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EXHIBIT 10.2.3
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
between
XXXXXX X. XXXXXXX
and
CHESAPEAKE ENERGY CORPORATION
Effective August 1, 2000
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TABLE OF CONTENTS
Page
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1. Employment....................................................................................... 1
2. Executive's Duties............................................................................... 1
2.1 Specific Duties............................................................................. 1
2.2 Supervision................................................................................. 1
2.3 Rules and Regulations....................................................................... 1
2.4 Stock Investment............................................................................ 2
3. Other Activities................................................................................. 2
4. Executive's Compensation......................................................................... 2
4.1 Base Salary................................................................................. 2
4.2 Bonus....................................................................................... 2
4.3 Stock Options............................................................................... 2
4.4 Benefits.................................................................................... 3
4.4.1 Vacation............................................................................. 3
4.4.2 Membership Dues...................................................................... 3
4.4.3 Compensation Review.................................................................. 3
4.4.4 Automobile Allowance................................................................. 3
4.4.5 Aircraft Allowance................................................................... 3
5. Term............................................................................................. 4
6. Termination...................................................................................... 4
6.1 Termination by Company...................................................................... 4
6.1.1 Termination without Cause............................................................ 4
6.1.2 Termination for Cause................................................................ 4
6.1.3 Termination After Change of Control.................................................. 4
6.2 Termination by Executive.................................................................... 5
6.3 Incapacity of Executive..................................................................... 5
6.4 Death of Executive.......................................................................... 6
6.5 Effect of Termination....................................................................... 6
7. Confidentiality.................................................................................. 6
8. Noncompetition................................................................................... 7
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9. Proprietary Matters.............................................................................. 7
TABLE OF CONTENTS (continued)
10. Arbitration...................................................................................... 8
11. Miscellaneous.................................................................................... 8
11.1 Time................................................................................ 8
11.2 Notices............................................................................. 8
11.3 Assignment.......................................................................... 9
11.4 Construction........................................................................ 9
11.5 Entire Agreement.................................................................... 9
11.6 Binding Effect...................................................................... 9
11.7 Legal Fees.......................................................................... 9
11.8 Supercession........................................................................ 10
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EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective August 1, 2000, between CHESAPEAKE ENERGY
CORPORATION, an Oklahoma corporation (the "Company"), and XXXXXX X. XXXXXXX, an
individual (the "Executive") and replaces and supersedes those certain
Employment Agreements between Company and Executive dated March 1, 1995, July 1,
1997, July 1, 1998 and June 1, 2000.
WITNESSETH:
WHEREAS, the Company desires to retain the services of the Executive and
the Executive desires to make the Executive's services available to the Company.
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the Company and the Executive agree as follows:
1. Employment. The Company hereby employs the Executive and the Executive hereby
accepts such employment subject to the terms and conditions contained in this
Agreement. The Executive is engaged as an employee of the Company, and the
Executive and the Company do not intend to create a joint venture, partnership
or other relationship which might impose a fiduciary obligation on the Executive
or the Company in the performance of this Agreement.
2. Executive's Duties. The Executive is employed on a full-time basis, defined
for the purposes of this Agreement as the Executive working an average of four
(4) days per week. Throughout the term of this Agreement, the Executive will use
the Executive's best efforts and due diligence to assist the Company in
achieving the most profitable operation of the Company and the Company's
affiliated entities consistent with developing and maintaining a quality
business operation.
2.1 Specific Duties. The Executive will serve as Chief Financial Officer
and Executive Vice President - Finance for the Company. The Executive
will perform all of the services required to fully and faithfully
execute the office and position to which the Executive is appointed
and such other services as may be reasonably requested by the
Executive's supervisor. During the term of this Agreement, the
Executive may be nominated for election or appointed to serve as a
director or officer of the Company's subsidiaries as determined in the
board of directors' sole discretion.
2.2 Supervision. The services of the Executive will be requested and
directed by the Company's Chief Executive Officer, Xx. Xxxxxx X.
