Employment Agreement - Chesapeake Operating Inc. and Martha A. Burger
EMPLOYMENT AGREEMENT
between
MARTHA A. BURGER
and
CHESAPEAKE OPERATING, INC.
Effective July 1, 1995
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TABLE OF CONTENTS
Page
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1. Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Employee's Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Specific Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Supervision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Other Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
4. Employee's Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.1 Base Salary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.2 Bonus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.3 Stock Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.4 Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
5. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6.1 Termination by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6.1.1 Termination without Cause . . . . . . . . . . . . . . . . . . . . 3
6.1.2 Termination for Cause . . . . . . . . . . . . . . . . . . . . . . 3
6.1.3 Termination in the Event of Sale,
Merger or Takeover . . . . . . . . . . . . . . . . . . . . . . . . 3
6.2 Termination by Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
6.3 Incapacity of Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
6.4 Death of Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
6.5 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
8. Noncompetition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
9. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
9.1 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
9.3 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
9.4 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
9.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
9.6 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
9.7 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
9.8 Supersession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective July 1, 1995, between CHESAPEAKE
OPERATING, INC., an Oklahoma corporation (the "Company"), and MARTHA A. BURGER,
an individual (the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to retain the services of the Employee
and the Employee desires to make the Employee's services available to the
Company.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the Company and the Employee agree as follows:
1. Employment. The Company hereby employs the Employee and the Employee
hereby accepts such employment subject to the terms and conditions contained in
this Agreement. The Employee is engaged as an employee of the Company, and the
Employee and the Company do not intend to create a joint venture, partnership
or other relationship which might impose a fiduciary obligation on the Employee
or the Company in the performance of this Agreement.
2. Employee's Duties. The Employee's employment will be on a full-time
basis. Throughout the term of this Agreement, the Employee will use the
Employee's best efforts and due diligence to assist the Company in achieving
the most profitable operation of the Company and the Company's subsidiary
corporations, partnerships and entities consistent with developing and
maintaining a quality business operation.
2.1 Specific Duties. The Employee will serve as Assistant
Controller-Operations for the Company. The Employee will
perform all of the services required to fully and faithfully
execute the office and position to which the Employee is
appointed under this paragraph and such other services as
may be reasonably requested by the Employee's supervisor.
2.2 Supervision. The services of the Employee will be requested
and directed by the Vice President- Finance, Mr. Marcus C.
Rowland.
3. Other Activities. Unless the Employee has obtained the prior written
approval of the President of the Company, the Employee will not: (a) engage in
business independent of the Employee's employment by the Company; (b) serve as
an officer, general partner or member in any corporation, partnership or firm;
(c) directly or indirectly invest in, participate in, acquire an interest in
any oil and gas business including, without limitation, oil and gas
production, drilling, owning or operating oil and gas wells, providing services
or materials to the oil and gas industry, marketing or refining oil and gas,
drilling, owning or drilling oil and gas leases or mineral interests and any
interest in any corporation, partnership, company or entity which conducts any
of the foregoing activities. The limitation in this paragraph 3 will not
prohibit: (i) an investment by the Employee in publicly traded securities; or
(ii) the continued direct ownership and operation of oil and gas interests and
leases to the extent owned by the Employee on July 1, 1995. The Employee
agrees not
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to acquire, directly or indirectly, any additional oil and gas interests or
increase, directly or indirectly, ownership of any oil and gas interests owned
by the Employee on July 1, 1995.
4. Employee's Compensation. The Company agrees to compensate the
Employee as follows:
4.1 Base Salary. A base salary (the "Base Salary") will be paid
to the Employee at the annual rate of not less than
Seventy-Five Thousand ($75,000.00) for the two (2) year
period commencing July 1, 1995 and ending June 30, 1997.
The Base Salary will be payable in equal semi-monthly
installments on the fifteenth (15th) and last day of each
month during the term of this Agreement commencing July 15,
1995.
4.2 Bonus. In addition to the Base Salary described at
paragraph 4.1 of this Agreement, it is anticipated that the
Company may pay bonus compensation to the Employee. 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 Employee will
be eligible to participate in grants of stock options from
the Chesapeake Energy Corporation 1994 Incentive Stock
Option Plan subject to the terms and conditions thereof.
