competent jurisdiction finds that any restriction contained in
                  this Agreement is unenforceable, and such restriction cannot
                  be amended so as to make it enforceable, such finding shall
                  not affect the enforceability of any of the other restrictions
                  contained herein.

8.       INDEMNIFICATION

         Except to the extent attributable to Executive's willful misconduct or
         action leading to the Company's termination of this Agreement for
         Cause, the Company shall indemnify Executive against expenses
         (including attorneys' fees), judgments, fines, and amounts paid in
         settlement actually and reasonably incurred by him in connection with
         any action, suit or proceeding to which Executive has been made a party
         by reason of his capacity as Executive Officer of the Company if
         Executive acted in good faith and in a manner Executive reasonably
         believed to be in or not opposed to the best interest of the Company
         and, with respect to any criminal action or proceeding, had no
         reasonable cause to believe Executive's conduct was unlawful. The
         termination of any action, suit, or proceeding by judgment, order,
         settlement, conviction, or upon a plea of nolo contendere or its
         equivalent, shall not, of itself, create a presumption that Executive
         did not act in good faith and in a manner which Executive reasonably
         believed to be in or not opposed to the best interest of the Company,
         and with respect to any criminal action or proceeding, had reasonable
         cause to believe that Executive's conduct was unlawful.

9.       ADDITIONAL REMEDIES

         In the event of a breach or a threatened breach of the terms of Section
         5 or 7 by Executive, the Company shall, in addition to all other
         remedies, be entitled to a temporary or permanent injunction and/or a
         decree for specific performance, in accordance with the provisions
         hereof, without showing any actual damage or that monetary damages
         would not provide an adequate remedy and without any bond or other
         security being required.

10.      NONASSIGNMENT

         This Agreement is personal to Executive and shall not be assigned by
         him. Executive shall not hypothecate, delegate, encumber, alienate,
         transfer, or otherwise dispose of his rights and duties hereunder. The
         Company may assign this Agreement without Executive's consent to any
         other entity who, in connection with such assignment, acquires all or
         substantially all of the Company's assets, or into or with which the
         Company is merged or consolidated.

                                      -11-
<PAGE>   12

11.      WAIVER

         The waiver by the Company of a breach by Executive of any provision of
         this Agreement shall not be construed as a waiver of any subsequent
         breach by Executive.

12.      SEVERABILITY

         If any clause, phrase, provision, or portion of this Agreement or the
         application thereof to any person or circumstance shall be invalid or
         unenforceable under any applicable law, such event shall not affect or
         render invalid or unenforceable the remainder of this Agreement and
         shall not affect the application of any clause, provision, or portion
         hereof to other persons or circumstances.

13.      DISPUTES

         Each of the parties hereto hereby irrevocably agrees that any legal
         action or proceeding arising out of this Agreement shall be brought
         only in the state or federal courts located in the State of Texas. Each
         party hereto hereby irrevocably consents to the service of process
         outside the territorial jurisdiction of such courts in any such action
         or proceeding by the mailing of such documents by registered United
         States mail, postage prepaid, if to the Company to the address of its
         principal place of business and if to Executive to the address listed
         in the Company's books and records.

14.      RELEVANT LAW

         This Agreement shall be construed by, subject to, and governed in
         accordance with the internal laws of the State of Texas.

15.      NOTICES

         All notices, requests, demands, and other communications in connection
         with this Agreement shall be made in writing and shall be deemed to
         have been given when delivered by hand or 48 hours after mailing at any
         general or branch United States post office by registered or certified
         mail, postage prepaid, addressed as follows, or to such other address
         as shall have been designated in writing by the addressee:

         a.       If to the Company

                           Contour Energy Co.
                           Suite 1100
                           601 Jefferson Street
                           Houston, Texas   77002
                           Attention:  Corporate Secretary

         b.       If to Executive:

                           Rick Lester
                           Contour Energy Co.
                           Suite 1100
                           601 Jefferson Street
                           Houston, Texas   77002

                                      -12-
<PAGE>   13

16.      ENTIRE AGREEMENT

         This Agreement sets forth the entire understanding of the parties and
         supersedes all prior agreements, arrangements, and communications,
         whether oral or written, and this Agreement shall not be modified or
         amended except by written agreement of the Company and Executive.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first set forth above.

                                    COMPANY:

                                    CONTOUR ENERGY CO.