XxXxxxxxx.
2.3 Rules and Regulations. The Company currently has an Employment
Policies Manual which sets forth the general human resources policies
of the Company
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and addresses frequently asked questions regarding the Company. The
Executive agrees to comply with the Employment Policies Manual except
to the extent inconsistent with this Agreement. The Employment
Policies Manual is subject to change without notice in the sole
discretion of the Company at any time.
2.4 Stock Investment. The Executive agrees to hold not less than Five
Thousand (5,000) shares of the Company's common stock during the term
of this Agreement.
3. Other Activities. The Executive currently conducts oil and gas activities
individually and through various related or family-owned entities, including
Infinity Resources, L.L.C. The Executive will be permitted to continue oil and
gas activities individually, and directly or indirectly through Infinity
Resources, L.L.C., provided that the Executive, subsequent to August 1, 2000,
will not acquire, attempt to acquire or aid another in the acquisition or
attempted acquisition of an interest in oil and gas assets, oil and gas
production, oil and gas leases, mineral interests, oil and gas xxxxx or other
such oil and gas exploration, development or production activities within five
(5) miles of any operations or ownership interests of the Company or its
affiliated corporations, partnerships or entities. In the event the Executive or
the Company becomes aware of any oil and gas activities by the Executive that
may violate the foregoing provision, the party discovering the activity will
immediately notify the other party in writing and Executive will use his good
faith efforts to correct the situation by sale or transfer to the Company.
4. Executive's Compensation. The Company agrees to compensate the Executive as
follows:
4.1 Base Salary. A base salary (the "Base Salary"), at the annual rate of
not less than Two Hundred Fifty Thousand Dollars ($250,000.00), will
be paid to the Executive in equal semi-monthly installments beginning
August 15, 2000, and at the annual rate of not less than Two Hundred
Seventy-Five Thousand Dollars ($275,000) will be paid to the Executive
in equal semi-monthly installments beginning January 15, 2001 during
the remainder of this Agreement.
4.2 Bonus. In addition to the Base Salary described at paragraph 4.1 of
this Agreement, the Company may periodically pay bonus compensation to
the Executive. Any bonus compensation will be at the absolute
discretion of the Company in such amounts and at such times as the
board of directors of the Company may determine.
4.3 Stock Options. In addition to the compensation set forth in paragraphs
4.1 and 4.2 of this Agreement, the Executive may periodically receive
grants of stock options from the Company's various stock option plans,
subject to the terms and conditions thereof.
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4.4 Benefits. The Company will provide the Executive such retirement
benefits, reimbursement of reasonable expenditures for dues, travel
and entertainment and such other benefits as are customarily provided
by the Company and as are set forth in and governed by the Company's
Employment Policies Manual. The Company will also provide the
Executive the opportunity to apply for coverage under the Company's
medical, life and disability plans, if any. If the Executive is
accepted for coverage under such plans, the Company will make such
coverage available to the Executive on the same terms as is
customarily provided by the Company to the plan participants as
modified from time to time. The following specific benefits will also
be provided to the Executive at the expense of the Company:
4.4.1 Vacation. The Executive will be entitled to take three (3)
weeks of paid vacation each twelve months during the term of
this Agreement. No additional compensation will be paid for
failure to take vacation and no vacation may be carried forward
from one twelve month period to another.
4.4.2 Membership Dues. The Company will reimburse the Executive for:
(a) the monthly dues necessary to maintain a full membership in
a country club in the Oklahoma City area selected by the
Executive; and (b) the reasonable cost of any qualified
business entertainment at such country club. All other costs,
including, without implied limitation, any initiation costs,
initial membership costs, personal use and business
entertainment unrelated to the Company will be the sole
obligation of the Executive and the Company will have no
liability with respect to such amounts.
4.4.3 Compensation Review. The compensation of the Executive will be
reviewed not less frequently than annually by the board of
directors of the Company. The compensation of the Executive
prescribed by paragraph 4 of this Agreement may be increased at
the discretion of the Company, but may not be reduced without
the prior written consent of the Executive.
