Employment Agreement - Chesapeake Energy Corp. and Marcus C. Rowland
EMPLOYMENT AGREEMENT
between
MARCUS C. ROWLAND
and
CHESAPEAKE ENERGY CORPORATION
Effective July 1, 1997
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TABLE OF CONTENTS
Page
----
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
3.1 Company's Activities . . . . . . . . . . . . . . . . 3
3.1.1 Amount of Participation . . . . . . . . . . . 3
3.1.2 Conditions of Participation . . . . . . . . . 4
3.2 Other Activities . . . . . . . . . . . . . . . . . . 4
4. Executive's Compensation . . . . . . . . . . . . . . . . . 4
4.1 Base Salary . . . . . . . . . . . . . . . . . . . . . 4
4.2 Bonus . . . . . . . . . . . . . . . . . . . . . . . . 5
4.3 Stock Options . . . . . . . . . . . . . . . . . . . . 5
4.4 Benefits . . . . . . . . . . . . . . . . . . . . . . 5
4.4.1 Vacation . . . . . . . . . . . . . . . . . . . 5
4.4.2 Membership Dues . . . . . . . . . . . . . . . . 5
4.4.3 Compensation Review . . . . . . . . . . . . . . 5
4.4.4 Automobile Allowance . . . . . . . . . . . . . 6
5. Term . . . . . . . . . . . . . . . . . . . . . . . . 6
6. Termination . . . . . . . . . . . . . . . . . . . . . . . . 6
6.1 Termination by Company . . . . . . . . . . . . . . . 6
6.1.1 Termination without Cause . . . . . . . . . . . 6
6.1.2 Termination for Cause . . . . . . . . . . . . . 6
6.1.3 Termination After Change in Control . . . . . . 7
6.2 Termination by Executive . . . . . . . . . . . . . . 7
6.3 Incapacity of Executive . . . . . . . . . . . . . . . 8
6.4 Death of Executive . . . . . . . . . . . . . . . . . 8
6.5 Effect of Termination . . . . . . . . . . . . . . . . 8
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TABLE OF CONTENTS (continued)
7. Confidentiality . . . . . . . . . . . . . . . . . . . . . . 8
8. Noncompetition . . . . . . . . . . . . . . . . . . . . . . 9
9. Proprietary Matters . . . . . . . . . . . . . . . . . . . . 9
10. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . 10
11. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 11
11.1 Time . . . . . . . . . . . . . . . . . . . . . . . . 11
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . 11
11.3 Assignment . . . . . . . . . . . . . . . . . . . . . 11
11.4 Construction . . . . . . . . . . . . . . . . . . . . 11
11.5 Entire Agreement . . . . . . . . . . . . . . . . . . 11
11.6 Binding Effect . . . . . . . . . . . . . . . . . . . 12
11.7 Attorney's Fees . . . . . . . . . . . . . . . . . . . 12
11.8 Supersession . . . . . . . . . . . . . . . . . . . . 12
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EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective July 1, 1997, between CHESAPEAKE ENERGY
CORPORATION, an Oklahoma corporation (the "Company"), and MARCUS C. ROWLAND, an
individual (the "Executive") and replaces and supersedes that certain
Employment Agreement between Company and Executive dated March 1, 1995.
W I T N E S S E T H:
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.
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 Senior 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 Chief Executive Officer, Mr. Aubrey K. McClendon.
2.3 Rules and Regulations. The Company currently has an Employment
Policies Manual which 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
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Manual is subject to change without notice in the sole discretion of
the Company at any time.
2.4 Stock Investment. For each calendar year during which this Agreement
is in effect, the Executive agrees to hold shares of the Company's
common stock having aggregate Investment Value equal to one hundred
percent (100%) of the compensation paid to the Executive under
paragraphs 4.1 and 4.2 of this Agreement during such calendar year.
For purposes of this section, the "Investment Value" of each share of
stock will be the higher of either (a) the price paid by the Executive
for such share as part of an open market purchase; or (b) the fair
market value on the date of exercise for shares acquired through the
exercise of employee stock options. Any shares of common stock
acquired by the Executive prior to the date of this Agreement and
still owned by the Executive during the term of this Agreement may be
used to satisfy this requirement to acquire common stock. The
Investment Value for previously acquired stock shall be calculated
using the average stock price during the first six months of this
Agreement.