                                    By  /s/ Ward W. Woods
                                      ------------------------------------------
                                        Authorized Representative

                                    EXECUTIVE:

                                        /s/ Rick G. Lester
                                      ------------------------------------------

                                      -13-<PAGE>   1
                                                                    EXHIBIT 10.2

                              EMPLOYMENT AGREEMENT

         This Agreement, made as of this 22nd day of March, 2001, by and between
Contour Energy Co., a Delaware corporation (the "Company"), and Kenneth R.
Sanders ("Executive").

                                   WITNESSETH:

         WHEREAS, the Company desires to employ Executive, and in particular, as
President and Chief Executive Officer, effective April 30, 2001, on the terms
set forth below, and Executive is willing to accept such employment on such
terms.

         NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the parties hereto do hereby agree:

1.       DEFINITIONS

         As used in this Agreement, defined words and phrases have the meaning
         first ascribed to them herein whenever the first letter of each word is
         capitalized. Words used in the masculine apply equally to the feminine,
         and wherever the context dictates, the plural should be read as the
         singular and the singular as the plural. References to Sections are to
         Sections of this Agreement. The headings at the beginning of each
         section are inserted for convenience only and are not intended to
         describe, interpret, define, or limit the scope, extent, or intent of
         this Agreement.

         a.       "Board" means the Company's board of directors.

         b.       "Cause" shall be deemed to exist if, and only if:

                  i.       Executive is convicted in a court of law of any crime
                           (i) that constitutes a felony relating to the Company
                           or any other business endeavor or (ii) that
                           constitutes a felony which involves moral turpitude;
                           or

                  ii.      Executive engages in willful misconduct or any
                           material breach of or willful material failure to
                           perform his duties and responsibilities hereunder,
                           which misconduct, breach, or failure shall continue
                           after the Company, by action of the Board, shall have
                           advised Executive thereof in writing and shall have
                           afforded Executive a reasonable opportunity (which
                           shall be at least 30 days from the date of such
                           written advice or knowledge thereof) to correct the
                           acts or omissions complained of, and which Executive
                           shall have so failed to take action to correct within
                           such period.

         c.       "Disability" means Executive's inability to fully and
                  competently perform the duties hereunder for a period of at
                  least three consecutive months by reason of mental or physical
                  illness or other incapacity. The Company and Executive or his
                  attorney-in-fact shall, based on competent medical advice,
                  determine whether Executive is and continues to be disabled.
                  If the Company and Executive or his attorney-in-fact disagree
                  with the determination of disability, then each of them shall
                  appoint a doctor and the two doctors shall select a third
                  independent doctor whose decision as to whether Executive has
                  been unable to perform the duties of the nature contemplated
                  hereunder for a three-consecutive-month period shall be
                  binding on the parties.

<PAGE>   2

                  The doctor advising the Company with regard to the Company's
                  initial determination of whether Executive has been disabled
                  within the foregoing meaning and the independent doctor
                  selected by the two doctors designated by the Company and
                  Executive or his attorney-in-fact shall be given full access
                  to Executive's medical records and shall be afforded a
                  reasonable opportunity to examine Executive. The Company
                  agrees to instruct such doctors to maintain all information
                  reflected in Executive's records in full confidence and not to
                  disclose such information to any person (including the
                  Company) except as may be necessary for the determination
                  described above. All references to doctor in this paragraph
                  1.d shall mean a practicing doctor of medicine.

         d.       "Executive Officer" means all positions held by Executive with
                  the Company at present and, effective April 30, 2001,
                  President and Chief Executive Officer.

         e.       "Fair Market Value" has the meaning given such phrase in
                  Section 4.b hereof.

         f.       "Notice of Termination" means a written notice that sets forth
                  the date of termination and, in the event of termination for
                  Cause or Disability, the facts and circumstances claimed to
                  provide a basis for termination of Executive's employment.

