Exhibit 10.2.4
AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
THIS AGREEMENT is made effective September 30,
2009, between CHESAPEAKE ENERGY CORPORATION, an Oklahoma
corporation (the "Company"), and J. MARK LESTER, an individual (the
"Executive").
W I T N E S S E T H:
WHEREAS, the Company previously retained the
services of the Executive under the Employment Agreement dated
effective October 1, 2006, (the "Prior Agreement").
WHEREAS, the Board of Directors has determined
that it is in the best interests of the Company to renew the
Executive's employment arrangement and to maximize the Executive's
incentive to remain as an employee and officer of the
Company.
WHEREAS, as a result of the Executive's
contribution to the Company and the Company's consummation of the
joint venture transactions consummated by the Company during 2008
that increased the Company's intrinsic value by at least $10
billion, the Board of Directors has also determined that it is in
the best interests of the Company to grant to the Executive an
incentive award as provided herein.
WHEREAS, the Company and the Executive desire to
amend and restate the Prior Agreement in its entirety to
incorporate the foregoing and other changes to the employment
arrangement between the Company and the Executive.
NOW, THEREFORE, in consideration of the mutual
promises herein contained, the Company and the Executive agree as
follows:
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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 Executive 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.
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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. The Executive shall also devote all of
Executive's working time, attention and energies to the performance
of Executive's duties and responsibilities under this
Agreement.
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Specific
Duties . The
Executive will serve as Executive Vice President - Exploration for
the Company, and in such positions as are mutually agreed upon by
the parties. The Executive shall perform all of the duties required
to fully and faithfully execute the office and position to which
the Executive is appointed, and such other duties 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 any of
the Company's affiliated entities as determined in such affiliates'
Board of Directors' sole discretion. The services of the
Executive will be requested and directed by the Chief Executive
Officer, Mr. Aubrey K. McClendon.
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Rules and
Regulations . The Company has issued various
policies and procedures applicable to employees and the Executive
including an Employment Policies Manual which sets forth the
general human resources policies of the Company and addresses
frequently asked questions regarding the Company. The
Executive agrees to comply with such policies and procedures except
to the extent inconsistent with this Agreement. Such
policies and procedures may be changed or adopted in the sole
discretion of the Company without advance notice.
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Stock
Investment . The Executive acknowledges that the
Executive is expected to own not less than twenty-five thousand
(25,000) shares of the Company's common stock at all times after
September 29, 2009 and prior to termination of the
Agreement. In the event the Executive's stock investment
is less than 25,000 shares, the Executive will have a grace period
of at least ninety (90) days to restore the Executive's stock
investment to the guideline amount. The Compensation
Committee of the Board of Directors (the "Compensation Committee")
may in its discretion extend the grace period for complying with
the Executive's stock investment guideline. The Company has no
obligation to sell to or to purchase from the Executive any of the
Company's stock in connection with this paragraph and has made no
representations or warranties regarding the Company's stock,
operations or financial condition.
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Other
Activities . Except as provided in this
Agreement or approved by the Compensation Committee, or its
designee, as applicable, in writing, the Executive agrees not
to: (a) engage in other business activities independent
of the Company; (b) serve as a general partner, officer, executive,
director or member of any corporation, partnership, company or
firm; or (c) directly or indirectly invest, participate or engage
in the Oil and Gas Business. For purposes of this
Agreement the term "Oil and Gas Business" means: (i)
producing oil and gas; (ii) drilling, owning or operating an
interest in oil and gas leases or wells; (iii) providing material
or services to the Oil and Gas Business; (iv) refining, processing
or marketing oil or gas; or (v) owning an interest in or assisting
any corporation, partnership, company, entity or person in any of
the foregoing. The foregoing will not prohibit: (v)
ownership of publicly traded securities; (w) ownership of royalty
interests where the Executive owns or previously owned the surface
of the land covered in whole or in part by the royalty interest and
the ownership of the royalty interest is incidental to the
ownership of such surface estate; (x) ownership of royalty
interests, overriding royalty interests, working interests or other
interests in oil and gas owned prior to the Executive's date of
first employment with the company and disclosed to the Company in
writing; (y) ownership of royalty interests, overriding royalty
interests, working interests or other interests in oil and gas
acquired by the Executive through a bona fide gift or inheritance
subject to disclosure by Executive to the Company in writing; or
(z) service as an officer or director of a not-for-profit
organization. If the Executive serves as a director or
officer of a not-for-profit organization, the Executive shall
disclose the name of the organization and their involvement in an
annual disclosure statement, the form of which shall be provided by
the Company.
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Executive's Compensation . The Company agrees to
compensate the Executive as follows:
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Base
Salary . A
base salary (the "Base Salary"), at the initial annual rate of not
less than Seven Hundred Seventy Five Thousand Dollars ($775,000.00)
will be paid to the Executive in regular installments in accordance
with the Company's designated payroll schedule. The
Executive Agrees that the Base Salary will not exceed the amount
set forth in this paragraph prior to September 30, 2012.
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Bonus . In addition to the Base Salary
described in paragraph 4.1 of this Agreement, the Company may
periodically pay bonus compensation to the
Executive. Any bonus compensation is subject to the
requirement that the Executive be employed on the bonus payment
date(s) selected by the Company and 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. The Executive
Agrees that any bonus compensation payable under this paragraph 4.2
during any calendar year through 2012 will not exceed the sum of
the bonus compensation paid to the Executive (a) for the last half
of 2008, plus (b) for the first half of 2009.
