Exhibit 10.2

 

JONES ENERGY, LLC

 

SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”), dated
as of January 14, 2019 and effective as of December 12, 2018, is entered into
between Jones Energy, LLC, a Texas limited liability company (the “Company”),
and Carl F. Giesler, Jr. (the “Employee”).

 

W I T N E S S E T H

 

WHEREAS, the Company previously entered into that certain Employment Agreement
with the Employee on July 12, 2018 and that certain Amended and Restated
Employment Agreement on September 24, 2018 (the “Amended Agreement”); and

 

WHEREAS, the parties to the Amended Agreement desire to amend and restate the
Original Agreement in its entirety pursuant to the terms and conditions set
forth herein.

 

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises
contained herein and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

 

1.                                      POSITION AND DUTIES.

 

(a)                                 During the Employment Term (as defined in
Section 2 hereof), the Employee shall serve as the Chief Executive Officer of
the Company and Jones Energy, Inc. (the “Corporation”).  In this capacity, the
Employee shall have the duties, authorities and responsibilities as are
commensurate with the duties, authorities and responsibilities of persons in
similar capacities in similarly sized companies, and such other duties,
authorities and responsibilities as may reasonably be assigned to the Employee
by the Board of Directors (the “Board”) of the Corporation that are not
inconsistent with the Employee’s position as Chief Executive Officer of the
Company and the Corporation. The Employee’s principal place of employment with
the Company shall be in Austin, Texas, provided that the Employee understands
and agrees that the Employee may be required to travel from time to time for
business purposes. The Company understands that the Employee will reside in
Houston, Texas and commute to Austin, Texas as appropriate.  The Employee shall
report directly to the Board.

 

(b)                                 During the Employment Term, the Employee
shall devote substantially all of the Employee’s business time, energy, business
judgment, knowledge and skill and the Employee’s best efforts to the performance
of the Employee’s duties with the Company, provided that the foregoing shall not
prevent the Employee from (i) serving on the boards of directors of non-profit
organizations, (ii) participating in charitable, civic, educational,
professional, community or industry affairs, and (iii) managing the Employee’s
passive personal investments so long as such activities in the aggregate do not
materially interfere or conflict with the Employee’s duties hereunder or create
a potential business or fiduciary conflict.

 

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(c)                                  The Board shall take such action as may be
necessary to appoint or elect the Employee as a member of the Board as promptly
as practicable after the date hereof; provided, that no such appointment or
election shall occur if such action could result in the occurrence of a “change
of control” as set forth in the Company’s documentation regarding the Company’s
funded debt obligations or other governing agreements.  Thereafter, during the
Employment Term and subject to such action not resulting in in the occurrence of
a “change of control” as set forth in the Company’s documentation regarding the
Company’s funded debt obligations or other governing agreements, the Board shall
nominate the Employee for re-election as a member of the Board at the expiration
of the then current term, provided that the foregoing shall not be required to
the extent prohibited by legal or regulatory requirements.

 

2.                                      EMPLOYMENT TERM.  The Company agrees to
employ the Employee pursuant to the terms of this Agreement, and the Employee
agrees to be so employed, for a term of two (2) years (the “Initial Term”)
commencing as of July 23, 2018 (the “Effective Date”).  On each anniversary of
the Effective Date following the Initial Term, the term of this Agreement shall
be automatically extended for successive one-year periods; provided, however,
that either party hereto may elect not to extend this Agreement by giving
written notice to the other party at least ninety (90) days prior to any such
anniversary date.  Notwithstanding the foregoing, the Employee’s employment
hereunder may be earlier terminated in accordance with Section 8  hereof,
subject to Section 9 hereof.  The period of time between the Effective Date and
the termination of the Employee’s employment hereunder shall be referred to
herein as the “Employment Term.”

 

3.                                      BASE SALARY.  The Company agrees to pay
the Employee a base salary at an annual rate of $495,000 (“Base Salary”),
payable in accordance with the regular payroll practices of the Company, but not
less frequently than monthly.  The Employee’s Base Salary shall be subject to
annual review by the Board (or a committee thereof), and may be adjusted, from
time to time by the Board.  The Base Salary as determined herein and adjusted
from time to time shall constitute “Base Salary” for purposes of this Agreement.

 

4.                                      ANNUAL BONUS.  Commencing with the 2019
performance year and during the Employment Term, the Employee shall be eligible
to receive a discretionary incentive payment under the Company’s short-term
bonus plan as may be in effect from time to time (the “Bonus”) based on an
annual target bonus opportunity of 50% to 150% of Base Salary (the “Target
Bonus”) (provided that the Board or the Compensation Committee of the Board (the
“Committee”) may, as applicable, in its discretion, pay Employee a greater
Bonus), upon the attainment of certain pre-established performance goals
established by the Board or the Committee, as applicable, in its sole
discretion, and subject to the Employee’s continued employment with the Company
through the date of payment of any such Bonus ultimately earned. 
Notwithstanding the foregoing, within thirty (30) days following the Effective
Date, the Company paid the Employee a guaranteed bonus payment in respect of the
2018 performance year, equal to $371,250 (less applicable taxes) (the
“Guaranteed Bonus”), provided that, if the Company terminates the Employee for
Cause or the Employee resigns without Good Reason, in either case, prior to the
first anniversary of the Effective Date, the Employee shall repay to the Company
within ten (10) days of such termination in full the after-tax value of the
Guaranteed Bonus.

 

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5.                                      EQUITY AWARD.  The Employee was granted
by the Corporation, effective as of the Effective Date, three million
(3,000,000) restricted stock units of the Corporation (the “Restricted Stock
Units”), adjusted to one-hundred fifty thousand (150,000) restricted stock units
as a result of a one (1) for twenty (20) revised stock split effective
September 7, 2018, each of which represents the value of one share of Class A
common stock, par value $0.001 per share, of the Corporation (“Class A common
stock”). The grant of the Restricted Stock Units was an “inducement” award made
outside of the Jones Energy, Inc. 2013 Omnibus Incentive Plan, as amended and
restated May 4, 2016 (the “Plan”) (and any other existing Company equity
compensation plans) in reliance on the New York Stock Exchange Listed Company
Manual Rule 303A.08. The Restricted Stock Units will be eligible to vest in
equal 1/3 installments on each of July 1, 2019, July 1, 2020 and July 1, 2021,
subject to the Employee’s continued employment with the Company through each
applicable vesting date, and subject to additional vesting criteria and other
terms and conditions set forth in an award agreement to be entered into by the
Employee and the Corporation relating to the Restricted Stock Units.