         g.       "Change of Control" means if (i) the Company is merged or
                  consolidated with another corporation and as a result of such
                  merger or consolidation less than 50% of the outstanding
                  voting securities of the surviving or resulting corporation
                  are owned in the aggregate by the former shareholders of the
                  Company; (ii) the Company sells all or substantially all of
                  its assets to another corporation, which is not a wholly-owned
                  subsidiary of the Company; (iii) any person or group within
                  the meaning of the Securities Exchange Act of 1934, as
                  amended, acquires (together with voting securities of the
                  Company held by such person or group) 30% or more of the
                  outstanding voting securities of the Company (whether
                  directly, indirectly, beneficially or of record) pursuant to
                  any transaction or combination of transactions; (iv) there is
                  a change of control of the Company of a nature that would be
                  required to be reported in response to Item 6(e) of Schedule
                  14A of Regulation 14A promulgated under the Securities
                  Exchange Act of 1934,, as amended, whether or not the Company
                  is then subject to such reporting requirements; or (v) the
                  individuals who, at the beginning of any period of twelve
                  consecutive months, constituted the Board of Directors cease,
                  for any reason, to constitute at least a majority thereof,
                  unless the nomination for election or election by the
                  Company's shareholders of each new director of the Company was
                  approved by a vote of at least two-thirds of the directors
                  then still in office who either were directors at the
                  beginning of such period or whose election or nomination for
                  election was previously so approved.

2.       TERM

         This Agreement commences effective as of March 22, 2001 (the
         "Commencement Date"), and shall continue for three (3) years from the
         Commencement Date, unless sooner terminated (the "Employment Term").

                                      -2-
<PAGE>   3

3.       DUTIES

         During the Employment Term the Company will employ Executive in a
         senior executive capacity, with such responsibilities as the Company
         may from time to time determine during the term of this Agreement,
         including the duties attendant to being Executive Officer. Executive
         will comply with all applicable laws, with all corporate documents
         governing the conduct of the Company's business and affairs, and with
         the Company's policies.

         Executive agrees to devote substantially all of his business time to
         the performance of his duties hereunder.

4.       COMPENSATION

         a.       The Company shall pay Executive for all services to be
                  performed hereunder during the term of this Agreement. The
                  Company agrees to pay to Executive an annual salary of
                  $250,000 (the "Base Salary"), payable in semimonthly
                  installments in arrears on the fifteenth and last day of each
                  calendar month, the first such installment to be payable for
                  the period ended March 31, 2001. On the anniversary of this
                  Agreement in each of 2002 and 2003, the Base Salary shall be
                  adjusted upward by the amount necessary, if any, to provide a
                  cost of living adjustment ("COLA"). The annual adjustment
                  shall be determined by reference to the latest available
                  monthly publication (prior to each such anniversary date) by
                  the U.S. Department of Labor of the Consumer Price Index
                  compared to the comparable publication in the preceding year
                  and applying appropriate calculations to arrive at the Base
                  Salary for the ensuing year of the Employment Term.

         b.       With respect to each full fiscal year during the Employment
                  Term, Executive shall be eligible to earn an annual bonus
                  award (an "Annual Bonus") in such amount, if any, as
                  determined in the sole discretion of the Board; provided,
                  however, that, should he remain employed for the full
                  Employment Term, Executive shall be paid a cash lump sum of
                  the lesser of (a) $400,000 and (ii) $400,000 minus an amount
                  equal to "Aggregate Value". "Aggregate Value" shall mean (i)
                  all amounts payable to Executive as Annual Bonuses, plus (ii)
                  a dollar amount equal to 400,000 multiplied by the excess, if
                  any, of (a) the Fair Market Value (as hereinafter defined) of
                  a Share (as hereinafter defined) as of March 21, 2004, over
                  (b) $2.00. For purposes hereof "Fair Market Value" of a Share
                  shall mean the arithmetic average, for the twenty business
                  days preceding March 21, 2004 or, if earlier preceding the
                  date of termination of Executive's employment pursuant to
                  Sections 6b, 6c or 6d hereof, on which Shares could have been
                  traded, of the last reported sale prices regular way or, in
                  case no such reported sale takes place on any such day, the
                  average of the last closing bid and asked prices regular way,
                  in either case on the principal national securities exchange
                  on which the Shares are listed or admitted to trading, or if
                  not listed or admitted to trading on any national securities
                  exchange, (i) the closing sale price for such day reported by
                  the NASDAQ Stock Market, if such security is traded
                  over-the-counter and quoted on the NASDAQ Stock Market, or
                  (ii) if such security is so traded, but no so quoted, the
                  average of the closing reported bid and

                                      -3-
<PAGE>   4

                  asked prices of such security as reported by the NASDAQ Stock
                  Market or any comparable system, or (iii) if such security is
                  not listed on the NASDAQ Stock Market or any comparable
                  system, the average of the closing bid and asked prices as
                  furnished by two members of the National Association of
                  Securities Dealers, Inc. selected from time to time by the
                  Company for that purpose. If such security is not listed and
                  traded in a manner that the quotations referred to above are
                  available for the period required hereunder, the Fair Market
                  Value per Share of such security shall be deemed to be the
                  fair value per share of such security as reasonably determined
                  in good faith by the Board of Directors of the Company.