4.4 Benefits. The Company will provide the Employee such paid
vacations, retirement benefits, reimbursement of reasonable
expenditures for dues, travel and entertainment and such
other benefits as are customarily provided by the Company,
as set forth in more detail in the Company's Employee
Manual. The Company will also provide the Employee the
opportunity to apply for coverage under the Company's
medical, life and disability plans, if any. If the Employee
is accepted for coverage under such plans, the Company will
provide such coverage on the same terms as is customarily
provided by the Company to the plan participants as modified
from time to time.
5. Term. In the absence of prior termination pursuant to the provisions
of this Agreement, this Agreement will extend for a term of two (2) years
commencing on July 1, 1995, and ending on June 30, 1997 (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 Employee specifying an
effective date of such termination not sooner
than thirty (30) days after
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the date of such notice (the "Termination
Date"). In the event the Employee is terminated
without cause, or the Company elects not to
renew the contract, the Employee will receive as
termination compensation: (a) sixty (60) days
compensation; (b) any benefits payable by
operation of paragraph 4.4 of this Agreement;
and (c) any vacation pay accrued through the
date of termination.
6.1.2 Termination for Cause. The Company may
terminate this Agreement for cause if the
Employee: (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 material injury to the Company; or
(d) willfully and repeatedly fails to perform
the Employee'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 Employee
after the effective date of such termination.
6.1.3 Termination After Change in Control. If, during
the term of this Agreement, there is a "Change
of Control" and within one (1) year thereafter:
(a) this Agreement expires and is not extended;
or (b) the Employee is terminated other than
under paragraphs 6.1.2, 6.3 or 6.4 based on
adequate grounds; or (c) the Employee resigns as
a result of a reassignment of duties
inconsistent with the Employee's position or a
reduction in the Employee's compensation under
paragraph 4 of this Agreement, then the Employee
will be entitled to a severance payment (in
addition to any other amounts payable to the
Employee under this Agreement or otherwise) in
an amount equal to twelve (12) months
compensation under paragraph 4.1 of this
Agreement. 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 the Company
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 the Company
representing the right to vote thirty-five
percent (35%) or more of the combined voting
power of the Company's then outstanding
securities having the right to vote for the
election of directors, or (ii) within two years
of a tender offer or exchange offer for the
voting stock of the Company or as a result of a
merger, consolidation, sale of assets or
contested election (or any combination of the
foregoing), a majority of the members of the
Company's board of directors is replaced by
directors who were not nominated and approved by
the board of directors. For purposes of the
foregoing definition, the term "Company"
includes any corporation, partnership or other
entity which owns or controls the Company.
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6.2 Termination by Employee. The Employee may voluntarily
terminate this Agreement with or without cause by the
service of written notice of such termination to the Company
specifying an effective date of such termination thirty (30)
days after the date of such notice, during which time
Employee 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 Employee, neither the Company
nor the Employee will have any further obligations hereunder
including, without limitation, any obligation of the Company
to provide any further payments or benefits to the Employee
after the effective date of such termination.
6.3 Incapacity of Employee. If the Employee suffers from a
physical or mental condition which in the reasonable
judgment of the Company's management prevents the Employee
from performing the duties specified herein for a period of
three (3) consecutive weeks, the Employee may be terminated
and the termination shall be treated as a Termination
Without Cause and any benefits payable hereunder will be
continued through the Expiration Date. Notwithstanding the
foregoing, the Employee's compensation under paragraph 4.4
of this Agreement will be reduced by any benefits payable
under any disability plans.
6.4 Death of Employee. If the Employee dies during the term of
this Agreement, the Company may thereafter terminate this
Agreement without compensation to the Employee's estate
except: (a) the obligation to continue the Base Salary
payments under paragraph 4.1 of this Agreement for sixty
(60) days; and (b) the benefits described in paragraph 4.4
of this Agreement accrued through the effective date of such
termination.