4.4.4 Automobile Allowance. The Executive will receive a monthly cash
allowance in the amount of One Thousand Dollars ($1,000.00) to
defer a portion of the Executive's cost of acquiring, operating
and maintaining an automobile for use in the Executive's
employment.
4.4.5 Aircraft Allowance. The Executive will receive the right to use
up to fifteen (15) hours of flight time on the Company's
aircraft during the five (5) month period beginning August 1,
2000 and ending on December 31, 2000.
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5. Term. In the absence of termination as set forth in paragraph 6 below, this
Agreement will extend for a term of thirty-five (35) months commencing on August
1, 2000, and ending on June 30, 2003 (the "Expiration Date").
6. Termination. This Agreement will continue in effect until the expiration of
the term stated at paragraph 5 of this Agreement unless earlier terminated
pursuant to this paragraph 6.
6.1 Termination by Company. The Company will have the following
rights to terminate this Agreement:
6.1.1 Termination without Cause. The Company may terminate this
Agreement without cause at any time by the service of written
notice of termination to the Executive specifying an effective
date of such termination not sooner than thirty (30) days after
the date of such notice (the "Termination Date"). In the event
the Executive is terminated without cause, the Executive will
receive as termination compensation: (a) continuation of the
Base Salary provided by paragraph 4.1 for a period of one
hundred eighty (180) days; (b) any benefits payable by
operation of paragraph 4.4 of this Agreement; and (c) any
vacation pay accrued through the Termination Date. The
termination compensation in (a) shall be paid only if the
Executive executes the Company's standard termination agreement
releasing all legally waivable claims arising from the
Executive's employment.
6.1.2 Termination for Cause. The Company may terminate this Agreement
for cause if the Executive: (a) misappropriates the property of
the Company or commits any other act of dishonesty; (b) engages
in personal misconduct which materially injures the Company;
(c) willfully violates any law or regulation relating to the
business of the Company which results in injury to the Company;
or (d) willfully and repeatedly fails to perform the
Executive's duties hereunder. In the event this Agreement is
terminated for cause, the Company will not have any obligation
to provide any further payments or benefits to the Executive
after the effective date of such termination. In the event this
Agreement is terminated for cause, the Company will not have
any obligation to provide any further payments or benefits to
the Executive after the Termination Date.
6.1.3 Termination after Change of Control. If, during the term of
this Agreement, there is a "Change of Control" and within one
(1) year from the effective date of such Change of Control: (a)
this Agreement expires and is not extended; or (b) the
Executive resigns as a result of (i) a reduction in the
Executive's
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compensation (including the Executive's then current Base
Salary under Paragraphs 4.1 of this Agreement and bonuses equal
to those paid to the Executive during calendar year 2000 under
paragraph 4.2 of this Agreement or its predecessor), or (ii) a
required relocation more than twenty-five (25) miles from the
Executive's then current place of employment; or within one (1)
year from the effective date of the Change of Control the
Executive is terminated other than under Paragraphs 6.1.2, 6.3
or 6.4 based on adequate grounds; then the Executive will be
entitled to a severance payment (in addition to any other
amounts payable to the Executive under this Agreement or
otherwise, excluding any Base Salary payable under Paragraph
6.1.1, as of the date of termination or resignation hereunder)
in an amount equal to six (6) months of the Executive's then
current Base Salary under Paragraph 4.1 of this Agreement plus
bonuses equal to fifty percent (50%) of those paid to the
Executive during calendar year 2000 under Paragraph 4.2 of this
Agreement or its predecessor. The term "Change of Control"
means any action of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation
14A under the Securities Exchange Act of 1934 with respect to
Chesapeake Energy Corporation ("Chesapeake") including, without
limitation (i) the direct or indirect acquisition by any person
after the date hereof of beneficial ownership of the right to
vote or securities of Chesapeake representing the right to vote
fifty one percent (51%) or more of the combined voting power of
Chesapeake's then outstanding securities having the right to
vote for the election of directors, or (ii) a merger,
consolidation, sale of assets or contested election or (iii)
any combination of (i) and (ii) which results in a majority of
the members of Chesapeake's board of directors being replaced
by directors who were not nominated and approved by the
existing board of directors.