         c.       The Company acknowledges that the Board (and/or the
                  Compensation Committee thereof) has granted Executive, as of
                  March 22, 2001, under the Company's 2001 Stock Plan, options
                  ("Options") to purchase 400,000 shares ("Shares") of common
                  stock of the Company, at an exercise price of $2.00 per share,
                  subject to adjustment from time to time in accordance with
                  such Plan.

         d.       In addition to the payments and awards set forth in paragraphs
                  a, b, c, and d above:

                  i.       During the term of this Agreement, upon submission of
                           a reasonable accounting, the Company shall reimburse
                           Executive for all reasonable travel, entertainment,
                           and other business expenses that are in compliance
                           with Company policy related to his employment
                           hereunder.

                  ii.      During the term of this Agreement, Executive shall be
                           eligible for the Company's employee benefit programs
                           on the terms on which the same are extended to the
                           Company's executives generally, including but not
                           limited to the Company's Section 401(k) plan, a
                           health care plan, 30 work days (per calendar year)
                           vacation, and reimbursement for reserved parking
                           expenses. To the extent that vacation is not used in
                           any year during the Employment Term, such vacation
                           may be carried forward without limitation. The amount
                           of vacation accrued for the year in which termination
                           of employment occurs shall be prorated for the
                           fraction of the year which has transpired as of the
                           date of termination.

         e.       During the term of this Agreement, Executive shall be entitled
                  to reimbursement for membership dues for a business club
                  (luncheon) and a country club and to reimbursement for the
                  initiation fees and dues for an athletic club.

         The Company shall have the right to deduct from all payments to be made
         under this Agreement any federal, state, or local taxes required by law
         to be withheld from such payments.

5.       NONDISCLOSURE OF CONFIDENTIAL INFORMATION

         Executive agrees that, during his employment by the Company and
         thereafter, he will not use or disclose to others, directly or
         indirectly, any confidential information relating to the business,
         prospects, or plans of the Company or its subsidiaries. Notwithstanding
         the previous sentence, Executive shall not be in violation of this
         section in the event of a disclosure pursuant to a court action or
         governmental rule, regulation or proceeding (hereinafter referred to as
         an "Ordered Disclosure") provided Executive has notified the

                                      -4-
<PAGE>   5

         Company of such Ordered Disclosure within five business days of being
         personally served with such Ordered Disclosure. Executive agrees to
         cooperate in good faith with the Company in responding to such Ordered
         Disclosure in order to prevent, limit, or impose restrictions on such
         Ordered Disclosure. In no event, however, shall this section require
         Executive to take action or otherwise cause Executive to be in
         violation of any law or result in contempt of such Ordered Disclosure.

         Upon termination of his employment with the Company, Executive shall
         surrender to the Company any and all work papers, reports, manuals,
         documents, and the like (including all originals and copies thereof and
         all electronic versions thereof) in his possession which contain
         confidential information relating to the business, prospects or plans
         of the Company or its affiliates.

         Executive agrees that following any termination of his employment with
         the Company, he will endorse strategies of the Company, and will not
         disclose or cause to be disclosed any negative, adverse, or derogatory
         comments or information of a substantial nature about the Company or
         its management, or about any product or service provided by the
         Company, or about the Company's prospects for the future. The Company
         may seek the assistance, cooperation, or testimony of Executive
         following any such termination in connection with any investigation,
         litigation, or proceeding arising out of matters within the knowledge
         of Executive and related to his position as an officer or employee of
         the Company, and in any instance, Executive shall provide such
         assistance, cooperation, or testimony and the Company shall pay
         Executive's reasonable costs and expenses in connection therewith. In
         addition, if such assistance, cooperation, or testimony requires more
         than a nominal commitment of Executive's time, the Company will
         compensate Executive for such time at a per diem rate derived from
         Executive's salary from the Company at the time of Executive's
         termination.