 

6.                                      CASH AWARD.  The Employee was granted by
the Corporation, effective as of the Effective Date, a cash award of $320,000
(the “Cash Award”) under the Plan. The Cash Award will be eligible to vest in
equal 1/3 installments on each of April 1, 2019, October 1, 2019 and April 1,
2020, subject to the Employee’s continued employment with the Company through
each applicable vesting date, and subject to additional vesting criteria and
other terms and conditions set forth in an award agreement to be entered into by
the Employee and the Corporation relating to the Cash Award.

 

7.                                      EMPLOYEE BENEFITS.

 

(a)                                 BENEFIT PLANS.  During the Employment Term,
the Employee shall be entitled to participate in any employee benefit plan that
the Company has adopted or may adopt, maintain or contribute to for the benefit
of its employees generally, subject to satisfying the applicable eligibility
requirements, except to the extent such plans are duplicative of the benefits
otherwise provided to hereunder.  The Employee’s participation will be subject
to the terms of the applicable plan documents and generally applicable Company
policies.  Notwithstanding the foregoing, the Company may modify or terminate
any employee benefit plan at any time.

 

(b)                                 VACATIONS.  During the Employment Term, the
Employee shall be entitled to twenty (20) days of paid vacation per calendar
year (as prorated for partial years) in accordance with the Company’s policy on
accrual and use applicable to employees as in effect from time to time.  Up to
five (5) days of any accrued and unused vacation time may be carried forward to
use in the first quarter of the following year. The Employee will also be
eligible for up to five (5) days of personal time each calendar year which do
not carry forward.  Vacation may be taken at such times and intervals as the
Employee determines, subject to the business needs of the Company.

 

(c)                                  BUSINESS EXPENSES.  Upon presentation of
reasonable substantiation and documentation as the Company may specify from time
to time, the Employee shall be reimbursed in accordance with the Company’s
expense reimbursement policy, for all reasonable out-of-pocket business
expenses, including but not limited to reasonable commuting expenses between
Houston and the Company’s headquarters, incurred and paid by the Employee during
the Employment Term and in connection with the performance of the Employee’s
duties hereunder.

 

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8.                                      TERMINATION.  The Employee’s employment
and the Employment Term shall terminate on the first of the following to occur:

 

(a)                                 DISABILITY.  Upon ten (10) business days’
prior written notice by the Company to the Employee of termination due to
Disability.  For purposes of this Agreement, “Disability” shall be defined as
the inability of the Employee to have performed the Employee’s material duties
hereunder due to a physical or mental injury, infirmity or incapacity for one
hundred eighty (180) days (including weekends and holidays) in any 365-day
period as determined by the Board in its reasonable discretion.  The Employee
shall cooperate in all respects with the Company if a question arises as to
whether the Employee has become disabled, including, without limitation,
submitting to reasonable examinations by one or more medical doctors and other
health care specialists selected by the Company and authorizing such medical
doctors and other health care specialists to discuss the Employee’s condition
with the Company.

 

(b)                                 DEATH.  Automatically upon the date of death
of the Employee.

 

(c)                                  CAUSE.  Immediately upon written notice by
the Company to the Employee of a termination for Cause.  “Cause” shall mean:

 

(i)                                     the Employee’s willful misconduct or
gross negligence in the performance of the Employee’s duties to the Company;

 

(ii)                                  the Employee’s willful failure to perform
the Employee’s duties to the Company or to follow the lawful directives of the
Board (other than as a result of death or Disability);

 

(iii)                               indictment for, conviction of, or pleading
of guilty or nolo contendere to, a felony or any crime involving moral
turpitude;

 

(iv)                              the Employee’s failure to cooperate in any
audit or investigation of the business or financial practices of the Company or
any of its subsidiaries;

 

(v)                                 the Employee’s performance of any material
act of theft, embezzlement, fraud, malfeasance, dishonesty or misappropriation
of the Company’s property; or

 

(vi)                              breach of this Agreement or any other
agreement with the Company, or a violation of the Company’s code of conduct or
other written policy.

 

Any determination of Cause by the Company will be made by a resolution approved
by a majority of the members of the Board, provided that no such determination
may be made until the Employee has been given written notice detailing the
specific Cause event and a period of thirty (30) days following receipt of such
notice to cure such event (if susceptible to cure) to the satisfaction of the
Board.  Notwithstanding anything to the contrary contained herein, the
Employee’s right to cure as set forth in the preceding sentence shall not apply
if there are habitual or repeated breaches by the Employee.

 

(d)                                 WITHOUT CAUSE.  Immediately upon written
notice by the Company to the Employee of an involuntary termination without
Cause (other than for death or Disability).

 

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(e)                                  GOOD REASON.  Upon written notice by the
Employee to the Company of a termination for Good Reason.  “Good Reason” shall
mean the occurrence of any of the following events, without the express written
consent of the Employee, unless such events are fully corrected in all material
respects by the Company within thirty (30) days following written notification
by the Employee to the Company of the occurrence of one of the reasons set forth
below:

 

(i)                                     material diminution in the Employee’s
Base Salary or Target Bonus;

 

(ii)                                  material diminution in the Employee’s
duties, authorities or responsibilities (other than temporarily while physically
or mentally incapacitated or as required by applicable law); or

 

(iii)                               the removal of the Employee from the Board
by the Company (other than for Cause) or the failure to re-elect the Employee to
serve on the Board, subject to the conditions set forth in Section 1(c) herein;
or

 

(iv)                              relocation of the Company Headquarters to a
location greater than 50 miles from its current location and from Austin, Texas.

