EXHIBIT 10.2.3

 

AMENDED AND RESTATED

 

EMPLOYMENT AGREEMENT

 

between

 

MARCUS C. ROWLAND

 

and

 

CHESAPEAKE ENERGY CORPORATION

 

 

 

Effective April 1, 2003

 

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TABLE OF CONTENTS

 

              

Page

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1.

  

Employment

  

1

2.

  

Executive’s Duties

  

1

    

2.1

  

Specific Duties

  

1

    

2.2

  

Supervision

  

1

    

2.3

  

Rules and Regulations

  

1

    

2.4

  

Stock Investment

  

2

3.

  

Other Activities

  

2

4.

  

Executive’s Compensation

  

2

    

4.1

  

Base Salary

  

2

    

4.2

  

Bonus

  

2

    

4.3

  

Equity Compensation

  

2

    

4.4

  

Benefits

  

2

         

4.4.1    Vacation

  

3

         

4.4.2    Membership Dues

  

3

         

4.4.3    Automobile Allowance

  

3

    

4.5

  

Change of Control Payment

  

3

    

4.6

  

Compensation Review

  

5

5.

  

Term

  

5

6.

  

Termination

  

5

    

6.1

  

Termination by Company

  

5

         

6.1.1    Termination without Cause

  

5

         

6.1.2    Termination for Cause

  

5

    

6.2

  

Termination by Executive

  

6

    

6.3

  

Incapacity of Executive

  

6

    

6.4

  

Death of Executive

  

6

    

6.5

  

Effect of Termination

  

6

7.

  

Confidentiality

  

7

8.

  

Noncompetition

  

7

9.

  

Proprietary Matters

  

8

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TABLE OF CONTENTS (continued)

 

10.

  

Arbitration

  

8

11.

  

Miscellaneous

  

9

    

11.1 Time

  

9

    

11.2 Notices

  

9

    

11.3 Assignment

  

9

    

11.4 Construction

  

9

    

11.5 Entire Agreement

  

9

    

11.6 Binding Effect

  

10

    

11.7 Legal Fees

  

10

    

11.8 Supersession

  

10

 

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EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is made effective April 1, 2003, between CHESAPEAKE ENERGY
CORPORATION, an Oklahoma corporation (the “Company”), and MARCUS C. ROWLAND, an
individual (the “Executive”) and replaces and supersedes that certain Employment
Agreement between Company and Executive dated August 1, 2000.

 

W I T N E S S E T H:

 

WHEREAS, the Company desires to retain the services of the Executive and the
Executive desires to make the Executive’s services available to the Company.

 

NOW, THEREFORE, in consideration of the mutual promises herein contained, the
Company and the Executive agree as follows:

 

1. Employment. The Company hereby employs the Executive and the Executive hereby
accepts such employment subject to the terms and conditions contained in this
Agreement. The Executive is engaged as an employee of the Company, and the
Executive and the Company do not intend to create a joint venture, partnership
or other relationship which might impose a fiduciary obligation on the Executive
or the Company in the performance of this Agreement.

 

2. Executive’s Duties. The Executive is employed on a full-time basis.
Throughout the term of this Agreement, the Executive will use the Executive’s
best efforts and due diligence to assist the Company in achieving the most
profitable operation of the Company and the Company’s affiliated entities
consistent with developing and maintaining a quality business operation.

 

  2.1   Specific Duties. The Executive will serve as Chief Financial Officer and
Executive Vice President for the Company. The Executive will perform all of the
services required to fully and faithfully execute the office and position to
which the Executive is appointed and such other services as may be reasonably
requested by the Executive’s supervisor. During the term of this Agreement, the
Executive may be nominated for election or appointed to serve as a director or
officer of the Company’s subsidiaries as determined in the board of directors’
sole discretion.

 

  2.2   Supervision. The services of the Executive will be requested and
directed by the Chief Executive Officer, Mr. Aubrey K. McClendon.

 

  2.3   Rules and Regulations. The Company currently has an Employment Policies
Manual which sets forth the general human resources policies of the Company and
addresses frequently asked questions regarding the Company. The Executive agrees
to comply with the Employment Policies Manual except to the extent inconsistent
with this Agreement. The

 

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Employment Policies Manual is subject to change without notice in the sole
discretion of the Company at any time.

 

  2.4   Stock Investment. The Executive agrees to hold not less than five
thousand (5,000) shares of the Company’s common stock during the term of this
Agreement.