6.       TERMINATION

         The Employment Term and Executive's employment hereunder may be
         terminated by either party at any time and for any reason; provided,
         however, that Executive must provide the Company at least sixty days'
         advance written notice of any resignation of Executive's employment.
         Notwithstanding any other provision of this Agreement, the provisions
         of this Section 6 shall exclusively govern Executive's rights upon
         termination of employment with the Company and its affiliates and
         Executive shall have no other rights to any amounts not herein provided
         for, including any other severance or termination benefits or payments.

         a.       By the Company For Cause or By Executive Resignation.

                  i.       The Employment Term and Executive's employment
                           hereunder may be terminated by the Company for Cause.

                  ii.      If Executive's employment is terminated by the
                           Company for Cause, or if Executive resigns, Executive
                           shall be entitled to receive:

                           (A)      in cash the Base Salary, as the same may be
                                    adjusted for any applicable COLA, through
                                    the date of termination;

                                      -5-
<PAGE>   6

                           (B)      in cash any Annual Bonus earned but unpaid
                                    as of the date of termination for any
                                    previously completed fiscal year;

                           (C)      reimbursement in cash for any unreimbursed
                                    business expenses properly incurred by
                                    Executive in accordance with Company policy
                                    prior to the date of Executive's
                                    termination;

                           (D)      such Employee Benefits, if any, as to which
                                    Executive may be entitled under the employee
                                    benefit plans of the Company, including, but
                                    not limited to, the Company's 2000 Unit
                                    Performance Plan and the Company's 2001
                                    Stock Option and Stock Award Plan; and

                           (E)      an amount in cash in respect of all accrued
                                    but unused vacation through the date of
                                    termination based on Executive's Base Salary
                                    then in effect and using a per diem rate of
                                    pay based on such Base Salary calculated by
                                    dividing such Base Salary by 260. The dollar
                                    amount payable to Executive under this
                                    Section 6aii(E) shall be the product of such
                                    per diem rate and the number of days of
                                    accrued but unused vacation (the amounts
                                    described in clauses (A) through (E) hereof
                                    being referred to as the "Accrued Rights").

         Following such termination of Executive's employment by the Company for
         Cause or resignation by Executive, except as set forth in this Section
         6aii, Executive shall have no further rights to any compensation or any
         other benefits under this Agreement.

         b.       Disability or Death.

                  i.       The Employment Term and Executive's employment
                           hereunder shall terminate upon Executive's death and
                           may be terminated by the Company if Executive suffers
                           a Disability.

                  ii.      Upon termination of Executive's employment hereunder
                           for either Disability or death, Executive or
                           Executive's estate (as the case may be) shall be
                           entitled to receive:

                           (A)      the Accrued Rights; and

                           (B)      a cash lump sum equal to (i) the product of
                                    $400,000 multiplied by a fraction the
                                    denominator of which is 1095 and the
                                    numerator of which is the number of days
                                    transpiring from March 22, 2001 to the date
                                    of Executive's death or Disability minus
                                    (ii) the aggregate amount of Annual Bonuses
                                    which have previously become payable to
                                    Executive hereunder and (iii) minus the
                                    amount determined by multiplying (I) the
                                    excess of the Fair Market Value of a Share
                                    as of the date of termination of Executive's
                                    employment over $2.00 by (II) the number of
                                    Options vested under the Company's 2001
                                    Stock Option Award Plan as of such date.

                                      -6-
<PAGE>   7

         Following Executive's termination of employment due to death or
         Disability, except as set forth in this Section 6bii, Executive shall
         have no further rights to any compensation or any other benefits under
         this Agreement.

         c.       By the Company Without Cause.

                  i.       The Employment Term and Executive's employment
                           hereunder may be terminated by the Company without
                           Cause.

                  ii.      If Executive's employment is terminated by the
                           Company without Cause, Executive shall be entitled to
                           receive:

                           (A)      the Accrued Rights;

                           (B)      a cash lump sum equal to the greater of the
                                    then current Base Salary for 12 months or
                                    the then current Base Salary prorated for
                                    the remaining Employment Term; and

                           (C)      a cash lump sum equal to the Adjusted
                                    Aggregate Value.

         Following Executive's termination of employment by the Company without
         Cause, except as set forth in this Section 6cii, Executive shall have
         no further rights to any compensation or any other benefits under this
         Agreement.

         d.       Following a Change in Control.

                  i.       The Employment Term and Executive's employment
                           hereunder may be terminated by either party following
                           a Change in Control.

                  ii.      Notwithstanding the foregoing provisions of this
                           Section 6, if Executive's employment is terminated by
                           the Company (or its successor) without Cause, or if
                           Executive resigns for any reason, in each case within
                           ninety days following a Change in Control, Executive
                           shall be entitled to receive, subject to clause iii
                           below:

                           (A)      the Accrued Rights;