 

The Employee shall provide the Company with a written notice detailing the
specific circumstances alleged to constitute Good Reason within thirty (30) days
after the first occurrence of such circumstances, and actually terminate
employment within thirty (30) days following the expiration of the Company’s
thirty (30)-day cure period described above.  Otherwise, any claim of such
circumstances as “Good Reason” shall be deemed irrevocably waived by the
Employee.

 

(f)                                   WITHOUT GOOD REASON.  Upon ninety (90)
days’ prior written notice by the Employee to the Company of the Employee’s
voluntary termination of employment without Good Reason (which the Company may,
in its sole discretion, make effective earlier than any notice date).

 

(g)                                  EXPIRATION OF EMPLOYMENT TERM;
NON-EXTENSION OF AGREEMENT.  Upon the expiration of the Employment Term due to a
non-extension of this Agreement by the Company or the Employee pursuant to the
provisions of Section 2 hereof.

 

9.                                      CONSEQUENCES OF TERMINATION.

 

(a)                                 DEATH.  In the event that the Employee’s
employment and the Employment Term ends on account of the Employee’s death, the
Employee or the Employee’s estate, as the case may be, shall be entitled to the
following (with the amounts due under Sections 9(a)(i) through 9(a)(iv) hereof
to be paid within sixty (60) days following termination of employment, or such
earlier date as may be required by applicable law):

 

(i)                                     any unpaid Base Salary through the date
of termination;

 

(ii)                                  any Bonus earned but unpaid with respect
to the performance period ending on or preceding the date of termination;

 

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(iii)                               reimbursement for any unreimbursed business
expenses incurred through the date of termination;

 

(iv)                              any accrued but unused vacation time in
accordance with Company policy; and

 

(v)                                 all other payments, benefits or fringe
benefits to which the Employee shall be entitled under the terms of any
applicable compensation arrangement or benefit, equity or fringe benefit plan or
program or grant or this Agreement (collectively, Sections 9(a)(i) through
9(a)(v) hereof shall be hereafter referred to as the “Accrued Benefits”).

 

In addition, the Company shall pay the Employee’s estate a pro-rata portion of
the Employee’s Bonus for the performance period in which the Employee’s
termination occurs based on actual results for such period (determined by
multiplying the amount of such bonus which would be due for the full performance
period by a fraction, the numerator of which is the number of days during the
performance period that includes Executive’s termination that the Employee is
employed by the Company and the denominator of which is the number of days in
such performance period) payable at the same time bonuses for such performance
period are paid to other senior executives of the Company (the “Pro Rata
Bonus”).

 

(b)                                 DISABILITY.  In the event that the
Employee’s employment and/or Employment Term ends on account of the Employee’s
Disability, the Company shall pay or provide the Employee with the Accrued
Benefits.  In addition, the Company shall pay the Employee a Pro Rata Bonus
payable at the same time bonuses for the applicable performance period are paid
to other senior executives of the Company.

 

(c)                                  TERMINATION FOR CAUSE OR WITHOUT GOOD
REASON OR AS A RESULT OF EMPLOYEE NON-EXTENSION OF THIS AGREEMENT.  If the
Employee’s employment is terminated (x) by the Company for Cause, (y) by the
Employee without Good Reason, or (z) as a result of the Employee’s non-extension
of the Employment Term as provided in Section 2 hereof, the Company shall pay to
the Employee the Accrued Benefits other than the benefit described in
Section 9(a)(ii) hereof.

 

(d)                                 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON
OR AS A RESULT OF COMPANY NON-EXTENSION OF THIS AGREEMENT.  If the Employee’s
employment by the Company is terminated (x) by the Company other than for Cause,
(y) by the Employee for Good Reason, or (z) as a result of the Company’s
non-extension of the Employment Term as provided in Section 2 hereof, the
Company shall pay or provide the Employee with the following, subject to the
provisions of Section 25 hereof:

 

(i)                                     the Accrued Benefits;

 

(ii)                                  subject to the Employee’s continued
compliance with the obligations in Sections 10, 11 and 12 hereof, a Pro Rata
Bonus payable at the same time bonuses for the applicable performance period are
paid to other senior executives of the Company;

 

(iii)                               subject to the Employee’s continued
compliance with the obligations in Sections 10, 11 and 12 hereof, an amount
equal to the Employee’s monthly Base Salary rate, paid

 

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monthly for the longer of (A) a period of twelve (12) months following such
termination or (B) the period remaining in the Initial Term if termination
occurs during the Initial Term; provided that to the extent that the payment of
any amount constitutes “nonqualified deferred compensation” for purposes of Code
Section 409A (as defined in Section 25 hereof), any such payment scheduled to
occur during the first sixty (60) days following the termination of employment
shall not be paid until the first regularly scheduled pay period following the
sixtieth (60th) day following such termination and shall include payment of any
amount that was otherwise scheduled to be paid prior thereto;

 

(iv)                              subject to the Employee’s continued compliance
with the obligations in Sections 10, 11 and 12 hereof, an amount equal to one
(1) times the Employee’s Target Bonus for the calendar year during which the
Employee’s termination occurs, with such amount paid in a single lump sum
payment on the sixtieth (60th) day following the date of termination of
employment, and

 

(v)                                 subject to (A) the Employee’s timely
election of continuation coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”), (B) the Employee’s continued
copayment of premiums at the same level and cost to the Employee as if the
Employee were an employee of the Company (excluding, for purposes of calculating
cost, an employee’s ability to pay premiums with pre-tax dollars), and (C) the
Employee’s continued compliance with the obligations in Sections 10, 11 and 12
hereof, continued participation in the Company’s group health plan (to the
extent permitted under applicable law and the terms of such plan) which covers
the Employee (and the Employee’s eligible dependents) for a period of twelve
(12) months, provided that the Employee is eligible and remains eligible for
COBRA coverage; provided, further, that the Company may modify the continuation
coverage contemplated by this Section 9(d)(v) to the extent reasonably necessary
to avoid the imposition of any excise taxes on the Company for failure to comply
with the nondiscrimination requirements of the Patient Protection and Affordable
Care Act of 2010, as amended, and/or the Health Care and Education
Reconciliation Act of 2010, as amended (to the extent applicable); and provided,
further, that in the event that the Employee obtains other employment that
offers group health benefits, such continuation of coverage by the Company under
this Section 9(d)(v) shall immediately cease.