The stock acquired or owned pursuant to this paragraph 2.4 must be
held by the Executive at all times during the Executive's employment
by the Company or the Company's affiliated entities. In order to
administer this provision, the Executive agrees to return to the
Company's Chief Executive Officer a semi-annual report of purchases
and ownership in a form prepared by the Company. This paragraph will
become null and void if the Company's common stock ceases to be listed
on the New York Stock Exchange or on the National Association of
Securities Dealers Automated Quotation System. The Company has no
obligation to sell or to purchase from the Executive any of the
Company's stock in connection with this paragraph 2.4 and has made no
representations or warranties regarding the Company's stock,
operations or financial condition.
3. Other Activities. Except for the activities (the "Permitted Activities")
expressly permitted by paragraphs 3.1 and 3.2 of this Agreement, or the prior
written approval of the board of directors of the Company, the Executive will
not: (a) engage in business independent of the Executive's employment by the
Company; (b) serve as an officer, general partner or member in any corporation,
partnership, company, or firm; (c) directly or indirectly invest in,
participate in or acquire an interest in any oil and gas business, including,
without limitation, (i) producing oil and gas, (ii) drilling, owning or
operating oil and gas leases or wells, (iii) providing services or materials to
the oil and gas industry, (iv) marketing or refining oil or gas, or (v) owning
any interest in any corporation, partnership, company or entity which conducts
any of the foregoing activities. The limitation in this paragraph 3 will not
prohibit an investment by the Executive in publicly traded securities; or the
continued direct ownership and operation of oil and gas interests and leases to
the extent such interests were owned by the Executive on March 1, 1995.
Notwithstanding the foregoing, the Executive will be
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permitted to participate in the following activities which will be deemed to be
approved by the Company, if such activities are undertaken in strict compliance
with this Agreement.
3.1 Company's Activities. The Executive or the Executive's designated
affiliate will be permitted to acquire a working interest in all of
the wells spudded by the Company or the Company's subsidiary
corporations, partnerships or entities (the "Program Wells") during
any Calendar Quarter (as hereafter defined) on the terms and
conditions set forth herein. The Program Wells include any well
spudded during such Calendar Quarter in which the Company or the
Company's subsidiary corporations, partnerships or entities
participate as a nonoperator.
3.1.1 Amount of Participation. On or before the date which is
thirty (30) days before the first (1st) day of each
Calendar Quarter, the Executive will provide notice to the
compensation committee of the Company's board of directors
of the Executive's intent to participate in the Program
Wells during the succeeding Calendar Quarter and the
approximate percentage working interest which the
Executive proposes to participate with during such
Calendar Quarter. The Executive's percentage working
interest in the Program Wells spudded during such Calendar
Quarter will be subject to approval by the disinterested
members of the compensation committee of the Company's
board of directors and to the limitations set forth herein
(the "Approved Percentage"). The Executive's Approved
Percentage working Interest participation (determined
without consideration of any carried interest) in the
Program Wells for any Calendar Quarter will not exceed one
percent (1.0%) on an eight-eighths (8/8ths) basis. On
designation of the Approved Percentage for a Calendar
Quarter, the Executive will be deemed to have elected to
participate in each Program Well spudded during such
calendar Quarter with a working interest equal to the
following applicable percentage determined on a well-by-
well basis (the "Minimum Participation"): (a) the Approved
Percentage for a Program Well which does not fall within
clause (b) of this paragraph 3.1.1 or an Operations Well;
or (b) zero percent (0%) if the combined participation in
the Program Well by the Executive, Mr. Tom L. Ward and Mr.
Aubrey K. McClendon with such individuals' Approved
Percentage under their respective employment agreements
causes the Company's working interest (determined without
consideration of any carried interest) on the spud date
for such Program Well to be less than twelve and one-half
percent (12.5%) on an eight-eighths (8/8ths) basis. If
clause (b) of this paragraph 3.1.1 prohibits the
Executive's participation in a Program Well, then Messrs.
Ward and McClendon will not be entitled to participate in
such Program Well under their employment agreements. An
"Operations Well" means a Program Well which falls within
the provisions of clause (b) of this paragraph 3.1.1, but
for which the
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Executive's participation is deemed necessary for the
Company to retain operations as determined by the
disinterested members of the compensation committee of the
Company's board of directors. If the Executive fails to
provide notice of the Executive's intent to participate
and the Executive's proposed participation prior to the
specified date as provided herein, the amount of the
Approved Percentage for the Calendar Quarter will be
deemed to be zero (0).