                           (B)      a cash lump sum equal to the amount
                                    determined by multiplying the Base Salary in
                                    effect at the date of termination by three
                                    (3); and

                           (C)      a cash lump sum equal to the Adjusted
                                    Aggregate Value.

                  iii.     If all or any portion of the amount of any payment
                           made on account of this Section 6d or otherwise (a
                           "Change in Control Payment") would not be deductible
                           for federal income tax purposes by a Tax Affiliate
                           (or other person who made or is required to make such
                           Change in Control Payment) by reason of the
                           application of Section 280G of the Internal Revenue
                           Code of 1984 (the "Code"), the aggregate amount of
                           such payment shall be reduced until (A) no portion of
                           the total amount of all Change in Control Payments is
                           not deductible by a Tax Affiliate (or other person
                           who made or is required to make such Change in
                           Control Payment) by reason of the application of that
                           section or (B) the aggregate amount of such payment
                           is

                                      -7-
<PAGE>   8

                           reduced to zero. For purposes of determining whether
                           all or any portion of the amount of any Change in
                           Control Payment would not be deductible for federal
                           income tax purposes by a Tax Affiliate (or other
                           person who made or is required to make such Change in
                           Control Payment) by reason of the application of that
                           section,

                           (A)      no portion of the total amount of all Change
                                    in Control Payments the receipt or enjoyment
                                    of which the Employee shall have effectively
                                    waived, for purposes of section 280G of the
                                    Code, before the date of payment of the
                                    payments required under Section 6d shall be
                                    taken into account;

                           (B)      no portion of the total amount of all Change
                                    in Control Payments shall be taken into
                                    account that, in the opinion of tax counsel
                                    selected by the Company's independent
                                    accountants and reasonably acceptable to
                                    Executive (the "Tax Counsel"), does not
                                    constitute a "parachute payment" within the
                                    meaning of section 280G(b)(2) of the Code;

                           (C)      no portion of the total amount of all Change
                                    in Control Payments shall be taken into
                                    account that, in the opinion of Tax Counsel,
                                    (x) constitutes reasonable compensation for
                                    services rendered within the meaning of
                                    section 280G(B)(4) of the Code and (y) is
                                    not considered in the calculation of a
                                    "parachute payment"; and

                           (D)      the value of any noncash benefit or any
                                    deferred payment or benefit included in the
                                    total amount of all Change in Control
                                    Payments shall be determined by the
                                    Company's independent accountants, subject
                                    to review and comment by Executive, in
                                    accordance with sections 280G(d)(3) and
                                    280G(d)(4) of the Code.

                  Notwithstanding the foregoing provisions of this Section
                  6diii, it is the intention of the Company and the Executive to
                  give effect to the full amount of the payments contemplated by
                  Section 6dii above, and the Company agrees to use commercially
                  reasonable efforts to structure such payments in such a manner
                  as to achieve the fullest deductibility as is practicable and
                  consistent with legal requirements. Such structural features
                  may include, without limitation, reasonable allocations of
                  portions of the payments as consideration for surviving
                  covenants of Executive hereunder, deferral of portions of such
                  payments or other appropriate changes with respect to such
                  payments.

         e.       Definition of Adjusted Aggregate Value. "Adjusted Aggregate
                  Value" at any date with reference to the termination of
                  Executive's employment under Sections 6c and 6d hereof shall
                  mean the lesser of (i) $400,000 and (ii) an amount equal to
                  $400,000 minus the aggregate amount of Annual Bonuses which
                  have previously become payable to Executive hereunder and
                  minus the amount determined by multiplying (I) the excess of
                  the Fair Market Value of a Share as of the date of

                                      -8-
<PAGE>   9

                  termination of Executive's employment over $2.00 by (II) the
                  number of Options vested under the Company's 2001 Stock Option
                  Award Plan as of such date.

         f.       Prompt Payment. Amounts payable in cash under this Section 6
                  shall be paid promptly upon termination of employment but in
                  any event within 30 days thereafter.

         g.       Continued Employment Beyond the Expiration of the Employment
                  Term. Unless the parties otherwise agree in writing,
                  continuation of Executive's employment with the Company beyond
                  the expiration of the Employment Term shall be deemed an
                  employment at-will and shall not be deemed to extend any of
                  the provisions of this Agreement and Executive's employment
                  may thereafter be terminated at will by either Executive or
                  the Company; provided that the provisions Sections 5, 7, and 9
                  of this Agreement shall survive any termination of this
                  Agreement or Executive's termination of employment hereunder.

         h.       Notice of Termination. Any purported termination of employment
                  by the Company or by Executive (other than due to Executive's
                  death) shall be communicated by Notice of Termination to the
                  other party hereto in accordance with Section 15.

         i.       Board Resignation. Upon termination of Executive's employment
                  for any reason, Executive shall resign, as of the date of such
                  termination and to the extent applicable, from the Board and
                  the board of directors of any of the Company's affiliates.