 

Payments and benefits provided in this Section 9(d) shall be in lieu of any
termination or severance payments or benefits for which the Employee may be
eligible under any of the plans, policies or programs of the Company or under
the Worker Adjustment Retraining Notification Act of 1988 or any similar state
statute or regulation.

 

(e)                                  CODE SECTION 280G.  To the extent that any
amount payable to the Employee hereunder, as well as any other “parachute
payment,” as such term is defined under Section 280G of the Internal Revenue
Code, payable to the Employee in connection with the Employee’s employment by
the Company or any of its affiliates, exceed the limitations of Section 280G of
the Internal Revenue Code such that an excise tax will be imposed under
Section 4999 of the Code, such parachute payments shall be reduced to the extent
necessary to avoid application of the excise tax in the following order: 
(i) any cash severance based on a multiple of Base Salary or Annual Bonus,
(ii) any other cash amounts payable to the Employee, (iii) benefits valued as
parachute payments, and (iv) acceleration of vesting of any equity awards.

 

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(f)                                   OTHER OBLIGATIONS.  Upon any termination
of the Employee’s employment with the Company, the Employee shall promptly
resign from the Board and any other position as an officer, director or
fiduciary of any Company-related entity.

 

(g)                                  EXCLUSIVE REMEDY.  The amounts payable to
the Employee following termination of employment and the Employment Term
hereunder pursuant to Sections 8 and 9 hereof shall be in full and complete
satisfaction of the Employee’s rights under this Agreement and any other claims
that the Employee may have in respect of the Employee’s employment with the
Company or any of its affiliates, and the Employee acknowledges that such
amounts are fair and reasonable, and are the Employee’s sole and exclusive
remedy, in lieu of all other remedies at law or in equity, with respect to the
termination of the Employee’s employment hereunder or any breach of this
Agreement.

 

10.                               RELEASE; NO MITIGATION.  Any and all amounts
payable and benefits or additional rights provided pursuant to this Agreement
beyond the Accrued Benefits (other than amounts described in
Section 9(a)(iii) hereof) shall only be payable if the Employee delivers to the
Company and does not revoke a customary general release of claims in favor of
the Company in a form reasonably satisfactory to the Company.  Such release
shall be executed and delivered (and no longer subject to revocation, if
applicable) within sixty (60) days following termination.  The Employee shall
not be required to mitigate his damages in order to receive the amounts payable
under Sections 7 and 8 hereof.

 

11.                               RESTRICTIVE COVENANTS.

 

(a)                                 CONFIDENTIALITY.  During the course of the
Employee’s employment with the Company, the Employee will have access to
Confidential Information.  For purposes of this Agreement, “Confidential
Information” means all data, information, ideas, concepts, discoveries, trade
secrets, inventions (whether or not patentable or reduced to practice),
innovations, improvements, know-how, developments, techniques, methods,
processes, treatments, drawings, sketches, specifications, designs, plans,
patterns, models, plans and strategies, and all other confidential or
proprietary information or trade secrets in any form or medium (whether merely
remembered or embodied in a tangible or intangible form or medium) whether now
or hereafter existing, relating to or arising from the past, current or
potential business, activities and/or operations of the Company or any of its
affiliates, including, without limitation, any such information relating to or
concerning finances, sales, marketing, advertising, transition, promotions,
pricing, personnel, customers, suppliers, vendors, raw partners and/or
competitors.  The Employee agrees that the Employee shall not, directly or
indirectly, use, make available, sell, disclose or otherwise communicate to any
person, other than in the course of the Employee’s assigned duties and for the
benefit of the Company, either during the period of the Employee’s employment or
at any time thereafter, any Confidential Information or other confidential or
proprietary information received from third parties subject to a duty on the
Company’s and its subsidiaries’ and affiliates’ part to maintain the
confidentiality of such information, and to use such information only for
certain limited purposes, in each case, which shall have been obtained by the
Employee during the Employee’s employment by the Company (or any predecessor). 
The foregoing shall not apply to information that (i) was known to the public
prior to its disclosure to the Employee; (ii) becomes generally known to the
public subsequent to disclosure to the Employee through no wrongful act of the
Employee or any representative of the Employee; or (iii)

 

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the Employee is required to disclose by applicable law, regulation or legal
process (provided that the Employee provides the Company with prior notice of
the contemplated disclosure and cooperates with the Company at its expense in
seeking a protective order or other appropriate protection of such
information).  The terms and conditions of this Agreement shall remain strictly
confidential, and the Employee hereby agrees not to disclose the terms and
conditions hereof to any person or entity, other than immediate family members,
legal advisors or personal tax or financial advisors, or prospective future
employers solely for the purpose of disclosing the limitations on the Employee’s
conduct imposed by the provisions of this Section 11 who, in each case, agree to
keep such information confidential.

