EXHIBIT 10.2.5

 

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February 10, 2006

 

VIA HAND DELIVERY

PERSONAL AND CONFIDENTIAL

 

Mr. Tom L. Ward

19200 North Rockwell Avenue

Edmond, Oklahoma 73003

 

Re:

Resignation Agreement

 

Dear Tom:

 

The purpose of this letter is to memorialize the agreement between you and
Chesapeake Energy Corporation, an Oklahoma corporation (“Chesapeake Energy”),
regarding your resignation from Chesapeake Energy and all affiliated entities
(collectively “Chesapeake”). We have agreed that the terms of such separation
are as follows:

 

1.             Resignation. Pursuant to paragraph 6.2 of your Fourth Amended and
Restated Employment Agreement (the “Employment Agreement”) dated effective July
1, 2005, you hereby resign without cause from all of your positions at
Chesapeake. The foregoing resignation is effective February 10, 2006 (the
“Effective Date”) and includes, without implied limitation, resignation from:
(a) any employment by Chesapeake, (b) each directorship or similar position with
Chesapeake and (c) any position as an officer, manager, partner or similar
position with Chesapeake. Neither Chesapeake nor any Chesapeake subsidiary,
parent company, affiliate or their respective shareholders, partners, directors,
officers, employees, attorneys or agents (collectively, the “Chesapeake
Parties”) have any obligation to rehire, reemploy, recall, hire or continue to
employ you in the future. Except as expressly modified herein you agree to
comply with each of the provisions of your Employment Agreement including,
without implied limitation, any provisions regarding covenants not to compete,
confidentiality and interest in proprietary matters. The parties further agree
that if you acquire in any manner (including through a merger or directly or
indirectly through another entity) a company or package of properties that
includes interests prohibited by the non-competition provisions of the
Employment Agreement (the “Restricted Properties”) and the allocated value of
the Restricted Properties are less than 25% of the total purchase price for such
package or company, then Chesapeake’s sole remedy under the Employment Agreement
for such inadvertent breach will be the right to purchase the Restricted
Properties at your cost after you provide written notice to Chesapeake of the
purchase of Restricted Properties. You agree to notify Chesapeake if you acquire

 

Chesapeake Energy Corporation

6100 N. Western Ave., Oklahoma City, OK 73118 • P. O. Box 18496, Oklahoma City,
OK 73154-0496

405-879-9226 • fax 405-848-8588 • amcclendon@chkenergy.com

 

 

 

Mr. Tom L. Ward

February 10, 2006

Page 2

 

 

or enter into an agreement to acquire, directly or indirectly, any oil and gas
interest or business that violates the provisions of the Employment Agreement.

 

2.             Consultant. For the six (6) month period (the “NC Period”) after
the Effective Date you agree to act as a consultant for Chesapeake and use your
best efforts to assist in the transition of your responsibilities to the
designated employees of Chesapeake. The services required under this Agreement
will be those reasonably requested by Chesapeake but will not require you to
expend more than 20 hours per week to provide such services during the NC
Period. Except as expressly provided herein you will receive no compensation for
the services provided under this paragraph 2, but Chesapeake will reimburse you
for approved reasonable out of pocket costs incurred in providing such services.
The parties acknowledge that the right to participate in the Founder’s Well
Participation Program will terminate at the end of the NC Period in accordance
with the Founder’s Well Participation Program.

 

3.             Compensation. You will receive compensation and benefits in
accordance with your Employment Agreement through the Effective Date. The
amounts paid in accordance with this paragraph 3 are gross amounts, subject to
lawful deductions, including taxes and any deductions you have previously
authorized. After the Effective Date, you are entitled to continue your group
health insurance coverage in accordance with applicable law. Please complete the
COBRA election form and return it to Chesapeake in accordance with Chesapeake’s
policies if you elect to continue such insurance coverage. Chesapeake agrees to
settle promptly all authorized reimbursable business expenses, if any, when you
submit appropriate expense reports along with the required receipts and
documentation. The expense reports must be submitted to Chesapeake by the close
of business on February 28, 2006. Except as expressly set forth in this
Agreement, you have been paid in full and waive all claims for all overtime pay,
back pay, future pay, unpaid vacation, unpaid sick leave or any other form of
compensation or payments.