6.2 Termination by Executive. The Executive may voluntarily
terminate this Agreement with or without cause by the service
of written notice of such termination to the Company specifying
a Termination Date sixty (60) days after the date of such
notice, during which time Executive may use remaining accrued
vacation days, or at the Company's option, be paid for such
days. In the event this Agreement is terminated by the
Executive, neither the Company nor the Executive will have any
further obligations hereunder including, without limitation,
any obligation of the Company to provide any further payments
or benefits to the Executive after the Termination Date.
6.3 Incapacity of Executive. If the Executive suffers from a
physical or mental condition which in the reasonable judgment
of the Company's management
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prevents the Executive in whole or in part from performing the
duties specified herein for a period of three (3) consecutive
months, the Executive may be terminated. Although the
termination shall be deemed as a termination for cause, any
compensation payable under paragraph 4 of this Agreement will
be continued through the remaining contract period, but in any
event, through the Expiration Date. Notwithstanding the
foregoing, the Executive's Base Salary specified in paragraph
4.1 of this Agreement shall be reduced by any benefits payable
under any disability plans.
6.4 Death of Executive. If the Executive dies during the term of
this Agreement, the Company may thereafter terminate this
Agreement without compensation to the Executive's estate
except: (a) the obligation to continue the Base Salary payments
under paragraph 4.1 of this Agreement for twelve (12) months
following the date of the Executive's death and (b) the
benefits described in paragraph 4.4 of this Agreement accrued
through the date of the Executive's death.
6.5 Effect of Termination. The termination of this Agreement will
terminate all obligations of the Executive to render services
on behalf of the Company from and after the Termination Date,
provided that the Executive will maintain the confidentiality
of all information acquired by the Executive during the term of
his employment in accordance with paragraph 7 of this
Agreement. Except as otherwise provided in paragraph 6 of this
Agreement, no accrued bonus, severance pay or other form of
compensation will be payable by the Company to the Executive by
reason of the termination of this Agreement. All keys, entry
cards, credit cards, files, records, financial information,
furniture, furnishings, equipment, supplies and other items
relating to the Company in the Executive's possession will
remain the property of the Company. The Executive will have the
right to retain and remove all personal property and effects
which are owned by the Executive and located in the offices of
the Company. All such personal items will be removed from such
offices no later than two (2) days after the Termination Date
and the Company is hereby authorized to discard any items
remaining and to reassign the Executive's office space after
such date. Prior to the Termination Date, the Executive will
render such services to the Company as might be reasonably
required to provide for the orderly termination of the
Executive's employment.
7. Confidentiality. The Executive recognizes that the nature of the Executive's
services are such that the Executive will have access to information which
constitutes trade secrets, is of a confidential nature, is of great value to the
Company or is the foundation on which the business of the Company is predicated.
The Executive agrees not to disclose to any person other than the Company's
employees or the Company's legal counsel nor use for any purpose, other than the
performance of this Agreement, any confidential information ("Confidential
Information"). Confidential Information includes data or material (regardless of
form) which is: (a) a trade secret; (b) provided, disclosed or delivered to
Executive by the Company, any officer, director, employee, agent, attorney,
accountant, consultant, or other person or entity employed by the
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Company in any capacity, any customer, borrower or business associate of the
Company or any public authority having jurisdiction over the Company of any
business activity conducted by the Company; or (c) produced, developed, obtained
or prepared by or on behalf of Executive or the Company (whether or not such
information was developed in the performance of this Agreement) with respect to
the Company or any assets oil and gas prospects, business activities, officers,
directors, employees, borrowers or customers of the foregoing. However,
Confidential Information shall not include any information, data or material
which at the time of disclosure or use was generally available to the public
other than by a breach of this Agreement, was available to the party to whom
disclosed on a non-confidential basis by disclosure or access provided by the
Company or a third party, or was otherwise developed or obtained independently
by the person to whom disclosed without a breach of this Agreement. On request
by the Company, the Company will be entitled to the return of any Confidential
Information in the possession of the Executive. The Executive also agrees that
the provisions of this paragraph 7 will survive the termination, expiration or
cancellation of this Agreement for a period of three (3) years. The Executive
will deliver to the Company all originals and copies of the documents or
materials containing Confidential Information. For purposes of paragraphs 7, 8,
and 9 of this Agreement, the Company expressly includes any of the Company's
affiliated corporations, partnerships or entities.