 

(b)                                 NONCOMPETITION.  The Employee acknowledges
that (i) the Employee performs services of a unique nature for the Company that
are irreplaceable, and that the Employee’s performance of such services to a
competing business will result in irreparable harm to the Company, (ii) the
Employee has had and will continue to have access to Confidential Information
which, if disclosed, would unfairly and inappropriately assist in competition
against the Company or any of its affiliates, (iii) in the course of the
Employee’s employment by a competitor, the Employee would inevitably use or
disclose such Confidential Information, (iv) the Company and its affiliates have
substantial relationships with their customers and the Employee has had and will
continue to have access to these customers, (v) the Employee has received and
will receive specialized training from the Company and its affiliates, and
(vi) the Employee has generated and will continue to generate goodwill for the
Company and its affiliates in the course of the Employee’s employment. 
Accordingly, during the Employee’s employment hereunder and for a period of one
(1) year thereafter, the Employee agrees that the Employee will not, directly or
indirectly, own, manage, operate, control, be employed by (whether as an
employee, consultant, independent contractor or otherwise, and whether or not
for compensation) or render services to any person, firm, corporation or other
entity, in whatever form, engaged in competition with the Company or any of its
subsidiaries or affiliates in any other material business in which the Company
or any of its subsidiaries or affiliates is engaged on the date of termination
or in which the Company’s board has considered, on or prior to such date, to
have the Company or any of its subsidiaries or affiliates become engaged in on
or after such date, in Oklahoma and the Texas Panhandle, and any basin or area
in which the Company’s Board has actively considered having the Company operate
during the Employment Term.  Notwithstanding the foregoing, nothing herein shall
prohibit the Employee from being a passive owner of not more than one percent
(1%) of the equity securities of a publicly traded corporation engaged in a
business that is in competition with the Company or any of its subsidiaries or
affiliates, so long as the Employee has no active participation in the business
of such corporation.  In addition, the provisions of this Section 11(b) shall
not be violated by the Employee commencing employment with a subsidiary,
division or unit of any entity that engages in a business in competition with
the Company or any of its subsidiaries or affiliates so long as the Employee and
such subsidiary, division or unit does not engage in a business in competition
with the Company or any of its subsidiaries or affiliates.

 

(c)                                  NONSOLICITATION; NONINTERFERENCE.  (i) 
During the Employee’s employment with the Company and for a period of one
(1) year thereafter, the Employee agrees that the Employee shall not, except in
the furtherance of the Employee’s duties hereunder, directly or indirectly,
individually or on behalf of any other person, firm, corporation or other
entity, solicit, aid or induce any customer of the Company or any of its
subsidiaries or affiliates to purchase goods or services then sold by the
Company or any of its subsidiaries or affiliates from another person,

 

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firm, corporation or other entity or assist or aid any other persons or entity
in identifying or soliciting any such customer.

 

(ii)                                  During the Employee’s employment with the
Company and for a period of two (2) years thereafter, the Employee agrees that
the Employee shall not, except in the furtherance of the Employee’s duties
hereunder, directly or indirectly, individually or on behalf of any other
person, firm, corporation or other entity, (A) solicit, aid or induce any
employee, representative or agent of the Company or any of its subsidiaries or
affiliates to leave such employment or retention or to accept employment with or
render services to or with any other person, firm, corporation or other entity
unaffiliated with the Company or hire or retain any such employee,
representative or agent, or take any action to materially assist or aid any
other person, firm, corporation or other entity in identifying, hiring or
soliciting any such employee, representative or agent, or (B) interfere, or aid
or induce any other person or entity in interfering, with the relationship
between the Company or any of its subsidiaries or affiliates and any of their
respective vendors, joint venturers or licensors.  An employee, representative
or agent shall be deemed covered by this Section 11(c)(ii) while so employed or
retained and for a period of six (6) months thereafter.

 

(d)                                 NONDISPARAGEMENT.  The Employee agrees not
to make negative comments or otherwise disparage the Company or its officers,
directors, employees, shareholders, agents or products other than in the good
faith performance of the Employee’s duties to the Company while the Employee is
employed by the Company.  The Company agrees that it will direct its directors
and executive officers not to, while employed by the Company or serving as a
director of the Company, as the case may be, make negative comments about the
Employee or otherwise disparage the Employee in any manner that is likely to be
harmful to the Employee’s business reputation.  The foregoing shall not be
violated by truthful statements in response to legal process, required
governmental testimony or filings (including SEC filings), or administrative or
arbitral proceedings (including, without limitation, depositions in connection
with such proceedings), and the foregoing limitation on the Company’s executives
and directors shall not be violated by statements that they in good faith
believe are necessary or appropriate to make in connection with performing their
duties and obligations to the Company.

 

(e)                                  INVENTIONS.  (i)  The Employee acknowledges
and agrees that all ideas, methods, inventions, discoveries, improvements, work
products, developments, software, know-how, processes, techniques, methods,
works of authorship and other work product, whether patentable or unpatentable,
(A) that are reduced to practice, created, invented, designed, developed,
contributed to, or improved with the use of any Company resources and/or within
the scope of the Employee’s work with the Company or that relate to the
business, operations or actual or demonstrably anticipated research or
development of the Company, and that are made or conceived by the Employee,
solely or jointly with others, during the Employment Term, or (B) suggested by
any work that the Employee performs in connection with the Company, either while
performing the Employee’s duties with the Company or on the Employee’s own time,
shall belong exclusively to the Company (or its designee), whether or not patent
or other applications for intellectual property protection are filed thereon
(the “Inventions”).  The Employee will keep full and complete written records
(the “Records”), in the manner prescribed by the Company, of all Inventions, and
will promptly disclose all Inventions completely and in writing to the Company. 
The Records shall be the sole and exclusive property of the Company, and the
Employee will surrender them upon the termination of the Employment Term, or
upon the Company’s request.

 

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The Employee irrevocably conveys, transfers and assigns to the Company the
Inventions and all patents or other intellectual property rights that may issue
thereon in any and all countries, whether during or subsequent to the Employment
Term, together with the right to file, in the Employee’s name or in the name of
the Company (or its designee), applications for patents and equivalent rights
(the “Applications”).  The Employee will, at any time during and subsequent to
the Employment Term, make such applications, sign such papers, take all rightful
oaths, and perform all other acts as may be requested from time to time by the
Company to perfect, record, enforce, protect, patent or register the Company’s
rights in the Inventions, all without additional compensation to the Employee
from the Company.  The Employee will also execute assignments to the Company (or
its designee) of the Applications, and give the Company and its attorneys all
reasonable assistance (including the giving of testimony) to obtain the
Inventions for the Company’s benefit, all without additional compensation to the
Employee from the Company.