 

3. Other Activities. The Executive currently conducts oil and gas activities
individually and through various related or family-owned entities, including
Infinity Resources, L.L.C. The Executive will be permitted to continue oil and
gas activities individually, and directly or indirectly through Infinity
Resources, L.L.C., provided that the Executive, subsequent to August 1, 2000,
will not acquire, attempt to acquire or aid another in the acquisition or
attempted acquisition of an interest in oil and gas assets, oil and gas
production, oil and gas leases, mineral interests, oil and gas wells or other
such oil and gas exploration, development or production activities within five
(5) miles of any operations or ownership interests of the Company or its
affiliated corporations, partnerships or entities. In the event the Executive or
the Company becomes aware of any oil and gas activities by the Executive that
may violate the foregoing provision, the party discovering the activity will
immediately notify the other party in writing and Executive will use his good
faith efforts to correct the situation by sale or transfer to the Company.

 

4. Executive’s Compensation. The Company agrees to compensate the Executive as
follows:

 

  4.1   Base Salary. A base salary (the “Base Salary”), at the initial annual
rate of not less than Three Hundred Fifty Thousand Dollars ($350,000.00) will be
paid to the Executive in equal semi-monthly installments beginning April 15,
2003 during the term of this Agreement.

 

  4.2   Bonus. In addition to the Base Salary described at paragraph 4.1 of this
Agreement, the Company may periodically pay bonus compensation to the Executive.
Any bonus compensation will be at the absolute discretion of the Company in such
amounts and at such times as the board of directors of the Company may
determine.

 

  4.3   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 stock options or awards from the Company’s various equity compensation
plans, subject to the terms and conditions thereof.

 

  4.4   Benefits. The Company will provide the Executive such retirement
benefits, reimbursement of reasonable expenditures for dues, travel and
entertainment and such other benefits as are customarily provided by the Company
and as are set forth in 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

 

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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 following specific benefits will also be
provided to the Executive at the expense of the Company:

 

  4.4.1   Vacation. The Executive will be entitled to take three (3) weeks of
paid vacation each twelve months during the term of this Agreement. No
additional compensation will be paid for failure to take vacation and no
vacation may be carried forward from one twelve month period to another.

 

  4.4.2   Membership Dues. The Company will reimburse the Executive for: (a) the
monthly dues necessary to maintain a full membership in a country club in the
Oklahoma City area selected by the Executive; and (b) the reasonable cost of any
approved business entertainment at such country club. All other costs,
including, without implied limitation, any initiation costs, initial membership
costs, personal use and business entertainment unrelated to the Company will be
the sole obligation of the Executive and the Company will have no liability with
respect to such amounts.

 

  4.4.3   Automobile Allowance. The Executive will receive a monthly cash
allowance in the amount of One Thousand Dollars ($1,000.00) to defer a portion
of the Executive’s cost of acquiring, operating and maintaining an automobile
for use in the Executive’s employment.

 

  4.5   Change of Control Payment. If, during the term of this Agreement, there
is a “Change of Control” the Executive will be entitled to a payment (in
addition to any other amounts payable to the Executive under this Agreement or
otherwise) in an amount equal to the Executive’s then current Base Salary under
paragraph 4.1 of this Agreement plus 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. The right to such
compensation is subject to the Executive’s continued compliance with each of the
provisions of this Agreement. If the foregoing amount is not paid within thirty
(30) days after a Change of Control the unpaid amount will bear interest at the
per annum rate equal to twelve percent (12%). For the purpose of this Agreement,
a “Change of Control” means the occurrence of any of the following:

 

(a) 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 20% or more of either (i)
the then outstanding shares of common stock of the Company (the “Outstanding
Company 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

 

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“Outstanding Company 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 any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the Company; or
(iv) any acquisition by any corporation pursuant to a transaction which complies
with clauses (i), (ii) and (iii) of paragraph (c) below;

 

(b) the individuals who, as of the date hereof, 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;

 

(c) 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 Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 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 Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% 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

 

4

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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
Board, providing for such Business Combination; or,

 

(d) the approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company.

 

  4.6   Compensation Review. The compensation of the Executive will be reviewed
not less frequently than annually by the board of directors of the Company.

 

5. Term. The employment relationship evidenced by this Agreement is an “at will”
employment relationship and the Company reserves the right to terminate the
Executive at any time with or without cause. In the absence of such termination,
this Agreement will extend for a term of three (3) years commencing on April 1,
2003, and ending on June 30, 2006 (the “Expiration Date”).