 

4.             Facilities and Support. During the NC Period you will be entitled
to use your current support staff in accordance with historical practices and
have access to Chesapeake’s aircraft in accordance with your historical usage.
The cost and expenses of the foregoing will be paid by Chesapeake subject to any
reimbursement obligations which would normally be due under your Employment
Agreement. You will also be entitled to use your office for up to 60 days after
the Effective Date. You will be entitled to hire Debbie Richardson, Cheryl
Hamilton and/or April McKnight at any time after the Effective Date without
violating the provisions of the Employment Agreement, any other agreement or any
policy of Chesapeake In the event that Ms. Richardson, Ms. Hamilton or
Ms. McKnight ceases to be employed by Chesapeake other than termination by
Chesapeake for cause and is permanently employed by you on or before 15 days
after the end of the NC Period, any such party’s stock options and restricted
stock will vest immediately.

 

5.             Equity Compensation. A schedule of your equity compensation is at
Schedule “A” attached as a part hereof, including all vested and unvested stock
options and restricted stock. You acknowledge agree that you have no other
equity compensation, stock options or restricted stock (or the right to receive
any of the foregoing). As consideration for your performance of this Agreement
Chesapeake Energy hereby agrees that the unvested equity compensation on
Schedule “A” will immediately vest on the execution and delivery of this
Agreement by both parties. The Chesapeake

 

Mr. Tom L. Ward

February 10, 2006

Page 3

 

 

Energy Board of Directors has approved the foregoing acceleration of your
unvested equity compensation.

 

6.             Litigation. You represent and warrant that you: (a) have not
suffered any work related injury during your employment; and (b) have not filed
and will not file any claims, complaints, charges or lawsuits against the
Chesapeake Parties with any governmental agency or any court for any matter,
claim or incident known or unknown which occurred or arose out of occurrences in
any way connected to the Chesapeake Parties, your employment with Chesapeake or
your separation from employment with Chesapeake. In addition, you agree to
cooperate with the Chesapeake Parties if you are subpoenaed to testify in any
deposition, hearing, trial or other judicial or administrative proceeding
regarding your activities or knowledge of any of the Chesapeake Parties’
activities while in the employment of Chesapeake. You agree to appear and
testify in connection with such matters without compensation from the Chesapeake
Parties other than reimbursement for travel and other reasonable out-of-pocket
expenses. You agree not to disclose any attorney/client communications occurring
during your employment without the prior written authorization of Chesapeake
Energy’s Board of Directors.

 

7.             Return of Property. You agree to timely return to Chesapeake all
documents, reports, copies, summaries, files, memoranda, records, credit cards
and cardkey passes, door and file keys, computer software, Company Information
(as hereinafter defined) and other personal property which you received,
prepared or assisted in the preparation of in connection with your employment.
The term “Company Information” means confidential information relating to the
Chesapeake Parties and other technical, business or financial information
relating to the Chesapeake Parties received in the course of your employment by
Chesapeake, including, without limitation, any procedures, policies and
information (in whatever form) received by you from the Chesapeake Parties’
investors, partners, participants, agents or business associates. You will
remove from Chesapeake’s premises any personal property within 10 days after you
no longer occupy your office in accordance with this Agreement.

 

8.             Release. This Agreement constitutes a full, final and complete
good faith settlement of your employment relationship with Chesapeake and any
and all economic or business relationships or transactions with the Chesapeake
Parties. This Agreement is not and will not in any way be considered or
interpreted as an admission of any type by Chesapeake or you. You hereby, on
your own behalf and on behalf of your spouse, family members, heirs, successors
and assigns (the “Ward Parties”) irrevocably and unconditionally release, acquit
and forever discharge the Chesapeake Parties from any and all causes of actions,
suits, claims, demands, losses, liabilities or damages whatsoever, whether now
existing or hereafter to accrue, by reason of, growing out of or in any way
connected with your employment with Chesapeake, your separation from employment
with Chesapeake or any relationship with any of the Chesapeake Parties,
including, without limitation, any claims under any federal, state or local
laws. You hereby warrant neither you nor any person acting on your behalf, has
or will file, charge, claim, sue or cause any action for damages or other relief
against any of the Chesapeake Parties involving any matter occurring through the
Effective Date. The provisions of this paragraph 8 do not limit any party’s
right to enforce such party’s rights under this Agreement.