 

(ii)                                  In addition, the Inventions will be deemed
Work for Hire, as such term is defined under the copyright laws of the United
States, on behalf of the Company and the Employee agrees that the Company will
be the sole owner of the Inventions, and all underlying rights therein, in all
media now known or hereinafter devised, throughout the universe and in
perpetuity without any further obligations to the Employee.  If the Inventions,
or any portion thereof, are deemed not to be Work for Hire, or the rights in
such Inventions do not otherwise automatically vest in the Company, the Employee
hereby irrevocably conveys, transfers and assigns to the Company, all rights, in
all media now known or hereinafter devised, throughout the universe and in
perpetuity, in and to the Inventions, including, without limitation, all of the
Employee’s right, title and interest in the copyrights (and all renewals,
revivals and extensions thereof) to the Inventions, including, without
limitation, all rights of any kind or any nature now or hereafter recognized,
including, without limitation, the unrestricted right to make modifications,
adaptations and revisions to the Inventions, to exploit and allow others to
exploit the Inventions and all rights to sue at law or in equity for any
infringement, or other unauthorized use or conduct in derogation of the
Inventions, known or unknown, prior to the date hereof, including, without
limitation, the right to receive all proceeds and damages therefrom.  In
addition, the Employee hereby waives any so-called “moral rights” with respect
to the Inventions.  The Employee hereby waives any and all currently existing
and future monetary rights in and to the Inventions and all patents and other
registrations for intellectual property that may issue thereon, including,
without limitation, any rights that would otherwise accrue to the Employee’s
benefit by virtue of the Employee being an employee of or other service provider
to the Company.

 

(f)                                   RETURN OF COMPANY PROPERTY.  On the date
of the Employee’s termination of employment with the Company for any reason (or
at any time prior thereto at the Company’s request), the Employee shall return
all property belonging to the Company or its affiliates (including, but not
limited to, any Company-provided laptops, computers, cell phones, wireless
electronic mail devices or other equipment, or documents and property belonging
to the Company).  The Employee may retain the Employee’s rolodex and similar
address books provided that such items only include contact information.

 

(g)                                  REASONABLENESS OF COVENANTS.  In signing
this Agreement, the Employee gives the Company assurance that the Employee has
carefully read and considered all of the terms and conditions of this Agreement,
including the restraints imposed under this Section 11 hereof.  The Employee
agrees that these restraints are necessary for the reasonable and proper

 

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protection of the Company and its affiliates and their Confidential Information
and that each and every one of the restraints is reasonable in respect to
subject matter, length of time and geographic area, and that these restraints,
individually or in the aggregate, will not prevent the Employee from obtaining
other suitable employment during the period in which the Employee is bound by
the restraints.  The Employee acknowledges that each of these covenants has a
unique, very substantial and immeasurable value to the Company and its
affiliates and that the Employee has sufficient assets and skills to provide a
livelihood while such covenants remain in force.  The Employee further covenants
that the Employee will not challenge the reasonableness or enforceability of any
of the covenants set forth in this Section 11, and that the Employee will
reimburse the Company and its affiliates for all costs (including reasonable
attorneys’ fees) incurred in connection with any action to enforce any of the
provisions of this Section 11 if the Employee challenges the reasonableness or
enforceability of any of the provisions of this Section 11.  It is also agreed
that each of the Company’s affiliates will have the right to enforce all of the
Employee’s obligations to that affiliate under this Agreement, including without
limitation pursuant to this Section 11.

 

(h)                                 REFORMATION.  If it is determined by a court
of competent jurisdiction in any state that any restriction in this Section 11
is excessive in duration or scope or is unreasonable or unenforceable under
applicable law, it is the intention of the parties that such restriction may be
modified or amended by the court to render it enforceable to the maximum extent
permitted by the laws of that state.

 

(i)                                     TOLLING.  In the event of any violation
of the provisions of this Section 11, the Employee acknowledges and agrees that
the post-termination restrictions contained in this Section 11 shall be extended
by a period of time equal to the period of such violation, it being the
intention of the parties hereto that the running of the applicable
post-termination restriction period shall be tolled during any period of such
violation.

 

(j)                                    SURVIVAL OF PROVISIONS.  The obligations
contained in Sections 11 and 12 hereof shall survive the termination or
expiration of the Employment Term and the Employee’s employment with the Company
and shall be fully enforceable thereafter.

 

12.                               COOPERATION.  Upon the receipt of reasonable
notice from the Company (including outside counsel), the Employee agrees that
while employed by the Company and thereafter, the Employee will respond and
provide information with regard to matters in which the Employee has knowledge
as a result of the Employee’s employment with the Company, and will provide
reasonable assistance to the Company, its affiliates and their respective
representatives in defense of any claims that may be made against the Company or
its affiliates, and will assist the Company and its affiliates in the
prosecution of any claims that may be made by the Company or its affiliates, to
the extent that such claims may relate to the period of the Employee’s
employment with the Company (collectively, the “Claims”).  The Employee agrees
to promptly inform the Company if the Employee becomes aware of any lawsuits
involving Claims that may be filed or threatened against the Company or its
affiliates.  The Employee also agrees to promptly inform the Company (to the
extent that the Employee is legally permitted to do so) if the Employee is asked
to assist in any investigation of the Company or its affiliates (or their
actions) or another party attempts to obtain information or documents from the
Employee (other than in connection with any litigation or other proceeding in
which the Employee is a party-in-opposition) with respect to matters the
Employee believes in good faith to relate to any investigation of the

 

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Company or its affiliates, in each case, regardless of whether a lawsuit or
other proceeding has then been filed against the Company or its affiliates with
respect to such investigation, and shall not do so unless legally required. 
During the pendency of any litigation or other proceeding involving Claims, the
Employee shall not communicate with anyone (other than the Employee’s attorneys
and tax and/or financial advisors and except to the extent that the Employee
determines in good faith is necessary in connection with the performance of the
Employee’s duties hereunder) with respect to the facts or subject matter of any
pending or potential litigation or regulatory or administrative proceeding
involving the Company or any of its affiliates without giving prior written
notice to the Company or the Company’s counsel.  Upon presentation of
appropriate documentation, the Company shall pay or reimburse the Employee for
all reasonable attorneys’ fees and out-of-pocket expenses, including travel,
duplicating or telephonic expenses, incurred by the Employee in complying with
this Section 12.