3.1.2 Conditions of Participation. The Participation by the
Executive in each Program Well will be on no better terms
than the terms agreed to by unaffiliated third party
participants in connection with the acquisition of an
interest in such Program Well from the Company or its
subsidiary corporations, partnerships or entities. The
Approved Percentage cannot be changed during any Calendar
Quarter without the prior approval of the disinterested
members of the compensation committee of the Company's
board of directors. Any participation by the Executive
under this paragraph 3.1 is also conditioned upon the
Executive's participation in each Program Well spudded
during such Calendar Quarter in an amount equal to the
Minimum Participation. The Executive hereby agrees to
execute and deliver any documents reasonably requested by
the Company and hereby appoints the Company as the
Executive's agent and attorney-in-fact to execute and
deliver such documents if the Executive fails or refuses
to execute such documents. The Executive further agrees to
pay all joint interest billings within one hundred twenty
(120) days after receipt. For purposes of this Agreement,
the term "Calendar Quarter" means the three (3) month
periods commencing on the first (1st) day of January,
April, July and October.
3.2 Other Activities. The Executive currently conducts oil and gas
investment activities individually and through MJ Partners, a Texas
general partnership ("MJ"). The Executive will be permitted to
continue oil and gas activities in such entity, but only to the extent
such activities are conducted on oil and gas leases or interests owned
by the Executive or MJ as of March 1, 1993, or acquired pursuant to
paragraph 3.1 of this Agreement.
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 initial annual
rate of not less than Two Hundred Twenty Five Thousand Dollars
($225,000.00), will be paid to the Executive in equal semi-monthly
installments beginning July 15, 1997 during the term of this
Agreement.
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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.
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 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 provide such coverage 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.
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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.
5. Term. In the absence of termination as set forth in paragraph 6 below, this
Agreement will extend for a term of three (3) years commencing on July 1, 1997,
and ending on June 30, 2000 (the "Expiration Date"). Unless the Company
provides thirty (30) days prior written notice of nonextension to the
Executive, on each June 30 during the term of this Agreement, the term will be
automatically extended for one (1) additional year so that the remaining term
on this Agreement will be not less than two (2) and not more than three (3)
years.
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 sixty (60) business
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
during the portion of the contract period remaining after the
date of the Executive's termination, but in any event, through
the Expiration Date; (b) any benefits payable by operation of
paragraph 4.4 of this Agreement during the portion of the
contract period remaining after the date of the Executive's
termination, but in any event, through the Expiration Date;
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
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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.
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 Executive is terminated other than under
paragraphs 6.1.2, 6.3 or 6.4 based on adequate grounds; or (c)
the Executive resigns as a result of a reassignment of duties
inconsistent with the Executive's position, a reduction in the
Executive's then current compensation under paragraph 4 of
this Agreement, or a required relocation more than 25 miles
from the Executive's then current place of employment, 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) in an amount equal to thirty six
(36) months of Base Salary as set forth in 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.
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 an effective date of such
termination 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 effective date
of such termination.
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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 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 with 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 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 Executive to render services on
behalf of the Company, 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 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 effective date of termination, 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 effective date
of termination, 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
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("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 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 a copy 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 five (5) 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 6.2 above, or Termination for Cause pursuant to
paragraph 6.1.2 above, Executive will not: (a) 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 five (5) miles of any operations or ownership
interests of the Company or its affiliated corporations, partnerships or
entities, provided, however, this provision shall not apply to acquisitions
within said five (5) mile radius of assets or activities of a successor entity
resulting from a "Change in Control" as described in paragraph 6.1.3., which
assets were owned or activities were being conducted (1) prior to the date of
such Change in Control, or (2) after such Change in Control but for which the
Executive had no material responsibility; and; (b) for the Executive's own
account or for the benefit of another party solicit, induce, entice or attempt
to entice any employee, contractor, customer, vendor or subcontractor to
terminate or breach any relationship with the Company or the Company's
affiliates. 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
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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, 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
300% 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.
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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 to such other or additional addresses as any
party might designate by written notice to the other party:
To the Company: Chesapeake Energy Corporation
Post Office Box 18496
Oklahoma City, OK 73154-0496
Attn: Aubrey K. McClendon
To the Executive: Mr. Marcus C. Rowland
15000 Wilson Rd.
Edmond, OK 73013
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.
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
sitting 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
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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.
11.7 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.
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/ AUBREY K. McCLENDON
--------------------------------------------
Aubrey K. McClendon, Chief Executive Officer
(the "Company")
By: /s/ MARCUS C. ROWLAND
--------------------------------------------
Marcus C. Rowland, Individually
(the "Executive")
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