 

 

Mr. Tom L. Ward

February 10, 2006

Page 4

 

 

 

9.             Chesapeake Release. Chesapeake Energy hereby, on its own behalf
and on behalf of each Chesapeake entity, irrevocably and unconditionally
releases, acquits and forever discharges you from any and all causes of actions,
suits, claims, demands, losses, liabilities or damages whatsoever, whether now
existing or hereafter to accrue, by reason of, growing out of or in any way
connected with the ordinary course of performance of your employment with
Chesapeake. The release in this paragraph 9 is intended to include negligent
acts or omissions by you in the ordinary course of your employment but does not
apply to or affect fraud or intentional misconduct by you. The provisions of
this paragraph 9 do not limit any party’s right to enforce such party’s rights
under this Agreement or the Employment Agreement.

 

10.          Indemnification. As a material inducement to enter into this
Agreement, you hereby irrevocably agree to indemnify and hold harmless the
Chesapeake Parties from and against any loss, damage, claim, liability, debt or
expense (including legal fees, interest and expenses of litigation) arising
directly or indirectly from claims by the Ward Parties, your employment by
Chesapeake, any relationship with the Chesapeake Parties, this Agreement or any
breach of this Agreement.

 

11.

Miscellaneous. We further agree as follows:

 

 

11.1

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 on the third (3rd)
business day after the same is sent by certified mail, postage and charges
prepaid, directed to you at the address appearing in Chesapeake’s records, to
Chesapeake at the address designated above or such additional addresses as
either party might designate by written notice to the other party.

 

 

11.2

Entire Agreements. With respect to the termination of your employment, there are
no agree­ments, understand­ings, warranties or representa­tions except as set
forth in the Employment Agreement or herein. Neither this Agreement nor any of
the provisions hereof can be changed, waived, discharged or terminated, except
by an instrument in writing signed by both parties.

 

 

11.3

Binding Effect. This Agreement will inure to the benefit of the parties and will
bind their respective heirs, successors and permitted assigns. This Agreement is
intended to create rights between the Chesapeake Parties and you and is not
intended to confer rights on any other person or to constitute such person a
third party beneficiary of this Agreement. If any clause or provision of this
Agreement is illegal, invalid or unenforceable under any present or future law,
the remainder of this Agreement will not be affected thereby. It is the
intention of the parties that if any such provision is held to be illegal,
invalid or unenforce­able, there will be added in lieu thereof a provision as
similar in terms to such provisions as is possible and to be legal, valid and
enforceable.

 

 

Mr. Tom L. Ward

February 10, 2006

Page 5

 

 

 

 

11.3

Governing Law. This Agreement will be interpreted and construed under and by
virtue of the internal laws of the State of Oklahoma and will be deemed to have
been made and executed in Oklahoma County, Oklahoma. All claims, disputes and
other matters in question arising out of or relating to this Agreement or the
breach thereof will be decided by proceedings instituted and litigated in a
court of competent jurisdiction sitting in Oklahoma County, Oklahoma.

 

 

11.4

Authority. You hereby represent and warrant that you: (a) have executed and
delivered this Agreement after consultation with legal counsel which you
selected and after an independent analysis of the facts and circum­stances; and
(b) have the requisite authority and power to execute, deliver and perform this
Agreement on your own behalf and on behalf of the Ward Parties. You agree to
execute and deliver any documents reasonably requested by Chesapeake. On
execution by you and Chesa­peake, this Agreement will be a legal, valid and
binding agreement enforceable in accordance with its terms regardless of any
change in the facts or circumstances.

 

If the foregoing accurately represents the terms of our agreement, please sign
and date the enclosed original of this letter, and return the original to
Chesapeake.

 

Best regards,

 

 

 

 

/s/ MARTHA A. BURGER

 

 

Senior Vice President and Treasurer

 

 

 

 

 

AGREED TO AND ACCEPTED on this 9th day of February, 2006.

 

 

 

 

 

 

 

 

/s/ TOM L. WARD, individually