8. Noncompetition. For a period of twelve (12) months after Executive is no
longer employed by the Company as a result of either the resignation by the
Executive pursuant to paragraph 6.1.3 or 6.2 above, or termination for cause
pursuant to paragraph 6.1.2 above, Executive will not acquire, attempt to
acquire or aid another in the acquisition or attempted acquisition of an
interest in oil and gas assets, oil and gas production, oil and gas leases,
mineral interests, oil and gas xxxxx or other such oil and gas exploration,
development or production activities within five (5) miles of any operations or
ownership interests of the Company or its affiliated corporations, partnerships
or entities. The Executive further agrees that the Executive will not circumvent
or attempt to circumvent the foregoing agreements by any future arrangement or
through the actions of a third party.
9. Proprietary Matters. The Executive expressly understands and agrees that any
and all improvements, inventions, discoveries, processes or know-how that are
generated or conceived by the Executive during the term of this Agreement,
whether generated or conceived during the Executive's regular working hours or
otherwise, will be the sole and exclusive property of the Company. Whenever
requested by the Company (either during the term of this Agreement or
thereafter), the Executive will assign or execute any and all applications,
assignments and or other instruments and do all things which the Company deems
necessary or appropriate in order to permit the Company to: (a) assign and
convey or otherwise make available to the Company the sole and exclusive right,
title, and interest in and to said improvements, inventions, discoveries,
processes, know-how, applications, patents, copyrights, trade names or
trademarks; or (b) apply for, obtain, maintain, enforce and defend patents,
copyrights, trade names, or trademarks of the United States or of foreign
countries for said improvements, inventions, discoveries, processes or know-how.
However,
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the improvements, inventions, discoveries, processes or know-how generated or
conceived by the Executive and referred to above (except as they may be included
in the patents, copyrights or registered trade names or trademarks of the
Company, or corporations, partnerships or other entities which may be affiliated
with the Company) shall not be exclusive property of the Company at any time
after having been disclosed or revealed or have otherwise become available to
the public or to a third party on a non-confidential basis other than by a
breach of this Agreement, or after they have been independently developed or
discussed without a breach of this Agreement by a third party who has no
obligation to the Company or its affiliates.
10. Arbitration. The parties will attempt to promptly resolve any dispute or
controversy arising out of or relating to this Agreement or termination of the
Executive by the Company. Any negotiations pursuant to this paragraph 10 are
confidential and will be treated as compromise and settlement negotiations for
all purposes. If the parties are unable to reach a settlement amicably, the
dispute will be submitted to binding arbitration before a single arbitrator in
accordance with the Employment Dispute Resolution Rules of the American
Arbitration Association. The arbitrator will be instructed and empowered to take
reasonable steps to expedite the arbitration and the arbitrator's judgment will
be final and binding upon the parties subject solely to challenge on the grounds
of fraud or gross misconduct. Except for damages arising out of a breach of
paragraphs 7, 8 or 9 of this Agreement, the arbitrator is not empowered to award
total damages (including compensatory damages) which exceed 200% of compensatory
damages and each party hereby irrevocably waives any damages in excess of that
amount. The arbitration will be held in Oklahoma County, Oklahoma. Judgment upon
any verdict in arbitration may be entered in any court of competent jurisdiction
and the parties hereby consent to the jurisdiction of, and proper venue in, the
federal and state courts located in Oklahoma County, Oklahoma. Each party will
bear its own costs in connection with the arbitration and the costs of the
arbitrator will be borne by the party who the arbitrator determines did not
prevail in the matter. Unless otherwise expressly set forth in this Agreement,
the procedures specified in this paragraph 10 will be the sole and exclusive
procedures for the resolution of disputes and controversies between the parties
arising out of or relating to this Agreement. Notwithstanding the foregoing, a
party may seek a preliminary injunction or other provisional judicial relief if
in such party's judgment such action is necessary to avoid irreparable damage or
to preserve the status quo.