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Equity
Compensation . In addition to the compensation set
forth in paragraphs 4.1 and 4.2 of this Agreement, the Executive
may periodically receive grants of Chesapeake Energy Corporation
restricted stock or other awards from the Company's various equity
compensation plans, subject to the terms and conditions
thereof.
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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 to similarly situated
executives of 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 Executive is subject to all of the terms and
provisions of the Company's benefit plans or
policies. The following specific benefits will also be
provided to the Executive at the expense of the Company:
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Vacation . The Executive will be entitled to
take four (4) weeks of paid vacation, calculated from the
Executive's anniversary date, during the term of this
Agreement. No additional compensation will be paid for
failure to take vacation.
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Membership
Dues . The
Company will reimburse the Executive for: (a) the monthly dues
necessary to maintain a full membership in a club in the Oklahoma
City area selected by the Executive; and (b) the reasonable cost of
any approved business entertainment at such club. Such
reimbursement shall be made within thirty (30) days of the date
such costs are incurred and submitted for
reimbursement. 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.
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Change of
Control Payment . If, during the term of this
Agreement, there is a Change of Control (as hereafter defined) the
Executive will be entitled to a lump sum payment (the "Change of
Control Payment") within thirty (30) days of the effective date of
the Change of Control (in addition to any other amounts payable to
the Executive under this Agreement or otherwise including the
acceleration of the 2008 Incentive Award Payments under paragraph
4.6 of this Agreement) in an amount equal to two hundred percent
(200%) of: (a) the Executive's then current Base Salary under
paragraph 4.1 of this Agreement and (b) the actual bonuses paid to
the Executive during the twelve (12) calendar months preceding the
Change of Control under paragraph 4.2 of this Agreement or its
predecessor. Additionally, upon the occurrence of such a
Change of Control all Equity Compensation granted to the Executive
under Section 4.3 of this Agreement will be immediately vested and
the remaining unpaid installments of the 2008 Incentive Award under
paragraph 4.6 of this Agreement will be paid in a lump sum
contemporaneously with the Change of Control
Payment. For the purpose of this Agreement, a "Change of
Control" means the occurrence of any of the following:
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the acquisition
by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of thirty percent (30%) or more of either (i) the then
outstanding shares of the Company's common stock (the "Outstanding
CHK Common Stock") or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding CHK Voting
Securities"). For purposes of this paragraph, the
following acquisitions by a Person will not constitute a Change of
Control: (i) any acquisition directly from the Company; (ii) any
acquisition by the Company; (iii) any acquisition by or sponsored
by Mr. Aubrey K. McClendon; (iv) any acquisition by any Executive
benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company; or (v) any
acquisition by any corporation pursuant to a transaction which
complies with clauses (i), (ii) and (iii) of paragraph (c)
below;
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the individuals
who, as of June 12, 2009, constitute the Board of Directors (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board of Directors. Any individual
becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company's shareholders, is
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board will be considered a member of the
Incumbent Board as of the date hereof, but any such individual
whose initial assumption of office occurs as a result of an actual
or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Incumbent Board will not be deemed a member of the Incumbent Board
as of the date hereof;
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the
consummation of a reorganization, merger, consolidation or sale or
other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), unless following such Business
Combination: (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding CHK Common Stock and Outstanding CHK Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than sixty percent (60%) of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as
a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination of the Outstanding CHK Common Stock and Outstanding CHK
Voting Securities, as the case may be, (ii) no Person (excluding
any corporation resulting from such Business Combination or any
Executive benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, thirty percent (30%) or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership existed
prior to the Business Combination and (iii) at least a majority of
the members of the Board of Directors of the corporation resulting
from such Business Combination were members of the Incumbent Board
at the time of the execution of the initial agreement, or of the
action of the Incumbent Board, providing for such Business
Combination; or,
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the approval by
the shareholders of the Company of a complete liquidation or
dissolution of the Company.
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2008
Incentive Award . In addition to any bonus
compensation under paragraph 4.2 of this Agreement, the Company
hereby grants to the Executive an incentive award in the amount of
One Million Seven Hundred Thirty Thousand Two Hundred Fifty Dollars
($1,730,250.00) (the "2008 Incentive Award") to be paid in four (4)
equal annual installments. The first installment of the 2008
Incentive Award will be paid no later than September 30, 2009 and
the remaining installments of the 2008 Incentive Award will be paid
on September 30, 2010, September 30, 2011 and September 30, 2012.
Except as expressly provided herein or approved by the Board of
Directors, the payment of each installment of the 2008 Incentive
Award is conditioned on the continued employment of the Executive
by the Company or an affiliate of the Company on the scheduled date
of payment of such installment. The remaining unpaid
installments of the 2008 Incentive Award will be accelerated and
payable in a lump sum: (a) on a Change of Control in accordance
with paragraph 4.5 of this Agreement; (b) as provided in paragraphs
6.1.1, 6.2, 6.4 and 6.5 of this Agreement. The amounts
payable under this paragraph will be excluded from all other wage
and benefit computations including, without implied limitation, the
base used to compute 401(k) benefits, deferred compensation
benefits, change of control payments and severance
compensation.
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Term . The employment relationship
evidenced by this Agreement is an "at will" employment relationship
and the Compan
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