7.       RESTRICTIVE COVENANT

         a.       Executive acknowledges and recognizes the highly competitive
                  nature of the businesses of the Company and its affiliates and
                  accordingly agrees as follows:

                  i.       During the period commencing on March 22, 2001, and
                           terminating on March 21, 2004, or, if a shorter
                           period, one (1) year after termination of employment
                           by the Company without Cause under Section 6c hereof
                           or following a Change in Control under Section 6d
                           hereof (the "Restricted Period"), Executive will not
                           directly or indirectly:

                           (A)      engage in any business that competes with
                                    the business of the Company or its
                                    affiliates (a "Competitive Business");

                           (B)      enter the employ of, or render any services
                                    to, any person or entity (or any division of
                                    any person or entity) who or which engages
                                    in a Competitive Business, including any
                                    person or entity who or which derives more
                                    than 10% of its annual revenues from any
                                    Competitive Business (or which is part of a
                                    controlled group of corporations which
                                    derives more than 10% of its annual revenues
                                    from any Competitive Business).

                           (C)      acquire a financial interest in, or
                                    otherwise become actively involved with, any
                                    Competitive Business, directly or
                                    indirectly, as

                                      -9-
<PAGE>   10

                                    an individual, partner, shareholder,
                                    officer, director, principal, agent, trustee
                                    or consultant; or

                           (D)      interfere with, or attempt to interfere
                                    with, business relationships (whether formed
                                    before, on, or after the date of this
                                    Agreement) between the Company or any of its
                                    affiliates and employees, customers, or
                                    suppliers of the Company or its affiliates.

                  ii.      Notwithstanding anything to the contrary in this
                           Agreement, Executive may directly or indirectly own,
                           solely as an investment, securities of any person
                           engaged in the business of the Company or its
                           affiliates which are publicly traded on a national or
                           regional stock exchange (including the NASDAQ Stock
                           Market as an exchange for this purpose) or on the
                           over-the-counter market if Executive (A) is not a
                           controlling person of, or a member of a group which
                           controls, such person and (B) does not, directly or
                           indirectly, own 3% or more of any class of securities
                           of such person.

                  iii.     During the period of one (1) year following the date
                           Executive ceases to be employed by the Company,
                           whether at the end of the Employment Term or sooner
                           (the "Special Restricted Period"), Executive will
                           not, whether on Executive's own behalf or on behalf
                           of or in conjunction with any person, company,
                           business entity or other organization whatsoever,
                           directly or indirectly:

                           (A)      solicit or encourage any employee of the
                                    Company or its affiliates to leave the
                                    employment of the Company or its affiliates;

                           (B)      hire any such employee who was employed by
                                    the Company or its affiliates as of the date
                                    of Executive's termination of employment
                                    with the Company or who left the employment
                                    of the Company or its affiliates coincident
                                    with, or within one year prior to or after,
                                    the termination of Executive's employment
                                    with the Company; or

                           (C)      directly or indirectly divert or attempt to
                                    divert from the Company any property
                                    acquisition or geological concept as to
                                    which the Company has been actively engaged
                                    during the term hereof.

                  iv.      During the Special Restricted Period, Executive will
                           not, directly or indirectly, solicit or encourage to
                           cease to work with the Company or its affiliates any
                           consultant then under contract with the Company or
                           its affiliates.

         b.       It is expressly understood that although Executive and the
                  company consider the restrictions contained in this Section 7
                  to be reasonable, if a final judicial determination is made by
                  a court of competent jurisdiction that the time or territory
                  or any other restriction contained in this Agreement is an
                  unenforceable restriction against Executive, the provisions of
                  this Agreement shall not be rendered void but shall be deemed
                  amended to apply as to such maximum time

                                      -10-
<PAGE>   11

                  and territory and to such maximum extent as such court may
                  judicially determine or indicate to be enforceable.
                  Alternatively, if any court of competent jurisdiction finds
                  that any restriction contained in this Agreement is
                  unenforceable, and such restriction cannot be amended so as to
                  make it enforceable, such finding shall not affect the
                  enforceability of any of the other restrictions contained
                  herein.