 

6. Termination. This Agreement will continue in effect until the expiration of
the term stated at paragraph 5 of this Agreement unless earlier terminated
pursuant to this paragraph 6.

 

  6.1   Termination by Company. The Company will have the following rights to
terminate this Agreement:

 

  6.1.1   Termination without Cause. The Company may terminate this Agreement
without cause at any time by the service of written notice of termination to the
Executive specifying an effective date of such termination not sooner than sixty
(60) business days after the date of such notice (the “Termination Date”). In
the event the Executive is terminated without cause, or the Company elects not
to renew this Agreement, the Executive will receive as termination compensation:
(a) Base Salary for a period of ninety (90) days; (b) any benefits payable by
operation of paragraph 4.4 of this Agreement; and (c) any vacation pay accrued
through the Termination Date. The right to the foregoing termination
compensation under clause (a) above: (i) is subject to the Executive’s execution
of the Company’s standard termination agreement releasing all legally waivable
claims against the Company and the Executive’s compliance with each of the
provisions of this Agreement; and (ii) will be reduced by the number of days
remaining in the one year period after any change of control payment under
paragraph 4.5 of this Agreement.

 

  6.1.2   Termination for Cause. The Company may terminate this Agreement for
cause if the Executive: (a) misappropriates the property of the Company or
commits any other act of dishonesty; (b) engages in personal misconduct which
materially injures the Company; (c) willfully violates any law or regulation
relating to the business of the Company which results in injury to the Company;

 

5

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or (d) willfully and repeatedly fails to perform the Executive’s duties
hereunder. In the event this Agreement is terminated for cause, the Company will
not have any obligation to provide any further payments or benefits to the
Executive after the Termination Date.

 

  6.2   Termination by Executive. The Executive may voluntarily terminate this
Agreement with or without cause by the service of written notice of such
termination to the Company specifying a Termination Date no sooner than thirty
(30) days after the date of such notice. In the event this Agreement is
terminated by the Executive, neither the Company nor the Executive will have any
further obligations hereunder including, without limitation, any obligation of
the Company to provide any further payments or benefits to the Executive after
the Termination Date.

 

  6.3   Incapacity of Executive. If the Executive suffers from a physical or
mental condition which in the reasonable judgment of the Company’s management
prevents the Executive in whole or in part from performing the duties specified
herein for a period of three (3) consecutive months, the Executive may be
terminated. Although the termination may be deemed as a termination for cause,
any compensation payable under paragraph 4 of this Agreement will be continued
for ninety (90) days following the Termination Date. Notwithstanding the
foregoing, the Executive’s Base Salary specified in paragraph 4.1 of this
Agreement will be reduced by any benefits payable under any disability plans.

 

  6.4   Death of Executive. If the Executive dies during the term of this
Agreement, the Company may thereafter terminate this Agreement without
compensation to the Executive’s estate except: (a) the obligation to continue
the Base Salary payments under paragraph 4.1 of this Agreement for ninety (90)
days following the date of the Executive’s death; and (b) the benefits described
in paragraph 4.4 of this Agreement accrued through the date of the Executive’s
death.

 

  6.5   Effect of Termination. The termination of this Agreement will terminate
all obligations of the Executive to render services on behalf of the Company
from and after the Termination Date, provided that the Executive will maintain
the confidentiality of all information acquired by the Executive during the term
of Executive’s employment in accordance with paragraph 7 of this Agreement.
Except as otherwise provided in paragraph 6 of this Agreement, no accrued bonus,
severance pay or other form of compensation will be payable by the Company to
the Executive by reason of the termination of this Agreement. All keys, entry
cards, credit cards, files, records, financial information, furniture,
furnishings, equipment, supplies and other items relating to the Company in the
Executive’s possession will remain the property of the Company. The Executive
will have the right to retain and remove all personal property and effects which
are owned by the Executive and located in the offices of the Company. All such
personal items will be

 

6

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removed from such offices no later than two (2) days after the Termination Date,
and the Company is hereby authorized to discard any items remaining and to
reassign the Executive’s office space after such date. Prior to the Termination
Date, the Executive will render such services to the Company as might be
reasonably required to provide for the orderly termination of the Executive’s
employment.