 

13.                               WHISTLEBLOWER PROTECTION. Notwithstanding
anything to the contrary contained herein, no provision of this Agreement shall
be interpreted so as to impede the Employee (or any other individual) from
reporting possible violations of federal law or regulation to any governmental
agency or entity, including but not limited to the Department of Justice, the
Securities and Exchange Commission, the Congress, and any agency Inspector
General, or making other disclosures under the whistleblower provisions of
federal law or regulation. The Employee does not need the prior authorization of
the Company to make any such reports or disclosures and the Employee shall not
be not required to notify the Company that such reports or disclosures have been
made.

 

14.                               EQUITABLE RELIEF AND OTHER REMEDIES.  The
Employee acknowledges and agrees that the Company’s remedies at law for a breach
or threatened breach of any of the provisions of Section 11 or Section 12 hereof
would be inadequate and, in recognition of this fact, the Employee agrees that,
in the event of such a breach or threatened breach, in addition to any remedies
at law, the Company, without posting any bond or other security, shall be
entitled to obtain equitable relief in the form of specific performance, a
temporary restraining order, a temporary or permanent injunction or any other
equitable remedy which may then be available, without the necessity of showing
actual monetary damages.  In the event of a violation by the Employee of
Section 11 or Section 12 hereof, any severance being paid to the Employee
pursuant to this Agreement or otherwise shall immediately cease, and any
severance previously paid to the Employee shall be immediately repaid to the
Company.

 

15.                               NO ASSIGNMENTS.  This Agreement is personal to
each of the parties hereto.  Except as provided in this Section 15 hereof, no
party may assign or delegate any rights or obligations hereunder without first
obtaining the written consent of the other party hereto.  The Company may assign
this Agreement to any successor to all or substantially all of the business
and/or assets of the Company, provided that the Company shall require such
successor to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place.  As used in this Agreement, “Company”
shall mean the Company and any successor to its business and/or assets, which
assumes and agrees to perform the duties and obligations of the Company under
this Agreement by operation of law or otherwise.

 

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16.                               NOTICE.  For purposes of this Agreement,
notices and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given (a) on the date of delivery,
if delivered by hand, (b) on the date of transmission, if delivered by confirmed
facsimile or electronic mail, (c) on the first (1st) business day following the
date of deposit, if delivered by guaranteed overnight delivery service, or
(d) on the fourth (4th) business day following the date delivered or mailed by
United States registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:

 

If to the Employee:

 

At the address (or to the facsimile number) shown
in the books and records of the Company.

 

If to the Company:

 

Jones Energy, LLC

807 Las Cimas Parkway

Suite 350

Austin, TX 78746

Attn: Director of Human Resources

 

or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

 

17.                               SECTION HEADINGS; INCONSISTENCY.  The section
headings used in this Agreement are included solely for convenience and shall
not affect, or be used in connection with, the interpretation of this
Agreement.  In the event of any inconsistency between the terms of this
Agreement and any form, award, plan or policy of the Company, the terms of this
Agreement shall govern and control.

 

18.                               SEVERABILITY.  The provisions of this
Agreement shall be deemed severable.  The invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Agreement in such
jurisdiction or the validity, legality or enforceability of any provision of
this Agreement in any other jurisdiction, it being intended that all rights and
obligations of the parties hereunder shall be enforceable to the fullest extent
permitted by applicable law.

 

19.                               COUNTERPARTS.  This Agreement may be executed
in several counterparts, each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.

 

20.                               INDEMNIFICATION.  The Company hereby agrees to
indemnify the Employee and hold the Employee harmless to the extent provided
under the By-Laws of the Company against and in respect of any and all actions,
suits, proceedings, claims, demands, judgments, costs, expenses (including
reasonable attorney’s fees), losses, and damages resulting from the Employee’s
good faith performance of the Employee’s duties and obligations with the
Company.  This obligation shall survive the termination of the Employee’s
employment with the Company.

 

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21.                               LIABILITY INSURANCE.  The Company shall cover
the Employee under directors’ and officers’ liability insurance both during and,
while potential liability exists, after the term of this Agreement in the same
amount and to the same extent as the Company covers its other officers and
directors.

 

22.                               GOVERNING LAW; JURISDICTION.  This Agreement,
the rights and obligations of the parties hereto, and any claims or disputes
relating thereto, shall be governed by and construed in accordance with the laws
of the State of Texas (without regard to its choice of law provisions).  Each of
the parties agrees that any dispute between the parties shall be resolved only
in the state or federal courts of the State of Texas and the appellate courts
having jurisdiction of appeals in such courts.  In that context, and without
limiting the generality of the foregoing, each of the parties hereto irrevocably
and unconditionally (a) submits in any proceeding relating to this Agreement or
the Employee’s employment by the Company or any affiliate, or for the
recognition and enforcement of any judgment in respect thereof (a “Proceeding”),
to the exclusive jurisdiction of the state or federal courts of the State of
Texas and the appellate courts having jurisdiction of appeals in such courts,
and agrees that all claims in respect of any such Proceeding shall be heard and
determined in such Texas State court or, to the extent permitted by law, in such
federal court, (b) consents that any such Proceeding may and shall be brought in
such courts and waives any objection that the Employee or the Company may now or
thereafter have to the venue or jurisdiction of any such Proceeding in any such
court or that such Proceeding was brought in an inconvenient court and agrees
not to plead or claim the same, (c) waives all right to trial by jury in any
Proceeding (whether based on contract, tort or otherwise) arising out of or
relating to this Agreement or the Employee’s employment by the Company or any
affiliate of the Company, or the Employee’s or the Company’s performance under,
or the enforcement of, this Agreement, (d) agrees that service of process in any
such Proceeding may be effected by mailing a copy of such process by registered
or certified mail (or any substantially similar form of mail), postage prepaid,
to such party at the Employee’s or the Company’s address as provided in
Section 16 hereof, and (e) agrees that nothing in this Agreement shall affect
the right to effect service of process in any other manner permitted by the laws
of the State of Texas.  The parties acknowledge and agree that in connection
with any dispute hereunder, each party shall pay all of its own costs and
expenses, including, without limitation, its own legal fees and expenses.