8.       INDEMNIFICATION

         Except to the extent attributable to Executive's willful misconduct or
         action leading to the Company's termination of this Agreement for
         Cause, the Company shall indemnify Executive against expenses
         (including attorneys' fees), judgments, fines, and amounts paid in
         settlement actually and reasonably incurred by him in connection with
         any action, suit or proceeding to which Executive has been made a party
         by reason of his capacity as Executive Officer of the Company if
         Executive acted in good faith and in a manner Executive reasonably
         believed to be in or not opposed to the best interest of the Company
         and, with respect to any criminal action or proceeding, had no
         reasonable cause to believe Executive's conduct was unlawful. The
         termination of any action, suit, or proceeding by judgment, order,
         settlement, conviction, or upon a plea of nolo contendere or its
         equivalent, shall not, of itself, create a presumption that Executive
         did not act in good faith and in a manner which Executive reasonably
         believed to be in or not opposed to the best interest of the Company,
         and with respect to any criminal action or proceeding, had reasonable
         cause to believe that Executive's conduct was unlawful.

9.       ADDITIONAL REMEDIES

         In the event of a breach or a threatened breach of the terms of Section
         5 or 7 by Executive, the Company shall, in addition to all other
         remedies, be entitled to a temporary or permanent injunction and/or a
         decree for specific performance, in accordance with the provisions
         hereof, without showing any actual damage or that monetary damages
         would not provide an adequate remedy and without any bond or other
         security being required.

10.      NONASSIGNMENT

         This Agreement is personal to Executive and shall not be assigned by
         him. Executive shall not hypothecate, delegate, encumber, alienate,
         transfer, or otherwise dispose of his rights and duties hereunder. The
         Company may assign this Agreement without Executive's consent to any
         other entity who, in connection with such assignment, acquires all or
         substantially all of the Company's assets, or into or with which the
         Company is merged or consolidated.

11.      WAIVER

         The waiver by the Company of a breach by Executive of any provision of
         this Agreement shall not be construed as a waiver of any subsequent
         breach by Executive.

12.      SEVERABILITY

         If any clause, phrase, provision, or portion of this Agreement or the
         application thereof to any person or circumstance shall be invalid or
         unenforceable under any applicable law,

                                      -11-
<PAGE>   12

         such event shall not affect or render invalid or unenforceable the
         remainder of this Agreement and shall not affect the application of any
         clause, provision, or portion hereof to other persons or circumstances.

13.      DISPUTES

         Each of the parties hereto hereby irrevocably agrees that any legal
         action or proceeding arising out of this Agreement shall be brought
         only in the state or federal courts located in the State of Texas. Each
         party hereto hereby irrevocably consents to the service of process
         outside the territorial jurisdiction of such courts in any such action
         or proceeding by the mailing of such documents by registered United
         States mail, postage prepaid, if to the Company to the address of its
         principal place of business and if to Executive to the address listed
         in the Company's books and records.

14.      RELEVANT LAW

         This Agreement shall be construed by, subject to, and governed in
         accordance with the internal laws of the State of Texas.

15.      NOTICES

         All notices, requests, demands, and other communications in connection
         with this Agreement shall be made in writing and shall be deemed to
         have been given when delivered by hand or 48 hours after mailing at any
         general or branch United States post office by registered or certified
         mail, postage prepaid, addressed as follows, or to such other address
         as shall have been designated in writing by the addressee:

         a.       If to the Company

                           Contour Energy Co.
                           Suite 1100
                           601 Jefferson Street
                           Houston, Texas   77002
                           Attention:  Corporate Secretary

         b.       If to Executive:

                           Kenneth R. Sanders
                           Contour Energy Co.
                           Suite 1100
                           601 Jefferson Street
                           Houston, Texas   77002

16.      ENTIRE AGREEMENT

         This Agreement sets forth the entire understanding of the parties and
         supersedes all prior agreements, arrangements, and communications,
         whether oral or written, and this Agreement shall not be modified or
         amended except by written agreement of the Company and Executive.

                                      -12-
<PAGE>   13

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first set forth above.

                                        COMPANY:

                                        CONTOUR ENERGY CO.

                                        By  /s/ Ward W. Woods
                                          --------------------------------------
                                            Authorized Representative

                                        EXECUTIVE:

                                            /s/ Kenneth R. Sanders
                                        ----------------------------------------

                                      -13-

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