 

7. Confidentiality. The Executive recognizes that the nature of the Executive’s
services are such that the Executive will have access to information which
constitutes trade secrets, is of a confidential nature, is of great value to the
Company or is the foundation on which the business of the Company is predicated.
The Executive agrees not to disclose to any person other than the Company’s
employees or the Company’s legal counsel nor use for any purpose, other than the
performance of this Agreement, any confidential information (“Confidential
Information”). Confidential Information includes data or material (regardless of
form) which is: (a) a trade secret; (b) provided, disclosed or delivered to
Executive by the Company, any officer, director, employee, agent, attorney,
accountant, consultant, or other person or entity employed by the Company in any
capacity, any customer, borrower or business associate of the Company or any
public authority having jurisdiction over the Company of any business activity
conducted by the Company; or (c) produced, developed, obtained or prepared by or
on behalf of Executive or the Company (whether or not such information was
developed in the performance of this Agreement) with respect to the Company or
any assets oil and gas prospects, business activities, officers, directors,
employees, borrowers or customers of the foregoing. However, Confidential
Information shall not include any information, data or material which at the
time of disclosure or use was generally available to the public other than by a
breach of this Agreement, was available to the party to whom disclosed on a
non-confidential basis by disclosure or access provided by the Company or a
third party, or was otherwise developed or obtained independently by the person
to whom disclosed without a breach of this Agreement. On request by the Company,
the Company will be entitled to the return of any Confidential Information in
the possession of the Executive. The Executive also agrees that the provisions
of this paragraph 7 will survive the termination, expiration or cancellation of
this Agreement for a period of three (3) years. The Executive will deliver to
the Company all originals and copies of the documents or materials containing
Confidential Information. For purposes of paragraphs 7, 8, and 9 of this
Agreement, the Company expressly includes any of the Company’s affiliated
corporations, partnerships or entities.

 

8. Noncompetition. For a period of twelve (12) months after Executive is no
longer employed by the Company as a result of either the resignation by the
Executive pursuant to paragraph 6.2 above or termination for cause pursuant to
paragraph 6.1.2 above, the Executive will not solicit, induce, entice or attempt
to entice any employee, contractor, customer, vendor or subcontractor to
terminate or breach any relationship with the Company or the Company’s
affiliates for the Executive’s own account or for the benefit of another party.
The Executive further agrees that the Executive will not circumvent or attempt
to circumvent the foregoing agreements by any future arrangement or through the
actions of a third party.

 

9. Proprietary Matters. The Executive expressly understands and agrees that any
and all improvements, inventions, discoveries, processes, know-how or
intellectual property that

 

7

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are generated or conceived by the Executive during the term of this Agreement,
whether generated or conceived during the Executive’s regular working hours or
otherwise, will be the sole and exclusive property of the Company. Whenever
requested by the Company (either during the term of this Agreement or
thereafter), the Executive will assign or execute any and all applications,
assignments and or other instruments and do all things which the Company deems
necessary or appropriate in order to permit the Company to: (a) assign and
convey or otherwise make available to the Company the sole and exclusive right,
title, and interest in and to said improvements, inventions, discoveries,
processes, know-how, applications, patents, copyrights, trade names or
trademarks; or (b) apply for, obtain, maintain, enforce and defend patents,
copyrights, trade names, or trademarks of the United States or of foreign
countries for said improvements, inventions, discoveries, processes or know-how.
However, the improvements, inventions, discoveries, processes or know-how
generated or conceived by the Executive and referred to above (except as they
may be included in the patents, copyrights or registered trade names or
trademarks of the Company, or corporations, partnerships or other entities which
may be affiliated with the Company) shall not be exclusive property of the
Company at any time after having been disclosed or revealed or have otherwise
become available to the public or to a third party on a non-confidential basis
other than by a breach of this Agreement, or after they have been independently
developed or discussed without a breach of this Agreement by a third party who
has no obligation to the Company or its affiliates.