 

23.                               MISCELLANEOUS.  No provision of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by the Employee and such officer or
director as may be designated by the Board.  No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.  This Agreement together with all
exhibits hereto sets forth the entire agreement of the parties hereto in respect
of the subject matter contained herein and supersedes the Original Agreement and
any and all other prior agreements or understandings between the Employee and
the Company with respect to the subject matter hereof, including, but not
limited to, the Original Agreement.  No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.

 

24.                               REPRESENTATIONS.  The Employee represents and
warrants to the Company that (a) the Employee has the legal right to enter into
this Agreement and to perform all of the

 

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obligations on the Employee’s part to be performed hereunder in accordance with
its terms, and (b) the Employee is not a party to any agreement or
understanding, written or oral, and is not subject to any restriction, which, in
either case, could prevent the Employee from entering into this Agreement or
performing all of the Employee’s duties and obligations hereunder.  In addition,
the Employee acknowledges that the Employee is aware of Section 304 (Forfeiture
of Certain Bonuses and Profits) of the Sarbanes-Oxley Act of 2002 and the right
of the Company to be reimbursed for certain payments to the Employee in
compliance therewith.

 

25.                               TAX MATTERS.

 

(a)                                 WITHHOLDING.  The Company may withhold from
any and all amounts payable under this Agreement or otherwise such federal,
state and local taxes as may be required to be withheld pursuant to any
applicable law or regulation.  In the event that the Company fails to withhold
any taxes required to be withheld by applicable law or regulation, the Employee
agrees to indemnify the Company for any amount paid with respect to any such
taxes, together with any interest, penalty and/or expense related thereto.

 

(b)                                 SECTION 409A COMPLIANCE.

 

(i)                                     The intent of the parties is that
payments and benefits under this Agreement comply with Internal Revenue Code
Section 409A and the regulations and guidance promulgated thereunder
(collectively “Code Section 409A”) and, accordingly, to the maximum extent
permitted, this Agreement shall be interpreted to be in compliance therewith. 
To the extent that any provision hereof is modified in order to comply with Code
Section 409A, such modification shall be made in good faith and shall, to the
maximum extent reasonably possible, maintain the original intent and economic
benefit to the Employee and the Company of the applicable provision without
violating the provisions of Code Section 409A.  In no event whatsoever shall the
Company be liable for any additional tax, interest or penalty that may be
imposed on the Employee by Code Section 409A or damages for failing to comply
with Code Section 409A.

 

(ii)                                  A termination of employment shall not be
deemed to have occurred for purposes of any provision of this Agreement
providing for the payment of any amounts or benefits upon or following a
termination of employment unless such termination is also a “separation from
service” within the meaning of Code Section 409A and, for purposes of any such
provision of this Agreement, references to a “termination,” “termination of
employment” or like terms shall mean “separation from service.”  Notwithstanding
anything to the contrary in this Agreement, if the Employee is deemed on the
date of termination to be a “specified employee” within the meaning of that term
under Code Section 409A(a)(2)(B), then with regard to any payment or the
provision of any benefit that is considered deferred compensation under Code
Section 409A payable on account of a “separation from service,” such payment or
benefit shall not be made or provided until the date which is the earlier of
(A) the expiration of the six (6)-month period measured from the date of such
“separation from service” of the Employee, and (B) the date of the Employee’s
death, to the extent required under Code Section 409A.  Upon the expiration of
the foregoing delay period, all payments and benefits delayed pursuant to this
Section 25(b)(ii) (whether they would have otherwise been payable in a single
sum or in installments in the absence of such delay) shall be paid or reimbursed
to the Employee in a lump sum following the date of the “separation from

 

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service”, and any remaining payments and benefits due under this Agreement shall
be paid or provided in accordance with the normal payment dates specified for
them herein.

 

(iii)                               To the extent that reimbursements or other
in-kind benefits under this Agreement constitute “nonqualified deferred
compensation” for purposes of Code Section 409A, (A) all expenses or other
reimbursements hereunder shall be made on or prior to the last day of the
taxable year following the taxable year in which such expenses were incurred by
the Employee, (B) any right to reimbursement or in-kind benefits shall not be
subject to liquidation or exchange for another benefit, and (C) no such
reimbursement, expenses eligible for reimbursement, or in-kind benefits provided
in any taxable year shall in any way affect the expenses eligible for
reimbursement, or in-kind benefits to be provided, in any other taxable year.

 

(iv)                              For purposes of Code Section 409A, the
Employee’s right to receive any installment payments pursuant to this Agreement
shall be treated as a right to receive a series of separate and distinct
payments.  Whenever a payment under this Agreement specifies a payment period
with reference to a number of days, the actual date of payment within the
specified period shall be within the sole discretion of the Company.

 

(v)                                 Notwithstanding any other provision of this
Agreement to the contrary, in no event shall any payment under this Agreement
that constitutes “nonqualified deferred compensation” for purposes of Code
Section 409A be subject to offset by any other amount unless otherwise permitted
by Code Section 409A.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

 

 

COMPANY:

 

 

 

JONES ENERGY, LLC

 

 

 

By:

/s/ Thomas Hester

 

 

Thomas Hester

 

 

Senior Vice President and Chief Financial Officer

 

 

 

EMPLOYEE:

 

 

 

/s/ Carl F. Giesler, Jr.

 

Carl F. Giesler, Jr.

 

Signature Page to Second Amended and Restated Employment Agreement

 

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