11. Miscellaneous. The parties further agree as follows:
11.1 Time. Time is of the essence of each provision of this
Agreement.
11.2 Notices. Any notice, payment, demand or communication required
or permitted to be given by any provision of this Agreement
will be in writing and will be deemed to have been given when
delivered personally or by telefacsimile to the party
designated to receive such notice, or on the date following the
day sent by overnight courier, or on the third (3rd) business
day after the same is sent by certified mail, postage and
charges prepaid, directed to the following address or
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to such other or additional addresses as any party might
designate by written notice to the other party:
To the Company: Chesapeake Energy Corporation
Xxxx Xxxxxx Xxx 00000
Xxxxxxxx Xxxx, XX 00000-0000
Attn: Xxxxxx X. XxXxxxxxx
To the Executive: Xx. Xxxxxx X. Xxxxxxx
00000 Xxxxxx Xx.
Xxxxxx, XX 00000
11.3 Assignment. Neither this Agreement nor any of the parties'
rights or obligations hereunder can be transferred or assigned
without the prior written consent of the other parties to this
Agreement; provided, however, the Company may assign this
Agreement to any wholly owned affiliate or subsidiary of the
Company without Executive's consent.
11.4 Construction. If any provision of this Agreement or the
application thereof to any person or circumstances is
determined, to any extent, to be invalid or unenforceable, the
remainder of this Agreement, or the application of such
provision to persons or circumstances other than those as to
which the same is held invalid or unenforceable, will not be
affected thereby, and each term and provision of this
Agreement will be valid and enforceable to the fullest extent
permitted by law. This Agreement is intended to be
interpreted, construed and enforced in accordance with the
laws of the State of Oklahoma and any litigation relating to
this Agreement will be conducted in a court of competent
jurisdiction located in Oklahoma County, Oklahoma.
11.5 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the
subject matter herein contained, and no modification hereof
will be effective unless made by a supplemental written
agreement executed by all of the parties hereto.
11.6 Binding Effect. This Agreement will be binding on the parties
and their respective successors, legal representatives and
permitted assigns. In the event of a merger, consolidation,
combination, dissolution or liquidation of the Company, the
performance of this Agreement will be assumed by any entity
which succeeds to or is transferred the business of the
Company as a result thereof, and the Executive waives the
consent requirement of paragraph 11.3 to effect such
assumption.
11.7 Legal Fees. If any party institutes an action or proceeding
against any other party relating to the provisions of this
Agreement or any default hereunder, the unsuccessful party to
such action or proceeding will reimburse the successful
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party therein for the reasonable expenses of any legal fees
incurred by the successful party, except with respect to any
arbitration proceeding conducted pursuant to paragraph 10
above.
11.8 Supercession. On execution of this Agreement by the Company
and the Executive, the relationship between the Company and
the Executive will be bound by the terms of this Agreement and
the Employment Policies Manual and not by any other agreements
or otherwise. In the event of a conflict between the
Employment Policies Manual and this Agreement, this Agreement
will control in all respects.
IN WITNESS WHEREOF, the undersigned have executed this Agreement effective
the date first above written.
CHESAPEAKE ENERGY CORPORATION, an
Oklahoma corporation
By: /s/ Xxxxxx X. XxXxxxxxx
--------------------------------------------
Xxxxxx X. XxXxxxxxx, Chief Executive Officer
(the "Company")
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxxx, Individually
(the "Executive")
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