 

10. Arbitration. The parties will attempt to promptly resolve any dispute or
controversy arising out of or relating to this Agreement or termination of the
Executive by the Company. Any negotiations pursuant to this paragraph 10 are
confidential and will be treated as compromise and settlement negotiations for
all purposes. If the parties are unable to reach a settlement amicably, the
dispute will be submitted to binding arbitration before a single arbitrator in
accordance with the Employment Dispute Resolution Rules of the American
Arbitration Association. The arbitrator will be instructed and empowered to take
reasonable steps to expedite the arbitration and the arbitrator’s judgment will
be final and binding upon the parties subject solely to challenge on the grounds
of fraud or gross misconduct. Except for damages arising out of a breach of
paragraphs 7, 8 or 9 of this Agreement, the arbitrator is not empowered to award
total damages (including compensatory damages) which exceed 200% of compensatory
damages and each party hereby irrevocably waives any damages in excess of that
amount. The arbitration will be held in Oklahoma County, Oklahoma. Judgment upon
any verdict in arbitration may be entered in any court of competent jurisdiction
and the parties hereby consent to the jurisdiction of, and proper venue in, the
federal and state courts located in Oklahoma County, Oklahoma. Each party will
bear its own costs in connection with the arbitration and the costs of the
arbitrator will be borne by the party who the arbitrator determines did not
prevail in the matter. Unless otherwise expressly set forth in this Agreement,
the procedures specified in this paragraph 10 will be the sole and exclusive
procedures for the resolution of disputes and controversies between the parties
arising out of or relating to this Agreement. Notwithstanding the foregoing, a
party may seek a preliminary injunction or other provisional judicial relief if
in such party’s judgment such action is necessary to avoid irreparable damage or
to preserve the status quo.

 

11. Miscellaneous. The parties further agree as follows:

 

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  11.1   Time. Time is of the essence of each provision of this Agreement.

 

  11.2   Notices. Any notice, payment, demand or communication required or
permitted to be given by any provision of this Agreement will be in writing and
will be deemed to have been given when delivered personally or by telefacsimile
to the party designated to receive such notice, or on the date following the day
sent by overnight courier, or on the third (3rd) business day after the same is
sent by certified mail, postage and charges prepaid, directed to the following
address or to such other or additional addresses as any party might designate by
written notice to the other party:

 

To the Company:

  

Chesapeake Energy Corporation

    

Post Office Box 18496

    

Oklahoma City, OK 73154-0496

    

Attn: Aubrey K. McClendon

To the Executive:

  

Marcus C. Rowland

    

15000 Wilson Road

    

Edmond, OK 73013

 

  11.3   Assignment. Neither this Agreement nor any of the parties’ rights or
obligations hereunder can be transferred or assigned without the prior written
consent of the other parties to this Agreement; provided, however, the Company
may assign this Agreement to any wholly owned affiliate or subsidiary of the
Company without Executive’s consent.

 

  11.4   Construction. If any provision of this Agreement or the application
thereof to any person or circumstances is determined, to any extent, to be
invalid or unenforceable, the remainder of this Agreement, or the application of
such provision to persons or circumstances other than those as to which the same
is held invalid or unenforceable, will not be affected thereby, and each term
and provision of this Agreement will be valid and enforceable to the fullest
extent permitted by law. This Agreement is intended to be interpreted, construed
and enforced in accordance with the laws of the State of Oklahoma and any
litigation relating to this Agreement will be conducted in a court of competent
jurisdiction located in Oklahoma County, Oklahoma.

 

  11.5   Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter herein contained,
and no modification hereof will be effective unless made by a supplemental
written agreement executed by all of the parties hereto.

 

  11.6   Binding Effect. This Agreement will be binding on the parties and their
respective successors, legal representatives and permitted assigns. In the event
of a merger, consolidation, combination, dissolution or liquidation of the
Company, the performance of this Agreement will be assumed by any entity which
succeeds to or is transferred the business of the Company as a result

 

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thereof, and the Executive waives the consent requirement of paragraph 11.3 to
effect such assumption.

 

  11.7   Legal Fees. If any party institutes an action or proceeding against any
other party relating to the provisions of this Agreement or any default
hereunder, the unsuccessful party to such action or proceeding will reimburse
the successful party therein for the reasonable expenses of any legal fees
incurred by the successful party, except with respect to any arbitration
proceeding conducted pursuant to paragraph 10 above.

 

  11.8   Supersession. On execution of this Agreement by the Company and the
Executive, the relationship between the Company and the Executive will be bound
by the terms of this Agreement and the Employment Policies Manual and not by any
other agreements or otherwise. In the event of a conflict between the Employment
Policies Manual and this Agreement, this Agreement will control in all respects.

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement effective the
date first above written.

 

CHESAPEAKE ENERGY CORPORATION, an

Oklahoma corporation

By:

 

 

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Aubrey K. McClendon, Chief Executive Officer

(the “Company”)

By:

 

 

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Marcus C. Rowland, Individually

(the “Executive”)

 

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