6.5 Effect of Termination. The termination of this Agreement
will terminate all obligations of the Employee to render
services on behalf of the Company, provided that the
Employee will maintain the confidentiality of all
information acquired by the Employee during the term of this
Agreement 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 Employee
by reason of the termination of this Agreement. All keys,
credit cards, files, records, financial information,
furniture, furnishings, equipment, supplies and other items
relating to the Company will remain the property of the
Company. The Employee will have the right to retain and
remove all personal property and effects which are owned by
the Employee and located in the offices of the Company. All
such personal items will be removed from such offices no
later than three (3) days after the effective date of
termination, and the Company is hereby authorized to discard
any items remaining and to reassign the Employee's office
space after such date. Prior to the effective date of
termination, the Employee will render such services to the
Company as might be reasonably required to provide for the
orderly termination of the Employee's employment.
7. Confidentiality. The Employee recognizes that the nature of the
Employee's services are such that the Employee will have access to information
which constitutes trade secrets, is of a confidential nature, is of great value
to the Company and is
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the foundation on which the business of the Company is predicated. The
Employee 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 information, data or material
(regardless of the form) which is: (a) a trade secret; (b) provided, disclosed
or delivered to the Employee by the Company, any officer, director, employee,
agent, attorney, accountant, consultant, or other person or entity employed by
the Company in any capacity, any customer, borrower or business associate of
the Company or any public authority having jurisdiction over the Company or any
business activity conducted by the Company; or (c) produced, developed,
obtained or prepared by or on behalf of the Employee 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. On request by the Company, the Company will be entitled to a copy
of any such documents or such information in the possession of the Employee.
The Employee also agrees that the provisions of this paragraph 7 will survive
the termination, expiration or cancellation of this Agreement and that on
termination, expiration or cancellation of this Agreement and that on
termination, expiration or cancellation of this Agreement, the Employee will
deliver to the Company all originals and copies of the information, data and
material containing such information.
8. Noncompetition. For a period of twelve (12) months after Employee is
no longer employed by the Company, Employee will not: (a) procure, solicit, or
aid a "Partner" (as defined below) in the procurement or solicitation of an
investment in oil and gas leases, mineral interests, the development of oil and
gas assets or operation of oil and gas assets in any area in which Employee had
any material responsibility during the Employee's employment by the Company (a
"Partner" is any person or entity who has invested in such activities described
above with the Company or the Company's affiliated corporations, partnerships
or entities during the twelve (12) months preceding the end of Employee's
employment by the Company); and (b) 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 wells or other such oil and gas exploration, development or production
activities within ten (10) miles of any operations or ownership interests of
the Company or its affiliated corporations, partnerships or entities in the
twelve (12) months preceding the end of Employee's employment.
9. Miscellaneous. The parties further agree as follows:
9.1 Time. Time is of the essence of each provision of this
Agreement.
9.2 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 to such other or additional addresses as any
party might designate by written notice to the other party:
To the Company: Chesapeake Operating, Inc.
Post Office Box 18496
Oklahoma City, OK 73154
Attn: Mr. Aubrey K. McClendon
To the Employee: Martha A. Burger
3005 Red Oak Road
Oklahoma City, OK 73120
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9.3 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.
9.4 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 sitting in Oklahoma County, Oklahoma.
9.5 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.
9.6 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.
9.7 Attorneys' 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 party therein for the reasonable
expenses of attorneys' fees and disbursements and litigation
expenses incurred by the successful party.
9.8 Supersession. This Agreement is the final, complete and
exclusive expression of the agreement between the Company
and the Employee and supersedes and replaces in all respects
any other agreements between the Company and the Employee.
On execution of this agreement by the Company and the
Employee, the relationship between the Company and the
Employee will be governed by the terms of this Agreement and
not by any other agreements, oral or otherwise.
<PAGE> 9
IN WITNESS WHEREOF, the undersigned have executed this Agreement
effective the date first above written.
CHESAPEAKE OPERATING, INC., an
Oklahoma corporation
By /s/ Aubrey K. McClendon
------------------------------
AUBREY K. MCCLENDON, President
(the "Company")
/s/ Martha A. Burger
------------------------------
MARTHA A. BURGER, individually
(the "Employee")